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Idaho Railway Supply, Inc. v. Upadhya

March 17, 2010

IDAHO RAILWAY SUPPLY, INC., PLAINTIFF,
v.
KAMLESHWAR UPADHYA, DEFENDANT.



The opinion of the court was delivered by: Honorable Edward J. Lodge U. S. District Judge

MEMORANDUM ORDER ON DEFENDANT'S MOTION TO DISMISS AND MOTION TO STRIKE

Pending before this Court in the above titled matter are Defendant's motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2) and 12(b)(6) and motion to strike. Defendant argues that this Court lacks personal jurisdiction over him and that venue is improper in Idaho, and alternatively seeks transfer of venue to California. Defendant further argues that plaintiff has failed to state a claim under which relief can be granted because the statute of limitations period has expired, and also moves to strike the affidavit of James Washburn. Plaintiff has responded to the motion asserting that both personal jurisdiction and venue are proper in Idaho, and further that the statute of limitations has not yet passed. Having fully reviewed the record herein, the Court finds that the facts and legal arguments are adequately presented in the briefs and record. Accordingly, in the interest of avoiding further delay, and because the Court conclusively finds that the decisional process would not be significantly aided by oral argument, these motions shall be decided on the record before this Court without oral argument. Local Rule 7.1(b).

FACTUAL AND PROCEDURAL BACKGROUND

This case involves a contract dispute between the parties for amounts due and owing under an ongoing purchase agreement for locomotive parts. Plaintiff Idaho Railway Supplies, Inc. ("IRS") is a wholesale distributor of railway parts. Its principal place of business is in Idaho. IRS is the authorized wholesaler for Dayton-Phoenix Group, Inc. ("Dayton-Phoenix"), a manufacturer of railway parts located in Ohio. Defendant Kamleshwar Upadhya ("Upadhya") is an individual residing in California. Defendant operates an import/export company, Advanced Machinery and Technology Company ("AMTC"), which buys locomotive parts for shipment to India.

Upadhya first contacted Dayton-Phoenix to purchase products from it for shipment to India. Dayton-Phoenix advised Upadhya that he would have to purchase the products through its authorized wholesaler, IRS. It appears that both parties agree that the initial contact between the two parties occurred in 1999.*fn1 A series of communications, negotiations, dealings, and transactions allegedly occurred between 2002-2008.

In 2002, Upadhya contacted James Washburn, the president of IRS, and requested a price quote for sixty-six radiator cooling fans. Washburn initially responded to Upadhya's request with a quote of $9,365 per cooling fan unit in a letter dated April 2, 2002. After receiving this quote, Upadhya told Washburn the price was too high and Washburn revised the quote on April 24, 2002 to $8,500 per unit. This lower price of $8,500 per unit was contingent upon IRS also receiving an order for a minimum of fifty auxiliary generators at the price of $7,250 per unit. Again, Upadhya told Washburn the quote was too high and on June 20, 2002, IRS issued a new proposal. This time, IRS quoted the cooling fans at $8,000 per unit, contingent upon an order for a minimum of fifty auxiliary generators at $8,301.80 per unit as well. Upadhya accepted this proposal on August 2, 2002.

Washburn confirmed Upadhya's acceptance of this quote and the conditions of the contract by sending him a fax. Washburn also received a telephone call from Upadhya, wherein he was notified that Upadhya would place the additional order for the auxiliary generators as agreed. Washburn then sent its purchase order to the manufacturer, Dayton-Phoenix for the parts. The first twenty fans were shipped to Upadhya between December 18, 2002 and December 23, 2003 [sic]. IRS invoiced Upadhya for the twenty fans at the time they were shipped and it received payment in the amount of $160,000 from Upadhya with a balance of $27,300 remaining on his account.

