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RAINBOW INDUS. PRODS. v. HAYBUSTER MFG.

August 18, 1976

RAINBOW INDUSTRIAL PRODUCTS, Plaintiff,
v.
HAYBUSTER MANUFACTURING, INC., Defendant



The opinion of the court was delivered by: PRATT

MEMORANDUM AND ORDER

 PRATT, District Judge.

 Every day business dealings between New York State and cities throughout the country are carried on by countless phone calls and letters. In many cases, these communications are the only contacts which business concerns from other states have with New York. The question before the court is: are such phone calls and letters, without more, sufficient to subject an out of state business to the long arm jurisdiction of New York State?

 Defendant, a North Dakota corporation, moves to dismiss for lack of personal jurisdiction an action brought by a New York corporation for breach of contract. Subject matter jurisdiction rests on diversity of citizenship. Absent constitutional restrictions not present here, in personam jurisdiction in diversity actions is determined in accordance with the law of the state where the District Court sits. Arrowsmith v. U.P.I., 320 F.2d 219 (C.A.2 1963). Consequently, jurisdiction in this case, if it exists, must arise out of New York's Civil Practice Law and Rules (CPLR).

 More specifically, any jurisdiction over the defendant here must be based on CPLR § 302(a)1, which provides 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:
 
"1. transacts any business within the state; * * *"

 whether or not a defendant "transacts business within the state" depends heavily on the facts in each case.

 
"The inquiry to be made in a section 302 case is whether, looking at 'the totality of the defendant's activities within the forum,' purposeful acts have been performed in New York by the foreign corporation in relation to the contract, 'albeit preliminary or subsequent to its execution.' While there may be little or no argument with this statement of the rule, each case arising under the statute requires a consideration of each of the defendant's activities within and without the state, bearing in mind that 'although it is their aggregate which will decide the issue of jurisdiction, some activities are more important than others and, therefore, separate evaluation aids analysis.' McLaughlin, Practice Commentaries 7B CPLR § 302 (McKinney 1972), at 74." Galgay v. Bulletin Company, Inc., 504 F.2d 1062 (C.A.2 1974).

 Here the relevant facts presented in the affidavits are not in dispute. Plaintiff, a New York corporation, is engaged in the manufacture and sale of industrial products. Defendant, a North Dakota corporation, makes agricultural machinery. In 1972, defendant first contacted plaintiff to discuss the purchase of goods. From 1972 through 1974 the parties communicated in three ways: by phone, by mail, and face-to-face in meetings at defendant's office in Jamestown, North Dakota. There was never any meeting of the parties in New York. As a result of these communications defendant made several different purchases of plaintiff's goods, at a total price of over one million dollars.

 This action concerns only one of defendant's purchases: an order for specially manufactured chains at a price of approximately $203,000. The order was mailed from North Dakota to New York in January of 1974, following the usual negotiations by phone, by mail, and face-to-face at defendant's office in North Dakota. After accepting the order by letter and telephone, plaintiff arranged for the chains to be manufactured in Japan, from where they were apparently shipped via the West Coast for delivery to defendant. Plaintiff, alleging that defendant did not fully pay for the chains, brought this action in New York District Court for the balance of the price.

 Although plaintiff concedes "that defendant has physically never been in New York during the transactions between defendant and plaintiff" (Miller affidavit, para. 5), it claims that personal jurisdiction under CPLR 302(a)1 arises out of the many phone calls and letters between the parties from 1972 through 1974, along with the mailing into New York and acceptance in New York of the particular purchase order being sued upon.

 The guidelines for determining whether a defendant has transacted any business within the state under CPLR 302 were considered by the New York Court of Appeals in Longines-Wittnauer Watch Co. v. Barnes & Reinecke, Inc., 15 N.Y.2d 443, 261 N.Y.S.2d 8, 209 N.E.2d 68 (1965), cert. den. sub nom. Estwing Manufacturing Co. v. Singer, 382 U.S. 905, 86 S. Ct. 241, 15 L. Ed. 2d 158 (1965). In that case, a Chicago corporate defendant in a breach of warranty action sought to defeat jurisdiction on the ground that it had signed the contract in Chicago. The court rejected the argument holding that:

 
"Even though the last act marking the formal execution of the contract may not have occurred within New York, the statutory test may be satisfied by a showing of other purposeful acts performed by the (defendant) in this state in relation to the contract, albeit preliminary or subsequent to its execution." 15 N.Y.2d at 457, 261 N.Y.S.2d ...

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