United States District Court, Southern District of Illinois, East St. Louis Division
March 8, 1985
PHYLLIS HARVEY, PLAINTIFF,
J. MAX PRICE, DEFENDANT.
The opinion of the court was delivered by: Foreman, Chief Judge:
MEMORANDUM AND ORDER
Before the Court are defendant's Motion to Dismiss (Document
No. 4) and plaintiff's Motion to Remand (Document No. 9).
Plaintiff filed this action on June 24, 1981, in the Circuit
Court of the Twentieth Judicial Circuit, St. Clair County,
Illinois. The one-count complaint alleged that the defendant, an
attorney, made a misrepresentation to plaintiff's attorney
concerning insurance coverage in an earlier incident. Plaintiff
sought $10,000 in this complaint. In July of 1981, the defendant
moved to dismiss the complaint for lack of personal jurisdiction.
Sometime later, the state court denied this motion stating that
personal jurisdiction did lie over the defendant. On November 30,
1984, the plaintiff amended his complaint adding a second count
which alleged that the defendant's misrepresentation was willful
and wanton. The plaintiff sought in this count $10,000 actual
damages plus $500,000 punitive damages. On December 8, 1984, the
defendant removed the case to this Court on the basis that
diversity jurisdiction now existed since the amount in
controversy exceeded $10,000. On December 20, 1984, the defendant
filed a Motion to Dismiss in this Court, arguing as he did
previously in the state court that personal jurisdiction over him
The plaintiff raises a number of points with regard to removal
and the Motion to Dismiss. First, the plaintiff contends that if
in fact the Illinois court lacked personal jurisdiction over the
defendant then under the derivative jurisdiction doctrine this
Court would not possess proper removal jurisdiction. Second, the
plaintiff argues that the state court's ruling on the defendant's
Motion to Dismiss represents the "law of the case" so as to
preclude the defendant from relitigating that point. Finally, the
plaintiff submits that this Court has personal jurisdiction over
the defendant since the defendant has committed a tort within the
state so as to trigger application of the Illinois Long-Arm
The first question the Court must decide is whether this case
is properly removable. 28 U.S.C. § 1446(b) provides that:
If the case stated by the initial pleading is not
removable, a petition for removal may be filed within
thirty days after receipt by the defendant, through
service or otherwise, of a copy of an amended
pleading, motion, order or other paper from which it
may first be ascertained that the case is one which
is or has become removable.
Here, the original one-count complaint was not removable since
the plaintiff did not seek in excess of $10,000. However, with
the amendment to the complaint in 1984, the plaintiff sought in
excess of $10,000 since punitive damages can be included in the
amount of controversy requirement if under the governing law of
suit they are recoverable. Bell v. Preferred Life Assurance Soc.,
320 U.S. 238
, 64 S.Ct. 5, 88 L.Ed. 15 (1943). Punitive damages
are allowed in Illinois where a defendant has acted wilfully or
with such extreme negligence as to indicate reckless disregard
for the safety of others. Hazelwood v. Illinois Central Gulf
R.R., 114 Ill.App.3d 703, 71 Ill.Dec. 320, 450 N.E.2d 1199
(1983). The plaintiff in the instant case seeks punitive damages
because the defendant's actions were wilful and wanton. Thus, the
case meets the amount in controversy requirements.
Under the "derivative jurisdiction" doctrine a case is not
properly removable unless its within the jurisdiction of the
state court from which it is removed. Wright, Miller & Cooper,
Federal Practice and Procedure: Jurisdiction § 3372. However,
this doctrine only pertains to subject matter jurisdiction; a
federal court can retain a removed case for new service if it
determines that the state court lacked jurisdiction over the
person of the defendant. Id. Further, mere removal of an action
does not constitute a waiver of the defendant's
objection that the state court lacks jurisdiction over his
person. 1A Moore's Federal Practice ¶ 0.157[3.-5]. If after the
case is removed, the court determines that it lacks personal
jurisdiction over the defendant it must dismiss the case. Id.
Remand would be an alternative if, and only if, the state court
could possess personal jurisdiction over the defendant when the
federal court would not. This scenario would be highly unlikely
since a federal court sitting in diversity applies the long-arm
statute of the state in which it sits. Therefore, even if the
state court did not possess personal jurisdiction over the
defendant, this court does possess proper removal jurisdiction
over the case.
