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United States District Court, Northern District of Illinois, E.D

January 19, 1983


The opinion of the court was delivered by: Shadur, District Judge.


Illinois corporation Felicia, Ltd. ("Felicia") brings this breach of contract action against Florida partnership Gulf American Barge, Ltd. ("Gulf American") and its individual partners. Felicia contends Gulf American, by refusing to make rental payments and provide a performance bond, violated an agreement captioned "Bare Barge Charter Party With Option to Purchase" (the "Agreement"). As its title suggests, the Agreement entitled Gulf American to charter two barges from Felicia and, at Gulf American's option, to purchase them.

Defendants now move to dismiss this action for lack of personal jurisdiction under Fed.R.Civ.P. ("Rule") 12(b)(2) or alternatively to transfer it to the United States District Court for the Northern District of Florida pursuant to 28 U.S.C. § 1404(a). For the reasons stated in this memorandum opinion and order, both motions are denied.


In the early months of 1982 Gulf American (based in Panama City, Florida) became interested in renting barges to transport various petroleum products on the Intercoastal Waterway between the pan-handle area of Florida and Brownsville, Texas. Toward the end of March 1982 Joseph Large ("Large"), one of the Gulf American partners, spotted in the Waterways Journal a Felicia advertisement offering barges for lease. Intrigued, Large telephoned Carmelo Aiello ("Aiello"), a Felicia employee in its West Chicago office, to explore the possibility of chartering Felicia barges. During the ensuing weeks Large and Aiello had several more telephone conversations to negotiate the specific terms of a leasing arrangement. On June 4, 1982 a Gulf American employee met with Aiello in Chicago to discuss the condition of the barges and then traveled to Lemont, Illinois to inspect both vessels.

On July 1, 1982 Aiello and Kay Large, another Gulf American partner, signed the Agreement in Panama City, Florida. Nine days later an official of Waterways Transportation Services, Inc. ("Waterways"), acting on behalf of both Felicia and Gulf American,*fn2 inspected both barges in Lemont and issued a report on their condition. Under the Agreement such a joint inspection was required both before delivery and after redelivery of the barges to Lemont.

At Large's request (made sometime before delivery) Felicia customized the two barges and their equipment to conform to the specifications given by Large. On July 18, 1982 Felicia delivered the barges to Gulf American at Lemont — the delivery location established by the Agreement (under the terms of which Gulf American then became contractually obligated to make rental payments and purchase insurance coverage). Aiello arranged for third parties to transport the barges to Hanrahan, Louisiana, where Gulf American employees first took physical possession.*fn3

Because of its dissatisfaction with the seaworthiness of the two barges, Gulf American returned the vessels (which are now docked at Lemont) without paying any rent or obtaining a performance bond. These asserted contractual breaches form the basis of Felicia's present suit.

Personal Jurisdiction

Exercise of personal jurisdiction over the nonresident defendants must comply with both statutory and constitutional standards. International Shoe Co. v. State of Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945) and its progeny define the due process constraints. Because no federal statute prescribes the manner of service of process in diversity actions, under Rule 4(d)(7) the Illinois long-arm statute (Ill.Rev. Stat. ch. 110, § 2-209(a)(1), "Section 2-209(a)(1)") furnishes the statutory predicate:

  (a) Any person, whether or not a citizen or
  resident of this State, who in person or through
  an agent does any of the acts hereinafter
  enumerated, thereby submits such person, and, if
  an individual, his personal representative, to
  the jurisdiction of the courts of this State as
  to any cause of action arising from the doing of
  any such acts:

    (1) The transaction of any business within this

Because constitutional questions should not be faced unless they must, this opinion will address the statutory test first.

1. "Transaction of Business"

Until recently it had been assumed Section 2-209's predecessor extended jurisdiction to the outermost boundaries permitted by the Due Process Clause. See, e.g., Nelson v. Miller, 11 Ill.2d 378, 389, 143 N.E.2d 673, 679 (1957). Then in Green v. Advance Ross Electronics Corp., 86 Ill.2d 431, 436-37, 56 Ill.Dec. 657, 661-62, 427 N.E.2d 1203, 1207-08 (1981), the Illinois Supreme Court announced the statute was not coextensive with due process requirements. See also Cook Associates, Inc. v. Lexington United Corp., 87 Ill.2d 190, 57 Ill.Dec. 730, 429 N.E.2d 847 (1981).

But the pronouncements in Green and Cook Associates do not signal any significant curtailment in the reach of Section 2-209. First, they merely express the unexceptionable notion that Section 2-209 (which after all does not expressly adopt the Due Process Clause) should be interpreted in light of the "fixed meaning" of the actual words used by the Illinois legislature. Second, their specific holdings are also unremarkable, for the forum contacts they found insufficient were tenuous and likely would not have satisfied the dictates of due process either. See Ronco, Inc. v. Plastics, Inc., 539 F. Supp. 391, 398-99 (N.D.Ill. 1982). Most important, it would be inconsistent with Green and Cook Associates themselves to read those cases as undercutting jurisdictional precepts developed in prior Illinois case law.

