Neiman v. Hudson Real Estate Advisors, LLC
Filing
17
MEMORANDUM (Order to follow as separate docket entry) (eo)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF PENNSYLVANIA
STEVEN H. NEIMAN
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Plaintiff,
v.
HUDSON REAL ESTATE ADVISORS,
Defendant.
1:16-cv-1418
Hon. John E. Jones III
MEMORANDUM
October 17, 2016
Plaintiff Steven Neiman (“Plaintiff” or “Neiman”) brings the abovecaptioned action asserting two counts of breach of a promissory note, and, in the
alternative, claims of unjust enrichment and promissory estoppel against Defendant
Hudson Real Estate Advisors, LLC (“Hudson”). (Doc. 1). Presently before the
Court is Hudson’s Motion to Dismiss for lack of personal jurisdiction, or in the
alternative to transfer venue pursuant to 28 U.S.C. § 1404(a). (Docs. 10, 15 &
16).1 The Motion has been fully briefed (docs. 10-3, 11, 12) and is therefore ripe
for our review. For the reasons that follow, Hudson’s Motion to Dismiss shall be
denied. Hudson’s Motion to Transfer Venue to the Southern District of Florida
shall be granted.
1
Due to a clerical error, Hudson’s Motion was refiled several times and thus appears at
multiple locations on the docket.
1
I.
FACTUAL AND PROCEDURAL HISTORY
In accordance with the standard of review applicable to a motion to dismiss,
the following facts regarding the claim itself are derived from Plaintiff’s
Complaint. (Doc. 1). However, because a challenge of personal jurisdiction under
Rule 12(b)(2) allows the parties to produce competent evidence to either establish
or refute jurisdiction, see Metcalfe v. Renaissance Marine, Inc., 566 F.3d 324, 330331 (3d Cir. 2009), facts regarding jurisdiction are derived from the Plaintiff’s
Complaint (Doc. 1) as well as the briefs (Docs. 10-3, 11, 12), and evidence
attached to the filings.
Plaintiff Steven Neiman is a resident of Pennsylvania. (Doc. 1, ¶ 1).
Neiman is also a partial owner of a property in Fort Lauderdale, Florida, which he
visits sporadically. (Doc. 11-1, ¶ 18). Hudson is a Florida limited-liability
corporation with its principal place of business in Delray Beach, Florida. (Id., ¶ 2).
On or about October 16, 2013, Neiman agreed to loan Hudson a sum of $200,000
plus interest pursuant to a promissory note (the “October Note”), to be repaid in
full on February 1, 2015, together with any accrued and outstanding interest. (Id.,
¶¶ 8-10). On or about December 16, 2013, Neiman further agreed to loan Hudson
a sum of $100,000 plus interest pursuant to a second promissory note (the
“December Note”). (Id., ¶¶ 25-27). The December Note was to be repaid with
interest on or before January 16, 2014. (Id., ¶ 27). Though the Notes do not
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specify the purpose of the loans, through affidavit Hudson indicates that its only
business venture is in the redevelopment of a parcel of land known as Swinton
Commons and adjacent property in Delray Beach, Florida. (Doc. 10-3, p. 6 (citing
Doc. 10, ¶¶ 6, 9)).
Neiman now alleges that Hudson has failed to repay the Notes. According
to Neiman, as of July 1, 2016, Hudson owed Neiman $244,926.66 on the October
Note and $146.952.05 on the December Note. (Id., ¶¶ 22, 36).
II.
STANDARD OF REVIEW
Federal Rule of Civil Procedure 4(e) allows a district court to assert personal
jurisdiction over a non-resident to the extent allowed by the law of the state in
which it sits. See Time Share Vacation Club v. Atlantic Resorts, Ltd., 735 F.2d 61,
63 (3d Cir. 1984). Pennsylvania’s long-arm statute provides that a court may
exercise personal jurisdiction over non-residents “to the fullest extent allowed
under the Constitution of the United States.” 42 Pa. C. S.A. § 5322(b).
Due process requires that a defendant have sufficient “minimum contacts”
with the state in which the court sits “such that maintenance of the suit does not
offend traditional notions of fair play and substantial justice.” International Shoe
Co. v. State of Washington, 326 U.S. 310, 316 (1945) (internal quotations omitted).
“Such minimum contacts are established when there is ‘some act by which the
defendant purposefully avails itself of the privilege of conducting activities within
3
the forum State, thus invoking the benefits and protections of its laws.’” Isaacs v.
Arizona Bd. of Regents, 608 F. App'x 70, 74 (3d Cir. 2015) (quoting Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)). When determining whether
personal jurisdiction exists, the court must resolve the question based on the
circumstances that the particular case presents. Burger King, 471 U.S. at 485.
