Wilmot H. Simonson Co. v. Green Textile Associates, 82 C 5907.

• Decision Date: 04 February 1983
• Docket Number: No. 82 C 5907.,82 C 5907.
• Court: U.S. District Court — Northern District of Illinois
• Parties: WILMOT H. SIMONSON CO., an Illinois corporation, Plaintiff, v. GREEN TEXTILE ASSOCIATES, INC., a Massachusetts corporation, and Maurice Simon, Defendants.

554 F. Supp. 1229

WILMOT H. SIMONSON CO., an Illinois corporation, Plaintiff, v. GREEN TEXTILE ASSOCIATES, INC., a Massachusetts corporation, and Maurice Simon, Defendants.

No. 82 C 5907.

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

February 4, 1983.

COPYRIGHT MATERIAL OMITTED

Richard Apostolik, Gordon, Schlack, Glickson, Gordon & Davidson, Chicago, Ill., for plaintiff.

Rosemarie J. Guadnolo, Arvey, Hodes, Costello & Burman, Chicago, Ill., for defendants.

OPINION AND ORDER

BUA, District Judge.

Before the Court is the Defendants' Motion to Dismiss or to Transfer brought under the various provisions of Fed.R.Civ.P. 12(b). For the reasons stated herein, the Motion to Dismiss is denied and the cause is ordered transferred to the District of Massachusetts.

FACTS

Plaintiff brought the instant lawsuit in the U.S. District Court for the Northern District of Illinois seeking a declaratory judgment pursuant to 28 U.S.C. 1332. Federal jurisdiction is based on diversity.

Plaintiff Wilmot H. Simonson Co., Inc., (WHS-Ill.) is an Illinois corporation engaged in the sale and manufacture of fruitbased beverages. Defendant Green Textiles Associates, Inc. (Green Textiles) is a Massachusetts corporation and is a party to, and guarantor of, the agreement which is the subject of the instant lawsuit. Defendant Simon, a resident of Massachusetts, is an officer, director, and shareholder of Green Textiles and was a signatory of the agreement.

In its complaint, plaintiff alleges that in September, 1979, an Agreement of Sale (the "agreement") was entered into among Wilmot H. Simonson Co., Inc., a Massachusetts corporation (WHS-Mass.), Green Textiles, Simon, and The Nedlog Company (Nedlog), an Illinois corporation. Under the terms of the agreement, WHS-Mass. was to sell Nedlog substantially all of its assets. Additionally, it was agreed that WHS-Mass., Green Textiles, and Simon would refrain from participating in the area of business of the buyer and the seller for a period of ten years. After the distribution of assets, WHS-Mass. was merged with Green Textiles.

On or about September 17, 1979, WHS-Ill. was organized as an Illinois corporation. Shortly thereafter, Nedlog assigned to WHS-Ill. all of its rights, title and interest in the agreement. WHS-Ill. eventually received the assets of WHS-Mass. which had been distributed to Nedlog under the agreement.

In December, 1980, Richard Green, an officer, director, and shareholder of Green Textiles on the date the agreement was executed, entered into employment with Thirsty Time Beverages Corp., a Massachusetts corporation. Thirsty Time is also engaged in the fruit drink business. It is alleged that such employment is in violation of the covenant not to compete contained in the agreement. That issue is the subject of a lawsuit currently pending in the District Court for the District of Massachusetts entitled Richard Green v. Wilmot H. Simonson Company and The Nedlog Company, Case No. 81-2301.

In March, 1981, Green's employment with Thirsty Time terminated. Since that time, Green has been employed by and has also been terminated by the 4-U Company of America, another entity involved in the fruit beverage business.

In Count I, WHS-Ill. asserts that, by the competitive activities of Green, Green Textiles has violated the covenant not to compete contained in the agreement. Count II of the complaint alleges that Green Textiles breached its obligations as a guarantor under the agreement. Under the agreement, Green Textiles agreed to unconditionally guarantee each and every obligation, representation, and warranty of WHS-Mass. and to indemnify WHS-Ill. for all losses, damages, liabilities, costs and expenses, including reasonable attorneys' fees arising from breaches of the agreement. Due to Green's alleged competitive activities, WHS-Ill. has incurred legal fees in excess of $38,000 and claims additionally that it has lost business as a result of such activities. Green Textiles has refused to indemnify WHS-Ill. for its costs, losses, or attorneys' fees.

In its motion to dismiss or transfer, the defendants have claimed a litany of bases on which they claim the instant matter should be dismissed or transferred. The Court will consider these assertions seriatim.

I. 12(b)1

The defendant has challenged this Court's diversity jurisdiction over the instant matter by asserting that the complaint does not sufficiently allege the jurisdictional amount of $10,000 as required by 28 U.S.C. § 1332.¹ The plaintiffs have, however, claimed damages far in excess of the jurisdictional amount.

