## Facts

- Through its predecessor in interest, S & S Associates, Wallkill 5 Associates II (Wallkill), a New Jersey partnership, retained Tectonic Engineering, P.C. (Tectonic), a New York engineering firm, to conduct geotechnical testing and prepare a written report for land in Wallkill, New York that Wallkill was considering purchasing for commercial development.
- Tectonic issued a formal geotechnical report stating that the property would be suitable for development if certain remedial measures were taken.
- Relying on the report, Wallkill purchased the property (after holding an option to buy) and proceeded with plans to construct and lease a warehouse.
- Wallkill hired Walter Poppe General Contractors, Inc. (Poppe), a New Jersey contractor, to develop the site and build the warehouse.
- After construction had been underway for months, Poppe reported that certain areas required more remediation than set forth in Tectonic’s report because of unsuitable organic material (including items such as wood chips, branches, and stumps).
- The condition suggested that organic material had been placed over the original ground in some areas; Tectonic contended that other site activity (including work attributed to another contractor) may have created or moved the problematic material.
- Tectonic maintained that its report’s findings and recommendations were correct; Wallkill contended that the report’s conclusions were erroneous and that it incurred substantially higher development costs as a result.
- Wallkill sued Tectonic in the U.S. District Court for the District of New Jersey, asserting state-law claims including breach of contract, breach of warranties, and failure to meet professional standards of care.
- Wallkill did not sue Poppe (or other contractors mentioned in the dispute), and Tectonic moved to dismiss for lack of personal jurisdiction, improper venue, and failure to join an indispensable party; alternatively, Tectonic sought a transfer of venue and requested the ability to bring Poppe into the case as a third-party defendant.

## Issues

1. Whether a New Jersey federal court could exercise specific personal jurisdiction over a New York engineering firm based on its work for a New Jersey partnership and its geotechnical report prepared for a New York property.
2. Whether venue in the District of New Jersey was proper for claims arising from the engineering report and related communications and reliance, despite the property being located in New York.
3. Whether Poppe (and/or other contractors alleged to have contributed to the site condition) was a required and indispensable party under Federal Rule of Civil Procedure 19 such that the action had to be dismissed if not joined.
4. If dismissal was not warranted, whether the court should transfer the case to another federal district and whether Tectonic could seek to add Poppe through third-party practice.

## Decision

- The court denied Tectonic’s motion to dismiss for lack of personal jurisdiction.
- The court denied Tectonic’s motion to dismiss for improper venue.
- The court denied dismissal under Rule 19, concluding that Poppe was not an indispensable party whose absence required dismissal.
- The court declined to end the case on joinder grounds and indicated that disputes about comparative responsibility could be addressed through third-party practice rather than mandatory joinder of the contractor as a defendant.
- The court denied the requested transfer of venue.

## Legal Principles

- Specific personal jurisdiction may be exercised over a nonresident defendant when the defendant purposefully forms and carries out a relationship with the forum and the claims arise out of or relate to those forum-directed contacts, consistent with due process fairness factors.
- Venue is proper where a substantial part of the events or omissions giving rise to the claim occurred; in contract and professional-services disputes, that can include negotiations, communications, delivery of reports, and reliance causing economic injury in the forum, even if the physical project site is elsewhere.
- Rule 19 requires a two-step analysis: (1) whether the absent person is required for complete relief among existing parties or to protect legally cognizable interests, and (2) if joinder is not feasible, whether the case must be dismissed because the person is indispensable.
- Potential joint tortfeasors and others who may share fault are ordinarily not indispensable parties; a plaintiff may sue one alleged wrongdoer without suing all others.
- A defendant seeking contribution or indemnity from a nonparty typically should proceed under Rule 14 (impleader) rather than using Rule 19 to force the plaintiff to add that nonparty as a defendant.

## Conclusion

The District of New Jersey permitted Wallkill’s action against Tectonic to proceed, holding that New Jersey could exercise specific personal jurisdiction over the New York engineering firm and that venue in New Jersey was proper; the court also rejected Rule 19 dismissal because the contractor Poppe was not indispensable, leaving allocation-of-fault concerns to third-party practice rather than compulsory joinder.


Wallkill 5 Associates II v. Tectonic Engineering, P.C., 1997 WL 452252 (1997)