author: WARREN, District Judge.

text:
    UNI-BOND, LTD., Plaintiff, v. Leonard SCHULTZ, d/b/a the “Schultz Group”, Defendant.
    No. 83-C-907.
    United States District Court, E.D. Wisconsin.
    May 2, 1985.

      Ross A. Anderson, Milwaukee, Wis., for plaintiff.
    Jeffrey Clark, Milwaukee, Wis., for defendant.
   DECISION AND ORDER

WARREN, District Judge.

Presently before the Court are the plaintiff’s motion to remand this matter to the state court in which the complaint was initially filed, pursuant to 28 U.S.C. § 1447(c), and the defendant’s motion to dismiss the action in toto for lack of personal jurisdiction, pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. The Court, having reviewed the legal mem-oranda submitted by the parties and considered the opposing positions articulated therein, concludes, for the reasons set forth below, that the motion to remand must be denied and the motion to dismiss granted.

BACKGROUND

This action was initiated on April 28, 1983, when the plaintiff filed its complaint in the Wisconsin Circuit Court for Milwaukee County, claiming certain damages allegedly arising out of the breach of a written contract entered into by the parties. According to the terms of that contract, executed on or about April 30, 1980, the plaintiff agreed to pay the sum of $250,-000.00 plus a royalty of 7% of the gross selling price to purchase a certain chemical formula developed and owned by the defendant. That formula was for a polymer or pre-polymer construction material to be used as a building alternative for concrete and asphalt.

The contract further provided that the plaintiff pay an initial $50,000.00 installment within 21 days of the date of execution and the balance of $200,000.00 in twelve equal quarterly installments, beginning either one year after the first sale of the construction material or eighteen months after execution of the contract, whichever came first. The defendant purportedly agreed to deliver the formula to the plaintiff upon receipt of the initial $50,-000.00 payment. However, according to the central factual averment in the complaint, the defendant failed to deliver the chemical formula as promised, despite the plaintiff’s payment of the initial installment on or about May 21, 1980.

The two principal causes of action are based on theories of breach of contract, pursuant to which the plaintiff claims damages in the amount of $75,000.00, and fraudulent conversion — that is, that the defendant allegedly failed to return the $50,-000.00 installment despite the plaintiff’s request for repayment. With respect to this count, the plaintiff seeks $50,000.00 in compensatory damages and an amount not to exceed $250,000.00 in punitive damages.

In the alternative, the complaint states causes of action for intentional and negligent misrepresentation and misrepresentation giving rise to strict liability; these claims are premised on the defendant’s purportedly false representation that he had developed and did possess a commercially usable chemical formula for a polymer or pre-polymer building material. By each of these alternative counts, the plaintiff seeks $75,000.00 in compensatory damages plus punitive damages in an amount not to exceed $250,000.00.

Upon the defendant’s petition of July 18, 1983, this action was removed to the United States District Court for the Eastern District of Wisconsin, pursuant to 28 U.S.C. §§ 1441 & 1446. Invoking the Court’s diversity jurisdiction, as established under 28 U.S.C. § 1332(a)(1), the defendant alleged in its removal petition that the parties to this action are citizens of different states and that the matter in controversy exceeds the sum or value of $10,000.00, exclusive of interest and costs. Accompanying the defendant’s petition was an appropriate bond, insuring, pursuant to 28 U.S.C. § 1446(d), that the defendant will pay all expenses attendant upon the removal proceedings if it is determined that the case is not removable or was improperly removed.

Three days later, on July 21, 1983, the defendant filed its motion to dismiss the complaint for lack of personal jurisdiction, pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. Invoking the well-established principle that a nonresident defendant must have sufficient minimum contacts with a forum state as a condition precedent to the exercise of personal jurisdiction over it, the movant maintains that he does not have the requisite relationship with the State of Wisconsin for purposes of the present action and, accordingly, that the complaint against him must be dismissed. The defendant further contends that both the relevant analysis and the result articulated by the Court of Appeals for the Seventh Circuit in Lakeside Bridge & Steel Company v. Mountain State Construction Company, 597 F.2d 596 (7th Cir.1979), cert. denied, 445 U.S. 907, 100 S.Ct. 1087, 63 L.Ed.2d 325 (1980), compel a finding of lack of personal jurisdiction under the particular circumstances of this lawsuit.

By its responsive memorandum of November 8, 1983, the plaintiff contends that the propriety of this Court’s exercise of personal jurisdiction is plainly established under both the relevant provisions of Wisconsin’s long-arm statute, Wis.Stat. § 801.-05(5) (1977), and generally-accepted constitutional principles as applied to the particular facts of this case. As to the former, the plaintiff argues that, pursuant to the unequivocal terms of the parties’ contract, the defendant engaged in a “single act” that effectively makes him subject to the jurisdiction of the courts of this state. Wis.Stat. § 801.05(5) (1977). Observing that compliance with the statutory requirements for the exercise of personal jurisdiction under Wis.Stat. § 801.05(5) gives rise to a presumption that constitutional due process considerations have likewise been satisfied, the plaintiff nonetheless characterizes the defendant’s contacts with the State of Wisconsin as sufficient to meet any constitutional challenge to the exercise of jurisdiction over this nonresident party.

Those contacts are clearly established by the very nature of the continuing relationship envisioned by the contract between the parties, pursuant to which all significant developments in the project were to be accomplished in Wisconsin, and, significantly, by the appearance in the state of one of the defendant’s representatives for the purpose of exhibition and presentation of the chemical formula, or so the argument goes. Citing Wisconsin Electrical Manufacturing Company v. Pennant Products, Inc., 619 F.2d 676 (7th Cir.1980), the plaintiff contends that dismissal of the complaint would prove wholly unjustified under these facts and that the authority cited by the defendant in support of his position is entirely distinguishable.

Predictably, the movant argues in reply that the circumstances under which one of his representatives appeared in the state do not support the exercise of personal jurisdiction; that the nature of the continuing, contractual relationship between the parties, including the exchange of telephone calls and correspondence in interstate commerce, does not satisfy the requirements of due process as established by the Fourteenth Amendment to the United States Constitution; and that it is the caselaw invoked by the plaintiff that is, in fact, inapposite.

In the midst of the parties’ briefing of the motion to dismiss, the plaintiff, on July 27, 1983, moved to remand this action to the state court in which it was initiated, pursuant to 28 U.S.C. § 1447(c). In support of its petition, the plaintiff explains that this lawsuit was commenced on April 28, 1983, that personal service on the defendant was unsuccessfully attempted through a process server in the State of Michigan, but that service was eventually accomplished by mailing the summons and complaint to the defendant on June 9, 1983, and publishing the summons as a Class 3 notice in The Detroit Legal News on June 15, June 22, & June 29, 1983. The plaintiff further recounts the nature of a conversation its attorney had with defense counsel on June 21, 1983, during the course of which counsel indicated that his client had received the summons and complaint. Invoking the unequivocal requirement of 28 U.S.C. § 1446(b) that a petition for removal from state to federal court must be filed within 30 days after receipt of those documents, the movant observes, first, that the present petition was filed some 39 days after the summons and complaint were mailed on June 9, 1983, and, second, that those materials were presumptively received by the defendant three days thereafter. It is the plaintiffs final position that unless the defendant can demonstrate receipt of process on or after June 18,1983, the petition for removal must be dismissed as untimely and the case remanded back to the Wisconsin Circuit Court for Milwaukee County.

By its responsive brief of November 3, 1983, the defendant maintains simply that he did, in fact, receive the summons and complaint in this action on June 18, 1983, nine days after mailing. In this context, the defendant further disputes the mov-ant’s description of presumptive receipt within three days as unsupported in the relevant, federal procedural law. The defendant concludes simply that remand would be inappropriate since the removal petition was, indeed, filed with the federal district court within thirty days of receipt of process, as prescribed by 28 U.S.C. § 1446(b).

Because the Court views the plaintiff’s challenge to the propriety of removal as a threshold jurisdictional matter, the Court will dispose of it prior to addressing the merits of the parties' opposing positions with respect to the exercise of personal jurisdiction over the nonresident defendant.

THE PLAINTIFF’S MOTION TO REMAND PURSUANT TO 28 U.S.C. § 1447(c)

As both parties to this action recognize, the federal trial court is empowered to remand any matter to the state court from which it was removed “[i]f at anytime before final judgment it appears that the case was removed improvidently and without jurisdiction_” 28 U.S.C. § 1447(c). It is well established that, in determining whether an action is improvidently removed, the Court must consider the timeliness of the removal petition under 28 U.S.C. § 1446(b). Royal v. State Farm Fire & Casualty Company, 685 F.2d 124, 127 (5th Cir.1982); London v. United States Fire Insurance Company, 531 F.2d 257, 259-269 (5th Cir.1976).

Subsection (b) of 28 U.S.C. § 1446 provides, in its entirety, as follows:

The petition for removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within thirty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whichever period is shorter.

As already noted, the plaintiffs procedural challenge in this action is that the case was “improvidently” removed from state court, since the removal petition was filed more than 30 days after the defendant’s receipt of the summons and complaint. The argument is premised on the belief that the defendant must have received process on some date prior to June 18, 1983.

However, by his affidavit of November 3, 1983, the defendant clearly states that, “[o]n June 18, 1983, [he] found in his Post Office Box an envelope bearing a postal date of June 9, 1983, in which envelope [he] found a summons and complaint in [this case].... ” Affidavit of Leonard Schultz at 1-2 (October 31, 1983). Pursuant to 28 U.S.C. § 1446(b), the defendant was thereafter afforded a period of time up to and including July 18, 1983, in which to file a petition for removal — a petition that was, indeed, timely filed on that date.

There is nothing in the record — including the affidavit of plaintiffs attorney, Ross A. Anderson, testifying to both the manner in which service was effected and the substance of a subsequent phone conversation with the defendant’s attorney, and that of former defense counsel Michael C. Hecht-man, largely confirming the procedural history of the initial stages of this litigation— to suggest that the defendant received process on any date prior to June 18, 1983. The mere fact that some nine days passed between the time of mailing and the defendant’s receipt of the summons and complaint does not support a contrary conclusion. In this context, the Court notes, if only parenthetically, its agreement with the defendant that neither Wis.Stat. § 801.-15(5) (1977) nor Rule 6(e) of the Federal Rules of Civil Procedure establishes a presumptive date of receipt within three days of mailing for purposes of this federal lawsuit.

Because the Court concludes, for the reasons articulated, that the defendant’s petition for removal was filed in a timely fashion on July 18, 1983, the plaintiff’s motion to remand this matter to the Wisconsin Circuit Court for Milwaukee County, pursuant to 28 U.S.C. § 1447(c), must be denied.

