Opinion
03 Civ. 2099 (HB)
November 25, 2003
OPINION AND ORDER
Third-party defendant C.I. Uniban S.A. ("Uniban") moves to dismiss the complaint and the third-party complaint for lack of jurisdiction pursuant to Fed.R.Civ.P. 14(c) and 12(b)(2), respectively. Defendants and third-party plaintiffs Unicoolship Ltd., Unicool Ltd., Cool Carriers A.B. and Hough Fleet Services (collectively "Cool") oppose this motion, asserting jurisdiction in this Court over Uniban due to Uniban's ties to New York and its corporate relationship with both plaintiff Turbana Corporation ("Turbana") and several of the third-party defendants. For the following reasons, Uniban's motion to dismiss is granted-in-part and denied-in-part, without prejudice to Uniban's ability to raise its jurisdictional objections anew, after acquiring further documentation for its defense through limited discovery.
While this Court does not challenge Uniban's authority to raise defenses to the complaint, because the complaint does not assert any claims against Uniban Uniban's personal jurisdiction challenge is without effect.
I. BACKGROUND
A. Factual Background
This case arises out of complications associated with a shipment of bananas from the port of Turbo, Colombia to Bridgeport, Connecticut, aboard the M/V Summer Meadow ("Summer Meadow"). It is undisputed that Uniban grew the bananas that traveled aboard the Summer Meadow, Cool shipped the bananas from Colombia to Bridgeport, and Turbana was prepared to market the bananas in the United States under the Turbana label. Turbana asserts $1,100,000.00 in damages to the bananas, resulting from beetle infestation at the port of Turbo. According to Turbana, the beetles flocked to the vessel's white halogen lights during the loading process, after which they dispersed. This same shipment eventually reached Bridgeport. Cool asserts that Uniban, the shipper and stevedore responsible for loading the bananas, is responsible and must indemnify Cool for any damage that Turbana may recover.
It is undisputed that Uniban is a Colombian company with its principal place of business in Medellin Colombia. Uniban further asserts that it has never done business in New York, is not registered to do business in the state, and does not have a general agent or even an agent to receive service of process in New York. Further, Uniban does not have an office in New York, nor employees stationed in New York, nor a mailing address, telephone, or fax machine in New York. Uniban asserts that it has never advertised in New York nor had a customer in the state. Finally, while Uniban has a single bank account in New York, it has two additional bank accounts in the United States, both in Florida, and a fourth account in Colombia. Uniban asserts that the Florida account is where it "conduct[s] substantially all of its banking business, if any, in the United States." (Un. Mem. at 2). Uniban claims that its New York account is solely "to receive payments for exports made from Colombia and to make payments for imports into Colombia." ( Id.).
Although it is undisputed that Uniban is a Colombian company with few ties to the United States, let alone to New York, it is apparent that Uniban is closely affiliated with Turbana and other of the third-party dependants. Cool believes these parent-subsidiary relationships are sufficient to confer jurisdiction. While Uniban readily concedes that it is the parent of both Turbana and several of the other third-party defendants, including Isabella, it contends that it has in no way failed to maintain proper corporate formalities, and cannot be reached under any of the applicable New York statutes.
B. Procedural History
Plaintiff filed its complaint in this matter on March 26, 2003 and filed an amended complaint in June 2, 2003. Defendants filed their third-party complaint on August 1, 2003. Uniban filed the instant motion to dismiss on September 3, 2003 and it was fully briefed on October 20, 2003.
II. DISCUSSION
A. Standard of Review
In addressing a defendant's motion to dismiss for lack of personal jurisdiction under Fed.R.Civ.P. 12(b)(2), when no discovery and no evidentiary hearing as to jurisdictional matters has been conducted, the plaintiff need only allege facts which constitute a prima facie showing of jurisdiction over the defendant ( see Jazini v. Nissan Motor Co., 148 F.3d 181, 184 (2d Cir. 1998)), and the Court must construe the pleadings and affidavits in the light most favorable to the plaintiff ( see CutCo Industries, Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986); Packer v. TDI Systems, Inc., 959 F. Supp. 192, 196(S.D.N.Y. 1997)).
