Rose v. Franchetti

Decision Date16 May 1989
Docket NumberNo. 88 C 10036.,88 C 10036.
Citation713 F. Supp. 1203
PartiesWilliam R. ROSE, Plaintiff, v. Greg FRANCHETTI, Individually and doing business as Fall River Airways, Defendant.
CourtU.S. District Court — Northern District of Illinois

COPYRIGHT MATERIAL OMITTED

Warren R. Fuller, Chicago, Ill., for plaintiff.

Greg Franchetti, Lincoln, R.I., pro se.

Arnold H. Landis, Chicago, Ill., for defendant.

MEMORANDUM OPINION

BRIAN BARNETT DUFF, District Judge.

Plaintiff William Rose has sued defendant Greg Franchetti for breach of contract and fraud arising out of the plaintiff's purchase of an airplane from the defendant. Diversity jurisdiction exists, but the defendant has moved to dismiss pursuant to Rule 12(b)(2) on the grounds that the court lacks personal jurisdiction over him, and in the alternative, requests transfer of venue pursuant to 28 U.S.C. § 1404(a). As set forth below, the motion will be denied.

FACTS

The facts relevant to this motion are not in dispute. The plaintiff is a citizen of Illinois. The defendant is a citizen of Rhode Island who does business out of Massachusetts. In June, 1988, the plaintiff was reading a magazine of general circulation when he came across the defendant's advertisement for the sale of an airplane. He instructed his employee, Andrew Spak, to contact the defendant to inquire about the aircraft. Spak did so.

Over the next few weeks, Spak and the defendant exchanged phone calls on a number of occasions to discuss the plane.1 During these conversations, the defendant represented that the plane was in good condition, that he had inspected it, that it needed only minor repairs, and that he had engaged Federal Aeronautics Administration ("FAA") certified mechanics to do the repairs in accordance with FAA practices.

The plaintiff thereafter sent agents to Massachusetts to see the plane. After inspecting the plane's records, the agents purchased the plane and flew it back to Illinois.

Spak, a certified FAA mechanic, then disassembled the plane for inspection. He discovered numerous repairs which had not been logged in the aircraft's records and which did not comply with FAA practices. The condition of the aircraft rendered it virtually valueless.

The plaintiff subsequently filed this lawsuit alleging breach of contract and intentional misrepresentation. The defendant has moved to dismiss the complaint for lack of personal jurisdiction, or in the alternative, to transfer this case to Massachusetts.

DISCUSSION
Personal Jurisdiction

In order to enter a binding judgment, a court must have personal jurisdiction over the defendant. A court acquires such jurisdiction when the plaintiff properly serves the defendant with process pursuant to a statute or rule, and the service does not violate due process. Omni Capital International v. Rudolf Wolff & Co., Ltd., 484 U.S. 97, 108 S.Ct. 404, 409, 98 L.Ed.2d 415 (1987).

In federal court, Fed.R.Civ.P. 4 governs service of process. Rules 4(c)-(e) prescribe the manner in which process may be served. Rule 4(f) describes where it may be served:

All process other than a subpoena may be served anywhere within the territorial limits of the state in which the district court is held, and, when authorized by a statute of the United States or by these rules, beyond the territorial limits of that state.

Where, as here, the plaintiff is suing a defendant located "beyond the territorial limits of the state," id., Rule 4(f) refers to Rule 4(e):

(e) Summons: Service Upon Party Not Inhabitant of or Found Within State.
Whenever a statute of the United States or an order of court thereunder provides for service of a summons, or of a notice, or of an order in lieu of summons upon a party not an inhabitant of or found within the state in which the district court is held, service may be made under the circumstances and in the manner prescribed by the statute or order, or if thre is no provision therein prescribing the manner of service, in a manner stated in this rule. Whenever a statute or rule of court of the state in which the district court is held provides ... for service of a summons, or of notice, or of an order in lieu of summons upon a party not an inhabitant of or found within the state ... service may ... be made under the circumstances and in the manner prescribed in the statute or rule.

Thus, the first sentence of this rule applies when a federal statute authorizes out-of-state service of process. The second sentence governs in the absence of such a federal statute. In this case, no such statute exists, so this court may obtain personal jurisdiction over the defendant only "under the circumstances and in the manner prescribed in an Illinois statute or rule." Fed.R.Civ.P. 4(e).

Neither party has informed the court as to the manner of service plaintiff employed in serving the defendant. Since the defendant has not objected to it, this court assumes that the manner of service was proper. See Fed.R.Civ.P. 12(b)(4), (5).

