Falco v Klear View Appliance Corp.

[*1] Falco v Klear View Appliance Corp. 2013 NY Slip Op 51689(U) Decided on October 3, 2013 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 This opinion is uncorrected and will not be published in the printed Official Reports.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 October 3, 2013
Supreme Court, Kings County

Michael J. Falco and ANDREA FALCO, Plaintiffs,

against

Klear View Appliance Corp., KLEARVIEW TRUCKING INC., FRIEDRICH AIR CONDITIONING CO., A. DUIE PYLE, INC., and SOUTHEASTER FREIGHT LINES, INC., Defendants.



500595/2013



Plaintiff's Attorney: Melvin B. Berfond, Esq., 277 Broadway, Suite 810, New York, NY 10007

Defendant's Attorney: Rivkin Radler, LLP, 926 RXR Plaza, Uniondale, NY 11556-0926

David I. Schmidt, J.

Defendant Southeastern Freight Lines, Inc. (Southeastern) moves to dismiss the complaint for lack of personal jurisdiction, pursuant to CPLR 3211(a)(8).[FN1] Plaintiffs, as well as defendants Klear View Appliance Corp. and Klearview Trucking Inc., oppose. This is an action to recover damages for personal injuries sustained by plaintiff Michael J. Falco (Falco).[FN2]

For the following reason, Southeastern's motion is granted.

I.Background

On June 28, 2010, Falco, a police officer with the New York City Police Department (NYPD), was supervising the delivery of air conditioning units to a NYPD warehouse in Queens when a number of units fell from the delivery truck striking him and causing injury. Compl. ¶¶ 58-59. Previously, on June 17, 2010, the NYPD contracted with defendant Klear View Appliance Corp. (Klear View) to supply the aforementioned air conditioning units. Id., ¶ 20. To fill the order, Klear View entered into a contract with defendant Friedrich Air Conditioning Co. (Friedrich) for the purchase of air conditioning units to be delivered to the NYPD. Id., ¶ 34. [*2]

On June 22, 2010, Southeastern, a regional carrier, picked up the air conditioning units from Friedrich's factory in San Antonio, Texas and transported them to Duie's warehouse in Pennsylvania. See affidavit of Russell Garrett, sworn to April 8, 2013 (Garrett aff.), ¶¶ 10-12. According to Southeastern, it transferred possession of the freight to Duie in Pennsylvania and its role in the shipping of the units ended at that point. Id., ¶ 12. None of Southeastern's employees participated in loading the air conditioning units onto the Duie truck that brought the units to New York. Id., ¶ 13.

Plaintiffs allege that defendants were negligent in that they "improperly stacked, packed, and/or loaded the air conditioning units into their truck" and "failed to utilize the appropriate devices necessary to load and unload merchandise from a truck," resulting in injury to Falco. Compl. ¶¶ 60-61.

II.Discussion

A.The Parties' Contentions

In support of its motion, Southeastern, a non-domiciliary, argues that plaintiffs have failed to meet their prima facie burden of proving that New York has personal jurisdiction over it. Southeastern additionally argues that maintenance of this action against it would violate constitutional requirements of due process because it lacks sufficient minimum contacts with New York.

More specifically, Southeastern contends that New York cannot exercise personal jurisdiction under its long-arm statute because the evidence demonstrates that it merely transported goods from a manufacturer in Texas to a warehouse in Pennsylvania for delivery by a separate carrier to the NYPD's warehouse in New York.[FN3] In this regard, Southeastern points to the freight bill presented to Friedrich by Southeastern before pick-up, which specifically identifies Duie as the delivery carrier, as proof that the parties had contemplated from the outset that Duie, not Southeastern, would be responsible for making the actual delivery in New York. See Garrett aff., ¶ 10; affirmation of Sarah P. Kenney, dated April 8, 2013 (Kenney aff.), Ex. B. Southeastern also states that its contract for the shipment of the units was with Friedrich and that it did not negotiate or contract with anyone related to this transaction in New York. See Garrett aff., ¶ 15. Southeastern further testifies that it is not aware of any contracts relating to the instant transaction that contain a New York choice of law provision. Id.

