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WILMOT H. SIMONSON CO. v. GREEN TEXTILE ASSOCIATES

February 4, 1983

WILMOT H. SIMONSON CO., AN ILLINOIS CORPORATION, PLAINTIFF,
v.
GREEN TEXTILE ASSOCIATES, INC., A MASSACHUSETTS CORPORATION, AND MAURICE SIMON, DEFENDANTS.



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

  OPINION AND ORDER

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 Massachusetts.

FACTS

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 agreement.

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.

I. 12(b)1

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 jurisdictional amount.

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 ...


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