The only question remaining then, is whether service was authorized "under the circumstances"—that is, whether Illinois law permits service on this out-of-state defendant. The Illinois long-arm statute, Ill. Rev.Stat.1987 ch. 110, ¶ 2-209(a) ("¶ 2-209(a)"), provides:

Any person, whether or not a citizen or a resident of this State, who in person or through an agent does any of the acts hereinafter enumerated, thereby submits such person, and if an individual, his or her personal representative, to the jurisdiction of the courts of this State as to any cause of action arising from the doing of any of such acts:
(1) The transaction of any business within the State;
(2) The commission of a tortious act within this State....

Thus, in order to sue the defendant here, the plaintiff must establish that the defendant either transacted business within Illinois or committed a tort within Illinois, and that the causes of action arose from these acts.2

The defendant first contends jurisdiction does not lie under ¶ 2-209(a)(1) because advertising in a newspaper that circulates to Illinois and making phone calls to a potential purchaser in Illinois do not constitute the transaction of business within the state. The plaintiff does not dispute this argument. Instead, he argues that the defendant committed a tortious act in Illinois and is therefore amenable to jurisdiction under ¶ 2-209(a)(2). Before turning to this argument, it is worth examining why the plaintiff chose not to rely on ¶ 2-209(a)(1).

In Wiles v. Morita Iron Works Co., 152 Ill.App.3d 782, 105 Ill.Dec. 657, 504 N.E.2d 942 (1987), rev'd on other grounds, 125 Ill.2d 144, 125 Ill.Dec. 812, 530 N.E.2d 1382 (1988), the court held that personal jurisdiction existed under ¶ 2-209(a)(1) over a foreign defendant for claims arising out of a single transaction which occurred outside the state because the defendant "sold its products to a corporation that used the products in Illinois, the transaction was a money-making event for defendant, and plaintiff's injury was a direct result of the transaction." Id., 152 Ill.App.3d at 789, 105 Ill.Dec. 657, 504 N.E.2d 942. This holding certainly suggests that the defendant here, who sold a plane for profit in Massachusetts knowing it would be returned to Illinois, falls within the reach of ¶ 2-209(a)(1).

To be sure, the defendant could have argued that Wiles is distinguishable on the grounds that the injury there occurred inside Illinois whereas the injury here arguably occurred in Massachusetts, where the defective plane was purchased. But that distinction does not explain why the plaintiff failed to cite the case, for he has predicated most of his arguments on the theory that his injury occurred when his employee inspected the plane in Illinois and discovered the defects.

The plaintiff, however, may have had another reason for not relying on Wiles as a basis for asserting jurisdiction under ¶ 2-209(a)(1): Wiles, or at least that portion of it dealing with this subsection, is probably wrong.3 Wiles relied heavily on Connelly v. Uniroyal, Inc., 75 Ill.2d 393, 27 Ill.Dec. 343, 389 N.E.2d 155 (1979). Connelly held that the analysis under ¶ 2-209(a)(1) coincides with "economic activity" analysis of the California and United States Supreme Courts, so that an out-of-state manufacturer submits himself to jurisdiction within the state "whenever the state generates gross income for the manufacturer and is not so fortuitous or unforseeable as to negative the existence of an intent on the manufacturer's part to bring about that result." Buckeye Boiler Co. v. Superior Court, 71 Cal.2d 893, 902, 80 Cal.Rptr. 113, 458 P.2d 57 (1969) (citing Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958)).

Connelly, however, come at a time when the Illinois Supreme Court still viewed the Illinois long-arm statute as extending as far as federal due process would allow. See Connelly, 75 Ill.2d at 402, 27 Ill.Dec. 343, 389 N.E.2d 155. Green v. Advance Ross Electronics Corp., 86 Ill.2d 431, 56 Ill.Dec. 657, 427 N.E.2d 1203 (1981), subsequently rejected this premise, holding that ¶ 2-209 is not coterminous with the due process clause, and the Seventh Circuit has read Green as undermining the reasoning of cases decided before it. See Small v. Sheba Investors, Inc., 811 F.2d 1163, 1164-65 (7th Cir.1987).4 Thus, Connelly probably is no longer good law on the reach of ¶ 2-209(a)(1); if it is not, then Wiles is not either.

Gordon v. Tow, 148 Ill.App.3d 275, 101 Ill.Dec. 394, 498 N.E.2d 718 (1986), by contrast, recognized that Green changed the landscape for ¶ 2-209 analysis, and set forth a multifactor test for determining when an out-of-state defendant transacts business within Illinois for the purposes of ¶ 2-209(a)(1):

The determination of whether defendant sufficiently transacted business in Illinois so as to avail himself of the benefits of Illinois law requires consideration of several factors: who initiated the transaction; where the contract was entered into; and
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