JWQ CABINETRY INC. v. GRANADA WOOD & CABINETS INC. et al

Filing 19

OPINION. Signed by Judge Freda L. Wolfson on 5/19/2014. (jjc)

*NOT FOR PUBLICATION*
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
___________________________________
:
JWQ CABINETRY, INC.,
:
:
Civil Action No. 13-4110 (FLW)
Plaintiff,
:
:
v.
:
OPINION
:
GRANADA WOOD & CABINETS, INC.,:
et al.,
:
:
Defendants.
:
___________________________________:
WOLFSON, United States District Judge:
This breach of contract action arises out of the allegations by Plaintiff JWQ Cabinetry,
Inc. (“Plaintiff” or “JWQ”) that it received defective cabinets shipped from a non-party Chinese
entity. Plaintiff claims that defendants Granada Wood & Cabinets, Inc., Granada Kitchen and
Floor, LLC, (hereinafter referred to as “Granada”)1 and Tao Zhang (collectively, “Defendants”)
breached an agreement related to the shipments of those cabinets to Plaintiff. Based upon that
alleged breach, Plaintiff also accuses Defendants of, inter alia, committing fraud. In the instant
matter, Defendants move to dismiss all claims on the bases that this Court lacks personal
jurisdiction over Defendants, that Plaintiff has failed to effectuate proper service, as well as that
the Complaint failes to state a claim pursuant to Fed. R. Civ. 12(b)(6). For the reasons that
follow, Defendants’ motion to dismiss defendants Granada Wood and Granada Kitchen based on
a lack of personal jurisdiction is GRANTED.

Defendants’ motion to dismiss Zhang for

improper service is GRANTED; the Court finds that Plaintiff failed to effectuate proper service
1

According to the Complaint, Granada Kitchen is an affiliate or successor of Granada
Wood. For the purposes of this motion, the Court will refer these entities as “Granada.”

on Zhang, and therefore, he is dismissed, without prejudice, as a defendant. However, the Court
will provide Plaintiff an opportunity to effectuate proper service on Zhang within 30 days from
the date of the Order accompanying this Opinion. Since all defendants are dismissed, the Court
does not address the motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(6).
BACKGROUND
The facts of this case are derived from the Complaint and they are taken as true for the
purposes of this motion. Plaintiff is a New Jersey corporation that purchases and sells kitchen
cabinets for consumer use. Kaiyang Kunlun Wood Co. (“Kunlun”), not named as a defendant in
this suit, is a major supplier of kitchen cabinets in China. According to Plaintiff, JWQ has been
purchasing wood cabinetry from Kunlun since 2010.

In that connection, Plaintiff would

communicate with Kunlun through its agent, affiliate and/or subsidiary defendants Granada
Wood and Granada Kitchen, both California corporations, and defendant Zhang.
JWQ and Kunlun entered into an agreement, dated August 14, 2012, for the purchase of
two containers of cabinetry with Kunlun. See Compl., ¶ 14. Consistent with JWQ’s regular
course of dealing, JWQ, first, remitted to Kunlun $40,000 as a deposit payment on August 16,
2012, and the remaining balance was paid by November 20, 2012. Id. at ¶¶ 16-17. Upon
receiving both containers of cabinets, directly from Kunlan, JWQ discovered that the cabinet
color and finish were defective. In an effort to complain to Kunlun regarding the defects, JWQ
communicated with defendant Zhang, who, according to Plaintiff, was Kunlun’s owner. Id. at ¶
26. JWQ also rejected both containers. Zhang instructed JWQ to arrange for shipment and
return all of the allegedly defective merchandise to defendant Granada’s warehouse located in
California. Id. at ¶ 29. In lieu of receiving a refund, JWQ was given a credit in the amount of
$144,351.21 for future purchases (the “Credit”). Id. at ¶ 38.

