Court Opinion

ID: 4171483
Source: CourtListenerOpinion
Date Created: 2017-05-24 19:16:45.427618+00
Date Added: 2024-06-11T14:39:12.747775
License: Public Domain

J-A27027-16

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

MAX FAUST                                         IN THE SUPERIOR COURT OF
                                                        PENNSYLVANIA
                            Appellant

                       v.

BAYERISCHE MOTOREN WERKE AG AND
BMW OF NORTH AMERICA, LLC A/K/A
“BMW, NA’ AND/OR “BMW” AND TAKATA
CORPORATION AND TK HOLDINGS, INC
AND N&H, LLC D/B/A HANNA MOTORS

                                                      No. 3468 EDA 2015

                 Appeal from the Order Entered October 15, 2015
              In the Court of Common Pleas of Philadelphia County
           Civil Division at No(s): November Term, 2014, No. 000656

BEFORE: PANELLA, J., LAZARUS, J., and FITZGERALD, J.*

MEMORANDUM BY LAZARUS, J.:                               FILED MAY 24, 2017

        Max Faust appeals from the order granting the preliminary objections

of Appellees, Bayerische Motoren Werke AG (“BMW”), BMW of North America

(“BMW NA”), Takata Corporation, TK Holdings, Inc. (collectively, “Takata”),

and N&H, LLC, and transferring this personal injury case to Lancaster County

based upon a finding of improper venue. Faust contends that the trial court

erred in concluding that BMW NA established that it did not regularly conduct

business in Philadelphia and in entering the instant order prior to the

____________________________________________

*
    Former Justice specially assigned to the Superior Court.
J-A27027-16

completion of discovery on the issue of venue.              After careful review, we

affirm.

          This case arises from a motor vehicle accident that occurred in

Lancaster County.        Faust was a passenger in a vehicle involved in the

accident, during which the vehicle’s air bag deployed, causing severe injury

to Faust’s right eye.

       Faust   filed   suit    against   the   vehicle’s   manufacturer,   BMW;   the

manufacturer’s North American marketing subsidiary, BMW NA; the airbag

manufacturer and its subsidiary, Takata; and the dealership that sold the

vehicle, N&H, LLC.            Faust filed the complaint in Philadelphia County.

Subsequently, all defendants except BMW1 filed preliminary objections

asserting that Philadelphia County was an improper venue for the suit. The

trial court granted Faust’s request for discovery on the issue.

       Faust took several depositions and sought further information from

BMW NA in the form of documents indicating the number of sales of BMW

vehicles to customers in Philadelphia County. BMW NA asserted that it did

not maintain sales figures in a way that would allow it to respond to this

request and moved for permission to file an affidavit attesting to this fact.

The Honorable Lisa M. Rau granted BMW NA permission to file the affidavit

in response to Faust’s request.
____________________________________________

1
  Resolution of BMW’s preliminary objection to personal jurisdiction has been
stayed, pending the outcome of this appeal.

                                           -2-
J-A27027-16

       BMW NA’s assertion was contradicted by the deposition testimony of

employees of a nonparty BMW dealership near Philadelphia. Nick DeFelice,

sales manager at the dealership, testified that he could compile a list of

sales to Philadelphia residents by performing a search of sales by zip code.

See N.T., DeFelice Deposition, 5/15/15, at 11-12. Marc Schramm, general

manager of the dealership, testified that it would not be difficult for the

dealership to identify customers who resided in Philadelphia County.       See

N.T., Schramm Deposition, 5/15/15, at 42. Sales made by the dealership

are reported to BMW NA on an individual basis. See id. at 64.

       Based upon these discrepancies, Faust requested that he be permitted

to depose the affiant of BMW NA’s response. Judge Rau did not rule on this

request, but deferred to the trial court. Ultimately, the trial court entered an

order granting the preliminary objections of Appellees, and ordered the case

transferred to Lancaster County.

       On appeal, Faust raises two issues for our review. First, he contends

that the trial court abused its discretion in finding that the quality of BMW

NA’s business contacts with Philadelphia County was insufficient to establish

venue.2 Second, he argues that the trial court erred in finding, prior to the

____________________________________________

2
  Since Faust has asserted various theories of joint and several liability
amongst the Appellees, venue need only be proper with respect to any one
of them. See Pa.R.C.P. 1006(c)(1). Thus, if Philadelphia County is a
suitable venue for his claims against BMW NA, Philadelphia County would be
a suitable venue for his claims against the other Appellees, absent BMW’s
(Footnote Continued Next Page)

                                           -3-
J-A27027-16

close of discovery on the issue, that the quantity of BMW NA’s business

contacts with Philadelphia County was insufficient to establish venue.

