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DANBURY BOWLARAMA CORP. v. RCA CORP.

May 13, 1976

DANBURY BOWLARAMA CORP., Plaintiff,
v.
RCA CORPORATION et al., Defendants



The opinion of the court was delivered by: POLLACK

MEMORANDUM

 POLLACK, District Judge.

 Defendant RCA Corporation in this contract action asserting non-federal claims moves for dismissal of the complaint for lack of subject matter jurisdiction on the ground that the requisite diversity of citizenship is lacking. *fn1" On the facts adduced as shown hereafter, the motion must be granted.

 Plaintiff sues for rescission of a sale of an automatic bowling scorer installed in a Danbury, Connecticut bowling center. Defendants, the seller under the contract (Rapid Score, Inc.), the seller's parent (Conbow Corp.), and the assignee of the contract (RCA Corp.), are three corporations either incorporated or doing their principal business in New York. RCA contends that, while plaintiff, the purchaser of the bowling equipment, is incorporated in Connecticut, its principal place of business is New York.

 Diversity jurisdiction is conferred on the federal courts when a suit involves citizens of different states and involves the requisite amount in controversy, and "[a] corporation [party] shall be deemed a citizen . . . of the State where it has its principal place of business . . . ." 28 U.S.C. § 1332(c).

 The burden of establishing jurisdiction is on the party who seeks the exercise of that jurisdiction, namely the plaintiff herein. Thomson v. Gaskill, 315 U.S. 442, 446, 62 S. Ct. 673, 675, 86 L. Ed. 951, 955 (1942); Quaker State Dyeing & Finish Co. v. ITT Terryphone Corp., 461 F.2d 1140 (3d Cir. 1972).

 On this motion the issue is whether the plaintiff corporation has its principal place of business at its president's Port Chester, New York office, as indicated by all the corporate documents, or at the bowling center in Danbury, Connecticut, where its vice-president has a desk and he and the corporation's only other employee spend a third of their week.

 The contract of sale involved in the suit lists the plaintiff corporation at a Port Chester, New York address. It was executed by Andrew Benerofe, Danbury Bowlarama Corporation's president and one of its directors, and a representative of Rapid Score in New York on January 17, 1974. In June of that year the equipment sold under the contract, a scorer, was installed in the Danbury bowling center and, according to the allegations of the complaint, began to malfunction shortly thereafter.

 Defendant RCA, the assignee of the contract, claims to have serviced the scorer as required under the contract's warranty provisions, but such services were not apparently to plaintiff's satisfaction. Counsel for plaintiff sent a letter to all the defendants herein on December 29, 1975 purporting to revoke acceptance of and to tender back the scorer. This action for rescission, return of the contract price and consequential damages was filed in this Court in January of 1976.

 Danbury Bowlarama Corporation leases a bowling and billiard center in Danbury, Connecticut. The only business of this corporation is to collect fees under a sub-lease or franchise agreement with Louis Spano and Ed Loughlin, the center's operators. The arrangement between plaintiff and Spano and Loughlin (who are doing business under the name "Danbury Bowlarama" but are not parties in this action) is that in addition to the sub-lease the plaintiff provides promotional and general business guidance through its vice-president, Bernard O'Kane, and provides a master mechanic, Joseph DiPasquale, in return for a fee or a rental based on the number of lines that are bowled.

 O'Kane and DiPasquale, Danbury's only salaried employees, split their working week between the Danbury bowling center and three other centers run by three different corporations. Benerofe estimates that each visits the Danbury center at least three times a week and spends roughly a third of their working time there. O'Kane keeps a desk in an office at the Danbury bowling center which he shares with Spano and one of Spano's employees. However, he travels to Benerofe's New York office for at least two-thirds of the weekly meetings between these two officers. The remainder of these weekly meetings are held either in Danbury or at one of the other three bowling centers for which O'Kane is responsible.

 Benerofe is the chief officer of the corporation and his office in New York is listed in the corporate by-laws as the principal office. It is from that office that Benerofe directs the activities of O'Kane and DiPasquale, both by telephone to O'Kane and in most of the face-to-face meetings with O'Kane. While Benerofe asserts that he spends only two hours a week on Danbury Bowlarama Corporation matters, it is clear that his office is the focal point of the corporation's business affairs. The address of that office is listed on the corporation's federal and Connecticut corporate tax returns and the corporation's federal return was sent to the Internal Revenue Service office that handles Westchester County, New York, returns. The corporate records are all kept in New York and the corporation's accountants and lawyers do their business with that office. There have been no formal corporate minutes since 1966 when a meeting was recorded as held in New York for the election of officers.

 It is from the New York office that Benerofe controls the plaintiff corporation's finances. He signs about 75% of the corporation's checks (leaving the remainder to be signed by O'Kane generally as a matter of Benerofe's convenience) and the bank statements from the corporation's two bank accounts, in Port Chester and Danbury, are directed to him at Port Chester. The bookkeeping for the corporation is done by a bookkeeper employed by Benerofe Construction who works in the New York office. (The plaintiff corporation pays Benerofe Construction for the use of its bookkeeper.) The address on the contract at issue here is that of the New York office and the letters concerning that contract that have been submitted to the Court, with only one exception, bear either the New York address or the address of plaintiff's New York counsel. *fn2"

 In addition, three of the four directors and three of the four officers of the plaintiff corporation ...


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