New York provides for jurisdiction over foreign defendants if (1)the corporation is "doing business" within New York (N.Y. Civ. Prac. L. R. ("CPLR") § 301)) or (2) the non-domiciliary defendant's actions fall within the reach of New York's long-arm statute or some other jurisdiction-enlarging statute, and (3) the exercise of personal jurisdiction over the defendant comports with the Due Process Clause of the Fifth and Fourteenth Amendments. See 5-Star Management, Inc. v. Rogers, 940 F. Supp. 512, 516 (E.D.N.Y. 1996). Even if this Court determines that plaintiff has satisfied its prima facie showing, such determination will not foreclose Uniban from raising its jurisdictional challenges again. Further, even if Cool does not satisfy its burden of establishing a prima facie case for jurisdiction, if Cool has shown that limited discovery would serve to fill any holes in its showing, this Court may order limited discovery, targeted at the missing jurisdictional factors, in order to allow a timely determination regarding the propriety of jurisdiction over Uniban. See Filus v. Lot Polish Airlines, 907 F.2d 1328, 1332 (2d Cir. 1990) (court may order limited discovery with respect to the jurisdictional issue alone before it has determined that it has jurisdiction over a defendant).
B. New York Civil Practice Law and Rules ("CPLR") §§ 301 or 302
1. CPLR § 301
New York's general jurisdiction statute, CPLR § 301, allows a court to exercise jurisdiction over a foreign corporation, on any matter, when that corporation is "engaged in such continuous and systematic course of doing business here as to warrant a finding of its presence in this jurisdiction." Landoil Resources Corp. v. Alexander Alexander Serv., 918 F.2d 1039, 1043 (2d. Cir. 1990) (citations omitted). Further, in personam jurisdiction must also comply with the constitutional due process requirements set forth in International Shoe Co. v. Washington, 326 U.S. 310 (1954). These constitutional requirements mandate that a corporation is only considered to be "doing business" in the state when "the quality and nature" of its contacts with the state "make it reasonable and just" pursuant to "traditional notions of fair play and substantial justice" that the corporation be hauled into court in the state. See Klinghoffer v. S.N.C. Achille Lauro Ed Altri-Gestione, 937 F.2d 44, 51 (2d. Cir. 1991). "[T]he existence of an office in the state, the solicitation of business in the state, the presence of bank accounts and property in the state, and the presence of employees of the foreign defendant in the state" ( Hojfritz for Cutlery Inc. v. Amajac, Ltd., 763 F.2d 55, 57 (2d Cir. 1985)) are factors supporting a finding that a foreign corporation is "doing business" in the state.
Of these relevant contacts, Uniban has only one tie to New York — a New York bank account. Uniban is (1) a Colombian corporation, (2) with its principal place of business in Colombia, (3) with no office, employees, mailing address, telephone or facsimile number in New York, (4) who does not perform any advertising in the state and has never had a customer in the state, (5) with no agent for service of process in New York, and (6) with no registration to conduct business in the state. (Un. Mem. at 5). And, although Uniban has a New York bank account, "New York courts have consistently held that the maintenance of a local bank account does not, without more, amount to 'doing business' in the state." United Trading Co. S.A. v. M.V. Sakura Reefer et al., 95 Civ. 2846, 1996 U.S. Dist. LEXIS 9190, at *4-5 (S.D.N.Y. June 28, 1996) (citing cases). In order for a foreign corporation's local bank account to be sufficient to establish jurisdiction, the entity must utilize the bank account more than nominally, and/or must exert control over the account. For example, if the entity places substantially all of its income in the account, the account, alone, may be sufficient. See United Rope Distributors Inc. v. Kimberly Line, 770 F. Supp. 128, 133 (S.D.N.Y. 1991). However, if the company "could neither deposit nor withdraw money from the fund" and the "sole function of the New York account was to automatically deposit the monies into the overseas account," jurisdiction based solely on the account will likely be lacking. United Trading Co., 1996 U.S. Dist. LEXIS, at *5-6; See e.g., Landoil Resources v. Alexander, 77N.Y.2d28 (1990).
In this case, Uniban has two other North American bank accounts, both in Florida, from which it professes it "conduce[s] substantially all of its banking business, if any, in the United States." (Un. Mem. at 2). Uniban asserts that it utilizes its New York account "to receive payments for exports made from Colombia and to make payments for imports into Colombia" (Arango Decl. ¶ 5). Therefore, while it is clear that Uniban does not conduct all of its North American banking business from its New York account, at this early stage, it is uncertain what degree of control Uniban has over its New York account and further, how central this account is to Uniban's North American business. Therefore, because the existence of the New York account is sufficient to prove a prima facie case for jurisdiction over Uniban, or at least to warrant additional targeted discovery to reveal further information concerning the account, Uniban's motion to dismiss for lack of personal jurisdiction under § 301, is denied at this time. If discovery reveals that Uniban's bank account activity is insufficient, Uniban may again raise its jurisdictional objections.
