Unitrade Corp. v International Data Sys., Inc.

[*1] Unitrade Corp. v International Data Sys., Inc. 2012 NY Slip Op 51006(U) Decided on June 7, 2012 Supreme Court, Kings County Schmidt, J. Published by New York State Law Reporting Bureau pursuant to Judiciary Law § 431. This opinion is uncorrected and will not be published in the printed Official Reports.

Decided on June 7, 2012
Supreme Court, Kings County

Unitrade Corporation, Plaintiffs,

against

International Data Systems, Inc., Defendant.



8653/2011



Plaintiff Attorney: Solomon Antar, Esq., 42 Falmouth Street, Brooklyn, NY 11235

Defendant Attorney: Roscetti & DeCastro, P.C., 730 Main Street, Niagara Falls, NY 14301

David I. Schmidt, J.

Upon the foregoing papers, defendant International Data Systems, Inc. (IDS) moves for an order: (1) pursuant to CPLR 302 (a) (1), dismissing the complaint for lack of personal jurisdiction; or (2) in the alternative, pursuant to CPLR 510 (3), granting a change of venue from Kings County to Niagara County.

FACTS AND PROCEDURAL HISTORY

On or about April 14, 2011, plaintiff Unitrade Corporation (Unitrade), a New York distributor and reseller of various brands of office paper products, commenced this action seeking payment totaling $89,100.00 for goods allegedly sold and delivered to IDS, a wholesale distributor of computer supplies located in Ontario, Canada. On or about June 20, 2011, IDS joined issue by serving its Answer, which contained affirmative defenses for lack of personal jurisdiction and improper venue.

The alleged purchases originated from an sales solicitation telephone call made by Unitrade to IDS regarding printer ink cartridges available for sale. In response, in February 2007, IDS made a telephone call from Canada to inquire about the possible purchase of cartridges. As listed on the Unitrade invoices dated March 8, 2007 and March 26, 2007, IDS subsequently placed two orders for printer ink cartridges via facsimile/fax, specifically, 600 units of Canon E-[*2]40 (the "Canon cartridges") and 400 units of Xerox 6R914 (the "Xerox cartridges"). IDS was to pay $$56,400.00 for the Canon cartridges and $32,700.00 for the Xerox cartridges, and the total price of all goods ordered by defendant was $89,100.00.

As agreed by the parties during the telephone call, defendant arranged for an independent trucking company or common carrier in Canada to pick up the goods from Unitrade's warehouse in Suffern, New York, and transport the shipment to IDS in Ontario, Canada. The common carrier picked up and delivered the Canon cartridges and Xerox cartridges to defendant on March 8, 2007 and March 28, 2007, respectively. As reflected on the invoices, both deliveries were marked "F.O.B." (free on board), and plaintiff did not charge defendant for shipping services.

According to the affidavit of Pardeep Bhatia (Bhatia), the owner and president of IDS, defendant received delivery of the Canon cartridges in Ontario, Canada on or about March 12, 2007, and in turn shipped said cartridges to its customer in Canada. After the customer complained about irregularities in the Canon cartridges and the dubious authenticity of the product, Bhatia conducted his own inspection and concluded that the product was indeed suspect. IDS then arranged for its second delivery from plaintiff (with the Xerox cartridges), to be delivered directly from plaintiff to the Xerox logistics center in Ontario, Canada so that Xerox could verify the authenticity of the product. As Bhatia attests, Xerox seized the entire shipment after confirming that the product delivered by plaintiff was indeed counterfeit, and those products remain in Xerox's possession in Canada.

According to the affidavit of Matitia Grohman (Grohman), the president of Unitrade, it began calling IDS in late April 2007 to demand payment for the delivered printer cartridges, and the first time IDS informed plaintiff of its non-conformity concerns regarding the products was over thirty days after their delivery. As IDS refused to pay for the allegedly non-conforming products, the parties agreed to meet in Niagara Falls, New York, with IDS's attorney present, on April 12, 2007. The meeting resulted in an executed written settlement agreement, which was drafted and notarized in New York by defendant's attorney, whereby defendant allegedly agreed to attempt selling the goods in question, and to return any unsold non-conforming goods to plaintiff. Ultimately, plaintiff alleges, defendant nevertheless refused to either pay plaintiff for goods already sold or return the remaining unsold goods to plaintiff. This lawsuit ensued.

