Dixon v. GAA Classic Cars, LLC

2019 IL App (1st) 182416
No. 1-18-2416
September 30, 2019
FIRST DIVISION
IN THE
APPELLATE COURT OF ILLINOIS
FIRST DISTRICT
JOHN DIXON, ) Appeal from the Circuit Court
) of Cook County.
Plaintiff-Appellant, )
) No. 18 L 005429
v. )
) The Honorable
GAA CLASSIC CARS, LLC, ) Daniel J. Kubasiak,
) Judge Presiding.
Defendant-Appellee. )
JUSTICE WALKER delivered the judgment of the court, with opinion.
Presiding Justice Griffin and Justice Hyman concurred in the judgment and opinion.
OPINION
¶1 John Dixon sued GAA Classic Cars, LLC (GAA), for fraudulent misrepresentations in
connection with the sale of an automobile at an auction livestreamed over the Internet from
North Carolina. The circuit court granted GAA’s motion to dismiss the complaint for lack of
personal jurisdiction. We hold that Dixon’s allegations that GAA sent fraudulent
advertisements, e-mails, and phone calls to Illinois and made fraudulent misrepresentations
No. 1-18-2416
on its website suffice to give Illinois courts personal jurisdiction over GAA. We reverse the
circuit court’s judgment.
¶2 I. BACKGROUND
¶3 On January 25, 2018, plaintiff John Dixon saw an advertisement posted by GAA on a
car-related website. The advertisement listed a 1973 Ford Bronco for sale at auction. Dixon
responded to the advertisement by sending an e-mail to GAA, requesting more information
about the Bronco, including how to bid for it. GAA responded with an e-mail to Dixon,
inviting Dixon to bid on the Bronco at the auction scheduled for March 2, 2018. GAA’s e-
mail told Dixon he could participate “via live simulcast bidding or on the telephone via
phone bidding.” GAA added that Dixon could find more information about the Bronco at
GAA’s website. Dixon, via e-mail, asked for pictures of the Bronco’s engine. GAA again
responded by e-mail that it would send him pictures of the engine once GAA received the
Bronco from its owner. GAA told Dixon that the auction price for the Bronco should “run
around $30,000.00 - $40,000.00.”
¶4 Dixon spoke telephonically with an agent of GAA on February 6, 2018. They discussed
registration for the March auction, and the agent offered to e-mail the forms that Dixon
needed to return for participation in the auction. In a subsequent phone conversation, GAA
reaffirmed the representations it made in the advertisement, that the owner had the Bronco
“Frame Off Restored in 2017” with “New Brakes & Tires” and the Bronco was “Garage
Kept & Frequently Driven Since Restoration.” GAA’s agent added that the Bronco was rated
“4.5 out of 5.” Dixon returned the signed registration form to GAA, and GAA forwarded a
2
No. 1-18-2416
photograph of the Bronco via text message to Dixon’s cell phone. On February 27, 2018,
GAA sent Dixon two photographs of the Bronco’s engine.
¶5 GAA telephoned Dixon on March 2, 2018, at his Illinois telephone number, to obtain
Dixon’s bids on the Bronco. Dixon watched GAA’s simulcast of the auction, and in the
simulcast, GAA again said the Bronco was “frame off restored.” Dixon bid $37,000 for the
Bronco, and he was the highest bidder. GAA e-mailed a bill of sale to Dixon, along with
payment instructions. Dixon hired the shipping transport company GAA recommended to
ship the Bronco to Illinois. On March 13, 2018, Dixon received the Bronco, and he
immediately recognized that it had significant problems because GAA had misrepresented
the Bronco’s condition.
¶6 Dixon had the Bronco towed to a mechanic “well-versed in the repair, building, and
restoration of 1973 Ford Broncos.” The mechanic determined that the Bronco
“(1) was not ‘frame off’ restored; (2) was in a mechanically and electrically
unsafe condition; (3) contained significant material defects that were purposefully
hidden to conceal their discovery and identity; (4) had significant safety issues
that were hidden to conceal their discovery and identity; (5) was inoperable and
could not have been ‘frequently drive[n]’ as represented by Defendant; (6) did not
have ‘new brakes’ as represented by Defendant; (7) had a steering stabilizer that
was worn out and leaking; (8) did not have an operable heating system; (9) had an
illegally oversized right rear drum; (10) had cut electrical wires controlling the
turn signal connector, windshield wiper, and interior lights; (11) contained an
3
No. 1-18-2416
engine that was not original and had been improperly modified; and (12) was not,
by any means, in a condition where it would receive a ‘4.5/5’ rating.”
