Opinion
Civil Action No. 03-164.
September 29, 2005
ORDER
This matter comes before the Court on Defendant P A Maritime, Inc.'s ("PA") Rule 12(b)(2) motion to dismiss the Complaint for lack of personal jurisdiction over PA. For the reasons discussed below, the Court will deny the motion.
I. BACKGROUND
PA's motion contends that this Court lacks personal jurisdiction over it. Specifically, PA argues that it lacks the necessary contacts with the State of New Jersey to render it amenable to suit in a court within this forum. Ferrostaal responded to PA's motion with three arguments. First, it claims that PA waived the personal jurisdiction defense by its conduct during this litigation. Second, Ferrostaal argues that PA failed to preserve the jurisdictional defense in its Answer to the Complaint. Finally, it asserts that even if the personal jurisdiction defense was still available to PA, its contacts with the State of New Jersey are sufficient to confer at specific jurisdiction.
II. DISCUSSION A. Waiver of Personal Jurisdiction Defense
As a threshold matter, this Court must consider whether PA is entitled to raise lack of personal jurisdiction as a defense at this point. Ferrostaal argues that this defense was waived by PA's participation in the early stages of this litigation. As discussed below, this Court disagrees with Ferrostaal's conclusion.The Due Process Clause's requirement of personal jurisdiction protects an entity's liberty interest in not being subject to the binding judgments of a forum with which it has established no meaningful "contacts, ties, or relations." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-72 (1985) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 319 (1945)). Because the requirement of personal jurisdiction constitutes an individual right, it, like other rights, may be waived. Ins. Corp. of Ir. v. Compagnie Des Bauxites De Guinee, 456 U.S. 694, 703 (1982);Bel-Ray Co. v. Chemrite Ltd., 181 F.3d 435, 443 (3d Cir. 1999).
Ferrostaal claims that PA's participation in matters pertaining to discovery constitutes a waiver of the personal jurisdiction defense. However, this contention is not supported by any caselaw of which this Court is aware. On the other hand, there is authority for the proposition that participation in discovery is not sufficient to waive the personal jurisdiction defense. See Paul Yanuzzi Builders v. Music Mt. Assoc., 2003 U.S. Dist. LEXIS 3375 (E.D. Pa. Feb. 28, 2003) (holding that personal jurisdiction defense not waived where the defendant participated in discovery and demanded replies within thirty days).
Rather, the type of conduct that typically constitutes a waiver of the jurisdictional defense is more focused on adjudication of the underlying merits of the controversy. For example, inBel-Ray, the Third Circuit stated that:
the actions of the defendant may amount to a legal submission to the jurisdiction of the court, whether voluntary or not. In particular, where a party seeks affirmative relief from a court, it normally submits itself to the jurisdiction of the court with respect to the adjudication of claims arising from the same subject matter.181 F.3d at 443 (emphasis added) (citations omitted). The defendants in that case engaged in substantial conduct early in the litigation that raised questions about whether they had waived their jurisdictional defense. Specifically, they filed an answer with a counterclaim, in addition to asserting their personal jurisdiction defense. Id. at 443. Three months after their initial appearances before the district court, they moved for summary judgment on the counterclaim and litigated that motion before securing a personal jurisdiction determination.Id. at 443-44. One month after the summary judgment motion was denied, the defendants filed affidavits in support of their jurisdictional defense. Id. at 444. Thus, the Third Circuit held that while the defendants timely raised their personal jurisdiction defense in their answer, their conduct in regard to the merits of their counterclaims indicated a submission to the district court's jurisdiction. Bel-Ray, 181 F.3d at 443-44. Therefore, the defendants' jurisdictional defense was waived.
Ferrostaal insists that Bel-Ray should lead the Court to conclude that PA has waived its personal jurisdiction defense in this case. However, PA has not engaged in the same type of conduct with respect to the merits of this case as the Bel-Ray defendants did. Specifically, PA has sought no affirmative relief against Ferrostaal. Rather, it has only filed an Answer to the Complaint, along with a crossclaim against its co-defendants. This distinction is critical because while the Bel-Ray defendants' counterclaim sought affirmative relief against the original plaintiff in that case, PA's crossclaim merely seeks indemnification from co-defendants in the event that liability is ultimately found to exist. Because the crossclaim is contingent on an ultimate determination of liability, PA, unlike the defendants in Bel-Ray, has not sought summary judgment prior to litigating its personal jurisdiction defense. Thus, PA has not really availed itself of this Court, and the Court concludes that PA therefore has not waived its personal jurisdiction defense based on its conduct during this litigation.
While Ferrostaal claims that PA filed a motion for partial summary judgment on a separate issue, this Court found no such motion in the record. Rather, the only motion for summary judgment filed thus far was filed on behalf of Delardo Shipping Co. and Trans Sea Transport N.V. (See Exh. 11.)
