Searching over 5,500,000 cases.


searching
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.

FIRST UNION RAIL CORPORATION v. HELLER PERFORMANCE POLYMERS

July 7, 2004.

FIRST UNION RAIL CORPORATION, Plaintiff,
v.
HELLER PERFORMANCE POLYMERS, INC., Defendant.



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.

FACTUAL BACKGROUND

  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.

  DISCUSSION

  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 in turn.

  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 sufficient ...


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.