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Buehler v. S & G Enterprises Inc.

June 2, 2009


The opinion of the court was delivered by: Judge Virginia M. Kendall


Plaintiff Terrence Buehler ("Buehler") brought suit against Defendant S & G Enterprises, Inc. ("S & G") asserting breach of contract (Count I) and violations of the Texas Uniform Commercial Code (Count II). S & G now moves this Court to dismiss Buehler's claims pursuant to Fed. R. Civ. P. 12(b)(2) for lack of personal jurisdiction, or in the alternative, to transfer the instant action to the United States District Court for the Northern District of Texas--Dallas Division. For the reasons stated below, S & G's Motion to Dismiss for Lack of Personal Jurisdiction is denied and its Motion to Transfer Venue is granted.


S & G, a table top party rental company, is a corporation organized under the laws of the state of Texas with its principal place of business in Dallas, Texas. Amend. Compl. at ¶ 3. S & G has two principals, Steven Servin ("Servin") and Gary Buehler ("Gary"). Def. Mtn. to Dismiss Ex. A at ¶ 2.*fn1 Plaintiff Terrence Buehler ("Buehler") is Gary's older brother and a citizen of the State of Illinois. Def. Mtn. to Dismiss Ex. A at ¶ 2. In August of 2007, S & G Enterprises, through Gary, approached Buehler requesting a loan in the amount of $100,000. Gary Buehler Dec. Ex. A at ¶¶ 8-10; Terrence Buehler Dec. Ex. B at ¶¶ 3-5. Buehler agreed to loan S & G the money provided that the loan would bear interest at the rate of 8% per year and that the principal and all accrued interest would be immediately payable upon demand. Amend. Compl. at ¶ 8. S & G accepted the offer and on September 1, 2007, S & G and Buehler executed a demand promissory note memorializing their agreement. Amend. Compl. at ¶ 10; Compl. Ex. A. The Demand Note was signed by Buehler, on behalf of the Lender, and by Gary, on behalf of the borrower. Amend. Compl. Ex. A. Buehler performed his obligations under the agreement by loaning S & G $100,000, and S & G paid Buehler $4,000 in accrued interest between September 1, 2007, and March 1, 2008; however, S & G has not paid any accrued interest since March 1, 2008, and has not repaid any of the loan's principal. Amend. Compl. at ¶¶ 13-16. Eventually, on December 31, 2008, Buehler demanded repayment of the loan principal and all accrued interest to date. Amend. Compl. at ¶ 17. S & G, however, has not repaid Buehler any of the amounts that he demanded pursuant to their agreement. Amend. Compl. at ¶¶ 19-20.

S & G is not now, and has never been, qualified or registered to do business in Illinois, has never owned, operated, or managed any property in the State of Illinois, and has never provided rentals for any events in Illinois. Servin Dec., Ex. A to Motion to Dismiss at ¶¶ 4-5. Additionally, S & G has no operations or customers in Illinois and does not maintain any bank accounts in Illinois.

Servin Dec. Ex. A to Motion to Dismiss at ¶ 7.

On January 23, 2009, Buehler filed suit in the Circuit Court of Cook County against S & G and Servin, in his individual capacity, alleging breach of contract and conversion. On March 5, 2009, S & G and Servin removed the suit to federal court based on diversity jurisdiction. On March 10, 2009, S & G and Servin filed a Motion to Dismiss for Lack of Personal Jurisdiction and a Motion to Transfer Venue. On March 11, 2009, Buehler filed an Amended Complaint which dropped all claims against Servin in his individual capacity. In response, S & G filed a new Motion to Dismiss, and it has requested that the Court apply its old Motion to Transfer to Buehler's Amended Complaint. See Def. Supplement to Motion to Transfer [D.E. 20].

