Environamics v. Thelco CV-96-068-M 08/26/96 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

Environamics Corporation, Plaintiff

v. Civil No. C-96-68-M

Thelco Corp., Defendant.

O R D E R

Environamics Corporation brings this diversity action

against Thelco Corp., seeking to recover damages it sustained as

a result of Thelco's alleged breach of contract. Presently

before the court is Thelco's motion to dismiss for lack of

personal jurisdiction.

Background.

Environamics is a Delaware corporation, with a principal

place of business in Hudson, New Hampshire. It manufactures and

sells pumps and pump technology for use in industrial

applications, such as petrochemical plants, paper mills, and food

processing facilities. It manufactures its products exclusively

in New Hampshire and sells those products primarily through a

series of distributors located throughout the country. Thelco is a Colorado Corporation, with its principal offices in Englewood,

Colorado and Salt Lake City, Utah.

In the summer of 1994, Environamics and Thelco began

discussing the possibility entering into a distribution

agreement, under which Thelco would become the exclusive

distributor of Environamics products in a number of western

states (the "Agreement"). Allen LeBoeuf, the director of sales

and marketing for Environamics, visited Thelco's Colorado office

to explore Thelco's interest in the proposal and to examine its

facilities. Thereafter, negotiations between the parties

concerning the Agreement occurred by telephone, facsimile, mail,

and overnight courier.

On August 13, 1994, prior to signing the Agreement, Thelco

placed a blanket purchase order with Environamics for a number of

its products. Subseguently, on August 31, 1994, the parties

executed the Agreement, by which Thelco became an authorized

distributor of Environamics products in Colorado, Montana,

Wyoming, and Utah and portions of Nebraska, North Dakota, South

Dakota, Nevada, and Idaho. Environamics then shipped

approximately $147,000 worth of its products to Thelco. Although

2 Thelco made a partial payment for that shipment, an outstanding

balance of roughly $144,500 remains unpaid. Thelco's non-payment

for that shipment and its alleged breach of the Agreement form

the basis of this action.

The Agreement provides that it will remain in effect until

December 31, 1995, and annually thereafter, unless terminated in

accordance with its provisions. It also provides that Thelco

will dedicate a minimum of one "specialist" who will act as a

salesperson exclusively for the Environamics product line and who

will support Thelco's distribution sales force. Prior to

entering into the Agreement, Thelco representatives never visited

Environamics' facilities or entered the State of New Hampshire.

After executing the Agreement, however, Thelco sent

representatives to New Hampshire on two separate occasions

(October 24-27 and May 8-12), to attend seminars given by

Environamics designed to familiarize its distributors with the

product line and fundamentals of pump design, installation, and

operation.

Subseguently, on May 24, 1995, Thelco's president. Miles

Carson, sent a letter to Robert Rockwood, president of

3 Environamics, notifying him that "[i]t appears to us at Thelco

that the investment in time, sales and marketing effort necessary

to bring such a new and progressive design to market is more than

our small company can handle if in addition we are expected to

maintain a sizeable inventory." Accordingly, Mr. Carson proposed

that Thelco be permitted to continue as a distributor of

Environamics' products, but be relieved of the Agreement's

reguirement to pay for the inventory which it is reguired to

maintain (until, of course, that inventory is sold to a third

party). Alternatively, Mr. Carson proposed that Thelco terminate

its relationship with Environamics, ship the inventory back to

New Hampshire, and pay a five percent (5%) restocking charge. By

letter dated July 6, 1995, Environamics rejected both of Thelco's

proposals.

Standard of Review.

I. Generally.

It is well established that in a diversity case personal

jurisdiction over a nonresident defendant is governed, at least

in part, by the forum state's long-arm statute. Goldman,

Antonetti, Ferraiuoli, Axtmaver & Hertell, Partnership v. Medfit

Int'1, Inc.,

(1st Cir. 1993). And, when

4 personal jurisdiction is contested, the plaintiff bears the

burden of establishing that the court has such jurisdiction.

