United States District Court, E.D. Pennsylvania
J. PAPPERT, J.
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
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,
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).
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.
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).
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.)
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).
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)).
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.)
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
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.)
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).
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).
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
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.)
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. ...