Opposition Brief — Sugar v. Diamond Mortgage Corp., 111 S. Ct. 968 (1991) (No. 90-1021)
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Supreme Court, U.S,
: FILED
a JAN 22 199)
No. 90-1021 | JOSEPH F: SPANIOA, Use |
: CLERK
IN THE
Supreme Court of the United States
OCTOBER TERM, 1990
PETER SUGAR, DAVID D. WARNER,
and JAFFE, SNIDER, RAITT & HEUER,
Professional Corporation,
Petitioners,
Vv.
DIAMOND MORTGAGE CORPORATION OF ILLINOIS
and A.J. OBIE & ASSOCIATES, INC.,
Respondents.
On Petition For Writ Of Certiorari To The United
States Court Of Appeals For The Seventh Circuit
RESPONDENTS’ BRIEF IN OPPOSITION
RonaLp R. PETERSON
Russ M. StroBei
Counsel of Record
C. STevEN TOMASHEFSKY
DaniEL S. GOLDMAN
JENNER & BLOCK
One IBM Plaza
Chicago, Illinois 60611
(812) 222-9350
Counsel for Respondents
Photex — 444 North Wabash Avenue — Chicago 60611 — 321-0223
LC Aas
TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES ............ ii
SUMMARY OF ARGUMENT .......eeee. ° 2
STATEMENT OF THE CASE ........... 3
REASONS FOR DENYING THE PETITION. 14
I.
THE JUDGMENT BELOW RESTS
ON AN INDEPENDENT STATE-LAW
GROUND IN WHICH THERE IS
NO FEDERAL INTEREST........... 14
A. This Court Should Not
Devote Its Limited
Resources To Deciding
A Pure Question Of
State i. « «i aoe ao ee #@#eee#e#seee#*# 15
B. The Court Of Appeals Did
Not Improperly Disturb
Any Factual Findings By
The District Court........ 18
Cc. Petitioners Present No
Colorable Due Process
RMS kato ne eae ke oe a ia a 22
oo
THE COURT OF APPEALS' DECISION
OF THE BANKRUPTCY RULES ISSUE
WAS FULLY CONSIDERED AND
PRESENTS NO SPECIAL REASONS
JUSTIFYING REVIEW........ eee ee 27
A. The Bankruptcy Rules
Apply In "Related To"
PUA sc ccc es eecees 29
nite
B. This Is An "Adversary
Proceeding," To Which
The Bankruptcy Adversary
Rules Apply..........-2+e--
C. Applying Nationwide
Service Of Process Does
Not Offend The Due
Process Clause In This
COBO cccccscceces seseseses
CARMA AU ccc ees etee ees aseeeeseee
EXHIBIT (Ill. P.A. 86-840)
TABLE OF AUTHORITIES
CASES
Asahi Metal Industry Co. v. Superior
Court, 480 U.S. 102 (1987) . .
Bose Corp. v. Consumers Union of United
States, Inc., 466 U.S. 485
(Jeet aw we ee eo eo S's
Burger King Corp. v. Rudzewice, 471 U.S.
462 (1985) . _ _ _ . _ *. o
Carlton v. BAWW, Inc., 751 F.2d 781 (5th
Cie. 2BGS) «1 «+ 6 © «© 6 & ee 8
Deluxe Ice Cream Co. v. R.C.H. Tool
Corp., 726 F.2d 1209 (7th Gir.
1984) & 6 wwe eae eee ew 4
Elscint, Inc. v. First Wisconsin
Financial Corp. (In re Xonics
Inc.), 813 F.2d 127 (7th Cir.
|) Re ee ae ed ae
38
42
46
25
19
26
36
17
33
-iii-
Granfinanciera, S.A. v. Nordberg, 109 S.
Ct. 2782 (1989)
Green v. Advance Ross Electronics Corp.,
86 Ill. 2d 431,
(1981) ..
Haring v. Prosise, 462 U.S.
427 N.E.2d 1203
306 (1983) ..
In re Oil Spill by Amoco Cadiz, 699 F.2d
909 (7th Cir.), cert. denied sub
nom. Astilleros Espanoles, S.A.
v. Standard Oil Co.,
864 (1983)
Insurance Co. of the State of
Pennsylvania v. Ben Cooper,
ing,., 111 S&S. Ct.
Jacobs/Kahan & Cc. v. Marsh,
464 U.S.
peas + SF
425 (1990) ...
740 F.2d 587
(7th Cir. 1984) . ca a
John Waiker & Sons, Ltd. v. DeMert &
Dougherty, Inc., 821 F.2d 399
(7th Cir. 1987) Sy ee
Kelly v. Nodine (In re Salem Mortgage
Co.), 783 F.2d 626 (6th err.
1986) ..
Mason v. F.
Maschio Fu G.B.
383 (7th Cir.
Miles _v. Apex Marine Corp.,
317 (1990)
Milkovich v. Lorain Journal Co.,
Ct. 2695 (1990)
LI Luigi and Franco Dal
Northern Pipeline Construction Co. v.
Marathon Pipe Line Co.,
50 (1982)
s.n.c, 832 F.2d
1987) “ : » @ @
2ii S&S. Ct.
110 S.
458 U.S.
30,
16
15
25
17
17
33
25
39
39
42
Pacor, Inc. v. Higgins, 743 F.2d 984 (3d
Cis. Seeay. . .
Pembaur v. Cincinnati, 475 U.S. 469
(1986) .
Petty v. Cadwallader,
135 Ill. App.
3d
695, 482 N.E.2d 225 (4th Dist.
1985) .
Pierson v. Ray, 386 U.S.
Pullman-Standard v. Swint,
(1982) .
Ragan v. Merchants Transfer & Warehouse
Co., 207 U.S.
Reda, Inc. v. Harris Trust & Savings Bank
(In re Reda, Inc.),
178 (Bankr. N.D. Ill.
Shaffer v. Heitner,
Texaco, Inc. v. Hasbrouck,
2535 (199
United States v. Union Pacific Railroad
433 U.S.
OR sr ng
547 (1967)
456 U.S.
530 (1949)
°
273
60 Bankr.
1986)
186 (1977)
Co., 98 U.S. 569 (1878)
110 S. Ct.
Wasserman v. Immormino (In re Granger
Garage, Inc.), No. 89-4022 (6th
Cir. Nov.
30, 1990)
App. LEXIS 20847
’
1990 U.S.
World-Wide Volkswagen Corp. v. Woodson,
444 U.S.
286 (1980)
33
16
16
15
19
16
17
44
31
24
-V-
STATUTES
Bankruptcy Act of 1978 ("Bankruptcy Code"),
Pub. L. No. 95-598,
92 Stat. 2549 . ..-«-. 2 - 30,
Bankruptcy Amendments and Federal
Judgeship Act of 1984 ("BAFJA")
Pub. L. No. 98-353, 98 Stat.
