Commercial Coin Laundry v. Loon Investments

• Decision Date: 29 June 2007
• Docket Number: No. 1-06-3718.,1-06-3718.
• Citation: 871 N.E.2d 898
• Parties: COMMERCIAL COIN LAUNDRY SYSTEMS, Plaintiff-Appellee, v. LOON INVESTMENTS, LLC., Defendant-Appellant.
• Court: United States Appellate Court of Illinois

871 N.E.2d 898

COMMERCIAL COIN LAUNDRY SYSTEMS, Plaintiff-Appellee, v. LOON INVESTMENTS, LLC., Defendant-Appellant.

No. 1-06-3718.

Appellate Court of Illinois, First District, First Division.

June 29, 2007.

Johnson & Bell, Ltd., Chicago (Garrett L. Boehm, Jr., Kevin G. Owens and Julie E. Benes, of counsel), for Appellant.

Russel G. Winick & Associates, P.C., Naperville (Russel G. Winick, of counsel), for Appellee.

Justice ROBERT E. GORDON delivered the opinion of the court:

Plaintiff, Commercial Coin Laundry Systems, is an Illinois general partnership engaged in the business of installing and maintaining commercial laundry equipment in multiple-unit apartment buildings. Defendant, Loon Investments, LLC., is a Wisconsin limited liability company and the current owner of the apartment building located at 1657 South 17th Street in Milwaukee, Wisconsin (the property). Plaintiff had signed an agreement with the prior owner of the property for the purpose of installing and maintaining laundry equipment there. As the result of alleged vandalism and theft of laundry equipment on the property, plaintiff sued defendant alleging breach of contract, damage to personal property and conversion. Defendant moved to dismiss for lack of personal jurisdiction, and the circuit court of Cook County denied the motion. For the reasons set forth below, we reverse.

BACKGROUND

On August 4, 1988, plaintiff signed a written lease agreement with Ruth Kuehn, who was then the owner of the subject property, which has 29 apartments. Plaintiff leased the laundry areas in order to install and operate coin-operated laundry machines for use by tenants. In return for use of the laundry areas, plaintiff agreed to pay the lessor 15% of the coin receipts from the machines, and an additional $1,600 flat fee to reimburse the lessor for improvements to the laundry areas. Plaintiff alleged that it prepared and negotiated the lease from its offices in Chicago.

The lease stated that title of the machines remained with plaintiff and that "lessor does not assume any responsibility for any loss, damage or destruction of said laundry equipment by fire, theft or any other casualty beyond lessor's reasonable control or prevention." The lessor was responsible for "all janitorial and housekeeping services for the laundry room and equipment" and warranted that "the premises have adequate utilities and proper venting and there will be no building code violations which adversely affect" plaintiff's ability to run laundry machines.

The lease was for "a term of 10 years commencing August 30, 1988." However, the lease stated that it "shall continue for additional ten year terms unless terminated in writing by either lessee or lessor." The parties agree that, pursuant to this renewal provision, the lease did renew after the expiration of the first term on August 30, 1998. The second term is in effect and continues until August 30, 2008.

The lease provided that it was binding on future owners of the property:

"This Lease Agreement shall be binding upon and shall inure to the benefit of the lessor and the lessee and their respective successors and assigns, including any future owners, beneficiaries or lessee of the Building, it being the intention of the parties that the interest granted to lessee herein shall run with the land and building."

The lease had a choice-of-law provision, which stated: "This agreement shall be governed by the laws of the State of Illinois." The lease also provided that "[t]he Lease shall not take effect until accepted by lessee at the office of lessee in Chicago, Illinois."

On September 1, 1999, defendant acquired the building. Plaintiff filed suit in Cook County, Illinois, against defendant alleging counts for breach of contract, damage to personal property and conversion. The complaint alleged that "beginning very shortly after defendant acquired the building and continuing up to the present time, [plaintiff] has suffered repeated acts of vandalism, break-ins, and theft of its laundry equipment." The alleged incidents included "coin boxes being broken into, washer hoses disconnected, electrical cords cut, concrete poured into the washers, and oil poured into the dryers." On February 13, 2006, plaintiff "discovered that all of its laundry machines had been stolen from each of the laundry rooms."

Plaintiff alleged that prior to defendant's acquisition of the building, it had experienced no incidents of vandalism or theft there. However, after defendant's acquisition, plaintiff has been forced to replace its laundry machines on four occasions. Plaintiff alleged that tenants had informed its agent that defendant's maintenance man had intentionally cut the electrical cords on all of its laundry machines.

In addition to the incidents of theft and vandalism, plaintiff also alleged utility problems, such as "blown fuses, drainage problems in the laundry room, water shut off to the laundry room, no electricity for the equipment, no lights in a laundry room and no electricity for a laundry room." Plaintiff alleged that it had experienced no utility problems prior to defendant's acquisition and that it contacted defendant repeatedly asking defendant to provide adequate security and utilities but defendant never did so.

