PNC BANK v. KANAAN

Filing 11

MEMORANDUM AND OPINION. SIGNED BY HONORABLE R. BARCLAY SURRICK ON 5/21/12. 5/21/12 ENTERED AND E-MAILED AND FAXED BY CHAMBERS.[FDC]

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA

PNC BANK, NATIONAL
ASSOCIATION, SUCCESSOR TO
NATIONAL CITY BANK,
AS LENDER AND AS AGENT
FOR LENDERS
v.
DANIEL KANAAN

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SURRICK, J.

CIVIL ACTION
NO. 11-7770

MAY

21 , 2012

MEMORANDUM
Presently before the Court is Defendant Daniel Kanaan’s Motion to Dismiss Plaintiff’s
Amended Complaint for Lack of Personal Jurisdiction and for Improper Venue, or in the
Alternative, to Transfer Venue. (ECF No. 7.) For the following reasons, the Motion will be
denied.
I.

BACKGROUND
A.

Facts1
1.

The Parties

Plaintiff PNC Bank, National Association, Successor to National City Bank, as Lender
and as Agent for Lenders, is a national bank chartered under the laws of the United States. (Am.

1

In deciding a Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction, the
allegations of the complaint are taken as true. Dayhoff Inc. v. H.J. Heinz Co., 86 F.3d 1287,
1302 (3d Cir. 1996). Similarly, “[i]n considering a motion to dismiss for improper venue under
Federal Rule of Civil Procedure 12(b)(3), the court must generally accept as true the allegations
in the complaint.” Fellner v. Phila. Toboggan Coasters, Inc., No. 05-2052, 2005 WL 2660351,
at *1 (E.D. Pa. Oct. 18, 2005); see also Kimmel v. Phelan Hallinan & Schmieg, PC, No. 112596, --- F. Supp. 2d ---, 2012 WL 645987, at *4 (E.D. Pa. Feb. 28, 2012).

Compl. ¶ 1, ECF No. 6.) Plaintiff’s home office, as set forth in its Articles of Association, is in
Delaware, and its principal place of business is in Pennsylvania. (Id.)
Defendant is an adult individual residing in Canton, Michigan. (Id. at ¶ 2.) At all
relevant times, Defendant was a forty-percent shareholder of Advanced Communications, Inc.
(“ACI”), a Michigan corporation that provides outsourced business services and which has a
principal place of business in Wayne County, Michigan. (Mich. Verified Compl. ¶¶ 2, 19-22, 24,
Def.’s Mot. Ex. 7, ECF No. 7.) Defendant was also the Executive Vice President and Chief
Operating Officer of ACI. In that capacity, he was responsible for the sales and field operations
of the company. (Id. at ¶ 24.) Defendant claims that he has never been involved in ACI’s
financial reporting. (Id. at ¶ 25.)
At all relevant times, an individual named Michael A. Falsetti was a sixty-percent
shareholder, and President and Chief Executive Officer (“CEO”), of ACI. In that capacity,
Falsetti was responsible for managing the financial affairs of the company. (Id. at ¶¶ 22-23.)
Falsetti resides in Wayne County, Michigan. (Id. at ¶ 6.) Defendant claims that Falsetti was
responsible for maintaining ACI’s relationships with its lenders and was a key player in the
transaction underlying this lawsuit. (See id. at ¶¶ 92-93, 130-235; Def.’s Br. 6, ECF No. 7.)
2.

The Loan Documents
a)

Revolving Credit, Term Loan and Security Agreement

On October 2, 2009, ACI and National City Bank entered into a Revolving Credit, Term
Loan and Security Agreement. (Am. Compl. ¶ 10 & Ex. B (“Revolv. Credit Agreement”).)
Pursuant to this Agreement, National City Bank agreed to lend to ACI certain advances and ACI
agreed to repay those advances in accordance with the Agreement’s terms. (Am. Compl. ¶ 11
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(citing Revolv. Credit Agreement §§ 2.6, 2.7).) National City Bank also agreed to issue Letters
of Credit to ACI, subject to certain conditions. (Am. Compl. ¶ 12 (citing Revolv. Credit
Agreement §§ 2.9-2.12).) This Agreement was signed by Falsetti in his capacity as CEO and
President of ACI. (Revolv. Credit Agreement.)
b)

Revolving Credit Note

Also on October 2, 2009, ACI and National City Bank executed a Revolving Credit Note.
(Revolv. Note, Am. Compl. Ex. C.) Pursuant to the terms of the Note, ACI agreed to pay
Plaintiff at the end of the term or earlier, as provided in the Revolving Credit, Term Loan and
Security Agreement, the lesser of the principal sum of $27 million or a lesser sum as provided in
that Agreement. (Id.; Am. Compl. ¶ 13.) Falsetti signed this Credit Note in his capacity as CEO
and President of ACI. (Revolv. Note.)
c)

Term Loan Note

In addition, on October 2, 2009, ACI executed a Term Loan Note. ACI agreed to pay
Plaintiff $1 million or a lesser sum, as provided in the Revolving Credit, Term Loan and
Security Agreement. (Am. Compl. ¶ 14 & Ex. D (“Loan Note”).) Falsetti signed this Loan Note
in his capacity as CEO and President of ACI. (Loan Note.)
d)