We ee Se eos a ek ee 8
ce Wee ee ks a ae a ae ee
$6 rece eee 4 Se Se eo
Aa U8.G. 6 OR.
oe ee Oe ee Se See ee ee
a ie, ee nw a Se Se
i Caw See hk ae a SS Se
aS a ee go ew ie 8 eo
se Fe Sr a
OE ey eg og a ee
11 U.S.C. § 552(a)
i Mee OC Oe kk
i > a 2) ee
ee ae re
28 U.S.C. § 157(b)(1) ...
28 U.S.C. § 157(c) (1)
28 U.S.C. § 1332(a) (1)
31,
32,
43,
42
ae U.8.€.-§ i334€@) «++ 6 « « 20, a2
ee Uu8.e. & A3340B) «© «© ew wo se passim
noe. © Seeeene ". fe et es —e
28 U.S.C. § 1452 . wes eek oe Ak oe oe
28 U.S.C. § 2075 aes ie ee en ee ee a ee
Ill. Rev. Stat. ch. 110, § 2-209 ..... 8
eg eee ae rere or er er a ee
RULES
Supreme Court Rule 10.1(a) : +e 4) ee ee
an. Sie O See 6 6s ae ee wee 9
Fed. R. Civ. P. 12(b) (6) a ee ee Oe ee
re ee Cee, ge eb ee
Bankruptcy Rule 1001 es *« © «6 @ 66 eee
Bankruptcy Rule 2004 a an a a oe ae a
Bankruptcy Rule 7001(1) .... ++ ++. 9, 38
Bankruptcy Rule 7001(10) ‘ * *«-s * #-bo8 nee
Bankruptcy Rule 7004(d) ..... .. . passim
-vii-
MISCE OUS
H.R. Rep. No. 595, 95th Cong., 2d Sess.
445-46, reprinted in 1978 U.S.
Code Cong. & Admin. News 5787
S. Rep. No. 989, 95th Cong., 2d Sess.
153-54, reprinted in 1978 U.S.
Code Cong & Admin. News 5787 .
Bankruptcy Rule 7001, Advisory Committee
at ks «ee: ee ee eee
1 Collier on Bankruptcy, § 3.01 oath 3 ed.
eee ek ee wwe ee ia
32,
32,
42
41
36
No. 90-1021
IN THE
SUPREME COURT OF THE UNITED STATES
October Term, 1990
PETER SUGAR, DAVID D. WARNER, and JAFFE,
SNIDER, RAITT & HEUER, Professional
Corporation,
Petitioners,
Vv.
DIAMOND MORTGAGE CORPORATION OF ILLINOIS
and A.J. OBIE & ASSOCIATES, INC.,
Debtors-in-Possession,
Respondents.
ON PETITION FOR A WRIT OF
CERTIORARI TO THE UNITED STATES
COURT OF APPEALS FOR THE
SEVENTH CIRCUIT
RESPONDENTS BRIEF IN OPPOSITION
Respondents, Diamond Mortgage
Corporation of Illinois ("Diamond") and
A.J. Obie & Associates, Inc. ("Obie"),
respectfully request that this Court deny
the petition for a writ of certiorari
seeking review of the decision below. The
-2-
opinion of the United States Court of
Appeals for the Seventh Circuit is
reported at 913 F.2d 1233 (1990).
SUMMARY OF ARGUMENT
The judgment below rests on
alternative grounds, one of which is
solely a matter of Illinois law. Thus,
even if this Court were inclined to review
the federal-law issue in this case, it
could not change the outcome unless the
Court also reviewed and reversed the Court
of Appeals' state-law holding. This Court
should not expend its limited resources in
reviewing appe’’ate determinations of
state law or in issuing advisory opinions
that cannot change the judgment below.
2. Moreover, Petitioners' argument
for review of the federal-law issue
demonstrates no conflict with any opinion
of this Court, no conflict among the
circuits, and no dissenting opinions or en
~_
banc consideration of the issue in the
Court of Appeals. Indeed, Petitioners
themselves demonstrate a unanimity of
judicial and academic support for the
Court of Appeals' holding and merely argue
that all these courts and commentators are
"confused." Only Petitioners are
confused. The petition presents no
federal issue needing clarification and
should be denied.
STATEMENT OF THE CASE
Diamond was a mortgage lender that
made loans on real estate located in
Illinois. It is an Illinois corporation,
and, at all times, its only offices have
been in Illinois. Obie was an affiliated
Illinois corporation that offered for
sale, solely to Illinois investors,
mortgage notes originated by Diamond and
secured by Illinois real estate.
~
On August 25, 1986, Diamond and Obie
filed petitions for reorganization under
Chapter 11 of the Bankruptcy Code in the
United States Bankruptcy Court for the
Northern District of Illinois. Some
investors had received a properly recorded
assignment of a mortgage and were treated
as secured creditors. Many other
investors, however, never were assigned a
mortgage and became unsecured creditors of
the bankruptcy estates. The corporations'
combined insolvency exceeded $10 million.
Petitioners are Detroit-based
attorneys who represented Diamond and Obie
as securities counsel from 1981 until
shortly before the bankruptcies.
VY Diamond also sued Michigan attorney
Ronald M. Barron (and several law firms of
which he was senior partner). The Barron
defendants acted as Diamond's and Obie's
general counsel during the 1981-86 period.
Although the Court of Appeals' ruling
applies to the Barron defendants, they
have not joined in Petitioners' petition
or filed one of their own.
oo
Petitioners prepared the offering
circulars distributed by Obie to Illinois
investors. They also reviewed and revised
advertising materials used by Obie to
solicit Illinois purchasers for the
Diamond mortgage notes. Finally, they
corresponded with Illinois regulatory
agencies on Diamond's and Obie's behalf.
At the same time they represented
Diamond and Obie, Petitioners also
represented several Michigan-based
corporations affiliated with Diamond and
Obie. The Complaint alleges that
Petitioners committed legal malpractice
and breached their fiduciary duties to
Diamond and Obie in four ways. First,
they simultaneously represented the
Michigan corporations that were a
transacting business with Diamond and Obie
and which looted Diamond and Obie in those
transactions. Second, they failed to
advise, Diamond and Obie properly as to the
«he
conflict of interest posed by that
Simultaneous representation. Third, they
failed to withdraw from the conflicting
representation when they should have done
so. Fourth, they failed properly to
advise Diamond and Obie regarding the
corporations' own unsafe and unsound
business practices. These breaches
prolonged Diamond's and Obie's existence
past the point of insolvency and deepened
the insolvency.
