Highway Traffic Safety Associates v. Gomien and Harrop ( 2006 )

No. 3--05--0786
Filed October 17, 2006.
_________________________________________________________________
IN THE
APPELLATE COURT OF ILLINOIS
THIRD DISTRICT
A.D., 2006
HIGHWAY TRAFFIC SAFETY ) Appeal from the Circuit Court
ASSOCIATES, LLC, ) of the 13th Judicial Circuit,
) Grundy County, Illinois,
Plaintiff-Appellee, )
)
v. ) No. 04--LM--85
)
GOMIEN AND HARROP, an Illinois )
Law Firm and Partnership, ) Honorable
) William Balestri,
Defendant-Appellant. )Judge, Presiding.
_________________________________________________________________
PRESIDING JUSTICE SCHMIDT delivered the opinion of the court:
_________________________________________________________________
The plaintiff, Highway Traffic Safety Associates, LLC, is a consulting firm located
in Bethesda, Maryland. The defendant, Gomien & Harrop, was formerly an Illinois law
firm. The plaintiff was granted a default judgment in Maryland against the defendant.
The plaintiff then filed a motion to enforce judgment here in Illinois under the Uniform
Enforcement of Foreign Judgments Act. 735 ILCS 5/12--650 et seq. (West 2004). The
defendant moved to vacate, claiming Maryland lacked personal jurisdiction over it. The
circuit court denied the defendant's motion, finding jurisdiction in Maryland was proper.
The defendant appeals, contending the circuit court erred in denying its motion to
vacate for lack of personal jurisdiction. The defendant also claims that the trial court
erred by allowing the plaintiff to proceed in a civil action in Illinois under section 45--45
of the Limited Liability Company Act. 805 ILCS 180/45--45(a) (West 2004). We affirm.
The parties stipulated the following facts. The defendant law firm, which
dissolved on July 31, 2003, was located in Morris, Illinois, at all times relevant to this
case. Neither partner of the firm has ever lived or practiced law in Maryland. The
defendant did not have any contact with any Maryland resident or entity other than the
plaintiff.
Roger Gomien, a partner in the defendant law firm, represented a plaintiff in a
lawsuit against Ford Motor Company (Ford). In May 2003, a motion for summary
judgment filed by Ford was pending. To respond to that motion, Gomien deemed it
necessary to obtain an affidavit from an expert in the relevant field. Another attorney
recommended Allan Kam, the sole owner of the plaintiff consulting firm, to Gomien.
On May 20, 2003, Gomien telephoned Kam at the plaintiff's office in Maryland,
and they discussed Kam's qualifications, his hourly fee and his retainer. On May 28,
2003, Gomien again telephoned Kam and engaged his services to review the pending
motion and other documents and provide an affidavit supporting the client's position.
Also on that date, Gomien sent Kam a letter of engagement, a $3,000 retainer, and
other relevant documents. Kam e-mailed Gomien on May 28 confirming their
agreement and attached a copy of his curriculum vitae.
At Gomien's request, Kam contacted another attorney, Robert Palmer, who is an
authority on preemption law. On June 2, 2003, Palmer sent Kam a copy of a CD-ROM
containing material relevant to the preemption issue in the underlying lawsuit against
Ford. Also on June 2, 2003, Gomien faxed Kam 23 additional pages of material to
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review and mailed him two memoranda of law from other cases. On June 4, 2003,
Gomien telephoned Kam and sent him a CD-ROM containing other documents for
Kam's review.
On June 7, 2003, Kam sent a draft affidavit to Gomien at Gomien's vacation
home in Texas. On June 18, 2003, Gomien telephoned Kam at his Maryland office to
request revisions to the draft affidavit. Kam made the requested revisions and e-mailed
the new draft to Gomien. On June 19, 2003, Gomien and Kam spoke on the telephone.
Kam made further revisions to the affidavit and e-mailed those revisions to Gomien.
On June 20, 2003, Kam's final, notarized affidavit was sent to Gomien's law office in
Illinois accompanied by an invoice for Kam's services. The amount due exceeded the
$3,000 retainer, and the defendant refused to pay the remainder due.
