Reeves v. Baltimore & Ohio R.R. Co.

• Decision Date: 20 June 1988
• Docket Number: No. 87-2070,87-2107,87-2070
• Citation: Reeves v. Baltimore & Ohio R.R. Co., 526 N.E.2d 404, 171 Ill.App.3d 1021, 122 Ill.Dec. 145 (Ill. App. 1988)
• Parties: , 122 Ill.Dec. 145 Darrell E. REEVES, Plaintiff, v. The Baltimore & Ohio Railroad Company, and Iowa Mold Tooling Company, et al., Defendants (The Baltimore & Ohio Railroad Company, Third-Party/Plaintiff- Appellant; Mize Construction, Inc., Third-Party/Defendant-Appellee).
• Court: Appellate Court of Illinois

Page 404

526 N.E.2d 404

171 Ill.App.3d 1021, 122 Ill.Dec. 145

Darrell E. REEVES, Plaintiff, v.The Baltimore & Ohio Railroad Company, and Iowa Mold Tooling Company, et al., Defendants (The Baltimore & Ohio Railroad Company, Third-Party/Plaintiff- Appellant; Mize Construction, Inc., Third-Party/Defendant-Appellee).

No. 87-2070, 87-2107.

Appellate Court of Illinois First District, First Division.

June 20, 1988.

Lord, Bissell & Brook, Chicago, Thomas J. Healey, Hugh C. Griffin, Paul J. Peralta, of counsel, for appellantBaltimore & Ohio R.R. Co.

Wildman, Harrold, Allen & Dixon, Chicago, Robert E. Haley, Michael R. Blankshain, of counsel, for appellantIowa Mold Tooling Co.

Querrey & Harrow, Ltd., Chicago, Michael Resis, Victor J. Piekarski, of counsel, for appellee Mize Const.

Justice QUINLANdelivered the opinion of the court:

On February 19, 1980, the plaintiff, Darrell Reeves(Reeves) filed a suit in the circuit court of Cook County for personal injuries he sustained when the crane unit he was working on tipped and fell off of a trestle.The injury took place on March 27, 1979 in Cincinnati, Ohio, while Reeves was an employee of Mize Construction, Inc.(Mize).Reeves filed suit against numerous parties, including the Baltimore and Ohio Railroad Company(B & O) and Iowa Mold Tooling Company(IMTCO) on the basis of products liability.B & O filed a third-party complaint against Mize on December 19, 1986, premised upon strict liability, express indemnity and contribution.Mize, after filing a special and limited appearance, moved to quash and dismiss the third-party complaint for lack of personal jurisdiction.The trial court granted Mize's motion on May 26, 1987.B & O appeals that ruling.^*

In 1971, Mize was incorporated in the state of Indiana.On September 9, 1978, B & O and Mize entered into a contract (the contract was not in anyway connected to Illinois, i.e., the negotiation, performance, and execution did not occur in Illinois) under which Mize was to remove B & O tracks in Ohio.On March 27, 1979, Reeves, a Mize employee, was injured while in Ohio on the B & O/Mize job.B & O claimed that Mize's relevant contacts with Illinois were sufficient to constitute doing business in Illinois.Mize's business contacts with Illinois were established as involving substantially the following percentages of business during the years set forth below:

[122 Ill.Dec. 147] Percentages of gross revenue
                derived from Illinois work
                1979     5"10%
                1980     5"10%
                1981     5"6%
                1982     0"2%
                1983"86  0%
                

Since 1982, Mize has done no work in Illinois and has derived no income from Illinois jobs.In fact, since 1983, Mize has been out of business.A successor corporation, Pine Construction, Inc. was formed.Pine is not in the construction business, and had no contacts with Illinois.Mize never had, and, of course, does not now have, an office in Illinois, a registered agent, nor did it have or does it now own any real estate in Illinois.

The issue raised by B & O on appeal concerns whether Mize was "doing business" in Illinois during the claimed relevant period of time which B & O contends was when its cause of action arose or, in any event, when the underlying action was filed in Cook County.If so, B & O asserts that the Illinois courts then had personal jurisdiction over Mize.Consequently, B & O contends that the trial court erred when it granted Mize's motion to quash and dismiss B & O's claim against Mize for lack of personal jurisdiction because, B & O claims, Mize was clearly "doing business" in Illinois during these relevant time periods.

The burden of asserting personal jurisdiction over a nonresident defendant rests on the party who asserts that jurisdiction exists.(R.W. Sawant & Co. v. Allied Programs Corp.(1986), 111 Ill.2d 304, 95 Ill.Dec. 496, 489 N.E.2d 1360.)Thus, it was B & O's burden to show that the constitutional requirement of minimum contacts, in accordance with due process, had been met, and specifically, B & O had to have alleged facts in its complaint upon which jurisdiction could be found over the nonresident defendant.SeeHeller Financial v. Sullivan(1988), 166 Ill.App.3d 1, 117 Ill.Dec. 571, 520 N.E.2d 922;Bobka v. Cook County Hospital(1983), 117 Ill.App.3d 359, 360-61, 73 Ill.Dec. 3, 4-5, 453 N.E.2d 828, 829-30.

