Pennzoil Products Co. v. Colelli & Associates, Inc.

149 F.3d 197, 1998 WL 378809
CourtCourt of Appeals for the Third Circuit
DecidedJuly 9, 1998
Docket97-3335, 97-3344
StatusUnknown
Cited by3 cases

This text of 149 F.3d 197 (Pennzoil Products Co. v. Colelli & Associates, Inc.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Third Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Pennzoil Products Co. v. Colelli & Associates, Inc., 149 F.3d 197, 1998 WL 378809 (3d Cir. 1998).

Opinion

ROTH, Circuit Judge.

This appeal arises from a diversity action brought by Pennzoil Products Company (“Pennzoil”) against, among others, Colelli & Associates, Inc. and Colelli Oil Well Services, Inc. (collectively “Colelli”). Colelli sold to crude oil producers in Ohio a solvent, which was designed to reduce the accumulation of wax in the shafts of oil wells. The oil producers sold the oil to refineries, one of which was Pennzoil’s refinery in Pennsylvania. Pennzoil alleges that Colelli’s solvent contained silicon and that the silicon-tainted oil caused damage to its refinery. The district court granted Colelli’s motion to dismiss for lack of personal jurisdiction and certified its order for interlocutory appeal. Because we conclude that Pennsylvania’s long-arm statute extends personal jurisdiction to Colelli and that the exercise of such jurisdiction complies with constitutional due process requirements, we will reverse and remand to the district court for further proceedings consistent with this opinion.

I.

Pennzoil is a Nevada corporation with its principal place of business in Texas. Pennzoil operates an oil refinery in Rouseville, Pennsylvania, for which it purchases Penn grade and Corning grade crude oil from producers in Ohio. The two Colelli entities' are Ohio corporations with principal places of business in Ohio. Colelli is in the oil well maintenance business. It sells chemicals to oil producers to clean residue from their wells. Unlike most of the crude oil produced in the United.States, Penn grade and Corning grade crude oil from the Ohio oil fields contain high levels of paraffin (i.e., wax); The high wax content results in the gradual accumulation of wax in the shafts of oil wells. Wax build-up impedes oil flow and production. Colelli sold a paraffin solvent to Ohio oil producers which they injected into the oil wells to reduce the accumulation of wax. As a result, however, the solvent also mixed with the oil produced from those wells.

Approximately sixty percent of the Penn grade and Corning grade crude oil produced by the Ohio producers was sold and shipped to Pennsylvania refineries. One of these was Pennzoil’s Rouseville refinery. The other was a refinery owned by Witco in Bradford, Pennsylvania. The remaining oil was sold to a refinery in West Virginia. Cam C. Colelli, who founded and runs Colelli, has stated in deposition that he knew his customers (the producers) would be shipping oil to Pennzoil’s Rouseville refinery. In fact, in 1994 (prior to the events that underlie the present case), Pennzoil had complained of damage caused to its refinery by chlorides in Colelli solvents. Once the issue was brought to his attention, Cam Colelli worked with Pennzoil .to alleviate the chloride problem. He sent samples of solvents to Pennzoil’s laboratories for testing and attended a trade association seminar on the dangers of chlorides in crude oil solvents.

In September 1995, Pennzoil initiated a diversity action in the Western District of Pennsylvania against Colelli & Associates, alleging that the anti-paraffin solvent injected into the Ohio oil wells contained silicon and that the silicon damaged its Rouseville refinery. The complaint also named Pyramid Treating, Inc. (“Pyramid”) and T.O.P. Production and Oilfield Services, Inc. (“T.O.P.”) as defendants. In April 1996, Pennzoil amended its complaint to add Colelli Oil Well Services and Chemical Solvents, Inc. (“Chemical”) as defendants. Like Colelli, the other defendants are .Ohio corporations with principal places, of business in Ohio.

In August 1996, Colelli moved to dismiss for lack of personal jurisdiction pursuant to *200 Rule 12(b)(2) of the Federal Rules of Civil Procedure. On February 7,1997, the district court granted Colelli’s motion. Later that month, Pennzoil moved for modification of the February 7 order to permit an interlocutory appeal. Pyramid, T.O.P. and Chemical joined Pennzoil’s motion. In May 1997, the district court granted Pennzoil’s motion to permit the appeal. Subsequently, Pennzoil filed a petition for permission to appeal to this court, which was granted. Pyramid, T.O.P. and Chemical also filed a notice of appeal. The two appeals have been consolidated.

II.

Although the propriety of personal jurisdiction is in dispute, the district court clearly had subject-matter jurisdiction over this diversity action, pursuant to 28 U.S.C. § 1332(a). Furthermore, since its order dismissed some, but not all, of the defendants, the order was not final and appealable under 28 U.S.C. § 1291. Nonetheless, the district court did grant permission for an interlocutory appeal. Therefore, we have jurisdiction to hear this appeal pursuant to 28 U.S.C. § 1292(b).

To the extent that a district court makes factual findings in determining personal jurisdiction, we review for clear error. Mellon Bank (East) PSFS, National Association v. Farino, 960 F.2d 1217, 1220 (3d Cir.1992). However, a district court’s decision that it possesses or lacks personal jurisdiction over certain defendants is an issue of law of which our review is plenary. Id. at 1221.

III.

There are specific analytical steps we must take in determining whether personal jurisdiction can be asserted over a nonresident defendant. Rule 4(e) of the Federal Rules of Civil Procedure is the starting point. This rule “authorizes personal jurisdiction over non-resident defendants to the extent permissible under the law of the state where the district court sits.” Farino, 960 F.2d at 1221 (citation omitted). The forum state in this case is Pennsylvania. That state’s long-arm statute is codified at 42 Pa. Cons.Stat. Aun. § 5322. 1 We have acknowledged that the statute permits Pennsylvania courts to exercise personal jurisdiction over nonresident defendants “to the constitutional limits of the [D]ue [Pjrocess [Cjlause of the [Fjour-teenth [Ajmendment.” Farino, 960 F.2d at 1221 (citations omitted); see also Renner v. Lanard Toys Limited, 33 F.3d 277, 279 (3d Cir.1994) (noting that “Pennsylvania’s long-arm statute authorizes jurisdiction to the fullest extent permissible under the Constitution”). A district court’s exercise of personal jurisdiction pursuant to Pennsylvania’s long-arm statute is therefore valid as long as it is constitutional. Farino, 960 F.2d at 1221; see also Renner, 33 F.3d at 279 (“[Tjhis court’s inquiry is solely whether the exercise of personal jurisdiction over the defendant would be constitutional.”) (citation omitted).

Next, we must determine whether the defendant’s contacts with the forum state are sufficient to support general personal jurisdiction. Farino, 960 F.2d at 1221.

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149 F.3d 197, 1998 WL 378809, Counsel Stack Legal Research, https://law.counselstack.com/opinion/pennzoil-products-co-v-colelli-associates-inc-ca3-1998.