Mors v. Williams, 91 C 6041.

• Decision Date: 03 June 1992
• Docket Number: No. 91 C 6041.,91 C 6041.
• Citation: 791 F. Supp. 739
• Parties: Wayne A. MORS, Plaintiff, v. Rance WILLIAMS and Samuel R. Elkins, Jr., Defendants.
• Court: U.S. District Court — Northern District of Illinois

791 F. Supp. 739

Wayne A. MORS, Plaintiff, v. Rance WILLIAMS and Samuel R. Elkins, Jr., Defendants.

No. 91 C 6041.

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

June 3, 1992.

Stanley D. Kubacki, James J. Reidy Ltd., William A. Murphy, Murphy & Murphy, Chicago, Ill., for plaintiff.

Ronald Hanley Balson, Ronald H. Balson, P.C., Chicago, Ill., for defendants.

MEMORANDUM OPINION AND ORDER

ALESIA, District Judge.

Plaintiff, Wayne A. Mors ("Mors"), brings this action against defendants Rance Williams ("Williams") and Samuel R. Elkins, Jr. ("Elkins") (collectively "defendants"), for breach of oral contract. On January 24, 1992, defendants filed a motion to dismiss the amended complaint for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of Civil Procedure. We grant defendants' motion in part, and deny it in part. Specifically, we dismiss Elkins from this lawsuit as a party defendant because he is not subject to this court's personal jurisdiction. On the other hand, Williams is subject to this court's personal jurisdiction and his motion to dismiss is denied.

I. Facts

The law is straightforward and beyond dispute. In ruling on a motion to dismiss for lack of personal jurisdiction we interpret the facts in favor of the party asserting jurisdiction. Continental Bank N.A. v. Everett, 742 F.Supp. 508, 508 n. 1 (N.D.Ill.1990) (citing Turnock v. Cope, 816 F.2d 332, 333 (7th Cir.1987)); Nelson v. Park Indus., Inc., 717 F.2d 1120, 1123 (7th Cir.1983), cert. denied, 465 U.S. 1024, 104 S.Ct. 1277, 79 L.Ed.2d 682 (1984). Guided by this standard we now address the facts.

Mors is a citizen of Illinois. Williams is a citizen of Ohio. Elkins is a citizen of Georgia. Before April of 1989, Mors knew that Williams and Elkins had a joint interest in the manufacture and sale of fused silica investment material. Thereafter, in April of 1989, Williams telephoned Mors at his office in McHenry, Illinois and initiated a business transaction. During the course of their telephone conversation, Williams informed Mors that Elkins needed $100,000 in order to purchase equipment for his fused silica plant in Georgia. Williams further informed Mors that Elkins had originally asked Williams for the money, but he was unable to raise the cash. During this same telephone conversation, Williams asked Mors to advance Williams $100,000 so that Williams could pay the $100,000 over to Elkins.

In return, Williams promised Mors that he would repay the loan in full together with interest at the rate of four percent per annum in excess of the average prime rate as published in the Wall Street Journal. In addition, Williams also promised to pay Mors, as consideration for the loan, five percent of Williams' net commissions for five years from the sale of products sold by Williams' corporation, the Act Corporation. Williams also promised to personally repay the loan within no later than three years. After the parties' telephone conversation of April, 1989, and based on Williams' representations, Mors on or about April 24, 1989, borrowed $100,000 from his bank in Illinois which he then wire transferred to Williams' account at the Trust Corp. Bank in Ohio.

In the Fall of 1989, Mors traveled to the fused silica plant in Georgia. The fused silica plant is owned and operated by Elkins. While Mors was visiting the Georgia plant, Elkins stated to Mors that he had received the money from Williams and that he would repay the money to Mors through Williams as soon as Williams successfully secured an end loan.

From May of 1989 until December of 1990, Williams paid Mors monthly interest payments in the amount of one-thousand two-hundred seventy-four dollars and ten cents ($1,274.10). This amount represented the approximate interest charges on the loan Mors had secured from his Illinois bank. As of December, 1990, neither Williams nor Elkins have made payments of any kind to Mors.

II. Discussion

Mors contends that this court has jurisdiction based on diversity of citizenship. 28 U.S.C. § 1332.¹ In a case based on diversity of citizenship, a federal district court in Illinois has personal jurisdiction over a nonresident defendant only if an Illinois court would have jurisdiction. Daniel J. Hartwig Assoc., Inc. v. Kanner, 913 F.2d 1213, 1216 (7th Cir.1990); Heritage House Restaurants, Inc. v. Continental Funding Group, Inc., 906 F.2d 276, 279 (7th Cir.1990); FMC Corp. v. Varonos, 892 F.2d 1308, 1310 (7th Cir.1990). In determining whether a state court has jurisdiction we need to make two inquiries: "(1) whether a state statute grants personal jurisdiction over the defendant; and (2) whether such jurisdiction is within constitutional bounds." Dehmlow v. Austin Fireworks, 963 F.2d 941, 945 (7th Cir.1992).

