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CATALYST ENERGY DEV. CORP. v. IRON MT. MINES

April 9, 1986

CATALYST ENERGY DEVELOPMENT CORPORATION, Plaintiff, against IRON MOUNTAIN MINES, INC., Defendant.


The opinion of the court was delivered by: MACMAHON

FACTS

MacMAHON, District Judge.

 Defendant, Iron Mountain Mines, Inc. ("IMMI"), moves, pursuant to Rule 12(b)(2), Fed.R.Civ.P., to dismiss plaintiff's complaint for lack of personal jurisdiction.

 In February 1984, plaintiff, Catalyst Energy Development Corporation ("Catalyst"), a New York corporation, entered into an agreement with IMMI, a corporation headquartered in California, whereby Catalyst agreed to fund a hydroelectric project on property owned by IMMI in Redding, California. The agreement was executed in Sacramento, California, and required Catalyst to make an initial down payment to IMMI of $50,000 and a later payment of $450,000.

 IMMI directed Catalyst to deposit a $50,000 check, payable to IMMI in IMMI's bank account at Irving Trust Company in New York City. Catalyst took back from IMMI a $50,000 promissory note which was executed in California but made payable to Catalyst in New York, and which, by its terms, was to be governed and construed in accordance with New York law.

 When the energy development agreement between the parties eventually collapsed, Catalyst brought this action to collect on IMMI's promissory note. A default judgment was entered against IMMI but was later vacated for improper service of process.

 IMMI now moves to dismiss the complaint on the ground that there are insufficient contacts between IMMI and New York to satisfy constitutional standards for the exercise of personal jurisdiction over IMMI.

 DISCUSSION

 Plaintiff bears the burden of showing that this court has personal jurisdiction over defendant IMMI. *fn1" Plaintiff need only make a prima facie showing of jurisdiction at this time, however, because we are deciding the question of personal jurisdiction solely on the basis of affidavits and documentary material. *fn2" Eventually, however, plaintiff must show by a preponderance of the evidence, at a pretrial hearing or at trial, that this court has personal jurisdiction over defendant. *fn3"

 Catalyst does not contend that jurisdiction over IMMI may be predicated upon IMMI's general presence in New York. Rather, plaintiff invokes New York's long-arm statute, Section 302 of the New York Civil Practice Law and Rules ("CPLR"), which, in pertinent part, provides:

 
(a) As to a cause of action arising from any of the acts enumerated in this section, a court may exercise personal jurisdiction over any non-domiciliary . . . who in person or through an agent:
 
1. transacts any business within the state. . . .

 Catalyst contends that IMMI transacted business in New York when it deposited the $50,000 down payment in IMMI's New York bank account, pursuant to contract and at IMMI's express direction. In addition, plaintiff contends that the following factors are jurisdictionally significant: (1) the promissory note was payable to Catalyst in New York; (2) the promissory note states that it is to be governed and construed in accordance with New York law; and (3) IMMI directed numerous telephone and written communications to New York regarding the $50,000 down payment and negotiations of the note.

 Our inquiry begins with International Shoe Co. v. Washington, 326 U.S. 310, 90 L. Ed. 95, 66 S. Ct. 154 (1945), which established that "due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" *fn4" A defendant must "purposefully avail itself of the privilege of conducting activities within the forum State." *fn5" Further, due process requires that "the defendant's ...


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