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REAL COLORS, INC. v. PATEL

July 25, 1997

REAL COLORS, INC., Plaintiff,
v.
JAYPRAKASH PATEL, Individually and d/b/a JAY CHEM, ISOCHEM COLORS, INC., and PRISM INTERNATIONAL, INCORPORATED, Defendants.



The opinion of the court was delivered by: KEYS

 This matter comes before the Court on Defendant Isochem Colors, Inc.'s ("Isochem") motion to dismiss for lack of personal jurisdiction and improper venue, pursuant to Federal Rules of Civil Procedure 12(b)(2) and 12(b)(3). In the alternative, Isochem moves for a change of venue, pursuant to 28 U.S.C. § 1406(a) or § 1404(a). For the following reasons, Isochem's motion is granted in part, and denied in part.

 BACKGROUND

 This case involves a supplier"middleman" which alleges that it was wrongfully cut out of a deal by the manufacturer and the buyer. Plaintiff, Real Colors, Inc. ("Real Colors"), is an Illinois corporation, with its principle place of business in Chicago, Illinois. (Second Amended Complaint [2d Am. Compl.] P1.) Real Colors is a supplier of salt-free dyes. (Plaintiff's Response [to] Defendant's Motions to Dismiss and Transfer Venue [Pl.'s Resp.], Affidavit [Shah Aff.] P1.) Defendant Isochem is a North Carolina corporation, with its principle place of business in Rock Hill, South Carolina. (2d Am. Compl. P4.) Isochem processes dyes into liquids in order to sell them to textile manufacturers. (2d Am. Compl. P4.) Defendant Jay Chem is a corporation in India, owned by Jayprakash Patel. (2d Am. Compl. PP2-3.) Jay Chem manufactures dyes. (Shah Aff. P4.)

 Initially, in August or September of 1994, Nirav Shah, an employee of Real Colors, called Isochem after seeing an advertisement in a trade magazine. (Shah Aff. P2.) Mr. Shah spoke with Isochem's Vice President, Bill Whisenant, about supplying Isochem with dyes. (Shah Aff. PP1-2.) At Isochem's request, Mr. Shah sent dye samples to Isochem. (Shah Aff. P2.)

 On December 24, 1994, Jeff Zavitkovsky, Isochem's purchasing manager, called Real Colors and ordered one ton of Reactive Yellow 37 dye. (Shah Aff. P3.) Real Colors arranged for Jay Chem to send Isochem the one ton of Reactive Yellow 37 dye. (Shah Aff. P4.) Jay Chem delivered the dye to Isochem in March of 1994, and Isochem sent payment, in May of 1994, to Real Colors (in Illinois). (Shah Aff. P5.)

 On February 7, 1995, Mr. Zavitkovsky faxed a form letter to Real Colors, which described how often inventory should be made available. *fn1" (Shah Aff. P6; Declaration of Jeff Zavitkovsky [Zavitkovsky Aff.] P4; Pl.'s Resp., Exhibit A.) Because Real Colors had extended Isochem a line of credit, on March 7, 1995, Mr. Shah, along with a co-owner of Real Colors, traveled to South Carolina to view Isochem's operations. (Shah Aff. P7.) While Mr. Shah was there, Messrs. Zavitkovsky and Whisenant proposed entering into a one-year contract. (Shah Aff. P7.) The contract, which was negotiated in South Carolina, stipulated that Real Colors would supply Isochem with Reactive Yellow 37 dye for one year. (Shah Aff. P7; Zavitkovsky Aff. P5; Pl.'s Resp., Exhibit B.) Real Colors asserts that this was to be an exclusive relationship, but Isochem states that it never intended to buy Reactive Yellow 37 dye exclusively from Real Colors. (Shah Aff. P7; Zavitkovsky Aff. P5.) Pursuant to Real Colors' request, Isochem sent a copy of the agreement, that same day, to Real Colors' office in Illinois. (Zavitkovsky Aff. P6.; Pl.'s Resp., Exhibit B.)

 In May of 1995, Mr. Shah, as an agent of Real Colors, met in Illinois with Mr. Patel, Jay Chem's owner and president, to form a contract stipulating that Jay Chem would supply Reactive Yellow 37 dye to Real Colors. (Shah Aff. P9.) That same day, Messrs. Shah and Patel entered into an oral agreement that Jay Chem would not sell this dye directly to any of Real Colors' customers. (Shah Aff. P9; 2d Am. Compl., Count II, P6.)

