WCGS & CO. v. PNC FINANCIAL SERVICES GROUP, INC. et al

Filing 16

OPINION fld. Signed by Judge Dennis M. Cavanaugh on 12/23/13. (sr, )

NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
WCGS & Co., a New Jersey Corporation, :
d/b/a HERITAGE FINANCIAL
RECOVERY SERVICES,
:
Plaintiff,

:

Hon. Dennis M. Cavanaugh

OPINION
Civil Action No. 2:13-cv-02510 (DMC) (JBC)

v.
PNC FINANCIAL SERVICES GROUP,
INC., PNC BANK, National Association,
JAMES ROHR, JOHN KRAULAND,
ROBERT STRUNK, VINCENT
JOHNSON, STEVE KHOURY, GARY
URSCHLER. TOM WITTMAN,
BEVERLY BORTZ. MARYANN
VAC C A, CAROLYN I FE, AMANDA
HEINZ. MATTHEW BOYER. WILLIAM
WILL1AMS, RANDALL COSTANZA
and JOHN DOES 1 through 100,
Defendants.

DENNIS M. CAVANAUGH, U.S.D.J.:
This matter comes before the Court upon (1) a motion for partial dismissal brought by
Defendants PNC Financial Services Group, Inc., PNC Bank, James Rohr, John Krauland, Robert
Strunk, Vincent Johnson, Steve Khourny, Gary Urschler, Torn Wittrnan, Beverly Bortz, Marya
nn
Vacca, Carolyn Lee, Arnanda Heinz, Matthew Boyer, William Williams and Randall Costan
za
(collectively “Defendants”) pursuant to FED. R. Civ. P. 12(b)(6) (May 9, 2013, ECF No. 7) and
(2) a motion to transfer venue brought by Defendants pursuant to 2$ U.S.C.

§

1404(a) (May 9,

2013, ECF No. 8). Pursuant to FED. R. Civ. P. 78, no oral argument was heard. Based on the

following and for the reasons expressed herein, Defendants’ motion to transfer is

granted

and

motion for partial dismissal is denied without prejudice.
I.

1
BACKGROUND
Defendant PNC Bank (“PNC”) entered into a Collection Services Agreement (the

‘CSA”) with Plaintiff WCGS & Co., d/b/a Heritage Financial Recovery Services (‘Plaintiff’
or
“Heritage”) in April 2010, in which PNC agreed to engage Plaintiffs debt-collection services in
order to obtain payment on delinquent customer accounts owned by PNC. PNC agreed that for
each payment received from an account assigned to Plaintiff Plaintiff would he paid a fee or
commission equal to an agreed-upon percentage of the payment received. Although the
delinquent accounts assigned to Plaintiff were instructed to make payment to Plaintiff on
occasion debtors would make payments directly to PNC. In that event, Plaintiff was still to be
compensated in the same manner as if the payment had been made to Plaintiff Paragraph 22 of
the CSA contains a forum selection clause stating that Plaintiff “hereby irrevocably consents to
the exclusive jurisdiction of any state or federal court for the county or judicial district located in
Pittsburgh, Allegheny County, Pennsylvania.” The forum selection clause states further that
both PNC and Plaintiff “agree that the venue provided above is the most convenient forum for
both [PNC] and the [Plaintiff]. The [Plaintiff] waives any objection to venue and any objection
based on a more convenient forum in any action instituted under this Agreement.”
On December ii. 2012, Plaintiff filed a Complaint against Defendants in the Superior
Court of New Jersey, Bergen County alleging breach of contract, conversion and fraud arising
from a fraudulent scheme to hide direct payments made to PNC on accounts which had been
submitted by PNC to Heritage for collection under the CSA. Specifically, Plaintiffs Complaint

