AM Intern. Leasing v. Nat. Council of Negro Women

• Decision Date: 31 January 1986
• Docket Number: No. 85 C 4780.,85 C 4780.
• Citation: 627 F. Supp. 1302
• Parties: AM INTERNATIONAL LEASING CORPORATION, Plaintiff, v. NATIONAL COUNCIL OF NEGRO WOMEN, INC., Defendant.
• Court: U.S. District Court — Northern District of Illinois

627 F. Supp. 1302

AM INTERNATIONAL LEASING CORPORATION, Plaintiff, v. NATIONAL COUNCIL OF NEGRO WOMEN, INC., Defendant.

No. 85 C 4780.

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

January 31, 1986.

Nathaniel Baccus III, Baccus, James & Padgett, Washington, D.C., Ronald S. Samuels, Washington, Kennon, Hunter & Samuels, Chicago, Ill., for defendant.

Alan J. Lirtzman, Parker F. McMahan, Jr. & Assoc., Ltd., Chicago, Ill., for plaintiff.

MEMORANDUM OPINION AND ORDER

SHADUR, District Judge.

AM International Leasing Corporation ("Leasing") sues National Council of Negro Women, Inc. ("NCNW") to recover $87,324.93 in deficiencies on two defaulted office-equipment leases.¹ NCNW initially filed an alternative motion to dismiss or transfer. This Court's October 28, 1985 memorandum order (the "Order") denied that motion, rejecting all grounds asserted by NCNW and holding (Order at 1-2):

1. Venue was proper in the Northern District of Illinois because Leasing's principal place of business is here (see 28 U.S.C. § 1391(a)).

2. Nothing supported NCNW's contention that the choice-of-law provisions of the Lease Agreements—which deem each to have been made at Palatine, Illinois and choose Illinois law to govern the validity, performance and construction of the Agreements—were invalid contracts of adhesion or improper attempts to limit jurisdiction to a particular forum.

3. No adequate factual showing supported NCNW's request for transfer under 28 U.S.C. § 1404(a) ("Section 1404(a)").

4. NCNW's labeling of Shaw Industries, Inc. ("Shaw") as an indispensable party was "arrant nonsense."

NCNW now renews its motion,² reasserting as well the failure to join Shaw as an allegedly indispensable party. For the first time it also claims the absence of personal jurisdiction. For the reasons stated in this memorandum opinion and order, NCNW's renewed motion suffers the same fate as the original.

Facts³

NCNW's national headquarters are in Alexandria, Virginia (Height 2d Aff. ¶ 1), and it is "either incorporated or registered to do business" in Washington, D.C., Virginia, New York, Georgia, California, Louisiana and Mississippi (id. ¶ 3). Some time before December 16, 1980 NCNW established an economic development project in Mississippi (the "Factory Project"), funded by various federal agencies (Gavin Aff. ¶ 2). Staff for the Factory Project placed bid solicitations for office equipment (the "Equipment") in the Jackson, Mississippi daily newspaper (id. ¶¶ 3, 5). Among the published specifications was one obligating the bidders to provide financing for the Equipment (id. ¶ 6).

Two of the successful bids came from AM Varityper ("Varityper") and AM Multigraphics ("Multigraphics") (id. ¶¶ 7-8).⁴ Details of the transactions were negotiated at meetings between Factory Project Director Vern Gavin ("Gavin") and local salespersons of Varityper and Multigraphics. All those meetings took place at NCNW's Mississippi factory (id. ¶ 9).⁵

Financing of the Equipment was accomplished via two 60-month Leases, the 1980 Lease Agreement (Ex. A) covering the Multigraphics items and the 1981 Lease Agreement (Ex. E) covering the Varityper items. In each instance the lessor was Leasing, not Varityper or Multigraphics. NCNW applied for the leases by mailing application forms to Leasing's Illinois offices for approval, and the Lease Agreements were approved and "executed" there (Fry Aff. ¶¶ 3-4).⁶

Forms related to the 1980 Lease Agreement listed, in handwriting or typewriting, the "Division" or "Sales Division" as Multigraphics, while the corresponding reference in the 1981 Lease Agreement and related documents was to Varityper (Exs. A, B, E, F; NCNW R.Mem.Ex. B at 5, 7). But as already stated, all forms used in connection with the transactions—including the Lease Agreements themselves—specifically identified the lessor as Leasing, headquartered in Palatine, Illinois. And each Lease Agreement further specified:

12. CHOICE OF LAW. This Lease shall be deemed to have been made in Palatine, Illinois regardless of the order in which the signatures of the parties shall be affixed, and the validity, performance and construction of this Lease shall be governed by the laws of the State of Illinois.

Once the Equipment was installed, payments were to be made to Leasing in Illinois as provided in each Lease Agreement (Exs. A, E):

2. LEASE TERM AND PAYMENTS.... Lessee agrees to pay to Lessor (at its principal place of business in Illinois) the total number of lease payments specified....

Whatever payments were made complied with that requirement (Fry Aff. ¶ 5).

