Forty-Eight Insulations v. Johns-Manville Products

• Decision Date: 14 June 1979
• Docket Number: No. 77 C 3822.,77 C 3822.
• Parties: FORTY-EIGHT INSULATIONS, INC., an Illinois Corporation, Plaintiff, v. JOHNS-MANVILLE PRODUCTS CORPORATION, Johns-Manville Sales Corporation, Asbestos Corporation, Ltd., and Cary Canadian Mines, Ltd., Defendants.
• Court: U.S. District Court — Northern District of Illinois

472 F. Supp. 385

FORTY-EIGHT INSULATIONS, INC., an Illinois Corporation, Plaintiff, v. JOHNS-MANVILLE PRODUCTS CORPORATION, Johns-Manville Sales Corporation, Asbestos Corporation, Ltd., and Cary Canadian Mines, Ltd., Defendants.

No. 77 C 3822.

United States District Court, N. D. Illinois, E. D.

June 14, 1979.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

William C. Murphy, Richard L. Horwitz, Reid, Ochsenschlager, Murphy & Hupps, Aurora, Ill., for plaintiff.

Paul R. Gary, William V. Johnson, William D. Maddux, Ltd., Chicago, Ill., for defendants Johns-Manville Products Corp. and Johns-Manville Sales Corp.

Robert L. Byman, Jenner & Block, Chicago, Ill., for defendant Asbestos Corp., Ltd.

Michael P. Connelly, Sloan & Connelly, Chicago, Ill., for defendant Cary Canadian Mines, Ltd.

MEMORANDUM DECISION

MARSHALL, District Judge.

In this civil action, the plaintiff, Forty-Eight Insulations, Inc. (Forty-Eight), has brought suit for common law indemnity against the defendants, Johns-Manville Products Corporation, Johns-Manville Sales Corporation, Asbestos Corporation, Ltd., and Cary Canadian Mines, Ltd. The jurisdiction of this court is based on diversity of citizenship under 28 U.S.C. § 1332. Plaintiff's complaint alleges that it has been named a defendant in 188 personal injury suits throughout the United States.¹ Plaintiff seeks indemnity from the defendants for all liabilities which it has incurred. In addition, plaintiff seeks a declaratory judgment as to its right to indemnity from these defendants for any liability it may incur in the future. Each of the four defendants moved to dismiss. We denied these motions on April 18, 1978. Defendants' motion to reconsider that decision is now pending.

Plaintiff manufactures insulation block and insulation cement. Until 1970, some of these products contained asbestos as a component part. Plaintiff purchased asbestos from each of the defendants and incorporated the asbestos, unchanged, into its insulation products. Plaintiff alleges that each of the defendants sold and delivered asbestos to plaintiff's plant in Kane County, Illinois. Forty-Eight Insulations has been named as a defendant in personal injury suits brought by persons who have been exposed to the asbestos contained in Forty-Eight Insulations' insulation products. Allegedly as a result of the exposure to asbestos, the personal injury plaintiffs have contracted various diseases. The majority of these victims are workers who install insulation products. All of these suits contain a count based on a strict liability in tort theory.² Forty-Eight alleges that it has had to incur the cost of defending these suits and that it "has been and will be compelled to pay reasonable sums to settle and conclude such actions." Plaintiff contends that its liability to the personal injury plaintiffs is dependent upon a showing that the asbestos Forty-Eight purchased from defendants and incorporated unchanged into its products was unreasonably dangerous. Therefore plaintiff seeks indemnity from the defendants for the liabilities it has already incurred and a declaratory judgment of its right to indemnity for all future liability arising out of the personal injury suits.

All four defendants filed motions to dismiss plaintiff's complaint. Defendants Asbestos Corporation, Ltd. and Cary Canadian Mines, Ltd. challenged this court's in personam jurisdiction over them. All defendants moved to dismiss the complaint for failure to state a claim. The latter challenge has two prongs: first, a declaratory judgment would be improper in this action because no "actual controversy" exists between the parties as required by 28 U.S.C. § 2201; and second, because of the complex and uncertain nature of the indemnity sought here, this court should exercise its discretion to refuse to entertain the action.

We turn first to the question of in personam jurisdiction over two of the defendants. In actions based on diversity jurisdiction the federal courts must follow state rules regarding the exercise of in personam jurisdiction over non-resident defendants. Federal Rule of Civil Procedure 4(d)(7). In the instant case, plaintiff seeks to sustain jurisdiction under the Illinois Long-Arm Statute, Ill.Rev.Stat., ch. 110, § 17. Section 17 provides in pertinent part:

(1) Any person, whether or not a citizen or resident of this State, who in person or through an agent does any of the acts hereinafter enumerated, thereby submits such person, . . . to the jurisdiction of the courts of this State as to any cause of action arising from the doing of any such acts: . . .