¶7 In May 2018, Dixon filed a complaint against GAA. The complaint, as amended, alleged
negligent misrepresentation, fraudulent misrepresentation, deceptive practices, and fraudulent
concealment. GAA filed a motion to dismiss the first amended complaint for lack of
jurisdiction. GAA, a North Carolina corporation with its principal place of business in
Greensboro, North Carolina, argued that it did not have ongoing activity in Illinois and never
purposely availed itself of the privilege of conducting business in Illinois.
¶8 The circuit court granted GAA’s motion, finding that the circuit court lacked specific
personal jurisdiction over GAA because GAA did not have sufficient contacts with the state
of Illinois. Dixon now appeals.
¶9 II. ANALYSIS
¶ 10 On appeal, Dixon argues he alleged facts showing that Illinois courts have personal
jurisdiction over GAA. Because the circuit court decided the jurisdictional issue solely on
documentary evidence, we review the ruling de novo. Wiggen v. Wiggen, 2011 IL App (2d)
100982, ¶ 20.
¶ 11 Illinois courts have general jurisdiction over a nonresident defendant only if the
defendant’s “affiliations with the State in which suit is brought are so constant and pervasive
as to render [it] essentially at home in the forum State.” (Internal quotation marks omitted.)
Daimler AG v. Bauman, 571 U.S. 117, 122 (2014). Dixon does not argue that Illinois courts
have general jurisdiction over GAA. Thus, we address only the issue of whether Dixon met
4
No. 1-18-2416
his burden of alleging facts that establish a prima facie case for specific jurisdiction over
GAA. See Wiggen, 2011 IL App (2d) 100982, ¶ 20.
¶ 12 Specific jurisdiction requires
“a showing that the defendant purposefully directed its activities at the forum state
and the cause of action arose out of or relates to the defendant’s contacts with the
forum state. [Citation.] Under specific jurisdiction, a nonresident defendant may be
subjected to a forum state’s jurisdiction based on certain single or occasional acts in
the state but only with respect to matters related to those acts.” (Internal quotation
marks omitted.) Russell v. SNFA, 2013 IL 113909, ¶ 40.
¶ 13 Dixon points to several alleged acts by which GAA directed its activities to Illinois. GAA
posted an advertisement on a website that reached a national audience. GAA sent e-mails to
Dixon in Illinois, and those e-mails included forms for Dixon to fill out to enter the auction
and to complete the purchase of the Bronco. The e-mails included a link to GAA’s website,
which also reached a national audience. In the e-mails and in phone calls, GAA invited
Dixon to participate in the auction by watching it as GAA simulcast it on its website. GAA
engaged in several telephone conversations with Dixon, and GAA called him in Illinois on
March 2, 2018, to solicit his bid for the Bronco.
¶ 14 “The type of Internet activity that is sufficient to establish personal jurisdiction remains
an emerging area of jurisprudence.” Bombliss v. Cornelsen, 355 Ill. App. 3d 1107, 1114
(2005). Generally, “a website that provides only information does not create the minimum
contacts necessary to establish personal jurisdiction over a defendant.” Illinois v. Hemi
5
No. 1-18-2416
Group LLC, 622 F.3d 754, 759 (7th Cir. 2010). In ruling that Illinois courts had personal
jurisdiction over Hemi Group, the Hemi Group court found:
“Hemi created several commercial, interactive websites through which customers
could purchase cigarettes from Hemi. Hemi held itself out as open to do business
with every state (including Illinois) except New York. After the customers made
their purchases online, Hemi shipped the cigarettes to their various destinations. It
is Hemi reaching out to residents of Illinois, and not the residents reaching back,
that creates the sufficient minimum contacts with Illinois that justify exercising
personal jurisdiction over Hemi in Illinois.” Hemi Group, 622 F.3d at 758.
¶ 15 Similarly, operating a website that permitted Illinois users to submit payment online for
goods and services sufficed to give Illinois courts jurisdiction over the nonresident defendant
in uBID, Inc. v. GoDaddy Group, Inc., 623 F.3d 421 (7th Cir. 2010). GAA’s website
included information on cars for sale to customers in all states, and it simulcast an auction in
which GAA solicited bids from all across the country.
¶ 16 GAA also sent e-mails to Dixon in Illinois, including forms and instructions that served
as an integral part of its extraction of money from Dixon. “[E-]mails may be properly
considered in minimum contacts analyses, especially if they were purposefully sent to a
forum resident knowing that they would ‘most likely’ be read in the forum.” Levin v. Posen
Foundation, 62 F. Supp. 3d 733, 740 (N.D. Ill. 2014) (quoting Felland v. Clifton, 682 F.3d
665, 676 n.3 (7th Cir. 2012)). In Bryant v. Smith Interior Design Group, Inc., 310 S.W.3d
227, 229 (Mo. 2010), the Missouri Supreme Court found that Missouri courts had jurisdiction
over a nonresident defendant who “sent e-mails and fraudulent or misleading documents into
6
No. 1-18-2416
Missouri with the intent to defraud [the plaintiff] and to conceal the true nature of [the
defendant’s] commission charges, resulting in harm to [the plaintiff] in Missouri.”
