Gavin v. Read Corporation

356 F. Supp. 483, 1973 U.S. Dist. LEXIS 14411
CourtDistrict Court, E.D. Pennsylvania
DecidedMarch 21, 1973
DocketCiv. A. 70-164
StatusPublished
Cited by24 cases

This text of 356 F. Supp. 483 (Gavin v. Read Corporation) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Gavin v. Read Corporation, 356 F. Supp. 483, 1973 U.S. Dist. LEXIS 14411 (E.D. Pa. 1973).

Opinion

MEMORANDUM

CLIFFORD SCOTT GREEN, District Judge.

Plaintiff, James Gavin who is a Pennsylvania citizen and resident, has filed suit on theories of negligence and strict liability for personal injuries alleged to have resulted from the breach of a duty owed to him by defendant Read Corporation (hereinafter referred to as “Read”), and defendant Cleveland Machine Controls. Plaintiff alleges that both defendants are corporations “incorporated under the laws of a state other than Pennsylvania and have their principal place of business in states other than Pennsylvania.” The Court is presently called upon to rule on Read’s motion to dismiss pursuant to Rule 12(b) (1) of the Federal Rules of Civil Procedure. In support of its motion, Read, which is incorporated in the State of Delaware, avers that there is no complete diversity of citizenship as required by 28 U.S.C. § 1332, because it has its principal, and only place of business within Pennsylvania, the same state of which plaintiff is a citizen.

To satisfy the jurisdictional requisites of the federal court in a diversity suit, none of the plaintiffs can be a citizen of the same state as any of the defendants. Quaker State Dyeing & Finishing Co. v. ITT Terryphone Corp., 461 F.2d 1140 (3rd Cir. 1972); Mission Insurance Company v. Mackey, 340 F.Supp. 824 (W.D.Mo.1971); Potter’s Photographic Applications Co. v. Ealing Corporation, 292 F.Supp. 92 (E. D.N.Y.1968). By virtue of the 1958 amendment to 28 U.S.C. § 1332, a corporation has dual citizenship of both its state of incorporation and its principal place of business. Where plaintiff is a citizen of the same state as the principal place of business of one of the defendant corporations, diversity jurisdiction does not exist. Wymard v. McCloskey & Co., 342 F.2d 495 (3rd Cir. 1965), cert. denied, 382 U.S. 823, 86 S.Ct. 52, 15 L.Ed.2d 68 (1965); Taussig v. Wellington Fund, Inc., 187 F.Supp. 179 (D.Del. 1960); aff’d, 313 F.2d 472 (3rd Cir. 1963), cert. denied, 374 U.S. 806, 83 S.Ct. 1693, 10 L.Ed.2d 1031 (1963). A party who seeks to establish jurisdiction, has the burden of proving all of the facts required to sustain it. Thomson v. Gaskill, 315 U.S. 442, 62 S.Ct. *485 673, 86 L.Ed. 951 (1942); McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 56 S.Ct. 780, 80 L.Ed. 1135 (1935). Thus, plaintiff has to establish that Read did not have its principal place of business in Pennsylvania. See Hoffman v. Lenyo, 433 F.2d 657 (3rd Cir. 1970); Joyce v. Seigel, 429 F.2d 128 (3rd Cir. 1970); Siegel v. Slaney, 419 F.2d 176 (3rd Cir. 1969); Law v. Converse, 419 F.2d 38 (3rd Cir. 1969); McSparran v. Weist, 402 F.2d 867 (3rd Cir. 1968), cert. denied, (395 U.S. 903, 89 S.Ct. 1739, 23 L.Ed.2d 217 (1969).

On February 19, 1968, the plaintiff was injured during the course of his employment allegedly as a result of an improperly manufactured and designed power' roll. According to plaintiff, several years prior to the accident, Read had manufactured and sold the power roll to John Wood Company (third-party defendant), the employer of the plaintiff. Subsequently, on August 6, 1968, Read and Teledyne, Inc., a Delaware corporation, executed a contract (Plan and Agreement of Reorganization) whereby Read agreed to convey, transfer, assign and deliver to Teledyne “. . . all of the assets, properties, business and good will of Transferor of every kind and description . . . ” After August 6, 1968, the only assets that were retained by Read consisted of the Agreement itself, the shares of Teledyne, Inc., which Read received and which it completely distributed to its shareholders and cash not in excess of $10,000 to pay the costs and expenses of carrying out the Agreement “including the subsequent dissolution and liquidation of transferor.” For sometime after August 6, 1968, the entire activities of Read essentially consisted of one officer forwarding correspondence and preserving the books and records of Read. Since August 6, 1968, there have been no formal meetings of officers or directors in Pennsylvania.

On January 14, 1970, plaintiff instituted this action. In an apparent attempt to counter Read’s contention that it had its principal place of business in York, Pennsylvania, plaintiff initially alleged that as a result of the “Agreement” between Read and Teledyne, Inc., there had been either a merger or a de facto merger of the two corporations and that Teledyne, Inc., as the surviving corporation is the proper defendant, and is liable for the injuries due to the defects in the products manufactured by the extinguished corporation, Read, before the transfer of assets. However, plaintiff’s present position as a result of recent discoveries, is that Read has never dissolved but is still in existence. This is not disputed by Read. Indeed, Read admits that “since August 6, 1968, it has remained a corporation incorporated and in good standing in Delaware.”

In the fifth paragraph of its motion to dismiss, Read, declares that “ . . at all times relevant to this action [it] has had its principal place of business within Pennsylvania for the purposes of 28 U.S.C. § 1332(c).” (Emphasis ours.) Read urges that when only the evénts prior to the August 6, 1968 sale of assets are considered, its principal place of business was clearly York, Pennsylvania. Moreover, Read directs our attention to the fact that since that date its offices have remained there (in York, Pa.), and that as of October 28, 1971, it became a division of Vasco Metals, Inc., which is incorporated in Pennsylvania, and which has its only office at Latrobe, Pennsylvania. Read’s assertions are of no consequence, since, as plaintiff correctly indicates, the significant date for the Court’s consideration is January 14, 1970. Contrary to the mistaken position of Read, a party’s citizenship is determined at the time the action is commenced and subsequent events cannot affect jurisdiction once it has attached. Gaines v. Dixie Carriers, Inc., 434 F.2d 52 (5th Cir. 1970); Television Reception Corp. v. Dunbar, 426 F.2d 174 (6th Cir. 1970); McNello v. John B. Kelly, Inc., 283 F.2d 96 (3rd Cir. 1960); Herpst v. S. B. I. Liquidating Corp., 279 F.Supp. 928 (E.D.Pa. 1968); Hamlin v. Holland, 256 F.Supp. 25 (E.D.Pa.1966); Barron & Holtzoff (Wright ed.) Sec. 26, n. 91.

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Bluebook (online)
356 F. Supp. 483, 1973 U.S. Dist. LEXIS 14411, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gavin-v-read-corporation-paed-1973.