Opposition Brief — Mitchell's Formal Wear, Inc. v. Kentucky Oaks Mall Co.

a

No. 90-726

IN THE CLERK

SUPREME COURT OF THE UNITED STATES —

OCTOBER TERM, 1990

MITCHELL’S FORMAL WEAR, INC.,

Petitioner.

Vv.

KENTUCKY OAKS MALL COMPANY,

Respondent.

On Petition For A Writ Of Certiorari

To The Supreme Court Of Ohio

BRIEF IN OPPOSITION TO PETITION FOR

A WRIT OF CERTIORARI

David A. Fantauzzi

Counsel of Record

2445 Belmont Avenue

P.O. Box 2186

Youngstown, OH 44504-0186

(216) 747-2661

James M. Dobran

Jay Blackstone

2445 Belmont Avenue

P.O. Box 2186

Youngstown, OH 44504-0186

(216) 747-2661

Counsel for Respondent

| earner ace SPREE PESTA SEASON

BECKER GALLAGHER LEGAL PUBLISHING, INC., CINCINNATI, OHIO (513) 621-2880

JOSEPH F. SPANIOL

QUESTION PRESENTED

Did the Supreme Court of Ohio correctly assert per-

sonal jurisdiction over a nonresident corporation in an

action arising from the nonresident’s refusal to pay rent

and other obligations due in Ohio, when the nonresi-

dent’s minimum contacts with Ohio include those and

other continuing obligations it agreed to perform in

Ohio and did partly perform in Ohio under a shopping-

mall lease creating a 10-year interdependent relationship

with an Ohio resident plus other contacts substantially

similar to those found to comport with due process in

Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985),

although a choice-of-law clause provides Kentucky law

governs that lease of Kentucky premises?

LIST OF PARTIES & RULE 29.1 LIST

Respondent is satisfied with Petitioner’s List of Parties

and Rule 29.1 List and makes this further disclosure.

Respondent Kentucky Oaks Mall Company is an Ohio

limited partnership. Its general partners are William M.

Cafaro, an individual residing in Ohio, Anthony M.

Cafaro, an individual residing in Ohio, and Eastwood

Mal!, Inc., an Ohio corporation. Eastwood Mall, Inc.

has no parent company, and both it and its subsidiaries

are closely held and are not publicly traded companies.

One of Respondent’s limited partners is JCP Realty,

Inc., a Delaware corporation. The parent company of

JCP Realty, Inc. is J.C. Penney Company, Inc., a

Delaware corporation. JCP Realty, Inc. has no sub-

sidiaries (other than those wholly owned). Respondent's

other limited partner is Paducah Development Com-

pany, a Kentucky general partnership. Kentucky Oaks

Corp., an Ohio corporation, is the only corporation with

any direct or indirect ownership interest in Paducah

Development Company. Kentucky Oaks Corp. has no

parent company or subsidiaries.

Ill

TABLE OF CONTENTS

Page

ety ye 0g | 8 8. yy 8 ) BSR I

LIST OF PARTIES & RULE 29.1 LIST.......... rf

TABLE OF AUTHORITIES ................... IV

os EG ]

Eee ne 2

CONSTITUTIONAL PROVISIONS, STATUTE,

EE SE ee ee 3

Simeon Wer iene, CASE.................. 3

REASONS FOR DENYING THE WRIT ......... 8

I. THE UNANIMOUS OHIO SUPREME

COURT CORRECTLY FOLLOWED

THE PRECEDENTS OF THIS COURT,

WHICH CONTROLLED THE OUT-

RD eee eee eee ewe eee 9

A. The Unanimous Ohio Supreme Court

Correctly Followed All The Steps Of

= 10

B. The Unanimous Ohio Supreme Court

Correctly Applied The Due Process

Standards of Burger King To The An-

alogous Facts In The Record Of This

ae 5 a 00K Sie ee 8 Ses 14

II. THE UNANIMOUS DECISION OF THE

OHIO SUPREME COURT DOES NOT

CONFLICT WITH THE DECISION OF

ANY OTHER JURISDICTION. ........... 23

‘IV

Page

Ill. THE UNANIMOUS DECISION OF THE

OHIO SUPREME COURT IS SOUND

POLICY AND PETITIONER’S SPECU-

LATION THAT OTHER STATES MIGHT

CHOOSE TO EXPAND IT TO HALE

LESSEES INTO COURT UNDER CIR-

CUMSTANCES DIFFERENT FROM

THIS CASE IS IRRELEVANT............. 26

SE 5 als aoe ea Gh AR ASK Oe tke 28

APPENDIX

Letter from Joseph B. Doyle, marked Exhibit B.. la

Partial transcript of proceedings at hearing on

ND 6 5 3 er Gs 2a

v

TABLE OF AUTHORITIES

Cases Page

Advance Realty Assocs. v. Krupp,

636 F. Supp. 316 (S.D. N.Y. 1986) ............ 23

Arthur, Ross & Peters v. Housing, Inc.,

S08 Fa SER Gite Cale. BOTS)... ww ees 24, 25

Beco Corp. v. Roberts & Sons Constr. Co.,

114 Idaho 704, 760 P.2d 1120 (1988)........... 2)

Burger King Corp. v. Rudzewicz,

ot reer rer ere ee rece passim

Calder v. Jones, |

Se re I in xc hee aw cans eed beats ews 14, 27

DelBello v. Japanese Steak House,

43 A.D.2d 455, 352 N.Y.S.2d 537 (App. Div.

SR A, Pre ea ree en ary Lone 23

Grossman v. Wal-Mart Stores,

682 F. Supp. 752 (S.D. N.Y. 1968) .......:.... 23

Haisten v. Grass Valley Medical Reimbursement

Fund, Ltd., 784 F.2d 1392 (9th Cir. 1986) ...... 20

Hanson v. Denckla,

— fe Serr 13, 20, 25

International Shoe Co. v. Washington.

Se ee Dn 0 oh oa pa end ong enen 8, 9, 10, 24

Jackam v. Hospital Corp. of America Mideast,

800 F.2d S77 (Lith Cir. 1966)................ 20

Keeton v. Hustler Magazine, Inc.,

gS eT Pee er ree earn 14

VI

Page

Kentucky Oaks Mall Co. v. Mitchell’s Formal

Wear, Inc., 53 Ohio St. 3d 73, 559 N.E.2d

hls Lk vga saith head wk Onis s Zh . passim

Kulko v. Superior Court,

Ss an we ae 13

LAK, Inc. v. Deer Creek Enter.,

885 F.2d 1293 (6th Cir. 1989)................. 21

Marine Charter & Storage Ltd. v. Denison Ma-

rine, Inc., 701 F. Supp. 930 (D. Mass. 1988) .... 20

McGee vy. International Life Ins. Co.,

355 U.S. 220 (1957)....... eark ence ence 14, 16, 27

Milliken v. Meyer,

I oo os. ks x cs Wien wees cae oe )