In addition, Southeastern asserts that it purposefully confines its activities to twelve southeastern States and has no contacts of any kind with New York. See Garret aff., ¶¶ 5, 9, 14, 16, 21-23. In this regard, Southeastern states that it has exclusive "interliner" agreements with several other regional carriers to deliver to final destinations in the 38 States that are outside of Southeastern's zone of operation. Id., ¶ 6. According to Russell Garrett, Southeastern's Vice President of Pricing and Traffic, it is Southeastern's business practice to deliver goods that originate within its territory but have a final destination outside of its territory to an agreed upon interchange point where a second regional carrier picks up the freight and completes the shipment. Id., ¶¶ 5-6. Southeastern's partner for shipment to the Northeast, including New York, [*3]is Duie.[FN4] Id., ¶ 7. Duie does not have any interchange sites in New York, and Southeastern avers that its trucks have never entered New York to pick up or deliver a shipment, and that it has otherwise never conducted business in New York. Id., ¶ 9. Furthermore, under its agreement with Duie, Southeastern is not paid for the portion of the route undertaken by Duie and derives no revenue from carriage in New York. Id., ¶ 17.

Based on this showing, Southeastern insists that plaintiffs cannot satisfy any relevant subsections of CPLR 302,[FN5] and in particular, subsection (a)(1), which provides that personal jurisdiction may be exercised over any non-domiciliary that, in person or through an agent, "transacts any business within the state or contracts anywhere to supply goods or services in the state."

Anticipating plaintiffs' resort to CPLR 302(a)(3), Southeastern contends that plaintiffs cannot satisfy that subsection's threshold requirement ("commits a tortious act without the state causing injury to person or property within the state") based on their allegation that Falco was injured during the unloading of the air conditioning units in New York (Compl. ¶¶ 60-61). Southeastern maintains that it had nothing to do with that process inasmuch as it did not pack the units, load them onto the Duie truck that made the delivery, or participate in unloading them in New York. See Garrett aff., ¶ 13. Without a tortious act on its part, Southeastern asserts that [*4]there can be no jurisdiction over it as a matter of law.

In opposition, plaintiffs argue that jurisdictional discovery should be granted, pursuant to CPLR 3211(d), on the basis of Falco's affidavit submitted in opposition to the motion. Plaintiffs urge that the facts testified to therein provide a "sufficient start" to confer jurisdiction under CPLR 302(a)(3). In this regard, Falco attests that, at the time the units were being unloaded at the NYPD warehouse, he observed the air conditioning units on a wooden pallet, placed at the rear of the truck by the truck driver. See affidavit of Michael Falco, sworn to May 20, 2013, ¶ 3. Falco further testifies that, just prior to the incident, there was a sound of wood cracking, the pallet broke and 5 to 6 air conditioners fell from the truck, striking him. Id.

In light of this, plaintiffs argue that the issue is not whether other parties acted negligently (as Southeastern would have it), but whether Southeastern caused damage to the pallet while the shipment was under its control during the 1000 plus mile trip from Texas to Pennsylvania, a circumstance that was reasonably foreseeable, as required by CPLR 302(a)(3)(ii). In addition, and in further satisfaction of CPLR 302(a)(3)(ii), plaintiffs contend that there can be no serious dispute that Southeastern derives substantial revenue from interstate commerce. See Garrett aff., ¶¶ 5-6 ("Southeastern operates exclusively in Alabama, Florida, Georgia, Louisiana, Mississippi, North Carolina, Oklahoma, South Carolina, Tennessee, Texas, Virginia and Puerto Rico . . . and . . . maintains exclusive agreements . . . with carriers in the other 38 states"). Consequently, plaintiffs contend that they have demonstrated that sufficient facts exist to warrant jurisdictional discovery on the issue of whether Southeastern committed a tortious act outside the state causing injury in New York.