A court may exercise personal jurisdiction based on a defendant’s general or
specific contacts with the forum. “General jurisdiction is based upon the
defendant's continuous and systematic contacts with the forum.” Remick v.
Manfredy, 238 F.3d 248, 255 (3d Cir. 2001) (internal quotations omitted). Specific
jurisdiction is appropriate only if the “plaintiff's cause of action arises out of a
defendant's forum-related activities, such that the defendant ‘should reasonably
expect being haled into court’ in that forum.” Vetrotex Certainteed Corp. v.
Consol. Fiber Glass Prod. Co., 75 F.3d 147, 151 (3d Cir. 1996) (quoting
Worldwide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)). Specific
jurisdiction is established where “(1) the defendant purposely directed his activities
at the forum state; (2) the plaintiff's claim arises out of and relates to at least one of
those specific activities; and (3) the exercise of jurisdiction comports with fair play
and substantial justice.” Isaacs, 608 F. App’x at 74.
In deciding a motion to dismiss for lack of personal jurisdiction, the
allegations of the complaint are taken as true. Eurofins Pharma US Holdings v.
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BioAlliance Pharma SA, 623 F.3d 147, 155 (3d Cir. 2010). However, once a
jurisdictional defense is raised, the plaintiff bears the burden of proving, through
affidavits, or competent evidence, sufficient contacts with the forum state to
establish personal jurisdiction. Metcalfe v. Renaissance Marine, Inc., 566 F.3d
324, 330-331 (3d Cir. 2009). Once the plaintiff makes out a prima facie case in
favor of personal jurisdiction, the burden shifts to the defendant to “present a
compelling case that the presence of some other considerations would render
jurisdiction unreasonable.” Burger King, 471 U.S. at 477.
III.
ANALYSIS
Neiman first argues that by engaging in business with a Pennsylvania
resident, Hudson has availed itself of Pennsylvania such that specific jurisdiction
over Hudson is appropriate. (Doc. 11, p. 9). Neiman further argues that the plain
language of the December Note includes a choice of forum clause such that
Hudson has consented to jurisdiction in “any federal court.” (Id.). Finally,
Neiman argues that to transfer this case to Florida would impose a “significant
burden,” as Neiman is “currently facing a prolonged recovery from major cardiac
surgery.” (Id.). Neiman indicates that he is unable to drive or fly, and that he may
undergo major orthopedic surgery at the end of this year. (Id., p. 8). We first
consider the forum selection clause in the December Note in conjunction with
Hudson’s contacts in Pennsylvania.
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A.
Jurisdictional Consent and Venue Selection Clause
Both parties point to a provision in the December Note in support of their
opposing arguments related to jurisdiction and venue. The provision reads:
THE UNDERSIGNED HEREBY CONSENTS AND SUBJECTS ITSELF
TO THE JURISDICTION OF THE COURTS OF THE STATE OF
FLORIDA AS WELL AS TO ANY FEDERAL COURT, AND WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, TO THE VENUE
OF SUCH COURTS IN MIAMI-DADE COUNTY, FLORIDA.
(Doc. 10-3, p. 7 (citing to Doc. 1-2, p. 8)). The Note also includes a choice-of-law
provision in favor of the state of Florida. (Doc. 1-2, p. 8). The Note is
undersigned by Andrew Greenbaum, President of Hudson Real Estate.
Hudson interprets this provision to have meant that it consents to the
jurisdiction of any federal court within the state of Florida, and that furthermore
the parties agreed to a venue in Miami-Dade County. (Doc. 10-3, p. 7). Neiman,
however, argues that Hudson consented to the jurisdiction of any federal court
anywhere in the United States. (Doc. 1, ¶ 7).2 Both parties direct the Court to
consider Resolution Trust Corp. v. Miller, No. CIV. A. 92-6959, 1993 WL 306106,
for their opposing arguments regarding whether Hudson consented to the
jurisdiction of “any federal court.”
2
Neiman further argues that though Hudson may have consented to venue in Miami-Dade
County, venue is also proper in the Middle District under 28 U.S.C. Section 1391(b)(2). (Doc.
11, p. 19). This issue shall be addressed more fully below.
