AS Engine Leasing, LLC v. Vision Airlines, Inc.
Filing
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MEMORANDUM Opinion and Order. Visions's motion to dismiss for lack of personal jurisdiction 25 is granted. This case is ordered dismissed without prejudice to allow plaintiff AS Engine to pursue its action where personal jurisdiction over defendant Vision properly exists if the dispute cannot be settled. The court encourages settlement. Civil case terminated. Signed by the Honorable James F. Holderman on 11/18/2014. Notice mailed by judge's staff (ntf, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
AS ENGINE LEASING, LLC,
Plaintiff,
v.
VISION AIRLINES, INC.,
Defendant.
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No. 14 C 1436
MEMORANDUM OPINION AND ORDER
JAMES F. HOLDERMAN, Judge:
On February 27, 2014, plaintiff AS Engine Leasing, LLC (“AS Engine”) filed an
amended complaint alleging two counts of breach of contract against defendant Vision Airlines,
Inc. (“Vision”). (Dkt. No. 22 (“Am. Compl.”)) On May 2, 2014, Vision filed a motion to dismiss
the complaint for lack of personal jurisdiction pursuant to Rule 12(b)(2) of the Federal Rules of
Civil Procedure. (Dkt. No. 25.) For the reasons set forth below, the court grants Vision’s motion.
BACKGROUND
This litigation arises out of a lease (the “Lease”) between AS Engine and Vision for an
aircraft engine, which AS Engine accuses Vision of breaching. AS Engine is a limited liability
company organized under the laws of the state of Delaware. (Am. Compl. ¶ 2) The sole member
of AS Engine is Aviation Sales, LLC, which is also organized under the laws of the state of
Delaware. (Id.) The sole member of Aviation Sales, LLC is Victoria Ricks (“Ricks”), an
individual who resides in Chicago, Illinois. (Id.) Vision is a corporation organized under the laws
of the state of Nevada with its principal place of business in North Las Vegas, Nevada. (Dkt. No.
26, Ex. A (“Acor Aff.”) ¶¶ 3, 4.) Vision is not registered to do business in Illinois and has no
operations in Illinois. (Id. ¶ 4.) Vision does not own any assets or property in Illinois, and it does
not have any bank accounts in Illinois. (Id. ¶ 12.)
In April 2013, David Meers, then the Senior Vice President of Vision, contacted BCI
Aircraft Leasing, Inc. (“BCI”) in an effort to lease two aircraft engines. (Dkt. No. 55, Ex. 1
(“Meers Decl.”) ¶¶ 1, 4.) Meers’ primary contact at BCI was Brian Hollnagel (“Hollnagel”).
(Id.) On April 12, 2013, BCI presented Vision a “Proposal Letter” summarizing the terms and
conditions for a lease of two engines. (Dkt. No. 55, Ex. 1, at 8-11.) Both Hollnagel and Meers
executed the proposal. (Meers Decl.¶ 5.) In May 2013, however, BCI informed Meers that it was
not interested following through with their proposed transaction, but suggested that Ricks may be
interested in leasing engines to Vision. (Id. ¶ 7.) Hollnagel informed Ricks, who is his wife,
about the opportunity to lease an engine to Vision. (Ricks Decl. ¶ 3.) Ricks then created AS
Engine, and it acquired the engine at issue in this case (the “Engine”) to lease to Vision. (Id. ¶¶
5, 6.) Meers consequently negotiated the Lease with AS Engine. (Meers Decl. ¶ 7.)
Meers executed the Lease on behalf of Vision in Miami, Florida. (Accor Aff. ¶ 9.) On
May 12, 2013, Ricks received a copy of the partially executed Lease while in Illinois. (Ricks
Decl. ¶ 3.) Ricks executed the Lease and returned it to Vision. (Id. ¶ 7.) Pursuant to the terms of
the Lease, Vision paid a security deposit, rent, and maintenance reserves to Aviation Sales,
LLC’s bank account, which is located in Chicago, Illinois. (Id. ¶ 8.)
