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Thrivest Legal Funding, LLC v. Gilberg

United States District Court, E.D. Pennsylvania

April 3, 2017

THRIVEST LEGAL FUNDING, LLC, Plaintiff,
v.
DANIEL GILBERG, Defendant.

          MEMORANDUM

          GERALD J. PAPPERT, J.

         Thrivest Legal Funding is Philadelphia based litigation-finance company that offers cash advances to plaintiffs and plaintiffs' attorneys. In exchange for an up-front payment from Thrivest, attorneys agree to pay back a portion of the fees they earn when a particular case is resolved. Thrivest sued Daniel Gilberg, an attorney in New York City, for breach of contract after Gilberg allegedly failed to make required payments to Thrivest under the terms of five separate cash advance agreements (“the Agreements”). Gilberg now moves to dismiss the Complaint for lack of personal jurisdiction and improper venue. In the alternative, he seeks to transfer the case to the Southern District of New York. His motion is denied in all respects.

         I.

         Gilberg is a personal injury attorney practicing in New York. (Compl. ¶ 2, ECF No. 1.) Gilberg and Thrivest's predecessor, a Pennsylvania limited liability corporation with offices in Philadelphia called LawSuit Funding Solutions, LLC, [1] entered into the first of the five Agreements in July 2015. (Id. at Ex. A.) Under the terms of that contract, Thrivest advanced Gilberg $20, 000 and Gilberg agreed to pay Thrivest a portion of the fees he earned representing Lyudmila Gladkovister and Dorothy Villalba in two unrelated lawsuits. See (id. at Exs. A & B). Gilberg subsequently entered into three more Agreements with Thrivest: a September 29, 2015 contract for $20, 000 for his representation of Villalba; an October 28, 2015 agreement for $20, 000 tied to his representation of Minnie Parker; and a March 9, 2016 contract for $20, 000 with respect to his representation of Marilyn Morson. (Id. at Exs. B, C & F.) Thrivest also contends that Gilberg is liable under a fifth contract between Thrivest and one of Gilberg's clients, Antar LeGendre, in which Thrivest advanced LeGendre $3, 000 and LeGendre assigned Thrivest an interest in any settlement or favorable judgment. (Id. at ¶¶ 38- 50); see also (id. at Ex. D & E).

         During the parties' course of dealings, Gilberg never came to Pennsylvania, though he communicated with Thrivest on numerous occasions. While negotiating the Agreements, Gilberg sent at least eleven emails and one fax to Thrivest employees in Philadelphia. (Madiera Aff. ¶¶ 17(a)-(f); (h)-(m), ECF No. 7-2.) Gilberg also made between five and six telephone calls to Thrivest employees to secure each cash advance-a total of twenty-five to thirty calls. (Id. ¶ 18.)

         Gilberg's communications with Thrivest in Pennsylvania continued throughout the performance and alleged breach of the Agreements. After Gilberg settled the Villalba case and failed to pay a portion of his fees to Thrivest, Gilberg had multiple communications with Thrivest personnel via text message and email in late March and early April 2016. (Id. ¶ 17(r)-(w)). According to Gilberg's own text messages, he also attempted to send a check by regular mail to Thrivest in Pennsylvania. See (Compl., at Ex. 20).

         Thrivest sued Gilberg on July 21, 2016. (ECF No. 1.) On October 17, 2016 Gilberg filed his motion to dismiss, (ECF No. 6), Thrivest filed its response on October 28, (ECF No. 7), and Gilberg filed a reply on November 14, (ECF No. 8). This case was initially assigned to Judge Dalzell and reassigned to this Court on November 28, 2016. (ECF No. 10.)

         II.

         In reviewing a motion to dismiss for lack of personal jurisdiction under Federal Rule of Civil Procedure 12(b)(2), the Court “must accept all of the plaintiff's allegations as true and construe disputed facts in favor of the plaintiff.” Pinker v. Roche Holdings Ltd., 292 F.3d 361, 368 (3d Cir. 2002) (citation omitted). A motion made pursuant to Rule 12(b)(2) “is inherently a matter which requires resolution of factual issues outside the pleadings, ” that is, “whether in personam jurisdiction actually lies.” Time Share Vacation Club v. Atl. Resorts, Ltd., 735 F.2d 61, 66 n.9 (3d Cir. 1984). Once the defense has been raised, “the plaintiff must satisfy its burden of proof in establishing jurisdictional facts through sworn affidavits or other competent evidence” and may not “rely on the bare pleadings alone.” Id. (citing Int'l Ass'n of Machinists & Aerospace Workers v. Nw. Airlines, Inc., 673 F.2d 700 (3d Cir. 1982)). The plaintiff must offer evidence that establishes with reasonable particularity the existence of sufficient contacts between the defendant and the forum state to support jurisdiction. See Carteret Sav. Bank v. Shushan, 954 F.2d 141, 146 (3d Cir. 1992); see also Provident Nat'l Bank v. Cal. Fed. Sav. & Loan Ass'n, 819 F.2d 434, 437 (3d Cir. 1987).

