Searching over 5,500,000 cases.

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.

My Canary LLC v. SusieAir, LLC

United States District Court, N.D. Illinois, Eastern Division

February 15, 2017

My Canary LLC and Chicago Aviation, Inc., Plaintiffs,
SusieAir, LLC, and Scott Bender, Defendants.


          Manish S. Shah, Judge

         My Canary LLC and Chicago Aviation, Inc., allege various contract and tort claims against SusieAir, LLC, and its owner, Scott Bender, for the botched sale of a Cessna Mustang aircraft. SusieAir and Bender move to dismiss for failure to state a claim, and Bender also moves to dismiss for lack of personal jurisdiction. For the following reasons, the motion to dismiss is granted in part, denied in part.

         I. Background

         The following allegations are taken from the plaintiffs' second amended complaint. [60].[1] In May 2014, SusieAir, LLC, engaged a broker, Chicago Aviation, Inc., to sell SusieAir's Cessna Mustang 510 aircraft. By early June 2014, My Canary LLC made an offer to purchase the Mustang. Chicago Aviation communicated the offer to SusieAir through Scott Bender, SusieAir's sole member and director, who negotiated with My Canary through Chicago Aviation. My Canary and SusieAir entered into an aircraft purchase agreement on June 13, 2014. The agreement provided for a closing date of June 25, 2014. It also provided that My Canary would have an exclusive right to purchase the Mustang and that the sale was contingent on the results of a pre-purchase inspection of the aircraft-called a “pre-buy survey”-at My Canary's expense. My Canary could accept the inspection results, subject to SusieAir's obligation to correct any discrepancies, or could reject the aircraft and cancel the agreement. Bender also agreed to pay Chicago Aviation a 1% commission of the Mustang's gross sale price of $1.7 million. My Canary paid a deposit into escrow and arranged financing to purchase the plane. Cessna Service Direct, LLC, d/b/a Mesa Citation Service (Mesa) began conducting the pre-buy survey of the Mustang in Mesa, Arizona, on June 18, 2014.

         Unbeknownst to My Canary and Chicago Aviation, however, SusieAir had already entered into a contract with Cessna Aircraft Company in or around May 2014. Under the terms of the deal, SusieAir would trade-in the Mustang for $1.5 million off the purchase price of a Cessna Citation M2 aircraft. SusieAir would also receive a $500, 000 discount if the Cessna sale was completed by June 27, 2014 (the end of Cessna's fiscal quarter). While Mesa was conducting the pre-buy survey, SusieAir was communicating with Cessna Aircraft and Textron Aviation (Cessna Aircraft's parent company) about trading in the Mustang. Mesa and Cessna Aircraft were aware of SusieAir's deal with My Canary.

         During the pre-buy survey, Mesa discovered what appeared to be corrosion within the Mustang's engines. On June 23, 2014, a Cessna engineer advised Mesa that the only way to determine the seriousness of the corrosion (to determine whether it was a discrepancy under the purchase agreement) was to partially dismantle the engines to permit better visualization. Mesa communicated this information to SusieAir and estimated that the work would cost around $1, 100 to $1, 300 to perform. SusieAir did not inform My Canary about the work necessary to determine whether corrosion constituted a deficiency under their agreement. The next day, a Mesa maintenance supervisor told one of My Canary's principals that a Cessna representative had instructed him to stop cooperating with My Canary because Cessna had purchased the Mustang. On June 25, 2014, the contractual closing date, SusieAir sent My Canary notice that it was canceling the agreement because My Canary had missed the deadline to close. Additional inspections of the Mustang performed a few days later revealed that the corrosion was only in the “layers” of the engine and would not have required significant repair.

         My Canary and Chicago Aviation originally brought suit against Cessna Aircraft, Textron Aviation, SusieAir, and Bender in the District of New Jersey. [1]. The case was transferred to this district. [45]; [46]. My Canary and Chicago Aviation then filed a second amended complaint. [60]. My Canary and Chicago Aviation bring claims against SusieAir for breach of contract and breach of the implied covenant of good faith and fair dealing (Counts 1, 5, 13, 14). My Canary also brings a constructive trust claim against SusieAir (Count 12) and claims against SusieAir and Bender for common law fraud, consumer fraud, and conspiracy (Counts 2, 4, 7). The Cessna defendants were dismissed for lack of personal jurisdiction. [81]. Bender also moves to dismiss for lack of personal jurisdiction, and SusieAir and Bender move to dismiss all claims against them for failure to state a claim.

