POSVEN, C.A. v. Liberty Mutual Insurance

303 F. Supp. 2d 391, 2004 U.S. Dist. LEXIS 381, 2004 WL 63497
CourtDistrict Court, S.D. New York
DecidedJanuary 12, 2004
Docket02 Civ. 0623(PKL)
StatusPublished
Cited by59 cases

This text of 303 F. Supp. 2d 391 (POSVEN, C.A. v. Liberty Mutual Insurance) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
POSVEN, C.A. v. Liberty Mutual Insurance, 303 F. Supp. 2d 391, 2004 U.S. Dist. LEXIS 381, 2004 WL 63497 (S.D.N.Y. 2004).

Opinion

OPINION AND ORDER

LEISURE, District Judge.

Plaintiff POSVEN, C.A. (“POSVEN”) commenced this diversity action seeking damages for breach of a $39,375,000 performance bond (“Performance Bond” or “Bond”) issued by defendant and third-party plaintiff Liberty Mutual Insurance Co. d/b/a Liberty Bond Services (“Liberty Mutual”). The Bond secured performance by Energy Overseas International, Inc. (“EOI”) and United Engineers, Inc. (“UEI”) on a series of contracts between POSVEN and EOI, UEI, and third-party defendant POSCO Engineering & Construction Co., Ltd. (“POSEC”). Liberty Mutual, in turn, brought a third-party complaint against POSEC for exoneration and quia timet, subrogation, contribution, reimbursement, restitution and indemnity. In response, POSEC now moves to dismiss the third-party complaint for lack of personal jurisdiction, pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. Liberty Mutual opposes the motion to dismiss and has filed a cross-motion to transfer the entire action to the Eastern District of Pennsylvania pursuant to 28 U.S.C. § 1404(a). Both POSVEN and PO-SEC oppose transfer of venue. For the reasons set for below, the Court denies the motion to dismiss and grants the motion to transfer.

I. BACKGROUND

This case centers on the performance of various contracts relating to the construction of a hot-briquette iron facility in Peur-to Ordaz, Venezuela (“the Project”). Plaintiff POSVEN is a Venezuelan company, with its principal place of business in Venezuela, formed as a joint venture among a number of companies including Pohang Iron & Steel Co., Ltd., third-party defendant POSEC-itself a subsidiary of Pohang Iron & Steel Co., Ltd., and UEI for the purpose of owning and operating the Project. (Third Party Compl. ¶ 2; Willems Aff., Ex. D.)

In 1997, POSEC, EOI, and UEI, formed a consortium and entered into a series of contracts (“the EPC Contracts”) with POSVEN to provide engineering, procurement and construction services for the Project. (Willems Aff. Ex. C, E-H.) The EPC Contracts were not negotiated in New York and none of the parties to the EPC Contracts were New York citizens or residents (Koo Decl. ¶ 9-10); however, the EPC Contracts do contain New York choice of law provisions (Willems Aff., Exs. E-H). Under the EPC Contracts, EOI and UEI were required to furnish a performance bond for the benefit of POS-VEN. (ComplV 7.) To fulfill this obligation, EOI and UEI obtained the Bond from defendant Liberty Mutual, a Massachusetts company with its principle place of business in Boston, Massachusetts and its headquarters in the Philadelphia, Pennsylvania area. (Compl. ¶¶ 2, 8; Liberty Mutual Opp. at 9 n. 5.)

In early 2001, problems began to arise relating to the quality of hot-briquette iron produced by the Project and the construction and engineering of the Project. POS-VEN now alleges in its complaint filed January 25, 2002 that EOI and UEI *395 breached the EPC Contracts in numerous respects, including failing to pay liquidated damages for delay and lack of performance to POSVEN, failing to perform required work and failing to correct deficient and defective work on the Project, abandoning the Project, and filing for bankruptcy. (ComplJ 9.) POSVEN contends that because EOI and UEI are in default and have been declared to be in default of their obligations under the EPC Contracts POS-VEN is entitled to the full sum of the Bond. (Compl.M 10-12.)

Liberty Mutual, in turn, alleges in its third-party complaint that POSEC, a Korean company with its principal place of business in the Republic of Korea, is jointly and severally liable for the alleged breaches of the EPC Contracts and moreover that the alleged breaches- relate in substantial part to the performance of equipment supplied by POSEC as part of its obligations under the EPC Contracts. (Third Party Compl. ¶¶ 6-12.) Accordingly, Liberty Mutual seeks recovery from POSEC under various subrogation, contribution and indemnification causes of action. POSEC has moved to dismiss the third-part complaint on the grounds that it is not subject to personal jurisdiction in this Court. Liberty Mutual argues that this Court does have personal jurisdiction over POSEC but that if the Court is inclined to find otherwise, the appropriate course is to transfer venue to the Eastern District of Pennsylvania where, according to Liberty Mutual, POSEC is subject to personal jurisdiction.

While most of the relevant acts and omissions in this case occurred in Venezuela, certain acts of jurisdictional significance occurred in both Pennsylvania and New York. Between 1997 and 2001, both UEI and EOI had their principal place of business in Philadelphia, Pennsylvania, where UEI performed most of its engineering and procurement duties under the EPC Contracts. (Marrone Decl. ¶ 3.) From February 1997 to October 1997, POSEC essentially ran a satellite office in space it rented within UEI’s Philadelphia office. (Id.) As many as seven PÓSEC employees performed substantial procurement and engineering work relating to the EPC contracts out of this office, including taking part in meetings and other eommuniea-tions with UEI, EOI and various contractors and subcontractors and preparing reports outlining the progress of POSEC’s performance under the EPC Contracts. (Marrone Decl. -¶3, Exs. 4-12.) In addition, POSVEN corresponded extensively with the Philadelphia offices of UEO, EOI and POSEC via mail, facsimile and telephone regarding the Project. (Marrone Decl. ¶ 3.) After October 1997, POSEC maintained a liaison officer in Philadelphia through mid-February 1998. (Id.)

The relevant contacts in New York occurred on May 16, 2001 when all of POS-VEN’s shareholders attended a meeting in New York City. The agenda for this meeting was to resolve the financial restrüctur-ing of POSVEN;' however, the minutes of the meeting show substantial discussion regarding the construction and quality problems impeding the Project. (Id. ¶ 4 and Ex. 13.) Furthermore; the minutes indicate that the proposed financial restructuring was closely integrated with and largely contingent upon the resolution of these same construction and quality problems. (Id:, Ex. 13). POSEC was represented at the meeting by POSVEN’s general counsel,- Mr. Fernando Pelaez Pier, Esq. (Id.) Mr. Pier was not an employee of POSEC, but rather was granted power of attorney for the purpose of representing POSEC in the May 16 meeting. (Supp. Koo Decl. ¶ 4.) Specifically, Mr. Pelaez Pier was authorized to represent POSEC in resolving the financial restructuring of POSVEN, including taking part *396 in the deliberations and voting on this issue. (Supp. Koo Dech, Ex. A.)

II. DISCUSSION

A. Personal Jurisdiction

On a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, it is well established that “the plaintiff bears the burden of showing that the court has jurisdiction over the defendant.” Bank Brussels Lambert v. Fiddler Gonzalez & Rodriguez, 171 F.3d 779, 784 (2d Cir.1999); Metropolitan Life Ins. Co. v. Robertson-Ceco Corp.,

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303 F. Supp. 2d 391, 2004 U.S. Dist. LEXIS 381, 2004 WL 63497, Counsel Stack Legal Research, https://law.counselstack.com/opinion/posven-ca-v-liberty-mutual-insurance-nysd-2004.