United States District Court, Northern District of Illinois, E. D
October 17, 1973
ROSENTHAL & COMPANY, PLAINTIFF,
JACK M. DODICK, DEFENDANT.
The opinion of the court was delivered by: Bauer, District Judge.
MEMORANDUM OPINION AND ORDER
This cause comes on the defendant's motion to dismiss or
alternatively, for a change of venue.
This is an action based on diversity of citizenship seeking
to redress an alleged breach of a Customer's Agreement between
the plaintiff and defendant.
The plaintiff, Rosenthal & Company ("Rosenthal"), is a
limited partnership organized under the laws of the State of
Illinois, with its principal place of business at Chicago,
Illinois. The plaintiff Rosenthal is a broker and dealer in
commodities. The defendant, Jack M. Dodick ("Dodick") is a
citizen and resident
of the State of New York and allegedly an experienced,
sophisticated and knowledgeable trader in commodities. The
amount in controversy, exclusive of costs and interest,
exceeds the sum of $10,000.00.
The plaintiff in the complaint alleges, inter alia, the
1. On or about February 15, 1973 Rosenthal and
defendant Dodick entered into a Customer's
Agreement which provided, among other things,
that "all monies which the undersigned
[defendant Dodick] owes to you [plaintiff
Rosenthal] at any time shall be repayable to
you at your office in Chicago." From time to
time and in accordance with statements of
accounts (purchase and sale), plaintiff and
defendant entered into agreements for the
purchase of certain commodities. As to each
transaction plaintiff caused a written
confirmation to be mailed from the office in
Chicago to the defendant. Defendant did not
in any manner or at any time object to the
written confirmations or any of the terms
2. After plaintiff made purchases on the
defendant's behalf, plaintiff demanded that
defendant deposit with them additional
monies, in accordance with the Customer's
Agreement. Defendant Dodick failed and
refused to deposit the additional funds
demanded. Thereupon the plaintiff Rosenthal
liquidated defendant Dodick's account. After
allowing full credit for the commodities
liquidated and all other just set offs or
claims, defendant is indebted to plaintiff in
the sum of $444,492 plus interest.
3. On or about March 2, 1973 plaintiff demanded
that defendant deposit with them additional
sums of money for margin. At that time the
market price of commodities purchased for the
defendant had dropped and the defendant's
previous deposits of margins were inadequate.
In order to induce plaintiff to continue to
carry defendant's account, defendant made and
delivered to plaintiff his personal check for
$100,000.00 dated March 3, 1973. On or about
March 5, 1973 the defendant ordered the
drawee bank to stop payment on the check. The
check was returned to the plaintiff
dishonored on or about March 12, 1972. By
this time the market price of the commodities
in question had dropped still further. As a
direct and proximate result of these wrongful
acts of the defendant plaintiff was injured
in the sum of $444,492.97. Further the
actions of the defendant were willful and
malicious. Plaintiff ought to have and
recover punitive damages in the sum of
$450,000 and the amount of the dishonored
The defendant in his instant motion contends that the
plaintiff has failed to properly allege that this Court has
subject matter jurisdiction over this action. Further, the
defendant contends that this Court lacks jurisdiction over the
person of the defendant. In the alternative the defendant
contends that this Court should transfer this action to the
Southern District of New York in the interest of justice and
for the overall convenience of the parties and witnesses.
The defendant, in support of his motion, has submitted his
affidavit which states in relevant part:
1. "I have never been in Illinois for the
purpose of transacting any business with
Rosenthal & Company. I never made any
telephone calls to Rosenthal & Company in
Illinois. Rosenthal & Company has a business
office located at 2 Coentis Slip, New York
City, New York (hereinafter referred to as
`Rosenthal's New York office')."
2. "Mr. Claude C. Huang, whose residence is 2
Horizon Road, Fort
Lee, New Jersey, an employee of Walston &
Co., Inc., with offices at 32 Commerce
Street, Newark, New Jersey, solicited me on
behalf of Rosenthal & Company to become a
customer of Rosenthal in personal
conversations in New York and New Jersey
during the period February 12-15, 1973. I had
never transacted any business with Rosenthal
& Company prior to February 15, 1973."
3. "The customer documents attached to the
complaint as Exhibit A was presented to me by
Mr. Claude C. Huang and executed by me at Mr.
Claude C. Huang's residence in New Jersey on
February 15, 1973 and Mr. Huang delivered
them to Mr. Philip Smith of Rosenthal's New
4. "On February 21, 1973 and February 23, 1973 I
delivered two checks totalling $50,000 to
Claude Huang in New York City and he
delivered them to Mr. Philip Smith of
Rosenthal's New York office. They were
deposited by Rosenthal in New York City. All
of the purchases made by plaintiff allegedly
on my behalf were executed by Rosenthal's New
York office. I believe they were executed on
commodity exchanges located in New York."
5. "On March 3, 1973 I delivered to Claude C.
Huang my check for $100,000 which is attached
to the complaint as Exhibit D. Claude Huang
delivered the check to Mr. Philip Smith of
Rosenthal's New York office and the check was
deposited by Rosenthal's New York office in
the Marine Midland Bank located in New York
City. I received a letter of guarantee from
Rosenthal & Company signed by Mr. Philip
Smith. The letter was written from their New
York office and hand delivered to me in New
6. "It would be a hardship both to myself and to
my patients for me to be compelled to come to
Chicago, Illinois for trial of this lawsuit.