THE DEFENDANT’S MOTION TO DISMISS PURSUANT TO RULE 12(b) (2) OF THE FEDERAL RULES OF CIVIL PROCEDURE

As the Court’s preliminary remarks, supra at 1363-1364, suggest, this case joins what the Seventh Circuit has recently described as “a long list of cases that have presented personal jurisdiction, minimum contacts, and due process issues regarding the permissible constitutional reach of state long-arm statutes.” Hall’s Specialties, Inc. v. Schupbach, 758 F.2d 214, 215 (7th Cir.1985). When such issues are raised in the context of a motion to dismiss, the trial court routinely begins its analysis with the language of the relevant long-árm statute itself; the Wisconsin statute, Wis. Stat. § 801.05(5) (1977), provides, in relevant part, as follows:

A court of this state having jurisdiction of the subject matter has jurisdiction over a person served in an action pursu-ánt to s. 801.11 under any of the following circumstances:
(5) Local Services, goods or contracts. In any action which:
(a) Arises out of a promise, made anywhere to the plaintiff or to some 3rd party for the plaintiff’s benefit, by the defendant to perform services within this state or to pay for services to be performed in this state by the plaintiff; or
(b) Arises out of services actually performed for the plaintiff by the defendant within this state, or services actually performed for the defendant by the plaintiff within this state if such performance within this state was authorized or ratified by the defendant; or
(c) Arises out of a promise, made anywhere to the plaintiff or to some 3rd party for the plaintiff’s benefit, by the defendant to deliver or receive within this state or to ship from this state goods, documents of title, or other things of value....

The plaintiff contends — and the defendant apparently concedes — that the particular facts of the present action fall neatly within the three, jurisdictional subsections of Wis.Stat. § 801.05(5) (1977), set forth above. Paralleling the language of subsection (a), it is clear that the defendant contracted to sell a certain chemical formula to the plaintiff for $250,000.00; the plaintiff, in turn, performed its preliminary obligation under that contract by providing the initial $50,000.00 installment payment. Consistent with subsection (b) of the statute, the defendant, pursuant to the terms of the subject contract, agreed to deliver the chemical formula to the plaintiff upon receipt of the initial installment. The only apparent obstacle to invocation of this provision is, as the complaint sets forth, that the plaintiff never actually received that formula. Finally, in conformity with the jurisdictional prerequisites established in subsection (c), it is clear that the contract for the purchase and sale of the chemical formula involved a product of considerable value to the parties; among other things, the plaintiff intended to use it in a process for the manufacture of a construction material, and the defendant was to receive royalties on the gross selling price of the finished product.

Based on this preliminary analysis, the Court concludes that the plaintiff has met its initial burden of establishing the Court’s personal jurisdiction over the defendant under Wisconsin’s long-arm statute, Wis.Stat. § 801.05(5) (1977). In turn, since § 801.05 was drafted as a codification of those minimum contacts sufficient to comport with a nonresident party’s right to due process under the Fourteenth Amendment to the United States Constitution, compliance with the statute raises a presumption of compliance with the minimal requirements of due process. Schmitz v. Hunter Machinery Company, 89 Wis.2d 388, 403, 279 N.W.2d 172, 179 (1979); Stevens v. White Motor Corporation, 77 Wis.2d 64, 70, 252 N.W.2d 88, 91 (1977).

At the same time, that presumption may be rebutted by analyzing the position of an out-of-state defendant under five, well-established touchstones — namely, the quantity of the party’s contacts with the state, the nature and quality of those contacts, the source and. cause of the action, the interest of the state in the lawsuit, and the convenience of the parties in trying the matter in this forum. Vermont Yogurt Company v. Blanke Baer Fruit and Flavor Company, 107 Wis.2d 603, 608, 321 N.W.2d 315, 318 (1982); Lincoln v. Seawright, 104 Wis.2d 4, 11, 310 N.W.2d 596, 599 (1981). Stated differently, to obtain personal jurisdiction over a nonresident litigant, extraterritorial service of process must satisfy both the requirements of the state long-arm statute and the significant, constitutional constraints of the due process clause. Brunswick Corporation v. Suzuki Motor Company, Ltd., 575 F.Supp. 1412, 1417 (E.D.Wis.1983); Jadair, Inc. v. Walt Keeler Company, Inc., 508 F.Supp. 879, 880-881 (E.D.Wis.1981), aff'd, 679 F.2d 131 (7th Cir.), cert. denied, 459 U.S. 944, 103 S.Ct. 258, 74 L.Ed.2d 201 (1982).

It is undisputed that that clause of the Fourteenth Amendment demands “such contacts of the [defendant] with the state of the forum as make it reasonable, in the context of our federal system of government, to require the [defendant] to defend the particular suit which is brought there.... [D]ue process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he has certain minimum contacts with it such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.’ ” International Shoe Company v. State of Washington, 326 U.S. 310, 317, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). In Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239-40, 2 L.Ed.2d 1283 (1958), the United States Supreme Court provided this gloss on the due process implications of personal jurisdiction over nonresident defendants:

The unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State. The application of that rule will vary with the quality and nature of the defendant’s activity, but it is essential in each case that there be some acts by which the defendant purposely avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.

See also Shaffer v. Heitner, 433 U.S. 186, 204, 97 S.Ct. 2569, 2580, 53 L.Ed.2d 683 (1977) (noting that “the relationship among the defendant, the forum, and the litigation” is “the central concern of the inquiry into personal jurisdiction”).

In World-Wide Volkswagen Corporation v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980), the Supreme Court explored further the significance of the due process clause with respect to the exercise of personal jurisdiction over a nonresident party. In that case, the Court refused to recognize the personal jurisdiction of an Oklahoma tribunal over a New York automobile wholesaler and retailer doing business only in the New York area. Writing for the Court, Justice White described the significant purpose of constitutional limitations on personal jurisdiction this way:

The concept of minimum contacts ... can be seen to perform two related, but distinguishable functions. It protects the defendant against the burdens of litigating in a distant or inconvenient forum. And it acts to ensure that the States, through their courts, do not reach out beyond the limits imposed on them by their status as coequal sovereigns in a federal system.

World-Wide Volkswagen Corporation v. Woodson, 444 U.S. 286, 291-292, 100 S.Ct. 559, 564, 62 L.Ed.2d 490 (1980). Justice White’s observations were perhaps most recently underscored in United States v. Morton, — U.S. -, 104 S.Ct. 2769, 81 L.Ed.2d 680 (1984), where Justice Stevens, writing for the court, reaffirmed that

personal jurisdiction protects the, individual interest that is implicated when a nonresident defendant is haled into a distant and possibly inconvenient forum [citation omitted]. The strength of this interest in a particular case cannot be ascertained from the “face” of the process; it can be determined only by evaluating a specific aggregation of facts, as well as the possible vagaries of the law of the forum, and then determining if the relationship between the defendant ... and the forum, or possibly the particular controversy, makes it reasonable to expect the defendant to defend the action that has been filed in the forum state.

United States v. Morton, — U.S. -, -, 104 S.Ct. 2769, 2773-2774, 81 L.Ed.2d 680, 688 (1984); see also Insurance Corporation of Ireland, Ltd. v. Compagnie Des Bauxites De Guinee, 456 U.S. 694, 702, 102 S.Ct. 2099, 2104, 72 L.Ed.2d 492 (1982) (“The personal jurisdiction requirement recognizes and protects an individual liberty interest”).

The Court of Appeals for the Seventh Circuit has itself, in recent years and in several contexts, wrestled with the considerable problems attendant upon application of the “minimum contacts” test to challenges to the exercise of personal jurisdiction. In what has become a seminal case in this area, Lakeside Bridge & Steel Company v. Mountain State Construction Company, Inc., 597 F.2d 596 (7th Cir.1979), cert. denied, 445 U.S. 907, 100 S.Ct. 1087, 63 L.Ed.2d 325 (1980), the court determined that a nonresident’s order for goods from a Wisconsin plaintiff, coupled with that party’s knowledge that those goods would likely be manufactured in and shipped from Wisconsin, was not sufficient for due process purposes to permit the trial court to exercise personal jurisdiction. In reaching this conclusion, the Seventh Circuit noted, at the outset, that

Lakeside’s cause of action is not one entirely “arising from these [in-state] effects,” in the words of § 50 of the Restatement [ (Second), Conflict of Laws § 50 (1971)]. It arises in part at least from events that occurred in West Virginia and Virginia.
More important from the standpoint of the Restatement analysis, in view of the fact that the events in Wisconsin were not “of a sort highly dangerous to persons or things,” is the complete absence of “other relationships” between Mountain State and Wisconsin. It is the presence or absence of these other relationships upon which the state’s right to “exercise jurisdiction over the defendant is likely to depend at least in part.” Restatement, supra, § 37, Comment a.
When only the plaintiff has relationships to the forum state and the parties are business corporations engaged in a commercial contract dispute, another important factor comes into play, one which the Restatement comment calls “the best interests of the international and interstate systems.” This factor is based on the proposition that “[a] state should not improperly impinge upon the interests of other states by trying in its courts a case with which it has no adequate relationship.” Restatement, supra, § 24, Comment b.
Viewed realistically, the contacts with Wisconsin in this case consist solely of “[t]he unilateral activity of [one] who claim[s] some relationship with a nonresident defendant,” and this “cannot satisfy the requirement of contact with the forum State” [citing Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239-40, 2 L.Ed.2d 1283 (1958)].

Lakeside Bridge & Steel Company v. Mountain State Construction Company, 597 F.2d 596, 603 (7th Cir.1979), cert. denied, 445 U.S. 907, 100 S.Ct. 1087, 63 L.Ed.2d 325 (1980). As explained, supra at 1363, the defendant finds principal support for its motion to dismiss in both the analysis and result articulated by the Seventh Circuit in this seminal case.

Just one year later, however, in Wisconsin Electrical Manufacturing Company, Inc. v. Pennant Products, Inc., 619 F.2d 676 (7th Cir.1980), the Court of Appeals found occasion to distinguish Lakeside in an action in which a New York corporation with its sole place of business in New York challenged the trial court’s personal jurisdiction in a contract action initiated by a Wisconsin corporation. The circuit court explained its conclusion this way:

The significant contacts of the out-of-state buyer with the forum state that are present here but absent in Lakeside are visits by the buyers’ agents to Wisconsin in connection with the business on which the claim is based....
The two visits by agents of the defendant to Wisconsin are enough, in our opinion, to distinguish this case from Lake-side_ Satisfied here is the requirement that the defendant, not merely the plaintiff, conduct activities in the forum state which in a contract case must relate to the formation or performance of the contract. The visits by Pennant’s agents to be the forum state, first during negotiations to determine, by inspecting WEM’s facilities there, whether it would be able to perform the contract, and later, while the contract was being performed, to negotiate with WEM about performance, were not merely matters of convenience, ... but rather were significant in the formation of the contract and Pennant’s efforts to have it satisfactorily performed [citations omitted].

