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Medix Staffing Solutions, Inc. v. Williams, Cohen & Gray, Inc.

United States District Court, Seventh Circuit

October 10, 2013

MEDIX STAFFING SOLUTIONS, INC., Plaintiff,
v.
WILLIAMS, COHEN & GRAY, INC., Hon. Harry D. Leinenweber ROBERT D. WILLIAMS, and DAVID GIANECHINI, Defendants.

MEMORANDUM OPINION AND ORDER

HARRY D. LEINENWEBER, District Judge.

Before the Court is Defendants' Motion to Dismiss Plaintiff's Complaint for Lack of Subject-Matter Jurisdiction and Lack of Personal Jurisdiction. For the reasons stated herein, the Motion is denied.

I. BACKGROUND

This case involves a business dispute between Plaintiff Medix Staffing Solutions ("Plaintiff") and Defendants Williams, Cohen & Gray, Inc. ("WCG"), Robert D. Williams ("Williams"), and David Gianechini ("Gianechini"). Plaintiff is an Illinois corporation with its principal place of business in Illinois, and WCG is a Texas Corporation.

As alleged in the Complaint, Plaintiff contracted with WCG for debt collection services. WCG was responsible for settling debts on Plaintiff's behalf, with those settlements subject to Plaintiff's approval. WCG would then facilitate collection of the settlement amount, and remit the money to Plaintiff after the deduction of WCG's fee.

Plaintiff alleges that WCG, on its way to going out of business, engaged in a "firesale" practice of collecting numerous debts at unreasonably low rates without the knowledge, consent, or authorization of its clients, such as Plaintiff. WCG then took the money from the unauthorized settlements, but did not remit any portion to Plaintiff. WCG is alleged to have settled fraudulently two of Plaintiff's debts, one for $29, 302.00 and another for $40, 565.00.

Plaintiff alleges six counts, all of them under Illinois law. Against the WCG, Plaintiff alleges breach of contract, common law fraud, consumer fraud, and conversion. Plaintiff also brings one count of conversion each against Williams and Gianechini in their individual capacities. Defendants ask this Court to dismiss on either of two grounds: (1) that the Court lacks subject-matter jurisdiction over the case because the amount in controversy requirement is not met; or (2) that the Court lacks personal jurisdiction over the Defendants.

II. LEGAL STANDARD

A complaint must provide a short and plain statement of the claim showing the plaintiff is entitled to relief. FED. R. CIV. P. 8(a)(2). A Rule 12(b)(6) motion to dismiss challenges the legal sufficiency of a complaint. Hallinan v. Fraternal Order of Police of Chicago Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009). When ruling on a 12(b)(6) motion, the Court construes a complaint in the light most favorable to the plaintiff and accepts all well-pled facts as true. Justice v. Town of Cicero, 577 F.3d 768, 771 (7th Cir. 2009).

III. ANALYSIS

A. Subject-Matter Jurisdiction

This Court has original jurisdiction over civil actions between diverse parties where the amount in controversy exceeds $75, 000, exclusive of interest and costs. 28 U.S.C. ยง 1332(a). Defendants do not contest diversity of citizenship, but they dispute whether the amount in controversy meets the jurisdictional minimum.

Where a party challenges the amount in controversy allegation, the plaintiff must provide "competent proof" that the claim meets or exceeds the jurisdictional amount. Rexford Rand Corp. v. Ancel, 58 F.3d 1215, 1218 (7th Cir. 1995). "Competent proof" means "proof to a reasonable probability that jurisdiction exists." Id. Plaintiff alleges that Defendant settled fraudulently two debts, one for $29, 302.00 and another for $40, 565.00. Because Plaintiff has lost the ability to settle those debts on its own, it claims entitlement to at least the sum of those debts, or $69, 867.00.

That total is below the jurisdictional threshold, but that is not the end of the inquiry. Plaintiff argues that it may be entitled to punitive damages, which would result in a verdict in excess of $75, 000. Where a Plaintiff relies on punitive damages to meet the amount in controversy, the Court must first determine whether punitive damages are recoverable under state law. LM Ins. Corp. v. Spaulding Enters. Inc., 533 F.3d 542, 551 (7th Cir. 2008). If punitive damages are available, the Court has ...


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