The plaintiff ultimately filed suit against the defendant in the district court of
Maryland for Montgomery County. The defendant failed to appear in that suit. On April
14, 2004, the Maryland court granted a default judgment in favor of the plaintiff in the
amount of $9,843.75.
On June 9, 2004, the plaintiff filed a petition to register a foreign judgment in the
circuit court of Grundy County, Illinois. On June 22, 2004, the defendant entered a
special appearance and filed a motion to vacate registration of foreign judgment,
arguing that the Maryland judgment is void because Maryland lacks personal jurisdiction
over the defendant. The parties submitted stipulated facts to the court via affidavit by
Gomien and Kam, and the court heard legal argument on May 27, 2005. The court
issued a written order on October 5, 2005, finding that Maryland properly exercised
personal jurisdiction over the defendant and, thus, denying the defendant's motion.
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On appeal, the defendant renews its argument that the Maryland judgment is
void because the Maryland court lacked personal jurisdiction over it. Specifically, the
defendant maintains it did not transact business in Maryland and did not have sufficient
contacts with the state. The plaintiff, however, contends that the defendant's contacts
with the State of Maryland constituted a transaction of business and that these contacts
were constitutionally sufficient for Maryland to assert personal jurisdiction over it. Our
review is de novo. Khan v. Van Remmen, Inc., 325 Ill. App. 3d 49, 756 N.E.2d 902(2001).
Initially, the plaintiff argues that the defendant may not litigate in Illinois the
question of Maryland's personal jurisdiction over the defendant under its long-arm
statute. The plaintiff claims the defendant forfeited the right to contest Maryland's
jurisdiction by failing to do so in Maryland. We disagree. "'Under the doctrine of full
faith and credit, the forum court will not rehear a case on its merits because the
judgment is res judicata. [Citations.]'" Sackett Enterprises, Inc. v. Staren, 211 Ill. App.
3d 997, 1001, 570 N.E.2d 702, 704 (1991). However, the trial court may inquire into
whether a sister state had subject matter and personal jurisdiction in the matter.
Sackett Enterprises, 211 Ill. App. 3d 997, 570 N.E.2d 702.
"If this inquiry reveals a jurisdictional defect which would either render the
foreign judgment void according to the law of the foreign State, or deprive
the foreign court of jurisdiction over the nonresident under the general
constitutional standards of due process, the foreign judgment has no
constitutional claim to full faith and credit." Sackett Enterprises, 211 Ill.
App. 3d at 1001, 570 N.E.2d at 704.
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Whether Maryland courts can exercise personal jurisdiction over a defendant
starts with a two-part inquiry. MaryCLE, LLC v. First Choice Internet, Inc., 166 Md. App.
481, 890 A.2d 818 (2006). First, we must determine whether jurisdiction is authorized
under Maryland's long arm statute. MaryCLE, 166 Md. App. 481, 890 A.2d 818.
Second, we consider whether exercising jurisdiction in this case comports with federal
constitutional due process requirements. MaryCLE, 166 Md. App. 481, 890 A.2d 818.
Maryland courts have consistently construed their long-arm statute "to authorize the
exercise of personal jurisdiction to the full extent allowable under the Due Process
Clause." Bond v. Messerman, 391 Md. 706, 721, 895 A.2d 990, 999 (2006). "Thus,
'our statutory inquiry merges with our constitutional examination.' [Citation.]" MaryCLE,
166 Md. App. 481, 498, 890 A.2d 818, 828.
Maryland's long-arm statute provides, in pertinent part, "A court may exercise
personal jurisdiction over a person, who directly or by an agent *** [t]ransacts any
business or performs any character of work or service in the State." Md. Code Ann.,
Cts. & Jud. Proc. '6--103(b)(1) (2006). "A nonresident who has never entered the
State, either personally or through an agent, may be deemed to have 'transacted
business' in the State within the meaning of subsection (b)(1) as long as his or her
actions culminate in 'purposeful activity' within the State." Sleph v. Radtke, 76 Md. App.