As to Southeastern's showing with respect to CPLR 302(a)(1), i.e., that it has never entered or conducted business in New York, including with respect to the instant transaction, plaintiffs argue that without discovery of the various distribution agreements that Southeastern has with its affiliated shippers and the particulars of their business relationships, it is impossible to determine whether Southeastern transacts any business within the state or contracts anywhere to supply goods or services in the state.

In reply, Southeastern reaffirms that the weight of the evidence it submitted in its moving papers establishes conclusively that it has never transacted business in New York or contracted to supply goods or services within New York. Further, in response to the Falco affidavit, Southeastern asserts that it had no material connection to the pallet at issue. Specifically, Southeastern testifies that it did not supply the pallets, stack those units onto the pallets, or secure them to the pallets. See supplemental affidavit of Russell Garrett, sworn to June 5, 2013 (Garrett supp. aff.), ¶ 3. Southeastern states that this all had been done, "presumably," by Friedrich. Id. Southeastern also contends that it played no role in loading any pallet onto the truck that carried those units into New York, where the pallet in question broke. Id., ¶ 4; Garrett aff., ¶ 13.

At the hearing on the motion, and because of Southeastern's suggestion in its reply affidavit that the pallet was supplied and stacked by Friedrich, the court directed Friedrich to submit an affidavit as to whether the pallet at issue was supplied and/or owned by it. See June 7, 2013 Order. Friedrich subsequently submitted an affidavit denying that it provided the pallet when it arranged for the shipment of the units based on the following facts: "Friedrich does not palletize its products for shipping and delivery unless specifically requested to do so by the customer. An extra charge is applied to the [*5]purchasing transaction if the customer makes such a request.""[Friedrich has] reviewed the records pertaining to the purchase order placed by the New York City Police Department for the subject air conditioning units supplied by plaintiff's counsel. According to those records, neither the NYPD nor the retailer requested a palletized shipment. Further an additional charge for pallets was not added to the purchase amount. As such, Friedrich did not palletize the units and did not instruct anyone else to palletize the units."

See affidavit of Michael Callaway, sworn to July 9, 2013, ¶¶ 3-4.

In a response affidavit in further support of its motion, Southeastern states that, based on its review of its shipping records, "it is clear that Southeastern neither supplied nor touched the pallet referenced in the Falco Affidavit. The Units shipped by Southeastern were not palletized at any time while they were in Southeastern's control." See affidavit of Russell Garrett in response to affidavit of Michael Callaway and in further support of Southeastern's motion to dismiss, sworn to September 3, 2013 (Garrett response aff.), ¶ 8. Southeastern bases its disavowal of any relationship to the pallet at issue on the following evidence: "[T]he Bill of Lading . . . reflects that the Units were tendered as 50 individually packaged units. The Bill of Lading references 50 packages and makes no reference to any pallets. Had there been any pallets, they would have been referenced in the Bill of Lading. In addition, beside the driver's signature are the letters SLC.' This stands for shipper load and count,' and means that the shipper - here, Friedrich - loaded the Units onto the trailer that Southeastern was responsible for driving to Pennsylvania and that Friedrich was responsible for counting the Units to ensure all were present. In an SLC pickup, the driver would not have been present for the loading of the Units onto the trailer; the driver would have driven the Units as they were packed and loaded by the shipper, i.e., Friedrich, without alteration."

Id. ¶ 4 and Ex. B.

"Southeastern's regular practice for SLC pickups is to ship products as they are packed and loaded by the shipper; Southeastern does not add pallets to SLC pickups."

Id., ¶ 5.