While Cool also asserts that because Uniban and Turbana are so closely intertwined, this Court may exercise jurisdiction over Uniban, Cool fails to establish the basis for this Court's jurisdiction over Turbana. Nowhere does Cool assert that Turbana "does business" in New York. Therefore, at least with regard to § 301, this Court need not address the effect of Uniban's parent-subsidiary relationship with Turbana on Uniban's exposure to jurisdiction.
2. CPLR § 302
In addition to its general jurisdiction statute, New York has an alternate means of bringing parties into its courts — its long-arm statute, CPLR § 302. This section provides three additional ways by which New York courts can subject foreign entities to suit in the state: (1) if the individual or corporation transacts business within the state pursuant to § 302(a)(1), (2) if the individual or corporation commits a tortious act in the state, pursuant to § 302(a)(2), and (3) if the individual or corporation, even though outside the state, causes damage to persons or property within the state, pursuant to § 302(a)(3). Because this statute is not a general jurisdiction statute, and rather, holds parties responsible and confers jurisdiction in this state, solely based on particular contacts, the subject of the suit must arise out of the contact or contacts that create(s) jurisdiction.
Only three of the sub-sections are relevant to the facts as alleged by Turbana, so only those three are discussed herein.
Pursuant to § 302(a)(1), if an entity "transacts business within the state or contracts anywhere to supply goods or services in the state," a New York court may exercise jurisdiction over this entity, on a suit, arising out of the transaction. An entity is deemed to be "transacting business" in New York when he "purposefully avails [himself] of the privilege of conducting activities within [New York]." Cutco Industries, Inc. v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986). As the subject of this suit involves fruit shipped from Colombia to Connecticut, it fails to meet this test and jurisdiction is therefore lacking under § 302(a)(1).
Section 302(a)(2) allows New York to assert jurisdiction over an entity whom commits a tortious act in New York so long as the entity was present in New York when the tort occurred. See Launer v. Buena Vista Winery, Inc., 916 F. Supp. 204, 210 (E.D.N.Y. 1996). As the cargo damage that forms the basis of this suit is alleged to have occurred in Colombia, or at least during the voyage from Colombia to Bridgeport, which undisputedly did not traverse New York, Uniban did not commit a tortious act in New York, and therefore jurisdiction based on this provision is improper.
Finally, § 302(a)(3) provides jurisdiction over entities whom commit tortious acts outside of New York that cause injury to a person or property within New York. "The situs of the injury is the location of the original event which caused the injury, not the location where the resultant damages are subsequently felt by the plaintiff." Mareno v. Rowe, 910 F.2d 1043, 1046 (2d. Cir. 1990). Again, because any damage that occurred, happened aboard the Summer Meadow in Colombia, or during transport to Connecticut, and there was no effect on people or property in New York, this provision does not provide jurisdiction over Uniban. Cool's abject failure to provide any specific contacts between Uniban (or even Turbana) with New York, relating to this shipment, make the assertion of jurisdiction under New York's long arm statute difficult at best. Therefore, Uniban's motion to dismiss, with regard to § 302, is granted, and because discovery would serve no purpose ( see Norvel Ltd., et al. v. Ultein Propellar AS, et al., 161 F. Supp.2d 190, 208 (S.D.N.Y. 2001) (denying discovery when no prima facie showing was made because discovery "likely would result in a fishing expedition")), Cool's request for limited discovery, with regard to § 302 is denied. C. Jurisdiction Pursuant to Rules 4(k)(1)-(2)
1. Rule4(k)(1)
The bulge rule, Fed.R.Civ.P. 4(k)(1)(B), extends jurisdiction to any party served within 100 miles from the place from which the summons issues. The purpose of the bulge rule is to effectuate jurisdiction over third-parties, who would not otherwise be subject to the court's jurisdiction. See Quinones v. Pennsylvania Gen. Ins. Co., 804 F.2d 1167, 1173-78 (10th Cir. 1986). Cool asserts that in addition to serving Uniban in Colombia and in Florida, it served Uniban by personally serving Interoceanica Agency, Inc. ("Interoceanica") — Isabella's agent — in Bridgeport, Connecticut. Cool asserts that because Uniban founded Isabella, for purposes of transporting its bananas and plantains into North America, and Isabella "is represented by Interoceanica Agency" (Nord. Decl. ¶ 12), and most importantly, because Uniban construes itself as intertwined with Isabella and Interoceanica (Uniban's website page instructs viewers to "Contact Us" in North America at Interoceanica's address and phone number) (Nord. Decl. Exh. D)), this Court should overlook the formal differences between the entities, and exercise jurisdiction over Uniban as a result of bulge rule jurisdiction over Isabella. Although this Court is dubious about Cool's assertions regarding Uniban's failure to observe corporate formalities, and questions whether the evidence drawn from the companies' websites suffices, when construing Cool's arguments in the light most favorable to Cool, it is evident that Cool has either made out A prima facie showing of jurisdiction, or at least has asserted colorable claims sufficient to warrant limited discovery to, if possible, flesh out its claims. Therefore, Uniban's motion to dismiss on the basis of Rule 4(k)(1) is denied, and the parties are again directed to take jurisdictional discovery aimed at answering all necessary questions concerning the Uniban entities' corporate independence. 2. Rule4(k)(2)
