United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
Honorable Thomas M. Durkin United States District Judge
Hepp alleges that Defendants fraudulently transferred funds
from Ultra Green Energy Services LLC to prevent him from
collecting on a guarantee Ultra Green had executed in
Hepp's favor. R. 1. Defendants CPS Financial, Kathy
Paskvan, Bill Paskvan, and Jonathan Payne, have moved to
dismiss pursuant to Federal Rule of Civil Procedure 12(b)(2)
for lack of personal jurisdiction. R. 15. For the following
reasons, that motion is denied.
plaintiff bears the burden of establishing personal
jurisdiction when the defendant challenges it.” N.
Grain Mktg., LLC v. Greving, 743 F.3d 487, 491 (7th Cir.
2014). On a motion challenging personal jurisdiction, the
Court may “receive and weigh” affidavits and
other evidence outside the pleadings. See Purdue Research
Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782
(7th Cir. 2003). If the Court does not hold an evidentiary
hearing to resolve factual disputes, the plaintiff
“need only make out a prima facie case of
personal jurisdiction.” N. Grain, 743 F.3d at
491. On a motion pursuant to Rule 12(b)(2), the Court will
“resolve factual disputes in the plaintiff's
favor.” Id. The Court, however, also
“accept[s] as true any facts contained in the
defendant's affidavits that remain unrefuted by the
plaintiff.” GCIU-Employer Retirement Fund v.
Goldfarb Corp., 565 F.3d 1018, 1020 n.1 (7th Cir. 2009).
resident of Texas, made a loan to M1 Energy Risk Management,
LLC, and M1 executed a promissory note in favor of Hepp. R. 1
¶¶ 1, 4. Ultra Green guaranteed the note.
Id. ¶ 1. M1 defaulted on the loan, and Hepp
demanded payment on the guarantee from Ultra Green in early
2013, but Ultra Green refused to pay. Id.
¶¶ 1, 17. Hepp brought an action to enforce the
guarantee against Ultra Green in this Court on June 27, 2013.
See 13 C 4692 (N.D. Ill.). On September 30, 2015,
Hepp won a judgment against Ultra Green in the amount of
$402, 199. R. 1 ¶ 2.
Green is a Delaware LLC that originally had its principal
place of business in Illinois. Id. ¶ 5. At the
time of its formation, Ultra Green had three
members-defendants CPS Financial, and Jay and Cathy Pierce.
Id. ¶¶ 12-13; R. 15-1 at 8. CPS-which is
solely owned by defendant Kathy Paskvan-held an 80% interest
in Ultra Green, and Jay and Cathy Pierce each held a 10%
interest. Id. ¶¶ 12-13; R. 15-1 at 8. The
Pierces also managed Ultra Green's operations and
finances, id. ¶ 13, including its bank accounts
and files which, according to Kathy Paskvan, were located in
Illinois. See R. 15-1 ¶¶ 20-25. Ultra
Green began to wind down its business in October or November
2012, and was no longer doing business by the end of 2012. R.
1 ¶ 14.
purchase agreement effective April 25, 2013, CPS purchased
the Pierces' interest in Ultra Green. Id.
¶¶ 18-19. The purchase agreement and the related
promissory note provided for jurisdiction and venue in Cook
County, Illinois in the event of a dispute. Id.
¶ 19. After the purchase, defendant Jonathan Payne-an
Ultra Green employee and minority shareholder, and Michigan
resident-became a managing member of Ultra Green.
Id. ¶ 9, 23. Kathy Paskvan states in a sworn
affidavit that Ultra Green was immediately relocated to
Georgia upon CPS's purchase from the Pierces. R. 15-1
¶ 21. This relocation was accomplished by closing Ultra
Green's bank account in Illinois, opening an account for
Ultra Green in Georgia, and sending Ultra Green's files
from Illinois to Georgia. Id. ¶¶ 21-25. In
her affidavit, Kathy Paskvan states that all these events
occurred immediately upon the CPS's purchase of the
Pierces' interests in Ultra Green, but she also states
that Ultra Green's bank account in Illinois was open
until at least May 13, 2013, when Cathy Pierce mailed a check
from Ultra Green's Illinois bank account to Kathy Paskan.
R. 15-1 ¶ 25; R. 16-2 at 2-3. Ultra Green also was not
registered as a Georgia limited liability company until July,
11, 2013, and it remained registered as an Illinois limited
liability company until July 11, 2014. R. 15-1 ¶ 24; R.
16-5 at 2.
alleges that between May 2013 and August 2015, Ultra Green
transferred $505, 518.36 to CPS and Kathy Paskvan. R. 1
¶ 27. Hepp also alleges that Payne received $187, 500
from Ultra Green between May 2013 and April 2014.
