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AFIRM, INC. v. FRAZEE PAINT & WALLCOVERING

December 24, 1985

AFIRM, INC., A CORPORATION, PLAINTIFF,
v.
FRAZEE PAINT & WALLCOVERING COMPANY, INC., DEFENDANT.



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

MEMORANDUM OPINION AND ORDER

Plaintiff Afirm, Inc. ("Afirm") brought this diversity suit against defendant Frazee Paint and Wallcovering Company, Inc. ("Frazee") for breach of an oral contract. Afirm is an Illinois corporation with its principal place of business in Hinsdale, Illinois. Frazee is a California corporation with its principal place of business in San Diego, California. Frazee contends that the court lacks personal jurisdiction over Frazee and has moved to dismiss the suit under 12(b)(2). For the reasons set forth below, the court grants Frazee's motions.

Facts

The parties have submitted conflicting affidavits concerning the material facts.*fn1 While Afirm carries the burden of producing evidence sufficient to support jurisdiction, see, e.g., Caicos Petroleum Service Corp. v. Hunsaker, 551 F. Supp. 152, 153 (N.D.Ill. 1982), it enjoys the concurrent advantage of having factual conflicts resolved in its favor. See Jacobs/Kahan v. Marsh, 740 F.2d 587, 589 (7th Cir. 1984); Deluxe Ice Cream v. R.C.H. Tool Corp., 726 F.2d 1209, 1215 (7th Cir. 1984). Thus, the factual statement that follows is derived from Afirm's affidavit and complaint and from Frazee's affidavits to the extent they are not in conflict with Afirm's statements.

Frazee is registered to do business in California — not Illinois. Frazee does not maintain or operate any facility in any Illinois county. Nor does Frazee own, use or possess any real property in Illinois. In the past twelve months, Frazee has not made any shipment or sale of any kind whatsoever to any entity, buyer or recipient in Illinois. However, Frazee has had unsolicited business contact and interstate telephone conversations with Afirm in the last two years.

Afirm is an employment agency. Its job is to help businesses find qualified employees and vice versa. If it is successful, the hiring corporation pays it a fee, usually a percentage of the salary of the person hired. In the last two years on several occasions, Afirm made unsolicited interstate calls to Frazee to present applicants for various positions. Frazee never called Afirm, unless Frazee was returning a call. Nor did Frazee ever meet with Afirm or interview applicants in Illinois. However, Afirm alleges that the parties agreed over the phone that if Frazee hired an employee Afirm referred to it, it would pay Afirm 25% of the employee's first annual salary.

On June 9, 1983, candidate Martin Balow was presented by Afirm to Frazee for a "technical director" position. Per Frazee's request, Balow's resume was submitted. In addition, an appointment by telephone was arranged for Balow to be interviewed by Frazee in California in September 1983. But Frazee did not hire Balow then. Instead, Frazee hired Cyriac Alexander, another potential candidate, for the technical director position. Balow then accepted a technical director position with another company.

In May of 1984, Frazee placed an ad for a senior chemist in a trade publication circulated in Illinois. Afirm responded to this ad by placing another unsolicited call to Frazee. Afirm spoke to Cyriac Alexander, now the Senior Vice President of Operations,*fn2 and presented not Balow but a former applicant, Ray Guchurra. Mr. Alexander never followed up on Afirm's presentation or returned Afirm's calls.

The parties did not communicate with each other again until October 15, 1984, the day Afirm found out that Frazee ended up hiring Balow in July 1984 for the technical director position.*fn3 Afirm contacted Alexander and demanded a placement fee of 25% of Balow's first year's salary ($12,500). Frazee refused to pay such fee. Afirm filed this lawsuit.

Afirm contends that Frazee transacted business in Illinois, thereby rendering Frazee amenable to in personam jurisdiction within Illinois pursuant to the Illinois Long Arm Statute. Ill.Rev.Stat. ch. 110, § 2-209(a)(1) (1983). In addition, Afirm argues that Frazee has been "doing business" in Illinois for the last two years, thereby subjecting Frazee to personal jurisdiction under the doctrine bearing that name. We hold below that personal jurisdiction is lacking under either theory.

Discussion

In a suit based on diversity of citizenship, a federal court has personal jurisdiction only if the forum state court would have jurisdiction. See, Maurice Sternberg v. James, 577 F. Supp. 882, 884 (N.D.Ill. 1984). Therefore, the first step in the analysis is to determine as a statutory matter whether the Illinois long-arm statute reaches the defendant. Id. If so, the court must decide whether the Due Process Clause permits service of process. See, e.g., Deluxe Ice Cream Co. v. R.C.H. Tool Corp., 726 F.2d at 1214.*fn4 Because we find below that the long-arm statute does not reach the defendant, we will not need to address the constitutional issue.

The only pertinent provisions of the Illinois long-arm statute state:

  (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 person and, if an individual, his or her
  personal representative, to the jurisdiction of the
  courts of this State as ...

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