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Smb Consulting and Investing LLC v. Apple Valley Waste Service

July 20, 2011


The opinion of the court was delivered by: Buckwalter, S.J.


Defendant Apple Valley Waste Service, Inc. has filed the present Motion to Dismiss or Transfer Venue. For the following reasons, the Motion is granted and the case is transferred to the Northern District of West Virginia.


Plaintiff SMB Consulting and Investing LLC ("Plaintiff") is a Pennsylvania limited liability company that provides consulting advice to waste management companies. (Compl. ¶ 6.) Defendant Apple Valley Waste Service, Inc. ("Defendant") is a West Virginia corporation engaged in the business of waste transportation. (Id. ¶ 7.) According to the facts alleged in the Complaint, Plaintiff and Defendant entered into a Consulting Agreement under which Plaintiff would provide exclusive consulting services in connection with the sale of Defendant's assets. (Id. ¶ 2.) In exchange, Plaintiff would receive a six percent commission on the total sale price of the assets. (Id.) In furtherance of the Consulting Agreement, Plaintiff compiled information pertaining to Defendant's assets, marketed the assets for sale, and sought out potential purchasers. (Id. ¶ 3.) Among those potential buyers was Summer Street Capital Partners ("Summer Street"). (Id.) After Plaintiff informed Summer Street that Defendant's assets were available for purchase, Defendant and Summer Street entered into a contract for the sale of the assets without informing Plaintiff of the transaction. (Id. ¶ 4.) Plaintiff alleges that Defendant breached the Consulting Agreement by failing to pay it a commission on this sale. (Id. ¶ 5.)

On April 7, 2011, Plaintiff filed its Complaint in the Court of Common Pleas for Bucks County, Pennsylvania. The Complaint seeks damages for breach of contract and breach of the duty of good faith and fair dealing. (Id. ¶¶ 56-75.) Defendant removed the Complaint to this Court on May 3, 2011, and filed the present Motion to Dismiss or Transfer Venue on May 9, 2011. Plaintiff filed a Response in Opposition on May 23, 2011, and Defendant filed a Reply Brief on June 7, 2011.


Pursuant to Federal Rule of Civil Procedure 12(b)(2), a defendant bears the initial burden of raising the lack of personal jurisdiction defense. Nat'l Paintball Supply, Inc. v. Cossio, 996 F. Supp. 459, 460 (E.D. Pa. 1998) (citing Clark v. Matsushita Elec. Indus. Co., Ltd., 811 F. Supp. 1061, 1064 (M.D. Pa. 1993)). Once the defense has been raised, the burden shifts to the plaintiff to demonstrate that such jurisdiction exists. Poole v. Sasson, 122 F. Supp. 2d 556, 557 (E.D. Pa. 2000) (citation omitted). Although the court is required to accept as true the allegations of the pleadings and all reasonable inferences therefrom, "a plaintiff may not solely rely on bare pleadings to satisfy his jurisdictional burden. Rather, the plaintiff must offer evidence that establishes with reasonable particularity sufficient contact between the defendant and the forum state to support jurisdiction." Id. If the plaintiff meets this burden, the defendant must then establish the presence of other considerations that would render jurisdiction unreasonable. De Lage Landen Fin. Servs., Inc. v. Rasa Floors, LP, No. CIV.A.08-00533, 2008 WL 4822033, at *3 (E.D. Pa. Nov. 4, 2008) (citing Carteret Sav. Bank v. Shushan, 954 F.2d 141, 150 (3d Cir. 1992)).


A. Personal Jurisdiction

Pursuant to Federal Rule of Civil Procedure 4(k)(1)(A), a federal court may exercise personal jurisdiction over a non-resident defendant to the extent provided by the law of the state in which the federal court sits. FED. R. CIV. P. 4(k)(1)(A); see also Martin v. Citizens Fin. Group, Inc., No. CIV.A.10-260, 2010 WL 3239187, at *3 (E.D. Pa. Aug. 13, 2010). In Pennsylvania, personal jurisdiction over nonresident defendants is permitted "to the fullest extent allowed under the Constitution of the United States and may be based on the most minimum contact with this Commonwealth allowed under the Constitution of the United States." 42 PA. CONS. STAT. §5322(b); see also Mellon Bank (East) PSFS, Nat'l Ass'n v. Farino, 960 F.2d 1217, 1221 (3d Cir. 1992) ("The Pennsylvania statute permits the courts of that state to exercise personal jurisdiction over nonresident defendants to the constitutional limits of the due process clause of the fourteenth amendment.").

