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Tyler Stein and Harriet Stein v. Sam's East

SUPERIOR COURT OF NEW JERSEY APPELLATE DIVISION


December 13, 2010

TYLER STEIN AND HARRIET STEIN, PLAINTIFF-APPELLANTS,
v.
SAM'S EAST, INC.*FN1 , AND TRUE SEATING CONCEPTS, LLC, DEFENDANTS-RESPONDENTS, AND CTS PRODUCTS, INC., DEFENDANT.

On appeal from Superior Court of New Jersey, Law Division, Mercer County, Docket No. L-713-05.

Per curiam.

NOT FOR PUBLICATION WITHOUT THE APPROVAL OF THE APPELLATE DIVISION

Argued September 29, 2010

Before Judges Fuentes, Gilroy and Ashrafi.

Plaintiffs Tyler and Harriet Stein appeal from an order of the Law Division dismissing their complaint against defendant True Seating Concepts, LLC, for lack of personal jurisdiction, and an order dismissing their claims against defendant Sam's East, Inc. (Sam's Club) by summary judgment. We reverse.

I.

In April 2003, on his last day at work before retirement, plaintiff Tyler Stein was injured when the base of an office chair "snapped in two" and he fell to the floor. After obtaining an expert engineering report concluding that the chair was defective, plaintiff and his wife*fn2 brought a products liability lawsuit in March 2005 against Sam's Club as the alleged seller, CTS Products, Inc. as the alleged distributor, and a fictitiously-named defendant as the alleged manufacturer of the chair. Plaintiff eventually learned that CTS Products, Inc. had been dissolved, and the claims against that defendant were dismissed under Rule 1:13-7 for lack of prosecution.

After service of process upon Sam's Club, the case was delayed for about two years because of entry and later vacating of default. Sam's Club eventually filed an answer in April 2007. Discovery ensued. More than a year later, in July 2008, the attorney for Sam's Club wrote to plaintiff's attorney stating that the manufacturer of the chair was True Seating Concepts c/o True North America, a company with an address in California.

Plaintiff immediately moved for and obtained leave of the court to amend the complaint to substitute True Seating Concepts, Inc. for the fictitiously-named manufacturer of the chair. An amended complaint was filed in September 2008. In January 2009, it was served upon the registered agent of True North America, Inc. in Delaware.

Further delays occurred because of default and later vacating of default of the newly-named defendant. Eventually, True Seating Concepts, LLC (True Seating) filed an answer in May 2009. Subsequently, the attorney for Sam's Club wrote another letter recanting the prior identification of True Seating as the manufacturer. In July 2009, True Seating filed a motion to dismiss the complaint against it for lack of personal jurisdiction, both because it had no contacts with the State of New Jersey and because service of process was allegedly defective. The trial court granted the motion on August 28, 2009.

Sam's Club then filed a motion for summary judgment asserting that plaintiff lacked evidence that it was the seller of the chair that collapsed. The trial court heard argument and granted summary judgment to Sam's Club on October 9, 2009.

On appeal from the two dismissal orders, plaintiff argues that the Law Division improperly made findings of fact that are in dispute and that it erred legally in concluding that the court lacked personal jurisdiction over True Seating.

II.

Viewed most favorably to plaintiff, see R. 4:46-2(c); Brill v. Guardian Life Ins. Co. of Am., 142 N.J. 520, 540 (1995), the evidence presented in the summary judgment motion of Sam's Club showed the following facts regarding the accident and the seller of the chair.

Plaintiff was employed as a manager by Action Resources, Inc., a company that did maintenance work and cleaning services for government-owned and commercial buildings. The owner of the company was Joel Meyers. At the time of the accident, plaintiff was sixty-two years old and weighed about 220 pounds.

According to plaintiff's deposition testimony, Meyers had purchased an office chair for plaintiff's use about one and a half years before the April 11, 2003 accident. The chair had been delivered in a sealed box. It required minor assembly, which Meyers completed. It was a black, high-backed, swivel chair, and it had arms, a pedestal, and castors. Plaintiff visually inspected or cleaned the chair from time to time, and he never had any problems with it until the day of the accident.