THE PARTIES' CONTENTIONS

Defendant seeks dismissal on the ground that it is a not a New York domiciliary and has no New York contacts under CPLR 302 (a) (1). IDS first avers that it is not "doing business" in New York because the long-arm statute does not extend to confer jurisdiction over non-domiciliaries who merely ship goods into the state without crossing its borders, and the two purchase orders made by defendant were not part of a systemic purchasing, nor were they tied to any New York agent. Furthermore, it argues that none of its activities were purposeful and there is no substantial relationship between the transaction and the claim alleged because it merely placed the purchase orders by telephone from Canada in response to plaintiff's sales solicitation call. Defendant also argues that its use of an independent common carrier to pick up the goods from New York to take out of state to Canada does not constitute an "agent" relationship, as it did not own or exercise any control over that independent contractor. [*3]

In the alternative, defendant argues that the venue should be transferred to Niagara County, on the ground of forum non conveniens. It asserts that, as stated in the Bhatia's affidavit, neither Bhatia nor defendant ever traveled to New York State or Kings County with respect to any of the alleged transactions relating to the purchases; defendant's office is located Ontario, Canada, near Niagara County; and the intended witnesses coming from the Canon and Xerox corporations, its customers, and some remaining product are all located in Ontario.

In opposition, plaintiff contends that IDS is subject to personal jurisdiction in New York because it transacted business under CPLR 302 (a) (1), as demonstrated by its purposeful contacts of calling plaintiff by telephone to inquire about purchasing the goods; having formed the contract in New York when defendant in Canada faxed two purchase orders to plaintiff in New York, who then accepted the offers by faxing back invoices for the sale of goods; having title of the goods passed to defendant in New York when the common carrier picked up the goods "F.O.B." in New York; meeting plaintiff in New York to settle the payment dispute; and signing and notarizing the written settlement agreement in New York. Plaintiff further argues that the common carrier who picked up goods from plaintiff in New York on two separate occasions served as defendant's agent and that plaintiff indeed exercised control over that agent by rerouting the truck's driver directly to Xerox's logistics center once he became suspicious of the shipment's conformity. Plaintiff also maintains that defendant's attorney who negotiated the written agreement on defendant's behalf is also an agent of defendant, and that negotiating that settlement in New York is sufficient to confer jurisdiction upon defendant. Finally, plaintiff argues that defendant benefitted from New York's benefits and protections, including by reaching out to plaintiff in New York to purchase goods; utilizing New York roads for the transport of such goods; retaining a New York attorney to negotiate a settlement in New York; and signing and notarizing such settlement in New York.

With respect to venue, plaintiff argues that Kings County is the proper venue for this action because it is where plaintiff resides, and that IDS cannot demand a change of venue because it is an unlicensed foreign corporation and not a resident of New York. It further contends that the convenience of defendant, as a party to this action, is not a relevant consideration for determining whether a change of venue is warranted. Similarly, plaintiff asserts that even the proposed Niagara County is improper as venue because the purported witnesses are not located there, but in Ontario, Canada, and that the presence of defendant's attorney in Niagara County does not justify moving venue there. Finally, plaintiff contends that defendant's application to change venue is deficient because its moving affidavit did not set forth details regarding the purported witnesses' names, addresses, and residence, expected testimony, willingness to testify at trial, and how they would be inconvenienced if relief were not granted.

DISCUSSION

It is well settled that "[a] foreign corporation is amenable to suit in New York courts under CPLR 301 if it has engaged in such continuous and systematic course of doing business that a finding of its presence in this jurisdiction is warranted" (Landoil Resources Corp. v Alexander & Alexander Servs., Inc., 77 NY2d 28, 33 [1990] [internal quotation marks and citations omitted]). "The essential factual inquiry is whether the defendant has a permanent and [*4]continuous presence in the State, as opposed to merely occasional or casual contact with the State" (Holness v Maritime Overseas Corp., 251 AD2d 220, 222 [1998]). CPLR 301 allows for jurisdiction with regard to any cause of action brought against the subject corporation and is not limited to claims arising out of the entity's specific business transactions as is the case with the so-called "long arm-jurisdiction" premised upon CPLR 302 (Mingmen Acupuncture Serv., P.C. v American Tr. Ins. Co., 183 Misc 2d 270, 276 [1999]).

