Auto Driveaway Co. v. Auto Logistics of Columbus

188 F.R.D. 262, 1999 U.S. Dist. LEXIS 12624, 1999 WL 635623
CourtDistrict Court, S.D. Ohio
DecidedJune 9, 1999
DocketNo. C2-98-285
StatusPublished
Cited by5 cases

This text of 188 F.R.D. 262 (Auto Driveaway Co. v. Auto Logistics of Columbus) is published on Counsel Stack Legal Research, covering District Court, S.D. Ohio primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Auto Driveaway Co. v. Auto Logistics of Columbus, 188 F.R.D. 262, 1999 U.S. Dist. LEXIS 12624, 1999 WL 635623 (S.D. Ohio 1999).

Opinion

OPINION & ORDER

MARBLEY, Judge.

This cause comes before the Court on Defendants’ Motion to Dismiss or Stay Proceedings for Plaintiffs Failure to Comply with Ohio Rev.Code § 1703.03. For the following reasons, this Motion is GRANTED. This action is STAYED until Plaintiff conforms to the dictates § 1703.03.

I.

Plaintiff Auto Driveaway Co. (“Plaintiff’) is a vehicle delivery service operating through company offices as well as offices of independent Auto Driveaway agents in the United States and Canada. Under the Auto Driveaway system, individual and commercial customers seeking to move cars, trucks and other vehicles from city to city place orders with Auto Driveaway agents who then make the requested transfers. Auto Driveaway agents charge customers tariffs for all vehicles they deliver; the tariff is determined by federal law and depends on the type of transfer chosen by the customer.

Plaintiff provides its agents access to a network of other Auto Driveaway agents in the U.S. and Canada. For example, when an Auto Driveaway agent takes an order to move a vehicle that is not located within the agent’s operating territory, the agent may call upon the Auto Driveaway agent nearest the vehicle to make the shipment. Such shipments are called “split-fee” shipments [264]*264because the booking agent and the shipping-agent split the fee paid by the customer according to a fixed percentage. In exchange for their participation in the Auto Driveaway system, agents must pay Plaintiff home office fees for each shipment they make.

In Ohio, Plaintiff operates its vehicle transportation service through three independent agents, located in Columbus, Cleveland and Cincinnati. From April 13, 1982 through February 12, 1997, Defendants Auto Logistics of Columbus, Inc., an Ohio corporation, William R. Huber, Jr., and William A. Huber, Sr. (“Defendants”) operated an independent Auto Driveaway agency in Columbus, Ohio. Plaintiff terminated Defendants’ agency on February 12,1997.

On March 17, 1998, Plaintiff filed this suit alleging that Defendants failed to pay all home office fees and misrepresented the amount of home office fees due to Plaintiff. Now, Defendants move to dismiss or stay these proceedings for Plaintiffs failure to comply with Ohio Rev.Code § 1703.03.

II.

Ohio Revised Code § 1703.03 requires that all companies transacting business in Ohio hold a license to do so. The statute states:

No foreign corporation not excepted from sections 1703.01 to 1703.31, inclusive, of the Revised Code, shall transact business in this state unless it holds an unexpired and uncanceled license to do so issued by the secretary of state. To procure and maintain such a license, a foreign corporation shall file an application, pay a filing fee, file annual reports, pay a license fee in initial and additional installments, and comply with all other requirements of law respecting the maintenance of such license as provided in such sections.
Ohio Rev.Code § 1703.03. While an unlicensed foreign corporation may enter into valid contracts, it cannot maintain any court action until it obtains a license to transact business in the State of Ohio. Ohio Revised Code § 1703.29(A) provides this enforcement mechanism for § 1703.03 by stating:
The failure of any corporation to obtain a license under section 1703.01 to 1703.31, inclusive, of the Revised Code, does not affect the validity of any contract with such corporation, but no foreign corporation which should have obtained such license shall maintain any action in any court until it has obtained a license. Before any such corporation shall maintain such action on any cause of action arising at the time when it was not license to transact business in this state, it shall pay the secretary of state a forfeiture of two hundred fifty dollars and file in this office the papers required by divisions (B) or (C) of this section, whichever is applicable.

Ohio Rev.Code § 1703.29. Corporations engaged solely in interstate commerce, however, are excepted from the licensing requirements of § 1703.03. See Ohio Rev.Code § 1703.02. Defendants contend that Plaintiff was and is doing business in Ohio and failed to become licensed pursuant to § 1703.03, and that Plaintiff therefore lacks the standing to bring suit pursuant to § 1703.29(A).

Plaintiff states in its Complaint that it is a Delaware corporation with its principal place of business in Chicago, Illinois. As a corporation incorporated under the laws of another state, Plaintiff is deemed a “foreign corporation” for the purposes of Ohio’s business licensing statute. See Ohio Rev.Code § 1703.01(B). Plaintiff does not dispute its “foreign” status, but argues that its Ohio operations deal solely in interstate commerce and thus are exempt from Ohio’s licensing requirements, pursuant to § 1703.02.

Whether a corporation engages solely in interstate commerce so that it is exempt from Ohio’s licensing requirements is largely a factual determination, dependent upon the totality of the relevant circumstances surrounding the corporation’s business operations. See Dot Systems, Inc. v. Adams Robinson Enterprises, Inc., 67 Ohio App.3d 475, 480, 587 N.E.2d 844; Contel Credit Corp. v. Tiger, Inc., 36 Ohio App.3d 71, 73, 520 N.E.2d 1385 (1987). A foreign corporation engages solely in interstate commerce when its business within Ohio consists merely of selling and delivering through traveling agents goods manufactured outside [265]*265of the state. See Dot Systems, 67 Ohio App.3d at 480, 587 N.E.2d 844. It is well-recognized, however, that a foreign corporation transacts business within a state when “it has entered the state by its agents and is there engaged in carrying on and transacting through them some substantial part of its ordinary or customary business, usually continuous in the sense that it may be distinguished from merely casual, sporadic, or occasional transactions and isolated acts.” Id. at 481, 587 N.E.2d 844. See also Cocon, Inc. v. Botnick Bldg. Co., 59 Ohio App.3d 42, 43, 570 N.E.2d 303 (1989); Contel, 36 Ohio App.3d at 73, 520 N.E.2d 1385; Acton Sell Assoc. v. St. Vincent Med. Ctr., 63 Ohio Misc.2d 404, 406, 631 N.E.2d 181 (1992).

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Promac Technologies, L.L.C. v. Fabrication Automation, L.L.C.
2021 Ohio 4272 (Ohio Court of Appeals, 2021)
Stepp v. Proficient Transport, Inc.
2017 Ohio 8007 (Ohio Court of Appeals, 2017)
Bosl v. First Fin. Invest. Fund I
2011 Ohio 1938 (Ohio Court of Appeals, 2011)
Drown v. ESB (In Re Farley)
387 B.R. 751 (S.D. Ohio, 2008)

Cite This Page — Counsel Stack

Bluebook (online)
188 F.R.D. 262, 1999 U.S. Dist. LEXIS 12624, 1999 WL 635623, Counsel Stack Legal Research, https://law.counselstack.com/opinion/auto-driveaway-co-v-auto-logistics-of-columbus-ohsd-1999.