Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.


March 29, 2001


The opinion of the court was delivered by: Judge George M. Marovich


Plaintiff Heller Financial, Inc. ("Heller") filed a Complaint against Ohio Savings Bank ("OSB") for breach of contract. OSB has moved to dismiss the Complaint for lack of personal jurisdiction pursuant to Fed. R. Civ. P. 12(b)(2). In the alternative, OSB seeks to transfer venue to the Southern District of Florida pursuant to 28 U.S.C. § 1404(a). For the reasons set forth below, the Court grants OSB's motion to dismiss the Complaint.


In September 1994, OSB and Heller each entered into loan agreements with Excel Country Club Limited Partnership ("Excel"). OSB, under the terms of its agreement ("OSB Loan Agreement"), leant Excel $3,602,000 secured by a first mortgage on property in Florida which Excel would develop as a subdivision of single family homes ("Property"). Under the agreement, Excel would be considered in default by committing any of the following acts: "(1) the failure to pay any indebtedness due to OSB under the Loan Agreement within five calendar days after becoming due; (2) the failure to perform any terms contained in the . . . Loan Agreement; and (3) the failure to complete construction on the Project as detailed in the . . . Loan Agreement." (Compl. ¶ 7.) Upon Excel's default, OSB had the right to accelerate the balance due under the Loan Agreement and foreclose on its lien on the Property.

By December 31, 1998, Excel had defaulted under the OSB Loan Agreement by failing to pay certain amounts when they became due and by failing to complete construction on the Property pursuant to the OSB Loan Agreement. Consequently, OSB exercised its right under the OSB Loan Agreement to accelerate the out standing balance due and foreclosing on its mortgage on the Property pursuant to the OSB Loan Agreement. OSB failed to provide Heller written notice of Excel's default under the OSB Loan Agreement and failed to provide Heller the opportunity to cure Excel's default prior to acceleration and foreclosure. On September 28, 1999, Excel sold the Property.


I. Personal Jurisdiction

On a motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating the existence of personal jurisdiction. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir. 1997). When deciding such a motion, "a court must accept all undenied factual allegations and resolve all factual disputes in favor of plaintiff." Chemical Waste Management, Inc. v. Sims, 870 F. Supp. 870, 871 (N.D. Ill. 1994) (citation omitted).

A federal district court sitting in diversity jurisdiction in Illinois has personal jurisdiction over a non-resident party "only if an Illinois state court could have such jurisdiction." RAR, 107 F.3d at 1275. Under Illinois law, the long-arm statute permits in personam jurisdiction over a party to the extent allowed under federal due process. See 735 Ill. Comp. Stat. 5/2-209(c); Dehmlow v. Austin Fireworks, 963 F.2d 941, 945 (7th Cir. 1992). In addition, the due process guarantees of the Illinois Constitution also must be satisfied before personal jurisdiction may be asserted over an out-of-state defendant. Jamik, Inc. v. Days Inn of Mount Laurel, 74 F. Supp. 818, 821 (N.D. Ill. 1999).

A. Federal Due Process

The Due Process Clause of the Fourteenth Amendment limits personal jurisdiction over non-resident defendants. RAR, 107 F.3d at 1277. Personal jurisdiction may take two forms: specific jurisdiction or general jurisdiction. Specific jurisdiction exists "when the defendant's contacts with the forum are related to the controversy and these contacts reach a minimum threshold." Allied Metal Co. v. Edgerton Metal Prods., Inc., 908 F. Supp. 576, 580 (N.D. Ill. 1995) (citing International Shoe v. Washington, 326 U.S. 310, 316 (1945)). In this case, Heller seeks to invoke specific jurisdiction because it contends that OSB's contacts with Illinois are related to the alleged breach of contract.

In specific jurisdiction cases, a court must decide whether a defendant has "certain minimum contacts with [Illinois] such that the maintenance of the suit does not offend `traditional notions of fair play and substantial justice.'" International Shoe, 326 U.S. at 316 (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). These minimum contacts must "result from the actions by the defendant himself that create a `substantial connection' with the forum state." Burger King v. Rudzewicz, 471 U.S. 462, 475 (1985) (citations omitted). The defendant's connection to the State must be substantial enough that "he should reasonably anticipate being haled into court there." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). In contract disputes "only the `dealings between the parties in regard to the disputed contract' . . . are relevant to minimum contact analysis." RAR, 107 F.3d at 1278 (citing Vetrotex Certainteed Co. v. Consolidated Fiber Glass Prods. Co., 75 F.3d 147, 153 (3rd. Cir. 1996)). "[A]n out-of-state party's contract with an in-state party is alone not enough to establish the minimum contacts." Id. at 1277 (citing Burger King, 471 U.S. at 474-75).

Applying these principals to the present action, this Court finds that it would be unreasonable to exercise jurisdiction over OSB, a Florida corporation. While it is the Plaintiff's burden to establish personal jurisdiction, the only "contacts" alleged by Heller is the contract — the Recognition Agreement — and the meager negotiations leading up to that contract. Heller initiated the negotiations, since, by its own admission, it required assurances from OSB before it would agree to make the loan to Excel. (Decl. of Dennis Holland ¶)*fn1 OSB representatives did not travel to Illinois to negotiate the Recognition Agreement with Heller. Rather, all negotiations took place via telephone and facsimile. Even aggregated, OSB's telephone calls and faxes do not constitute minimum contacts with Illinois. Ameritech Servs., Inc. v. SCA Promotions, Inc., No. 99 C 160, 2000 WL 283098, at *3 (N.D. Ill. March 6, 2000) (citations omitted) OSB's representative signed the agreement in Florida then mailed it to Illinois for Heller's signature. While Heller's signature, as the last chronologically, actually created the contract, this factor alone is simply not enough to tilt the balance in favor of asserting personal jurisdiction over OSB. Furthermore, the performance contemplated by the Recognition Agreement required OSB to draft a letter in Florida explaining that Excel was in default under the OSB Loan Agreement and giving Heller a chance to cure the default. The fact that this letter would then be mailed to Heller, in Illinois, does not constitute ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.