United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
E. Bucklo United States District Judge
action, plaintiffs allege that defendants committed
securities fraud and common law fraud, violated the Illinois
Consumer Fraud and Deceptive Practices Act, and breached
their contracts with plaintiffs by selling plaintiffs
VSP's discounted accounts receivables, knowing that the
receivables would not be paid. Before me is defendants'
motion to dismiss for lack of personal jurisdiction, which I
deny for the following reasons.
to the complaint, VSP manufacturers “green
energy” products, including solar and wind powered
mobile generators, which it sells through a network of
dealers. Defendants Von Stach, a Canadian citizen who lives
in Ontario, and Walker, a Canadian citizen who maintains an
office in Michigan, are, or were, principals of the corporate
defendants.The complaint alleges that defendants
placed an advertisement in USA Today soliciting investors to
purchase its accounts receivables at a discount. Cmplt.
¶ 12. Plaintiffs' corporate representative responded
to the ad by email, and over the course of a subsequent email
exchange, Von Stach explained that the offer was for
investors to purchase one or more receivables from VSP at a
twenty-percent discount, after which VSP would assign the
right to receive payment on the receivable(s) to the
purchasing investors, which would then recover face value
directly from VSP's dealers. Von Stach represented that
the receivables were fully insured; that they were for
product sales to VSP's dealers for the dealers' own
stock, and were not consignment sales, nor could the products
be returned to VSP by the dealers; and that each receivable
was due within 90 days.
on the foregoing representations, and after visiting
defendants' facility in Ontario, plaintiffs then
purchased a number of accounts receivables from VSP-FL, only
to discover that defendants never shipped any products to
several of the dealers from whom plaintiffs expected to
receive payment; that defendants had shipped products on
consignment to several other dealers; and that they had made
only a partial shipment to one dealer. Accordingly,
defendants had no valid receivables from the dealers whose
accounts they purported to sell to plaintiffs. Defendants
purported to “cure” their default by assigning
plaintiffs new invoices for sales to different dealers, but
those, too, were for products that VSP never shipped, so the
receivables were similarly without substance.
assert that Von Stach and Walker knew at the time they made
the representations on which plaintiffs based their decision
to enter into these transactions that (1) VSP had no accounts
receivable; (2) the VSP-FL accounts transferred to plaintiffs
were not valid receivables; (3) that defendants lacked
sufficient capital and inventory to fulfill the orders
corresponding to the assigned receivables; and (4) that the
products that were shipped were sold on consignment.
argue that the complaint's allegations conclusively
establish that personal jurisdiction over them is lacking.
federal court exercising diversity jurisdiction has personal
jurisdiction over a defendant to the extent that a court of
the state in which it sits-Illinois in this case-would have
such jurisdiction. Philos Techs., Inc. v. Philos & D,
Inc., 645 F.3d 851, 855 n. 2 (7th Cir. 2011). Because
Illinois allows for personal jurisdiction to the full extent
consistent with due process, the federal constitutional and
state statutory inquiries merge. See Tamburo v.
Dworkin, 601 F.3d 693, 700 (7th Cir. 2010). “The
plaintiff has 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 plaintiff
need only make a prima facie showing of jurisdictional
facts.” Id. Accordingly, I “take as true
all well-pleaded facts alleged in the complaint and resolve
any factual disputes in the affidavits in favor of the
jurisdiction may be general or specific, only specific
jurisdiction is at issue here. Specific jurisdiction requires
plaintiffs to establish three elements: 1) that defendants
purposefully availed themselves of the privilege of
conducting business in Illinois, or purposefully directed
their activities at Illinois; 2) that the alleged injury
arose from defendants' forum-related activities; and 3)
that the exercise of jurisdiction comports with traditional
notions of fair play and substantial justice. Felland v.
Clifton, 682 F.3d 665, 673 (7th Cir. 2012).
response to defendants' motion, plaintiffs have submitted
the affidavit of Barry Edmonson, who states he is the
controller for plaintiff Bellaboom and an agent of plaintiff
Café Real Estate. Defendants do not offer any evidence
to dispute the facts set forth in the Edmonson affidavit.
Instead, they argue that the facts asserted are insufficient
to support jurisdiction a matter of law. I disagree.
affidavit, Edmonson states that over an eighteen-month
period, he and his colleague, Joseph Canfora, exchanged
numerous emails with Von Stach in which Von Stach explained
the terms of the offer and made the representations described
above. Exhibits attached to the affidavit show that both
Canfora's and Edmonson's signature blocks identify
their location as Burr Ridge, Illinois. Edmonson also states
that beginning in February of 2015, plaintiffs made multiple
wire transfers from their bank accounts in Illinois to VSP
North America, pursuant to Von Stach's instructions.
Exhibits attached to the affidavit also show that when
defendants assigned invoices to plaintiffs, they provided
their dealers with plaintiffs' Illinois bank account
information for payment of the invoices.
addition, Edmonson states that Von Stach and Walker met with
plaintiffs twice in Burr Ridge, Illinois: once on July 8,
2015, and again on February 14, 2016. Around the time of the
July meeting (according to the affidavit, the parties met
several times in July of 2015, but only once in Illinois),
the parties discussed several other deals, one of which
contemplated jointly forming an Illinois limited liability
company. Another involved further investment by plaintiffs in
VSP invoices and a plan for repayment of the VSP
entities' outstanding obligations to plaintiffs. Neither
of these deals closed, but the parties continued to work
together until at least February 14, 2016.
noted, defendants do not dispute any of the above facts,
which I conclude satisfy all three requirements for personal
jurisdiction. In their reply, defendants point, in
succession, to the various types of case-related forum
contacts the Edmonson affidavit identifies, and insist that
none of them, alone, supports personal jurisdiction. This
argument fails to appreciate, however, that defendants'
case-related contacts with Illinois must be viewed in the
aggregate. Accordingly, their arguments that: 1) injuries
felt in the forum state alone are insufficient,
see Reply at 2; 2) defendants' emails to
plaintiffs alone are insufficient, id., at
3; and 3) defendants' two meetings with plaintiffs in
Illinois alone are insufficient, id., at
3-4, ring hollow. Moreover, the cases on which defendants
rely are factually distinct and did not address the kinds of
ongoing conduct directed to the forum that the Edmonson
affidavit articulates. See Advanced Tactical Ordnance
Systems LLC v. Real Action Paintball, Inc., 751 F.3d 799
(7th Cir. 2014) (placement of advertisements in
non-geographically restricted publications, email
“blasts” received by forum residents, fulfillment
of orders placed by forum ...