Medix Staffing Solutions, Inc. v. Williams, Cohen & Gray, Inc. et al
Filing
16
MEMORANDUM OPINION AND ORDER Signed by the Honorable Harry D. Leinenweber on 10/10/2013:Mailed notice(wp, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
MEDIX STAFFING SOLUTIONS, INC.,
Plaintiff,
v.
Case No. 13 C 2640
WILLIAMS, COHEN & GRAY, INC.,
ROBERT D. WILLIAMS, and DAVID
GIANECHINI,
Hon. Harry D. Leinenweber
Defendants.
MEMORANDUM OPINION AND ORDER
Before the Court is Defendants’ Motion to Dismiss Plaintiff’s
Complaint for Lack of Subject-Matter Jurisdiction and Lack of
Personal Jurisdiction.
For the reasons stated herein, the Motion
is denied.
I.
BACKGROUND
This case involves a business dispute between Plaintiff Medix
Staffing Solutions (“Plaintiff”) and Defendants Williams, Cohen &
Gray, Inc. (“WCG”), Robert D. Williams (“Williams”), and David
Gianechini (“Gianechini”).
Plaintiff is an Illinois corporation
with its principal place of business in Illinois, and WCG is a
Texas Corporation.
As alleged in the Complaint, Plaintiff contracted with WCG for
debt collection services.
WCG was responsible for settling debts
on
with
Plaintiff’s
behalf,
those
settlements
subject
to
Plaintiff’s approval.
WCG would then facilitate collection of the
settlement amount, and remit the money to Plaintiff after the
deduction of WCG’s fee.
Plaintiff alleges that WCG, on its way to going out of
business, engaged in a “firesale” practice of collecting numerous
debts at unreasonably low rates without the knowledge, consent, or
authorization of its clients, such as Plaintiff. WCG then took the
money from the unauthorized settlements, but did not remit any
portion to Plaintiff.
WCG is alleged to have settled fraudulently
two of Plaintiff’s debts, one for $29,302.00 and another for
$40,565.00.
Plaintiff alleges six counts, all of them under Illinois law.
Against the WCG, Plaintiff alleges breach of contract, common law
fraud, consumer fraud, and conversion.
Plaintiff also brings one
count of conversion each against Williams and Gianechini in their
individual capacities.
Defendants ask this Court to dismiss on
either of two grounds:
(1) that the Court lacks subject-matter
jurisdiction over the case because the amount in controversy
requirement is not met; or (2) that the Court lacks personal
jurisdiction over the Defendants.
II.
LEGAL STANDARD
A complaint must provide a short and plain statement of the
claim showing the plaintiff is entitled to relief.
FED. R. CIV.
P. 8(a)(2). A Rule 12(b)(6) motion to dismiss challenges the legal
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sufficiency of a complaint.
Hallinan v. Fraternal Order of Police
of Chicago Lodge No. 7, 570 F.3d 811, 820 (7th Cir. 2009).
When
ruling on a 12(b)(6) motion, the Court construes a complaint in the
light most favorable to the plaintiff and accepts all well-pled
facts as true.
Justice v. Town of Cicero, 577 F.3d 768, 771 (7th
Cir. 2009).
III.
A.
This
Court
has
ANALYSIS
Subject-Matter Jurisdiction
original
jurisdiction
over
civil
actions
between diverse parties where the amount in controversy exceeds
$75,000, exclusive of interest and costs.
28 U.S.C. § 1332(a).
Defendants do not contest diversity of citizenship, but they
dispute whether the amount in controversy meets the jurisdictional
minimum.
Where a party challenges the amount in controversy allegation,
the plaintiff must provide “competent proof” that the claim meets
or exceeds the jurisdictional amount. Rexford Rand Corp. v. Ancel,
58 F.3d 1215, 1218 (7th Cir. 1995). “Competent proof” means “proof
to
a
reasonable
probability
that
jurisdiction
exists.”
Id.
Plaintiff alleges that Defendant settled fraudulently two debts,
one for $29,302.00 and another for $40,565.00.
