Cafe Real Estate llc et al v. VSP North America LLC et al
Filing
29
MEMORANDUM Opinion and Order Signed by the Honorable Elaine E. Bucklo on 3/1/2017. Mailed notice. (mgh, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
Café Real Estate LLC, and
Bellaboom LLC
Plaintiffs,
v.
VSP North America LLC, VSP
Florida LLC, John Von Stach,
and Ryan Walker,
Defendants.
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No. 16 C 6150
MEMORANDUM OPINION AND ORDER
In this 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.
I.
According
energy”
to
products,
generators,
which
the
complaint,
VSP
manufacturers
“green
and
wind
mobile
including
solar
it
through
sells
a
powered
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.1
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
purchasing
directly
receive
investors,
from
VSP’s
payment
which
on
the
would
dealers.
Von
then
Stach
receivable(s)
recover
to
face
represented
the
value
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.
Relying
visiting
on
the
defendants’
foregoing
facility
representations,
in
Ontario,
and
plaintiffs
after
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
1
Walker was allegedly the sole member of VSP-FL, a Florida
limited liability company that was involuntarily dissolved on
September 11, 2015, for failure to file its annual reports.
Cmplt. at ¶ 4.
2
other dealers; and that they had made only a partial shipment to
one
from
dealer.
the
dealers
plaintiffs.
assigning
dealers,
Accordingly,
whose
Defendants
those,
accounts
purported
plaintiffs
but
defendants
new
too,
had
they
to
no
valid
purported
“cure”
to
their
invoices
for
were
products
for
receivables
sales
sell
to
default
by
to
different
that
VSP
never
shipped, so the receivables were similarly without substance.
Plaintiffs 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.
Defendants
argue
that
the
complaint’s
allegations
conclusively establish that personal jurisdiction over them is
lacking.
II.
A
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
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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 plaintiff.” Id.
Although
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).
In
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
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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.
In his affidavit, Edmonson states that over an eighteenmonth 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.
In 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
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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.
As 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,
supports
personal
and
insist
jurisdiction.
that
none
This
of
them,
argument
alone,
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
publications,
advertisements
email
“blasts”
in
non-geographically
received
by
forum
restricted
residents,
fulfillment of orders placed by forum residents, and maintenance
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of
interactive
website
insufficient
to
support
personal
jurisdiction); United Airlines, Inc. v. Zaman, 152 F. Supp. 3d
1041
(N.D.
Ill.
2015)
(allegedly
tortious
statements
about
plaintiff published on defendant’s website and communications
primarily initiated by plaintiff insufficient).
The facts set forth in the Edmonson affidavit are closer to
those at issue in Felland, where the plaintiffs invested in a
real
estate
project
in
reliance
of
misrepresentations
the
defendants made over the course of years. In addition, Felland
makes clear that in cases such as this, where the plaintiffs’
claims include an intentional tort such as fraud, communications
“expressly aimed at the forum state” that contain intentional
misrepresentations can support jurisdiction. 682 F.3d at 674-75
and
n.
3.
Moreover,
defendants
were
plainly
aware
that
plaintiffs’ injury would be felt in Illinois, as that is where
the bank accounts from which payments were made to defendants
are located.
Finally, defendants argue that personal jurisdiction over
Von Stach and Walker is inappropriate because they cannot be
held personally liable on a veil-piercing theory. But whether
veil-piercing is appropriate is a separate issue from personal
jurisdiction, and, indeed, none of the cases they cite in this
connection addresses personal jurisdiction.
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III.
For the foregoing reasons, defendants’ motion to dismiss
for lack of personal jurisdiction is denied.
ENTER ORDER:
Elaine E. Bucklo
United States District Judge
Dated: March 1, 2017
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