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Behavioral Health Industry News, Inc. v. Mental Health Systems, Inc.

United States District Court, M.D. Pennsylvania

May 4, 2017

BEHAVIORAL HEALTH INDUSTRY NEWS, INC. D/B/A OPEN MINDS, INC., Plaintiff,
v.
MENTAL HEALTH SYSTEMS, INC., Defendant

          MEMORANDUM

          Christopher C Conner Chief Judge United States District Court.

         Plaintiff Behavioral Health Industry News Inc d/b/a Open Minds Inc (“Open Minds”) alleges that defendant Mental Health Systems Inc (“Mental Health”) failed to make payments to Open Minds in accordance with two contracts (See Doc 1) Presently before the court is Mental Health's motion (Doc 5) to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2) Fed R Civ P 12(b)(2) or in the alternative to transfer this case to the United States District Court for the Southern District of California pursuant to 28 USC § 1404(a) For the reasons that follow the court will deny the motion

         I Factual & Procedural Background

         Open Minds is a Pennsylvania corporation with its principal place of business in the Commonwealth (Doc 1 at 11 ¶ 1) Open Minds offers consulting and other services in the health and human services field (Id. at 12 ¶ 8) Mental Health is a California corporation that provides mental health and drug and alcohol rehabilitation services to California residents (Id. at 11 ¶ 2; Doc 6 at 3) Mental Health's services are primarily funded by San Diego County with additional funding from Riverside Fresno Santa Barbara San Bernardino and Contra Costa Counties (Doc 6 at 3) Mental Health does not provide any services in the Commonwealth of Pennsylvania (Id.) It also does not receive state funding from the Commonwealth (Id.)

         Open Minds entered into four contracts with Mental Health only two of which are subjects of the instant case (Doc 1 at 12-14 ¶¶ 10 13 & n1) The first contract involves Open Minds assisting Mental Health in identifying a software vendor for Mental Health's electronic healthcare records of California patients (the “Services Agreement”) (Id. at 12 ¶ 10) The contract features Open Minds' letterhead and originated in Pennsylvania before being sent to Mental Health in California (Id. at 19) Mental Health also agreed to reimburse Open Minds “for any additional pre-authorized services billed monthly at discounted hourly rates” (Id. at 13 ¶ 12) Mental Health and Open Minds signed this contract on December 21 2010 and January 2 2011 respectively (Id. at 20) Mental Health paid Open Minds a $51 500 fixed fee under this contract (Id. at 13 ¶ 15)

         Appendix A of the Services Agreement enumerates Open Minds' contractual responsibilities in greater detail (See Id. at 21-22) Open Minds would first “conduct an on-site assessment and review” of Mental Health's “organizational materials” to determine Mental Health's requirements for an electronic healthcare records provider (Id. at 21) The on-site assessment would be conducted over the course of a one-time three-day site visit to Mental Health's facilities in California (Id.) Open Minds also agreed to “assist [Mental Health] leadership with on-site vendor demonstrations ” by providing “two one-day on-site visits” (Id. at 22)

         Open Minds also entered into a Discounted Hourly Basis Agreement (the “Hourly Agreement”) with Mental Health (Id. at 13 ¶ 13) The Hourly Agreement proffered by Open Minds is a letter sent to Mental Health on August 3 2011 by Monica Oss president and founder of Open Minds (Id. at 24) The letter states that Open Minds would “set up a new project number for ongoing consultation as requested” (Id.) The work contemplated would be billed at “[Open Minds'] discounted hourly rates as per [the] original agreement” (Id. at 13 ¶ 13)

         Mental Health requested and paid for Open Minds' consultation services pursuant to the Services Agreement and Hourly Agreement for four years (Id. at 14 ¶¶ 16-18) Mental Health ceased making payments after July 1 2015 (Id. at 14 ¶ 19) In the fall of 2015 Kim Bond (“Bond”) Mental Health's Chief Executive Officer flew to Pennsylvania to discuss amounts due to Open Minds (Id. at 14 ¶ 20) Open Minds received no subsequent payments despite Bond's alleged agreement to pay in full any amounts due from 2015 to 2016 (Id. at 14-15 ¶¶ 20-21)

         Open Minds commenced this action in the Court of Common Pleas for Adams County on August 5 2016 (Id. at 2 ¶ 1) Open Minds' complaint contains two counts: breach of contract and in the alternative unjust enrichment (Id. at 15-17 ¶¶ 23-35) Open Minds alleges that Mental Health failed to make payments pursuant to the Services Agreement and the Hourly Agreement totaling $236 04508 (Id. at 15-16 ¶¶ 24-29) Mental Health timely removed the action to the Middle District of Pennsylvania on September 12 2016 (Id. at 1-5) On September 19 2016 Mental Health filed the instant motion (Doc 5) to dismiss for lack of personal jurisdiction or in the alternative to transfer this case to the United States District Court for the Southern District of California The motion is fully briefed (Docs 6 7 15) and ripe for disposition

         II Legal Standard

         Pursuant to Federal Rule of Civil Procedure 12(b)(2) a party may move to dismiss a complaint for lack of personal jurisdiction Fed R Civ P 12(b)(2) In ruling on a Rule 12(b)(2) motion the court must accept the allegations in the complaint as true and draw all reasonable inferences supported by the well-pled factual allegations in the plaintiff's favor Pinker v Roche Holdings Ltd, 292 F.3d 361 368 (3d Cir 2002); Carteret Sav Bank FA v Shushan, 954 F.2d 141142 n1 (3d Cir 1992) The court's review is not limited to the face of the pleadings as consideration of affidavits submitted by the parties is both appropriate and required See Carteret Sav Bank, 954 F.2d at 146.

         Even though the plaintiff bears the ultimate burden of proving personal jurisdiction over a defendant Mellon Bank (East) PSFS Nat'l Ass'n v Farino 960 F.2d 1217 1223 (3d Cir 1992) the plaintiff need not make such a showing at the pleading stage of litigation Metcalfe v Renaissance Marine Inc 566 F.3d 324 330 (3d Cir 2009) To survive a motion to dismiss the plaintiff must merely allege sufficient facts to establish a prima facie case of jurisdiction over the defendant Id.; Carteret Sav Bank 954 F.2d at 142 n1

         Motions for dismissal or transfer based on the inconvenience of the forum require an individualized analysis of the facts of each case Jumara v State Farm Ins Co., 55 F.3d 873 879-80 (3d Cir 1995); Lony v EI Du Pont de Nemours & Co., 935 F.2d 604 608-15 (3d Cir 1991) The moving party bears the burden of proving by a preponderance of evidence the facts supporting the inadequacy of the current venue and the benefits of the proposed location Jumara, 55 F.3d at 879-80; Lony, 935 F.2d at 609 An evidentiary hearing is permissible and sometimes necessary but such motions may often be resolved on the basis of the undisputed allegations of the pleadings and affidavits submitted by the parties See Plum Tree Inc v Stockment, 488 F.2d 754 756 (3d Cir 1973); see 15 Charles Alan Wright et al Federal Practice and Procedure §§ 3828 3844 (2d ed 1986)

         III ...


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