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ELLIS CORPORATION v. TEAM TEXTILE CORPORATION

November 17, 1983

ELLIS CORPORATION, AN ILLINOIS CORPORATION, PLAINTIFF,
v.
TEAM TEXTILE CORPORATION, A PENNSYLVANIA CORPORATION, DEFENDANT.



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

ORDER

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 Illinois.

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 Insurance 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 Illinois.

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 ...


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