American Valve Mfg. Co. v. VIR

685 So. 2d 1156
CourtLouisiana Court of Appeal
DecidedDecember 11, 1996
Docket28942-CA, 28943-CA
StatusPublished
Cited by3 cases

This text of 685 So. 2d 1156 (American Valve Mfg. Co. v. VIR) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
American Valve Mfg. Co. v. VIR, 685 So. 2d 1156 (La. Ct. App. 1996).

Opinion

685 So.2d 1156 (1996)

AMERICAN VALVE MANUFACTURING COMPANY and Federal Insurance Company, Plaintiffs-Appellants,
v.
VALVO INDUSTRIA ING RIZZIO, aka Vir S.p.A. and L'Abeille Assicurazioni, Defendants-Appellees.
Dennis W. MOORE, et al Plaintiffs-Appellants
v.
CRYSTAL OIL COMPANY, et al Defendants-Appellees.

Nos. 28942-CA, 28943-CA.

Court of Appeal of Louisiana, Second Circuit.

December 11, 1996.
Writ Denied March 7, 1997.

*1158 Mayer, Smith & Roberts by Deborah Shea Baukman and Steven E. Soileau, and James E. Franklin, Jr., Shreveport, for Plaintiffs-Appellants.

Barlow & Hardtner by Joseph L. Shea, Jr. and Jonathan D. Baughman, Shreveport, for Defendants-Appellees.

Before MARVIN, NORRIS and GASKINS, JJ.

NORRIS, Judge.

American Valve Manufacturing Co. and its insurer, Federal Insurance Co. (hereinafter "AV"), appeal a judgment sustaining the declinatory exception of lack of personal jurisdiction filed by Valvo Industria Ing Rizzio, a/k/a VIR SpA and its insurer, L'Abeille Assicurazioni ("VIR"), and dismissing VIR from two lawsuits.[1] For the reasons expressed, we reverse and remand.

Factual and procedural background

The tort suit (No. 28,943-CA) began when Dennis Moore was welding legs to a barrel at a compressor station owned by Crystal Oil near Shongaloo. A valve on a nearby metal pipe failed, allowing oil and gas to gush in Moore's direction. His torch ignited the fuel and by the time the fire was contained Moore had sustained burns to 56½% of his body. He sued, inter alia, Crystal, the owner of the station; CBC Supply, the vendor from whom Crystal had bought the valve; Specialty Warehouse, the distributor from whom CBC had bought the valve; and AV, which allegedly "designed, assembled, constructed and manufactured" the valve. Some time later, AV and its insurer third-partied VIR for indemnification or contribution, alleging that VIR designed and manufactured the valve that failed. Moore also joined VIR as a defendant but has not yet attempted service.

AV subsequently filed a second suit (No. 28,942-CA) against VIR, praying for the same relief, indemnification or contribution. In both petitions AV obtained long-arm service by alleging that VIR was "a foreign corporation doing business in Louisiana within the meaning of La. R.S. 13:3201 et seq."

VIR filed several exceptions, including the declinatory exception of lack of personal jurisdiction. VIR and AV argued the exception at a hearing in January 1996. In addition to the argument, two exhibits were submitted.

The first exhibit was the affidavit of Dott. Savino Rizzio, the managing director of VIR. He attested that VIR has a manufacturing facility in northern Italy, but no employees, agents or offices in Louisiana; no direct sales to any buyers here; no advertising, solicitation, or channels for communicating with customers here; and no registration or license in Louisiana, Texas, Arkansas or Mississippi. He also averred that VIR manufactures no product with the intent of marketing it in Louisiana.

The second exhibit was the deposition of Mr. Frederick L. Guterman, the president of AV until 1990. He described in detail the sales chain between VIR, AV and its ultimate buyers. AV manufactured various sizes of valves, but the 2½" bronze ball-model valve that exploded at Crystal's station was cast by VIR in Italy. AV had provided all the specifications for the casting, including the marking "WOG" (meaning the valve was suitable for use in water, oil and gas pipelines), and sold the valve as its own product; however, VIR had actually cast and finished the *1159 valves. AV bought these and other components from VIR with the oral understanding from Dr. Rizzio that the products were being sold to no one else in the United States; the exclusive distributorship lasted from the inception of the parties' dealings until AV filed Chapter 11 bankruptcy in 1986. AV had the 2½ valves shipped to its factory in New York, tested them, then distributed them to a system of wholesalers (Mr. Guterman also called them distributors) which covered 48 states. Mr. Guterman thought that most of AV's distributors sold directly to the enduser, but admitted that additional middlemen could be involved. He knew that AV's products could go to any state. He further testified that VIR's products made up only 5-10% of AV's total sales, and they sold at most 1,000 of VIR's 2½ valves ($10,000 in sales) in any given year. From AV's standpoint, the valve at issue was not an "isolated" sale in Louisiana. Dep., 27. Mr. Guterman also testified that although VIR representatives had on several occasions attended trade shows in the United States, VIR probably did not understand AV's American distribution system. He confirmed Dr. Rizzio's assertion that VIR never sold directly to a distributor or end-user in the United States.

The District Court ruled from the bench that VIR did not have sufficient minimum contacts with Louisiana for the court to exercise jurisdiction over the company. R.p. 45.

Applicable law

The Due Process clause of the Fourteenth Amendment requires that in order for a state court to exercise jurisdiction over a nonresident defendant, the defendant must have certain minimum contacts with the forum state such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. International Shoe Co. v. Washington, 326 U.S. 310, 320, 66 S.Ct. 154, 160, 90 L.Ed. 95 (1945). Due process also requires that the nonresident defendant be amenable to service of process under the state's long-arm statute. See, e.g., McBead Drilling Co. v. Kremco Ltd., 509 So.2d 429 (La.1987), describing the "dual analysis." However, since a 1987 amendment to Louisiana's long-arm statute, R.S. 13:3201 B[2] is specifically coextensive with the federal due process clause and the "dual analysis" resolves to a single test of whether the defendant's contacts with the state satisfy minimum contacts and fundamental fairness. See de Reyes v. Marine Management & Consulting Ltd., 586 So.2d 103 (La. 1991); Dalton v. R & W Marine Inc., 897 F.2d 1359 (5th Cir.1990).

For purposes of due process, "minimum contacts" must arise from actions by which the nonresident defendant purposefully avails itself of the privilege of conducting business activities within the forum state, thus invoking the benefits and protections of its laws. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528 (1985). The forum state may 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 and those products subsequently injure consumers there.[3]World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297-298, 100 S.Ct. 559, 567-568, 62 L.Ed.2d 490 (1980).

The expectation or foreseeability contemplated by the Supreme Court turns on whether the defendant's conduct and connection with the forum state are such that it "should reasonably anticipate being haled into court there." Id.; de Reyes, 586 So.2d at 106.

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Bluebook (online)
685 So. 2d 1156, Counsel Stack Legal Research, https://law.counselstack.com/opinion/american-valve-mfg-co-v-vir-lactapp-1996.