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Quebecor World Inc. v. Harsha Associates

October 11, 2006

QUEBECOR WORLD (USA), INC., PLAINTIFF,
v.
HARSHA ASSOCIATES, L.L.C., ET AL., DEFENDANTS.



The opinion of the court was delivered by: David G. Larimer United States District Judge

DECISION AND ORDER

Plaintiff, Quebecor World (USA) Inc. ("Quebecor"), brought this action against four defendants--Harsha Associates, L.L.C.; Harsha & Associates; Harpro, LLC d/b/a Harsha Productions ("Harpro"); and Mark Harsha, individually, ("Harsha")--alleging breach of contract and other claims under New York law. Jurisdiction is premised on diversity of citizenship under 28 U.S.C. § 1332. Two of the four defendants, Harpro and Harsha, have moved to dismiss the complaint against them for lack of personal jurisdiction, or in the alternative, to transfer the case to the Western District of Oklahoma.

BACKGROUND

Quebecor is a Delaware corporation with its principal place of business in Connecticut, and is engaged in the printing industry. Defendants are all citizens of Oklahoma, and at all relevant times have been engaged in the advertising business.

In October 2003, Harsha submitted to Quebecor an "Application for Credit" on behalf of Harsha & Associates, in apparent anticipation of a job order for Quebecor to produce weekly advertising inserts for an as-yet unspecified customer. See Dkt. #13-2. Harsha signed the application as "Member" of Harsha & Associates. At the bottom of the application was a guaranty stating, inter alia, that "the undersigned ... guaranty [sic] prompt payment when due of any and all indebtedness now due or which may hereafter become due from [Harsha & Associates] to [Quebecor] ...," and that "[t]his shall be a continuing guaranty and shall not be revocable," except as to transactions occurring after Quebecor's receipt of written notice from Harsha that he was revoking the guaranty as to future transactions. Id. at 4.

In December 2003, Quebecor and Harsha & Associates entered into a contract ("the printing contract"), a copy of which is attached to the amended complaint as Exhibit A, by which Quebecor agreed to print certain materials described in the contract as "IGA Phoenix Retail Inserts" or "the catalog." The printing contract was to run for three years, from January 2004 through December 2006. Dkt. #15-3 ¶ 2.

The contract also provided that if Harsha & Associates "discontinue[d]" publication of the catalog, meaning "a total, permanent cessation of publishing the catalog," Harsha & Associates would give Quebecor forty-five days' written notice. Id. ¶ 19. Harsha & Associates agreed that if it failed to give such notice, it would be liable to Quebecor for certain expenses such as down-time, work in progress, and work completed but not yet billed or paid for. Id. Harsha signed the contract on behalf of Harsha & Associates, listing his title as "member." Id. at 5.

Unlike the application for credit, the printing contract contains a forum-selection clause. It states in part that [s]uit to enforce this Agreement or any provision or portion thereof will be brought exclusively in the federal courts located in the State of New York ... . Each party to this Agreement irrevocably agrees that all claims in respect of such actions or proceedings may be heard and determined in such courts and irrevocably submits to the jurisdiction thereof. Each of the parties irrevocably waives, to the fullest extent permitted by applicable law, any objection which they may now or hereafter have to laying venue of any such dispute brought in such court or any defense of inconvenient forum in connection therewith.

Dkt. #15-3 at 5.

In June 2005, defendants notified Quebecor that they were terminating the printing contract. Specifically, on June 21, Harsha sent an email to Kent Aurand, a sales representative at Quebecor, stating that "due to competitive circumstances we are moving our weekly print job effective this week. Thank you for the services you have provided." Dkt. #13-5 at 2.

After the termination, Quebecor alleges that it has sent invoices to defendants for goods and services performed under the contract from March 29, 2005, to June 22, 2005, totaling $178,116.72, none of which have been paid. See Dkt. #15-5. Under the printing contract, payment is due within forty-five days from the date of each invoice. Dkt. #15-3 ¶ 5. Quebecor also alleges that it is owed another $79,289.60 for expenses incurred as a result of defendants' termination of the contract. See Dkt. #15-4.

Quebecor commenced this action on January 3, 2006, asserting a cause of action for breach of contract and related claims, and seeking damages totaling $257,406.32, plus costs and attorney's fees. All the defendants have been served by means of service on Harsha, both in his personal capacity and as authorized agent for the other three defendants. As stated, Harsha and Harpro have moved to dismiss for lack of personal jurisdiction, or to transfer venue. Harsha Associates, L.L.C. and Harsha & Associates have not appeared in the action and are in default.

DISCUSSION

I. Personal Jurisdiction

A. Mark Harsha

1. Guaranty Provision

Plaintiff contends that Harsha is subject to personal jurisdiction in this district by virtue of the guaranty that he signed in connection with Harsha & Associates' application for credit. Although neither the guaranty nor the application for credit contains a forum-selection clause, plaintiff maintains that "courts regularly exercise personal jurisdiction over guarantors where it is clear that the entity whose obligations were guaranteed is closely connected to the guarantor" and that entity is ...


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