Northern Trust Co. v. Randolph C. Dillon, Inc.,

508 F. Supp. 1118 (N.D. Ill. 1983) ............ 24

Rush v. Savchuk,

OO UB. SR TTGBD) ow cece cena n ees 13

Shaffer v. Heitner,

aS gs Se 13

Signet Bank/Virginia v. Tillis,

196 Ga. App. 433, 396 S.E.2d 54 (1990) ........ 25

Southern Machine Co. v. Mohasco Indus.,

401 F.2d 374 (6th Cir. 1968).................. 20

United Methodist Church v. Superior Court,

SRT 9g

Wester v. Casein Co. of America,

206 N.Y. 506, 100 N.E. 488 (1912) ............ 19

Vil

Page

World-Wide Volkswagen Corp. v. Woodson,

fe RR OT rer es Pon ere li

Wright Int'l Express v. Roger Dean Chevrelet,

689 F. Supp. 788 (S.D. Ohio 1988) ............ 21

Constitutional Provisions

te ee 2 re passim

Statutes

Ohio Rev. Code Ann. § 2307.382 (Anderson

SS re ee en ee eer eT eee 2

Rules

I Se I 0 OU oe) oe te ee ee 2

aN SIE TI Bk 55 hea eee eees 23

No. 90-726

IN THE

SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1990

MITCHELL’S FORMAL WEAR, INC.,

Petitioner,

v.

KENTUCKY OAKS MALL COMPANY,

Respondent.

On Petition For A Writ Of Certiorari

To The Supreme Court Of Ohio

BRIEF IN OPPOSITION TO PETITION FOR

A WRIT OF CERTIORARI

Respondent respectfully urges this Court to deny the

writ of certiorari.

OPINIONS BELOW

The opinion of the Supreme Court of Ohio is reported

at 53 Ohio St. 3d 73, 559 N.E.2d 477 (1990). Petitioner

]

2

properly states the lower court opinions in this case are

unreported. The reproduction of all three opinions in the

appendix to the petition appears to be accurate except

for immaterial typographical errors.

JURISDICTION

Respondent is satisfied with the statement of jurisdic-

tion set forth in the Petition for a Writ of Certiorari.

CONSTITUTIONAL PROVISION,

STATUTE, & RULE

The texts of the constitutional provision, U.S. Const.

amend XIV, § 1, the statute, Ohio Rev. Code Ann.

§ 2307.382 (Anderson Supp. 1989), and the rule, Ohio

Civ. R. 4.3, involved in the case are properly set out (ex-

cept for immaterial typographical errors) in the Petition

for a Writ of Certiorari (Pet. 3-5).

3

STATEMENT OF THE CASE

This case is about the personal jurisdiction of an Ohio

court predicated on the particular facts of the in-

terdependent relationship created by a shopping-mall

lease between Petitioner and Respondent. While some of

what Petitioner says in the first two paragraphs of its

Statement of the Case is accurate, as reiterated briefly

below, Petitioner’s other statements are not accurate.

Conspicuously absent from Petitioner’s statement are

most of the details of that relationship, many of which

the Ohio Supreme Court described and relied on in its

unanimous opinion below.

Respondent is Kentucky Oaks Mall Company, an

Ohio limited partnership affiliated with The Cafaro

Company, one of the largest developers of retail shop-

ping malls in the United States. (Pet. 6, 3la.) Petitioner

is Mitchell’s Formal Wear, Inc., a Georgia corporation.

(Id.) Petitioner operates 101 stores, including stores out-

side Georgia, in 11 states. (Pet. 6, 3a.) It has also entered

into leases with other Ohio residents besides Respondent,

such as Jacobs Visconsi & Jacobs (“JVJ”), which Peti-

tioner knows has its home office in Cleveland, Ohio. (p.

3a-4a, infra.)

In 1985, Petitioner knowingly negotiated a lease by

mail and telephone with Respondent in Youngstown,

Ohio. (Pet. 6, 3a.) Petitioner signed the Lease in Georgia

and mailed it to Respondent in Ohio. (/d.) Respondent

then signed and accepted the Lease in Ohio. (Pet. 4a.)

The Lease became effective in Youngstown, Ohio. (Cl.

43; Pet. 7la.)' Consequently, Petitioner, as Tenant,

1 Although not a determinative fact, Petitioner argues, for the first time,

that the Lease became effective in Georgia. (Pet. 6.) Apparently, Petitioner

reads “delivery” to mean actual receipt by Petitioner. This, however, con-

4

entered into a Lease with Respondent, as Landlord, for

a shopping center storeroom known as unit #640 in the

Kentucky Oaks Mall. (Pet. 3a, 3la.) Although the shop-

ping center is located in Kentucky, the home office of

Respondent is located in Youngstown, Ohio, as iden-

tified in the first sentence of the Lease. (Pet. 4a, 3la.)

Petitioner knowingly created ongoing obligations to

an Ohio resident and agreed to the exacting regulation

of its business by Respondent from Ohio. (Pet. 9a.) The

Lease is for ten years and requires Petitioner to remit

rent, maintenance costs, merchants association fees and

various other payments monthly and annually to Re-

spondent in Ohio. (Cls. 3, 4, 5, 10, 11, 21G, 26, 32, 33;

Pet. 4a, 33a-36a, 43a-46a, 55a, 62a, 65a-68a.) The

Lease also requires Petitioner to obtain various ap-

provals from and periodically submit gross sales reports

and various other certificates and signed documents to

Respondent in Ohio. (Cls. 2, 5, 6, 7, 8, 14, 15, 16, 21,

29, 30, 35; Pet. 32a-33a, 35a-43a, 48a-50a, 5la-55a,

63a-64a, 68a-69a.) The Lease regulates, for example,

liability (Cls. 24, 27; Pet. 57a, 62a); defaults (Cl. 24;

Pet. 57a); termination (Cls. 24, 31; Pet. 57a, 65a);

assignment and subletting (Cl. 16; Pet. 49a); insurance

(Cl. 21; Pet. 5la); auditing of gross sales (Cl. 5; Pet.

37a); percentage rent computed from gross sales (Cl. 5;

Pet. 35a); business use and name (Cl. 6; Pet. 37a); hours

of operation (id.); construction and building layout (Cl.

2 & Exhibit A; Pet. 32a, 76a.); signs and displays (Cls.

7(B)(1), (2), 8 & Exhibit B; Pet. 41a, 42a, 8la); advertis-

tradicts the intent of the parties reflected in Clause 42 of the Lease (Pet.

7la). That clause marks the time of mailing as the time of rendition and ex-

pressly states a sole—and different—circumstance when delivery means ac-

tual receipt. Since the parties knew how to expressly require actual receipt

but did not say that in Clause 43, delivery of the Lease was completed upon

mailing it in Ohio.

5

ing and promotion (Cls. 7(A)(5), (6), 7(B)(5), 32; Pet.

39a, 42a, 65a); cleanliness (Cls. 7(A)(1), (9), 12; Pet.

