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Pullman Financial Corp. v. Hotaling

June 23, 2008


The opinion of the court was delivered by: Magistrate Judge Amy Reynolds Hay


In this diversity matter, Pullman Financial Corporation ("PFC" or "the Plaintiff"), a Pennsylvania corporation, alleges that Robert M. Hotaling ("Hotaling" or "the Defendant"), a New York state resident, owes PFC $138, 306.73, representing Hotaling's half of the agents' commission on a life insurance policy written for one of Hotaling's clients. The insurer required that the full commission be returned when it ultimately denied a claim made on the policy. In response to the Complaint (Doc. 1), Hotaling filed the pending Motion to Dismiss for Lack of Personal Jurisdiction Pursuant to Fed. R. Civ. P. 12(b)(2), or in the alternative, to Dismiss for Failure to State a Cause of Action Pursuant to Rule 12(b)(6), or to Dismiss or Transfer this Matter Pursuant to the venue provisions set out in 28 U.S.C. §1404(a) and §1406(a) (Doc. 5). The Motion, insofar as it seeks dismissal for lack of personal jurisdiction or for improper venue will be denied. The Motion to transfer venue pursuant to 28 U.S.C. § 1406(a) will be granted. The court does not reach the Defendants' Motion to Dismiss pursuant to Rule 12(b)(6).


In late 2004 or early 2005, Ronald V. Pullman ("Pullman"), the sole shareholder of PFC, and Hotaling, a principal in the New York independent financial services company, Hotaling Group, met during an overseas insurance convention. There, they explored a possible joint venture whereby the two would cooperate in selling premium financed life insurance policies "based on written presentations and cost illustrations prepared by PFC at its headquarters . . . in Carnegie, Pennsylvania." (Pullman Affidavit ¶ 5). PFC agreed to perform services for Hotaling's existing New York client base, including analyzing the prospective client's financial status, determining the maximum amount of insurance needed, preparing written illustrations, and attending client meetings, either in person or by telephone. PFC also agreed to secure financial documents for insurance and loan underwriting, and to coordinate with banks, insurance companies, and insurance trusts. ( Id. at ¶ 6). Commissions received for successful sales were to be split equally between Pullman and Hotaling. (Doc. 1 at ¶ 2(a)). This joint venture extended over a period of twenty-three months and involved presentations to numerous clients. (Pullman Affidavit at ¶ 9). Pullman contends that PFC assisted Hotaling in closing sales for at least thirty-two prospective clients. Information relating to these accounts, including the date on which PFC opened files, copies of email between the parties, life insurance illustrations, and copies of written presentations are attached as exhibits to Pullman's affidavit.

The current dispute originated with a June 20, 2005 account presentation made to New York residents, Mr. and Mrs. Constantino Presta. PFC and Hotaling proposed to sell Mr. Presta ("Presta") a premium financed life insurance policy with a face amount of ten million dollars. It was anticipated that at Presta's demise, this policy would cover the amount of estate tax due. Under the plan proposed by PFC, Presta would purchase a term life insurance policy naming as beneficiary an irrevocable trust exempt from federal estate taxes. This term policy would then be converted to "an Elite Index Universal Life Insurance Policy" whose premium would be financed by a collateralized loan. (Doc. 1 at ¶ 2(b) - (e)).

In furtherance of this plan, the Presta Irrevocable Trust was created on July 29, 2005, and four months later, an application was filed with the American General Life Insurance Company ("AIG"). This application specified that agents Pullman and Hotaling were each to be paid fifty percent of the commission. AIG issued the policy on January 16, 2006. (Id. at ¶ 2(e) - (g)).

On March 28, 2006, an In-Force Change Application was filed with AIG in order to convert the Presta term policy to an Elite Universal Life Insurance Policy, with the premium to be paid with proceeds of a loan made by HSBC Bank, USA. AIG then issued a new policy, with a face amount of $9,537,785, identifying the Bank as assignee. (Id. at ¶ 2(I)).

On March 31, 2006, AIG issued a commission check for $276,613.45 to Pullman. Six days later, PFC issued a check to Hotaling in the amount of $138, 306.73, half of the full commission paid by AIG to Pullman. (Id. at ¶2(j) - (l)).

In late 2006, Presta died. The Trust made a claim on his estate under the Premium Adjustable Life Insurance Policy. Following an investigation, AIG concluded that Presta had failed to disclose a pre-existing condition, and denied the claim. (Id. at ¶ 2(p) - (q)).

On October 5, 2007, AIG reversed the $276,613.45 commission check issued to Pullman, and refunded premiums to Presta's estate. PFC alleges that it has made repeated demands on Hotaling for reimbursement of his portion of the Presta commission, but Hotaling has refused to return the money. (Id. at ¶¶ 2 (r) -(s)).

Hotaling responded to the Complaint, filing Motions to Dismiss pursuant to Fed. R. Civ. P. 12(b)(2) for lack of personal jurisdiction, Fed. R. Civ. P. 12(b)(6) for failure to state a claim, and Fed. R. Civ. P. 12(b)(3) for improper venue. Hotaling asks that this matter not be dismissed, and that it be transferred to the United States District Court for the Southern District of New York.

The court turns first to the issue of personal jurisdiction.


A. Personal ...

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