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ABN AMRO SAGE CORPORATION v. COHEN

September 2, 2003

ABN AMRO SAGE CORPORATION, PLAINTIFF,
v.
MITCHELL COHEN, DEFENDANT



The opinion of the court was delivered by: Suzanne Conlon, District Judge

MEMORANDUM OPINION AND ORDER

ABN Amro Sage (AA Sage) sues Mitchell Cohen (Cohen) for breach of contract pertaining to a guaranty agreement. Cohen is now fighting AA Sage's efforts to hale him into court. Cohen moves to dismiss for lack of personal jurisdiction and improper venue pursuant to Federal Rule of Civil Procedure 12(b)(2) and (b)(3).

BACKGROUND

Both AA Sage and Cohen submitted affidavits to support their positions on personal jurisdiction. In deciding a motion to dismiss for lack of personal jurisdiction, AA Sage bears the burden of demonstrating the existence of personal jurisdiction. RAR, Inc. v. Turner Diesel 107 F.3d 1272, 1276 (7th Cir. 1997). Once personal jurisdiction has been challenged under Rule 12(b)(2), AA Sage must prove the case for personal jurisdiction that it alleged in its complaint. Tobin for Governor v. Illinois State Bd. of Elections, 268 F.3d 517, 521 (7th Cir. 2001); see also Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 712-13 (7th Cir. 2002). To that end, the court accepts all well-pleaded jurisdictional allegations in the complaint as true unless controverted by affidavit. Turnock v. Cope, 816 F.2d 332, 333 (7th Cir. 1987); see also Hyatt Int'l Corp., 302 Page 2 F.3d at 712-13. Any conflict presented by affidavit must be resolved in AA Sage's favor. Hyatt Int'l Corp., 302 F.3d at 712-13. Any unrefuted facts offered by Cohen, however, will be accepted as true. Facilitec Corp. v. Grease Stopper, Inc., No. Ol-C-2971, 2002 WL 226758, at *2 (N.D. Ill. Feb. 13, 2002).

AA Sage is a Delaware corporation, principally doing business in Chicago. Cohen resides in the State of New York. In 1999, Cohen sought a loan from Harris Trust & Savings Bank to finance the purchase of seats on stock exchanges. Before it would grant the loan, Harris Bank insisted that the loan be guaranteed by a clearing firm. Cohen entered into an agreement with AA Sage, whereby AA Sage pledged to serve as Cohen's guarantor.*fn1 Cohen also retained AA Sage to serve as his clearing bank for payments generated by leasing seats on the Pacific and American Stock Exchanges that were purchased with the proceeds from the Harris loan. Cohen eventually defaulted on his obligation to Harris Bank, and in 2003, AA Sage was forced to repay the loan. After honoring Harris Bank's demand for the outstanding balance of the loan, AA Sage sought reimbursement from Cohen. This suit arises out of Cohen's alleged refusal to honor the guaranty agreement.

In obtaining financing from Harris Bank, Cohen made two or three phone calls to Harris' offices in Illinois to facilitate the transaction. Ultimately, Cohen entered into an agreement with Page 3 Harris Bank that was governed by Illinois law. Cohen also authorized Harris to disclose his personal information related to the loan to AA Sage as his "Guarantor."

As Cohen's clearing bank, AA Sage sent payments to Harris Bank in Illinois. Cohen, however, asserts that he has had no contact with AA Sage's Chicago office, and that he has dealt exclusively with AA Sage's New York and San Francisco offices. Cohen Aff. at ¶ 13. In failing to address these claims, AA Sage concedes these facts.

DISCUSSION

I. Personal Jurisdiction

AA Sage has the burden of demonstrating personal jurisdiction over Cohen is proper See RAR, 107 F.3d at 1276. A federal district court may exercise personal jurisdiction over a nonresident defendant if jurisdiction over that defendant is proper under the law of the forum state. See id.; Fed.R.Civ.P. 4(e). A federal district court sitting in diversity has personal jurisdiction "only if a court of the state in which it sits would have such jurisdiction." Klump v. Duffus, 71 F.3d 1368, 1371 (7th Cir. 1995). To establish personal jurisdiction, AA Sage must show (1) that Cohen satisfies one of the provisions of the Illinois long-arm statute, 735 ILCS 5/2-209, and (2) that Cohen purposefully established minimum contacts with Illinois that satisfy both state and federal due process. See RAR, Inc., 107 F.3d at 1276.

The Illinois long-arm statute contains both a list of particular, enumerated grounds for jurisdiction and a catch-all provision that authorizes the exercise of personal jurisdiction on any basis "now or hereafter permitted by the Illinois Constitution and the Constitution of the United States." 735 ILCS 5/2-209(c); see Hyatt Int'l Corp., 302 F.3d at 714. In application, the reach of Illinois' long arm statute terminates at the boundaries created by state and federal due process Page 4 requirements. See id.; see also Central States, Southeast and Southwest Areas Pension Fund v. Reimer Express World Corp., 230 F.3d 934, 940 (7th Cir. 2000). Therefore the inquiry "collapses into two constitutional inquiries — one state and one federal." RAR, 107 F.3d at 1276.

Turning to the state constitutional inquiry, the Illinois Supreme Court has held that the due process requirements imposed by the Illinois Constitution and United States Constitution are not necessarily equivalent. Rollins v. Ellwood, 141 Ill.2d 244, 271, 565 N.E.2d 1302, 1314 (1990). The Rollins court explained that personal jurisdiction may be "asserted only when it is fair, just, and reasonable to require a nonresident defendant to defend an action in Illinois, considering the quality and nature of the defendant's acts which occur in Illinois or which affect interests located in Illinois." Rollins, 141 Ill.2d at 275, 565 N.E.2d at 1316. The Seventh Circuit, while acknowledging the possibility that state and federal standards might diverge in some cases, has suggested that in practice there is "no operative difference between the limits imposed by the Illinois Constitution and the federal limitations on personal jurisdiction." Hyatt Int'l Corp., 302 F.3d at 715-16. Nothing about this case suggests that the due process limits applied here would be different under the state and federal constitutions.

AA Sage has not alleged that Cohen had "continuous and systematic general business contacts" with Illinois that would subject him to general jurisdiction. AA Sage has thus waived any general jurisdiction argument. See RAR, 107 F.3d at 1277. AA Sage has instead argued that Cohen is subject to specific personal jurisdiction.

To establish specific jurisdiction, AA Sage must prove Cohen "purposefully established minimum contacts within the forum State." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476-77 (1985). In determining whether Cohen had sufficient minimum contacts with Illinois, courts Page 5 consider whether a defendant could "reasonably anticipate being haled into court" in Illinois. World-Wide Volkswagen Corp. v. Woodsen, 444 U.S. 286, 297 (1980). These contacts may not be fortuitous or attenuated. Instead, this requirement is satisfied when the defendant purposefully ...


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