39a-40a, 47a), and even vending machines (Cl. 7(B)(8);

Pet. 42a). Petitioner is required to send all payments and

communications to Respondent at its home office in

Ohio. All payments must be actually received by

Respondent. (Cl. 42.; Pet. 71a.)

In the course of dealing, Petitioner has sent rent,

maintenance cost, and merchants association fee pay-

ments, certificates of sales reports, and other communi-

cation to Respondent in Ohio. (Pet. 6, 8a-9a; p. 4a-7a,

infra.) Respondent is one of the few persons to whom

Petitioner discloses its confidential sales reports, other

than the I.R.S. and the state. (p. 7a, infra.) Indeed,

Petitioner also sent a proposed lease cancellation agree-

ment signed only by it, along with a letter and a check,

to Respondent in Ohio. (Pet. 19a; p. la, infra.)

Petitioner, however, defaulted by failing to pay all the

amounts the Lease requires Petitioner to pay in Ohio to

Respondent. As a result, the present cause of action

arose. (Pet. 3a.)

Petitioner’s statement of the procedural history of the

case in the common pleas court and court of appeals is

accurate as far as it goes, but omits several facts. The

Lease does not specify where a lawsuit may or may not

be brought. (Pet. 3la.) Therefore, on January 8, 1988,

Respondent sued Petitioner in Ohio. (Pet. 6, 3a.) When

the common pleas court heard the dismissal motion,

testimony and documentary evidence were presented,

including the Lease. (p. 2a, infra.) Petitioner’s Presi-

dent, Joseph B. Doyle, who had been its president for

ten years and who had signed the Lease on behalf of

Petitioner, testified. (p. 3a, infra.) Under oath, he ad-

mitted knowing that various Lease provisions regulate

6

Petitioner, require it to obtain approvals from Respon-

dent in Ohio, and require Petitioner to direct payments,

sales reports, and other communication to Ohio for ten

years. (p. 4a-7a, infra.) However, the common pleas

court dismissed the case because it found:

the contract [sic] between Defendant and the

State of Ohio insufficient to make it fair and

reasonable for the out-of-state corporation to de-

fend a suit in this jurisdiction.

(Pet. 17a.)

The Ohio court of appeals affirmed on June 29, 1989.

(Pet. lla.) The sole reason given by the court of appeals

to support its judgment was that Clause 44 of the Lease

(Pet. 72a)? provides the Lease shall be governed by and

construed in accordance with the applicable laws of the

State of Kentucky. (Pet. 15a-16a.)

On August 8, 1990, the unanimous Ohio Supreme

Court reversed and remanded for further proceedings.

(Pet. 2a.) Petitioner, however, misrepresents the deci-

sion of the Ohio Supreme Court. While Petitioner cor-

rectly describes and quotes the court’s decision on the

state law grounds under the Ohio long-arm statute and

rule (Pet. 8), Petitioner distorts the court’s decision

under the Due Process Clause of the Fourteenth Amend-

ment. The court did conclude the exercise of jurisdiction

over Petitioner comports with due process, but the

reason was not as Petitioner misrepresents:

2 The reproduction of the Lease in the appendix to the petition includes

Clause 44, “Governing Law,” twice, apparently due to typographical error.

The actuai Lease in the record contains only one Clause 44.

7

merely because petitioner conducts business out-

side Georgia and entered into a lease with an

Ohio-based limited partnership.

(Pet. 9.) Rather, the court thoroughly reviewed the

record and carefully followed this Court’s precedent in

Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985).

Its unanimous conclusion was based on Petitioner's deal-

ings with Respondent in Ohio, creation of the continu-

ing obligations Petitioner is to perform in Ohio, breach

of those obligations causing foreseeable injury in Ohio,

and failure to present a compelling case that jurisdiction

would be unreasonable—in addition to the reasons given

by Petitioner. (Pet. 6a-10a.)

Petitioner filed its Petition for a Writ of Certiorari on

November 5, 1990, which Respondent received on No-

vember 7, 1990. To set the record straight, Respondent

now explains the reasons why the case should not be

reviewed by this Court.

8

REASONS FOR DENYING THE WRIT

Petitioner would have this Court believe that all seven

Justices of the Ohio Supreme Court somehow disre-

garded every personal-jurisdiction precedent of this

Court and expanded personal jurisdiction by basing it

simply on Petitioner’s sending rent payments to Ohio.

But that is not this case. The petition produces a greatly

distorted reflection of the true aspect of this case. The

decision below is not “confusing,” as Petitioner con-

tends. (Pet. 17.) It is Petitioner who tries to create the il-

lusion of confusion by rewriting the opinion below and

ignoring the facts. Contrary to Petitioner's meritless

arguments, (1) the unanimous Ohio Supreme Court (a)

did follow the International Shoe Co. v. Washington,

326 U.S. 310 (1945), test and (b) did correctly apply

Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985),

to the analogous facts of this case, (2) the unanimous

decision below does not conflict with any comparable

decisions of other jurisdictions, and (3) the unanimous

decision, which is based on both Ohio and federal law,

does not mean all lessees nationwide will be haled into

court in every state where they fail to perform their con-

tractual obligations. In sum, this case does not present

any important questions worthy of this Court’s review.

9

I. THE UNANIMOUS OHIO SUPREME COURT

CORRECTLY FOLLOWED THE PRECE-

DENTS OF THIS COURT, WHICH CON-

TROLLED THE OUTCOME BELOW.

The decision below and the facts of this case do not

raise the specific question presented in the petition. (Pet.

i.) At best, the only question presented by Petitioner is

whether the quality and nature of all its contacts with

Ohio are such that “maintenance of the suit [in Ohio]

does not offend ‘traditional notions of fair play and

substantial justice.’ International Shoe, 326 U.S. at

316 (quoting Milliken v. Meyer, 311 U.S. 457, 463

(1940)).

Such questions generally tend to depend on the

particular facts of each case, and I believe that

only a marked departure by a lower court in the

application of established law would persuade

four Justices to grant certiorari. [T]here is no'in-

dication that it [the lower court] failed to apply

the due process standards enunciated in /nterna-

tional Shoe, and cases which have followed it, to

the circumstances presented, and, therefore, I

believe it unlikely that this issue would command

the votes necessary for certiorari.

United Methodist Church v. Superior Court, 439 U.S.

1369, 1373-74 (1978) (Rehnquist, Circuit Justice), cert.

denied, 439 U.S. 912 (1978). The Ohio Supreme Court

neither markedly departed from nor failed to apply the

due process standards enunciated in International Shoe

and its progeny to the particular facts of this case.

Therefore, this Court should deny certiorari in this case

too.

10

A. The Unanimous Ohio Supreme Court Cor-

rectly Followed All The Steps Of Jnter-

national Shoe.

