Mandalay Associates Ltd. Partnership v. Hoffman, 85-1339

• Decision Date: 07 March 1986
• Docket Number: No. 85-1339,85-1339
• Parties: , 96 Ill.Dec. 225 MANDALAY ASSOCIATES LIMITED PARTNERSHIP, Robert Washlow, Sheldon Chertow and David Pattis, Plaintiffs-Appellants, v. Alfred HOFFMAN, Jr., and Hoffman Construction Company, Defendants-Appellees.
• Court: United States Appellate Court of Illinois

Page 39

491 N.E.2d 39

141 Ill.App.3d 891, 96 Ill.Dec. 225

MANDALAY ASSOCIATES LIMITED PARTNERSHIP, Robert Washlow, Sheldon Chertow and David Pattis, Plaintiffs-Appellants, v. Alfred HOFFMAN, Jr., and Hoffman Construction Company,

Defendants-Appellees.

No. 85-1339.

Appellate Court of Illinois,

First District, Fifth Division.

March 7, 1986.

[141 Ill.App.3d 893] [96 Ill.Dec. 227] Eugene J. Frett, Sperling, Slater & Spitz, Chicago, for plaint iffs-appellants.

Michael Weininger, Lester A. Ottenheimer, III, Katz, Randall & Weinberg, Chicago, for defendants-appellees.

Presiding Justice SULLIVAN delivered the opinion of the court:

Plaintiffs appeal from an order dismissing for lack of personal jurisdiction their action for breaches of contract and of fiduciary duty. They contend that defendants' contacts with Illinois were sufficient to subject them to jurisdiction under its long-arm statute. We agree.

The individual plaintiffs, who reside in Illinois, are the general partners of plaintiff, Mandalay Associates Limited Partnership (the partnership), which was organized under the laws of Florida but has its principal office in Chicago. The partnership was formed for the purpose of acquiring, rehabilitating and operating an apartment project in Clearwater Beach, Florida, known as the Mandalay Shores Apartments (The Mandalay Project). Defendant Albert Hoffman, Jr. (Hoffman), a Florida real estate developer and sole owner of defendant Hoffman Construction Co. (Hoffman Company), is a limited partner of the partnership. Hoffman Company is a Florida corporation engaged in the business of residential and commercial building construction in the area of Tampa, Florida.

In an affidavit submitted in opposition to defendants' motion to dismiss, plaintiff Chertow stated that he and the other individual plaintiffs negotiated the terms and financial arrangements of the partnership agreement (the agreement) with Hoffman during six meetings held in Illinois between August 1981 and February 1982. The terms of the agreement included the matters at issue in the present litigation, i.e., Hoffman's undertaking that Hoffman Company, his wholly-owned corporation, would serve as management supervisor for The Mandalay Project; and Hoffman's agreements, as president of Hoffman Company that for a fee, (a) Hoffman Company would serve as construction management agent for the partnership; and (b) he would enter into a covenant not to compete with the partnership. In his discovery deposition, Hoffman admitted that he had engaged in extensive negotiations in Illinois regarding the terms of the partnership agreement with plaintiffs and it is noted that plaintiffs invested several million dollars in the partnership and that Hoffman and Hoffman Company received substantial fees from the partnership.

The agreement was concluded in February 1982, and made effective as of January 2, 1982. It was executed in Illinois by plaintiffs and the Illinois limited partners and in Florida by Hoffman and the other Florida limited partners. One of the amendments to it was also executed by plaintiffs and the Illinois limited partners in Illinois and by the Florida limited partners in Florida. In accordance with the agreement the partnership's principal office was located in Illinois, all of its books and records were to be kept there, its principal Following acquisition in March 1982 of The Mandalay Project property defendants were in constant communication with plaintiffs in Illinois, both by mail and by telephone, regarding the progress and coordination of the project. Disputes, however, quickly arose regarding defendants' alleged failure to meet their obligations under the agreement and in August 1983 a representative of the Florida limited partners requested a meeting with plaintiffs in Chicago to discuss these problems. Shortly thereafter, several Florida limited partners, including Hoffman, met with plaintiffs at the partnership's Chicago office. When the disputes were not resolved, plaintiffs filed their complaint against defendants seeking damages from both for breaches of the agreement and from Hoffman separately for breach of his fiduciary duty to the partnership. On defendants' motion, the complaint was dismissed for want of personal jurisdiction and this appeal followed.

[96 Ill.Dec. 228] bank account was maintained in Illinois, and the plaintiffs performed prescribed duties in Illinois.

