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LASHCON, INC. v. BUTLER

October 7, 2004.

LASHCON, INC. and FOURELL, INC., Plaintiffs,
v.
JIM BUTLER, Defendant.



The opinion of the court was delivered by: RICHARD MILLS, Senior District Judge

OPINION

We deal here with venue.

  This breach of contract action was initially filed in the Circuit Court for the Seventh Judicial Circuit, Scott County, Illinois. On September 1, 2004, Defendant Jim Butler filed a notice of removal of the action to this Court.

  On September 3, 2004, United States Magistrate Judge Charles H. Evans conducted a telephone conference with the parties regarding the merits of the notice of removal. Judge Evans instructed the Defendant to file a supplement to his notice of removal by September 17, 2004. The Plaintiffs were directed to file any objections to the Defendant's notice of removal within seven days after the filing of the supplement. No objections were filed to the Defendant's supplement.

  I. ANALYSIS

  A. SUBJECT MATTER JURISDICTION

  The Defendant purports to remove this action, pursuant to 28 U.S.C. § 1441, on the basis of diversity of citizenship jurisdiction. In his initial notice of removal, the Defendant did not properly allege the citizenship of all of the parties. Specifically, he alleged only that he is a resident of Indiana. Of course, it is the parties' citizenship, not residency, which determines whether a federal district court has subject matter jurisdiction under 28 U.S.C. § 1332. In paragraph 3 of the supplement to the notice of removal, it appears that the Defendant has erroneously identified himself as a citizen of Illinois. That paragraph lists the Defendant's address as 1346 Flintlock Drive, Greenwood, Illinois. Because the summons, which is attached to the notice of removal, identifies the Defendant as residing at 1346 Flintlock Drive, Greenwood, Indiana 46143, the Court is confident that the Defendant merely erred in listing his address in paragraph 3 and that he is, in fact, a citizen of Indiana.*fn1

  Pursuant to section 1332(c)(1), a corporation is deemed to be a citizen of the State in which it was incorporated and the State in which it has its principal place of business. In the supplement to the notice of removal, the Defendant states that both Plaintiffs are incorporated in Illinois with principal places of business in Illinois.

  Based on the foregoing, the Court has determined that there is complete diversity of citizenship between the parties. According to their complaint, the Plaintiffs are seeking damages in the amount of $92,368.67. Because the amount in controversy exceeds $75,000, and the dispute is between citizens of different States, the Court concludes that it has subject matter jurisdiction pursuant to 28 U.S.C. § 1332. B. VENUE

  There is also some question regarding whether this Court is the appropriate venue for this action. In the supplement to his notice of removal, the Defendant asks the Court, pursuant to 28 U.S.C. §§ 1404(a) and 1406(a), to transfer this action to a court of proper venue if it determines that venue is improper in the Central District of Illinois. The Defendant submits that the Southern District of Indiana or Northern District of Illinois would be appropriate venues.

  The relevant venue statute provides in pertinent part:
A civil action wherein jurisdiction is founded only on diversity of citizenship may, except as otherwise provided by law, be brought only in (1) a judicial district where any defendant resides, if all defendants reside in the same State, (2) a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred, or a substantial part of property that is the subject of the action is situated, or (3) a judicial district in which any defendant is subject to personal jurisdiction at the time the action is commenced, if there is no district in which the action may otherwise be brought.
28 U.S.C. § 1391(a). Because the sole basis of jurisdiction in this case is diversity of citizenship, the Court will examine the above factors to determine if venue is appropriate in the Central District of Illinois. It appears that Defendant Jim Butler resides in the Southern District of Indiana; therefore, the first factor does not provide a basis for venue in this Court.

  Pursuant to section 1391(a)(2), venue may still be appropriate in the Central District of Illinois if a substantial part of the events or omissions giving rise to the Plaintiff's claim occurred in this district. In their complaint filed in the Circuit Court of Scott County, the Plaintiffs state that they are businesses operating in Scott County, and the transactions which are alleged occurred in Scott County. The Plaintiffs claim that they entered into an oral agreement with the Defendant, wherein they made loans to him for the purpose of developing a sales relationship with the National Collegiate Athletic Association ("NCAA"). The Plaintiffs further claim that the Defendant encouraged them to seek out business from the NCAA and enter into a contractual relationship for a marketing agreement between the NCAA and the Plaintiffs. Moreover, the Plaintiffs issued numerous checks to the Defendant during 2000 and 2001, which were marked with notations "loan" or "salesperson commission." The Plaintiffs allege that, pursuant to the contract, the Defendant at various times made sales on their behalf. However, the Plaintiffs contend that the Defendant has failed and refused to make any payments on the loans.

  In the Defendant's initial notice of removal, there are no allegations regarding whether the events giving rise to the claim occurred in this judicial district. The only allegation in the notice that is related to that issue is that the Plaintiffs are doing business in Scott County, Illinois, which is within this judicial district.

  The Defendant has included more specific factual allegations in the supplement to the notice of removal. Based on those allegations, it appears that the connection between this case and the Central District is quite weak. The Defendant states that the Plaintiffs' complaint is based on the alleged breach of an oral contractual agreement between the Defendant and the Plaintiffs. The Defendant alleges that the oral agreement was entered into with John Lashmett, d/b/a Regalo, as a result of conversations in the fall of 1999 when the Defendant resided in Kansas City, Missouri, and Mr. Lashmett resided in Chicago, Illinois. The Defendant ...


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