All of my records relating to my transactions
with Rosenthal are located in New York City,
The plaintiff, in opposition to the instant motion, contends
that this Court has subject matter jurisdiction over the
instant action and personal jurisdiction over the defendant.
The plaintiff further contends that this Court should not
transfer the instant action.
In support of its position, the plaintiff has submitted the
affidavit of Richard Mortell which states, in relevant part,
that: (1) each and every member of the plaintiff's limited
partnership are residents of the Northern District of
Illinois;*fn* and (2) in accordance with the terms of the
agreement between the parties, the defendant agreed to make
payments at plaintiff's offices in Chicago, Illinois; and (3)
defendant, in fact, did make payments to plaintiff, which were
credited to him at plaintiff's offices in Chicago.
It is the opinion of this Court that it lacks personal
jurisdiction over the defendant Jack M. Dodick.
Rule 4(e) of the Federal Rules of Civil Procedure provides
that federal courts are to follow state rules regarding the
assertion of in personam jurisdiction over nonresidents to the
extent such rules are consistent with due process.
The legislative intent of the Illinois long arm statute
(Chapter 110, §§ 16 and 17 of the Illinois Revised Statutes) is
to exert jurisdiction over nonresidents to the extent permitted
under the due process clause. O'Hare International Bank v.
Hampton, 437 F.2d 1173 (7th Cir. 1971); Hutter Northern Trust
v. Door County Chamber of Commerce, 403 F.2d 481 (7th Cir.
1968); Nelson v. Miller, 11 Ill.2d 378, 143 N.E.2d 673 (1957);
Ziegler v. Houghton-Mifflin Co., 80 Ill.App.2d 210,
224 N.E.2d 12 (1967). The due process implications of the extention of
personal jurisdiction over nonresident defendants were settled
in International Shoe Co. v. State of Washington, 326 U.S. 310,
66 S.Ct. 154, 90 L.Ed. 95 (1945); McGee v. International Life
Ins. Co., 355 U.S. 220, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957);
Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283
(1958). The thrust of these decisions is that sufficient
"minimum contacts" must exist in the forum state so that
jurisdiction over nonresident defendants is reasonable and just
according to traditional concepts of fair play and substantial
justice. There is no set formula or rule of thumb for
determining whether there are sufficient minimum contacts short
of ascertaining what is fair and reasonable in the
circumstances of a particular case. Hutter Northern Trust v.
Door County Chamber of Commerce, supra.
Thus, the relevant inquiry is whether the defendant engaged
in some act or conduct by which he may be said to have invoked
the benefits and protections of the law of the forum. Gray v.
American Radiator & Standard Sanitary Corp., 22 Ill.2d 432,
176 N.E.2d 761 (1961); Consolidated Laboratories, Inc. v.
Shandon Scientific Co., 384 F.2d 797 (7th Cir. 1967).
Defendant made no personal visits to Illinois, sent no
written communications to Illinois and placed no telephone
calls to Illinois concerning the subject matter of this
lawsuit. The relationship between defendant and plaintiff was
initiated in New York and New Jersey. The transaction of
business between plaintiff and defendant was conducted
exclusively in New York where the commodities were
respectively purchased and sold and where plaintiff accepted
and deposited the defendant's money. The plaintiff has failed
to state any facts which would constitute the sufficient
minimum contacts necessary to confer the fair and reasonable
jurisdiction of this Court over the defendant. The unilateral
action of plaintiff in sending confirmations and statements of
account to defendant from its Chicago office rather than its
New York office cannot satisfy the requirement of minimum
contact with Illinois because it is the acts of the defendant
which are relevant. Hanson v. Denckla, supra; Fisons Limited v.
United States, 458 F.2d 1241 (7th Cir. 1972).
The provision of the "customer agreement" providing for the
payment at plaintiff's Chicago office was a "boilerplate"
provision. All moneys were paid by defendant to plaintiff at
its New York office and were deposited by plaintiff in its New
York bank account. Furthermore, if the mere payment of money
or shipment of goods into Illinois were sufficient to confer
long arm jurisdiction it would follow that the existence of a
business relationship with an Illinois resident would
automatically sustain Illinois jurisdiction. It is clear that
no federal or state court would confer such a broad grant of
personal jurisdiction. See Hanson v. Denckla, supra; Geneva
Industries, Inc. v. Copeland Construction Corp., 312 F. Supp. 186
(N.D. Ill. 1970); Quartet Manufacturing Company v. Allied
Traders Ltd., 343 F. Supp. 1302 (N.D.Ill. 1972).
Further, there have been no facts presented by the parties
which would demonstrate that the defendant, by his own
actions, sought to invoke the benefits and protections of the
laws of Illinois. It is offensive to the concept of due
process and reasonableness to conclude that a brokerage firm
with a New York office can compel a New York resident
defendant to stand trial in Illinois
as a result of the transaction of business between the parties
at the plaintiff's New York office. See United Securities Co.
of America v. Hornblower & Weeks, Hemphill & Noyes
(D.C.Oregon, Civil No. 72-647, decided June 22, 1973).
This Court lacks personal jurisdiction over the defendant
because the defendant has never "transacted business" in
Illinois within the meaning of the Illinois long arm statute
and thus the defendant has not had the requisite "minimum
contacts" with Illinois.
Accordingly, it is hereby ordered that the defendant's
motion to dismiss is granted and the cause is dismissed