Rosier v. Cascade Mountain, Inc. , 367 Ill. App. 3d 559 ( 2006 )

First Division
September 11, 2006
No. 1-05-3457
GARY AND SHARON ROSIER, Individually )
and as Parents and Next Friends of )
Steven Rosier, a Disabled Minor, ) Appeal from
) the Circuit Court
Plaintiffs-Appellees, ) of Cook County
)
v. ) 03 L 14414
)
CASCADE MOUNTAIN, INC., and THE WALZ ) Honorable
FAMILY CORPORATION, ) Michael J. Hogan,
) Judge Presiding
Defendants-Appellants. )
PRESIDING JUSTICE McBRIDE delivered the opinion of the
court:
Wisconsin defendants Cascade Mountain, Inc., and The Walz
Family Corporation bring this appeal under Supreme Court Rule
306(a)(3) from an order of the circuit court of Cook County
denying their motion to dismiss plaintiffs' tort claim for lack
of personal jurisdiction. 166 Ill. 2d R. 306(a)(3). The main
issue we address is whether the Wisconsin defendants have been
doing business in Illinois and are therefore subject to general
personal jurisdiction in Illinois pursuant to section 2-209(b)(4)
of the Code of Civil Procedure. 735 ILCS 5/2-209(b)(4) (West
2002).
Illinois residents Gary and Sharon Rosier, individually and
as next friends of their minor son Steven, filed this negligence
action in Illinois after Steven was injured on March 3, 2003,
while attempting to snowboard over the "J.J." tabletop jump at
the defendants' Cascade Mountain ski and snowboard facility in
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Portage, Wisconsin. The plaintiffs sought a minimum of $50,000
in compensatory damages based on allegations that the Wisconsin
corporations negligently designed, constructed, maintained,
monitored, or supervised the tabletop jump and/or negligently
failed to timely respond to Steven's injuries.
The plaintiffs served the defendants in Wisconsin.
In conjunction with their motion to quash service of summons
and dismiss the case, the Wisconsin corporations filed the
affidavit of their president and director, Phil Walz. The
affidavit indicated the corporations did not own any real estate
or other assets in Illinois, maintain any personnel, offices or
business equipment in Illinois, or file tax returns in Illinois.
The affidavit further specified the corporations contracted with
an Illinois telecommunications provider for an Illinois telephone
number through which callers could listen to a prerecorded
Wisconsin snow report, and that the corporations had secured a
loan and a line of credit with an Illinois bank to fund chairlift
and snow making improvements at Cascade Mountain. The Wisconsin
entities argued these contacts were insufficient to subject them
to specific in personam jurisdiction in Illinois pursuant to the
long-arm statute, which is set out in section 2-209(a) of the
Code of Civil Procedure, or to general in personam jurisdiction
in Illinois under the doing business doctrine, which is codified
in section 2-209(b)(4) of the Code of Civil Procedure. 735 ILCS
5/2-209(a), (b)(4) (West 2002) (Code).
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The Rosiers did not file any affidavits rebutting Phil
Walz's sworn statement 1 or otherwise respond directly to the
Wisconsin defendants' contentions about sections 2-209(a) and
(b)(4) of the Code. Instead, the Rosiers argued Cascade
Mountain's local telephone number, local marketing, and
interactive website evidenced sufficient contacts with Illinois
to justify its courts' assertion of general jurisdiction over
both Wisconsin defendants under the catchall provision of the
Illinois' long arm statute. The catchall provision provides: "A
court may also exercise jurisdiction on any other basis now or
hereafter permitted by the Illinois Constitution and the
Constitution of the United States." 735 ILCS 5/2-209(c) (West
2002).
When the circuit court decides a jurisdictional question
solely on the basis of documentary evidence as it did in this
1
Since the Rosiers did not file any affidavits rebutting
Phil Walz's affidavit, the well-alleged facts in his affidavit
must be taken as true. Forrester v. Seven Seventeen HB St. Louis
Redevelopment Corp., 336 Ill. App. 3d 572, 579, 784 N.E.2d 834,
839 (2002).