In 1988, Diamond and Obie, as
debtors-in-possession, filed the Complaint
in the United States District Court for
the Northern District of Illinois, the
district in which the Chapter 11 cases
were pending.*/ The Complaint predicated
2/ Diamond and Obie filed the Complaint
with the District Court clerk because they
were entitled to a jury trial, and it was
established in the Northern District of
Illinois that Article I bankruptcy judges
could not conduct jury trials. See, e.g.,
Reda, Inc. v. Harris Trust & Savings Bank
(continued...)
Res eT
olen
subject matter jurisdiction on both 28
U.S.C. §§ 1332(a)(1) (diversity of
citizenship) and 1334(b) (bankruptcy).
Petitioners do not contest the validity of
either jurisdictional basis. Pet. at 2-3
and n. 3.
Petitioners moved to dismiss under
Fed. R. Civ. P. 12(b)(2), alleging lack of
personal jurisdiction.2#/ Diamond and
2/ (...continued)
(In re Reda, Inc.), 60 Bankr. 178, 182-83
(Bankr. N.D. Ill. 1986); cf.
Granfinanciera, S.A. v. Nordberg, 109 S.
Ct. 2782, 2802 (1989) (leaving open
question whether bankruptcy judges can
conduct jury trials). This Court recently
remanded on jurisdictional grounds a case
in which certiorari had been granted to
decide whether bankruptcy judges can
constitutionally conduct some jury trials.
Insurance Co. of the State of Pennsylvania
v. Ben Cooper, Inc., 111 S. Ct. 425
(1990).
3’ ~=petitioners also moved to dismiss
under Fed. R. Civ. P. 12(b) (6), alleging
failure to state a claim for which relief
can be granted. The District Court did
not reach this issue. Petitioners
reasserted their 12(b)(6) motion in the
Court of Appeals, which rejected
Petitioners' claim. Petitioners' Appendix
(continued...)
-3-
Obie argued that jurisdiction was proper
pursuant to nationwide service of process
under Bankruptcy Rule 7004(d) and the
Illinois long-arm statute, Ill. Rev. Stat.
ch. 110, 4 2-209.“ On Petitioners'
motion, the District Court stayed all
discovery, including discovery as to
jurisdictional facts.?/
V/ (...continued)
("APP.") 26a-27a. Petitioners do not seek
review of that ruling here.
3/ This statute was amended effective
September 7, 1989 by Public Act 86-840.
The current statute differs significantly
from the statute in effect when the
Complaint was filed. See Exhibit 1
hereto.
a/ Petitioners assert that the factual
record is "extensive" and includes all of
their files. Pet at 4. While Diamond and
Obie took some discovery pursuant to
Bankruptcy Rule 2004 before filing the
Complaint, they never had the opportunity
to take discovery on the specific
jurisdictional issues Petitioners raised.
Nor did they have the opportunity to test
Petitioners' assertion that all files were
turned over. Indeed, some files were
withheld on a claim of privilege and were
not produced when the asserted privilege
was later waived.
alpen
The Magistrate, to whom the motion
was referred, recommended dismissal. APP.
36a. Apparently relying on the text of
Bankruptcy Rule 7001 prior to its 1987
amendment, the Magistrate held that the
Bankruptcy Rules could only be applied in
Bankruptcy Court. APP. 3la. Further, the
Magistrate held that, notwithstanding
Petitioners' acknowledged contacts with
Illinois, Diamond's and Obie's claims did
not “arise from" those contacts within the
meaning of the Illinois long-arm statute.
APP. 32a-36a.
The District Court adopted the
Magistrate's recommendation in a one-
paragraph minute order. While conceding
there was "superficial logic" to the
proposition that the bankruptcy courts are
no longer jurisdictionally distinct from
the district courts, the District Court
held that Diamond and Obie could utilize
Bankruptcy Rule 7004(d) only in bankruptcy
—yo
court. APP. 38a. The District Court
adopted without comment the Magistrate's
recommendation as to the Illinois long-arm
statute.
Diamond and Obie moved to reconsider,
noting again that the 1987 Bankruptcy
Rules amendments had made the Bankruptcy
Rules expressly applicable in the district
courts. The District Court denied
reconsideration, this time holding that
the Bankruptcy Rules are applicable only
in “core proceedings" as defined in
28 U.S.C. § 157. APP. 4la.
Contrary to Petitioners' assertion
(Pet. at 21) that the District Court
"found that it could not assert
jurisdiction over the Jaffe attorneys
consistent with these due process
considerations," neither the District
Court nor the Magistrate made reference to
any due process considerations.
ata
The Court of Appezls reversed,
holding that the adversary Bankruptcy
Rules, and Rule 7004(d) in particular, by
definition apply to this proceeding and
that the District Court's exercise of
personal jurisdiction over Petitioners
would not violate the Fifth Amendment Due
Process Clause. APP. 12a-20a. In so
doing, the Court of Appeals rejected
Petitioners' contentions that the
Bankruptcy Rules apply only to proceedings
"commenced" in a bankruptcy court and that
they apply only to "core" proceedings.
APP. 12a-16a; APP. 17a-18a.
The Court of Appeals also reversed
the District Court's judgment as to the
Illinois long-arm statute, finding an
independent and alternative basis for
personal jurisdiction under Illinois law.
While the Magistrate and the District
Court had held that the statute conferred
jurisdiction only if specific negligent
-12—<
acts were performed in Illinois, the Court
of Appeals found the Magistrate's
treatment “"perplex[ing]." APP. 23a.
Noting that Illinois courts consistently
require only that the cause of action "lie
in the wake of the transaction of
business" in Illinois, APP. 22a, the Court
of Appeals observed that Petitioners'
failure to reveal their conflicts of
interest and to remedy them lay "in the
wake of" all their contacts with Illinois,
including visits, correspondence, and
telephone calls. APP. 23a.
Finally, the Court of Appeals
rejected Petitioners' contention that the
District Court's exercise of personal
jurisdiction under the Illinois long-arm
statute would violate the Due Process
Clause. There was no dispute that
Petitioners had intentionally provided
services directly to their Illinois
clients and that those services were
%: Son
expressly tailored to the requirements of
their Illinois clients. APP. 24a-25a.
Nor had Petitioners shown that litigation
in the Northern District of Illinois, the
location of the clients they had
represented and where they had performed
acts on those clients' behalf, was
excessively burdensome. APP. 26a.°%
After the Court of Appeals issued its
opinion, Petitioners filed a petition for
rehearing with suggestion for rehearing en
banc. The Court of Appeals denied this
petition, no judge in active service
requesting a vote for rehearing. APP.