Gulf American plainly transacted business in Illinois within the meaning of Section 2-209(a)(1). All roads lead to that destination.

First, it performed (and committed itself to perform) substantially all its contractual obligations in Illinois (see Ronco, 539 F. Supp. at 395 and cases cited):

    1. It participated in the definitive joint
  inspection of the two barges at Lemont through
  the Waterways surveyor, its own representative as
  well as Felicia's.

    2. It took delivery of the vessels in Lemont
  and was contractually responsible for returning
  them to the same location (unless the parties
  designated another

  redelivery point or Gulf American exercised its
  purchase option).*fn4

    3. It was obligated to remit its rental
  payments to Felicia's West Chicago office.*fn5

    4. Had it elected to exercise its purchase
  option, Gulf American's representative would have
  been required to travel to Chicago to close the

Second, Gulf American's very initiation of the specific Felicia transaction in suit is another factor that strongly supports jurisdiction.*fn7 See Telco, 586 F.2d at 52.

Third, the contractual and practical necessities that Felicia perform its obligations in Illinois also confirm jurisdiction here. Under the Agreement Felicia had to deliver and accept redelivery of the barges at Lemont. And the joint inspection called for by the Agreement also had to be conducted at Lemont (the only port at which Felicia ever docked these barges) or at least somewhere in northern Illinois (given the fact Felicia's only office is in Chicago). This is a critically different situation from that in Lakeside, 597 F.2d at 603, which disregarded the forum situs of plaintiff's performance because of its absolute control over where its contractual activities would be conducted.*fn8

As for the final factor to be considered — the place of contract negotiations and execution — it is no worse than neutral on the question whether Gulf American transacted business in Illinois. Contract preliminaries involved Illinois (where Gulf American sent its own employee to inspect the barges), Illinois-Florida phone conversations*fn9 and Florida (immediately before execution of the Agreement). Actual signing of the Agreement took place in Florida. But as Lakeside, 597 F.2d at 604 emphasizes, "formalities of contract execution are not determinative for purposes of jurisdiction." Certainly the aggregate of these items does not negate Illinois jurisdiction.

Jurisdiction is not the same balancing concept as, say, forum non conveniens. On the facts here it cannot seriously be questioned that Gulf American transacted business in Illinois for Section 2-209(a)(1) purposes.

Given the nature of general partnerships, that conclusion carries with it jurisdiction over the Gulf American partners. General partners as well as partnership employees or agents are agents for all other general partners. Accordingly the Illinois contacts that bring Gulf American into court equally support the assertion of personal jurisdiction over each of its general partners. See Morton v. Environmental Land Systems, Ltd., 55 Ill. App.3d 369, 13 Ill.Dec. 79, 370 N.E.2d 1106 (1st Dist. 1977) (affirming without discussion the exercise of personal jurisdiction over all nonresident general partners on basis of forum contacts by two partners).

These fundamental agency concepts are unaffected by Ill.Rev.Stat. ch. 110, § 2-411, which simply offers the procedural choice of suing a partnership in its firm name or suing the individual partners. Nor does the line of case law typified by Hurleton Whittier, Inc. v. Barda, 82 Ill. App.3d 443, 37 Ill.Dec. 838, 402 N.E.2d 840 (1st Dist. 1980) call for a different result. Applying an Illinois version of what is often called the "corporate shield" doctrine to corporate officials, Hurleton Whittier said, 82 Ill. App.3d at 447, 37 Ill.Dec. at 841, 402 N.E.2d at 843 (emphasis added):

  The existence of personal jurisdiction must be
  established by acts of the defendant; however,
  the conduct of a person in a
  representative capacity cannot be relied upon to
  exercise individual personal jurisdiction over that

Accord, Knorr Brake Corp. v. Harbil, Inc., 550 F. Supp. 476, 479 (N.D.Ill. 1982). But by definition corporate officials are only agents, while general partners are both agents and principals. As principals they do not represent the partnership, they are the partnership.*fn10

2. Due Process

International Shoe, 326 U.S. at 316, 66 S.Ct. at 158, articulated the due process limits on assertion of personal jurisdiction:

  [D]ue process requires only that in order to
  subject a defendant to a judgment in personam, if
  he be not present within the territory of the
  forum, he have certain minimum contacts with it
  such that the maintenance of the suit does not
  offend "traditional notions of fair play and
  substantial justice."