Wisconsin Electrical Manufacturing Company, Inc. v. Pennant Products, Inc., 619 F.2d 676, 677-678 (7th Cir.1980); see also Nieman v. Rudolf Wolff & Company, Ltd., 619 F.2d 1189 (7th Cir.), cert. denied, 449 U.S. 920, 101 S.Ct. 319, 66 L.Ed.2d 148 (1980) (issued on the same day as Pennant Products and holding that a defendant’s meeting with the plaintiff in the forum state to solicit business and negotiate the subject contract likewise distinguishes Lakeside and authorizes personal jurisdiction). Not surprisingly, the plaintiff maintains, as indicated supra at 1363, that the circumstances of the present case are more akin to those presented to the Court of Appeals in Pennant Products than in Lakeside.

In just the past several months, the Seventh Circuit has further complicated the already rugged landscape of due process-“minimum contacts” authority with its decisions in Madison Consulting Group v. State of South Carolina, 752 F.2d 1193 (7th Cir.1985), and Hall’s Specialties, Inc. v. Schupbach, 758 F.2d 214 (7th Cir.1985). In the former, Judge Flaum, having chronicled the colorful treatment of the personal jurisdiction issue by the federal appellate courts, concluded that the exercise of jurisdiction over a nonresident defendant who initiated certain contract negotiations with a plaintiff by phone call through its counsel, thereby inducing the plaintiffs partner to travel across the country to discuss further certain commercial prospects, does not offend well-established principles of due process. In so ruling, Judge Flaum found compelling the fact that the nonresident defendant had undertaken considerable efforts to solicit the subject contract, as follows:

... By so actively reaching out to solicit the services of a Wisconsin partnership in connection with this contract, we conclude that defendants have purposefully established contacts with Wisconsin that easily satisfy the dictates of constitutional due process.
Unlike the district court, we do hot deem defendants’ solicitation efforts as comparable to the defendant’s mere act of ordering goods from a foreign corporation in Lakeside. In commercial transactions, the actual ordering of goods— like the signing and execution of a contract — is often no more than the final link in a long transactional chain connecting the parties, and thus might not be considered an adequate commercial contact in itself to establish personal jurisdiction [citation omitted]. Nevertheless, when a defendant is responsible for initiating several significant links with the forum plaintiff leading to the transaction at issue, this is sufficient to satisfy the Fourteenth Amendment.

Madison Consulting Group v. State of South Carolina, 752 F.2d 1193, 1203 (7th Cir.1985). The Court of Appeals also found relevant, though not dispositive, the plaintiff’s performance of the contract in Wisconsin — something clearly contemplated by the parties at the time of contracting — and the considerable inconvenience that might accrue to the plaintiff if it were compelled to pursue the action in another forum.

Finally, in what is surely its most recent bout with this troublesome issue, the Seventh Circuit, in Hall’s Specialties, Inc. v. Schupbach, 758 F.2d 214, 216 (7th Cir.1985), upheld the trial court’s dismissal of a complaint for breach of warranty and recission of a sales contract on the basis that personal jurisdiction could not properly be exercised over the nonresident defendant. Invoking the “solicitation” test articulated some three months earlier in Madison Consulting Group v. State of South Carolina, 752 F.2d 1193 (7th Cir.1985), Judge Evans concluded that the nonresident defendant

did not purposely avail himself of the privilege of doing business in Indiana and thus did not invoke the benefits and protections of that forum’s laws. To make [defendant] Schupbach susceptible to suit in Indiana we believe he would have had to knowingly solicit (in more than a general way) the sale there. Had he done so, his voluntary action would have been calculated to have an effect in Indiana. In such a situation, due process would not be offended by requiring him to go to Indiana and defend himself if the sale turned sour.

Hall’s Specialties, Inc. v. Schupbach, 758 F.2d 214, 216-17 (7th Cir.1985). The Court is inclined to sepculate that, if the parties to the present action were afforded an opportunity for additional briefing, the plaintiff would describe the present case in terms characteristic of the Court of Appeals’ opinion in Madison Consulting Group, while the defendant and present movant would align itself with the result announced in Hall’s Specialties. Indeed, if the discussion now completed teaches any lesson at all, it is that this area of the law remains highly unsettled and that the absence of any clear, intelligible principles presages even more disagreement among federal courts as to the proper import of the due process — “minimum contacts” concept. See, e.g., Madison Consulting Group v. State of South Carolina, 752 F.2d 1193, 1205-1210 (7th Cir.1985) (Swygert, J., concurring in the result, but arguing, among other things, that Lakeside should be overruled); Hall’s Specialties, Inc. v. Schupbach, 758 F.2d 214, 216-18 (7th Cir.1985) (Flaum, J., dissenting to “an overly narrow and technical construction of the ‘minimum contacts’ test”).

Despite this apparent disarray in the present state of the law, the Court concludes that the circumstances of the present case are more analogous to the facts in Lakeside and its progeny than those of Pennant Products and the cases finding sufficient contacts for the proper exercise of personal jurisdiction. By his own testimony, defendant Schultz affirms that he “has never traveled to the State of Wisconsin and has not conducted any activities within the State of Wisconsin in connection with the events or transactions giving rise to this lawsuit.” Affidavit of Leonard Schultz at 1 (July 20, 1983). The plaintiff, however, finds considerable significance in the fact that one of the defendant’s representatives — namely, Marvin Weintraub — traveled to Wisconsin in November of 1980 to meet with its staff; indeed, it is the plaintiff’s contention that the actual breach of the parties’ contract occurred upon Mr. Weintraub’s delivery of the chemical formula in Wisconsin at that time.

Nonetheless, Mr. Weintraub’s affidavit makes clear that his appearance in Wisconsin came in the wake of his attendance at a business seminar in Chicago, Illinois, and during the course of his subsequent vacation from his employer, Ford Motor Company. In this context, Mr. Weintraub affirms that he traveled to Wisconsin to meet with the plaintiff’s representatives solely “as a matter of convenience” and, significantly, that if he “had not attended [the] work related seminar in Chicago, Illinois, he would not have gone to Milwaukee, Wisconsin.” Affidavit of Marvin Weintraub (November 16, 1983). The factual circumstances underlying the Seventh Circuit’s opinion in Wisconsin Electrical Manufacturing Company, Inc. v. Pennant Products, Inc., 619 F.2d 676 (7th Cir.1980), upon which the plaintiff principally relies, are wholly distinguishable: In that case, the court found that the requirements of due process had been sufficiently established by two in state appearances by representatives of the nonresident defendant — once to inspect the plaintiff’s facilities to determine whether it was capable of performing the contemplated contract and a second time to discuss certain “misunderstandings” that had arisen between the parties. As explained supra at 1368, the Court of Appeals specifically held that the defendant’s visits were not merely occasioned by convenience but were critical to the execution of the contract and the parties’ performance thereunder. This Court declines to so characterize Marvin Weintraub’s singular visit to Wisconsin in November of 1980, apparently undertaken for the sole purpose of delivery of the formula. The record persuasively establishes that his appearance was, indeed, merely a matter of convenience and, as such, constituted nothing more than “a foot-fall on the State’s soil,” an event upon which the Pennant Products court would have plainly declined to find jurisdiction. Wisconsin Electrical Manufacturing Company, Inc. v. Pennant Products, Inc., 619 F.2d 676, 678 n. 8 (7th Cir.1980).

The Court also finds significant the defendant’s affirmation that he has “never advertised or solicited any investors; or conducted any advertising or solicitation activities, in the State of Wisconsin”; neither does he maintain a telephone listing, post office box, office, employees, representatives, or registered agents within the state. Affidavit of Leonard Schultz at 1-2 (July 20, 1983). Although the contract itself, appended to the plaintiff’s responsive memorandum as an exhibit, provides little insight into the identity of the soliciting party, the defendant’s uncontroverted affidavit clearly removes this case from the scope of the “soliciting party” principle articulated in Madison Consulting Group v. State of South Carolina, 752 F.2d 1193 (7th Cir.1985), and invoked, although to a different end, in Hall’s Specialties, Inc. v. Schupbach, 758 F.2d 214, 216 (7th Cir.1985), see supra at 1369-1370.

The most persuasive argument the plaintiff rallies in support of its position is that the contract, by its very terms and conditions, contemplated “a continuing relationship” between the parties as the project developed — a relationship that was purportedly to include the defendant’s participation in the development of the formula technology and its concomitant share in the tangible results of the project through receipt of royalties. See Plaintiffs Memorandum in Opposition to Motion to Dismiss at 10-12 (November 8, 1983). The apparent difficulty with the argument is that it proves too much: The Court would be establishing a curious precedent indeed if it found today that a nonresident party might properly be haled into the court of a foreign jurisdiction merely by contracting for the provision of goods and services for an indeterminate period of time into the future. The absurdity of such a result is underscored by the very circumstances of this case, in which the so-called “continuing relationship” did not last beyond the delivery of what the plaintiff now characterizes as a worthless product.

Finally, the Court finds nothing to support the exercise of personal jurisdiction over this defendant in the parties’ apparent exchange of correspondence and telephone calls, all purportedly in reference to the performance of the subject contract. Such “contacts” are surely characteristic of most commercial transactions, including but not limited to those attendant upon the execution and performance of business contracts between parties in different states. The Seventh Circuit, in Lakeside Bridge & Steel Company v. Mountain State Construction Company, 597 F.2d 596, 604 (7th Cir.1979), cert. denied, 445 U.S. 907, 100 S.Ct. 1087, 63 L.Ed.2d 325 (1980), specifically identified the anomalous end to which the plaintiff’s argument would lead: The “[u]se of the interstate telephone and mail service to communicate with a Wisconsin plaintiff, if constituting contact supporting jurisdiction, would give jurisdiction to any state into which communications were directed.”

For all of these reasons, the Court concludes that the defendant did not, in the language of Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2 L.Ed.2d 1283 (1958), “purposely avail[] himself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.” Accordingly, the motion to dismiss the complaint for lack of personal jurisdiction must be granted.

