Court Opinion

ID: 3146125
Source: CourtListenerOpinion
Date Created: 2015-10-22 18:13:25.050637+00
Date Added: 2024-06-11T12:28:33.401789
License: Public Domain

First Division
                                                September 11, 2006

No. 1-05-3457

GARY AND SHARON ROSIER, Individually     )
and as Parents and Next Friends of       )
Steven Rosier, a Disabled Minor,         )   Appeal from
                                         )   the Circuit Court
     Plaintiffs-Appellees,               )   of Cook County
                                         )
          v.                             )   03 L 14414
                                         )
CASCADE MOUNTAIN, INC., and THE WALZ     )   Honorable
FAMILY CORPORATION,                      )   Michael J. Hogan,
                                         )   Judge Presiding
     Defendants-Appellants.              )

     PRESIDING JUSTICE McBRIDE delivered the opinion of the

court:

     Wisconsin defendants Cascade Mountain, Inc., and The Walz

Family Corporation bring this appeal under Supreme Court Rule

306(a)(3) from an order of the circuit court of Cook County

denying their motion to dismiss plaintiffs' tort claim for lack
of personal jurisdiction.    166 Ill. 2d R. 306(a)(3).    The main

issue we address is whether the Wisconsin defendants have been

doing business in Illinois and are therefore subject to general

personal jurisdiction in Illinois pursuant to section 2-209(b)(4)

of the Code of Civil Procedure.    735 ILCS 5/2-209(b)(4) (West

2002).

     Illinois residents Gary and Sharon Rosier, individually and

as next friends of their minor son Steven, filed this negligence

action in Illinois after Steven was injured on March 3, 2003,

while attempting to snowboard over the "J.J." tabletop jump at

the defendants' Cascade Mountain ski and snowboard facility in
1-05-3457
Portage, Wisconsin.   The plaintiffs sought a minimum of $50,000

in compensatory damages based on allegations that the Wisconsin

corporations negligently designed, constructed, maintained,

monitored, or supervised the tabletop jump and/or negligently

failed to timely respond to Steven's injuries.

     The plaintiffs served the defendants in Wisconsin.

     In conjunction with their motion to quash service of summons

and dismiss the case, the Wisconsin corporations filed the

affidavit of their president and director, Phil Walz.    The

affidavit indicated the corporations did not own any real estate

or other assets in Illinois, maintain any personnel, offices or

business equipment in Illinois, or file tax returns in Illinois.

 The affidavit further specified the corporations contracted with

an Illinois telecommunications provider for an Illinois telephone

number through which callers could listen to a prerecorded

Wisconsin snow report, and that the corporations had secured a

loan and a line of credit with an Illinois bank to fund chairlift

and snow making improvements at Cascade Mountain.   The Wisconsin

entities argued these contacts were insufficient to subject them

to specific in personam jurisdiction in Illinois pursuant to the

long-arm statute, which is set out in section 2-209(a) of the

Code of Civil Procedure, or to general in personam jurisdiction

in Illinois under the doing business doctrine, which is codified

in section 2-209(b)(4) of the Code of Civil Procedure.    735 ILCS

5/2-209(a), (b)(4) (West 2002) (Code).

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     The Rosiers did not file any affidavits rebutting Phil

Walz's sworn statement 1 or otherwise respond directly to the

Wisconsin defendants' contentions about sections 2-209(a) and

(b)(4) of the Code.   Instead, the Rosiers argued Cascade

Mountain's local telephone number, local marketing, and

interactive website evidenced sufficient contacts with Illinois

to justify its courts' assertion of general jurisdiction over

both Wisconsin defendants under the catchall provision of the

Illinois' long arm statute.   The catchall provision provides:    "A

court may also exercise jurisdiction on any other basis now or

hereafter permitted by the Illinois Constitution and the

Constitution of the United States."   735 ILCS 5/2-209(c) (West

2002).

     When the circuit court decides a jurisdictional question

solely on the basis of documentary evidence as it did in this
     1
       Since the Rosiers did not file any affidavits rebutting
Phil Walz's affidavit, the well-alleged facts in his affidavit
must be taken as true. Forrester v. Seven Seventeen HB St. Louis
Redevelopment Corp., 336 Ill. App. 3d 572, 579, 784 N.E.2d 834,
839 (2002).

