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STARCK v. DEWANE
September 12, 1973
P.A. STARCK AND JANE STARCK, PLAINTIFFS,
DONALD E. DEWANE AND WAYNE BROWN, DEFENDANTS.
The opinion of the court was delivered by: Bauer, District Judge.
MEMORANDUM OPINION AND ORDER
This cause comes on the defendants' motion to dismiss the
complaint for lack of jurisdiction.
This is an action to redress an alleged violation of Section
10(b) of the Securities Exchange Act of 1934 (15 U.S.C. § 78j(b)),
and Rule 10b-5 promulgated thereunder
(17 C.F.R. § 240.10b-5). More specifically, the plaintiff alleges in Count I
of the complaint that the defendants made false and misleading
representations in the offer and sale of a security.
Jurisdiction is based on Section 27 of the Securities Exchange
Act of 1934 (15 U.S.C. § 78aa). The plaintiffs, in Counts II
and III of the complaint also claim respectively that the
defendants committed a common law tort of fraud and violated
the Illinois Consumer Fraud Act, Chapter 121 1/2, § 262A of the
Illinois Revised Statutes.
The defendants in support of their motion to dismiss for
lack of jurisdiction contend:
1. Neither defendant Donald E. Dewane or Wayne
Brown used the mails and/or other means of
interstate commerce in regard to any of the
allegations of Count I of the plaintiff's
complaint and thereby this Court lacks
jurisdiction under Section 27 of the
Securities Act of 1934 (15 U.S.C. § 78aa).
2. There is no pendent jurisdiction before this
Court as alleged in both Counts II and III of
plaintiff's complaint as the Court lacks
jurisdiction over any federal question or
The plaintiffs in opposition to the instant motion contend
that Donald E. Dewane used the telephone to arrange meetings
with the plaintiffs regarding the sale of the House of Health,
Inc. common shares; and also that the collection of the checks
used to purchase the shares involved the use of the mails. In
support of this contention the plaintiffs have submitted the
affidavits of P.A. Starck, Jane Starck and Karen Wascher.
Plaintiff P.A. Starck, in his affidavit, states, in relevant
2. That on or about September 3, 1971, he had a
meeting with Donald E. Dewane, one of the
defendants in the above entitled case; that the
meeting took place at the affiant's home located
at 8909 McConnell Road, Woodstock, Illinois; that
the only other person at the meeting was
affiant's wife, Jane Starck; and that at the
meeting he purchased stock in a business known as
the House of Health, Inc. from Donald E. Dewane,
the President of the Corporation.
3. That the date for the meeting on or about
September 3, 1971, was set by Donald E. Dewane
during a telephone call affiant had received from
the said Dewane on or about August 29, 1971.
4. That during the period of on or about March
10, 1971 to on or about September 3, 1971,
several other telephone calls were received by
affiant from Donald E. Dewane concerning the
purchase of stock in House of Health, Inc.
5. During the meeting of on or about September
3, 1971 the affiant delivered to Donald E. Dewane
a check dated September 3, 1971 for $15,000
payable to House of Health, Inc. for the purchase
of 100 shares of House of Health, Inc. common
6. That the check attached to this affidavit
and marked as Exhibit A is a true and correct
copy of the check he delivered to Donald E.
Dewane on September 3, 1971. The check when he
received it back in the mails with his bank
statement was in the same condition as when he
gave it to Donald E. Dewane except the front side
had a paid stamp on it and the reverse side of
the check bore the written endorsements of House
of Health, Inc., Donald E. Dewane as well as
various stamped endorsements including
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