418, 427, 545 A.2d 111, 115 (1988). In this case, the defendant initiated contact with
the plaintiff in Maryland, contracted for its services, and sent a retainer and numerous
documents to Maryland for Kam to review. Thus, the defendant transacted business in
Maryland within the meaning of the statute. See Jason Pharmaceuticals, Inc. v. Jianas
Bros. Packaging Co., Inc., 94 Md. App. 425, 617 A.2d 1125 (1993).
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Federal due process requires that a "defendant ha[ve] sufficient 'minimum
contacts' with the forum state, such that maintaining an action there comports with
'traditional notions of fair play and substantial justice.' [Citation.]" Bombliss v.
Cornelsen, 355 Ill. App. 3d 1107, 1112, 824 N.E.2d 1175, 1179 (2005). To determine
whether a court's exercise of jurisdiction over a defendant satisfies due process, we
must consider: "(1) whether the nonresident defendant has minimum contacts within the
forum state such that he has fair warning that he may be required to defend himself
there; (2) whether the action arises out of the defendant's contacts with the forum State;
and (3) whether it is reasonable to require the defendant to litigate in the forum State.
[Citations.]" Pilipauskas v. Yakel, 258 Ill. App. 3d 47, 55, 629 N.E.2d 733, 739 (1994).
First, we consider whether the plaintiff's claim arises out of the defendant's
contacts with Maryland. " 'If a defendant's contacts with the forum state are related to
the operative facts of the controversy, then an action will be deemed to have arisen
from those contacts.' [Citation.]" MaryCLE, 166 Md. App. at 504, 890 A.2d at 832. In a
contract case, only the dealings between the parties regarding the disputed contract are
relevant to the question of whether a plaintiff's claim arises out of a defendant's contacts
with the forum state. Travelers Casualty & Surety Co. v. Interclaim (Bermuda) Ltd., 304
F. Supp. 2d 1018 (N.D. Ill. 2004). Here, the plaintiff brought suit against the defendant
in Maryland for payment owed under the parties' agreement for the plaintiff to provide
an expert witness affidavit for the defendant's use in another lawsuit. This claim directly
relates to the defendant's contacts with Maryland. Therefore, this requirement for
personal jurisdiction is met.
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Second, we address whether the defendant had fair warning that it may be
required to defend itself in Maryland. The fair warning requirement may be met by
showing that the defendant "purposefully availed himself of the privilege of conducting
activities within the forum State, thereby invoking the benefits and protections of its
laws." Pilipauskas, 258 Ill. App. 3d at 56, 629 N.E.2d at 739. The quality and nature of
the defendant's contacts with Maryland are critical to the question of purposeful
availment. Hanson v. Denckla, 357 U.S. 235, 2 L. Ed. 2d 1283, 78 S. Ct. 1228 (1958).
When a contract is at issue, courts have considered the following factors to
determine the question of purposeful availment: "(1) who initiated the transaction, (2)
where the contract was entered into, and (3) where the performance of the contract was
to take place. [Citation]" Dilling v. Sergio, 263 Ill. App. 3d 191, 196, 635 N.E.2d 590,
594 (1994). "'The strongest factor that seems to have emerged, however, is a
determination of whether the defendant initiated the business relationship in some
way.'" Potomac Design, Inc. v. Eurocal Trading, Inc., 839 F.Supp. 364, 370 (D.Md.
1993), quoting Nueva Engineering, Inc. v. Accurate Electronics, Inc., 628 F. Supp. 953,
955 (D.Md. 1986).
