Shared Medical Equipment Group, LLC v. Simi Valley Hospital & Healthcare Services

3 F. Supp. 3d 735, 2014 U.S. Dist. LEXIS 23521, 2014 WL 713108
CourtDistrict Court, W.D. Wisconsin
DecidedFebruary 25, 2014
DocketNo. 13-cv-631-wmc
StatusPublished
Cited by3 cases

This text of 3 F. Supp. 3d 735 (Shared Medical Equipment Group, LLC v. Simi Valley Hospital & Healthcare Services) is published on Counsel Stack Legal Research, covering District Court, W.D. Wisconsin primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Shared Medical Equipment Group, LLC v. Simi Valley Hospital & Healthcare Services, 3 F. Supp. 3d 735, 2014 U.S. Dist. LEXIS 23521, 2014 WL 713108 (W.D. Wis. 2014).

Opinion

OPINION & ORDER

WILLIAM M. CONLEY, District Judge.

In this civil action, plaintiff Shared Medical Equipment Group, LLC alleges that defendant Simi Valley Hospital and Healthcare Services breached contracts between them by failing to pay for damage done to its MRI system and for repair charges. Before the court now is defendant’s motion to dismiss for lack of personal jurisdiction and for improper venue. (Dkt. # 9.) Because Shared Medical has made out a prima facie case for this court’s exercise of personal jurisdiction over Simi Valley and because venue is proper in this district, the court will deny the motion to dismiss.1

ALLEGATIONS OF FACT2

Plaintiff Shared Medical is a Wisconsin limited liability corporation that is wholly owned by Shared Medical Services, Inc., a corporation organized under Minnesota law with its principal place of business in Wisconsin. Defendant Simi Valley is a corporation organized under California law and with its principal place of business in Simi Valley, California.3 Simi Valley has no physical presence, facilities, real property, offices or registered agents in Wisconsin.

In 2009, Monica Berlin, Simi Valley’s Administrative Director of Ambulatory Services, called Paul Zahn of Shared Medical to request information on pricing for the lease of a Parker Mobile MRI System. For more than a year, the parties negotiated over the terms of a proposed lease. Simi Valley eventually negotiated a lease with Shared Medical that included reduced rental fees, a quicker response time for service calls, more favorable payment terms and a California choice-of-law provision.

Consistent with those terms, the parties entered into the Magnetic Resonance Imaging Lease Agreement (“the Lease”) on July 16, 2010. Under the Lease, Shared Medical retained ownership of the MRI system, as well as the responsibility to provide preventative maintenance and respond to service calls. The MRI system [738]*738that Simi Valley leased was located at Shared Medical’s headquarters in Cottage Grove, Wisconsin. Under the Lease, Simi Valley was required to pay the cost of transporting the system from Wisconsin to California. The Lease also required Simi Valley to provide continuous power to the system to maintain the cryogenic temperatures that the superconducting magnet required to avoid magnet “quenching”4; Simi Valley was responsible for any damage caused by the interruption of electrical service to the system.

During the lease term, Simi Valley made nineteen calls to Wisconsin for service. As required by the Lease, Shared Medical then arranged for repairs and service from its Wisconsin offices on behalf of Simi Valley. In addition, Shared Medical received notice on October 5, 2010, that there was a problem with the system. Shared Medical dispatched a representative from the manufacturer of the system, Phillips, to investigate. Electronic data revealed that the system had been powered off for at least a month and that the superconducting magnet had quenched as a result.

Based on the terms of the Lease, Shared Medical looked to Simi Valley for payment to repair the quenched magnet. Following extensive discussions, including 31 e-mails that Simi Valley sent to Shared Medical in Wisconsin and a meeting in Chicago, the parties signed a purchase order in which Simi Valley authorized a payment of up to $80,000 to cover Shared Medical’s costs of repairing the system. Simi Valley sent the purchase order to Shared Medical in Wisconsin, which then subcontracted for repair of the system and submitted an invoice to Simi Valley for payment. Simi Valley indicated it would pay the invoice and made weekly cryogen report levels to Shared Medical for the next two and a half years to ensure proper maintenance of the magnet, but never paid the $80,000 invoice for repairs to the MRI system.

In June 2013, Simi Valley sent Shared Medical a 90-day notice of termination of the Lease. On July 1, 2013, Simi Valley emailed Shared Medical to ask if Shared Medical could find another lessee for the MRI system so that Simi Valley could exit the Lease early. In response, Shared Medical accordingly located another facility willing to take over the Lease, which allowed Simi Valley to save about $18,000 in rental payments.

OPINION

I. Personal Jurisdiction

Plaintiffs have the burden of proving that personal jurisdiction exists. RAR, Inc. v. Turner Diesel, Ltd., 107 F.3d 1272, 1276 (7th Cir.1997) (citing McIlwee v. ADM Indus., Inc., 17 F.3d 222, 223 (7th Cir.1994)). In diversity cases like this one, a federal district court has personal jurisdiction “only if a court of the state in which it sits would have such jurisdiction.” Id. (quoting Klump v. Duffus, 71 F.3d 1368, 1371 (7th Cir.1995)). The inquiry is, therefore, a two-step process. The court must initially determine whether the Wisconsin long-arm statute, Wis. Stat. § 801.05, would subject Simi Valley to personal jurisdiction in Wisconsin courts. Daniel J. Hartwig Assocs., Inc. v. Kanner, 913 F.2d 1213, 1216 (7th Cir.1990). If the answer is “yes,” the court must then determine whether its exercise of personal jurisdiction under § 801.05 would violate the due process requirements of the Fourteenth Amendment.5 Id.

[739]*739A. Wisconsin Long-Arm Statute

Wisconsin’s long-arm statute is to be liberally construed in favor of exercising jurisdiction to the fullest extent allowed under the due process clause. PKWare, Inc. v. Meade, 79 F.Supp.2d 1007, 1012 (E.D.Wis.2000) (citing Johnson Worldwide Assoc., Inc. v. Brunton Co., 12 F.Supp.2d 901, 906 (E.D.Wis.1998)); Daniel J. Hartwig Assocs., 913 F.2d at 1217. Shared Medical contends that three separate provisions in the long-arm statute authorize this court’s exercise of personal jurisdiction over defendant Simi Valley. The first provides:

A court of this state having jurisdiction of the subject matter has jurisdiction over a person served in an action pursuant to s. 801.11 under any of the following circumstances: ...
(5) Local services, goods or contracts. In any action which: ...
(d) Relates to goods, documents of title, or other things of value shipped from this state by the plaintiff to the defendant on the defendant’s order or direction.

Wis. Stat. § 801.05(5)(d).

Shared Medical contends that the MRI system was indisputably a “thing of value” shipped from Wisconsin to Simi Valley in California pursuant to the terms of the Lease. It also points out that Wisconsin courts have construed the term “relates” broadly. Accordingly, Shared Medical argues this court should exercise personal jurisdiction over Simi Valley under § 801.05(5)(d).

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3 F. Supp. 3d 735, 2014 U.S. Dist. LEXIS 23521, 2014 WL 713108, Counsel Stack Legal Research, https://law.counselstack.com/opinion/shared-medical-equipment-group-llc-v-simi-valley-hospital-healthcare-wiwd-2014.