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LOVEBRIGHT DIAMOND CO. v. SPRAGINS

October 24, 1983

LOVEBRIGHT DIAMOND COMPANY, INC., Plaintiff, against ROBERT SPRAGINS and LONE STAR DIAMOND COMPANY, INCORPORATED, Defendants.


The opinion of the court was delivered by: DUFFY

MEMORANDUM & ORDER

KEVIN THOMAS DUFFY, D.J.:

 Defendants, Robert Spragins ("Spragins") and Lone Star Diamond Company, Inc. ("Lone Star"), have moved pursuant to Fed. R. Civ. P. 12(b)(2) to dismiss plaintiff's complaint on the ground that the court lacks personal jurisdiction over the defendants. Alternatively the defendants have moved pursuant to Fed. R. Civ. P. 12(b)(6) to dismiss the third claim asserted by the plaintiff on the ground that it fails to state a claim upon which relief can be granted. Finally, pursuant to 28 U.S.C. § 1404(a) (1976), the defendants seek to have the plaintiff's action transferred to the Northern District of Texas should the motions to dismiss be denied. For the reasons stated below, the defendants' motion to dismiss the plaintiff's complaint on the ground of lack of personal jurisdiction is denied. The motion to dismiss the plaintiff's third claim for punitive damages is granted. Finally, the defendants' motion to transfer is granted.

 I.

 FACTS

 In order to decide the jurisdictinal issue, I will take the allegations set forth in the plaintiff's complaint and affidavits as true. See Aurea Jewelry Creations, Inc. v. Lissona, 344 F. Supp. 179, 180 (S.D.N.Y. 1972). The plaintiff is a corporation organized and existing under the laws of New York and has its principal place of business in New York. The defendant, Lone Star Diamond Company ("Lone Star") is a corporation organized under the laws of Texas with its principal place of business in Texas. The defendant, Robert Spragins is the president of Lone Star and is a resident of Texas.

 The plaintiff and Spragins entered into an agreemnt under which the defendant agreed to act as sales representative for the plaintiff in consideration for $750.00 per week drawn against commissions from the sale of the plaintiff's products. The defendant agreed to carry out only the defendant's "Lovebright line and no other" and spend all his selling time promoting that line.

 In the plaintiff's sworn affidavit in opposition to the defendant's motion, the deponent, president of Lovebright Diamond Company, Inc. ("Lovebright") states that he met with Spragins on or about April 20, 1978 at the plaintiff's offices in New York City to discuss the possibility of an employment contract. The meeting lasted approximately half a day and allegedly resulted in the defendant agreeing to act as the plaintiff's sales representative. Plaintiff's Affidavit at 2. According to the plaintiff, Spragins took a written agreement with him when he left the plaintiff's offices on April 20, 1978. In August of 1981, the plaintiff, Spragins, and Lone Star, a corporation formed by Spragins, entered into an agreement whereby Lone Star assumed all of the terms, conditions and obligations of Spragins' earlier agreemnt and agreed that all commissions would thereafter be paid to Lone Star.

 The defendant thereafter allegedly breached the exclusive selling agreement and implied duties of loyalty and good faith by handling jewelry lines other than the plaintiff's line. Further, the defendant allegedly retained merchandise without accounting for such goods to the plaintiff. The plaintiff instituted an action in this court seeking compensatory and punitive damages for breach of contract and an implied duty of loyalty and good faith. The plaintiff seeks also to recover damages in the amount of the value of merchandise which was received by the defendants but for which no receipts from sales were forwarded to the plaintiff. The third cause of action asserted by the plaintiff is for punitive damages.

 The defendants move here to dismiss the plaintiff's action on the grounds of lack of jurisdiction or alternatively to have the action transferred to the district court for the Northern District of Texas.

 II.

 DISCUSSION

 A. Jurisdiction over Defendant -- CPLR 301(a)(1)

 The amenability of a nondomicilary to suit in a federal diversity case is determined under the laws of the forum state which in the instant case is New York. See Arrowsmith v. United Press International, 320 F.2d 219 (2d Cir. 1963). In New York, the N.Y. Civ. Prac. Law ("CPLR") § 302(a) (McKinney 1972) (long-arm statute) provides the jurisdictional predicate necessary to subject a noncomicilary to service of process by a New York court. Section 302(a)(1) of the CPLR provides that jurisdiction may be obtained over someone "who in person or through an agent . . . transacts any business within the state" so long as the cause of action arises from the ...


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