Dorf v. Ron March Co.

• Decision Date: 18 May 2000
• Docket Number: No. 99-C-1116.,99-C-1116.
• Citation: 99 F.Supp.2d 994
• Parties: Stanley DORF, Plaintiff, v. The RON MARCH COMPANY, Ron March & Associates, Inc., and Ronald E. March, Defendants.
• Court: U.S. District Court — Eastern District of Wisconsin

99 F.Supp.2d 994

Stanley DORF, Plaintiff, v. The RON MARCH COMPANY, Ron March & Associates, Inc., and Ronald E. March, Defendants.

No. 99-C-1116.

United States District Court, E.D. Wisconsin.

May 18, 2000.

Thomas G. Herz, Grant Killoron, for plaintiff.

David P. Faulkner, Rockford, IL, for defendants.

DECISION AND ORDER

ADELMAN, District Judge.

Plaintiff Stanley Dorf sues Ron March and several businesses controlled by March (collectively "defendant") for breach of contract. On October 1, 1993, plaintiff entered into an agreement with defendant pursuant to which plaintiff advanced defendant $225,000 for the purpose of developing a shopping center. The agreement required defendant to commence the project or return the money to plaintiff with interest. Plaintiff alleges that defendant did neither. Plaintiff and defendant are citizens of Wisconsin and Illinois respectively and the court has diversity jurisdiction. Defendant now moves to dismiss the complaint for lack of personal jurisdiction.

I. FACTUAL BACKGROUND

Some of the facts are undisputed and, in some respects, the parties' versions vary. Plaintiff states that in August 1993 defendant called him in his Milwaukee office soliciting investment in defendant's project to develop a shopping center. (Pl.'s Aff. ¶ 2.) Plaintiff states that subsequently he met with defendant in Milwaukee where defendant promoted his project and presented a proposed agreement. (Id. ¶ 3.) In this presentation defendant emphasized that he had previously developed shopping centers in Wisconsin, one in partnership with Herb Kohl who had since become a United States senator from Wisconsin. (Id. Ex. B.)

Around this time defendant also came to Milwaukee to solicit investment from another Milwaukee businessman, Kenneth Berke. (Berke Aff. ¶ 2.) Plaintiff states that defendant came to Milwaukee a second time and met with plaintiff and plaintiffs wife at the Brynwood Country Club about the agreement. (Pl.'s Aff. ¶ 7.) Plaintiff states that he and defendant negotiated the agreement by telephone and fax between plaintiffs office in Milwaukee and defendant's office in Schaumburg, Illinois. (Id. ¶ 3.) Plaintiff indicates that in the six years after the agreement took effect defendant met him in Kenosha, Wisconsin two or three times to discuss the project and also called and sent faxes to him in Wisconsin about it. (Id. ¶¶ 9, 10 & 11.)

Defendant states that in September 1993 Stephen Weiss, a mortgage broker and plaintiffs cousin, called him at his office in Schaumburg and said that plaintiff might be interested in investing with him. (Def.'s Aff ¶ 8.) Defendant states that shortly after this call he met with plaintiff and Weiss in Schaumburg. (Id. ¶ 9.)¹ Defendant further states that he and plaintiff negotiated the agreement via telephone, mail and fax, (id. ¶¶ 9, 10 & 11), and that during the week of October 18, 1993, after the agreement was signed, he met with plaintiff and plaintiffs wife in Milwaukee about the project.² (Id.) Defendant acknowledges that he met with plaintiff in Wisconsin on one or two occasions after the agreement was in effect. (Id. ¶ 14.)

III. DISCUSSION

Plaintiff has the burden of proving that this court has personal jurisdiction over the defendant. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir. 1997). The burden, however, is not a heavy one. Johnson Worldwide Assoc., Inc. v. Brunton Co., 12 F.Supp.2d 901, 906 (E.D.Wis.1998). Plaintiff need only make a prima facie showing of the existence of personal jurisdiction. Id.

In considering a motion to dismiss for lack of personal jurisdiction, I am not limited to facts alleged in the complaint but may consider affidavits. Kaufmann v. United States, 840 F.Supp. 641, 649 (E.D.Wis.1993). Here, the affidavits disclose the existence of disputed facts. However, plaintiff is entitled to have any conflicts in the affidavits resolved in his favor. RAR, 107 F.3d at 1275.

In diversity cases a federal court has personal jurisdiction over the parties only if a court in the state in which the federal court sits would have jurisdiction. Klump v. Duffus, 71 F.3d 1368, 1371 (7th Cir. 1995). To determine whether this court has personal jurisdiction I first must decide whether defendant is subject to personal jurisdiction under Wisconsin's long arm statute and, if so, whether exercising jurisdiction under the statute is consistent with the due process requirements of the Fourteenth Amendment. Daniel J. Hartwig Assoc., Inc. v. Kanner, 913 F.2d 1213, 1216 (7th Cir.1990).

