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De Lage Landen Financial Services, Inc. v. New Life Anointed Ministries International

June 30, 2011

DE LAGE LANDEN FINANCIAL SERVICES, INC.
v.
NEW LIFE ANOINTED MINISTRIES INTERNATIONAL, INC.



The opinion of the court was delivered by: Juan R. Sanchez, J.

MEMORANDUM

Plaintiff De Lage Landen Financial Services, Inc. (DLL) sues New Life Anointed Ministries International, Inc. (New Life) for breaching an agreement for the lease of computer equipment. New Life asks this Court to dismiss this case for lack of personal jurisdiction. Because New Life has not purposefully established sufficient minimum contacts with Pennsylvania to support the exercise of personal jurisdiction, the motion will be granted.

FACTS*fn1

New Life is a non-denominational worship center*fn2 organized as a Delaware corporation and located in Woodbridge, Virginia. New Life does not maintain an office in Pennsylvania, and no employee of New Life has ever traveled to Pennsylvania on business. Def.'s Mot. to Dismiss Ex. D ¶¶ 4, 6. The church's only relationship with the Commonwealth appears to be the fact that its senior pastor provides "spiritual covering" for churches in Pennsylvania, among other states. Pl.'s Resp. to Mot. to Dismiss Ex. A.

In 2007, New Life sought to acquire certain computer software, equipment, and support services from ACI Solutions (ACI), a company located in Virginia, for use at New Life's church in Virginia. ACI suggested Cisco, a Nevada corporation with offices in Wayne, Pennsylvania, as an available source of funding for the purchase. On June 12, 2007, New Life executed a "Master Lease Agreement" (Lease) with Cisco, establishing the general terms and conditions under which Cisco would purchase the software, equipment, and services-referred to collectively in the Lease as a "System"-from ACI and lease it to New Life. Although the parties to the Lease were New Life and Cisco, New Life did not engage in any negotiations with Cisco. Rather, all of New Life's communications about the Lease were with ACI. New Life received the Lease from ACI, signed it, and then returned the signed Lease to ACI-all in Virginia. Def.'s Mot. to Dismiss Ex. D ¶¶ 7-9.

The Lease provided it would "be binding and effective when accepted by [Cisco] at its corporate office in Wayne, Pennsylvania," Compl. Ex. A ¶ 24, and directed that all payments and notices thereunder be sent to Cisco at the Wayne address, id. ¶¶ 2, 21. The Lease also included a choice of law clause specifying it would be governed by New York law, and reflecting the parties' agreement to submit to the non-exclusive jurisdiction of the courts of New York County, New York, and the New York federal courts "for the purpose of any action or proceeding arising out of or relating to [the Lease]." Id. ¶ 24.

On October 16, 2007, New Life purportedly executed a Progress Payment Addendum (Addendum) to the Lease in which Cisco agreed to make interim payments to ACI during the period of time when portions of the System were being delivered to New Life and prior to New Life's acceptance of the entire System, and New Life agreed to pay Cisco interest on these "progress payments."*fn3 The Addendum also provided that (1) any progress payments advanced by Cisco would be New Life's obligation, and (2) if for any reason the Lease did not commence within 150 days after the first progress payment was made, Cisco did not accept the Lease, or New Life failed to make payments under the Addendum, then New Life would pay Cisco on demand "an amount equal to the sum of all Progress Payments plus Progress Rent through the date of payment." Compl. Ex. B ¶ 5.

On September 12, 2007, Cisco assigned all of its rights, title, and interest in the Lease to DLL. Pl.'s Resp. to Mot. to Dismiss Ex. E. According to the Complaint, DLL made progress payments of $85,976.80 and $51,586.08 to ACI on September 12, 2007, and October 23, 2007, respectively, and interest on these payments began accruing on January 10, 2008. Compl. ¶ 9.