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Vision accepted delivery of the Engine at the Aviation Repair Technologies facility
located in Blytheville, Arkansas. (Accor Aff. ¶ 12.) The Engine is currently located in Mexico
City, Mexico. (Id. ¶ 13.) AS Engine alleges that Vision has failed to make payments of rent and
maintenance reserves when due. (Am. Compl. ¶¶ 46-55.) AS Engine further alleges that Vision
has failed to return the Engine in accordance with the conditions set out in the Lease.
(Am. Compl. ¶¶ 56-63.)
LEGAL STANDARDS
Rule 12(b)(2) provides for dismissal where a court lacks personal jurisdiction over a
party. Fed.R.Civ.P. 12(b)(2). Once the defendant moves to dismiss a complaint under Rule
12(b)(2) for lack of personal jurisdiction, the plaintiff bears the burden of demonstrating the
existence of jurisdiction. Purdue Research Found. v. Sanofi–Synthelabo, S.A., 338 F.3d 773, 782
(7th Cir. 2003). In ruling on a motion to dismiss, a court may consider matters outside of the
pleadings. See id. When a court rules on personal jurisdiction based on the submission of written
materials without holding an evidentiary hearing, the plaintiff is only required to make a prima
facie case of personal jurisdiction. Id. (quoting Hyatt Int'l Corp. v. Coco, 302 F.3d 707, 713 (7th
Cir. 2002)). If the defendant has submitted evidence in opposition to the implementation of
jurisdiction, however, “the plaintiff must go beyond the pleadings and submit affirmative
evidence supporting the exercise of jurisdiction.” Id. at 782–83. In determining whether the
prima facie standard has been satisfied, the court resolves any conflicts in affidavits or other
supporting materials in the plaintiff's favor. Id. at 782 (quoting Nelson by Carson v. Park Indus.,
Inc., 717 F.2d 1120, 1123 (7th Cir. 1983)).
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ANALYSIS
“A federal court sitting in diversity has personal jurisdiction only where a court of the
state in which it sits would have such jurisdiction.” Citadel Grp. Ltd. v. Wash. Reg'l Med. Ctr.,
536 F.3d 757, 760 (7th Cir. 2008) (citing RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1275
(7th Cir. 1997)) “An Illinois state court has personal jurisdiction when the Illinois long-arm
statute, the Illinois state constitution and the due process clause of the federal constitution
authorize it.” Joy v. Hay Group, Inc., No. 02 C 4989, 2003 WL 22118930, at *3 (N.D. Ill. Sept.
11, 2003) (citing Cent. States, S.E. and S.W. Areas Pension Fund v. Reimer Express World
Corp., 230 F.3d 934, 939 (7th Cir. 2000)).
The Illinois Long–Arm Statute permits personal jurisdiction on any basis permitted by
the due process clauses of the Illinois and United States Constitutions. 735 Ill. Comp. Stat. 5/2–
209(c). Although the Illinois Supreme Court has noted that the Illinois constitutional due process
requirement is distinct from the federal requirement, see Rollins v. Ellwood, 565 N.E.2d 1302,
1316 (Ill. 1990), the Seventh Circuit has determined that because there is no operative difference
between the Illinois and federal due process standards, a single due process analysis is sufficient.
Illinois v. Hemi Grp. LLC, 622 F.3d 754, 757 (7th Cir. 2010).
Personal jurisdiction under the federal due process clause requires that “the defendants
must have minimum contacts with the forum state such that the maintenance of the suit does not
offend ‘traditional notions of fair play and substantial justice.’” Hyatt Int’l Corp. v. Coco, 302
F.3d 707, 716 (7th Cir. 2002) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316
(1945) (citations omitted)). The United States Supreme Court has “framed the constitutional
inquiry in terms of whether the defendant purposefully avails itself of the benefits and
protections of conducting activities in the forum state.” Mobile Anesthesiologists Chicago, LLC
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v. Anesthesia Assocs. of Houston Metroplex, P.A., 623 F.3d 440, 444 (7th Cir. 2010) (internal
quotation marks omitted). To be subject to personal jurisdiction, “[t]he defendant's contacts must
not be merely random, fortuitous, or attenuated; rather, the ‘defendant's conduct and connection
with the forum state’ must be such that it should ‘reasonably anticipate being haled into court
there.’” Citadel, 536 F.3d at 61 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474–75
(1985)).
