IN THE APPELLATE COURT
COMMUNITY MERCHANT SERVICES, INC., an Illinois Corporation, Plaintiff-Appellant and Cross-Appellee, v. SAMUEL K. JONAS, Individually; CASH RESOURCES, INC., a Colorado Corpora- tion; and MEDIACHOICETV.COM, INC., a Colorado Corporation Doing Business as CONVENIENTV.COM, Defendants-Appellees and Cross-Appellants. | ) ) ) ) ) ) ) ) ) ) ) ) | Appeal from Circuit Court of McLean County No. 02L15
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JUSTICE MYERSCOUGH delivered the opinion of the court:
In January 2002, in McLean County, Illinois, plaintiff,Community Merchant Services, Inc. (Community), filed a complaintagainst defendants, Samuel K. Jonas, individually, Cash Resources, Inc. (Cash Resources), and MediachoiceTV.com, Inc.,doing business as ConvenienTV.com (CTV). Community's complaintalleged breach of contract and alter-ego claims. An amendedcomplaint filed in August 2002 further alleged breach of fiduciary duty, fraudulent inducement, conversion, and fraud.
Defendants filed motions to dismiss based on lack ofpersonal jurisdiction and the doctrine of forum non conveniens. The trial court found personal jurisdiction existed over alldefendants but concluded the complaint should nevertheless bedismissed on forum non conveniens grounds.
Community appeals, arguing the trial court abused itsdiscretion in dismissing its complaint pursuant to the doctrineof forum non conveniens. Defendants cross-appeal, contending thecourt abused its discretion in finding personal jurisdiction overdefendants Jonas and Cash Resources. We affirm in part andreverse in part.
Community is an Illinois corporation with its principalplace of business in Bloomington, Illinois. It is an independentservice operator in the automated teller machine (ATM) industryand places ATMs throughout Illinois. Community developed andowns the Kahuna Media Network (Kahuna), a business also in theATM industry.
MediachoiceTV.com is a Colorado corporation doingbusiness as CTV. CTV is in the business of providing digitalmedia and advertising services utilized in connection with point-of-sale advertising. Cash Resources is also a Colorado corporation and is in the business of providing data processing andother services for ATMs. Jonas is the president and majorityshareholder of CTV and was the president and sole shareholder ofCash Resources until the sale of its assets in August 2002 to anentity known as eFunds, Inc.
In October 2000, Community and CTV began discussing thepotential sale of Kahuna by Community to CTV. As a result ofthese discussions, three documents were drafted and signed by theparties. First, in October 2000, a disclosure agreement wasentered into and signed by Community and defendant Jonas in hiscapacity as president of both CTV and Cash Resources. Second, inDecember 2000, a temporary letter agreement, sometimes referredto by the parties as a letter of intent, was entered into andsigned by the parties. Finally, in April 2001, an addendum wassigned by the parties and added to the letter agreement. Theaddendum was to serve as the parties' binding agreement. None ofthe agreements contained a choice-of-forum provision.
Paragraph seven of the addendum incorporated a breakupprovision, providing for reimbursement to CTV in the event ofimpossibility of performance due to "catastrophic circumstancesbeyond remedy or repair." CTV claims it eventually attempted to invoke the breakup provision, contending "catastrophic circumstances" had occurred.
In January 2002, Community brought suit in McLeanCounty, Illinois, against CTV, Jonas, and Cash Resources, alleging defendants defaulted on their agreement to purchase Kahuna. Community specifically alleged a breach-of-contract claim againstCTV and single alter-ego claims against both Jonas and CashResources. In August 2002, an amended complaint was filed. Theamended complaint further alleged breach-of-fiduciary-duty,fraud, and conversion claims against Jonas and a fraudulent-inducement claim against both Jonas and Cash Resources.
In February 2002, 17 days after Community filed itsoriginal complaint, CTV filed suit against Community in ArapahoeCounty, Colorado. CTV, in part, sought a declaratory judgmentconcerning the existence of a "catastrophic circumstance beyondremedy or repair," entitling it to invoke paragraph seven of theaddendum. Community filed motions to quash service and todismiss the Colorado complaint based upon lack of jurisdictionand forum non conveniens. Community's motions were denied. TheColorado court, however, stayed the action pending a finaldisposition in the Illinois suit.
