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September 23, 1981

ALCHEMIE INTERNATIONAL, INC., a New Jersey Corporation, Plaintiff,
METAL WORLD, INC., a Missouri Corporation, Defendant

The opinion of the court was delivered by: LACEY

This is a breach-of-contract action brought by Alchemie International, Inc. (Alchemie), a New Jersey corporation, against Metal World, Inc. (Metal World), a Missouri corporation with its principal place of business in East St. Louis, Illinois. Metal World brings the present motion to dismiss the complaint for lack of in personam jurisdiction. For the reasons set forth below, this motion will be denied.


 In brief, the complaint alleges that on February 15, 1980, Alchemie and Metal World executed a contract under which Metal World agreed to sell and Alchemie agreed to buy approximately 34,993 pounds of molybdenum oxide material containing not less than 58.14% molybdenum oxide and no more than certain amounts of specified impurities. The purchase price was $ 275,683.59, F.O.B. East St. Louis. Among other conditions precedent to the sale, Metal World was to produce a certificate of analysis and weight from Ledoux and Company (Ledoux), a New Jersey firm. The complaint charges that Alchemie has performed its obligations under the agreement, including payment of the purchase price, but that Metal World's tendered molybdenum oxide materially breached the contract because it failed to meet the agreed upon quality and quantity specifications. Plaintiff asserts that it timely rejected (or revoked acceptance of) the material tendered by Metal World, and it now seeks the purchase price, "additional direct costs," and attorneys fees.

 In support of its motion to dismiss, Metal World has submitted the affidavits of its president, Richard Becker, and its vice-president, Stanley Plocker. In opposition, Alchemie has put in the affidavits of Kevin McKenna, its president, Thomas Primavera, its counsel, and Samuel Ardinto, an employee of another New Jersey molybdenum purchaser, who asserts that his company has had certain dealings with Metal World in the past.

 The facts on which there is no dispute are as follows. Prior to the February 15, 1980, contract at issue here, there had been an earlier agreement between the parties in January 1980 that had been performed to the satisfaction of both Alchemie and Metal World. McKenna admits that he cannot recall who initiated the first contact that led to this agreement. Affidavit of Kevin D. McKenna P 3 (Mar. 30, 1981) (hereinafter McKenna Affidavit). The contract, similar to the one underlying the present action, was prepared in Alchemie's offices in New Jersey and mailed to defendant in Illinois. Id.

 Shortly after the initial contract, McKenna was contacted by Plocker, who offered a second shipment of molybdenum oxide; this offer became the basis of the February 15, 1981, agreement on which Alchemie now sues. Id. P 5. The contract was again prepared by McKenna in New Jersey and mailed to Plocker, presumably in Illinois. See id. In addition to the terms related above, the contract provided that payment would be made following presentation of the certification of weight and analysis from Ledoux, id. P 6, and that the contract would be construed in accordance with the laws of New Jersey, id. P 3. *fn1"

 The analysis was duly performed by Ledoux in New Jersey. Id. P 6. Following receipt of proper documentation, Alchemie directed its bank, located in New Jersey, to satisfy the Metal World invoice by direct wire transfer. Alchemie asserts that all funds used to satisfy the invoice originated in New Jersey, id. PP 4, 7; this point is, however, apparently disputed by Metal World. See note 36 infra.

 Immediately following consummation of its contract with Metal World, Alchemie sold the molybdenum oxide to Treibacher, USA in New York, which in turn sold it to North American Metallurgical Corp. in New Jersey, which sold it to Washington Steel Corp. in Pennsylvania, which ultimately rejected the material for failure to comply with the Ledoux certificate. Id. P 8. Metal World asserts, without contradiction, that none of the molybdenum oxide tendered to Alchemie ever entered New Jersey. Affidavit of Stanley J. Plocker P 3 (Mar. 16, 1981) (hereinafter Plocker Affidavit).

 Metal World admits, in connection with this transaction, "the mailing of certain papers to the District (of New Jersey) and certain telephone conversations to or from the District." Id. P 4. However, it insists, "At no time did any representative of Metal World, Inc. enter the State of New Jersey in connection with this transaction." Id. P 3. Metal World's sole place of business is in East St. Louis and "it maintains no offices or personnel in New Jersey, nor does it conduct any active form of business within that District." Id. P 2.

 In addition to the foregoing, plaintiff makes several assertions, two of which Metal World disputes. First, Alchemie states that it first learned of Metal World from Associated Cargo of New Jersey (Associated), which was apparently engaged in certain assaying work for Metal World. McKenna Affidavit P 2. From this, Alchemie argues that Associated may be an agent of Metal World. Plaintiff's Brief at 1. Metal World strenuously disputes this characterization, stating that it knew of Associated as Associated Cargo Service Co., Ltd., of New York, and that although Metal World first learned of Alchemie from representatives of Associated, Associated "is not authorized to solicit business or otherwise act for Metal World, Inc." Affidavit of Richard Becker P 4 (Apr. 15, 1981) (hereinafter Becker Affidavit).

 Second, Alchemie contends that Ledoux and Company is also an agent of Metal World, "at least for this transaction." Plaintiff's Brief at 2, 6. Metal World admits that it has had dealings with Ledoux, but asserts that these all took place with Ledoux' Illinois agent, in Illinois. Affidavit of Stanley J. Plocker P 2 (Apr. 15, 1981) (hereinafter Second Plocker Affidavit). Metal World does admit, however, sending checks for Ledoux' services to Ledoux' New Jersey office, id. P 3, although Metal World also contends that the Ledoux analysis was made prior to initiation of the present transaction with Alchemie. Defendant's Reply Brief at 3. In addition, Metal World flatly states that Ledoux "is not an agent of Metal World, Inc. It is not authorized to solicit business or otherwise act for Metal World, Inc." Second Plocker Affidavit P 5.

