United States District Court, Southern District of New York
June 24, 1991
CHASE MANHATTAN SERVICE CORPORATION, PLAINTIFF,
NATIONAL BUSINESS SYSTEMS, INC. AND NATIONAL BUSINESS SYSTEMS, INC., DEFENDANTS.
The opinion of the court was delivered by: Leisure, District Judge:
This is an action to recover $354,506.85 (plus additionally
accruing late charges) from National Business Systems, Inc., a
Delaware corporation ("NBS/Delaware"), arising from
NBS/Delaware's default under an equipment lease, and from
National Business Systems, Inc., a Canadian corporation
("NBS/Canada"), as guarantor of NBS/Delaware's obligations.
NBS/Canada has now moved to dismiss the action against it for
lack of personal jurisdiction, and plaintiff has cross-moved
for summary judgment against NBS/Delaware. For the reasons set
forth below, NBS/Canada's motion to dismiss is denied, and
plaintiff's cross-motion for summary judgment is granted.
On or about July 12, 1984, United States Banknote Corporation
("USBC") entered into an equipment lease (the "Lease") with
plaintiff, pursuant to which USBC leased certain equipment (the
"Equipment"), with lease payments to be made in 28 consecutive
quarterly installments of $36,303.85, plus applicable tax.
Pursuant to a transfer agreement dated April 22, 1985 (the
"Transfer Agreement"), USBC transferred its right, title and
interest to the Lease and Equipment to NBS/Delaware. In order
to induce plaintiff to consent to the Transfer Agreement,
NBS/Canada subsequently executed an unconditional guaranty (the
"Guaranty") in favor of plaintiff, a New York corporation with
its principal place of business in New York, pursuant to which
NBS/Canada guarantied the obligations of NBS/Delaware under the
Lease and Transfer Agreement. Under the terms of the Lease, the
Transfer Agreement, and the Guaranty, NBS/Canada agreed to make
the Lease payments at plaintiff's corporate headquarters,
located in New York City.
NBS/Delaware thereafter defaulted on its obligations under
the Lease by failing to pay the quarterly installment due
January 1990, and by failing to make any payments due
thereafter. Despite due demand by plaintiff, NBS/Canada has
allegedly refused to make these payments on behalf of
NBS/Delaware, and thus has allegedly failed to satisfy its
obligations under the Guaranty.
I. Motion to Dismiss for Lack of Personal Jurisdiction Over
In this diversity action, personal jurisdiction over a
is determined by reference to the law of the
jurisdiction in which the court sits. The burden
of establishing jurisdiction over a defendant, by
a preponderance of the evidence, is upon the
plaintiff. Until an evidentiary hearing is held,
however, the plaintiff need make only a prima
facie showing that jurisdiction exists, and this
remains true not withstanding a controverting
presentation by the moving party. In the absence
of an evidentiary hearing on the jurisdictional
allegations, or a trial on the merits, all
pleadings and affidavits are construed in the
light most favorable to plaintiff, and where doubt
exist, they are resolved in the plaintiff's favor.
Hoffritz For Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55
, 57 (2d
Cir. 1985) (citations omitted).*fn1
Section 302 of the New
York Civil Practice Law and Rules ("CPLR") embodies New York's
personal jurisdiction "long-arm" rules. CPLR § 302(a)(1)
[a]s 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 . . . transacts any business
within the state or contracts anywhere to supply
goods or services in the state.
CPLR § 302(a)(1).
NBS/Canada contends that the Guaranty, absent any further
contacts between NBS/Canada and New York, is not a sufficient
basis upon which NBS/Canada can be subjected to the personal
jurisdiction of this Court. Plaintiff argues that NBS/Canada's
guaranty of NBS/Delaware's lease payments, when those payments
are to be made in New York, constitutes a contract to supply
"services" in New York within the meaning of CPLR § 302(a)(1),
and thus provides a sufficient basis for the exercise of
personal jurisdiction over NBS/Canada by this Court.
In support of its position on this question, NBS/Canada cites
several cases, none of which involves a guaranty of payments,
and all of which were decided prior to 1979 when the state
legislature amended CPLR § 302(a)(1), expanding the reach of
New York's "long arm" statute over nondomiciliaries. See 1 J.
Weinstein, H. Korn & A. Miller, New York Civil Practice, ¶
302.11a, at 3-130 (1986) (citing cases). As such, these cases
are of little weight.
On the other hand, New York courts that have been directly
presented with the issue of the sufficiency of a guaranty as
the basis for the exercise of personal jurisdiction over the
guarantor, have held that providing a guaranty — where the
payments are to be made in New York — constitutes "supply[ing]
goods or services in the state" under CPLR § 302(a)(1).*fn2
See Bankers Trust Co. v. Nordheimer, 746 F. Supp. 363, 368
(S.D.N.Y. 1990); Manufacturers Hanover Leasing Corp. v. Ace
Drilling Co., 720 F. Supp. 48, 49 (S.D.N.Y. 1989); Gaines
Service Leasing Corp. v. Ashkenazy, 635 F. Supp. 805, 806-807
(E.D.N.Y. 1986); Chemco International Leasing, Inc. v. Meridian
Engineering, Inc., 590 F. Supp. 539 (S.D.N.Y. 1984); Culp and
Evans v. White, 524 F. Supp. 81 (W.D.N.Y. 1981); Fashion
Tanning Co. v. Shutzer Industries, Inc., 108 A.D.2d 485, 489
N YS.2d 791 (3d Dep't 1985).
Nevertheless, this application of CPLR § 302(a)(1) must also
comport with the constitutional requirements of the Due Process
Clause. In the instant case, the guarantying of the Lease by
NBS/Canada, including the promise to make payments to plaintiff
in New York, constitutes "`some act by which the defendant
purposefully avails itself of the privilege of conducting
activities within the forum State, thus invoking the benefits
and the protection of its laws.'" Burger King Corporation v.
Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 2183, 85 L.Ed.2d
528 (1985) (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78
S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1958)); see also
Manufacturers Hanover, supra, 720 F. Supp. at 50; Gaines Service
Leasing, supra, 635 F. Supp. at 807 (citing Burger King).
Accordingly, the exercise of personal jurisdiction over
NBS/Canada would not offend "our traditional conception of fair
play and substantial justice." See International Shoe Co. v.
Washington, 326 U.S. 310, 320, 66 S.Ct. 154, 160, 90 L.Ed. 95
II. Plaintiff's Cross-Motion For Summary Judgment
Plaintiff has cross-moved for summary judgment against
NBS/Delaware. On May 15, 1991, counsel for NBS/Delaware
notified this Court, via telephone, that it would not submit
papers opposing plaintiff's motion, and it has not done so.
Therefore, plaintiff's motion for summary judgment is granted.
See Rule 3(b) of the Civil Rules
of the United States District Courts for the Southern and
Eastern Districts of New York.
For the reasons set forth above, defendant NBS/Canada's
motion to dismiss the action against it for lack of personal
jurisdiction is denied, and plaintiff's cross-motion for
summary judgment against defendant NBS/Delaware is granted.