An examination of B & O's third-party complaint reveals absolutely no allegations of facts upon which Illinois courts could base jurisdiction.This failure to include factual allegations of Mize's acts in Illinois is, in and of itself, fatal to B & O's claim.(SeeHeller Financial, 166 Ill.App.3d 1, 117 Ill.Dec. 571, 520 N.E.2d 922.)Hence, B & O's lack of proper allegations in its third-party complaint provides a separate and independent basis for dismissal of the third-party complaint other than that found by the trial court.

Nevertheless, while this failure to allege sufficient jurisdictional facts would normally be fatal to B & O's assertions, we will also examine B & O's other contentions concerning the asserted jurisdictional basis for its claim against Mize, because, inasmuch as Mize never raised such an argument itself, the interests of justice require such an examination.(SeeParks v. McWhorter(1985), 106 Ill.2d 181, 88 Ill.Dec. 9, 478 N.E.2d 324, appeal after remand144 Ill.App.3d 270, 98 Ill.Dec. 307, 494 N.E.2d 234.)A party may assert personal jurisdiction over a nonresident defendant in Illinois on the following bases: (a) under the Illinois long arm statute, which subjects a nonresident to jurisdiction if the nonresident has transacted business in Illinois, and where that business was transacted in connection with or arose from the claim being asserted, or where the tortious act complained of occurred in Illinois (Ill.Rev.Stat.1985, ch. 110, par. 2-209); or (b) under the principle established by Illinois case law, which subjects a nonresident to personal jurisdiction if that defendant is generally "doing business" in Illinois.(SeeCook Associates, Inc. v. Lexington United Corp.(1981), 87 Ill.2d 190, 57 Ill.Dec. 730, 429 N.E.2d 847.)Here, there can be no question that the proper standard to be applied is the "doing business" standard, since the underlying tort occurred in Ohio, and any business transacted in connection with the job on which Reeves was injured did not occur in Illinois.

"Doing business" for jurisdictional purposes means that the nonresident defendant, in this case, the corporation, is conducting business in Illinois 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.( Cook Associates, 87 Ill.2d 190, 57 Ill.Dec. 730, 429 N.E.2d 847.)Illinois courts have required continuous, permanent, ongoing and systematic contacts with Illinois which are not occasional or casual, to establish such a jurisdictional basis.(Maunder v. DeHavilland Aircraft(1984), 102 Ill.2d 342, 351, 80 Ill.Dec. 765, 769, 466 N.E.2d 217, 221, cert. denied469 U.S. 1036, 105 S.Ct. 511, 83 L.Ed.2d 401.)Accordingly, the "doing business" standard must turn on the unique facts of each case.( Maunder, 102 Ill.2d at 350-51, 80 Ill.Dec. at 769, 466 N.E.2d at 221.)The focus, however, must be upon contacts purposely directed towards Illinois, rather than a business' mere physical presence in Illinois.Maunder, 102 Ill.2d at 353, 80 Ill.Dec. at 769, 466 N.E.2d at 221;see alsoBurger King Corp. v. Rudzewicz(1985), 471 U.S. 462, 105 S.Ct. 2174, 85 L.Ed.2d 528.

The parties here dispute the time period which must be examined to determine whether Mize was "doing business" in Illinois.B & O argues that the relevant time period is either when the underlying injury of the initial plaintiff occurred (March 27, 1979) or when the plaintiff's underlying suit was filed (February 19, 1980), relying on Pennsylvania and California case law to support its assertion.B & O also contends that it is irrelevant that Mize dissolved in 1983 because Illinois law specifically allows claims against dissolved corporations up to five years after dissolution.(SeeIll.Rev.Stat.1985, ch. 32, par. 12.80.)Mize, on the other hand, argues that the determinative time under Illinois law is when B & O filed its third-party claim against it, i.e., when Mize was joined as a party to the suit (December 19, 1986) which was the time that service of process on Mize would have been attempted.

We find that the cases cited by the parties are not dispositive of the issue presented here.B & O relies on a Pennsylvania case, Mobay Chemical Corp. v. Air Products & Chemicals, Inc.(1981), 290 Pa.Super. 489, 434 A.2d 1250, which was based upon the Pennsylvania long arm statute and dealt with business transacted which was specifically related to the claim presented, and Miller v. Miller(1986), 176 Cal.App.3d 1183, 222 Cal.Rptr. 652, which involved an individual defendant, and was based expressly upon California marital law and Federal law.Conversely, Mize relies on two cases which are not factually applicable to the case at bar.Mize first cites Wilson v. Central Illinois Public Service Co.(1988), 165 Ill.App.3d 533, 116 Ill.Dec. 454, 519...