Kowalski v. Doherty, Wallace, Pillsburv & Murphy,

(1st Cir. 198 6).

Allegations of jurisdictional facts are construed in the

plaintiff's favor, Buckley v. Bourdon,

(D.N.H.

1988), and, if the court proceeds based upon the written

submissions of the parties without an evidentiary hearing, the

plaintiff need only make a prima facie showing that jurisdiction

exists. Kowalski,

; Boit v. Gar-Tec Products, Inc.,

(1st Cir. 1992). Nevertheless, the

plaintiff's demonstration of personal jurisdiction must be based

on specific facts set forth in the record in order to defeat a

defendant's motion to dismiss. And, "in reviewing the record

before it, a court 'may consider pleadings, affidavits, and other

evidentiary materials without converting the motion to dismiss to

a motion for summary judgment.1" VDI Technologies v. Price,

(D.N.H. 1991) (guoting Lex Computer & Management

Corp. v. Eslinqer & Pelton, B.C.,

(D.N.H.

1987))

5 Before a court may exercise personal jurisdiction over a

non-resident defendant, the plaintiff must show, first, that the

forum state's long-arm statute confers jurisdiction over the

defendant, and second, that the exercise of jurisdiction comports

with constitutional due process standards (by establishing that

the defendant has sufficient "minimum contacts" with the forum

state). Kowalski,

. New Hampshire's corporate

long-arm statute, N.H. RSA 293-A:15.10, authorizes jurisdiction

over foreign corporations to the full extent permitted by federal

law. McClarv v. Erie Engine & Mfg. Co.,

(D.N.H. 1994) Z

Stated another way. New Hampshire's corporate long-arm

statute is coextensive with the outer limits of due process

In McClarv v. Erie Engine & Mfg. Co.,

(D.N.H. 1994), this court (Devine, J.) held:

[T]he Legislature's elimination of the restrictive long-arm language contained in [the former statute] and its provision for the service of foreign corporations by mail demonstrate that it intended RSA 293-A:15.10 to authorize jurisdiction over foreign corporations to the full extent allowed by federal law. Because RSA 293-A:15.10 reaches to the federal limit, the traditional two-part personal jurisdiction inguiry collapses into the single guestion of whether the constitutional reguirements of due process have been met.

.

6 protection under the federal constitution. Accordingly, the

court's "proper inquiry . . . focuses on whether jurisdiction

comports with federal constitutional guarantees." McClarv,

supra, at 52 .

Before a court may exercise personal jurisdiction over a

foreign defendant in a manner consistent with the Constitution,

the plaintiff must demonstrate that the defendant has "certain

minimum contacts with the forum such that the maintenance of the

suit does not offend traditional notions of fair play and

substantial justice." Helicopteros Nacionales De Colombia, S.A.

v. Hall,

(1984) . And, before finding that a

defendant has such "minimum contacts," the court must be

satisfied that the defendant's conduct bears such a "substantial

connection with the forum state" that the defendant "should

reasonably anticipate being haled into court there." Burger King

Corp. v. Rudzewicz,

(1985) (citing World-

Wide Volkswagen Corp. v. Woodson,

(1980)).

II. General v. Specific Jurisdiction.

A court may exercise either general or specific jurisdiction

over a defendant. "General jurisdiction exists when the

7 litigation is not directly founded on the defendant's forum-based

contacts, but the defendant has nevertheless engaged in

continuous and systematic activity, unrelated to the suit, in the

forum state." United Elec. Workers v. 163 Pleasant Street Corp.,

, 1088 (1st Cir. 1992). Environamics does not

contend that Thelco engaged in "continuous and systematic

activity" in New Hampshire, nor does it ask the court to exercise

general jurisdiction over Thelco. So, if the court may properly

exercise personal jurisdiction over Thelco, it must be specific

jurisdiction.