The Guaranty

On October 2, 2009, National City Bank, Defendant and financial institutions that became
lenders entered into a Guaranty and Suretyship Agreement (“Guaranty”). (Guaranty, Am.
Compl. Ex. A.) Defendant agreed to guarantee and become the surety for the prompt payment
and performance of the Obligations assumed in connection with the Guaranty. (Id. at ¶ 1.) The
“Obligations” included:
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(i) any and all loans (including, without limitation, all Advances and the Term Loan,
advances, debts, liabilities, obligations, covenants and duties) owing by any Borrower
. . . to Lenders, Agent or National City Bank under this Agreement, the Other
Documents . . . and (ii) any and all loans (including without limitation, all advances,
debts, liabilities, obligations, covenants and duties) owing by any Borrower . . . to
National City Bank of any kind or nature, in each case whether present or future
(including any interest or other amounts accruing thereon, and any costs and expenses
arising therefrom of any Person payable by Borrower and any indemnification
obligations payable to Borrower . . . arising or payable after maturity, or after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding relating to any Borrower . . . whether or not a claim
for post-filing or post-petition interest or other amounts is allowable or allowed in
such proceeding), whether or not evidenced by any note, guaranty or other
instrument, whether arising under any agreement, instrument or document, (including
this Agreement and the Other Documents) whether or not for the payment of money,
whether arising by reason of an extension of credit, opening of a letter of credit, loan,
equipment lease or guarantee, under any interest or currency swap, future option or
other similar agreement, or in any other manner, whether arising out of overdrafts or
deposit or other accounts or electronic funds transfers (whether through automated
clearing houses or otherwise) or out of the Agent’s or any Lenders non-receipt of or
inability to collect funds or otherwise not being made whole in connection with
depository transfer check or other similar arrangements, whether direct or indirect
(including those acquired by assignment or participation), absolute or contingent,
joint or several, due or to become due, now existing or hereafter arising, contractual
or tortious, liquidated or unliquidated, regardless of how such indebtedness or
liabilities arise or by what agreement or instrument they may be evidenced or whether
evidenced by any agreement or instrument, including, but not limited to, (i) any and
all of Borrower’s Indebtedness and/or liabilities under this Agreement or the Other
Documents or under any other agreement between National City Bank and any
Borrower and any amendments, extensions, renewals or increases . . . and (iii) all
costs and expenses of Agent, any Lender, or of any other direct or indirect subsidiary
or affiliate of Agent or any Lender, incurred in the documentation, negotiation,
modification, enforcement, collection or otherwise in connection with any of the
foregoing, including but not limited to, reasonable attorneys’ fees and expenses and
all obligations of any Borrower . . . to Agent, Lenders or to any other direct or
indirect subsidiary or affiliate of Agent or any Lender, to perform acts or refrain from
taking any action.
(Am. Compl. ¶ 19 (citing Revolv. Credit Agreement § 1.2).) The Guaranty defined an “Event of
Default” to include ACI’s failure to comply with financial covenants and failure to deliver certain
financial projections upon which the revolving line of credit amounts were based. (Am. Compl.
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¶ 20.) Plaintiff alleges that Defendant “unconditionally guaranteed” all of ACI’s obligations
under the Revolving Credit, Term Loan and Security Agreement, and is obligated to repay all of
those obligations, without further notice, upon Plaintiff’s demand. (Id. at ¶ 21.)
Paragraph 19 of the Guaranty states, in relevant part:
This Guaranty and any other instrument, document or agreement executed or
delivered in connection herewith or the transactions related hereto or thereto, and all
matters relating hereto and arising herefrom (whether arising in tort, contract law or
otherwise), in each case, whether now existing or hereafter arising, shall be governed
by and construed in accordance with the laws of the Commonwealth of Pennsylvania
applied to contracts to be performed wholly within the Commonwealth of
Pennsylvania. Any judicial proceeding brought by or against Guarantor with respect
to any of the Obligations, this Guaranty, any of the Other Documents or any related
agreement may be brought in any court of competent jurisdiction in the
Commonwealth of Pennsylvania, United States of America, and, by execution and
delivery of this Guaranty, Guarantor accepts for itself and in connection with its
properties, generally and unconditionally, the non-exclusive jurisdiction of the
aforesaid courts, and irrevocably agrees to be bound by any judgment rendered
thereby in connection with this Guaranty.
...
Nothing herein shall affect the right to serve process in any manner permitted by law
or shall limit the right of Agent or any Lender to bring proceedings against Guarantor
in the courts of any other jurisdiction. Guarantor waives any objection to jurisdiction
and venue of any action instituted hereunder and shall not assert any defense based
on lack of jurisdiction or venue or based upon forum nonconveniens.
...
Any judicial proceeding by Guarantor against Agent or any Lender involving, directly
or indirectly, any matter or claim in any way arising out of, related to or connected
with this Guaranty or any related agreement, shall be brought only in a federal or
state court located in the County of Philadelphia, Commonwealth of Pennsylvania,
provided that the foregoing shall not preclude the Guarantor from bringing a claim
or counterclaim action in any court in which Agent or any Lender has initiated a
judicial proceeding against Guarantor.
(Id. at ¶ 19.) Defendant signed the Guaranty. (Am. Compl. ¶¶ 15, 18, 20; see also Guaranty.)

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National City Bank loaned money to ACI pursuant to the terms of the Revolving Credit,
Term Loan and Security Agreement, Revolving Credit Note, Term Loan Note and Guaranty
(collectively, “Loan Documents”). (Id. at ¶ 17.)
4.

ACI’s Defaults

ACI defaulted on the Revolving Credit, Term Loan and Security Agreement. (Id. at ¶
23.) Plaintiff claims that pursuant to the terms of the Loan Documents, Defendant is obligated to
repay immediately all of ACI’s debt obligations. (Id.)
Plaintiff asserts that it has authority to enforce the Loan Documents in light of its merger
with National City Bank and the resulting succession to all of its rights under the Loan
Documents. (Id. at ¶ 22.) On July 8, 2010, Plaintiff sent ACI a letter, and copied ACI’s and
Defendant’s counsel. The letter informed ACI that it was in default of the Revolving Credit,
Term Loan and Security Agreement. (Id. at ¶ 24.) Plaintiff claimed that ACI was in default for
its failure to comply with the covenants set forth in Sections 6.5 and 7.6 of the Agreement. (Id.;
see also July 8 Letter, Am. Compl. Ex. E.) Section 6.5 requires ACI to “cause to be maintained
as of the end of each fiscal quarter, commencing with the fiscal quarter ending October 31, 2009,
a Fixed Charge Coverage Ratio of not less than 1.1 to 1 calculated for the trailing twelve month
period then ended.” (Am. Compl. ¶ 24 (citing Revolv. Credit Agreement § 6.5).)2 Pursuant to

