48 F.4th 513
7th Cir.2022Background:
- Debtor Joseph Sheehan, an Illinois resident, obtained Irish loans to buy Blackrock Hospital shares and Irish real estate (Ballyheigue); he defaulted and an Irish creditor, Breccia, acquired the loans and moved to enforce collateral.
- Irish courts authorized Breccia to realize on the Blackrock Shares and the Ballyheigue property; Breccia registered the shares and appointed an Irish receiver, Damien Murran (an RSM Ireland employee), to take possession and sell the assets.
- On March 12, 2020 Sheehan filed Chapter 11 in the N.D. of Illinois, triggering the automatic stay; he notified the Irish receiver and Breccia, but the receivership continued steps to sell the Irish collateral.
- Sheehan filed an adversary complaint in bankruptcy court seeking turnover of the assets and damages for willful violation of the automatic stay; defendants moved to dismiss for lack of personal jurisdiction and insufficient service (and some raised forum non conveniens).
- The bankruptcy court dismissed for lack of personal jurisdiction and found Hague Convention service ineffective; the district court affirmed for lack of jurisdiction; the Seventh Circuit affirmed the district court.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Personal jurisdiction (specific) | Sheehan: bankruptcy in rem fiction places estate property in Illinois, so defendants’ acts affecting that property subject them to Illinois jurisdiction | Defendants: all conduct occurred in Ireland directed at Irish property; no purposeful availment of Illinois | No specific personal jurisdiction; defendants’ contacts with Illinois insufficient |
| In rem jurisdiction v. personal jurisdiction | Sheehan: in rem power over estate property legally locates the property in Illinois, so defendants’ acts are effectively in Illinois | Defendants: in rem jurisdiction over property does not supply personal jurisdiction over nonparticipating foreign creditors | Rejected; in rem jurisdiction does not bootstrap personal jurisdiction |
| Jurisdictional discovery | Sheehan: allow discovery into defendants’ contacts to establish jurisdiction | Defendants: requests speculative, a fishing expedition; foreign discovery disfavored | Denied; bankruptcy and district courts did not abuse discretion in refusing discovery |
| Service of process / forum non conveniens | Sheehan: email notice and Hague arguments sufficient or at least disputed | Defendants: Hague service was insufficient; some argued forum non conveniens | Bankruptcy court held Hague service ineffective and invoked forum non conveniens for some defendants, but appellate courts affirmed dismissal on jurisdictional grounds and did not rely on those issues |
Key Cases Cited
- Int'l Shoe Co. v. Washington Office of Unemployment Compensation & Placement, 326 U.S. 310 (1945) (minimum contacts due process standard)
- Walden v. Fiore, 571 U.S. 277 (2014) (jurisdiction requires defendant-created contacts with forum; plaintiff's connections alone insufficient)
- Calder v. Jones, 465 U.S. 783 (1984) (effects test: purposeful targeting of the forum can support specific jurisdiction)
- Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (2017) (specific jurisdiction requires affiliation between forum and underlying controversy)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) (purposeful availment and deliberate affiliation analysis)
- Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102 (1987) (limitations on stream-of-commerce theory for jurisdiction)
- J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873 (2011) (focus on defendant's actions, not expectations)
- Mobile Anesthesiologists Chicago, L.L.C. v. Anesthesia Assocs. of Houston Metroplex, 623 F.3d 440 (7th Cir. 2010) (express aiming required; effects in forum insufficient)
- Tennessee Student Assistance Corp. v. Hood, 541 U.S. 440 (2004) (bankruptcy courts have in rem jurisdiction over estate property wherever located)
- Celotex Corp. v. Edwards, 514 U.S. 300 (1995) (bankruptcy court jurisdiction is statutorily limited)
- Freeman v. Alderson, 119 U.S. 185 (1886) (state jurisdiction over property within its limits; no personal jurisdiction absent property)
- Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011) (general jurisdiction requires defendant to be at home in forum)