United States District Court, Northern District of Illinois, E.D
November 17, 1983
ELLIS CORPORATION, AN ILLINOIS CORPORATION, PLAINTIFF,
TEAM TEXTILE CORPORATION, A PENNSYLVANIA CORPORATION, DEFENDANT.
The opinion of the court was delivered by: Bua, District Judge.
Before the Court is the defendant's Motion to Dismiss or Transfer or,
in the Alternative, to Stay the Action. For the reasons stated herein,
the Motion to Dismiss is denied, the Motion to Transfer is granted, and
the Motion to Stay is denied.
The parties entered into a contract in 1980 under which plaintiff was
to manufacture and sell certain commercial laundry equipment to defendant
which was to be Installed at defendant's Houston, Texas facility. When
the equipment allegedly failed to function as expected, defendant stopped
paying on the contract, causing plaintiff to file the instant lawsuit on
December 22, 1982. Five days later, on December 27, 1982, defendant sued
plaintiff in the United States District Court for the Southern District of
Texas seeking rescission of the contract, general and consequential
damages arising from the alleged malfunctioning of the goods sold, and
damages for violation of the Texas Deceptive Trade Practices Act. Subject
matter jurisdiction is based on diversity of citizenship.
28 U.S.C. § 1332.
I. The Motion to Dismiss for Lack of Personal Jurisdiction
Defendant Team Textile Service Corporation (Team) first claims that
this Court, sitting in Illinois, has no personal jurisdiction over it and
therefore, that the cause should be dismissed. Team is a Pennsylvania
corporation with its main offices in Houston, Texas. It claims that it is
not licensed to do business in Illinois and in fact does not do business
in Illinois. Furthermore, it claims that no part of the transaction which
forms the basis of the instant lawsuit took place in Illinois. Plaintiff
argues that, at very least, the transaction took place in part in
Under the Illinois Long-Arm Statute, a non-resident defendant submits
to the jurisdiction of the courts located in Illinois when the cause of
action, inter alia, arises from the transaction of any business within
the state. Ill.Rev.Stat. ch. 110 ¶ 2-209(a)(1) (1981). This provision
has been interpreted as requiring that the foreign defendant's business
in Illinois at least be related to the cause of action. Volkswagen
Co. v. Whittington, 58 Ill. App.3d 621, 625, 16 Ill.Dec. 179,
374 N.E.2d 954 (1978).
Determination of whether a defendant has performed acts sufficient to
have submitted to the jurisdiction of a particular forum state is based
upon the due process notions of whether requiring him to defend therein is
reasonable and does not offend "`traditional notions of fair play and
substantial justice.'" International Shoe Co. v. Washington,
326 U.S. 810, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945), quoting
Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 342, 85 L.Ed.
278 (1940). This determination, in turn, is made on a case-by-case basis
taking into account the quality of the defendant's activities in the forum
state in the context of the circumstances presented. Braband v. Beech
Aircraft Corp., 72 Ill.2d 548, 21 Ill.Dec. 888, 382 N.E.2d 252
(1978). A single business transaction, however, is sufficient for personal
jurisdiction. Cook Associates, Inc. v. Colonial Broach and Machine Co.,
14 Ill. App.3d 965, 304 N.E.2d 27 (1973).
In the case at bar, the parties contracted following negotiations which
were conducted in part by defendant placing a telephone call to
plaintiffs offices in Illinois.*fn1 At no time did any representatives of
defendant physically come to Illinois. Once the terms of the contract
were memorialized, the proposed terms were sent to defendant in Texas
where the document was signed and returned to plaintiff in Illinois for
acceptance. The contract specifically provided that it did not become
binding until accepted by plaintiff, an event which occurred in
The products were manufactured in Illinois and delivered, F.O.B.
Chicago, Illinois, in Texas where they were installed and used by
defendant. When defendant failed to make payments on the goods, Louis E.
Schutt, plaintiff's controller, called Houston but was instructed to
contact defendant's parent corporation, Dometic, in Bloomington, Illinois
which was taking care of the payments. Schutt contacted Dometic and
discussed the delinquent payment problem. Subsequently, a check for
roughly $158,000, drawn on a Bloomington, Illinois bank, was received. On
another occasion, on August 20, 1980, a check for $105,000 was received,
also from Bloomington, Illinois.
Defendant Team Textile admits that from October, 1979 through May,
1981, its corporate books and records were maintained in Bloomington,
Illinois. It also admits that during that time period, payments on its
debts were made by its parent, Dometic, out of the Bloomington, Illinois
office. However, it denies that it ever did business in Illinois and
maintains that all other corporate functions took place in Houston.
This Court need not determine that defendant was doing business in
Illinois in order to assert personal jurisdiction over it despite the
fact that a persuasive argument could be made in support thereof based on
Team's apparent interrelatedness with Dometic, an Illinois based entity.
Instead, the court need only find that the transaction which lies at the
heart of this suit was in some way related to this forum. This may be
done with ease.