CONCLUSION

For the reasons set forth herein, the Court hereby DENIES the plaintiff’s motion to remand this case to the Wisconsin Circuit Court for Milwaukee County, pursuant to 28 U.S.C. § 1447(c).

The Court further GRANTS the defendant’s motion to dismiss the complaint in toto for lack of personal jurisdiction, pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure.


source: Caselaw Access Project

author: MacMAHON, District Judge.

license: Public Domain

text:
    Charlene M. HAMILTON, Plaintiff, v. The HERTZ CORPORATION, Hertz International, Ltd. (a wholly-owned subsidiary of the Hertz Corporation) and Randolph Evans, Defendants.
    No. 85 Civ. 1248 (LFM).
    United States District Court, S.D. New York.
    May 2, 1985.

      Williams & Geiger, P.C., by Norman Williams, Brooklyn, N.Y., for plaintiff.
    Moore Berson Liflander & Mewhinney, by Daniel J. Dillon, New York City, for defendants Hertz Intern., Ltd. and The Hertz Corp.
   OPINION

MacMAHON, District Judge.

Plaintiff moves to remand this action to the Supreme Court of the State of New York, New York County (“state court”), pursuant to 28 U.S.C. § 1447(c), on the grounds that there are no federal issues present and defendants’ removal papers are defective and imposed for delay. In the alternative, plaintiff seeks to amend her pleadings to include a demand for a jury trial.

This action was originally commenced in state court and removed pursuant to 28 U.S.C. § 1441. Jurisdiction is invoked under 28 U.S.C. §§ 1338, 1441, and the Lan-ham Trademark Act, 15 U.S.C. § 1121.

Plaintiff brought this action to recover damages for personal injuries allegedly sustained in an accident which occurred while she was riding, as a passenger, in a vehicle rented from defendants Hertz Corporation (“Hertz”) and Hertz International, Ltd. (“Int’l”), in Cartagena, Colombia. Defendants were served with a summons and verified complaint on or about December 21, 1982. After it was asserted that the vehicle in which plaintiff was injured was rented from a sublicensee of Hertz’s trademark and defendant Hertz claimed it had no control or interest over the sublicensee, plaintiff moved, on February 6, 1985, to amend her complaint to include claims of fraud and breach of contract. The motion to amend was granted on February 14, 1985. On that same day, defendants filed their petition for removal, although the petition and accompanying papers were predated as early as February 6. The order granting the amendment was served on defendants on February 20, 1985.

DISCUSSION

Where the initial pleading does not set forth grounds for removal, “a petition for removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may be ascertained that the case is one which is or has become removable.” 28 U.S.C. § 1446(b).

Generally, defendants’ receipt on February 6 of plaintiff’s motion papers requesting leave to amend the complaint would give sufficient notice that the case may be removable and the thirty-day period would .start to run. However, “the time within which to amend the pleading as of course had expired and leave of court had to be obtained for such amendment. CPLR § 3025. Thus, the service of the motion papers on [February 6, 1985] could not serve as the date from which the thirty day period would be measured.” Gibson v. Atlantic Coast Line R. Co., 299 F.Supp. 268, 269 (S.D.N.Y.1969).

Defendants filed the petition for removal on February 14, the same day the motion to amend was granted. Generally, the time period would start to run “after receipt” by defendants of a copy of the order, which occurred on February 20, six days after the filing of the removal petition.

However, the receipt of a proposed order is sufficient to start the period running, even though the signed order was received later. Gibson v. Atlantic Coast Line R. Co., supra, 299 F.Supp. at 269. The thirty-day period “is not a jurisdictional requisite, but a procedural expedient intended to accomplish expedition in the disposition of causes in which this court has the power to function.” Fisher v. Exico Co., 13 F.R.D. 195, 196 (E.D.N.Y.1952).

Here, although the filing of the petition for removal may have been premature, the purpose behind the time period was not thwarted, and we shall consider the petition timely filed. The question for us now is whether this action arises under the Constitution, treaties or laws of the United States and thus was removable, pursuant to 28 U.S.C. § 1441(b), or should be remanded under § 1447(c).

Discussing the tests for removal, the Supreme Court has stated:

To bring a case within the statute, a right or immunity created by the Constitution or laws of the United States must be an element, and an essential one, of the plaintiffs cause of action. * * * The right or immunity must be such that it will be supported if the Constitution or laws of the United States are given one construction or effect, and defeated if they receive another. * * * A genuine and present controversy, not merely a possible or conjectural one, must exist with reference thereto * * * and the controversy must be disclosed upon the face of the complaint, unaided by the answer or by the petition for removal. * * *■

Gully v. First National Bank in Meridian, 299 U.S. 109, 112-13, 57 S.Ct. 96, 97-98, 81 L.Ed. 70 (1936).

The removal statutes represent congressionally authorized encroachments by the federal courts into the states’ sovereignties. Therefore, the provisions must be “strictly construed,” and their established procedure must be rigidly adhered to. New York v. Muka, 440 F.Supp. 33, 35 (N.D.N.Y.1977). Any doubts as to federal jurisdiction are to be resolved against removal. Irving Trust Co. v. Century Export & Import, S.A., 464 F.Supp. 1232, 1236 (S.D.N.Y.1979). The grounds for removal must inhere in the plaintiffs claims. Id. at 1238.

Unless Congress has stated that the source of plaintiffs relief is solely in federal law, courts are prohibited from looking outside the plaintiffs complaint to determine whether or not a suit arises under federal law. Hearst Corp. v. Shopping Center Network, Inc., 307 F.Supp. 551, 556 (S.D.N.Y.1969). The Lanham Act, however, does not preempt state regulation of trademarks, statutory or common law. La Chemise LaCoste v. Alligator Co., 506 F.2d 339, 346 (3d Cir.1974); Application of State of New York, 362 F.Supp. 922, 927-928 (S.D.N.Y.1973). It is proper then to determine whether plaintiffs claim arises under federal law by examining only the amended complaint.

The essence of plaintiff’s claim is to recover for her personal injuries, allegedly caused by defendants’ negligence. Her second cause of action alleges that the fraudulent use of defendants’ trademark induced her into renting the vehicle in which she sustained those injuries. She is not claiming that the use of the trademark itself caused her injuries.

The purpose of the Lanham Act is to ensure the integrity of registered trademarks. Oberlin v. Marlin American Corp., 596 F.2d 1322, 1326 (7th Cir.1979). The likelihood of consumer confusion is crucial in any action alleging trademark infringement or unfair competition under the Lanham Act. R.G. Barry Corp. v. Mushroom Makers, Inc., 612 F.2d 651, 658 (2d Cir.1979).

However, simply because a trademark is implicated does not signify that removal jurisdiction is appropriate. Id. at 658. Courts have found federal question jurisdiction only if the complaint specifically asserts or claims protection under federal trademark law. Application of State of New York, supra, 362 F.Supp. at 927-928; Cue Pub. Co. v. Colgate Palmolive Co., 233 F.Supp. 443, 444 (S.D.N.Y.1964). “Ample experience indicates that, where a state trademark or infringement action is sought to be removed to federal court on the theory that the action could have been predicated on the Lanham Act, federal courts have been unwilling to find a federal question by implication and have remanded to state courts.” La Chemise LaCosta v. Alligator Co., supra, 506 F.2d at 346 n. 9, and cases cited within.

In her second claim, plaintiff does not seek relief for any trademark infringement or unfair competition under the Lan-ham Act, but rather seeks to be compensated for the injuries she received in the vehicle she was induced to rent because of defendants’ false representations. This action does not implicate the powers of federal jurisdiction under the Lanham Act merely because a trademark was mentioned in one of the claims.

Accordingly, plaintiffs motion to remand this action to state court is granted. Plaintiff’s request for costs is denied.

So ordered.


author: SWEET, District Judge.

text:
    FOUR STAR GROCERY, INC., Plaintiff, v. UNITED STATES of America, Defendant.
    No. 84 Civ. 6994 (RWS).
    United States District Court, S.D. New York.
    May 2, 1985.
    Carlucci & Legum, Mineóla, N.Y., for plaintiff; Steven G. Legum, Mineóla, of counsel.
    Rudolph W. Giuliani, U.S. Atty. for the S.D.N.Y., New York City, for defendant; Amy Rothstein, Asst. U.S. Atty., New York City, of counsel.
   SWEET, District Judge.

Plaintiff Four Star Grocery, Inc. (“Four Star”) brought this action pursuant to 7 U.S.C. § 2023 and 7 CFR § 279.10 to obtain judicial review of an order of the United States Department of Agriculture’s Food and Nutrition Service (“FNS”) which disqualified Four Star from participating in the Federal Food Stamp Program for a one-year period. The government has moved for summary judgment. This motion is granted.

Facts

For the purposes of this motion, all facts presented by Four Star are taken as true. Four Star is a retail food store authorized by the FNS to participate in the Federal Food Stamp Program (the “Program”). As a participant in the Program, Four Star is entitled to accept food stamps as payment for food or food products for home consumption except alcohol or tobacco (7 U.S.C. § 2012). Four Star is located in an area in which there is a high concentration of households eligible to receive food stamps, and a substantial amount of Four Star’s business is transacted in food stamps.

Theodore Owens (“Owens”) is an employee of Four Star. On three separate occasions while on duty at Four Star, Owens purchased food stamps at a discounted rate from an undercover FNS agent. On December 17, 1981, he purchased food stamps with a face value of $150 for $120; on January 6, 1982, he purchased $200 worth of food stamps for $160; and on February 12, 1982 he brought $250 worth of food stamps for $200. Owens was criminally prosecuted and convicted for this activity. He was subsequently fired from his employment at Four Star and later rehired as an assistant to the store manager at the request of his probation officer. Owens maintains that he purchased the food stamps solely for his own .benefit and not for that of his employer.

By letter dated March 28, 1984, Four Star was advised by FNS that its authorization to participate in the Program was to be suspended for a period of one year. This was confirmed in a letter dated September 7, 1984 following an administrative review requested by Four Star.

Discussion

The regulations governing the participation of retail stores in the Food Stamp Program that were in effect at the time relevant to this action authorize the FNS to “disqualify any authorized retail food store ... from further participation in the program for a reasonable period of time, not to exceed three years, as FNS may determine, if the firm fails to comply with the Food Stamp Act or this part.” 7 C.F.R. § 278.6 (1981). This section further provided that: “[T]he FNS regional office shall ... [Disqualify the firm for 1 year if [t]he firm bought coupons at a discount.” Id. For the purposes of this section, the term “Firm” included: “the ownership or management of an authorized retail food store ... or any person acting on behalf of the ownership or management.” Id.