The United States Supreme Court recently confirmed its adherence to the distinction
between “general jurisdiction” and “specific jurisdiction.” See Daimler AG v. Bauman, 134 S.Ct.
746, 754-55 (2014). A foreign corporation is subject to general jurisdiction “only when the
corporation's affiliations with the State in which suit is brought are so constant and pervasive as
to render [it] essentially at home in the forum State.” Id. at 751. To support an exercise of
specific personal jurisdiction, the defendant's contacts with the forum state must “directly relate
to the challenged conduct or transaction.” Northern Grain Marketing, LLC v. Greving, 743 F.3d
487, 492 (7th Cir. 2014) (citing Logan Prod. v. Optibase, 103 F.3d 49, 52 (7th Cir. 1996). Here,
AS Engine concedes, and the court agrees, that there is no basis for exercising general personal
jurisdiction over Vision. AS Engine argues, however, that this court has specific personal
jurisdiction over Vision.
“With respect to contract disputes, contracting with an out-of-state party alone cannot
establish automatically sufficient minimum contacts in the other party's home forum.” Northern
Grain, 743 F.3d at 493 (quotation marks and citations omitted). Beyond the mere existence of a
contract, this court, sitting in Illinois, must examine several factors including (1) whether the
contract was negotiated or executed in Illinois and whether it was to be performed in Illinois; (2)
whether payment was to be made in Illinois; (3) whether the defendant was ever physically
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present in Illinois in connection with the contract; (4) whether the Illinois plaintiff or the out of
state defendant initiated the transaction; (5) and the occurrence of telephone calls or other
communications to and from Illinois. See Citadel Group Ltd. v. Merle West Medical Center, Inc.,
No. 06-C-6162, 2007 WL 5160444, at *3 (N.D.Ill. June. 13, 2007). None of these factors alone
is necessarily sufficient for the court to exercise personal jurisdiction, but each is relevant and
can support an exercise of jurisdiction. See id. The specific jurisdiction inquiry is one of the
totality of the circumstances. Citadel, 536 F.3d at 761.
It is undisputed in this case that Vision reached into Illinois when Meers contacted BCI in
an effort to lease aircraft engines. However, Vision did not consummate a transaction with BCI,
and BCI is not a party in this matter. Instead, after BCI informed Vision that it was no longer
interested in following through with their proposed transaction, BCI suggested Meers that Ricks
might be interested in leasing an engine to Vision.
What transpired next is disputed. Vision contends that it did not initiate discussions with
AS Engine, but was contacted by AS Engine regarding a potential transaction. (Accor Aff. ¶ 6.)
AS Engine argues that Hollnagel was acting as its agent, and therefore Meers’ initial email to
Hollnagel demonstrates that Vision initiated the transaction with AS Engine. (Ricks Decl. ¶ 4;
Dkt. No. 55 at 5.) However, the record does not support AS Engine’s conclusory assertion that
Hollnagel was acting as its agent. AS Engine does not point to any evidence indicating that
Meers should have had reason to believe he was dealing AS Engine when he was communicating
with Hollnagel. To the contrary, AS Engine submitted a copy of the email exchange between
Meers and Hollnagel, which shows that Meers sent his initial inquiry to Hollnagel’s BCI email
address. (Dkt. No. 55, Ex. 1, at 6-7.) After the initial email exchange, Meers and Hollnagel
executed a “Proposal Letter” on BCI letterhead. (Dkt. No. 55, Ex. 1, at 8-11.)
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The court is required to resolve factual disputes in favor of AS Engine, but the court does
not view this as a genuine factual dispute. AS Engine’s conclusory allegation, which is
controverted by the record, is insufficient to carry its burden to produce evidence supporting
jurisdiction. See Purdue, 338 F.3d 773, 783 & n. 13 (7th Cir. 2003) (citing Meier v. Sun Int'l
Hotels, Ltd., 288 F.3d 1264, 1269 (11th Cir.2002) (“Where, as here, the defendant submits
affidavits to the contrary, the burden traditionally shifts back to the plaintiff to produce evidence
supporting jurisdiction unless those affidavits contain only conclusory assertions that the
defendant is not subject to jurisdiction)). Accordingly, the court does not find that Vision
initiated contact with AS Engine. Moreover, even if the court were to construe the dispute as to
which party initiated contact in favor of AS Engine, the identity of the party who initiated
contact is not dispositive to a determination of personal jurisdiction. See Logan Productions, Inc.
v. Optibase, Inc., 103 F.3d 49, 52 (7th Cir. 1996) (“[T]he constitutionality of jurisdiction does
not turn on which party ‘started it.’”).
