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MET-L-WOOD CORPORATION v. SWS INDUSTRIES

October 9, 1984

MET-L-WOOD CORPORATION, PLAINTIFF,
v.
SWS INDUSTRIES, INC., DEFENDANT. (TWO CASES).



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

MEMORANDUM OPINION AND ORDER

Met-L-Wood Corporation ("Met-L-Wood") sues SWS Industries, Inc. ("SWS") for breach of contract in each of these related actions. SWS has moved alternatively (1) to dismiss both actions under Fed.R.Civ.P. ("Rule") 12 (b)(2) for lack of personal jurisdiction or (2) to transfer them under 28 U.S.C. § 1404 (a) ("Section 1404(a)") to the District Court for the District of New Jersey.*fn1 For the reasons stated in this memorandum opinion and order, each of SWS' motions to dismiss is denied and each of its motions to transfer is granted.

Facts

Both parties have submitted affidavits.*fn2 In the following statement of facts, any factual conflicts have been resolved in favor of the non-moving party (Met-L-Wood) and Met-L-Wood's Complaint allegations have been accepted as true. Neiman v. Rudolph Wolff & Co., 619 F.2d 1189, 1190 (7th Cir.), cert. denied, 448 U.S. 920, 101 S.Ct. 819, 66 L.Ed.2d 148 (1980).

Met-L-Wood, a Delaware corporation with its principal place of business in Bedford Park, Illinois, manufactures panels used in the installation of curtain wall systems. SWS, a New Jersey corporation with its principal place of business in Moonachie, New Jersey, installs window and curtain wall systems in commercial and industrial buildings.

In 1982 two SWS employees visited Met-L-Wood's Illinois offices and plant to assess Met-L-Wood's manufacturing capability. During their visit they discussed with a Met-L-Wood executive general terms and prices offered by Met-L-Wood for the fabrication of curtain wall panels. Following the visit SWS ordered panels from Met-L-Wood for five separate construction projects in New Jersey, two of which ("Mercedes," contracted for in May 1983, and "Hasbrouck," contracted for in August 1983) are the subjects of these actions. Before the manufacture of the Hasbrouck panels and during the manufacture of the Mercedes panels, an SWS agent made two additional inspection visits to Met-L-Wood's plant. SWS and Met-L-Wood also exchanged numerous letters and phone calls.

Both projects required custom-made panels fabricated according to drawings furnished by SWS. SWS also submitted a model of a part that Met-L-Wood was to copy and attach to each panel for both projects. After the panels were manufactured Met-L-Wood delivered them to SWS in New Jersey. Although SWS apparently accepted both sets of panels and made partial payment for them, the general contractor on each project rejected the panels as nonconforming due to discoloration.*fn3 When Met-L-Wood's efforts to cure proved unsuccessful, SWS refused to make further payments on the contract.

On May 80, 1984 SWS sued Met-L-Wood and the Mercedes general contractor in a New Jersey state court for declaratory judgment of its rights and duties under the Mercedes contract. On June 1 Met-L-Wood sued SWS in this Court for breach of the same contract. Six weeks later Met-L-Wood filed a second contract action against SWS in this District Court for failure to make payments on the Hasbrouck contract.*fn4

Personal Jurisdiction*fn5

This Court recently discussed at considerable length the standards by which, under Illinois law (applicable here as well), personal jurisdiction over nonresident defendants must be determined. Club Assistance Program, Inc. v. Zukerman, 594 F. Supp. 341 (1984). Because SWS' primary concern seems to be in having these actions heard in New Jersey as opposed to having them dismissed outright, and because transfer to New Jersey will render Illinois jurisdiction irrelevant, this opinion will abbreviate the detailed analysis in Club Assistance.

Federal courts sitting in Illinois must separately analyze the Illinois long-arm statute (Ill.Rev.Stat. ch. 110, ¶ 2-209, "Section 2-209") and the constitutional constraints of due process to determine the existence of personal jurisdiction over nonresident defendants. Jacobs/Kahan & Co. v. Marsh, 740 F.2d 587, 589 (7th Cir. 1984). This opinion therefore addresses both considerations.

As relevant for current purposes, the long-arm statute establishes personal jurisdiction over a nonresident "as to any cause of action arising from . . . the transaction of any business" in Illinois. Section 2-209(a). "Transaction of business" may perhaps require more than "mere solicitation" (Loggans v. Jewish Community Center, 113 Ill. App.3d 549, 556, 69 Ill.Dec. 484, 489, 447 N.E.2d 919, 924 (1st Dist. 1983)), though that has been cast in some doubt by the Illinois Supreme Court's most recent pronouncement in the field, Maunder v. DeHavilland Aircraft of Canada, Ltd., 102 Ill.2d 342, 351-52, 80 Ill.Dec. 765, 769-770, 466 N.E.2d 217, 221-22 (1984). But in any event our Court of Appeals has made it clear in two recent cases that nearly anything beyond solicitation qualifies as the transaction of business. Deluxe Ice Cream Co. v. R.C.H. Tool Corp., 726 F.2d 1209, 1216 (1984) found the "transaction of business" requirement satisfied by two conversations defendant's agent held in Illinois to discuss the purchase and repair of equipment that was the subject of the suit. In Jacobs/Kahan, 740 F.2d at 590, defendants' sole contact with Illinois was sending an agent to Chicago on one occasion to inspect plaintiff's operations, finish negotiating its service contract with plaintiff and sign the contract. That partial negotiation and execution in Illinois were held the "transaction of business" (id.).

These actions plainly resemble both Jacobs/Kahan and Deluxe Ice Cream in that SWS agents made three separate visits to Met-L-Wood's plant in Illinois, the first before entering into the contracts and the others to inspect the work in progress. Those visits obviously satisfy the "transaction of business" requirement under the teaching of the cases.

SWS argues the visits by its agents do not satisfy the "arising from" language of Section 2-209 because the contract dispute arose from the manufacture of the panels, not from the visit by the SWS employees. Such a reading is far too narrow. Jacobs/Kahan emphasized "arising from" is to be construed broadly to encompass any cause of action that "lie[s] in the wake" of the transaction of business. Both contracts in issue may fairly be said to have resulted ...


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