         II. This Court Has Personal Jurisdiction Over Bender.

         Federal Rule of Civil Procedure 12(b)(2) governs dismissals based on lack of personal jurisdiction. Plaintiffs have the burden of establishing personal jurisdiction, and where, as here, the issue is raised by a motion to dismiss and decided on the basis of written materials rather than an evidentiary hearing, the plaintiffs need only make a prima facie showing of jurisdictional facts. Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir. 2010). At this stage, all well-pleaded facts alleged in the complaint are taken as true and any factual disputes in affidavits are resolved in plaintiffs' favor. Id. Where no federal statute authorizes nationwide service of process, personal jurisdiction is governed by the law of the forum state. Fed.R.Civ.P. 4(k)(1)(A); Tamburo, 601 F.3d at 700. Because the Illinois long-arm statute permits the exercise of jurisdiction to the full extent permitted by federal due process, the state statutory and federal constitutional inquiries merge. Tamburo, 601 F.3d at 700.

         My Canary makes no argument for general jurisdiction over Bender, a Texas citizen, so it must make a prima facie showing of jurisdictional facts sufficient to support specific jurisdiction. Specific jurisdiction exists when the defendant's suit-related conduct “create[s] a substantial connection with the forum State, ” Walden v. Fiore, 134 S.Ct. 1115, 1121 (2014), and 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. Tamburo, 601 F.3d at 702 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)). The exercise of specific personal jurisdiction must also comport with traditional notions of fair play and substantial justice as required by the Fourteenth Amendment's Due Process Clause. Id. (citing International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

         Bender argues that his alleged actions were taken on behalf of SusieAir and, under the fiduciary shield doctrine, those jurisdictional contacts cannot be attributed to him personally. My Canary responds that the fiduciary shield doctrine does not apply because Bender is SusieAir's sole member and director and was responsible for negotiating with My Canary. The fiduciary shield doctrine is recognized in Illinois (but not all states) and “denies personal jurisdiction over an individual whose presence and activity in the state in which the suit is brought were solely on behalf of his employer or other principal.” Rice v. Nova Biomedical Corp., 38 F.3d 909, 912 (7th Cir. 1994) (citing Rollins v. Ellwood, 141 Ill.2d 244, 267-78 (1990)). The idea behind the doctrine is that it would be unfair to subject an employee to personal jurisdiction for acts within the scope of their employment when the employee “has little or no alternative besides unemployment when ordered to enter another State to carry out the wishes of his employer.” Rollins, 141 Ill.2d at 280. It is an equitable doctrine subject to judicial discretion. See Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 903 (2d Cir. 1981); In re Mahurkar Double Lumen Hemodialysis Catheter Patent Litig., 750 F.Supp. 330, 335 (N.D. Ill. 1990) (Easterbrook, J., sitting by designation).

