United States District Court, W.D. Pennsylvania
GIBSON UNITED STATES DISTRICT JUDGE.
diversity action for breach of contract was filed on February
24, 2016, by Plaintiff Gasbarre Products, Inc., a
Pennsylvania corporation. (ECF No. 1.) Gasbarre alleges that
it contracted for the sale of, and in fact delivered, two
pieces of equipment to the Defendants, Diamond Automotive
Group Florida, Inc. ("Diamond Florida") and
Industrial de Autopartes Parral S.de R.I. de C.V.
("IAP"), for which Defendants have not yet paid
almost $1, 000, 000. (Id.) While it brings
relatively run-of-the-mill contract claims, Gasbarre's
Complaint quickly hit a wall. Diamond Florida filed a motion
to dismiss on the grounds that Gasbarre's contract was
only with IAP and that the Court has no personal jurisdiction
over Diamond Florida. (ECF No. 8.) At the same time, IAP, a
Mexican corporation represented by the same attorney as
Diamond Florida, proved quite difficult to
approximately eight months, Gasbarre filed a motion for
alternative service on IAP, which the Court granted. (ECF No.
32.) Thus, IAP has finally been served and the Court turns to
Diamond Florida's motion to dismiss for lack of personal
jurisdiction and failure to state a claim. Gasbarre argues
that Diamond Florida should not be dismissed from the lawsuit
under the theory that Diamond Florida is an alter ego of IAP.
For the reasons that follow, Diamond Florida's motion
will be granted with respect to the claim for breach of the
covenant of good faith and fair dealing and denied in all
Jurisdiction and Venue
Court has jurisdiction over this matter pursuant to 28 U.S.C.
§ 1332(a)(1), as there is complete diversity of
citizenship between the parties, and the amount in
controversy exceeds $75, 000. Venue is proper under 28 U.S.C.
§ 1391(b)(2) because a substantial portion of the events
giving rise to the claims occurred in the Western District of
following facts are alleged in the Complaint, which the Court
will accept as true for the sole purpose of deciding the
October 3, 2012, Gasbarre was contacted about supplying a
piece of equipment to Diamond Automotive and IAP. (ECF No.
1 ¶ 14.) Negotiations took place over the course of
several months. (Id. ¶¶ 15-26.)
Gasbarre's sales manager visited Diamond Automotive's
office in Chihuahua, Mexico in November of 2012.
(Id. ¶ 19.) Employees from either IAP and or
Diamond Automotive also visited Gasbarre's office in
Dubois, Pennsylvania several times. (Id. ¶ 27.)
A proposal review was conducted in Chihuahua, Mexico on
February 12, 2013, and attended by several employees of IAP
and or Diamond Automotive, including Said Carbajal and
Gregorio Carbajal, and Gasbarre's sales manager.
(Id. ¶ 28.) After the proposal review, Diamond
Automotive requested a revised proposal with IAP listed as
the customer instead of Diamond Automotive. (Id.
¶ 29.) Gasbarre's initial proposal dated January 7,
2013, lists “Diamond Automotive Power” as the
customer. (ECF No. 28-1 at 5.) On or about March 6, 2013,
Gasbarre and IAP entered into a contract for Gasbarre to sell
IAP a furnace and a hydraulic press. (ECF No. 1 ¶¶
from IAP and or Diamond Automotive traveled to Dubois,
Pennsylvania frequently to inspect the progress and to
Gasbarre's office in Michigan for training. (Id.
¶¶ 38-43.) All equipment was delivered and
installed at the plant in Mexico by June 2014. (Id.
¶ 44.) It is alleged that Defendants accepted delivery
and made partial payments totaling $1, 335, 000 but still owe
$961, 707.94 for the press and furnace. (Id.
¶¶ 45-46.) Gasbarre alleges that Defendants
subsequently made several promises to pay the remainder but
never actually did so. (Id. ¶¶ 47-66.)
