CPB INTERNATIONAL, INC. v. FEDERAL LABORATORIES CORP. ( 2013 )

SUPREME COURT OF THE STATE OF NEW YORK
Appellate Division, Fourth Judicial Department
1485
CA 12-00497
PRESENT: SMITH, J.P., PERADOTTO, LINDLEY, SCONIERS, AND VALENTINO, JJ.
CPB INTERNATIONAL, INC., PLAINTIFF-RESPONDENT,
V MEMORANDUM AND ORDER
FEDERAL LABORATORIES CORP., DEFENDANT-APPELLANT.
AMIGONE, SANCHEZ & MATTREY, LLP, BUFFALO (ARTHUR G. BAUMEISTER, JR.,
OF COUNSEL), FOR DEFENDANT-APPELLANT.
GROSS, SHUMAN, BRIZDLE & GILFILLAN, P.C., BUFFALO (JOHN K. ROTTARIS OF
COUNSEL), FOR PLAINTIFF-RESPONDENT.
Appeal from an order of the Supreme Court, Erie County (John A.
Michalek, J.), entered October 19, 2011. The order denied defendant’s
motion to dismiss plaintiff’s complaint.
It is hereby ORDERED that the order so appealed from is
unanimously affirmed without costs.
Memorandum: Defendant appeals from an order denying its motion
to dismiss the complaint in this action, which seeks, inter alia, to
enforce a default judgment entered against it by a Pennsylvania court.
We conclude that Supreme Court properly denied the motion.
Plaintiff is a Delaware corporation with its principal place of
business in Pennsylvania. Defendant is a New York corporation engaged
in the manufacture and sale of nutritional supplements, and its
principal place of business is in the Town of Alden, New York. In
2006, plaintiff sold quantities of a substance known as chondroitin
sodium sulfate to defendant pursuant to three separate contracts. In
2007, plaintiff commenced an action in the United States District
Court for the Middle District of Pennsylvania, alleging that defendant
had breached those contracts by failing to pay the sums due
thereunder. The federal court granted defendant’s motion to dismiss
that action for lack of personal jurisdiction (see generally World-
Wide Volkswagen Corp. v Woodson, 444 US 286, 291-294; International
Shoe Co. v Washington, 326 US 310, 316-319).
Plaintiff thereafter commenced an action in a Pennsylvania court,
asserting the same breach of contract causes of action against
defendant that had been dismissed in the federal court action. The
complaint alleged that jurisdiction was proper in the Pennsylvania
court pursuant to the “General Terms and Conditions” of each contract,
in which the parties agreed that the contracts would be governed by
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CA 12-00497
Pennsylvania law and that disputes arising therefrom would be resolved
in the state courts of Pennsylvania or the federal courts in
Pennsylvania. Although the record establishes that defendant received
service of process in that action, defendant did not answer or
otherwise appear, and a default judgment was entered against it.
Plaintiff subsequently commenced the instant action seeking
enforcement of the Pennsylvania court’s default judgment and
asserting three causes of action each for breach of contract and
account stated. Defendant moved to dismiss the complaint on the
grounds that the Pennsylvania court lacked personal jurisdiction to
render the default judgment that plaintiff seeks to enforce (see CPLR
3211 [a] [1]) and that the remaining causes of action are barred by
the applicable statute of limitations (see CPLR 3211 [a] [5]).
Supreme Court properly denied the motion.
“The full faith and credit clause of the United States
Constitution (US Const, art IV, § 1) requires a judgment of one state
court to have the same credit, validity, and effect in every other
court of the United States [as] it ha[s] in the state in which it was
pronounced” (Matter of Bennett, 84 AD3d 1365, 1367, lv denied 19 NY3d
801; see Boudreaux v State of La., Dept. of Transp., 11 NY3d 321, 325,
cert denied ___ US ___, 129 S Ct 2864). Thus, “[a]s a matter of full
faith and credit, . . . the courts of this State [are] limited to
determining whether the rendering court had jurisdiction” before
enforcing a judgment of a sister state, including one obtained upon
default (Fiore v Oakwood Plaza Shopping Ctr., 78 NY2d 572, 577, rearg
denied 79 NY2d 916, cert denied 506 US 823; see generally Parker v
Hoefer, 2 NY2d 612, 616-617, cert denied 355 US 833).
Here, contrary to defendant’s contention, we conclude that the
order dismissing the federal action did not deprive the Pennsylvania
court of personal jurisdiction over it. While that order may have
provided a basis for asserting the defense of collateral estoppel in
the Pennsylvania action, which defendant could have raised or waived
under Pennsylvania law (see Hopewell Estates, Inc. v Kent, 646 A2d
1192, 1194), it does not provide a ground for a collateral attack upon
the Pennsylvania court’s ensuing default judgment by means of the
instant action (see Oldham v McRoberts, 21 AD2d 231, 234-235, affd 15
NY2d 891; Steinberg v Metro Entertainment Corp., 145 AD2d 333, 333-
334).
With respect to the remaining causes of action, we agree with
defendant that each are subject to a four-year limitations period
under the law of both New York (see UCC 2-725 [1]; CPLR 213 [2]; Herba
v Chichester, 301 AD2d 822, 822-823) and Pennsylvania (see 13 Pa CS §
2725 [a]; 42 Pa CS § 5525 [a] [2]), and that more than four years
elapsed between the accrual of plaintiff’s most recent cause of action
and its commencement of the instant action. As Supreme Court properly
concluded, however, plaintiff raised a triable issue of fact with
respect to the timeliness of those causes of action by submitting
evidence that defendant tendered a partial payment toward its
purported contractual obligations such that the four-year limitations
period may have been effectively tolled up to and including the date
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CA 12-00497
upon which plaintiff ultimately commenced this action (see Lew Morris
Demolition Co. v Board of Educ. of City of N.Y., 40 NY2d 516, 521-522;
New York State Higher Educ. Servs. Corp. v Muson, 117 AD2d 947, 947-
948; Chittenholm v Giffin, 65 A2d 371, 373).
Entered: February 1, 2013 Frances E. Cafarell
Clerk of the Court