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case, the question is addressed de novo on appeal Spartan
Motors, Inc. v. Lube Power, Inc., 337 Ill. App. 3d 556, 559-60,
786 N.E.2d 613, 616 (2003). The plaintiff bears the burden of
establishing a prima facie basis upon which jurisdiction over an
out-of-state resident may be exercised. Khan v. Van Remmen,
Inc., 325 Ill. App. 3d 49, 53, 756 N.E.2d 902, 907 (2001). The
due process clause of the fourteenth amendment to the federal
constitution limits the instances in which a state may assert
personal jurisdiction over a nonresident corporate defendant.
Cook Associates, Inc. v. Lexington United Corp., 87 Ill. 2d 190,
197, 429 N.E.2d 847, 850 (1981). "The Due Process Clause
protects an individual's liberty interest in not being subject to
the binding judgments of a forum with which he has established no
meaningful 'contacts ties or relations.' " Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 471-72, 85 L. Ed. 2d 528, 540, 105 S.
Ct. 2174, 2181 (1985), quoting International Shoe Co. v.
Washington, 326 U.S. 310, 319, 90 L. Ed. 95, 104, 66 S. Ct. 154,
160 (1945). Thus, the plaintiff's burden is to demonstrate that
the out-of-state defendant has had the necessary minimum contacts
with the forum state. Reimer v. KSL Recreation Corp., 348 Ill.
App. 3d 26, 33-34, 807 N.E.2d 1004, 1011 (2004). The minimum
contacts standard ensures that "requiring the out-of-state
resident to defend in the forum does not ' "offend traditional
notions of fair play and substantial justice." ' " Borden
Chemicals & Plastics, L.P. v. Zehnder, 312 Ill. App. 3d 35, 41,
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726 N.E.2d 73, 78 (2000), quoting International Shoe, 326 U.S. at
316, 90 L. Ed. at 102, 66 S. Ct. at 158, quoting Milliken v.
Meyer, 311 U.S. 457, 463, 85 L. Ed. 278, 283, 61 S. Ct. 339, 343
(1940). The minimum contacts analysis must be based on some act
by which the defendant purposefully availed itself of the
privilege of conducting activities within the forum state, in
order to assure that a nonresident will not be haled into a forum
solely as a result of random, fortuitous, or attenuated contacts
with the forum or the unilateral acts of a consumer or some other
third person. Burger King, 471 U.S. at 475, 85 L. Ed. at 542,
105 S. Ct. at 2183.
The meaning of the minimum contacts standard depends on
whether a court is asserting general jurisdiction or specific
jurisdiction over the out-of-state defendant. Borden Chemicals,
312 Ill. App. 3d at 41, 726 N.E.2d at 78.
A court may potentially assert specific jurisdiction over an
out-of-state resident if the lawsuit arises out of or is
connected to the defendant's purportedly wrongful activities
within the forum state. Borden Chemicals, 312 Ill. App. 3d at
41, 726 N.E.2d at 79. When a corporation exercises the privilege
of conducting activities within a state, it enjoys the benefits
and protections of that state, and so requiring it to respond to
a suit in that state concerning those specific activities " 'can,
in most instances, hardly be said to be undue.' " Borden
Chemicals, 312 Ill. App. 3d at 42, 726 N.E.2d at 79, quoting
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International Shoe, 326 U.S. at 319, 90 L. Ed. at 104, 66 S. Ct.
at 160. The Rosiers' lawsuit is not based on any activity within
Illinois; therefore, specific jurisdiction principles are not
relevant to their appeal.
When a suit neither arises from nor relates to a defendant's
activities within the state where suit has been filed, the court
is limited to exercising general jurisdiction over the out-of-
state defendant. Borden Chemicals, 312 Ill. App. 3d at 41, 726
N.E.2d at 78. Federal standards permit a court to exercise
general jurisdiction over a nonresident only where the
nonresident has continuous and systematic general business
contacts with the forum. Borden Chemicals, 312 Ill. App. 3d at
41, 726 N.E.2d at 78-79. In addition, Illinois limits general
jurisdiction over nonresidents to instances in which the
nonresident was " 'present and doing business' " in the forum.
