was honoring the obligations of the Florida general partnership.
In addition to the contractual agreement, S & S appears to have been involved in another business transaction within Illinois, namely, trading on the CBOE. The contract between Pax and S & S was designed to further the trading activities of a person on the floor of the CBOE. This CBOE trader appears to have been an agent of S & S, as he was trading on the partnership's behalf. Not only was the partnership to receive the trader's profits, it was also to pay the trader's losses. Indeed, when the trader suffered losses, the partnership adopted the trader's actions by acknowledging the losses and providing partial repayment. This trading activity, coupled with the contractual agreement, supports a transaction of a business claim.
The provisions of the Illinois long-arm statute also require that the cause of action arise from the act set forth as the basis for jurisdiction. In effect, the cause of action must "lie in the wake" of the making or performance of a contact or the transaction of business. Jacobs/Kahan & Co. v. Marsh, 740 F.2d 587, 591 (7th Cir. 1984). That requirement is easily satisfied in this case. The contract alleged as S & S's transaction of business is the very contract upon which Wolfson bases his breach of contract suit. And, the funds sought by Wolfson are reimbursement for the losses flowing directly from the trader's actions on the CBOE. With both these requirements satisfied, Wolfson has established the Illinois long-arm portion of the analysis.
Constitutional requirements constitute the remaining portion of the analysis. Constitutionally, the question is whether the defendant purposefully established minimum contacts in the forum state such that bringing suit there would not offend "traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 90 L. Ed. 95, 66 S. Ct. 154 (1945). Due process requirements are met when the defendant engages in "some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 2 L. Ed. 2d 1283, 78 S. Ct. 1228 (1958). In this case, S & S established minimum contacts with Illinois by both contracting with Pax for performance in Illinois and engaging a trader to trade on the CBOE on the partnership's behalf. Surely, S & S could have foreseen that it would be called into Illinois court if it did not complete performance in Illinois. After all, S & S had allegedly promised to pay an Illinois partnership in Illinois. In turn, the partnership had promised to perform in Illinois. See Heritage House Restaurants v. Continental Funding Group, Inc., 906 F.2d 276, 283 (7th Cir. 1990) ("main factor in the minimum contacts due process analysis is not physical presence in the forum but rather foreseeability"). Additionally, S & S would likely have sought the benefit and protection of Illinois laws should actions have arisen as a result of its trading activities. These contacts are sufficient to satisfy constitutional requirements. The court has personal jurisdiction over the partnership.
Since the court has jurisdiction over the partnership, jurisdiction also exists over the general partners. "The Illinois contacts that bring the [partnership] into court equally support the assertion of personal jurisdiction over each of its general partners." Felicia, Ltd. v. Gulf American Barge, Ltd., 555 F. Supp. 801, 806 (N.D. Ill. 1983). Even though S & S may have entered into the contract before Wells came on board, he still bears responsibility for the agreement. "A person admitted as a partner into an existing partnership is liable for all the obligations of the partnership arising before his admission as though he had been a partner when such obligations were incurred, except that his liability shall be satisfied only out of partnership property." Unif. Partnership Act § 17, 6 U.L.A. 207 (1969).
As a general partner in the New York S & S partnership, Wells can be held liable for the partnership's actions. The court finds, therefore, that it has personal jurisdiction over Wells.
II. Motion to Stay or Abstain
Alternatively, Wells asks the court to stay or abstain from acting on Wolfson's suit because of the existence of parallel proceedings in New York state court. Although the Supreme Court has made clear that abstention by a federal court is the exception rather than the rule, the court finds that a stay is appropriate in this case.
In Colorado River Water Conservation District v. United States, 424 U.S. 800, 47 L. Ed. 2d 483, 96 S. Ct. 1236 (1976), the Court enumerated exceptional circumstances which, if present, would warrant abstention in cases involving parallel federal and state proceedings. "These principles rest on considerations of 'wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation.'" Id. at 817 (quoting Kerotest Mfg. Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 183, 96 L. Ed. 200, 72 S. Ct. 219 (1952)). The circumstances include: (1) the determination of whether the district court or state court first assumed jurisdiction over property; (2) "the inconvenience of the federal forum"; (3) "the desirability of avoiding piecemeal litigation"; and (4) "the order in which jurisdiction was obtained by the concurrent forums". Colorado River, 424 U.S. at 818-819. See Moses H. Cone Memorial Hospital v. Mercury Construction, 460 U.S. 1, 21, 26, 74 L. Ed. 2d 765, 103 S. Ct. 927 (1983) (additional factors include adequacy of state court action to protect federal plaintiff's rights and relative progress of the state and federal proceedings).
Before applying the exceptional circumstances test, though, the court must determine whether parallel proceedings actually exist. "A suit is parallel when substantially the same parties are contemporaneously litigating substantially the same issues in another forum. . . ." Calvert Fire Ins. Co. v. Am. Mut. Reins. Co., 600 F.2d 1228, 1229 n. 1 (7th Cir. 1979). The case before the court and the suit in New York state court have all the earmarks of parallel proceedings. Wells, the lone defendant in the case before the court, is pursuing the New York state suit. The defendant in that case is the plaintiff in this case. Further, both cases boil down to the question of whether a contract existed between S & S and Pax. Wells' suit in New York seeks to recover the monies paid to Pax ostensibly as payment under the contract. Wolfson seeks payment of the remainder of the monies allegedly owed Pax pursuant to the contract. These similarities suggest parallel proceedings.
A review of the circumstances in this case counsels abstention. Both parties would find it inconvenient to be simultaneously litigating suits in New York and Illinois. A stay would have the added benefit of avoiding piecemeal litigation. "In analyzing whether a . . . stay will further the interest in avoiding piecemeal litigation, we look . . . for a substantial likelihood that the state litigation will dispose of all claims presented in the federal case." Lumen Construction, Inc. v. Brant Construction Co., Inc., 780 F.2d 691, 695 (7th Cir. 1985). On its face, the suit filed by Wells does not appear to dispose of Wolfson's claim. Yet, both the state and federal case hinge on the existence of a contract with any ensuing liabilities. If the New York state court were to decide that no contract existed between the parties, such a decision would dispose of Wolfson's claims in federal court. Even if the New York court were to decide that a contract did exist, the issue of payment under the contract would inevitably arise in connection with the award of relief. In all likelihood, then, the state case will dispose of the claims presented in the federal case. Additionally, jurisdiction was first obtained in New York state court. The case in New York was filed on March 6, 1990. Discovery as well as other proceedings are currently underway in New York. In comparison, the suit before the court was filed on July 18, 1990. Thus far, the parties have merely submitted pleadings and briefed this motion. Based on a balance of these considerations, the court finds that abstention is warranted in this case. See Day v. Union Mines, Inc., 862 F.2d 652, 656 (7th Cir. 1988) ("Where the validity, enforceability and interpretation of a contract are at issue in both federal and state courts, and the state litigation was commenced first and has progressed substantially towards completion, entry of a stay does not under Colorado River constitute an abuse of discretion."); Rosen v. Com Dev., Inc., No. 89 C 9394, 1990 U.S. Dist. LEXIS 7467 (N.D. Ill. June 19, 1990) (federal action seeking damages for defendant's alleged breach of contract stayed pending resolution of Florida declaratory judgment action). Wells' motion to stay or abstain is granted.
IT IS SO ORDERED.