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Citadel Group Limited v. Washington Regional Medical Center

June 18, 2007


The opinion of the court was delivered by: Marvin E. Aspen, District Judge


Plaintiff Citadel Group Limited ("Citadel") brings this breach of contract action against Defendant Washington Regional Medical Center ("WRMC"). Before us is Defendant's motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2) for lack of personal jurisdiction and Rule 12(b)(3) for improper venue. Alternatively, Defendant moves to transfer the case to the Western District of Arkansas. For the reasons set forth below, we grant Defendant's motion to dismiss for lack of personal jurisdiction and deny its remaining motions as moot.


Plaintiff Citadel is a Delaware corporation with its principal place of business in Chicago, Illinois. (Compl. at ¶ 1.) Defendant WRMC is an Arkansas non-profit corporation that operates a regional medical center with offices only in Arkansas. (Affidavit of Tami E. Hutchinson at ¶ 4.) Non-party Washington Regional Medical Foundation ("WRMF"), an Arkansas non-profit corporation which acts as a supporting organization for WRMC, owns land in Springdale, Arkansas on which WRMC sought to develop a medical office building ("MOB"). (Id. at ¶ 5.)

In May 2005, WRMC mailed from Arkansas "Requests for Proposals" relating to construction of the proposed MOB. (Id. at ¶ 6.) WRMC sent these requests to developers in Arkansas and other states, including Citadel, in Illinois. (Id.) WRMC sought a "ground lease" arrangement, whereby the developer would lease land from WRMF and erect an MOB on it, which WRMC would in turn lease from the developer. (Id. at ¶ 8.) Shortly thereafter, Citadel sent WRMC a development proposal, and the parties commenced negotiations over the summer. (Id. at ¶ 11.) The parties' correspondence was conducted electronically, by mail, and through in-person discussions in Arkansas. (Id. See also Affidavit of David Varwig at 1-5; Affidavit of Alvin Kruse at 1-2.)

In September 2005, Citadel faxed WRMC a one-paragraph "Authorization to Proceed," which an officer of WRMC received and signed in Arkansas, thereby forming a contractual relationship between the parties. (Compl. at ¶¶ 6-7; Affidavit of Tami E. Hutchinson at ¶ 14.) That document authorized Citadel to "proceed with Project development at a fee of four percent (4%) of project costs," and provided that "[WRMC] is responsible for all legal expenses and other costs associated with Project development, except architectural and engineering fees, whether or not the Project is ultimately developed." (Compl. Ex. F. at p.2.) In accordance with the Authorization, WRMC delivered a $40,000 good faith deposit to Citadel in Chicago. (Compl. at ¶ 7.) Citadel does not dispute that no employee or officer of WRMC ever visited Illinois in connection with the Authorization, nor for any other reason related to the development of the MOB. (Affidavit of Tami E. Hutchinson at ¶ 14.)

In the following months, Citadel prepared to complete the transaction, incurring expenses through its retention of attorneys, accountants, and banks in Illinois. (Compl. at ¶ 9.) During this period, WRMC was in frequent contact with Citadel and the Illinois attorneys and banks that Citadel had retained. (Id.) In May 2006, however, WRMC informed Citadel that it did not intend to complete the transaction. (Id. at ¶ 10.) Pursuant to the Authorization, Citadel has made demands for payment of various costs, which WRMC has refused to pay. (Id. at ¶ 13.)


In a motion to dismiss under Federal Rule of Civil Procedure 12(b)(2), the plaintiff bears the burden of showing a prima facie case of personal jurisdiction. Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). See also RAR, Inc. v. Turner Diesel, Ltd., 101 F.3d 1272, 1276 (7th Cir. 1997). In determining whether we have personal jurisdiction over the defendant, we may receive and consider affidavits and other materials submitted by the parties. See Turnock v. Cope, 816 F.2d 332, 333 (7th Cir. 1987), superceded by statute on other grounds as stated in FMC Corp. v. Varonos, 892 F.2d 1308, 1310 (7th Cir.1990). For purposes of a motion to dismiss based on personal jurisdiction, we "accept all allegations of the complaint as true except those controverted by defendants' affidavits." Northwestern Corp. v. Gabriel Mfg. Co., No. 96 C 2004, 1996 WL 73622, at *2 (N.D. Ill. Feb. 6, 1996). Where the defendant submits an affidavit contesting personal jurisdiction, "the plaintiff must go beyond the pleadings and submit affirmative evidence supporting the existence of jurisdiction." Purdue, 338 F.3d at 783. We resolve all factual disputes in the record in plaintiff's favor, but we may accept as true those facts presented in defendant's affidavit that remain uncontested. Id.; RAR, 107 F.3d at 1275.


