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MARINE MIDLAND BANK v. MILLER

March 5, 1981

MARINE MIDLAND BANK, Plaintiff,
v.
James W. MILLER, Defendant



The opinion of the court was delivered by: DUFFY

MEMORANDUM & ORDER

Plaintiff Marine Midland Bank (hereinafter "the Bank") complains that it made loans, which are now in default, to a coal mining project on the basis of erroneous representations made by Mr. James Miller. Mr. Miller is the president of a West Virginia coal consulting firm called J. W. Miller and Associates, Inc. (hereinafter "Miller Associates"). The Bank alleges that Mr. Miller was grossly negligent in making the statements and, thus, should be held personally liable for the losses incurred on the loans by the Bank.

Mr. Miller now moves to dismiss this action for lack of personal jurisdiction. Plaintiff opposes this motion on the ground that New York has personal jurisdiction over Mr. Miller under two separate provisions of the New York long-arm statute, N.Y.Civ.Prac.Law § 302(a) (McKinney 1980). Plaintiff urges that Miller committed a tortious act in New York, within the meaning of C.P.L.R. § 302(a)(2), and transacted business in New York out of which this action arises, within the meaning of C.P.L.R. § 302(a)(1). *fn1"

 Defendant Miller challenges these bases of jurisdiction arguing that none of his acts can form the predicate for jurisdiction over him as an individual because he acted only as an agent for a corporation. *fn2"

 For the reasons that follow, I hold that the court does not have personal jurisdiction over Mr. Miller and hereby dismiss the complaint against him.

 I. Facts

 In 1977, a group of investors tried to borrow approximately $ 6 million from the Bank to develop a coal mine in Utah. As a principal part of their presentation to the Bank, the investors submitted a feasibility study of the proposed coal mining project prepared by the Miller Associates. The report stated that the Utah property would yield nearly 27 million tons of commercially acceptable coal and that a profitable strip mine could be operated there. This conclusion was confirmed by another expert coal consultant, Keplinger & Associates, Inc. (hereinafter "Keplinger"), which the Bank hired to evaluate the Miller Associates' report.

 The report prepared by the Miller Associates was presented to the Bank at meetings in the Bank's offices in New York by defendant James Miller, the president of Miller Associates. Mr. Miller also made oral statements to the Bank to the effect that there were 32 million tons of coal in place, with nearly 27 million tons of recoverable coal which could be sold at a profit sufficient to make the project economically viable.

 On the basis of all the information it received, the Bank agreed to loan the investors $ 6 million to finance the coal mines. During the following year, the Bank actually lent more than $ 8 million to the project due to cost overruns at the mine. During this time, Keplinger reported regularly to the Bank about the status of the project.

 In the fall of 1978, questions were raised about the original estimates of coal reserves. Keplinger reported in March, 1979, that the reserves were actually much smaller and of poorer quality than it and Miller Associates had originally represented to Marine Midland. Virtually no coal can be economically mined and sold.

 On May 22, 1980, the Bank commenced suit against Mr. James W. Miller. *fn3"

 II. Discussion

 It is the rule in New York and in this circuit that long-arm jurisdiction over a person in his individual capacity cannot be based on acts performed by that person in his corporate capacity. Lehigh Valley Industries, Inc. v. Birenbaum, 527 F.2d 87, 92 (2d Cir. 1975); Grove Press, Inc. v. Central Intelligence Agency, 483 F. Supp. 132, 135 (S.D.N.Y.1980). This rule applies to tortious acts committed by corporate officers on behalf of the corporation, as well as to acts which constitute "transacting business" for a corporation within the meaning of C.P.L.R. § 302(a)(1).

 The issue, then, is in what capacity did Mr. Miller perform the allegedly tortious acts or ...


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