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USCIC of North Carolina Rsa #1, Inc. v. Ramcell

November 6, 2007

USCIC OF NORTH CAROLINA RSA #1, INC. PLAINTIFF,
v.
RAMCELL, INC. DEFENDANT.



The opinion of the court was delivered by: Elaine E. Bucklo United States District Judge

MEMORANDUM OPINION AND ORDER

On October 10, 2007, Plaintiff USCIC of North Carolina RSA #1, Inc. ("USCIC") filed a five count complaint seeking injunctive and other relief against defendant Ramcell, Inc. ("Ramcell"). USCIC simultaneously filed a motion for preliminary injunction. On October 29, 2007, Ramcell filed a motion to dismiss for lack of personal jurisdiction or, in the alternative, to transfer to a more convenient forum (the "motion to dismiss or transfer"). USCIC seeks to enjoin Ramcell from enforcing a capital call that issued on September 7, 2007, for which payment is due on November 6, 2007. For the following reasons, I find that USCIC has made a prima facie showing that personal jurisdiction over Ramcell exists and, therefore, I deny the motion to dismiss or transfer. I also preliminarily enjoin Ramcell from enforcing the September 7 capital call, from diluting USCIC's partnership interest for failure to pay the requested capital, and from issuing any additional capital calls for the duration of this action.

I.

USCIC is a Delaware corporation with its principal place of business in Chicago, Illinois. Ramcell is a Florida corporation with its principal place of business in Kentucky. USCIC and Ramcell are each general partners with equal 50% interests in North Carolina RSA 1 Partnership (the "Partnership"). Ramcell is also the managing partner of the Partnership. The Partnership is a Delaware general partnership, which provides cellular telephone service in North Carolina.

USCIC and Ramcell have been partners since 1995. Ramcell has regularly sent mail to USCIC in Chicago, including financial statements since 1998, capital distributions from 2001 to 2004, and capital calls in 2006 and 2007. Ramcell also has communicated with USCIC employees in Illinois via telephone and electronic mail regarding Partnership operations.

The parties' relationship is governed by the Agreement Establishing North Carolina RSA 1 Partnership and all amendments thereto (the "Partnership Agreement"). Under Sections 9.1 and 9.2 of the Partnership Agreement, as managing partner, Ramcell must prepare an annual budget by November 1 of each year for both partners' approval or amendment at a meeting to take place no later than December 20 of each year. USCIC did not approve the budget for 2007 originally proposed by Ramcell and Ramcell never provided a revised proposed budget. Pursuant to Section 5.2 of the Partnership Agreement, as managing partner, Ramcell may require the investment of additional capital contributions. Section 5.2 states that such capital contributions "may only be requested consistent with the annual budgets prepared under Section 9.2 and only if they are needed to meet the financial obligations of the Partnership and operating and management expenses as set forth in Section 4.2."

On February 20, 2006, Ramcell issued a capital call in the amount of $400,000.00, and USCIC paid its $200,000.00 share on March 16, 2006. On June 30, 2006, Ramcell issued a capital call in the amount of $500,000.00, and USCIC paid its $250,000.00 share on July 18, 2006. On December 5, 2006, Ramcell issued a capital call in the amount of $200,000.00; USCIC paid its $100,000.00 share on February 2, 2007, but indicated that its payment was made under protest. On December 22, 2006, Ramcell issued a capital call in the amount of $250,000.00; USCIC paid its $125,000.00 share on February 16, 2007, but indicated that its payment was made under protest. On April 25, 2007, Ramcell issued a capital call in the amount of $400,000.00; USCIC paid its $200,000.00 share on June 22, 2007, but indicated that its payment was made under protest. Finally, on September 7, 2007, Ramcell made the capital call presently at issue in the amount of $3,450,000.00. Under Section 5.2 of the Partnership Agreement, USCIC's $1,725,000.00 share is due not less than 60 days from the date of the notice, or on November 6, 2007. USCIC alleges that, because a final budget for 2007 was never approved, the September 7 capital call (as well as the other capital calls)*fn1 was not requested consistent with the annual budget as required under Section 5.2 of the Partnership Agreement.

