author: SHADUR, District Judge.

text:
    Herman NEAL, et al., Plaintiffs, v. REPUBLIC AIRLINES, INC., Defendant.
    No. 84 C 10034.
    United States District Court, N.D. Illinois, E.D.
    March 27, 1985.

      Stephen E. Smith, Gottlieb & Schwartz, Chicago, Ill., for plaintiffs.
    N.F. Thompson, Lord, Bissell & Brook, Chicago, Ill., for defendant.
   MEMORANDUM OPINION AND ORDER

SHADUR, District Judge.

All the children and heirs at law of Rozena Neal (“Mrs. Neal”) filed this diversity action against Republic Airlines (“Republic”) for damages arising from Republic’s failure to deliver Mrs. Neal’s remains to Columbus, Mississippi on November 24, 1982 as promised. Plaintiffs’ six-count Complaint purports to state causes of action against Republic based on allegations of breach of contract, negligence, bailment, res ipsa loquitur, negligent infliction of emotional distress and gross negligence. Republic has now moved under Fed.R. Civ.P. (“Rule”) 56 for summary judgment on all six counts. For the reasons stated in this memorandum opinion and order, Republic’s motion is granted.

Facts

Mrs. Neal died in Chicago November 23, 1982, having previously expressed the wish to be buried in her birthplace, Sullijent, Alabama. Arrangements were immediately made with Inman Nationwide Shipping (“Inman”) to ship Mrs. Neal’s remains from Chicago to Alabama. Inman in turn contracted with Republic to transport Mrs. Neal’s remains by air from Chicago to Columbus, Mississippi (the airport nearest to Sullijent). There Mrs. Neal’s remains were to be delivered to Norwood Funeral Home (“Norwood”), which had agreed to carry them to Sullijent.

Upon receipt of Mrs. Neal’s remains at O’Hare International Airport, Republic issued an airbill to Inman providing for shipment on November 24 via Republic’s flight 480. Through some error, Mrs. Neal’s remains were not transported on flight 480 but were instead shipped on other flights from Chicago to Memphis to Atlanta to Greenville, Mississippi and then back to Memphis again. They did not arrive in Columbus until the afternoon of November 25, approximately 24 hours later than expected. That delay, according to Complaint ¶ 31, “interfered with the timely and proper burial of their mother by plaintiffs.”

Counts II-VI

Republic contends Counts II-VI (sounding in negligence, bailment, res ipsa loquitur, negligent infliction of emotional distress and gross negligence) fail to state claims upon which relief can be granted. That contention is grounded in doctrine well-settled in the case law well before 1979 (which, as will later be seen, plaintiffs urge is a watershed year). As Blair v. Delta Air Lines, Inc., 344 F.Supp. 360, 365 (S.D.Fla.1972) (citations omitted) said:

It is also clear that tariffs, if valid and accepted by the C.A.B. [the Civil Aeronautics Board, “CAB”], may contain exculpatory clauses for certain classes of freight and limitations of liability for loss or damage to specified property, regardless of fault.... The established rule is that the tariffs, if valid, constitute the contract of carriage between the parties and “conclusively and exclusively govern the rights and liabilities between the parties.” Mao v. Eastern Air Lines, Inc., 310 F.Supp. 844, 846 (S.D.N.Y.1970).

That statement of the law reflects principles derived from the common law of common carriers. While the common law generally held a carrier should not be able to avoid liability for its own negligence,' it distinguished the case where a carrier calculated the carriage rate on the declared value of the property shipped. In that instance (First Pennsylvania Bank v. Eastern Air Lines, Inc., 731 F.2d 1113, 1116 (3d Cir.1984)):

In a suit against the carrier in such a case, the carrier’s negligence was assumed to exist, rather than avoided; the limitation of the shipper’s damages to the agreed value was merely a consequence of the assumption that the agreed upon value was the true value of the property transported.... The agreed upon value merely constituted an estoppel against the unfairness of asserting a larger amount as the true value when the carrier was sued for damages in spite of the fact that a smaller value had been used to calculate the rate.

That rationale stands up, of course, only on the assumption that a shipper has had a fair opportunity to declare a value for the property shipped and to pay the corresponding rate. See Fireman’s Fund Insurance Cos. v. Barnes Electric, Inc., 540 F.Supp. 640, 645 (N.D.Ind.1982). Once air carriers were required to file tariffs with the CAB, which in turn reviewed them and required publication of those it approved (see 49 U.S.C. § 1373 (1976)), shippers were presumed to have knowledge of the liability limits corresponding to the carriage rates they agreed to pay. Thus the federal law regulating air carrier tariffs arose in the context of and operated in conjunction with the existing common-law doctrine of declared or released value rates. See First Pennsylvania Bank, 731 F.2d at 1116-17.

Under the regime just outlined, then, a shipper seeking damages from a carrier for delay in delivery or loss of property is bound by the terms of the carriage contract. Consequently the shipper may not, by recasting the form of action, escape the effect of a valid stipulation restricting liability to the declared valuation. See Young v. Delta Air Lines, Inc., 78 A.D.2d 616, 432 N.Y.S.2d 390 (1980) and cases there cited. Where (as here) it is clear plaintiffs seek damages for breach of the carriage contract with Republic, they may not avoid that contract’s liability limits by framing their complaint in terms of bailment and tort. They must proceed, if at all, on a breach of contract theory.

In a misguided effort to avoid dismissal of Counts II-VI, plaintiffs argue the reasoning of the pre-1979 cases no longer represents good law because in late 1978 the CAB, acting under the authority of the Airline Deregulation Act of 1978, 49 U.S.C. § 1551, issued regulations exempting air carriers from tariff filing requirements. See Regulation ER-1080, Operating Rules for All-Cargo Carriers and Domestic Cargo Transportation by Section 401 and 418 Carriers, reissuing part 291 of General Rules for All Cargo Carriers, 14 C.F.R. Part 291 (1979). Plaintiffs’ Mem. 1 contends the lifting of the filing requirements for air carriers “voided their ability to hide behind limitations of liability in the tariffs that they had previously filed.”

But as the discussion earlier in this opinion suggests, the common-law doctrine of declared value rates predated the tariff filing scheme. All the pre-1979 CAB-filed tariffs did in that respect was to create a system of constructive notice to shippers (somewhat akin to the recording system for documents affecting real estate—or aircraft—titles). While Regulation ER-1080 —whose aim was to leave the setting of air carriage tariffs to market forces—meant air carriers could no longer presume a shipper’s notice of CAB-approved tariffs, it did not bar the carriers themselves from providing shippers with the requisite notice of declared value rates. As First Pennsylvania Bank, 731 F.2d at 1120 put it:

With respect to rates, a succinct statement of the effect of the deregulation would be that the CAB was shorn of its powers to pass upon the reasonableness of rates for interstate air transportation of property, and to prescribe future rates to replace those found to be unreasonable. Abolition of these powers of the CAB simply abrogated pro tanto the doctrine of “primary jurisdiction” with respect to such rates. The courts were thus left free to proceed without circuity to apply directly the familiar federal common law rules relating to the subject matter of released value rates.

Here there can be no doubt Inman, as shipper, did have actual notice of Republic’s tariffs and an adequate opportunity to declare a higher value for the shipment. Republic’s airbill to Inman (Complaint Ex. 1) states twice on its face (once at the top and once in the space provided for the shipper’s signature) that it is subject to the “Conditions of Contract” set out on the reverse. Those include specific liability limitations:

Carriage is subject to the Carrier’s governing rules, rates, and classifications, stated in the most recent Official Airline Freight Rate Tariff. Such rules, rates, and classifications are incorporated into this Contract and are available for inspection by the parties hereto at all points where Carrier’s air freight transportation is sold or shipments are accepted by the Carrier.
* * * * * *
A shipment shall have a declared value of $0.50 per lb. (but not less than $50.00) unless a higher value is declared on the airbill at the time of receipt of the shipment from the shipper, and if a higher value is so declared, an additional transportation charge of $0.40 shall be required for reach $100.00 (or fraction thereof) by which such higher value ex-, ceeds $0.50 per lb. or $50.00, whichever is higher.
Carrier shall not be liable for special or consequential damages unless, at the time of receipt of the shipment, Carrier is given notice in writing on the airbill of the circumstances which could result in such damages. Carrier’s liability for such damages shall not exceed the declared value of the shipment.
* * * * * *
By tendering the shipment to the carrier for transportation, the shipper, for himself and all other parties having an interest in the shipment, agrees to the limitations set forth in these rules and affirms the description of the shipment as recited on the airbill and the fact that the shipment is not of a nature unsuitable for the carriage by air or hazardous thereto.

Those conditions provide unequivocal notice of Republic’s rate and liability structure, affording Inman ample opportunity to have declared a value in excess of the contract-specified amount of $0.50 per pound. Inman did not. Accordingly neither Inman nor those on whose behalf it acted—parties with an interest in the shipment—may look to anything but the airbill itself as a basis for recovery from Republic. Counts II-VI are dismissed with prejudice.

Count I

Although Republic acknowledges it is open to suit for breach of the carriage contract, it challenges Count I on the ground that plaintiffs are not in a position to assert that contract claim. Republic points out the airbill identifies Inman as the shipper and Norwood as the consignee. It nowhere identifies plaintiffs as parties to the carriage contract. Under those circumstances, Republic argues, its liability runs to the parties with whom it dealt, not to parties who stand at some remove from the transaction.

That argument does not directly address plaintiffs’ allegation (Complaint ¶ 14) that they are third-party beneficiaries of the carriage contract with Republic, but it does point to the poverty of that assertion. It is hornbook contract law that a third-party beneficiary must be an intended beneficiary of the performance of the contract. Restatement (Second) of Contracts 2d §§ 302, 304 (1981). With Republic having no specific awareness of plaintiffs’ existence or of their interest in the contract, it is wholly implausible to conclude they were intended beneficiaries. At most they were incidental beneficiaries of Republic’s performance and as such have no right to sue. Id.

To turn from the general law to the specific, the law governing the liability of interstate carriers makes plain that in cases involving an intermediate freight handler between the carrier and the original shipper, the carrier’s liability runs to the middleman alone. As the Supreme Court stated in Chicago, Milwaukee, St. Paul & Pacific R.R. Co. v. Acme Fast Freight, Inc., 336 U.S. 465, 487, 69 S.Ct. 692, 702, 93 L.Ed. 817 (1949), setting out the long standing rule applicable to such three-party cases:

As shippers, [freight forwarders] have, of course, always had a right of action against the underlying carrier at fault. The defense that the goods are not those of the forwarder is not open to the carrier, since, as we have held, the carrier is not concerned with questions of ownership, but must treat the forwarder as shipper.

See also Montgomery Ward & Co. v. Peter J. McBreen & Associates, 40 Ill.App.3d 69, 72, 351 N.E.2d 324, 326 (1st Dist.1976) (citing Acme Fast Freight and holding an air carrier’s liability for loss of cargo runs to the freight forwarder, not to the original shipper). While plaintiffs may have a claim against Inman or Norwood, they are not in a position to state one against Republic. Republic’s motion must be granted as to Count I as well.