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In Miller, the District Court for the Eastern District of Pennsylvania
considered whether it had personal jurisdiction over a couple, the Millers, who had
entered into a loan agreement with a bank located in Pennsylvania, sent payments
to that bank, and submitted to a Pennsylvania choice-of-law provision. Miller,
1993 WL 306106, at *4-5. The court emphasized that “[s]tanding alone, the
Millers’ agreement to make loan repayments to a Pennsylvania bank and their
consent to a Pennsylvania choice-of-law provision . . . would not constitute
sufficient forum contacts to sustain personal jurisdiction.” Id. at *4. However, the
court also noted that the Millers had signed a cognovit note, or consent provision,
to consent to the jurisdiction of “any court of record.” In considering the cognovit
note, the court expressed serious “doubts that a broad clause providing that a
borrower consents to the jurisdiction of ‘any court of record’ would support
jurisdiction in a forum with no rational relationship to the loan transaction.” Id. at
*5. The court went on to reason, however, that “[i]n the instant case, . . . there is a
rational relationship between the loan transaction and Pennsylvania, which also is a
likely and logical place where the Millers could anticipate [the bank] having
judgment entered.” Id. In Miller, the court ultimately ruled that a D.C. district
court’s determination that personal jurisdiction existed over the Millers in
Pennsylvania was not implausible, and thus, jurisdiction was appropriate.
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Though the circumstances of Miller are not identical to those presented here,
we find the court’s rationale in Miller to be persuasive. As Hudson points out,
under Neiman’s interpretation, it is likely that such a broad forum selection clause
as that which Hudson agreed to would be unenforceable had Neiman attempted to
subject Hudson to the jurisdiction of a federal court in a state with absolutely no
relations to the instant transaction. (Doc. 10-3, p. 9). But, as in Miller, here there
are ties to Pennsylvania such that the Commonwealth does bear a rational
relationship to the situation at hand. Though standing alone, it is likely that
Hudson’s actions do not give rise to sufficient minimum contacts to support an
exercise of personal jurisdiction, we need not engage in such an analysis here.
Rather, it is sufficient to conclude that the forum selection clause and Hudson’s
actions taken in combination create sufficient awareness such that Hudson
consented to jurisdiction in Pennsylvania.
To that end, we briefly describe Hudson’s contacts with Pennsylvania. The
record indicates that even if Hudson had not known that Neiman was based in
Pennsylvania when it reached out to Neiman to propose the loan, Hudson was
made aware that Neiman was a Pennsylvania resident by the terms of the October
Note. Furthermore, both the October and December Notes listed Neiman’s address
in Mechanicsburg, Pennsylvania, and throughout the course of the execution of
repayment on the loans, to the extent that such repayment occurred, Hudson sent
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payments to Neiman’s bank in Pennsylvania. Hudson also reached out to contact
Neiman, albeit through technological instead of physical means, in Pennsylvania to
negotiate the terms of the loan. Though representatives of Hudson never
physically came to Pennsylvania, the Third Circuit has recently observed that “[i]n
modern commercial business arrangements, . . . communication by electronic
facilities, rather than physical presence, is the rule. Where these types of long-term
relationships have been established, actual territorial presence [in the forum state]
becomes less determinative.” General Electric Co. v. Deutz AG, 270 F.3d 144,
151 (3d Cir. 2001) (finding personal jurisdiction over a German company that had
deliberately assumed long-term obligations with a resident in the forum state).
We conclude that Hudson had sufficient knowledge of Neiman’s status as a
Pennsylvania resident such that, combined with the forum selection clause in the
December Note, Hudson could reasonably have foreseen being “haled into court”
here.3 In so concluding, we also note that Hudson is not an individual borrower
but a sophisticated business entity, such that they were more likely to be cognizant
of these factors.4 For all of the reasons set forth, personal jurisdiction over Hudson
is appropriate.
B.
Venue
3
See Vetrotex Certainteed Corp., 75 F.3d at 151.
The court in Miller similarly noted that as an attorney, Mr. Miller was a sophisticated
defendant, likely to be aware of the meaning behind the terms of the cognovit. Miller, 1993 WL
306106, at *4 (“Mr. Miller is an attorney and presumably understood the terms of the note he
was executing.”).
4
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We turn now to considerations of venue. There is a venue selection clause
contained in the December Note, by which Hudson “consents and subjects” itself
to the venue of “courts in Miami-Dade County.” Though Neiman acknowledges
that Hudson consented to a venue of Miami-Dade County, Florida, he argues that
venue is appropriate in the Middle District under 28 U.S.C. Section 1391(b)(2) as
“a substantial portion of the events and omissions giving rise to the claims”
occurred in Pennsylvania. (Doc. 11, p. 19). For the following reasons, we
disagree.
28 U.S.C. § 1406(a) provides that “[t]he district court of a district in which is
filed a case laying venue in the wrong division or district shall dismiss, or if it be in
the interest of justice, transfer such case to any district or division in which it could
have been brought.” 28 U.S.C. § 1391(b)(2) provides that, in diversity cases such
as this, venue is appropriate in “a judicial district in which a substantial part of the
events or omissions giving rise to the claim occurred, or a substantial part of
property that is the subject of the action is situated.” 28 U.S.C. § 1391(b)(2).