A federal court can acquire personal jurisdiction over a non-resident defendant by asserting either general or specific jurisdiction. General jurisdiction is proper only where a defendant has regular, continuous, and systematic contacts with the forum state. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-16 (1984). Here, there is no dispute that WRMC lacks Illinois contacts sufficient for us to exercise general jurisdiction over it. However, in the absence of general jurisdiction, a court can acquire specific jurisdiction over a non-resident defendant when the claim arises from or is related to the defendant's contacts with the forum. Int'l Shoe Co. v. Washington, 326 U.S. 310 (1945).

To establish a prima facie case for specific personal jurisdiction, a plaintiff must show: 1) that the defendant is amenable to process; and 2) that the assertion of jurisdiction does not violate due process requirements. See, e.g., Watchworks, Inc. v. Total Time, Inc., 2002 WL 424631 (N.D. Ill. 2002). Under Federal Rule of Civil Procedure 4(k), a defendant is amenable to service when authorized by statute or when the defendant is subject to the forum state's long arm statute. Here, there is no statute providing for national service of process, so we look to the Illinois law to determine whether WRMC is amenable to process. LFG, LLC v. Zapata Corp., 78 F. Supp. 2d 731, 734 (N.D. Ill. 1999). Because Illinois authorizes personal jurisdiction to the maximum extent allowed by the Illinois and federal constitutions, this inquiry collapses into a due process inquiry. 735 ILCS 5/2-209(c). See also Euromarket Designs, Inc. v. Crate & Barrel Ltd., 96 F. Supp. 2d 824, 833-34 (N.D. Ill. 2000); see also. That inquiry requires us to "decide whether a defendant has 'purposefully established minimum contacts within the forum State' and consider whether, by traditional standards, those contacts would make personal jurisdiction reasonable and fair under the circumstances." RAR, 107 F.3d at 1277.

Though a contractual relationship can sometimes establish sufficient contacts with the forum state, "an out-of-state party's contract with an in-state party is alone not enough to establish the requisite minimum contacts." RAR, 107 F.3d at 1277 (citing Burger King, 471 U.S. at 478). "Rather, prior negotiations and contemplated future consequences, along with the terms of the contract and the parties' actual course of dealing must indicate the purposeful availment that makes litigating in the forum state foreseeable to the defendant." Id. (quoting Burger King, 471 U.S. at 479) (internal quotations omitted). In making that determination, we consider: 1) who initiated the transaction; 2) where the contract was entered into; (3) where the performance of the contract was to take place; and 4) where the contract was negotiated. See BAB Systems, Inc. v. UNK, Inc., No. 02 C 8797, 2002 WL 31867705, at * 2 (N.D. Ill. Dec. 20, 2002) (not reported in F. Supp. 2d) (citing Viktron Ltd. Partnership v. Program Data, Inc., 759 N.E. 2d 186, 193-94 (Ill. App. 2d Dist. 2001)). Here, it is undisputed that no agent or employee of WRMC ever left Arkansas during the negotiations or ultimate signing of the Authorization. Indeed, Citadel actually sent employees to Arkansas to discuss WRMC's plans in-person. (Affidavit of Tami E. Hutchinson at ¶ 11.) However, the parties disagree as to which entity is properly considered to have "initiated" their transaction, and whether Citadel's performance occurred in Illinois.

The parties' relationship commenced after WRMC sent -- and Citadel responded to -- a two page "Request for Proposal" outlining the basic contours of WRMC's plans for the MOB. (Compl. at ¶ 6. See also Compl. Ex. A.) WRMC had sent these "generic" requests to numerous developers in Arkansas, Illinois, and other states. (Compl. at ¶ 6.) In arguing that its "Requests for Proposal" did not initiate the transaction, WRMC points to a number of cases distinguishing between the proper "initiation" of a transaction and mere offers to do business or solicit bids.*fn1 ...

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