Reimer, 348 Ill. App. 3d at 34, 807 N.E.2d at 1012, quoting
Braband v. Beech Aircraft Corp., 72 Ill. 2d 548, 554-55, 382
N.E.2d 252, 255 (1978). The doing business standard requires a
nonresident defendant to carry on business activity in Illinois "
'not occasionally or casually, but with a fair measure of
permanence and continuity.' " Maunder v. DeHavilland Aircraft of
Canada, Ltd., 102 Ill. 2d 342, 351, 466 N.E.2d 217, 221 (1984),
quoting Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 267, 115
N.E. 915, 917 (1917). The doing business standard is quite high
and generally "means conducting business in Illinois of such
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character and extent that it may be inferred that the defendant
has subjected itself to the jurisdiction and laws of this state
and is bound to appear when properly served." Reimer, 348 Ill.
App. 3d at 35, 807 N.E.2d at 1012. "In effect, the foreign
corporation has taken up residence in Illinois and, therefore,
may be sued on causes of action both related and unrelated to its
activities in Illinois." Reimer, 348 Ill. App. 3d at 35, 807
N.E.2d at 1013.
The Rosiers rely primarily on Adams v. Harrah's Maryland
Heights Corp., 338 Ill. App. 3d 745, 789 N.E.2d 426 (2003), to
sustain their burden of establishing that general jurisdiction is
properly asserted over the nonresident corporations. We do not
find Adams' analysis particularly persuasive because it relied
primarily on specific jurisdiction case law and principles to
determine whether general jurisdiction was properly asserted over
a Missouri defendant. See Adams, 338 Ill. App. 3d at 747-50, 789
N.E.2d at 539-41, citing Flint v. Court Appointed Special
Advocates of Du Page County, Inc., 285 Ill. App. 3d 152, 169, 674
N.E.2d 831, 834 (finding "[defendant] NCASAA's contacts within
Illinois are sufficiently related to the cause of action against
them and, at least in part, gave rise to it"); Allerion, Inc. v.
Nueva Icacos, S.A. de C.V., 283 Ill. App. 3d 40, 52, 669 N.E.2d
1158, 1166 (1996) (finding it was "not unfair to bring [the
defendant] 'into an Illinois court to enforce the [contractual]
obligations [the defendant] knowingly undertook"); Burger King
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Corp., 471 U.S. 462, 85 L. Ed. 528, 105 S. Ct. 2174 (finding
contract negotiation, contemplated future consequences, terms of
contract, and course of dealing justified bringing Michigan
residents to Florida to answer breach of franchise contract);
Rollins v. Ellwood, 141 Ill. 2d 244, 275, 565 N.E.2d 1302, 1316
(1990) (finding Missouri police officer could not be haled into
Illinois on the basis of his allegedly tortious act in Illinois).
Nevertheless, the Wisconsin defendants' contacts with
Illinois are substantially less than those described in Adams.
The defendant in Adams, a Missouri casino, maintained a "gold
card holder" program (Adams, 338 Ill. App. 3d at 748-49, 789
N.E.2d at 440), which presumably encouraged customers to maintain
a continuing relationship with the Missouri gaming facility. In
fact, about 64,000 individuals, which was approximately one-third
of all the defendant's gold card holders, were from Illinois.
Adams, 338 Ill. App. 3d at 748-49, 789 N.E.2d at 440. In
addition, the defendant provided a free, regular shuttle bus
service to physically transport Illinois residents from this
jurisdiction to its Missouri site. Adams, 338 Ill. App. 3d at
748-49, 789 N.E.2d at 440. The defendant also directed magazine,
television, radio, and telephone book ads, as well as flyers,
brochures, and coupons to Illinois residents to lure them into
continuing relationships. Adams, 338 Ill. App. 3d at 748-49, 789
N.E.2d at 400. In light of the "continuous and systematic
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business contacts" directed at the Illinois marketplace, the
volume of Illinois customers, and the shuttle service from
Illinois to Missouri, the court concluded it was reasonable for
Illinois courts to exercise jurisdiction over the Missouri
defendant. Adams, 338 Ill. App. 3d at 749, 789 N.E.2d at 441.
