Shared Med. Equip. Grp., LLC v. Simi Valley Hosp. & Healthcare Servs.

• Decision Date: 25 February 2014
• Docket Number: No. 13–cv–631–wmc.,13–cv–631–wmc.
• Citation: 3 F.Supp.3d 735
• Parties: SHARED MEDICAL EQUIPMENT GROUP, LLC, Plaintiff, v. SIMI VALLEY HOSPITAL AND HEALTHCARE SERVICES, Defendant.
• Court: U.S. District Court — Western District of Wisconsin

3 F.Supp.3d 735

SHARED MEDICAL EQUIPMENT GROUP, LLC, Plaintiff,

v.SIMI VALLEY HOSPITAL AND HEALTHCARE SERVICES, Defendant.

No. 13–cv–631–wmc.

United States District Court,

W.D. Wisconsin.

Signed Feb. 25, 2014.

Mark Patrick Tilkens, Tony H. McGrath, Constangy, Brooks & Smith, LLP, Madison, WI, for Plaintiff.

Maura Yusof, Heyl Royster Voelker & Allen, Chicago, IL, for Defendant.

OPINION & ORDER

WILLIAM M. CONLEY, District Judge.

In this civil action, plaintiff Shared Medical Equipment Group, LLC alleges that defendant Simi Valley Hospital and Healthcare Services breached contracts between them by failing to pay for damage done to its MRI system and for repair charges. Before the court now is defendant's motion to dismiss for lack of personal jurisdiction and for improper venue. (Dkt. # 9.) Because Shared Medical has made out a prima facie case for this court's exercise of personal jurisdiction over Simi Valley and because venue is proper in this district, the court will deny the motion to dismiss.¹

ALLEGATIONS OF FACT ²

Plaintiff Shared Medical is a Wisconsin limited liability corporation that is wholly owned by Shared Medical Services, Inc., a corporation organized under Minnesota law with its principal place of business in Wisconsin. Defendant Simi Valley is a corporation organized under California law and with its principal place of business in Simi Valley, California.³ Simi Valley has no physical presence, facilities, real property, offices or registered agents in Wisconsin.

In 2009, Monica Berlin, Simi Valley's Administrative Director of Ambulatory Services, called Paul Zahn of Shared Medical to request information on pricing for the lease of a Parker Mobile MRI System. For more than a year, the parties negotiated over the terms of a proposed lease. Simi Valley eventually negotiated a lease with Shared Medical that included reduced rental fees, a quicker response time for service calls, more favorable payment terms and a California choice-of-law provision.

Consistent with those terms, the parties entered into the Magnetic Resonance Imaging Lease Agreement (“the Lease”) on July 16, 2010. Under the Lease, Shared Medical retained ownership of the MRI system, as well as the responsibility to provide preventative maintenance and respond to service calls. The MRI systemthat Simi Valley leased was located at Shared Medical's headquarters in Cottage Grove, Wisconsin. Under the Lease, Simi Valley was required to pay the cost of transporting the system from Wisconsin to California. The Lease also required Simi Valley to provide continuous power to the system to maintain the cryogenic temperatures that the superconducting magnet required to avoid magnet “quenching” ⁴; Simi Valley was responsible for any damage caused by the interruption of electrical service to the system.

During the lease term, Simi Valley made nineteen calls to Wisconsin for service. As required by the Lease, Shared Medical then arranged for repairs and service from its Wisconsin offices on behalf of Simi Valley. In addition, Shared Medical received notice on October 5, 2010, that there was a problem with the system. Shared Medical dispatched a representative from the manufacturer of the system, Phillips, to investigate. Electronic data revealed that the system had been powered off for at least a month and that the superconducting magnet had quenched as a result.

Based on the terms of the Lease, Shared Medical looked to Simi Valley for payment to repair the quenched magnet. Following extensive discussions, including 31 e-mails that Simi Valley sent to Shared Medical in Wisconsin and a meeting in Chicago, the parties signed a purchase order in which Simi Valley authorized a payment of up to $80,000 to cover Shared Medical's costs of repairing the system. Simi Valley sent the purchase order to Shared Medical in Wisconsin, which then subcontracted for repair of the system and submitted an invoice to Simi Valley for payment. Simi Valley indicated it would pay the invoice and made weekly cryogen report levels to Shared Medical for the next two and a half years to ensure proper maintenance of the magnet, but never paid the $80,000 invoice for repairs to the MRI system.

In June 2013, Simi Valley sent Shared Medical a 90–day notice of termination of the Lease. On July 1, 2013, Simi Valley e-mailed Shared Medical to ask if Shared Medical could find another lessee for the MRI system so that Simi Valley could exit the Lease early. In response, Shared Medical accordingly located another facility willing to take over the Lease, which allowed Simi Valley to save about $18,000 in rental payments.