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Prior to being provided with a credit, on or about October 23, 2012, JWQ placed another
order for one container of cabinets from Kunlun, and JWQ paid a deposit of $20,000. Id. at ¶¶
39-40. On or about January 22, 2013, JWQ was notified by Kunlun that the shipment would
arrive soon and that a balance of $47,784.98 was due immediately. In response, JWQ requested
that Kunlun apply the Credit to pay for the remaining sum. Id. at ¶ 42. It appears that JWQ had
received that shipment.
In January 2013 and March 2013, JWQ, respectively, placed two additional cabinet
orders. The first order “was confirmed by contract dated . . . January 31, 2013.” Id. at ¶ 44.
However, Kunlun neither confirmed nor responded to the second order. Id. at ¶ 47.

Despite

numerous inquiries, Kunlun never sent the shipments to JWQ. In April 2013, JWQ sent Zunlun,
Zhang and Granada a final request for refund of the Credit in the amount of $96,566.23. Id. at ¶¶
50-51. To date, Plaintiff has not received any payment.
Based on these allegations, Plaintiff asserts the following causes of action against the
named Defendants 2 : 1) breach of the implied covenant of good faith and fair dealing; 2)
unconscionable business practices; 3) fraud; 4) breach of contract; and 5) unjust enrichment. In
the instant matter, Defendants move to dismiss these claims for lack of personal jurisdiction over
them, failure to effectuate proper service and failure to state a claim.
DISCUSSION
I.

Personal Jurisdiction
Where, as here, a federal court has diversity jurisdiction pursuant to 28 U.S.C. § 1332, a

“‘federal district court may assert personal jurisdiction over a non-resident of the state in which
the court sits to the extent authorized’” by that state's law. Fisher v. Teva PFC SRL, 212 Fed.

2

Kunlun has not been named as a party.
3

Appx. 72, 75 (3d Cir. 2006)(quoting Provident Nat'l Bank v. Cal. Fed. Sav. & Loan Assoc., 819
F.2d 434, 436 (3d Cir. 1987)). To that end, the New Jersey Long-Arm Statute grants jurisdiction
over non-residents to the full extent of the Due Process Clause of the United States Constitution.
Miller Yacht Sales, Inc. v. Smith, 384 F.3d 93, 96 (3d Cir. 2004) (citing N.J. Court Rule 4:4-4(c)).
Under the Due Process Clause of the Fourteenth Amendment, a federal court has personal
jurisdiction over a non-resident defendant only where the defendant has “certain minimum
contacts with [the forum] such that the maintenance of the suit does not offend ‘traditional
notions of fair play and substantial justice.’” Provident Nat'l Bank, 819 F.2d at 436-37 (quoting
Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).
Two types of personal jurisdiction exist: general and specific. Helicopteros Nacionales de
Colombia S.A. v. Hall, 466 U.S. 408, 414 (1984). Recently, the Supreme Court refined the
standard for finding general jurisdiction in Daimler AG v. Bauman, 134 S. Ct. 746, 751 (2014).
According to Bauman, general jurisdiction refers to a court's power to “hear any and all claims”
against an out-of- state entity or person when its “affiliations with the State are so continuous and
systematic as to render [it] at home in the forum state.”

Id. (internal quotation marks and

citation omitted) (emphasis added). By contrast, specific jurisdiction exists when the plaintiff's
claim arises out of the defendant's activities within the forum such that the defendant could
reasonably anticipate being haled into the state's courts. Vetrotex Certainteed Corp. v. Consl.
Fiber Glass Prods. Co., 75 F.3d 147 (3d Cir. 1995).

As to the burden of proof, if a

jurisdictional defense is raised, "the plaintiff bears the burden of establishing with reasonable
particularity sufficient contacts between the defendant and the forum state to support
jurisdiction." Provident Nat'l Bank v. California Federal Sav. & Loan Asso., 819 F.2d 434, 437