In March 2002, in the Illinois suit, CTV filed ageneral appearance and a motion to dismiss based upon forum nonconveniens. In the same month, defendants Jonas and Cash Resources filed special and limited appearances and motions toquash service due to lack of personal jurisdiction. Jonas andCash Resources contended they were Colorado residents with anabsence of Illinois contacts and an absence of actions undertakenon their behalf in connection with the current dispute.
In July 2003, Jonas traveled to Bloomington, Illinois,and was personally served with process. His stated reason forcoming to Illinois was to assist his counsel in preparing for,and taking the deposition of Frank Lunn, the president of Community. After leaving Bloomington, Jonas traveled to Chicago forthe deposition of nonparty witness Andrew Yonke, again statinghis purpose was to provide factual assistance to counsel. Jonasalso moved to quash this service as improper.
In December 2003, the trial court denied the jurisdictional motions of Jonas and Cash Resources. The court initiallyfound personal jurisdiction over Jonas pursuant to him havingbeen personally served in Illinois. See 735 ILCS 5/2-209(b)(1)(West 2002). The court next found two sources of personaljurisdiction with respect to Cash Resources. The court firstfound Cash Resources was generally doing business in Illinois(735 ILCS 5/2-209(b)(4) (West 2002)) and then concluded that thepresent cause of action arose out of Cash Resources's transactions of business within Illinois (735 ILCS 5/2-209(a)(1) (West2002)). The court reserved ruling on CTV's motion to dismissbased upon forum non conveniens, pending the filing of similarmotions by Jonas and Cash Resources.
In January 2004, Jonas and Cash Resources both filedmotions to dismiss on forum non conveniens grounds. In April2004, at a hearing on all three motions, the trial court foundColorado to be the most appropriate forum for litigation andgranted the motions to dismiss.
These appeals followed.
A. Forum Non Conveniens
On appeal, Community argues the trial court erred ingranting the motions to dismiss on forum non conveniens grounds. See 735 ILCS 5/2-619(a)(3) (West 2002). Specifically, Communityargues the court failed to give deference to plaintiff's choiceof forum and defendants failed to meet their burden of demonstrating the balance of factors strongly favored dismissal ofCommunity's Illinois complaint.
A trial court's decision involving a forum nonconveniens motion lies within its sound discretion and will onlybe reversed on appeal if the court abused its discretion inbalancing the relevant factors. Dawdy v. Union Pacific R.R. Co.,207 Ill. 2d 167, 176-77, 797 N.E.2d 687, 696 (2003). In Dawdy,the Supreme Court of Illinois stated that when more than onepotential forum exists for an action, a court may invoke theequitable doctrine of forum non conveniens to determine the mostappropriate forum. Dawdy, 207 Ill. 2d at 171, 797 N.E.2d at 693. When applying the doctrine, a court must balance both private-and public-interest factors to determine the appropriate forum inwhich the case should be tried. Dawdy, 207 Ill. 2d at 172, 797N.E.2d at 693.
Relevant private-interest factors to be considered inconnection with the doctrine of forum non conveniens include theconvenience of the parties; the relative ease of access tosources of testimonial, documentary, and real evidence; theavailability of compulsory process; the cost to obtain attendanceof willing witnesses; the possibility of viewing the premises, ifappropriate; and all other practical considerations that make atrial easy, expeditious, and inexpensive. Dawdy, 207 Ill. 2d at172, 797 N.E.2d at 693. Additionally, relevant public-interestfactors include the administrative difficulties in congestedvenues, the unfairness of imposing jury duty upon individualswith no connection to the litigation, and the interest in havinglocal controversies decided locally. Dawdy, 207 Ill. 2d at 173,797 N.E.2d at 693.
A plaintiff's right to select the forum is substantial,and unless the factors weigh strongly in favor of transfer, theplaintiff's choice of forum should rarely be disturbed. Dawdy,207 Ill. 2d at 173, 797 N.E.2d at 694. Further, if theplaintiff's chosen forum is its home forum, that choice will begiven substantial deference. Skoien v. Utility MechanicalContractors, Inc., 207 Ill. App. 3d 79, 84, 565 N.E.2d 286, 288(1990). A plaintiff's choice of forum, however, receives lessdeference when neither the plaintiff's residence nor the site ofthe accident or injury is located in the chosen forum. Griffithv. Mitsubishi Aircraft International, Inc., 136 Ill. 2d 101, 106,554 N.E.2d 209, 211 (1990).
