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Tianjin Universal Link Enterprises, Ltd. v. Midwest Contracting Concepts, Inc.

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

September 19, 2017

TIANJIN UNIVERSAL LINK ENTERPRISES, LTD, Plaintiff,
v.
MIDWEST CONTRACTING CONCEPTS, INC. and ALSAPO ENTERPRISES, LTD., Defendants,

          MEMORANDUM OPINION AND ORDER

          Honorable Marvin E. Aspen, United States District Judge.

         Plaintiff Tianjin Universal Link Enterprises, Ltd. (“Plaintiff” or “Tianjin”) filed this breach of contract action to recover on several contracts for the purchase of vehicles it sought to import to China. Presently before us is Defendant Alsapo Enterprises, Ltd.'s (“Alsapo”) motion to dismiss Counts II, III, and IV for lack of personal jurisdiction. (Dkt. No. 35.) For the reasons stated below, we grant Alsapo's motion.

         BACKGROUND

         For the purposes of a motion to dismiss, we accept all well-pleaded factual allegations as true and draw all inferences in the plaintiff's favor. Katz-Crank v. Haskett, 843 F.3d 641, 646 (7th Cir. 2016). Defendant Alsapo, a corporation organized under the laws of Cyprus, has been engaged in the business of exporting luxury vehicles to markets in Asia since at least 1984. (Am. Compl. (Dkt. No. 33) ¶ 6.) In early 2015, Alsapo sought to sell American-made vehicles to clients in China, and to that end, began discussions with a potential supplier, Mega World Builder Corp. (“Mega World”). (Id. ¶¶ 7-8.) After Mega World advised Alsapo that there “could be problems with financing of the transactions due to new bank regulations, ” Alsapo contacted Defendant Midwest Contracting Concepts, Inc. (“Midwest”), an Illinois corporation with its principal place of business in Illinois, with whom it had a “pre-existing, personal relationship.” (Id. ¶¶ 9-10.) Following discussions to determine whether Midwest's involvement could “solve the financing issue, ” Alsapo and Midwest entered into an agreement to form a joint enterprise whereby they would sell vehicles overseas to China. (Id. ¶¶ 3, 10-11, 84, 89, 97, 102, 116, 121, 135, 140.)

         Plaintiff alleges that “[u]nder the terms of the agreement and as evidenced by their later course of dealing, ” Alsapo was responsible for managing the day-to-day aspects of the purchase and shipment of vehicles, including but not limited to, directly communicating with suppliers, collecting and processing paperwork necessary to facilitate shipments, monitoring progress of shipments, and updating customers. (Id. ¶¶ 12, 85.) Meanwhile, Midwest was responsible for securing financing for the transactions and other tasks, such as inspecting vehicles prior to shipment on an as-needed basis. (Id. ¶¶ 13, 86.) In consideration for their respective contributions “of money, effort, skill and knowledge, ” Alsapo and Midwest agreed to divide the profits and losses from the operation of their joint enterprise. (Id. ¶¶ 14, 87.)

         In 2015, Plaintiff entered into several written agreements with Alsapo for the purchase of vehicles for import into China. (Id. ¶¶ 15, 46, 56, 66.) Plaintiff is a Chinese corporation engaged in international trade, including the import of new automobiles from the United States and Europe for sale in China. (Id. ¶ 1.) On June 30, 2015, Plaintiff entered into a written agreement with Alsapo and Midwest for the purchase of 27 new 2016 Ford Explorers (the “Explorer Agreement”). (Id. ¶ 15; see also id., Exh. 1 (Dkt. No. 33-1).) On October 30, 2015, Plaintiff alleges it executed three separate written agreements for the purchase of 30 Range Rovers each (the “Range Rover Agreements”). (Id. ¶¶ 46, 56, 66; see also id., Exhs. 7-9 (Dkt. Nos. 33-7, 33-8, 33-9).) Plaintiff alleges all four of the agreements fell through after Alsapo and Midwest failed to hold up their end of the bargain.

         With respect to the first of the agreements, Alsapo and Midwest worked together to negotiate an agreement with Mega World for the purchase of the Ford Explorers and to secure financing for the deal. (Am. Compl. ¶ 22.) Alsapo's President, George Samaha, traveled to Illinois on September 25, 2015 to meet with the owner of Mega World and the owner of Midwest in order to finalize the terms of the purchase agreement and to discuss other details of the transaction. (Id. ¶ 23.) Alsapo and Midwest performed a “last-minute background check” on Mega World and executed the purchase agreement on September 29, 2015. (Id. ¶¶ 24-25.) On October 2, 2015, Alsapo and Midwest issued an invoice for the Explorers to Plaintiff. (Id. ¶ 28.) Plaintiff subsequently provided “the required Letter of Credit pursuant to the terms of the Explorer Agreement” on October 9, 2015 based on the defendants' assurance that the vehicles were being prepared for shipment, and Alsapo and Midwest provided Plaintiff with a packing list indicating that each of the 27 Explorers had been loaded into nine sealed and numbered shipping containers scheduled to be shipped from Houston to a port in Fuzhou, China. (Id. ¶¶ 29-31.) Midwest's owner, George Stathopoulos, executed the bills of lading sent by Mega World, and Mega World provided the defendants with an inspection report from SGS America, Inc. (“SGS”), which purported to show that the vehicles had been placed into the containers. (Id. ¶¶ 21, 32-33.) Between October and December 2015, Alsapo managed day-to-day aspects of the purchase and shipment, and Midwest worked on securing the financing for the transaction. (Id. ¶¶ 34-35.)