The sole issue raised by Four Star as to its liability for Owens’ actions is that with respect to the particular violations charged, Owens was acting solely for his own benefit and not that of his employer. An examination of the law in effect at the time, however, indicates that Owens’ motivation for trafficking in food stamps is irrelevant and that the government is entitled to summary judgment based on Owens undisputed illegal purchases of food stamps and the unrefuted nature of his employment at Four Star. 7 C.F.R. § 278.6 (1981).

As noted above, there is no dispute that Owens was employed by Four Star and that he trafficked in food stamps on at least threé occasions. The government maintains that Four Star employed Owens as a manager, and have presented a report of a site visit to Four Star performed by FNS on September 27, 1984 which indicates that the person contacted was Owens and that his title was manager. Although Four Star does not directly refute this claim in its pleadings or memorandum of law, it submits an affidavit from Owens in which he asserts that at all relevant times he was employed as an assistant manager. Whether or not Owens was employed as a manager or assistant manager, however, it is undisputed that he was a “person acting on behalf of the ownership or management.” 7 C.F.R. § 278.6(a). As such, his actions may be attributed to Four Star. This conclusion is further supported by case law in this Circuit. See, e.g., J.C.B. Supermarkets, Inc. v. United States, 530 F.2d 1119, 1122 (2d Cir.1976). (“The abuse of th[e] program by employees authorized to act by [the corporation] suffices to inculpate the corporation.”)

Four Star alternatively seeks judicial review of the sanction imposed upon it by FNS, claiming that the penalty is arbitrary and capricious and should be modified. Despite Four Star’s contention that because the government did not warn Four Star of the existence of violations it failed to meet the conditions precedent set forth in the regulations, the sanction imposed is in conformity with the regulations in effect at the time. 7 CRF § 278.6(e)(2)(B)(ii) (disqualification appropriate where firm warned or where FNS determines violations to be serious). The majority of the Circuit Courts which have addressed this issue have held that a court does not have subject matter jurisdiction to review a penalty which conforms to the applicable regulations. See, e.g., Kulkin v. Bergland, 626 F.2d 181, 185 (1st Cir.1980); Woodward v. United States, 725 F.2d 1072, 1077-78 (6th Cir.1984); see also Save More of Gary, Inc., v. United States, 442 F.2d 36, 39 (7th Cir.), cert. dismissed, 404 U.S. 987, 92 S.Ct. 535, 30 L.Ed.2d 549 (1971). But see Goodman v. United States, 518 F.2d 505 (5th Cir.1975).

Although the Second Circuit has not yet ruled on this issue, the reasoning of the district court in Great Atlantic & Pacific Tea Company v. United States, 342 F.Supp. 492 (S.D.N.Y.1972), seems equally applicable here:

[I]t would ... be a mischievous practice for a District Court to engage in a competition with the administrative tribunal and its hearing officers in the measurement of fair and reasonable periods of disqualification for plain, inexcusable violations. It would lead to a form of chaos for the courts to compete with the agency representatives on the quantum of disqualification to be meted out.

Id. at 493. See also M.R. Damiani v. U.S. Dept. of Agriculture, 421 F.Supp. 697, 699 (S.D.N.Y.1976) (“where there is no disputed factual issue as to the validity of the Review Officer’s determination that the food stamp program has been violated, the court should not embark on a review of the sanction imposed”). Because the penalty imposed upon Four Star is in compliance with the regulations then in effect, review of the sanction is not appropriate.

For the above reasons the respondents’ motion for summary judgment will be granted. The clerk is directed to enter judgment dismissing the complaint.

IT IS SO ORDERED.

      . In December 1982, the regulation was amended to require permanent disqualification if any of the firms’ personnel is found to have purchased or otherwise trafficked in food stamps. 7 C.F.R. § 278.6 (1983).


text:
    OLIN CORPORATION, Plaintiff, v. INSURANCE COMPANY OF NORTH AMERICA, the Hanover Insurance Company (as successor to Massachusetts Bonding and Insurance Company), American Home Assurance Company, American Re-Insurance Company, Certain Underwriters At Lloyd’s, London, Commercial Union Insurance Company (as successor to Employers’ Liability Assurance Corporation, Ltd., and Employers Commercial Union Insurance Company of America), Continental Casualty Company, Employers Insurance of Wausau a Mutual Company, Falcon Insurance Company (as successor to Employers’ Surplus Lines Insurance Company), Federal Insurance Company, Fireman’s Fund Insurance Company, Great American Insurance Company, the Home Insurance Company, Lexington Insurance Company, London & Edinburgh Insurance Company Limited, National American Insurance Company of New York (as successor to Stuyvesant Insurance Company), National Union Fire Insurance Company of Pittsburgh, North River Insurance Company, Northbrook Excess and Surplus Insurance Company, and Transit Casualty Company, Defendants.
    No. 84 Civ. 1968 (LFM).
    United States District Court, S.D. New York.
    May 3, 1985.

      Kissam, Halpin & Genovese by James J. Harrington and Norma B. Levy, New York City, for plaintiff.
    Davis Polk & Wardwell by Guy Miller Struve, Paul R. Ko'epff, Daniel L. Brockett and Lisa Huestis, New York City, for defendant Ins. Co. of North America.
   OPINION

MacMAHON, District Judge.

Plaintiff Olin Corporation (“Olin”) moves, pursuant to Rule 3(j) of the Local Rules for the Southern District of New York, to reargue its motion for partial summary judgment, or, in the alternative, pursuant to 28 U.S.C. § 1292(b), for certification that this court’s order denying summary judgment involves a controlling question of law which should be immediately appealed.

In its motion for partial summary judgment, Olin sought to hold defendant Insurance Company of North America (“INA”) liable for 100% of the defense costs Olin incurred in defending claims for bodily injury and property damage resulting from its manufacture of dichlorodiphenyltrichloroe-thane (“DDT”). INA cross-moved for partial summary judgment declaring that defense costs should be paid either equally or proportionately by INA, Olin and three other primary insurers. In our decision, dated March 6, 1985, we denied both motions because of the existence of material issues of fact in dispute. 603 F.Supp. 445 (D.C.N. Y.).

In support of its reargument motion, Olin asserts that INA’s admissions, controlling authorities and interpretations of the policies themselves require reversal of our prior decision. However, Olin has failed to point out any authority that would lead us to change our original decision. Issues of fact still exist which preclude our granting of summary judgment to either party. The extent of INA’s, or any other insurer’s, duty to defend can only be determined upon a plenary trial.

In the alternative, Olin seeks certification for immediate appeal. In order to certify a question for appeal under 28 U.S.C. § 1292(b), it must involve a controlling question of law as to which there is substantial ground for difference of opinion, which may materially advance the ultimate termination of the litigation. “The legislative history of § 1292(b) ‘stresses] the limited and exceptional character of the cases to which it applies and condemn[s] any indiscriminate use of the authority given.’ ” Arnett v. Gerber Scientific, Inc., 575 F.Supp. 770, 771 (S.D.N.Y.1983).

The essence of Olin’s argument is that there is a substantial difference of opinion on a controlling question of law as to whether Olin must bear the burden of establishing that injury occurred during INA’s policy or whether the burden is on the insurer to exclude itself from liability for defense costs.

The question for certification “must arise in a sufficiently developed factual context to ‘sharply define the legal issues raised.’ ” Arnett, supra, 575 F.Supp. at 771. “It is doubtful whether the denial of summary judgment when the applicable law is clear but there is a genuine issue as to a material fact can properly be certified under Section 1292(b), for that section is limited only to certifying an order involving a ‘controlling question of law.’ ” Chappell & Co. v. Frankel, 367 F.2d 197, 200 n. 4 (2d Cir.1966). See also, DeWitt v. American Stock Transfer Co., 440 F.Supp. 1084 (S.D.N.Y.1977). Without a more fully developed factual record, certification is inappropriate. There is a lack of certainty as to whether the question is controlling. Arnett, supra, 575 F.Supp. at 772.

Accordingly, plaintiff’s motion for rear-gument is granted, and, upon reargument, we adhere to our opinion, dated March 6, 1985, denying plaintiff’s and defendant’s motions for partial summary judgment. Since plaintiff has failed to demonstrate that there is a controlling question of law warranting certification, its alternative motion for certification is denied. SO ORDERED.


author: KRAM, District Judge.

text:
    WESTCHESTER LEGAL SERVICES, INC. and Gerald A. Norlander, Plaintiffs, v. COUNTY OF WESTCHESTER, Andrew P. O’Rourke, Individually and In His Official Capacity as County Executive of the County of Westchester, New York and the Board of Acquisition and Contract of Westchester County, Defendants.
    No. 85 Civ. 3115 (SWK).
    United States District Court, S.D. New York.
    May 3, 1985.

      Cravath, Swaine & Moore, Richard L. Hoffman, Ellen T. Lowenthal, New York City, for plaintiffs.
    Westchester County Law Dept., Henry J. Logan, Peter A. Meisels, County Attys., White Plains, N.Y., for defendants.
   MEMORANDUM OPINION AND ORDER

KRAM, District Judge.

The instant case is before the Court on plaintiffs’ motion for a preliminary injunction. The plaintiffs in this action are West-chester Legal Services, Inc. (“Welserv”) and Gerald A. Norlander (“Norlander”). Welserv is a non-profit legal services corporation which provides free legal services in civil matters to indigent persons. Welserv is authorized to practice law pursuant to Section 495(7) of the New York State Judiciary Law. Norlander is the Executive Director of Welserv. The defendants are the County of Westchester (“the County”), Andrew P. O’Rourke (“O’Rourke”), and the Westchester County Board of Acquisition and Contract (“the Board”). The County is a New York State municipal corporation. O’Rourke is the County Executive for the County. He is sued in his individual and official capacities. The Board is the entity which must approve all contracts to which the County is a party. Subject-matter jurisdiction exists pursuant to 28 U.S.C. §§ 1331 and 1343(a), and 42 U.S.C. § 1983. There is also a pendent, breach of contract, state law claim.

The complaint alleges that the defendants, in violation of 42 U.S.C. § 1983, have deprived plaintiffs of their rights secured by the First and Fourteenth Amendments to the United States Constitution. The complaint also alleges that the defendants breached a valid contract with the plaintiffs. The instant action arises from the defendants’ decision to terminate some of the funding for Welserv as a result of the latter’s representation of persons suing the County and its various agencies.

In 1984 Welserv had a budget of approximately one million dollars ($1,000,000) and handled approximately 1,600 cases. Approximately 15% of Welserv’s 1984 budget came from funds provided by the County. These funds appear to have been provided pursuant to two separate grants or contracts; one for $105,000 and the other for $50,000. Only the latter is the subject of the current dispute.

