Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Centurion Service Group, LLC v. SBMC Healthcare, LLC

United States District Court, Seventh Circuit

May 7, 2013

CENTURION SERVICE GROUP, LLC, an Illinois limited liability company, Plaintiff,
v.
SBMC HEALTHCARE, LLC, a Texas limited liability company, MCVEY & CO. INVESTMENTS, LLC, a Texas limited liability company, MARTY L. MCVEY, a Texas resident, and RICHARD S. GARFINKEL, a Texas resident, Defendants.

MEMORANDUM OPINION AND ORDER

AMY J. ST. EVE, District Judge.

Defendants McVey & Co. Investments, LLC ("McVey LLC") and Marty L. McVey ("McVey") (collectively, "Defendants") move pursuant to Federal Rules of Civil Procedure ("Rule") 12(b)(2) and 12(b)(3) to dismiss all claims against them[1] due to lack of personal jurisdiction and improper venue.[2] (R. 15, Mot. at 1.) Alternatively, they move to dismiss on the basis of forum non conveniens, or to transfer on forum non conveniens grounds pursuant to 28 U.S.C. §§ 1404. ( Id. at 1.) The Court grants Defendants' motion without prejudice.

BACKGROUND

On November 23, 2012, Plaintiff Centurion Service Group, LLC ("Plaintiff" or "Centurion"), an auctioneer in the business of buying, selling and/or conducting auctions of medial equipment, filed its Amended Verified Complaint alleging breach of contract, declaratory relief, and fraud. Plaintiff's claims stem from an agreement between Defendant SBMC Healthcare, LLC ("SBMC") and Centurion regarding the sale and auction of medical equipment located at Spring Branch Medical Center (the "Agreement"). (R. 7, Amend. Compl. §11; R. 16-1, McVey Decl. § 6; R. 38, Pl.'s Resp. § 2.) SMBC is the owner and operator of the Spring Branch Medical Center, a hospital in Houston, Texas. (Amend. Compl. § 10.) SBMC's manager for its general operations is McVey LLC. (Amend. Compl. § 10.) McVey LLC is a limited liability company located in and with its principal and only place of business in Houston, Texas. (McVey Decl. 3.) Marty McVey is the Chief Executive Officer for both SBMC and McVey LLC. (McVey Decl. §§ 3, 4.) McVey is a citizen of Texas and resides in Houston, Texas. (Amend. Compl. § 4, R. 216-1, McVey Decl. § 2.)

"McVey LLC, McVey and Garfinkel were not parties to the Agreement" between Centurion and SBMC. (R. 16, Defs.' Mem. § 1; McVey Decl. § 8.) McVey, as Chief Executive Officer of SBMC and of McVey LLC, and Garfinkel, general counsel for SBMC and McVey LLC, however, executed a personal Guarantee for the full performance of SBMC's obligations under the Agreement (the "Guarantee"). (Pl.'s Resp. § 2, McVey Decl. § 3, 7.) The parties negotiated and executed the Guarantee in Houston, Texas. (McVey Decl. § 7.) The Guarantee did not include a forum selection clause, unlike the Agreement which contained a clause designating Cook County, Illinois as the appropriate forum for disputes under the Agreement. ( Id at §§ 6, 7.) Centurion later waived the Guarantee, relying on the fact that SBMC still owned all assets defined in the Agreement. (Pl.'s Resp. § 3; Amend. Compl. § 32.) Centurion alleges that Defendants intentionally concealed that McVey had already sold some of these assets to a third party. (Pl.'s Resp. § 3; Amend. Compl. §§ 59-60, 68-69.)

In the Amended Complaint, Centurion alleges two counts against McVey and McVey LLC. In Count II, Centurion seeks a declaratory judgment against McVey that (1) he fraudulently obtained the release of the Guarantee, and (2) that the release of the Guarantee executed by McVey remains in full force and effect. (Amend. Compl. § 63.) In Count III, Centurion asserts a fraud claim against McVey and McVey LLC, alleging that they obtained the release of the Guarantee by fraud. (Pl.'s Resp. § 3; Amend. Compl. §§ 67-76.)

