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Valley Air Service, Inc. v. Southaire

December 15, 2006

VALLEY AIR SERVICE, INC., PLAINTIFF,
v.
SOUTHAIRE, INC. AND CENTRAL FLYING SERVICE, INC., DEFENDANTS.



The opinion of the court was delivered by: Blanche M. Manning United States District Court Judge

MEMORANDUM AND ORDER

Valley Air Service contracted with Southaire to purchase an airplane which was to be customized by Central Flying Service pursuant to a contract between Central Flying and Southaire. Contending that it is a third party beneficiary of the Central Flying--Southaire contract, Valley Air sued Southaire in state court. After Southaire removed the state court action based on diversity, Valley Air amended its complaint to add Central Flying as an additional defendant. Central Flying seeks to dismiss the claims against it based on lack of personal jurisdiction and improper venue. Alternatively, it seeks to transfer this action to the United States District Court for the Eastern District of Arkansas. For the following reasons, Central Flying's motion to dismiss for lack of personal jurisdiction and improper venue is denied and its motion to transfer venue is denied without prejudice.

Background

Regrettably, the parties launch into a discussion of the merits without the benefit of a summary of the relevant facts. The court will thus forge on with no assistance from counsel. Valley Air is an Illinois corporation with its principal place of business in Illinois. Southaire is a Tennessee corporation with its principal place of business in Tennessee. Central Flying is an Arkansas corporation with its principal place of business in Arkansas, and offers aircraft maintenance and service.

Valley Air was interested in purchasing a Citation 550 airplane from Southaire. The contract between Valley Air and Southaire required certain upgrades to the airplane prior to delivery and contained a forum selection clause which required suits arising from the contract to be filed in Illinois. As a condition to the contract, Valley Air stipulated that Central Flying would perform the necessary work on the airplane. According to Valley Air, once the plane was delivered, it had all sorts of problems. Thus, Valley Air sued Southaire for breach of contract, fraud, and breach of the Illinois Consumer Fraud Act and sued Central Flying for breach of the Southaire-Valley Air contract under a third party beneficiary theory.

Southaire lined up Central Flying to perform work on the plane before Valley Air came to Arkansas to inspect the plane (without any sort of solicitation to do so by Central Flying) and agreed to purchase it from Southaire. Central Flying would have been the company responsible for upgrading the plane regardless of who purchased it. Central Flying performed all of the work on the plane at its facility in Arkansas pursuant to the Central Flying--Southaire contract but as specified by Valley Air, the plane's ultimate owner.

According to Valley Air Service's President, Valley Air employees in Illinois had "dozens" of conversations about the plane with Central Flying's employees via telephone, fax, email, and regular mail. Central Flying ordered parts for the plane after it learned that the work it was performing was for Valley Air's benefit. Moreover, Central Flying was aware that Valley Air was the plane's ultimate owner and was going to base the plane in Illinois, and thus was aware that Valley Air would be covered by the warranties issued by Central Flying. Pursuant to the warranty, Central Flying shipped replacement parts to Valley Air's offices in Illinois. Southaire paid most, but not all, of Central Flying's invoices.

In addition, the plane, which was manufactured by Cessna Aircraft, participates in a maintenance tracking program administered by Cessna known as CESCOM. Participation in CESCOM requires maintenance facilities to provide reports to CESCOM after certain maintenance or inspections are performed. These are referred to as maintenance transactions reports, and are maintained by the maintenance facility. Maintenance facilities can therefore reasonably anticipate an ongoing relationship with aircraft owners to provide maintenance transactions reports at the request of aircraft owners. In fact, the day following Valley Air's acceptance of the aircraft, Valley Air faxed such a request from its office in Illinois to Central Flying.

With respect to acceptance of the plane, Valley Air picked the plane up in Arkansas and flew it to Illinois. In an effort to begin generating revenue, Valley Air accepted the plane with side panels not of its choosing based on Central Flying's assurances that the appropriate replacement side panels would be shipped to Valley Air at a future date. The MTRs and side panels were each, respectively, sent into Illinois, directly from, or at the direction of, Central.

Central Flying is based in Arkansas, and is not registered to do business in Illinois, has no offices in Illinois, does not have an agent for service of process in Illinois, has no subsidiaries in Illinois, owns no property in Illinois, and has never filed a lawsuit in Illinois. However, it operates a website (http://www.central.aero/) and runs national advertising. In addition, although it does not keep records of its direct mail solicitations, discovery uncovered one list of recipients, and that list included Illinois owners of airplanes. See Response Exhibits G & H.

Standard for a Motion to Dismiss for Lack of Personal Jurisdiction

In ruling on a motion to dismiss pursuant to Fed. R. Civ. P. 12(b)(2) based on lack of personal jurisdiction, the court may consider matters outside the pleadings, such as affidavits and other materials submitted by the parties. See Fed. R. Civ. P. 12(b). The plaintiff bears the burden of establishing personal jurisdiction by a preponderance of the evidence. Turnock v. Cope, 816 F.2d 332, 333 (7th Cir. 1987). In making its determination regarding personal jurisdiction, the court must resolve any factual disputes in the plaintiff's favor, but must accept the allegations in the complaint as true only to the extent that they are not controverted by other evidence in the record. Id. The court must also accept uncontested jurisdictional facts presented by the defendants as true. Connolly v. Samuelson, 613 F. Supp. 109, 111 (N.D. Ill. 1985).

Where the court's subject matter jurisdiction stems from diversity of citizenship, as in this case, the court may assert personal jurisdiction over a defendant only if personal jurisdiction would be proper in an Illinois court. Michael J. Neuman & Assoc., Ltd. v. Florabelle Flowers, Inc., 15 F.3d 721, 724 (7th Cir. 1994). Under the Illinois long-arm statute, Illinois state courts have general jurisdiction over nonresident defendants "doing business" in Illinois and specific jurisdiction over nonresident defendants if the claims arise from their "transactions" in Illinois. 735 ILCS §§ 5/2-209(a) & (b).

The Illinois long-arm statute also contains a "catch-all" provision which allows Illinois state courts to assert personal jurisdiction to the maximum extent permitted by the Illinois and United States Constitutions. 735 ILCS ยง 5/2- 209(c). Thus, jurisdiction is coextensive with federal due process requirements. See, e.g., RAR, Inc. v. Tuner Diesel Ltd., 107 F.3d 1272, 1276 (7th Cir. 1997). The Due Process Clause of the Fourteenth Amendment to the United States Constitution limits when a state may assert in personam jurisdiction over nonresident defendants. Pennoyer v. Neff, 95 U.S. 714, 733 (1878). To assert personal jurisdiction consistent with federal due process, a defendant must have (1) "certain minimum contacts with the forum ...


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