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case, the question is addressed de novo on appeal       Spartan

Motors, Inc. v. Lube Power, Inc., 337 Ill. App. 3d 556, 559-60,

786 N.E.2d 613, 616 (2003).   The plaintiff bears the burden of

establishing a prima facie basis upon which jurisdiction over an

out-of-state resident may be exercised.       Khan v. Van Remmen,

Inc., 325 Ill. App. 3d 49, 53, 756 N.E.2d 902, 907 (2001).        The

due process clause of the fourteenth amendment to the federal

constitution limits the instances in which a state may assert

personal jurisdiction over a nonresident corporate defendant.

Cook Associates, Inc. v. Lexington United Corp., 87 Ill. 2d 190,

197, 429 N.E.2d 847, 850 (1981).       "The Due Process Clause

protects an individual's liberty interest in not being subject to

the binding judgments of a forum with which he has established no

meaningful 'contacts ties or relations.' "       Burger King Corp. v.

Rudzewicz, 471 U.S. 462, 471-72, 85 L. Ed. 2d 528, 540, 105 S.

Ct. 2174, 2181 (1985), quoting International Shoe Co. v.

Washington, 326 U.S. 310, 319, 90 L. Ed. 95, 104, 66 S. Ct. 154,

160 (1945).   Thus, the plaintiff's burden is to demonstrate that

the out-of-state defendant has had the necessary minimum contacts

with the forum state.   Reimer v. KSL Recreation Corp., 348 Ill.

App. 3d 26, 33-34, 807 N.E.2d 1004, 1011 (2004).       The minimum

contacts standard ensures that "requiring the out-of-state

resident to defend in the forum does not ' "offend traditional

notions of fair play and substantial justice." ' "       Borden

Chemicals & Plastics, L.P. v. Zehnder, 312 Ill. App. 3d 35, 41,

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726 N.E.2d 73, 78 (2000), quoting International Shoe, 326 U.S. at

316, 90 L. Ed. at 102, 66 S. Ct. at 158, quoting Milliken v.

Meyer, 311 U.S. 457, 463, 85 L. Ed. 278, 283, 61 S. Ct. 339, 343

(1940).   The minimum contacts analysis must be based on some act

by which the defendant purposefully availed itself of the

privilege of conducting activities within the forum state, in

order to assure that a nonresident will not be haled into a forum

solely as a result of random, fortuitous, or attenuated contacts

with the forum or the unilateral acts of a consumer or some other

third person.   Burger King, 471 U.S. at 475, 85 L. Ed. at 542,
105 S. Ct. at 2183.

     The meaning of the minimum contacts standard depends on

whether a court is asserting general jurisdiction or specific

jurisdiction over the out-of-state defendant.   Borden Chemicals,
312 Ill. App. 3d at 41, 726 N.E.2d at 78.

     A court may potentially assert specific jurisdiction over an

out-of-state resident if the lawsuit arises out of or is

connected to the defendant's purportedly wrongful activities

within the forum state.   Borden Chemicals, 312 Ill. App. 3d at

41, 726 N.E.2d at 79.   When a corporation exercises the privilege

of conducting activities within a state, it enjoys the benefits

and protections of that state, and so requiring it to respond to

a suit in that state concerning those specific activities " 'can,

in most instances, hardly be said to be undue.' "   Borden

Chemicals, 312 Ill. App. 3d at 42, 726 N.E.2d at 79, quoting

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International Shoe, 326 U.S. at 319, 90 L. Ed. at 104, 66 S. Ct.

at 160.   The Rosiers' lawsuit is not based on any activity within

Illinois; therefore, specific jurisdiction principles are not

relevant to their appeal.

     When a suit neither arises from nor relates to a defendant's

activities within the state where suit has been filed, the court

is limited to exercising general jurisdiction over the out-of-

state defendant.   Borden Chemicals, 312 Ill. App. 3d at 41, 726

N.E.2d at 78.   Federal standards permit a court to exercise

general jurisdiction over a nonresident only where the

nonresident has continuous and systematic general business

contacts with the forum.    Borden Chemicals, 312 Ill. App. 3d at

41, 726 N.E.2d at 78-79.    In addition, Illinois limits general

jurisdiction over nonresidents to instances in which the

nonresident was " 'present and doing business' " in the forum.