43a-44a.
& Petitioners, who are based in
Detroit, contended they could be sued
anywhere in the state of Michigan, but
that litigation in Chicago would impose an
undue (and, therefore, unconstitutional)
burden. However, in practical terms,
travel between Detroit and Chicago is far
less burdensome than travel between
Detroit and, for example, Michigan's Upper
Peninsula.
-14-
REASONS FOR DENYING THE PETITION
THE JUDGMENT BELOW mnoee ON AN
INDEPENDENT STATE-LAW GROUND
IN WHICH THERE IS NO FEDERAL INTEREST.
Wholly apart from the bankruptcy
issue resolved by the Court of Appeals,
the decision below rests alternatively and
independently on personal jurisdiction
conferred by the Illinois long-arm
statute. Thus, even if this Court were to
conclude that the Court of Appeals wrongly
decided the bankruptcy issue, the judgment
could not be changed unless this Court
reviewed and reversed the Court of Appeals
on a question of Illinois statutory
interpretation.
This Court should not grant
certiorari to interpret Illinois law.
Implicitly recognizing this, Petitioners
attempt to recast the state-law issue as a
question of standard-of-review. This
atGea
attempt mischaracterizes the Court of
Appeals' holding and, even if accepted
arguendo, presents only a fact-bound
inquiry unsuited to review by this Court.
A. This Court Should Not Devote Its
Limited Resources To Deciding
A Pure Question Of State Law.
This Court "do[es] not ordinarily
review the holding of a court of appeals
on a matter of state law." Pierson v.
Ray, 386 U.S. 547, 558 n. 12 (1967); see
also Haring v. Prosise, 462 U.S. 306, 314
n. 8 (1983). There is no significant
federal interest in having this Court
interpret the Illinois long-arm statute.
The Illinois courts are charged with
principal responsibility for interpreting
Illinois law. This Court's limited
resources should be reserved for other
purposes.
Moreover, the Illinois long-arm
statute has been significantly amended
~16<
since the time this action was commenced.
See Exhibit 1 hereto.” It would be
particularly wasteful for this Court to
expend its resources on interpreting a
superseded statute.
This Court routinely "accord[s] great
deference to the interpretation and
application of state law by the courts of
appeals." Pembaur v. Cincinnati, 475 U.S.
469, 484 n. 13 (1986); see also Ragan v.
Merchants Transfer & Warehouse Co., 337
U.S. 530, 534 (1949). The Court of
Appeals has extensive experience in
interpreting the Illinois long-arm statute
”/ While the former statute applicable
here had been interpreted by Illinois
courts independently of the Due Process
Clause, see, e.g., Green v. Advance Ross
Electronics Corp., 86 Ill. 2d 431, 436-37,
427 N.E.2d 1203, 1206 (1981); Petty v.
Cadwallader, 135 Ill. App. 3d 695, 697,
482 N.E.2d 225, 227 (4th Dist. 1985), the
amended statute now permits jurisdiction
on “any .. . basis now or hereafter
permitted by the Illinois Constitution and
the Constitution of the United States."
P.A. 86-840 § l(c).
“39a
and has issued numerous opinions on the
relevant issue. The Court of Appeals
did not ignore the cases on which
Petitioners relied but, rather, carefully
considered them. APP. 23a-24a. Exercise
of this Court's certiorari jurisdiction to
review an issue of solely historical and
parochial inmaeebe: is wholly unjustified.
Finally, the law of personal
jurisdiction is especially fact bound.
See, e.g., Shaffer v. Heitner, 433 U.S.
186, 221 (1977) (Brennan, J., concurring
in part and dissenting in part). Even if
this Court were inclined to review a
question of state law, review of the
holding below is unlikely to generate any
8/ ~See, e.g., John Walker & Sons, Ltd.
v. DeMert & Dougherty, Inc., 821 F.2d 399,
401-04 (7th Cir. 1987); Jacobs/Kahan & Co.
v. Marsh, 740 F.2d 587, 589-91 (7th Cir.
1984); Deluxe Ice Cream Co. v. R.C.H. Tool
Corp., 726 F.2d 1209, 1212-16 (7th Cir.
1984); In re Oil Spill by Amoco Cadiz, 699
F.2d 909, 915 (7th Cir.), cert. denied sub
nom. Astilleros Espanoles, S.A. v.
Standard Oil Co., 464 U.S. 864 (1983).
-18-
principles of general application even for
Illinois litigants.
B. The Court Of Appeals Did Not
Improperly Disturb Any Factual
Findings By The District Court.
Petitioners attempt to wring a
federal issue out of a state-law question
by asserting that the Court of Appeals
"improperly substituted its views for
those of the district court.” Pet. at 24.
Petitioners simply ignore the actual
inquiry the Court of Appeals undertook.
The Magistrate recognized that
Petitioners had contacts with Illinois on
Diamond's and Obie's business, including
personal visits, phone calls, and letters.
APP. 33a. But the Magistrate thought that
these contacts "do not appear to
constitute the malpractice of which
plaintiffs complain." APP. 34a. Further,
the Magistrate thought that the Illinois
statute was not satisfied because, as he
otR—
read the Complaint, Petitioners had not
committed any acts of malpractice in
Illinois. APP. 35a.
Petitioners concede that the question
whether there is a "nexus" between their
Illinois contacts and the cause of action
alleged in the Complaint "is a mixed
question of law and fact subject to de
novo review." Pet. at 24-25; see, e.gqg.,
Pullman-Standard v. Swint, 456 U.S. 273,
287 (1982) (district court's findings
resting on erroneous view of applicable
law are subject to de novo review).
Appellate courts are free to
correct errors of law, including
those that may infect a so-called
mixed finding of law and fact, ora.
finding that is predicated on a
misunderstanding of the governing
rule of law.
Bose Corp. v. Consumers Union of United
States, Inc., 466 U.S. 485, 501 (1984).
Here, the Magistrate's and District
Court's findings were predicated on a
-20-
misunderstanding of the governing long-arm
statute. The controlling question is not
what Petitioners' Illinois contacts were,
but the legal significance of those
contacts as measured by the statutory
standard.
The Court of Appeals held that the
Magistrate (and, by adoption, the District
Court) applied an overly rigid
interpretation of the Illinois statute.
While the Magistrate apparently thought
that the cause of action must arise from
business actually transacted in Illinois,
the Court of Appeals held that "Illinois's
long-arm statute '"requires only that the
cause of action lie im the wake of the
transaction of business [in Illinois]."'"
APP. 22a.
