Court Opinion

ID: 9462979
Source: CourtListenerOpinion
Date Created: 2023-08-04 22:54:51.942501+00
Date Added: 2024-06-11T17:37:52.442885
License: Public Domain

GARTH, Circuit Judge
(dissenting):
I agree with the majority that defendant Scully was not “doing business” in Pennsylvania and thus in personam jurisdiction cannot be predicated upon 42 Purd.Stat. Ann. § 8304. However, I cannot accept the majority’s unduly restrictive view of 42 Purd.Stat.Ann. § 8305. I would conclude that Scully was amenable to in personam jurisdiction in Pennsylvania based upon his having caused harm inside the Commonwealth arising from his conduct in Ohio.
Section 8305 provides that “[a]ny nonresident . . . who, acting outside of this Commonwealth, . . . shall have caused harm within this Commonwealth . shall be subject to service of process . . . arising out of or by reason of any such conduct.” Thus, nonresidents who act outside Pennsylvania but cause harm inside Pennsylvania are subject to long-arm jurisdiction in any action “arising out of or by reason of any such conduct.” At issue here is whether this section extends jurisdiction over persons who cause harm in Pennsylvania resulting from their failure to act, where action is mandated by law, as well as from their affirmative acts. Certainly the harm to those within the Commonwealth is identical regardless of whether the harm results from an act or a failure to act where the duty to act exists. Hence, the question presented to us is: has Pennsylvania extended its jurisdiction to reach nonresidents who cause harm within the Commonwealth through their failure to act where they have the duty to do so.
The majority has focused exclusively upon the meaning of the word “acting” in § 8305. It has concluded that the “common meaning of ‘act’ is performance; it is the opposite of non-performance.” Majority Op. at 5. However, Webster’s Third New International Dictionary includes among other definitions of “act” the following: “to carry into effect a determination of the *954will.” A failure or refusal to perform a legally prescribed duty is just as much a carrying into effect of a determination of the will as an affirmative action. This definition is also in accord with common usage. For example, I can see no difference between a corporate officer’s mismanagement of corporate funds (which the majority would characterize as “acting”) and a corporate officer’s abdication of all responsibility for the operation of the corporation which results in mismanagement (which under the majority’s definition would be “inaction”). Inaction, where action is legally mandated, necessarily constitutes “action”, for both involve a conscious decision and both can result in harm.
Moreover, the text of § 8305 further confirms my view that the section is not restricted to affirmative acts alone. A person “acting” outside Pennsylvania is subject to jurisdiction in suits arising out of “such conduct.” As I read the statute, “such conduct” must relate back to the phrase “acting outside of this Commonwealth.” Consequently, I believe the Pennsylvania legislature has equated “acting” with “conduct.” Webster’s Third New International Dictionary defines “conduct” as follows: “behavior in a particular situation or relation or on a specified occasion.” Behavior subsumes a refusal to act where a legal duty to do so exists as well as affirmative acts. Thus, I find § 8305, when read in its entirety, as drawing within its reach harm that results from nonfeasance as well as from affirmative acts.
Nor am I persuaded by the majority’s “perception of the legislative intent” in the enactment of § 8305. Majority Op. at 6. The Restatement of Torts § 284 — “Negligent Conduct; Act or Failure to Act”— defines the substantive elements which give rise to a cause of action in tort. However, § 8305 is not a statute which creates a cause of action. Rather, § 8305 expands the jurisdiction of the Pennsylvania courts so as to reach nonresidents who cause harm in the Commonwealth. Presumably it was the intent of the legislature to provide a means of redress against those nonresidents who might otherwise not be amenable to suit in the Commonwealth. Given the nature of the statute and its presumed purpose, the absence of language that “acting” or “conduct” includes an “act or failure to act” is not dispositive of the problem here. Furthermore, the fact that other states have included the words “act or omission” in their long arm jurisdiction statutes does not resolve the sole question here — whether Pennsylvania has extended jurisdiction to reach Scully on the facts before us. Thus, I find neither the statutes of other jurisdictions nor the Restatement of Torts formulation helpful in construing § 8305.
On this motion to quash service of process and dismiss for lack of personal jurisdiction, the allegations of the complaint must be accepted as true. Hochman v. Board of Education, 534 F.2d 1094, 1096, (3d Cir. 1976). Plaintiff Witt, Receiver of Pioneer Finance Co., alleged that Scully, as an officer and director of Pioneer, breached his fiduciary responsibilities1 to the company by failing to attend meetings of the board of directors, failing to insure that adequate corporate records were kept, and failing to exercise any control or management of the corporation’s business and affairs.. As a consequence, Witt alleged that the corporation was mismanaged, ultimately resulting in its insolvency.
Since there are no Pennsylvania precedents which determine the applicability of § 8305 where the failure to perform a legal duty is charged, we must predict how Pennsylvania courts would resolve this question. Suchomajcz v. Hummel Chemical Co., 524 F.2d 19, 24 (3d Cir. 1975). In accordance with the Pennsylvania Statutory Construction Act, 46 Purd.Stat.Ann. §§ 558, 551, *955§ 8305 must be “liberally construed” to effectuate the “intention of the legislature.” At least in this context where a legal duty is imposed on officers and directors of Pennsylvania corporations, I would predict that Pennsylvania courts would construe this section as extending long-arm jurisdiction to those nonresidents who cause harm in the Commonwealth by conduct outside the Commonwealth. Hence, I would hold that proper service had been made upon Scully and that jurisdiction was obtained over him. I would therefore affirm the district court’s order which denied Scully’s motion to dismiss.

. Scully, as an officer and director of a Pennsylvania corporation, was charged with fiduciary duties under 15 Purd.Stat.Ann. § 1408:
Officers and directors shall be deemed to stand in a fiduciary relation to the corporation, and shall discharge the duties of their respective positions in good faith and with that diligence, care and skill which ordinarily prudent men would exercise under similar circumstances in their personal business affairs.