I. Motion to Dismiss*fn2

In reviewing a motion to dismiss for lack of personal jurisdiction, the Court accepts all well-pleaded factual allegations in the complaint as true unless controverted by the defendant's affidavits. See Turncock v. Cope, 816 F.2d 332, 333 (7th Cir. 1987), superceded on other grounds. Where affidavits submitted by the plaintiff create a factual dispute, all disputed facts are construed in the plaintiff's favor. See Logan Prods., Inc. v. Optibase, Inc., 103 F.3d 49, 52 (7th Cir. 1996).

Once a defendant challenges the court's exercise of personal jurisdiction, the plaintiff bears the burden of demonstrating that personal jurisdiction exists. See Jennings v. AC Hydraulic A/S, 383 F.3d 546, 548 (7th Cir. 2004). When a court decides a motion solely on the written submissions, the plaintiff bears the burden to establish a prima facie case that jurisdiction may be exercised. See Purdue Research Foundation v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). The Court first reviews whether statutory grounds exist for personal jurisdiction and then determines if the exercise of jurisdiction would be consistent with state and federal constitutional law. See Central States, Southeast and Southwest Areas Pension Fund v. Reimer Express World Corp., 230 F.3d 934, 939 (7th Cir. 2000). A federal court sitting in diversity has personal jurisdiction over a defendant only if the courts of the state in which it sits would have personal jurisdiction. See RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir. 1997).

"A federal court borrowing a state jurisdictional statute may acquire personal jurisdiction only to the extent that the state law authorizes service of process." Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2002). The Illinois long-arm statute governs service of process in Illinois and "permits its courts to exercise jurisdiction on any basis permitted by the Illinois and United States constitutions." See 735 ILCS 5/2-209(c); Hyatt, 302 F.3d at 714. Due process requirements for jurisdiction under the Illinois Constitution parallel due process requirements for jurisdiction under the federal Constitution; therefore, the inquiry collapses into whether the exercise of jurisdiction over S & G would comport with the due process requirements of the federal Constitution. See Central States, 230 F.3d at 940; accord Hyatt, 302 F.3d at 714-16.

To satisfy the requirements of due process, a defendant must have "minimum contacts" with Illinois and those minimum contacts must not offend "traditional notions of fair play and substantial justice." See RAR, 107 F.3d at 1275, discussing International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). There exist two types of jurisdiction: "general" and "specific." See Hyatt, 302 F.3d at 713, discussing Helicopteros Nationales de Colombia v. Hall, 466 U.S. 408, 414 (1984). "General jurisdiction is proper only when the defendant has 'continuous and systematic' contacts with the state in question; if such contacts exist, the court may exercise personal jurisdiction over the defendant even in cases that do not arise out of and are not related to the defendant's forum contacts." Hyatt, 3102 F.3d at 713. Specific jurisdiction allows the Court to exercise jurisdiction over a defendant whose contacts with the forum state are limited, but "the plaintiff's cause of action must arise out of or be related to these minimum contacts that sufficiently comport with fairness and justice." Central States, 230 F.3d at 943.

Here, Buehler concedes that S & G is not subject to this Court's general jurisdiction but argues that the Court has specific personal jurisdiction over S & G. See Pl. Resp. Br. to Def's Mtn. To Dismiss and Transfer Venue [D.E. 28] at n. 5. In determining whether specific jurisdiction exists over an out-of-state defendant, the Court must determine whether the minimum contacts between the defendant and the forum state demonstrate that the defendant "purposefully availed itself of the privilege of conducting activities" in the forum state such that it should reasonably anticipate being haled into court there." See RAR, 107 F.3d at 1277. The Court focuses on "the relationship among the defendant, the forum, and the litigation." Heritage House Restaurants, Inc. v. Continental Funding Group, Inc., 906 F.2d 276, 283 (7th Cir. 1990).

The main factor in the minimum contacts analysis is not physical presence in the forum state but rather "foreseeability." Heritage House, 906 F.2d at 283-84. An out-of-state party's contract with an Illinois resident is alone not sufficient to establish the requisite minimum contacts. See RAR, 107 F.3d at 1277. Instead, the Court must look to several other factors including who initiated the transaction, where the negotiations were conducted, where the parties executed the contract, and where the defendant would have performed the ...

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