Applying this standard, the Court of
Appeals found that Petitioners' Illinois
contacts easily satisfied the Illinois
statute. The essence of Diamond's and
RD a
Obie's Complaint was Petitioners' failure
to disclose material conflicts and their
failure to withdraw as counsel.
Petitioners "had an obligation to disclose
their conflict of interest when they
transacted business or gave legal advice
to Diamond and Obie in Illinois." APP.
23a. The Magistrate's "perplex[ing]"
treatment of the Complaint simply ignored
the cause of action Diamond and Obie
alleged. Id.
The Court of Appeals was not bound by
either the Magistrate's interpretation of
the Illinois long-arm statute or his
interpretation of the Complaint.”
Neither of these is a factual
2/ Contrary to Petitioners' assertion
(Pet. at 25-26), the Court of Appeals did
not ignore facts and "recitf{e] the mere
allegations of the complaint." The
Complaint's allegations determine the
cause of action that must arise from the
jurisdictional contacts. The Court of
Appeals focused on the Complaint because
the Magistrate failed to do so in his
treatment of Diamond's and Obie's claims.
——
-22-
determination. The Court of Appeals
properly reviewed these matters de novo
and applied the undisputed facts.
The record in this action does not
present the standard-of-review issue
Petitioners wish to assert. Petitioners
agree that the Court of Appeals was
entitled to undertake de novo review of
the intertwined questions of law.and fact
that determine personal jurisdiction.
That is exactly what the Court of Appeals
did.
e. Petitioners Present No Colorable
Due Process Claim.
Making a brief stab at a
constitutional argument, Petitioners
assert that their Due Process Clause
rights were violated because they had no
"fair warning" that their representation
of Diamond and Obie might subject them to
personal jurisdiction in Illinois. Pet.
at 27. This argument has no chance of
-23-
success. It runs counter to this Court's
well-established due-process
jurisprudence, and it presents no novel or
important issues warranting a reassessment
of this Court's prior decisions.
Petitioners assert that they could,
over a five-year period: (1) knowingly
represent an Illinois client; (2)
knowingly represent a client that made
mortgages solely on Illinois real estate
and sold investments solely to Illinois
investors; (3) knowingly tailor their work
product to the Illinois client's Illinois
needs; and (4) knowingly transmit their
work product to the client in Illinois
through letters, phone calls, and personal
visits - yet still have no "fair warning"
that the client might sue them for
malpractice in Illinois. Petitioners'
contention is self-refuting, as the Court
of Appeals correctly held.
a
-24-
This is not a case like World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286
(1980), in which the stream of commerce
eventually and unforeseeably carried the
defendant's product to a far-off state.
444 U.S. at 295-97. Here, the sale of
services was directly to Illinois. As
this Court observed in Worid-Wide
Volkswagen:
Hence if the sale of a product of a
manufacturer or distributor such as
Audi or Volkswagen is not simply an
isolated occurrence, but arises from
the efforts of the manufacturer or
distributor to serve, directly or
indirectly, the market for its
product in other States, it is not
unreasonable to subject it to suit
in one of those States if its
allegedly defective merchandise has
there been the source of injury to
its owner or to others. The forum
State does not exceed its powers
under the Due Process Clause if it
asserts personal jurisdiction over a
corporation that delivers its product
into the stream of commerce with the
expectation that it will be purchased
by consumers in the forum State.
444 U.S. at 297-98 (emphasis added).
Here, Petitioners had more the an
=-25-
expectation that their "product" - legal
services - would be purchased by consumers
in Illinois. That was a certainty, since
the sale was direct to Diamond and Obie.
And, like a car that lacks a critical
part, Petitioners' product was defective:
it lacked loyalty.
Petitioners not only dealt directly
with Diamond and Obie in Illinois, they
tailored their product to their Illinois
clients' specific needs. While merely
placing a product in the stream of
commerce does not suffice to connect the
producer with a particular forum state,
"designing the product for the market in
the forum State" adds the necessary
connection. Asahi Metal Industry Co. v.
Superior Court, 480 U.S. 102, 112 (1987);
Mason v. F. LLI Luigi and Franco Dal
Maschio Fu G.B. s.n.c, 832 F.2d 383, 386
(7th Cir. 1987); Amoco Cadiz, 699 F.2d at
916 (same). Petitioners had to know that,
GE
-26-
if the product was defective, they were
likely to be sued in Illinois.
Personal jurisdiction does not depend
on technicalities. So long as a defendant
has "purposefully directed" its acts
toward residents of the forum state, the
defendant need never have been physically
present in the forum state to be subject
to jurisdiction there. Burger King Corp.
v. Rudzewicz, 471 U.S. 462, 476 (1985).
The Due Process Clause does not require a
"mechanical" tally of visits, letters, or
phone calls. Burger King, 471 U.S. at
478.
Petitioners' physical contacts with
Diamond and Obie in Illinois are
substantial. But even if they were not,
this Court's decisions demonstrate that
Petitioners' longstanding attorney-client
relationship with Diamond and Obie makes
the exercise of personal jurisdiction in
Illinois both foreseeable and just. This
-27-
case supplies neither novel facts nor
special considerations of justice that
would warrant review.
THE COURT OF awemesa* DECISION OF THE
BANKRUPTCY RULES ISSUE WAS FULLY
CONSIDERED AND PRESENTS NO SPECIAL
REASONS JUSTIFYING REVIEW.
Though they hyperbolically state that
"(ijt is difficult to imagine a more
important conflict than the question of
personal jurisdiction presented by this
case," Pet. at 5, Petitioners point to no
conflict with any decision of this Court
or of any court of appeals.
Further, Petitioners themselves cite
a dozen district court and bankruptcy
court decisions fully consistent with the
decision below. Pet. at 9 n. 9; id. at 16
n. 14; id. at 17 n. 15. Ignoring the
obvious conclusion that the lower courts
are consistently getting the issue right,
-28-
Petitioners attempt to spin gold from
straw by asserting that the "havoc" of
these allegedly incorrect decisions "is
approaching epidemic proportions." Id. at
16.
Petitioners' approach to certiorari
turns this Court's rules on their head.
Supreme Court Rule 10.1(a) provides that
the hallmarks of a decision meriting
review are conflict with a decision of
this Court or the decision of another
court of appeals, or an extensive
departure from the accepted and usual
course of judicial proceedings. To the
contrary, Petitioners assert that
unanimity of lower-court opinion—
demonstrates “widespread confusion," Pet.
at 5, and requires this Court's action.
Rather than stem the tide of correct
decisions below, this Court should reserve
its certiorari jurisdiction for issues
that present important conflicts. As the
-29-
following sections show, Petitioners'
construction of the Bankruptcy Rules and
their enabling statutes is grounded on a
misreading of the Rules' language and sows
confusion where none exists.
