United States District Court, Northern District of Illinois, E.D
July 29, 1974
WILLIAM B. COHAN, PLAINTIFF,
MUNICIPAL LEASING SYSTEMS, INC., A CORPORATION, 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 this
action and to
quash the summons served upon it in Bethlehem, Pennsylvania, on
the ground that this Court does not have in personam
This is an action seeking to redress the alleged breach of a
contract. The jurisdiction of this Court over this action is
allegedly based on diversity of citizenship pursuant to 28 U.S.C. § 1332.
The plaintiff, William B. Cohan, is a citizen and
resident of the State of Illinois. The defendant, Municipal
Leasing Systems, Inc. ("Municipal") is a corporation organized
under the laws of the State of Pennsylvania and maintaining its
principal place of business in the State of Pennsylvania. The
amount in controversy allegedly exceeds $10,000, exclusive of
interest and costs.
The plaintiff, in his complaint, alleges, inter alia, the
1. The plaintiff is a licensed structural engineer in
the State of Illinois and does practice that
2. The defendant entered into an oral agreement in
September of 1972 wherein the defendant did retain
the services of the plaintiff as a structural
engineer and for the further purposes of the
plaintiff obtaining, on the defendant's behalf,
certain financing for the development of
properties belonging to the defendant.
3. At that meeting and subject to the agreement
therein made, the defendant paid to the plaintiff
the sum of $10,000.00 as a retainer for the
4. The defendant did orally agree with the plaintiff
that it would pay to the plaintiff as compensation
for services rendered and would be rendered
additional sums of money based on the plaintiff's
normal and usual billing in such matters.
5. The plaintiff did, in reliance on that retainer
and oral agreement, lose other employment as he
did not have adequate time for other jobs and was,
therefore, damaged in the sum of $100,000.00.
6. The check was presented for payment by the
plaintiff but the bank upon which said check was
drawn returned same to the plaintiff, advising
that the endorsement had been cancelled.
7. Plaintiff has made repeated requests and demands
upon the defendant to pay that obligation, but the
defendant has refused and still refuses to do so.
The plaintiff seeks damages in the amount of $110,000.00 plus
The defendant Municipal in support of its motion contends that:
1. Municipal is a Pennsylvania corporation with its
principal offices in Bethlehem, Pennsylvania and
is not licensed or authorized to do business in
Illinois, nor is it doing business in Illinois.
2. Municipal was served with summons in this action
in Bethlehem, Pennsylvania by application, through
Rule 4(e) of the Federal Rules of Civil Procedure,
of the Illinois "long arm" statute, Sections 16
and 17 of Chapter 110 of the Illinois Revised
3. The complaint contains no allegations concerning
any contacts, ties, or relations of Municipal
Leasing Systems, Inc., within the State of
Illinois, and indeed the only reference to
Illinois relates to plaintiff's alleged place of
citizenship, residence and license as a structural
4. Robert Morris in his affidavits states that
apparently the agreement alleged in the complaint
refers to two written agreements, between the
plaintiff and a David A. Valente, which were
negotiated and signed in Pennsylvania and which
were with regard to services
to be performed in Pennsylvania relating to
property situated in Pennsylvania and for which
payment was rendered and accepted in Pennsylvania.
The plaintiff, in opposition to the instant motion, has filed
affidavits in which he states, in relevant part, that:
1. "That during the Summer of 1972, I was contacted
by a Mr. Louis Teeman, who represented himself to
be the agent for the Defendant, MUNICIPAL LEASING
SYSTEMS, INC., and was requested by Mr. Teeman to
prepare preliminary drawings for said Defendant.
I was given a check by Mr. Teeman for $2,500.00 as
an initial retainer and this check was
subsequently returned `Not Sufficient Funds'. The
aforementioned meeting took place in my office,
which is located in Chicago, Illinois."