A foreign corporation may also be subject to personal jurisdiction under New York's long-arm statute, CPLR 302, which authorizes the court to exercise jurisdiction over non-domiciliaries or their agents for tort and contract claims arising from a defendant's transaction of business in this state (see Daventree Ltd. v Republic Azerbaijan, 349 F Supp 2d 736, 758 [SDNY 2004]). CPLR 302 (a) (1),[FN1] on which plaintiff relies, is a "single act" statute, and proof of one transaction in New York is sufficient to invoke jurisdiction, even though the defendant never enters New York, so long as the defendant's activities here were purposeful and there is a substantial relationship between the transaction and the claim asserted (see Reiner & Co. v Schwartz, 41 NY2d 648, 651-652 [1997]). In assessing long-arm jurisdiction, the court considers "the totality of the circumstances" (Catauro v Goldome Bank For Sav., 189 AD2d 747, 748 [1993]). The burden of establishing personal jurisdiction under the long-arm statute rests on the plaintiff, as the party asserting jurisdiction (see O'Brien v Hackensack Univ. Med. Ctr., 305 AD2d 199 [2003]; Armouth Intl., Inc. v Haband Co., Inc., 277 AD2d 189 [2000]). A finding that an out-of-state defendant transacts business in New York will not offend due process if the defendant "avails itself of the benefits of the forum, has sufficient minimum contacts with it, and should reasonably expect to defend its actions there" (Kreutter v Mc Fadden Oil Corp., 71 NY2d 460, 466 [1988] [citations omitted]).

The parties do not seem to dispute that IDS does not fall under New York jurisdiction pursuant to CPLR 301 because its activities within the state were not "systematic." Rather, plaintiff argues that IDS entered New York on two occasions, each of which he alleges constitutes a separate transaction giving rise to jurisdiction under CPLR 302 (a) (1): first, when the common carrier hired by IDS picked up the goods from plaintiff's New York warehouse, acting as its agent, and again, when defendant attended the meeting in Niagara Falls, New York to discuss settlement. Plaintiff also urges the court to consider the alleged "purposeful" contacts made by defendant to the state of New York: calling plaintiff by telephone to inquire about purchasing the goods; forming the contract in New York; title of the goods passing to defendant in New York; and signing and notarizing the written settlement agreement in New York.

The court finds that IDS has met its burden of demonstrating that the circumstances do not warrant the exercise of personal jurisdiction over it. In moving to dismiss the action, defendant highlights case law indicating that long-arm jurisdiction does not extend to non-domiciliaries who merely ship goods into the state without crossing its borders or taking further actions (see McGowan v Smith, 52 NY2d 268 [1981]). Likewise, the court acknowledges [*5]precedent stating, "[t]he classic instance in which personal jurisdiction is found not to exist is the one in which the in-state plaintiff ships goods to the out-of-state defendant, who . . . fails to send[] payment. Without more, this is insufficient to confer long-arm jurisdiction" (Spencer Laminating Corp. v Denby, 5 Misc 3d 200, 203 [2004], citing Katz & Son Billiard Prods. v Correale & Sons, 26 AD2d 52 [1966], affd 20 NY2d 903 [1967] [where New Jersey corporation that ordered billiards equipment from New York was not subject to jurisdiction]).

Significantly, the court finds that defendant's utilization of a trucking company or common carrier in Canada to pick up the goods from plaintiff's New York warehouse is not sufficient to confer jurisdiction on this court. In Katz & Son Billiard Prods. (26 AD2d 52, affd 20 NY2d 903), the First Department found that a New Jersey defendant did not transact business in New York within the meaning of the long-arm statute by accepting delivery of goods shipped to New Jersey "F.O.B. [plaintiff's] factory in New York City." As another New York appellate court subsequently noted, "In Katz . . . the defendant never entered New York, and delivery was by a common carrier" (Empire Beef Co., Inc. v Meyners-Robinson Co., Inc., 248 AD2d 1012, 1013 [1998]). Moreover, in Agrashell, Inc. v Bernard Sirotta Co. (344 F2d 583 [2d Cir 1965]), the Second Circuit distinguished between goods shipped by a Missouri corporate defendant in trucks owned or leased by the defendant, "F.O.B. New York," versus shipped by common carriers subject to the plaintiff buyer's directions, "F.O.B. Missouri" for purposes of determining personal jurisdiction under the long-arm statute (see also Lemme v Wine of Japan Import, Inc., 631 F Supp 456 [EDNY 1986] [relying on Agrashell]; but see Laumann Mfg. v Castings USA, Inc., 913 F Supp 712, 717-718 [EDNY 1996] [limiting the application of Lemme and Agrashell]). The court also takes note of a more recent case in which the fact that a third-party defendant art gallery shipped a painting to New York by common carrier was a relevant factor in determining that the art gallery did not have purposeful contacts with New York under the long-arm statute (see Russeck Fine Art Group, Inc. v Theodore B. Donson, Ltd., 20 Misc 3d 1119[A], 2008 NY Slip Op 51476[U], *4 [2008]).