Id. ¶ 29. During the trial of Hepp's claims
against Ultra Green, Kathy Paskvan testified that she also
received payments from Ultra Green prior to April 2013. R.
16-2 at 5. Hepp alleges that CPS, Kathy Paskvan, and Payne
did no “real work” in consideration for these
payments. Id. ¶¶ 25, 27, 30.
Green received a payment of $1, 966, 437.08 from the federal
government on September 27, 2013, id. ¶ 32, but
as of December 31, 2014, Ultra Green had only $471, 216 in
its bank accounts. Id. ¶ 35. As of August 31,
2015, Ultra Green's funds were down to $103.54.
Id. ¶ 37.
alleges that Bill Paskvan controls both CPS and Ultra Green,
because his wife Kathy Paskvan knows “little or nothing
about the business, and her role [is] that of a nominal owner
in name only.” R. 1 ¶¶ 12, 18. According to
Hepp “any actions taken by Kathy Paskvan were done on
behalf of, and at the direction of, Bill Paskvan.”
Id. ¶¶ 23-24. By affidavit in this case,
Bill Paskvan admits that Jay Pierce frequently called him
“to report on the status of [UItra Green's]
business operations.” R. 15-2 ¶ 11. He also admits
that “[b]eginning on or after April 25, 2013, [he]
advised [Ultra Green] in the liquidation of [its]
assets.” Id. ¶ 12. At the trial of
Hepp's claims against Ultra Green, Kathy Paskvan
testified that Bill Paskvan “kept in touch with Jay
Pierce” regarding UItra Green's business, and
“[t]hat was all between my husband and Mr.
Pierce.” R. 16-4 at 5. She testified that with respect
to Ultra Green's affairs, “my husband acted as my
representative, ” and “my husband took care of
the affairs with [Ultra Green] on my behalf.”
Id. at 5. Kathy Paskvan also testified that she did
not know whether Ultra Green made a profit between 2007 and
2013 because the “financial statements went to my
husband.” Id. at 6. She also testified that
she did not understand Ultra Green's business,
“[s]o my husband took care of this for me.”
Id. at 9.
federal court sitting in diversity, ” as is the case
here, “must rely on the law of personal jurisdiction
that governs the courts of general jurisdiction in the state
where the court is sitting.” Hyatt Int'l Corp.
v. Coco, 302 F.3d 707, 713 (7th Cir. 2002). Illinois law
permits its courts to exercise jurisdiction over a person to
the extent permitted by the Constitution. See N.
Grain, 743 F.3d at 491 (citing 735 ILCS 5/2-209(c)). The
Supreme Court has held that under the Due Process Clause of
the Fourteenth Amendment a “forum state's courts
may not exercise personal jurisdiction over a nonconsenting,
out-of-state defendant unless the defendant has
‘certain minimum contacts with it such that the
maintenance of the suit does not offend traditional notions
of fair play and substantial justice.'”
Id. at 492 (quoting Int'l Shoe Co. v. State
of Washington, Office of Unemployment Comp. &
Placement, 326 U.S. 310, 319 (1945)). “If the
defendant has ‘continuous and systematic' contacts
with a state, the defendant is subject to general
jurisdiction there in any action, even if the action is
unrelated to those contacts.” N. Grain, 743
F.3d at 492 (quoting Helicopteros Nacionales de Colombia,
S.A. v. Hall, 466 U.S. 408, 416 (1984)). “To
support an exercise of specific personal jurisdiction, the
defendant's contacts with the forum state must directly
relate to the challenged conduct or transaction.”
N. Grain, 743 F.3d at 492; see also Walden v.
Fiore, 134 S.Ct. 1115, 1121 (2014) (“The inquiry
whether a forum State may assert specific jurisdiction over a
nonresident defendant focuses on the relationship among the
defendant, the forum, and the litigation.”). By
contrast, “[s]pecific personal jurisdiction is
appropriate where (1) the defendant has purposefully directed
his activities at the forum state or purposefully availed
himself of the privilege of conducting business in that
state, and (2) the alleged injury arises out of the
defendant's forum-related activities.” N.
Grain, 743 F.3d at 492 (citing Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 472 (1985)). “The
exercise of specific jurisdiction must also comport with
traditional notions of fair play and substantial
justice.” N. Grain, 743 F.3d at 492. In
general, “[t]he defendant's conduct and connection
with the forum state must be substantial enough to make it
reasonable for the defendant to anticipate that he could be
haled into court there.” Id. (citing
Burger King, 471 U.S. at 474).