Reimer, 348 Ill. App. 3d at 34, 807 N.E.2d at 1012, quoting

Braband v. Beech Aircraft Corp., 72 Ill. 2d 548, 554-55, 382
N.E.2d 252, 255 (1978).    The doing business standard requires a

nonresident defendant to carry on business activity in Illinois "

'not occasionally or casually, but with a fair measure of

permanence and continuity.' "    Maunder v. DeHavilland Aircraft of

Canada, Ltd., 102 Ill. 2d 342, 351, 466 N.E.2d 217, 221 (1984),

quoting Tauza v. Susquehanna Coal Co., 220 N.Y. 259, 267, 115
N.E. 915, 917 (1917).   The doing business standard is quite high

and generally "means conducting business in Illinois of such

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character and extent that it may be inferred that the defendant

has subjected itself to the jurisdiction and laws of this state

and is bound to appear when properly served."   Reimer, 348 Ill.

App. 3d at 35, 807 N.E.2d at 1012. "In effect, the foreign

corporation has taken up residence in Illinois and, therefore,

may be sued on causes of action both related and unrelated to its

activities in Illinois."   Reimer, 348 Ill. App. 3d at 35, 807

N.E.2d at 1013.

     The Rosiers rely primarily on Adams v. Harrah's Maryland

Heights Corp., 338 Ill. App. 3d 745, 789 N.E.2d 426 (2003), to

sustain their burden of establishing that general jurisdiction is

properly asserted over the nonresident corporations.   We do not

find Adams' analysis particularly persuasive because it relied

primarily on specific jurisdiction case law and principles to

determine whether general jurisdiction was properly asserted over

a Missouri defendant.   See Adams, 338 Ill. App. 3d at 747-50, 789

N.E.2d at 539-41, citing Flint v. Court Appointed Special

Advocates of Du Page County, Inc., 285 Ill. App. 3d 152, 169, 674
N.E.2d 831, 834 (finding "[defendant] NCASAA's contacts within

Illinois are sufficiently related to the cause of action against

them and, at least in part, gave rise to it"); Allerion, Inc. v.

Nueva Icacos, S.A. de   C.V., 283 Ill. App. 3d 40, 52, 669 N.E.2d
1158, 1166 (1996) (finding it was "not unfair to bring [the

defendant] 'into an Illinois court to enforce the [contractual]

obligations [the defendant] knowingly undertook"); Burger King

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Corp., 471 U.S. 462, 85 L. Ed. 528, 105 S. Ct. 2174 (finding

contract negotiation, contemplated future consequences, terms of

contract, and course of dealing justified bringing Michigan

residents to Florida to answer breach of franchise contract);

Rollins v. Ellwood, 141 Ill. 2d 244, 275, 565 N.E.2d 1302, 1316

(1990) (finding Missouri police officer could not be haled into

Illinois on the basis of his allegedly tortious act in Illinois).

     Nevertheless, the Wisconsin defendants' contacts with

Illinois are substantially less than those described in Adams.

The defendant in Adams, a Missouri casino, maintained a "gold

card holder" program (Adams, 338 Ill. App. 3d at 748-49, 789

N.E.2d at 440), which presumably encouraged customers to maintain

a continuing relationship with the Missouri gaming facility.    In

fact, about 64,000 individuals, which was approximately one-third

of all the defendant's gold card holders, were from Illinois.

Adams, 338 Ill. App. 3d at 748-49, 789 N.E.2d at 440.   In

addition, the defendant provided a free, regular shuttle bus

service to physically transport Illinois residents from this

jurisdiction to its Missouri site.    Adams, 338 Ill. App. 3d at

748-49, 789 N.E.2d at 440.   The defendant also directed magazine,

television, radio, and telephone book ads, as well as flyers,

brochures, and coupons to Illinois residents to lure them into

continuing relationships.    Adams, 338 Ill. App. 3d at 748-49, 789

N.E.2d at 400.   In light of the "continuous and systematic

                                  8
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business contacts" directed at the Illinois marketplace, the

volume of Illinois customers, and the shuttle service from

Illinois to Missouri, the court concluded it was reasonable for

Illinois courts to exercise jurisdiction over the Missouri

defendant.   Adams, 338 Ill. App. 3d at 749, 789 N.E.2d at 441.