The County receives Community Development Block Grants (“CDBG”) from the Department of Housing and Urban Development. These grants are made pursuant to a three-year funding plan. The most recent three-year plan began in 1982. The CDBG three-year plan for funds to the County for the fiscal years 1982, 1983 and 1984 included annual allocations for Wel-serv. Welserv’s annual allocations were provided for Welserv to represent eligible clients in housing and shelter-related disputes. Welserv was to receive $60,000 in the first two years, and $50,000 in the current fiscal year, which began in October of 1984. See Exhibit A annexed to Plaintiffs’ Complaint. Welserv received its allocated funds during the 1982 and 1983 fiscal years. The instant dispute revolves around the $50,000 contract for the current fiscal year and the three-year funding plan which is being drafted to cover the 1985,1986 and 1987 fiscal years.

On April 1, 1985, Lawrence C. Salley, a Deputy Commissioner for the County, mailed a letter to Norlander which stated: Dear Mr. Norlander:

The above mentioned contract which expired on March 21, 1985 between the Westchester Legal Services Inc. and the County of Westchester will not be renewed for the fiscal year 1984 Community Development Program Year.

See Exhibit D annexed to Plaintiffs’ Com- . plaint.

This was a rather curious development, to say the least, since Norlander had received from the County on March 15, 1985 three copies of a contract granting Welserv $50,000, for the period from October 19, 1984 through October 18, 1985 (the 1984 fiscal year), to represent eligible persons. See Exhibit B to Plaintiffs’ Complaint. Moreover, on April 29, 1985 Norlander received a document which contains the preliminary allocation of funds for the CDBG three-year funding plan for 1985 through 1987. This document indicates that Wel-serv will receive no funds during this three-year period.

The record before this Court indicates that Welserv has represented several clients in lawsuits against the instant defendants, apparently with a fair degree of success. It is this conduct by Welserv which the plaintiffs contend led to the termination of funding for Welserv. The parties have submitted various affidavits and memoranda of law to the Court. Oral argument was held and the parties agreed that there was no need to hold-an evidentia-ry hearing; they were content to rely upon their submissions.

The record before the Court is replete with uncontradicted statements by O’Rourke that Welserv’s funding was terminated because it had sued the County and its agencies. O’Rourke contends that groups which receive funds from the County should not be permitted to sue the County. The defendants have produced no evidence to cast doubt upon this contention.

In view of the imminent threat to Wel-serv from defendants’ action, and because attempts to resolve the dispute were unsuccessful, plaintiffs filed the instant action and then moved for a preliminary injunction pursuant to Fed.R.Civ.P. 65. The Court finds that plaintiffs have proceeded expeditiously in seeking the instant relief. Discussion

In order to obtain a preliminary injunction in this Circuit a plaintiff must meet the following standard:

Preliminary injunctive relief in this Circuit calls for a showing of “(a) irreparable harm and (b) either (1) likelihood of success on the merits or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of hardships tipping decidedly toward the party requesting the preliminary relief.”

Jack Kahn Music Co. v. Baldwin Piano & Organ Co., 604 F.2d 755, 758 (2d Cir.1979). See also Power Test Petroleum Distributors, Inc. v. Calcu Gas, Inc., 754 F.2d 91, 95 (2d Cir.1985).

Plaintiffs, to obtain a preliminary injunction, need not show that there is a likelihood of success on the merits of all of their claims for relief. Rather, they must show a likelihood of' success on the merits of at least one of their claims. Plaintiffs allege three claims or causes of action in the complaint. They allege that defendants, in violation of 42 U.S.C. § 1983, deprived plaintiffs of rights guaranteed to them by the First and Fourteenth Amendments to the United States Constitution. Plaintiffs also allege that, in violation of 42 U.S.C. § 1983, defendants have deprived them of a property interest protected by due process rights guaranteed by the Fourteenth Amendment to the United States Constitution. Finally, plaintiffs contend that defendants breached a valid contract. The Court expresses no view at this time as to plaintiffs’ breach of contract claim. Based upon a review of the record as it currently stands, the Court concludes that plaintiffs have shown a likelihood of success on their first two causes of action.

Freedom of expression and association are two of the most fundamental and deeply cherished liberties protected by the First Amendment. It is the Fourteenth Amendment which makes the First Amendment applicable to the States. The plaintiffs contend that the defendants’ acts, if not enjoined, will severely inhibit the exercise of plaintiffs’ First Amendment rights and will punish plaintiffs for previously exercising those rights.

The Court has little trouble accepting plaintiffs’ contention that the type of activity in which Welserv engages and to which the defendants object — litigation on behalf of indigent clients to secure their legal rights — falls directly within the protection of the First Amendment. The First Amendment “protects the right of associations to engage in advocacy on behalf of their members.” Smith v. Arkansas State Highway Employees, 441 U.S. 463, 464, 99 S.Ct. 1826, 1827, 60 L.Ed.2d 360 (1979). (citations omitted). Moreover, Welserv “engages in litigation as a vehicle for effective political expression and association, as well as a means of communicating useful information to the public.” In Re Primus, 436 U.S. 412, 431, 98 S.Ct. 1893, 1904, 56 L.Ed.2d 417 (1978) (citations omitted). Because Welserv’s actions are protected by the guarantees of the First Amendment “[t]he government is prohibited from infringing upon these guarantees either by a general prohibition against certain forms of advocacy, or by imposing sanctions for the expression of particular views it opposes.” Smith, supra, 441 U.S. at 464, 99 S.Ct. at 1827 (citations omitted). The Court, therefore, concludes that the activities in which Welserv engages on behalf of indigent clients with funds utilized from the County are activities clearly protected by the First Amendment. Smith, id.; In Re Primus, supra, 436 U.S. at 426, 431-432, 98 S.Ct. at 1901, 1904-1905; United Transportation Union v. State Bar of Michigan, 401 U.S. 576, 580-581, 585, 91 S.Ct. 1076, 1079-80, 1082, 28 L.Ed.2d 339 (1971); N.A.A.C.P. v. Button, 371 U.S. 415, 428-431, 83 S.Ct. 328, 335-337, 9 L.Ed.2d 405 (1963); In Re Halkin, 598 F.2d 176, 187 (D.C.Cir.1979); Northern Penna Legal Services, Inc. v. County of Lackawana, 513 F.Supp. 678, 684 (M.D.Pa.1981).

This conclusion does not end the Court’s inquiry, however. First, the Court notes that the existence of a protected right under the First Amendment does not in any way depend upon the existence of a protectible property interest. The Supreme Court has stated:

Doyle’s claim under the First and Fourteenth Amendments are not defeated by the fact that he did not have tenure. Even though he could have been discharged for no reason whatever, and had no constitutional right to a hearing prior to the decision not to rehire him, he may nonetheless establish a claim to reinstatement if the decision not to rehire him was made by reason of his exercise of constitutionally protected First Amendment freedoms.

Mt. Healthy City School District Board of Education v. Doyle, 429 U.S. 274, 283-284, 97 S.Ct. 568, 574-575, 50 L.Ed.2d 471 (1977) (citations omitted). This is precisely the situation which the Court is confronted with in the instant case.

Having made this point, the Court will now address the framework within which plaintiffs’ First Amendment claim must be considered. Doyle, supra, articulates the standard by which such a claim is to evaluated. The standard is as follows: ■

Initially, in this case, the burden was properly placed upon respondent to show that his conduct was constitutionally protected, and that this conduct was a “substantial factor” — or to put it in other words, that it was a “motivating factor” in the Board’s decision not to rehire him. Respondent having carried' that burden, however, the District Court should have gone on to determine whether the Board had shown by a preponderance of the evidence that it would have reached the same decision as to respondent’s reemployment even in the absence of the protected conduct.

Doyle, supra, at 287, 97 S.Ct. at 576 (footnote omitted).

In the instant case plaintiffs have overwhelmingly demonstrated that Welserv’s conduct was constitutionally protected and that this conduct was a “substantial factor” and a “motivating factor” in the County’s decision to terminate the $50,000 contract. Moreover, defendants have not only failed to make the requisite showing by a preponderance of the evidence, but have failed to produce any evidence which would indicate that the County would have reached the same decision in the absence of Welserv’s protected conduct.

In view of the foregoing, the Court concludes that plaintiffs have demonstrated a likelihood of success on the merits as to their First Amendment claim with respect to the $50,000—1984 fiscal year contract. See Northern Penna Legal Services, Inc., supra, at 684-685. And, as the Supreme Court has stated:

“Inasmuch as this case involves First Amendment rights of association which must be carefully guarded against infringement by public office holders, we judge that injunctive relief is clearly appropriate in these cases.” (Burns v. Elrod] 509 F.2d [1133] at 1136 [7th Cir.1975]. We agree.

Elrod v. Burns, 427 U.S. 347, 373, 96 S.Ct. 2673, 2689, 49 L.Ed.2d 547 (1976) (emphasis added).

Before discussing the issue of irreparable harm, the Court will address the issue of plaintiffs’ second cause of action. Plaintiffs, as their second cause of action in the complaint, allege that the 1984 fiscal year $50,000 contract was a protective property interest which was terminated in violation of due process rights protected by the Fourteenth Amendment. The Supreme Court has stated:

The Fourteenth Amendment’s procedural protection of property is a safeguard of the security of interests that a person has already acquired in specific benefits. These interests—property interests—may take many forms.

Board of Regents of State Colleges v. Roth, 408 U.S. 564, 576, 92 S.Ct. 2701, 2708, 33 L.Ed.2d 548 (1972). The Court further stated:

.To have a property interest in a benefit, a person clearly must have more than an abstract need or desire for it. He must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it.

Id. at 577, 92 S.Ct. at 2709.

The Court has no question, based on the record before it, that Welserv has a legitimate claim of entitlement to the 1984 fiscal year $50,000 contract.

The Court, having concluded that the plaintiffs have shown a likelihood of success in arguing that they had a protectible property interest which implicated due process rights, must next consider whether defendants’ termination of this interest was “arbitrary, capricious, or without a rational basis.” Northern Penna Legal Services, Inc., supra, 513 F.Supp., at 683 (citations omitted).