Plaintiff further argues that the common carrier served as defendant's agent in picking up the goods in New York. To invoke long-arm jurisdiction pursuant to CPLR 302 (a) (1) based on the actions of defendant's agent, a plaintiff must persuade the court that "the agent engaged in purposeful activities in New York in relation to his transaction for the benefit of and with the knowledge and consent of the out-of-state defendants, and that they exercised some control over the agent in the matter" (Northern Val. Partners, LLC v Jenkins, 27 Misc 3d 1207[A], 2010 NY Slip Op 50605[U], *3 [2010], citing Kreutter, 71 NY2d 460). Although plaintiff maintains that the common carrier served as defendant's agent because IDS exercised control over it by re-routing the second shipment and having it delivered directly to Xerox's logistics center instead, the court is not persuaded that such conduct manifests the requisite control, as the common carrier herein was merely executing a modification in a specific job it was hired to perform. Plaintiff relies on Med-Span Shipping Servs., Ltd. v Jerry Jones Mack, Inc. (442 F Supp 904 [SDNY 1978]), but that case is inapposite because the defendant shipper did not simply transport goods therein; it engaged a New York based freight forwarder who prepared the bill of lading for shipment and presented the bill to the carrier for execution, therefore performing acts "tantamount to the execution of a contract of carriage within the state and might, in themselves, be a sufficient premise for the exercise of jurisdiction" (Id. at 906). [*6]

The court thus finds that defendant's ordering of plaintiff's goods by telephone and fax, followed by its use of a common carrier in Canada to pick up the goods from plaintiff's warehouse in New York, are not contacts constituting "purposeful acts" sufficient to sustain application of CPLR 302 (a) (1). In rejecting plaintiff's position, the court distinguishes Med-Span Shipping Servs. (442 F Supp 904) and Empire Beef Co. (248 AD2d 1012), cited in plaintiff's brief, on the basis that the former involved a freight forwarder based in New York and the latter involved delivery via the defendant's own trucks rather than by a common carrier. Similarly, in Kaddis Mfg. Corp. v Gil-Bar Rubber Prods. Co. (103 AD2d 1010 [1984]), also cited by plaintiff, the defendant therein was found subject to New York's long-arm statute, but based on purposeful acts beyond taking the goods for delivery, including the return of some goods to Rochester, New York for repair.

The court also does not credit plaintiff's arguments that defendant's attorney served as an agent of defendant for personal jurisdiction purposes or that the meeting in Niagara Falls constituted a transaction under the long-arm statute. In this regard, plaintiff's breach of contract cause of action cannot be said to have arisen from the parties' meeting in Niagara Falls (cf. Flemming, Zulak & Williamson, LLP. v Dunbar, 2004 WL 2496092 [2004] [where the allegations of plaintiff, a New York law firm, that the instant claims arose out of non-resident defendant's (a) retention of plaintiff as counsel and (b) plaintiff's settlement of an unrelated underlying action were transactions sufficient to bring defendant within the jurisdiction of the court under CPLR 302 (a) (1) because the disputed fees and disbursements were incurred during the representation and settlement]).

While defendant has demonstrated the absence of contacts in New York, plaintiff fails to establish any purposeful contacts or a substantial relationship between either defendant's use of a common carrier in Canada to pick up the goods from New York or defendant's presence in New York to discuss settlement of the dispute, and defendant's alleged breach of contract (see Armouth Intl., 277 AD2d 189). Additionally, defendant's telephone calls and faxes from Canada to New York to negotiate the purchase clearly do not suffice to confer jurisdiction (see Stengel v Black, 28 AD3d 401, 402 [2006]; Granat v Bochner, 268 AD2d 365 [ 2000] ["sending faxes and making phone calls to this State are not, without more, activities tantamount to transacting business' within the meaning of the aforecited long-arm statute"]). Similarly, the other alleged contacts cannot be considered "purposeful" in nature, as it cannot be said that IDS attempted to avail himself of the benefits of New York State. Thus, in examining "the totality of the circumstances," the court concludes that IDS was not transacting business within the meaning of CPLR 302 (a) (1), and the instant complaint should be dismissed for lack of personal jurisdiction. The parties' arguments concerning change of venue are therefore deemed moot.

Accordingly,

ORDERED that defendant IDS's motion to dismiss the complaint is granted.

The foregoing constitutes the decision and order of the court.

E N T E R,

J. S. C. Footnotes

Footnote 1: The New York long-arm statute (CPLR 302 [a] [1]) provides, in pertinent part: "As 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 . . . (1) transacts any business within the state or contracts anywhere to supply goods or services in the state."