1

The

facts set forth in this Opinion are taken from the parties’ respective moving papers and filings.
2

asserts the following Counts: (I) breach of contract; (2) breach of implied covena
nt of good faith
and fair dealing; (3) conversion; (4) fraudulent breach of trust; (6) common law
fraud and
misrepresentation; (7) civil conspiracy; (8) aiding and abetting; (9) negligent misrep
resentation;
(10) unjust enrichment; and (11) quantum meruit. On April 18, 2013 Defendants
removed the
action to this Court.
On May 9, 2014 Defendants filed a motion for partial dismissal of Plaintiffs Complaint
pursuant to Fed. R. Civ. P. 12 (b)(6). (ECF No. 7). In this motion, Defendants assert that all
the
counts in the Complaint sounding in tort or quasi-contract and all claims asserted against
individual officers or employees of PNC fail to state a cause of action and should be dismissed.
Defendants also filed a motion to dismiss Plaintiffs Complaint based on the forum selection
clause or in the alternative to transfer venue pursuant to 28 U.S.C.
II.

§

1404(a). (ECF No. 8).

LEGAL STANDARD
a. Motion to Dismiss Pursuant to Rule 12(b)(6)
In deciding a motion under Rule 12(b)(6), a district court is ‘required to accept as

true

all

factual allegations in the complaint and draw all inferences in the facts alleged in the light most
favorable to the [Plaintiffi.” Phillips v. Cntv. of Allegheny, 515 F.3d 224. 228 (3d Cir.
200$).
“FAI complaint attacked by a

.

.

.

motion to

dismiss does not need detailed factual allegations.”

Bell At!. Corp. v. Twombly, 550 U.S. 544, 555 (2007). However, the Plaintiffs “obligation to
provide the ‘grounds’ of his entitle[ment] to relief requires more than labels and conclusions, and
a formulaic recitation of the elements of a cause of action will not do.” Id. (internal citations
omitted).

“[A court is] not bound to accept as true a legal conclusion couched as a factual

allegation.” Papasan v. Allain, 478 U.S. 265, 286 (1986). Instead, assuming that the factual
allegations in the complaint are true, those ‘[f1actual allegations must be enough to raise a right
to

3

relief above a speculative level.” Twombly, 550 U.S. at 555.
A complaint will survive a motion to dismiss if it contains sufficient factual
matter to “state
a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S.
662, 678 (2009) (citing
Twombly, 550 U.S. at 570). “A claim has facial plausibility when the
pleaded factual content
allows the court to draw the reasonable inference that the defendant is
liable for misconduct
allegcd.’ Id. “Determining whether the allegations in a complaint are plausib
le’ is a context
specific task that requires the reviewing court to draw on its judicial experie
nce and common
sense.” Young v. Speziale, Civ. No. 07-03 129, 2009 WL 3806296, at *3 (D.N.J
. Nov. 10, 2009)
(quoting Iqbal, 556 U.S. at 679). “[W]here the well-pleaded facts do not permit
the court to infer
more than the mere possibility of misconduct, the complaint has alleged—but it has
not ‘shown’—
that the pleader is entitled to relief.” Iqbal, 556 U.S. at 679.
b. Motion to Transfer Pursuant to 28 U.S.C.

§

1404(a)

The decision of whether to transfer a case is committed to the trial court’s sound
discretion. Cadapult Graphic Sys. v. Tektronix, Inc., 98 F. Supp. 2d 560, 564 (D.N.J
. 2000);
Days inns Worldwide, Inc. v. RAM Lodging. LLC, No. 09—2275, 2010 WL 15409
26, at *2
(D.N.J, April 14, 2010). In relevant part, 28 U.S.C.

§

1404(a) states, “for the convenience of

parties and witnesses, in the interest ofjustice, a district court may transfer any civil
action to
any other district where it may have been brought.” In construing the statutory langua
ge of 28
USC.

