Ameritech Mobile Communications, Inc. v. Cellular Communications

• Decision Date: 29 June 1987
• Docket Number: No. 86 C 1238.,86 C 1238.
• Citation: 664 F. Supp. 1175
• Parties: AMERITECH MOBILE COMMUNICATIONS, INC., a Delaware corporation, Plaintiff, v. CELLULAR COMMUNICATIONS CORPORATION, a Michigan corporation, Radio Tom Co., a Michigan corporation, and Thomas Parks, Defendants.
• Court: U.S. District Court — Northern District of Illinois

664 F. Supp. 1175

AMERITECH MOBILE COMMUNICATIONS, INC., a Delaware corporation, Plaintiff, v. CELLULAR COMMUNICATIONS CORPORATION, a Michigan corporation, Radio Tom Co., a Michigan corporation, and Thomas Parks, Defendants.

No. 86 C 1238.

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

June 29, 1987.

Kenneth J. Jurek, Mayer, Brown & Platt, Chicago, Ill., for plaintiff.

Peter J. Berman, Ltd., Howard M. Rubin, Chicago, Ill., Schlussel, Lifton, Simon, Rands, Kaufman, Galvin & Jackier, Southfield, Mich., for defendants.

MEMORANDUM OPINION AND ORDER

NORDBERG, District Judge.

In this diversity contract action, plaintiff Ameritech Mobile Communications, Inc. ("Ameritech") alleges that defendants Cellular Communications Corp. ("Cellcom"), Radio Tom Co. ("Radio Tom") and Thomas Parks breached their agreements to purchase mobile telephone equipment from Ameritech. Ameritech seeks recovery from Cellcom for breach of contract, and from Radio Tom and Parks on the grounds that Parks is the "alter ego" of these two corporations, and he has not kept the two corporations as separate identities. The parties are before the court on defendants' motion to dismiss the action for lack of jurisdiction and venue, or to transfer the action pursuant to 28 U.S.C. § 1404(a). For the reasons set forth below, the court denies defendants' motion to dismiss or transfer.

Factual Allegations

Ameritech alleges that, in September of 1984, Ameritech and Radio Tom entered into an Authorized Sales Agent Agreement (the "RT Agreement") whereby Radio Tom would act as Ameritech's sales agent for its cellular mobile telephone services. This agreement was the culmination of mutual negotiations between Radio Tom and Ameritech, some of which occurred at Ameritech's offices in Cook County, Illinois (Compl. ¶ 4).

In November of 1984, Parks, the sole owner of Radio Tom, incorporated Cellcom and transferred all of Radio Tom's mobile telephone business to it. By mutual agreement, the RT contract was terminated, and a new agreement between Ameritech and Cellcom was created ("the AC Agreement"). The provisions of the new agreement were subject to the same terms and conditions as the agreement between Radio Tom and Ameritech.

Cellcom purchased 120 units of cellular mobile telephones from Ameritech in 1985, and Ameritech shipped these phones in accordance with the AC agreement. Ameritech alleges that Cellular has breached its agreements with Ameritech by failing and refusing to pay for the telephones shipped subsequent to March 14, 1985.

Based on these facts, Ameritech filed a three count complaint. Counts I and II are against Cellcom only, alleging a breach of contract and seeking recovery for an account stated. Count III is against all three defendants, alleging that Radio Tom and Parks should be held liable for Cellcom's breach of the AC Agreement because proper separations between the corporate and financial affairs of the three defendants have not been maintained. Specifically, Ameritech alleges that the finances of Radio Tom and Cellcom have been commingled to defraud creditors; and that Parks has substantially depleted the assets of Cellcom. It asserts that, "Cellcom and Radio Tom are the mere instrumentalities and alter ego of Thomas Parks who has defrauded Ameritech by hiding behind the veil of the corporate defendants' allegedly separate existence." (Complaint ¶ 15).

Personal Jurisdiction

Ameritech has the burden of providing sufficient evidence to establish a prima facie case of personal jurisdiction. For the purposes of this motion, the allegations of the complaint are accepted as true unless controverted by defendants' affidavits; and the court must resolve all conflicts in affidavits in Ameritech's favor. Turnock v. Cope, 816 F.2d 332, 333 (7th Cir.1987). See also O'Hare International Bank v. Hampton, 437 F.2d 1173, 1176 (7th Cir. 1971).

A federal district court sitting in diversity may exercise personal jurisdiction over a nonresident defendant only if a court of the state in which it sits could exercise such jurisdiction. Turnock, 816 F.2d at 334; Young v. Colgate-Palmolive Co., 790 F.2d 567, 569 (7th Cir.1986). A non-resident may be sued in Illinois if "(1) he performs one of the acts enumerated in the Illinois long-arm statute, Ill.Rev.Stat. ch. 110, § 2-209,¹ and (2) the minimum contacts required by due process have been met." Turnock, supra. See also Young, 790 F.2d at 569.