In response to the complaint, defendant filed a motion to dismiss for lack of personal jurisdiction. In support of its motion, defendant submitted the affidavit of Daryl Nirode, who stated that he was the "Controller" of defendant, which is a Wisconsin limited liability corporation with its principal place of business in Milwaukee. Nirode stated that defendant did not own or manage any property within Illinois, that it did not conduct any business in Illinois and that it had no offices or employees in Illinois.

In response, plaintiff submitted the affidavit of S. Saul Silverstein, who stated that he was a general partner of plaintiff, which is an Illinois general partnership with its office in Chicago, Illinois. Silverstein stated that plaintiff calculates and pays the rent due under the lease and administers its laundry equipment service from its offices in Chicago and that defendant has accepted rent payments from plaintiff for years.

On November 29, 2006, the trial court denied defendant's motion. The order did not make factual findings or identify the section of the jurisdictional statute pursuant to which the court was exercising jurisdiction over the defendant. On December 28, 2006, plaintiff petitioned this court for leave to appeal, which was granted. For the following reasons, we reverse.

ANALYSIS

"When the circuit court decides a jurisdictional question solely on the basis of documentary evidence, as it did in this case, the question is addressed de novo on appeal." Rosier v. Cascade Mountain, Inc., 367 Ill.App.3d 559, 561, 305 Ill.Dec. 352, 855 N.E.2d 243 (2006); Alderson v. Southern Co., 321 Ill.App.3d 832, 846, 254 Ill.Dec. 514, 747 N.E.2d 926 (2001). "The plaintiff bears the burden of establishing a prima facie basis upon which jurisdiction over an out-of-state resident may be exercised." Rosier, 367 Ill.App.3d at 561, 305 Ill.Dec. 352, 855 N.E.2d 243; Alderson, 321 Ill.App.3d at 846, 254 Ill.Dec. 514, 747 N.E.2d 926; Khan v. Van Remmen, Inc., 325 Ill.App.3d 49, 53-54, 258 Ill.Dec. 628, 756 N.E.2d 902 (2001).

Section 2-209 of the Code of Civil Procedure (735 ILCS 5/2-209 (West 2004)) sets forth when Illinois courts will exercise personal jurisdiction over a defendant. Subsection 2-209(a), which governs specific jurisdiction, lists 14 grounds by which a defendant may subject itself to Illinois jurisdiction. 735 ILCS 5/2-209(a)(1) through (a)(14) (West 2004). Subsection 2-209(b), which governs general jurisdiction, lists four grounds, only two of which apply to corporations: "(3) * * * a corporation organized under the laws of this State; or (4) * * * [a] corporation doing business within this State." 735 ILCS 5/2-209(b)(3), (b)(4) (West 2004). Subsection 2-209(c) is a "catch-all provision" which permits Illinois courts to "`exercise jurisdiction on any other basis now or hereafter permitted by the Illinois Constitution and the Constitution of the United States.'" Rosier, 367 Ill.App.3d at 561, 305 Ill.Dec. 352, 855 N.E.2d 243, quoting 735 ILCS 5/2-209(c) (West 2004). Subsection 2-209(c) permits an Illinois court to exercise personal jurisdiction to the extent permitted by the due process clause of the fourteenth amendment to the United States Constitution. Klump v. Duffus, 71 F.3d 1368, 1371 (7th Cir.1995) (Illinois long-arm statute was amended in 1989 to add subsection 2-209(c), which is "coextensive with the due process requirements of the United States Constitution").

An exercise of jurisdiction under any of these three subsections must also comport with the due process clause. The due process clause limits a state's exercise of personal jurisdiction over a nonresident defendant to those instances where the defendant had at least "minimum contacts" with the state. Rosier, 367 Ill.App.3d at 561, 305 Ill.Dec. 352, 855 N.E.2d 243. This court recently described the minimum contacts standard as follows:

"The minimum contacts standard ensures that `requiring the out-of-state resident to defend in the forum does not "`offend traditional notions of fair play and substantial justice.'"' [Citation.] The minimum contacts analysis must be based on some act by which the defendant purposefully availed itself of the privilege of conducting activities within the forum state, in order to assure that a nonresident will not be haled into a forum solely as a result of random, fortuitous, or attenuated contacts with the forum or the unilateral acts of a consumer or some other third person." Rosier, 367 Ill.App.3d at 561-62, 305 Ill.Dec. 352, 855 N.E.2d 243.

In the case at bar, plaintiff claimed that this court may exercise jurisdiction under subsection 2-209(a) or (c) but not (b). Plaintiff did not claim, as ...