By quoting passages from the opinion below out of

context, Petitioner misleadingly suggests the court below

did not follow all the steps of inquiry mandated by In-

ternational Shoe and its progeny. As is clear from the ac-

tual text of its opinion, however, the unanimous Ohio

Supreme Court correctly identified and analyzed all the

steps of the International Shoe test. At the outset of Part

II of the opinion,*® the court acknowledged:

Over forty years ago, in International Shoe Co. v.

Washington (1945), 326 U.S. 310, the court an-

nounced that a state may assert personal jurisdic-

tion over a nonresident defendant if the nonresi-

dent has “* * * certain minimum contacts with it

such that maintenance of the suit does not offend

‘traditional notions of fair play and substantial

justice.” ” (Citation omitted.) Jd. at 316.

(Pet. 7a.) Of course, the court recognized this test con-

sists of separate steps. Identifying the first step, the court

said:

“[T he constitutional touchstone remains whether

the defendant purposefully established ‘minimum

contacts’ in the forum State. International Shoe

Co. v. Washington, supra, at 316.” (Emphasis

added.) Id. at 474. The nonresident defendant

has purposefully established minimum contacts

3 Part I of the opinion answered the threshold question of whether Peti-

tioner was “transacting any business” in Ohio within the meaning of Ohio's

long-arm statute and rule. (Pet. 5a.) That question of state law is not raised

in the petition and is not reviewable in any event.

1]

ok Ox

* where the contacts proximately result from

actions by the defendant himself that create a

‘substantial connection’ with the forum State

*** where the defendant ‘deliberately’ has

engaged in significant activities within a State

* * * or has created ‘continuing obligations’ be-

tween himself and residents of the forum * * * he

manifestly has availed himself of the privilege of

conducting business there, and because his ac-

tivities are shielded by ‘the benefits and protec-

tions’ of the forum’s laws it is presumptively not

unreasonable to require him to submit to the

burdens of litigation in the forum as well.” (Cita-

tions omitted and emphasis added in part.) Id. at

475-476. Furthermore, minimum contacts are

satisfied when the defendant foreseeably causes

injury in the forum state if “‘*** the

defendant’s conduct and connection with the

forum .State are such that he should reasonably

anticipate being haled into court there.’ * * *”

Id. at 474 (quoting Worid-Wide Volkswagen

Corp. v. Woodson [1980], 444 U.S. 286, 297).

(Pet. 7a-8a) (quoting Burger King Corp. v. Rudzewicz,

471 U.S. 462, 474-76 (1985)). The court next identified

the second step:

[T]he question of whether personal jurisdiction

exists does not end with a finding that the

nonresident defendant has purposely established

minimum contacts. . .:

“Once it has been decided that a defendant

purposefully established minimum contacts

within the forum State, these contacts may be

considered in light of other factors to determine

whether the assertion of personal jurisdiction

12

would comport with ‘fair play and substantial

justice.’ ”

(Pet. 8a) (quoting Burger King, 471 U.S. at 476-77).

Contrary to Petitioner’s contention (Pet. 10, 11, 13),

the Ohio Supreme Court did not ignore the “minimum

contacts” step. Rather, the court specifically did analyze

Petitioner's “minimum contacts” with Ohio first, and

then turned to the “fair play and substantial justice”

step.

In light of the guidelines articulated above, and

after a thorough review of the record before us, it

is apparent that Mitchell’s [Petitioner] pur-

posefully directed activities at an Ohio-based

limited partnership, so that it could reasonably

anticipate being haled into an Ohio court.

Moreover, it is equally evident that the assertion

of personal jurisdiction over Mitchell’s comports

with fair play and substantial justice.

Whether a nonresident defendant purposefully

established minimum contacts with the forum

depends upon the dealings between the parties

prior to and following the document’s execution,

contemplated future consequences, along with

the terms of the contract. . . . [C]onsidering Mit-

chell’s dealings and the creation of continuing

duties and obligations with appellant [Respon-

dent], we are satisfied that the guidelines set forth

in Burger King have been met.

Having found that Mitchell’s purposefully

established minimum contacts with Ohio, it now

remains only to inquire whether the assertion of

jurisdiction comports with “fair play and substan-

tial justice.”

13

(Pet. 8a-9a) (citation omitted). Only then did the court

consider the “other factors” of Respondent’s interest in

litigating in Ohio, the State’s interest in providing its

citizens a forum, and the lack of burden on Petitioner.

(Pet. 9a-10a.)

Consequently, when Petitioner claims that the court

erred by giving the “other factors” paramount impor-

tance over Petitioner’s purposefully establishing contacts

with Ohio (Pet. 13), Petitioner contradicts the explicit

reasoning of the Ohio Supreme Court. Likewise, this

case does not conflict with Hanson v. Denckla, 357 U.S.

235 (1958), Shaffer v. Heitner, 433 U.S. 186 (1977),

Kulko v. Superior Court, 436 U.S. 84 (1978), or Rush v.

Savchuk, 444 U.S. 320 (1980). Trying to create an ap-

pearance of conflict, Petitioner quotes out of context the

court’s consideration of the “other factors.” (Pet. 11.)

But the differences between the material facts of this

case and each of those decisions could not be more com-

plete. Moreover, Petitioner's misreading of the opinion

below doubtless is the result of its misreading of Burger

King. Attempting to support its theory that a court can-

not consider these “other factors” to have such great im-

portance as to save jurisdiction when minimum contacts

are few, Petitioner quotes from Burger King concerning

the consideration of these “other factors” but abruptly

stops short. (Pet. 13.) The very next sentence after the

quoted passage makes clear that the consideration of

“other factors” is not whoily divorced from the

minimum-contacts analysis and may even save jurisdic-

tion:

These considerations sometimes serve to establish

the reasonableness of jurisdiction upon a lesser

showing of minimum ¢emtacts than would other.

14

wise be required. See, e.g., Keeton v. Hustler

Magazine, Inc., supra, at 780; Calder v. Jones,

supra, at 788-789; McGee v. International Life

Insurance Co., supra, at 223-224.

Burger King, 471 U.S. at 477. Unlike Petitioner, the

Ohio Supreme Court accurately quoted both passages

and correctly recognized the reinforcing effect of these

“other factors.” (Pet. 8a.)

Therefore, the Ohio Supreme Court did not depart

from the established due process standards. The correct-

ness of the court’s weighing of the particular facts is

discussed next.

B. The Unanimous Ohio Supreme Court Cor-

rectly Applied The Due Process Standards

of Burger King To The Analogous Facts In

The Record Of This Case.

The unanimous opinion below does not conflict with

Burger King because the Ohio Supreme Court correctly

applied the principles enunciated in Burger King to the

substantially similar facts of this case. This Court re-

solved the uncertainty of determining minimum contacts

based on a contract by identifying the factors that must

be evaluated in contract cases:

prior negotiations and contemplated future conse-

quences, along with the terms of the contract and

the parties’ actual course of dealing.

471 U.S. at 478-79. These factors remain especially

workable guides and were expressly evaluated below by

the Ohio Supreme Court:

Although the lease contains a choice-of-law

15

provision, this, standing alone, does _ not

automatically defeat a finding that minimum

contacts exist. Burger King, supra, at 478.