Conclusion

There is no genuine issue of material fact. Republic is entitled to a judgment as a matter of law on all six counts of the Complaint. This action is dismissed with prejudice.

      . Familiar Rule 56 principles impose on the party moving for summary judgment the burden of establishing the lack of a genuine issue of material fact. Korf v. Ball State University, 726 F.2d 1222, 1226 (7th Cir.1984). For that purpose the court must, in viewing the evidence, draw all reasonable inferences in the light most favorable to the nonmovant. Hermes v. Hein, 742 F.2d 350, 353 (7th Cir.1984). Because Republic’s motion (depending as it does on rules of law applicable to plaintiffs' version of the facts) comes before the completion of any substantial discovery in the case, the summary in the text is based in principal part on the factual allegations in the Complaint. There is no quarrel between the parties as to the relevant facts.

      . Though the doctrine of declared value rates has been applied by both state and federal courts, its status as a doctrine of federal common law is of interest for purposes of this case. Both sides agree, and the case law makes plain, that contracts for interstate carriage are governed by federal law. See First Pennsylvania Bank, 731 F.2d at 1115-19.

      . In a further effort to escape this result, plaintiffs also argue wilful conduct on the part of the carrier will void contractual liability limits. They say Count VI, which alleges wanton and wilful conduct against Republic, must then survive. That argument is faulty in two respects:
      1. Where interstate carriage is concerned, only an appropriation of property by the carrier for its own use is sufficient to get around limits on liability. Wilful misconduct is not enough. See Rocky Ford Moving Vans v. United States, 501 F.2d 1369, 1372-73 (8th Cir.1974); Glickfield v. Howard Van Lines, Inc., 213 F.2d 723, 727 (9th Cir.1954). Plaintiffs’ citation of Tarar v. Pakistan International Airlines, 554 F.Supp. 471, 478-79 (S.D.Tex.1982), a case decided under the Warsaw Convention, is simply inapt. Article 25 of the Warsaw Convention provides explicitly: (1) The carrier shall not be entitled to avail himself of the provisions of this convention which exclude or limit his liability, if the damage is caused by his wilful misconduct or by such other default on his part as, in accordance with the law of the Court to which the case is submitted, is considered to be equivalent to wilful misconduct.
      No similar provision covers the contract of carriage at issue in this case.
      2. Even if wilful misconduct were enough to void the liability limits of Republic’s air-bill, plaintiffs have offered no factual basis (even with the benefit of reasonable inferences) for plaintiffs’ Count VI allegations (see Rule 56(e)). After all Mrs. Neal's remains were delivered only 24 hours later than promised and only 48 hours after her death. There is no indication, moreover, that the shipment was mishandled or damaged apart from the delay.

      . Indeed it is not clear just where plaintiffs stand in relation to Republic. It is possible— though it seems unlikely—that plaintiffs approached Inman directly to arrange for shipment of Mrs. Neal's remains. It is much more likely that plaintiffs approached either Norwood or an unnamed third party in Chicago who in turn made arrangement for shipment with In-man. In any event there is no indication plaintiffs dealt directly with Republic, and that controls the current motion. At best plaintiffs relied on Inman to arrange for timely delivery. This opinion does not of course deal with any claim they may have against Inman, not Republic.

      . Indeed, even were neither of those fatal flaws applicable to defeat plaintiffs’ contract claim, the terms of the contract itself would likely do so. As third-party beneficiaries, plaintiffs would have to take the contract as they found it. Condition 7 of the contract reads in part:
      Claims for non-delivery must be filed within 9 months and 9 days of shipment date.
      If "non-delivery” includes failure to deliver when promised, plaintiffs (who sued two years after the delayed delivery) are out of time. And of course they cannot rely on the timely claim by Norwood, the only claim Republic knew about and one that Republic promptly settled.

      . This Court therefore need not consider Republic’s arguments directed to the contingency of a viable breach-of-contract claim. Several would defeat the claim entirely (see, e.g., n. 5). And of course even if plaintiffs did have such a claim and even were they deemed to have satisfied all the contractual conditions, their recovery would be limited to $130 (260 pounds at $0.50 per pound) by virtue of the liability limits applicable under the declared value rates doctrine.


source: Caselaw Access Project

author: STAPLETON, Chief Judge:

license: Public Domain

text:
    Robert R. GOFFE, a citizen of the District of Columbia, Plaintiff, v. Stephen BLAKE, a citizen of Indiana, individually and as an officer and director of AMW, Inc., and as an officer, director, and owner of Avanti Motor Corporation, AMW, Inc., a corporation of the State of Delaware, and Avanti Motor Corporation, an Indiana corporation, Defendants.
    Civ. A. No. 83-762-WKS.
    United States District Court, D. Delaware.
    March 27, 1985.

      Richard R. Wier, Jr., Vernon R. Proctor, Prickett, Jones, Elliott, Kristol & Schnee, Wilmington, Del., J. Michael Cavanaugh, Gary W. Christian, Graham & James, Washington, D.C., for plaintiff.
    Michael D. Goldman, Potter, Anderson & Corroon, Wilmington, Del., Charles R. Donnenfeld, Lucinda J. Bach, Schwalb, Donnenfeld, Bray & Silbert, Washington, D.C., for defendants.
   OPINION

STAPLETON, Chief Judge:

This is a diversity action brought by plaintiff Robert R. Goffe (“Goffe”) against defendants Stephen EL- Blake (“Blake”), AMW, Inc. (“AMW-Delaware”), and Avanti Motor Corporation (“Avanti”) asserting claims based on breach of contract, common law fraud, and breach of fiduciary duty. Following the filing of an amended complaint, defendants moved to dismiss. I denied the motion to dismiss with respect to AMW-Delaware and Avanti but held that venue was improper as to Blake. Thereafter, Goffe moved to transfer the case to the District of Columbia and defendants moved to transfer the case to the Northern District of Indiana. For the reasons set forth herein, I find that this case should be transferred to the District of Columbia.

BACKGROUND

Plaintiff Goffe is a citizen and resident of the District of Columbia where he practices law, specializing in tax and securities matters. Defendant Blake is a resident of the Northern District of Indiana, although he was a resident of the District of Columbia prior to October, 1982. Blake is an officer, director, and owner of Avanti.

The background with respect to AMW-Delaware and Avanti is somewhat more complicated. AMW-Delaware was formed in 1981 allegedly as part of á plan to acquire Avanti Motor Corporation (a going concern manufacturing automobiles). Blake held stock in AMW-Delaware. On September 27, 1982, another corporation called AMW, Inc. was incorporated in Indiana (“AMW-Indiana”), and, on October 1, 1982, AMW-Delaware was merged into AMW-Indiana. In accordance with the merger agreement all outstanding shares of AMW-Delaware were then converted into shares of AMW-Indiana. At approximately the same time, AMW-Indiana purchased Avanti Motor Corporation. Thereafter, on November 1, 1982, AMW-Indiana formally was renamed Avanti Motor Corporation. As a result of these transactions, Blake became a stockholder of Avanti. Apparently, the merger agreement was not filed in Delaware after its approval, and consequently, AMW-Delaware continued to exist as a Delaware entity. However, counsel has indicated that the certificate of merger has now been filed in Delaware, and as a result, AMW-Delaware no longer exists.

In general terms, Goffe alleges that Blake approached him in Washington, D.C. in January, 1981, to retain Goffe's services in connection with Blake’s quest to acquire Avanti Motor Corporation. Following this meeting, Goffe claims that he entered into an oral agreement with Blake that he would help raise capital and perform other preacquisition services for Blake in return for an interest equal to Blake’s in Avanti or any entity acquiring an interest in Avanti. Blake and Goffe also allegedly agreed that Goffe would be paid for his legal services out of investment capital, once the acquisition took place.

In September, 1981, Goffe claims that he and Blake decided to incorporate AMW-Delaware as a vehicle for acquiring Avanti Motor Corporation. As part of this plan, it was allegedly agreed upon that both Goffe and Blake would purchase 250 shares of the initial 1,000 share offering' of AMW-Delaware. Goffe asserts that this agreement was memorialized in a Pre-Incorporation Agreement which was allegedly signed in October, 1981.

On December 17, 1981, AMW-Delaware was incorporated and on December 21, 1981, an organizational meeting was allegedly held in Washington, D.C. Goffe claims that at this meeting he and Blake were elected officers of AMW-Delaware and were issued stock in accordance with the Pre-Incorporation Agreement. However, on December 29, 1981, Blake allegedly informed Goffe that there had been a “foul-up” with the incorporation of AMW-Delaware and by March, 1982, all communications between Blake and Goffe had ended. Indeed, Goffe claims he was unable to locate or contact Blake thereafter. Only then did Goffe terminate the services that he had allegedly been performing on a full time basis since January, 1981.

On October 28, 1983, Goffe initiated this action seeking, inter alia, specific performance of the Pre-Incorporation Agreement, damages caused by the defendants’ breach of this agreement, damages resulting from being fraudulently induced to provide services in connection with Blake’s efforts to acquire Avanti, and reimbursement in quantum meruit for those services thus provided. The defendants have denied virtually all of the material allegations contained in the complaint and the affidavits submitted by Goffe.

DISCUSSION

Goffe has moved to transfer this action to the District of Columbia pursuant to 28 U.S.C. § 1406(a) which provides, as follows:

The district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought.

(emphasis added).

By contrast, defendants have moved to transfer the case to the Northern District of Indiana pursuant to 28 U.S.C. § 1404(a) which provides, as follows:

For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought.

(emphasis added).

The parties agree that under either statute, it is necessary to show that all defendants are subject to the in personam jurisdiction of the transferee court before transfer to that court can be properly effectuated. The defendants maintain, however, that this action cannot be transferred to the District of Columbia because Avanti is not subject to personal jurisdiction in that forum. Goffe, on the other hand, argues that Avanti’s contacts with the District of Columbia are sufficient to render Avanti amenable to suit under the District of Columbia long-arm statute thereby allowing transfer to that forum.

A. The Standard To Be Applied

In Shutte v. Armco Steel Corp., 431 F.2d 22 (3d Cir.1970), cert. denied, 401 U.S. 910, 91 S.Ct. 871, 27 L.Ed.2d 808 (1971), the Third Circuit Court of Appeals discussed the statutory requirement that a case be transferred only to a forum in which it could have been originally brought, commenting as follows:

[A] transfer is authorized by the statute only if the plaintiff had an “unqualified right” to bring the action in the transferee forum at the time of the commencement of the action; i.e. venue must have been proper in the transferee district and the transferee court must have had power to command jurisdiction over all the defendants.... If there is a “real question” whether a plaintiff could have commenced the action originally in the transferee forum, ... it is evident that he would not have an unqualified right to bring his cause in the transferee forum.

Id. at 24. The court found that there was substantial doubt as to the validity of the then new long-arm statute of the state of the transferee forum, and hence, that plaintiff did not have an “unqualified right” to bring her suit in the transferee forum because personal jurisdiction over one of the defendants was questionable. Id. at 24-25. Therefore, if I find that there is a “real question” over whether Avanti is amenable to service of process in the District of Columbia, I must deny Goffe’s motion to transfer the case to that forum.