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(3d Cir. 1987) (citing Gehling v. St. George's School of Medicine, Ltd., 773 F.2d 539, 542 (3d
Cir. 1985)).
Here, the out-of-state Defendants assert that this Court lacks personal jurisdiction against
them. First, I find that general jurisdiction is lacking. As to defendant Zhang, there is no
evidence, or even allegation, that he is domiciled in New Jersey such that this Court has personal
jurisdiction over him. Plaintiff does not dispute that Zhang has no property, and does not live, in
New Jersey. Similarly, as to Granada, Plaintiff has not alleged any facts, let alone submitted any
evidence, that would show that defendant Granada, -- incorporated, and with its principal place
of business, in California -- conducts substantial business within New Jersey such that its
activities would render it at home in New Jersey. To be clear, since the recent Supreme Court’s
decision in Bauman, courts have noted that general jurisdiction extends beyond an entity's state
of incorporation and principal place of business only in the exceptional case where its contacts
with another forum are so substantial as to render it "at home" in that state.

See, e.g., Sonera

Holding B.V. v. Cukurova Holding A.S., No. 12-4820, 2014 U.S. App. LEXIS 7809, at *2-3 (2d
Cir. Apr. 25, 2014); Baldwin v. Taishang Gypsum Co., Ltd., 742 F.3d 576, 587 (5th Cir. 2014);
Henry A. v. Willden, No. 10-528, 2014 U.S. Dist. LEXIS 63129, at *19 (D. Nev. May 7, 2014)
(finding that Supreme Court in Bauman has clarified that “the reach of general jurisdiction is
narrower than had been supposed in the lower courts for many years.”); Jennings v. Bonus Bldg.
Care, Inc., No. 13-663, 2014 U.S. Dist. LEXIS 62836, at *10-11 (W.D. Mo. May 7, 2014). The
natural result of general jurisdiction's “at home” requirement is that “only a limited set of
affiliations with a forum will render a defendant amenable to all-purpose jurisdiction there.”
Daimler, 134 S. Ct. at 760. “A corporation that operates in many places can scarcely be deemed
at home in all of them.” Id. at 762 n.20. The paradigm forum for general jurisdiction over an

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individual is the individual's domicile, his home. For a corporation, it is an equivalent place, with
the place of incorporation and the principal place of business being the paradigm bases. “Those
affiliations have the virtue of being unique—that is, each ordinarily indicates only one place—as
well as easily ascertainable.” Id. at 760.
Here, Plaintiff only offers various invoices as evidence to establish general jurisdiction.
These invoices, Plaintiff argues, show that Granada has conducted business in New Jersey with
JWQ and another non-party New Jersey entity since 2011.3 Plaintiff argues that these invoices
are sufficient to show that Granada distributes goods into the stream of commerce within New
Jersey. However, the business activities shown by these invoices simply do not meet Bauman’s
standard of an exceptional case. Indeed, Plaintiff has only offered evidence that shows that
Granada conducted some business in New Jersey, and that is not sufficient to meet the due
process requirements under general jurisdiction. Accordingly, I do not find that this Court has
general jurisdiction over any of the defendants.
Next, I turn to specific jurisdiction.

Specific jurisdiction exists when the plaintiff

establishes the existence of minimum contacts between the defendant and the forum state. Rocke
v. Pebble Beach Co., 541 Fed. Appx. 208, 211 (3d Cir. 2013). When there is an assertion of
specific jurisdiction, as in this case, the constitutional inquiry requires a court to consider, first,
“whether the defendant ‘purposefully directed his activities’ at the forum,” Cerciello v. Canale,
No. 13-3491, 2014 U.S. App. LEXIS 7624, at *8 (3d Cir. Apr. 13, 2014)(citing Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (internal quotation marks omitted)); second,