Whether a nonresident defendant purposefully

established minimum contacts with the forum

depends upon the dealings between the parties

prior to and following the document’s execution,

contemplated future consequences, along with

the terms of the contract. Id. at 479. We are

aware that the choice-of-law provision may be a

significant factor in the overall picture; however,

considering Mitchell’s dealings and the creation of

continuing duties and obligations with appellant,

we are satisfied that the guidelines set forth in

Burger King have been met.

(Pet. Ya.)

The court reached this result because the record con-

tains facts substantially similar to the facts in Burger

King. (Pet. 7a.) Some of those facts are described in the

opinion below:

Mitchell’s conducted negotiations of the lease

terms by telephone contact to Ohio with ap-

pellant, an Ohio-based limited partnership. Mit-

chell’s intentionally and purposefully directed ac-

tivities at Ohio when it agreed to the contract

terms, signed the document in Georgia and sent it

to Ohio to be signed by appellant. The ten-year

lease requires that Mitchell’s submit to appellant

on a monthly or annual basis rental payments,

maintenance costs, association fees and _ sales

reports. If Mitchell’s refuses to make the contrac-

tually required payments in Ohio, as alleged by

appellant, such refusal will undoubtedly cause

foreseeable injuries. Further, Mitchell's is not

provided with unfettered control of its retail sale

16

and rental operation. The lease calls for ap-

peliant’s approval in many areas and also restricts

or regulates many activities. Mitchell’s is also

aware that all communications need to be

directed to appellant in Ohio.

(Pet. 8a-9a.)

In comparison, this Court earlier upheld the assertion

of personal jurisdiction over a Michigan resident by a

court in Florida based on similar facts:

Rudzewicz did not maintain offices in Florida

and, for all that appears from the record, has

never even visited there. Yet this franchise dispute

grew directly out of “a contract which had a

substantial connection with that State.” McGee v.

International Life Insurance Co., 355 U.S., at

223 (emphasis added). Eschewing the option of

operating an independent local enterprise,

Rudzewicz deliberately “reach[ed] out beyond”

Michigan and negotiated with a Florida corpora-

tion for the purchase of a long-term franchise and

the manifold benefits that would derive from af-

filiation with a nationwide organization. Upon

approval, he entered into a-carefully structured

20-year relationship that envisioned continuing

and wide-ranging contacts with Burger King in

Florida. In light of Rudzewicz’s voluntary accep-

tance of the long-term and exacting regulation of

his business from Burger King’s Miami head-

quarters, the “quality and nature” of his relation-

ship to the company in Florida can in no sense be

viewed as “random,” “fortuitous,” or “atten-

uated.” Rudzewicz’s refusal to make the contrac-

tually required payments in Miami .. . caused

foreseeable injuries to the corporation in Florida.

For these reasons, it was, at the very least,

17

presumptively reasonable for Rudzewicz to be

called to account there for such injuries.

471 U.S. at 479-80 (citations omitted).

Based on Petitioner’s prior negotiations and subse-

quent dealings with Respondent in Ohio, creation of

continuing obligations to be performed in Ohio, and ac-

ceptance of extensive regulation from Ohio, this case

strongly resembles Burger King. The Ohio Supreme

Court weighed the facts correctly in favor of jurisdic-

tion.

In both cases, the contracts include comprehensive

leases. Cf. 471 U.S. at 464. Petitioner’s attempt to

distinguish the Lease from a franchise and limit Burger

King to franchise cases ignores the reality of the relation-

ship and puts form before substance. Although this case

does not involve a typical franchise, the shopping-mall

lease creates a similar long-term, interdependent rela-

tionship. “Eschewing the option of operating an in-

dependent local enterprise,” Petitioner chose to be iden-

tified with the name and success of Respondent’s shop-

ping mall. By doing so, Petitioner sought to derive

benefits not only from Respondent but also from the ex-

pertise of one of the nation’s largest shopping mall

developers affiliated with Respondent.

Ignoring Burger King, Petitioner makes too much of

the location of the leased property and Petitioner’s

physical absence from the forum. In both cases, the

leased property is outside the forum, the nonresident

was not physically present in the forum, and the nonresi-

dent communicated by mail and telephone with the

forum. Cf. id. at 466, 476, 479, 481.

Moreover, in both cases, the lease requires the

18

nonresident to perform continuing obligations in the

forum, such as making periodic payments there, in-

cluding percentage rent computed from gross sales. Both

contracts exactingly regulate from the forum many of

the same things, such as liability, defaults, termination,

assignments, insurance, auditing, business use and

name, hours of operation, building layout, displays,

advertising and promotion, cleanliness, and even vend-

ing machines. Cf. p. 4-5, supra, with 471 U.S. at

464-65, n. 4.

Petitioner attempts to summarily dismiss these exten-

sive regulations by casually calling them “incidental to

the purpose of the contract—to establish a Mitchell's

Formal Wear store in Paducah, Kentucky.” (Pet. 12.) By

that logic, the purpose of Rudzewicz’s contract with

Burger King was to establish a hamburger restaurant in

Michigan and the regulations there were likewise “in-

cidental”! Rather, in both cases, the regulations are part

of the same deal and part of the quid pro quo for

establishing the business location. The purpose of the

regulations is the same in both cases: to assure uniformi-

ty, quality, and patron satisfaction. Just as each fran-

chisee affects Burger King, the success and reputation of

each tenant affects the success and reputation of Respon-

dent. Thus, Respondent regulates virtually every aspect

of the shopping-mall landlord-and-tenant relationship,

including material aspects of the tenant’s business. Peti-

tioner’s view of the object of the lease is short-sighted. As

in Burger King, the object is not only the leased property

but also the interdependent relationship that requires

Petitioner to perform continuing obligations and accept

regulation in Ohio.

Likewise, Petitioner's characterization of Respon-

dent’s residence as a “mere fortuitous consequence” (Pet.

19

12) must fail. From the beginning of the negotiations

through the present, Respondent’s residence has re-

mained constant—as identified in the Lease itself.

Respondent’s home office in Youngstown, Ohio, with

which Petitioner dealt throughout, is as “fortuitous” as

Burger King’s headquarters in Miami, Florida! In both

cases, the contract requires the nonresident to send all

notices and payments to the home office in the forum.

As in Burger King, Petitioner knew it was dealing with a

company based in the forum, where all major business

decisions were made as evinced by Petitioner’s sending

not only the Lease, periodic payments, and sales reports,

but also the lease cancellation agreement to Ohio for ac-

ceptance by Respondent. Cf. 471 U.S. at 480.