B. Bases For Personal Jurisdiction Over Avanti In The District Of Columbia

Plaintiff argues that Avanti is subject to personal jurisdiction in the District of Columbia under either the general “doing business” jurisdictional statute, D.C.Code Ann. § 13-334, or the District of Columbia “long-arm” statute, D.C.Code Ann. § 13-423. Plaintiff grounds this argument on both Avanti’s contacts and actions with respect to the District of Columbia, and the contacts and actions of AMW-Delaware and Blake with respect to the District of Columbia which plaintiff asserts may be attributed to Avanti for purposes of personal jurisdiction.

1. Attribution of the Conduct of Blake and AWM-Delaware to Avanti for Purposes of Personal Jurisdiction

As a general proposition, actions arid conduct of a constituent corporation may be attributed to the surviving corporation following a merger for purposes of determining the surviving corporation’s amenability to personal jurisdiction for liabilities incurred by the constituent corporation. For example, in Duris v. Erato Shipping, Inc., 684 F.2d 352 (6th Cir.1982), the lower court dismissed plaintiff’s complaint on grounds, inter alia, that plaintiff had failed to establish in personam jurisdiction over the surviving corporation to a merger because the surviving corporation, as opposed to the constituent corporation, did not have sufficient business contacts in Ohio to bring it within the reach of that state’s long-arm jurisdictional statute. On appeal, the Sixth Circuit reversed, finding that although the surviving corporation never had done any business in Ohio, its constituent corporation clearly had. Moreover, under Ohio law, the surviving corporation was liable “for all claims against the constituent corporation.” Id. at 356. The court thus held that the plaintiff could gain personal jurisdiction over the surviving corporation merely by establishing Ohio contacts sufficient to exercise personal jurisdiction over the constituent corporation. “Any other ruling would allow corporations to immunize themselves by formalistically changing their titles.” Id. The Supreme Court affirmed without addressing this aspect of the case. Pallas Shipping Agency, Ltd. v. Duris, 461 U.S. 529, 103 S.Ct. 1991, 76 L.Ed.2d 120 (1983).

Similarly, in Cole v. Caterpillar Machinery Corp., 562 F.Supp. 179 (M.D.La.1983), the court ruled that where a successor corporation to a merger had no contacts with the forum state, it could still be subject to in personam jurisdiction without offending due process requirements since plaintiffs claim arose against the constituent corporation and that corporation had had significant contacts with the forum state. The court noted that as a result of the merger, the successor corporation had assumed both the liabilities and the assets of the constituent corporation. The court then found as follows:

Since Americas [the surviving corporation] could have availed itself of the benefits of the forum in order to sue for monies owed its corporate predecessor, it seems only fair that Americas, deriving benefits from the forum should also be expected to answer for liabilities incurred by the alleged negligent actions of its predecessor.... Louisiana’s courts were open for Americas to assert any claims it might have by virtue of its merger with Machinery [the constituent corporation]. Having available the benefits, Americas has a corresponding duty to answer for liabilities.

Id. at 180-81.

Likewise, in Maryland National Bank v. Shaffer Stores Co., 240 F.Supp. 777 (D.Md.1965), the court held that personal jurisdiction could be properly asserted pursuant to the Maryland long-arm statute and the Due Process Clause of the Constitution over the surviving corporation to a merger for claims based on an agreement entered into by a constituent corporation. The court specifically rejected the argument advanced by the surviving corporation that since its sole contact with Maryland was as “the successor, by several corporate mergers, to an alleged obligor under a contract concededly made in Maryland”, id. at 779, it would be a denial of due process to subject it to suit in Maryland under such circumstances. See also Fehl v. S.W.C. Corp., 433 F.Supp. 939, 947 (D.Del.1977) (“personal jurisdiction ... [under Delaware law] may be assumed over a successor corporation, on the basis of acts of its predecessor, in cases where a merger or continuation has preserved the same corporate entity intact”), reh’g denied, 449 F.Supp. 48 (D.Del.1978).

Defendants vigorously oppose the conclusion that the actions and conduct of a constituent corporation may be attributed to the surviving corporation of a merger for purposes of establishing in personam jurisdiction over such corporation asserting that, at least in this case, Delaware’s Corporation Law mandates that suits arising out of liabilities of AMW-Delaware, the predecessor or constituent corporation to the merger, are to be brought in Delaware and only Delaware. Specifically, while defendants concede that under 8 Del. C. § 259(a) (1983), Avanti, as the surviving corporation to the merger, is subject to all the debts, liabilities, and duties of the constituent corporation, AMW-Delaware, they assert that 8 Del. C. § 252(d) (1983) limits where suits on such debts, liabilities, and duties can be filed to only Delaware, invoking the following statutory language:

If the corporation surviving or resulting from the merger or consolidation is to be governed by the laws of the District of Columbia or any state other than this State, it shall agree that it may be served with process in this State in any proceeding for enforcement of any obligation of any constituent corporation of this State....

8 Del. C. § 252(d) (1983). Defendants rely on Cole v. National Cash Credit Association, 18 Del. Ch. 47, 156 A. 183 (1931), as support for their interpretation of this section of the Delaware Corporation Law.

I do not find defendants’ contentions persuasive. The central thrust of both Section 252(d) of the Delaware Corporation Law, 8 Del. C. § 252(d) (1983), and Cole v. National Cash Credit Association is to ensure that there is at least one judicial forum available in which claims against a constituent or predecessor Delaware corporation can be brought. Contrary to defendants’ position, there is nothing in these two authorities to indicate that Delaware is to be the only forum for asserting such claims. Consequently, the actions and conduct of AMW-Delaware may be attributed to Avanti for determining whether Avanti is subject to the jurisdiction of the District of Columbia courts.

With respect to whether the actions and conduct of Blake within the District of Columbia may be attributed to Avanti, it is clear that under District of Columbia law, the acts of an agent can be attributed to the agent’s principal for purposes of asserting personal jurisdiction. D.C.Code § 13-423(a). See Rose v. Silver, 394 A.2d 1368, 1371-72 (D.C.1978), reh’g denied, 398 A.2d 787 (D.C.1979); Daughtry v. Arlington County, 490 F.Supp. 307 (D.D.C.1980); Mandelkorn v. Patrick, 359 F.Supp. 692 (D.D.C.1973). As the president and treasurer of AMW-Delaware, Blake had the power to act as AMW-Delaware’s agent. Consequently, his conduct can be attributed to AMW-Delaware for purposes of personal jurisdiction. Since I have already found that AMW-Delaware’s actions can likewise be attributed to Avanti, I conclude that to the extent Blake was acting as AMW-Delaware’s agent, his actions can be attributed to Avanti for purposes of deciding whether Avanti is subject to the jurisdiction of the District of Columbia courts. Likewise, to the extent Blake was acting as Avanti’s agent following the merger of AMW-Delaware into AMW-Indiana (Avanti), Blake’s conduct can be directly attributed to Avanti for such purposes.

2. The District of Columbia Long-Arm Statute

Goffe asserts that Avanti is amenable to service of process in the District of Columbia under subsections (a)(1), (a)(3), and (a)(4) of the District of Columbia long-arm statute. D.C.Code Ann. §§ 13-423(a)(1), (a)(3), (a)(4). Subsection (a)(1) provides that “[a] District of Columbia court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a claim for relief arising from the person’s transacting any business in the District of Columbia.” D.C.Code Ann. § 13-423(a)(l). The District of Columbia Court of Appeals has declared that this clause “permit[s] the exercise of personal jurisdiction over nonresident defendants to the extent permitted by the due process clause of the United States Constitution.” Environmental Research International, Inc. v. Lockwood Greene Engineers, Inc., 355 A.2d 808, 810-11 (D.C.1976) (en banc). See also Hummel v. Koehler, 458 A.2d 1187, 1190 (D.C.1983); Smith v. Jenkins, 452 A.2d 333, 336 (D.C.1982); Mouzavires v. Baxter, 434 A.2d 988, 993 (D.C.1981) (en bane), cert. denied, 455 U.S. 1006, 102 S.Ct. 1643, 71 L.Ed.2d 875 (1982); Stabilisierungsfonds Fur Wein v. Kaiser Stuhl Wine Distributors Pty., Ltd., 647 F.2d 200, 204-205 (D.C.Cir.1981) (hereafter “SFW v. Kaiser”).

Generally, a determination as to whether a court may properly assert personal jurisdiction over a nonresident defendant involves an examination of both the statutory authority for extraterritorial service of process and due process limitations on such service. Smith v. Jenkins, supra, 452 A.2d at 336; Mouzavires v. Baxter, supra, 434 A.2d at 992. However, it has been suggested that since the “transacting any business” provision of the District’s long-arm statute,- D.C.Code Ann. § 13—423(a)(1), has been found to be coextensive with the permissible bounds of due process, these two steps have been merged “into a single due process analysis.” Smith v. Jenkins, supra, 452 A.2d at 336. While this may be a short-hand way of indicating that in most cases grounding in personam jurisdiction on subsection (a)(1) of the long-arm statute, D.C.Code Ann. § 13-423(a)(1), the required analysis will necessarily and primarily involve due process considerations, it is clear that the District of Columbia has not abandoned the requirement found in the long-arm statute that “jurisdiction of the court ‘is restricted to .claims arising from the particular transaction of business carried-out in the District’ ”. Beachboard v. Trustees of Columbia University, 475 A.2d 398, 401 (D.C.1984) (quoting Berwyn Fuel, Inc. v. Hogan, 399 A.2d 79, 80 (D.C.1979)). See also Cockrell v. Cumberland Corp., 458 A.2d 716, 717 n. 2 (D.C.1983) (“The fact that appellee may have transacted business with other customers in the District of Columbia is of no help to appellant, for his claim must arise from the particular transaction on which he relies as a basis for jurisdiction”); D.C.Code Ann. § 13-423(b).

In the case at bar, plaintiff Goffe alleges, inter alia, that AMW-Delaware expressly and/or impliedly adopted at the corporation’s organizational meeting held in the District of Columbia the Pre-Incorporation Agreement entered into between Goffe and Blake. By adopting this Agreement, Goffe asserts that AMW-Delaware became contractually bound to honor its terms including the provision whereby Goffe was to receive the same amount of stock in AMW-Delaware as Blake. Goffe contends that he never received the ownership interest in AMW-Delaware (and later Avanti) to which he was entitled under the terms of the Pre-Incorporation Agreement, and therefore, AMW-Delaware and consequently Avanti as the successor corporation is jointly and severally liable with Blake for breach of contract. Goffe supports this claim with his own sworn affidavits as well as copies of documents allegedly constituting the minutes of the organizational meeting, the Pre-Incorporation Agreement, the initial stock ledger of AMW-Delaware, and a stock certificate for 250 shares of AMW-Delaware.