2

The Fixed Charge Coverage Ratio is defined as:

with respect to any fiscal period, the ratio of (a) EBITDA minus Unfunded Capital
Expenditures made during such period, minus distributions (including tax
distributions made during such period) and dividends, minus cash taxes paid during
such period to (b) all Debt Payments made during such period.
(Am. Compl. ¶ 25 (citing Revolv. Credit Agreement § 1.2).)
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Section 7.6, ACI agreed not to “contract for, purchase or make any expenditure or commitments
for Capital Expenditures in any fiscal year in the aggregate amount for all Borrowers in excess of
$850,000.” (Am. Compl. ¶ 26 (citing Revolv. Credit Agreement § 7.6).) Plaintiff claims that
ACI is in default “for failing to maintain the requisite Fixed Charge Ratio as required under the
Agreement and for making prohibited expenditures and commitments in violation of Section 7.6
of the Agreement.” (Id. at ¶ 27.)
On June 30, 2010, ACI sent a Compliance Certificate to Plaintiff, which stated, in
relevant part, that “[ACI] certifies that it is in compliance with the aforementioned sections of the
loan agreement except Section 6.5. Fixed Coverage Ratio is less than 1.0 for the trailing 12
months. [ACI] attributes part of this to year[-]end journal entries being combined into January
2010.” (Am. Compl. ¶ 28 (citing Compliance Cert., Compl. Ex. F).)3
On March 23, 2011, Plaintiff sent ACI a letter stating that the defaults identified in the
July 8, 2010 letter had continued, that ACI failed to deliver its projections for the fiscal period
ending January 31, 2012 as required by the Revolving Credit, Term Loan and Security
Agreement, and that Plaintiff, pursuant to Section 3.1 of the Agreement, was increasing the rate
of interest on the obligations to the default rate as defined in the Agreement. (Am. Compl. ¶ 31.)
This letter also stated Plaintiff’s intent to charge ACI’s account $5,000 per day until the earlier of
(i) payment in full of the unpaid default interest or (ii) receipt by Plaintiff of the Undelivered
3

In addition, Plaintiff contends that prior to this June 30, 2010 letter, ACI indicated to
Plaintiff that it was maintaining a proper Fixed Charge Ratio. Plaintiff asserts that this
“erroneous information caused Plaintiff to over-advance several million dollars to [ACI], an
amount that was not backed by adequate collateral and which is immediately due and payable to
Plaintiff.” (Am. Compl. ¶ 29.) This, Plaintiff claims, along with the failure to maintain the
Fixed Charge Ratio, constituted “events of default under the Agreement which have not been
cured and which continue to date.” (Id. at ¶ 30.)
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Projections in a way that complied with the Agreement. (Id. at ¶ 32.) Plaintiff asserts that it has
loaned to ACI a total of $25,737,939.32 under the Revolving Line of Credit, $1,258,344.77 in
Letters of Credit, and $1 million under the Term Loan, of which $277,777.72 remains
outstanding. (Id. at ¶ 33.)
5.

Alleged Basis for Jurisdiction and Venue

Plaintiff alleges subject matter jurisdiction based upon diversity. (Id. at ¶ 3.) It alleges
that this Court has personal jurisdiction over Defendant since he “has expressly consented to
personal jurisdiction and has waived any objections to personal jurisdiction in this Court under
the provisions of the Guaranty signed by Defendant that is the subject of this lawsuit.” (Id. at ¶
6.) In addition, Plaintiff alleges that venue is proper since “a substantial part of the events or
omissions giving rise to the claim occurred in [the Eastern District of Pennsylvania]” (id. at ¶ 4)
and Defendant “has expressly consented to venue in this Court and has waived any and all
objections to venue, under the provisions of the Guaranty signed by Defendant that is the subject
of this lawsuit” (id. at ¶ 5).4
B.

Procedural History

On December 21, 2011, Plaintiff filed a Complaint. (ECF No. 1.) The Complaint
asserted one count of breach of contract. (Id. at ¶¶ 29-35.) On March 15, 2012, Defendant filed
a motion to dismiss for lack of jurisdiction and for improper venue. (ECF No. 3.)5 On April 3,

4

Plaintiff also alleges that Defendant has waived any objection based on forum non
conveniens by signing the Guaranty. (Am. Compl. ¶ 7.)
5

On that same day, Defendant filed a motion to seal certain exhibits that were filed with
the motion. (ECF No. 4.) We granted the motion to seal on March 20, 2012. (ECF No. 5.) In
light of the present Motion, Defendant’s March 15, 2012 motion to dismiss for lack of
jurisdiction and for improper venue is denied as moot.
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2012, Plaintiff filed an Amended Complaint. (Am. Compl.) Plaintiff added allegations
concerning the Paragraph of the Guaranty that dictated the governing law and jurisdiction. (See
id. at ¶ 8 (citing Guaranty ¶ 19).) The Amended Complaint asserts one count of breach of
contract. (Am. Compl. ¶¶ 34-40.) Plaintiff seeks damages and attorneys’ fees and costs for this
count. (Id. at ¶ 40.) On April 17, 2012, Defendant filed the instant Motion to Dismiss Plaintiff’s
Amended Complaint for Lack of Personal Jurisdiction and for Improper Venue, or in the
Alternative, to Transfer Venue. (Def.’s Mot.; see also ECF No. 8 (exhibits to Defendant’s
Motion).) On April 30, 2012, Plaintiff filed a Response in opposition to Defendant’s Motion.
(Pl.’s Resp., ECF No. 9.)
II.

DEFENDANT’S MOTION TO DISMISS
A.

Motion to Dismiss for Lack of Personal Jurisdiction

Defendant argues that the Amended Complaint should be dismissed pursuant to Federal
Rule of Civil Procedure 12(b)(2) since he lacks sufficient minimum contacts with Pennsylvania.
Accordingly, Defendant argues, this Court lacks personal jurisdiction over him. (Def.’s Br. 3.)
Plaintiff argues that Defendant signed a valid and enforceable forum selection clause, in
which he consented to this Court’s jurisdiction and agreed that venue in Pennsylvania is proper.
(Pl.’s Br. 1, ECF No. 9.) Plaintiff asserts that Defendant has failed to show that the forum
selection clause was procured with fraud. (Id.)
1.