While the record indicates the Wisconsin defendants advertise in
Illinois, sometimes appear at Illinois trade shows, maintain an
Illinois telephone number, and derive some revenue from the
residents of this state, these contacts amount to mere
solicitation to do business in Wisconsin, which is an
insufficient basis for inferring that the Wisconsin defendants
have subjected themselves to the jurisdiction of the Illinois
courts. Maintaining an Illinois telephone number is not enough
to sustain jurisdiction. Radosta v. Devil's Head Ski Lodge, 172
Ill. App. 3d 289, 295, 526 N.E.2d 561, 565 (1988). Nor is
soliciting Illinois residents to transact business in Wisconsin,
through a booth at a trade show, magazine advertisements, and
radio broadcasts. Radosta, 172 Ill. App. 3d at 295, 526 N.E.2d
at 565; Dal Ponte v. Northern Manitoba Native Lodges, Inc., 220
Ill. App. 3d 878, 884, 581 N.E.2d 329, 333 (1991). Furthermore,
the Wisconsin defendants do not continuously and systematically
physically transport Illinois residents from Illinois to their
Portage, Wisconsin, ski and snowboarding facilities and, thus,
are not comparable to the Missouri defendant in Adams. Adams,
338 Ill. App. 3d at 748-49, 789 N.E.2d at 540.
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The Rosiers also argue that Cascade Mountain's presence on
the Internet is significant for the purposes of acquiring
jurisdiction over a nonresident defendant and support this
argument with discussion of Euromarket Designs, Inc. v. Crate &
Barrel, Ltd., 96 F. Supp. 2d 824 (N.D. Ill. 2000) and George S.
May International Co. v. Xcentric Ventures, LLC, 409 F. Supp.
1052 (N.D Ill. 2006). The Rosiers contend individuals may use
the Cascade Mountain website to subscribe to e-mail bulletins
from the defendants and that the site "provides for online
purchase of gift certificates, season passes, insurance and
equipment rental" and that these items range in price "from $5 to
$999." We find the e-mail bulletins are analogous to other
advertising mediums the defendants use in this jurisdiction, such
as radio and magazine advertising, and that the e-mail messages
at most solicit Illinois residents to transact business in
Wisconsin and are not a basis for exercising jurisdiction in this
forum. In addition, the Rosiers overlook dispositive
distinctions in Euromarket Designs and George S. May
International. The Rosiers contend the Cascade Mountain website
"provide[s] for online purchase[s]" but fail to offer evidence
that the website is being used for actual purchases. This
failure is significant not only because the plaintiffs bear the
burden of demonstrating the necessary minimum contacts to support
general jurisdiction, but also because in Euromarket Designs, the
court remarked that generally a defendant's "mere maintenance of
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an Internet website is not sufficient activity to exercise
general jurisdiction over the defendant." Euromarket Designs, 96
F. Supp. 2d at 833. More importantly, this remark was offered
only in passing and the court's analysis focuses on whether it
had specific personal jurisdiction rather than general personal
jurisdiction over the foreign defendant due to the defendant's
Internet and non-Internet activities. Euromarket Designs, 96
Supp. 2d at 833-39. The Rosiers, however, disregard these
indications that Euromarket Designs is not supportive of their
appeal. The Rosiers also fail to acknowledge that George S. May
International was an action primarily for trade libel and
deceptive business practices and that the court determined it had
specific jurisdiction over the non-resident defendants based on
defamatory statements posted on their website. George S. May
International, 409 F. Supp. 2d at 1054. After extensive
discussion supporting its finding of specific jurisdiction
(George S. May International, 409 F. Supp. 2d at 1057-60), the
court briefly stated that it was also proper to find the
existence of general jurisdiction based on the defendant's
"continuous and systematic" contacts with Illinois. George S.
May International, 409 F. Supp. 2d at 1060. Unlike the Rosiers,
the plaintiff in that case demonstrated that the defendants had
engaged in actual commerce through their website. The court
cited the specific number of commercial transactions with
Illinois residents -- 47 donations were made in Illinois in
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response to the defendants' solicitations and 13 Illinois
residents bought books. George S. May International, 409 F.
Supp. at 1059. In contrast, the Rosiers only contend the Cascade
Mountain website is a means to transact business. In short, the
Rosiers fail to provide factual or legal support for their
contention that Cascade Mountain's presence on the Internet is a
basis for exerting general jurisdiction over the nonresident
defendants.
