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Alliedbarton Security Services, LLC v. Onyx on the Bay

December 22, 2009

ALLIEDBARTON SECURITY SERVICES, LLC PLAINTIFF,
v.
ONYX ON THE BAY, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Gene E.K. Pratter Unitedstatesdistrictjudge

AMENDED MEMORANDUM*fn1

GENE E.K. PRATTER, J.

AlliedBarton Security Services, LLC ("AlliedBarton") hopes to pursue claims for breach of contract and quasi-contact arising from the provision of security services in Florida. The sole remaining defendant, Onyx on the Bay Condominium Association, Inc. ("Onyx"), moves to dismiss the Amended Complaint on the grounds that the Court lacks personal jurisdiction over Onyx, that venue is improper, and that AlliedBarton failed to state a claim upon which relief can be granted. For the reasons stated below, the Court concludes that the motion should be granted because Onyx has insufficient contacts with the Commonwealth of Pennsylvania to support the Court's exercise of personal jurisdiction over it.

I. FACTUAL AND PROCEDURAL BACKGROUND

Given the relatively straightforward personal jurisdiction issues presented to the Court, this case already has an unusually lengthy procedural history. Suit was brought in Pennsylvania state court, in the name of Allied Security, Inc., against GGM Developers LLC, Sterling International Properties LLC, Onyx on the Bay, Onyx on the Bay Condominium Association, Inc., BAP-GGM Development LLC, and BAP Development Inc. Allied Security claimed that the Defendants breached a contract for security services, and sought recovery for its services represented by unpaid bills allegedly incurred by the Defendants.

Defendants removed the case to federal court on July 31, 2008, and three months later, default was entered against all of them for failure to plead or otherwise defend. Promptly thereafter, Defendants filed a motion to set aside default and dismiss the complaint, on the grounds that the Court did not have subject matter or personal jurisdiction, that venue was improper, that the Complaint failed to state a claim upon which relief could be granted, and that a necessary or indispensable party was not joined. Specifically, chief among Defendants' arguments were that 1) "Allied Security, Inc." was not a party or beneficiary to the contract at issue, and 2) Defendants did not have sufficient minimum contacts with Pennsylvania to be subject to personal jurisdiction in Pennsylvania.

Over the next few months, the parties filed various memoranda and exhibits regarding the motion, and conducted limited initial, informal discovery about the parties' corporate structures and proper names, contacts with Pennsylvania, and corporate relationships with one another. During the course of the discovery, Defendants filed a motion to compel production of information regarding the parties' corporate structure and jurisdiction. Not to be outdone, Allied Security filed a cross-motion to compel discovery. The dueling discovery motions necessitated a delay in the Court's scheduled hearing to resolve the motions, in favor of a telephone conference with counsel. During this conference, the parties discussed their prior, informal discovery efforts regarding jurisdictional issues and the parties' corporate structures and relationships. Following the conference, the Court granted the motion to set aside the default and mooted the motion to dismiss. The Court granted in part and denied in part the competing discovery motions, and set a new jurisdictional discovery deadline. Defendants were granted leave to refile their motion to dismiss after the close of jurisdictional discovery, if appropriate.

However, before the close of jurisdictional discovery, Allied Security sought leave to file an amended complaint and correct its own name. At the parties' request, the Court extended the period for jurisdictional discovery and issued deadlines addressing the motion to file an amended complaint and change the name of the Plaintiff. The Court permitted Plaintiff to file an amended complaint in the name of "AlliedBarton Security Services, LLC."

In the Amended Complaint, AlliedBarton advanced causes of action for breach of contract and for quantum merit/quasi contract, on the grounds that Onyx had failed to pay AlliedBarton for security guards and other security services that AlliedBarton provided to Onyx in Florida. Specifically, AlliedBarton claims that it entered into a valid, written contract with Defendants, by which AlliedBarton "was to provide security guards at Defendants' location, and in exchange Defendants were to pay [AlliedBarton] a set rate for the guards' time and time for other security services." Id. at ¶ 13. AlliedBarton alleges that, although it performed the security services and sent invoices to Onyx, it was not paid. Id. at ¶ 14. AlliedBarton further asserts that Onyx did not cancel the contract but continued requesting services, made repeated promises to pay the required fees, and admitted owing the amount demanded under the contract. Id. at ¶ 15. AlliedBarton claims that the breach of contract and outstanding debt caused it to sustain damages in the amount of $178,703.00, which includes compensatory damages, attorney's fees, prejudgment interest and other damages. Id. at ¶ 19. AlliedBarton pleads, in the alternative and pursuant to Pa. R. C. P. 1020, that it is entitled to recover under the doctrine of quantum merit or quasi-contract "for receiving unjust enrichment, receiving and retaining the benefit of the advertisements, which were provided by [AlliedBarton] under expectation of payment from Defendants with the good faith belief of contractual relationship." Id. at ¶ 21.*fn2

With respect to personal jurisdiction and the parties' respective "minimum contacts," AlliedBarton alleges that it is registered to do business in Pennsylvania and the State of Florida, with a principal place of business in Pennsylvania, and that Onyx has a principal place of business in Florida. Id. at ¶¶ 1, 3. Further, AlliedBarton alleges that "[c]ommunications and contractual negotiations between the parties to this action were held in Pennsylvania or from Pennsylvania;" the "place of contracts on which this action is based is Pennsylvania." AlliedBarton contends that Defendants "regularly" sent payments to AlliedBarton's Pennsylvania office, Defendants "regularly" conduct business in Pennsylvania, Defendants "regularly" advertise and market to Pennsylvania residents and engage in business over the Internet accessible from Pennsylvania, and Defendants have "other substantial, ongoing contacts with Pennsylvania, Pennsylvania residents and Pennsylvania companies." Id. at ¶ 8. AlliedBarton alleges that "[v]enue of this action is properly in Montgomery County due to the fact that the contractual negotiations, the place of contract and the breach occurred, and Plaintiff's place of business is located, in King of Prussia, Montgomery County, Pennsylvania." Id. at ¶ 9. Montgomery County is, of course, within the Eastern District of Pennsylvahnia.

Throughout the past summer months, the parties continued to have disputes with each other. AlliedBarton filed a motion to compel and for sanctions, arguing that Defendants had failed to produce documents related to jurisdiction, failed to answer interrogatories related to jurisdiction, and failed to produce for deposition a designated representative on jurisdictional issues. The Court ultimately ordered that AlliedBarton be allowed to depose Defendants' jurisdictional representative, and to file a supplemental opposition to the motion to dismiss by September 18, 2009. Nonetheless, the Court received correspondence and a stipulation from the parties, asking for another extension of time for Plaintiff to complete the deposition of Defendants' jurisdictional representative and to file a supplemental opposition brief regarding the motion to dismiss. The Court granted the requested extension, and adjusted the briefing schedule accordingly.

An oral argument on the motion to dismiss was held on November 23, 2009. At the oral argument, AlliedBarton elected to proceed only against Onyx, and to dismiss GGM Developers LLC, Sterling International Properties LLC, Onyx on the Bay, BAP-GGM Development LLC, and BAP Development Inc. from the action. See 11/23/2009 Oral Argument Tr. at 18-19.

II. DISCUSSION

A. Standard of ...


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