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Apollo Galileo USA Partnership v. American Leisure Holdings

February 11, 2009

APOLLO GALILEO USA PARTNERSHIP, A DELAWARE PARTNERSHIP, PLAINTIFF,
v.
AMERICAN LEISURE HOLDINGS, INC., A NEVADA CORPORATION, AMERICAN LEISURE EQUITIES CORPORATION, A FLORIDA CORPORATION AND AROUND THE WORLD TRAVEL, INC., A FLORIDA CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Judge Ronald A. Guzmán

MEMORANDUM OPINION AND ORDER

In this diversity action, Apollo Galileo USA Partnership ("Apollo") has sued American Leisure Holdings, Inc. ("ALH"), a Nevada corporation; American Leisure Equities Corp. ("ALEC"), a Florida corporation; and Around the World Travel, Inc. ("AWT"), a Florida corporation, for breach of contract. Before the Court is ALH and ALEC's motion to dismiss the complaint for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2) ("Rule 12(b)(2)"). For the reasons set forth below, the Court grants the motion.

Facts

ALH is a real estate development, travel, and communications services distribution company. (Compl. ¶ 2.) ALEC is one of ALH's wholly-owned subsidiaries engaged in the travel aspect of ALH's business. (Id.; Pl.'s Resp. Mot. Dismiss, Ex. A, Jimenez Dep. ("Jimenez Dep.") 12:3-4.) Prior to 2004, AWT owned TraveLeaders, a large travel services distribution business. (Compl.¶ 4.) Apollo is a provider of travel information and travel-related transaction processing. (Id. ¶ 1.)

On October 30, 2002, AWT d/b/a TraveLeaders and Apollo entered into a Subscriber Services Agreement ("Agreement"). (Id. ¶ 9.) Under the terms of the Agreement, Apollo was to provide certain hardware and licenses to AWT that would permit AWT to use, among other things, Apollo's reservation services. (Id.¶¶ 9-10.) The Agreement set forth annual reservation targets that AWT was required to meet and outlined the shortfall fees that AWT would have to pay if AWT failed to meet such targets. (Id. ¶¶ 12-13.) The Agreement provided that "disputes arising under or in connection with this Agreement shall be governed by the internal laws of the State of Illinois . . . [and] shall be brought and tried in federal or state courts located within the County of Cook, State of Illinois, and the parties hereby consent to submit to the personal jurisdiction of such courts . . . ." (Defs.' Mot. Dismiss, Ex. A, Subscriber Service Agreement ¶ 17.) The term of the Agreement was from November 1, 2002 to October 31, 2007. (Compl. ¶ 8.)

In 2004, ALEC purchased certain assets of AWT and acquired no obligations. (See Defs.' Mot. Dismiss, Ex., Jimenez Aff. ("Jimenez Aff.") ¶ 11; Jimenez Dep. at 61:2-62:7.) Apollo, without any citation to evidentiary support, alleges that: ALH, either individually or through ALEC, acquired AWT's assets and obligations, including the Agreement between AWT d/b/a TraveLeaders and Apollo and ALH d/b/a TraveLeaders continued to receive and use services under the Agreement. (Compl. ¶ 19; Pl.'s Resp. Mot. Dismiss 14-15.) Thus, according to Apollo, ALH and AWT failed to pay the shortfall fees associated with TraveLeaders' failure to meet the 2007 annual target in accordance with the Agreement. (Compl. ¶¶ 22-23, 29-30.)

On September 13, 2007, this Court granted Apollo's motion to stay the briefing schedule on the motion to dismiss and allowed discovery as to personal jurisdiction. Discovery has concluded and the motion is now fully briefed.

Defendants ALEC and ALH move to dismiss this action for lack of personal jurisdiction, and argue that Apollo failed to establish that ALEC and ALH have sufficient contacts with Illinois. Specifically, ALEC and ALH argue that this Court lacks general jurisdiction as well as specific jurisdiction over them.

Discussion

When deciding a Rule 12(b)(2) motion to dismiss, "all well-pleaded jurisdictional allegations in the complaint are accepted as true unless controverted by affidavit." Travelers Cas. & Sur. Co. v. Interclaim (Bermuda) Ltd.,304 F. Supp. 2d 1018, 1021 (N.D. Ill. 2004). "Any conflicts in the pleadings and affidavits are to be resolved in the plaintiffs' favor, but the court accepts as true any facts contained in the defendants' affidavits that remain unrefuted by the plaintiffs." Interlease Aviation Investors II (Aloha) L.L.C. v. Vanguard Airlines, Inc.,262 F. Supp. 2d 898, 905 (N.D. Ill. 2003); see RAR, Inc. v. Turner Diesel, Ltd.,107 F.3d 1272, 1275 (7th Cir. 1997). "[T]he plaintiff bears the burden of demonstrating the existence of jurisdiction." Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003).

