GLENN DISTRIBUTORS CORPORATION v. K.I.D. INTERNATIONAL, INC

NOT FOR PUBLICATION WITHOUT THE

APPROVAL OF THE APPELLATE DIVISION

This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R.1:36-3.

SUPERIOR COURT OF NEW JERSEY

APPELLATE DIVISION

DOCKET NO. A-0

GLENN DISTRIBUTORS CORPORATION,

Plaintiff-Respondent,

v.

K.I.D. INTERNATIONAL, INC.,

Defendant-Appellant.

_______________________________

October 31, 2016

Argued October 6, 2016 - Decided

Before Judges Lihotz and Hoffman.

On appeal from Superior Court of New Jersey, Law Division, Monmouth County, Docket No. DJ-148500-14.

Daniel Louis Grossman argued the cause for appellant.

Adam Nachmani argued the cause for respondent (Sirlin, Lesser & Benson, P.C., attorneys; Mr. Nachmani, on the brief).

PER CURIAM

Plaintiff Glenn Distributors Corp. filed this action to enforce a $3,884.10 Pennsylvania default judgment against assets owned by defendant K.I.D. International, Inc. Defendant moved to vacate the judgment, arguing the Pennsylvania court lacked personal jurisdiction to consider plaintiff's complaint. The Law Division denied the motion, finding defendant's contacts with Pennsylvania were sufficient to establish long-arm jurisdiction. Defendant appeals from the August 14, 2015 order, arguing the judge's factual findings were unsupported. Following our de novo review of this legal issue, Estate of Hanges v. Metro. Prop. & Cas. Ins. Co., 202 N.J. 369, 382 (2010), we affirm substantially for the reasons stated in the opinion issued by Judge Joseph P. Quinn. R. 2:11-3(e)(1)(A).

The facts are largely undisputed. The parties had a five-year business relationship. Plaintiff is a Pennsylvania corporation with operations in Pennsylvania and New Jersey; defendant is a Delaware corporation with its principal place of business located in Farmingdale. In satisfaction of a transaction, plaintiff wired money to defendant from a bank branch located in Philadelphia, Pennsylvania. The sum wired exceeding the amount referenced on defendant's February 19, 2014 invoice by $3,360.1 In a separate transaction, plaintiff sold defendant $12,423.60 worth of goods. Plaintiff's February 24, 2014 invoice included the terms: "Net F.O.B. Philadelphia."2 Plaintiff asserted defendant picked-up the goods from plaintiff's Philadelphia warehouse. When defendant issued payment for these goods, the amount was $423.10 less than the balance due.

Defendant ignored plaintiff's requests for reimbursement of the overpayment and satisfaction of the invoice. Consequently, plaintiff filed a two-count complaint in Philadelphia Municipal Court. Personal jurisdiction and venue were premised on plaintiff's assertion "the transaction that is the subject of this action occurred in Philadelphia County, Pennsylvania." Plaintiff specifically noted the origin of the wire transfer was Philadelphia. Defendant did not defend the action and the court entered a default judgment.

Plaintiff domesticated the Pennsylvania judgment, pursuant to the Uniform Enforcement of Foreign Judgments Act (the Act) N.J.S.A. 2A:49A-25. Docketing was completed on August 12, 2014, after which plaintiff served an informational subpoena upon defendant, which was ignored. A writ of execution ordered the Monmouth County Sheriff's Department to execute and levy upon defendant's personalty, which occurred on April 14, 2015.

Defendant moved to vacate the judgment, alleging the Pennsylvania court lacked personal jurisdiction. To support this position, defendant's president Jacob Y. Stefansky certified defendant never had an office or advertised in Pennsylvania; did not manage a web site, and all businesses were solicited by telephone, primarily "in the South and West." Further, Stefansky asserted his search of defendant's records revealed no "systematic and regular transactions that involved Pennsylvania[,] in the last three years." Stefansky further noted defendant operated a warehouse in Pennsauken. He disputed the transaction at issue had "anything to do with Pennsylvania, 'explaining' defendant has not regularly transacted business there on any basis, for as long as [he could] remember." In his reply certification, Stefansky stated: "If [defendant] made pick-ups in Philadelphia[] that was purely fortuitous" and "for defendant's convenience."

Objecting to the motion, plaintiff filed a certification from its employee, Farrah Nachmani, who identified plaintiff's Philadelphia warehouse as where "[d]efendant's employees picked up goods . . . on numerous occasions," including the goods referenced on the February 24, 2014 invoice.

