Source: http://nj.findacase.com/research/wfrmDocViewer.aspx/xq/fac.19770322_0040169.C03.htm/qx
Timestamp: 2016-12-07 12:39:20
Document Index: 389283295

Matched Legal Cases: ['§ 8301', '§ 8302', '§ 8309', '§ 8309', '§ 8309', '§ 8309', '§ 8309', '§ 8303', '§ 8304', '§ 8305', '§ 8301', '§ 8303', '§ 8305']

| General Heat and Power Co. v. Diversified Mortgage Investors A Massachusetts Business Trust 100 Federal Street Boston
General Heat and Power Co. v. Diversified Mortgage Investors A Massachusetts Business Trust 100 Federal Street Boston
GENERAL HEAT AND POWER CO., INC., APPELLANT,v.DIVERSIFIED MORTGAGE INVESTORS A MASSACHUSETTS BUSINESS TRUST 100 FEDERAL STREET BOSTON, MASSACHUSETTS 02110 (CIVIL ACTION NO. 74-871)
The plaintiff, General Heat and Power Company, Inc., a Pennsylvania corporation, appeals from an order granting the motion of Diversified Mortgage Investors, a Massachusetts business trust, to dismiss the complaint against it for insufficiency of process. Service of process was attempted pursuant to F.R. Civ. P. 4(e) and the Pennsylvania long arm statute, 42 P.S. §§ 8301-8310. The district court held that the attempt was ineffectual because Diversified was not subject to process under that statute.*fn1 We reverse.
The district court concluded that Diversified was not amenable to service of the instant complaint under any provision of the Pennsylvania longarm statute.*fn2 That complaint charges that Diversified, which is in the business of real estate mortgage financing, entered into a construction loan agreement with a Pennsylvania mortgagor under which it agreed to advance $15,500,000, secured by a duly executed mortgage on premises in Luzerne County, Pennsylvania. It further alleges that General Heat and Power, in reliance on the loan agreement, undertook to make improvements on the mortgaged premises by erecting buildings thereon. The complaint then alleges:
(App. at 6a).
The gravamen of the first count,*fn3 then, is that an out of state lending institution, holding a security interest in real estate in Pennsylvania, fraudulently induced a Pennsylvania contractor to make improvements which enhanced the value of the security interest, by misrepresenting or concealing that it did not intend to perform a loan agreement with the owner in accordance with its undertaking.
If we regard Diversified as a foreign corporation which has not qualified to do business in Pennsylvania, service of process is governed by 42 P.S. § 8302, which authorizes service on any corporation which has done any business in the Commonwealth. Doing business is broadly defined in 42 P.S. § 8309(a), and § 8309(b) provides:
The question is not whether, if it did what is charged in paragraphs 10 through 12 of the complaint Diversified was doing business, but whether, assuming it to be a corporation, the fourteenth amendment as incorporated in § 8309(b) permits Pennsylvania to litigate the dispute. The limits of Pennsylvania's adjudicating power are found in International Shoe Co. v. Washington, 326 U.S. 310, 90 L. Ed. 95, 66 S. Ct. 154 (1945) and its progeny. See Jonnet v. Dollar Savings Bank of City of New York, 530 F.2d 1123, 1130 (3d Cir. 1976) (concurring opinion). The due process inquiry focuses on the fairness of requiring the foreign defendant to answer in a given forum, considering the impact or lack thereof of his activities on that forum.
Here it is alleged that a foreign owner of a security interest in Pennsylvania real estate made false representations outside the Commonwealth which caused a Pennsylvania plaintiff to improve the Pennsylvania real estate and enhance the value of the security interest. No other jurisdiction, it seems to us, has any higher claim to the exercise of decisional responsibility over the resulting dispute, for the harm is alleged to have occurred to a Pennsylvania plaintiff in Pennsylvania, and the fruits of the wrong inured to the defendant's benefit in Pennsylvania. Thus, if Diversified is regarded as a corporation, it is by virtue of 42 P.S. § 8309(b) subject to service of process.
If, on the other hand, Diversified is not a corporation, Pennsylvania has not attempted to cast so wide a jurisdictional net as in § 8309(b). It has dealt separately with the commission of tortious acts by individuals in the Commonwealth, 42 P.S. § 8303, with doing business by individuals, 42 P.S. § 8304, and with causing harm in the Commonwealth by individuals. 42 P.S. § 8305. The latter provision is applicable to the allegations of paragraphs 10-12 of the complaint. It reads:
Any nonresident of this Commonwealth who, acting outside of this Commonwealth, individually, under or through a fictitious business name, or through an agent, servant or employee, shall have caused any harm within this Commonwealth shall be subject to service of process in any civil action or proceeding instituted in the courts of this Commonwealth arising out of or by reason of any such conduct. . . .*fn4
We cannot accept the view that the legislature intended such a restrictive definition, even assuming the sections' titles are intended to be restrictive in some way. A careful review of the Long Arm sections shows that the legislature created two classes of potential nonresident defendants. Foreign corporations are categorized in §§ 8301 and 8302. The remaining sections are all applicable to another class. 42 P.S. §§ 8303-05. We cannot conclude that by using "individuals," the legislature intended to immunize non-resident partnerships, joint ventures and trusts, as well as labor unions, from liability for injury to residents of the state. In another context, the Pennsylvania supreme court held,
". . . We do not think the word individuals is to be understood in a sense so narrow as that which the respondents would assign to it. It means something more than single persons. It would not exclude a partnership. . . ." Pennsylvania R.R. Co. v. Canal Commissioners, 1852, 21 Pa. 9, 20.
It is clear that by using "individuals" in this manner the title was intended to cover lawsuits against all nonresidents who are not corporations. Thus, the predecessor to the current long arm statute has been held to cover partnerships, Saccamani v. Robert Reiser & Co., Inc., W.D. Pa. 1972, 348 F. Supp. 514, and we hold that it covers labor unions.
393 F. Supp. at 873-74. That analysis of the statutory scheme is persuasive, and we adopt it as the most likely prediction of what the Supreme Court of Pennsylvania would hold. If Diversified is not a corporation, it is an unincorporated entity falling within § 8305.