 During this meeting, Real Colors ordered approximately twenty-seven tons of Reactive Yellow 37 dye, *fn2" and had ten tons of the dye shipped to South Carolina. (Shah Aff. P9; 2d Am. Compl. P4.) Isochem did not pay for the dye, and had the dye stored in its warehouse, in South Carolina, until it could pay. (Zavitkovsky Aff. P7; 2d Am. Compl. P5.) Over the next several months, Isochem paid for three tons of the dye, mailing its payments to Illinois. (Shah Aff. P11.) Even though Isochem only bought the three tons, Mr. Zavitkovsky assured Mr. Shah that Isochem would eventually pay for the rest of the dye. (Shah Aff. P11.)

 While Real Colors was waiting for Isochem to pay for the rest of the dye, an agent *fn3" of Jay Chem's contacted Isochem, in November of 1995, and offered to supply Reactive Yellow 37 dye directly to Isochem at a price lower than Real Colors'. (Shah Aff. P12.) Isochem advised Real Colors of this lower offer. (Shah Aff. P12; Pl.'s Resp., Exhibit E.) When Mr. Shah then informed Jay Chem that Isochem was Real Colors' client, Mr. Patel sent Isochem a letter, in which he told Isochem to disregard Jay Chem's lower price offer. (Shah Aff. P14; Pl.'s Resp., Exhibit F.)

 In May of 1996, after several telephone conversations to determine what to do with the remaining dye that had been shipped, but never paid for by Isochem, Mr. Patel traveled to Illinois, and suggested that Mr. Shah send the dye back to Jay Chem in India. (Shah Aff. P15.) Mr. Shah claims that this was so that Jay Chem could sell the dye back to Isochem at a cheaper price than Real Colors offered. (Shah Aff. PP15, 17.) That same day, Mr. Shah received a telephone call from Mr. Zavitkovsky, during which Mr. Zavitkovsky recommended that Mr. Shah send the dye back to Jay Chem. (Shah Aff. P16.) Later, Mr. Shah learned that Isochem did buy Reactive Yellow 37 dye directly from Jay Chem. (Shah Aff. P18.)

 On September 20, 1996, Real Colors brought suit against both Jay Chem and Isochem. *fn4" Real Colors is suing Isochem and Jay Chem for breach of contract. (2d Am. Compl., Counts I, II.) Real Colors is also suing Jay Chem for tortiously interfering with the contract between Real Colors and Isochem, and is suing Isochem for tortiously interfering with the contract between Real Colors and Jay Chem. (2d Am. Compl., Counts III, IV.) Additionally, Real Colors accuses both Isochem and Jay Chem of conspiracy to breach a contract and tortiously interfere with a contract. (2d Am. Compl., Count V.) Currently before the Court is Isochem's motion for dismissal based upon lack of personal jurisdiction and improper venue, or, in the alternative, a transfer of venue. (Defendant Isochem Colors, Inc.'s Motion to Dismiss for Lack of Personal Jurisdiction and Improper Venue or, in the Alternative, for a Change of Venue.)

 DISCUSSION

 A motion to dismiss for lack of personal jurisdiction is properly brought under Federal Rule of Civil Procedure 12(b)(2). When ruling on such a motion, allegations in the complaint "are to be taken as true unless controverted by the defendants' affidavits . . . ." Turnock v. Cope, 816 F.2d 332, 333 (7th Cir. 1987). Conflicts between the parties' affidavits "are to be resolved in [the plaintiff's] favor." Id. Real Colors bears the burden of establishing a prima facie case for personal jurisdiction. Michael J. Neuman & Assocs., Ltd. v. Florabelle Flowers, Inc., 15 F.3d 721, 724 (7th Cir. 1994). This Court may exercise personal jurisdiction over a defendant in a diversity case only if an Illinois state court could exercise personal jurisdiction. Klump v. Duffus, 71 F.3d 1368, 1371 (7th Cir.), cert. denied, 135 L. Ed. 2d 1047, 116 S. Ct. 2523 (1996). Thus, in order for this Court to exercise personal jurisdiction over Isochem, Real Colors must first show that Illinois' long arm statute allows personal jurisdiction. *fn5" RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir. 1997).

 A. The Illinois Long Arm Statute

 The Illinois long arm statute, in relevant ...


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