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UNIDEX SYS. CORP. v. BUTZ ENGG. CORP.

January 5, 1976

UNIDEX SYSTEMS CORPORATION, Plaintiff,
v.
BUTZ ENGINEERING CORPORATION and REPUBLIC CORPORATION, Defendants



The opinion of the court was delivered by: BRYANT

 The court is called upon to determine whether the defendants are subject to the jurisdiction of the courts of the District of Columbia. Service of the summons and complaint was made on the defendants by mail outside the District of Columbia and they moved to dismiss the action on the grounds of insufficiency of service of process and lack of personal jurisdiction.

 The manner of service for actions brought in the District of Columbia is prescribed in Section 13-431 of the District of Columbia Code which provides that where extraterritorial service is authorized, it may be made "by any form of mail addressed to the person to be served and requiring a signed receipt." § 13-431(a)(3). Service outside of the District is authorized in those cases where "the exercise of personal jurisdiction is authorized by this subchapter." § 13-424.

 Plaintiff relies on a provision of the District of Columbia Long-Arm Statute (§ 13-423(a)(1)) as the basis for the exercise by the court of personal jurisdiction over defendants. That subsection provides:

 
"(a) A District of Columbia court may exercise personal jurisdiction over a person, who acts directly or by an agent, as to a claim for relief arising from the person's --
 
"(1) transacting any business in the District of Columbia;"

 Plaintiff, Unidex Systems Corporation ("Unidex"), alleges in its complaint that defendants Republic Corporation ("Republic") and Butz Engineering Corporation ("Butz Engineering") breached an oral agreement entered into with defendants on or about April 7, 1971 in the District of Columbia calling for services by plaintiff in connection with work to be performed by Butz Engineering for the United States Postal Service. Defendants moved to dismiss the complaint on the ground that extraterritorial service against them was insufficient as they had neither entered into an oral agreement with plaintiff in the District of Columbia as alleged in the complaint, nor otherwise transacted business in the District giving rise to the claims asserted by plaintiff.

 In support of their motion the defendants filed affidavits and the deposition of Jerome J. McGranaghan, president of Unidex. The plaintiff's opposition was supported by counter-affidavits. The court ordered an evidentiary hearing in the hope that it would aid in resolving the conflicts in the paper record. At the hearing no witnesses were called by the parties. The court thereupon granted defendant's motion, and plaintiff appealed. Our Circuit Court of Appeals remanded for the purpose of conducting an evidentiary hearing and the entry of an order reflecting findings of fact and conclusions of law. No such findings and conclusions had heretofore been entered by the court.

 Unidex, a District of Columbia corporation, was a software engineering firm with offices located in the McLachlen Bank Building in Washington, D.C. A software firm basically prepares drawings, studies, analyses, etc., but does not have the capability to do fabrication and installation work which is described in the trade as "hardware". Plaintiff's only client at the time was the U.S. Postal Service.

 The defendant Republic is a Delaware corporation with its principal place of business in Century City, California. Butz Engineering is a California corporation engaged primarily in the manufacture and sale of conveyor systems, and has its main business site in Azusa, California. All of the stock of Butz Engineering is owned by a wholly owned subsidiary of Republic. Defendants are not qualified to do business in the District of Columbia, carry on no business operations in the District, and have not designated an agency for service of process here. They own no real or personal property here and are not listed in any local telephone directory.

 On March 7, 1971 the Postal Service initiated a project to rehabilitate and equip the mail handling system for the Morgan Station postal facility in New York City. Both Unidex and Butz were interested in participating in this work, but neither company was initially included in the list of companies to which the Postal Service sent requests for proposals.

 McGranaghan, an attorney, was doing legal work for Republic in the District of Columbia on a monthly retainer. He described his role as that of a "trouble shooter" in dealings with government agencies. This was independent of his role as president of Unidex. The Postal Service scheduled a briefing conference pertaining to the Morgan Station project for March 18, 1971 and a walk-through of the facility the next day. Clarence Butz, president of Butz Engineering, informed a group vice-president of Republic that he would not be able to attend the March 18th briefing but would be able to participate in the walk-through the next day. Thereupon Republic's president called McGranaghan and arranged for him to attend the briefing. McGranaghan was accompanied by Donald G. Lyons, a Unidex employee.

 The next day Butz met Donald Lyons at the Morgan Station facility and participated in the walk-through with him. At the time some engineering problems were noted and discussed and both men made some notes relative thereto, and according to Lyons there was some general discussion about Unidex's qualifications for helping to get the contract. Lyons stated that he was trying to sell Unidex's abilities to Butz and that Butz appeared to be receptive.

 The RFP required bidders to submit a written proposal by the close of business April 15, 1971, later extended to May 14th. The proposal was to be in two parts: a technical management proposal and a pricing proposal. The overall proposal was to cover the design of the system ...


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