It is undisputed that no Vision employee ever set foot in Illinois in connection with the
Lease. Vision signed the Lease while in Florida and AS Engine signed the Lease while in
Illinois. Of course, physical presence in Illinois is neither necessary nor sufficient to subject a
non-resident to personal jurisdiction. See Burger King, 471 U.S. at 476 (“It is an inescapable fact
of modern commercial life that a substantial amount of business is transacted solely by mail and
wire communications across state lines, thus obviating the need for physical presence within a
State in which business is conducted....”). Isolated communications may not provide a basis for
asserting personal jurisdiction, but telephone and email communications are relevant when
considering the totality of a defendant’s contacts with the forum state. See Felland v. Clifton, 682
F.3d 665, 679 (7th Cir. 2012) (clarifying that letters, phone calls and emails do not always
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establish minimum contacts); Abbott Labs., Inc. v. Bio Valve Technologies, Inc., 543 F.Supp.2d
913, 921 (N.D.Ill. 2008) (finding that sustained telephone and e-mail communications or the
course of seven months were not “random, fortuitous, or attenuated.”); Vasilj v. Duzich, No. 07
C 5462, 2008 WL 2062371, at *4 (N.D.Ill. May 13, 2008) (finding that a steady stream of
communications from defendant into Illinois was a significant factor in establishing minimum
contacts).
Vision and AS Engine clearly exchanged some communications while negotiating and
executing the Lease. For example, Ricks claims that Vision sent her a partially executed copy of
the Lease. (Ricks Decl. ¶ 7.) AS Engine further argues that Vision’s “representatives
communicated regularly and directly with AS Engine’s representatives via electronic mail and by
phone to support Vision’s use of the Engine.” (Dkt. No. 63 at 3.) However, AS Engine failed to
allege sufficient facts, let alone present evidence, specifying the extent of parties’
communications. 1 AS Engine’s failure to present evidence to support the inference of sustained
and substantial communications undermines its ability to meet its burden of establishing a prima
facie case. See Centurion Serv. Grp., LLC v. SBMC Healthcare, LLC, 944 F.Supp.2d 617
(N.D.Ill. 2013). (finding that an unspecified number of email and telephone communications was
insufficient to establish specific jurisdiction).
With respect to performance, the Lease did not envision wide-ranging contacts with
Illinois. AS Engine’s contractual obligation was to complete a discrete task: delivering the
Engine to Vision in Arkansas. The Engine itself was never present in Illinois. Vision’s
contractual obligations were limited to making payments to a bank account located in Illinois.
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AS Engine has presented an e-mail exchange between Vision’s Meers and BCI’s Hollnagel,
but, as previously discussed, BCI is not a party to this action. (Dkt. No. 55, Ex. 1, at 6-7.)
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This case is more like Lakeside Bridge and Steel Co. v. Mountain State Constr. Co., 597 F.2d
596 (7th Cir. 1979) (no personal jurisdiction where a contract, initiated by the defendant,
required the forum-state plaintiff to complete the discrete task of manufacturing and shipping
industrial parts and required the defendant only to accept and pay for the parts) than Citadel. 2 In
Citadel, an Arkansas-based defendant contracted with an Illinois-based plaintiff for a “project
development” in preparation of the construction of a medical office building in Arkansas. 536
F.3d at 763. The Seventh Circuit upheld specific personal jurisdiction in Citadel because, due to
the nature of the contract, the Illinois-based plaintiff was required to undertake a substantial
amount administrative work in Illinois to perform and the defendant was required not only to pay
the plaintiff but also to stay in continuous contact with it during the course of performance. Id.
Here, AS Engine does not allege that it was required to undertake a substantial amount work in
Illinois in order to satisfy its obligations under the Lease, and there is no evidence that the parties
contemplated remaining in continuous contact throughout the course of performance.
