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VAN GELDER v. TAYLOR
November 13, 1985
ERIC VAN GELDER; AND ERIC VAN GELDER ON HIS OWN BEHALF AND ON BEHALF OF ALL OTHER SHAREHOLDERS OF THE ROOKERY, INC., PLAINTIFF,
LAMAR S. TAYLOR, JR.; JAMES B. KEE; AND THE ROOKERY, INC., A GEORGIA CORPORATION, DEFENDANTS.
The opinion of the court was delivered by: Bua, District Judge.
Before the Court is defendants' motion to dismiss for lack
of personal jurisdiction and improper venue or, in the
alternative, to transfer this case to the United States
District Court for the Middle District of Georgia pursuant to
28 U.S.C. § 1404(a) and 1406(a). For the reasons stated
herein, defendants' motion to dismiss is denied and the motion
to transfer is granted.
Plaintiff Eric Van Gelder filed a two-count complaint
against defendants. Count 1 has been brought by Van Gelder
individually and purports to state a claim of fraud against
the individual defendants, Taylor and Kee. Count I alleges
that the individual defendants fraudulently induced plaintiff
to invest in defendant corporation, The Rookery, Inc. Count 2
has been brought by Van Gelder as a shareholder's derivative
action on behalf of The Rookery, Inc., a Georgia corporation,
and purports to state a claim for breach of fiduciary duty to
The Rookery, Inc. and to Van Gelder by defendants Taylor and
Kee. Count 2 alleges that Taylor and Kee wrongfully and
fraudulently used their fiduciary positions to utilize
corporate assets and facilities for their own personal gain to
the detriment of both defendant corporation and plaintiff, as
a minority shareholder of the corporation.
For jurisdictional purposes, the citizenship of the parties
must be established. Plaintiff is a citizen of the State of
Illinois, defendants Taylor and Kee are both citizens of the
State of Georgia, and defendant The Rookery, Inc. is a
corporation duly organized and existing under the law of the
State of Georgia with its principal place of business in
Plaintiff's claims arise out of a business venture entered
into by Van Gelder, Taylor and Kee. Taylor and Kee allegedly
solicited Van Gelder to invest $30,000 in The Rookery, Inc. in
return for one third of the stock in said corporation. Taylor
and Kee were each to own one third of the same stock to
constitute the remaining stockholders. It is alleged that
Taylor and Kee also solicited Van Gelder to invest for the
group $15,000 as a down payment for the purchase of the
Georgia building in which The Rookery, Inc. conducts its
retail business and to invest $7,500 for attorneys' fees. Van
Gelder argues that he was to be reimbursed by the two
individual defendants for their pro rata share of these latter
two expenses. The control of The Rookery, Inc. is vested in
Taylor and Kee through their control of the shareholder's
meetings and the Board of Director's meetings.
In this case, federal subject matter jurisdiction is based
solely on diversity of citizenship. In diversity cases, a
federal district court has jurisdiction over the persons of
the defendants only if a court of the state in which the
federal court is sitting would have personal jurisdiction.
Snyder v. Smith, 736 F.2d 409, 415 (7th Cir. 1984); Deluxe Ice
Cream Co. v. R.C.H. Tool Corp., 726 F.2d 1209, 1212 (7th Cir.
1984); Lakeside Bridge & Steel v. Mountain State Construction
Co., 597 F.2d 596, 598 (7th Cir. 1979); cert. denied,
445 U.S. 907-08, 100 S.Ct. 1087, 63 L.Ed.2d 325 (1980). As such,
Illinois law will govern the determination as to whether this
Court has personal jurisdiction over the defendants. Welles
Product Corp. v. Plad Equipment Co., Ltd., 563 F. Supp. 446, 448
Under Illinois law, foreign defendants are subject to the
jurisdiction of state and federal courts in Illinois only if
they have committed any of the acts specified in the Illinois
Long Arm Statute. Ill. Rev.Stat. ch. 110, § 2-209(a). Green v.
Advance Ross Electronics Corp., 86 Ill.2d 431, 56 Ill.Dec. 657,
427 N.E.2d 1203 (1981). Commission of one or more of those
specified acts will support jurisdiction over the persons of
the defendants only as to causes of action arising from the
commission of those acts. Ill.Rev.Stat. ch. 110, § 2-209(c).
For specification as to the acts which submit a person to the
jurisdiction of the state, the Illinois Long Arm Statute ch.
110, § 2-209 provides in pertinent part:
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 person . . . to the
jurisdiction of the courts of this State as to
any cause of action arising from the doing of
(1) The transaction of any business within this
(2) The commission of a tortious act within
A plaintiff bears the burden of proving that a court has
personal jurisdiction over defendants, i.e., that defendants
have committed acts that fall within the Illinois Long Arm
Statute. Kutner v. DeMassa, 96 Ill. App.3d 243, 247, 51
Ill.Dec. 723, 421 N.E.2d 231 (1st Dist. 1981).
Proper venue under Illinois law lies "in the county in which
the transaction or some part thereof occurred out of which the
cause of action arose." ...