While Blake has submitted affidavits controverting virtually all of Goffe’s allegations, I am satisfied that Goffe has made at least a prima facie showing that his breach of contract claims arose out of the transaction of business by AMW-Delaware and Blake in the District of Columbia. See Lott v. Burning Tree Club, Inc., 516 F.Supp. 913, 918 (D.D.C.1980); 2 J. Moore, Moore’s Federal Practice, 114.41-1[3] at 4-471—4-472 (2nd Ed.1984) (burden to show the court a basis for the assertion of long-arm jurisdiction is met “by only a threshold prima facie showing that jurisdiction is conferred by the state long-arm statute; and, the pleadings and affidavits should be construed most strongly against the moving party.”).

Moreover, I find that by conducting its first organizational meeting in the District of Columbia, AMW-Delaware’s contacts with the District were such that it “does not offend ‘traditional notions of fair play and substantial justice’ ”, World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S.Ct. 559, 564, 62 L.Ed.2d 490 (1980) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) and Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 342, 85 L.Ed. 278 (1940)), to require AMW-Delaware to defend claims arising out of that meeting in the District. By purposefully going to the District of Columbia to hold its organizational meeting, AMW-Delaware invoked the benefits and protection of the laws of the District. It is therefore not unfair to require AMW-Delaware to submit to the jurisdiction of the District of Columbia courts to defend a suit relating to some degree to that organizational meeting. This is all that is necessary to satisfy due process concerns. Since I have already determined that AMW-Delaware’s conduct and activities may be attributed to Avanti without offending due process requirements, I find that in personam jurisdiction is available over Avanti in the District of Columbia.

Similarly, Goffe claims that he is entitled under a quantum meruit theory to compensation for legal and consulting services rendered for the benefit of both AMW-Delaware and Blake. Goffe asserts that these services were performed “almost entirely in the District of Columbia.” Goffe Aff., ¶ 3 (Sept. 20, 1984). While the bulk of these services were allegedly performed before AMW-Delaware was incorporated, Goffe specifically avers that he provided services for both Blake and AMW-Delaware for approximately two months following the date of incorporation. Goffe Aff., ¶ 9 (Sept. 20, 1984).

In Hummel v. Koehler, 458 A.2d 1187, 1190-91 (D.C.1983), the court found that personal jurisdiction had properly been asserted over a nonresident defendant pursuant to subsection (a)(1) of the District of Columbia long-arm statute, D.C.Code Ann. § 13-423(a)(1), where the defendant had retained a District of Columbia law firm to provide legal services and the defendant had made three trips to the District in relation to these services. Similarly, in Mouzavires v. Baxter, 434 A.2d 988 (D.C.1981) (en bane), cert. denied, 455 U.S. 1006, 102 S.Ct. 1643, 71 L.Ed.2d 875 (1982), a plurality of the court indicated that personal jurisdiction could be asserted pursuant to subsection (a)(1) of the District of Columbia long-arm statute, D.C.Code Ann. § 13-423(a)(1), over a non-resident defendant who merely telephoned a District of Columbia attorney to arrange for special assistance in a trademark and unfair competition case and thereafter corresponded and participated in additional telephone conversations with the attorney. Cf. Environmental Research International, Inc. v. Lockwood Greene Engineers, Inc., 355 A.2d 808 (D.C.1976) (en banc) (acknowledging that even a small amount of business activity within the District of Columbia is sufficient to permit the conclusion that a nonresident defendant has transacted business in the District, but holding that where a plaintiff has a business relationship with the defendant, plaintiff cannot rely solely on his or her own activities in the District as a basis for asserting jurisdiction over that defendant).

By comparison, in the case at bar, Goffe allegedly provided legal and consulting services for both Blake and AMW-Delaware in the District. Moreover, AMW-Delaware had its first organizational meeting in the District during which Goffe avers he performed services for AMW-Delaware as the corporate secretary, and, in addition, AMW-Delaware maintained an office in the District during the time period in question. Goffe thus is not relying solely on his own actions in the District of Columbia as a basis for asserting jurisdiction over the defendants. Furthermore, I find that there is a sufficient nexus between AMW-Delaware’s business activities in the District and Goffe’s quantum meruit claim that his claim may be properly said to have “arisen out of” this business activity. Consequently, I conclude that in personam jurisdiction is available over AMW-Delaware pursuant to the “transacting any business’ provision of the District of Columbia long-arm statute. Hence, as the successor corporation to AMW-Delaware, Avanti is subject to service of process in the District with respect to Goffe’s quantum meruit claim.

Goffe also asserts in his amended complaint claims for common law fraud and breach of fiduciary duty. It appears that these claims are primarily if not entirely directed at Blake. However, to the extent that they include AMW-Delaware, I am satisfied that they are sufficiently related to the course of events which allegedly took place during the organizational meeting held in the District of Columbia that jurisdiction could be asserted over AMW-Delaware, and consequently Avanti, pursuant to subsection (a)(1) of the District of Columbia long-arm statute. D.C.Code Ann. § 13-423(a)(l).

Therefore, I find that Avanti clearly is subject to the jurisdiction of the District of Columbia courts with respect to Goffe’s claims pursuant to the “transacting any business” provision of the District of Columbia long-arm statute. Consequently, I need not address the other bases for jurisdiction raised by Goffe in his briefs and at oral argument. Since the parties do not dispute that venue is proper in the District of Columbia and I have determined that personal jurisdiction is available as to all the parties in that forum, I conclude that there is no “real question” that the action before me could have been brought originally in the District of Columbia.

C. Transfer

Since I have found that this action could have been brought originally in the District of Columbia and it does not appear that the parties seriously dispute that the action could also have been brought originally in the Northern District of Indiana, I must now decide to which of these two forums the case should be transferred.

As was noted earlier, defendants have moved to transfer pursuant to 28 U.S.C. § 1404(a) while Goffe has moved to transfer under 28 U.S.C. § 1406(a). Since I previously ruled that venue in the District of Delaware was not proper as to Blake, it would appear that defendants rely on the wrong statutory provision since transfer under 28 U.S.C. § 1404(a) presupposes that venue in the transferor forum is proper while 28 U.S.C. § 1406(a) addresses the situation where, as here, venue in the transferor forum is improper. See Van Dusen v. Barrack, 376 U.S. 612, 634, 84 S.Ct. 805, 818, 11 L.Ed.2d 945 (1964) “[a]lthough both sections were broadly designed to allow transfer instead of dismissal, § 1406(a) provides for transfer from forums in which venue is wrongly or improperly laid, whereas, in contrast, § 1404(a) operates on the premise that the plaintiff has properly exercised his venue privilege.”); Devex Corp. v. General Motors Corp., 263 F.Supp. 17, 23 (D.Del.1967); 15 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 3844 at 211 (1976) (“If venue is improper, transfer, if at all, must be under Section 1406(a). But a court that has subject matter jurisdiction and that is a proper venue may transfer under Section 1404(a)....”). Therefore, 28 U.S.C. § 1406(a) controls my decision as to where this case is to be transferred.

Under Section 1406(a), transfer to another forum must be in the “interest of justice.” 28 U.S.C. § 1406(a). I am convinced that transfer to the District of Columbia satisfies this standard. Quite simply, I find that the District of Columbia is a more appropriate forum for this case than the Northern District of Indiana. As I previously concluded in my earlier opinion, Goffe’s claims arose in the District of Columbia. Moreover, Goffe has indicated that he expects to call at least sixteen residents of the District of Columbia to testify at trial, and he avers that he possesses “voluminous documentary evidence” pertaining to his relationship with Blake and AMW-Delaware which is located in the District of Columbia. Goffe Aff., ¶ 3(e) (Nov. 2, 1984). Finally, it appears that District of Columbia law will control the substantive aspects of Goffe’s claims. It therefore makes sense to transfer the case to the District of Columbia where both counsel and the courts are familiar with the applicable law.

CONCLUSION

For the foregoing reasons, I conclude that Goffe’s motion to transfer this action to the District of Columbia should be granted and defendants’ motion to transfer this action to the Northern District of Indiana should be denied.

      . I do not understand the defendants to contend that the District of Columbia courts could not properly exercise personal jurisdiction over Blake. Indeed, defendants argue that "this action arises solely from Blake’s alleged activities in the District of Columbia prior to the acquisition of Avanti.” Defendants’ Opening Brief at 9. Moreover, as was previously noted, it does not appear that AMW-Delaware remains in existence as a corporate entity over which personal jurisdiction could be exerted. In addition, however, defendants apparently concede that if AMW-Delaware were in existence, it would be subject to the jurisdiction of the District of Columbia courts.

      . The defendants concede that venue is proper in the District of Columbia. Likewise, although Goffe in a footnote in his opening brief indicated that he does not concede that the case could have originally been brought in the Northern District of Indiana, he has not disputed in any meaningful way defendants’ assertion both that in personam jurisdiction is available as to all the defendants and that venue is proper in that forum.

      . In Fehl v. S.W.C. Corp., Judge Wright was confronted with the issue of whether a successor corporation could be subject to personal jurisdiction on the basis of actions taken by a predecessor corporation where the predecessor corporation had sold to the successor all the assets relating to a specific line of business rather than merged into the successor.

      . Cole v. National Cash Credit Association involved, inter alia, a suit by a New Jersey creditor to preliminarily enjoin the merger of the debtor Delaware corporation with another corporation. The creditor asserted that because the debtor corporation was licensed to do business in New Jersey, the creditor had the right to sue the debtor in New Jersey, a right or remedy which allegedly would be extinguished if the merger were consummated. Since the Delaware Corporation Law prohibited the impairment of rights or remedies by a merger, the creditor argued that a preliminary injunction was appropriate. While the Chancellor, in denying injunctive relief, did state that "[w]hen our [corporation] statute preserves remedies generally to creditors in consolidation and merger cases, it does not undertake to guarantee to them jurisdictions in which to assert the remedies,” 156 A. at 187, he emphasized that he had great doubts "that the act of merging would deprive the complainant of its right to a remedy in New Jersey.” Id. at 186.

      . The District of Columbia long-arm jurisdictional statute provides in its entirety, as follows:
      (a) A District of Columbia court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a claim for relief arising from the person's—
      (1) transacting any business in the District of Columbia:
      (2) contracting to supply services in the District of Columbia;
      (3) causing tortious injury in the District of Columbia by an act or omission in the District of Columbia;
      (4) causing tortious injury in the District of Columbia by an act or omission outside the District of Columbia if he regularly does or solicits business, engages in any other persistent course of conduct, or derives substantial revenue from goods used or consumed, or services rendered, in the District of Columbia;
      (5) having an interest in, using, or possessing real property in the District of Columbia;
      (6) contracting to insure or act as surety for or on any person, property, or risk, contract, obligation, or agreement located, executed, or to be performed within the District of Columbia at the time of contracting, unless the parties otherwise provide in writing; or
      (7) marital or parent and child relationship in the District of Columbia if:
      (A) the plaintiff resides in the District of Columbia at the time the suit is filed;
      (B) such person is personally served with process; and
      (C) in the case of a claim arising from a marital relationship:
      (i) the District of Columbia was the matrimonial domicile of the parties immediately prior to their separation or
      (ii) the cause of action to pay spousal support arose under the laws of the District of Columbia or under an agreement executed by the parties in the District of Columbia; or
      (D) in the case of a claim affecting the parent and child relationship:
      (i) the. child was conceived in the District of Columbia and such person is the parent or alleged parent of the child;
      (ii) the child resides in the District of Columbia as a result of the acts, directives, or approval of such person; or
      (iii) such person has resided with the child in the District of Columbia.
      (E) notwithstanding the provisions of sub-paragraphs (A) through (D), the court may exercise personal jurisdiction if there is any basis consistent with the United States Constitution for the exercise of personal jurisdiction.
      (b) When jurisdiction over a person is based solely upon this section, only a claim for relief arising from acts enumerated in this section may be asserted against him.
      D.C.Code Ann. § 13-423 (1984 Supp.).