OPINION

I. Personal Jurisdiction

Plaintiffs have the burden of proving that personal jurisdiction exists. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir.1997) (citing McIlwee v. ADM Indus., Inc., 17 F.3d 222, 223 (7th Cir.1994)). In diversity cases like this one, a federal district court has personal jurisdiction “only if a court of the state in which it sits would have such jurisdiction.” Id. (quoting Klump v. Duffus, 71 F.3d 1368, 1371 (7th Cir.1995)). The inquiry is, therefore, a two-step process. The court must initially determine whether the Wisconsin long-arm statute, Wis. Stat. § 801.05, would subject Simi Valley to personal jurisdiction in Wisconsin courts. Daniel J. Hartwig Assocs., Inc. v. Kanner, 913 F.2d 1213, 1216 (7th Cir.1990). If the answer is “yes,” the court must then determine whether its exercise of personal jurisdiction under § 801.05 would violate the due process requirements of the Fourteenth Amendment.⁵Id.

A. Wisconsin Long–Arm Statute

Wisconsin's long-arm statute is to be liberally construed in favor of exercising jurisdiction to the fullest extent allowed under the due process clause. PKWare, Inc. v. Meade, 79 F.Supp.2d 1007, 1012 (E.D.Wis.2000) (citing Johnson Worldwide Assoc., Inc. v. Brunton Co., 12 F.Supp.2d 901, 906 (E.D.Wis.1998)); Daniel J. Hartwig Assocs., 913 F.2d at 1217. Shared Medical contends that three separate provisions in the long-arm statute authorize this court's exercise of personal jurisdiction over defendant Simi Valley. The first provides:

A court of this state having jurisdiction of the subject matter has jurisdiction over a person served in an action pursuant to s. 801.11 under any of the following circumstances: ...

(5) Local services, goods or contracts. In any action which: ...

(d) Relates to goods, documents of title, or other things of value shipped from this state by the plaintiff to the defendant on the defendant's order or direction.

Wis. Stat. § 801.05(5)(d).

Shared Medical contends that the MRI system was indisputably a “thing of value” shipped from Wisconsin to Simi Valley in California pursuant to the terms of the Lease. It also points out that Wisconsin courts have construed the term “relates” broadly. Accordingly, Shared Medical argues this court should exercise personal jurisdiction over Simi Valley under § 801.05(5)(d).

Simi Valley does not appear to dispute that the MRI system is a “thing of value” shipped from Wisconsin by plaintiff Shared Medical. Instead, it argues that (1) Shared Medical shipped the MRI system to California “unilaterally” rather than at its order or direction; and (2) the action in this case does not arise from or relate to the shipment of the MRI system from Wisconsin to California. The court finds neither argument persuasive.

As for the contention that the MRI system was shipped “unilaterally” to California, Simi Valley acknowledges that the Lease required it (as the lessee) to pay for the costs of transporting the MRI system to California, but argues that requirement was not proposed by Simi Valley. Simi Valley also points out that the Lease itself “makes no mention of Wisconsin as the location from which the subject System was required to be shipped.” (Reply (dkt. # 14) 3.) Accordingly, Simi Valley argues that there is no evidence that it “ordered” or “directed” Shared Medical to ship the system from Wisconsin.

This argument is nothing but a strawman and a weak one at that. The inquiry under § 801.05(5)(d) is whether Shared Medical shipped the MRI system from Wisconsin at Simi Valley's behest, not whether Simi Valley volunteered to pay the shipping costs. Relying on the latter inquiry would essentially foreclose personal jurisdiction over out-of-state buyers or lessees, since few would volunteer to pay shipping. In any case, the undisputed facts demonstrate that Simi Valley entered into the Lease so that it could use the MRI system at its California facilities. Once Simi Valley agreed to the Lease terms, Shared Medical accordingly shipped the MRI system from Wisconsin to California. Simi Valley's contention that Shared Medical “unilaterally” shipped the MRI system from Wisconsin to California because Shared Medical required Simi Valley to pay the transport costs borders on the nonsensical.

Simi Valley's other argument—that Shared Medical was not required to ship the MRI systemfrom Wisconsin—is also a non sequitur. While courts have found that a party's “unilateral decision” to perform certain acts in a state does not support a finding of personal jurisdiction, see, e.g., Lakeside Bridge & Steel Co. v. Mountain State Constr. Co., Inc., 597 F.2d 596 (7th Cir.1979), that principle applies in the context of due process under the Fourteenth Amendment; it is not grafted into § 801.05(5)(d). To the contrary, cases interpreting § 801.05(5)(d) stick strictly to the language of the statute and interpret it liberally to find personal jurisdiction, as the Wisconsin Supreme Court has required. See, e.g., Lakeside Bridge, 597 F.2d at 600 (noting that § 801.05(5)(d) applied where plaintiff manufactured goods in Wisconsin and shipped them to Virginia, even though personal jurisdiction under the Fourteenth Amendment was ultimately inappropriate); Kuhn Knight, Inc. v. VMC Enters., Inc., 464 F.Supp.2d 806, 811 (W.D.Wis.2006) (holding that “it is undisputed that defen...