Legal Standard

To survive a motion to dismiss for lack of personal jurisdiction, a plaintiff bears the
burden of establishing the court’s jurisdiction over the moving defendants. Miller Yacht Sales,
Inc. v. Smith, 384 F.3d 93, 97 (3d Cir. 2004) (citing Pinker v. Roche Holdings Ltd., 292 F.3d 361,
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368 (3d Cir. 2002)). If the court does not hold an evidentiary hearing on the motion to dismiss,
the plaintiff “need only establish a prima facie case of personal jurisdiction and the plaintiff is
entitled to have its allegations taken as true and all factual disputes drawn in its favor.” Id.
(citing Pinker, 292 F.3d at 368). However, the plaintiff cannot rely on general averments in the
complaint or unsupported statements in its response. Instead, it must “establish[ ] with
reasonable particularity sufficient contacts between the defendant and the forum state,” Mellon
Bank (East) PSFS, Nat’l Ass’n v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992) (citing Provident
Nat’l Bank v. Cal. Fed. Sav. & Loan Ass’n, 819 F.2d 434, 437 (3d Cir. 1987)) (internal
quotations omitted); Mass. Sch. of Law at Andover, Inc. v. Am. Bar Ass’n, 846 F. Supp. 374, 377
(E.D. Pa. 1994), by providing jurisdictional facts supported by affidavits or competent evidence,
Time Share Vacation Club v. Atl. Resorts, Ltd., 735 F.2d 61, 66 n.9 (3d Cir. 1984).
Personal jurisdiction may be exercised over an out-of-state defendant only to the extent
permissible by the law of the state in which the district court sits, and then only to the extent that
the exercise of that jurisdiction is consistent with the requirements of the United States
Constitution. Fed. R. Civ. P. 4(e); Mesalic v. Fiberfloat Corp., 897 F.2d 696, 698 (3d Cir. 1990)
(holding that a district court may assert personal jurisdiction over a non-resident defendant to the
extent permissible under the law of the state in which the district court sits).
Pennsylvania’s long-arm statute allows a court to exercise jurisdiction over a non-resident
defendant “to the fullest extent allowed under the Constitution of the United States and may be
based upon the most minimum contact with this Commonwealth allowed under the Constitution
of the United States.” 42 Pa. Cons. Stat. Ann. § 5322(b); see also Time Share Vacation Club,
Ltd., 735 F.2d at 63. Accordingly, the reach of Pennsylvania’s long-arm statute is “coextensive
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with the due process clause of the United States Constitution.” Time Share Vacation Club, 735
F.2d at 63. The due process clause of the United States Constitution requires a non-resident
defendant to have certain “minimum contacts” with the forum state in order for a court in that
forum to properly exercise personal jurisdiction. Int’l Shoe Co. v. Washington, 326 U.S. 310,
316 (1945).
Personal jurisdiction may be exercised under the theory of general jurisdiction or under
the theory of specific jurisdiction. General jurisdiction may be exercised over a non-resident
defendant when the defendant has “continuous and systematic” contacts with the forum state.
Int’l Shoe Co., 326 U.S. at 317; see also Reliance Steel Prods. Co. v. Watson, Ess, Marshall &
Enggas, 675 F.2d 587, 588 (3d Cir. 1982) (“If the claim pursued arises from non-forum related
activity, the plaintiff must demonstrate that in other respects the defendant has maintained
‘continuous and substantial’ forum affiliations.”). This Court may assert general jurisdiction
over a person when a defendant “is generally present in Pennsylvania, has consented to suit there,
or systematically or continuously conducts business in that state.” 42 Pa. Cons. Stat. Ann. §
5322 n.3. Specific jurisdiction may be exercised over a non-resident defendant when “the claim
is related to or arises out of the defendant’s contacts with the forum.” IMO Indus., Inc. v. Kiekert
AG, 155 F.3d 254, 259 (3d Cir. 1998) (citing Helicopteros Nacionales de Colombia, S.A. v. Hall,
466 U.S. 408, 414 n. 8 (1984)). For specific jurisdiction, the defendant must have “certain
minimum contacts with the forum state such that the maintenance of the suit does not offend
traditional notions of fair play and substantial justice.” Int’l Shoe Co., 326 U.S. at 316. The
plaintiff must show that: (1) there is a “substantial connection” between the defendant and the

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forum state, Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985);6 and (2) the exercise of
jurisdiction would not make litigation “so gravely difficult and inconvenient” that the party is
severely disadvantaged, M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 18 (1972).
2.

General Jurisdiction

Plaintiff argues that this Court has general jurisdiction over Defendant. (Pl.’s Br. 6.) It
points out the fact that Defendant signed the Guaranty, which contains a forum selection clause.
6