While the record indicates the Wisconsin defendants advertise in

Illinois, sometimes appear at Illinois trade shows, maintain an

Illinois telephone number, and derive some revenue from the

residents of this state, these contacts amount to mere

solicitation to do business in Wisconsin, which is an

insufficient basis for inferring that the Wisconsin defendants

have subjected themselves to the jurisdiction of the Illinois

courts.   Maintaining an Illinois telephone number is not enough

to sustain jurisdiction.   Radosta v. Devil's Head Ski Lodge, 172
Ill. App. 3d 289, 295, 526 N.E.2d 561, 565 (1988).   Nor is

soliciting Illinois residents to transact business in Wisconsin,

through a booth at a trade show, magazine advertisements, and

radio broadcasts.   Radosta, 172 Ill. App. 3d at 295, 526 N.E.2d

at 565; Dal Ponte v. Northern Manitoba Native Lodges, Inc., 220
Ill. App. 3d 878, 884, 581 N.E.2d 329, 333 (1991).   Furthermore,

the Wisconsin defendants do not continuously and systematically

physically transport Illinois residents from Illinois to their

Portage, Wisconsin, ski and snowboarding facilities and, thus,

are not comparable to the Missouri defendant in Adams.   Adams,
338 Ill. App. 3d at 748-49, 789 N.E.2d at 540.

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     The Rosiers also argue that Cascade Mountain's presence on

the Internet is significant for the purposes of acquiring

jurisdiction over a nonresident defendant and support this

argument with discussion of Euromarket Designs, Inc. v. Crate &

Barrel, Ltd., 96 F. Supp. 2d 824 (N.D. Ill. 2000) and George S.

May International Co. v. Xcentric Ventures, LLC, 409 F. Supp.
1052 (N.D Ill. 2006).   The Rosiers contend individuals may use

the Cascade Mountain website to subscribe to e-mail bulletins

from the defendants and that the site "provides for online

purchase of gift certificates, season passes, insurance and

equipment rental" and that these items range in price "from $5 to

$999."   We find the e-mail bulletins are analogous to other

advertising mediums the defendants use in this jurisdiction, such

as radio and magazine advertising, and that the e-mail messages

at most solicit Illinois residents to transact business in

Wisconsin and are not a basis for exercising jurisdiction in this

forum.   In addition, the Rosiers overlook dispositive

distinctions in Euromarket Designs and George S. May

International.   The Rosiers contend the Cascade Mountain website

"provide[s] for online purchase[s]" but fail to offer evidence

that the website is being used for actual purchases.     This

failure is significant not only because the plaintiffs bear the

burden of demonstrating the necessary minimum contacts to support

general jurisdiction, but also because in Euromarket Designs, the

court remarked that generally a defendant's "mere maintenance of

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an Internet website is not sufficient activity to exercise

general jurisdiction over the defendant."     Euromarket Designs, 96
F. Supp. 2d at 833.   More importantly, this remark was offered

only in passing and the court's analysis focuses on whether it

had specific personal jurisdiction rather than general personal

jurisdiction over the foreign defendant due to the defendant's

Internet and non-Internet activities.     Euromarket Designs, 96

Supp. 2d at 833-39.   The Rosiers, however, disregard these

indications that Euromarket Designs is not supportive of their

appeal.   The Rosiers also fail to acknowledge that George S. May

International was an action primarily for trade libel and

deceptive business practices and that the court determined it had

specific jurisdiction over the non-resident defendants based on

defamatory statements posted on their website.     George S. May

International, 409 F. Supp. 2d at 1054.     After extensive

discussion supporting its finding of specific jurisdiction

(George S. May International, 409 F. Supp. 2d at 1057-60), the

court briefly stated that it was also proper to find the

existence of general jurisdiction based on the defendant's

"continuous and systematic" contacts with Illinois.     George S.

May International, 409 F. Supp. 2d at 1060.     Unlike the Rosiers,

the plaintiff in that case demonstrated that the defendants had

engaged in actual commerce through their website.    The court

cited the specific number of commercial transactions with

Illinois residents -- 47 donations were made in Illinois in

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response to the defendants' solicitations and 13 Illinois

residents bought books.    George S. May International, 409 F.