We also reject the Rosiers' contention that the trial court
should have "pierced the corporate veil" of the Cascade Mountain
and Walz Family corporations in order to find jurisdiction over
the corporations. The Rosiers are referring to an equitable
remedy under which a court may find a corporation's shareholders,
directors, or officers -- who are not as a general rule liable
for any corporate debts and obligations -- personally liable for
the corporation's debts and obligations. Ted Harrison Oil Co. v.
Dokka, 247 Ill. App. 3d 791, 795, 617 N.E.2d 898, 901 (1993). We
emphasize that the Rosiers' complaint did not suggest in any way
that they were attempting to hold individual shareholders,
directors, or officers personally liable for Steven's injuries.
There were no allegations in the complaint regarding the conduct
of any individual. The Rosiers, however, argued the corporate
veil theory was an alternate means for the trial court to acquire
jurisdiction over the defendant Wisconsin corporations, and that
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if the court found the Rosiers' evidence was lacking, it should
permit the Rosiers to pursue additional discovery on the issue.
The written order on appeal does not specify the trial court's
reason or reasons for finding it had general personal
jurisdiction over the Wisconsin defendants, and neither side has
tendered a transcript of the hearing. Nevertheless, the Rosiers'
appellate brief suggests the court indicated in some way that it
did not find the corporate veil theory persuasive.
The remedy of disregarding or piercing the corporate veil in
order to get to assets held by an individual will be employed
where there is such unity of interest and ownership that the
separate personalities of the corporation and the individual no
longer exist and where adherence to the fiction of a separate
corporate existence would sanction a fraud, promote injustice, or
promote inequitable consequences. People v. V & M Industries,
Inc., 298 Ill. App. 3d 733, 739, 700 N.E.2d 746, 750 (1998). The
party seeking to disregard the corporate entity must make "a
substantial showing that the corporation is really a dummy or
sham for a dominating personality." Ted Harrison Oil Co., 247
Ill. App. 3d at 796, 617 N.E.2d at 902. A trial court should be
reluctant to pierce the corporate veil, and its finding will be
reversed on appeal only where it is against the manifest weight
of the evidence. Ted Harrison Oil Co., 247 Ill. App. 3d at 796,
617 N.E.2d at 902.
One of the cases the Rosiers' rely upon, V & M Industries,
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illustrates the proper application of the concept. In that case,
the State sought injunctive relief and civil penalties under the
Illinois Environmental Protection Act (415 ILCS 5/1 et seq. (West
1994)) after approximately 40,000 to 50,000 tires burned on
property owned by a corporation. V & M Industries, 298 Ill. App.
3d at 734, 700 N.E.2d at 747. The fire burned for nearly a week,
despite the efforts of numerous firefighters, and produced huge
black smoke clouds and the emission of human carcinogens and
deadly poisons. V & M Industries, 298 Ill. App. 3d at 734, 700
N.E.2d at 747. The burn area, a corner measuring 150 feet by 150
feet, was the only asset the corporation owned when the fire
occurred. V & M Industries, 298 Ill. App. 3d at 742, 700 N.E.2d
at 753. Vernon, the dominant shareholder, had piled all the
tires into that corner (V & M Industries, 298 Ill. App. 3d at
738, 700 N.E.2d at 749) and the corporation's remaining 14 acres
had been put into a land trust with Vernon as beneficiary. V & M
Industries, 298 Ill. App. 3d at 742, 700 N.E.2d at 753. The
corporation was dissolved after the fire. V & M Industries, 298
Ill. App. 3d at 734, 700 N.E.2d at 747.
The court determined, however, that Vernon should be held
personally liable for the corporation's debt because each of the
eight relevant factors was present. V & M Industries, 298 Ill.
