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Wilson v. Liebel Holdings III

February 5, 2010

DONALD R. WILSON, JR., PLAINTIFF,
v.
LIEBEL HOLDINGS III, LLC AND STEVEN E. LIEBEL, DEFENDANTS.



The opinion of the court was delivered by: Judge James B. Zagel

MEMORANDUM OPINION AND ORDER

This is a complaint for a declaratory judgment regarding losses related to the yacht STARS & STRIPES. Plaintiff filed this complaint in the Circuit Court of Cook County, Illinois, and Defendants removed the case to this Court. Defendants now move to dismiss this case for a lack of personal jurisdiction, or alternatively, to transfer or stay this case. For the following reasons, Defendants' motion to dismiss is granted.

I. FACTUAL BACKGROUND

On May 20, 2008, Liebel Holdings III ("Liebel Holdings") and Convexity Racing, LLC ("Convexity") entered into a Yacht Charter Party Agreement ("Charter Agreement") for the charter of the high performance sailing yacht STARS & STRIPES ("Yacht"). Convexity is an Illinois limited liability company and Plaintiff Donald R. Wilson ("Wilson") is its sole member. The Charter Agreement was for hire of the Yacht from May 20, 2008 to August 15, 2008 and contemplated its participation in two races, the Port Huron to Mackinac race and the Chicago to Mackinac race. The Charter Agreement stated that "Practice may also occur[.]"

Possession of the Yacht took place in Bradenton, Florida and the Charter Agreement stated that after the Yacht was removed from its berth in Bradenton, Florida, any breakdown or damage caused to the Yacht would be the responsibility of the Charterer. Furthermore, full control of the operation and management of the Yacht was given to the Charterer, although the Charter Agreement acknowledged that "the Owner and/or Owner's friends or existing crew members may sail with the Yacht and Charterer on one or more races and delivery trips. . . Charterer retains total and absolute control and responsibility for the Yacht[.]" Furthermore, the Charter Agreement states that venue shall lie exclusively in the city and state of the owner's residence and that any controversy or claim arising out of the Charter Agreement shall be settled by arbitration.

Concurrent with the Charter Agreement, the parties also entered into an Indemnification Agreement whereby Wilson agreed to indemnify Liebel Holdings for certain events or damage in connection with the Yacht's charter. While the Charter Agreement is between Liebel Holdings and Convexity Racing, the Indemnification Agreement is between Liebel Holdings, Steven Liebel and Donald Wilson. The Indemnification Agreement states that "LH III has requested that Wilson indemnify LH III and Liebel for certain events which may occur in connection with the chartering the [sic] Yacht pursuant to the Charter Agreement." The Indemnification Agreement contains a choice of law provision stating that the agreement shall be governed in accordance with Illinois law.

Prior to the Charter Agreement, Convexity conducted a two-day trial sail in Florida to determine whether or not it would be interested in chartering the vessel for the Mackinac Island races. Convexity initiated contact with Defendants in regard to the initial trial Yacht charter, and both a Trial Charter Agreement and Trial Indemnification Agreement were executed accordingly. During both days of the trial, the Yacht experienced equipment failures. Over the following months, the parties exchanged emails discussing the progress of repairs and negotiating the terms of what would become the Charter and Indemnification Agreements. The Yacht continued to experience equipment failures prior to the races.

The Yacht arrived in Chicago at the end of May 2008 and soon required repairs. Plaintiff alleges that on June 12, 2008 Defendant Liebel arrived in Chicago to race with Plaintiff in the National Offshore One Design ("NOOD") race and to practice on the Yacht. Although Defendant Liebel admits that he did in fact race in the NOOD with Wilson, he states in his affidavit that the sailing vessel was named CONVERGANCE. Furthermore, Liebel states in his affidavit that while in Chicago, the Yacht STARS & STRIPES was not assembled, nor did he sail onboard that Yacht during his visit. Indeed, Wilson does not assert in his own affidavit that Liebel was present in Illinois when equipment failures required repair in Chicago. Liebel did not arrange for any repairs to be made in Chicago but instead merely paid the invoice submitted to him by Plaintiff. Payment was made to Blair Ross, a Chicago boat repair service.

On July 10, 2008, the Stars & Stripes set out with a twelve-member crew on the Port Huron leg of the Mackinac Island race. At approximately 2:00 a.m. on July 11, the Yacht dismasted as it neared Presque Isle, Michigan.

The damage to the boat is extensive, and Defendants assert that Convexity is responsible for repairs under the Charter Agreement, or that Wilson is responsible under the Indemnification Agreement. On June 9, 2009, Wilson filed his complaint for declaratory relief in the Circuit Court of Cook County. Plaintiff seeks a judgment declaring that the losses at issue did not "arise out of or result from Convexity's use of the Stars and Stripes" within the meaning of the Indemnification Agreement. On July 31, 2009, Liebel Holdings filed a Petition to Compel Arbitration in the United States District Court, Middle District of Florida.

II. STANDARD OF REVIEW

The plaintiff has the burden of demonstrating the existence of personal jurisdiction over the defendant. See RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir.1997). In order to defeat a defendant's motion to dismiss for lack of personal jurisdiction, the plaintiff need only make a prima facie case showing that personal jurisdiction exists. Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 713 (7th Cir.2002). In reviewing the complaint and affidavits, I must read the complaint liberally and draw all reasonable inferences in favor of the plaintiff. Sapperstein v. Hager, 188 F.3d 852, 855 (7th Cir.1999). Furthermore, when faced with conflicting evidence, I must resolve factual disputes in the plaintiff's favor. RAR, 107 F.3d at 1275.

III. DISCUSSION

A district court exercising diversity jurisdiction may only exercise personal jurisdiction over a defendant if an Illinois state court would have such jurisdiction. RAR, 107 F.3d at 1275. The Illinois long-arm statute subjects a nonresident defendant to jurisdiction in Illinois in several circumstances, such as if the nonresident has conducted a business transaction in Illinois, and the plaintiff's claim arises from that specific act. 735 IL. COMP. STAT 5/2-209(a). The statute also includes a "catch-all" provision permitting a court to exercise jurisdiction on any basis permitted by the Illinois Constitution or the ...


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