At the time of the accident, plaintiff was seated in the chair speaking to two co-employees. He pushed the chair away from his desk and turned to one side to get some supplies from a closet. At that moment, the chair broke, and plaintiff fell to the floor. He alleges he suffered serious injuries to his arm, shoulder, knee, and back.

Meyers, who was working nearby, heard a thump and immediately came to the scene. In his appellate brief, plaintiff alleges Meyers remarked that he had purchased the chair at Sam's Club. We have not found this allegation in the evidentiary record presented to the trial judge in the motion for summary judgment.

In his deposition, Meyers testified that he could not remember making such a remark, but he did not deny that he could have. He testified that he was not certain whether he had purchased the chair at Sam's Club. He testified further that there were ten to twelve chairs in the office, and he believed he had purchased two office chairs at separate times from Sam's Club in the late 1990s. He estimated a two-to-one chance that he had purchased the chair that broke at Sam's Club.

Records of Meyers' purchases from Sam's Club showed that two "grey executive chair[s]" were purchased on the same date, March 11, 1998, for $199.98. No other purchases of office chairs were noted on the purchase record.

The trial court ruled that plaintiff lacked sufficient evidence for a jury to determine that Sam's Club was the seller of the chair that collapsed. In its oral decision of October 9, 2009, the court commented that plaintiff should have identified the seller by the time of the motion, which was more than six years after the accident. It believed that the jury would have to guess about whether the subject chair was one of the ones that Meyers had purchased from Sam's Club. The court said: "At best, what I see here is two out of twelve chairs were purchased at Sam's Club and there's no identification of the chair that was involved in this accident with Sam's Club." The court concluded that the evidence did not present a genuine issue of material fact for the jury to decide and granted summary judgment dismissing plaintiff's claims against Sam's Club.

On appeal, our standard of review from a granting of summary judgment is plenary. Because we review the same record as the trial court, we must determine for ourselves, without deference to the trial court's ruling, whether disputed issues of fact exist for determination by a jury. See Prudential Prop. & Cas. Ins. Co. v. Boylan, 307 N.J. Super. 162, 167 (App. Div.), certif. denied, 154 N.J. 608 (1998). We must "consider whether the competent evidential materials presented, when viewed in the light most favorable to the non-moving party, are sufficient to permit a rational factfinder to resolve the alleged disputed issue in favor of the non-moving party." Brill, supra, 142 N.J. at 540.

To determine whether an issue is "genuine" under the Brill standard for summary judgment, the court takes into consideration the applicable burden of persuasion as to that issue. Id. at 536, 540. Here, plaintiff bears the burden of proving by a preponderance of the evidence that Sam's Club sold the subject chair. The disputed factual issue is whether, based on the evidence, it is more likely than not that the chair was purchased at Sam's Club. See Model Jury Charge (Civil), 1.12(H), "Preponderance of the Evidence" (1998).

We conclude that plaintiff presented sufficient evidence to avoid summary judgment in favor of Sam's Club on that issue.

The only label or marking on the chair itself said:

Distributed by CTS Products Inc

Cerritos CA USA 90703 Made in Taiwan Date of Delivery Dec. 1997

In the course of discovery, counsel for Sam's Club identified True Seating Concepts c/o True North America of Irvine, California, as the manufacturer of the chair, possibly in an effort to absolve Sam's Club of potential strict liability if the chair were determined to have been defective. See N.J.S.A. 2A:58C-9.*fn3 Later, counsel for Sam's Club retracted the information contained in the July 2008 letter, now stating that True Seating appears to have been the distributor but that the manufacturer was unidentified.

Despite uncertainty about the origins of the chair, plaintiff's employer, Meyers, had a recollection of purchasing two office chairs from Sam's Club in the 1990s, and the records of Sam's Club showed that two chairs that generally fit the description of the broken chair were purchased in March 1998. While the date did not match plaintiff's recollection that his chair was delivered about one and a half years before the 2003 accident, and the color was not a match, the purchase date shown on the Sam's Club record was consistent with a delivery date shown on the label of the chair itself, and the distinction between gray and black could possibly be explained as a minor discrepancy.