Supp. at 1059.   In contrast, the Rosiers only contend the Cascade

Mountain website is a means to transact business.    In short, the

Rosiers fail to provide factual or legal support for their

contention that Cascade Mountain's presence on the Internet is a

basis for exerting general jurisdiction over the nonresident

defendants.

     We also reject the Rosiers' contention that the trial court

should have "pierced the corporate veil" of the Cascade Mountain

and Walz Family corporations in order to find jurisdiction over

the corporations.    The Rosiers are referring to an equitable

remedy under which a court may find a corporation's shareholders,

directors, or officers -- who are not as a general rule liable

for any corporate debts and obligations -- personally liable for

the corporation's debts and obligations.    Ted Harrison Oil Co. v.

Dokka, 247 Ill. App. 3d 791, 795, 617 N.E.2d 898, 901 (1993).      We

emphasize that the Rosiers' complaint did not suggest in any way

that they were attempting to hold individual shareholders,

directors, or officers personally liable for Steven's injuries.

There were no allegations in the complaint regarding the conduct

of any individual.    The Rosiers, however, argued the corporate

veil theory was an alternate means for the trial court to acquire

jurisdiction over the defendant Wisconsin corporations, and that

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if the court found the Rosiers' evidence was lacking, it should

permit the Rosiers to pursue additional discovery on the issue.

The written order on appeal does not specify the trial court's

reason or reasons for finding it had general personal

jurisdiction over the Wisconsin defendants, and neither side has

tendered a transcript of the hearing.     Nevertheless, the Rosiers'

appellate brief suggests the court indicated in some way that it

did not find the corporate veil theory persuasive.

     The remedy of disregarding or piercing the corporate veil in

order to get to assets held by an individual will be employed

where there is such unity of interest and ownership that the

separate personalities of the corporation and the individual no

longer exist and where adherence to the fiction of a separate

corporate existence would sanction a fraud, promote injustice, or

promote inequitable consequences.      People v. V & M Industries,

Inc., 298 Ill. App. 3d 733, 739, 700 N.E.2d 746, 750 (1998).     The

party seeking to disregard the corporate entity must make "a

substantial showing that the corporation is really a dummy or

sham for a dominating personality."     Ted Harrison Oil Co., 247
Ill. App. 3d at 796, 617 N.E.2d at 902.     A trial court should be

reluctant to pierce the corporate veil, and its finding will be

reversed on appeal only where it is against the manifest weight

of the evidence.     Ted Harrison Oil Co., 247 Ill. App. 3d at 796,

617 N.E.2d at 902.

     One of the cases the Rosiers' rely upon, V & M Industries,

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illustrates the proper application of the concept.     In that case,

the State sought injunctive relief and civil penalties under the

Illinois Environmental Protection Act (415 ILCS 5/1 et seq. (West

1994)) after approximately 40,000 to 50,000 tires burned on

property owned by a corporation.      V & M Industries, 298 Ill. App.
3d at 734, 700 N.E.2d at 747.   The fire burned for nearly a week,

despite the efforts of numerous firefighters, and produced huge

black smoke clouds and the emission of human carcinogens and

deadly poisons.    V & M Industries, 298 Ill. App. 3d at 734, 700
N.E.2d at 747.    The burn area, a corner measuring 150 feet by 150

feet, was the only asset the corporation owned when the fire

occurred.   V & M Industries, 298 Ill. App. 3d at 742, 700 N.E.2d

at 753.   Vernon, the dominant shareholder, had piled all the

tires into that corner (V & M Industries, 298 Ill. App. 3d at

738, 700 N.E.2d at 749) and the corporation's remaining 14 acres

had been put into a land trust with Vernon as beneficiary.        V & M

Industries, 298 Ill. App. 3d at 742, 700 N.E.2d at 753.     The

corporation was dissolved after the fire.     V & M Industries, 298
Ill. App. 3d at 734, 700 N.E.2d at 747.

     The court determined, however, that Vernon should be held

personally liable for the corporation's debt because each of the

eight relevant factors was present.     V & M Industries, 298 Ill.