Pennsylvania’s long-arm statute provides for specific jurisdiction when the cause of
action arises from defendant’s business transactions within the Commonwealth. 42 Pa. Cons.
Stat. Ann. § 5322(a)(1). Specifically, the statute states that:
A tribunal of this Commonwealth may exercise personal jurisdiction over a person
. . . who acts directly or by an agent, as to a cause of action or other matter arising
from such person:
(1) Transacting any business in this Commonwealth. Without excluding other acts
which may constitute transacting business in this Commonwealth, any of the
following shall constitute transacting business for the purpose of this paragraph:
(i) The doing by any person in this Commonwealth of a series of similar acts
for the purpose of thereby realizing pecuniary benefit or otherwise
accomplishing an object.
(ii) The doing of a single act in this Commonwealth for the purpose of
thereby realizing pecuniary benefit or otherwise accomplishing an object with
the intention of initiating a series of such acts.
(iii) The shipping of merchandise directly or indirectly into or through this
Commonwealth.
(iv) The engaging in any business or profession within this Commonwealth,
whether or not such business requires license or approval by any government
unit of this Commonwealth.
(v) The ownership, use or possession of any real property situate within this
Commonwealth.
42 Pa Cons. Stat. Ann. §§ 5322(a)(1)(i)-(v).
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Plaintiff argues that this clause is valid and enforceable and that Defendant has failed to allege
facts to the contrary. (Id. at 8-10.)
Defendant contends that this Court cannot exercise general jurisdiction over him since
Plaintiff is “unable to make even the slightest allegation that [Defendant] has had any contact
with the Commonwealth of Pennsylvania whatsoever.” (Def.’s Br. 11.)
An individual defendant may consent to personal jurisdiction and venue through forum
selection clauses. See, e.g., Provident Mut. Life Ins. Co. v. Bickerstaff, 818 F. Supp. 116, 120
(E.D. Pa. 1993) (finding insufficient basis to set aside the forum selection provision of
promissory note); see also 42 Pa. Cons. Stat. Ann. § 5322 n.3 (noting that general jurisdiction
may be asserted when a defendant “has consented to suit” in Pennsylvania). This Court has
stated that:
[a]lthough in the usual case the plaintiff must show that the defendant has sufficient
minimum contacts with the forum state such that the assertion of personal
jurisdiction over him comports with the notions of fair play and substantial justice,
in actions involving forum selection clauses analysis of the contacts with the forum
state is inappropriate. Instead, the court must consider the validity and effect of the
forum selection clause in order to determine if there has been a consent to in
personam jurisdiction.
Bickerstaff, 818 F. Supp. at 118 (citing Burger King Corp., 471 U.S. at 475; Int’l Shoe Co., 326
U.S. at 320; Mellon Bank (East) PSFS Nat’l Ass’n, 960 F.2d at 1222; Mut. Fire, Marine & Inland
Ins. Co. v. Barry, 646 F. Supp. 831, 832-33 (E.D. Pa. 1986)).
Forum selection clauses are “prima facie valid” and should be enforced unless shown to
be “‘unreasonable’ under the circumstances.” M/S Bremen, 407 U.S. at 10; Foster v. Chesapeake
Ins. Co., 933 F.2d 1207, 1219 (3d Cir. 1991); Bickerstaff, 818 F. Supp. at 118. A forum
selection clause “should be held unenforceable if enforcement would contravene a strong public
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policy of the forum in which suit is brought, whether declared by statute or by judicial
decisions.” M/S Bremen, 407 U.S. at 16. Such a clause may be held to be unenforceable if it was
procured through fraud or overreaching. Id. at 15. The party opposing a forum selection clause
has the heavy burden of proving that the clause should not be enforced. This burden requires
more than a showing of inconvenience or additional expense. Bickerstaff, 818 F. Supp. at 118;
see also Cedarbrook Assocs. v. Equitec Sav. Bank, 678 F. Supp. 107, 108 (E.D. Pa. 1987)
(citations omitted).
Defendant has not met his burden of demonstrating that the forum selection clause is
unjust, unreasonable or should not otherwise be enforced. Paragraph 19 of the Guaranty states,
in relevant part:
Any judicial proceeding brought by or against Guarantor with respect to any of the
Obligations, this Guaranty, any of the Other Documents or any related agreement
may be brought in any court of competent jurisdiction in the Commonwealth of
Pennsylvania, United States of America, and, by execution and delivery of this
Guaranty, Guarantor accepts for itself and in connection with its properties, generally
and unconditionally, the non-exclusive jurisdiction of the aforesaid courts, and
irrevocably agrees to be bound by any judgment rendered thereby in connection with
this Guaranty.
...
Guarantor waives any objection to jurisdiction and venue of any action instituted
hereunder and shall not assert any defense based on lack of jurisdiction or venue or
based upon forum nonconveniens.
(Guaranty ¶ 19.) Defendant signed the Guaranty. Like the defendant in Provident Mutual Life
Insurance Company of Philadelphia v. Bickerstaff, Defendant argues that he does not and has not
resided in Pennsylvania or had any contact with Pennsylvania. 818 F. Supp. at 119; (Def.’s Br.
11-12). He argues that he does not own or lease any property in Pennsylvania. (Def.’s Br. 12.)

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Like the defendant in Bickerstaff, Defendant points out that “[n]one of the witnesses reside in the
Commonwealth of Pennsylvania or within this judicial district” and that as a result, “[l]itigation
in this judicial district will be unnecessarily expensive, and burdensome and will be inconvenient
for the parties and all witnesses.” (Id. at 4); see also Bickerstaff, 818 F. Supp. at 119. However,
the record does not reveal any evidence suggesting that the forum selection clause was
fraudulently obtained, and Defendant has not shown that its enforcement would violate any
public policy, or that he would be deprived of his day in court if this action were to continue in
this forum. See M/S Bremen, 407 U.S. at 15 (stating that “it would be unrealistic to think that the
parties did not conduct their negotiations including fixing the monetary terms, with the
consequences of the forum clause figuring prominently in their calculations”). Defendant has not
provided a sufficient basis upon which to set aside the forum selection clause at issue.7
Accordingly, we will enforce the forum selection clause of the Guaranty. See Bickerstaff, 818 F.
Supp. at 120 (denying motion to dismiss for lack of jurisdiction over defendant).
The exercise of personal jurisdiction over a defendant, whether general or specific, must
comport with “traditional notions of fair play and substantial justice,” such that the parties can
“reasonably anticipate being haled into court [in this forum].” Integral Nuclear Assocs., LLC v.
Nair, No. 05-382, 2005 WL 2012036, at *4 (E.D. Pa. Aug. 19, 2005) (citing World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)); see also Michael Williams Consulting
LLC v. Wyckoff Heights Med. Cntr., No. 09-4328, 2010 WL 2674425, at *3 (“Regardless of

