The opinion of the court was delivered by: Parsons, Senior District Judge.
MEMORANDUM OPINION AND ORDER
This case involves an action for indemnification. The
plaintiff, Saul Stone & Company, alleges that the defendant,
Jerry Browning a/k/a Jerry Bloom, should be required to
guarantee any and all damages awarded to John E. Blum, as a
result of another action arising from the same transaction and
pending in the State of Washington.
On or about October 25, 1980, the defendant Browning, an
undisclosed agent for Blum, executed a customer's agreement
with one Bonnie Frost, an agent of Saul Stone & Company, to
trade commodity futures using monies supplied by Browning. The
negotiations occurred in Grant County, Washington. Performance
took place on the exchange floor in Chicago. Pursuant to
conditions contained in the agreement, final acceptance of the
contract did not occur until Stone received the completed
contract from its agent, Bonnie Frost. The parties agreed to
consent to the jurisdiction and venue of Illinois state and
In a pending action filed in December, 1983 in the Eastern
District of Washington,
Blum, a resident of San Mateo, California, has claimed that
Stone, an Illinois corporation with its principal place of
business in Chicago, succeeded in managing Blum's investment
of $80,000 to reach a balance of $350,000 at which point Blum
directed Stone to liquidate the account. Stone allegedly
failed to carry out this order. This resulted in a total loss
of the profits and initial investment belonging to Blum. Blum
thereafter filed an action against Stone in the Eastern
District of Washington to recover his investment, lost
profits, lost interest, and treble damages of $10,000.00 made
available to him under the Washington State Consumer
Protection Act. Blum also asked for an unspecified punitive
In January, 1984, Stone filed the instant action in the
Northern District of Illinois, Eastern Division, seeking
indemnity from Browning for any and all damages recoverable
from it by Blum in the pending action, Blum v. Stone. The
defendant Browning has submitted a motion to dismiss the
instant case for lack of jurisdiction or, in the alternative,
to transfer the case to the Eastern District of Washington.
Both motions are hereby denied.
Section 1332(a) of Title 28, U.S. Code, confers original
jurisdiction upon the federal district court in cases where
the amount in controversy exceeds $10,000, exclusive of
interest and costs, and the litigants' citizenship is diverse.
In this case, plaintiff, Stone, is an Illinois corporation
with its principal place of business in Chicago. The
corporation is domiciled in the Northern District of Illinois.
Browning is a citizen and resident of British Columbia,
Due process requires in this case only that maintenance of
the suit does not offend "traditional notions of fair play and
substantial justice." Milliken v. Meyer, 311 U.S. 457, 463, 61
S.Ct. 339, 343, 85 L.Ed. 278 (1940). This requires the
existence of "minimum contacts" between the defendant and the
jurisdiction in which the suit is filed. Merrill Lynch, Pierce,
Fenner & Smith v. Lecopulos, 553 F.2d 842 (2nd Cir. 1977).
The defendant claims that he has had no minimum contacts
with this jurisdiction. He maintains no office here. According
to his affidavit, he transacted business with an agent of
Stone in a Moses Lake, in the State of Washington; but
acceptance of the account itself occurred in Chicago according
to paragraph 16 of the service contract. Performance of
Stone's services under the contract were to take place in
Chicago. The alleged breach of which Stone complains took
place in Chicago. Correspondence relative to the account has
occurred in and originated from Chicago. Paragraph 13 of the
service contract binds the parties to submit to the
jurisdiction and venue of Illinois courts, state or federal.
Our courts have held that excepting a showing of
overreaching, unconscionability, or adhesion, consent
provisions in contracts show a contemplation of the parties
that the place for resolving any disputes arising from this
contract is mutually preferred and should be recognized.
Heinold Commodities, Inc. v. Hager, Comm.Fut.L.Rep. at p.
The commodity futures exchange deals with a number of
agencies which act for others on the exchange floor. Mr.
Browning easily could have used another exchange house instead
of Stone. Theirs was an arm's length transaction. The
jurisdiction they selected had a reasonable relationship to
the parties and to their dispute. Comprehensive Merch.
Catalogs, Inc. v. Madison Sales Corp., 521 F.2d 1210, 1212 (7th
It is well established in this circuit that a federal
district court has personal jurisdiction over a party in a
diversity case only if a court of the state in which the
district court is sitting otherwise would have jurisdiction.
Lakeside Bridge & Steel Co. v. Mountain State Construction Co.,
597 F.2d 596, 598 (7th Cir. 1979), cert. denied,
455 U.S. 907-08, 100 S.Ct. 1087-88, 63 L.Ed.2d 325 (1980). The Supreme
Court has defined the necessary minimum contact
as some act by which the defendant purposefully avails itself
of the privilege of conducting activities within the forum
state, thus invoking the benefits and protection of its laws.
Hanson v. Denkla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239, 2
L.Ed.2d 1283 (1958). I find that jurisdiction has attached as
to this district of this state.
Venue involves a slightly different consideration. It
relates to the convenience of the litigants. Location of and
ease of obtaining witnesses and location of and ease of
obtaining evidence, and the best interests of justice are
considerations in deciding venue. Here Browning seeks to
transfer this case to the Eastern District of Washington, the
jurisdiction where the pending action was filed. Yet it is
uncontroverted that the witnesses, including the defendant,
his principal or partner, the involved agents of Saul Stone,
Bonnie Frost and Orville Mueller, were not here. Mueller's
residence presently is undetermined, but Stone alleges that
Frost is willing and available to come here to testify.
Stone's records of the transactions on Blum's account are
located here. Stone's home office witnesses are here. No
material witnesses except Bonnie Frost are located in
Washington and she will come here. What is most compelling,
however, is that the parties agreed to submit their litigation
to the courts here.
Choice of forum provisions are looked upon favorably by the
courts. In Heinold Commodities, Inc. v. Hager, supra, Judge
Shadur of this court upheld a venue provision in the service
contract. His judgment was based upon the Supreme Court's
checklist found in Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 67
S.Ct. 839, 91 L.Ed. 1055 (1947). There the Court indicated
these factors: 1) relative ease and access to sources of proof;
2) availability of unwilling witnesses to service of subpoena;
3) cost of attendance at trial by willing witnesses; 4)
relation of the community in which courts and jurors are
required to serve to the occurrence at issue in the litigation;
5) accessibility of the premises involved in the litigation;
and 6) relative congestion of the court dockets and ...