Because Plaintiff
has lost the ability to settle those debts on its own, it claims
entitlement to at least the sum of those debts, or $69,867.00.
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That total is below the jurisdictional threshold, but that is
not the end of the inquiry.
Plaintiff argues that it may be
entitled to punitive damages, which would result in a verdict in
excess of $75,000. Where a Plaintiff relies on punitive damages to
meet the amount in controversy, the Court must first determine
whether punitive damages are recoverable under state law.
LM Ins.
Corp. v. Spaulding Enters. Inc., 533 F.3d 542, 551 (7th Cir. 2008).
If punitive damages are available, the Court has jurisdiction
“unless it is legally certain that the plaintiff will be unable to
recover the requisite jurisdictional amount.”
Id.
In Illinois, punitive damages may be awarded where a tort was
committed
under
circumstances
showing
“fraud,
actual
malice,
deliberate violence or oppression, or when the defendant acts
willfully, or with such gross negligence as to indicate a wanton
disregard of the rights of others.”
Kelsay v. Motorola, Inc., 384
N.E.2d 353, 359 (Ill. 1978). Plaintiff alleges that Defendants are
liable
for
common
law
fraud
based
upon
intentional
misrepresentations and other deceptive practices.
Plaintiff’s
Count III alleges a violation of the Illinois Consumer Fraud and
Deceptive Business Practices Act, violations of which can justify
punitive damages under the right circumstances.
Martin v. Heinold
Commodities, Inc., 643 N.E.2d 734, 756-57 (Ill. 1994).
In this
case, punitive damages are recoverable under state law, and this
Court has no grounds to say with legal certainty that Plaintiff
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will not be able to recover the requisite jurisdictional amount.
Thus,
the
Court
is
satisfied
that
Plaintiff
has
met
the
jurisdictional minimum.
Because Plaintiff has satisfied the amount in controversy for
at least one count, if not more, the Court has subject-matter
jurisdiction over the case. See, Johnson v. Wattenbarger, 361 F.3d
991, 993 (7th Cir. 2004) (explaining that “[i]t is the case, rather
than the claim, to which the $75,000 minimum applies”).
B.
Personal Jurisdiction
Where the jurisdiction of a federal court is premised on
diversity, the court has personal jurisdiction over a defendant
only if a state court where the district court sits would have
personal jurisdiction.
713 (7th Cir. 2002).
Hyatt Int'l Corp. v. Coco, 302 F.3d 707,
A person who commits a tortious act within
Illinois thereby submits to the jurisdiction of Illinois courts as
to any cause of action arising from the tortious act.
Comp. Stat. 5/2-209(a)(2).
735 Ill.
The tortious act must result in an
injury and the injury must occur in Illinois.
N.E.2d 511, 512 (Ill. Ct. App. 1970).
Bolf v. Wise, 255
Plaintiff alleges that it
suffered money damages as a result of Defendants’ tortious acts of
fraud and conversion.
This damage was sustained in Illinois
because Plaintiff is an Illinois corporation with its principal
place of business in Illinois.
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Defendants argue that it would violate due process for an
Illinois court to exercise jurisdiction over them. Defendants’ due
process argument is based on the principle that there must be
“minimum contacts” between the nonresident defendant and the forum
state before the latter may exercise jurisdiction over the former.
World–Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980).
In this case, Defendants contracted knowingly with an Illinois
company.
Defendants had every reason to anticipate that, should
something go wrong with the business relationship, Plaintiff would
bring suit in Illinois.
In addition, Illinois has an interest in
providing a forum for its residents.
McGee v. Int’l Life Ins. Co.,
355
had
U.S.
220,
223
(1957)
(state
jurisdiction
residents contracted with foreign corporation).
where
its
This exercise of
jurisdiction does not offend traditional notions of fair play and
substantial justice and does not violate due process.
See, Int’l
Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).
IV.
CONCLUSION
For the reasons stated herein, Defendants’ Motion to Dismiss
[ECF No. 8] is denied.
IT IS SO ORDERED.
Harry D. Leinenweber, Judge
United States District Court
Date: October 10, 2013
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