§

1 404(a), the Third Circuit has pointed out that “commentators have called on the courts

to consider all relevant factors to determine whether on balance the litigation would
more
conveniently proceed and the interests ofjustice be better served by transfer to
a different
forum.” Jumara v. State Farm Ins. Co., 55 F. 3d 873, 879 (3d Cir. 1995). As enume
rated by the
Jumara Court,

4

There are a number of relevant private and public factors a court should
consider in deciding a motion to transfer. The private factors include: (1)
Plaintiffs choice of forum; (2) defendants preference; (3) whether the claim
arose elsewhere; (4) the convenience of the parties as indicated by their relative
physical and financial conditions; (5) the convenience of witnesses, only to the
extent that they may be unavailable for trial in one of the fora; and (6) the
location of books and records, again only to the extent that they could not be
produced in one of the fora. The public interests include: (1) enforceability of
the judgment; (2) practical considerations that could make the trial easy,
expeditious, or inexpensive; (3) relative administrative difficulties in the two
fora resulting from court congestion; (4) local interests in deciding local
controversies at home; (5) public policies of the fora; and (6) the familiarity of
the trial judge with the applicable state law in diversity cases.
Id. at 879-880. The Court must therefore conduct an “individualized, case-by-case consideration
of convenience and fairness” regarding which forum is most appropriate to consider the case.
Lawrence v. Xerox Corp., 56 F. Supp. 2d 442, 450 (D.N.J. 1999). “There is no rigid rule
governing a court’s determination; each case turns on its facts.” Id. (citing Lacey v. Cessna
Aircraft Co., 862 F.2d 38, 43 (3d Cir. 1988) (internal citations omitted)). The burden of
persuasion fails upon the moving party on a motion to transfer. Rappoport v. Steven Spielberg,
Inc.. 16 F. Supp. 2d 481. 502 (D.N.J. 1998). However, when a contract contains a forum
selection clause, the burden shifts and “the plaintiffs bear the burden of demonstrating why they
should not be bound by their contractual choice of forum.” Jurnara, 55 F.3d at 879-80.
c. Enforcement of Forum Selection Provisions
While a valid forum selection clause does not oust a court of its jurisdiction, “a court should
decline to adjudicate a matter governed by a mandatory forum selection clause that vests authority
in a different jurisdiction.” Int’l Bus. Software Solutions, Inc. v. Sail Labs Tech. AG. 440 F. Supp.
2d 357, 362 (D.N.J, 2006). Forum selection clauses are presumptively valid and enforceable. jç
This presumption is rebutted only when the party’ opposing enforcement of the forum selection
provision can “make a strong showing, either that the forum thus selected is so gravely difficult

5

and inconvenient that he will for all practical purposes be deprived of his day in
court. or that the
clause was procured through fraud or overreaching.” Id. (quoting Foster v. Chesap
eake Ins. Co..
Ltd., 933 F.2d 1207, 1219 (3d Cir.) cert. denied, 502 U.S. 908 (1991)). Additi
onally. this Court
may not enforce a forum selection clause that is unreasonable or a clause that violate
s a strong
public policy of the forum. See Cadapult Graphic Sys.. Inc. v. Tektronix. Inc., 98
F. Supp.2d 560.

56465 (D.NJ. 2000) (citing Coastal Steel Corp. v. Tilghman Wheelabrator Ltd., 709
F.2d 190,
202 (3d Cir. 1983), overruled on other grounds, Lauro Lines v. Chasser, 490 U.S. 495
(1989)).
III.

DISCUSSION
a. The Forum Selection Clause
Defendants have moved to transfer this action to the United States District Court for the

Western District of Pennsylvania, Pittsburgh Division pursuant to the forum selection clause
in
the CSA signed by Plaintiff and PNC in which both parties agreed to the exclusive jurisdi
ction of
the state and federal courts in Pittsburgh, Allegheny County, Pennsylvania. Plaintiff asserts
that
the forum selection clause is invalid because the CSA was offered by PNC on a take-it-or-lea
veit basis and was neither negotiated for nor discussed by the parties. Plaintiff also points to
the
discrepancy in bargaining power between a large national bank and a small collect
ion company.
Under federal law, a forum selection clause is presumptively valid and enforceable unless
the
objecting party “establishes (1) that it is the result of fraud or overreaching, (2) that enforc
ement
would violate a strong public policy of the forum, or (3) that enforcement would in the
particular
circumstances of the case result in litigation in a jurisdiction so seriously inconvenient
as to be
unreasonable,” Coastal Steel Corp. v. Tilghman Wheelabrator, Ltd., 709 F.2d 190, 202 (3d
Cir,
1983); see also M/S Bremen v. Zapata Off—Shore Co., 407 U.S. 1, 15 (1972).

