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TORCO OIL CO. v. INNOVATIVE THERMAL CORP.

December 28, 1989

TORCO OIL COMPANY, Plaintiff
v.
INNOVATIVE THERMAL CORPORATION, JOHN RIVERA, and H. JENKS CALDWELL, Defendants


James B. Moran, United States District Judge.


The opinion of the court was delivered by: MORAN

JAMES B. MORAN, UNITED STATES DISTRICT JUDGE

 Plaintiff Torco Oil Company (Torco) brings this action against defendants Innovative Thermal Corporation (ITC) and two of its officers, John Rivera and H. Jenks Caldwell, each 50% owners of ITC, *fn1" alleging breach of contract and fraud. Before this court is defendants' motion to dismiss the action based on lack of personal jurisdiction. For the reasons set forth below, the motion is granted in part and denied in part.

 FACTS

 In June 1988, Torco and ITC entered into a contract for the sale and purchase of natural gas. Under this contract ITC covenanted to deliver and Torco to purchase "all gas necessary to meet [Torco's] requirements for Natural Gas up to the volumes of gas as are set forth in the Nomination Notice." This nomination notice, appended to the contract, specified that a quantity of 25,000 mmbtu, or one million British Thermal Units, of gas per day for a year be supplied. *fn2" No gas was ever delivered under the contract and Torco brought this action seeking damages resulting from the breach.

 Supplementing the breach of contract claim is Torco's allegation in its complaint that it was fraudulently induced to enter into the contract by false statements made by Rivera and Caldwell that represented ITC as "adequately capitalized and sound" and "experience[d] in the sale of natural gas" with "access to substantial reserves and supply." To convince Torco of ITC's financial legitimacy and secure their participation in the contemplated transaction, Torco claims, Rivera and Caldwell drew on the financial stability of Caldwell's other business concerns; in addition to his half-ownership interest in ITC, Caldwell owns various other entities, including Charlotte Aircraft Corporation, Charlotte Aerospace Company, and Caldwell Aircraft Trading Company.

 ITC now moves to dismiss the counts against all three defendants based on lack of personal jurisdiction. The contacts between ITC and Illinois, it argues, fall short of the level needed to satisfy the Illinois long-arm statute. Even if these contacts are found to be sufficient, ITC continues, they cannot be attributed to Rivera and Caldwell to bring them as individuals within the ambit of Illinois jurisdiction, for the fiduciary shield doctrine, applicable here, according to ITC, serves to protect individuals from amenability to a state's jurisdiction where, as here, the only contacts with that state spring from their activities as representatives.

 DISCUSSION

 To the extent the fiduciary shield doctrine does not apply, jurisdiction over Rivera and Caldwell may be proper on the basis of ITC's contacts with Illinois. Because jurisdiction over the individuals is in part derivative of the corporation's amenability, then, we consider first whether ITC is properly before this court.

 I. Amenability of Innovative Thermal Corporation to Illinois Jurisdiction3

 A federal district court sitting in diversity has personal jurisdiction over a party only if a state court of the forum in which the district court sits could exercise jurisdiction. Turnock v. Cope, 816 F.2d 332, 334 (7th Cir. 1987). It is to Illinois law, therefore, that we turn in determining whether jurisdiction over defendant ITC is proper. In a motion to dismiss for lack of personal jurisdiction, the party asserting the existence of jurisdiction -- the plaintiff -- carries the burden to provide sufficient evidence to support jurisdiction. O'Hare Int'l Bank v. Hampton, 437 F.2d 1173, 1176 (7th Cir. 1971); Caicos Petroleum Service Corp. v. Hunsaker, 551 F. Supp. 152, 153 (N.D.Ill. 1982); Olinski v. Duce, 155 Ill.App.3d 441, 443, 508 N.E.2d 398, 400, 108 Ill.Dec. 237, 239 (1987). A prima facie showing that jurisdiction over the defendant is proper will satisfy this burden. O'Hare Int'l Bank; Ingersoll Milling Machine Co. v. J.E. Bernard & Co., 508 F. Supp. 907, 911 (N.D.Ill. 1981). In deciding the motion, a court may receive and consider affidavits from both parties, O'Hare Int'l Bank; Connolly v. Samuelson, 613 F. Supp. 109, 100 (N.D.Ill. 1985); Caicos Petroleum, 551 F. Supp. at 155, and all factual conflicts between the parties are to be resolved in favor of the plaintiff. Deluxe Ice Cream Co. v. R.C.H. Tool Corp., 726 F.2d 1209, 1215 (7th Cir. 1984); Neiman v. Rudolf Wolff & Co., 619 F.2d 1189, 1190 (7th Cir.), cert. denied, 449 U.S. 920, 66 L. Ed. 2d 148, 101 S. Ct. 319 (1980); Financial Management Services v. Sibilsky and Sibilsky, 130 Ill.App.3d 826, 831, 474 N.E.2d 1297, 1302, 86 Ill.Dec. 100, 105.

 A plaintiff may establish jurisdiction over a nonresident defendant in Illinois if it can make a prima facie case that the defendant has performed -- and the cause of action arises from -- one of the jurisdictional acts enumerated in the Illinois long-arm statute, Ill.Rev.Stat. ch. 110, para. 2-209 (1987), or is "doing business" in Illinois, and that jurisdiction over the defendant comports with the prescripts of due process. See Deluxe, 726 F.2d at 1212. Although these inquiries were deemed at one time to be coextensive, see, e.g., Nelson v. Miller, 11 Ill.2d 378, 389, 143 N.E.2d 673, 679 (1957), the Illinois Supreme Court recently liberated long-arm statute analysis from its dependence on due process decisions:

 
A statute worded in the way ours is should have a fixed meaning without regard to changing concepts of due process, except, of course, that an interpretation which renders the statute unconstitutional should be avoided, if possible.

 Green v. Advance Ross Electronics Corp., 86 Ill.2d 431, 436, 427 N.E.2d 1203, 1206, 56 Ill.Dec. 657, 660 (1981). Green thus mandates a bifurcated analysis, requiring a court to consider separately whether jurisdiction over a defendant complies with Illinois statutory requirements and due process standards.

 A. Illinois Long-Arm Statute

 Torco does not argue that ITC regularly "does business" in Illinois -- nor could it, for ITC's business transactions, with the sole exception of its ill-fated contract with Torco, have been limited to activities outside of Illinois that have neither directly nor indirectly involved that state; *fn4" jurisdiction is proper under a "doing business" theory "only when there is some regularity of activities in Illinois." Connolly, 613 F. Supp. at 111 (citing Cook Associates, Inc v. Lexington United Corp., 87 Ill.2d 190, 202-03, 429 N.E.2d 847, 852-53, 57 Ill.Dec. 730, 735-36 (1981)). Our analysis, therefore, will focus on the Illinois long-arm statute and its applicability to the facts in the instant dispute.

 The Illinois long-arm statute provides that a defendant submits to jurisdiction in Illinois if it engages in, inter alia,

 
(1) The transaction of any business within this State; [or]
 
(2) The commission of a tortious act within this State;

 and the "cause of action aris[es] from the doing of . . . such acts." Ill.Rev.Stat. ch. 110, para. 2-209 (1987). Although Torco includes a count of fraud in its first amended complaint, it does not pursue this count as a basis for jurisdiction, and therefore we limit our ...


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