The opinion of the court was delivered by: DAVID COAR, District Judge
MEMORANDUM OPINION AND ORDER
Before this court is Heller Performance Polymers Inc.'s motion
to dismiss, or alternatively, transfer venue to the United States
District Court for the Eastern District of California. For the
reasons set forth below, Defendant's motion is denied.
Plaintiff First Union Rail Corporation ("Plaintiff" or "First
Union") is a North Carolina corporation, with its principal place
of business in Rosemont, Illinois. (Pl. Compl. ¶ 1). Defendant
Heller Performance Polymers, Inc. ("Defendant" or "HPP") is a
Delaware corporation with its principal place of business in
Visalia, California. (Def. Memo. in Supp. of Mot. to Dismiss, or
Alternatively, Transfer Venue, p. 1).*fn1 First Union and
HPP entered into a written lease agreement dated June 11, 1998, in addition to various
Riders (collectively, the "Lease"), under which HPP agreed to
lease from First Union sixteen covered hopper railroad cars. (Pl.
Compl. ¶ 5). The Lease obligated HPP, upon expiration of the
specified terms of the Lease agreement, to return the Railroad
Cars to the designated location empty and free from residue,
clean, and in the same good condition as when each railroad car
was delivered to HPP by First Union, ordinary wear and tear
excepted. (Pl. Compl. ¶ 7). Additionally, the Lease provided that
in the event that any railroad car was not delivered to First
Union in accordance with the Lease within thirty days after the
end of the term for such car, the monthly rental for such would
be set at one and one-half times the monthly rental rate. Id.
On March 1, 2002, the Plaintiff alleges that the Defendant
agreed in writing to a one-year renewal period of the Lease
("Lease Renewal") expiring on March 31, 2003. (Pl. Compl. ¶ 8).
The terms of the Lease Renewal obligated HPP to pay First Union a
rental of $325.00 per car per month. (Pl. Comp. ¶ 9). Upon
expiration, the Lease Renewal provided the Defendant an option to
either continue the lease on a month to month basis or return the
railroad cars to a point designated by First Union. Id.
Plaintiff alleges that HPP continued to use the cars in its
business operations during the one-year renewal period, yet
failed to make any monthly payments to First Union pursuant to
the Lease Renewal during or after the one-year renewal period.
(Pl. Comp. ¶¶ 10-11). Additionally, First Union contends that HPP
failed to return all of the railroad cars in accordance with the
Lease and the Lease Renewal, and failed to make any payments with
respect to the railroad cars for recovery, transportation,
storage and repair costs, as First Union alleges is required
under the terms of the Lease. (Pl. Comp. ¶ 12). In its four count
Complaint, First Union requests damages for: (1) Breach of Contract; (2) Unjust
Enrichment (an alternative to Plaintiff's Breach of Contract
claim); (3) Replevin; and (4) Conversion.
HPP believes that dismissal of First Union's Complaint is
warranted for four reasons. Defendant contends that dismissal is
warranted under Fed.R.Civ.P. 12(b)(1) because it believes that
this court lacks subject matter jurisdiction over Plaintiff's
cause of action. Second, HPP believes that Plaintiff's Complaint
should be dismissed pursuant to Fed.R.Civ.P. 12(b)(2), because
this Court lacks personal jurisdiction over HPP. Third, Defendant
argues that Plaintiff's Complaint should be dismissed under Fed.
R. Civ. P. 12(b)(3), for reasons of improper venue. Finally,
Defendant urges this Court to dismiss Plaintiff's Complaint
pursuant to Fed.R.Civ.P. 12(b)(6), as Plaintiff's Complaint fails
to state a claim upon which relief can be granted. Alternatively,
if this Court does not dismiss Plaintiff's Complaint for the
reasons stated above, HPP contends that this matter should be
transferred to the United States District Court, Eastern District
of California. The Court will address each ground for dismissal
I. Must First Union's Complaint be Dismissed for Lack of
Subject Matter Jurisdiction?
HPP contends that dismissal of First Union's Complaint is
warranted under Fed.R.Civ.P. 12(b)(1), because this Court
lacks subject matter jurisdiction over Plaintiff's Complaint.