The plaintiff must establish personal jurisdiction by a preponderance of the evidence. RAR, Inc.,107 F.3d at 1276. In a diversity suit, personal jurisdiction exists only if an Illinois court would have jurisdiction. Dehmlow v. Austin Fireworks,963 F.2d 941, 945 (7th Cir. 1992). To determine whether an Illinois court has personal jurisdiction over a non-resident defendant, a Court must determine: (1) whether Illinois' long-arm statute permits in personam jurisdiction and (2) whether the assertion of jurisdiction under the long-arm statute would be inconsistent with due process. Daniel J. Hartwig Assocs., Inc. v. Kanner,913 F.2d 1213, 1216 (7th Cir. 1990). Under Illinois' long-arm statute, Illinois courts may exercise jurisdiction 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(c). Accordingly, "there is no operative difference between the limits imposed by the Illinois Constitution and the federal limitations on personal jurisdiction." Hyatt Int'l v. Coco, 302 F.3d 707, 715 (7th Cir. 2002).

The Supreme Court has recognized two types of personal jurisdiction: general and specific. Helicopteros Nacionales de Columbia, S.A. v. Hall, 466 U.S. 408, 414-15 nn.8-9 (1984). Ultimately, a court may only exercise personal jurisdiction over a non-resident defendant if it has "certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quotation omitted).

In the Complaint, Apollo alleges that this Court has personal jurisdiction over ALH and ALEC because they "do business within this District, were involved in the making and performance of a contract that has a substantial connection to this District, and expressly consented to the jurisdiction of this court in the . . . Agreement." (Compl. ¶ 6.) In its motion to dismiss, ALEC and ALH assert that this Court lacks general jurisdiction over ALH and ALEC because neither have had sufficient contacts with Illinois. With respect to specific jurisdiction, ALEC and ALH concede that ALEC was the entity that purchased certain assets from AWT -- not ALH. (Defs.' Mot. Dismiss 8.)

In its response to the motion to dismiss, Apollo presumes that ALEC and ALH are one entity for jurisdictional purposes. Accordingly, the Court will first address whether it may exercise general or specific jurisdiction over ALEC and then address whether ALEC's contacts should be imputed to ALH based on their relationship.*fn1

General Jurisdiction as to ALEC

"[G]eneral jurisdiction allows a defendant to be sued in the forum regardless of the subject matter of the litigation." Purdue Research,338 F.3d at 787. "General jurisdiction is permitted only where the defendant has continuous and systematic general business contacts with the forum." Id. (quotation omitted). "Those contacts must be so extensive as to make it 'fundamentally fair to require [defendants] to answer in any [Illinois] court in any litigation arising out of any transaction or occurrence taking place anywhere in the world.'" Travelers Cas.,304 F. Supp. 2d at 1025 (quoting Purdue Research,338 F.3d at 787) (emphasis in original).

Apollo has not alleged that ALH and ALEC have continuous and systematic general business contacts with Illinois. (See Compl. ¶ 6.) Accordingly, the issue is deemed waived. See RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272 (7th Cir.1997) (finding that plaintiff's failure to allege that defendant had systematic contacts with Illinois constituted a waiver of any general jurisdiction argument). As discussed below, however, even if the issue were not waived, the Court would still find that there is no general jurisdiction over ALEC and ALH.

1. Thousands of Travel Transactions

Apollo argues that ALEC entered into thousands of travel-related business transactions with Illinois residents between January 1, 2005 and Fall 2007. (Pl.'s Sur-Reply Opp'n Mot. Dismiss 4-5.) In support, Apollo offers an ALEC-generated report of transaction activity as well as portions of ALEC's Chief Financial Officer Omar Jimenez's deposition testimony describing the report. (Pl.'s Resp. Mot. Dismiss 5; Jimenez Dep. at 64:4-66:5; Pl.'s Ex. 27, Transaction Report.) Within that report, Apollo lists at least 1,347 individuals who are Illinois residents. (Id.) Apollo asserts that ALH and ALEC made a profit from these transactions with Illinois residents. (Pl.'s Resp. Mot. Dismiss 5; Jimenez Dep. at 66:22-67:6.) The transactions were entered into either by way of a travel agent who spoke directly with ...


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