Because we conclude that the quality of BMW NA’s contacts with Philadelphia

County is insufficient to establish venue, we need only address Faust’s first

claim.

      We begin by noting that this matter is before us as an interlocutory

appeal as of right.       Specifically, Pa.R.A.P. 311 provides that “[a]n appeal

may be taken as of right from an order in a civil action or proceeding

changing venue, transferring the matter to another court of coordinate

jurisdiction, or declining to proceed in the matter on the basis of forum non

conveniens or analogous principles.” Pa.R.A.P. 311(c).

      Our standard of review on this issue is one of abuse of discretion. See

Purcell v. Bryn Mawr Hospital, 579 A.2d 1282, 1284 (Pa. 1990).               An

abuse of discretion occurs when the trial judge overrides or misapplies the

law, or exercises judgment in a manifestly unreasonable manner, or renders

a decision based on partiality, prejudice, bias, or ill-will.     Forrester v.

Hanson, 901 A.2d 548, 552 (Pa. Super. 2006) (citation omitted).               A

plaintiff’s choice of forum is to be given great weight, and the burden is on

the party challenging the choice to show it was improper. Id. However, a

                       _______________________
(Footnote Continued)

pending jurisdictional challenge. Faust does not contend that any of the
other Appellees regularly conduct business in Philadelphia County.

                                            -4-
J-A27027-16

plaintiff’s choice of venue is not absolute or unassailable. Id. If there exists

any proper basis for the trial court’s decision to grant a petition to transfer

venue, the decision must stand. Id.

      The Pennsylvania Rules of Civil Procedure provide for venue over

corporate or other business-entity defendants as follows:

      (a) Except as otherwise provided by an Act of Assembly, by Rule
      1006(a.1) or by subdivision (b) of this rule, a personal action
      against a corporation or similar entity may be brought in and
      only in

         (1) the county where its registered office or principal place
         of business is located;

         (2) a county where it regularly conducts business;

         (3) the county where the cause of action arose;

         (4) a county where a transaction or occurrence took place
         out of which the cause of action arose, or

         (5) a county where the property or a part of the property
         which is the subject matter of the action is located
         provided that equitable relief is sought with respect to the
         property.

Pa.R.C.P. 2179(a).

      At issue in this case is subsection (a)(2), which establishes that venue

is proper in any county where a defendant regularly conducts business.

      In determining whether a corporation or partnership regularly
      conducts business in a county, we employ a quality-quantity
      analysis. A business entity must perform acts in a county of
      sufficient quality and quantity before venue in that county will be
      established. Quality of acts will be found if an entity performs
      acts in a county that directly further or are essential to the
      entity’s business objective; incidental acts in the county are not
      sufficient to meet the quality aspect of the test. Acts that aid a
      main purpose are collateral and incidental while those necessary
      to an entity’s existence are direct.

                                     -5-
J-A27027-16

Zampana-Barry v. Donaghue, 921 A.2d 500, 503-04 (Pa. Super. 2007)

(citations omitted). Mere solicitation of business in a particular county does

not amount to conducting business.             Purcell v. Bryn Mawr Hosp., 579

A.2d 1282, 1287 (Pa. 1990).

        Faust argues that the trial court erred in concluding that BMW NA’s

contacts with Philadelphia County are of insufficient quality to establish

venue pursuant to the “quality-quantity” test. To the contrary, Faust asserts

that he “identified for the [trial] court a variety of evidence[3] demonstrating

____________________________________________

3
    Faust alleged the following contacts with Philadelphia County:

           BMW NA wants to sell cars to Philadelphia County residents;
           BMW vehicles are currently sold to Philadelphia County
            residents;
           BMW NA directly assigns multiple dealerships to a “Primary
            Market Area” (a/k/a “PMA”), multiple of which are assigned
            territories located throughout Philadelphia County;
           BMW NA expects [] its dealerships, in addition to the
            Delaware Valley Dealership Group [(“DVDG”)], to advertise
            within Philadelphia County;
           BMW NA provides direct funding for advertising and
            promotional efforts for the DVDG, which is comprised of
            individual dealerships that sell directly to Philadelphia County
            residents;
           BMW NA funds television advertisements for the DVDG,
            [which] broadcasts within Philadelphia County;
           BMW NA created a corporate fleet sales program, where client
            advisors are sent within Philadelphia County to generate
            corporate sales;
           BMW NA created a co-op program, where it provides direct
            funding to its dealerships to promote BMW, support new
            product launches, create an urgency towards purchase,
            among other things;
(Footnote Continued Next Page)

