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Hupp v. Accessory Distributors Inc.

Decided: May 4, 1984.

KEITH HUPP, PLAINTIFF-RESPONDENT,
v.
ACCESSORY DISTRIBUTORS, INC., A NEW YORK CORPORATION, DEFENDANT-THIRD PARTY PLAINTIFF-APPELLANT, V. ARAI HELMET, LTD., THIRD PARTY DEFENDANT-RESPONDENT



On appeal from the Superior Court, Law Division, Bergen County.

Ard, Morton I. Greenberg and Trautwein. The opinion of the court was delivered by Morton I. Greenberg, J.A.D.

Greenberg

Defendant Accessory Distributors, Inc. (ADI) appeals from an order for summary judgment in favor of plaintiff Keith Hupp in an action on a Hawaii judgment and an order dismissing its third party complaint against Arai Helmet, Ltd. The issues involved in this matter relate to the validity of the Hawaii judgment and Arai Helmet's liability to ADI for contribution and indemnification.

In 1967 ADI, a New York corporation with its principal place of business in New Jersey, at the request of Arai Hirotake Shoten Company, Ltd. (Arai Hirotake), a Japanese manufacturer of motorcycle helmets, processed documents for Arai Hirotake to ship 508 motorcycle helmets from Japan to a purchaser in Hawaii. ADI obtained payment, from which it retained a commission, for Arai Hirotake for the helmets. ADI has never conducted any other business related to Hawaii. Further ADI has never been authorized to do business, paid taxes, had an office or address, had a salesperson or agent or solicited business in Hawaii.

At some time prior to March 20, 1973 plaintiff purchased from a friend a used motorcycle helmet manufactured by Arai Hirotake. On March 20, 1973 plaintiff while riding his motorcycle and wearing this helmet was struck by a vehicle driven by Charles Hassard. The impact hurled plaintiff through the air at which time the helmet flew off. Plaintiff landed on his head suffering serious injuries.

On May 17, 1973 plaintiff filed a complaint in the Circuit Court of the First Circuit, State of Hawaii, seeking damages for his injuries from Arai Hirotake, ADI and other parties not germane to this appeal. ADI was served by service on the Hawaii Department of Regulatory Agencies and by mail at its New Jersey office. ADI sent the summons and complaint to its attorney in New York City who forwarded them to an insurance carrier ADI perceived to be responsible for its defense. As a consequence of a dispute between ADI and the carrier, no defense was entered and on March 18, 1974 default was entered against ADI. A default had previously been entered against Arai Hirotake which did not appear to defend this action.

On March 22, 1974 ADI filed a motion to set aside the default asserting its failure to answer the complaint was due to inadvertence or excusable neglect caused by the confusion surrounding its insurance coverage. ADI further maintained that the Hawaii court did not have jurisdiction over it and on the merits it was not liable to plaintiff. A certification in support of its motion set forth what ADI conceived to be a complete factual basis for its contention that it was not subject to the jurisdiction of the Hawaii court. By order dated May 29, 1974 the trial court without giving reasons or making findings of fact denied the motion to vacate. ADI appealed this order to the Intermediate Court of Appeals of Hawaii which affirmed the trial court on this point. See Hupp v. Accessory Distributors, Inc., 1 Hawaii App. 174, 616 P. 2d 233 (1980). The appellate court predicated its decision on a finding that ADI's neglect to defend was inexcusable and thus the trial judge did not abuse his discretion in failing to set aside the default. It made no finding that the Hawaii courts had jurisdiction over ADI. The Supreme Court of Hawaii denied certiorari. Following the completion of the appeals from ADI's efforts to vacate the default, a proof hearing was held in the Hawaii Circuit Court to ascertain plaintiff's damages. ADI but not Arai Hirotake participated at this hearing. On June 24, 1981 the court issued an order holding ADI and Arai Hirotake jointly

and severally liable for $617,410.19 plus costs and post-judgment interest.

On December 16, 1981 plaintiff filed a complaint in the Superior Court of New Jersey, Law Division, against ADI seeking to enforce the default judgment entered in Hawaii. This New Jersey action has led to this appeal. ADI answered asserting that the Hawaii court did not have personal jurisdiction over it and thus the court's judgment was not entitled to full faith and credit. ADI filed a third party complaint for contribution and indemnification against Arai Helmet, Ltd.*fn1 which it claimed was the successor in interest to Arai Hirotake. In its answer to this complaint Arai Helmet denied it was a successor in interest to Arai Hirotake. Thereafter Arai Helmet moved for summary judgment to dismiss the third party complaint. ADI opposed this motion arguing that Arai Helmet's motion was not ripe for decision since discovery might indicate that Arai Helmet is part of the integrated economic network of Arai Hirotake. The trial court denied Arai Helmet's motion for summary judgment.

ADI subsequently moved to amend its third party complaint to add Arai Hirotake as a third party defendant but in an order not appealed this motion was denied. ADI then filed an independent action for contribution and indemnification against Arai Hirotake. As far as we are aware this case is still pending in the trial court and in any event is not before us.

On November 24, 1982 plaintiff amended its Superior Court complaint by adding Arai Helmet as a direct defendant. Arai Helmet filed an answer to this amended complaint asserting that the Hawaii judgment was unenforceable against it because it was not the successor in interest to Arai Hirotake, the Hawaii court did not have jurisdiction over ...


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