OPINION

Under section 2-209(a)(1) of the Code of Civil Procedure (Ill.Rev.Stat.1981, ch. 110, par. 2-209(a)(1)), to sustain the exercise of long-arm jurisdiction, plaintiffs here were required to show: (1) that defendants transacted business in Illinois, (2) that their cause of action arose from this transaction of business and (3) that personal jurisdiction was consistent with due process. (See Jacobs/Kahan & Co. v. Marsh (7th Cir.1984), 740 F.2d 587.) In meeting their burden, it is only necessary that there be a prima facie showing that jurisdiction exists (Kutner v. DeMassa (1981), 96 Ill.App.3d 243, 51 Ill.Dec. 723, 421 N.E.2d 231), and in determining whether there has been such a showing, a court must accept all undenied well-pleaded allegations in plaintiffs' complaint as true, and resolve all factual disputes in plaintiffs' favor (Neiman v. Rudolf Wolff & Co., Ltd. (7th Cir.), 619 F.2d 1189, cert. denied (1980), 449 U.S. 920, 101 S.Ct. 319, 66 L.Ed.2d 148; Kutner v. DeMassa (1981), 96 Ill.App.3d 243, 51 Ill.Dec. 723, 421 N.E.2d 231). Furthermore, since there was no evidentiary hearing on defendants' motion to dismiss, we will independently determine whether defendants' contacts with Illinois are sufficient to subject them to the jurisdiction of the Illinois courts. See Zeunert v. Quail Ridge Partnership (1981), 102 Ill.App.3d 603, 58 Ill.Dec. 242, 430 N.E.2d 184.

In this regard we note that Hoffman made six trips to Illinois to negotiate the terms of a partnership agreement with plaintiffs which was eventually executed in Illinois by plaintiffs and the Illinois limited partners. This, we believe, was a sufficient prima facie showing of the transaction of business in Illinois within the meaning of the Illinois long-arm statute. (See United Air Lines, Inc. v. Conductron Corp. (1979), 69 Ill.App.3d 847, 26 Ill.Dec. 344, 387 N.E.2d 1272; American National Bank & Trust Co. of Chicago v. Hamilton Industries International, Inc. (N.D.Ill.1984), 583 F.Supp. 164, rev'd on other grounds sub nom. Paribas v. Hamilton Industries International, Inc. (7th Cir.1985), 767 F.2d 380, and the cases cited therein.) In light of defendants' extensive negotiations in Illinois, it is immaterial that there was other precontract activity conducted outside of this State, i.e., that defendants' executed the partnership agreement in Florida, that the agreement was to be governed by the laws of that state, and that defendants' performance of their obligations under the agreement was required in Florida. (Jacobs/Kahan & Co. v. Marsh (7th Cir.1984), 740 F.2d 587; Scovill Mfg. Co. v. Dateline Electric Co. (7th Cir.1972), 461 F.2d 897; Ronco, Inc. v. Plastics, Inc. (N.D.Ill.1982), 539 F.Supp. 391.) The focus of our inquiry is not how much activity occurred outside of Illinois, but whether defendants' acts in Illinois constituted sufficient contacts with Illinois to subject them to the jurisdiction of its courts. Illinois National Bank & Trust Co. v. Gulf States Energy Corp. (1981), 102 Ill.App.3d 1113, 57 Ill.Dec. 938, 429 N.E.2d 1301; United Air Lines, Inc. v. Conductron Corp. (1979), 69 Ill.App.3d 847, 26 Ill.Dec. 344, 387 N.E.2d 1272.

In an attempt to minimize the significance of their partnership negotiations in Illinois, defendants assert that Hoffman came to Chicago only at the specific request of the plaintiffs. The record, however, indicates otherwise. Contradicting the representations made in an earlier affidavit, Hoffman testified at his deposition that he had attempted to form a Mandalay Project partnership with a group of Florida investors and when negotiations collapsed in December 1981, he telephoned one of the plaintiffs in Chicago and asked whether a partnership could be formed with his group on the same terms which he had attempted to arrange with the other investors. Hoffman then flew to Chicago to discuss an agreement with plaintiffs. Subsequently he came to Chicago twice to determine the availability of interim construction financing for the project. On each of those occasions he invited plaintiffs to accompany him to a meeting which he had arranged with a Chicago bank and while here he also engaged in further negotiations with plaintiffs regarding the terms of a possible partnership. Although plaintiffs did invite Hoffman to Illinois on three other occasions, it is clear that he voluntarily came into Illinois for the purpose of attracting investors and financing for The Mandalay Project. In the absence of any evidence that...