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MAURICE STERNBERG, INC. v. JAMES

January 11, 1984

MAURICE STERNBERG, INC., PLAINTIFF,
v.
A. EVERETTE JAMES, JR., DEFENDANT.



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

  MEMORANDUM OPINION

This case is before the court on defendant's motion to dismiss for lack of jurisdiction under Fed.R.Civ.P. 12(b)(2).

Plaintiff Maurice Sternberg, Inc., an Illinois corporation with its principal place of business in Chicago, Illinois, is an art gallery engaged in exhibiting, purchasing and selling works of art and in activities related thereto. Defendant A. Everette James, Jr. is a physician who resides in Tennessee and collects paintings as a hobby. Defendant is not currently, nor has he ever been, an art dealer. The case involves a transaction in which plaintiff traded a painting to defendant in return for three other paintings and $7,500.00. Plaintiff alleges that one of the paintings exchanged by defendant is not authentic and that defendant knowingly misrepresented the painting as an original.

This action was originally filed in the Circuit Court of Cook County, Illinois, seeking contract rescission or alternatively actual and punitive damages pursuant to Ill. Rev.Stat. ch. 121 1/2, § 270a and Ill.Rev.Stat. ch. 26, §§ 2-714 and 2-715 (1982), and for an alleged misrepresentation of material fact.*fn1 Defendant subsequently removed the action to this court pursuant to 28 U.S.C. § 1441 and 1332. Defendant has moved to dismiss the action on the grounds that exercise of personal jurisdiction over him would violate both the Illinois long-arm statute, Ill.Rev.Stat. ch. 110, § 2-209(a) (1983), and the due process clause of the United States Constitution. For the following reasons, we grant defendant's motion.

In a suit based on diversity of citizenship, a federal court has personal jurisdiction only if the forum state court would have jurisdiction. See Lakeside Bridge & Steel Co. v. Mountain State Constr. Co., Inc., 597 F.2d 596, 601 (7th Cir. 1979), cert. denied, 445 U.S. 907, 100 S.Ct. 1087, 63 L.Ed.2d 325 (1980); Fed.R. Civ.P. 4(c) and 4(e). Therefore, the first step in the analysis is to determine as a statutory matter whether the Illinois long-arm statute reaches the defendant. See Ronco, Inc. v. Plastics, Inc., 539 F. Supp. 391, 395-99 (N.D.Ill. 1982); Cook Associates, Inc. v. Lexington United Corp., 87 Ill.2d 190, 57 Ill.Dec. 730, 733-34, 429 N.E.2d 847, 850-51 (1981); Green v. Advance Ross Electronics Corp., 86 Ill.2d 431, 56 Ill.Dec. 657, 661-62, 427 N.E.2d 1203, 1207-08 (1981).

Ill.Rev.Stat. ch. 110, § 2-209(a)(1) (1983)*fn2 provides that:

    (1) The transaction of any business within this
  State;

The issue is thus whether defendant's conduct falls within the language of this long-arm provision.*fn3

From the affidavits submitted by the parties,*fn4 it appears that there are three components to defendant's contacts with Illinois: (1) various interstate telephone conversations and mail correspondence regarding the transaction; (2) defendant's contract with an Illinois corporation whose portion of the contract was performed in Illinois; and (3) two visits by defendant to Chicago in November 1981 and April 1982 during which he visited plaintiff gallery. These factors will be examined individually and in tandem to determine whether they are sufficient to establish jurisdiction under the Illinois long-arm statute.

First, interstate telephone and mail communications to an Illinois plaintiff are not sufficient to constitute the transaction of business required by the Illinois long-arm statute. Caicos Petroleum Service Corp. v. Hunsaker, 551 F. Supp. 152, 155 (N.D.Ill. 1982); Wessel Co., Inc. v. Yoffee and Beitman Management Corp., 457 F. Supp. 939, 941 (N.D.Ill. 1978); Woodfield Ford, Inc. v. Akins Ford Corp., 77 Ill. App.3d 343, 32 Ill.Dec. 750, 755, 395 N.E.2d 1131, 1136 (1st Dist. 1979). This is true regardless of which party initiates the calls, correspondence or the transaction itself. United States Reduction Co. v. Amalgamet, Inc., 545 F. Supp. 401, 403 (N.D.Ill. 1982). Therefore, the communications by telephone and mail between the parties in the present case are an insufficient predicate for jurisdiction over the defendant.

Second, while any contract involving an Illinois party inevitably involves contact with the state, that fact alone is insufficient for jurisdictional purposes. Woodfield Ford, supra, 77 Ill.App.3d 343, 32 Ill.Dec. at 756, 395 N.E.2d at 1137. A distinction must be drawn "between the transaction of business in Illinois and the transaction of business with an Illinois corporation." Wessel, supra, at 941. The fact that the Illinois plaintiff's part of the contract was to be performed in Illinois is not transacting business for jurisdictional purposes. Id. The focus of the inquiry must be on the acts of the defendant to determine whether there has been a transaction of business. Unarco Indus., Inc. v. Frederick Mfg. Co., Inc., 109 Ill. App.3d 189, 64 Ill.Dec. 808, 810, 440 N.E.2d 360, 362 (3d Dist. 1982). In the present case, therefore, the fact that plaintiff shipped the painting in question and performed its part of the bargain in Illinois is irrelevant for jurisdictional purposes. Defendant performed its part of the bargain in Nashville. These facts will not support long-arm jurisdiction in Illinois.

Finally, while physical presence in Illinois is not always required to assert long-arm jurisdiction, it is one factor which may be looked at to determine whether a party has "transacted business" in Illinois. See, e.g., United Air Lines, Inc. v. Conduction Corp., 69 Ill.App.3d 847, 26 Ill. Dec. 344, 348, 387 N.E.2d 1272, 1276 (1st Dist. 1979). Where a party enters Illinois and initiates or solicits a transaction, the courts will find that jurisdiction exists. Caicos Petroleum, supra, at 154. Further, where a defendant engages in substantial pre-contract negotiations which eventuate in the execution of the contract, even in a single session, this will constitute transacting business for jurisdictional purposes. Ronco, supra, at 396; United Air Lines, supra, 69 Ill.App.3d 847, 26 Ill.Dec. at 349, 387 N.E.2d at 1277. However, mere physical presence in Illinois unrelated to the transaction in question will not satisfy the requirements even where some of the events leading up to the execution of the final contract occurred in Illinois as a result of that presence. Ronco, supra, at 396 n. 7. Further, a contract negotiated in Illinois which is later rejected will not provide the basis of jurisdiction of a later different contract between the same parties. See Cook Associates, supra, 87 Ill.2d 190, 57 Ill.Dec. at 733-34, 429 N.E.2d at 850-51; see also Drilled Foundations, Inc. v. Strata-Dyne, Inc., No. 79 C 4242, slip op. at 1 (N.D.Ill. Nov. 13, 1980) (Grady, J.).

The question presented in the present case is whether defendant's two visits to Illinois can be characterized as transacting business under these interpretations of the statute. Defendant's first visit to the gallery, made while he was attending a medical convention in Chicago, cannot be characterized as transacting business. Although plaintiff asserts in its responsive memorandum that this visit was an important component of the transaction (Plaintiff's Response to Defendant's Motion to Dismiss, at pp. 3, 9-10), there is no reference in plaintiff's representative's affidavit to the fact that defendant negotiated, much less entered into, any contract on that first visit. Mere "fascination and interest" in a number ...


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