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International Precision Components Corp. v. Greenpath Recovery West, Inc.

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

April 24, 2018

INTERNATIONAL PRECISION COMPONENTS CORPORATION, Plaintiff,
v.
GREENPATH RECOVERY WEST, INC. and JOSEPH CASTRO, Defendants.

          MEMORANDUM OPINION AND ORDER

          Hon. Virginia M. Kendall Judge

         Plaintiff International Precision Components Corporation (IPCC) filed suit against Greenpath Recovery West, Inc. and Joseph Castro (collectively, Defendants) in the Circuit Court of Lake County, Illinois alleging one claim for breach of contract. (See Dkt. No. 1). On December 21, 2017, Defendants removed the case to federal court (id.) and, on February 5, 2018, filed a Motion to Dismiss Plaintiff's Complaint for lack of personal jurisdiction pursuant to Rule 12(b)(2) and, in the alternative, for improper venue based on the existence of a forum selection clause pursuant to Rule 12(b)(3) and for failure to state a claim based on the doctrine of res judicata pursuant to Rule 12(b)(6). (Dkt. No. 19). For the following reasons, the Court grants Defendants' Motion to Dismiss [19] without prejudice for lack of personal jurisdiction pursuant to Rule 12(b)(2).

         BACKGROUND

         The following facts are based on the allegations in the Complaint and the statements provided in the affidavits submitted by both parties that controvert or supplement the Plaintiff's allegations. To determine a motion to dismiss for lack of personal jurisdiction, the Court “take[s] as true all well-pleaded facts alleged in the complaint and resolve[s] any factual disputes in the affidavits in favor of the plaintiff.” Tamburo v. Dworkin, 601 F.3d 693, 700 (7th Cir. 2010) (citing Purdue Res. Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773, 782 (7th Cir. 2003)).

         IPCC is an Illinois corporation with its sole offices located in Lake County, Illinois that specializes in injection molding plastic products. (Dkt. No. 31, Ex. A at ¶¶ 2-3 (“Stolzman Aff.”)). To create its products, IPCC purchases resin from various suppliers who then deliver the resin to one of IPCC's manufacturers. (Id.). Greenpath, a Nevada corporation with its principal place of business in Colton, California, is a commercial recycler that sells recycled resin for use in manufacturing. (Dkt. No. 20-1 at ¶¶ 2-3 (“Castro Decl.”)).

         On July 22, 2014, Matt Ebbin of IPCC emailed a representative of Greenpath following up on a previous phone conversation and providing the representative information about a request for bids that IPCC was issuing to its resin suppliers. (Dkt. No. 32-1 at ¶ 3, Ex. A). At some point in time, the owner of one of IPCC's manufacturers referred IPCC to Joseph Castro, the principal officer and owner of Greenpath. (Stolzman Aff. at ¶ 5). In or around September 2014, Castro contacted IPCC for the purpose of soliciting business and, thereafter, IPCC began to purchase resin from Greenpath. (Id. at ¶¶ 4, 6).

         According to the Complaint, IPCC placed multiple purchase orders of resin with Greenpath between November 2014 and June 2015. (Dkt. No. 1, Ex. A at ¶ 1 (“Compl.”)). The orders totaled 355, 720 pounds of resin for $172, 361.10 and were to be delivered to IPCC manufacturers in California. (Id. at ¶¶ 1-3). Greenpath issued fifteen invoices in connection with these purchase orders. (Id. at ¶ 3, Ex. A). According to Greenpath, each of the purchase orders were delivered and signed for by IPCC agents in California. (Castro Decl. 2 at ¶ 5). IPCC paid the invoices in full but later discovered Greenpath never delivered the resin it purchased. (Id. at 4; Stolzman Aff. at ¶ 11).

         In early 2016, IPCC fell behind on payments to Greenpath for certain purchase orders. (Stolzman Aff. at ¶ 12). In February 2016, Greenpath issued a demand letter alleging IPCC owed it $161, 734.59. (Id. at ¶ 13). After some negotiation, the parties agreed on the amount due and, on July 14, 2016, executed a Promissory Note and Confession of Judgment Statement whereby IPCC agreed to pay Greenpath $130, 344.80 by December 4, 2017 according to a schedule set forth in the Note, admitted to liability for the amount due, agreed Greenpath was entitled to judgment against it upon default of the Note, and waived all defenses to any enforcement of judgment. (Id. at ¶¶ 14-15, Ex. A-2, A-3). IPCC's attorney also executed a Declaration in Support of Statement Confessing Judgment confirming he advised IPCC with respect to the waiver of rights and defenses under the confession of judgment procedure. (Id. at ¶ 16, Ex. D).

         The Promissory Note also included a forum selection clause requiring that “all actions or proceedings arising in connection with this note shall be tried and determined only in the state and federal courts located in the State of California.” (Id. at Ex. A-2). The parties dispute whether there is any overlap between the invoices at issue in Plaintiff's Complaint and the unpaid invoices giving rise to the Promissory Note and, therefore, whether the Complaint is an “action or proceeding arising in connection with” the Note. (See Dkt. No. 20 at 2-3; Dkt. No. 31 at 8-9; Dkt. No. 32 at 3-5).

         By April 2017, the balance due on the Promissory Note was $67, 895.10. (Stolzman Aff. at ¶ 17). In April 2017, IPCC discovered through an internal audit that Greenpath had failed to deliver any of the above-mentioned resin IPCC had purchased between November 2014 and June 2015 to IPCC manufacturers. (Compl. at ¶ 5; Stolzman Aff. at ¶ 18). IPCC discontinued payments under the Promissory Note and, in June 2017, demanded that Greenpath deliver the non-delivered resin or refund the $172, 361.10 paid for the non-delivered resin by crediting $67, 895.10 of that amount toward IPCC's outstanding balance with Greenpath and paying IPCC the $104, 466.00 difference. (Compl. at ¶ 6; Stolzman Aff. at ¶¶ 22-24). Greenpath refused to do either and instead demanded IPCC pay the balance due on the Note, which Greenpath claimed was $76, 581.56. (Stolzman Aff. at ¶¶ 25-26).

         In August 2017, Greenpath filed an Enforcement of Judgment action against IPCC in the Superior Court of San Bernadino County, California for IPCC's defaulting on the Note. (Id. at ¶ 27). On October 12, 2017, Greenpath notified IPCC that judgment had been entered against it in the amount of $128, 915.88. (Id. at ¶ 29). IPCC filed the Complaint against Greenpath in Lake County, Illinois on October 4, 2017 and Greenpath was served on November 21, 2017. (See Dkt. No. 1 at ¶¶ 1-2).

         Greenpath has its main office in Colton, California and another office in Reno, Nevada. (Castro Decl. at ¶ 2). Its operations are solely within the state of California and each of the orders placed by IPCC was processed in California, shipped in California and delivered in California. (Id. at ¶¶ 3, 7). Greenpath has never provided recycling services in Illinois, advertised in Illinois or solicited business in Illinois, except for the solicitation call Castro made to IPCC in September 2014. (Id. at ¶ 4). Greenpath has never had an office, employee, contractor, property or bank account in Illinois. (Id.). It is not registered to conduct business in Illinois and has no agent for service of process in Illinois. (Id.). The same is true for Castro. (Id. at ¶ 5). In fact, Castro's only interactions with IPCC were as a representative of Greenpath and while he was in the state of California. (Id.).

         IPCC's sole offices are in Lake County, Illinois; it is not licensed to do business in California and has no offices in ...


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