"Additionally, the Freight Bill . . . reflects that Southeastern shipped 50 PCS,' meaning loose, unpalletized pieces (i.e., individually packaged units). Southeastern tracks the number of pallets on its freight bills because it prices shipments differently depending on whether it is shipping pallets, loose pieces, or some combination thereof. In the box just above and to the left of the TYPE CHARGE/CLASS' box, the bill states 0 + 50 +50,' meaning that the shipment [*6]included zero (0) pallets and fifty (50) loose pieces, for a total of fifty (50) items. Had the shipment included one or more pallets, the first number in that box would have been greater than zero."

Id., ¶ 6 and Ex. C.

B.Analysis

A plaintiff bears the ultimate burden of proof on the issue of personal jurisdiction. See Ying Jun Chen v Lei Shi, 19 AD3d 407, 407 (2d Dept 2005) (citation omitted). However, in opposing a motion to dismiss pursuant to CPLR 3211(a)(8) on the ground that discovery on the issue of personal jurisdiction is necessary, plaintiffs need not make a prima facie showing of jurisdiction, but instead must only set forth "a sufficient start, and show[] their position not to be frivolous." Peterson v Spartan Indus., 33 NY2d 463, 467 (1974).

CPLR 302(a)(1) provides that a court may exercise personal jurisdiction over any nondomiciliary who in person or through an agent "transacts any business within the state or contracts anywhere to supply goods or services in the state." CPLR 302(a)(1). It is a "single act statute" that effectively permits personal jurisdiction over a defendant who never entered New York, if "there is a substantial relationship between the act and the claim asserted." Kreutter v McFadden Oil Corp., 71 NY2d 460, 467 (1988). If it is established that Southeastern purposefully availed itself of the benefits of the State of New York, then personal jurisdiction is appropriate. Fischbarg v Doucet, 9 NY3d 375, 380 (2007). "Purposeful activities are those with which a defendant, through volitional acts, avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Id. (inner quotation marks and citation omitted). Whether a foreign defendant has engaged in sufficient purposeful activity to confer jurisdiction in New York requires an examination of the totality of the circumstances. Farkas v Farkas, 36 AD3d 852, 853 (2nd Dept 2007).

To this end, the courts have considered such factors as "(1) whether the [non-domiciliary] defendant has an ongoing contractual relationship with a New York corporation; (2) whether the contract was negotiated or executed in New York; (3) [whether the contract has a New York] choice of law clause []; and (4) whether the contract requires notices and payments to be sent into the forum state." Bluman v Labock Tech., Inc., 13 Misc 3d 1244(A), *2-3 (Sup Ct, NY County 2006) (internal quotation marks and citation omitted). Similarly, for the "contracts anywhere" prong of CPLR 302(a)(1) to apply, the non-domiciliary has to project itself into New York to supply goods or services in this state and purposefully avail itself of the privileges and benefits of the laws of New York. See Liberatore v Calvino, 293 AD2d 217, 220 (1st Dept 2002).

Here, none of Southeastern's activities in connection with the transaction, as described above, establish a sufficient nexus between Southeastern and New York. Southeastern has no contract with a New York entity;[FN6] it did not negotiate or execute a contract in New York; it did not physically come to New York; there is no evidence of a choice-of-law clause selecting New York; no notices or payments were sent into New York; and there was no supervision of anything by Southeastern in New York. See Garrett aff., ¶¶ 15, 18. Thus, based upon the totality of the [*7]circumstances, Southeastern has not engaged in purposeful activity in New York sufficient to confer personal jurisdiction over it under CPLR 302(a)(1).

Nor can plaintiffs (though they do not fully articulate their argument as such) establish jurisdiction over Southeastern based on Duie's actions in New York as its purported agent. In this regard, Southeastern avers that: (i) once it transferred possession of the freight to Duie in Pennsylvania it "had no control over the shipment" (Garrett aff., ¶ 12); (ii) received no revenue from the portion of the route undertaken by Duie (id., ¶ 17); and (iii) did not supervise any of Duie's activities in New York (id., ¶ 15). Effectively, this testimony compels the conclusion that the affiliation between Southeastern and Duie with respect to the transaction at issue does not rise to the level of an agency relationship that would bring Southeastern within the jurisdiction of the court. See Teachers Insurance & Annuity Ass'n v Butler, 592 F Supp 1097, 1101 (SD NY 1984) ("To constitute an agent for the purposes of [CPLR 302] . . . the nondomiciliary must exercise some element of control over the agent").