The plaintiff is also incorrect in his assertion that the state
court's ruling on the defendant's earlier Motion to Dismiss for
lack of personal jurisdiction represents the law of the case so
as to preclude a further determination by this Court. Any orders
issued by the state court prior to removal are not conclusive
upon the parties. This solution is intended
to give the District Court complete control over
interlocutory orders made and proceedings had in the
cause before removal, and, by necessary implication,
to authorize the setting aside or modification of
orders made by the state court. If the cause had
continued before the state court it could have set
aside or modified the orders in question, and what it
could have done may be done by the District Court on
a rehearing, if the facts warrant such a course.
Indeed upon the District Court's assuming
jurisdiction of the suit, it must have free hand to
dispose of all phases of the controversy.
Dicks-David Co. v. Edward Maurer Co., 279 Fed. 281, 283 (D.N.J.
1922). Further, the defendant's amenability to suit in this Court
is a federal matter and the state court's ruling would not
establish the law of the case as to that question. 1B Moore's
Federal Practice ¶ 0.404[b]. Therefore, this Court is free to
determine whether it has personal jurisdiction over the
Personal jurisdiction is based on a combination of two
elements, amenability to jurisdiction and service of process.
Terry v. Raymond International, Inc., 658 F.2d 398, 401 (5th Cir.
1981), cert. denied, 456 U.S. 928, 102 S.Ct. 1975, 72 L.Ed.2d 443
(1982). Both must be present to authorize a district court to
adjudicate the case. Id. Amenability refers to the substantive
reach of the forum's jurisdiction. Amenability has both state law
and federal constitutional significance. Service of process is
these physical means by which jurisdiction is asserted. Applying
the principles the courts have developed three tests to determine
if a court possesses personal jurisdiction over defendant: (1)
the assertion of jurisdiction by the law of the forum; (2)
conformity of this law with the Constitution; and (3) authority
for the means of service of process. Id. The first two tests
apply to amenability and the third test applies to service of
In a diversity case, as here, the amenability portion of the
above tests consists of the following analysis. First, state law
(usually the state Long-Arm Statute or case law "doing business"
requirement) must assert jurisdiction over the defendant for the
cause of action at issue in this suit. Id. Second, the exercise
of personal jurisdiction over the defendant must be consistent
with the due process clause of the fourteenth amendment. This
inquiry consists of deciding whether the defendant has minimum
contacts with the forum state "such that the maintenance of the
suit does not offend `traditional notions of fair play and
substantial justice.'" International Shoe Co. v. Washington,
326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). Terry, 658
F.2d at 401.
With regard to service of process prong of the above test,
under Fed.R.Civ.P. 4 either federal or state methods of service
are authorized. Congress has permitted nationwide service of
process in several specialized statutes. See e.g. 28 U.S.C. § 2361
(1978) (interpleader); 15 U.S.C. § 5, 22, 25 (1973)
(federal antitrust laws); 15 U.S.C. § 77v(a) (1971) (federal
laws). In those areas where Congress has not so provided,
Fed.R.Civ.P. 4 authorizes that process can be served outside the
state in which the district sits only under the state procedures
for extraterritorial service or within the 100 mile area.
Generally, this has permitted service on an out-of-state
defendant pursuant to a state long-arm statute. In this regard
the state long-arm statute is utilized twice. First, in a
diversity action to assert jurisdiction over the out-of-state
defendant for amendability purposes; and second to authorize
service on the out-of-state defendant in both diversity and
federal question cases.
In the present case the plaintiff alleges the following facts:
On December 4, 1978, the plaintiff was involved in a traffic
accident on Missouri Avenue, East St. Louis, Illinois, with
Ernest Coverdell. After an investigation, the plaintiff forwarded
a lien letter to Mr. Coverdell requesting that Mr. Coverdell turn
the lien letter over to his insurance carrier. On January 8,
1979, the defendant, the attorney for Mr. Coverdell, contacted
the plaintiff's attorney and indicated that he had not had
sufficient time to discuss with his client whether or not he had
liability insurance. On January 10, 1979, the defendant
telephoned the attorney for the plaintiff and indicated that his
client had told him that he did not have any liability insurance
and that he would attempt to settle the matter on a cash basis.