Rule 4(k)(2) provides for jurisdiction over foreign defendants who, in a case arising under federal law, have insufficient contacts with any particular state, but have sufficient aggregate ties to the United States as a whole, to render jurisdiction constitutional. It is undisputed that as this case arises under admiralty and maritime law, it arises under federal law ( see Norvel Ltd. et al v. Ultein Propellar AS et al., 161 F. Supp.2d 190, 200 (S.D.N.Y. 2001) ("[a]dmiralty and maritime cases arise under federal law for purposes of Rule 4(k)(2)")), and that as Uniban conceded that it is not subject to jurisdiction in any state, the second prong is also met. Cool asserts that Uniban has extensive contacts with the United States as a result of its regular supply and shipment of bananas and plantains to the United States. Cool argues that Uniban "grows, packs, ships and markets more than 30% of the bananas grown in Colombia under the Turbana label" and "is the 4th largest importer of bananas and first importer of plantains in North America." (Cool Mem. at 7). In rebuttal, Uniban argues that Turbana, not Uniban, is responsible for these imports — Uniban simply grows the fruit. Uniban explains that 'Turbana takes title to the fruit in Colombia and markets the fruit in the United States under the Turbana label." (Uniban Reply Mem. at 1). Therefore, whether these significant contacts may be attributed to Uniban turns in large part on a determination of the degree to which Uniban and Turbana maintain separate and independent corporate identities — a determination that this Court cannot make without further information. Therefore, this Court finds that Cool has made a sufficient showing to meet the threshold necessary to establish a prima facie case of jurisdiction under Rule 4(k)(2), or at least to suggest that limited discovery could serve to complete any insufficiency in its showing.
As a result, Uniban's motion to dismiss based on this Court's lack of jurisdiction under Rule 4(k)(2) is denied. Limited discovery is directed to support Cool's assertions and to allow Uniban to raise its jurisdictional objections anew if such discovery proves Cool's assertions to be without merit.
D. Waiver of Jurisdictional Objections
Cool argues that Uniban contractually agreed to subject itself to suit in this district when it signed a contract with a forum selection clause that mandated that "[a]ll suits against the Carrier shall be brought in the United States District Court for the Southern District of New York . . ." (Nord. Decl. Exh. B). See Atlantic Mutual Ins. Co. v. M/V Humacao, 169 F. Supp.2d 211 (S.D.N.Y. 2001) ("It has long been settled that parties waive objections to personal jurisdiction if they agree to submit to the jurisdiction of a particular court."). While Uniban does not contest the validity of the forum selection clause, it contends that the clause only applies to suits against the Carrier (Nord. Decl. Exh. B. ¶ 19) ("All suits against the Carrier shall be brought in the United States District Court for the Southern District of New York, and the Carrier, by executing this Bill of Lading, accepts jurisdiction of that Court . . .")), and therefore, because Uniban was the Shipper not the Carrier, (Un. Reply Mem. at 7), it did not waive its jurisdictional objections through this clause. This Court agrees; therefore, Uniban's motion to dismiss, with regard to jurisdiction pursuant to the forum selection clause, is granted. Because this Court does not foresee what discovery would enable Cool to correct its pleading insufficiency with regard to this jurisdictional ground, Cool's request for discovery regarding contractual waiver is denied.
III. CONCLUSION
For the foregoing reasons, Uniban's motion to dismiss the third-party complaint is granted with respect to § 301 and the forum selection clause, and is denied with respect to jurisdiction under § 302 and Rules 4(k)(1) and (2). Limited discovery focusing on (1) Uniban's utilization of and control over its New York Citibank account, and (2) the intricacies of the corporate relationships between Uniban and its subsidiaries, will be completed by January 15, 2004. On or before January 15, the Court will have received a letter-brief of no more than five pages from both Uniban and Cool, setting out any additional information relevant to jurisdiction or to the challenge to jurisdiction, and will rule accordingly.
As explained at the onset, because the complaint does not assert any claims against Uniban, Uniban's motion to dismiss the complaint on grounds of lack of personal jurisdiction is denied.
IT IS SO ORDERED