In the instant case, the defendant "reached out" into Maryland by initiating
contact with the plaintiff by telephone to secure its services. Additionally, the defendant
repeatedly telephoned the plaintiff in Maryland and sent numerous documents to
Maryland for Kam to review so he could prepare the requested affidavit. The defendant
also sent the plaintiff's initial retainer to Maryland. Indeed, the defendant anticipated
that the plaintiff would perform all of its work in Maryland. The defendant deliberately
established contact and obligations with a Maryland resident. "'[T]he Due Process
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Clause may not readily be wielded as a territorial shield to avoid interstate obligations
that have been voluntarily assumed.' [Citation.]" Ruprecht Co. v. Sysco Food Services
of Seattle, Inc., 309 Ill. App. 3d 113, 120, 722 N.E.2d 694, 700 (1999). Thus, we
determine that the defendant purposely availed itself of the privileges of conducting
business in Maryland. See Ruprecht, 309 Ill. App. 3d 113, 722 N.E.2d 694 (finding that
nonresident corporation purposefully directed activities at Illinois where nonresident
placed two orders with Illinois resident via fax and obtained information from resident via
telephone); see also Sleph, 76 Md. App. 418, 545 A.2d 111.
Third, we must determine whether Maryland's exercise of personal jurisdiction
over the defendant was constitutionally reasonable. To determine what is reasonable,
courts consider several factors: "(1) the burden on the defendant of defending the action
in the forum state; (2) the forum state's interest in adjudicating the dispute; (3) the
plaintiff's interest in obtaining effective relief; (4) the interstate judicial system's interest
in obtaining the most efficient resolution of the action; and (5) the shared interests of the
several states in advancing fundamental social policies. [Citation.]" Bombliss, 355 Ill.
App. 3d at 1115, 824 N.E.2d at 1181. The Supreme Court has asserted that, once
purposeful availment has been established, a defendant must make a "compelling case"
that it is unreasonable or unfair to require it to defend a suit out of state. Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 477, 85 L. Ed. 2d 528, 544, 105 S. Ct. 2174, 2185
(1985).
The defendant has failed to meet its burden. The defendant has not provided us
with any compelling reasons to find that Maryland's exercise of jurisdiction over it was
constitutionally unreasonable or unfair. In addition, the applicable factors weigh in favor
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of the plaintiff's position. Maryland has an interest in affording its citizens a forum for
relief in breach of contract situations, as the plaintiff has an interest in obtaining
convenient relief. Furthermore, public policy supports Maryland's assertion of
jurisdiction in this factual scenario. It is fairly routine in litigation to engage expert
witnesses who live in states other than the forum state of the litigation. Entering into
agreement in which the expert does most, if not all, of his work at his place of business
reduces the costs of litigation for all parties. It would be unreasonable to deny such an
expert a forum in his home state to adjudicate disputes over payment. Defendant could
have provided by contract that any disputes would be resolved by Illinois courts. Of
course, such a contract provision would likely dissuade out-of-state parties from
contracting with defendant. As a practical matter, why would a Maryland resident, who
was retained by an Illinois resident to perform services in Maryland, agree to a contract
provision requiring him to come to Illinois to seek redress if the Illinois resident stiffed
him on his bill? Thus, we find that Maryland properly asserted personal jurisdiction over
the defendant in this case.
The defendant also claims the trial court erred by allowing the nonresident
plaintiff to proceed in a civil action in Illinois. The defendant relies upon section 45--
45(a) of the Limited Liability Company Act to argue the plaintiff may not pursue a civil
action in Illinois because it is not registered to do business in Illinois. 805 ILCS 180/45--
45(a) (West 2004). That statute reads, "A foreign limited liability company transacting
business in this State may not maintain a civil action in any court of this State until the
limited liability company is admitted to transact business in this State." 805 ILCS
180/45--45(a) (West 2004). The defendant does not cite any authority interpreting this
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statute to apply in the case of a petition to register a foreign judgment. We decline to
apply the statute here, where the plaintiff seeks to enforce a foreign judgment under the
full faith and credit clause of the federal Constitution, rather than initiate a new cause of
action in Illinois. U.S. Const., art IV, '1; 735 ILCS 5/12--650 et seq. (West 2004).
Based upon the above analysis, we conclude that Maryland properly exercised
personal jurisdiction over the defendant. In addition, we reject the defendant's claim
that section 45--45 of the Limited Liability Company Act applies here. Accordingly, the
judgment of the Grundy County circuit court is affirmed.
Affirmed.
HOLDRIDGE and McDADE, JJ., concur.
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