The Court reaches the same conclusion it reached earlier: defendants have failed to produce any evidence which refutes plaintiffs’ contention that the contract was terminated in retaliation for Wel-serv’s representation of indigent clients in suits against the County and its agencies. “The Constitution does not permit a governmental body to punish attorneys simply because they decide to represent particular clients. The authorities may not deter individuals from seeking relief in court through threats or other punitive actions.” Northern Penna Legal Services, Inc., at 683 (citation omitted). Thus, the Court concludes that plaintiffs have also demonstrated a likelihood of success on the merits of their second claim, which rests upon their due process rights guaranteed by the Fourteenth Amendment. Id. at 682-684.

The Court also concludes, in the alternative, based on the foregoing discussion, that with respect to plaintiffs’ two constitutional claims for relief (brought pursuant to 42 U.S.C. § 1983), they have presented sufficiently serious questions going to the merits to make them a fair ground for litigation and that a balance of hardships tipping decidedly in plaintiffs' favor exists. Of course, plaintiffs need only show either the likelihood of success on the merits or the existence of a sufficiently serious question.

The Court next must consider the existence of irreparable harm. The Court is satisfied, based on the record before it, that plaintiffs have sufficiently demonstrated the existence of irreparable harm to them from the defendants’ actions. Wel-serv receives a substantial amount of money from the County. The funds in question finance particular activities of Welserv: the $50,000 is provided specifically to represent indigent clients in housing and shelter-related cases. The termination of the $50,-000 contract could very well curtail or destroy altogether the rendering of services by Welserv to clients with housing or shelter-related problems. Moreover, a violation of plaintiffs’ constitutional rights, and in particular, a violation of First Amendment rights, constitutes irreparable harm, per se. Northern Penna Legal Services, Inc., 513 F.Supp., at 685.

In view of this, the plaintiffs have met their burden with respect to obtaining a preliminary injunction. Before discussing the particular terms of the injunction, however, the Court wishes to express its concurrence with and adoption of the views expressed by the Court in Northern Penna Legal Services, Inc., supra, wherein that Court stated:

Finally, there is the matter of the public interest. Again, the court must emphasize that the evidence presented at the hearing requires that, for the purposes of this action, it be concluded that the repudiation was in retaliation for the initiation of certain lawsuits. There certainly is no public interest in such deterrence. Indeed, the latter consideration favors entry of an injunction. This action will have two salutary effects: (1) prevention of several potential violations of the United States Constitution and (2) guarantee that the flow of legal assistance to the poor will not be interrupted for improper reasons ...
The federal judiciary is naturally reluctant to interfere in the affairs of local government. The present case, however, presents a special situation. Review of the record conclusively demonstrates that a preliminary injunction is proper. As previously explained, the defendants have not contradicted substantial evidence to the effect that the termination would be unconstitutional. The theories proffered by the plaintiffs, moreover, are neither attenuated nor exotic. Rather, they have considerable support in the authorities rendered by the United States Supreme Court and other respected tribunals. In short, the instant suit is one of those rare instances in which a federal district court must, and shall, enjoin an action of local officials.

Id. at 685-686. This Court is also reluctant to enjoin the action of local officials, but the Court is presented with a suit where it must enter such an injunction.

Conclusion

The Court will enter a preliminary injunction against the defendants with respect to the 1984 fiscal year $50,000 contract. However, the injunction the Court is going to enter shall apply only with respect to the termination of this contract and not with respect to the three-year funding plan for the period from 1985 until 1987. Thus far all that has occurred with respect to this plan is a preliminary allocation. At some point in the future, when a decision is reached or additional action is taken with respect to this plan, the plaintiffs may move for appropriate preliminary or permanent injunctive relief. At this point, however, they have not carried their burden to obtain a preliminary injunction with respect to the three-year funding plan involving the fiscal years 1985, 1986 and 1987.

Accordingly, it is hereby ORDERED that the defendants in the above-captioned action and their officers, agents, employees, servants and all persons acting by or under their authority, direction and control and/or who are in active concert or participation with them, are preliminarily enjoined from doing the following:

(1) violating the rights and privileges granted to plaintiffs under the First and Fourteenth Amendments to the Constitution of the United States and to represent clients in litigation against the County of Westchester without fear of reprisal, as discussed in the instant opinion;
(2) terminating or failing to renew the contract between the County of West-chester and Welserv for the third year (the 1984 fiscal year) of the current grant program;
(3) granting to any other person or organization the $50,000 that was allocated to Welserv pursuant to the 1984-1985 year (the 1984 fiscal year) of the Urban County Community Development Block grant.

It is further

ORDERED that the defendant O’Rourke and the defendant Board of Acquisition and Contract are to approve, execute and deliver promptly to Westchester Legal Services, Inc. a renewal contract for $50,000 for the Westchester Legal Services’ Urban County Program.

SO ORDERED.

      . Welserv may properly assert the First Amendment rights implicated in the instant case. N.A.A.C.P. v. Button, infra, 371 U.S. at 428, 83 S.Ct. at 335. "We think petitioner [the N.A.A.C.P.] may assert this right on its own behalf, because, though a corporation, it is directly engaged in those activities claimed to be constitutionally protected_” Id.

      . The Court does not accept the defendants' contention that they have a genuine concern and question as to whether it is ethical for a group which receives funding from a government entity to engage in litigation against that source of funding. This is the reason O’Rourke advances for seeking the advice of the local Bar Association. The Court notes, first, that there is no serious ethical question regarding Welserv’s conduct and the County funding it receives. See Washington v. Seattle School District No. 1, 458 U.S. 457, 102 S.Ct. 3187, 3204 n. 31, 73 L.Ed.2d 896 (1982); Shadis v. Beal, 685 F.2d 824, 832-833 (3d Cir.), cert. denied, 459 U.S. 970, 103 S.Ct. 300, 74 L.Ed.2d 282 (1982); Dennis v. Chang, 611 F.2d 1302, 1306-1307 (9th Cir.1980). Secondly, if defendants are truly concerned about a conflict of interest or some other ethical consideration, they may file an appropriate motion to disqualify Welserv in cases where Wel-serv sues the County.

      . This is so even if there is no valid, enforceable contract under state law. The Court expresses no view on this issue at this time. For this reason, defendants' reliance on Modern Amusements, Inc. v. Marriott Corp., 599 F.Supp. 1548 (S.D.N.Y.1984), is misplaced.

      . See Footnote 2.


author: EDELSTEIN, District Judge:

text:
    BLYTHE INDUSTRIES, INC. and Vanguard Construction Corp. (as assignees of Blythe-Vanguard Construction Corp.), Plaintiffs, v. PUERTO RICO AQUEDUCT AND SEWER AUTHORITY and F.M.C. Corp. (Peerless Pump Division), Defendants.
    No. 82 Civ. 7421 (DNE).
    United States District Court, S.D. New York.
    May 6, 1985.

      Tunstead, Schechter & Torre, New York City (Jonah C. Grill, New York City, of counsel), for plaintiffs.
    Symmers, Fish & Warner, New York City (William Warner, New York City, of counsel), for defendant F.M.C. Corp.
   OPINION AND ORDER

EDELSTEIN, District Judge:

Defendant F.M.C. Corp., Peerless Pump Division, (“FMC”) has moved for summary judgment pursuant to Fed.R.Civ.P. 56(b). For the reasons set forth below, defendant’s motion is granted.

FACTUAL BACKGROUND

On November 9, 1982, Blythe Industries, Inc. and Vanguard Construction Corp. (“plaintiffs”), commenced this action against FMC for $49,449.00 in losses allegedly caused by defects in certain effluent pumping systems. The systems were supplied by FMC to plaintiffs’ predecessor in interest, Blythe-Vanguard Construction Corp. (“Blythe-Vanguard”) for use during construction of additions to the Puerto Rico Nuevo Sewage Treatment Plant (“The Project”). In a subsequently filed action before Judge Knapp, Peerless Pump v. Blythe-Vanguard Construction Corporation and Richard A. Tunstead, 83 Civ. 3166 (WK) (S.D.N.Y. filed April 25, 1983), Peerless Pump, a division of Thyssen-Bornemisza, Inc. (“Peerless-TBI”), sought to recover $18,711.00 from plaintiffs’ assignors, Blythe-Vanguard, for two impellers, components of the effluent pumping systems they supplied Blythe-Vanguard for use during The Project. Blythe-Vanguard counterclaimed in the suit before Judge Knapp for $49,449.00, the exact amount plaintiffs seek in the complaint before this court, for damages caused by defects in the effluent pumping systems.

FMC, the defendant herein, sold its Peerless Pump division to the Indian Head subsidiary of TBI, the plaintiff in the case before Judge Knapp, in July of 1976. For purposes of this motion and of adjudicating any liability owing to plaintiffs, FMC and Peerless-TBI are the same. See Plaintiffs’ Response to Defendant’s Rule 3(g) statement, submitted March 11, 1985 (“Plaintiffs’ Rule 3(g) Statement”), at ¶ 3.

On September 27, 1983, FMC moved in this action for dismissal of the complaint, pursuant to Fed.R.Civ.P. 12(c) or, alternatively, for summary judgment, pursuant to Fed.R.Civ.P. 56(b), on the ground that plaintiffs’ claims were barred by the statute of limitations. On March 29, 1984, this court denied FMC’s motion on the ground that the court needed a fuller record to determine the applicable statute of limitations.

On January 15, 1985, Judge Knapp dismissed Blythe-Vanguard’s counterclaim against Peerless-TBI as barred by the statute of limitations. Judge Knapp held that the transaction for the effluent pumping systems involved the sale of goods, for which the applicable statute of limitations is four years under New York’s Uniform Commercial Code § 2-725. Blythe-Vanguard has not appealed this decision, Plaintiffs’ Rule 3(g) Statement at ¶ 5, and, because judgment was entered on February 20, 1985, the time to appeal has expired. On February 27, 1985, FMC moved this court for an order, pursuant to Fed.R. Civ.P. 56, dismissing the complaint as barred by the statute of limitations. FMC contends that plaintiffs are collaterally es-topped from rearguing the merits of the statute of limitations question.

DISCUSSION

As a preliminary matter, the court’s March, 1984 determination that it needed a fuller factual record to determine which statute of limitations applies does not now bind the court to deny the motion for summary judgment. The law of the case doctrine is not a limit on the court’s power, but merely expresses the practice of courts generally to refuse to reopen what has been decided. Erie Conduit Corp. v. Metropolitan Asphalt Paving Ass’n, 560 F.Supp. 305, 307 (E.D.N.Y.1983). As the Court of Appeals for the Second Circuit has held, a district court judge always has the power to change a previous ruling which denied a motion for summary judgment. Corporacion De Mercadeo Agricola v. Mellon Bank, 608 F.2d 43, 48 (2d Cir.1979). In this case, the court now has the benefit of the fuller factual record developed by Judge Knapp on the same issue between virtually the same parties. Moreover, in view of the intervening authority embodied by Judge Knapp’s opinion, the court is justified in reconsidering its earlier determination.