         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. See O'Connor v. Sandy Lane Hotel Co., Ltd., 496 F.3d 312, 316 (3d Cir. 2007). Pennsylvania's long-arm statute permits courts to exercise personal jurisdiction “to the fullest extent allowed under the Constitution of the United States and . . . based on the most minimum contact with this Commonwealth allowed under the Constitution of the United States.” 42 Pa. C.S.A. § 5322(b). To exercise personal jurisdiction over Gilberg, the Court must therefore determine whether, under the Due Process Clause, Gilberg 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 316-17 (citing Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

         There are two type of personal jurisdiction: general and specific. General jurisdiction is proper when a defendant's contacts with the forum state are “continuous and systematic, ” whether or not those contacts are related to the plaintiff's cause of action. See Remick v. Manfredy, 238 F.3d 248, 255 (3d Cir. 2001). Specific jurisdiction exists when the “non-resident defendant has ‘purposefully directed' his activities at a resident of the forum and the injury arises from or is related to those activities.” Gen. Elec. Co. v. Deutz, 270 F.3d 144, 150 (3d Cir. 2001) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985)). Thrivest does not argue that Pennsylvania has general jurisdiction over Gilberg. Gilberg contends that the Court lacks specific personal jurisdiction over him. (Def.'s Mot. ¶ 1, ECF No. 6.)

         The specific jurisdiction inquiry has three parts. See O'Connor, 496 F.3d at 317. First, the plaintiff must show that the defendant “purposefully directed [its] activities at the forum.” Burger King, 471 U.S. at 472; see also Marten v. Godwin, 499 F.3d 290, 296 (3d Cir. 2007). Second, the litigation must “arise out of or relate to” at least one of those activities. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984); see also Grimes v. Vitalink Commc'ns Corp., 17 F.3d 1553, 1559 (3d Cir. 1994). Third, if the prior two requirements are met, the Court may consider whether the exercise of jurisdiction otherwise “comport[s] with ‘fair play and substantial justice.'” Burger King, 471 U.S. at 476 (quoting Int'l Shoe, 326 U.S. at 320).

         III.

         Gilberg argues that he lacks minimum contacts with Pennsylvania. In an affidavit attached to his motion, Gilberg avers that he is domiciled in New York, owns no property in Pennsylvania and that the relevant contacts giving rise to the dispute in this case occurred in New York. See (Pl.'s Mot. to Dismiss, at 9-10, ECF No. 6.)

         Specific jurisdiction does not require physical presence in the forum state during contract negotiations or performance. Deutz AG, 270 F.3d at 150. The Court must instead examine “whether the defendant's contacts with the forum were instrumental in either the formation of the contract or its breach.” Id. (citing Phillips Exeter Acad v. Howard Phillips Fund, Inc., 196 F.3d 284, 289 (1st Cir. 1999)). When a defendant reaches out beyond his own state to “create continuing relationships and obligations with citizens of another state, ” he is subject to the jurisdiction of that state. Burger King, 417 U.S. at 473. Contemporary business relationships are typically developed through electronic communication, Deutz, 270 F.3d at 150, and “[w]here these types of long-term relationships have been established, actual territorial presence becomes less determinative, ” id. (citing Burger King 417 U.S. at 476).

         Gilberg purposefully directed his activities toward Pennsylvania with regard to each of the Agreements. In negotiating the two Villalba contracts, Gilberg sent four emails to Thrivest employees in Pennsylvania. (Madeira Aff. ¶¶ 17(a)-(c), (h).) Thrivest also provided an email-in addition to the five to six calls Thrivest claims he made-from Gilberg to secure the contract concerning the Parker litigation. To help his client Antar LeGendre secure the October 5, 2015 agreement, Gilberg sent three emails to Thrivest employees in Pennsylvania providing information on LeGendre's lawsuit. (Id. ¶¶ 17(d)-(f).) Finally, in negotiating the contract associated with the Morson litigation, Gilberg sent three emails, a fax and multiple text messages to Thrivest employees in Pennsylvania. (Id. ¶ 17(j)-(n).) In addition to these contacts, Gilberg called Thrivest employees in Pennsylvania five to six times while negotiating each contract. (Id. ¶ 18.) Moreover, Gilberg knew that Thrivest was in Pennsylvania: to satisfy his obligations on a prior contract unrelated to this case, he mailed at least one check to Thrivest's predecessor in Pennsylvania. See (Pl.'s Resp., Ex. 1, ECF No. 7-3); see also (Madeira Aff. ¶ 14).[2]

         By entering into the Agreements, Gilberg established continuing obligations with citizens of the forum state. See Burger King, 471 U.S. at 475-76. Gilberg was obligated to repay Thrivest from settlement funds to cover the cash advances, costs and fees he received from Thrivest whenever he resolved the cases named in the contracts. See (Compl., at Exs. A-C, F). This obligation was ongoing and lasted as long as the referenced underlying litigation. Where a defendant has “availed himself of the privilege of conducting business” in the forum state in such a way, “[j]urisdiction may not be avoided merely because the defendant did not physically enter the forum State.” See Burger King, 471 U.S. at 463.

         Gilberg's contacts with Thrivest in Pennsylvania did not stop at the negotiation phase. Gilberg exchanged several more emails and text messages with Thrivest employees once Thrivest learned he settled the cases without remitting the funds owed under the Agreements. Throughout April and May 2015, Gilberg participated in at least five text-message exchanges, (Madeira Aff. ¶¶ 17(o), (q)-(r), (v)-(w)), and three email exchanges, (id. ¶¶ (s)-(u)), with Thrivest employees in Pennsylvania. In those communications Gilberg assured Thrivest he would honor the Agreements. According to his texts, he also sent a check via regular mail to Thrivest in Pennsylvania. (Compl., Ex. 20, ECF No. 7-22.)

         Additionally, the Agreements each contained the following choice-of-law clause: “This Agreement shall be governed, interpreted, and enforced in accordance with the substantive and procedural laws and rules of the State of Pennsylvania.” (Compl., at 15, 19, 23, 29, 36.) While a choice-of-law clause, without more, cannot vest a court with personal jurisdiction over a claim, such a clause should not “be ignored in considering whether a defendant has ‘purposefully invoked the benefits and protections of a State's laws' for jurisdictional purposes.” Burger King, 471 U.S. at 482. ...


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