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United Linen Wholesale, L.L.C. v. Northwest Co.

July 26, 2007

UNITED LINEN WHOLESALE, L.L.C.,, PLAINTIFF,
v.
THE NORTHWEST COMPANY, DEFENDANT.



The opinion of the court was delivered by: Hon. Dennis M. Cavanaugh

OPINION

DENNIS M. CAVANAUGH, U.S.D.J.

This matter comes before the Court upon Plaintiff United Linen Wholesale, L.L.C.'s ("Plaintiff" or "ULW") motion for entry of final judgment and upon cross-motion by The Northwest Company ("Defendant" or "Northwest") to dismiss Plaintiff's Complaint or, in the alternative, to vacate the default entered in Plaintiff's favor and allow Defendant to answer Plaintiff's Complaint. This Court entertained no oral argument pursuant to Fed R. Civ. P. 78. For the reasons stated below, the Plaintiff's motion for entry of final judgment is denied, and the Defendant's motion to dismiss is denied, and the Defendant's motion to vacate the entry of default is granted.

I. BACKGROUND

Defendant Northwest is a North Carolina corporation which manufactures home textile products, such as licensed comforters, pillows, throws and bedding bearing the recognized brands and logos of the National Football League and Disney, for example. Northwest's corporate offices are located in Roslyn, New York and its showroom is in New York City. Plaintiff ULW is a limited liability company located in Elmwood Park, New Jersey. ULW is in the business of obtaining and selling licensed items, such as those manufactured by Northwest.

In April 2006, Defendants sold Plaintiff its licensed blankets, comforters and bedding. Plaintiff claims that the Defendant agreed that only Plaintiff would be the exclusive buyer of the products which Plaintiff purchased from Defendant. After the exchange of several payments for the shipments of the merchandise, an issue arose regarding the exclusivity of the agreement and quality of the products.

On December 12, 2006, Plaintiff filed a Complaint alleging causes of action for Breach of Contract, Breach of the Covenant of Good Faith and Fair Dealing, Material Misrepresentation, Breach of Fiduciary Duty, Unjust Enrichment, Breach of Contract/Constructive Discharge from Contract and Intentional Infliction of Emotional Distress. Plaintiff requested a default against Defendant for failure to answer or otherwise respond to Plaintiff's Complaint on January 20, 2007. The Clerk of this Court entered a default against Defendant on January 22, 2007.

Plaintiff filed a Motion for Entry of Final Judgment on January 26, 2007. Defendant filed a cross-motion to dismiss for lack of personal jurisdiction or, in the alternative, to grant Defendant leave to file an Answer out of time.

II. DISCUSSION

Personal Jurisdiction

On a motion to dismiss for lack of personal jurisdiction, "the plaintiff bears the burden to prove, by a preponderance of the evidence, facts sufficient to establish jurisdiction." Carteret Sav. Bank, FA v. Shushan, 954 F.2d 141, 146 (3d Cir. 1992). Defendant argues that Plaintiff cannot make the requisite showing because Defendant has insufficient contacts with New Jersey to subject it to jurisdiction. Plaintiff disagrees and asserts that this Court should exercise personal jurisdiction over Defendant because Defendant, through its conduct and actions, has purposely availed itself of the privileges, benefits and protections of the forum state and thus it is not unreasonable to require the Defendant to submit to litigation in New Jersey.

Pursuant to Fed. R. Civ. P. 4(e), "district courts have personal jurisdiction over non-resident defendants to the extent authorized under the law of the forum state in which the district court sits." Fed. R. Civ. P. 4(e) (2007); Sunbelt Corp. v. Noble, Denton & Assocs., 5 F.3d 28, 31 (3d Cir. 1993). New Jersey's long-arm statute permits the exercise of personal jurisdiction over a non-resident defendant to the full extent permitted by the Due Process Clause of the Fourteenth Amendment of the Constitution. See N.J. Sup. Ct. R. 4:4-4(c)(1); see also DeJames v. Magnificence Carriers, Inc., 654 F.2d 280, 284 (3d Cir. 1981). Accordingly, the question of whether a court has personal jurisdiction over a defendant is determined by federal constitutional law. See IMO Indus. v. Kiekert AG, 155 F.3d 254, 259 (3d Cir. 1998).

"Due process requires that the defendant have 'minimum contacts' in the forum state, and that the exercise of jurisdiction comport with 'traditional notions of fair play and substantial justice.'" Remick v. Manfredy, 238 F.3d 248, 255 (3d Cir. 2001) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). "[M]inimum contacts must have a basis in 'some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.'" Id. (quoting Asahi Metal Indus. Co., Ltd. v. Superior Court of California, 480 U.S. 102, 109 (1987) (citation omitted)).

Minimum contacts can be satisfied in two ways: specific or general. See Eaton Corp. v. Maslym Holding Co., 929 F. Supp. 792, 796 (D.N.J. 1996) ("Personal jurisdiction can be found where there exists general or specific jurisdiction over a defendant or defendants."). To satisfy the Due Process Clause of the Fourteenth Amendment, however, both general and specific jurisdiction require "the defendant's conduct and connection with the forum State [to be] such that he ...


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