B. Preservation of Personal Jurisdiction Defense
Ferrostaal also argues in opposition to the instant motion to dismiss that PA failed to preserve the jurisdictional defense in its initial responsive pleading or in a pre-pleading motion. Ferrostaal is incorrect in its conclusion.
Fed.R.Civ.P. 12(h)(1) governs the procedure for reserving affirmative defenses such as lack of personal jurisdiction. It provides:
A defense of lack of jurisdiction over the person . . . is waived (A) if omitted from a motion in the circumstances described in subdivision (g), or (B) if it is neither made by motion under this rule nor included in a responsive pleading or an amendment thereof permitted by Rule 15(a) to be made as a matter of course.
Fed.R.Civ.P. 12(h)(1). Subsection (g) of Rule 12 addresses a situation in which a Rule 12 defense or objection is not included with a motion that raises other Rule 12 defenses or objections. Thus, provision (A) of Rule 12(h)(1) would waive PA's personal jurisdiction defense only if other Rule 12 defenses were previously raised in earlier motions. This, however, is not the case because the motion currently before the Court is the first to be filed by PA. Alternatively, the Court must consider whether PA waived its personal jurisdiction defense by virtue of provision (B) of Rule 12(h)(1). Because the jurisdictional defense was not raised by motion prior to PA's responsive pleading, the question is whether the defense was preserved within its Answer.
PA's Answer to the Complaint states:
Defendants claim benefit of all limitation clauses, arbitration clauses and forum selection clauses, including but not limited to defenses based on lack of jurisdiction, improper venue, and Defendant's rights to have claims against them presented to foreign tribunals.
(PA Ans. at 4) (emphasis added). Although it seems plain that this constitutes preservation of the jurisdictional defense, Ferrostaal argues that it is insufficient because the reference to the personal jurisdiction defense comes only in the context of the preceding clause. That is, Ferrostaal claims that the reference to lack of jurisdiction is not an additional independent defense, but rather is subsumed into PA's claim of benefit of the limitations, arbitration, and forum selection clauses in the bill of lading. It seems that Ferrostaal would require defendants to separately specify the jurisdictional defense in a clause independent of any other defense. Nothing, however, in the language of Rule 12(h)(1) can be read to support this requirement. Moreover, Ferrostaal points to no caselaw supportive of this proposition. For these reasons, the Court concludes that PA's Answer sufficiently reserved the jurisdictional defense.
Ferrostaal does cite to several cases concerning the interplay of forum selection and arbitration clauses, and jurisdictional issues. See Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 (1974) (stating that an arbitration clause is "a specialized forum selection clause that posits not only the situs of suit but also the procedure to be used in resolving the dispute"); Incontrade, Inc. v. Oilborn International, S.A., 407 F. Supp. 1359 (S.D.N.Y. 1976) (declining to exercise jurisdiction over dispute within scope of arbitration provision); Intermetals Corp. v. Hanover Int'l Aktiengesellschaft Fur Inustrievsicherungen, 188 F. Supp. 2d 454 (D.N.J. 2001) (holding that defense of improper forum should be raised as failure to state a claim under Rule 12(b)(6)); Mateco Inc. and Celta Agencies, Inc. v. M/V ELLI, 103 F. Supp. 2d 70 (D.P.R. 2000) (holding that defense of improper forum must be raised as improper venue under Rule 12(b)(3)); Jockey Int'l, Inc. v. M/V LEVERKUSEN EXPRESS, 217 F. Supp. 2d 447 (S.D.N.Y. 2002) (holding that enforcement of a forum selection clause should not be premised on a motion to dismiss for lack of personal jurisdiction). None of these cases, however, offer support for Ferrostaal's proposition that a responsive pleading, in order to preserve the jurisdictional defense, must reference it separately from all other defenses.
C. PA's Contacts With the Forum
Because it appears that PA has not waived the jurisdictional defense open to it, the Court must examine the merits of PA's argument that it is not subject to this Court's jurisdiction because it lacks sufficient contacts with the State of New Jersey
A federal court exerts personal jurisdiction to the extent authorized by the law of the state in which that court sits.See Provident Nat'l Bank v. California Fed. Sav. and Loan Ass'n, 819 F.2d 434, 436 (3d Cir. 1987) (citing Fed.R.Civ.P. 4(e)). The New Jersey Long-Arm Statute permits an exercise of jurisdiction to the fullest extent allowed by the Due Process Clause of the Fourteenth Amendment. Nicholas v. Saul Stone Co. LLC, 224 F.3d 179, 184 (3d Cir. 2000); N.J. Ct. R. 4:4-4.
Two types of personal jurisdiction may be asserted over a defendant. General jurisdiction exists where a defendant has "continuous or systematic" contacts with the forum. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984) (citing Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 445 (1952)). When such contacts exist, a court may adjudicate as to a defendant even where the controversy before the court is unrelated to the defendant's activities within the forum. Id. Alternatively, a court may exercise specific jurisdiction over a defendant. This is permissible only when the controversy before the court is related to or arises out of the defendant's contacts with the forum. Helicopteros, 466 U.S. at 414 n. 8.
