Rosenthal & Company v. Dodick

• Decision Date: 17 October 1973
• Docket Number: No. 73 C 1221.,73 C 1221.
• Citation: 365 F. Supp. 847
• Court: U.S. District Court — Northern District of Illinois
• Parties: ROSENTHAL & COMPANY, Plaintiff, v. Jack M. DODICK, Defendant.

365 F. Supp. 847

ROSENTHAL & COMPANY, Plaintiff, v. Jack M. DODICK, Defendant.

No. 73 C 1221.

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

October 17, 1973.

Ralph Mantynband, Arvey, Hodes & Mantynband, Chicago, Ill., for plaintiff.

Leon E. Lindenbaum, Walsh, Case & Coale, Chicago, Ill., for defendant.

MEMORANDUM OPINION AND ORDER

BAUER, District Judge.

This cause comes on the defendant's motion to dismiss or alternatively, for a change of venue.

This is an action based on diversity of citizenship seeking to redress an alleged breach of a Customer's Agreement between the plaintiff and defendant.

The plaintiff, Rosenthal & Company ("Rosenthal"), is a limited partnership organized under the laws of the State of Illinois, with its principal place of business at Chicago, Illinois. The plaintiff Rosenthal is a broker and dealer in commodities. The defendant, Jack M. Dodick ("Dodick") is a citizen and resident of the State of New York and allegedly an experienced, sophisticated and knowledgeable trader in commodities. The amount in controversy, exclusive of costs and interest, exceeds the sum of $10,000.00.

The plaintiff in the complaint alleges, inter alia, the following facts:

1. On or about February 15, 1973 Rosenthal and defendant Dodick entered into a Customer's Agreement which provided, among other things, that "all monies which the undersigned defendant Dodick owes to you plaintiff Rosenthal at any time shall be repayable to you at your office in Chicago." From time to time and in accordance with statements of accounts (purchase and sale), plaintiff and defendant entered into agreements for the purchase of certain commodities. As to each transaction plaintiff caused a written confirmation to be mailed from the office in Chicago to the defendant. Defendant did not in any manner or at any time object to the written confirmations or any of the terms thereof.

2. After plaintiff made purchases on the defendant's behalf, plaintiff demanded that defendant deposit with them additional monies, in accordance with the Customer's Agreement. Defendant Dodick failed and refused to deposit the additional funds demanded. Thereupon the plaintiff Rosenthal liquidated defendant Dodick's account. After allowing full credit for the commodities liquidated and all other just set offs or claims, defendant is indebted to plaintiff in the sum of $444,492 plus interest.

3. On or about March 2, 1973 plaintiff demanded that defendant deposit with them additional sums of money for margin. At that time the market price of commodities purchased for the defendant had dropped and the defendant's previous deposits of margins were inadequate. In order to induce plaintiff to continue to carry defendant's account, defendant made and delivered to plaintiff his personal check for $100,000.00 dated March 3, 1973. On or about March 5, 1973 the defendant ordered the drawee bank to stop payment on the check. The check was returned to the plaintiff dishonored on or about March 12, 1972. By this time the market price of the commodities in question had dropped still further. As a direct and proximate result of these wrongful acts of the defendant plaintiff was injured in the sum of $444,492.97. Further the actions of the defendant were willful and malicious. Plaintiff ought to have and recover punitive damages in the sum of $450,000 and the amount of the dishonored check.

The defendant in his instant motion contends that the plaintiff has failed to properly allege that this Court has subject matter jurisdiction over this action. Further, the defendant contends that this Court lacks jurisdiction over the person of the defendant. In the alternative the defendant contends that this Court should transfer this action to the Southern District of New York in the interest of justice and for the overall convenience of the parties and witnesses.

The defendant, in support of his motion, has submitted his affidavit which states in relevant part:

1. "I have never been in Illinois for the purpose of transacting any business with Rosenthal & Company. I never made any telephone calls to Rosenthal & Company in Illinois. Rosenthal & Company has a business office located at 2 Coentis Slip, New York City, New York (hereinafter referred to as `Rosenthal's New York office')."

2. "Mr. Claude C. Huang, whose residence is 2 Horizon Road, Fort Lee, New Jersey, an employee of Walston & Co., Inc., with offices at 32 Commerce Street, Newark, New Jersey, solicited me on behalf of Rosenthal & Company to become a customer of Rosenthal in personal conversations in New York and New Jersey during the period February 12-15, 1973. I had never transacted any business with Rosenthal & Company prior to February 15, 1973."

3. "The customer documents attached to the complaint as Exhibit A was presented to me by Mr. Claude C. Huang and executed by me at Mr. Claude C. Huang's residence in New Jersey on February 15, 1973 and Mr. Huang delivered them to Mr. Philip Smith of Rosenthal's New York office."

4. "On February 21, 1973 and February 23, 1973 I delivered two checks totalling $50,000 to Claude Huang in New York City and he delivered them to Mr. Philip Smith of Rosenthal's New York office. They were deposited by Rosenthal in New York City. All of the purchases made by plaintiff allegedly on my behalf were executed by Rosenthal's New York office. I believe they were executed on commodity exchanges located in New York."

5. "On March 3, 1973 I delivered to Claude C. Huang my check for $100,000 which is attached to the complaint as Exhibit D. Claude Huang delivered the check to Mr. Philip Smith of Rosenthal's New York office and the check was deposited by Rosenthal's New York office in the Marine Midland Bank located in New York City. I received a letter of guarantee from Rosenthal & Company signed by Mr. Philip Smith. The letter was written from their New York office and hand delivered to me in New York City."

6. "It would be a hardship both to myself and to my patients for me to be compelled to come to Chicago, Illinois for trial of this lawsuit. All of my records relating to my transactions with Rosenthal are located in New York City, New York."

The plaintiff, in opposition to the instant motion, contends that this Court has subject matter jurisdiction over the instant action and personal jurisdiction over the defendant. The plaintiff further contends that this Court should not transfer the instant action.

In support of its position, the plaintiff has submitted the affidavit of Richard Mortell which states, in relevant part, that: (1) each and every member of the plaintiff's limited partnership are residents of the Northern District of Illinois;^* and (2) in accordance with the terms of the agreement between the parties, the defendant agreed to make payments at plaintiff's offices in Chicago, Illinois; and (3) defendant, in fact, did make payments to plaintiff, which were credited to him at plaintiff's offices in Chicago.

It is the opinion of this Court that it lacks personal jurisdiction over the defendant Jack M. Dodick.

Rule 4(e) of the Federal Rules of Civil Procedure provides that federal courts are to follow state rules regarding the assertion of in personam jurisdiction over nonresidents to the extent such rules are consistent with due process.

The legislative intent of the Illinois long arm statute (Chapter 110, §§ 16 and 17 of the Illinois Revised Statutes) is to exert jurisdiction over nonresidents to the...