MORECAMBE MARITIME v. NAT. BANK OF GREECE

• Decision Date: 23 December 2004
• Docket Number: No. 1-03-3578.,1-03-3578.
• Citation: 290 Ill.Dec. 468,821 N.E.2d 780,354 Ill. App.3d 707
• Parties: MORECAMBE MARITIME, INC., a Foreign Corporation, Plaintiff-Appellant, v. NATIONAL BANK OF GREECE, S.A., a Foreign Corporation, Defendant-Appellee.
• Court: United States Appellate Court of Illinois

821 N.E.2d 780

354 Ill. App.3d 707

290 Ill.Dec. 468

MORECAMBE MARITIME, INC., a Foreign Corporation, Plaintiff-Appellant, v. NATIONAL BANK OF GREECE, S.A., a Foreign Corporation, Defendant-Appellee.

No. 1-03-3578.

Appellate Court of Illinois, First District, Fourth Division.

December 23, 2004.

Law Offices of Michael J. Rovell, Michael J. Rovell, Lisa I Fair, Chicago, for Plaintiff-Appellant.

Kirkland & Ellis, LLP, Mark S. Lillie, Hariklia Karis, S. Raja Krishnamoorthi, Chicago, for Defendant-Appellee.

Justice GREIMAN delivered the opinion of the court:

Plaintiff, Morecambe Maritime, Inc., appeals from the circuit court's order granting defendant's motion to dismiss for lack of personal jurisdiction. Specifically, plaintiff argues that the Illinois courts' assertion of personal jurisdiction over defendant, National Bank of Greece. S.A., would not offend due process because defendant had previously conducted business in Illinois and currently has a local subsidiary. For the following reasons, we affirm.

Plaintiff is a Liberian corporation with its principal place of business in Liberia. Defendant is a Greek corporation with its principal place of business in Athens, Greece, and an office in London, England. Defendant also had an office in Chicago until December 31, 1998, when it surrendered its certificate of authority to conduct business in Illinois. Atlantic Bank of New York (ABNY), a subsidiary of defendant, acquired the Chicago office from defendant for approximately $10 million worth of ABNY shares on January 1, 1999.

On January 16, 1998, plaintiff entered into a loan agreement with defendant. Under the loan agreement, plaintiff borrowed $4,531,250 from defendant to assist in refinancing existing debt that plaintiff owed defendant. As collateral for the loan, plaintiff provided defendant with a first mortgage on the M.V. Doxa (the Doxa), a motor tanker owned by plaintiff and registered in the Bahamas. The entire formation of the contract occurred in defendant's London branch. The contract includes a choice of law provision specifying English law as the governing body of law and a submission to jurisdiction provision which states that, "The parties further agree that only the Courts of England and not those of any other State shall have jurisdiction to determine any claim which the Borrower may have against the Bank arising out of or in connection with this Agreement." In addition, the security agreement regarding the Doxa also specifies England as the forum for any claims that plaintiff may have against defendant regarding the mortgage.

In September 1999, the Doxa suffered severe engine damage and was taken to India to be moored. Subsequently, an insurance claim for the damage to the Doxa was settled for $6,500,000. Following this settlement, plaintiff and John Makris, a representative of defendant, entered into an agreement that the insurance proceeds would be used to repair the ship and that mortgage payments would stop for a brief period of time but later resume. Unbeknownst to plaintiff, Makris did not have the authority to enter into this agreement. Consequently, on February 11, 2000, defendant's London office sent plaintiff a default notice claiming plaintiff had failed to pay installments of $156,250 in principal on November 9, 1999, and on February 9, 2000. Plaintiff also failed to pay one installment of $61,457.09 in interest. As a result, the default notice called the entire loan due.

In March 2002, plaintiff filed suit in the circuit court of Cook County alleging breach of contract. The complaint was served on defendant in Athens, Greece, on November 8, 2002. On February 7, 2003, defendant filed a motion to dismiss for lack of personal jurisdiction pursuant to section 2-301 of the Code of Civil Procedure (735 ILCS 5/2-301 (West 2002)). The circuit court heard oral arguments and reviewed the submitted documents solely on the issue of personal jurisdiction.

According to the declaration of Constantinos Othoneos, defendant's manager of international network, division B, ABNY received "all right, title, and interest" to the Chicago office effective January 1, 1999. ABNY also assumed substantially all of the Chicago office's liabilities. Defendant neither loaned nor assisted in the training of any of ABNY's employees in the Chicago office. Moreover, Othoneos stated that as of January 1, 1999, defendant does not own any real property in Illinois and does not have an address, a phone number, bank accounts, employees, agents, or a registered representative for service of process in Illinois. Finally, Othoneos stated that defendant was organized under the laws of Greece and does not conduct any business in Illinois.