Petitioner’s characterization of its failure to make

payments in Ohio as “its alleged failure to perform its

part of the contract in Georgia” (Pet. 12) ignores the ex-

press language of the Lease, Burger King, and long-

settled law. Clause 42 expressly requires Petitioner’s

payments to be actually received in Ohio by the Respon-

dent. (Pet. 7la.) Burger King concluded the failure to

make contractually required payments from Michigan to

Florida caused injury in Florida. 471 U.S. at 480. A

breach occurs and the cause of action arises where pay-

ment is due. E.g., Wester v. Casein Co. of America, 206

N.Y. 506, 100 N.E. 488, 490 (1912). As did this Court in

Burger King, the Ohio Supreme Court aiso found that

the action in this case arises from the injury to Respon-

dent in Ohio caused by Petitioner’s refusal to make the

payments. (Pet. 9a.)

Therefore, Ohio’s assertion of personal jurisdiction

over Petitioner is presumptively reasonable. The

reasonableness_is also reinforced by the “other factors”

identified in Burger King. Respondent and Ohio have

20

strong interests in adjudicating the dispute in Ohio, since

the Ohio legislature intended to provide a forum there

and Ohio has an interest in resolving suits brought by its

citizens and seeing that they get the benefit of their

bargains. Requiring Petitioner to defend in Ohio is not a

burden in this age of modern transportation. (Pet.

Ya-10a.) After all, Petitioner operates 101 stores in 11

states. It was only in this context that the court below

observed that Petitioner, having ventured extensively

beyond Georgia to Kentucky, can just as easily travel to

the neighboring state of Ohio to defend against this ac-

tion. (Pet. 9a.) The burden on Petitioner is not excessive.

(Pet. 9a.) Petitioner simply failed to carry its burden of

showing a compelling case of unreasonableness or un-

fairness. (Pet. 8a.)

Petitioner’s argument reduces to the novel theory that

a choice-of-law clause selecting nonforum law to govern

the Lease destroys otherwise proper personal jurisdiction

in the forum. This theory has never been the rule, except

for the short-lived Ohio court of appeals opinion below.

(Pet. 15a-16a.) Indeed, the unanimous rejection of this

theory by the Ohio Supreme Court (Pet. 9a) is consistent

with every other jurisdiction that has considered it.‘

4 Haisten v. Grass Valley Medical Reimbursement Fund, Ltd., 784 F.2d

1392, 1399-1400 (9th Cir. 1986) (contractual choice of Cayman Islands law

“alone will not suffice to block jurisdiction” in California); Jackam v.

Hospital Corp. of America Mideast, 800 F.2d 1577, 1581-82 (11th Cir.

1986) (a plaintiff may prove minimum contacts with Georgia despite con-

tractual choice of Saudi Arabia law); Southern Machine Co. v. Mohasco In-

dus., 401 F.2d 374, 382 (6th Cir. 1968) (contractual choice of New York law

“cannot change the business realities of the transaction” when other facts

evinced the minimum contacts necessary for jurisdiction in Tennessee);

Marine Charter ¢ Storage Ltd. v. Denison Marine, Inc., 701 F. Supp. 930,

934-36 (D. Mass. 1988) (contractual choice of Florida law is not deter-

minative of whether nonresident “purposefully availed itself of the benefits

21

Even when courts find jurisdiction does not exist, they

consider the choice-of-law provision only parenthetical-

ly, attaching far greater importance to the lack of con-

tinuous obligations to or lack of regulation from the

forum. LAK, Inc. v. Deer Creek Enter., 885 F.2d 1293,

1295 (6th Cir. 1989), cert. denied, 110 S.Ct. 1525

(1990).

This theory should be rejected for good reason. First,

such a rule would make a choice-of-law clause tanta-

mount to a choice-of-forum clause. Second, such a rule

would lead to the absurd result that personal jurisdiction

in a contract case would exist if nonforum law governed

because the contract was silent, but would not exist if

the contract happened to include a choice-of-law clause

providing nonforum law governed. See Burger King,

471 U.S. at 477, 483 n. 26 (jurisdiction not unconstitu-

tional when choice-of-law rules can be applied). Third,

such a rule would have a chilling effect on the voluntary

inclusion of choice-of-law clauses in contracts and would

increase the number of conflicts of law for the courts to

untangle. Therefore, Petitioner’s theory would be bad

public policy.

Contrary to what Petitioner says, the court below did

not ignore the dicta in Burger King about the effect of a

choice-of-law provision and did not fail to give any

weight to the Kentucky law provision. Rather, like this

and protections of Massachusetts law”); Wright Int'l Express v. Roger Dean

Chevrolet, 689 F. Supp. 788, 791 (S.D. Ohio 1988) (lease provided

minimum contacts with Ohio, despite contractual choice of Florida law);

Beco Corp. v. Roberts & Sons Constr. Co., 114 Idaho 704, 760 P.2d 1120

(1988) (personal jurisdiction in Idaho despite contractual choice of Arizona

law; even the lone dissenter considered the choice-of-law provision not

dispositive, but only one factor).

22

Court, the court understood that such a provision stand-

ing alone is not sufficient but must be viewed in the

greater context of all the jurisdictional facts. (Pet. 9a.)

Cf. 471 U.S. at 482. The fact Petitioner relies on does

not outweigh the facts supporting jurisdiction. An other-

wise proper forum, such as Ohio, does not become un-

foreseeable simply because the law of another state ap-

plies.

Burger King, being by far the most analogous prece-

dent, controls. Therefore, the Ohio Supreme Court cor-

rectly applied the due process standards to the facts of

this case.

23

II. THE UNANIMOUS DECISION OF THE

OHIO SUPREME COURT DOES NOT CON-

FLICT WITH THE DECISION OF ANY

OTHER JURISDICTION.

The unanimous decision of the Ohio Supreme Court

does not conflict with the decisions of other jurisdictions.

Supreme Court Rule 10.1 states in pertinent part:

A petition for a writ of certiorari will be granted

only when there are special and important

reasons therefor. The following, while neither

controlling nor fully measuring the Court’s discre-

tion, indicate the character of reasons that will be

considered:

(b) When a state court of last resort has decided

a federal question in a way that conflicts with the

decision of another state court of last resort or of a

United States court of appeals.

Although Petitioner claims such a conflict, only one of

the six cases Petitioner cites is a decision of a federal

court of appeals. (Pet. 16-17.) But even that one case

was decided 10 years before this Court’s decision in

Burger King. None of the remaining five is the decision

of another state’s court of last resort. While three of Peti-

tioner’s cited cases were decided after Burger King, only

one involved federal due process. All six cases are readily

distinguishable from this case so that no conflict exists.

Petitioner’s reliance on Grossman v. Wal-Mart Stores,

682 F. Supp. 752 (S.D. N.Y. 1988) (suit by lessor against

lessee’s assignee), Advance Realty Assocs. v. Krupp, 636

F. Supp. 316 (S.D. N.Y. 1986) (suit by real estate broker

against purchaser), and DelBello v. Japanese Steak

House, 43 A.D.2d 455, 352 N.Y.S.2d 537 (App. Div.

24

1974) (suit by franchisee against franchisor) is grossly

misplaced. None of these cases even mentions due proc-

ess or International Shoe or any of its progeny. All three

were decided solely on the state law grounds of what

constitutes “doing business” or “transaction of business”

under New York law.

