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Seg Liquidation Co., LLC v. Stevenson

October 18, 2007


The opinion of the court was delivered by: Charles P. Kocoras, District Judge


This matter comes before the court on the motion of Defendant Hugo Stevenson to dismiss the Amended Complaint of Plaintiffs SEG Liquidation Company, LLC ("SEG Liquidation"), and Thomas Lesko for lack of personal jurisdiction and improper venue. For the reasons set forth below, the motion is denied.


Stevenson lives in California and has since 1993.*fn1 In February 2002, he founded Stevenson Entertainment Group, LLC ("SEG") with Jerrod Shoun in Colorado. At that time, the business was located in Wheatridge, Colorado. SEG engaged in the development, manufacture, marketing, and distribution of toys and collectibles.

Later in 2002, Stevenson traveled to Illinois to meet with Lesko and another man named Michael Romano to discuss the possibility of those two men, who both lived and worked in Illinois, investing in SEG. In November 2002, Lesko and Romano purchased Shoun's interest in the company. The company's principal place of business moved from Colorado to Schaumburg, Illinois, and the five members of the company executed a new operating agreement that, inter alia, acknowledged the office's new location and specified that the agreement would be governed by Illinois law.

Lesko and Romano set about to obtain financing for SEG, and in late November 2003, Stevenson traveled to Illinois to discuss financing options with Romano and a bank with offices in Illinois. From 2002 until 2006, Stevenson traveled to Illinois in connection with his relationship to SEG at least three times. During the same time period, Stevenson had regular email and phone contact with Lesko and Romano; for at least the last year and a half of Stevenson's involvement with SEG, he and Lesko spoke at least once a week about SEG business matters.

With respect to the financial matters of SEG, Stevenson signed two guaranties of loans from Fifth Third Bank to SEG: one for $375,000 on December 5, 2003, and another for $450,000 on March 22, 2004. Each document states that the guaranty will be governed by Illinois law and that Stevenson agreed, upon Fifth Third's request, "to the jurisdiction of the courts of Cook County, State of Illinois." Lesko was also a guarantor of each of these loans, pursuant to separate agreements with Fifth Third.

On two occasions in 2003, Stevenson also borrowed money from SEG. In conjunction with those loans, he executed two promissory notes; each indicated that Stevenson agreed that the notes "shall be governed by the laws and jurisdiction of the State of Illinois." The notes specified that the party to be paid was SEG, located in Schaumburg, Illinois.

In 2006, SEG defaulted on various loan obligations, including the $825,000 owed to Fifth Third on the loans guarantied by Stevenson and Lesko. Fifth Third subsequently assigned its rights under the loans to Plaintiff SEG Liquidation. Lesko is the sole member of SEG Liquidation, and according to the complaint, he has paid Fifth Third the full guarantied amount of $825,000.

SEG Liquidation and Lesko brought the instant suit against Stevenson in a three-count complaint. Count I alleges that Stevenson breached the guaranty agreements by failing to pay the guarantied amounts to Fifth Third. Count II is a common law contribution claim by Lesko for the amounts he paid to Fifth Third as coguarantor of the two loans. Count III alleges that Stevenson did not honor his obligations under the promissory notes he executed in 2003 and seeks payment of the amounts set forth in the notes, with interest. The asserted basis for our jurisdiction is diversity, pursuant to 28 U.S.C. § 1332.

Stevenson now urges that this court is an improper venue with respect to Count I and contests our ability to exercise personal jurisdiction over him with respect to Counts II and III. Accordingly, he moves for dismissal of Count I pursuant to Fed. R. Civ. P. 12(b)(3) and of Counts II and III pursuant to Fed. R. Civ. P. 12(b)(2).


A. Dismissal for Improper Venue

Fed. R. Civ. P. 12(b)(3) provides that a complaint may be dismissed for improper venue. In diversity cases, venue is proper 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 (3) a judicial district in which any defendant is subject to personal jurisdiction at the time the ...

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