A court may exercise specific jurisdiction when the cause of

action arises directly out of, or relates to, the defendant's

forum-based contacts. United Elec. Workers, 960 F.2d at 1088-89.

In an effort to assist district courts in determining whether

they might properly exercise specific jurisdiction, the Court of

Appeals has formulated a three-part test:

First, the claim underlying the litigation must directly arise out of, or relate to, the defendant's forum-state contacts. Second, the defendant's in-state activities must represent a purposeful availment of the privilege of conducting activities in the forum state, thereby invoking the benefits and protections of that state's laws and making the defendant's involuntary presence before the state's courts foreseeable. Third, the exercise of jurisdiction must, in light of the Gestalt factors, be reasonable.

United Elec. Workers, 960 F.2d at 1089.

Discussion.

Here, plaintiff claims and the court is satisfied that the

following factors, when viewed in their entirety, satisfy the

three-part jurisdictional inguiry outlined by the court of

appeals: (i) Thelco knowingly established a long-term contractual

relationship with a New Hampshire corporation, which it knew

manufactured and sold its products exclusively in and from New

Hampshire; (11) the Agreement expressly provides that it shall be

governed by, and interpreted in accordance with, the laws of New

Hampshire (See Burger King,

); (ill) Thelco

purposefully directed numerous telephone, facsimile, and mail

communications to Environamics and into the State of New

Hampshire (See Burger King,

; Sawtelle v. Farrell,

(1st Cir. 1995)); (iv) the Agreement

provides that Thelco will take shipment of all Environamics

products freight on board ("FOB") Hudson, New Hampshire and that

Thelco will assume all responsibility for losses and/or damage

that might occur during shipping (essentially, then, Thelco took possession of all Environamics products it ordered in New

Hampshire); (v) payments to Environamics under the Agreement are

to be directed to its office in New Hampshire (See Ganis Corp. of

California v. Jackson,

(1st Cir. 1987)); (vi)

Thelco placed a purchase order for, and took shipment (FOB

Hudson, New Hampshire) of, over $140,000 worth of Environamics

products which were manufactured in New Hampshire; and (vii)

Thelco sent four of its representatives to New Hampshire on two

separate occasions to attend a series of multiple-day training

seminars conducted by Environamics for the benefit of its

distributors, and for the purpose of facilitating performance of

its (Thelco's) contractual obligations.

Based upon the foregoing, it is clear that Thelco knowingly

and purposefully availed itself of the privilege of conducting

business in New Hampshire. United Elec. Workers, 960 F.2d at

1089-90. It is egually plain that this litigation (to enforce

Thelco's obligations under the Agreement) arises from or relates

to Thelco's contacts with this state. I_d. Finally, in light of

all of the factors discussed above, the exercise of bn personam

jurisdiction over Thelco is reasonable. See Donatelli v.

National Hockey League,

(1st Cir. 1990)

10 (discussing the so-called "Gestalt factors" which a court should

consider when determining whether the exercise of personal

jurisdiction is appropriate).

In short, Environamics has made a prima facie showing that

Thelco's conduct bears a sufficiently substantial connection with

New Hampshire that it should reasonably have anticipated being

haled into court in this forum to answer for its alleged breach

of the Agreement. Thelco has established sufficient "minimum

contacts with [New Hampshire] that the maintenance of the suit

does not offend traditional notions of fair play and substantial

justice," Helicopteros Nacionales De Colombia,

,

and therefore, the exercise of personal jurisdiction over Thelco

comports with constitutional due process standards.

Conclusion.

For the foregoing reasons, the court holds that it may,

consistent with constitutional reguirements of due process and

fundamental notions of justice and fairness, exercise bn personam

jurisdiction over Thelco. Accordingly, Thelco's motion to

dismiss (document no. 6) is denied.

11 SO ORDERED.

Steven J. McAuliffe United States District Judge

August 26, 1996

cc: Christopher Cole, Esg. Daniel P. Schwarz, Esg. Ellen F. McCauley, Esg. Laurin D. Quiat, Esg.

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