Brody v. Hoch

1

2024 IL App (1st) 231524

KENNETH S. BRODY, Plaintiff-Appellant, v. STEVEN L. HOCH and KAREN L. MANSFIELD, Defendants-Appellees.

No. 1-23-1524

Court of Appeals of Illinois, First District, First Division

September 16, 2024

Appeal from the Circuit Court of Cook County. No. 2022 L 009869 The Honorable Mary Colleen Roberts, Judge Presiding.

Attorneys for Appellant: Michael J. Gill and Raul C Loureiro, of Mayer Brown LLP, of Chicago, for appellant.

Attorneys for Appellee: Jefferey Ogden Katz, of The Katz Law Firm, P.C., of Chicago, for appellees.

PRESIDING JUSTICE LAVIN delivered the judgment of the court with opinion. Presiding Justice Fitzgerald Smith and Justice Cobbs concurred in the judgment and opinion.

OPINION

LAVIN PRESIDING JUSTICE

¶ 1 Plaintiff, Kenneth Brody, a Tennessee resident, brought a defamation per se action against defendants, Steven Hoch and Karen Mansfield, both residents of California. Plaintiff alleged that defendants sent five defamatory letters about him to the Chief Executive Officer (CEO), as well as current and former partners of his employer, DRW Holdings LLC (DRW), an Illinois financial firm. Defendants subsequently moved, successfully, to dismiss the case for lack of personal jurisdiction. Specifically, the court below held that it lacked personal jurisdiction over defendants because they did not have sufficient minimum contacts with Illinois and it would be unreasonable to exercise jurisdiction over them, given that plaintiff was also not a resident of the forum state. For the reasons that follow, we reverse the lower court's judgment and remand for further proceedings consistent with this decision.

¶ 2 I. BACKGROUND

¶ 3 Briefly stated, Steven Hoch was involved in spousal support proceedings in California with his ex-wife, Susan Hoch. During those proceedings, Steven discovered that plaintiff transferred over five thousand dollars to Susan in June 2019. According to plaintiff, he loaned Susan the money to cover a debt owed to her by a friend, Milli Ta. Plaintiff, however, had never met either Susan or Ta; instead, a mutual acquaintance of plaintiff and Ta had arranged the loan transfer.^[1]

¶ 4 During the spousal support proceedings, Karen Mansfield, who is in a romantic relationship with Steven, mailed a signed settlement offer to Susan concerning Steven's spousal support obligations that contained, among other things, statements indicating that Mansfield had personal knowledge of Susan's finances.^[2] Mansfield gave Susan until the end of February 2022 to accept her settlement offer.

¶ 5 Less than two weeks after the offer expired, five identical, anonymous letters were sent to DRW's head office, located at 540 West Madison Street in Chicago, Illinois. The letters were addressed to the CEO and founder of DRW, as well as current and former DRW partners (herein after referred to as "DRW partners"). The letters claimed that plaintiff, a DRW senior executive, was engaged in money laundering, wire fraud, unlicensed money transmitting, embezzlement, and tax evasion. The letters also contained Susan's social security and bank account numbers. The letters recommended that the allegations contained therein be taken seriously and that plaintiff be investigated concerning said allegations. Specifically, the letters stated, in relevant part:

"I am contacting you because I believe you need to investigate Kenneth Saul Brody, Senior fixed income derivative trader with DRW Trading. ***

I believe he has bene [sic], and may still be, involved in international money laundering, wire fraud, unlicensed money transmitting, and may even be embezzling from clients. He has funneled funds through Susan Beatty Hoch of Los Angeles, California and Millie Ta of Costa Mesa, California[.]

Some funds have been wire transferred to 'Zulu Trading'.

Susan Hoch is at ***

Social Security Number: ***

She has used Wells Fargo bank account: ***, among others[.]

I believe there has been tax evasion as well, on the part of some of the parties involved.

I hope this information is helpful and taken seriously."

¶ 6 Plaintiff, thereafter, had two of the five anonymous letters DNA tested and examined by a document examiner. The DNA matched the DNA found on Mansfield's signed settlement offer to Susan. Specifically, Beth Chrisman, a certified questioned document examiner, inspected the letters sent to DRW partners Glenn Scwartz and Fred Schuster, as well as Mansfield's settlement letter to Susan. Chrisman concluded it was "probable" that the author of the three letters was the same person who authored the settlement letter-namely, Mansfield.^[3] Moreover, the DNA testing, conducted by Technical Associates, Inc., examined the letters sent to DRW partners Jeffrey Levoff and Glenn Scwartz, along with Mansfield's settlement letter. The test revealed it was "extremely likely" that the DNA found on the three letters belonged to the same individual who authored the settlement letter (again, namely Mansfield) and that the odds of another person having the same DNA profile were 1 in 16.9 septillion.

