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Coalsales II, LLC v. Gulf Power Co.

February 23, 2007

COALSALES II, LLC, A DELAWARE LIMITED LIABILITY COMPANY, PLAINTIFF,
v.
GULF POWER COMPANY, A MAINE CORPORATION, DEFENDANT.



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

MEMORANDUM & ORDER

I. INTRODUCTION

Plaintiff Coalsales II, LLC (f/k/a Peabody COALSALES Company) filed its Complaint (Doc. 2), seeking declaratory relief concerning a contract it had entered into with defendant Gulf Power Company. Shortly after filing its Complaint, Plaintiff also filed a Motion to Establish its Right to Proceed in this Form and supporting memorandum (Docs. 4 & 5). In response, Defendant filed a Motion to Dismiss, or in the Alternative, to Transfer (Doc. 11), seeking to transfer this case to the United States District Court for the Northern District of Florida. Thereafter, Plaintiff filed its Response (Doc. 16), to which Defendant filed its Reply (Doc. 16). Thus, the Motions have been fully briefed and are now before the Court. Due to the similarities of the issues and relief sought raised by both Plaintiff's and Defendant's Motions (Docs. 4 & 11), a single Order will suffice. As more explicitly outlined within this Order, the applicable law favors a dismissal of this action.

II. FACTUAL BACKGROUND

The instant dispute stems from a Coal Supply Agreement ("CSA"), executed by Plaintiff and Defendant on July 1, 1994, whereby Plaintiff agreed to supply and sell coal to Defendant. Although the CSA identified several potential sources (coal mines), it appears that most of the coal was supplied by the Galatia Mine, located in Galatia, Saline County, Illinois. According to Plaintiff, it was notified on December 30, 2005 that the Galatia Mine was forced to permanently close its Millennium Portal Mine and to cease all further mining activities, due to severely adverse mine conditions. Thus, Plaintiff notified Defendant via Defendant's agent, Southern Company, in a letter dated January 23, 2006, that the Galatia Millennium Portal Mine and cessation of mining constituted a force majeure event under Section 14 of the CSA. Further, Plaintiff stated it would no longer be able to supply coal to Defendant in accordance with the tonnage and quality specifications required under the CSA, but that its nonperformance was excused as a result of the force majeure.

The parties dispute whether the Galatia Mine was an exclusive source under the CSA, as Defendant believes the CSA imposes upon Plaintiff a continuing obligation to supply coal from other sources, regardless of the alleged force majeure at the Galatia Mine. Plaintiff and Defendant entered into negotiations to resolve the dispute, which were ultimately unsuccessful. On June 21, 2006, Plaintiff filed its Complaint seeking a declaratory judgment that the events at the Galatia Mine constituted a force majeure under the CSA. The following day, Defendant filed a separate action against Plaintiff for breach of contract, in the U.S. District Court for the Northern District of Florida. The parties currently contest where this matter should be litigated. Plaintiff, obviously, rallies for the action to remain with this Court and also asserts that it is not subject to personal jurisdiction in Florida. In its Motion (Doc. 4), Plaintiff requests that the Court issue an order stating that Defendant is subject to personal jurisdiction in this forum, venue is proper and that the Court will hear Plaintiff's declaratory judgment action. Conversely, Defendant advocates that proper venue instead lies with the Northern District of Florida, and asserts it is not subject to personal jurisdiction in Illinois. Therefore, Defendant seeks for a dismissal of this action or in the alternative, for a transfer to the Northern District of Florida, pursuant to 28 U.S.C. § 1404, so that this action may be consolidated with its lawsuit. Presently, the lawsuit initiated by Defendant for breach of contract against Plaintiff, filed in the Northern District of Florida, has been stayed, pending resolution of the instant matter.

III. ANALYSIS

Because the issue has been raised as the basis of Defendant's Motion to Dismiss, the Court must first determine whether Defendant is subject to personal jurisdiction in Illinois, otherwise, consideration of Plaintiff's Motion (Doc. 4) and Defendant's alternative request for a transfer of venue would be moot.