      . Four judges joined the plurality opinion, one judge concurred in the result, and four judges dissented.

      . I note that once personal jurisdiction has been established over a defendant pursuant to the District of Columbia long-arm statute, a plaintiff is entitled to assert claims relating to the transaction or conduct in question which rely on activity outside the District. As the court stated in Cohane v. Arpeja-California, Inc., 385 A.2d 153, 158-59 (D.C.), cert. denied, 439 U.S. 980, 99 S.Ct. 567, 58 L.Ed.2d 651 (1978):
      The limitation in § 13-423(b) that the claim for relief must arise from the transaction of business in the District of Columbia is meant to prevent "the assertion of claims in the forum state that do not bear some relationship to the acts in the forum state relied upon to confer jurisdiction.” Malinow v. Eberly, 322 F.Supp. 594, 599 (D.Md.1971). Once, however, the claim is related to acts in the District, § 13-423 does not require that the scope of the claim be limited to activity within this jurisdiction.

        See also Steinberg v. International Criminal Police Organization, 672 F.2d 927, 931 n. 8 (D.C.Cir.1981) (under District of Columbia law, the concept of a cause of action or claim for relief should be "broadly construed" to cover an entire transaction to allow, when possible, an entire dispute to be settled in a single litigation). Therefore, the fact that certain aspects of Goffe’s alleged relationship with defendants involved activities outside the District of Columbia should not preclude Goffe from fully litigating his claims in the District of Columbia courts in the event the case goes forward in that forum.

      . Although 28 U.S.C. § 1406(a) allows a court to dismiss an action where venue is improper, I do not find such an alternative appropriate in this situation. The case is already almost one-and-a-half years old and is still in its preliminary stages. I see no reason to cause further delay by dismissing the action only to have plaintiff renew his suit in a different forum.

      . While it unquestionably would be more convenient for the defendants to litigate in the Northern District of Indiana than in the District of Columbia, I find no compelling reasons as to why the case should be transferred there instead of the District of Columbia. Defendants argue that both significant amounts of pertinent documentary evidence and relevant witnesses are located in the Northern District of Indiana. Defendants indicate that these witnesses are "essential to establish the circumstances surrounding the acquisition of Avanti by AMW." Defendants’ Opening Brief at 23. Although these circumstances may be somewhat relevant to Goffe’s claims, I am not persuaded that this is a sufficient reason to transfer the case to the Northern District of Indiana since the critical issues of this litigation involve events which preceded the acquisition of Avanti by AMW-Indiana. As to the documentary evidence, defendants have not asserted that it could not be transported to the District of Columbia.


author: SAROKIN, District Judge.

text:
    GATEWAY APARTMENTS, INC., Plaintiff, v. The MAYOR AND TOWNSHIP COUNCIL OF the TOWNSHIP OF NUTLEY, Township of Nutley, and Rent Leveling Board of the Township of Nutley, Defendants.
    Civ. A. No. 84-2830.
    United States District Court, D. New Jersey.
    March 28, 1985.

      Ribis, McCluskey, Ruane & Graham by George G. Frino, Short Hills, N.J., for plaintiff.
    Anthony T. Drollas, Nutley, N.J., for Mayor and Tp. Council of Nutley and Nutley Tp.
    Michael E. Cozine, Nutley, N.J., for Rent Leveling Bd. of Nutley.
   OPINION

SAROKIN, District Judge.

INTRODUCTION

This matter involves a constitutional attack upon a municipal ordinance which requires landlords to share seventy-five percent of tax rebates with their tenants. The ordinance is predicated upon certain obvious realities in the world of residential landlord and tenant relations. Rents are based upon expenses, and real estate taxes make up a substantial portion of those expenses. In establishing rents and in seeking increases in rent-controlled communities, taxes are frequently relied upon in reaching that determination.

Simply stated, it is not illogical or irrational for a municipality desirous of protecting tenants’ rights and maintaining reasonable rents, to require that landlords who receive tax rebates should share them with those who have contributed to their payment. The subject ordinance does just that, although in an imperfect manner. The persons who have paid are not necessarily the persons whom receive the rebate; nor are the rebates shared in the same proportion among tenants as they have been paid.

These imperfections, however, do not render the ordinance unconstitutional. What underlies it is a legitimate function of municipal power exercised in a proper manner to protect the rights of tenants. Landlords ' might properly argue that tenants should not be able to participate in the profits of the venture when they assume no risk as to its investment. However, to rule otherwise in this instance, would be to declare that a municipality may not require the parties who have incurred an expense to share in its reimbursement. This would result in a windfall to landlords and deny to tenants the right to participate in a refund which they in large measure created.

We have long ago recognized the need to protect tenants particularly in those communities in which housing is extremely limited. We have made landlords unwilling partners with tenants, recognizing that housing needs must be balanced with the landlord’s right to make a reasonable profit. Requiring landlords to share tax refunds with the tenants who, in effect, have paid those taxes is not an unconstitutional exercise of power by the municipality and indeed, represents a rational and common sense method of distributing such refunds.

BACKGROUND

Plaintiff Gateway Apartments, Inc. brings this action challenging on several constitutional grounds, a Nutley Township ordinance which, as of the time of the filing of the Complaint, provided that whenever a landlord succeeds on a tax appeal, the benefits thereof were to be utilized to reduce the rents of the tenants to whom such landlord leased living space. Complaint, First Count ¶ 3 and Exh. B. Since that time, and indeed, since the original return date of the motion now before this court, such ordinance has been amended to reduce this so-called “pass through” to tenants from 100 percent of the tax rebate to 75 percent of such rebate. Defendant’s Brief at 1. Nonetheless, plaintiff continues to press the instant motion for summary judgment on all counts of the Complaint.

Plaintiff Gateway Apartments, Inc. owns a multi-family residential dwelling in Nutley Township (“the Township”), the defendant herein. As such it is subject to defendant’s rent control ordinance (“the ordinance”) which regulates rent increases within the Township. See Complaint, Exh. A, § 180-2(A). The ordinance provides for annual rent increases of between five percent and six percent, depending upon whether a tenant does or does not pay for his own heat. § 180-2(C). There are, however, three exceptions to this rule. First, a landlord may obtain from the Rent Leveling Board a “hardship rental increase” of up to fifteen percent if he is not realizing a ten percent return on the fair market value of his property after taking into account income and expenses. § 180-5(A). Under the applicable formula, expenses include taxes. Such hardship rental increases are not available to any landlords as to whom there is pending “any violation of State or municipal dwelling, code enforcement, health or fire statutes, ordinances or regulations.” ,§ 180-5(A)(3). Second, a landlord may receive a rent surcharge, based upon a formula, for “any major capital improvement to or any substantial increase in the services rendered to the tenants in any multiple dwelling.” § 180-5(B). Such surcharge, which may be granted upon application to the Rent Leveling Board, may not exceed fifteen percent of the annual rent. Ibid. Finally, defendant has a system of vacancy decontrol. That is, “[i]n the event that occupancy of a dwelling unit shall be terminated solely through voluntary, uncoerced action of the tenant or by a judgment of the Essex County District Court, the landlord may increase the basic rent without regard to the limitations imposed by this chapter ...,” provided that certain reporting requirements are met. § 180-6(A). Similarly, the initial rent set by a landlord is not regulated by the ordinance. § 180-10.

Plaintiff here challenges section 180-10.1 of the ordinance. That section states, in pertinent part,

In the event that a landlord perfects a successful tax appeal, the tenant shall receive seventy-five percent (75%) of all reductions as applied pro rata to the tenant’s living space so leased, after deducting all reasonable expenses incurred by the landlord in perfecting the tax appeal.

After instituting an action for reduction of its 1982 and 1983 local property taxes in the Tax Court of New Jersey, on March 14, 1984,' plaintiff entered into a settlement with the Township, pursuant to which a tax refund of over $70,000 was to be paid to plaintiff. See Complaint, First Count ¶ 4 and Exh. C; Plaintiff’s Brief at 6; Defendant’s Brief at 1. Defendant, through its Rent Leveling Board, demanded compliance with the aforesaid ordinance and, on July 17, 1984, plaintiff brought this action. It challenges the ordinance on several grounds: first, it alleges that the ordinance is unconstitutional in that it punishes, and thereby restricts, the legitimate utilization of the courts, in contravention of the due process and equal protection clauses of the fourteenth amendment. Complaint, Counts I and IV; Plaintiff’s Brief at 9-15. Second, it contends that the ordinance effects a taking of its private property without just compensation, in contravention of the takings clause of the fifth amendment. Complaint, Count II; Plaintiff’s Brief at 16-20. And third, it alleges that the ordinance violates the contract clause of the United States Constitution. Complaint, Count III; Plaintiff’s Brief at 21-25. Defendant has answered, admitting the facts pertinent hereto, but denying the unconstitutionality of the ordinance. It responds to the instant motion briefly, by arguing that this court is bound by the recent decision of the Appellate Division of the Superior Court of New Jersey in Parsippany Hills Associates v. Rent Leveling Board of the Township of Parsippany-Troy Hills, 194 N.J.Super. 34, 476 A.2d 271 (App.Div.1984). There, the court upheld a seventy-five percent pass-through provision, such as that now in effect in Nutley, as against challenges based primarily upon the legislative intent behind the particular ordinance at issue, 194 N.J.Super. at 44-46, 476 A.2d 271, and the preemptive effect of the New Jersey Tenants’ Property Tax Rebate Act, N.J.Stat.Ann. 54:4-6.2 et seq. 194 N.J.Super. at 46-51, 476 A.2d 271. Thus, although the Township urges that the dictates of comity and federalism require the court to “treat the State Court resolution of the issue in this case as definitive,” Defendant’s Brief at 3, the fact is that the issues here presented were not considered or decided by- the Appellate Division. The court must, therefore, proceed to address the merits of the instant application, essentially without the benefit of briefing by defendant.