2. "Subsequently, I made two (2) trips to Allentown,
Pennsylvania. The first trip was for the purpose
of examining the properties in order to make the
preliminary drawings and the second trip was to
meet with the Defendant's bank where I was advised
that sufficient funds were available for the
payment of my fees and for the various projects
that the Defendant anticipated becoming involved
3. "The afternoon of the meeting with the bank, I
returned to Chicago, Illinois by plane and I was
accompanied by the President of the Defendant
corporation, his secretary and Mr. Teeman. That
evening, at my office in Chicago, Illinois, Mr.
Teeman, as agent for the Defendant, handed me the
$10,000.00 check referred to in the Complaint."
4. "All the business that I have transacted with the
Defendant has been transacted, negotiated, and
consummated in the City of Chicago, State of
The defendant, in reply to the plaintiff's answering
affidavits, has filed a verified reply sworn to by David A.
Valente and Bruce D. Emig. The verified reply contains, in part,
the following statements:
1. "Louis Teeman was not an agent of Municipal
Leasing Systems, Inc., nor did he represent
himself to be an agent of that corporation. Mr.
Teeman acted as an independent contractor, and any
negotiations with the Plaintiff, during which
Teeman and the individual David A. Valente were
present, occurred in the cities of Allentown and
Bethlehem, Pennsylvania. None of the negotiations
or discussions took place in Chicago."
2. "The Plaintiff did in fact make two trips to
Allentown for the purpose of examining properties
and conducting negotiations with the individual
David A. Valente and a local Pennsylvania bank
with respect to financing the project being
discussed. The allegations contained in paragraph
2 of Plaintiff's Answer contradicts the
allegations in paragraph 4, where he states that
`all the business that I have transacted with the
Defendant has been transacted, negotiated, and
consummated in the City of Chicago, State of
3. "The President of Municipal Leasing Systems, Inc.,
during the summer of 1972 was David A. Valente. At
no time during the negotiations with the Plaintiff
did David A. Valente act as an officer of the
corporation. He acted as an individual and signed
agreements as an individual. Neither Valente, a
"secretary" or Mr. Teeman accompanied the
Plaintiff to Chicago. The $10,000.00 check
referred to was handed to the Plaintiff by one
Dawn Buchanan, in the presence of Bruce D. Emig,
in the City of Bethlehem, Lehigh County,
It is the opinion of this Court after carefully examining the
relevant pleadings, memoranda, affidavits and exhibits submitted
by the parties in support of their respective positions that the
defendant has presently failed to adequately demonstrate that
this Court lacks in personam jurisdiction.
Rule 4(d)(7) of the Federal Rules of Civil Procedure provides
that service of process upon a foreign corporation is sufficient
if served in the manner prescribed by the law of the state in
which the District Court sits. The applicable Illinois Long-Arm
Statute, § 17 of the Civil Practices Act, provides:
(1) Any person . . . who in person or through an
agent does any of the acts herein enumerated, thereby
submits such person . . . to the jurisdiction of the
courts of this State as to any cause of action
arising from the doing of business of any such acts:
(a) the transaction of any business within this
State. . . .
(3) Only causes of action arising from acts
enumerated herein may be asserted against a defendant
in an action in which jurisdiction over him is based
upon this Section.
While personal jurisdiction over a non-resident defendant does
not depend upon the physical presence of the defendant within the
state, it is necessary that the act or transaction which is the
subject matter of the suit have substantial connection with the
forum state. Gray v. American Radiator and Standard Sanitation
Corporation, 22 Ill.2d 432
, 176 N.E.2d 761
(1961); Koplin v.
Thomas Haab and Botts, 73 Ill.App.2d 242, 219 N.E.2d 646
Ziegler v. Houghton-Mifflin Company, 80 Ill.App.2d 210,
224 N.E.2d 12
The purpose of a state Long-Arm Statute is to permit courts
sitting within the state to exert jurisdiction over non-residents
to the extent permitted under the due process clause. See, e.g.,
Nelson v. Miller, 11 Ill.2d 378, 143 N.E.2d 673 (1957); Koplin v.