6

i. Forum Selection Was Not Procured by Fraud
Plaintiff does not allege that it was actually deceived or coerced into agreeing to the CSA
or that Plaintiff was not aware of the forum selection clause. Plaintiffs argument is based on
unequal bargaining power, lack of negotiations and being offered the agreement on a take-it-orleave-it basis. As this Court has previously held in upholding a similar forum selection clause
against analogous claims of lack of equal bargaining power and lack of negotiations:
The fact that there may not have been actual negotiations over [a forum selection] clause
does not affect its validity. Furthermore, while unequal bargaining power can be grounds
for not enforcing a forum selection clause, the party opposing enforcement of the clause
must still overcome the presumption in favor of enforcement by ‘demonstrating an
overweening bargaining position.’
Bonanno v. Quiznos et al., No. 06-cv-0 1415 (DMC), 2006 WL 3359673 at *3 (D.N.J. Nov. 17,
2006) (internal citations omitted). The Court finds that Plaintiff has not demonstrated an
overweening bargaining position sufficient to overcome the presumption in favor of
enforcement. Plaintiff is a sophisticated corporation that chose to enter into a contract with PNC
to collect consumer debts. Plaintiff is not a captive individual consumer who was put in a takeit-or-leave it position for basic necessities. The Court therefore finds no basis to invalidate the
forum selection clause simply because PNC is a larger corporation than Plaintiff.
ii. The Forum Selection Clause Is Not Contrary to New Jersey Public
Policy
Plaintiff asserts that enforcement of the forum selection clause would deprive New Jersey
of protecting its citizens from the misdeeds of a national banking association that does business
in the state. Plaintiff, however, has not provided any law or authority to support this position or
explained why the same public policy concern would not apply to Pennsylvania. Plaintiff has
thus failed to demonstrate any strong public policy interest in litigating this matter in New
Jersey.
7

iii. Litigation in Pennsylvania would not be so seriously inconvenient as
to be unreasonable.
Plaintiff’s primary reasons for why it would be inconvenient to litigate this matter in
Pennsylvania are the expense of retaining counsel as well as travel time and expenses. As to the
expense of retaining counsel, Plaintiff will have to retain counsel to litigate the matter regardless
of whether it is litigated in New Jersey or Pittsburgh. In addition, the Court does not fmd the
time and expense of traveling to Pittsburgh from New Jersey to be so seriously inconvenient as
to be unreasonable. For the foregoing reasons, the Court fmds that Plaintiff has not overcome
the presumption of validity of the forum selection clause. As such the Court holds the forum
selection clause is valid and enforceable.
b. 28 U.S.C. §1404(a) Analysis
In ruling on a motion for transfer of venue under 28 U.S.C. §1404(a) a district court is to
consider “all relevant factors to detennine whether on balance the litigation would more
conveniently proceed and the interests ofjustice be better served by transfer to a different
forum.” Jumara, 55 F.3d at 879. Where, as here, when a motion for transfer under §1404(a)

involves a forum selection clause, while not dispositive per se, it is an important factor in the
Court’s analysis. Jumara, 55 F.3d at 880 (“Although the parties’ agreement as to the most
proper forum should not receive dispositive weight, it is entitled to substantial
consideration.”);

Wall Street Aubrey Golf. 189 Fed. App’x at 85 (“Forum selection

clauses are entitled to great weight.”). Indeed, a forum selection clause is “a significant factor
that figures centrally” in a court’s analysis under §1404(a). Stewart Org.. Inc. v. Ricoh
Corp.. 487 U.S. 22, 29 (1988).
Section 1404(a) involves a multi-factor balancing test Tessler & Weiss/Premesco. Inc.
v. Sears Holding Mgmt. Corp.. Civ. No. 09-1243 (DRD), 2009 WL 3335570, at 4 (D.N.J.
8