In an affidavit, James Maxwell, executive vice president and general counsel of ABNY, described ABNY as "a separate, fully capitalized corporate entity distinct from [defendant]." He stated that ABNY maintains separate books, corporate records, tax returns, and financial statements. Moreover, ABNY pays its own bills and legal fees, generates its own business, and funds its operations without capital contributions from defendant. Although plaintiff alleges that defendant's then-deputy of the board also served as an ABNY director, Maxwell stated that none of ABNY's executives are executives of defendant. In addition, ABNY does not act as defendant's agent in Illinois. Furthermore, defendant does not participate in any of ABNY's daily decision-making.

In a supplemental affidavit, James Maxwell described the sale of the Chicago branch from defendant to ABNY as a full, rather than cosmetic, transfer of power. Maxwell also denied that ABNY has performed any services for defendant in Illinois since the transfer of power. Finally, Chicago Community Bank acquired ABNY's Chicago office on October 25, 2001.

Plaintiff did not submit any documentary evidence to rebut either the declaration of Constantinos Othoneos or the affidavits of James Maxwell. Subsequently, the circuit court granted defendant's motion, and plaintiff filed a timely notice of appeal.

Plaintiff argues that due process is not offended when a nonresident corporation that had previously conducted business in Illinois and currently has a local subsidiary is required to defend a lawsuit in Illinois. Therefore, plaintiff argues, Illinois courts may assert personal jurisdiction over defendant. We disagree.

We review this issue de novo because the circuit court granted defendant's motion to dismiss based only upon documentary evidence. Riemer v. KSL Recreation Corp., 348 Ill.App.3d 26, 33, 283 Ill.Dec. 163, 807 N.E.2d 1004 (2004). Plaintiff bears the burden of establishing a prima facie case for the assertion of personal jurisdiction over defendant; however, uncontradicted evidence may overcome the prima facie case and defeat jurisdiction. Riemer, 348 Ill.App.3d at 33, 283 Ill.Dec. 163, 807 N.E.2d 1004.

Under the following conditions relevant to this appeal, an Illinois court may assert personal jurisdiction over a nonresident defendant corporation if the cause of action arises out of an act within the state, if the nonresident defendant corporation is doing business within the state, or on any other basis permitted by the Illinois Constitution and the United States Constitution. 735 ILCS 5/2-209 (West 2002); Alderson v. Southern Co., 321 Ill.App.3d 832, 845-46, 254 Ill.Dec. 514, 747 N.E.2d 926 (2001). Because the cause of action in the instant case did not directly arise out of an act within Illinois, we first address whether defendant was doing business within the state, and then address whether the assertion of personal jurisdiction is permitted on any other basis under the Illinois Constitution and the United States Constitution.

Under Illinois's "doing business" doctrine, personal jurisdiction is permissible if the nonresident defendant is conducting business in Illinois that is "of such a character and to such an extent as to warrant the inference that the corporation has purposefully availed itself of the jurisdiction and laws of Illinois." Reeves v. Baltimore & Ohio R.R. Co., 171 Ill.App.3d 1021, 1025, 122 Ill.Dec. 145, 526 N.E.2d 404 (1988), citing Cook Associates, Inc. v. Lexington United Corp., 87 Ill.2d 190, 57 Ill.Dec. 730, 429 N.E.2d 847 (1981). A corporation's activities need to be consistent and permanent, not sporadic or casual. Cook, 87 Ill.2d at 202-03, 57 Ill.Dec. 730, 429 N.E.2d 847. Whether or not a corporation is doing business in Illinois varies based upon the facts of each case (Reeves, 171 Ill.App.3d at 1025, 122 Ill.Dec. 145, 526 N.E.2d 404, citing Maunder v. DeHavilland Aircraft of Canada, Ltd., 102 Ill.2d 342, 350-52, 80 Ill.Dec. 765, 466 N.E.2d 217 (1984)), with the focus on the corporation's contacts purposely directed towards Illinois (Reeves, 171 Ill.App.3d at 1025, 122 Ill.Dec. 145, 526 N.E.2d 404, citing Maunder, 102 Ill.2d at 353, 80 Ill.Dec. 765, 466 N.E.2d 217).

If the nonresident defendant is a parent corporation of a local subsidiary, Illinois courts cannot assert personal jurisdiction over the nonresident parent corporation simply because they have personal jurisdiction over the local subsidiary. Alderson, 321 Ill.App.3d at 854,254 Ill.Dec. 514,747 N.E.2d 926. Because a parent corporation necessarily controls, directs, and supervises its subsidiaries to a certain extent, courts must determine whether the subsidiary is conducting its own business or the parent corporation's business. Alderson, 321 Ill.App.3d at 854,254 Ill.Dec. 514,747 N.E.2d 926. If the subsidiary is effectively only doing business for the parent corporation, assertion of personal jurisdiction over the nonresident parent corporation is permissible. Alderson, 321 Ill.App.3d at 854,254 Ill.Dec. 514,747 N.E.2d 926. However, the existence of common officers of both the parent and the subsidiary is not sufficient, by itself, to permit jurisdiction over the nonresident parent corporation. Alderson, 321 Ill.App.3d at 854...