7

This is not a situation in which the chosen forum is so “seriously inconvenient” that the
forum selection clause must be rendered unenforceable. M/S Bremen, 407 U.S. at 16. “We are
not here dealing with an agreement between two Americans to resolve their essentially local
disputes in a remote alien forum.” Id. at 17.
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whether a court exercises specific or general jurisdiction, it must be established that the
defendant has purposefully directed its activities toward the residents of the forum state, . . . or
otherwise ‘purposefully avail[ed] itself of the privilege of conducting activities within the forum
[s]tate, thus invoking the benefits and protections of its laws.’”) (citing IMO Indus., Inc., 155
F.3d at 259). Pennsylvania law explicitly recognizes that general jurisdiction may be asserted
when a defendant “has consented to suit” in Pennsylvania. 42 Pa. Cons. Stat. Ann. § 5322 n.3.
Defendant here has done so by executing, and thereby agreeing to the terms of, the Guaranty,
which contains a valid and enforceable forum selection clause. By agreeing to be subject to this
Court’s jurisdiction, Defendant was on notice that it may “reasonably anticipate being haled into
court” in Pennsylvania. As noted above, the record shows no indication that any of the
contractual clauses at issue were fraudulently obtained or that enforcement of the forum selection
clause would be contrary to the public policies of this forum. This Court has enforced forum
selection clauses under similar circumstances. See, e.g., De Lage Landen Fin. Servs., Inc. v.
Mid-Am. Healthcare LP, No. 08-1264, 2008 WL 3889996, at *5 (E.D. Pa. Aug. 20, 2008)
(denying motion to dismiss for lack of personal jurisdiction, even though defendants claimed
never to have conducted business or resided in Pennsylvania and that it would be inconvenient
and expensive to litigate this action in Pennsylvania, because there was no evidence suggesting
that the forum selection clauses were fraudulently obtained, that enforcement would violate
public policy, or that defendants would somehow be deprived of their day in court of the action
were to remain in the current forum); Bickerstaff, 818 F. Supp. at 120 (enforcing forum selection
clause even though defendant did not conduct business or reside in Pennsylvania and all of his
witnesses resided in California). Accordingly, the forum selection clause will be enforced, and
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we have general jurisdiction over Defendant.
3.

Specific Jurisdiction

Defendant argues that there is no basis for this Court’s assertion of specific jurisdiction
over him. He states that he was not involved in the negotiations underlying the loan that formed
the basis of the alleged default, did not communicate with National City Bank or Plaintiff in
connection with this transaction, and any documents that may be related to the transaction were
executed in Michigan, not Pennsylvania. (Def.’s Br. 12-15.)
Plaintiff asserts that this purported lack of contact with Pennsylvania is irrelevant. (Pl.’s
Br. 9.) It emphasizes the existence of the forum selection clause, which it claims cannot be
overturned except under extraordinary circumstances. (Id.)
For the reasons discussed above, we will enforce the forum selection clause contained in
the Guaranty. By executing the Guaranty, Defendant agreed to this Court’s jurisdiction. (See
Guaranty ¶ 19.) Defendant has not demonstrated circumstances that would compel us to
invalidate the forum selection clause. Because this Court has general jurisdiction over
Defendant, we need not engage in a specific jurisdiction analysis. See, e.g., InfoMC, Inc. v.
Comprehensive Behavioral Care, Inc., No. 10-4907, 2012 WL 1114360, at *9 (E.D. Pa. Mar. 30,
2012) (holding that since the court already determined that it had general jurisdiction over a
defendant, it was unnecessary to engage in the specific jurisdiction analysis); Corporate Aviation
Concepts, Inc. v. Multiservice Corp., No. 03-3020, 2003 WL 22794693, at *4 n.4 (E.D. Pa. Nov.
13, 2003) (“Because I find that this court has general jurisdiction, it is not necessary to consider
the issue of specific jurisdiction.”); see also Pennzoil Prods. Co. v. Colelli & Assocs., Inc.,149
F.3d 197, 200 (3d Cir. 1998) (“When a state has general jurisdiction over a party, that party can
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be haled into court in that state ‘regardless of whether the subject matter of the cause of action
has any connection to the forum.’”) (citation omitted); Modern Mailers, Inc. v. Johnson & Quin,
Inc., 844 F. Supp. 1048, 1051 (E.D. Pa. 1994) (“Personal jurisdiction may be either specific or
general.”).
B.

Defendant’s Motion to Dismiss for Improper Venue

Defendant seeks dismissal of the Amended Complaint under Federal Rule of Civil
Procedure 12(b)(3). (Def.’s Br. 15.) Defendant contends that “[t]he existence of a permissive
forum selection clause is not, in and of itself, a sufficient basis to establish that the forum is
proper.” (Id. at 16.) He states that enforcing the forum selection clause would “be so seriously
inconvenient to the parties and the witnesses such that its enforcement would be unreasonable.”
(Id. at 17.) He also notes that “little, if any, discovery . . . would take place in Pennsylvania” and
that none of the events giving rise to Plaintiff’s claim arose in this District. (Id. at 20.)
Plaintiff contends that Defendant has failed to show that litigating this matter in this
District would offend the interests of justice or would be too inconvenient to the parties and
witnesses. (Pl.’s Br. 11.)
1.