Initially, plaintiffs have asserted that they have incurred legal expenses of more than $38,000 which they claim is recoverable under the contract. In addition, Count I asks the Court to declare the six remaining annual payments, which total over $75,000, as no longer due because of defendants' alleged competitive conduct in violation of the agreement. While there is no certainty that plaintiff will recover more than $10,000, it cannot be gainsaid that there is a legal certainty that the plaintiff cannot recover the amount claimed as required by St. Paul Mercury Indemnity Co. v. Red Cab Co., 303 U.S. 283, 288, 58 S.Ct. 586, 590, 82 L.Ed. 845 (1938). Plaintiff's allegations appear to have been made in good faith and without malice insofar as the jurisdictional amount is concerned. Defendants' claims to the contrary are without merit. The defendants' attempts to argue the merits of the case to show that the jurisdictional amount is not met are misplaced. The motion to dismiss for lack of federal jurisdiction is therefore denied.

II. 12(b)2 and 12(b)5

The defendant has also moved to dismiss the complaint for lack of personal jurisdiction. Defendants' assertions in this regard are also unfounded.

Paragraph 17.02 of the agreement, which forms the basis for the instant lawsuit, provides:

This Agreement shall be construed and enforced in accordance with the laws of the Commonwealth of Massachusetts. In the event of a dispute hereunder, the parties hereto consent to jurisdiction in an appropriate Illinois state court or the Federal District Court for the Northern District of Illinois.

The parties have plainly consented to the jurisdiction of the courts within the State of Illinois. The exertion of personal jurisdiction is generally limited only by the due process clause and may be exercised to the extent permitted therein. O'Hare International Bank v. Hampton, 437 F.2d 1173 (7th Cir.1971). It is unclear how it could be gainsaid that consenting to jurisdiction could conceivably violate due process where the party who has consented is the very party complaining of the due process violation.

Under the jurisdictional and process rules of the Illinois Courts, which control the instant matter, Fed.R.Civ.P. 4, it is clear that jurisdiction over a person may be conferred by consent. Rabbitt v. Webber & Co., 297 Ill. 491, 130 N.E. 787 (1921). See, also, Bania v. Royal Lahaina Hotel, 37 Ill. App.3d 661, 347 N.E.2d 106 (1st Dist.1975). Having so consented, the defendants cannot object to this Court's jurisdiction.

In connection with the motion to dismiss under Fed.R.Civ.P. 12(b)2, the defendants argue, in essence, that the consent is ineffective in the instant matter as, at least as to some defendants, the claim does not arise under the contract. The Court does not concur in this assessment.

All of the parties to this lawsuit are bound to the provisions of the agreement. WHS-Ill. seeks to recover from the defendants, who were parties to the agreement, under the terms of the contract. Whether it will ultimately succeed and against which parties is not a matter which the Court may consider at this juncture. Suffice it to say that, for purposes of jurisdiction and the consent to jurisdiction clause, the lawsuit arises under the contract, thus effectuating the consent to jurisdiction clause. Defendants' arguments to the contrary are simply unfounded.

As defendants had consented to personal jurisdiction in Illinois, under Fed.R. Civ.P. 4(c) and Ill.Rev.Stat. ch. 110, ¶ 2-208 (1981), personal service could be made outside of the State of Illinois in the same manner as personal service within the state. Pursuant to Rule 4(c), a special process server was appointed who, on October 4, 1982, personally served Defendant Simon for himself and on behalf of Defendant Green Textiles as its authorized agent. Proof of service was filed with the Court on October 13, 1982. The Court can see no reason why such service should be held improper. The service of summons clearly complied with the applicable law and was therefore valid and effective as personal service. The defendants' motions brought pursuant to Fed. R.Civ.P. 12(b)2 and Fed.R.Civ.P. 12(b)5 are therefore denied.

III. 12(b)3

Defendants have moved to dismiss the instant action based on an alleged impropriety of venue in the Northern District of Illinois. Defendants argue that venue is improper under 28 U.S.C. § 1391 as, it is claimed, venue in the instant case is controlled by § 1391(b) which places venue in the district in which the claim arose as well as where all the defendants reside, and not § 1391(a) which allows venue to be placed where all the plaintiffs reside as well. Support for defendants' assertions in this regard is founded in a most creative yet erroneous argument.

§ 1391(a), of course, is available only where federal jurisdiction is founded solely in diversity, whereas § 1391(b) applies in cases not founded solely in diversity. While defendant acknowledges that the only possible basis for jurisdiction in the instant case is diversity, it nevertheless argues that if the complaint properly asserts a jurisdictional amount at all, it does so only with respect to one count and not as to both. Although such an assertion is incorrect as both counts allege damages in excess of $10,000, (see § I., supra.) even were the defendants' assertion true, it would be...