Nor does the decision below conflict with Northern

Trust Co. v. Randolph C. Dillen, Inc., 558 F.Supp.

1118 (N.D.IIl. 1983). Petitioner’s recitation misstates

and omits several important facts. First, Petitioner

mistakenly says, with emphasis, that “the defendant

engaged in telephone calls with the Illinois plaintiff.”

This is not one of the facts from Northern Trust, but is a

fact from one of the precedents discussed by that case.

Even so, Burger King, decided two years later, now

teaches that such telephone calls are significant contacts.

Second, Petitioner omits telling that the nonresidents’

only contacts with Illinois were the sending of lease

payments there. All negotiations occurred in California.

The nonresidents’ agent had not even dealt with the II-

linois office. Jd. at 1123. In contrast, Petitioner’s con-

tacts with Ohio in this case far outnumber and outweigh

merely sending payments.

Similarly, Arthur, Ross & Peters v. Housing, Inc., 508

F.2d 562 (5th Cir. 1975), does not conflict with the deci-

sion of the Ohio Supreme Court. Arthur, Ross did not

involve a lease and is factually and legally dis-

tinguishable. Although the federal court also discussed

federal due process, its analysis of Texas law on

substituted service of process provided an adequate in-

dependent state law grounds for denying jurisdiction.

Texas legislation indicated only performance of a con-

tract, and not its negotiation or execution, can be con-

sidered when determining personal jurisdiction over a

25

nonresident. In its summary of Arthur, Ross, Petitioner

misleadingly refers to partial performance in Texas, try-

ing to force a comparison to this case. There, however,

the plaintiff unilaterally mailed its own initial payment

from the forum. This was not sufficient “performance.”

But the court observed it might be a different matter if

the contract expressly required payment to be made in

the forum. The nonresident’s only contacts were certain

notices and reimbursements the contract required to be

mailed to Texas, which the court held were not

dispositive based on Hanson v. Denckla, 357 U.S. 235

(1958). The court also thought physical presence was

necessary. 508 F.2d at 564-65. Because the facts are dif-

ferent in this case, including the express requirement

that payments be made in the forum, and because the

federal court did not have the benefit of this Court’s

teachings in Burger King, which was decided 10 years

later, there is no conflict.

Finally, Signet Bank/Virginia v. Tillis, 196 Ga. App.

433, 396 S.E.2d 54 (1990), the only case Petitioner cites

that discusses Burger King, does not conflict with the

decision below because the facts are plainly distinguish-

able. Signet Bank involved a consumer credit card, not a

commercial lease. There were no prior negotiations. The

plaintiff made the offer and the nonresident accepted it

outside the forum. The nonresident was a passive party,

who was not required to do anything except send pay-

ments if he used the credit card. Each use of the credit

card was a new, one-shot contract. The facts could

hardly differ more from this case.

Therefore, Petitioner has failed to identify any con-

flict between the unanimous decision of the Ohio

Supreme Court and the decision of any other jurisdic-

tion.

26

Ill. THE UNANIMOUS DECISION OF THE

OHIO SUPREME COURT IS SOUND POLICY

AND PETITIONER’S SPECULATION THAT

OTHER STATES MIGHT CHOOSE TO Ex-

PAND IT TO HALE LESSEES INTO COURT

UNDER CIRCUMSTANCES DIFFERENT

FROM THIS CASE IS IRRELEVANT.

Petitioner’s hypotheticals bear no resemblance to the

particular facts of the decision in this case and are far

outside the realm of the decision. The Ohio Supreme

Court did not create a per se rule that all commercial

lessees are amenable to personal jurisdiction under all

circumstances. Nor is its decision a binding precedent

outside Ohio. Indeed, Petitioner concedes that its “post

office box” hypothetical is “extreme.” (Pet. 18.) Even the

“Alaska-California-Florida” hypothetical is “extreme.”

Nothing in the opinion below says jurisdiction would be

proper on such scant facts. Typical of its approach to

this case, Petitioner omits all detail of the nature and

quality of the nonresident’s contacts. Knocking down

straw-men, Petitioner asks this Court to grant certiorari

to review hypothetical cases that may or may not ever

actually arise. By no means is it certain that other states

will expand this Ohio decision to such different cir-

cumstances. Moreover, Petitioner forgets that personal

jurisdiction usually involves a question of state law as

well as federal due process. Other states are free to adopt

and interpret their own long-arm statutes and rules

more narrowly. Thus, if a nonresident commercial lessee

is beyond the reach of the long-arm statute as a matter

of state law, those states will never reach the federal due

process issue reached in this case. There will be ample

opportunity to review Petitioner's imagined worst

scenarios if and when they become “actual cases and

27

controversies.". Meanwhile, Burger King and the other

precedents of this Court continue to provide adequaté

guidance.

Petitioner's argument also proceeds from the false

premise that a nonresident should not be haled into

court in the forum where the nonresident knowingly

causes injury. Such a “policy” is contrary to the un-

broken line of precedents of this Court.

An individual injured in California need not go to

Florida to seek redress from persons who, though

remaining in Florida, knowingly cause the injury

in California.

Calder v. Jones, 465 U.S. 783, 790 (1984) (citing McGee

v. International Life Ins. Co., 355 U.S. 220 (1957)

earlier in the opinion). Accord Burger King, 471 U.S.

462, 480 (1985). There is no reason to believe that corn-

mercial lessees as a class require special protection under

a different due process standard.

Finally, Petitioner seeks nothing less than the judicial

rewriting of contracts and leases. The decision of the

Ohio Supreme Court does not preclude Petitioner or any

other commercial lessee from bargaining with its lessor

for a choice-of-forum clause or for other terms affecting

the structure of their relationship, their contemplated

future consequences, and their actual course of dealing.

Like all other aspects of a commercial contract or lease,

personal jurisdiction is a negotiable, economic term.

Yet, Petitioner would constitutionalize a special federal

advantage for all commercial lessees to the disadvantage

of all commercial lessors. The present due process stan-

dards, however, adequately protect commercial lessees

and lessors alike.

28

CONCLUSION

For all these reasons, Respondent respectfully urges

this Court to deny the writ of certiorari.

Respectfully submitted,

David A. Fantauzzi

Counsel of Record

2445 Belmont Avenue

P.O. Box 2186

Youngstown, OH 44504-0186

(216) 747-2661

James M. Dobran

Jay Blackstone

2445 Belmont Avenue

P.O. Box 2186

Youngstown, OH 44504-0186

(216) 747-2661

Counsel for Respondent

APPENDIX

[This is the Exhibit B Petitioner omitted from

the appendix to the petition, Pet. 2la.]

December 28, 1987

Mr. Matt Smith

The Cafaro Company

2445 Belmont Avenue

P.O. Box 2186

Youngstown, Ohio 44504-0186

Re: Lease Agreement dated March 28, 1985

Landlord: Kentucky Oaks Mall Company

Tenant: Mitchell’s Formal Wear, Inc.