"Minimum contacts" between defendant and forum need only be substantial enough so that the defendant might reasonably have anticipated being haled into the courts of the forum state. See World Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980). As our Court of Appeals reminds us, "the proper inquiry is whether a non-resident defendant can be said to have invoked, by act or conduct, the benefits and protections of the law of the forum." Honeywell, Inc. v. Metz Apparatewerke, 509 F.2d 1137, 1144 (7th Cir. 1975).

Certainly Gulf American's forum involvement overleaps the due process threshold. Indeed that conclusion follows inescapably from this opinion's earlier determination that the more stringent "transaction of business" test is satisfied. Through the very entry into a contract requiring the bulk of Gulf American's performance to take place in Illinois, defendants purposefully availed themselves of "the benefits and protections of [Illinois] law." In World Wide Volkswagen terms, they clearly should have anticipated their susceptibility to suit in this forum. Finally, as the next section's evaluation will confirm, a weighing of comparative inconveniences and equities reinforces the constitutional propriety of requiring defendants to defend this action here. See Met-L-Wood Corp., 475 F. Supp. at 152 (taking such considerations into account in its minimum contacts analysis).

Section 1404(a) Transfer

Defendants have alternatively moved to transfer this action to the Northern District of Florida under 28 U.S.C. § 1404(a) ("Section 1404(a)"):

  For the convenience of parties and witnesses, in
  the interest of justice, a district court may
  transfer any civil action to any other district
  or division where it might have been brought.

Though it evolved from the forum non conveniens doctrine, Section 1404(a) confers broader discretion on a district court than its common law antecedent. See Rockwell International Corp. v. Eltra Corp., 538 F. Supp. 700, 702 (N.D.Ill. 1982). In Piper Aircraft Co. v. Reyno, 454 U.S. 235, 241 n. 6, 102 S.Ct. 252, 258 n. 6, 70 L.Ed.2d 419 (1981) (quoting Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508, 509, 67 S.Ct. 839, 843, 91 L.Ed. 1055 (1957)), the Supreme Court enumerated the "private interest" and "public interest" factors that should inform the exercise of such discretion (citation omitted):

  The factors pertaining to the private interests
  of the litigants included the "relative ease of
  access to sources of proof, availability of
  compulsory process for attendance of the
  unwilling, and the cost of obtaining willing,
  witnesses; possibility of view of premises, if
  view would be appropriate to the action; and all
  other practical problems that make trial of a
  case easy, expeditious, and inexpensive." . . .
  The public factors bearing on the question
  included the administrative difficulties flowing
  from court congestion; the "local interest in
  having localized controversies decided at home";
  the interest in having the trial of a diversity
  case in a forum that is at home with the law that
  must govern the action; the avoidance of
  unnecessary problems in conflict of laws, or in
  the application of foreign law; and the
  unfairness of burdening citizens in an unrelated
  forum with jury duty.

Detailed consideration of those factors is unnecessary, for defendants' showing in each sphere is patently inadequate.

Private interest considerations are heavily tilted against transfer:

    1. Importantly, the barges themselves are
  presently docked in Lemont and could be
  transported to Florida only at great expense.
  Location of the physical evidence is especially
  important because the barges' asserted
  unseaworthiness — the crux of Gulf American's
  defense to Felicia's charges of contractual breach
  — will probably be the decisive issue. Viewing of
  that evidence by the trier of fact, rather than
  being forced to decide between the expected
  contradictory expert opinions without the ready
  availability of the vessels if necessary, may be of
  major significance.

    2. Though the witnesses appear to be about
  evenly distributed between Illinois and Florida,
  the key witness — the jointly-designated Waterways
  surveyor who inspected the barges shortly before
  delivery — lives in Illinois.

    3. Defendants have not justified their bald
  assertion that the relevant documents are
  concentrated in Florida. Even were that so, their
  movement would involve less expense and logistic
  difficulty than moving the barges.

In short, transfer would merely shift the convenience from defendants to Felicia. That is no basis for granting defendants' motion, see 15 Wright & Miller, Federal Practice and Procedure § 3848 at 246 n. 20 (1976 & Supp. 1982) (citing cases), particularly when Gulf American's transaction-related contacts with Illinois far surpass Felicia's fleeting connection with Florida (including Aiello's brief visit to sign the Agreement).

As for the public interest, Illinois certainly is a more interested forum state than Florida, for the transaction has closer ties with Illinois*fn11 and the dispute involves economic injury to an Illinois citizen, Felicia, see Ronco, 539 F. Supp. at 402. Moreover defendants have made no showing that the docket of the proposed transferee forum is less congested than that of this Court.


This Court has personal jurisdiction over defendants, and transfer of this case to the Northern District of Florida is unwarranted. Accordingly defendants' Rule 12(b)(2) and Section 1404(a) motions are denied. Defendants are ordered to answer the Complaint on or before January 31, 1983.

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