¶ 7 In early November 2022, plaintiff filed the instant complaint alleging that defendants had sent the five anonymous letters to the DRW partners and that the statements within constituted defamation per se. The complaint further alleged that defendants' defamatory statements imputed that plaintiff had committed a crime; lacked integrity in his duties; prejudiced him in his profession; were false; were published, without privilege; were made, even though defendants knew they were false or with "reckless disregard for their truth"; and were so "obviously and materially harmful" that injury to plaintiff's reputation could be presumed.

¶ 8 The following year, defendants moved to dismiss plaintiff's complaint against them pursuant to section 2-619.1 (735 ILCS 5/2-619.1 (West 2020)) of the Illinois Code of Civil Procedure (Code). Defendants asserted that the court lacked specific personal jurisdiction over them, as nonresidents, because there was neither public policy nor efficiency in hearing the case in Illinois. Defendants further asserted that they did not have minimum contacts with Illinois and had no fair warning that they could be subject to the jurisdiction of the forum state.^[4] ¶ 9 In response, plaintiff asserted the court had specific personal jurisdiction over defendants because the Illinois long-arm statute (id. § 2-209(a)(2)) and due process were satisfied. More specifically, the long-arm statute was satisfied because defendants allegedly committed an intentional tort in Illinois when they sent the defamatory letters to DRW partners located in that state. In doing so, defendants "published the defamatory statements in Illinois." Due process was likewise satisfied because defendants had minimum contacts with the forum state, the suit arose from defendants' contacts with the state, and exercising jurisdiction over the matter was reasonable under the specific circumstances of this case. Furthermore, plaintiff's out-of-state residency was not determinative of whether Illinois courts had personal jurisdiction over defendants.

¶ 10 Defendants replied that, regardless of where the letters were sent, the letters were allegedly sent by two nonresidents and targeted a nonresident, thereby depriving the Illinois court of personal jurisdiction over them.^[5]

¶ 11 The circuit court ultimately granted defendants' dismissal motion, concluding that "the most important question for jurisdictional purposes is where the person or entity who is targeted *** is based."^[6] Consequently, because plaintiff is a non-resident, the court found that specific jurisdiction over defendants was unreasonable, stating, "it is not reasonable for Illinois to assert specific jurisdiction over [d]efendants where neither Illinois nor the [p]laintiff has a compelling interest in litigating this case in the state of Illinois and [d]efendant[s] [have] not had sufficient minimum contacts with this state." The court thus concluded that it lacked specific jurisdiction and dismissed the case for that reason.^[7]

¶ 12 We note that plaintiff, meanwhile, filed a nearly identical action against defendants in California, presumably as a precautionary measure in the event that he was unsuccessful in his appeal of the lower court's judgment in Illinois. In any event, we now turn to the merits of his appeal.

¶ 13 II. ANALYSIS

¶ 14 On appeal, plaintiff asserts that the circuit court erroneously granted defendants' dismissal motion because the court had personal jurisdiction over defendants where the Illinois long-arm statute was satisfied, the due process clauses of the United States and Illinois constitutions were met, and plaintiff's residency was not determinative of jurisdiction.

¶ 15 Section 2-619.1 of the Code allows the movants to combine a section 2-615 motion to dismiss (id. § 2-615) with a section 2-619 motion to dismiss (id. § 2-619). In re Application of the County Treasurer 2012 IL App (1st) 101976, ¶ 28. While a section 2-615 motion attacks the legal sufficiency of the nonmovant's claim, a section 2-619 motion admits the legal sufficiency of his claim but asserts affirmative defenses or other matters that avoid or defeat it. Id. We review the lower court's judgment granting a section 2-619.1 motion de novo. Id. ¶ 16 Personal jurisdiction is the power of a court over the parties in a case. Lightfoot v. Cendant Mortgage Corp., 580 U.S. 82, 95 (2017). Additionally, personal jurisdiction is divided into general and specific jurisdiction. Aasonn, LLC v. Delaney, 2011 IL App (2d) 101125, ¶ 14. A court has general jurisdiction over defendants if they have "continuous and systematic contacts with the forum state." Id. Contrarily, a court has...