The opinion of the court was delivered by: David Stewart Cercone United States District Judge
Plaintiff commenced this diversity action seeking to recover damages arising from defendants' alleged breach of contract. Presently before the court is Defendants' motion to dismiss or alternatively to transfer to the Middle District of Florida. For the reasons set forth below, the motion will be granted in part and the action will be transferred to the Middle District of Florida pursuant to 28 U.S.C. §1406(a).
Plaintiff is a Pennsylvania limited liability company in the business of obtaining financing and investment capital for individuals and businesses. Plaintiff does not provide direct financing to its clients, but rather uses its relations with various financial institutions to connect its clients to lenders. Defendants are the owners of real property in Orlando, Florida who intended to convert an existing hotel into a 161 unit luxury "condotel." Defendants Venturella and Parmee were to control the construction and operation the conversion project. The project was partially financed - $18, 750,000 - through a construction loan from USA Capital. After advancing $8.4 million on the loan, USA Capital filed for bankruptcy protection and refused to make any additional advances. By this time, Defendants had invested $4.5 million of their own money into the project.
Defendants were introduced to Plaintiff as part of the effect to find a new source of construction financing. Plaintiff was requested to assist Defendants in obtaining new financing. In requesting the assistance of Plaintiff, Defendants agreed to pay Plaintiff's fees and represented that the principals involved in the project, Venturella and Parmee, were placing their creditworthiness behind the new financing.
On or about May 30, 2006, Plaintiff and defendant Standard Property entered into a standard financing agreement, which provided that Plaintiff would obtain the needed financing in an amount up to $20,000,0000. The agreement was addressed to Parmee, on behalf of Standard Property Company, LLC. Defendants paid Plaintiff the $5,000 non-refundable fee through a Bank of America cashiers check dated October 25, 2006, and listed the remitter as Standard Property. Upon obtaining the financing, Plaintiff was to receive four percent (4%) of the total loan amount, which was due and payable upon closing. Following the execution of the agreement in Florida, Plaintiff began soliciting lenders while awaiting the prompt receipt of Defendants' financial documents. These financial documents were not provided to Plaintiff and this action for breach of contract ensued.
Plaintiff claims that jurisdiction is proper in this venue under 28 U.S.C. §1391(a)(2) because this is the judicial district in which a "substantial part of the events giving rise to the claim. . . occurred" and the contract contained a valid forum selection clause. This clause is found at paragraph 9 and states: "The parties hereto agree that this Agreement shall be deemed to have been executed in Allegheny County, PA and subject to the laws thereto." Plaintiff concedes that this language "does not dictate a perfect forum selection clause." Plaintiff's Brief in Opposition (Doc. No. 16) at 18. Plaintiff nevertheless asserts that this paragraph shows the contract was subject to the laws of Pennsylvania and as a consequence Defendants purposely directed their activities toward this forum. Plaintiff further argues that Defendants have sufficient minimum contacts with Pennsylvania, thereby conferring jurisdiction.
Conversely, Defendants argue that this court lacks jurisdiction because the clause at paragraph 9 is not a valid forum-selection clause and as a result there is no consent to Pennsylvania jurisdiction. They further assert that the record lacks sufficient contacts to support either a specific or general jurisdiction analysis.
Personal jurisdiction over nonresident defendants may be exercised pursuant Federal Rule of Civil Procedure 4(e) to the extent permissible under the law of the jurisdiction where the district court is located. Grand Entertainment Group, Ltd. v. Star Media Sales, Inc., 988 F.2d 476, 481 (3d Cir.1993). Pennsylvania's long arm statute is "coextensive with the limits placed on the states by the federal Constitution." Vetrotex v. Certainteed Corp. v. Consol. Fiber Glass Prods. Co., 75 F.3d 147, 150 (3d Cir.1996); Seealso 42 Pa. C. S. §§ 5301 (general jurisdiction) & 5322 (specific jurisdiction).
Once jurisdiction has been challenged, the plaintiff bears the burden of establishing contacts sufficient to support the exercise of personal jurisdiction. See Marten v. Godwin, 499 F.3d 290, 295-296 (3d Cir. 2007); Provident National Bank v. California Fed. Savings & Loan Assn., 819 F 2d.434, 437 (3d Cir. 1987). Initially, a plaintiff need only make a prima facie showing of jurisdiction, and the record is to be read in the light most favorable to the plaintiff. Pinker v. Roche Holdings, Ltd., 292 F.3d 361, 368 (3d Cir. 2002). If the plaintiff makes out a prima facie case for exercising personal jurisdiction, the burden shifts to the defendant to "present a compelling case" that the extension of jurisdiction is unconstitutional. Mellon Bank (East) PSFS, N.A. v. Farino, 960 F.2d 1217, 1221 (3d Cir. 1992).
The due process limits on personal jurisdiction are defined by a two prong test. Vetrotex Co., 75 F.3d at 150-51. First, the plaintiff must demonstrate that the defendant has constitutionally sufficient "minimum contacts" with the forum. Burger King, 471 U.S. at 474. In conducting a minimum contacts analysis, the court must examine "the relationship among the forum, the defendant and the litigation," Shaffer v. Heitner, 433 U.S. 186, 204 (1977), and determine whether the defendant "purposefully directed" its activities toward residents of the forum or the basis of litigation "aris[es] out of or relate[s] to" the defendant's forum contacts. Mellon Bank (East) PSFS, N.A. v. DiVeronica Bros., Inc., 938 F.2d 551, 554 (3d Cir. 1993); Burger King, 471 U.S. at 472. In other words, there must be "some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253 (1958); see also World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 287 (1980) ("[I]t is that the defendant's conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there."). Second, if the plaintiff demonstrates sufficient "minimum contacts," it must be determined whether the exercise of personal jurisdiction comports with the "traditional notions of fair play and substantial justice." IMO Indus., Inc. v. Kiekert AG, 155 F.3d 254, 25-59 (3d Cir. 1998) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).
There are two situations under which a defendant may be subjected to personal jurisdiction: general and specific. A defendant may be subjected to general jurisdiction when the defendant has maintained continuous and systematic contacts with the forum. Vetrotex, 75 F.3d at 151; Burger King, 471 U.S. at 473. "The threshold for establishing general jurisdiction is very high, and requires a showing of extensive and pervasive facts demonstrating connections with the forum state." Reliance Steel Prods. Co. v. Watson, Ess, Marshall & Enggas, 675 F.2d 587, 589 (3d Cir. 1982). A defendant may be subjected to specific jurisdiction "when the cause of action arises from the defendant's forum related activities such that the defendant should reasonably anticipate being haled into court there." Vetrotex, 75 F.3d at 151; 42 Pa. C. S. § 5322. "[S]pecific jurisdiction is established when a non-resident defendant has purposefully directed his activities at a resident of the forum and the injury arises from or is related to those activities." General Electric Co. v. Deutz AG, 270 F.3d 144, 150 (3d Cir. 2001) (citing Burger King, 471 U.S. at 472).
The parties vehemently dispute the import of the clause at paragraph 9 of the agreement.
The issue is whether the language "deemed to have been executed in Allegheny County...and subject to the laws thereto" without further explanation constitutes a valid forum selection clause, thereby subjecting ...