NCNW fell behind in its payments, apparently because its federal funding dried up. Gavin "notified all of the companies with leases of this situation" (Gavin Aff. ¶ 13) and had "numerous telephone conversations" with Leasing during 1982 about "late rental payments and possible settlement of the dispute" (Leasing Mem. 4).⁷ Leasing eventually repossessed the Equipment and on January 11, 1983 wrote NCNW, to Gavin's attention, announcing a forthcoming sale of the Equipment. That sale took place two weeks later, leaving the deficiencies Leasing now seeks to recover.

Meanwhile, a year earlier, NCNW had sold the Factory Project's assets to Shaw, including (NCNW R.Mem.Ex. B at 1):

all right, title and interest in and to any and all furniture, equipment, leases, deposits, contracts ... including but not limited to each and every item of equipment, furniture, lease as described on the copies of the leases, purchase agreements, furniture and equipment listing, attached hereto and incorporated herein by this reference.

Attached to the NCNW-Shaw agreement were some of the documents relating to the Lease Agreements (but not the Lease Agreements themselves), as well as a listing of all property to be transferred. That listing (NCNW R.Mem.Ex. B at 17, 19) clearly shows the "owner" of the Equipment as "AM Leasing, Inc." or "AM Leasing Corporation."⁸

Some time before Leasing foreclosed on the Equipment, Shaw attempted to negotiate assumption of NCNW's leases. However, no agreement was reached with Leasing (Fry Aff. ¶ 7).⁹

Personal Jurisdiction

Illinois personal-jurisdiction law provides the analytical framework here, for as Nelson, 717 F.2d at 1123 put it:

A federal court has personal jurisdiction over the parties in a diversity action only if a court in the state in which the federal court is sitting would have jurisdiction.

Since Green v. Advance Ross Electronics Corp., 86 Ill.2d 431, 436-37, 56 Ill.Dec. 657, 660, 427 N.E.2d 1203, 1206 (1981) and Cook Associates, Inc. v. Lexington United Corp., 87 Ill.2d 190, 197-98, 57 Ill.Dec. 730, 733, 429 N.E.2d 847, 850 (1981), it is plain the test for personal jurisdiction in Illinois has two steps (see State Security Insurance Co. v. Frank B. Hall & Co., 530 F.Supp. 94, 96-97 (N.D.Ill.1981)):

1. Courts must first look to Illinois' long-arm statute, Ill.Rev.Stat. ch. 110, ¶ 2-209 ("Section 2-209"), to determine whether it provides for jurisdiction. If the answer is no, the analysis is at an end.

2. Only if the statutory answer is affirmative must a court go on to consider whether assertion of personal jurisdiction in the particular case would violate the Due Process Clause under the "minimum contacts" test of International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) and its progeny.

Instead the parties have completely bypassed statutory analysis, focusing entirely on the constitutional question. Virtually all the cases cited in the briefs were decided before Green and Cook Associates (under the earlier regime of Nelson v. Miller, 11 Ill.2d 378, 389, 143 N.E.2d 673, 679 (1957), the scope of the long-arm statute had been thought coextensive with the reach of minimum-contacts analysis). See Petty v. Cadwallader, 135 Ill.App.3d 695, 697, 90 Ill.Dec. 518, 520, 482 N.E.2d 225, 227 (4th Dist.1985).

Section 2-209 provides in relevant part:

(a) 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 such acts:

(1) The transaction of any business within this State;

* * * * * *

(c) Only causes of action arising from acts enumerated herein may be asserted against a defendant in an action in which jurisdiction over him or her is based upon this Section.

Thus the first question to be answered is whether the NCNW-Leasing transactions were "the transaction of any business within this State" by NCNW. That determination amounts to weighing "a wide variety of factors" (First National Bank of Chicago v. Boelcskevy, 126 Ill.App.3d 271, 274, 81 Ill.Dec. 380, 383, 466 N.E.2d 1182, 1185 (1st Dist.1984)) to arrive at what is more a factual finding than the fairness determination mandated by International Shoe. Nonetheless Green and Cook Associates are new enough so that courts must perforce rely to some extent on earlier decisions, at least as to the list of factors to be considered and the weight to be given them. See, e.g., Boelcskevy, 126 Ill.App.3d at 274-75, 81 Ill.Dec. at 383-84, 466 N.E.2d at 1185-86.

Here the parties dispute which of two cases, both dealing with non-Illinois-citizen defendants, this case resembles more closely: O'Hare International Bank v. Hampton, 437 F.2d 1173 (7th Cir.1971) (finding jurisdiction) or Telco Leasing, Inc. v. Marshall County Hospital, 586 F.2d 49 (7th Cir.1978) (finding no jurisdiction). In the best tradition of Edward Levi's Introduction to Legal Reasoning, a factual comparison of the two cases becomes profitable.

O'Hare presented the following factors (437 F.2d at 1175):

1. Defendant initiated lease negotiations by phoning the Illinois lessor's Chicago office.¹⁰

2. Defendant traveled to Illinois to negotiate part of the lease.¹¹

3. Execution of the lease took place in Illinois (that is, the

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