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STANAT MFG. CO. v. IMPERIAL METAL FINISHING CO.

April 8, 1971

STANAT MANUFACTURING COMPANY, Inc., Plaintiff,
v.
IMPERIAL METAL FINISHING CO., Inc., Defendant


Weinstein, District Judge.


The opinion of the court was delivered by: WEINSTEIN

WEINSTEIN, District Judge.

$85,145.22 is sought for machinery and parts delivered and services rendered to defendant. Defendant moves to dismiss for lack of personal jurisdiction and, in the alternative, for change of venue to Southern California. For the reasons stated below this action must be dismissed.

 I

 There is very little dispute as to the facts. For purposes of this preliminary motion any dispute is resolved in favor of the plaintiff.

 Plaintiff, a New York corporation, designs, manufactures and sells metal processing machinery. Defendant, a processor and finisher of metal products, has its only place of business in Los Angeles, California; it is not licensed to do business, nor does it carry on any business, in New York.

 In 1968 defendant ordered from plaintiff a machine to be used in Los Angeles to slit rolls of flat metal. The negotiations for the sale began in the Spring of 1968 between defendant and Montague-Harris and Company, a California corporation acting as the agent of plaintiff. All the negotiations were carried on in California; the plaintiff's proposal was accepted by defendant in California; and the security agreement was signed by defendant in California. The machinery was delivered and installed in defendant's California plant by plaintiff's employees.

 Plaintiff alleges that after the original contract was signed, but before shipment of the machinery, defendant placed a telephone call in California to plaintiff in New York and obtained a modification of the terms of payment in the contract. Instead of payment of sixty percent of the purchase price prior to shipment of the machinery, twenty percent was to be paid prior to shipment and forty percent was to be paid immediately upon delivery.

 The agreement was breached. Though the machine was delivered and installed, eighty percent of the purchase price as well as the agreed amount to be paid for services rendered in installation and start up remain to be paid.

 It is plaintiff's theory that at the time of the renegotiation of the payment terms defendant never intended to pay the forty percent upon delivery and, in effect, committed a fraud by inducing shipment on the basis of a promise never intended to be kept. Plaintiff contends that the machinery would never have been shipped without the payment required by the original contract were it not for the defendant's fraudulent inducement.

 II

 To support its claim of jurisdiction, plaintiff relies upon Section 302(a)(2) of the New York Civil Procedure Laws and Rules dealing with tortious acts within the state. It reads in pertinent part:

 
"As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any nondomiciliary * * * who in person or through an agent:
 
* * *
 
2. commits a tortious act within the ...

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