Judge Quinn denied defendant's motion to vacate the judgment. Governed by the standards set forth in Rule 4:50-1, he rejected defendant's assertion the Pennsylvania judgment was void. He reviewed 42 Pa. C.S.A. 5322(b), governing Pennsylvania's long-arm jurisdiction over non-resident defendants, and concluded the evidence satisfies the statute's requirements for specific jurisdiction. This appeal ensued.

Defendant argues the facts limited solely to defendant picked up merchandise and plaintiff transferred payment from Philadelphia are insufficient to confer personal jurisdiction upon defendant in Pennsylvania. We are not persuaded.

The Full Faith and Credit Clause of the United States Constitution, U.S. Const. art. IV, 1, requires "any judgment properly executed in a foreign state, which complies with the requirements of the due process clause is entitled to full faith and credit in New Jersey." Ewing Oil v. John T. Burnett, 441 N.J. Super. 251, 259 (App. Div. 2015). "When viewed through the prism of due process protections, a foreign judgment will not be entitled to full faith and credit in New Jersey if a defendant can demonstrate the forum state lacked personal or subject matter jurisdiction . . . ." Id. at 260 (citing Tara Enters., Inc. v. Daribar Mgmt. Corp., 369 N.J. Super. 45, 56 (App. Div. 2004)).

The extent to which jurisdiction is proscribed by the Due Process Clause depends upon the nature and quality of the defendant's contacts with the forum state. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-76, 105 S. Ct. 2174, 2183, 85 L. Ed. 2d 528, 541-43 (1985); see also Kubik v. Letteri, 614 A.2d 1110, 1114 (1992). A defendant, who has "purposefully directed" his or her activities at the residents of the forum, is presumed to have fair warning that he or she may be haled into court in the forum state. Letteri, supra, 614 A.2d at 1114.

Pennsylvania's long arm statute, 42 Pa. C.S.A. 5322, is co-terminus with the protections afforded by the Fourteenth Amendment. See Mendel v. Williams, 53 A.3d 810, 817, 821 (Pa. Super. Ct. 2012) ("The Due Process Clause of the Fourteenth Amendment to the United States Constitution limits the authority of a state to exercise in personam jurisdiction over non-resident defendants."). Accordingly, a non-resident defendant's conduct and connection with the forum state must be examined on a case-by-case basis. See, Burger King, supra, 471 U.S. at 478, 105 S. Ct. at 2185, 85 L. Ed. 2d at 545 (Rejecting the application of "mechanical test" to determine personal jurisdiction and evaluating the nature of the defendant's contacts with the forum state).

Our twofold inquiry examines whether the Pennsylvania court properly exercised personal jurisdiction under Pennsylvania law, and whether the exercise of jurisdiction "offend[s] traditional notions of fair play and substantial justice." See McKesson Corp. v. Hackensack Med. Imaging, 197 N.J. 262, 276-77 (2009) (applying law of forum state to determine whether the court properly exercised jurisdiction over a New Jersey defendant).

In this matter, plaintiff acknowledged the facts do not support Pennsylvania's exercise of general jurisdiction, which would subject defendant to suit because of the continuous nature and quantum of contacts with the forum. Patel v. Karnavati America, LLC, 437 N.J. Super. 415, 425 (App. Div. 2014). However, "A foreign defendant who does not have sufficient contacts with Pennsylvania to establish general jurisdiction may nevertheless be subject to specific jurisdiction in Pennsylvania pursuant to the Pennsylvania Long-Arm Statute, 42 Pa.C.S.A. 5322 ([specifying b]ases of personal jurisdiction over persons outside this Commonwealth)." Mendel, supra, 53 A.3d at 820.

When examining facts to determine whether specific jurisdiction exists, the minimum contacts inquiry focuses on "the relationship among the defendant, the forum, and the litigation." Shaffer v. Heitner, 433 U.S. 186, 204, 97 S. Ct. 2569, 2579, 53 L. Ed. 2d 683, 698 (1977). See also Goodyear Dunlop Tires Ops., S.A. v. Brown, __ U.S. __, __, 131 S. Ct. 2846, 2851, 180 L. Ed. 2d 796, 803 (2011). Notably, "[b]ecause due process may permit specific jurisdiction based solely on 'single or occasional' acts purposefully directed at the forum, it is narrow in scope, limiting a cause of action to the extent that it 'arises out of or relates to' the very activity that establishes jurisdiction." Mendel, supra, 53 A.3d at 817.

Pennsylvania's Long-Arm Statute, 42 Pa.C.S.A. 5322, is divided into two sections.