In the instant case, Community is an Illinoiscorporation, and its principal place of business is Bloomington,Illinois. Bloomington is located in McLean County whereplaintiff filed the underlying lawsuit. Clearly, plaintiff'schosen forum is its home forum and should be afforded greatweight. The trial court, however, awarded no deference toplaintiff's home forum choice. Specifically, the court statedthat because defendant CTV had filed its suit in Colorado, CTVwas also a "plaintiff" for the purpose of the forum nonconveniens determination. Because each party's home forum choicereceived an equal amount of deference, the court concluded thatneither parties' choice of forum was entitled to a preferentialtreatment.
Here, the trial court's conclusion was not only anabuse of discretion but was also clearly erroneous. As statedabove, generally, a reviewing court will not reverse a trialcourt's forum non conveniens determination unless the courtabused its discretion in balancing the relevant factors. Dawdy,207 Ill. 2d at 176-77, 797 N.E.2d at 696. Moreover, in thiscase, the trial court's designation of CTV as a "plaintiff" inthe underlying lawsuit is a question of law and is subject to denovo review. Clemons v. Mechanical Devices Co., 202 Ill. 2d 344,352, 781 N.E.2d 1072, 1078 (2002)
The record indicates that defendant CTV filed aseparate law suit in Colorado and not a counterclaim in theIllinois suit. Therefore, CTV's role in the underlying suit is adefendant, and not, as the trial court found, a second"plaintiff." No support exists for the court's proposition thata defendant's filing of a later lawsuit entitles the defendant tothe consideration afforded to a plaintiff in the initial lawsuitin another state. More importantly, the trial court's holdingwould lead to absurd results. As the Supreme Court of Illinoisstated in First National Bank v. Guerine, 198 Ill. 2d 511, 521,764 N.E.2d 54, 61 (2002), "the plaintiff is entitled to somedeference in choosing a forum; the battle over forum begins withthe plaintiff's choice already in the lead." The trial court'sholding in question effectively eliminated any "deference" or"lead" that a plaintiff enjoys because any defendant can file aseparate lawsuit in its home forum and claim that its choiceshould be given the same weight. Because the trial courtincorrectly applied the above deferential factor, we reverse thecourt's finding and remand the cause for a new test that affordsplaintiff's home forum the weight that Illinois law prescribes.
B. Personal Jurisdiction
On cross-appeal, defendants argue the trial court erredin finding Jonas and Cash Resources subject to personaljurisdiction within the State of Illinois. Specifically,defendants argue personal service on Jonas is improper because hewas within the state solely to assist counsel with discovery thatrelated to the Illinois court's jurisdiction. Defendants alsoargue Cash Resources is a Colorado resident with an absence ofIllinois contacts and an absence of any actions undertaken on itsbehalf in connection with the dispute giving rise to thislitigation.
When a trial court has heard no testimony anddetermined jurisdiction solely on the basis of documentaryevidence, a de novo standard of review applies. Gaidar v.Tippecanoe Distribution Service, Inc., 299 Ill. App. 3d 1034,1039-40, 702 N.E.2d 316, 319 (1998). Further, the plaintiff hasthe burden of establishing a prima facie basis for the exerciseof personal jurisdiction; however, the plaintiff's prima faciecase can be overcome by a defendant's uncontradicted evidencethat defeats jurisdiction. Gaider, 299 Ill. App. 3d at 1040-41,702 N.E.2d at 320.
1. Personal Jurisdiction Over Jonas
On cross-appeal, defendants argue the trial court erredin finding Jonas subject to personal jurisdiction as a result ofhim being personally served within Illinois. Defendants argueJonas was present in Illinois solely in connection with discoverypertaining to the issue of the court's jurisdiction over theperson of the defendant, and thus service of process wasimproper. See 735 ILCS 5/2-301 (West 2002); Official ReportsAdvance Sheet No. 8 (April 17, 2002), R. 201(l), eff. July 1,2002.