A. The Bankruptcy Rules Apply
In "Related To" Proceedings.
Pursuant to authority granted by
Congress, 28 U.S.C. § 2075, this Court
has promulgated rules of procedure for
bankruptcy cases and proceedings (the
"Bankruptcy Rules"). Among these is
Bankruptcy Rule 7004(d), which provides
for nationwide service of process.
Petitioners assert that, although the
District Court properly had subject-matter
jurisdiction under the "related to" prong
of the bankruptcy jurisdictional statute,
28 U.S.C. § 1334(b), the Bankruptcy Rules
do not apply to any "related to”
proceedings, whether they are before a
district judge or a bankruptcy judge.
a2Q=
This sweeping nullification of the
Bankruptcy Rules finds no support from any
court and is dead wrong.
In Northern Pipeline Construction Co.
v. Marathon Pipe Line Co., 458 U.S. 50
(1982), this Court invalidated the portion
of the Bankruptcy Act of 1978, Pub. L. No.
95-598, 92 Stat. 2549, that granted to
Article I bankruptcy judges the power to
decide state-law disputes subject only to
appellate review. 458 U.S. at 87 and n.
40. In the wake of Northern Pipeline,
Congress enacted the Bankruptcy Amendments
and Federal Judgeship Act of 1984
("BAFJA"), Pub. L. No. 98-353, 98 Stat.
333, which created the following
jurisdictional scheme:
(1) district courts have "original
and exclusive jurisdiction of
all cases under title 11 [of the
United States Code]." 28 U.S.C.
§ 1334(a);
{
(2) district courts have "original
but not exclusive jurisdiction
of all civil proceedings arising
-31-
under title 11, or arising in or
related to cases under title
11." 28 U.S.C. § 1334(b);
(3) district courts may refer "all
cases under title 11 and any or
all proceedings arising under
title 11 or arising in or
related to a case under title
11" to bankruptcy judges. 28
U.S.C. § 157(a);
(4) bankruptcy judges may enter
final orders, subject only to
appellate review, in "core"
proceedings. 28 U.S.C.
§ 157(b) (1); and
(5) bankruptcy judges may "hear a
proceeding that is not a core
proceeding but that is otherwise
related to a case under title
11" but may make only
recommended findings and
conclusions to the district
court, subject to de novo
review. 28 U.S.C. § 157(c)(1).
Unlike the independent bankruptcy courts
created by the 1978 Bankruptcy Code, the
bankruptcy judges under BAFJA are "a unit
of the district court." 28 U.S.C. § 151.
Their jurisdiction is solely derivative of
the district courts' jurisdiction.
Wasserman v. Immormino (In re Granger
Garage, Inc.), No. 89-4022 (6th Cir. Nov.
-32-
30, 1990), 1990 U.S. App. LEXIS 20847 at
*6-*7.
The 1978 Bankruptcy Code and BAFJA
created several significant jurisdictional
terms of art. The bankruptcy "case," over
which the district courts have exclusive
jurisdiction (subject to referral toa
bankruptcy judge) includes the whole
collection of "proceedings," each one of
which in form may resemble a separate
lawsuit, that must be adjudicated after a
bankruptcy petition is filed. S. Rep. No.
989, 95th Cong., 2d Sess. 153-54,
reprinted in 1978 U.S. Code Cong & Admin.
News 5787, 5939-40 ("As used in this
section, everything that occurs in a
bankruptcy case is a proceeding.") ;
1 Collier on Bankruptcy, § 3.01 at 3-20-21
(15th ed. 1990).
"Proceedings" are of three types:
(1) those "arising under title 11," (2)
those “arising in... a case under title
-33-
11," and (3) those "related to a case
under title 11." 28 U.S.C. § 1334(b). A
proceeding is "related to" a case under
title 11 if its outcome "affects the
amount of property available for
distribution or the allocation of property
among creditors." Elscint, Inc. v. First
Wisconsin Financial Corp. (In re Xonics,
Inc.), 813 F.2d 127, 131 (7th Cir. 1987);
accord, Kelly v. Nodine (In re Salem
Mortgage Co.), 783 F.2d 626, 634 (6th Cir.
1986); Pacor, Inc. v. Higgins, 743 F.2d
984, 994 (3d Cir. 1984). The District
Court had subject-matter jurisdiction
under the "related to" prong of 28 U.S.C.
§ 1334(b) because, although the
substantive law goveriiing Diamond's and
Obie's cause of action is not supplied by
title 11, its outcome will have a
Significant impact on the distribution to
creditors. Petitioners do not contest
this. Pet. et 3.
Pn
-34-
Petitioners argue that none of the
Bankruptcy Rules is applicable in
proceedings under the "related to"
jurisdictional prong of 28 U.S.C.
§ 1334(b), regardless of whether the
proceeding is pending before a district
judge or a bankruptcy judge. This
represents a change of position.
Petitioners argued below that, as the
District Court held (APP. 38a), Rule
7004(da) would have applied had this
lawsuit been filed with the bankruptcy
clerk's office. Nevertheless,
Petitioners' new assertion is as incorrect
as their old one.
Petitioners' whole argument is based
on a misreading of Bankruptcy Rule 1001,
which provides:
The Bankruptcy Rules and Forms govern
procedure in cases under title 11 of
the United States Code.
Petitioners incorrectly equate the phrase
"cases under title 11" with the first
athe
prong of 28 U.S.C. § 1334(b), which grants
the district courts original but not
exclusive jurisdiction over "all civil
proceedings arising under title 11."
Thus, Petitioners argue, proceedings
deriving jurisdiction from.§ 1334(b)'s
third ("related to") prong are excluded
from the Bankruptcy Rules' scope.
A "case under title 11" is not the
same thing as a "proceeding arising under
title 11." As shown above, a "case under
title 11" is the umbrella under which all
disputes connected with the bankruptcy
estate are collected. See 28 U.S.C.
§ 1334(a) (granting district courts
exclusive jurisdiction of "all cases under
title 11"). By contrast, a "proceeding
arising under title 11" is a proceeding
that asserts a cause of action based on
some title 11 provision. H.R. Rep. No.
“595, 95th Cong., 2d Sess. 445-46,
reprinted in 1978 U.S. Code Cong. & Admin.
|
—_
News 5787, 6401; Carlton v. BAWW, Inc.,
751 F.2d 781, 787 (5th Cir. 1985); 1
Collier on Bankruptcy 4 3.01 at 3-23-26.
