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Norman v. Kal

OPINION FILED AUGUST 27, 1980.

HAROLD G. NORMAN, JR., PLAINTIFF-APPELLEE,

v.

DARWIN P. KAL, DEFENDANT-APPELLANT.



APPEAL from the Circuit Court of Cook County; the Hon. IRWIN COHEN, Judge, presiding.

MR. JUSTICE SIMON DELIVERED THE OPINION OF THE COURT:

The circuit court was asked to register a Florida default judgment ordering a joint guarantor to reimburse his co-guarantor. Applying the Florida long-arm statute, it found that the defendant had submitted to the jurisdiction of the Florida courts> by transacting business in the State. We do not agree. A guaranty signed as part of a single business transaction arranged to develop real estate outside of Florida does not submit an out-of-stater to Florida jurisdiction on a contribution claim by a co-guarantor. We reverse and grant summary judgment to the defendant.

The defendant, Darwin P. Kal, is an Illinois attorney who in the past has done business in Florida unrelated to this case. He met the brothers Ferguson in the course of that business. They were real estate developers residing in Coral Gables, Florida, and Kal agreed to become an investor in several of their projects. Along with Harold G. Norman, Jr., a Florida resident and the plaintiff in this case, Kal formed business ventures with the Fergusons to develop apartment complexes in Bellevue, Washington (to be called Yarrowood), and Sacramento, California (to be called Hidden Creek).

A certificate of limited partnership was filed in Cook County on May 9, 1974, for the Hidden Creek FDC Company. A similar certificate was filed in Sacramento County, California, on July 2, 1974. The Ferguson brothers were listed as general partners, with the plaintiff and the defendant as limited partners. The purpose of the partnership was to develop the Hidden Creek apartment project. Each partner was to receive 25 percent of the profits and losses.

The partnership obtained construction financing through a Boston bank. The bank demanded a letter of credit to back up the loan, so the Fergusons obtained one from a Miami bank. To back the letter of credit, the Miami bank asked each of the partners to sign a personal guaranty. Both plaintiff and defendant did so. The guaranty recited that it was made in Miami, Florida, and that payments due under it were to be made at the Miami bank.

Periodic project reports were sent to the partners by the Fergusons. Kal, however, noted some discrepanices in the Fergusons' handling of Yarrowood. That venture was organized as a corporation, so Kal took advantage of a bylaw and called a shareholders' meeting at the Ferguson offices in Coral Gables. Kal notified Norman, also a shareholder in Yarrowood, by letter. In a postscript, Kal added that he and Norman should also take the opportunity to discuss the Hidden Creek project.

The Yarrowood meeting occurred around the Fergusons' swimming pool in Coral Gables in early 1975. Norman recalled that he and Kal expressed their mutual concerns about Hidden Creek. Kal could not recall such conversations, but did not dispute that they occurred. The outcome of the swimming pool meeting is not clear, but the Fergusons' real estate ventures finally collapsed. Hidden Creek went into default on the financing loan, and the Boston bank drew down on the letter of credit. The partners signed over their interests in the venture to the Boston bank in return for a release of indebtedness. The Miami bank then sued on the guaranty, naming the Fergusons, Norman and Kal, among others, as defendants. Norman crossclaimed against the Fergusons and Kal, seeking indemnification and contribution.

Kal was personally served with both the Miami bank's complaint and Norman's cross-claim. He neither appeared in the Florida court nor filed an answer. A default was entered against him on Norman's cross-claim. Norman filed a verified petition in the circuit court of Cook County seeking to register his Florida judgment. Kal answered the petition and pleaded as an affirmative defense that Florida had lacked jurisdiction over him. The circuit court granted summary judgment to Norman, and this appeal followed.

• 1 The judgment of a court from another State cannot be registered and enforced under the full faith and credit clause of the United States Constitution (U.S. Const., art. IV, § 1) or the Uniform Enforcement of Foreign Judgments Act (Ill. Rev. Stat. 1979, ch. 77, pars. 88-105), where service was outside the State and the foreign court did not have jurisdiction under its State's long-arm statute or that State's long-arm statute violated due process. (Kolman v. National Racing Affiliates, Inc. (1965), 64 Ill. App.2d 61, 64, 212 N.E.2d 313, 315.) We need not address the constitutional question here, for an examination of the Florida statute and accompanying case law leads us to conclude that the plaintiff did not satisfy the requirements of Florida law for obtaining jurisdiction over an out-of-State resident.

• 2, 3 We start with the Illinois presumption that a court of general jurisdiction in rendering a judgment had proper jurisdiction over the parties. (Evans v. Advance Schools, Inc. (1979), 70 Ill. App.3d 947, 950, 388 N.E.2d 1003, 1005; Watts v. Barrett Industries Corp. (1978), 59 Ill. App.3d 1009, 1011, 376 N.E.2d 691, 692.) That presumption is for the benefit of the Illinois court asked to register the foreign judgment, and it is rebuttable. It operates only when the record is silent as to jurisdiction. (Forrest v. Fey (1905), 218 Ill. 165, 169-70, 75 N.E. 789, 791.) When the defendant resists registration of the foreign judgment and denies the jurisdiction of the foreign court, the issue has been met. The presumption is rebutted and ceases to operate. Here, the Florida decree is silent as to jurisdiction. Kal argued in the circuit court that he was justified in not appearing in Florida because the pleadings presented to him did not under Florida law adequately invoke Florida jurisdiction. With the issue so presented, we turn to Florida law and the merits of the jurisdictional issue.

The Florida long-arm statute offers the plaintiff two possible theories of jurisdiction. It states:

"Any person, whether or not a citizen or resident of this state, who personally or through an agent does any of the acts enumerated in this subsection thereby submits that person and, if he is a natural person, his personal representative to the jurisdiction of the courts> of this state for any cause of action arising from the doing of any of the following:

(a) Operates, conducts, engages in, or carries on a business or business venture in this state or has an office or agency in this state.

(g) Breaches a contract in this state by failing to perform acts required by the contract to be performed in this state." Fla. Stat. ...


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