On January 12, 1979, the defendant sent a letter to the attorney
for the plaintiff indicating that he had discussed the matter
with Mr. Coverdell, and that Mr. Coverdell decided to offer
settlement in the amount of $300 or $500. Plaintiff refused said
offer and eight months later filed an action against Mr.
Coverdell. Upon filing this action, the plaintiff was advised
that Mr. Coverdell did have liability insurance. The insurance
company later sought and received a declaratory judgment that Mr.
Coverdell's failure to notify the carrier of the accident barred
The plaintiff further alleges that in the declaratory judgment
trial Mr. Coverdell testified that he told the defendant in
January of 1979 that he did have liability insurance that would
cover this accident. The plaintiff contends therefore that the
defendant subjected himself to this Court's jurisdiction by
committing this act of misrepresentation in Illinois. The
Illinois Long-Arm Statute provides in pertinent part:
(a) Any person, whether, or not a citizen or
resident of this State, who in person or through an
agent does any of the acts hereinafter enumerated,
thereby submits such personal representative, to the
jurisdiction of the courts of this State as to any
cause of action arising from the doing of any of such
(1) The transaction of any business within this State;
(2) The commission of a tortious act within this
State; . . . .
(b) Service of process upon any person who is
subject to the jurisdiction of the courts of this
State, as provided in this Section, may be made by
personally serving the summons upon the defendant
outside this State, as provided in this Act, with the
same force and effect as through summons had been
personally served within this statute.
(c) Only causes of action arising from acts
enumerated herein may be asserted against a defendant
in an action in which jurisdiction over him or her is
based upon this Section. . . .
Ill.Stat.Ann. Ch. 110, 2-209 (Smith-Hurd 1984).
Plaintiff contends that pursuant to subdivision (b), the
defendant has subjected himself to this Court's jurisdiction.
Specifically, the plaintiff argues that the alleged
misrepresentation occurred in Illinois since the defendant,
telephoned from Missouri to the plaintiff's attorney in Illinois.
The Court agrees with the plaintiff that for purpose of the
statute, the misrepresentation, occurred, if at all, in Illinois
where the plaintiff relied on the defendant's statements to his
detriment. However, the Court recognizes that labeling the
defendant's actions an Illinois tort is merely a matter of
convenience over form.
Ascertaining precisely where a misrepresentation, made from one
state into another, occurred is a difficult if not totally
arbitrary process. In any event, this does not end the Court's
inquiry. The Court must determine whether the application of the
statute to this defendant meets the due process requirements of
the fourteenth amendment.
Pursuant to the due process clause of the fourteenth amendment
a defendant may be subjected to a judgment in personam, even if
he is not present in the forum, if he has such minimum contacts
with the forum such that the maintenance of the suit does not
offend judicial notions of fair play and substantial justice.
International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154,
90 L.Ed. 95 (1945). The test is not a mechanical one, but rather
it consists of a weighing of the defendant's contacts with the
forum against other factors such as the "forum state's interest
in adjudicating the dispute, the plaintiff's interest in
obtaining convenient and effective relief, the judicial system's
interest in obtaining the most efficient resolution of the
controversy, and the public interest in furthering fundamental
substantive social policies." 28 Fed.Proc. L.Ed. § 65:6 (citing
World Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 100 S.Ct.
559, 62 L.Ed.2d 490 (1980).
In the instant case, the defendant did not maintain the
necessary minimum contacts with Illinois. The defendant did not
practice law in Illinois, nor did he attempt to represent Mr.
Coverdell regarding the declaratory judgment action filed by the
insurance carrier. His only contact with Illinois in this matter
was his telephone call to the plaintiff's attorney. This call was
made after the plaintiff asked the defendant whether or not Mr.
Coverdell carried liability insurance. Although the commission of
a single tort in Illinois may meet the requirements of the
fourteenth amendment, here, as stated earlier, the labeling of
this tort as an Illinois tort is merely a matter of convenience.
Absent any further evidence of the defendant's contacts with
Illinois, the Court will refrain from exercising personal
jurisdiction over him.
Accordingly, the defendant's Motion to Dismiss (Document No. 4)
is hereby GRANTED. Plaintiff's Motion to Remand (Document No. 9)
is hereby DENIED. The plaintiff's complaint is hereby dismissed
without prejudice for lack of personal jurisdiction over the
IT IS SO ORDERED.
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