DISCUSSION

A. Access to the Courts

Plaintiff first contends that the ordinance here at issue punishes the taxpayer who seeks the just resolution of a legitimate tax dispute in the courts of the- State of New Jersey. Thus, in this particular case, plaintiff originally claimed that it was being taxed at a disproportionately high level relative to other taxpayers in the Township. See Plaintiff’s Brief at 6-7, and Plaintiff’s Appendix at 3-6, 26. Because the cause of action based upon this claim has been held not to constitute a federal question, whether it seeks injunctive relief, 28 U.S.C. § 1341, declaratory relief, Great Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 293, 63 S.Ct. 1070, 87 L.Ed. 1407 (1943), or damages, Fair Assessment in Real Estate Association, Inc. v. McNary, 454 U.S. 100, 113-15, 102 S.Ct. 177, 184-86, 70 L.Ed.2d 271 (1981) (including claim for unequal assessment), plaintiff’s sole recourse was to the state courts. Insofar as the ordinance discourages utilization of this avenue, plaintiff argues that it is arbitrary, capricious and unreasonable, all in violation of the due process clause. Insofar as the effect of the ordinance was to create a punishment for, and with it a disincentive to, the utilization of the only courts available to adjudicate these disputes, plaintiff claims that it “violates a recognized constitutional right.” Plaintiff’s Brief at 12.

These arguments are meritless. Plaintiff's first argument turns on its contention that “the only conceivable purpose for enacting [the ordinance] is the deprivation of the economic incentive to contest local property tax assessments, and therefore no rational, legitimate purpose exists for the enactment of this provision.” Id. at 10-11. This is, of course, untrue. As the Appellate Division aptly summarized, far more beneficent purposes underlie the ordinance:

We see no reason why the municipal officials in the enactment of an ordinance may not also recognize that a portion of the tenants’ rent includes taxes. Thus, when the taxes are reduced as a result of a change in the assessment upon the appeal of the landlord, an ordinance may provide that such reduction in taxes be shared with the tenants on some equitable formula.

Parsippany Hills Associates, supra, 194 N.J.Super. at 50-51, 476 A.2d 271.

It is nonetheless true that the ordinance is not a model of perfect draftsmanship. Indeed, it suffers from two fairly major defects. First, the ordinance does not necessarily distinguish between landlords who may have and have passed tax increases on to tenants and those who have and may not. Thus, a landlord whose taxes are increased may pass such increase on to tenants only if the increase places the landlord in a position where he is eligible for a “hardship rental increase,” or if apartment vacancies occur and new rent levels are set. As a result, the ordinance irrationally distinguishes between two landlords, one who, for reasons beyond his control, is unable to pass such claimed over-taxation on to his tenants, and the other who is properly taxed in the first place. As to the former, when his taxes are adjusted to their appropriate level, he will lose seventy-five percent of the rebate accordingly granted. This, of course, is not a problem for the latter. The result is an obvious inequity.

Second, as constructed, the ordinance does not necessarily afford a rebate to the particular tenants to whom a landlord passed on tax increases. Current tenants are the beneficiaries of a windfall which might have been paid by prior tenants, who were subject to, for example, hardship rental increases. Still more commonly, tenants subject to increased rent, as a result of increased taxes, because they occupied previously vacated apartments or were the original tenants of a particular unit, get the same rebate as tenants whose rent was absolutely unaffected by tax increases incurred by the landlord.

These imperfections to the contrary notwithstanding, the court finds the ordinance to withstand constitutional scrutiny under either the due process or equal protection clauses. As plaintiff concedes, see Plaintiff’s Brief at 10, the issue before the court involves economic regulation, and no suspect classification such as race or the exercise of a constitutional right is implicated. As such, the ordinance “need only be tested under the lenient standard of rationality ... traditionally applied in considering equal protection challenges to regulation of economic and commercial matters.” Exxon Corp. v. Eagerton, 462 U.S. 176, 103 S.Ct. 2296, 2308, 76 L.Ed.2d 497 (1983), citing Western & Southern Life Insurance Co. v. State Board of Equalization, 451 U.S. 648, 668, 101 S.Ct. 2070, 2083, 68 L.Ed.2d 514 (1981); Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456, 461-63, 101 S.Ct. 715, 722-23, 66 L.Ed.2d 659 (1981); Kotch v. Board of River Pilot Commissioners, 330 U.S. 552, 564, 67 S.Ct. 910, 916, 91 L.Ed. 1093 (1947). This standard, which also applies to plaintiff’s substantive due process challenge, see, e.g., Cospito v. Heckler, 742 F.2d 72, 84 (3d Cir.1984), engenders a two-pronged analysis:

(1) Does the challenged legislation have a legitimate purpose? and (2) Was it reasonable for the lawmakers to believe that, use of the challenged classification would promote that purpose?

Western & Southern Life Insurance, supra, 451 U.S. at 668, 101 S.Ct. at 2083. As to the former, there can be no doubt of the legitimacy of state rent control ordinances in general, see, e.g., Orange Taxpayers Council, Inc. v. City of Orange, 83 N.J. 246, 254-57, 416 A.2d 353 (1980) (citing cases); see also Bowles v. Willingham, 321 U.S. 503, 516-19, 64 S.Ct. 641, 648-49, 88 L.Ed. 892 (1944), and, as the court has noted, pass-through provisions such as the one here at issue in particular. See, e.g., Cold Indian Springs Corp. v. Township of Ocean, 81 N.J. 502, 511-13, 410 A.2d 652 (1980); Parsippany Hills, supra, 194 N.J.Super, at 50-51, 476 A.2d 271; Orange Taxpayers Council, Inc. v. City of Orange, 169 N.J.Super. 288, 299-300, 404 A.2d 1186 (App.Div.1979), aff’d, 83 N.J. 246, 416 A.2d 353 (1980); Inganamort v. Borough of Fort Lee, 120 N.J.Super. 286, 301-02, 293 A.2d 720 (Law Div.1972), aff’d, 62 N.J. 521, 303 A.2d 298 (1973). Thus, defendant clearly has a legitimate interest in regulating rents in a manner which prevents landlords from passing tax increases on to tenants, while reaping the windfall of subsequent tax rebates.

The question thus becomes one of the relationship between this goal and the means adopted by defendant to reach it, as embodied in the ordinance. The rational relationship test mandates a limited role for the court in this regard. See, e.g., Schweiker v. Wilson, 450 U.S. 221, 230, 101 S.Ct. 1074, 1080, 67 L.Ed.2d 186 (1981).

When local economic regulation is challenged solely as violating the equal protection clause, this court consistently defers to legislative determinations as to the desirability of particular statutory discriminations. Unless a classification trammels fundamental personal rights or is drawn upon inherently suspect distinctions such as race, religion, or alienage, our decisions presume the constitutionality of the statutory discriminations and require only that the classification challenged be rationally related to a legitimate state interest. States are accorded wide latitude in the regulation of their local economies under the police powers, and rational distinctions may be made with less than mathematical exactitude. Legislatures may implement their program step by step, in such economic areas, adopting regulations that only partially ameliorate a perceived evil and deferring complete elimination of the evil to future regulations. In short, the judiciary may not sit as a superlegislature to judge the wisdom or desirability of legislative policy determinations made in areas that neither affect fundamental rights nor proceed along suspect lines; in the local economic sphere, it is only the invidious discrimination, the wholly arbitrary act, which cannot stand consistently with the fourteenth amendment.

City of New Orleans v. Dukes, 427 U.S. 297, 303-04, 96 S.Ct. 2513, 2516-17, 49 L.Ed.2d 511 (1976) (citations and footnote omitted). Thus, the fact that the fit between a provision and its goals is imperfect, that a classification “is not made with mathematical nicety or ... in practice it results in some inequality,” does not require its invalidation. Dandridge v. Wil liams, 397 U.S. 471, 485, 90 S.Ct. 1153, 1161, 25 L.Ed.2d 491 (1970), cited in Tustin v. Heckler, 749 F.2d 1055, 1061 (3d Cir.1984). Nor is overinclusiveness or underinelusiveness fatal to a classification, for equal protection or due process purposes. See, e.g., Vance v. Bradley, 440 U.S. 93, 108, 99 S.Ct. 939, 948, 59 L.Ed.2d 171 (1979). See also Weinberger v. Salfi, 422 U.S. 749, 777, 95 S.Ct. 2457, 2472, 45 L.Ed.2d 522 (1975), cited in Cospito v. Heckler, supra, 742 F.2d at 84-85. Indeed, even the existence of a better method of achieving the ends sought is not enough for, as the Supreme Court has stated, “Whether we, or the District Court, think Congress was unwise in not choosing means more precisely related to its primary purpose is irrelevant.” Vance v. Bradley, supra, 440 U.S. at 109, 99 S.Ct. at 949. “The law need not be in every respect logically consistent with its aims to be constitutional. It is enough that there is an evil at hand for correction and that it might be thought that the particular legislative measure was a rational way to correct it.” Rogin v. Bensalem Township, 616 F.2d 680, 689 (3d Cir.1980), cert. denied, 450 U.S. 1029, 101 S.Ct. 1737, 68 L.Ed.2d 223 (1981), quoting Williamson v. Lee Optical Co., 348 U.S. 483, 487-88, 75 S.Ct. 461, 464-65, 99 L.Ed. 563 (1955). Thus, in cases such as these, the party challenging the statute bears a heavy burden indeed: “those challenging the legislative judgment must convince the court that the legislative facts on which the classification is apparently based could not reasonably be conceived to be true by the governmental decisionmaker.” Minnesota v. Clover Leaf Creamery, supra, 449 U.S. at 464, 101 S.Ct. at 724 (citing cases). See also Malmed v. Thornburgh, 621 F.2d 565, 570-72 (3d Cir.), cert. denied, 449 U.S. 955, 101 S.Ct. 361, 66 L.Ed.2d 219 (1980).

This is a burden which plaintiff has failed to bear. As noted above, the ordinance at issue is not perfect. However, its imperfections simply do not rise to a constitutional level. Thus; the ordinance aims to allow tenants who have shared the cost of a tax increase also to share the benefit of a tax rebate, should one occur. That it accomplishes this with a pass-through provision which rebates money to a tenant even though his landlord was not necessarily able to pass a prior tax increase through to him is, to be sure, problematic. It is not, however, fatal. The ordinance comprises one step down the road toward assuring that landlords share tax rebates with tenants with whom they have shared tax increases. Indeed, plaintiff has presented no factual evidence, known or available to the drafters of the ordinance, to suggest that tax increases are not generally passed on to tenants. It might well be the case that they are. Thus, because hardship rental increases specifically take tax increases into account, the drafters of the ordinance may reasonably have concluded that at least large tax increases would be passed along to tenants. Similarly, the drafters may have known that vacancies occur sufficiently frequently, and/or tax increases sufficiently infrequently, so that rent levels generally reflect taxes, if somewhat imperfectly. That a system in which increases are directly passed on to tenants, and tax rebates similarly passed through to them, would more perfectly accomplish the goal sought by the municipality, is, as noted above, “irrelevant.” The current ordinance makes provision in several ways for rent levels to reflect tax increases, particularly large tax increases which are more likely to push a landlord into the hardship category. Section 180-10.1 provides that, if and when a landlord receives a tax rebate, he must pass seventy-five percent of it on to tenants. In this sense, it accomplishes the goal sought; that it does not do so with “mathematical exactitude” does not render it unconstitutional. Nor does the fact that the wrong tenants may be the recipients of a rebate pass-through affect the ordinance’s unconstitutionality, especially where, as here, no protesting tenants appear before the court. Some tenants receive rebates; many of them may have paid for the prior tax increase. Facts to the contrary have not been presented by plaintiff. Indeed, the court understands that a more perfect system, in which those tenants who have paid tax increases are tracked down in order to be paid rebates to which they aré thus entitled, might comprise an expensive and unenforceable arrangement. The one that exists is adequate for due process and equal protection purposes.