Legal Standard

Rule 12(b)(3) allows a party to dismiss an action for improper venue. Fed. R. Civ. P.
12(b)(3). The movant bears the burden of establishing improper venue. Myers v. Am. Dental
Ass’n, 695 F.2d 716, 724 (3d Cir. 1982).
The federal venue statute states, in relevant part, that:
(a) A civil action wherein jurisdiction is founded only on diversity of citizenship
may, except as otherwise provided by law, be brought only in (1) a judicial district
where any defendant resides, if all defendants reside in the same State, (2) a judicial
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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,
or (3) a judicial district in which the defendants are subject to personal jurisdiction
at the time the action is commenced, if there is no district in which the action may
otherwise be brought.
28 U.S.C. § 1391(a). This venue statute does not require that a court determine the “best” forum,
Cottman Transmission Sys., Inc. v. Martino, 36 F.3d 291, 294 (3d Cir. 1994) (citation omitted),
or “the forum with the most substantial events,” Superior Precast, Inc. v. Safeco Ins. Co. of Am.,
71 F. Supp. 2d 438, 444 (E.D. Pa. 1999). Indeed, venue may be proper in more than one district.
Id.
Although venue may be proper in Michigan as Defendant suggests, it is clear that venue
is proper in this District in light of the forum selection clause and our determination that
Defendants are subject to personal jurisdiction here. Quinn v. Worldwide Comm’ns, Inc., No. 101512, 2011 WL 673748, at *5 (E.D. Pa. Feb. 16, 2011) (“Although venue may be proper in . . .
Washington or Colorado as Defendants suggest, it is clear that venue is proper in this District
where this Court has determined that Defendants are subject to personal jurisdiction.
Accordingly, Plaintiff’s Compliant will not be dismissed on the basis of improper venue.”);
Bickerstaff, 818 F. Supp. at 119 (“Where, however, a forum selection clause exists, its effect on
the issue of the appropriateness of venue is essentially identical to its effect on the question of
jurisdiction.”) (citations omitted). This action will not be dismissed on the basis of improper
venue.
III.

DEFENDANT’S MOTION TO TRANSFER VENUE
In the alternative, Defendant requests that we transfer this matter to the District Court for

the Eastern District of Michigan. (Def.’s Br. 21.) He claims that the events giving rise to
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Plaintiff’s claim, as well as “the preparation and submission of erroneous borrowing base history
certificates to PNC by various personnel at ACI, all occurred in Michigan.” (Id.) He claims that
Plaintiff “has not alleged a single act other than its own letter writing that occurred in
Pennsylvania. (Id. at 22.) Defendant argues that litigating the matter in Michigan would be less
expensive and more efficient. (Id. at 21.) He asserts that the Eastern District of Michigan would
have subpoena power over “all of the potential witnesses the parties are likely to call,” and the
books and records supporting Plaintiff’s claim are located there. (Id. at 21-22.)
Plaintiff argues that mere inconvenience to Defendant does not provide grounds for
transferring this action to Michigan. (Pl.’s Br. 12.) It states that “[t]ravel for Michigan is not so
inconvenient as to deprive Defendant of his day in court, and the distance between Michigan and
Pennsylvania . . . does not create financial burdens that can overcome a valid forum-selection
argument.” (Id. at 12-13.)
Even though venue is proper in this District, this action may still be transferred to another
venue pursuant to 28 U.S.C. § 1404(a), which provides that “[f]or the convenience of parties and
witnesses, in the interest of justice, a district court may transfer any civil action to any other
district or division where it might have been brought.” 28 U.S.C. § 1404(a); Lempke v. Gen.
Elec., Co., Nos. 10-5380, 10-5426, 2011 WL 3739499, at *2 (E.D. Pa. Aug. 25, 2011) (citing
Jumara v. State Farm Ins. Co., 55 F.3d 873, 878 (3d Cir. 1995) (stating that Section “1404(a)
provides for the transfer of a case where both the original and the requested venue are proper.”))
(internal quotation marks omitted). An action may be brought in another district if (1) venue is
proper in the transferee district, and (2) the transferee district can exercise personal jurisdiction
over the defendants. Shutte v. Armco Steel Corp., 431 F.2d 22, 24 (3d Cir. 1970).
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District courts have broad discretion in deciding whether to transfer an action for
improper venue or inconvenience. “[T]he plaintiff’s choice of forum is entitled to great weight
and the burden is therefore on the moving party to justify the transfer.” Bickerstaff, 818 F. Supp.
at 119 (citing Leonardo Da Vinci’s Horse, Inc. v. O’Brien, 761 F. Supp. 1222, 1229 (E.D. Pa.
1991); Nat’l Mortg. Network, Inc. v. Home Equity Cntrs., Inc., 683 F. Supp. 116, 119 (E.D. Pa.
1988)); see also Shutte, 431 F.2d at 25 (noting that “a plaintiff’s choice of a proper forum is a
paramount consideration in any determination of a transfer request, and that choice should not be
lightly disturbed.”).8 Nevertheless, a plaintiff’s choice of forum “is not always controlling;
otherwise Section 1404(a) would be meaningless.” Bartolacci v. Church of Jesus Christ of
Latter Day Saints, 476 F. Supp. 381, 383 (E.D. Pa. 1979).
The Third Circuit has compiled a list of factors that bear on motions to transfer venue.
These factors fall into two categories: private interests and public interests. Jumara, 55 F.3d at
879. Private interests include: (1) both the plaintiff’s and defendant’s forum preferences; (2)
whether the claim arose elsewhere; (3) the convenience of the parties “as indicated by their
relative physical and financial condition”; (4) the convenience of the witnesses, but only to the
extent that it bears on their availability for trial; and (5) the location of books and records. Id.
(citing 1A pt. 2 James W. Moore & Brett A. Ringle, Federal Practice ¶ 0.345[5] (2d ed.1995) &
Wright et al. §§ 3847-48, 3854). Public interests include:
[E]nforceability of the judgment; practical considerations that could make the trial
easy, expeditious, or inexpensive; the relative administrative difficulty in the two fora
resulting from court congestion; the local interest in deciding local controversies at
8

By contrast, a defendant’s forum preference is typically given considerably less weight
than the plaintiff’s. Blankenship v. Graco Children’s Prods., Inc., No. 11-4153, 2011 WL
4712419, at *2 n.5 (E.D. Pa. Oct. 6, 2011) (citations omitted).
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home; the public policies of the fora; and the familiarity of the trial judge with the
applicable state law in diversity cases.
Id. at 879-80 (citing Moore & Ringle ¶ 0.345[5] and Wright et al. § 3854) (internal citations
omitted). Not all factors will apply in a given case, and the court may address other
considerations if pertinent. Moreover, “[w]ithin this framework, a forum selection clause is
treated as a manifestation of the parties’ preferences as to a convenient forum.” Id. at 880.
“Although a forum selection clause ‘should not receive dispositive weight,’ it is ‘a
significant factor that figures centrally in [a] district court’s calculus.’” Sanders-Darigo v.
CareersUSA, No. 11-4050, --- F. Supp. 2d --- , 2012 WL 676995, at *6 (E.D. Pa. Mar. 1, 2012)
(quoting Stewart Org., Inc. v. Ricoh Corp., 487 U.S. 22, 29 (1988); Jumara, 55 F.3d at 880).
Still, the statute demands an “individualized, case-by-case consideration of convenience and
fairness.” Van Dusen v. Barrack, 376 U.S. 612, 622 (1964).
A.