3

I note that it does not appear anywhere on these invoices that the product orders are in
any way affiliated with Kunlun or Zhang. See Invoices dated March 31, 2011; February 24,
2012; and March 15, 2011. Therefore, to the extent that Plaintiff wishes to use these particular
invoices to establish specific jurisdiction over Defendants, he cannot do so. Indeed, the claims in
this case do not arise out of those transactions.
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whether the litigation “arise[s] out of or relate[s] to” those activities, Helicopteros Nacionales de
Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984); and third, if the first two requirements are met,
whether the exercise of jurisdiction otherwise “comport[s] with ‘fair play and substantial justice,’”
Burger King, 471 U.S. at 476 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 320 (1945)).
The court must bear in mind that the defendant must have “‘purposefully avail[ed] [himself] of
the privilege of conducting activities within the forum’” before specific jurisdiction arises.
O'Connor v. Sandy Lane Hotel Co., Ltd., 496 F.3d 312, 317 (3d Cir. 2007) (quoting Hanson v.
Denckla, 357 U.S. 235, 253 (1958)).
Here, Plaintiff claims that this Court should exercise specific jurisdiction over Granada
because 1) JWQ ordered the cabinets at issue from Kunlun through Granada; and 2) the defective
cabinets were returned to Granada at Zhang’s request. However, neither fact establishes specific
jurisdiction. To support a finding of jurisdiction, Plaintiff submits a certification from Xiaojiang
Qi, the President of JWQ, in which Mr. Qi attaches, inter alia, various invoices between JWQ
and Granada, and specific agreements with Kunlun. As to Plaintiff’s first contention, Plaintiff
does not cite any authority to support its argument that by merely submitting purchase orders
from Plaintiff to Kunlun, Granada would subject itself to specific jurisdiction in New Jersey.
Such passive conduct does not meet the purposeful availment test. More importantly, Plaintiff
does not make any effort to connect these invoices to the specific business transactions at issue in
this case. Rather, on their face, these invoices are nothing more than receipts sent by Granada to
JWQ -- there is no indication that any of these invoices are related to Kunlun’s cabinet shipments
at issue. Finally, the fact that Zhang directed the alleged defective cabinets to be sent to
Granada’s warehouse also cannot establish that Granada somehow purposefully directed any
activities into New Jersey. Absent any additional showing, I find that this Court does not have

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specific jurisdiction over Granada, and therefore, both defendants Granada Kitchen and Granada
Wood are dismissed for lack of personal jurisdiction.
On the other hand, however, I do find that this Court has specific jurisdiction over Zhang.
As alleged, Zhang is an owner of Kunlun, see Compl., ¶ 7, and Zhang negotiated and facilitated
the cabinet purchases made by JWQ. See Id. at ¶¶ 15, 27. While Defendants dispute that Zhang
is the owner of Kunlun, Plaintiff, nonetheless, further alleges – and it is not contested by
Defendants -- that Zhang made specific business decisions on behalf of Kunlun when issues
arose between the two parties. See Id. at ¶¶ 29, 37, 38. Indeed, according to Defendants, Zhang
is the Vice-President of Kunlun, and Plaintiff only dealt with Zhang in connection with
purchases from Kunlun. In that regard, Zhang availed himself in New Jersey for the purposes of
conducting business with JWQ, and this lawsuit arose out of those contacts. I further find that
the exercise of jurisdiction, here, comports with the traditional notion of fair play and substantial
justice. Accordingly, this Court has specific jurisdiction over Zhang.
II.

Service
Defendants, next, contend that service was defective. Courts cannot exercise jurisdiction

over a party that has not been properly served in conformity with Rule 4 of the Federal Rules of
Civil Procedure. Reddy v. Medquist, Inc., No.06-4410, 2009 U.S. Dist. LEXIS 68122, at *2
(D.N.J. Aug. 4, 2009). Where there is a question as to the validity of service, the burden of proof
of service lies on “the party asserting the validity of service.” Grand Entm't Group v. Star Media
Sales, 988 F.2d 476, 488 (3d Cir. 1993). Rule 4(e) provides various ways that service of process
may be made on individuals. Service of process may be effected by "following state law for
serving a summons in an action brought in courts of general jurisdiction in the state where the
district court is located or where service is made," by delivering service personally, by "leaving a