A. EXISTENCE OF PERSONAL JURISDICTION OVER DEFENDANT

Once a defendant moves to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2), a plaintiff has the burden of establishing the existence of personal jurisdiction over an out of state defendant. Purdue Research Foundation v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003) (internal citations omitted). A plaintiff must provide sufficient evidence to establish at least a prima facie case of personal jurisdiction.Turnock v. Cope, 816 F.2d 332, 333 (7th Cir.1987).

Because this Court sits in the Southern District of Illinois, it will accordingly apply the Illinois statutory law along with federal circuit law to determine whether it has personal jurisdiction over either of Defendants in this case. In fact, Plaintiff must demonstrate that personal jurisdiction over both Defendants in this case complies with (1) the Illinois long-arm statute, (2) Illinois constitutional law, and (3) federal constitutional law. RAR, Inc.v. Turner Diesel, Ltd,, 107 F.3d 1272, 1276 (7th Cir. 1997). Moreover, because the Illinois long-arm statute "'permits its courts to exercise jurisdiction on any basis permitted by the Illinois and United States Constitutions,'"*fn1 the analysis then becomes a two-prong examination: (1) determining whether the applicable state long-arm statute is satisfied; and (2) whether exercise of jurisdiction is consistent with the constitutional requirements of due process. Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 715 (7th Cir. 2002) (citing RAR, 107 F.3d at 1276; Klump v. Duffus, 71 F.3d 1368, 1371 n.4 (7th Cir. 1995)); see also FMC Corp. v. Varonos, 892 F.2d 1308, 1311 n.5 (7th Cir. 1990).

In comporting with the constitutional requirements of due process, "a state court may exercise personal jurisdiction over a nonresident defendant only so long as there exist 'minimum contacts' between the defendant and the forum state." World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). As such, a defendant's contacts with the forum state must be such "that maintenance of the suit 'does not offend 'traditional notions of fair play and substantial justice."" Id.at 292 (quoting Int'l Shoe, 444 U.S. at 316 (quoting Miliken v. Meyer, 311 U.S. 457, 463 (1940))). This standard is applied according to whether the forum state is attempting to assert "'general' or 'specific' jurisdiction over a defendant in a suit 'arising out of or related to the defendant's contacts with the forum.'" RAR, Inc., 107 F.3d at 1277 (quoting Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414 n.8 (1984)). The minimum contacts analysis requires "a showing that the defendant 'should reasonably anticipate being haled into court [the forum state].'" Hyatt, 302 F.3d at 716 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985)(quoting World-Wide Volkswagen, 444 U.S. at 297)).

The parties do not argue whether Defendant is subject to general jurisdiction in Illinois; they only discuss specific jurisdiction, or particularly, Defendant's contacts involving the CSA. Therefore, this analysis will be confined as to whether the exercise of specific jurisdiction over Defendant in Illinois is proper. Specific jurisdiction exists pursuant to the requirements of the Illinois long-arm statute when defendant commits any of the acts enumerated within subpart (a) of the statute or "on any other basis now or hereafter permitted by the Illinois Constitution and the Constitution of the United States." 735 ILL.COMP.STAT. 5/2-209(a)&(c). While the parties have extensively briefed the issue of whether Defendant took title to the coal in Illinois and thus, was subjected to personal jurisdiction, the Court finds personal jurisdiction on another basis, evident from the facts of the case.*fn2

"Illinois courts have held that despite the lack of physical presence within Illinois, the long-arm statute and due process permit Illinois courts to gain jurisdiction over a person or corporation who enters a contract knowing that it will be performed in Illinois." Biltmoor Moving and Storage Co. v. Shell Oil Co., 606 F.2d 202, 207 (7th Cir. 1979)(collecting Illinois cases). In determining whether a contractual relationship between the parties was sufficient to establish personal jurisdiction in Illinois over Defendant, the Court may consider the following: (1) who initiated the transaction; (2) where the contract was negotiated; (3) where the contract was executed; and (4) where performance under the contract was to take place. Vitron Ltd. P'ship v. Program Data Inc., 759 N.E.2d 186, 193 (Ill. App. Ct. 2001)(citing Ideal Ins. Agency, Inc. v. Shipyard Marine, Inc., 572 N.E.2d 353 (Ill. App. Ct. 1991)). Personal jurisdiction based on the performance of a contract in ...


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