¶ 17 Dixon alleged that in the advertisement and in his telephone conversations with GAA,
GAA misrepresented the condition of the Bronco. Dixon alleged that GAA stated, falsely,
that the Bronco’s owner had the Bronco “Frame Off Restored in 2017,” with “new brakes”;
the Bronco was “frequently driven since 2017”; and the Bronco was rated “4.5/5.”
Fraudulent statements in telephone calls gave Illinois courts jurisdiction over out of state
defendants in Khan v. Gramercy Advisors, LLC, 2016 IL App (4th) 150435, and Zazove v.
Pelikan, Inc., 326 Ill. App. 3d 798 (2001). The Zazove court found, “in cases of fraudulent
misrepresentation, reaching out to Illinois residents, whether by mail, telephone, telex or
facsimile, with an intent to affect Illinois interests, can be a sufficient basis for exercising
personal jurisdiction over a nonresident defendant.” Zazove, 326 Ill. App. 3d at 806. The
Khan court added, “[o]nly a trivial, formalistic distinction can be made between someone
who utters a fraudulent misrepresentation in person and someone who does so on the phone.”
Khan, 2016 IL App (4th) 150435, ¶ 197.
¶ 18 Andra v. Left Gate Property Holding, Inc., 453 S.W.3d 216 (Mo. 2015), has facts similar
to the facts alleged here. Left Gate listed a vehicle for sale on the eBay auction website.
Andra, using his computer in his Missouri home, saw Left Gate’s listing. Andra clicked the
“Buy It Now” button, which led to a series of phone calls and the mailing of a contract to
Andra and then from Andra to Left Gate. Andra alleged in his complaint that the eBay listing
included many false statements about the condition of the vehicle. The Andra court held:
7
No. 1-18-2416
“Left Gate made intentional contacts directed toward Mr. Andra to further the sale
of the vehicle, [and] allegedly made fraudulent representations about the features
and conditions of the vehicle ***. ***
Even though Mr. Andra initiated the contract for the purchase of the vehicle
by clicking the ‘Buy It Now’ button, ‘the fact that someone else initiated the first
contact does not mean that the entire course of conduct is considered unilateral.’
[Citation.] *** Instead, the contract and communications must be evaluated in
light of contemplated future consequences, as well as the terms of the contract and
the parties’ course of dealings[.] [Citation.]
***
*** Left Gate’s verbal representations over the telephone about the vehicle’s
features and condition created foreseeable future consequences when the vehicle
did not live up to the customer’s expectations. A defendant purposely avails itself
of the privilege of conducting business in the forum state when it sends fraudulent
misrepresentations into the state because the ‘actual content of communication
with [the] forum gives rise to intentional tort causes of action.’ [Citation.]”
(Internal quotation marks omitted.) Andra, 453 S.W.3d at 229-31.
¶ 19 We find that Andra persuasively supports the conclusion that GAA’s contacts with Dixon
suffice to give the Illinois courts specific personal jurisdiction over GAA under the
circumstances of this case.
¶ 20 GAA relies on federal cases for its argument that Illinois courts lack jurisdiction and cites
Monco v. Zoltek Corp., 342 F. Supp. 3d 829 (N.D. Ill. 2018), in which the district court
8
No. 1-18-2416
dismissed a complaint for failure to plead facts showing personal jurisdiction. The Monco
court gave the plaintiffs an opportunity to amend the complaint to allege “phone and email
communications and sustained contact with Plaintiff in Illinois related to the claims raised,”
because federal cases hold that “email communications directed at plaintiff in Illinois related
to the fraud, combined with plaintiffs’ injury in Illinois, established specific personal
jurisdiction.” (Internal quotation marks omitted.) Monco, 342 F. Supp. 3d at 836-37. Under
the standards applied in Monco, Dixon has sufficiently alleged facts establishing that GAA
has sufficient contacts with Illinois to give Illinois courts specific personal jurisdiction over
GAA for purposes of adjudicating Dixon’s claims.
¶ 21 Illinois courts “must consider whether the exercise of personal jurisdiction over [a
nonresident defendant] would offend traditional notions of fair play and substantial justice.”
Levin, 62 F. Supp. 3d at 741.
“[S]everal factors guide this inquiry: (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.”
Bombliss, 355 Ill. App. 3d at 1115.