An Illinois court may exercise jurisdiction in anyaction against any person who is a natural person present withinthis state when served. See 735 ILCS 5/2-209(b)(1) (West 2002). A trial court may, on its own initiative, or on the motion of anyparty, make a protective order as justice requires, denying,limiting, conditioning, or regulating discovery to preventunreasonable annoyance, expense, embarrassment, disadvantage, oroppression. See 166 Ill. 2d R. 201(c)(1). A trial court mayissue a protective order where necessary and reasonable,prohibiting service on a party to protect that party from themisuse of discovery. In re Marriage of Falstad, 152 Ill. App. 3d648, 655, 504 N.E.2d 908, 913 (1987)
Defendants cite two cases in support of their argumentthat personal service of process on Jonas was improper. Thefirst, Falstad, is a divorce case in which the wife attempted toserve her husband by substitute service with a petition fordissolution of marriage. Falstad, 152 Ill. App. 3d at 699, 504N.E.2d at 909. The husband filed a special and limitedappearance to contest the service. The wife then filed a noticeof deposition for the purpose of discovery on the issue of thecourt's jurisdiction over her husband. See Official ReportsAdvance Sheet No. 8 (April 17, 2002), R. 201(l), eff. July 1,2002. The husband, however, refused to comply, contending thathis wife would use the opportunity to effect personal serviceupon him. Falstad, 152 Ill. App. 3d at 649-50, 504 N.E.2d at909-10. The First District held the trial court could easilyhave entered a protective order to respond to the concern thatdiscovery not be used as a form of harassment or as a guise toaccomplish indirectly what cannot be done directly. Falstad, 152Ill. App. 3d at 654, 504 N.E.2d at 912.
Defendants next cite Harris v. Wally's World of Fun,Ltd., 279 Ill. App. 3d 61, 62-63, 664 N.E.2d 324, 325 (1996), inwhich the defendant filed a motion for entry of a protectiveorder to prohibit the plaintiff from attempting to serve himduring a hearing on the defendant's motion to quash. The trialcourt concluded that a motion for a protective order constituteda general appearance and thus waived any objections tojurisdiction. Harris, 279 Ill. App. 3d at 63, 664 N.E.2d at 326. The First District reversed and held a motion for a protectiveorder preventing personal service does not waive the issue ofjurisdiction. Harris, 279 Ill. App. 3d at 66, 664 N.E.2d at 327.
Defendants contend Falstad and Harris stand for theproposition that a party may enter the State of Illinois for thepurpose of discovery relating to a court's jurisdiction withoutbeing subject to personal service of process. However, theirinterpretation is incorrect. Correctly read, these cases standfor the proposition that a party who enters the state fordiscovery relating to a court's jurisdiction may not be subjectedto personal service, so long as a protective order has beengranted prohibiting such service from taking place.
The distinction between defendants' interpretation andthat of the trial court, and this court, relates to the entry ofa protective order before a party enters the state. The supremecourt rules state a protective order may be requested by eitherthat court upon its own motion or by a motion from one of theparties. See 166 Ill. 2d R. 201(c)(1). In both Falstad andHarris, protective orders were sought and received beforeentering into the state. In this case, however, no such orderwas sought by defendant Jonas. Therefore, Jonas was subject topersonal service of process upon entering Illinois.
A review of the record indicates personal service ondefendant Jonas was proper in this instance. A protective orderwas needed to give Jonas immunity from personal service, andsince one was not in place, service was proper. The trial courttherefore did not err in its determination that personaljurisdiction exists in Illinois over defendant Jonas.
2. Personal Jurisdiction Over Cash Resources
Defendants next argue on cross-appeal that the trialcourt erred in finding Cash Resources subject to personaljurisdiction within the State of Illinois. Specifically,defendants contend Cash Resources was neither doing business inIllinois, nor was it transacting business within the state. Theyargue an absence of both Illinois contacts and actions undertakenon Cash Resources's behalf in connection with the current causeof action.
In determining whether a basis for personaljurisdiction over a nonresident defendant exists, the trial courtmay consider a plaintiff's complaint and any affidavits submittedby the parties. Viktron Ltd. Partnership v. Program Data, Inc.,326 Ill. App. 3d 111, 116, 759 N.E.2d 186, 192 (2001). Anaffidavit satisfies the rule governing affidavits submitted inconnection with challenges to personal jurisdiction if, from thedocument as a whole, it appears the affidavit is based on thepersonal knowledge of the affiant and there is a reasonableinference that the affiant could competently testify to itscontents. Khan v. Van Remmen, Inc., 325 Ill. App. 3d 49, 56, 756N.E.2d 902, 909 (2001).
