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CURRENT TEXTILES CORP. v. AVA INDUS.

December 4, 1985

CURRENT TEXTILES CORP., Plaintiff, against AVA INDUSTRIES, INC. and ORO KNITS, INC., Defendants


The opinion of the court was delivered by: SWEET

SWEET, D.J.

Defendants Ava Industries, Inc. ("Ava") and Oro Knits, Inc. ("Oro") move to dismiss a complaint by Current Textiles Corporation ("Current") against them for lack of jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2). For the reasons set forth below, the motion will be granted.

 Current, a New York corporation, in April, 1984 delivered a quantity of yarn to defendants to be knitted by Oro and finished by Ava in Charlotte, North Carolina. Current contends that due to their joint or several negligence, defendants wasted an excessive amount of yarn during processing, and thereafter delivered defective material to Current's customer in Mississippi. Current seeks $75,000 in damages as a result of the alleged converion of yarn and negligent processing.

 In order to defeat the motion, Current must allege facts to establish that defendants are personally subject to this court's process. A complaint that makes a sufficient jurisdictional showing on its face consequently will defeat a motion to dismiss. Visual Sciences, supra, at 58. Nonetheless, Current must shoulder the burden of establishing jurisdiction over defendants by a preponderance of the evidence. Marine Midland Bank v. Miller, 664 F.2d 899, 904 (2d Cir. 1981).

 The rule followed in the Second Circuit is that "the amenability of a foreign corporation [or other non-resident] to suit in a federal court in a diversity action is determined in accordance with the law of the state where the court sits, with 'federal law' entering the picture only for the purpose of deciding whether a state's assertion of jurisdiction contravenes a constitutional guarantee." Arrowsmith v. United Press International, 320 F.2d 219, 223 (2d Cir. 1963) (en banc).

 New York Civil Practice Law § 302(a) (McKinney 1972 & Supp. 1984-85) authorizes courts of the state to exert personal jurisdiction over any nondomiciliary that:

 1. Transacts any business within the state or contracts anywhere to supply goods or services in the state ; or

 3. commits a tortious act without the state causing injury to person or property within the state if he

 (i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or

 (ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce;

 Jurisdiction does not attach under Section 302(a) unless a defendant has committed an act that falls within the purview of the conduct described in subsections (a)(1)-(4), and plaintiffs cause of action arises out of performance of that act. McGowan v. Smith, 52 N.Y.2d 268, 272-73, 437 N.Y.S.2d 643, 645, 419 N.E2d 321, 323 (1981). Current's memorandum in opposition to defendants' motion to dismiss appears to state stating alternative theories of jurisdiction. The first theory, basing jurisdiction under § 302(a)(1), alleges that defendants "transacted" business subject to a contract whose terms gave Current the option to order defendants to supply goods to New York, an agreement that defendants subsequently breached. Current's second theory seeks to base jurisdiction under § 302(a)(3), because defendants' negligence resulted in a commercial tort having a reasonably foreseeable legal effect in New York. Current has failed to meet its jurisdictional burden under both theories.

 Transacting Business § 302(a)(1)

 CPLR Section 302(a)(1) has been construed as a "one transaction statute." George Reiner & Co. Inc. v. Schwartz, 41 N.Y.2d 648, 394 N.Y.S.2d 844, 363 N.E.2d 551 (1977). Commenting on the scope of § 302(a)(1), the court in ECC Corporation v. Slater Electric, Inc., 336 F. Supp. 148, 152 (E.D.N.Y. 1971) remarked:

 [I]f the corporate intention through personnel of executive substance to come to the state to effect a purposeful and important activity on the corporation's part, and by doing so such personnel significantly advance the making of a corporate contract of importance, that activity and presence suffice as a basis for a later exercise of personal jurisdiction by the State of New York over the foreign ...


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