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LEMME v. WINE OF JAPAN IMPORT

March 28, 1986

RAYMOND LEMME, Individually and as assignee of certain rights of Wine Imports of America, Ltd., a New York Corporation, Plaintiff,
v.
WINE OF JAPAN IMPORT, INC. and KONISHI BREWING CO., LTD., Defendants



The opinion of the court was delivered by: MCLAUGHLIN

MEMORANDUM AND ORDER

 JOSEPH M. McLAUGHLIN, District Judge.

 This is a motion by defendant Konishi Brewing Co., Ltd. ("Konishi"), a Japanese corporation with its principal place of business in Japan, to dismiss plaintiff's complaint for lack of personal jurisdiction, insufficiency of process and insufficient service of process. Fed. R. Civ. P. 12(b)(2), (4), (5). Although a default judgment against Konishi has been noted, no one has questioned the propriety of defendant's motion, and both parties have briefed the personal jurisdiction issue. The Court will therefore treat defendant's motion as one for relief from a default judgment as well as for dismissal. Fed. R. Civ. P. 60(b)(4). For the reasons developed below, Konishi's motion is denied.

 Facts

 Plaintiff brought this diversity action against Konishi and Wine of Japan Import, Inc. ("Wine of Japan") for damages caused by defendants' alleged breach of a June 16, 1975 agreement (the "Agreement") between Wine of Japan and Wine Imports of America, Ltd. ("Wine Imports"). Wine Imports was a New York corporation of which plaintiff, a New Jersey citizen, was an officer and director. Wine of Japan is a New York corporation.

 Under the Agreement, Wine Imports would purchase certain wine products for distribution in the United States. All sales were to be made f.o.b. Japan. In addition, the Agreement contained a clause providing for consent to jurisdiction in New York.

 On August 4, 1975, Konishi, a major shareholder of Wine of Japan, lent its credit to the deal by guaranteeing "the performance of each and every term and condition of [the Agreement] as if said obligations, representations and warranties were of and made by it, or the conditions and terms of said Agreement were to be performed and [sic] by it." *fn1" Konishi signed this agreement in Japan.

 Konishi is a Japanese corporation with its principal place of business in Japan. It is not licensed to do business in New York. Konishi maintains no offices, employees or bank accounts in New York, owns no property here, and never solicits business or advertises its products in this state. Its only tangible contact with New York is that it sends a representative to an annual wine wholesalers' trade show here.

 Konishi shares no common directors or officers with Wine of Japan, but it does own twenty-seven percent of Wine of Japan's stock. Konishi sells all its products to Crown Trading Co., Ltd. ("Crown Trading"), a Japanese corporation, which in turn exports the products to the United States. Konishi owns none of the stock of Crown Trading and exports no products to the United States itself.

 Discussion

 1. Lack of a Basis for Personal Jurisdiction

 Upon a motion to dismiss for lack of personal jurisdiction, a district court may rely on the affidavits, permit discovery in aid of the motion, or conduct an evidentiary hearing. Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981). Upon analysis it is clear that the jurisdictional issue in this case *fn2" may be resolved by examination of the pleadings and affidavits alone.

 a. Jurisdiction Under C.P.L.R. § 302(a)(1)

 In the first of his three theories, plaintiff argues that this Court has jurisdiction over Konishi under New York C.P.L.R. § 302(a)(1). Section 302(a) permits a court to assert jurisdiction over a non-domiciliary who "in person or through an agent (1) transacts any business within the state or contracts anywhere to supply goods or services in the state . . . .," provided plaintiff's claim arises out of the transaction or contract. Plaintiff argues that when Konishi signed the guaranty, it "contract[ed] . . . to supply goods or services in the state."

 Plaintiff relies on Culp & Evans v. White, 524 F. Supp. 81 (W.D.N.Y. 1981). In that case the Court sustained personal jurisdiction on the basis of the "contracts anywhere" clause of section 302(a)(1) over a non-domiciliary who had signed guaranties for a construction contract that was to be performed in New York. Id. at 82-83; accord Chemco International Leasing, Inc. v. Meridian Engineering, Inc., 590 F. Supp. 539, 542-44 (S.D.N.Y. 1984). Here, however, the contract Konishi guaranteed was to be performed in Japan. When a foreign corporation sells goods f.o.b. out-of-state, it does not, under section 302(a)(1), perform its contract in New York. Agrashell, Inc. v. Bernard Sirotta Co., 344 F.2d 583, 588-89 (2d Cir. ...


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