Thomas Haab and Botts, supra. The due process implications of the
extension of personal jurisdiction over non-resident defendants
have been thoroughly explained by the Supreme Court.
International Shoe Co. v. State of Washington, 326 U.S. 310, 66
S.Ct. 154, 90 L.Ed. 95 (1945); McGee v. International Life
Insurance 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 Supreme Court decisions is that in
order for the state to have jurisdiction over a non-resident
defendant that defendant must have sufficient "minimum contacts"
in the forum state so that jurisdiction is reasonable and just.
It is well settled that in order to have a constitutionally
permissible minimum contact with the forum state a non-resident
defendant must, by some act, purposely avail itself of the
privilege of conducting business in the forum state. Hanson v.
Denckla, supra; Consolidated Laboratories, Inc. v. Shandon
Scientific Company, 384 F.2d 797 (7th Cir. 1967); Gray v.
American Radiator and Standard Sanitation Corporation, supra.
The plaintiff in his complaint and affidavit alleged that the
contract and retainer, which are the subject matter of the
instant complaint, were solicited, negotiated and consummated in
the City of Chicago, State of Illinois. Illinois state courts and
federal courts dealing with factual situations similar to those
alleged by the plaintiff in the instant action have held that
there were sufficient contacts with the forum state to have
personal jurisdiction over the non-resident defendant. See United
States Railway Equipment Co. v. Port Huron & Detroit Railroad
Company, 495 F.2d 1127 (7th Cir. 1974); O'Hare International Bank
v. Hampton, 437 F.2d 1173 (7th Cir. 1971); Colony Press, Inc.
v. Fleeman, 17 Ill.App.3d 14, 308 N.E.2d 78 (1974); Cook
Associates, Inc. v. Colonial Board and Machine Co., 14 Ill. App.3d 965,
304 N.E.2d 27 (1973). While the defendant's verified reply
raises the fact that there is a serious conflict between the
sworn statements submitted by the parties, it is the opinion of
the Court the defendant has failed in its burden of adequately
demonstrating that this Court lacks in personam jurisdiction over
The burden of proof usually rests upon the party asserting the
existence of jurisdiction. KVOS, Inc. v. Associated Press,
299 U.S. 269, 57 S.Ct. 197, 81 L.Ed. 183 (1936). However, this burden
is met by a prima facie showing that jurisdiction is conferred by
the long arm statute. United States v. Montreal Trust Co.,
358 F.2d 239 (2nd Cir. 1966). As noted above, the plaintiff in his
complaint and affidavit has made such a prima facie showing.
When a district court is confronted with two contradictory
factual allegations in which both parties swear that their
allegations are true, the court must assume, for the purpose of
the motion attacking jurisdiction, that the facts related in the
plaintiff's affidavit and complaint are true unless they are
clearly and effectively controverted by live sworn testimony and
the production of competent evidence before the Court. See O'Hare
International Bank v. Hampton, supra; Woodworkers Tool Works v.
Byrne, 191 F.2d 667 (9th Cir. 1951); Kesler v. Schetky Equipment
Corp., 200 F. Supp. 678 (N.D.Cal. 1961). The defendant has
presently failed to effectively controvert the factual
allegations of the plaintiff's complaint and affidavit. Thus the
defendant's motion should be denied at this time. However, the
instant ruling should not be interpreted to bar the defendant
from pursuing its instant motion. If the defendant desires to
perfect its instant motion it should move for a hearing on the
issue of in personam jurisdiction and produce competent witnesses
and other evidence in support of its position. See, e.g., Young
v. Albert Pick Hotels, 115 U.S.App.D.C. 400, 320 F.2d 719 (1963).
Accordingly, it is hereby ordered that the defendant's motion
to dismiss or to quash the summons is denied at this time and the
cause is set for status on September 4, 1974.
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