(a) The transaction of any business within this State; . . .

This exercise of personal jurisdiction over non-resident defendants must be consistent with the requirements of due process. Rosenthal & Co. v. Dodick, 365 F.Supp. 847, 849 (N.D.Ill.1973). Due process requires the existence of sufficient "minimum contacts" between the non-resident defendant and the forum state so that the exercise of personal jurisdiction is consistent with traditional concepts of fair play and substantial justice. Hanson v. Denckla, 357 U.S. 235, 251, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958); International Shoe Co. v. State of Washington, 326 U.S. 310, 320, 66 S.Ct. 154, 90 L.Ed. 95 (1945). We must determine whether the defendants have by some voluntary act or conduct purposely availed themselves of the privilege of conducting business within Illinois and thus invoked the benefits and protection of Illinois law. Hanson, supra, 357 U.S. at 253, 78 S.Ct. 1228; O'Hare International Bank v. Hampton, 437 F.2d 1173, 1176 (7th Cir. 1971).

Defendant Asbestos Corporation has filed the affidavit of its Secretary and General Counsel, Jeannine M. Rousseau, in support of its jurisdictional challenge. According to Rousseau's affidavit, Asbestos Corporation is a Canadian corporation which mines asbestos ore in Canada. All sales are made F.O.B. Thetford Mines, Quebec, Canada. Asbestos Corporation is not registered as a foreign corporation in Illinois, has no authorized agent in Illinois, maintains no office in Illinois, and has never been listed in any telephone directory in Illinois. It has no employees in Illinois, owns no property in the state, and has not used the Illinois courts to recover any debts.

Defendant Cary Canadian Mines has also filed an affidavit in support of its jurisdictional challenge. The affidavit of A. H. Bagenstose, Vice-President of Sales and Marketing for Cary Canadian, states that Forty-Eight purchased cyrstotile asbestos fiber from Cary Canadian during the years 1965-1970. All sales were F.O.B. from the mines of Cary Canadian at East Broughton, Quebec, Canada. Delivery was by common carrier with Forty-Eight bearing the expense and risk of transportation. All billings were made by mail from East Broughton and payments were received by mail at the same location.

Plaintiff contends that the sales between itself and these defendants were consummated in Illinois and that defendants did transact business in Illinois. In support of these allegations, plaintiff offers the affidavit of Arthur H. Mehlhorn, purchasing agent of the plaintiff between the years 1947 and 1973. Mehlhorn states that, while he was acting as the purchasing agent of Forty-Eight, he entered into contracts for the purchase of asbestos with salesmen or agents for both Cary Canadian and Asbestos Corporation. Further, he states that these contracts were entered into at Forty-Eight's office in North Aurora, Kane County, Illinois.

Before determining whether the facts alleged are sufficient to sustain the exercise of personal jurisdiction, we must first indicate what facts are missing from the affidavits of the parties. Although the affidavit submitted by the plaintiff states that the contracts were consummated in Illinois by "means including the transaction of business" between plaintiff and defendant, the affidavit does not state that the contracts were negotiated in Illinois or that the defendants solicited plaintiff's business in Illinois. The defendants' affidavits are completely silent on the issue of the negotiation and execution of the contracts.

A recent Seventh Circuit decision guides our resolution of the defendants' jurisdictional challenge. In Lakeside Bridge & Steel Co. v. Mountain State Construction Co., Inc., 597 F.2d 596 (7th Cir. 1979), the court determined whether the due process clause allowed Wisconsin to use its long arm statute to assert personal jurisdiction in a contract case over a non-resident defendant that had conducted no activities in Wisconsin. In Lakeside, the plaintiff, a Wisconsin corporation, sued the defendant West Virginia corporation on a contract for the sale of goods. The contract was solicited by plaintiff in West Virginia and negotiated in West Virginia and by interstate mail and telephone. The goods were manufactured by plaintiff in Wisconsin and shipped F.O.B. Milwaukee. After defendant withheld part of the purchase price because the goods were allegedly defective in certain respects, plaintiff brought suit in Wisconsin. After the suit was removed to federal court and resolved in plaintiff's favor, the defendant appealed.

The Court of Appeals held that the defendant did not have minimum contacts with Wisconsin sufficient to confer jurisdiction. The court held that performance of contractual obligations by the plaintiff in the forum state was not enough, by itself, to sustain jurisdiction. The court noted that the contract left plaintiff in control as to where it would manufacture the goods, which precluded an inference that defendants had purposefully availed itself of the privilege of conducting activities within the forum state. In addition, the defendant had no other relationship with the state apart from the isolated transaction with plaintiff. Further, the court stated that the cause of action did not arise from "instate effects" of the contract nor were the events in Wisconsin...