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Gordon v. Vitalis Partners

February 20, 2008


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


This matter comes before the court on the motion of Defendants Larry Harmon; Larry Harmon & Associates, P.A. ("LHA"); Vitalis Partners, LLC ("Vitalis"); Kenny Cruz; and KC Development Company, LLC ("KCD") to dismiss the complaint of Plaintiffs Ben Gordon; BG4, Inc.; and G7, Inc. for lack of personal jurisdiction. For the reasons set forth below, the motion is denied.


According to the allegations contained in the complaint, Plaintiff Ben Gordon is a professional basketball player who plays for the Chicago Bulls, a team in the National Basketball Association ("NBA"). He is a citizen of Illinois. Gordon is the sole shareholder of Plaintiffs BG4, Inc. and G7, Inc. Each corporation is a citizen of Delaware and Illinois. In May 2004, Gordon engaged Harmon and LHA as his financial advisors and consultants. Harmon and LHA are citizens of California, as are Vitalis, Cruz, and KCD.

The original agreement, set out in a letter, contemplated that Harmon and LHA would provide financial services to Gordon throughout his NBA career, which the letter characterized as "a long-term relationship." It further provided that they intended to be involved in all of Gordon's financial decisions. The letter set out a schedule of estimated fees for a four-year period: for the first year, the fee was $4000 per month plus out-of-pocket expenses; for the second, $5000 per month plus out-of-pocket expenses; and for the third and fourth, $6000 per month plus out-of-pocket expenses.

Once Gordon began playing for the Bulls, his paychecks were wired directly to accounts controlled by Harmon and LHA. Harmon traveled to Chicago to meet with Gordon to discuss investment opportunities. The relationship continued for over two years. In May 2006, Harmon contacted Gordon to discuss changing the fee structure to one based on a percentage of Gordon's income. According to the complaint, Gordon continually expressed reservations about such an arrangement and never agreed to the change. At some point not specified within the complaint, LHA began charging Gordon fees of 1.5% of his income for the services. Gordon alleges that he never consented to the change.

In August 2006, Harmon contacted Gordon about an investment opportunity in real estate in California. The complaint alleges that Harmon advised Gordon to invest a total of $1,000,000, consisting of $750,000 of Gordon's own funds and $250,000 in borrowed funds. However, rather than investing the money on Gordon's behalf, in February 2007 Vitalis, LHA, KCD, Cruz, and Harmon borrowed that amount from Gordon to invest it for their own benefit. They executed a promissory note stating that Gordon, BG4, and G7 had lent them $1,000,000 and setting out terms by which that amount would be repaid. When Gordon discovered the existence of the note, he attempted to enforce its terms, but to no avail.

Gordon, BG4, and G7 then filed a two-count complaint in Illinois state court. Count One asserts a claim against all five defendants for breach of contract from failure to honor the terms of the promissory note. Count Two contends that Harmon and LHA breached fiduciary duties to Gordon over the course of their relationship by actions such as changing the fee structure without Gordon's consent and recharacterizing the $1,000,000 transaction into a deal of a nature other than that to which Gordon agreed.

Vitalis, LHA, KCD, Cruz, and Harmon removed the case to this court, relying upon diversity jurisdiction and now move to dismiss the complaint pursuant to Fed. R. Civ. P. 12(b)(2), arguing that this court has no personal jurisdiction over them.


When faced with a motion to dismiss for lack of personal jurisdiction under Fed. R. Civ. P. 12(b)(2), a plaintiff bears the burden of making a prima facie showing that jurisdiction over the defendant is proper. Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). In considering the motion, a court accepts all well-pleaded allegations as true unless controverted by affidavits. Turnock v. Cope, 816 F.2d 332, 333 (7th Cir. 1987). If a defendant supplies affidavits contesting personal jurisdiction, a plaintiff must meet those assertions with affirmative evidence that supports the presence of jurisdiction. Purdue, 338 F.3d at 783.

In a diversity case, personal jurisdiction can be exercised over a nonresident defendant only if an appropriate state court would have such jurisdiction. Klump v. Duffus, 71 F.3d 1368, 1371 (7th Cir. 1995). Even if jurisdiction can be established under state law, the exercise of that jurisdiction must be consistent with constitutional due process concerns. Saylor v. Dyniewski, 836 F.2d 341, 343-44 (7th Cir. 1988). An exercise of jurisdiction over a non-resident defendant is constitutional due process if the defendant has "purposefully established minimum contacts within the forum State." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985). When a party's contact with a forum state reaches a certain level, it is reasonable for him or her to expect to be subject to suit in that state in connection with that contact. Id. at 474, 475. The level of contact necessary will depend on several factors. One consideration is whether the plaintiff asserts that the court has specific personal jurisdiction, meaning that the cause of action arises from the activities within the forum state, or general personal jurisdiction, meaning that the cause of action is unrelated to the defendant's activities in the forum state. In addition, factors other than the burden on the defending party can come into play, such as the interest of the forum state in adjudicating the dispute in its courts, allowing the plaintiff to obtain convenient and effective relief, and the interest of the interstate judicial system in efficient resolution of controversies that can be addressed in multiple fora. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980). No matter how these factors combine, however, due process mandates that maintenance of the suit in the forum is consistent with "traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).

With these principles in mind, we turn to the ...

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