Oct. 15, 2009) (citing Jumara, 55 F.3d at 875). A court’s §1404(a) analysis includes
an

evaluation of both “private” and “public” interests. The private interests to consider include
(1)
the ‘plaintiff’s forum preference,” (2) “the defendant’s preference.” (3) “whether the
claim arose
elsewhere.” (4) “the convenience of the parties as indicated by their relative physical
and
financial condition.” (5) “the convenience of the witnesses

—

but only to the extent that the

witnesses may actually be unavailable for trial in one of the fora,” and (6) “the location of books
and records (similarly limited to the extent that the files could not be produced in the alternative
foium)

‘

Jurnara 55 F 3d at 879 (citations omitted), Park Inn Int’l L L C v Mody Enters

mc,

105 F. Supp. 2d 370, 377 (D,N.J 2000).
i. Plaintiff’s Forum Preference

As demonstrated by the filing of this Complaint. Plaintiffs choice of forum

is New

Jersey. However, as the Third Circuit held in Jurnara. deference to a plaintiffs choice of
forum ‘is inappropriate where the plaintiff has already freely contractually chosen an
appropriate venue.” 55 F.3d at 880. Given that Plaintiff signed a valid agreement
consenting to Pennsylvania’s jurisdiction, the Court gives minimal weight to Plaintiffs
choice of forum.
ii, Defendant’s Forum Preference
The CSA’s forum selection clause indicates PNC’s prefeieice for Pennsylvania as a
forum. As expressed in Defendants’ moving papers, all sixteen (16) Defendants prefer
Pittsburgh, Pennsylvania as the forum for this litigation. This factor therefore weighs in
favor of transfer.
iii. Forum Where Claims Arose

The parties dispute whether the claims primarily arose in New Jersey or

9

Pennsylvania. Plaintiff asserts the claims arose out of a contract which was mostly
performed in New Jersey and points to the record but does not provide any specific facts or
details. Defendants point to the CSA which states that the Agreement ‘will be deemed to be
made in the Commonwealth of Pennsylvania.” Defendants also note that most of the
Complaint’s allegations pertain to alleged conduct by PNC employees located in
Pennsylvania, Ohio or Michigan. Since none of the PNC representatives that Plaintiff has
named in the Complaint reside or work in New Jersey, and therefore none of the alleged
wrongful conduct by PNC representatives took place in New Jersey. the Court finds this
factor also weighs in favor of transfer.
iv. Convenience of the Parties

Within the framework of the

§

1404(a) multi-factor balancing test, “a forum selection

clause is treated as a manifestation of the parties preferences as to a convenient forum.
t
Jumara, 55 F.3d at 880. Tn this case, Plaintiff and Defendant PNC Bank agreed via the CSA’s
forum selection clause that Pittsburgh, Pennsylvania is the most convenient venue. The Court
agrees with Defendants that Plaintiff cannot now contest that Pittsburgh is the most convenient
forum. Indeed, “by signing a forum selection clause, a plaintiff is estopped from claiming
inconvenience in that forum,” Tessler & Weiss/Premesc, 2009 WL 3335570, at *7 (citing
Park Inn Int’l, 105 F. Supp. 2d at 379 and Jumara, 55 F.3d at 880).
Plaintiff argues that the relative financial conditions of the parties demonstrate that
New Jersey is the more convenient forum. Plaintiff points out that PNC is a large national
bank which conducts business in New Jersey and Plaintiff is a small New Jersey enterprise
run by one woman with seven fuHtirne employees. However, Plaintiff ignores the fact that
fourteen of the Defendants named in Plaintiff’s Complaint are individuals, all of whom

l0

reside outside of New Jersey and most of whom reside in Pennsylvania. Given the forum
selection clause and the fact that Plaintiff is the only New Jersey party and eleven of the
Defendants are located in Pittsburgh, the Court finds this factor weighs in favor of transfl’r.
v. Convenience of Witnesses