“[T]he current statutory language . . . favors the defendant in a venue dispute by
requiring that the events or omissions supporting a claim be ‘substantial.’ Events
or omissions that might only have some tangential connection with the dispute are
not enough.” Cottman Transmission Sys., Inc. v. Martino, 36 F.3d 291, 294 (3d
Cir. 1994).
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“Although the statute no longer requires a court to select the “best” forum,
the weighing of “substantial” may at times seem to take on that flavor.” Id. This
requirement is “intended to preserve the element of fairness so that a defendant is
not haled into a remote district having no real relationship to the dispute.” Downs
v. Andrews, Civ. Action No. 13-5788, 2014 WL 7235841, at *6 (quoting Cottman
Transmission Sys., 36 F.3d at 294)).
While courts in the past have held that the location of one party while the
majority of contract negotiations took place may constitute a proper venue, see
Downs, 2014 WL 7235841, at *6 (holding that venue was appropriate in a location
where “although the alleged misconduct did not take place in this district, a
substantial portion of the underlying contract negotiations did”), here additional
substantial events giving rise to the claim took place in Florida such that the fact
that Neiman was predominantly located in Pennsylvania while the negotiations
took place is outweighed. Rather, as Hudson argues, venue is more appropriate in
the Southern District of Florida.
In reaching this conclusion, we consider several relevant facts of the dispute.
See Cottman Transmission Sys., 36 F.3d at 295 (“In assessing whether events or
omissions giving rise to the claims are substantial, it is necessary to look at the
nature of the dispute.”). The instant case arises due to Hudson’s alleged failure to
repay a loan. Their actions in failing to send the payments took place in Florida.
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So too did the signing of the Notes.5 Furthermore, all face-to-face business
interaction between the parties occurred in Florida, where Neiman keeps a parttime residence. Alleged social interaction between the parties also occurred in
Florida. Hudson consented to both venue and choice-of-law provisions in Florida,
giving rise to the plausible assumption that any suit that might arise would likely
be litigated in Florida. Further, the choice-of-law provision applying Florida law,
while not an impediment to this Court’s resolution of the matters at hand, makes
this dispute better suited to a Florida court more familiar with the application of the
parties’ chosen rule of law. Finally, the property at issue, meaning both the funds
Neiman provided and the investment properties meant to be benefited by the
parties’ arrangement, currently exists in Florida.
All of these characteristics arising in the case sub judice convince us that the
Southern District of Florida, and not the Middle District of Pennsylvania, is the
more appropriate venue for the case at hand. The parties also argue over the role
of various other entities in the instant litigation, including Swinton Commons LLC,
Stonehenge Services LLC and Downtown Delray Development LLC, in which
both Neiman and Michael Greenbaum are involved. Without the benefit of
additional discovery, it is impossible to accurately ascertain which party’s
5
Hudson signed both the October and December Notes in Florida before emailing copies
of both to Neiman. (Doc. 11-1, ¶ 7). That Neiman was in Pennsylvania when he received the
email is less consequential, as he could just as easily have been at his Florida residence or
anywhere else when the email was received.
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allegations are the more valid in regards to the role of these projects in the instant
dispute. Rather, given that all of the limited liability companies, investment
projects, and real property concerning the various endeavors are located in Florida,
as well as the witnesses and documentation relevant to these entities, it is more
prudent to transfer the instant matter to the Southern District of Florida, where all
parties with the exception of Neiman himself are situated.
C.
Neiman’s Heath
We are not unsympathetic to Neiman’s stated health concerns. According
to Neiman’s affidavit, he began intensive cardiac rehabilitation nearly two months
ago, on August 30, 2016, in Pennsylvania. (Doc. 11-1, ¶ 20). This rehabilitation
may take upwards of eighteen weeks to complete. (Id.). However, as Hudson
astutely notes, Neiman’s health concerns are not wholly appurtenant to the instant
decision. While we have no doubt that the District Court for the Southern District
of Florida will strive to conclude this litigation at the earliest possible opportunity,
we nonetheless observe that most federal litigation has a duration of several years.
We can only presume that Neiman would not need to travel out of Pennsylvania
for quite some time. Further, video depositions and other technological
advancements often make such travel less frequent or altogether unnecessary. We
trust that the parties will work amicably to provide any accommodations Neiman
may require.
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IV.
CONCLUSION
For the foregoing reasons, we shall deny Hudson’s Motion to Dismiss. We
shall grant Hudson’s Motion to Transfer Venue pursuant to 28 U.S.C. § 1404(a).
An appropriate order shall issue.
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