App. 3d at 740, 700 N.E.2d at 751.     A party seeking to rely on

the corporate veil theory need not prevail on all eight factors,

and no single factor is dispositive, but a court should take all

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of the variables into consideration.   See, e.g., V & M

Industries, 298 Ill. App. 3d at 740, 700 N.E.2d at 751.    The

court found (1) the corporation was undercapitalized for the

transactions that needed to be performed, such as buying real

estate to be leased to others and contracting for property

maintenance, (2) the corporation was insolvent when the court

considered the factors, (3) no stock was ever issued, (4) no

shareholder dividends were paid, (5) corporate formalities such

as regular meetings and minute taking were never observed, (6)

there was an absence of corporate records, and (7) other than the

dominant shareholder, Vernon, none of the corporate officers and

directors functioned in their roles.   Finally, (8) the

corporation was a "mere facade for the operation of the dominant

shareholder, Vernon," and "Vernon is *** V & M," as evidenced in

part by the fact that checks owed to the corporation totaling

$100,000 were made payable to Vernon, personally, and vice versa.

 V & M Industries, 298 Ill. App. 3d at 740-42, 700 N.E.2d at 751-

52.   These facts led the court to conclude, "[t]he circumstances

in this case are overwhelming to the point that adherence to the

fiction of a separate corporate existence would indeed sanction a

fraud, promote injustice, and promote inequitable consequences."

 V & M Industries, 298 Ill. App. 3d at 742, 700 N.E.2d at 753.

      The Rosiers cite other instances in which corporate status

has been disregarded and individuals associated with the

corporation have been held personally liable for judgments.      See

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Falcon Associates, Inc. v. Cox, 298 Ill. App. 3d 652, 664, 699
N.E.2d 203, 211 (1998) (relevant factors including no stock

issuance, no dividend payments, and transfer of all corporate

assets to a second corporation after dispute arose supported

conclusion that homebuilder-seller corporation, its president,

and second corporation should be treated as "but one single

entity" for purposes of liability); Washington Courte Condominium

Ass'n -- Four v. Washington-Gulf Corp., 267 Ill. App. 3d 790,

816-17, 643 N.E.2d 199, 217 (1994)    (in dispute over condominium

sale, court indicated, "[t]he record shows such a unity of

interest and ownership that the separate personalities of the

corporation and the individual no longer existed and ***

adherence to the separate corporate existence would sanction a

fraud, promote injustice and promote inequitable consequences").

     Thus, the Rosiers have demonstrated there are circumstances

under which a court may and will find corporate shareholders,

directors, or officers personally liable for corporate

obligations.    The Rosiers have not, however, offered any legal

authority or any reasoned argument indicating a court may

scrutinize the local contacts of a foreign corporation's

shareholders, directors, or officers in order to find that the

foreign corporation is subject to the court's personal

jurisdiction.    Accordingly, we find the Rosiers have waived

consideration of their contention that the corporate veil theory

is a means or should be a means of exerting general personal

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jurisdiction over a nonresident defendant.   188 Ill. 2d R.

341(e)(7); Ferguson v. Bill Berger Associates, Inc., 302 Ill.

App. 3d 61, 78, 704 N.E.2d 830, 842 (1998) (Supreme Court Rule

341(e)(7) requires proponent to cite supporting authority and

failure to do so results in waiver).

     In summary, all that defendants have done in this forum is

solicit business, absorb some of the expenses associated with

accessing a prerecorded announcement of snow conditions, and

borrow money.   The defendant or defendants have created a website

which is a potential means for transacting business in Illinois,

but the record does not disclose any transactions with Illinois

residents.   The Rosiers chose to initiate contact with the non-

Illinois defendants and chose to travel to Portage, Wisconsin, to

make use of the defendants' ski and snowboarding facilities.     It

would not be consistent with due process to require the Wisconsin

defendants to litigate the resulting dispute in Illinois.     The

contacts the defendants have with Illinois are not sufficient for

its courts to exercise general personal jurisdiction over the

Wisconsin entities.   The Rosiers' alternative argument that

piercing the corporate veil is an appropriate means of acquiring

jurisdiction over a non-Illinois corporation is not supported by

adequate legal reasoning and citation to supporting authority,

and therefore did not merit our consideration.   Because the

plaintiff Rosiers did not meet their burden of proving that in

personam jurisdiction exists over the nonresident defendants, we

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reverse the trial court's order denying the motion to quash

service and dismiss the complaint.

     Reversed.

     CAHILL and JOSEPH GORDON, JJ., concur.

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