 Finally, neither the Ardinto nor Primavera affidavit is contested by Metal World. The affidavit of Samuel Ardinto indicates that during 1978 and 1979, while working for M & R Refractory Metals (M & R), a New Jersey corporation, he had "several contacts" with Metal World which resulted in M & R purchasing molybdenum from Metal World. Affidavit of Samuel Ardinto P 2 (May 8, 1981) (hereinafter Ardinto Affidavit). A subsequent check of M & R's records shows that the sales were actually through third parties, one of which was a domiciliary of Colorado, another a domiciliary of Florida. Id. P 3.


 Under rule 4 of the Federal Rules of Civil Procedure, the propriety of service of process in this diversity action, and thus the validity of in personam jurisdiction, is determined by looking to the law of the State of New Jersey. Fed.R.Civ.P. 4(d)(7), 4(e). *fn2" Bernardi Bros. v. Pride Manufacturing, Inc., 427 F.2d 297, 298-99 (3d Cir. 1970); W. A. Kraft Corp. v. Terrace on the Park, Inc., 337 F. Supp. 206, 206-07 (D.N.J.1972). See Thos. P. Gonzalez Corp. v. Consejo Nacional de Produccion de Costa Rica, 614 F.2d 1247, 1250 (9th Cir. 1980); Lakeside Bridge & Steel Co. v. Mountain State Construction Co., 597 F.2d 596, 598 (7th Cir. 1979), cert. denied, 445 U.S. 907, 100 S. Ct. 1087, 63 L. Ed. 2d 325 (1980); Washington v. Norton Manufacturing, Inc., 588 F.2d 441, 444 (5th Cir.), cert. denied, 442 U.S. 942, 99 S. Ct. 2886, 61 L. Ed. 2d 313 (1979); Arrowsmith v. UPI, 320 F.2d 219, 223 (2d Cir. 1963); 2 Moore's Federal Practice §§ 4.32(1), at 4-342 n.2, 4.32(2), at 4-351 to -52, 4.41-1(1), at 4-424 to -25 (perm.rev.ed.1980); 4 C. Wright & A. Miller, Federal Practice and Procedure § 1075, at 309, 313-14 (1969). Rule 4:4-4(c)(1) of the New Jersey Civil Practice Rules *fn3" permits service on nonresident defendants "to the uttermost limits permitted by the United States Constitution," Avdel Corp. v. Mecure, 58 N.J. 264, 268, 277 A.2d 207 (1971); thus the State's long-arm rule is limited only by the due process constraints of the fourteenth amendment. DeJames v. Magnificence Carriers, Inc., 654 F.2d 280 at 283-84 (3d Cir. 1981). Whether this court's exertion of jurisdiction over the person of defendant would exceed these bounds is, of course, a question of federal law, and state authorities are not controlling. Woods v. Holy Cross Hospital, 591 F.2d 1164, 1171 (5th Cir. 1979); Scanapico v. Richmond, F. & P. R. Co., 439 F.2d 17, 19 (2d Cir. 1970); Partin v. Michaels Art Bronze Co., 202 F.2d 541, 543 (3d Cir. 1953).

  The starting point for this constitutional inquiry is International Shoe Co. v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945), in which the Supreme Court announced that

due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend "traditional notions of fair play and substantial justice."

 Id. at 316, 66 S. Ct. at 158 (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S. Ct. 339, 342, 85 L. Ed. 278 (1940)). *fn4" General principles aside, however, International Shoe is of little help resolving individual questions of jurisdiction, *fn5" except insofar as it jettisoned earlier theories of constructive presence and implied consent for determining personal jurisdiction *fn6" and as it suggested application of different standards, qualitatively and quantitatively, depending on whether an asserted claim is "contact" related.

 Of greater aid here is McGee v. International Life Insurance Co., 355 U.S. 220, 78 S. Ct. 199, 2 L. Ed. 2d 223 (1957). In McGee a nonresident insurance company mailed a reinsurance certificate to a California resident in California and offered to continue his insurance. The California resident accepted the offer and thenceforth mailed his premiums from California to the defendant in Texas. On these facts the Supreme Court held that the insurance contract between the parties had "substantial connection" with California so as to render the insurance company which had no other contact with California subject to jurisdiction in that state:

It is sufficient for purposes of due process that the suit was based on a contract which had a substantial connection with that State.... The contract was delivered in California, the premiums were mailed there and the insured was a resident of that State when he died. It cannot be denied that California has a manifest interest in providing effective means of redress for its residents when their insurers refuse to pay claims.

 The broad scope of in personam jurisdiction augured by McGee is not unlimited, however. Later the same Term the Court announced in Hanson v. Denckla, 357 U.S. 235, 251, 78 S. Ct. 1228, 1238, 2 L. Ed. 2d 1283 (1958), that "it is a mistake to assume that this trend heralds the eventual demise of all restrictions on the personal jurisdiction of state courts." First, the Court stated, the due process restrictions on personal jurisdiction "are more than a guarantee of immunity from inconvenient or distant litigation. They are a consequence of territorial limitations on the power of the respective States." Id. *fn8" The Court then emphasized that

(h)owever minimal the burden of defending in a foreign tribunal, a defendant may not be called upon to do so unless he has had the "minimal contacts" with that State that are a prerequisite to its exercise of power over him....
... The unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State. The application of that rule will vary with the quality and nature of the defendant's activity, but it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of ...

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