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SLAPSHOT BEV. CO. v. SOUTHERN PACKAGING MACH.

October 14, 1997

SLAPSHOT BEVERAGE COMPANY, INC., a corporation, Plaintiff,
v.
SOUTHERN PACKAGING MACHINERY, INC, Defendants.



The opinion of the court was delivered by: SPATT

 This diversity-breach of contract action arises from the claims of the plaintiff, Slapshot Beverage Company, Inc. ("the plaintiff' or "Slapshot") against the defendant, Southern Packaging Machinery, Inc. ("the defendant" or "SPI") to recover damages for the alleged delivery of bottling equipment that was different from that specified in the sales contract. Presently before the Court is the defendant's motion to dismiss the complaint for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure.

 I. BACKGROUND

 Defendant SPI is a corporation organized under the laws of the State of Georgia, and is engaged in the business of brokering and selling used and reconditioned packaging machinery and equipment. SPI's principal place of business and sole office is located in Lawrenceville, Georgia. The plaintiff, Slapshot Beverages, was incorporated in the State of Florida, and is in the business of manufacturing, packaging and selling alcoholic beverages to distributors throughout the United States. From the time of its incorporation in October of 1993, through October of 1995, Slapshot's principal place of business was in Royal Palm Beach, Florida.

 In July of 1995, Slapshot contacted SPI inquiring about a used packaging machine for use in its beverage business. SPI, in turn, contacted Hinkel & Associates ("Hinkel"), a used equipment broker located in Arden, North Carolina, and ascertained that Hinkel could obtain a packaging machine suitable for Slapshot's use. All negotiations of the purchase and sale of the machinery at issue took place between Slapshot's office in Royal Palm Beach, Florida, and SPI's office in Lawrenceville, Georgia. On July 31, 1995, Slapshot wired the agreed-upon purchase price of $ 31,800.00 to SPI's Georgia bank account. Pursuant to Slapshot's instructions, SPI arranged for the shipment of the machinery by Hinkel in North Carolina to Union Grove, Wisconsin, where another company, Systematics, Inc., was to modify the equipment according to Slapshot's specifications.

 After the equipment was delivered to Wisconsin, Slapshot informed SPI that the machine did not meet its specifications and was unsuitable for its uses. According to Slapshot, it was prompted to relocate its principal place of business from Royal Palm Beach, Florida to Nesconset, New York approximately three months after the transaction, in October, 1995, because it suffered financial difficulties as a result of this machinery being unacceptable.

 Before moving to New York, the plaintiff faxed a letter to the defendant advising it of the address change. From October, 1995 through April, 1996, the parties attempted to resolve their dispute regarding the specifications of the machine, and discussed the possibility of exchanging the machine for a different one or providing plaintiff with a refund of the purchase price. During the course of these negotiations, the parties exchanged faxes, letters and telephone calls between Slapshot's New York office and SPI's Georgia offices. These negotiations were unsuccessful and Slapshot commenced this action, alleging three causes of action: (1) breach of contract by SPI; (2) fraudulent misrepresentations by SPI regarding the equipment sold; and (3) damage to Slapshot's reputation as a result of it not being able to fulfill customers' orders without the machinery it had contracted to purchase from SPI.

 II. DISCUSSION

 A. Personal Jurisdiction Under New York Civil Practice Law and Rules ["CPLR"]

 Prior to discussing the issue presented by the instant motion, the Court will set forth several general principles which apply to motions challenging personal jurisdiction. If the Court relies on the pleadings and affidavits alone, the plaintiff need only make a prima facie showing of jurisdiction in order to defeat the motion to dismiss. Welinsky v. Resort of World D.N.V., 839 F.2d 928, 930 (2d Cir. 1988). Moreover, the pleadings and affidavits should be construed in the light most favorable to the plaintiff, and all doubts resolved in its favor.

 Personal jurisdiction over a defendant in a diversity action is determined by the law of the forum state ( Cutco Industries, Inc. v. Naughton, 806 F.2d 361, 365 [2d Cir. 1986]; Arrowsmith v. United Press International, 320 F.2d 219, 223 [2d Cir. 1963] [ en banc ]). As a result, the Court must look to New York's personal jurisdiction statutes, N.Y. CPLR sections 301 and 302, to determine whether the plaintiff has set forth a prima facie showing of in personam jurisdiction over the defendant (see Guardino v. American Sav. & Loan Ass'n., 593 F. Supp. 691, 693 [E.D.N.Y. 1984]). "If the exercise of jurisdiction is appropriate under the statute, the court then must decide whether such exercise comports with the requisites of due process. . . . Because [the Court] believes that the exercise of personal jurisdiction in the instant case is proscribed by the law of New York, [it] does not address the issue of due process." Bensusan Restaurant Corp. v. King, 937 F. Supp. 295, 1997 WL 560048, at *2 (2d Cir. 1997).

 CPLR Section 301, which confers jurisdiction over the defendant "on causes of action wholly unrelated to acts done in New York," occurs "when the defendant is 'engaged in such a continuous and systematic course of "doing business" [in New York] as to warrant a finding of its "presence"' in the jurisdiction" ( Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 198 [2d Cir.][quotations omitted], cert. denied, 498 U.S. 854, 111 S. Ct. 150, 112 L. Ed. 2d 116 [1990]).

 By contrast, CPLR § 302(a)(1) gives New York personal jurisdiction over a nondomiciliary "if two conditions are met: first, the nondomiciliary must 'transact business' within the state; second, the claim against the nondomiciliary must arise out of that business activity. A nondomiciliary 'transacts business' under CPLR 302(a)(1) when he 'purposefully avails [himself] of the privilege of conducting activities within [New York], thus invoking the benefits and protections of its laws.'" Cutco Industries, Inc. v. Naughton, supra, 806 F.2d at 365 [citations and quotations omitted]. "No single event or contact connecting the defendant to the forum state need be demonstrated; rather, the totality of all defendant's contacts with the forum state must indicate that the exercise of jurisdiction would be proper." Id. (Citing Sterling National Bank and Trust Co. Of New York v. Fidelity Mortgage ...


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