App. 3d at 740, 700 N.E.2d at 751. A party seeking to rely on
the corporate veil theory need not prevail on all eight factors,
and no single factor is dispositive, but a court should take all
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of the variables into consideration. See, e.g., V & M
Industries, 298 Ill. App. 3d at 740, 700 N.E.2d at 751. The
court found (1) the corporation was undercapitalized for the
transactions that needed to be performed, such as buying real
estate to be leased to others and contracting for property
maintenance, (2) the corporation was insolvent when the court
considered the factors, (3) no stock was ever issued, (4) no
shareholder dividends were paid, (5) corporate formalities such
as regular meetings and minute taking were never observed, (6)
there was an absence of corporate records, and (7) other than the
dominant shareholder, Vernon, none of the corporate officers and
directors functioned in their roles. Finally, (8) the
corporation was a "mere facade for the operation of the dominant
shareholder, Vernon," and "Vernon is *** V & M," as evidenced in
part by the fact that checks owed to the corporation totaling
$100,000 were made payable to Vernon, personally, and vice versa.
V & M Industries, 298 Ill. App. 3d at 740-42, 700 N.E.2d at 751-
52. These facts led the court to conclude, "[t]he circumstances
in this case are overwhelming to the point that adherence to the
fiction of a separate corporate existence would indeed sanction a
fraud, promote injustice, and promote inequitable consequences."
V & M Industries, 298 Ill. App. 3d at 742, 700 N.E.2d at 753.
The Rosiers cite other instances in which corporate status
has been disregarded and individuals associated with the
corporation have been held personally liable for judgments. See
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Falcon Associates, Inc. v. Cox, 298 Ill. App. 3d 652, 664, 699
N.E.2d 203, 211 (1998) (relevant factors including no stock
issuance, no dividend payments, and transfer of all corporate
assets to a second corporation after dispute arose supported
conclusion that homebuilder-seller corporation, its president,
and second corporation should be treated as "but one single
entity" for purposes of liability); Washington Courte Condominium
Ass'n -- Four v. Washington-Gulf Corp., 267 Ill. App. 3d 790,
816-17, 643 N.E.2d 199, 217 (1994) (in dispute over condominium
sale, court indicated, "[t]he record shows such a unity of
interest and ownership that the separate personalities of the
corporation and the individual no longer existed and ***
adherence to the separate corporate existence would sanction a
fraud, promote injustice and promote inequitable consequences").
Thus, the Rosiers have demonstrated there are circumstances
under which a court may and will find corporate shareholders,
directors, or officers personally liable for corporate
obligations. The Rosiers have not, however, offered any legal
authority or any reasoned argument indicating a court may
scrutinize the local contacts of a foreign corporation's
shareholders, directors, or officers in order to find that the
foreign corporation is subject to the court's personal
jurisdiction. Accordingly, we find the Rosiers have waived
consideration of their contention that the corporate veil theory
is a means or should be a means of exerting general personal
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jurisdiction over a nonresident defendant. 188 Ill. 2d R.
341(e)(7); Ferguson v. Bill Berger Associates, Inc., 302 Ill.
App. 3d 61, 78, 704 N.E.2d 830, 842 (1998) (Supreme Court Rule
341(e)(7) requires proponent to cite supporting authority and
failure to do so results in waiver).
In summary, all that defendants have done in this forum is
solicit business, absorb some of the expenses associated with
accessing a prerecorded announcement of snow conditions, and
borrow money. The defendant or defendants have created a website
which is a potential means for transacting business in Illinois,
but the record does not disclose any transactions with Illinois
residents. The Rosiers chose to initiate contact with the non-
Illinois defendants and chose to travel to Portage, Wisconsin, to
make use of the defendants' ski and snowboarding facilities. It
would not be consistent with due process to require the Wisconsin
defendants to litigate the resulting dispute in Illinois. The
contacts the defendants have with Illinois are not sufficient for
its courts to exercise general personal jurisdiction over the
Wisconsin entities. The Rosiers' alternative argument that
piercing the corporate veil is an appropriate means of acquiring
jurisdiction over a non-Illinois corporation is not supported by
adequate legal reasoning and citation to supporting authority,
and therefore did not merit our consideration. Because the
plaintiff Rosiers did not meet their burden of proving that in
personam jurisdiction exists over the nonresident defendants, we
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reverse the trial court's order denying the motion to quash
service and dismiss the complaint.
Reversed.
CAHILL and JOSEPH GORDON, JJ., concur.
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