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Bank of America, N.A. v. Trinity Lighting

October 20, 2010


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

Judge James B. Zagel


This is a collection action. Bank of America purchased all rights and interests in payments owing by Defendant to Berman Industries and now seeks to collect on the debt. Defendant now moves to dismiss Plaintiff's complaint pursuant to Federal Rule of Civil Procedure 12(b)(2), or alternatively to transfer venue. For the following reasons, Defendant's motion is denied.


Berman Industries, Inc. ("Berman"), True Home, Inc., and Casa Creations, Inc. (collectively "Berman Entities") manufactured, sold and delivered lighting fixtures and related products. Defendant has an outstanding balance owed to Berman. Bank of America purchased all rights and interests in payments owing by Defendant to Berman and now seeks to collect $276,129.93 plus interest for products Defendant ordered but failed to pay for.

The Berman Entities' products were primarily manufactured on a custom basis in an offshore factory. Berman invoiced Defendant directly. The Berman Entities and Bank of America were parties to an Amended and Restated Loan and Security Agreement. Berman Entities defaulted under the Loan Documents, and on April 7, 2009, it entered into a Trust Agreement and Assignment for the Benefit of Creditors. On October 30, 2009, a public sale of Berman Industries' personal property was conducted and Bank of America acquired all rights, title and interest in the Accounts Receivable. As a result, the Unpaid Amount owing from Defendant to Berman is now owing to Bank of America.


Federal Rule of Civil Procedure 12(b)(2) allows non-resident defendants to challenge the Court's assertion of jurisdiction over them. Fed.R.Civ.P. 12(b)(2). Under Rule 12(b)(2) the plaintiff bears the burden of demonstrating the existence of jurisdiction. Purdue Research Foundation v. Sanofi-Synthelabo, S.A ., 338 F.3d 773, 782 (7th Cir.2003). In determining whether to exercise personal jurisdiction, a court may examine affidavits and other evidentiary materials submitted by the parties. Id. at 782-83.

Defendant argues that the court's exercise of specific jurisdiction is improper. A federal court sitting in diversity only has personal jurisdiction to the extent that jurisdiction exists under state law. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1275 (7th Cir. 1997). Illinois statute permits the exercise of jurisdiction on any basis permitted by the United States Constitution. 735 Il. Comp. Stat. 5/2-209(c). Illinois courts look to the Due Process clause of the Fourteenth Amendment to determine personal jurisdiction over a no-resident defendant.

Pursuant to the Fourteenth Amendment, a state may only exercise jurisdiction over a defendant if he has certain minimum contacts with a forum state. Citadel Group Ltd. v. Washington Reg'l Med. Ctr., 536 F.3d 757, 761 (7th Cir. 2008). To invoke personal jurisdiction, Plaintiff must show that Defendant "purposefully availed itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Id. Defendant's contacts must be such that it should "reasonably anticipate being haled into court there." Id. Under the Illinois Constitution, a court may exercise personal jurisdiction "only 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." Rollins v. Ellwood, 565 N.E.2d 1302, 1316 (Ill.1990).

To satisfy federal due process requirements, Trinity must have sufficient "minimum contacts" with Illinois such that the exercise of jurisdiction does not offend "traditional notions of fair play and substantial justice." International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Courts consider three criteria in determining whether exercising jurisdiction over a non-resident comports with federal due process standards: (1) whether the non-resident defendant has minimum contacts within the forum state such that he has fair warning that he may be required to defend himself there; (2) whether the action arises out of the defendant's contacts with the forum state; and (3) whether it is reasonable to require the defendant to litigate in the forum state. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-77 (1985). When determining minimum contacts, courts consider prior negotiations, contemplated future consequences, as well as the parties' actual dealings. Citadel, 536 F.3d at 762.

Defendant denies that it purposefully availed itself of the benefits and protections of Illinois law. Though it admits that it had many contacts with Plaintiff, it states that its only contact with Plaintiff's Chicago office was in regard to payment. All other contacts with Plaintiff were directed at Plaintiff's Mississippi office or China facility.

Trinity is an Arkansas corporation with its principal place of business in Jonesboro, Arkansas. Trinity specializes in designing, manufacturing and marketing light products for the hospitality and healthcare industries. Many of Trinity's products are made in China and shipped to Arkansas for assembly and finishing. Products manufactured in China were purchased through Berman. Berman was an Illinois corporation that did business with Trinity for more than fifteen years. Trinity states that most of its contacts with Berman took place through Berman's Olive Branch, Mississippi office or China office. Trinity would send purchase orders to Berman's Mississippi office, and the Mississippi office would then facilitate the transaction. Goods were not routed through Berman's Illinois facilities. Trinity did, however, send final payment to Berman's Chicago office.

Contrary to Defendant's assertions, Plaintiff argues that substantial portions of the ongoing business between Trinity and Berman took place in Illinois. First, the initial relationship between the two entities was established in the early 1990's in Chicago. At that time, Berman's only office was located in Chicago. At a meeting in Chicago, Trinity's owner met with Berman's senior management. Plaintiff argues that credit was extended from the Chicago office, that purchase orders were received and invoiced through Berman's Chicago office, and all payments by Trinity were remitted to Berman's Chicago office. It is true that Trinity's purchase orders reflect Berman's Chicago office, although those orders were faxed directly to Mississippi. Berman's Olive Branch, Mississippi office was opened in 1995. Purchase orders were sent to the email addresses and Berman ...

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