II.

Ramcell moves to dismiss this action for lack of personal jurisdiction. A federal court exercising diversity jurisdiction relies on the law of personal jurisdiction applicable in the state in which it sits. See Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2002). USCIC has the burden of establishing a prima facie basis for personal jurisdiction over Ramcell, a non-resident defendant. See Commerce Trust Co. V. Air 1st Aviation Companies, Inc., 366 Ill. App. 3d 135, 140 (Ill. App. Ct. 2006). USCIC has satisfied its burden.

The Illinois long-arm statute allows an Illinois court to exercise personal jurisdiction "on any other basis now or hereafter permitted by the Illinois Constitution and the Constitution of the United States." 735 ILCS 5/2-209(c)). Accordingly, I need only consider whether exercising personal jurisdiction over Ramcell would be proper under Illinois and federal due process requirements. See Hyatt, 302 F.3d at 714-15. Under the Due Process Clause of the Illinois Constitution, a court may exercise jurisdiction "'when it is fair, just, and reasonable to require a nonresident defendant to defend an action in Illinois, considering the quality and nature of the defendant's acts which occur in Illinois or which affect interests located in Illinois.'" Id. at 715 (quoting Rollins v. Ellwood, 141 Ill. 2d 244, 275 (Ill. 1990)). No operative difference exists between the federal due process and Illinois due process analyses. See id.

The exercise of personal jurisdiction satisfies federal due process requirements when the defendant has sufficient minimum contacts with the forum state. Id. at 716; Commerce Trust, 366 Ill. App. 3d at 143. Such minimum contacts must involve an act by which the defendant has purposefully availed itself of the privilege of conducting activities within the forum state, thereby invoking the benefits and protections of its laws. Commerce Trust, 366 Ill. App. 3d at 143. Sufficient minimum contacts and purposeful availment are found when the defendant has deliberately reached out and created continuing obligations between itself a forum resident. Id. "The defendant's conduct and connections with the state must be such that 'he should reasonably anticipate being haled into court there.'" Id. (citation omitted) Additionally, the plaintiff must show that the cause of action arises out of or is related to the defendant's minimum contacts with the forum state. Hyatt, 302 F.3d at 716; see Commerce Trust, 366 Ill. App. 3d at 143. Finally, once the plaintiff has established that the defendant purposely directed its activities to Illinois, the defendant must present a compelling argument that litigating here would be unreasonable. Commerce Trust, 366 Ill. App. 3d at 146.

First, USCIC has shown that Ramcell has sufficient minimum contacts with Illinois. A party "has accepted the privilege of conducting business" in Illinois and "can reasonably be required to litigate" here if it engaged in significant activities in Illinois or created continuing obligations with an Illinois citizen. Id. at 144. Here, Ramcell has created a continuing obligation with USCIC by virtue of the parties' ongoing business relationship. See id. The parties are engaged in a business relationship that has spanned nearly thirteen years. During the course of this relationship, Ramcell has routinely communicated with its partner at USCIC's principal place of business in Illinois via mail, telephone, and electronic mail regarding Partnership business.

Second, the instant action arises out of Ramcell's contacts with Illinois. "An action arises out of a defendant's contacts with a forum state where that cause "'lie[s] in the wake of the commercial activities by which the defendant submitted to the jurisdiction' of the forum state." Id. at 145 (citations omitted). This case arises out of Ramcell's ongoing business relationship with USCIC and Ramcell's alleged breach of the underlying Partnership Agreement.

Finally, it would not be unreasonable to require Ramcell to litigate in Illinois. USCIC has shown that Ramcell purposely directed its activities to Illinois by entering into an ongoing business relationship with USCIC, during which Ramcell communicated with USCIC on numerous occasions in Illinois. Ramcell, in ...


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