Petitioners' argument founders on
their assumption that the phrase "cases
under title 11" as used in Bankruptcy Rule
1001 means the same thing as “proceedings
arising under title 11" as used in 28
U.S.C. § 1334(b). It doesn't.1¥
Indeed, if Petitioners' argument were
correct, this Court, in promulgating the
Bankruptcy Rules, and Congress, in
sanctioning them, would have left a huge
gap in bankruptcy procedure, because,
under Petitioners' argument, even
bankruptcy courts cannot apply the
1v/ By the same token, Petitioners'
argument that 28 U.S.C. § 2075 does not
authorize rulemaking for "related to"
proceedings (Pet. at 9-10) must fail.
Section 2075 gives this Court authority to
prescribe rules of practice and procedure
"in cases under title 11." Again, this
does not mean "in proceedings arising
under title 11."
=37=-
Bankruptcy Rules in "related to"
proceedings. But the Bankruptcy Courts
cannot apply the Federal Rules of Civil
Procedure either. See Fed. R. Civ. P.
81(a)(1) ("These rules do not apply to
proceedings in bankruptcy"). Thus,
according to Petitioners, this Court and
Congress have left bankruptcy courts with
no rules to govern procedure in the
numerous "related to" proceedings that
they adjudicate every day.1/
Petitioners' argument is not only
erroneous, it produces an impossible
result.
iW Petitioners recognize this problem
and suggest that the Advisory Committee on
Civil Rules needs to make some changes.
Pet. at 8 n. 8. But they are apparently
the first and only ones to see the need
for a change. Only on Petitioners'
garbled reading of the statute and the
Rule is a change necessary.
-38-
B. This Is An "Adversary
Proceeding," To Which
The Bankruptcy Adversary
Rules Apply.
Petitioners' second textual argument
is that, even if the Bankruptcy Rules
apply to "related to" proceedings, the
7000-series rules apply only to “adversary
proceedings," and this is not one. This
argument fails because, as the Court of
Appeals correctly found, this is an
adversary proceeding as defined in the
Bankruptcy Rules.
"Adversary proceeding" is another
bankruptcy term of art. It is defined
among other things, a proceeding "to
recover money or property... ."
Bankruptcy Rule 7001(1). This suit is
"to recover money." Petitioners argue
as,
one
(Pet. at 12-13) that this phrase applies
only to proceedings to “recover" money
that was once part of the estate. This
contention has no legal support and is
—
contrary to common sense. Money is
fungible. Only if a suit sought the
return of specific coins or dollar bills -
which would be of interest only to a
numismatist - would the suit be one to
"recover money" in the sense Petitioners
advance. Yet lawyers and courts,
including this Court, regularly speak of
"recovering" money damages. See, e.g.,
Miles v. Apex Marine Corp., 111 S. Ct.
317, 320 (1990) (“recover damages for loss
of society"); Milkovich v. Lorain Journal
Co., 110 S. Ct. 2695, 2704 (1990)
("recovery of presumed or punitive
damages"); Texaco, Inc. v. Hasbrouck, 110
S. Ct. 2535, 2538 (1990) ("respondents
recovered treble damages") .1¢/
1#/ It is also obviously nonsense to
speak of "recovering" punitive or treble
damages in Petitioners' parlance, because
the money paid by the defendant was never
even notionally the prior property of the
plaintiff.
~Ap@
Petitioners frequently assert that
this suit is not an adversary proceeding
because it is essentially a state-court
action that, solely by virtue of Diamond's
and Obie's bankruptcy, is proceeding ina
federal court. However, Bankruptcy Rule
7001(10) expressly provides that any
state-court suit removed to federal court
pursuant to 28 U.S.C. § 1452 is an
adversary proceeding. 1/ Thus, had this
suit originally been commenced in state
court, upon its removal to federal court
it would by definition be an adversary
proceeding. The fact that this suit was
commenced in federal court rather than
i3/ Though in non-bankruptcy litigation
only a defendant may remove to federal
court, 28 U.S.C. § 1441(a), Section 1452
provides that a "party" may remove claims
related to bankruptcy cases. Thus, had
Diamond and Obie commenced this suit in
state court and then filed their
bankruptcy petitions, they would have been
entitled to remove.
-4 1-
state court does not make it any less an
adversary proceeding.
Finally, the Advisory Committee notes
to Rule 7001 negate Petitioners'
contention. The notes state:
Proceedings to which the rules
in Part VII apply directly include
those brought to avoid transfers by
the debtor under §§ 544, 545, 547,
548 and 549 of the Code; subject to
important exceptions, proceedings to
recover money or property... .
Sections 544, 545, 547, 548, and 549 of
the Bankruptcy Code in a sense apply to
the “recovery" of property transferred
away by the debtor. But "proceedings to
recover money or property" is an
independent prong following the semicolon.
It does not modify the avoidance of
transfers; it adds another category. If
Petitioners' interpretation were correct,
this separate category would not exist.
Much of Petitioners' argument is
devoted to a discussion of "plenary" and
"summary" proceedings under the now-
-42-
repealed Bankruptcy Act of 1898. But the
1978 Bankruptcy Code eliminated these
categories and changed the structure of
bankruptcy courts and their jurisdiction.
Northern Pipeline, 458 U.S. at 54; see
also S. Rep. No. 989, 95th Cong., 2d Sess.
153, reprinted in 1978 U.S. Code Cong. &
Admin. News, 5787, 5939 ("[P]roceeding
here is used in its broadest sense, and
would encompass what are now called
contested matters, adversary proceedings,
and plenary actions under current
bankruptcy law."). Petitioners thus argue
from principles and definitions that no
longer exist.
Cc. Applying Nationwide Service Of
Process Does Not Offend The Due
Process Clause In This Case.
Petitioners' final argument is that
the Due Process Clause prohibits assertion
of nationwide personal jurisdiction in a
"related to" proceeding under 28 U.S.C.
-43-
§ 1334(b). Even if there were merit in
Petitioners' argument, this case is not a
proper test. As noted above (see section
I(C)), Petitioners' contacts with the
state of Illinois are quite substantial
enough to satisfy any reading of the Due
Process Clause. Thus, even assuming
arguendo that 28 U.S.C. § 1334(b) requires
minimum contacts with the forum state,
Petitioners have such contacts. This case
therefore does not present the question
whether a defendant's contacts with the
United States alone, as opposed to the
forum state, satisfy the Due Process
Clause. This Court should not grant
certiorari to decide an abstract question
where it is inevitable that the Court of
Appeals was correct as to the result.