Dear Mr. Smith:

Please find enclosed Mitchell's check in the amount of

$7,000.00 pursuant to the oral agreement reached re-

garding cancellation of the subject Lease Agreement to

be effective January 8, 1988.

Very truly yours,

Joseph B. Doyle

JBD/

Enclosures

EXHIBIT B

la

2a

PLAINTIFF'S

TRANSCRIPT OF PROCEEDINGS

AND EXHIBIT ON APPEAL

STATE OF OHIO )

) Ss.

COUNTY OF MAHONING)

IN THE COURT OF COMMON PLEAS

Case No. 88 CV 57

KENTUCKY OAKS MALL COMPANY,

Plaintiff

Vs.

MITCHELL’S FORMAL WEAR, INC.

Defendant

APPEARANCES: Attorney JAY BLACKSTONE

On Behalf of Plaintiff

Attorney DANIEL P. DANILUK

On Behalf of Plaintiff

Attorney JEFFREY B. FLECK

On Behalf of Defendant

Attorney ARCHER D. SMITH, III

On Behalf of Defendant

BE IT REMEMBERED that at the trial of the above

entitled cause, in the Court of Common Pleas, Mahon-

ing County, Ohio, on the 8th day of June, 1988, before

the Honorable WILLIAM G. HOUSER, the above ap-

pearances having been made, the following proceedings

were had:

3a

x * * *

[7] WHEREUPON, The Defendant called

JOSEPH B. DOYLE,

who, being first duly sworn,

testified as follows:

[8] THE COURT: Give that gentleman your full

name and address, please.

MR. DOYLE: Joseph B. Doyle, 51 Inland Circle,

Atlanta.

THE COURT: Atlanta, Georgia?

MR. DOYLE: Georgia.

* * x *

[14] CROSS EXAMINATION:

By Mr. Blackstone

Q Mr. Doyle, how long have you been President of

Mitchell’s?

A Ten years.

Q Ten years?

A Yes.

* * * *

Q And are you familiar with a Shopping Mall

Development Corporation which goes by the name of

JVJ°

A Yes.

Q Which is also possibly known as Jacobs, Visconsi

[15] & Jacobs?

A Iam, yes.

Q Are you?

A_ Yes, sir.

Q Are you located or is Mitcheli’s Formal Wear

located in any JVJ Malls?

A Yes, we are.

SS

4a

Could you tell us which ones?

We have several in the Carolinas.

Do you know where the JVJ home office is?

Cleveland.

Cleveland, Ohio?

Yes.

And do you have a copy of the lease in front of

you for Kentucky Oaks —

A Yes.

Q. And that’s the one —

A Im sure.

OPO ro YO

* x * *

[17] Q And could you also turn to paragraph 5 of

the lease, or article 5?

A Yes.

Q_ And that paragraph is labeled “Percentage Rent”.

Could you read that and explain to the Court the

mechanics of that paragraph?

A Well, the way “Percentage Rent” works is, if a te-

nant’s sales are favorable, then a certain percentage of

the sales above a specified level are tendered to the

landlord as an additional rental payment, and in this

case it is six percent of the specified amount of

$200,000.00 for the first five years, and $225,000.00 for

the second five years.

Q How does the landlord know whether you,

whether Mitchell’s Formal Wear has reached a par-

ticular level of gross sales?

A By periodic sales records that we submit to the

landlord.

Q. And in what form are those sales reports submit-

ted?

A Well, they come from monthly and annual reports

that are signed by an officer of the company.

er eee

5a

[18] Q And which officer is that?

A Our Vice-President of Finance.

Q Could you turn to Article 6 of the lease?

A_ Yes, sir.

Q. And without going into too much detail could you

briefly summarize to the Court the mechanics of that

paragraph; and in particular I’m really referring to the

very first paragraph.

A Well, the very first paragraph states that we shall

have the right to sell and rent formal wear on the de-

mised premises.

Q And you couldn’t sell hamburgers from that

premises; is that correct?

A That’s correct, not without approval.

Q Could you turn to Article 8 of the lease?

A_ Yes, sir.

Q And could you read the caption of that article?

A “Signs.”

Q

And in the interest of brevity and so that we are

able to move along quickly, that paragraph means, for

example, that you couldn’t put up a sign with flashing

lights, or you couldn’t have an audio loudspeaker

shouting into the mall that Mitchell’s Formal Wear is

doing business at this [19] particular unit; is that cor-

rect?

A Yes.

Q. Basically the sign that you put up must be ap-

proved by the landlord?

That’s correct.

Okay.

Basically any signs that we put up.

Could you turn to Article 11 of the lease?

Yes, sir.

Which is labeled “Common Area Maintenance’,

DOPOD

6a

and also briefly could you state the mechanics of how

that particular article works?

A Well, there are costs incurred in running a shop-

ping center such as maintaining the parking lots, paying

maintenance people, security people and so forth, and

the tenants pay a pro rata share of these charges, costs,

which are called “Common Area Maintenance.”

Q Paid to whom?

A To the landlord.

* * * *

[20] Q Okay. We'll pass over that for now.

Could you also turn to Article 32 of the lease and tell

this Court and me, if you can, and if you can’t —

A Right.

Q Can you?

A Yes.

Q And also could you define the mechanics of that

particular article?

A Yes. To promote the mall there is often times

what is called a “Merchants Association” where the, the

fenants of the shopping center contribute a specified

amount of money on a periodic basis to the association

which has the responsibility of furthering the success of

the shopping center through promotions for the benefit

of the tenants and so forth.

Q_ And Mitchell’s Formal Wear, for example, would

[21] pay a fee to the landlord; is that basically —

A A pre-determined fee, yes, that’s correct.

Q. To the landlord?

A That’s correct, to the !andlord.

* * * *

[22] Q Mr. Doyle, you're the President of

Mitcheil’s Formal Wear?

A President.

Ja

Q And can you tell us how many entities or persons

other than employees or shareholders of Mitchell’s For-

mal Wear have access to the sales figures, gross sales

figures of a particular store of Mitchell’s Formal Wear?

A Gosh, that’s pretty hard to say. We have all of the

key personnel in the various stores throughout those

states I mentioned. Like for Kentucky Oaks you have

Kentucky as well as, ah, Georgia which has a portion in-

volved. Then you would have Kentucky Oaks Company,

the mall management. The people on sight certainly

have that information. And, ah, I cannot speak for the

number of people within Kentucky Oaks [23] Company

that we have access, would have access to that. But that

would be it. Internal Revenue Service, state.

* x * *

[40] REPORTER’S CERTIFICATE

I HEREBY CERTIFY that the foregoing is a true and

correct transcript of all evidence introduced and pro-

ceedings had in the trial of the within named case as

shown by my stenographic notes taken by me during the

trial and at the time the evidence was being introduced.

/s) RAYMOND D. TOMKO

Official Shorthand Reporter