Although the Lease did envision a continuous relationship between parties whereby
Vision would lease the Engine for a period of sixty months, Vision did not, for example, enter
into a carefully structured, long-term franchise relationship that subjected it to exacting
regulation by AS Engine in Illinois. See Burger King, 471 U.S. at 479–80. The Lease merely
contemplated the single delivery of a single engine, for which Vision would make regular
payments. Such obligations are not enough to subject Vision to personal jurisdiction. See MAC
Funding Corp. v. Ne. Impressions, Inc., 215 F.Supp.2d 978, 981–82 (N.D.Ill. 2002) (the mere
fact that payment was to be sent to the plaintiff's office in Illinois was not a contact sufficient to
2
Although the Lakeside opinion has been criticized, the Seventh Circuit, in its 2014 opinion in
Northern Grain, expressly acknowledged the continued vitality of Lakeside. 743 F.3d at 494.
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support exercise of personal jurisdiction over guarantor); Ameritech Services, Inc. v. SCA
Promotions, Inc., No. 99 C 4160, 2000 WL 283098, at *4 (N.D.Ill. March 6, 2000) (finding no
personal jurisdiction over a Texas defendant who was obligated to mail payment from Texas to
Illinois).
Moreover, the Lease contains a choice of law provision reflecting the parties’ agreement
that the Lease would be governed by, and construed in accordance with, the laws of the State of
New York. Parties also consented to submit to the jurisdiction of the judicial courts of the State
of New York. The inclusion of this New York choice of law provision cuts against the notion
that Vision “purposefully availed [itself] of the benefits and protections of [Illinois’] laws” and
therefore should have foreseen being haled into court in Illinois. Burger King, 471 U.S. at 482
(giving weight to a Florida choice of law clause in analyzing whether there was personal
jurisdiction over a Michigan resident in Florida).
Not surprisingly, given the nature of personal jurisdiction analysis, both parties were able
to cite cases supporting their arguments. Yet, having balanced the factors for and against a
finding of specific personal jurisdiction, the court finds that AS Engine has not met its burden of
showing that Vision purposefully availed itself of the privilege of doing business in Illinois such
that Vision should have foreseen being haled into court here. Vision’s only contacts with Illinois
in connection with the Lease are its unspecified amount of telephone and email communications
to AS Engine in Illinois (unaccompanied by evidence of which party initiated the contact) and its
obligation to pay rent and maintenance reserves to a bank account located in Illinois. The case
law makes clear that where a contract is neither negotiated nor performed in the forum state,
communications and payments into the forum state, standing alone, are insufficient to establish
specific jurisdiction over a nonresident defendant. See Federated Rural Elec. Ins. Corp. v. Inland
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Power and Light Co., 18 F.3d 389, 395 (7th Cir. 1994) (“making telephone calls and mailing
payments into the forum state are insufficient bases for jurisdiction.”); AIT Worldwide Logistics,
Inc. v. Ramp Logic, Inc., No. 03–7661, 2004 WL 769399, at *3 (N.D.Ill., Apr.9, 2004); Sungard
Data Systems, Inc. v. Central Parking Corp., 214 F.Supp.2d 879, 882 (N.D.Ill., 2002). As the
United States Supreme Court recently noted, “[d]ue process limits on the State's adjudicative
authority principally protect the liberty of the nonresident defendant– not the convenience of
plaintiffs or third parties.” Walden v. Fiore, 134 S.Ct. 1115, 1122 (2014)).
Because the court finds that AS Engine has not established that Vision had the necessary
minimum contacts to establish personal jurisdiction, the court need not determine whether the
assertion of personal jurisdiction would comport with “fair play and substantial justice.” Burger
King, 471 U.S. at 476.
CONCLUSION
For the reasons explained above, Visions=s motion to dismiss for lack of personal
jurisdiction [25] is granted. This case is ordered dismissed without prejudice to allow plaintiff
AS Engine to pursue its action where personal jurisdiction over defendant Vision properly exists
if the dispute cannot be settled. The court encourages settlement. Civil case terminated.
ENTER:
______________________________
JAMES F. HOLDERMAN
Judge, United States District Judge
Date: November 18, 2014
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