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copy of each at the individual's dwelling or usual place of abode with someone of suitable age
and discretion who resides there," or by delivering service to an agent authorized by appointment
or by law. Fed. R. Civ. P. 4(e).
Rule 4(h) governs service on a corporation. This rule provides, in relevant part, that
“[u]nless federal law provides otherwise or the defendant's waiver has been filed, a domestic or
foreign corporation . . . must be served . . . in the manner prescribed by Rule 4(e)(1) for serving
an individual”; or “by delivering a copy of the summons and of the complaint to an officer, a
managing or general agent, or any other agent authorized by appointment or by law to receive
service of process and--if the agent is one authorized by statute and the statute so requires--by
also mailing a copy of each to the defendant . . . .” Fed R. Civ. P. 4(h).
Here, it appears that Plaintiff invokes the state of California’s service procedures.
Similar to its federal counterpart, California law allows a corporation to be served personally by
delivering the summons and complaint to the corporation's agent for service of process. Cal.
Code Civ. P. § 416.10. More particularly, a corporation’s agent may be “the president, chief
executive officer, or other head of the corporation, a vice president, a secretary or assistant
secretary, a treasurer or assistant treasurer, a controller or chief financial officer, a general
manager, or a person authorized by the corporation to receive service of process.” Cal. Code Civ.
P. § 416.10(b).

In this case, because the Court has already found that it lacks personal

jurisdiction over defendants Granada Wood and Granada Kitchen, I will only focus on the
service issue as to Zhang.
To show that it effectuated proper service, Plaintiff filed a proof of service indicating that
the Summons was served on Andy Yao, who, according to Plaintiff, was the General Manager of
Granada. Plaintiff also maintains that Mr. Yao indicated to the process server that he was

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authorized to accept service for not only for Granada but also for Zhang.

In response,

Defendants argue that Mr. Yao was not authorized to accept service on behalf of Zhang, and
there is no dispute that Plaintiff did not attempt to serve Zhang personally. Rather, according to
Plaintiff, serving the corporate defendants satisfies proper service for Zhang since he is an
employee of those defendants. In so arguing, Plaintiff does not provide any evidence that Mr.
Yao is appointed by Zhang or authorized by law to accept personal service on Zhang’s behalf.
Plaintiff only indicates that Mr. Yao is an agent authorized to accept service of behalf of the
corporate defendants. However, because Zhang is individually named as a defendant, the service
requirements set forth in Cal. Code Civ. P. § 416.10, relating to service on corporations, do not
apply to him. See McKinney v. Apollo Group, Inc, No. 07-2373, 2008 U.S. Dist. LEXIS 56324,
at *15 (S.D. Cal. Jul. 23, 2008) (finding that individual officers of the corporate defendant must
be served personally); Miller v. Facebook, Inc., No. 10-264, 2010 U.S. Dist. LEXIS 98924, at
*10 (N.D. Cal. Sep. 10, 2010). Plaintiff has not cited any California statute, case law or
otherwise that stands for the proposition that an agent of a corporation can accept service on
behalf of an individually named defendant, even if that defendant is an officer or employee of the
corporation. In other words, Zhang must be served personally pursuant to Rule 4(e). A lack of
proper service strips this Court of personal jurisdiction over Zhang, and therefore, he is
dismissed, without prejudice, as a defendant. See Travillion v. Coffee, 248 Fed. Appx. 335, 337
(3d Cir. 2007)(“proper service is a prerequisite to personal jurisdiction”).
CONCLUSION
Defendants’ motion to dismiss defendants Granada Wood and Granada Kitchen based on
a lack of personal jurisdiction is GRANTED.

Defendants’ motion to dismiss Zhang for

improper service is GRANTED; the Court finds that Plaintiff failed to effectuate proper service

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on Zhang, and therefore, he is dismissed, without prejudice, as a defendant. Having dismissed
all defendants, the Court need not consider Defendants’ dismissal motion based on Rule 12(b)(6).
The Court’s decision in this Opinion does not opine on the merits of Defendants’ motion under
Rule 12(b)(6). Rather, Plaintiff will be provided with 30 days from the date of the Order
accompanying this Opinion, to effectuate proper personal service on Zhang.

DATED:

May 19, 2014

/s/
Freda L. Wolfson
Freda L. Wolfson
United State District Judge

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