Centurion Service Group, LLC v. SBMC Healthcare, LLC

944 F. Supp. 2d 617, 2013 WL 1903292, 2013 U.S. Dist. LEXIS 64650
CourtDistrict Court, N.D. Illinois
DecidedMay 7, 2013
DocketCase No. 12 C 9318
StatusPublished
Cited by4 cases

This text of 944 F. Supp. 2d 617 (Centurion Service Group, LLC v. SBMC Healthcare, LLC) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Centurion Service Group, LLC v. SBMC Healthcare, LLC, 944 F. Supp. 2d 617, 2013 WL 1903292, 2013 U.S. Dist. LEXIS 64650 (N.D. Ill. 2013).

Opinion

MEMORANDUM OPINION AND ORDER

AMY J. ST. EVE, District Judge.

Defendants McVey & Co. Investments, LLC (“McVey LLC”) and Marty L. McVey (“McVey”) (collectively, “Defendants”) move pursuant to Federal Rules of Civil Procedure (“Rule”) 12(b)(2) and 12(b)(3) to dismiss all claims against them1 due to lack of personal jurisdiction and improper venue.2 (R. 15, Mot. at 1.) Alternatively, they move to dismiss on the basis of forum non conveniens, or to transfer on forum non conveniens grounds pursuant to 28 U.S.C. § 1404. (Id. at 1.) The Court grants Defendants’ motion without prejudice.

BACKGROUND

On November 23, 2012, Plaintiff Centurion Service Group, LLC (“Plaintiff’ or “Centurion”), an auctioneer in the business of buying, selling and/or conducting auc[620]*620tions of medial equipment, filed its Amended Verified Complaint alleging breach of contract, declaratory relief, and fraud. Plaintiffs claims stem from an agreement between Defendant SBMC Healthcare, LLC (“SBMC”) and Centurion regarding the sale and auction of medical equipment located at Spring Branch Medical Center (the “Agreement”). (R. 7, Amend. Compl. ¶ 11; R. 16-1, McVey Decl. ¶6; R. 38, Pl.’s Resp. ¶ 2.) SBMC is the owner and operator of the Spring Branch Medical Center, a hospital in Houston, Texas. (Amend. Compl. ¶ 10.) SBMC’s manager for its general operations is McVey LLC. (Amend. Compl. ¶ 10.) McVey LLC is a limited liability company located in and with its principal and only place of business in Houston, Texas. (McVey Decl. 3.) Marty McVey is the Chief Executive Officer for both SBMC and McVey LLC. (McVey Decl. ¶¶ 3, 4.) McVey is a citizen of Texas and resides in Houston, Texas. (Amend. Compl. ¶ 4, R. 216-1, McVey Decl. ¶ 2.)

“McVey LLC, McVey and Garfinkel were not parties to the Agreement” between Centurion and SBMC. (R. 16, Defs.’ Mem. ¶ 1; McVey Decl. ¶ 8.) McVey, as Chief Executive Officer of SBMC and of McVey LLC, and Garfinkel, general counsel for SBMC and McVey LLC, however, executed a personal Guarantee for the full performance of SBMC’s obligations under the Agreement (the “Guarantee”). (PL’s Resp. ¶ 2, McVey Decl. ¶ 3, 7.) The parties negotiated and executed the Guarantee in Houston, Texas. (McVey Decl. ¶ 7.) The Guarantee did not include a forum selection clause, unlike the Agreement which contained a clause designating Cook County, Illinois as the appropriate forum for disputes under the Agreement. (Id. at ¶¶ 6, 7.) Centurion later waived the Guarantee, relying on the fact that SBMC still owned all assets defined in the Agreement. (PL’s Resp. ¶ 3; Amend. Compl. ¶ 32.) Centurion alleges that Defendants intentionally concealed that McVey had already sold some of these assets to a third party. (PL’s Resp. ¶ 3; Amend. Compl. ¶¶ 59-60, 68-69.)

In the Amended Complaint, Centurion alleges two counts against McVey and McVey LLC. In Count II, Centurion seeks a declaratory judgment against McVey that (1) he fraudulently obtained the release of the Guarantee, and (2) that the release of the Guarantee executed by McVey remains in full force and effect. (Amend. Compl. ¶ 63.) In Count III, Centurion asserts a fraud claim against McVey and McVey LLC, alleging that they obtained the release of the Guarantee by fraud. (PL’s Resp. ¶ 3; Amend. Compl. ¶¶ 67-76.)

ANALYSIS

Defendants assert that they are not subject to personal jurisdiction in the Northern District of Illinois and move to dismiss this lawsuit pursuant to Rule 12(b)(2). They also move pursuant to Rule 12(b)(3) to dismiss based on lack of venue, or alternatively, to transfer the case to the Southern District of Texas.

I. Rule 12(b)(2) — Personal Jurisdiction

Where, as here, a court’s subject matter jurisdiction is based on diversity of citizenship, courts may exercise personal jurisdiction over a defendant only if personal jurisdiction would be proper in an Illinois court. See Hyatt Int’l Corp. v. Coco, 302 F.3d 707, 713 (7th Cir.2002). “A state’s exercise of personal jurisdiction is also subject to the demands of the Fourteenth Amendment’s due process clause” and “[b]ecause Illinois permits personal jurisdiction if it would be authorized by either the Illinois Constitution or the United States Constitution, the state statutory [621]*621and federal constitutional requirements merge.” uBID, Inc. v. GoDaddy Group, Inc., 623 F.3d 421, 425 (2010). Looking to the federal constitutional requirements, it is well-established that the due process test for personal jurisdiction requires that a defendant 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.’ ” Int’l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) (citations omitted). “[I]t is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.” Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1240, 2 L.Ed.2d 1283 (1958).

Two types of personal jurisdiction exist — general and specific. See Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 414-16, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984); Abelesz v. OTP Bank, 692 F.3d 638, 654 (7th Cir.2012). “General jurisdiction is for suits neither arising out of nor related to the defendant’s contacts with the State, and is permitted only where the defendant conducts continuous and systematic general business within the forum state.” GCIU-Emp’r Ret. Fund, 565 F.3d at 1023; see also Helicopteros Nacionales de Colombia, 466 U.S. at 416, 104 S.Ct. 1868. On the other hand, “Specific personal jurisdiction is appropriate when the defendant purposefully directs its activities at the forum state and the alleged injury arises out of those activities.” Mobile Anesthesiologists Chi., LLC v. Anesthesia Assoc. of Houston Metroplex, P.A., 623 F.3d 440, 444 (7th Cir. 2010); see also Abelesz, 692 F.3d at 654 (“Specific jurisdiction is jurisdiction over a specific claim based on the defendant’s contacts with the forum that gave rise to or are closely connected to the claim itself.”).

Here, Centurion does not argue that general jurisdiction exists, but instead maintains that it has established specific jurisdiction over Defendants concerning its fraud claims. The “court’s exercise of specific jurisdiction requires that the defendant’s contacts with the forum state relate to the challenged conduct.” Felland v. Clifton,

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944 F. Supp. 2d 617, 2013 WL 1903292, 2013 U.S. Dist. LEXIS 64650, Counsel Stack Legal Research, https://law.counselstack.com/opinion/centurion-service-group-llc-v-sbmc-healthcare-llc-ilnd-2013.