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National Electric Systems, Inc. v. City of Anderson

March 10, 2009

NATIONAL ELECTRIC SYSTEMS, INC., PLAINTIFFS,
v.
CITY OF ANDERSON, INDIANA, DEFENDANT.



The opinion of the court was delivered by: David N. Hurd United States District Judge

MEMORANDUM-DECISION and ORDER

I. INTRODUCTION

Plaintiff National Electric Systems, Inc. ("plaintiff" or "National") alleges defendant City of Anderson, Indiana ("defendant" or "Anderson") unlawfully assessed liquidated damages pursuant to a public works project contract between the two parties. Plaintiff asserts there is diversity jurisdiction to bring its breach of contract claim against defendant. Plaintiff is a corporation organized under the laws of New York with its principal place of business located in Boonville, New York, and defendant is a municipality organized and existing under the laws of Indiana.

Anderson moves to dismiss plaintiff's lawsuit pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction. Alternatively, defendant moves for transfer of the action to the Southern District of Indiana pursuant to 28 U.S.C. § 1406(a). Plaintiff opposes defendant's motions. Decision was reserved after hearing oral argument on January 16, 2009 in Utica, New York.

II. BACKGROUND

Sometime before August 2006, Anderson hired Spectrum Engineering ("Spectrum") to develop specifications for two transformers it planned to install in a new substation located in one of its industrial parks. Following defendant's approval, specifications were provided to several potential bidders, including U & I Products, Inc. ("U & I"), a sales representative servicing transformer manufacturers in New York. National learned of the specifications from U & I and later submitted a bid on the contract. Defendant accepted plaintiff's bid and faxed a purchase order for two transformers to plaintiff on August 15, 2006. See Ex. A to Pl's. Compl., Dkt. No. 1 (the purchase order). Plaintiff sub-contracted the manufacture of the transformers to Niagara Transformer Corp. ("Niagara"), a transformer manufacturing company located in Buffalo, New York.

On July 9, 2007, plaintiff's representatives attended a meeting in Anderson, Indiana to discuss the progress of the transformer project. In November of 2007 and January of 2008, Spectrum employees made two separate two-day trips to Niagara's facility in Buffalo, New York in order to observe final acceptance testing of the transformers before they were shipped to Anderson. Following successful testing, the first transformer was installed in defendant's substation in December 2007, and the second unit was installed in February 2008.

National admits it failed to deliver the second transformer until approximately eighty-one days after the contractual deadline. See Pl's. Compl., Dkt No. 1, ¶ 5. Pursuant to the liquidated damages provision of defendant's request for bids, see Ex. B to Pl's. Compl., Dkt No. 1, ¶ 23, defendant withheld $139,500.00 from its payments to plaintiff as a penalty for the untimely delivery of the second transformer. Plaintiff alleges in its complaint that liquidated damages were improper because the delay in delivery of the second transformer was the result of an unforeseeable shortage of requisite M3 grade core steel.

Without yet filing its answer, Anderson now moves to dismiss plaintiff's complaint for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2), or alternatively, for transfer of the action to the Southern District of Indiana pursuant to 28 U.S.C. § 1406(a). Defendant argues there is no basis for the exercise of personal jurisdiction pursuant to New York's long-arm statute, New York Civil Practice Law and Rules ("CPLR") §§ 301 or 302(a)(1). Plaintiff does not argue a basis for personal jurisdiction under CPLR § 301; rather, its arguments are limited to the exercise of personal jurisdiction under CPLR § 302(a)(1). See Pl's. Mem. of Law in Opp'n, Dkt. No. 8-3, 3 ("[S]ufficient New York roots exist to establish jurisdiction without consideration of CPLR § 301."). Accordingly, CPLR § 301 will not be considered.

III. DISCUSSION

A. Defendant's Motion to Dismiss for Lack of Personal Jurisdiction

In opposition to a motion to dismiss pursuant to Rule 12(b)(2), the plaintiff bears the burden of establishing a proper basis for personal jurisdiction over the defendant. Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 784 (2d Cir. 1999). Absent discovery or an evidentiary hearing, the plaintiff must only "allege facts constituting a prima facie showing of personal jurisdiction." PDK Labs, Inc. v. Friedlander, 103 F.3d 1105, 1106 (2d Cir. 1997) (citing Ball v. Metallurgie Hoboken-Overpelt, S.A., 902 F.2d 194, 197 (2d Cir. 1990)); see also Robinson v. Overseas Military Sales Corp., 21 F.3d 502, 507 (2d Cir. 1994) (citing CutCo Indus., Inc. v. Naughton, 806 F.2d 361, 364 (2d Cir. 1986)). Additionally, all pleadings and factual ambiguities are construed in favor of the plaintiff. Overseas Military Sales, 21 F.3d at 507; Hoffritz for Cutlery, Inc. v. Amajac, Ltd., 763 F.2d 55, 56-57 (2d Cir. 1985).

The law of the forum state must be used to determine whether there is a basis for the exercise of personal jurisdiction over a non-domiciliary defendant. Bensusan Rest. Corp. v. King, 126 F.3d 25, 27 (2d Cir. 1997). This analysis entails a two-part inquiry: First, plaintiff must have shown that the defendant is capable of being served with process under the forum state's laws; second, the exercise of personal jurisdiction over the non-domiciliary defendant must ...


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