Meyers also testified in deposition that he had about ten or twelve chairs in the office, and that other chairs were purchased as part of the assets of several cleaning businesses that he had acquired over the years. If the jury credited plaintiff's testimony that the chair that broke was delivered new to the office in a sealed box, it was unlikely that it was one that was acquired along with other furniture of another business. Therefore, the trial judge understated the chance that the chair was actually purchased at Sam's Club when he estimated the odds at about two out of twelve.

Plaintiff contends that Meyers' alleged remark immediately upon seeing the accident - that he purchased the chair at Sam's Club - is admissible in evidence as an excited utterance under N.J.R.E. 803(c)(2). The trial court did not rule upon or consider that proffered evidence because plaintiff did not present it as part of the summary judgment record. Had plaintiff proffered evidence of the remark in proper form, see R. 1:6-6, and established its admissibility, that evidence would also point to Sam's Club as the seller. Without an adequate evidential record, we disregard plaintiff's claim that the alleged remark should have been considered by the trial court. Nevertheless, even without remembering his alleged remark at the time of the accident, Meyers assigned a "two to one" chance that he had purchased the chair at Sam's Club, in other words, a sixty-seven percent chance.

The totality of plaintiff's evidence permits a jury to determine that it is more likely than not that Sam's Club was the seller of the chair. If credited by the jury, the evidence is sufficient to meet plaintiff's burden of proof. It does not call for mere guessing or speculation by the jury.

For these reasons, the order of October 9, 2009, granting summary judgment to Sam's Club is reversed, and plaintiff's complaint reinstated and remanded for trial against that defendant.

III.

True Seating moved to dismiss the complaint for lack of personal jurisdiction and defective service of process. Through a certification of its representative, True Seating averred that it was a Chinese corporation that manufactured office furniture in Hong Kong, but that it conducted no business in New Jersey, did not own any assets in this State, and had no other contacts with New Jersey. It also argued that plaintiff lacked any evidence that it had actually manufactured the subject chair, and its own investigation did not find any such evidence.

True Seating identified two other corporate entities as the past and current distributors of its products in the United States - True Seating Concepts, Inc., which is no longer in existence, and True North America, Inc., its current distributor located in Irvine, California. It contended that service of process upon the registered agent of True North America, Inc. in Delaware was not effective service upon True Seating as the alleged manufacturer. The trial court agreed with True Seating's arguments.

In a products liability action, the courts of New Jersey have personal jurisdiction over the foreign manufacturer of a product under a stream of commerce theory of contacts with New Jersey. See Nicastro v. McIntyre Machinery America, Ltd., 201 N.J. 48, 73, cert. granted, ___ U.S. ___, ___ S. Ct. ___, 177 L. Ed. 2d 1151 (2010). Even if a foreign corporation does no business in this State, we do "not exceed [our] powers under the Due Process Clause if [we] assert[] personal jurisdiction over a corporation that delivers its products into the stream of commerce with the expectation that they will be purchased by consumers in the forum state." Charles Gendler & Co. v. Telecom Equip. Corp., 102 N.J. 460, 475 (1986).

After a defendant presents evidence to show that it has no business presence or other general contacts with New Jersey, the plaintiff bears the burden of producing contrary evidence to establish the court's personal jurisdiction over the defendant. See Citibank, N.A. v. Estate of Simpson, 290 N.J. Super. 519, 533 (App. Div. 1996). In this case, plaintiff has focused on proving personal jurisdiction over True Seating as the manufacturer of the chair sold in New Jersey, not based on other contacts. The trial court seemed to rule that plaintiff was required to identify the manufacturer with certainty to establish personal jurisdiction. Plaintiff informally sought an opportunity for jurisdictional discovery at the time of oral argument on the motion to dismiss, but the trial court rejected that request.

True Seating acknowledges that our standard of review is plenary from a motion to dismiss for absence of personal jurisdiction. See Mastondrea v. Occidental Hotels Mgmt. S.A., 391 N.J. Super. 261, 268 (App. Div. 2007). It argues that we should defer to the trial court's findings of fact under the standard established in Rova Farms Resort, Inc. v. Investors Ins. Co. of Am., 65 N.J. 474, 484 (1974). However, the issue of jurisdiction in this case, and the trial court's ruling, did not include findings of fact pertaining to disputed evidence.