A. The Wisconsin Long-Arm Statute

Plaintiff relies on both § 801.05(1)(d) and § 801.05(5)(a) of Wisconsin's long-arm statute.

Section 801.05(1)(d) provides for personal jurisdiction in any action over "a defendant who when the action is commenced ... [i]s engaged in substantial and not isolated activities within this state, whether such activities are wholly interstate, intrastate or otherwise." The statute is to be liberally construed in favor of exercising jurisdiction and is intended to confer jurisdiction to the extent allowed by due process. Johnson Worldwide, 12 F.Supp.2d at 906.

A person is engaged in substantial activities in the state when the activities are "systematic and continuous." Harley-Davidson Motor Co. v. Motor Sport, Inc., 960 F.Supp. 1386 (E.D.Wis. 1997). A defendant generally has "substantial and not isolated" contacts with the state if it "solicit[s], create[s], nurture[s], or maintain[s], whether through personal contacts or long-distance communications, a continuing business relationship with anyone in the state." Stauffacher v. Bennett, 969 F.2d 455, 457 (7th Cir.1992). Even if a nonresident never sets foot in Wisconsin, the existence of a continuing business relationship with someone in Wisconsin is enough to warrant an inference that the defendant benefits from services provided in Wisconsin "and could therefore be required, as a quid pro quo, to submit to the jurisdiction of the state's courts." Id. at 457. See also PKWare, Inc. v. Meade, 79 F.Supp.2d 1007 (E.D.Wis.2000).

Five factors are relevant to the question of whether a defendant's Wisconsin contacts are "substantial" and not isolated for purposes of § 801.05(1)(d): (1) the quantity of contacts, (2) the nature and quality of the contacts, (3) the source of the contacts and their connection with the cause of action, (4) the interests of the State of Wisconsin, and (5) the convenience of the parties. Nagel v. Crain Cutter Co., 50 Wis.2d 638, 648-50, 184 N.W.2d 876 (1971).

I begin the analysis by considering the Nagel factors, the first of which is quantity of contacts. The record shows that in the course of negotiating the agreement with plaintiff and subsequently maintaining their business relationship defendant had a substantial number of Wisconsin contacts. In the fall of 1993 defendant visited Milwaukee twice to solicit or discuss plaintiff's investment in defendant's development project. Defendant also visited Milwaukee on another occasion to solicit investment in the project from another Milwaukee investor, Kenneth Berke. In addition, in the course of negotiating the agreement defendant also contacted plaintiff in Wisconsin by telephone and fax on a number of occasions.

After plaintiff and defendant entered into the agreement defendant visited Wisconsin two or three more times to discuss his progress with plaintiff. And, in the course of their business relationship defendant also continued to contact plaintiff in Wisconsin by telephone and, more frequently, by fax. Thus, in the six years after September 1993 defendant had a significant quantity of Wisconsin contacts in connection with his business relationship with plaintiff. A defendant who maintains a continuing business relationship with a Wisconsin resident whether through personal contacts or long distance communications generally has "substantial and not isolated" contacts with the state. Stauffacher, 969 F.2d at 457; PKWare, 79 F.Supp.2d at 1013.

The quality of defendant's Wisconsin contacts was also high for personal jurisdiction purposes. The highest quality contact is a personal visit. Here, defendant made four or five Wisconsin visits in connection with the agreement. The next highest quality contact is a personal contact of another type. Here, defendant had many personal contacts with Wisconsin by phone or fax.

With respect to the third Nagel factor, the source of the cause of action, plaintiff's lawsuit arises directly from defendant's Wisconsin contacts made in creating and nurturing the agreement which defendant is alleged to have breached. Although the last two Nagel factors are less important, Wisconsin has an interest in protecting its residents from breach of contract. Additionally, the convenience of the parties does not weigh against this forum. Defendant can drive from his office in Schaumburg to the federal courthouse in Milwaukee in little more time than it would take to get to the federal courthouse in Chicago.³

Although each case must be determined on its own facts, jurisdiction over defendant pursuant to § 801.05(1)(d) is also supported by a comparison to prior cases. In PKWare, 79 F.Supp.2d at 1013, an Ohio defendant had a six year business relationship with a Wisconsin company which involved contact by mail, phone and fax but only one personal visit. This court found that defendant's Wisconsin contacts were sufficient to confer personal jurisdiction. Here, in the course of establishing and maintaining his relationship with a Wisconsin resident, defendant made four or five personal visits to Wisconsin as well as numerous phone and fax contacts. These contacts are surely sufficient to warrant an inference that defendant benefitted from services provided in Wisconsin and could therefore be required as a quid pro quo to submit to the jurisdiction of Wisconsin courts. See Stauffacher, 969 F.2d at 457; see also Harley-Davidson Motor Co. v. Motor Sport, Inc., 960 F.Supp. 1386, 1387...