Because Dixon “has established that the defendant purposely directed his activities at the
forum state, it is the defendant’s burden to show that litigating the dispute in [this] state
would be unreasonable.” Bombliss, 355 Ill. App. 3d at 1115. We find the reasoning of
Bombliss applicable here:
9
No. 1-18-2416
“First, defendants have not shown that it would be unduly burdensome for
them to defend this action in Illinois. It would appear that most of the
documentary evidence and some of the witnesses are situated in Illinois. The
inconvenience to defendants of litigating here is no more burdensome to them
than the inconvenience of litigating in [North Carolina] would be to plaintiffs.
Turning to the second factor, Illinois has a strong interest in providing its
residents with a convenient forum. [Citation.] Third, any damages sustained by
plaintiffs would have affected their interests in Illinois. And, finally, defendants
have advanced no compelling argument for finding that litigating the cause in
[North Carolina] would serve the interstate judicial system, or that the shared
interests of both states in advancing fundamental social policies would be better
served by litigating in [North Carolina].” Bombliss, 355 Ill. App. 3d at 1116.
¶ 22 GAA, like the defendant in Bombliss, has not met its burden of showing that Illinois will
not provide a reasonable forum for this litigation. We hold that (1) GAA’s advertisement and
its website, sent into Illinois via the Internet, (2) GAA’s e-mails sent into Illinois, and (3) its
phone calls with Dixon in Illinois, considered together, suffice to give Illinois courts specific
personal jurisdiction over GAA for Dixon’s claim that GAA made fraudulent
misrepresentations in the advertisement, on its website, and over the telephone. All of these
forms of communication allowed GAA to profit from its alleged fraud.
¶ 23 GAA argues that Illinois courts should not exercise jurisdiction over GAA because the
bidder registration form Dixon signed stated: “By signing I do hereby affirm that I have read
and agree to the GAA Classic Cars Terms & Conditions.” GAA contends the registration
10
No. 1-18-2416
form incorporates by reference a separate document titled “GAA Classic Cars Terms &
Conditions,” and that document required Dixon to sue GAA in North Carolina. GAA does
not contend that it sent the “Terms” document to Dixon. GAA does not contend that its e-
mails and phone calls told Dixon about the “Terms” document and how to access it. Small
print on the face of the bidder registration form set out a number of terms for bidder
registration, and GAA repeated several of those terms in its “Terms” document. For example,
the small print informed Dixon that all bids are final and the bidder must pay certain fees
specified in the small print. Notably, the terms on the face of the bidder registration form
make no reference to any limit on the location of litigation. The bidder registration form does
not indicate that the “Terms” appear only on another document and not on the bidder
registration form.
¶ 24 “Generally, one instrument may incorporate another instrument by reference. [Citation.]
The contract must show an intent to incorporate the other document and make it part of the
contract itself.” Turner Construction Co. v. Midwest Curtainwalls, Inc., 187 Ill. App. 3d 417,
421 (1989). “The parties to a contract may incorporate by reference another document if that
intention is clearly shown on the face of the contract.” Jago v. Miller Fluid Power Corp., 245
Ill. App. 3d 876, 879 (1993). The bidder registration form does not specify that the reference
to “Terms” incorporates another document. Because the face of the bidder registration form
does not clearly show an intent to incorporate a separate document, we find no incorporation
here. The bidder registration form does not require litigation in North Carolina. Accordingly,
we hold that Illinois courts have specific personal jurisdiction over GAA for litigation
concerning the misrepresentations GAA allegedly made to Dixon about the Bronco.
11
No. 1-18-2416
¶ 25 III. CONCLUSION
¶ 26 Dixon adequately alleged that GAA directed its activities to Illinois by sending
advertisements, e-mails, and phone calls into Illinois and by using its website to reach
customers in Illinois. Dixon also adequately alleged that GAA used the advertisements, e-
mails, and phone calls to make fraudulent misrepresentations and to complete a fraudulent
transaction. GAA did not meet its burden of showing that Illinois would not provide an
appropriate forum for litigation concerning the misrepresentations. Because the registration
form did not specifically incorporate the document in which GAA sought to limit litigation to
North Carolina, the registration form does not mandate dismissal of the complaint.
Accordingly, we reverse the circuit court’s judgment and remand for further proceedings on
the complaint.
¶ 27 Reversed and remanded.
12
No. 1-18-2416
No. 1-18-2416
Cite as: Dixon v. GAA Classic Cars, LLC, 2019 IL App (1st) 182416
Decision Under Review: Appeal from the Circuit Court of Cook County, No. 18-L-
005429; the Hon. Daniel J. Kubasiak, Judge, presiding.
Attorneys Craig R. Annunziata and Jason D. Keck, of Fisher & Phillips,
for LLP, of Chicago, for appellant.
Appellant:
Attorneys Marc C. Smith, of Fox Rothschild LLP, of Chicago, for appellee.
for
Appellee:
13