Plaintiff acknowledged that he lacked sufficient evidence at the time of the motion to prove that True Seating was the manufacturer and subject to personal jurisdiction in New Jersey under the stream of commerce theory. The trial court denied plaintiff any further opportunity to conduct discovery because some six years had passed since the accident and some four years since plaintiff filed his complaint. But because the only entity identified on a label on the chair was no longer in existence, plaintiff could not learn the identity of the manufacturer until other defendants were engaged in litigation and subject to discovery.

Plaintiff had much less time than four years to conduct the discovery needed to learn the identity of the manufacturer. Both defendants defaulted upon initial service of the pleadings and did not engage in active litigation until months after service of the pleadings upon them. Sam's Club did not file an answer until April 2007, and it did not identify the manufacturer until its attorney's letter of July 2008. True Seating did not file its answer until May 21, 2009. Just seventy days later, True Seating moved to dismiss the complaint, and the court granted that motion a month later. Thus, plaintiff had only about fifteen months of discovery time through Sam's Club, and less than three months with True Seating.

We do not have a sufficient record of what discovery efforts plaintiff made in the time available, and the trial court did not make specific findings of fact with respect to discovery. While plaintiff appears to have been lax in pursuing discovery to establish the identity of the manufacturer, the trial court's view of a six-year opportunity was not supported by the record.

True Seating argues that the trial court has broad discretion to make discovery rulings, including jurisdictional discovery. See Central States, Southeast & Southwest Pension Fund v. Reimer Express World Corp., 230 F.3d 934, 946 (7th Cir. 2000), cert. denied, 532 U.S. 943, 121 S. Ct. 1406, 149 L.Ed. 2d 348 (2001). While we agree that abuse of discretion is generally the standard of review for discovery rulings, see Payton v. N.J. Tpk. Auth., 148 N.J. 524, 559 (1997), we think that less than three months to seek discovery from a newly-identified and engaged defendant in litigation is not sufficient time in the circumstances presented. The trial court should have allowed some limited jurisdictional discovery to determine whether True Seating has sufficient contacts with New Jersey, in particular, whether it manufactured the subject chair and placed it in the stream of commerce for sale to a customer in New Jersey.

We also conclude that plaintiff should have been given the opportunity to conduct discovery to help determine whether service of process upon the registered agent of True North America, Inc. was effective service upon True Seating Concepts, LLC. Although service of process on one corporate entity may not be sufficient to effect service on a related corporate entity, see Gapanovich v. Komori Corp., 255 N.J. Super. 607, 612 (App. Div. 1992), plaintiff had no opportunity to determine the relationship between the two entities. Furthermore, if the manufacturer was not subject to suit in the United States, plaintiff may have wished to proceed against True North America, Inc. as the distributor of the allegedly defective chair.

True North America, Inc. was properly served through its registered agent in Delaware. Because that corporate entity did not answer or respond to the summons and complaint, plaintiff may have had a right to seek entry of default judgment against that defendant as a successor to the alleged distributor of the chair. By consent order, plaintiff agreed to allow True Seating Concepts, LLC to vacate default and file an answer. We cannot tell from this record whether plaintiff gave up the right to seek judgment against the alleged distributor of the defective product with an understanding that True Seating Concepts, LLC would be substituted in place of True North America, Inc.

In any event, there is no dispute that True Seating Concepts, LLC received notice of the lawsuit and filed an answer. Contrary to its contentions on appeal, the trial court did not make findings of fact pertaining to the adequacy of service of process. That issue must also await jurisdictional discovery.

We reverse and remand to the trial court to permit limited jurisdictional discovery. Upon completion of that discovery, True Seating shall be permitted to renew its motion to dismiss the complaint if plaintiff still lacks evidence that it manufactured the chair or cannot show that it was effectively served through service upon the registered agent of True North America, Inc.

Reversed and remanded. We do not retain jurisdiction.


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