In sum, the court is aware that, as drafted, the ordinance disadvantages certain landlords who are incorrectly assessed vis a vis' similarly situated, but correctly assessed, landlords. This is an unfortunate bi-product of the ordinance, but one that is of such unknown frequency, and is the result of a policy which utilizes rational means to achieve legitimate ends, that the court cannot find the ordinance to be constitutionally defective. For these reasons, the court finds plaintiff’s due process and equal protection arguments to be without merit.

Nor is plaintiff correct that the ordinance impermissibly restricts access to the courts, by creating a disincentive to the pursuit of tax appeals. First, such argument ignores the realities which landlords face. As the Appellate Division has noted, the argument “overlooks that financial incentive to landlords to correct excessive assessments through tax appeals in order to maintain their competitive position by reducing rents comparably.” Hilltop Associates v. Mayor and Council of the Township of Edison, 181 N.J.Super. 100, 104, 436 A.2d 939 (App.Div.1981), certif. den., 91 N.J. 231, 450 A.2d 555 (1982). Similarly, landlords will continue to pursue such appeals, not only to collect the twenty-five percent of the rebate due them, but also to reduce the tax burden on their property, and consequently, to raise its market value. And finally, to the extent that plaintiff’s argument is based upon the public policy concern that inequitable tax assessments will not be corrected if land-, lords do not have the financial incentive to pursue these claims, see Hilltop Associates, supra, 181 N.J.Super. at 104, 436 A.2d 939, such argument is undercut by tenants’ clear standing to prosecute such appeals. See Parsippany Hills Associates, supra, 194 N.J.Super. at 43, 476 A.2d 271 (noting that it is “a close question” as to whether tenants have a vested right to rebates, and alluding to a class action filed by tenants). See generally Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., 454 U.S. 464, 472, 102 S.Ct. 752, 758, 70 L.Ed.2d 700 (1982) (“at an irreducible minimum, Art. Ill requires the party who invokes the court’s authority to ‘show that he personally suffered some actual or threatened injury as a result of the putatively illegal conduct of the defendant’ and that the injury ‘fairly can be traced to the challenged action’ and ‘is likely to be redressed by a favorable decision’ ”) (citing cases). See also Cold Indian Springs Corp. v. Ocean Township, 154 N.J.Super. 75, 88, 380 A.2d 1178 (Law Div.1977) (tenants showed “a direct financial interest” in litigation concerning the constitutionality of the Tenants’ Property Rebate Act, and were accordingly allowed to intervene), aff’d, 161 N.J.Super. 586, 392 A.2d 175 (App.Div.1978), aff’d, 81 N.J. 502, 410 A.2d 652 (1980).

For these reasons, plaintiffs motion for summary judgment on these grounds must be denied. The cases cited by plaintiff are inapposite: Boddie v. Connecticut, 401 U.S. 371, 91 S.Ct. 780, 28 L.Ed.2d 113 (1971) involved the constitutionality of requiring indigent parties to pay filing fees in order to obtain a divorce. The Supreme Court held that

given the basic position of the marriage relationship in this society’s hierachy of values and the concomitant state monopolization of the means for legally dissolving this relationship, due process does prohibit a State from denying, solely because of inability to pay, access to its courts to individuals who seek judicial dissolution of their marriage.

401 U.S. at 374, 91 S.Ct. at 784. As plaintiff concedes, no such fundamental rights are involved here, see Graham v. Office of Surface Mining Reclamation and Enforcement, 722 F.2d 1106, 1112 (3d Cir.1983) (economic rights are merely pecuniary, and not fundamental), citing Ortwein v. Schwab, 410 U.S. 656, 93 S.Ct. 1172, 35 L.Ed.2d 572 (1973); United States v. Kras, 409 U.S. 434, 93 S.Ct. 631, 34 L.Ed.2d 626 (1973); cf., Little v. Streater, 452 U.S. 1, 101 S.Ct. 2202, 68 L.Ed.2d 627 (1981) (state may not require indigent party to pay for blood test in paternity proceeding); nor is access to the courts denied in any fundamental manner. Indeed, it continues to be encouraged by the ordinance, if less so than it would have been absent any ordinance at all.

Neither is Silver v. Cormier, 529 F.2d 161 (10th Cir.1976), applicable to the instant situation: there, the defendant, a state agency, withheld funds legally owing to plaintiff when plaintiff filed suit against defendant based upon a different, though related dispute. 529 F.2d at 162-63. At issue was a penalty upon the commencement of litigation itself, see also McKay v. Hammock, 730 F.2d 1367, 1375 (10th Cir.1984) (en banc) (citing cases); Milhouse v. Carlson, 652 F.2d 371, 373-74 (3d Cir.1981) (citing cases); here, legitimate state regulation limits plaintiff’s ultimate recovery and, as such, may or may not affect its decision to proceed. In evaluating a state regulation which may discourage access to the courts, the court must balance the public and private interests involved. See Logan v. Zimmerman Brush Co., 455 U.S. 422, 430 n. 5, 102 S.Ct. 1148, 1154 n. 5, 71 L.Ed.2d 265 (1982); In re South, 689 F.2d 162, 165 (10th Cir.1982), cert. denied, 460 U.S. 1069, 103 S.Ct. 1522, 75 L.Ed.2d 946 (1983). Here, such balance reveals an ordinance that is of demonstrated public interest, see supra at 1165-1168, that may well have no demonstrable effect on a party’s willingness to utilize the courts, and that, at most, has an impact upon such party’s pursuit of economic, rather than fundamental, rights. The costs thus imposed by this ordinance are small and the benefits are large. For this reason, plaintiff’s motion for summary judgment on this ground is denied.

B. Taking of Property Without Just Compensation

Plaintiff’s argument that a taking has occurred is two-pronged. First, it contends that the ordinance effects a confiscation of what is essentially plaintiff’s property for what is, at best, a public benefit, without paying to plaintiff the compensation due it under the fifth amendment to the United States Constitution. And second, it argues that such taking is not “for public use” and thus constitutes an improper exercise of the police power for the benefit of certain private individuals only. Both of these contentions conceptually overlap with plaintiff’s due process arguments, in that the question of what constitutes a taking requiring just compensation, as well as of when such taking is for public use, turn on the public benefit' reasonably sought to be achieved by the challenged provision. See, e.g., United States v. Geophysical Corp., 732 F.2d 693, 700 (9th Cir.1984) (no taking where.government imposes financial condition upon receipt of debt, which condition is rationally related to the condition imposed); Chatham v. Jackson, 613 F.2d 73, 78-80 (5th Cir.1980) (requiring landlord to pay tenant’s delinquent water bill does not constitute a compensable taking in that measure is rationally related to city’s goal of fiscal soundness); Exxon Corp. v. Federal Energy Administration, 417 F.Supp. 516, 523 (D.N.J.1975) (Lacey, J.) (Cost Equalization Program of Emergency Petroleum Allocation Act of 1973 held not to be a taking in that any loss of' profits results from a “valid regulatory scheme”).

This is so, in part, because of the structure of takings analysis. The Supreme Court has recently summarized such doctrine as follows:

As has been admitted on numerous occasions, “this Court has generally ‘been unable to develop any “set formula” for determining when “justice and fairness” require that economic injuries caused by public action’ ” must be deemed a compensable taking. Kaiser Aetna v. United States, 444 U.S. 164, 175 [100 S.Ct. 383, 390, 62 L.Ed.2d 332] (1979), quoting Penn Central Transportation Co. v. New York City, 438 U.S. 104, 124 [98 S.Ct. 2646, 2659, 57 L.Ed.2d 631] (1978); accord, Hodel v. Virginia Surface Mining and Recl. Ass’n., 452 U.S. 264, 295 [101 S.Ct. 2352, 2370, 69 L.Ed.2d 1] (1981). The inquiry into whether a taking has occurred is essentially an “ad hoc, factual” inquiry. Kaiser Aetna, 444 U.S. at 175 [100 S.Ct. at 390]. The Court, however, has identified several factors that should be taken into account when determining whether a governmental action has gone beyond “regulation” and effects a “taking.” Among these factors are: “the character of the governmental action, its economic impact, and its interference with reasonable investment-backed expectations.” Prune-Yard Shopping Center v. Robins, 447 U.S. 74, 83 [100 S.Ct. 2035, 2042, 64 L.Ed.2d 741] (1980); see Kaiser Aetna, 444 U.S. at 175 [100 S.Ct. at 390]; Penn Central, 438 U.S. at 124 [98 S.Ct. at 2659],

Ruckelshaus v. Monsanto Corp., — U.S. -, 104 S.Ct. 2862, 2874-75, 81 L.Ed.2d 815 (1984). This court has already focused on the first of three factors to be considered, and has found the ordinance at issue to constitute legitimate governmental action, taken in a manner rationally related to the accomplishment of the ends sought. Because the interference here at issue “arises from some public program adjusting the benefits and burdens of economic life to promote the common good,” Penn Central, supra, 438 U.S. at 124, 98 S.Ct. at 2659, and in so doing “substantially advance[s] legitimate state interests,” Nectow v. Cambridge, 277 U.S. 183, 188, 48 S.Ct. 447, 448, 72 L.Ed. 842 (1928), cited in Agins v. City of Tiburon, 447 U.S. 255, 260, 100 S.Ct. 2138, 2141, 65 L.Ed.2d 106 (1980), it is less likely to be a taking than, for example, physical invasions, see, e.g., Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 102 S.Ct. 3164, 73 L.Ed.2d 868 (1982), the denial of the economically viable use of property, Agins, supra, 447 U.S. at 260, 100 S.Ct. at 2141, citing Penn Central, supra, 438 U.S. at 138 n. 36, 98 S.Ct. at 2666 n.. 36, or the extinction of a fundamental attribute of ownership, such as the right to exclude. See, e.g., Ruckelshaus v. Monsanto, supra, 104 S.Ct. at 2878, citing Kaiser Aetna, 444 U.S. at 176, 100 S.Ct. at 391. This is because, as stated by Justice Holmes, “Government could hardly go on if to some extent values incident to property could not be diminished without paying for every change in the general law.” Pennsylvania Coal Co. v. Mahon, 260 U.S. 393, 413, 43 S.Ct. 158, 159, 67 L.Ed. 322 (1922). For these reasons, “[e]xercises of the taxing power,” and “land-use regulations that destroyed or adversely affected recognized property interests,” for example, have been held not to constitute compensable takings. Penn Central, supra, 438 U.S. at 124-25, 98 S.Ct. at 2659-60 (citing cases). See also Matter of Quanta Resources Corp., 739 F.2d 912, 922 n. 11 (3d Cir.1984), cert. granted, — U.S. -, 105 S.Ct. 1168, 84 L.Ed.2d 319 (1985).