Plaintiff has named fourteen (14) present and former representatives of PNC as
Defendants and, thus, as potential witnesses. All of these individuals reside outside of New
Jersey and most of them reside in Pittsburgh. Therefore, the Court finds no basis to conclude
that a witness would be unavailable for trial in Pittsburgh. Thus, this factor also weighs in
favor of transfer.
vi. Availability of Books and Records in the Alternative Forum

Most of the documents that are likely relevant to Plaintiffs claims relate to payments
which PNC is alleged to have received directly from accounts that had been assigned to Plaintiff
for collection efforts. Defendants assert that the majority of these documents are likely in PNC’s
possession and are largely located in Pittsburgh. To the extent that Plaintiff’s business records
located in New Jersey are relevant to this matter, the Court finds no reason wh they could not be
produced in Pittsburgh. Thus, this factor weighs in favor of transfer.
vii. The Public Factors Also Favor Transfer to Pennsylvania

The public interests involved in a traditional §1404(a) analysis include: (1) ‘the
enforceability of the judgment,” (2) “practical considerations that could make the trial easy.
expeditious, or inexpensive,” (3) “the relative administrative difficulty in the two fora
resulting from court congestion,” (4) “the local interest in deciding local controversies at
home,” (5) “the public policies of the fora,” and (6) “the familiarity of the trial judge with the

11

applicable state law in diversity cases.” Jumara, 55 F.3d at 879-80; Park Inn Int’l,
105 F.
Supp. 2d at 377.
None of these factors would weigh in favor of disregarding the forum selection clause
agreed to by the parties. First, a judgment in this matter would be equally enforceable
in the
Western District of Pennsylvania or in the District of New Jersey. With respect to “practical
considerations,” the Western District of Pennsylvania is no less capable than this Court in
efficiently handling commercial disputes. See Weight Loss Servs., LP v. Herbal Magic, Inc.,
Civil Action No. 11-3859, 2011 WL 4402103, at *5 (E.D.Pa. Sept. 22, 2011). With regard
to
“congestion,” there is no indication that transfer of venue to the Western District of
Pennsylvania would place an undue burden upon. that court’s docket. Finally, neither “local
interests” nor the “public policies” of the two fora provide any reason to prefer that this case
be litigated in this Court rather than in the Western District of Pennsylvania.
The Court finds that the CSA’s forum selection clause providing for exclusive venue
in Pittsburgh, Pennsylvania is valid and enforceable. In addition, the Court finds that the
1404(a) factors relevant to a motion to transfer analysis weigh in favor of transferring this
case to the Western District of Pennsylvania. As such, Defendants’ motion for transfer is
granted. As this case is no longer within this Court’s jurisdiction, Defendants’ motion to
dismiss is to be considered by the transferee court and is therefore denied without prejudice
by this Court. The Court also notes that in Plaintiff’s moving papers, Plaintiff has
voluntarily dismissed all claims against the following Defendants: Amanda Heinz, Matthew
Boyer, William Williams, Randal Costanza and Steven Khoury. (Pl.’s Opp’n to Def’s Mot.
for Partial Dismissal n. 2, June 3, 2013, ECF No. 13). These Defendants are therefore
dismissed from the case.

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IV.

CONCLUSION
For the foregoing reasons, Defendants’ motion to transfer is granted and Defend
ants’

motion for partial dismissal is denied without prejudice. The following Defend
ants are
dismissed from the case: Amanda Heinz, Matthew Boyer, William Williams, Randa
l
Costanza and Steven Khoury. An appropriate Order accompanies this Opinion.

i

Date:
Original:
cc:

December —2O13
Clerk’s Office
Hon. James B. Clark, U.S.M.J.
All Counsel of Record
File

13

is M.

avanau.D.J.