Until September, 1989, a nonresident defendant could be sued in Illinois if (1) he performed one of the enumerated acts under Illinois' long-arm statute; and (2) the minimum contacts with Illinois that due process requires were present. FMC, 892 F.2d at 1310. Courts interpreting the Illinois long-arm statute considered these two requirements separately. See, e.g., Saylor v. Dyniewski, 836 F.2d 341, 343 (7th Cir. 1988); Green v. Advance Ross Electronics Corp., 86 Ill.2d 431, 56 Ill.Dec. 657, 660, 427 N.E.2d 1203, 1206 (1981).

However, Illinois amended its long-arm statute, effective September 7, 1989, to add a "catch-all" provision. This provision provides that "a court may also exercise jurisdiction on any other basis now or hereafter permitted by the Illinois Constitution and the Constitution of the United States." ILL.REV.STAT. ch. 110, para. 2-209(c) (1989). This amended provision makes the first inquiry (i.e., did defendant perform one of the enumerated acts under the Illinois long-arm statute) unnecessary because jurisdiction under the Illinois long-arm statute is co-extensive with the limits of due process. See Dehmlow, 963 F.2d at 945; FMC, 892 F.2d at 1311 n. 5; Damian Services Corp. v. PLC Services, Inc., 763 F.Supp. 369, 371 (N.D.Ill.1991); Kinney v. Anchorlock Corp., 736 F.Supp. 818, 825 n. 5 (N.D.Ill.1990). Stated differently, if due process is satisfied, jurisdiction is met under Section 2-209(c) of Illinois' long-arm statute irrespective of whether a defendant has done any of the acts set forth under Section 2-209(a)(1)-(14). ILL.REV.STAT. ch. 110, paras. 2-209(a, c) (1989); Damian, 763 F.Supp. at 371; Kinney, 736 F.Supp. at 825 n. 5.²

This does not end our analysis. The Illinois Supreme Court in Rollins v. Ellwood, 141 Ill.2d 244, 152 Ill.Dec. 384, 565 N.E.2d 1302 (1990), recently intimated that a new two-step inquiry may be required. In deciding whether it is fair to subject a nonresident defendant to Illinois jurisdiction a court may not look solely to the Illinois long-arm statute and the federal due process clause. Rollins, 152 Ill.Dec. at 398, 565 N.E.2d at 1316. See People ex rel. Hartigan v. Kennedy, 215 Ill.App.3d 880, 159 Ill.Dec. 438, 443, 576 N.E.2d 107, 112 (1991); Aetna Casualty & Surety Co. v. Crowther, Inc., 221 Ill.App.3d 275, 163 Ill. Dec. 679, 581 N.E.2d 833 (1991). The Illinois Supreme Court unequivocally stated that the Illinois Constitution, which contains its own separate and independent guarantee of due process, must also be satisfied. Rollins, 152 Ill.Dec. at 398, 565 N.E.2d at 1316. Therefore, in analyzing defendants' motion to dismiss, the central issue raised is whether this court's exercise of personal jurisdiction over Elkins and Williams is constitutional so as not to offend the due process clause of the Fourteenth Amendment and the due process clause of the Illinois Constitution.

A. Due Process Clause of the Fourteenth Amendment

A court's assertion of personal jurisdiction over a nonresident defendant must comport with "traditional notions of fair play and substantial justice" to satisfy the due process clause of the Fourteenth Amendment. Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). In fact, the Seventh Circuit has recently stated that the fair play and substantial justice standard is the only standard agreed upon by a majority of the Supreme Court. Dehmlow, 963 F.2d at 945; Asahi Metal Industry Co. v. Superior Court of California, 480 U.S. 102, 114-116, 107 S.Ct. 1026, 1033-1034, 94 L.Ed.2d 92 (1987) (Part II.B opinion of the Court). Therefore, we will use this standard as our benchmark.

1. Fairness Factors

Several factors must be considered by a court before exercising jurisdiction over a nonresident defendant. The Seventh Circuit has characterized certain concerns as fairness factors. These considerations include: "the burden on the defendant, the interests of the forum State, and the plaintiff's interest in obtaining relief. It must also weigh in its determination `the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and the shared interest of the several States in furthering fundamental substantive social policies.'" Dehmlow, 963 F.2d at 945 (quoting World-Wide Volkswagen v. Woodson, 444 U.S. 286, 292, 100 S.Ct. 559, 564, 62 L.Ed.2d 490 (1980)).

After weighing these factors, we conclude that it would be fair and reasonable to haul Williams, but not Elkins, into an Illinois court. In our opinion, it would not be unduly burdensome to require Williams to litigate this lawsuit in Illinois. Travel from Ohio to Illinois is not oppressive. In addition, Mors and the State of Illinois have considerable interests in litigating this case in Illinois. Mors is an Illinois citizen who claims that he was injured financially as a result of Williams' failure to repay the $100,000 loan with interest. Moreover, Illinois has a significant interest in assuring redress for its citizens. See Dehmlow, 963 F.2d at 947. These same considerations do not apply to Elkins.

2. Reasonableness of Jurisdiction

The Seventh Circuit in Dehmlow explained that the reasonableness of jurisdiction focuses not only on...