                                           -6-
J-A27027-16

BMW NA’s contacts with Philadelphia County that directly advance” its

corporate objective. Specifically, Faust claims he “provided record evidence

in the [trial] court that BMW NA itself performed marketing and other

essential activities directed towards and directly in Philadelphia County which

were in direct furtherance of BMW NA’s corporate objective.”          Brief of

                       _______________________
(Footnote Continued)

         BMW NA, through the co-op program, directly funds various
          promotional efforts conducted by dealerships who have
          Philadelphia County as PMA;
         BMW NA, through the co-op program, directly funds a mailer
          program for dealerships to promote sales to Philadelphia
          County residents;
         BMW NA, through the co-op program, directly funds various
          online efforts to target customers in Philadelphia County;
         BMW NA, through the co-op program, directly funds various
          radio advertisements that broadcast in Philadelphia County[;]
         BMW NA, through the co-op program, directly funds events in
          Philadelphia County that have included demonstrations of
          BMW vehicles;
         BMW NA demonstrates cars and generates business at the
          Philadelphia Auto Show;
         BMW directly pays client advisors/sales personnel to attend
          the Philadelphia Auto Show for the purpose of selling
          vehicles;
         BMW NA’s direct efforts in Philadelphia County at the
          Philadelphia Auto Show have resulted in both the sale and
          leasing of BMW vehicles;
         BMW NA, through its own marketing, advertises in
          Philadelphia County; [and]
         BMW NA . . . financially benefits when more BMW vehicles are
          sold.

Brief of Appellant, at 19-21 (emphasis in original). We note that the
Philadelphia Auto Show is a “non-selling show,” meaning that no sales are
allowed on the floor.          FAQ, Philadelphia Auto Show, 2018,
http://www.phillyautoshow.com/show-info/faqs/ (visited 5/3/17).

                                            -7-
J-A27027-16

Appellant, at 25 (emphasis in original). Indeed, Faust argues that BMW NA

did everything it legally could, short of effectuating a sale directly to a

consumer,4 to further its corporate objectives and that the trial court erred

in requiring sales in Philadelphia County to satisfy the quality test. Because

it cannot conduct direct sales to consumers, Faust asserts that under the

trial court’s logic, BMW NA could never “regularly conduct business”

anywhere in Pennsylvania.

       In order to apply the “quality-quantity” analysis, we must first

establish BMW NA’s corporate objective.          The trial court summarized BMW

NA’s primary business purpose as “to sell or lease its vehicles to individual

consumers, which is facilitated by a national distribution network of

authorized, affiliated, and independently-owned BMW dealerships.”5         Trial

Court Opinion, 12/2/15, at 6. Thus, in order for venue to lie in Philadelphia

____________________________________________

4
  Under Pennsylvania law, it is illegal for a vehicle manufacturer to sell
directly to a consumer. See 63 P.S. § 818.12(b) (“It shall be a violation of
this act for any manufacturer, factory branch, distributor, field
representative, officer, agent or any representative whatsoever of such
manufacturer, factory branch or distributor licensed under this act to: . . .
(9) Sell or exchange with a second or final stage manufacturer, retail
consumer or end user except through a licensed new vehicle dealer.”).
5
 BMW NA accomplishes this by wholesaling vehicles to independently owned
and operated dealerships, none of which are located in Philadelphia County,
which in turn sell them to consumers. In addition, BMW NA funds direct
mail, radio, television, internet-based, and in-person marketing and
advertising programs, some of which are directed at residents of Philadelphia
County. Trial Court Opinion, 12/2/15, at 7.

                                           -8-
J-A27027-16

County, BMW NA’s contacts would have to be “directly, furthering or

essential to” that purpose and be “so continuous and sufficient to be general

or habitual” and “necessary to its existence[.]” Singley v. Flier, 851 A.2d

200, 202 (Pa. Super. 2004) (citation omitted).       The court reviewed the

contacts alleged by Faust and concluded they “fall far short of satisfying” the

requirements for venue as established by our jurisprudence.        Trial Court

Opinion, 12/2/15, at 7 (emphasis in original).    The court emphasized that

the “vast majority” of BMW NA’s Philadelphia contacts are comprised of

“mere solicitation,” which cannot form the basis for venue. The court also

noted that Faust provided no evidence that any vehicle sales or leases have

been consummated within Philadelphia County, and discounted Faust’s

reliance on BMW NA’s participation in the Philadelphia Auto Show, concluding

that “the mere fact that BMW NA lets people see their latest models, sit in

the driver’s seat, and kick the tires a bit, does not transform [] enticement

into a connection with Philadelphia County that would render it a proper

venue for this lawsuit.” Id. at 8 (emphasis in original).

