Allstate Life Insurance v. Stanley W. Burns, Inc.
80 F. Supp. 3d 870
N.D. Ill.2015Background
- Allstate (Illinois) contracted with Burns, Inc. (Florida) under an L2000C Agreement making Burns Inc. an Allstate Exclusive Financial Specialist with a business location in Kissimmee, Florida; Burns (Florida resident) was the key person/agent.
- Allstate alleges Burns submitted false or replacement life-insurance applications (including "Bank Account Applications") from Florida, causing Allstate to pay $643,669.27 in unearned commissions; Allstate demanded repayment and return of records; Defendants refused.
- Allstate filed suit in the Northern District of Illinois asserting breach of contract, unjust enrichment, intentional misrepresentation, and fraud; Defendants moved to dismiss for improper venue under Rule 12(b)(3) or alternatively to transfer to the Middle District of Florida.
- Parties submitted competing affidavits (Burns and Allstate rep Lanspa); court allowed supplemental briefing and considered both affidavits when evaluating venue facts outside the pleadings.
- The L2000C Agreement identified Florida addresses and contemplated performance in Florida; many contested submissions were made electronically to Allstate affiliates in Nebraska/Texas/Florida before any indirect involvement by Allstate’s Illinois home office.
- Court concluded that a substantial part of the events occurred in Florida, not Illinois, and therefore venue in the Northern District of Illinois was improper; the case was transferred in the interest of justice to the Middle District of Florida under 28 U.S.C. § 1406.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether venue is proper under 28 U.S.C. § 1391(b)(2) | A substantial part of the events (phony submissions, communications, and payments) occurred in Illinois at Allstate's home office | The contract was performed in Florida; applications were submitted to Allstate affiliates outside Illinois and defendants are Florida-based | Venue improper in N.D. Ill.; substantial events occurred in Florida |
| Whether plaintiff’s communications and emails with Illinois staff make Illinois a substantial forum | Emails and case notes show communications with Allstate’s Northbrook home office tied to the claims | These contacts are tangential/indirect; defendant submitted applications to affiliates in other states | Communications were too attenuated to establish a substantial part in Illinois |
| Whether payments issued from Illinois constitute performance or venue-creating acts | Allstate suffered economic harm in Illinois when commissions were paid and thus venue is proper here | Economic harm in plaintiff’s forum alone does not satisfy the § 1391(b)(2) substantial-part test | Economic harm in Illinois insufficient to establish venue; payments are not performance in Illinois |
| Whether to dismiss or transfer under 28 U.S.C. § 1406 | N/A (Allstate opposed transfer to Florida on convenience grounds) | Transfer is warranted because Florida is a proper venue and case arose principally there | Court exercises discretion to transfer entire case to Middle District of Florida rather than dismiss |
Key Cases Cited
- Faulkenberg v. CB Tax Franchise Sys., LP, 637 F.3d 801 (7th Cir. 2011) (courts may consider facts outside the pleadings and plaintiff must submit affirmative evidence once defendant contests jurisdiction/venue)
- Purdue Research Found. v. Sanofi-Synthelabo, S.A., 338 F.3d 773 (7th Cir. 2003) (disputes of fact on venue/jurisdiction resolved in plaintiff's favor unless defendant submits contrary affidavits)
- Armstrong v. LaSalle Bank Nat’l Ass’n, 552 F.3d 613 (7th Cir. 2009) (venue may be proper in more than one district)
- Continental Ins. Co. v. M/V Orsula, 354 F.3d 603 (7th Cir. 2003) (district courts have broad discretion to transfer cases in the interest of justice)
- MB Financial Bank, N.A. v. Walker, 741 F. Supp. 2d 912 (N.D. Ill. 2010) (plaintiff’s economic harm in chosen forum does not alone make venue proper under § 1391(b)(2))
- Woodke v. Dahm, 70 F.3d 983 (8th Cir. 1995) (venue analysis should focus on defendant's relevant activities, not plaintiff's)