Private Interests

Paragraph 19 of the Guaranty states, in relevant part:
Any judicial proceeding brought by or against Guarantor with respect to any of the
Obligations, this Guaranty, any of the Other Documents or any related agreement
may be brought in any court of competent jurisdiction in the Commonwealth of
Pennsylvania, United States of America, and, by execution and delivery of this
Guaranty, Guarantor accepts for itself and in connection with its properties, generally
and unconditionally, the non-exclusive jurisdiction of the aforesaid courts, and
irrevocably agrees to be bound by any judgment rendered thereby in connection with
this Guaranty.
(Guaranty ¶ 19 (emphasis added).) This language reflects the parties’ agreed-upon forum
preference: any court of competent jurisdiction in Pennsylvania. The language “Guarantor
waives any objection to jurisdiction and venue of any action instituted hereunder and shall not
assert any defense based on lack of jurisdiction or venue or based upon forum nonconveniens”
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underscores the parties’ agreement. This factor favors retaining this action in this District. See
Centimark Corp. v. Lavine, No. 11-0757, 2011 WL 2941214, at *7 (W.D. Pa. July 20, 2011)
(holding that the presence of a valid forum selection clause in an employment agreement tipped
the balance of factors against transfer).
Defendant claims that the witnesses, books and records relevant to this action are located
in Michigan, which makes litigating in that forum more efficient and cost-effective. However,
Defendant has not identified any of these individual witnesses, or any details concerning the
testimony that these witnesses would provide. See Corporate Life Ins. Co. v. McGhan, No. 930980, 1994 WL 18637, at *7 (E.D. Pa. Jan. 14, 1994) (finding that “[t]he mere declaration that
the presentation of the defendants’ case will require witnesses for whom the plaintiff’s chosen
forum would be inconvenient is insufficient to carry the defendants’ burden under section
1404(a)”) (citing Bogosian v. Gulf Oil Corp., 337 F. Supp. 1230, 1233 (E.D. Pa. 1972); Bonnell
v. Baker, 331 F. Supp. 1373, 1374 (E.D. Pa. 1971)).
Litigating the action in this Court would be convenient to Plaintiff, which has its principal
place of business in Pennsylvania. It would be less convenient for Defendant, who resides in
Michigan. However, courts have found financial constraints and difficulties litigating in far more
distant fora to be inadequate to overcome the “heavy burden” on a litigant seeking to set aside a
forum selection clause. Beck v. CIT Group/Credit Fin., Inc., No. 94-5513, 1995 WL 394067, at
*7 (E.D. Pa. June 29, 1995) (citing Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 594
(1991) (rejecting claim of inordinate inconvenience and cost to Washington State parties of
litigating in designated Florida forum); Bense v. Interstate Battery Sys. of Am., 683 F.2d 718, 720
(2d Cir. 1982) (expense of litigating in designated forum insufficient reason not to enforce forum
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selection clause); Druckers, Inc. v. Pioneer Elecs. (USA), Inc., No. 93-1931, 1993 WL 431162, at
*2 (D.N.J. Oct. 20, 1993) (financial constraints and difficulty finding California counsel
insufficient reason not to enforce forum selection clause against New Jersey plaintiffs)). In
signing the Guaranty, Defendant had to appreciate that he might become involved in litigation in
Pennsylvania. See id. (citing Nat’l Micrographics Sys., Inc. v. Canon U.S.A., Inc., 825 F. Supp.
671, 679 (D.N.J. 1993) (party privy to agreement with forum selection clause cannot be surprised
at having to litigate in designated forum); Druckers, 1993 WL 431162, at *8 (party to agreement
with forum selection clause and non-party guarantor accepted prospect of litigation in designated
forum)).
With respect to the remaining private factors, even if Defendant could show that the
claim arose outside of Pennsylvania, and the location of records resides mostly outside of
Pennsylvania, these factors cannot overcome the “‘significant factor’ that the parties freely
contracted to litigate in Pennsylvania.” See Sanders-Darigo, 2012 WL 676995, at *7 (finding
that the forum selection clause remained the strongest indication of the parties’ private interests).
Accordingly, the private interests weigh in favor of litigating this action in this District.
B.

Public Interests

Defendant has not offered any evidence as to why it would be more difficult to enforce
the judgment of this case in the Eastern District of Pennsylvania than it would be if the case were
decided in the Eastern District of Michigan. Furthermore, the factor concerning a trial judge’s
familiarity with the applicable state law in diversity cases weighs in favor of Plaintiff, since the
Guaranty includes a choice of law provision applying Pennsylvania law. (See Guaranty ¶ 19.)
These factors favor a denial of Defendant’s motion to transfer venue. See De Lage Landen Fin.
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Servs., Inc., 2008 WL 3889996, at *8 (finding public factors to weigh against transfer since
defendants did not show why it would be more difficult to enforce the judgment in the Eastern
District of Pennsylvania than in the Eastern District of Missouri and since the contract included a
choice of law provision applying Pennsylvania law). As discussed above, Defendant has made
no showing that the forum selection clause was unreasonable or unjust, was obtained by fraud or
overreaching, or otherwise violated public policy. Accordingly, we will deny Defendant’s
motion to transfer venue to the Eastern District of Michigan.
IV.

CONCLUSION
For the foregoing reasons, Defendant’s Motion is denied.
An appropriate Order follows.

BY THE COURT:

R. BARCLAY SURRICK, J.

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