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Keefe v. Simons

United States District Court, Seventh Circuit

June 25, 2013



JOHN W. DARRAH, District Judge.

Plaintiff, Richard Keefe, filed a multi-count Complaint against Defendants, James Simons and Quilter's Rule International, LLC ("Quilter's Rule"), on February 5, 2013, alleging breach of contract, unjust enrichment, conversion, fraud, and financial exploitation and elder abuse under state law, and violations of the federal Racketeer Influenced and Corrupt Organizations ("RICO") Act. Defendants filed a Motion to Dismiss for Lack of Personal Jurisdiction or, in the alternative, to Dismiss for Improper Venue or, in the alternative, to Transfer Venue to the United States District Court for the Eastern District of Wisconsin. The Motion has been fully briefed.


A reading of the Complaint supports the following summary of the alleged conduct of the parties.[1] Fifteen years ago, Plaintiff met Defendant James Simons in Wilmette, Illinois, at a St. Patrick's Day Party. (Compl. ¶ 16.) At this party, Plaintiff and Simons entered into an oral contract whereby Plaintiff would invest $150, 000.00 in a start-up company that would later become Quilter's Rule, a limited liability company located in Waterford, Wisconsin. (Id. ¶¶ 13-18, 24.) Simons is the majority shareholder of Quilter's Rule, owning 62.9% of the company. (Defs.' Mot. ¶ 3.) Plaintiff has requested some return on investment over the past fifteen years, including a request in a letter dated October 7, 2012, but no money has been paid to Plaintiff to date. (Id. ¶¶ 23, 25-26.)


In order for a federal court to have subject-matter jurisdiction, there must either be a federal question or diversity of citizenship. 28 U.S.C. §§ 1331-1332. For subject-matter jurisdiction to exist because of a federal question, a claim arising under federal law "must be determined by reference to the well-pleaded complaint.'" Merrell Dow Pharmaceuticals Inc. v. Thompson, 478 U.S. 804, 808 (1986) (quoting Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 9-10 (1983)). For a federal court to have subject-matter jurisdiction on the basis of diversity of citizenship, the parties must be diverse, and the amount in controversy must exceed $75, 000.00. 28 U.S.C. § 1332. Diversity is determined by considering the domicile of the parties in the suit, and domicile is defined as "the place one intends to remain" for individual persons. Dakuras v. Edwards, 312 F.3d 256, 258 (7th Cir. 2002). For limited liability companies, citizenship is determined by looking at the owners of the LLC; an LLC is a citizen of every state where one of its owners is a citizen. Cosgrove v. Bartolotta, 150 F.3d 729, 731 (7th Cir. 1998).

A district court may have supplemental jurisdiction "over all other claims that are so related to claims in the cause of action within such original jurisdiction that they form part of the same case or controversy...." 28 U.S.C. § 1367(a). District courts assess whether supplemental jurisdiction exists by considering whether:

(1) the claim raises a novel or complex issue of State law, (2) the claim substantially predominates over the claim or claims over which the district court has original jurisdiction, (3) the district court has dismissed all claims over which it has original jurisdiction, or (4) in exceptional circumstances, there are other compelling reasons for declining jurisdiction.

28 U.S.C. § 1367(c).

A defendant may move to dismiss a claim for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2). The plaintiff bears the burden of demonstrating the existence of jurisdiction over the defendant once jurisdiction has been challenged. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir. 2003). In Illinois, a federal district court has personal jurisdiction over a nonresident party only if an Illinois state court would have jurisdiction over that party. Id. at 1275 (citations omitted). In order for an out-of-state defendant to be sued in Illinois, two criteria must be met: (1) jurisdiction must be authorized by the Illinois long-arm statute, and (2) the defendant must have minimum contacts with Illinois significant enough that personal jurisdiction does not violate due process. FMC Corp. v. Varonos, 892 F.2d 1308, 1310 (7th Cir. 1990).

In this instance, the Illinois long-arm statute extends to this case;[2] thus, the pertinent question is whether personal jurisdiction violates the Due Process Clause of the United States Constitution. 735 ILCS 5/2-209.

The Due Process Clause of the United States Constitution requires that an out-of-state defendant "have certain minimum contacts with it 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, 315 (1945) (internal quotation marks omitted). In order to establish specific jurisdiction, courts determine whether it is "fair and reasonable to call the defendant into the state's courts to answer the plaintiff's claim." uBid, Inc. v. The GoDaddy Group, Inc., 623 F.3d 421, 426 (7th Cir. 2010) (citing Int'l Shoe, 326 U.S. at 317).

Venue must also be proper in order for a case to proceed. Proper venue is dictated by 28 U.S.C. § 1391, which provides: "A civil action may be brought in... a judicial district in which a substantial part of the events or omissions giving rise to the claim occurred...." Even if venue is proper, "[f]or the convenience of parties and the witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought...." 28 U.S.C. § 1404(a). The movant for transfer of venue bears the burden of establishing the transferee forum as clearly more convenient. See Coffey v. Van Dorn ...

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