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L.B. FOSTER CO. v. RAILROAD SERV.

March 20, 1990

L.B. FOSTER COMPANY, a Delaware corporation, Plaintiff,
v.
RAILROAD SERVICE, INC., a Nevada corporation, Defendant


Ilana Diamond Rovner, United States District Judge.


The opinion of the court was delivered by: ROVNER

ILANA DIAMOND ROVNER, UNITED STATES DISTRICT JUDGE

 I. INTRODUCTION

 Plaintiff L.B. Foster Company brought this diversity action against defendant Railroad Service, Inc. for breach of two contracts in which defendant agreed to purchase railroad equipment from plaintiff. Defendant has filed a motion to dismiss for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2). For the reasons stated below, defendant's motion to dismiss is denied.

 II. FACTS

 For purposes of this motion, the Court accepts all undenied facts alleged in the complaint as true and resolves all disputed facts in favor of the party seeking jurisdiction. Ben Kozloff, Inc. v. H & G Distributors, Inc., 717 F. Supp. 1336, 1337 (N.D. Ill. 1989). Plaintiff is a Delaware corporation with its principal place of business in Pittsburgh, Pennsylvania. Plaintiff purchases and sells railroad equipment. It has a sales office located in Des Plaines, Illinois. Defendant is a Nevada corporation with its principal place of business in Lakeville, Minnesota. It provides services and products to the railroad industry. Defendant has never maintained an office in Illinois, nor does it market its services or products in Illinois. During the three years prior to this dispute, defendant purchased approximately one million dollars' worth of products from plaintiff through plaintiff's Illinois sales office.

 Plaintiff's suit arises out of two contracts made with defendant. In late 1987, defendant telephoned plaintiff's salesperson at the Illinois office to place an order for railroad turnouts, which enable railroad cars to pass from one track to another. Plaintiff sent an acknowledgment of the order from its Illinois office to the defendant to sign and return to plaintiff's Illinois office. It is unclear whether defendant actually signed and returned the acknowledgment to plaintiff. In September, 1988, defendant again contacted plaintiff to order additional turnouts under the first contract. An acknowledgment was sent by plaintiff to defendant in October, 1988, which defendant signed and returned.

 Plaintiff periodically sent invoices to defendant requiring that payment under the first contract be forwarded to a lock box in Atlanta, Georgia. Plaintiff alleges that it never received the money allegedly owed by defendant on the first contract. On May 5, 1989, a meeting was held between plaintiff and defendant's representatives at plaintiff's Illinois office to discuss defendant's obligations under that contract. However, no resolution was reached, and plaintiff contends that defendant still owes it money for the equipment.

 In April, 1989, defendant telephoned plaintiff at its Illinois office to order tie-plates. Plaintiff agreed to supply the tie-plates on the condition that defendant make a down payment of fifteen thousand dollars to plaintiff in advance. Defendant sent the down payment to plaintiff's Illinois office. Upon receipt of the payment, plaintiff shipped the tie-plates to defendant. Plaintiff alleges that defendant owes it the balance due on the tie-plate order.

 Under both contracts, plaintiff shipped the goods from sources outside of Illinois to defendant's projects sites which were also outside of Illinois. Furthermore, all the negotiations regarding the contracts were conducted by telephone or mail communication with the exception of the one visit to Illinois made by defendant's representatives.

 Plaintiff asserts that the Court has personal jurisdiction over defendant because defendant has transacted business in Illinois within the meaning of § 2-209(a)(1) of the Illinois long-arm statute. Ill. Rev. Stat. ch. 110, § 2-209(a)(1). Alternatively, plaintiff argues that jurisdiction is proper based on § 2-209(c) of the long-arm statute, which permits the courts to exercise jurisdiction on "any other basis now or hereafter permitted by the state or federal constitution." Ill. Rev. Stat. ch. 110, § 2-209(c). Defendant contends that its relationship with plaintiff does not constitute transaction of business within Illinois under § 2-209(a)(1) and that assertion of jurisdiction pursuant to either § 2-209(c) or § 2-209(a)(1) would fail to comport with due process.

 III. ILLINOIS LONG-ARM STATUTE

 Because this is a diversity suit, the Court has jurisdiction over defendant only if an Illinois state court would have jurisdiction. Ben Kozloff, 717 F. Supp. at 1337. Until recently, in order to determine whether personal jurisdiction over a non-resident defendant was proper, a court was faced with a two-pronged inquiry: first, whether the defendant's conduct fell within one of the categories provided in the long-arm statute; *fn1" and second, whether assertion of jurisdiction comported with the due process clause requirements of the United States Constitution. This two-pronged inquiry was necessitated by the Illinois Supreme Court's decisions in Cook Associates, Inc. v. Lexington United Corp., 87 Ill. 2d 190, 197, 429 N.E.2d 847, 850, 57 Ill. Dec. 730, 733 (1981), *fn2" and Green v. Advance Ross Electronics Corp., 86 Ill. 2d 431, 436, 427 N.E.2d 1203, 1206, 56 Ill. Dec. 657, 660 (1981).

 Effective September 7, 1989, the Illinois long-arm statute was amended to include additional grounds upon which a court may base its jurisdiction. Among those additional grounds is § 2-209(c), which states: "a court may also exercise jurisdiction on any other basis now or hereafter permitted by the Illinois Constitution and the Constitution of the United States." *fn3" The parties in this action dispute the meaning of § 2-209(c). Plaintiff argues that § 2-209(c) extends the reach of the courts to any non-resident defendant as long as the assertion of jurisdiction comports with due process requirements. Defendant contends that § 2-209(c) allows jurisdiction only if an affirmative enabling provision providing for the exercise of personal jurisdiction is made part of the ...


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