When an affidavit consists of mere conclusions, ratherthan evidentiary facts, it does not comply with the rulegoverning affidavits and does not provide a sufficient basis tosupport personal jurisdiction. Khan, 325 Ill. App. 3d at 56, 756N.E.2d at 909. Further, conflicts in the affidavits andpleadings must be resolved in favor of the plaintiff for purposesof determining whether a prima facie case for personaljurisdiction has been established. Khan, 325 Ill. App. 3d at 56,756 N.E.2d at 909.
a. Doing Business
An Illinois court may exercise jurisdiction over anyforeign corporation found to be doing business within the state. See 735 ILCS 5/2-209(b)(4) (West 2002). No comprehensive testhas been stated for determining what activities amount to doingbusiness; however, if a corporation is conducting business inIllinois of such character and extent as to warrant the inferencethat the corporation has subjected itself to the jurisdiction andlaws of the state, it may be found to be doing business inIllinois. Hendry v. Ornda Health Corp., 318 Ill. App. 3d 851,853, 742 N.E.2d 746, 748 (2000). Further, business activitywithin the state must be carried on with a fair measure ofpermanence and continuity, and such determinations are made on acase-by-case basis. Hendry, 318 Ill. App. 3d at 853, 742 N.E.2dat 748-49.
To support a finding that Cash Resources was doingbusiness in Illinois, Community relies, in part, on the affidavitof Andrew Yonke, a former employee of both Community anddefendants. In his affidavit, Yonke alleged he was paid by CTVbut did considerable work in Illinois for Cash Resources,unrelated to his position at CTV. Specifically, Yonke states heobtained numerous ATM contracts for Cash Resources. He furtherstated the lease for his apartment in Illinois was in the name ofCash Resources.
Information in the record contains additionalallegations made by Community. Community contends Cash Resourceshas leased or sold hundreds of ATMs to businesses in Illinois andprovides maintenance, servicing, and processing for those ATMs. Community also alleges Cash Resources has employees presentwithin the State of Illinois and has leased space from businessesto conduct business in Illinois.
Defendants answer Community's allegations by arguingthat Cash Resources's Illinois activities were unrelated toCommunity and were very limited in scope and time. They point tothe Hendry case as being factually similar to this case. Thecourt in Hendry concluded the majority of the plaintiff'sallegations against the foreign corporate defendant pointed tonothing more than the advertising of services in Illinois, andtherefore, the defendant was not doing business in Illinois. Hendry, 318 Ill. App. 3d at 854, 742 N.E.2d at 749.
The trial court in this case noted Hendry and found itarticulated the correct standard to be applied. However, thecourt concluded the facts of this case differ from those inHendry, such that a different outcome was warranted. Afterlooking at the information presented, the court found CashResources was doing business in Illinois and personaljurisdiction existed. Factors it considered include thedisclosure agreement entered into by Cash Resources, space leasesand processing agreements in Illinois, Yonke's apartment lease,and the activities of Yonke in Illinois on behalf of CashResources.
The record on appeal and the applicable law support thetrial court. The information presented shows Cash Resources hassold or leased ATMs to businesses throughout Illinois andprovided services for those ATMs. A sample processing agreementfrom Cash Resources shows, upon entering into such an agreement,it agreed to reprogram ATMs, perform maintenance or systemimprovements, and provide necessary data-processing services. Further, the duration of the sample processing agreement was fora period of five years, with automatic renewal for successivefive-year periods.
Further, the affidavit of Yonke is based on personalknowledge supporting the conclusion that Cash Resources was doingbusiness in Illinois. In Yonke's affidavit, he stated he waspresent in Illinois and doing business on behalf of CashResources and Cash Resources signed his apartment lease. Theseallegations, along with others presented by Community, lead tothe conclusion that Cash Resources subjected itself to the lawsof Illinois and could reasonably have anticipated being broughtinto court in this state.
