The opinion of the court was delivered by: ROVNER
ILANA DIAMOND ROVNER, UNITED STATES DISTRICT JUDGE
Plaintiff Vanguard Financial Service Corporation ("Vanguard") has sued the twenty-two defendants in this case on claims of breach of contract, fraud, and racketeering arising from office equipment leases into which Vanguard entered with eight churches in Dallas, Texas. The defendants include the churches, the church officials who executed the leases, the independent contractor who supplied the office equipment, and four lending officers who allegedly supplied false credit references to Vanguard on behalf of the churches. All of the defendants are residents of Texas. Eighteen of the defendants are in default.
Pending before the Court are three motions: Defendant Larry Johnson's motion to dismiss for lack of subject matter jurisdiction or, in the alternative, to transfer this case to the Northern District of Texas; defendant Tim Brown's motion to transfer the case to the Northern District of Texas; and finally, Vanguard's motion for the entry of judgment against all of the defendants who are currently in default. For the reasons set forth below, the Court has denied Johnson's motion to dismiss for lack of subject matter jurisdiction but granted Johnson and Brown's request to transfer this case to the Northern District of Texas. In light of the Court's decision to transfer the case, the Court has deemed it prudent not to rule upon Vanguard's motion for entry of a default judgment.
For purposes of the pending motions, the Court has assumed the allegations set forth in Vanguard's Amended Complaint to be true. Reed v. Brae Railcar Management, 727 F. Supp. 376, 377 n. 1 (N.D.Ill. 1989) (Aspen, J.).
Vanguard is an Illinois corporation engaged in the business of leasing and selling office equipment. Vanguard's principal place of business is located in Lombard, Illinois.
Vanguard relies upon independent contractors to locate customers who wish to lease office equipment. These contractors are typically sales representatives or dealers for the manufacturers of such equipment. When a contractor locates a prospective customer, the contractor has the customer complete a lease application, including credit references, for Vanguard's review. If Vanguard approves the application, Vanguard will proceed to purchase the equipment from the contractor and lease it to the customer pursuant to a written lease.
Defendant Larry Johnson was one of the independent contractors who provided Vanguard with customers. Johnson operated through a Texas company known as International Office Systems ("International"), selling office equipment to businesses like Vanguard for lease to customers located by Johnson and International.
In early 1988, Johnson entered into a conspiracy with the other defendants to defraud Vanguard, by persuading Vanguard to enter equipment leases with eight churches located in Dallas, Texas through a series of misrepresentations concerning the credit history of these churches.
Pursuant to this conspiracy, church officials would list either Bright Banc or T & M Mortgage as a credit reference on the lease applications.
These officials would also identify defendants Rosie Medlock and Tim Brown, who worked for Bright Banc, or defendants Cornelius McCowan and William Hill, who worked for T & M Mortgage, as the account officers on loans which the churches had purportedly received from these lending institutions. When Vanguard subsequently followed up on the information in the lease applications by making long-distance telephone calls from Illinois to Medlock, Brown, McCowan and Hill in Texas, these defendants represented to Vanguard that each of the churches had favorable credit histories with either Bright Banc or T & M Mortgage. In fact, none of the eight churches had a credit history of any kind with either of these two lenders.
Each of the defendant churches has defaulted under its lease agreement with Vanguard by failing to make the rental payments due and owing on the office equipment. The churches presently owe Vanguard amounts totalling approximately $ 87,000.
Vanguard filed its original complaint on May 17, 1989. Service was effected as to most of the defendants by July of 1989, and additional defendants were served in August of 1989. Defendant Hill was never served. With three exceptions, none of the defendants who have been served have either appeared or contested Vanguard's suit in any manner.
On July 28, 1989, defendant Johnson filed pro se what amounts to both a motion to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(1) for lack of subject matter jurisdiction as well as an answer to the allegations contained in the complaint. Defendant Medlock filed an answer to the complaint on August 9, 1989. Counsel for Medlock subsequently filed their appearances on September 6, 1989. Counsel for defendant Brown filed their appearances on July 18, 1989, and on August 2, 1989, Brown moved to transfer the case to the Northern District of Texas. That motion became fully briefed on October 10, 1989.
On November 2, 1989, Vanguard moved for entry of judgment against each of the defendants in default, and asked the Court to award it the amounts due and owing under the equipment leases, treble damages pursuant to the RICO allegations, punitive damages based upon the defendants' alleged acts of fraud, costs, and attorney fees. The Court took the motion under advisement, having expressed some concern about the property of awarding treble and punitive damages upon the defendants' default, and as to whether Vanguard's complaint stated a cause of action under RICO.
Before the Court ruled on the motion for a default judgment, Vanguard requested leave to file an amended complaint which expanded upon and clarified the racketeering allegations set forth in the original complaint. The Court granted this request on November 28, 1989, and granted the defendants 21 days to answer or otherwise plead to the amended complaint. Shortly thereafter, the Court struck Vanguard's motion for default judgment as moot, and sua sponte granted the defendants an additional period of time, until January 16, 1990, to answer or otherwise plead. Defendant Medlock filed an amended answer on January 16, 1990. No other defendant responded to the amended complaint.
On January 31, 1990, Vanguard once again moved for entry of a default judgment against all of the defendants, with the exception of Hill, who was never served, and Medlock, who had filed an answer to the amended complaint. That motion is pending before the Court, as are Johnson's motion to dismiss or transfer and Brown's motion to transfer.
A. Johnson's Motion to Dismiss for Lack of Subject ...