Defendant argues that although First Union has alleged that more
than $75,000 is in controversy, it cannot establish a good faith
expectation of recovery in excess of that amount. Federal courts are courts of limited jurisdiction. In order for
diversity jurisdiction to lie with the federal courts, two
requirements must be met: one, there must be complete diversity
of citizenship between all plaintiffs and all defendants, and
two, "the proper amount in controversy" must be sufficiently
alleged. Del Vecchio v. Conseco, Inc., 230 F.3d 974, 977 (7th
Cir. 2000). Under the usual circumstance, where the plaintiff's
assertion of the amount in controversy is uncontested, the court
will accept Plaintiff's good faith allegations, "unless it
`appear[s] to a legal certainty that the claim is really less
than the jurisdictional amount.'" Rexford Rand Corp. v. Ancel,
58 F.3d 1215, 1218 (7th Cir. 1995) (quoting St. Paul Mercury
Indemnity Co. v. Red Cab Co., 303 U.S. 283, 289 (1938)).
However, when the defendant challenges the plaintiff's
allegations of the amount in controversy, the plaintiff must
provide competent proof that it does, in fact, meet the
jurisdictional requirement. Rexford Rand, 58 F.3d at 1218
(citing McNutt v. General Motors Acceptance Corp.,
298 U.S. 178, 189 (1936)). That "competent proof" includes "proof to a
reasonable certainty that jurisdiction exists." Gould v.
Artisoft, Inc., 1 F.3d 544, 547 (7th Cir. 1993).
First Union contends that HPP owes rent to it for the railroad
cars in the amount of at least $325.00 per car, per month, from
April 1, 2002, through at least April 30, 2003. HPP alleges that
subject matter jurisdiction is lacking in this Court because
First Union bases its claims on a contract that HPP believes
never existed. Additionally, HPP argues, even if the monthly
amount stated was binding, HPP contends that First Union ignores
the fact that HPP attempted to return all the cars to First Union
when the Riders expired in 2002, and consequently, this refusal
to take back the cars does not equate to HPP's liability to pay
for the railroad cars during that time. HPP maintains that at
most, assuming First Union was entitled to rent for the four remaining cars, the amount in controversy falls below the
jurisdictional minimum required for diversity jurisdiction
pursuant to § 1332. In support of its arguments that the amount
in controversy exceeds the jurisdictional minimum, First Union
provides the numerical calculations of damages recoverable if
meritorious in its suit against HPP. First Union contends that in
its negotiations with HPP, the Parties agreed to renew the lease
for one year, at the rate of $325 per car, per month, for rental
of the sixteen railroad cars. See Pl. Ex. B, ¶¶ 7, 11-12.
Additionally, Plaintiff contends that as of March 1, 2002, HPP
was in possession of the cars, and was utilizing and loading the
cars, and that First Union did not receive any compensation for
HPP's use of the cars during this time period. Id. at ¶ 13.
First Union maintains that the fair value of the cars equals
services during the time period that Plaintiff was deprived of
use of the cars by HPP, which would exceed $96,000.00, which is
calculated by applying charges specified in the Lease Renewal.
Id. at ¶ 14. First Union contends that the net damages for
breach of the Lease Renewal exceed $132,000.00. Id. at ¶ 15.
First Union asserts that the net damages that were incurred
comprise the unpaid rent on each of the Cars (at $325 per car per
month until returned to First Union consistent with the Lease
terms), mechanical damages to repair the damaged Cars, storage
charges for each of the Cars (incurred by First Union when HPP
did not return the Cars consistent with the Lease terms and
instead stored the Cars at First Union's expense), and the
freight charges associated with placing each of the Cars in
storage. Id. Additionally, First Union notes that this
calculation does not include any necessary mechanical charges to
repair the Cars returned to First Union by HPP in April 2004.
Id. Finally, First Union contends that assuming, arguendo,
that the Lease Renewal does not apply, the terms of original
Lease between the Parties would apply, and consequently, First
Union's damages would exceed $214,000. Id. at ¶ 16. First Union arrives at this figure because under the Lease, rent
at 150% of the rate provided under Riders 4, 5 and 6 is charged
until each car is returned in proper condition. Id. According
to Plaintiff, as of March 2004, the 150% rate would have been in
effect for up to 24 months for certain railroad cars. Id.