ANALYSIS

Defendants assert that they are not subject to personal jurisdiction in the Northern District of Illinois and move to dismiss this lawsuit pursuant to Rule 12(b)(2). They also move pursuant to Rule 12(b)(3) to dismiss based on lack of venue, or alternatively, to transfer the case to the Southern District of Texas.

I. Rule 12(b)(2) - Personal Jurisdiction

Where, as here, a court's subject matter jurisdiction is based on diversity of citizenship, courts may exercise personal jurisdiction over a defendant only if personal jurisdiction would be proper in an Illinois court. See Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2002). "A state's exercise of personal jurisdiction is also subject to the demands of the Fourteenth Amendment's due process clause" and "[b]ecause Illinois permits personal jurisdiction if it would be authorized by either the Illinois Constitution or the United States Constitution, the state statutory and federal constitutional requirements merge." uBID, Inc., 623 F.3d at 425. Looking to the federal constitutional requirements, it is well-established that the due process test for personal jurisdiction requires that a defendant have 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, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) (citations omitted). "[I]t is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283 (1958).

Two types of personal jurisdiction exist - general and specific. See Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 414-16, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984); Abelesz v. OTP Bank, 692 F.3d 638, 654 (7th Cir. 2012). "General jurisdiction is for suits neither arising out of nor related to the defendant's contacts with the State, and is permitted only where the defendant conducts continuous and systematic general business within the forum state." GCIU-Emp'r Ret. Fund, 565 F.3d at 1023; see also Helicopteros Nacionales de Colombia, 466 U.S. at 416. On the other hand, "[s]pecific personal jurisdiction is appropriate when the defendant purposefully directs its activities at the forum state and the alleged injury arises out of those activities." Mobile Anesthesiologists Chi., LLC v. Anesthesia Assoc. of Houston Metroplex, P.A., 623 F.3d 440, 444 (7th Cir. 2010); see also Abelesz, 692 F.3d at 654 ("Specific jurisdiction is jurisdiction over a specific claim based on the defendant's contacts with the forum that gave rise to or are closely connected to the claim itself.").

Here, Centurion does not argue that general jurisdiction exists, but instead maintains that it has established specific jurisdiction over Defendants concerning its fraud claims. The "court's exercise of specific jurisdiction requires that the defendant's contacts with the forum state relate to the challenged conduct." Felland v. Clifton, 682 F.3d 665, 673 (7th Cir. 2012). There are three requirements to establish specific jurisdiction: "(1) the defendant must have purposefully availed himself of the privilege of conducting business in the forum state or purposefully directed his activities at the state, (2) the alleged injury must have arisen from the defendant's forum-related activities, and (3) the exercise of jurisdiction must comport with traditional notions of fair play and substantial justice." Id. (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (internal citation omitted)).

In ruling on a Rule 12(b)(2) motion, courts may consider matters outside of the pleadings. See Purdue Research Found. v. Sanofi-Sythlabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). When a district court determines a Rule 12(b)(2) motion based on the submission of written materials without holding an evidentiary hearing, the plaintiff must make a prima facie case of personal jurisdiction. See uBID, 623 F.3d at 423-24; GCIU-Emp'r Ret. Fund v. Goldfarb Corp., 565 F.3d 1018, 1023 (7th Cir. 2009). Under such circumstances, the plaintiff bears the burden of establishing that personal jurisdiction exists. See uBID, Inc., 623 F.3d at 423-24; see also Bally Export Corp. v. Balicar, Ltd., 804 F.2d 398, 401 (7th Cir.1986) ("Normally it is well established that the plaintiff must prove jurisdiction exists once it is challenged by the defendant."). In determining whether the plaintiff has met its burden, courts resolve all factual disputes in the plaintiff's favor. See id. at 423-24; GCIU-Emp'r Ret. Fund, 565 F.3d at 1020 n.1. Here, Defendants submitted affidavits contesting personal jurisdiction and venue as part of their motion to dismiss. (R. 16-1, 16-2.) Plaintiff did not offer any affidavits or other evidence to contradict the contents of Defendants' affidavits. The Court, therefore, accepts as true any facts contained in the Defendant's ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.