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First Financial Management Group, Inc v. University Painters of Baltimore

April 5, 2012

FIRST FINANCIAL MANAGEMENT GROUP, INC., PLAINTIFF,
v.
UNIVERSITY PAINTERS OF BALTIMORE, INC., ET AL., DEFENDANTS.



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

MEMORANDUM DENYING MOTION TO DISMISS

I. Introduction

This action arises out of the alleged violation of a non-compete clause contained in a contract that granted Defendant Michael Herzog a license to operate a "University Painters" painting business. Defendants in this case are Michael Herzog, Amy Herzog, Dennis Herzog, and Barbara Herzog (collectively, "the Herzog family"), as well as University Painters of Baltimore, Inc. ("UPB") and Perfect Painting and More, Inc. ("Perfect Painters"). Plaintiff First Financial Management Group, Inc. ("FFMG") filed suit in Pennsylvania state court, asserting the following claims against the following Defendants: Count I: breach of contract, asserted against Michael Herzog only; Count II: tortious interference with contractual relation, asserted against Perfect Painters and the Herzog family; Count III: conspiracy, asserted against all Defendants; and Count IV: violation of the Lanham Act, asserted against all Defendants. Defendant removed the case to this Court.

Presently before the Court is Defendants' Motion to Dismiss for Lack of Jurisdiction (ECF No. 12), filed October 4, 2011. Plaintiff responded on October 25, 2011 (ECF No. 17). During a November 2, 2011 conference call with attorneys for both sides, the Court granted Plaintiff leave to submit a supplemental response to Defendants' Motion. Plaintiff submitted the supplemental brief on November 7, 2011 (ECF No. 19) and Defendant filed a Reply Brief on November 18, 2011 (ECF No. 20). The Court also held a hearing on December 19, 2011 on the Motion to Dismiss as well as a Petition for Contempt (ECF No. 15) brought by Plaintiff, which is not the subject of this Memorandum. At the hearing, Plaintiff declined the opportunity to hold an additional evidentiary hearing on the jurisdictional issue. The Court also granted Plaintiff permission to file additional documentation in support of personal jurisdiction; however, Plaintiff did not file any other documents. Testimony relevant to this motion was also elicited at a Preliminary Injunction Hearing held on September 23, 2011. The question of personal jurisdiction having been fully briefed and argued by the parties, it is now ripe for decision by the Court.

For the reasons discussed below, the Court will DENY Defendants' Motion to Dismiss.

II. Factual Background

Plaintiff alleges the following facts. FFMG is a well-known house painting company that licenses its trademark and trade name "University Painters" to numerous licensees in east coast states including Maryland and Pennsylvania. Compl. ¶¶ 4-5. In 1999, Michael Herzog entered into a Licensing Agreement ("the Contract") with FFMG. Compl. ¶ 6; see also Licensing Agreement, Compl. Ex. A. Michael Herzog then formed his company, Herzog Painting, Inc. which conducted business as "University Painters" until 2005, when it changed its name to "University Painters of Baltimore." Compl. ¶ 7. The Contract prohibited the Licensee -- in this case, Michael Herzog -- from participating in any way in a business, venture or activity involving painting anywhere in the United States or Canada for three years following the expiration of the Contract. Compl. ¶ 9; Licensing Agreement, Compl. Ex. A § 8. Around 2008, Michael Herzog's revenues (and consequently the licensing fees he owed Plaintiff) began to decline and he was repeatedly tardy in providing sales information and remitting licensing fees to Plaintiff. Compl. ¶¶ 8,10. After making efforts to bring Michael Herzog into compliance with his obligations under the Contract, see Compl. ¶¶ 12-14, Plaintiff terminated the Contract. See Compl. ¶¶ 14-15. Before Plaintiff terminated the Contract, the Herzog family began operating the company Perfect Painters in the geographic location Plaintiff originally licensed to Michael Herzog. Compl. ¶ 15. Perfect Painters purchased a radio advertising slot that told listeners that the Herzog family (formerly UPB) was still in operation under the new name Perfect Painters. Compl. ¶ 16.

The Complaint acknowledges that each member of the Herzog family is a resident of Maryland. Compl. ¶ 2(b), (d)-(f). Additionally, UPB and Perfect Painters are both Maryland Corporations with usual places of business in Maryland. Compl. ¶ 2(a), (c).

The Contract also dictates the venues in which the parties could litigate a dispute. It specifies:

The parties agree that they will not assert or prosecute any claims against the other arising under, relating to or in any way involving the terms of this Agreement or their business relationship . . . except in the Federal Courts of the Eastern District of Pennsylvania or state courts located in Chester or Montgomery counties, Pennsylvania or state courts of Montgomery County, Maryland and each party consents to the personal jurisdiction in these courts regarding any such claims, and that each agrees it will not seek to transfer or to change the venue of any action in compliance with this choice of forum.

Licensing Agreement, Compl. Ex. A at 12. The contract was signed only by Michael Herzog. See id. at 13.

III. Legal Standards

A. Subject Matter Jurisdiction

This Court has jurisdiction over Plaintiff's federal Lanham Act claim pursuant to 28 U.S.C. ยง 1331 and supplemental jurisdiction over Plaintiff's state-law ...


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