Fidelity & Deposit Co. of Maryland v. Slurry Systems, Inc.

Citations: 235 F. Supp. 3d 1035; 2016 U.S. Dist. LEXIS 189159; 2016 WL 9306256Docket: No. 15 C 7016

Court: District Court, N.D. Illinois; July 7, 2016; Federal District Court

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Plaintiff Fidelity Deposit Company of Maryland filed claims against Slurry Systems, Inc. (SSI) and four individuals based on an indemnity agreement related to a bond issued for a construction project by SSI for the U.S. Army Corps of Engineers. Bryan Wesolek, one of the individuals, moved to dismiss the claims against him, arguing lack of personal jurisdiction. The court granted his motion, noting that personal jurisdiction requires a prima facie showing of jurisdictional facts that establish sufficient case-related contacts with Illinois as per constitutional due process standards.

The undisputed facts reveal that Wesolek is not an Illinois resident, has no real property or financial accounts in Illinois, and did not negotiate or sign the indemnity agreement there, which lacks a forum selection clause for Illinois jurisdiction. His sole contact with the plaintiff was a letter sent to him in Florida in 2014 regarding an indemnity payment. The court emphasized that merely having a contract with an in-state party is insufficient for establishing minimum contacts. The plaintiff argued that jurisdiction was warranted because Wesolek was married to SSI’s president at the time of signing the agreement and attended a mediation in Chicago related to a separate case, but these points did not satisfy the jurisdictional requirements.

Constitutionally adequate minimum contacts with Illinois are not established in this case. SSI, a closely held corporation co-owned by Dana Wesolek, Bryan’s estranged wife, is central to the plaintiff's argument for personal jurisdiction based on Bryan's alleged interest in SSI's contract for the McCook project. The plaintiff cites National Can Corp. v. K Beverage Co. for support, where the Sixth Circuit found spouses of shareholders subject to personal jurisdiction due to their proprietary interest in marital property. However, the analysis in National Can relied on specific marital property laws from four states, which do not apply here, and the plaintiff did not address Illinois’ marital property laws or the timing of Dana's ownership interest acquisition in SSI.

The plaintiff also references cases like Frontier Ins. Co. v. National Signal Corp. and Great American Ins. Co. v. Stephens, which similarly considered financial interests in businesses. Bryan's sole financial interest in SSI is through Dana, and since he has never been an owner or officer of SSI, this does not support personal jurisdiction.

Additionally, Bryan’s attendance at a settlement conference related to a different case does not constitute adequate minimum contacts, as he did not engage with the plaintiff or its counsel and was present for less than two hours. The plaintiff's assertion that the McCook project’s connection to Illinois implies jurisdiction is misleading; the indemnity agreement only pertains to loss compensation to the plaintiff and not to SSI's construction work. Therefore, the location of the project does not significantly affect jurisdictional analysis.

Consequently, Bryan Wesolek's motion to dismiss is granted, and the plaintiff's request to transfer the case to the Northern District of Indiana is denied. At the time of the complaint, related proceedings were ongoing, and Bryan noted in 2016 that his divorce from Dana was still in process.