Courts have accordingly upheld rent control ordinances as against takings chailenges. See, e.g., Bowles v. Willingham, supra; Block v. Hirsh, 256 U.S. 135, 41 S.Ct. 458, 65 L.Ed. 865 (1921). See also Hutton Park Gardens v. West Orange Town Council, 68 N.J. 543, 565-72, 350 A.2d 1 (1975) (rent control not unconstitutionally “confiscatory” so long as it permits a just and reasonable return); Brunetti v. Borough of New Milford, 68 N.J. 576, 595-98, 350 A.2d 19 (1975) (same); Troy Hills Village v. Parsippany-Troy Hills Township Council, 68 N.J. 604, 620-30, 350 A.2d 34 (1975) (same). See generally Matter of Egg Harbor Associates (Bayshore Centre), 94 N.J. 358, 373-74, 464 A.2d 1115 (1983). To an extent, of course, the ordinance here at issue is a rent control ordinance: it requires that rents be set at lower amounts for a limited period of time following a successful tax appeal by a landlord. Because such ordinance is ensconced in the heavily regulated landlord/tenant area, see, e.g., Loretto, supra, 458 U.S. at 440, 102 S.Ct. at 3178, the court cannot find that plaintiff could, or should, have had investment-backed expectations of a certain rent at a certain time. Moreover, to the extent that plaintiffs “expectation” of a reward as a result of its efforts in seeking tax relief are what are here “interfered with,” the ordinance provides that the “investment” giving rise to such expectation—that is, the litigation expense of a tax appeal— be returned to plaintiff. § 180-10.1.

Most important, however, the purposes underlying the ordinance serve both to minimize the reasonableness of any expectations that plaintiff may have had to the full rebate, and diminish the economic impact upon one in plaintiff’s position. Thus, the court’s earlier finding that the ordinance is reasonably related to the legitimate public interest in preventing tax rebates resulting from the overpayment of taxes by both landlord and tenant to accrue solely to the benefit of the landlord, has two important consequences for takings analysis. First, it means that landlords, having passed on at least some of their tax increases to tenants, ought not expect tax rebates necessarily to accrue solely to themselves. And second, it means that the economic impact of receiving only seventy-five percent of a rebate is minimal: having passed on tax increases to tenants, landlords do not deserve all of the subsequent tax rebates. Finally, as noted above, the impact upon landlords of a rebate is positive notwithstanding the ordinance, in that the landlord continues to reap the benefits of a rebate in terms of increased property value and competitive capability.

In sum, unlike the situation in Webb’s Fabulous Pharmacies, Inc. v. Beckwith, 449 U.S. 155, 101 S.Ct. 446, 66 L.Ed.2d 358 (1980), upon which plaintiff relies almost exclusively, see Plaintiff’s Brief at 18-19, there is a significant police power justification offered for the deprivation here imposed, one that bears a reasonable relationship to the legitimate goals of the ordinance. Cf., Webb’s, supra, 449 U.S. at 163, 101 S.Ct. at 451-52. For this reason, and because neither the legitimate investment-backed expectations of, nor the economic impact upon, plaintiff reveal a sufficient deprivation of plaintiff’s property interests, the court here finds no taking to have occurred, and accordingly denies plaintiff’s application for summary judgment.

C. Impairment of Contract

Finally, plaintiff contends that the ordinance, which was passed on September 23, 1982, retroactively impaired contracts entered into between it and its tenants, and affected taxes paid and litigation commenced prior to that date and, since it serves no “legitimate public purpose,” violates the contract clause. U.S. Const. Art. I, § 10, cl. 1. That clause declares that “No state shall ... pass any ... Law impairing the Obligation of Contracts....” The Supreme Court has recently summarized contemporary analysis under the contract clause, writing'

The threshold inquiry is “whether the state law has, in fact, operated as a substantial impairment of a contractual relationship.” The severity of the impairment is said to increase the level of scrutiny to which the legislation will be subjected. Total destruction of contractual expectations is not necessary for a finding of substantial impairment. On the other hand, state regulation that restricts a party to gains it reasonably expected from the contract does not necessarily constitute a substantial impairment. In determining the extent of the impairment, we are to consider whether the industry the complaining party has entered has been regulated in the past. The Court long ago observed: “One whose rights, such as they are, are subject to state restriction, cannot remove them from the power of the State by making a contract about them.”
If the state regulation constitutes a substantial impairment, the State, in justification, must have a significant and legitimaté public purpose behind the regulation, such as the remedying of a broad and general social or economic problem. Furthermore, since [Home Building & Loan Association v. Blaisdell, 290 U.S. 398, 54 S.Ct. 231, 78 L.Ed. 413 (1934)], the Court has indicated that the public purpose need not be addressed to an emergency or temporary situation. One legitimate state interest is the elimination of unforeseen windfall profits. The requirement of a legitimate public purpose guarantees that the State is exercising its police power, rather than providing a benefit to special interests.
Once a legitimate public purpose has been identified, the next inquiry is whether the adjustment of “the rights and responsibilities of contracting parties [is based] upon reasonable conditions and [is] of a character appropriate to the public purpose justifying [the legislation’s] adoption. Unless the State itself is a contracting party, “[a]s is customary in reviewing economic and social regulation, ... courts properly defer to legislative judgment as to the necessity and reasonableness of a particular measure.”

Energy Reserves Group, Inc. v. Kansas Power & Light Co., 459 U.S. 400, 411-13, 103 S.Ct. 697, 704-06, 74 L.Ed.2d 569 (1983) (citations and footnotes omitted) (emphasis added). See also Troy, Ltd. v. Renna, 727 F.2d 287, 294-99 (3d Cir.1984).

This analysis has obvious similarities to the due process and takings analyses undertaken above. See Hawaii Housing Authority, supra, 104 S.Ct. at 2330 n. 6 (summarily concluding that, insofar as state action constituted a rational exercise of the police power, it survived challenges under the due process and contract clauses as well). The result, so derived, is also the same. The court continues to find the contracts alleged to be impaired to be only minimally affected: rents, already highly regulated, are merely being temporarily reduced, in light of new facts. Troy, Ltd., supra, 727 F.2d at 297 (New Jersey Tenancy Act not a sufficiently severe impairment of contract to be invalidated, in part because “New Jersey had already placed significant limitations upon the rights of owners of multiple dwellings to define the landlord tenant relationship solely in terms of contract”). Moreover, the state interest, discussed above, in preventing a windfall to plaintiffs is significant and legitimate. See United States Trust Co. v. New Jersey, 431 U.S. 1, 31 n. 30, 97 S.Ct. 1505, 1522 n. 30, 52 L.Ed.2d 92 (1977). See also Cold Indian Springs Corp., supra, 81 N.J. at 512, 410 A.2d 652, citing El Paso v. Simmons, 379 U.S. 497, 507-08, 85 S.Ct. 577, 583-84, 13 L.Ed.2d 446 (1965). Finally, giving proper deference to the municipal governing body that enacted the ordinance here at issue, the court cannot but find that the means here adopted do, in fact, serve the desired ends; if the fit between the two is not perfect, it is also not unreasonable or arbitrary. For these reasons, plaintiffs motion for summary judgment on the basis of the contract clause is denied.

CONCLUSION

The court is aware that the matter before it presents issues of constitutional dimension that have a potential impact upon ordinances in numerous municipalities in New Jersey and elsewhere. The court also recognizes that such ordinances may discourage future building of housing units and thereby disserve the needs of tenants rather than advance them. However, such considerations are properly left to the governing bodies of the municipalities and not the courts. Therefore, the court concludes that plaintiffs constitutional challenge to the ordinance must fail as a matter of law. Accordingly, it denies plaintiffs application for summary judgment for the reasons set forth above, and directs that judgment be entered as against plaintiff, the moving party. No genuine issue of material fact remains and plaintiff has “had a full and fair opportunity to ventilate the issues involved in the motion.” Cool Fuel, Inc. v. Connett, 685 F.2d 309, 311-12 (9th Cir.1982). See also Missouri Pacific Railroad Co. v. National Milling Co., 409 F.2d 882, 885 (3d Cir.1969). See generally 6 Moore’s Federal Practice 1156.12, at 56-331—56-339 (1976); 10A C. Wright, A. Miller & M. Kane, Federal Practice and Procedure § 2720, at 27-35 (1983).

An appropriate order will issue.

      . To the extent that the issue before the court is viewed as a tax matter, as was the pass-through provision in Exxon Corp. v. Eagerton, supra, still greater deference to legislative authorities is called for. 103 S.Ct. at 2308, citing Regan v. Taxation with Representation of Washington, 461 U.S. 540, 103 S.Ct. 1997, 2002, 76 L.Ed.2d 129 (1983); Lehnhausen v. Lake Shore Auto Parts Co., 410 U.S. 356, 359, 93 S.Ct. 1001, 1003, 35 L.Ed.2d 351 (1973); Allied Stores of Ohio v. Bowers, 358 U.S. 522, 526-27, 79 S.Ct. 437, 440-41, 3 L.Ed.2d 480 (1959).

      . Plaintiff s motion for summary judgment does not argue a violation of the equal protection clause, and thus does not raise the equal protection arguments addressed here, which are implicated by the Fourth Count of the Complaint.

      . The Appellate Division has expressed some doubt as to whether this incentive would exist were there to be a one hundred percent pass through, Hilltop Associates, supra, 181 N.J.Super. at 105, 436 A.2d 939, but such doubts apparently disappear where, as here, the pass through is seventy-five percent. Parsippany Hills Associates, supra, 194 N.J.Super. at 51, 476 A.2d 271.

      . As such, the question of whether such taking was for private use need not be reached. However, having held that the ordinance engenders a valid exercise of defendant's police power, it must also be concluded that it satisfies the "public use” requirement of the fifth amendment. See Hawaii Housing Authority v. Midkiff, - U.S. -, 104 S.Ct. 2321, 2329, 81 L.Ed.2d 186 (1984) ("The ‘public use’ requirement is ... coterminous with the scope of a sovereign's police powers ... where the exercise of the eminent domain power is rationally related to a conceivable public purpose, the Court has never held a compensated taking to be proscribed by the Public Use Clause.”) (citing cases). See also Ruckelshaus v. Monstanto, supra, 104 S.Ct. at 2879-80.

      . Plaintiff seems to argue that the contract being impaired is between it and the state. This is not the case: rather, their relationship is as between taxpayer and taxing authority, a relationship which is not generally subject to the strictures of the contract clause. See Exxon Corp. v. Eagerton, supra, 103 S.Ct. at 2304-07 (Alabama tax exemption and pass-through provision valid as against contract clause challenge where a "generally applicable rule of conduct designed to advance ‘a broad societal interest’ rather than a measure whose sole effect was to repeal or effect a covenant between parties") (citing cases).