The Due Process Clause "requires that nonresident defendants have 'certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice.'" Kehm Oil Co. v. Texaco, Inc., 537 F.3d 290, 299-300 (3d Cir. 2008) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). Two types of personal jurisdiction have been recognized by federal courts: "general and specific jurisdiction. General jurisdiction exists when a defendant has maintained systematic and continuous contacts with the forum state." Id. at 300 (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-15 & n.9 (1984)). Specific jurisdiction is present "when the claim arises from or relates to conduct purposely directed at the forum state." Id. (citing Helicopteros, 466 U.S. at 414-15 & n.8). In deciding whether specific jurisdiction exists, a district court conducts a three-part analysis. First, the defendant's activities must have been "purposefully directed" at the forum. Marten v. Godwin, 499 F.3d 290, 296 (3d Cir. 2007) (quoting Burger King v. Rudzewicz, 471 U.S. 462, 472 (1985)). Next, "the plaintiff's claim must 'arise out of or relate to' at least one of those specific activities." Id. (quoting Helicopteros, 466 U.S. at 414). Finally, "courts may consider additional factors to ensure that the assertion of jurisdiction otherwise 'comport[s] with "fair play and substantial justice."'" Id. (quoting Burger King, 471 U.S. at 476).

Defendant, a West Virginia corporation, argues that it does not have the requisite contacts with Pennsylvania to establish either general or personal jurisdiction. (Def.'s Mot. Dismiss 8-14.) According to Defendant, there is no general jurisdiction because it does not operate in Pennsylvania, have business contacts in the state, or have any property, investors, board members, shareholders, or agents in Pennsylvania. (Id. at 10-11.) With respect to specific jurisdiction, Defendant contends that Plaintiff initiated the business discussions that resulted in the formation of the Consulting Agreement, that it never traveled to Pennsylvania in connection with its dealings with Plaintiff, and that the Consulting Agreement was presented to it in West Virginia. (Id. at 4, 14.) Defendant states that the only contacts it had with Pennsylvania were telephone calls concerning Plaintiff's request to provide consulting services, which are insufficient to create specific jurisdiction. (Id.)

In response, Plaintiff first argues that specific jurisdiction*fn1 exists over Defendant because its claims arise of out the Consulting Agreement, which was executed in Pennsylvania. (Pl.'s Resp. Opp'n 7-8.) Next, Plaintiff acknowledges that while the mere existence of the Consulting Agreement does not create jurisdiction, the totality of the circumstances in this case indicates that the exercise of jurisdiction would be proper. (Id. at 8.) To that end, Plaintiff contends that Defendant knew it was dealing with a Pennsylvania entity, that the Consulting Agreement required any notices to be sent to Plaintiff in Pennsylvania, that Defendant was to communicate with Plaintiff regarding performance of the contract, and that the Consulting Agreement and any claims arising out of it were governed by Pennsylvania law. (Id. at 9.) Furthermore, Defendant was aware that Plaintiff was using a Confidential Offering Memorandum that Plaintiff prepared in Pennsylvania to pursue Pennsylvania companies as possible purchasers for the assets. (Id.) Finally, Plaintiff argues that Defendant initiated seventy-one e-mails and twelve telephone calls to Plaintiff, both before and after the execution of the contract. (Id. at 10.)

At the outset of its analysis, the Court notes -- and both parties have acknowledged -- that "[m]erely entering into a contract with a forum resident does not subject a nonresident to personal jurisdiction." Quandel Grp. v. Chamberlin Co., Inc., No. CIV.A.98-5762, 1999 WL 382878, at *2 (E.D. Pa. June 14, 1999) (citations omitted). Rather, when assessing whether minimum contacts are present in a contracts case, a court should look to "the terms of the agreement, the place and character of prior negotiations, contemplated future consequences, or the course of dealings between the parties." Mellon Bank, 960 F.2d at 1223. Here, the Consulting Agreement states that it "is executed in, shall be governed by and construed in accordance with the laws of the Commonwealth of Pennsylvania." (Pl.'s Resp. Opp'n, Ex. A ΒΆ 19.) Nevertheless, choice of law clauses and contractual language indicating that an agreement was executed in a particular forum do not definitively establish jurisdiction, Quandel Grp., 1999 WL 382878, at *3, and there is nothing else in the Consulting Agreement to establish a connection with Pennsylvania. The contract merely describes the services to be rendered by Plaintiff in connection with its objective of finding a purchaser for Defendant's assets. The Consulting ...

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