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SCHWARTZ v. CDI JAPAN

June 21, 1996

Harold Schwartz, Plaintiff,
v.
CDI Japan, Ltd., et. al., Defendants.



The opinion of the court was delivered by: URBINA

 Denying Defendants' Motion to Dismiss

 This matter comes before the court upon the defendants' motion to dismiss for lack of personal jurisdiction, made pursuant to Fed.R.Civ.P. 12(b)(2). After considering the parties' submissions, the court concludes that both defendants have transacted business in the District of Columbia and that the plaintiff's claim is intricately related to the activities that the defendants have pursued in this jurisdiction. Accordingly, the court concludes that it may exercise jurisdiction over the defendants.

 I. Background

 This suit arises out of the purported breach of an agency contract that the plaintiff alleges existed between the defendants and himself. Harold D. Schwartz, (Schwartz) is a U.S. citizen who resides in Greenwood, Virginia. The two defendants are CDI Japan, Ltd. (CDI Japan) and Harezo Shimizu (Shimizu). CDI Japan is a corporation organized under the laws of Japan; its principal place of business is in Japan. Mr. Shimizu is a Japanese citizen who resides in Tokyo, Japan.

 In 1991, Mr. Schwartz and Michael K. Tsumaki (Tsumaki) began working on a project to export American art to Japan. Mr. Tsumaki was the manager of the Smithsonian American Art Project Preparatory Committee in Japan. The project entailed the production, distribution, and sale of a compact disk-interactive program (CD-I) whose purpose was to educate consumers about American art contained in the collections of the Smithsonian Institution's National Museum of American Art (NMAA). Mr. Schwartz and Mr. Tsumaki intended that a company known as "CDI Japan" would manufacture, market, and distribute the CD-I program under a licensing agreement with the NMAA. In April 1994, Mr. Tsumaki entered into a contract with the NMAA that, among other things, would include the development of the CD-I program. Mr. Schwartz served as Mr. Tsumaki's authorized representative in the U.S. Mr. Tsumaki was to compensate Mr. Schwartz for his services pursuant to a Distributorship Agreement entered into by Mr. Tsumaki and Mr. Schwartz on July 10, 1994 (Distributorship Agreement).

 In May 1994, Mr. Shimizu, Mr. Tsumaki and Mr. Shimizu's son, Kazuharu Ishida (Ishida) established CDI Japan under Japanese law and appointed themselves as CDI Japan's directors. Mr. Schwartz avers that in June 1994, with the NMAA's approval CDI Japan and Mr. Shimizu, jointly and severally, assumed Mr. Tsumaki's duties and obligations under the Smithsonian contract. *fn1" Notably, Mr. Tsumaki corroborates this assertion and many of Mr. Schwartz's other declarations. *fn2" Mr. Schwartz also alleges that CDI Japan and Mr. Shimizu continued to utilize him as their liaison and authorized representative after Mr. Tsumaki resigned from CDI Japan in September 1994.

 Mr. Schwartz asserts that as an agent for the defendants he made numerous trips into the District and met with several individuals at the NMAA. He also claims that he engaged in numerous communications with various people at the NMAA and with other companies with which the defendants expected to enter into distribution contracts. Mr. Schwartz also alleges that in order for Mr. Shimizu to facilitate his communications with Mr. Schwartz, Mr. Shimizu attempted to hire an interpreter and made his computer hardware and software compatible with Mr. Schwartz's. *fn3"

 In November 1994, Mr. Schwartz avers that CDI Japan and Mr. Shimizu made it clear that they did not intend to recognize and honor the Distributorship Agreement that the plaintiff alleges that they had assumed. In December 1994, the defendants hired a local lawyer to advise Mr. Schwartz that he no longer possessed any authority to represent CDI Japan or Mr. Shimizu in connection with the Smithsonian contract or with respect to any other matters. Subsequently Mr. Schwartz filed suit. He alleges breach of an express contract, breach of a contract implied in fact, breach of a contract implied in law, and fraud. Mr. Schwartz seeks the profits denied to him by CDI Japan and Mr. Shimizu and the reasonable value of the services he rendered as the defendants' purported agent in procuring, negotiating, and performing the Smithsonian contract. The issue before the court is whether it may exercise personal jurisdiction over the two defendants.

 II. Analysis

 1. Summary Judgment

 Both sides have presented affidavits and other supplementary materials outside the pleadings. The court will therefore treat the motion as one for summary judgment pursuant to Fed.R.Civ.P. 56. See Fed.R.Civ.P. 12(b); Reiman v. First Union Real Estate Equity & Mortg., 614 F. Supp. 255 (D.D.C. 1995). Fed.R.Civ.P. 56(c) provides that summary judgment "shall be rendered forthwith, if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law." The court must view the facts and any permissible inferences drawn from them in a light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587-88, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). A motion for summary judgment requires the court to resolve factual discrepancies in the plaintiff's favor and to view jurisdictional facts in the light most favorable to the plaintiff. Crane v. New York Zoological Society, 282 U.S. App. D.C. 295, 894 F.2d 454, 456 (D.C.Cir. 1990); Reiman, 614 F. Supp. at 259.

 2. Personal Jurisdiction

 In determining whether the exercise of personal jurisdiction over a non-resident defendant is proper, the court must engage in a two-part inquiry. The court must ascertain if the state's long arm statute authorizes jurisdiction. Steinberg v. International Criminal Police Org., 217 U.S. App. D.C. 365, 672 F.2d 927, 930 (D.C.Cir. 1981). If the answer is in the affirmative, the ...


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