In this case, there is no basis for exercising general jurisdiction over PA, nor does Ferrostaal argue that general jurisdiction is warranted. Thus, the Court will narrow its inquiry on whether an exercise of specific jurisdiction over PA is warranted.
In order to assert specific jurisdiction, a two-prong test must be satisfied. First, the defendant must have "purposefully established 'minimum contacts' in the forum State." Burger King, 471 U.S. at 472 (quoting International Shoe, 326 U.S. at 316). These contacts must be sufficient to indicate that "the defendant [has] purposefully avail[ed] itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Id. (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)).
Second, once it has been established that a defendant has sufficient minimum contacts with the forum, the court must decide whether the assertion of personal jurisdiction would comport with the concept of "fair play and substantial justice." Burger King, 471 U.S. at 476 (citing International Shoe, 326 U.S. at 320). Thus, courts may evaluate: 1) the burden on the defendant; 2) the forum State's interest in adjudicating the dispute; 3) the plaintiff's interest in obtaining convenient and effective relief; 4) the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and 5) the shared interest of the several States in furthering fundamental substantive social policies. Burger King, 471 U.S. at 476-77 (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980)).
PA concedes that the SEA PHOENIX's port call in New Jersey "rise[s] to the level of purposeful direction of activities toward the state of New Jersey." However, relying on Ascaro, Inc. V. Glenara, Ltd., 912 F.2d 784 (5th Cir. 1993), PA argues that the direction was made by the time chartered owner, Trans Sea Transport ("Trans Sea"), rather than PA. Ascaro is distinguishable because there, no contract to deliver goods existed among the ship's owner or manager. Here, the owner of the vessel, Delaro Shipping Co. Ltd. ("Delaro"), contracted with Trans Sea for a time charter of the SEA PHOENIX. Specifically, the contract states the routes that are acceptable for the charterer to follow. See Def. Br., Exh. A, lines 13-15. Moreover, the Management Agreement between Delaro and PA outlines the duties of PA to include, inter alia, "negotiat[ing], arrang[ing], complet[ing] and supervis[ing] the chartering or other employment of the Vessel." Pl. Opp., Exh. 3, ¶ 3(G).
Ferrostaal also argues that PA had direct contact with the forum by way of its communication with the SEA PHOENIX while the vessel was docked in Gloucester, New Jersey. In communications with SEA PHOENIX, PA was advised that the vessel encountered rough seas that possibly damaged the cargo and was forwarded conversations regarding the water ingress. Pl. Opp., Exh. 12. Moreover, PA obtained quotes and banking details from Capes Wilm/Phila regarding crew rates in reference to the SEA PHOENIX. Pl. Opp., Exh. 13. Subsequently, PA confirmed the transfer of those finances based on the quotes obtained. Id.
PA also relies on Conner v. Bouchard Transp. Co., Civ. No. 93-450, 2002 WL 388274 (E.D. Pa. Sept. 30, 1993), for the proposition that the unilateral activity of defendant's charterers could not satisfy the requirement of contact with the forum state. However, in that case, the plaintiffs were attempting to obtain general jurisdiction in Pennsylvania over an incident that occurred in Boston. Id. at *1. Here, Ferrostaal argues that jurisdiction in this Court is proper not because of activity in another forum, but because the alleged damages incurred were the result of conduct in this forum; namely that the steel was unloaded from SEA PHOENIX in a port in Gloucester, New Jersey.
Because PA was party to the Management Agreement and purposefully conducted business within New Jersey, the Court finds that PA purposefully availed itself of the privilege of conducting activities within the forum State. Moreover, the Court finds that asserting personal jurisdiction over PA comports with notions of fair play and substantial justice because PA cannot be burdened when it chose to conduct business in this forum, New Jersey has an interest in adjudicating the dispute based on the delivery of shipments to its ports, and Ferrostaal has an interest in obtaining convenient and effective relief. Therefore, the Court finds that PA is subject to the in personam jurisdiction in this forum and its motion will be denied.
III. CONCLUSION
PA has not waived personal jurisdiction as a defense by participating in the early states of this litigation because it has not availed itself of this Court. Moreover, PA preserved its jurisdictional defense in its Answer to the Complaint because it specifically preserved defenses based on lack of jurisdiction. However, this Court does have personal jurisdiction over PA because PA purposefully availed itself of the benefits of the State of New Jersey and the exercise comports with traditional notions of fairplay and substantial justice.
Accordingly,
IT IS ORDERED on this 29th day of September, 2005 that the motion of Defendant P A Maritime, Inc. to dismiss the Complaint for lack of personal jurisdiction [40] is hereby DENIED.