         In late November 2015, Alsapo and Midwest advised Plaintiff that the shipment of Explorers would be delayed “due to certain logistical issues, ” but it was scheduled to arrive in Fuzhou, China on or around January 25, 2016. (Id. ¶ 36.) On December 21, 2015, corporate counsel for SGS “advised Alsapo and Midwest that the SGS inspection report which Mega World had produced in October could not be authenticated and was possibly a forgery.” (Id. ¶ 37.) Neither of the defendants advised Plaintiff of this fact, nor did they tell Plaintiff that they had been unable to verify whether any of the vehicles had actually been shipped. (Id. ¶ 38.)

         The shipment never arrived in Fuzhou, China. (Id. ¶ 40.) Instead, in March 2016, Plaintiff learned that the nine sealed shipping containers had arrived at a different port in Hong Kong and they were being held in a bonded warehouse awaiting customs. (Id. ¶ 41.) Plaintiff gained access to the shipment on March 19, 2016 and discovered that rather than the agreed-upon 27 Ford Explorers, the containers were loaded with 18 trailers and no Explorers. (Id. ¶ 42.) Plaintiff rejected the shipment, notified the defendants, and demanded a return of all funds it had paid pursuant to the terms of the agreement. (Id. ¶¶ 43-44.)

         Meanwhile, before the Explorer Agreement fell apart, Plaintiff alleges it entered into three separate written agreements with Alsapo and Midwest for the purchase of 30 Range Rovers each. (Id. ¶¶ 46, 56, 65.) Each agreement required Plaintiff to provide 10 percent down payment by wire transfer and to provide a 90 percent irrevocable letter of credit within 12 days of Alsapo and Midwest providing the vehicle identification numbers (“VINs”) for each vehicle to be purchased. (Id. ¶¶ 48, 58, 68.) Upon issuance and acceptance of the letter of credit, the agreements required Alsapo to initiate shipment of the vehicles within a set period of time. (Id. ¶¶ 49, 59, 69.) On November 5, 2015, Plaintiff paid the 10 percent down payment, but Alsapo and Midwest failed to provide the VINs as required. (Id. ¶¶ 50-51, 60-61, 70-71.) Plaintiff alleges it made repeated demands to Alsapo and Midwest for the VINs, and in February 2016, an Alsapo representative conceded that it had no vehicles to ship and could not fulfill the terms of the agreement. (Id. ¶¶ 52-53, 62-63, 72-73.) On April 1, 2016, Plaintiff issued a demand for the return of its down payment. (Id. ¶¶ 54, 64, 74.) Plaintiff alleges it never obtained the vehicles, nor did it receive the return of its down payment. (Id. ¶¶ 55, 65, 75.)

         Plaintiff alleges Alsapo and Midwest filed a complaint in Texas state court against Mega World and others, alleging they jointly negotiated and entered into contracts to purchase the Explorers and “other vehicles” from Mega World. (Id. ¶¶ 76-77; see also Dkt. No. 30-3 ¶¶ 12-15, 56-59.) In addition, Plaintiff filed its complaint in this case against Alsapo and Midwest on August 25, 2016. Plaintiff asserted four claims for breach of contract based on the alleged breach of the Explorer Agreement (Count I) and the three Range Rover Agreements (Counts II through IV). After Alsapo moved to dismiss Counts II through IV for lack of personal jurisdiction over it as to the Range Rover Agreements, we granted Plaintiff's motion to amend its complaint. (Dkt. No. 32.) Plaintiff filed an amended complaint on May 17, 2017 asserting the same four claims, and Alsapo again moved to dismiss the counts, contending the claims for breach of contract based on the three Range Rover Agreements must be dismissed for lack of personal jurisdiction. (Dkt. Nos. 33, 35.)

         LEGAL STANDARD

         If a court lacks personal jurisdiction over a party to an action, it must dismiss the case as to that party. Fed.R.Civ.P. 12(b)(2). A complaint need not include facts alleging personal jurisdiction, but when a defendant moves to dismiss under Rule 12(b)(2), the plaintiff has the burden of demonstrating personal jurisdiction over the defendant. N. Grain Mktg., LLC v. Greving, 743 F.3d 487, 491 (7th Cir. 2014); Purdue Research Found. v. Sanofi- Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003). The court may consider affidavits or other evidence in opposition to or in support of the exercise of jurisdiction. Id. at 783. Where personal jurisdiction is challenged and material facts are in dispute, the court “must hold an evidentiary hearing to resolve them.” Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 713 (7th Cir. 2002). “Until such a hearing takes place, the party asserting personal jurisdiction need only make out a prima facie case of personal jurisdiction.” Id. “In evaluating whether the prima facie standard has been satisfied, the plaintiff ‘is entitled to the resolution in its favor of all disputes concerning relevant facts presented in the record.'” Purdue Research Found., ...


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