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Convergence Aviation, Ltd.; Image Air of Southwest Florida, L.C v. United Technologies Corp.;Pratt & Whitney Canada Corp.;Bba

February 29, 2012

CONVERGENCE AVIATION, LTD.; IMAGE AIR OF SOUTHWEST FLORIDA, L.C., A LIMITED LIABILITY COMPANY, D/B/A IMAGE AIR, LLC; AND ONALA AVIATION, LLC., PLAINTIFFS,
v.
UNITED TECHNOLOGIES CORP.;PRATT & WHITNEY CANADA CORP.;BBA AVIATION, PLC; DALLAS AIRMOTIVE, INC. (UK), LTD.; H ) AVIATION, LTD.; AND JETPROP, LLC, DEFENDANTS.



The opinion of the court was delivered by: Magistrate Judge Susan E. Cox

MEMORANDUM OPINION AND ORDER

Plaintiffs Convergence Aviation, Ltd., Image Air of Southwest Florida, L.C., and Onala Aviation, LLC, (hereinafter collectively "plaintiffs") have claims against six defendants for property damage to an aircraft that crashed due to engine failure.*fn1 Plaintiffs allege defendants were involved in either the manufacturing, overhauling, or servicing of the aircraft. But only one of those defendants is at issue here: BBA Aviation, PLC ("BBA"). BBA has filed a motion to dismiss for lack of personal jurisdiction, claiming that it is a holding company with no customers in Illinois, no employees, and no physical assets or offices in Illinois. Though BBA asserts that it was not involved in the overhaul of the damaged aircraft, plaintiffs argue BBA directly serviced and overhauled the engine on December 15, 2005. Counts XXIII through XXVII of plaintiffs' complaint are directed at BBA. For the reasons set forth, BBA's motion to dismiss is granted [dkt. 213].

I. Background

In 2002 plaintiff Convergence Aviation, ltd, purchased the aircraft at issue, a Piper Malibu PA-46. Months later the aircraft was converted to a Piper DLX-JetProp by installing a new engine. After it experienced engine failure, plaintiffs allege that it was overhauled by three of the defendants that are purported agents or alter-egos of BBA: Dallas Airmotive, Inc. ("Dallas"); H Aviation, Ltd. ("H"); and, Pratt & Whitney Canada Corporation("Pratt"). All of these defendants together are referred to as the "Dallas defendants" and all four of them are implicated in the overhaul of the engine that took place on December 15, 2005.

Years later, on January 8, 2008, the engine again experienced problems. The plane left Ocala, Florida and was en route to Bloomington, Illinois when the plane's engine experienced an extreme temperature rise.*fn2 The pilot was required to shutdown the engine in-flight and was unable to restart it thereafter. The pilot declared an emergency landing in Bowling Green, Kentucky.*fn3 During the final approach, the propeller came out of feather and, as a result, the pilot was unable to reach the runway.*fn4 The plane impacted the ground and caused substantial damage to the hull and the engine. Plaintiffs now claim that as a direct result of the service and repair of the engine by the Dallas defendants, the aircraft crashed on December 15, 2005.

II. Legal Standard

Personal jurisdiction determines, in part, where a plaintiff may sue a defendant. Once a defendant moves to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2), as BBA is doing here, "the plaintiff bears the burden of demonstrating the existence of jurisdiction."*fn5 We may consider matters outside of the pleadings, but a determination based on the submission of written materials, without an evidentiary hearing, requires the plaintiff to make a prima facie case of personal jurisdiction.*fn6

Here, the jurisdictional inquiry begins with an application of the statutory law of the forum state, the Illinois long-arm statute.*fn7 Because the Illinois long-arm statute is now "coextensive with the due process requirements of the United States Constitution," as long as the contacts between the defendant and Illinois "'are sufficient to satisfy the requirements of due process, then the requirements of both the Illinois long-arm statute and the United States Constitution have been met, and no other inquiry is necessary.'"*fn8

There are two forms of personal jurisdiction: general or specific. General jurisdiction is found where a defendant's contacts with the state are continuous and systematic,*fn9 so that "it can be sued in the forum state for any cause of action arising in any place."*fn10 Specific jurisdiction is found where a defendant has more limited contacts with the forum state, in which case "the plaintiff must show that its claims against the defendant arise out of the defendant's constitutionally sufficient contacts with the state."*fn11 In other words, specific jurisdiction looks to whether a defendant has "purposefully directed" activity at residents of the forum and if there are injuries that "arise out of or relate to" that activity.*fn12 Under either test, the standard remains that a defendant must have "'certain minimum contacts with [the forum] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'"*fn13

III. Analysis

To prevail under either theory of jurisdiction, plaintiffs must show an exception to the general rule that the "jurisdictional contacts of a subsidiary corporation are not imputed to the parent."*fn14 Personal jurisdiction will not be found where "corporate formalities are substantially observed and the parent does not exercise an unusually high degree of control over the subsidiary."*fn15

In Illinois, courts exercise jurisdiction over parent companies based on their subsidiaries' activities "where the corporate veil can be pierced, or perhaps where all the corporate formalities are observed but the subsidiary's only purpose is to conduct the business of the parent."*fn16 The latter is what plaintiffs are asking us to consider: whether BBA is so closely linked to its subsidiaries to create jurisdiction. If the subsidiaries were acting as BBA's Illinois agent, in essence conducting BBA's business rather than their own, then BBA can rightfully be sued.*fn17

A. Relationship Between BBA and Its Subsidiaries

To make that determination, plaintiffs urge us to look to a seminal case in Illinois that examined the nature of a subsidiary's activities and the degree of control exercised by the parent, Maunder v. DeHavilland Aircraft of Canada, Ltd..*fn18 In that case the parent corporation was an aircraft manufacturer in Canada, and the wholly owned subsidiary a Delaware corporation with its principal place of business in Illinois. The subsidiary's sole business was to sell the parent company's aircraft parts, all of its stock was owned by the parent, the parent paid the salaries of the subsidiary's directors, and the parent guaranteed the subsidiary's lease.*fn19 The subsidiary was also controlled by the parent company's Vice President of sales.*fn20 Under these circumstances, the Illinois Supreme Court held that the parent was "[c]learly...doing business in Illinois."*fn21

Citing to that case, plaintiffs then apply a set of factors to conclude that BBA, as the parent company, is so closely linked to its subsidiaries to create jurisdiction. These factors - in some form or another - have been used by several courts in this district and are as follows: whether the parent arranges financing for and capitalization of the subsidiary; whether separate books, tax returns and financial statements are kept; whether officers or directors are the same; whether the parent holds its subsidiary out as an agent; the method of payment made to the parent by the subsidiary; and how much control is exerted by the parent over the daily affairs of its subsidiary.*fn22

We begin our analysis with Maunder, and the factors outlined above, as our guide. .

Whether BBA arranges financing and capitalization of its subsidiaries

Plaintiffs first attempt to argue that any amount of financing or capitalization arranged by the parent company for its subsidiaries is sufficient to turn this factor in favor of imputing control and, therefore, personal jurisdiction. This is simply not correct. The case plaintiffs cite does not stand for this proposition and we find no case in this district that has held as such. The proper ...


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