Most of the communications regarding the Defendants'
promises to pay came from Said Carbajal. (Id.
¶¶ 49-66.) Based on these allegations, Gasbarre
brings claims against IAP and Diamond Florida for breach of
contract, unjust enrichment, and breach of the implied
covenant of good faith and fair dealing.
Summary of Arguments and Facts from Discovery
parties also submitted additional facts and arguments after
conducting limited discovery into the issue of personal
jurisdiction. The basis for each party's position can be
summarized as follows.
takes the position that Diamond Florida, Diamond Mexico, and
IAP are all essentially the same entity and that they have
been playing “an elaborate shell game.” (ECF No.
13 at 2.) Under Gasbarre's theory, employees of the
combined entity negotiated with Gasbarre as Diamond
Automotive, while keeping it vague as to whether it was
Diamond Mexico, Diamond Florida, or both, and then at the
last minute switched in a third entity, IAP, as the party to
the contract. When sued, Diamond Florida claims no
involvement and no personal jurisdiction and IAP attempts to
dodge service. This “shell game” as Gasbarre
calls it, would leave Gasbarre with no remedy to collect the
money owed to it for goods shipped in good faith to Mexico.
points to a number of facts in support of its prima facie
showing of this Court's personal jurisdiction over
Diamond Florida. First, it submits that in response to its
interrogatories, Diamond Florida was unable to produce
significant corporate documents, including records of the
Board of Director's, minutes of meetings, or
documentation of stockholder meetings. (ECF No. 28 at 9-10,
18.) The only two shareholders of Diamond Florida are its
President, Hector Carbajal Vazquez, and Said Carbajal
Vazquez, who is also a director of IAP and Diamond Mexico.
(Id. at 13.) Additionally, the treasurer of Diamond
Florida, Gregorio Carbajal, was simultaneously a director and
general manager of IAP. (Id. at 14.) Gregorio
Carbajal and Said Carbajal were both involved in the
negotiations with Gasbarre and were described to Gasbarre as
“investors in the project.” (Id. at
14-15.) Diamond Florida was founded in 2012 and capitalized
with $1, 000 in shares and a loan from Hector Carbajal
Vazquez. (ECF No. 28-1 at 24.) Diamond Mexico's website
(www.diamondautomotive.com.mx) shows that Diamond
Mexico and Diamond Florida share a unified marketing image,
including a logo with the words “Diamond Power.”
The website also prominently displays IAP's logo, and
lists the physical address and email address of Diamond
Florida. (ECF No. 28 at 16.) The same logo also appears on
Diamond Florida's Facebook page. (Id.)
Statements suggesting the three companies are part of the
same group have also appeared in the press. (Id. at
17.) Likewise, Diamond Florida and IAP are represented by the
same attorneys. (Id. at 20.)
part, Diamond Florida argues that the two
entities are simply different companies; that
Diamond Florida had no involvement in the contract between
Gasbarre and IAP; and that Gasbarre has failed to come
forward with sufficient evidence to support an alter ego
theory. In support of its position, Diamond Florida relies
largely on a sworn affidavit from its President, Hector
Carbajal Vazquez, which states that the companies are
separate. (ECF Nos. 9-1; 29 at 7) (IAP and Diamond Florida do
not own shares in each other and “Diamond Automotive
Florida is not a parent company, subsidiary, agent,
shareholder, alter ego, or affiliate of Diamond Automotive
respect to the President, Gasbarre's attorneys state that
they wanted to depose him, but were told he could only be
available for deposition in Mexico and not the United States.
(ECF No 28 at 19) (“This Court is thus told that a
company named Diamond in Florida, whose President will only
appear in Mexico, has nothing to do with a company named
Diamond in Mexico . . . .”).
motion has now been extensively briefed (ECF Nos. 9, 13, 27,
28, 29, 40, 44-1), and the parties have had the opportunity
to conduct limited discovery as to the issue of personal