      We agree with the trial court that BMW NA’s contacts with Philadelphia

County are not of the quality necessary to confer venue.       Faust points to

eighteen separate “contacts” with Philadelphia that he claims directly

advance BMW NA’s corporate objective. However, nearly every one of those

“contacts” may be properly characterized as solicitation.    As stated above,

our courts have repeatedly held mere solicitation to be insufficient, without

more, to establish venue. See Purcell, supra; see also Law v. Atl. Coast

                                     -9-
J-A27027-16

Line R. Co., 79 A.2d 252, 253 (Pa. 1951) (“doing business” must be

established by solicitation plus other activities).

      In addition to the laundry list of advertising and marketing activities

allegedly pursued by BMW NA in Philadelphia County, Faust focuses on the

sales of BMW autos to Philadelphia residents. However, this Court has held

that purchases of goods or services in one county by residents of another

county are insufficient to establish venue in the purchasers’ home county.

In Masel v. Glassman, 689 A.2d 314 (Pa. Super. 1997), this Court denied

venue in Philadelphia where a Bucks County defendant: received 20% of its

gross revenues from Philadelphia third-party payers; used a Philadelphia

recruitment agency to hire new physicians; and earned 3% of its gross

revenue from Philadelphia residents.       In holding that these contacts were

insufficient, the Court focused on the county in which the services were

provided, rather than the domicile of the patients:            “[A]ll services are

provided in Bucks County. Plaintiff does not point to, and we cannot find,

corporate activities taking place in Philadelphia County which directly further

or are essential to the corporate object.”       Id. at 318.   Likewise, here, all

“corporate activities” of BMW NA occur in counties other than Philadelphia.

      Faust also relies on Canter v. American Honda Motor Corp., 231

A.2d 140 (Pa. 1967). In that case, Motor Sport, a Honda motorcycle dealer,

filed preliminary objections disputing venue in Philadelphia County.        Motor

Sport asserted that: it was a Delaware Corporation with its principle place of

business   in   Delaware   County;    it   had   never   conducted   business   in

                                      - 10 -
J-A27027-16

Philadelphia County; the accident in question occurred in Montgomery

County; and no transaction or occurrence out of which the cause of action

arose occurred in Philadelphia County.         However, the record revealed that

Motor Sport demonstrated cars and consummated approximately one to two

percent of its total sales in Philadelphia County.         As these were acts that

were “directly essential to and in furtherance of [Motor Sport’s] corporate

objects,” the Supreme Court found that the “quality” test had been met. Id.

at 143. However, as the trial court in this matter correctly noted, Canter is

distinguishable from the case at bar in that, here, there is no dispute that

BMW NA does not consummate any sales or leases in Philadelphia County.

       In sum, Faust has failed to demonstrate that BMW NA conducts any

activities in Philadelphia County that are essential to its corporate objective,

which is the sale of BMW automobiles. Although the corporation engages in

various marketing activities in Philadelphia County, including participation in

the Philadelphia Auto Show, mere solicitation is insufficient to satisfy the

“quality” prong of the venue test.     Rather, such activity merely “aid[s] or

enhance[s] a main purpose and must be deemed collateral and incidental.”

Krosnowski v. Ward, 836 A.2d 143, 149 (Pa. Super. 2003) (en banc)

(Montgomery    County    hospital’s   affiliation   with    Children’s   Hospital   of

Philadelphia (CHOP) insufficient to establish venue in Philadelphia County

where hospital is affiliated with CHOP for inpatient and outpatient pediatric

services; hospital’s website states that its pediatric services are enhanced by

CHOP    connection;   hospital   physicians     consult    with   CHOP   specialists;

                                      - 11 -
J-A27027-16

transport service shuttles patients between hospital and CHOP; hospital is

member of inpatient “network” which allows collaboration among various

satellite facilities; and medical director of hospital’s pediatric program is on

staff at CHOP).   Accordingly, the trial court did not abuse its discretion in

granting the Appellees’ preliminary objections and transferring the case to

Lancaster County. Because Faust has failed to satisfy the “quality” prong of

the venue test, we need not address his second claim relating to discovery

on the issue of “quantity.”

      Order affirmed.

      FITZGERALD, J., Joins this memorandum.

      PANELLA, J., Files a Dissenting Memorandum.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 5/24/2017

                                     - 12 -