Section (a) contains ten subsections, which specify particular types of contact with Pennsylvania which will be deemed sufficient to warrant the exercise of long-arm personal jurisdiction. Section (b) is a catchall provision which authorizes the exercise of personal jurisdiction over persons who do not come within one of the express provisions of the ten subsections of section (a) so long as the minimum requisites of federal constitutional law are met.

[Scoggins v. Scoggins, 555 A.2d 1314, 1318 (Pa. Super. Ct. 1989).]

A court in Pennsylvania "may exercise personal jurisdiction over a person . . . [t]ransacting any business in th[e] Commonwealth," 42 Pa.C.S.A. 5322(a)(1), which includes

(i) The doing by any person in this Commonwealth of a series of similar acts for the purpose of thereby realizing pecuniary benefit or otherwise accomplishing an object.

(ii) The doing of a single act in this Commonwealth for the purpose of thereby realizing pecuniary benefit or otherwise accomplishing an object with the intention of initiating a series of such acts.

(iii) The shipping of merchandise directly or indirectly into or through this Commonwealth.

[Ibid.]

Thus, "[s]pecific jurisdiction . . . depends on an 'affiliatio[n] between the forum and the underlying controversy,' principally, activity or an occurrence that takes place in the forum State and is therefore subject to the State's regulation." Mendel, supra, 53 A.3d at 817.

The limited record in this matter shows defendant regularly engaged in business with plaintiff, a Pennsylvania corporation, for approximately five years. Defendant purchased goods from plaintiff, which at times were shipped to and picked up by defendant in Philadelphia, as demonstrated by the February 24, 2014 invoice. Despite protests contained in Stefansky's certification, he concedes product pick-up at plaintiff's Philadelphia warehouse was "simply for defendant's convenience." Also, the wire transfer remitting funds due defendant originated from a Pennsylvania bank, a readily foreseeable event in light of plaintiff's Pennsylvania business operations and corporate status. These contacts, although few, are specific to the claims alleged in plaintiff's complaint and arose directly from defendant's business activities conducted within the Commonwealth.

Having found sufficient minimum contacts for application of specific jurisdiction, we also must determine whether the exercise of personal jurisdiction would offend notions of "fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95, 102 (1945). "While the interests of the forum State and of the plaintiff in proceeding with the cause in the plaintiff's forum of choice are of course to be considered, an essential criterion in all cases is whether the 'quality and nature' of the defendant's activity is such that it is 'reasonable' and 'fair' to require him to conduct his defense in that State." Davis v. C & NW Transp. Co., 405 A.2d 959, 961 (Pa. Super. Ct. 1979) (quoting International Shoe, supra, 326 U.S. at 316-17, 319, 66 S. Ct. at 158-59, 90 L. Ed. at 103). We conclude they are.

Defendant conducted business activities within the forum State, specifically, contracting with a Pennsylvania corporation for the purchase of products, which is in turn sold for profit. Further, defendant designated those products be shipped, for its convenience, to plaintiff's Philadelphia, Pennsylvania warehouse. These acts involve a Pennsylvania business and invoke benefits and protections of the Commonwealth's laws in the pursuit of realizing "pecuniary gain." Consequently, it is not unreasonable to require defendant to respond to a suit seeking payment related to those goods, which is initiated in Pennsylvania. The Commonwealth's exercise of jurisdiction was proper and defendant offered no facts compelling considerations that would render the exercise of jurisdiction unreasonable. Burger King Corp., supra, 471 U.S. at 477, 105 S. Ct. at 2184, 62 L. Ed. 2d at 544.

As Judge Quinn concluded in his detailed analysis, Pennsylvania's judgment is entitled to full faith and credit in New Jersey. Accordingly, defendant's motion to vacate the judgment was properly denied.

Affirmed.

1 We note defendant asserts the initial goods sold by plaintiff to defendant were defective and the payment issued was a refund to satisfy refunds defendant made to its customers of $41,664 and an additional $3360 "on account" for anticipated refunds.

2 "F.O.B." is an acronym for "Free on Board," a shipping term referencing the place and manner of delivery of goods. For goods delivered F.O.B. (location), the seller is obligated to transport the goods to the specified location and safely transfer the goods either to a carrier for delivery to buyer, or to buyer himself. N.J.S.A. 12A:2-319. Title to the goods transfers from buyer to seller at this location. N.J.S.A. 12A:2-509. Here, the contract required plaintiff to tender the goods at their Philadelphia warehouse, and defendants were required to travel to Philadelphia to take title and possession of the goods.