Given that the court is not bound by its previous ruling denying the motion for summary judgment, the next question is whether plaintiffs are collaterally es-topped from relitigating the merits of the statute of limitations question reached by Judge Knapp. Under the doctrine of collateral estoppel, once an issue of law or fact is resolved against a party by a court, that party, or one in privity with that party, generally may not relitigate the matter in another lawsuit. LaRocca v. Gold, 662 F.2d 144, 148 (2d Cir.1981). Although the disposition of Blythe-Vanguard’s claim by Judge Knapp was by summary judgment based on affidavits, rather than a full trial, his decision nonetheless may have res judicata or collateral estoppel effect. Jackson v. Hayakawa, 605 F.2d 1121, 1125 n. 3 (9th Cir.1979), cert. denied, 445 U.S. 952, 100 S.Ct. 1601, 63 L.Ed.2d 787 (1980); In re Falstaff Brewing Corp. Antitrust Litig., 441 F.Supp. 62, 66 (E.D.Mo.1977). For plaintiffs to be precluded, FMC must establish the following: (1) plaintiffs were a party or in privity with a party to the action before Judge Knapp; (2) Judge Knapp made a final determination on the merits of the statute of limitations issue; (3) the statute of limitations issue was necessary, material and essential to the outcome of the prior action; (4) the issue in this suit is identical to the issue actually determined by Judge Knapp; and (5) plaintiffs had a full and fair opportunity to contest the issue before Judge Knapp. See Montana v. United States, 440 U.S. 147, 153-55, 99 S.Ct. 970, 973-75, 59 L.Ed.2d 210 (1979); LaRocca v. Gold, 662 F.2d 144, 148 (2d Cir.1981); Weiss v. Feigenbaum, 558 F.Supp. 265, 275 (E.D.N.Y.1982).

Plaintiffs contend that the issue decided by Judge Knapp is not identical to the issue presently before this court, because the facts are different. Plaintiff asserts: “In the case before Judge Knapp, the purchase order issued by Blythe-Vanguard to Peerless-TBI was for replacement units only. The contract between Blythe-Vanguard and FMC [the defendant herein] and the purchase order issued by Blythe-Vanguard to Peerless-TBI are separate and distinct transactions to which different statutes of limitations apply.” Affidavit of Jonah Grill, submitted March 11, 1985, at ¶ 4.

Under Rule 56(c), the burden is on FMC, the moving party, to show that no genuine issue of fact exists. However, plaintiffs, the non-moving party, “may not rest on mere conclusory allegations to show that an issue exists which should be resolved at trial.” Taylor v. Mayone, 574 F.Supp. 609, 612 (S.D.N.Y.1983). Because FMC has not sufficiently supported its contention that there were separate transactions in this case, nor has it stated any reason why a different statute of limitations should apply even if this is a “separate transaction,” the court rejects FMC’s opposition to the motion for summary judgment. Based on the statements submitted by the parties pursuant to local rule 3(g), the affidavits, memo-randa and the proceedings herein, the court finds no disputed issue of material fact and further finds that the statute of limitations issue before Judge Knapp is “identical” to the issue presently before this court.

As noted above, FMC earlier moved to dismiss plaintiffs’ claims in this action on the ground that they are time-barred. In opposition to the motion, plaintiffs submitted the affidavit of Edward P. Meehan, Vice President of plaintiff Vanguard Construction Corp. and former Sub Treasurer of Blythe-Vanguard. Affidavit of Edward P. Meehan, submitted September 22, 1983 (“Meehan Affidavit I”). Mr. Meehan had overall responsibilities for The Project and was to be plaintiffs’ chief witness at trial. See Joint Pre-Trial Order, submitted June 25, 1984 at 5. In a section of the affidavit designated “fact chronology,” Mr. Meehan sets forth the facts surrounding plaintiffs’ claims against FMC for the defective effluent pumping systems. Meehan Affidavit I at ÍÍH 3-18. Blythe-Vanguard submitted an identical affidavit in opposition to the motion before Judge Knapp to dismiss Blythe-Vanguard’s claims as time barred. Affidavit of Edward P. Meehan, submitted January 6, 1984, Peerless Pump v. Blythe-Vanguard Construction Corp., 83 Civ. 3166 (WK) (S.D.N.Y. filed April 25, 1983) (“Meehan Affidavit II”). The “fact chronologies” contained in the two affidavits are identical. See Meehan Affidavit II at n 2-20; see also Reply Affidavit of Edward P. Meehan, submitted September 30, 1983, at ¶¶ 3-4 (setting forth additional facts relevant to the statute of limitations question that are identical to the facts set forth at paragraphs 18-19 of Meehan Affidavit II). Plaintiffs’ counsel’s conclusory allegation that the transactions are materially different is insufficient to overcome the overwhelming evidence that the transactions at issue in the two cases are the same. Mr. Meehan's “fact chronology” does not delineate two separate transactions. Nor does he at any point distinguish between “replacement units” and any other type of effluent pumping systems supplied by FMC. It is noteworthy that plaintiffs’ counsel has not submitted a new affidavit from Mr. Meehan, or anyone else with personal knowledge of the facts underlying plaintiffs’ claims, to support his contention that there were two separate and distinct transactions.

The “fact chronologies” in the two Mee-han affidavits set forth the following sequence of events. By reason of change order no. P.R.-2, dated April 22, 1975, Blythe-Vanguard was directed to furnish and install size 48HH pumps, with ductile iron impellers, as manufactured by the Peerless Pump Division of FMC. Based on such direction, Blythe-Vanguard purchased the effluent pumping systems from FMC. It is unclear from the “fact chronologies” exactly when the effluent pumping systems were delivered. Both Meehan “fact chronologies” aver that the effluent pumping systems were delivered “in the early part of 1977.” Meehan Affidavit I at ¶ 10; Meehan Affidavit II at ¶ 9. Judge Knapp found this fact crucial in determining whether the statute of limitations had expired, because under New York law, the statute of limitations on a claim for breach of contract of sale accrues upon tender or delivery of the item. Peerless Pump v. Blythe-Vanguard Construction Corp., No. 83-3166, slip op. at 6 (S.D.N.Y. Jan. 15, 1985). Accordingly, by Memorandum and Order dated July 31, 1984, Judge Knapp ordered, inter alia, Blythe-Vanguard to inform the court as to “the precise date on which delivery was tendered for the original impellers.” In response to this order, Blythe-Vanguard’s counsel informed the court on August 21,1984, that “the original impellers were delivered sometime in October, 1976, the precise date being presently unknown.” Defendants’ Response to Court’s Request for Information, submitted August 21, 1984 at ¶ 1, Peerless Pump v. Blythe-Vanguard Construction Corp., 83 Civ. 3166 (WK) (S.D.N.Y. filed April 25, 1983). Plaintiffs have not informed this court that a different delivery, date applies to the transaction at issue in this case. Based on the affidavits and proceedings herein, the court finds that the same delivery date applies to this case.

Plaintiffs further contend that Judge Knapp dismissed Blythe-Vanguard’s counterclaim, not only because he found it to be time barred,, but also because he found that the counterclaim did not arise from the same transactions and occurrences upon which Peerless-TBI’s complaint was predicated. This contention pertains to collateral estoppel requirements three and four listed above. The court finds this contention, however, spurious. Judge Knapp clearly “dismissed the counter-claim as time barred.” Peerless Pump v. Blythe-Vanguard Construction Corp., supra, slip op. at 8. Blythe-Vanguard also asserted a separate ground for recovery under New York’s equitable recoupment provisions. N.Y.Civ.Prac.Law § 203(c) (McKinney 1972). This provision allows a defendant to “interpose, as a recoupment, any claim arising out of the same transaction, even though an independent action by the defendant on the claim would be time barred.” Id. practice commentary by J. McLaughlin, at 119 (McKinney 1972). Thus, in order for Judge Knapp to reach the recoupment claim, he first had to find that Blythe-Vanguard’s claims were time-barred. The statute of limitations issue was thus necessary, material and essential to the outcome of the action before Judge Knapp. This finding precludes plaintiffs from rearguing before this court that their independent action is not barred by the statute of limitations.

The court finds that all five collateral estoppel requirements have been satisfied. Plaintiffs were a party or in privity to a party to Judge Knapp’s final determination on the merits of the statute of limitations issue. The statute of limitations questions are identical in the two actions. Finally, the statute of limitations issue was necessary to the outcome of the action before Judge Knapp and plaintiffs had a full and fair opportunity to contest the issue.

CONCLUSION

Defendant’s motion for summary judgment, pursuant to Fed.R.Civ.P. 56(b) is granted in all respects. The complaint is hereby dismissed with prejudice and without costs to either party.

SO ORDERED.

      . Plaintiffs also sued Puerto Rico Aqueduct and Sewer Authority ("PRASA”) for breach of construction contract. By order dated February 18, 1983, the court dismissed plaintiffs’ claims against PRASA for lack of personal jurisdiction and improper venue. Causes of action one through five and eleven apply only to PRASA. Causes of action six through ten apply only to FMC and are the subject of this motion.

      . Blythe-Vanguard is the corporation that contracted with PRASA for construction of The Project. Blythe-Vanguard has assigned to plaintiffs herein all right, title and interest to all monies due and owing under the construction contract and to all claims arising out of the contract. Thus, the rights of Blythe-Vanguard and those of plaintiffs to recover for defects in the effluent pumping systems are identical.

      . Judge Knapp at page two of his opinion and order refers to a March 23, 1981 agreement between Blythe-Vanguard and Peerless-TBI, in which Blythe-Vanguard agreed to purchase two spare impellers provided Peerless-TBI furnished a replacement impeller at its own expense. Judge Knapp held that the March, 1981 negotiations, "which purported to effect a reservation of [Blythe-Vanguard’s] claims were insufficient to revive the limitations period.” Peerless Pump v. Blythe-Vanguard Construction Corp., No. 83-3166, slip op. at 7 (S.D.N.Y. Jan. 15, 1985). Blythe-Vanguard had a full and fair opportunity to litigate the revival issue before Judge Knapp and is precluded from rearguing it here.

      . Judge Knapp's grant of leave to file additional information is further support for FMC’s contention that Blythe-Vanguard had a full and fair opportunity to argue the merits of the statute of limitations question before Judge Knapp.

      . In the action before Judge Knapp, Blythe-Vanguard was represented by Jonah C. Grill, the same attorney who represents plaintiffs herein.