The opinion of the court was delivered by: Bua, District Judge.
Before the Court is the Defendants' Motion to Dismiss or to
Transfer brought under the various provisions of Fed.R.Civ.P.
12(b). For the reasons stated herein, the Motion to Dismiss is
denied and the cause is ordered transferred to the District of
Plaintiff brought the instant lawsuit in the U.S. District
Court for the Northern District of Illinois seeking a
declaratory judgment pursuant to 28 U.S.C. § 1332. Federal
jurisdiction is based on diversity.
Plaintiff Wilmot H. Simonson Co., Inc., (WHS-Ill.) is an
Illinois corporation engaged in the sale and manufacture of
fruit-based beverages. Defendant Green Textiles Associates,
Inc. (Green Textiles) is a Massachusetts corporation and is a
party to, and guarantor of, the agreement which is the subject
of the instant lawsuit. Defendant Simon, a resident of
Massachusetts, is an officer, director, and shareholder of
Green Textiles and was a signatory of the agreement.
In its complaint, plaintiff alleges that in September, 1979,
an Agreement of Sale (the "agreement") was entered into among
Wilmot H. Simonson Co., Inc., a Massachusetts corporation
(WHS-Mass.), Green Textiles, Simon, and The Nedlog Company
(Nedlog), an Illinois corporation. Under the terms of the
agreement, WHS-Mass. was to sell Nedlog substantially all of
its assets. Additionally, it was agreed that WHS-Mass., Green
Textiles, and Simon would refrain from participating in the
area of business of the buyer and the seller for a period of
ten years. After the distribution of assets, WHS-Mass. was
merged with Green Textiles.
On or about September 17, 1979, WHS-Ill. was organized as an
Illinois corporation. Shortly thereafter, Nedlog assigned to
WHS-Ill. all of its rights, title and interest in the
agreement. WHS-Ill. eventually received the assets of
WHS-Mass. which had been distributed to Nedlog under the
In December, 1980, Richard Green, an officer, director, and
shareholder of Green Textiles on the date the agreement was
executed, entered into employment with Thirsty Time Beverages
Corp., a Massachusetts corporation. Thirsty Time is also
engaged in the fruit drink business. It is alleged that such
employment is in violation of the covenant not to compete
contained in the agreement. That issue is the subject of a
lawsuit currently pending in the District Court for the
District of Massachusetts entitled Richard Green v. Wilmot H.
Simonson Company and The Nedlog Company, Case No. 81-2301.
In March, 1981, Green's employment with Thirsty Time
terminated. Since that time, Green has been employed by and
has also been terminated by the 4-U Company of America,
another entity involved in the fruit beverage business.
In Count I, WHS-Ill. asserts that, by the competitive
activities of Green, Green Textiles has violated the covenant
not to compete contained in the agreement. Count II of the
complaint alleges that Green Textiles breached its obligations
as a guarantor under the agreement. Under the agreement, Green
Textiles agreed to unconditionally guarantee each and every
obligation, representation, and warranty of WHS-Mass. and to
indemnify WHS-Ill. for all losses, damages, liabilities, costs
and expenses, including reasonable attorneys' fees arising
from breaches of the agreement. Due to Green's alleged
competitive activities, WHS-Ill. has
incurred legal fees in excess of $38,000 and claims
additionally that it has lost business as a result of such
activities. Green Textiles has refused to indemnify WHS-Ill.
for its costs, losses, or attorneys' fees.
In its motion to dismiss or transfer, the defendants have
claimed a litany of bases on which they claim the instant
matter should be dismissed or transferred. The Court will
consider these assertions seriatim.
The defendant has challenged this Court's diversity
jurisdiction over the instant matter by asserting that the
complaint does not sufficiently allege the jurisdictional
amount of $10,000 as required by 28 U.S.C. § 1332.*fn1 The
plaintiffs have, however, claimed damages far in excess of the
Initially, plaintiffs have asserted that they have incurred
legal expenses of more than $38,000 which they claim is
recoverable under the contract. In addition, Count I asks the
Court to declare the six remaining annual payments, which
total over $75,000, as no longer due because of defendants'
alleged competitive conduct in violation of the agreement.
While there is no certainty that plaintiff will recover more
than $10,000, it cannot be gainsaid that there is a legal
certainty that the plaintiff cannot recover the amount claimed
as required by St. Paul Mercury Indemnity Co. v. Red Cab Co.,
303 U.S. 283, 288, 58 S.Ct. 586, 590, 82 L.Ed. 845 (1938).
Plaintiff's allegations appear to have been made in good faith
and without malice insofar as the jurisdictional amount is
concerned. Defendants' claims to the contrary are ...