The record shows that Cash Resources was in fact doingbusiness within the State of Illinois. The activities of CashResources show a fair measure of permanence and continuity suchthat it should be subjected to personal jurisdiction in Illinois.Further, Cash Resources subjected itself to the laws of thisstate by signing Yonke's apartment lease and allowing Yonke to dobusiness in Illinois on its behalf. Therefore, the trial courtdid not err in finding Cash Resources was doing business inIllinois.
b. Transacting Business
An additional way in which a corporation may besubjected to personal jurisdiction in Illinois is under thestate's long-arm statute. Under that statute, if a defendanttransacts business in Illinois and the cause of action at issuearises from that activity, personal jurisdiction exists. See 735ILCS 5/2-209(a)(1) (West 2002). To meet the requirements of theIllinois long-arm statute, a plaintiff must show the defendanttransacted business in Illinois, the cause of action arose fromthis transaction of business, and personal jurisdiction isconsistent with due process. Khan, 325 Ill. App. 3d at 57, 756N.E.2d at 910.
A defendant transacts business in the state within themeaning of the long-arm statute when substantial performance ofcontractual duties is to be rendered in the state or when thedefendant invokes the benefits and protections of state law inthe contractual relationship. Khan, 325 Ill. App. 3d at 57, 756N.E.2d at 910. Further, a plaintiff's claim "arises from" thetransaction of business for purposes of the long-arm statute ifit lies in the wake of the commercial activities by which thedefendant submitted to the jurisdiction of state courts. Khan,325 Ill. App. 3d at 57, 756 N.E.2d at 910.
Factors relevant to whether a transaction amounts totransacting business for purposes of the Illinois long-armstatute include who initiated the transaction, where the contractwas entered into, and where performance of the contract was totake place; however, while none of these factors is controlling,each is significant. Khan, 325 Ill. App. 3d at 57, 756 N.E.2d at910. Only the conduct of the defendant at issue can form thebasis for jurisdiction. Poplar Grove State Bank v. Powers, 218Ill. App. 3d 509, 518, 578 N.E.2d 588, 595 (1991). Here, the trial court found the signing of thedisclosure agreement by Cash Resources, the apartment lease forYonke in the name of Cash Resources, activities of Yonke inIllinois on behalf of Cash Resources, space leases, andprocessing agreements were all related to the contract at issueand lie in the wake of the transaction that is the source of thecause of action. The court also stated it found the Hendry caseinstructive in this context as well. It noted that while theHendry court determined the defendant's activities did not riseto the level of doing business, it did find that arrangementsmade by the defendant for a limousine to pick up the plaintiffand transport her to the State of Iowa was sufficient forpurposes of the long-arm statute. Hendry, 318 Ill. App. 3d at855, 742 N.E.2d at 749-50. The evidence here establishespersonal jurisdiction over Cash Resources pursuant to theIllinois long-arm statute. In this case, Community's presidentwas approached in Illinois by Jonas, the president of CashResources and CTV, concerning the acquisition of Kahuna. Theparties entered into a disclosure agreement that was signed inIllinois by Community's president and in Colorado by Jonas in hiscapacity as president of both CTV and Cash Resources. Theparties continued to meet and communicate by phone, fax, andemail, and performance under the disclosure agreement took placein both Illinois and Colorado when each party kept protectedinformation confidential. Further, the disclosure agreement wasa precursor to the final agreement between Community and CTV, inthat if it had not been executed, the final agreement would nothave been entered into. Other information in therecord shows a press release, attached to Community's amendedcomplaint, that was issued in Englewood, Colorado, andBloomington, Illinois, and which described Kahuna as beingacquired by Cash Resources. Further, nonparty witness Yonke wasa key employee of Kahuna whom CTV agreed to employ, after itsacquisition of Kahuna, as its representative in the Chicago area. In his affidavit, Yonke alleges he was present in Illinois anddoing business for both CTV and Cash Resources. Specifically,Yonke stated during his employment with CTV he obtained numerousATM contracts for Cash Resources. This information shows thatCash Resources transacted business within the state of Illinoisthat is directly related to the contract at issue in the currentcause of action. The trial court did not err infinding personal jurisdiction over Cash Resources pursuant to theIllinois long-arm statute.
III. CONCLUSION
For the reasons stated, we affirm the trial court'sjudgment insofar as it confirms the existence of personaljurisdiction over defendants and reverse insofar as it grantsdefendants' motions to dismiss on forum non conveniens grounds.
Affirmed in part and reversed in part; cause remanded.
COOK, P.J., and APPLETON, J., concur.