In any event, the Court of Appeals'
decision was correct. Relying on an
unbroken line of decisions, the Court of
Appeals properly held that Congress may
yo
constitutionally provide for nationwide
service of process and that it has done so
—y APP. 19a-20a; see also United
States v. Union Pacific Railroad Co., 98
U.S. 569, 604 (1879) (the Constitution
does not prohibit Congress from providing
that suits of a special character may be
brought in any federal circuit court).
Petitioners argue that their state-
created rights should not be altered by
the happenstance that their clients have
filed bankruptcy petitions. But it is
commonplace that state-created rights
change in bankruptcy. Secure property
rights may be avoided as preferences or
fraudulent conveyances. il U.S.C. §§ 547,
548(a). Indisputable rights to foreclose
or pursue actions against a debtor are
stayed. 110U.S.C. § 362. Perfected
security interests in fruits of collateral
may be negated. 11 U.S.C. § 552(a).
~45-
Nothing in the decision below changes
Petitioners' fundamental substantive
rights. Whether they are liable for
malpractice has not been affected by the
"happenstance" of bankruptcy. The only
difference potentially created by
bankruptcy is the physical location of the
trial. This is a much lesser change than
the substantive changes wrought by 11
U.S.C. §§ 362, 547, 548(a), and 552 and
does not rise to constitutional dimension.
-46-
CONCLUSION
For all of the reasons stated above,
the petition for a writ of certiorari
should be denied.
Respectfully submitted,
Ronald R. Peterson
Russ M. Strobel
Counsel of Record
Cc. Steven Tomashefsky
Daniel S. Goldman
JENNER & BLOCK
One IBM Plaza
Chicago, Illinois 60611
(312) 222-9350
Counsel for Respondents
EXHIBIT
Illinois Public Act 86-840,
Amending Ill. Rev. Stat. ch. 110, § 2-209
LAWS
OF THE
STATE OF ILLINOIS
EFIGHTY-SIXTH
GENERAL ASSEMBLY
1989
PUBLIC ACT 86-1
THRU
PUBLIC ACT 86-1027
4629 PUBLIC ACT 86-839
health centers.
Passed in the General Assembly June 14, 1989.
Approved September 7, 1989.
Effective January l, 1990.
PUBLIC ACT 86-840
(Senate Bill No. 772)
AN ACT to amend the Code of Civil Procedure, approved
August 19, 1981, as amended, by changing Section 2-209.
Be it enacted by the People of the State of Illinois,
represented in the General Assembly:
Section 1. The Code of Civil Procedure, approved August
19, 1981, as amended, is amended by changing Section 2-209 as
follows:
(Ch. 110, par. 2-209)
Sec. 2-209. Act submitting to jurisdiction - Process.
(a) Any person, whether or not a citizen or resident of
this State, who in person or through an agent does ary of the
acts hereinafter enumerated, thereby submits such peiscn,
and, if an individual, his or her personal representative, to
the jurisdiction of the courts of this State as to any cause
of action arising from the doing of any of such acts:
(1) The transaction of any business within this
State;
(2) The commission of a tortious act within this
State;
(3) The ownership, use, or possession of any real
estate situated in this State;
(4) Contracting to insure any person, property or
risk located within this State at the time of
contracting;
(5) With respect to actions of dissolution of
marriage, declaration of invalidity of marriage and legal
separation, the maintenance in this State of a
matrimonial domicile at the time this cause of action
arose or the commission in this State of any act giving
rise to the cause of action;
(6) With respect to actions brought under the
Illinois Parentage Act of 1984, as now or hereafter
amended, the performance of an act of sexual intercourse
within this State during the possible period of
conception;-
(7) The making or performance of any contract or
promise substantially connected with this State;
(8) The performance of sexual intercourse within
this State which is claimed to have resulted in the
conception of a child who resides in this State;
(9) The failure to support a child, spouse or
former spouse who has continued to reside in this State
since the person either formerly resided with them in
this State or directed them to reside in this State;
(10) The acquisition of ownership, possession or
control of any asset or thing of value present within
this State when ownership, possession or control was
acquired;
(11) The breach of any fiduciary duty within this
State;
(12) The performance of duties as a director or
New matter indicated by italics - deletions by strikeout.
:
&
x
PUBLIC ACT 86-840 4630
officer of a corporation organized under the laws of this
State or having its principal place of business within
this State;
(13) The ownership of an interest in any trust
administered within this State; or
(14) The exercise of powers granted under the
authority of this State as a fiduciary.
(b) A court may exercise jurisdiction in any action
arising within or without this State against any person who:
(1) Is a natural person present within this State
when served;
(2) Is a natural person domiciled or resident
within this State when the cause of action arose, the
action was commenced, or process was served;
(3) Is a corporation organized under the laws of
this State; or
(4) Is @ natural person or corporation doing
business within this State.
(c) A court may also exercise jurisdiction on any other
basis now or hereafter permitted by the Illinois Constitution
and th. Constitution of the United States.
(d) +b} Service of process upon any person who is
subject to the jurisdiction of the courts of this State, as
provided in this Section, may be made by personally serving
the summons upon the defendant outside this State, as
provided in this Act, with the same force and effect as
though summons had been personally served within this State.
fe) te}y Service of process upon any person who resides
or whose business address is outside the United States and
who is subject to the jurisdiction of the courts of this
State, as provided in this Section, in any action based upon
product liability may be made by serving a copy of the
summons with a copy of the complaint attacned upon the
Secretary of State. The summons shall be accompanied by a $5
fee payable to the Secretary of State. The plaintiff shall
forthwith mail a copy of the summons, upon which the date of
service upon the Secretary is clearly shown, together with a
copy of the complaint to the defendant at his or her last
known place of residence or business address. Plaintiff
shall file with the circuit clerk an affidavit of the
plaintiff or his or her attorney stating the last known place
of residence or the last known business address of the
Gefendant and a certificate of mailing a copy of the summons
and complaint to the defendant at such address as required by
this subsection (fe) te}. The certificate of mailing shall be
prima facie evidence that the plaintiff or his or her
attorney mailed a copy of the summons and complaint to the
defendant as _ required. Service of the summons shall be
deemed to have been made upon the defendant on the date it is
served upon the Secretary and shall have the same force and
effect as though summons had been personally served upon the
defendant within this State.
(f) tdy Only causes of action arising from acts
enumerated herein may be asserted against a defendant in an
action in which jurisdiction over him or her is based upon
subsection (a) thts-Section.
(g) tez Nothing herein contained limits or affects the
right to serve any process in any other manner now or
hereafter provided by law.
Section 2. This Act takes effect upon becoming law.
New matter indicated by italics - deletions by strikeout.
4631 PUBLIC ACT 86-840
Passed in the General Assembly June 28, 1989.
Approved September 7, 1989.
Effective September 7, 1989.
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.