         Because the doctrine is grounded in fairness, the shield does not apply if the individual was also acting to serve his personal interests (including pecuniary interest), Rice, 38 F.3d at 912, and does not apply when the individual has discretion over his actions. Consumer Benefit Servs., Inc. v. Encore Mktg. Int'l, Inc., No. 01 C 6985, 2002 WL 31427021, at *3 (N.D. Ill. Oct. 30, 2002) (collecting cases). Exceptions to the fiduciary shield doctrine are found, for example, where a company is the alter ego of a defendant or where the defendant is a high-ranking company officer or shareholder with decision-making authority and a direct financial stake in the company. See Marine Midland, 664 F.2d at 903; In re Mahurkar, 750 F.Supp. at 335; Consumer Benefit, 2002 WL 31427021, at *3 (collecting cases). Although Bender argues that the complaint merely lumps him and SusieAir together without alleging his personal participation, the complaint alleges that SusieAir (who concedes personal jurisdiction) hired an Illinois company (Chicago Aviation) to advertise and facilitate the sale of the Mustang. Bender, who was simultaneously in communication with Cessna, allegedly received My Canary's offer to purchase the Mustang and took charge of the negotiations with My Canary (an Illinois and New Jersey LLC), passing communications containing the alleged misrepresentations and omissions through Chicago Aviation to induce My Canary into signing the aircraft purchase agreement. An out-of-state defendant's “lulling” or fraudulent communications may be sufficient to support personal jurisdiction for a fraud claim, Felland v. Clifton, 682 F.3d 665, 675-76 (7th Cir. 2012), and My Canary has made a prima facie showing that Bender, as owner, has a direct financial stake in SusieAir, and that, as its sole director, he had discretion over SusieAir's representations to and negotiations with My Canary. Bender is not an employee whose jurisdictional contacts with Illinois arose pursuant to another's orders, and his actions go beyond mere ownership of the corporation to supply the connection to Illinois. There is a prima facie showing that he negotiated with and made alleged misrepresentations to My Canary through Chicago Aviation, while aware that SusieAir was simultaneously striking a deal with Cessna Aircraft. In these circumstances, the fiduciary shield doctrine does not apply to preclude personal jurisdiction over Bender.

         Bender also argues that My Canary has not articulated any facts to pierce the corporate veil and that, under New Jersey law, a shareholder cannot be liable for a company's acts. But personal jurisdiction does not turn on the issue of Bender's personal liability for SusieAir's actions, it turns on Bender's contacts with Illinois. See Central States, Se. & Sw. Areas Pension Fund v. Reimer Express World Corp., 230 F.3d 934, 944 (7th Cir. 2000) (liability and personal jurisdiction are “two separate inquiries”). Bender is not being sued just as SusieAir's shareholder for SusieAir's actions. The claims asserted against Bender seek to hold him liable for his alleged role (as SusieAir's director and negotiator) in defrauding and conspiring to defraud My Canary.[2] While personal liability may be a related issue, it is a defendant's suit-related contacts with the forum that create specific jurisdiction, Walden, 134 S.Ct. at 1121, and a finding of personal jurisdiction does not require piercing the corporate veil. See Consumer Benefit, 2002 WL 31427021, at *3 (fiduciary shield doctrine does not protect high-ranking officers who are in a position to decide whether Illinois jurisdictional contacts should be made at all); In re Mahurkar, 750 F.Supp. at 335 (“One common reason to deny defendants the benefit of the shield is failure to maintain adequate separation between the person and the corporation-perhaps not enough of a breakdown to justify holding the person liable for the corporation's debts, but enough of one to justify treating the personal acts as a source of personal (as opposed to corporate) liability.”); Torco Oil Co. v. Innovative Thermal Corp., 730 F.Supp. 126, 136-37 (N.D. Ill. 1989) (alter ego exception to the fiduciary shield doctrine requires only a “minimally viable” showing that the corporation is a “sham”) (collecting cases). Here, the inquiry for specific jurisdiction is whether Bender has sufficient suit-related contacts with Illinois and whether the fiduciary shield doctrine protects him from personal jurisdiction for actions taken on behalf of SusieAir. For the above-stated reasons, Bender is not protected by the fiduciary shield doctrine.

         Bender does not argue that exercising personal jurisdiction over him would offend traditional notions of fair play and substantial justice, and it does not.

         Relevant factors include the burden on Bender, Illinois's interest in adjudicating the dispute, Bender's interest in obtaining convenient and effective relief, the interstate judicial system's interest in obtaining the most efficient resolution of controversies, and states' shared interest in further fundamental substantive social policies. See Tamburo, 601 F.3d at 709 (citing Burger King, 471 U.S. at 477). It will not significantly burden Bender to defend claims in Illinois. Although a Texas citizen, his company has conceded personal jurisdiction. Given his role as owner, director, and negotiator with My Canary, Bender will be significantly involved in the case regardless of the claims against him personally. He also shares an attorney with the company. Illinois has an interest in adjudicating a dispute over allegedly tortious conduct against resident companies, and resolving these related issues in a single litigation comports with notions of fair play.

         III. The Complaint States Claims for Breach of Contract and Fraud.

         A. ...

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.