Twenty more fans were built and ready to be shipped to Upadhya thereafter, however Washburn advised Upadhya that he would not release the fans for shipment until the $27,300 balance for the first twenty fans was paid in full. Upadhya telephoned Washburn requesting release of the fans, but Washburn reiterated that he could not release the fans until he either received payment in full for the first twenty fans or received a letter guaranteeing payment for same. On February 21, 2003, Upadhya faxed a letter guaranteeing payment in the amount of $90,090 for sixty-six radiator fans. The letter also provided that Upadhya would alternatively purchase sixty-six auxiliary generators for $7,250 per unit within seventy-five days. Apparently satisfied with the guarantee letter, IRS released the second shipment of twenty cooling fans on February 24, 2003 and invoiced Upadhya accordingly. The last twenty-six cooling fans were subsequently released for shipment on April 2, 2003.

IRS received $160,000 on April 21, 2003 for the second shipment of the twenty fans. This amount received was deficient by $27,300. On May 1, 2003, IRS received a final payment of $208,000 from Upadhya for the last twenty-six cooling fans. According to IRS, this amount was deficient by $35,490.

IRS alleges it called Upadhya weekly for seven months attempting to collect the $90,090 balance owed on the account. IRS also alleges that in each call, Upadhya assured Washburn that he would pay the balance on his account once he sold the auxiliary generators. Eventually, Upadhya made three payments toward his $90,090 balance, the last of which was made on May 15, 2006. However, a balance of $24,900 remained on his account for the original sixty-six radiator cooling fans he ordered.

On January 27, 2004, IRS received a purchase order from Upadhya for twenty auxiliary generators and twenty-six cooling fans. Notwithstanding the outstanding balance on Upadhya's account, Washburn agreed to sell Upadhya the generators at $4,500 per unit, contingent on Upadhya guaranteeing payment of his deficiency on the original sixty-six fans. And on February 14, 2007, Upadhya placed another order with IRS for thirty-five radiator cooling fans at $11,250 per unit. On July 13, 2007, IRS released eighteen cooling fans for shipment and invoiced Upadhya for $202,500.

According to IRS, while there were other sales transpiring between the parties, Upadhya continued to be delinquent on paying the money owed on his account. IRS alleges that this arrearage caused problems for IRS with Dayton-Phoenix. And on April 1, 2008, Dayton-Phoenix put IRS on a credit hold. The credit hold allegedly froze all of IRS's other pending orders. In order to release the hold, IRS had to pay Dayton-Phoenix $197, 874. On April 22, 2008, IRS received $115,000 of the $202,500 outstanding balance on Upadhya's account for the thirty-five radiator cooling fans he ordered back in February 2007. To date, IRS alleges Upadhya owes it $111,680. IRS filed its complaint against Upadhya in state court on January 6, 2009 seeking to recover the amounts unpaid by Upadhya on various invoices. On February 26, 2009, Upadhya removed the action to federal district of Idaho.

Upadhya now brings his motion to dismiss for lack of personal jurisdiction and for failure to state a claim upon which relief can be granted. Upadhya also moves to strike Washburn's affidavit.

DISCUSSION

I. Legal Standard for Motion to Dismiss Based on Lack of Personal Jurisdiction

A plaintiff has the burden of establishing personal jurisdiction over a nonresident defendant. Ziegler v. Indian River County, 64 F.3d 470, 473 (9th Cir. 1995). A plaintiff need only establish a prima facie showing of jurisdictional facts to withstand dismissal when, as here, a district court acts on a motion to dismiss without holding an evidentiary hearing. Id;See also Ballard v. Savage, 65 F.3d 1495 (9th Cir. 1995). In addressing a defendant's motion to dismiss for lack of personal jurisdiction, the court must take the plaintiff's uncontroverted allegations in its complaint as true, and resolve factual disputes in affidavits in its favor. Dole Food Co. v. Watts, 303 F.3d 1104, 1108 (9th Cir. 2002). However, where a defendant offers evidence in support of its motion, a plaintiff may not simply rest on the bare allegations of its ...


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