Additionally, Plaintiff contends, for those cars returned prior
to April 2004, repair damages exceeding $21,000.00 have been
identified, for which First Union believes HPP is responsible.
First Union has presented sufficient evidence to demonstrate
that the amount in controversy readily exceeds the jurisdictional
minimum of $75,000. In its arguments that First Union cannot meet
the jurisdictional requirement for purposes of diversity
jurisdiction, HPP assumes that First Union's claim for breach of
contract fails to state a claim upon which relief can be granted,
and consequently, First Union's damages cannot exceed the
requisite jurisdictional minimum. However, "[t]he inability of
the plaintiff to recover an amount adequate to give the court
jurisdiction does not show his bad faith or oust jurisdiction."
St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289
(1938) (emphasis added). Therefore, even assuming, arguendo,
that Plaintiff's breach of contract claim fails to state a claim
upon which relief can be granted, this Court still has subject
matter jurisdiction over Plaintiff's claim, as First Union
adequately alleges that the amount in controversy exceeds the
jurisdictional minimum of $75,000. Consequently, HPP's motion to
dismiss pursuant to Fed.R.Civ.P. 12(b)(1) for lack of subject
matter jurisdiction is denied. II. Can the Court Exercise Personal Jurisdiction Over HPP?
A. Legal Standard for the Exercise of Personal Jurisdiction
HPP contends that First Union's Complaint must be dismissed
pursuant to Fed.R.Civ.P. 12(b)(2), as this Court lacks
personal jurisdiction over it. "A federal district court
exercising diversity jurisdiction has personal jurisdiction `only
if a court of the state in which it sits would have such
jurisdiction'." RAR Incorporated v. Turner Diesel Limited,
107 F.3d 1272, 1275 (7th Cir. 1997) (quoting Klump v. Duffus,
71 F.3d 1368, 1371 (7th Cir. 1995) cert denied, 518 U.S. 1004
(1996)). First Union, as the Plaintiff, bears "the burden of
establishing a prima facie case for personal jurisdiction."
Brown v. Tenet Para American Bicycle Challenge, 931 F. Supp. 592,
593 (N.D. Ill. 1996) (quoting Michael J. Neuman &
Associates Limited v. Florabelle Flowers, Incorporated,
15 F.3d 721, 724 (7th Cir. 1994)). However, as the plaintiff, First Union
is entitled to have any conflicts in the affidavits resolved in
its favor. RAR, 107 F.3d at 1275 (citing Turnock v. Cope,
816 F.2d 332, 333 (7th Cir. 1987)).
There are three obstacles to personal jurisdiction: (1) state
statutory law; (2) state constitutional law; and (3) federal
constitutional law. RAR, 107 F.3d at 1276. Illinois statutory
law, per the Illinois long-arm statute, provides that an Illinois
court "may . . . exercise jurisdiction . . . on any basis now or
hereafter permitted by the Illinois Constitution and the
Constitution of the United States." Id. (quoting 735 ILCS
5/2-209). Therefore, under the Illinois long-arm statute, an
Illinois court has personal jurisdiction as long as the exercise
of jurisdiction comports with due process. "The parameters of
jurisdiction under the Illinois long-arm statute are contiguous
with the requirements of due process under the United States and
Illinois Constitutions." Rohde v. Central Railroad of Indiana,
930 F. Supp. 1269, 1271 (N.D. Ill. 1996) (citing Chemical Waste Management, Inc. v. Sims, 870 F. Supp. 870,
873 (N.D. Ill. 1994); see also Hyatt Int'l Corp. v.
CoCo, 302 F.3d 707, 715 (7th Cir. 2002) ("[T]here is no
operative difference between the limits imposed by the Illinois
Constitution and the federal limitations on personal
jurisdiction." (internal citations omitted)). Consequently, if a
defendant's contacts with Illinois satisfy the due process clause
of the United States Constitution, those contacts will also
satisfy the requirements of the Illinois long-arm statute.
Rohde, 930 F. Supp. at 1271. To satisfy the requirements of
federal due process, the nonresident defendant must have