Vitin Garment Manufacturing Corp. v. Schreck Wholesale, Inc.

Citations: 827 F. Supp. 847; 1993 U.S. Dist. LEXIS 11676; 1993 WL 322085Docket: Civ. No. 92-1931 (RLA)

Court: District Court, D. Puerto Rico; August 17, 1993; Federal District Court

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The court issued an opinion and order dismissing the complaint against codefendant Schreck Wholesale, Inc. ("SCHRECK") due to a lack of in personam jurisdiction. The plaintiff, Vitin Garment Manufacturing Corp. ("VITIN"), claimed breach of contract concerning the sale of goods to codefendant Codera Clothing, Inc. ("CODERA"), which acted as an agent for SCHRECK. VITIN, incorporated in Puerto Rico, alleged unpaid debts totaling $399,465.00 for goods delivered.

SCHRECK, an Illinois corporation, argued for dismissal on the basis that it had no business dealings with VITIN in Puerto Rico or elsewhere, and thus was not subject to the court's jurisdiction. VITIN was required to demonstrate the court's jurisdiction by providing sufficient evidence to meet the prima facie standard, showing that jurisdictional facts aligned with both the forum's long-arm statute and constitutional due process requirements. The court noted that VITIN must provide affirmative proof rather than relying on unsubstantiated allegations. The decision emphasized that if VITIN could substantiate its claims with specific facts, it could potentially overcome SCHRECK's motion to dismiss.

In Dalmau Rodríguez v. Hughes Aircraft Co., the Supreme Court of Puerto Rico established that in personam jurisdiction is constitutionally permissible in cases where minimum contacts exist between a defendant and the forum. For jurisdiction over the codefendant SCHRECK, it is essential to determine whether requiring the corporation to defend in Puerto Rico would comply with due process and fair play. The due process clause necessitates that a defendant has established minimum contacts with the forum and that exercising jurisdiction aligns with fair play and substantial justice.

Plaintiff claims SCHRECK conducted business in Puerto Rico via an agent, CODERA. Agency is defined as a fiduciary relationship where one party acts on behalf of another with their consent. The plaintiff provided documents suggesting CODERA entered into a contract with VITIN for goods that SCHRECK intended to obtain through CODERA. Testimony from VITIN's president indicated that representatives of SCHRECK led him to believe that CODERA was acting on SCHRECK's behalf. However, mere suspicion is insufficient to establish agency; concrete evidence is required. The plaintiff did not present specific facts supporting the claim of agency, and unilateral assertions are inadequate.

The court referenced that agency cannot be proven solely through the declarations of the alleged agent. Furthermore, the actions of a third party cannot be considered to justify jurisdiction over a defendant. An affidavit from SCHRECK's president indicated that CODERA initiated contact with SCHRECK, proposing a business deal, and that prior to this interaction, SCHRECK had no knowledge of CODERA. The plaintiff did not provide evidence to counter this sworn statement, weakening their claim for jurisdiction based on agency.

The plaintiff did not counter the affidavit, leading to the acceptance of the jurisdictional facts contained within as controlling. SCHRECK supplied goods to VITIN but did not hire or authorize CODERA for any representation or business dealings with VITIN. SCHRECK has no presence in Puerto Rico, lacking employees, offices, advertisements, real property, telephone listings, and bank accounts in the jurisdiction. There have been no communications or travel by SCHRECK related to the transactions in question, nor any agreements with VITIN for purchasing goods. SCHRECK is not authorized to do business in Puerto Rico, and its contacts do not meet the due process requirements for jurisdiction. The mere purchase of goods from a particular jurisdiction does not suffice for long arm jurisdiction. The court cited precedents indicating that a contract with an out-of-state party cannot establish sufficient minimum contacts. The only connection identified—the shipment of merchandise from VITIN to SCHRECK—is deemed too weak to support jurisdiction. The plaintiff failed to provide evidence supporting jurisdiction over SCHRECK, and even if minimum contacts were established, asserting jurisdiction would not align with "fair play and substantial justice." Consequently, the court granted SCHRECK’s Motion to Dismiss, dismissing the case against SCHRECK Wholesale, Inc., and denied the petition to transfer the case to Illinois as moot. Additionally, there was no proof of service for CODERA or Mr. Gilliam as required by prior orders, nor any answers to the complaint from these parties.