Finally, taken together, the testimony contained in the affidavits submitted by Southeastern and Friedrich forecloses the possibility that Southeastern had some connection to the allegedly defective pallet which caused Falco's injuries when the units were being unloaded in New York — thus, precluding a finding that jurisdiction could be maintained over Southeastern under CPLR 302(a)(3) ("commits a tortious act without the state causing injury to person or property within the state").

Based on the foregoing, plaintiffs have failed to make a "sufficient start" toward demonstrating that facts "may exist," for the exercise of personal jurisdiction over Southeastern, warranting jurisdictional discovery. Peterson, 33 NY2d at 467.

However, during a telephone conference with the court regarding the scheduling of a preliminary conference, plaintiffs' counsel expressed a concern that he was unable to depose Southeastern's driver who was no longer with the company because he did not have that person's last known address, and if Southeastern was dismissed from the case, the statute of limitations might run out before the driver could be found and a deposition take place. To address this concern, the court directed Southeastern to provide plaintiffs with the driver's last known address. If that has not yet occurred, Southeastern is ordered to provide plaintiffs with that information within 10 days from service of a copy of this decision and order with notice of entry. In addition, Southeastern's counsel stated that she would be amenable to an order granting Southeastern's motion conditioned upon its waiver of statute of limitations defenses should the deposition of the driver show that, contrary to its shipping records, Southeastern supplied or otherwise exercised control over the pallet during the transportation of the air conditioning units between Friedrich's plant in Texas and Duie's warehouse in Pennsylvania.

Accordingly, it is

ORDERED that defendant Southeastern Freight Lines, Inc.'s motion to dismiss the complaint as asserted against it, is granted; such order is conditioned upon Southeastern Freight Lines, Inc.'s waiver of statute of limitations defenses if upon completion of discovery it can be shown that the air conditioning units transported by Southeastern Freight Lines, Inc. were palletized at any time while they were in said defendant's control.

Dated: October 3, 2013 [*8]

ENTER:

_____________________J.S.C. Footnotes

Footnote 1:Defendant Duie Pyle Inc. (Duie) supports Southeastern's motion. See affirmation of David M. Goldman, dated June 4, 2013 (Goldman aff.) and Ex. B annexed thereto.

Footnote 2: In addition, the complaint asserts a cause of action on behalf of Andrea Falco, Falco's spouse, based on her claim of loss of services, earnings, consortium and society.

Footnote 3: Plaintiffs do not argue that the court has "general jurisdiction" over Southeastern under CPLR 301.

Footnote 4: The regional shippers with which Southeastern has exclusive agreements is listed on its website. See Kenney aff., Ex. A.

Footnote 5: As relevant herein, CPLR 302, the New York State long-arm statute provides:

"(a) Acts which are the basis of jurisdiction. 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, or his executor or administrator, who in person or through an agent:

1.transacts any business within the state or contracts anywhere to supply goods or services in the state; or ....

3.commits a tortious act without the state causing injury to person or property within the state, except as to a cause of action for defamation of character arising from the act, if he

(i) regularly does or solicits business, or engages in any other persistent course of conduct, or derives substantial revenue from persistent course of conduct, or derives substantial revenue from goods used or consumed or services rendered, in the state, or

(ii) expects or should reasonably expect the act to have consequences in the state and derives substantial revenue from interstate or international commerce ...."

Footnote 6: Duie is a Pennsylvania-based regional carrier. See affidavit of Peter Latta, sworn to June 3, 2013, ¶ 3, annexed as Ex. B to Goldman aff..