Ameritech asserts that this court may exercise jurisdiction over all three defendants pursuant to ch. 110, § 2-209(a)(1), which permits jurisdiction over defendants for claims arising from their "transaction of business" in Illinois. Under 2-209(a)(1), a single act of a defendant or his agent may be sufficient to find a transaction of business in Illinois, so long as this act forms the basis of the plaintiff's claim. John Walker and Sons, Ltd. v. DeMert & Dougherty, Inc., 821 F.2d 399, 402, 403 (7th Cir.1987). Financial Management Services, Inc. v. Sibilsky and Sibilsky, Inc., 130 Ill.App.3d 826, 833, 86 Ill.Dec. 100, 106, 474 N.E.2d 1297, 1303 (1985). A plaintiff asserting jurisdiction must identify the defendant's contacts in Illinois, and demonstrate that his claim "arises from" these contacts. First National Bank of Chicago v. Boelcskevy, 126 Ill.App.3d 271, 273-74, 81 Ill.Dec. 380, 383, 466 N.E.2d 1182, 1185 (1984). "While the term `arising from' is liberally construed by the Illinois courts, the contacts must still bear some relation to the cause of action; `the minimum relationship required is that the plaintiff's suit be one which lies in the wake of the commercial activities by which the defendant submitted to the jurisdiction of the Illinois courts.'" Young v. Colgate-Palmolive Co., 790 F.2d 567, 570 (7th Cir. 1986), citing Huffman v. Inland Oil & Transport Co., 98 Ill.App.3d 1010, 1016, 45 Ill.Dec. 306, 311, 424 N.E.2d 1209, 1214 (1981). See also John Walker and Sons, 821 F.2d at 403.

The record in the present case establishes that a significant portion of the parties' commercial dealings centered around Cellcom's activities in Illinois. Parks came to Chicago to discuss a Cellcom agency agreement in late 1984 (Syrios Aff. ¶ 6). The parties agreed to substitute this agreement for the RT agreement. Although Cellcom signed the agreement in Michigan, the agreement was governed by Illinois law and contemplated substantial commercial dealings with Ameritech in Illinois. The orders at issue were placed in Illinois, with terms of delivery F.O.B. Ameritech's warehouse facility in Illinois. Ameritech shipped the merchandise and mailed its invoices to Cellcom in Michigan, and the agreement required Cellcom to tender its payment to Ameritech's offices in Illinois. Under these circumstances, Cellcom's contacts with Illinois satisfy the standards for transaction of business under the Illinois long-arm statute. Empress International, Ltd. v. Riverside Seafoods, 112 Ill.App.3d 149, 67 Ill.Dec. 891, 445 N.E.2d 371 (1983) (upholding personal jurisdiction in buyer-seller relationship where the purchaser's Illinois contacts were less substantial than Cellcom's in the present case). See John Walker and Sons, supra. Cf. Afram Export Corp. v. Metallurgiki Hallyps, S.A., 772 F.2d 1358 (7th Cir.1985) (finding jurisdiction under Wisconsin statute under similar circumstances).²

The court also finds that its exercise of jurisdiction over Cellcom does not offend the due process clause. See Afram Export, 772 F.2d at 1362-64; Madison Consulting Group v. South Carolina, 752 F.2d 1193, 1200-05 (7th Cir.1985). The due process clause permits the exercise of jurisdiction over a nonresident who purposefully establishes "minimum contacts" in the forum state. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528 (1985); International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). "The minimum contacts must have a basis in `some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.'" Asahi Metal Industry Co. v. Superior Court of California, ___ U.S. ___, 107 S.Ct. 1026, 1031, 94 L.Ed.2d 92 (1987), citing Burger King, 471 U.S. at 475, 105 S.Ct. at 2183.

The court finds that these standards have clearly been met in the present case. Cellcom is a Michigan agent of an Illinois corporation. Its principal, Thomas Parks, entered Illinois to discuss the agency relationship, and Cellcom subsequently ordered goods from Ameritech pursuant to its agency agreement. An agent who enters an agreement with an Illinois principal that is governed by Illinois law and requires substantial performance in Illinois should not be surprised when the principal institutes litigation in Illinois based on a breach of the agency agreement. Cellcom's Illinois contacts provide ample support for this court's exercise of jurisdiction over it. See generally John Walker and Sons; Afram Export; Empress International, Ltd. v. Riverside Seafoods, Inc., 112 Ill.App.3d 149, 67 Ill.Dec. 891, 445 N.E.2d 371 (1983). Accordingly, the court denies Cellcom's motion to dismiss for lack of personal jurisdiction.

Count three of the amended complaint alleges that Radio Tom and Parks should be held liable for Cellcom's breach because Parks has not maintained the appropriate corporate formalities between Radio Tom and Cellcom, and between these corporations and himself. If all three parties are the same for purposes of Count III, then Cellcom's Illinois activities (including activities by defendants on Cellcom's behalf) can be considered when determining whether the court should assert jurisdiction over the other two defendants. Club Assistance Program, Inc. v. Zukerman, 594 F.Supp. 341, 350 (N.D.Ill.1984). Cf. Bally Export Corp. v. Balicar, 804 F.2d 398, 405 (7th Cir.1986).

Parks and Radio Tom argue that, before the court relies upon these...