In Kropp Porge Co. v. Jawitz, 37 Ill. App.2d 475, 186 N.E.2d 76 (1st
Dist. 1962), the court held that either the making of the contract itself
or the activity in furtherance of it in Illinois was sufficient to
constitute the transaction of business in Illinois. While in the case at
bar, the parties cannot agree whether the contract was made in Illinois
by defendant's admission, it was at least partially performed here by
defendant. This factor is sufficient to constitute the transaction of
business in Illinois. Defendant has therefore submitted to jurisdiction
in an Illinois forum, thus
requiring that the Motion to Dismiss be denied.
II. The Motion to Transfer Venue
In addition to moving to dismiss, defendant has moved to transfer the
instant matter to the Southern District of Texas, Houston Division, where
its later filed case against the plaintiff is currently pending. Under 28
U.S.C. 1404(a), a district court, for the convenience of parties and
witnesses, in the interest of justice, may transfer any civil action to
any other district where it might have originally been brought. Before a
transfer can be made under the statute, subject matter jurisdiction and
venue must be technically proper in the transferor court. Chicago R.I. &
P.R. Co. v. Igoe, 212 F.2d 378 (7th Cir. 1954); Wilmot H. Simonson Co.
v. Green Textile Associates, Inc., 554 F. Supp. 1229 (N.D.Ill. 1983).
These requirements have been met in the instant case.
In support of its motion, defendant notes that most of the nonparty .
. . witnesses in the case reside in Texas and would not be subject to
compulsory process in Illinois. In addition, defendant claims that the
cost of producing the witnesses, among them party witnesses, whose
testimony would be available in Illinois, would be prohibitive and would
severely impair its ability to continue operations during trial.
Moreover, defendant claims that it would ask that the jury be allowed to
view the equipment so that demonstration of the alleged defects would be
simplified. This equipment, of course, is located in Houston and could
not be moved.
Finally, defendant argues that the interests of justice require the
court to grant the transfer motion. Among the factors cited in support of
this argument is the fact that plaintiff would not be unduly burdened by
the transfer because of its extensive contacts and dealings in Texas. In
addition, defendant notes that all relevant facts and events surrounding
the solicitation and formation of the contract, as well as a majority of
the performance of it, transpired in Texas.
Plaintiff essentially disagrees with each factor cited by defendant and
claims that it would be burdened with hardship were the matter
transferred to Texas. Plaintiff claims that because it is incorporated in
Illinois and does business here, it would be forced to transport its
witnesses and other evidence to Texas. Additionally, plaintiff notes that
the goods in question were designed and manufactured in Illinois and that
defendant would not be burdened by trial in Illinois because of its
presence in the state at its parent company's offices located in
Plaintiff correctly notes that transfer should not be granted when to
do would merely shift, rather than eliminate, the inconvenience to the
parties. Bodine's, Inc. v. Sunny-O, Inc., 494 F. Supp. 1279, 1286
(N.D.Ill. 1980). However, in this Court's view, the burden which
defendant would be required to face if the matter were litigated in
Illinois is far greater than that which would be imposed upon plaintiff
were transfer ordered.
While plaintiff's choice of forum is important, it is of reduced value
where, as here, the chosen forum lacks significant contact with the
underlying cause of action Hotel Constructors, Inc. v, Seagrave Corp.,
548 F. Supp. 1048 (N.D.Ill. 1982). Notwithstanding its jurisdictional
connection with Illinois, the instant cape is really a cause of action
which arose in Texas and is strongly related to that forum. At the time
that defendant apparently chose to withhold the payments due under the
contract, the payments were being made from Texas. Indeed, even when the
payments were being sent from Illinois they were not sent from this
judicial district as Bloomington, Illinois, from which the payments
originated, is located in McLean County which is in the Central District
of Illinois. 28 U.S.C. § 95 (b). The choice not to pay was made
because of the malfunctioning and nonperformance of the product which
occurred solely in Texas. The product is presently located in Texas and
cannot be moved without the incurrence of unreasonable
expense. Because the central issue in this case revolves around the
performance of the product, access to the product in both the discovery
and trial stages is a necessity. Thus, regardless of where the case
proceeds, plaintiff would be required to bear the burden of obtaining
access to the product in Texas so that it may properly try its case.
In any event, it would be required to transport many of its witnesses
to Texas so, at very least, inspection of the product and other discovery
could be undertaken.*fn2
While the Court is constrained to transfer venue based on convenience,
in the instant matter, the final determination actually requires a
balance of inconvenience. While no forum would be wholly convenient for
both parties, it is the opinion of this Court that the Houston, Texas
forum is the more preferable one as it is quite convenient for defendant
and imposes less of a burden on plaintiff than would be imposed on
defendant were the matter litigated here. This is especially true in
light of the fact that the Northern District of Illinois, located in
Chicago, while technically a proper venue, has little actual connection
with the cause of action.
For the reasons stated herein, defendant's Motion to Dismiss for lack
of personal jurisdiction is denied, but the Motion to Transfer to the
United States District Court for the Southern District of Texas, Houston
Division, is granted. The Motion to Stay Proceedings is denied.
IT IS SO ORDERED.