On April 27, 2009, DLL notified New Life that New Life had defaulted under the Addendum because the Lease had not commenced within 150 days of the first progress payment and DLL did not accept the Lease. Def.'s Mot. to Dismiss Ex. B. DLL demanded immediate payment of the two progress payments it had made, plus interest, id., but New Life refused to pay. In April 2010, DLL filed the instant Complaint, asserting claims against New Life for breach of contract and promissory estoppel. The case was designated for compulsory arbitration pursuant to Local Civil Rule 53.2,*fn4 and an arbitration hearing was scheduled for October 6, 2010. New Life did not appear at the October 6 hearing, having advised the arbitrators of its defense based on lack of personal jurisdiction. Def.'s Mot. to Dismiss ¶ 23. The same day, the arbitrators issued an arbitration award, finding in favor of New Life and against DLL.*fn5 Id. Ex. E. DLL thereafter requested a trial de novo pursuant to Local Civil Rule 53.2(7), and trial was scheduled for November 18, 2011. In response, New Life filed the instant motion to dismiss the case for lack of personal jurisdiction. This Court heard oral argument on the motion on the scheduled trial date and took the motion under advisement. With the parties' consent, and without waiver of New Life's personal jurisdiction objection, the Court then proceeded to take testimony directed at the merits to avoid a second hearing in the event the motion to dismiss was denied.

DISCUSSION

"Once challenged, the plaintiff bears the burden of establishing personal jurisdiction." O'Connor v. Sandy Lane Hotel Co., Ltd., 496 F.3d 312, 316 (3d Cir. 2007). In the absence of an evidentiary hearing, a plaintiff "need only establish a prima facie case of personal jurisdiction." Id. (citation omitted). To meet this burden, a plaintiff may not rely "on the bare pleadings alone," but must respond with sworn affidavits or other competent evidence. Patterson, 893 F.2d at 603-04 (citation omitted); see also Metcalfe, 566 F.3d at 330-31.

"Under Federal Rule of Civil Procedure 4(k), a District Court typically exercises personal jurisdiction according to the law of the state where it sits." O'Connor, 496 F.3d at 316. The Pennsylvania long-arm statute authorizes the exercise of personal jurisdiction "to the fullest extent allowed under the Constitution of the United States." 42 Pa.C.S. § 5322(b). Therefore, to decide whether personal jurisdiction exists, this Court must determine whether New Life "has 'certain minimum contacts with . . . [Pennsylvania] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.'" O'Connor, 496 F.3d at 316 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

Although personal jurisdiction may be exercised under two distinct theories-general jurisdiction and specific jurisdiction-DLL invokes only specific jurisdiction here.*fn6 For specific jurisdiction to exist: (1) "the defendant must have purposefully directed [its] activities at the forum"; (2) "the litigation must arise out of or relate to at least one of those activities"; and (3) the exercise of jurisdiction must "otherwise comport[] with fair play and substantial justice." O'Connor, 496 F.3d at 317 (internal quotation marks and citations omitted). "The fact that a non-resident has contracted with a resident of the forum state is not, by itself, sufficient to justify personal jurisdiction over the nonresident." Mellon Bank (East) PSFS v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992); see also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 478 (1985) (stating an individual's contract with an out-of-state party alone does not "automatically establish sufficient minimum contacts in the other party's home forum"). Rather, because a contract is "ordinarily but an intermediate step serving to tie up prior business negotiations with future consequences which themselves are the real object of the business transaction," the court must consider such factors as the "prior negotiations and contemplated future consequences, along with the terms of the contract and the parties' actual course of dealing" to determine "whether the defendant purposefully established minimum contacts within the forum." Id. at 479 (internal quotation marks and citations omitted).

DLL argues New Life purposefully established the requisite minimum contacts in Pennsylvania by obtaining financing from Cisco in Pennsylvania pursuant to an agreement which was to become effective when accepted by Cisco in Pennsylvania, and which required payments to be made to Cisco in Pennsylvania. These contacts alone, however, are not dispositive. Rather, in determining whether a nonresident's financing agreement with a forum resident can support personal jurisdiction, the Third Circuit and Pennsylvania courts have evaluated parties' prior negotiations and actual course of ...


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