PENNACHIETTI v. MANSFIELD

Filing 9

MEMORANDUM SIGNED BY HONORABLE GERALD J. PAPPERT ON 12/11/17. 12/11/17 ENTERED AND COPIES E-MAILED. (va, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
DANIEL S. PENNACHIETTI,
Plaintiff,

CIVIL ACTION
NO. 17-02582

v.
CRAIG MANSFIELD,
Defendant.
PAPPERT, J.

December 11, 2017
MEMORANDUM

Daniel Pennachietti received an allegedly usurious loan through an internet
website operated by Sovereign Lending Solutions, LLC, a title lending company
established under the tribal law of the Lac Vieu Desert Band of Lake Superior
Chippewa Indians. (Compl., at 1–2, ECF No. 1.) Pennachietti has not sued the
Chippewa Tribe or Sovereign. Instead, he has sued Craig Mansfield, “a manager in
charge of day-to-day operations” at Sovereign. (Ex. P-2, at 2, ECF No. 1-1.) Mansfield
moves to dismiss the Complaint pursuant to Rules 8(a)(1), 12(b)(1), 12(b)(2), and
12(b)(3) of the Federal Rules of Civil Procedure.1 (Def.’s Mot. to Dismiss, at 10, 11, 16,
22, ECF No. 5.) For the reasons that follow, the Court denies Mansfield’s Motion.

Mansfield argues that his Motion should be granted under Rule 8(a)(1) because Pennachietti
failed to attach to his Complaint the loan agreement, and thus fails to allege grounds for this Court’s
jurisdiction or his entitlement to relief. (Def.’s Mot. to Dismiss, at 10.) Although Pennachietti did
not attach the loan agreement, accepting his allegations as true and construing disputed facts in his
favor, Pennachiett has alleged sufficient grounds for this Court’s jurisdiction, see infra Part III, and
that he may be entitled to relief.
1

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I
In July 2013, Pennachietti borrowed $5,050.00 from Sovereign. (Compl., at 3.)
He submitted his loan application online through “Title Loan America,” a website
operated by Sovereign. (Id., Ex. P-1.) Pennachietti does not recall seeing or accepting
any particular terms or conditions at the time he took the loan, and he was not
provided a copy of the loan agreement. (Id. at 3–4.) Over the next year, Pennachietti
made payments to Sovereign totaling $6,301.68. (Id. at 4.) He was late making the
final, or “balloon” payment for the outstanding balance on the loan, and Sovereign had
his car was repossessed. (Id.) Sovereign demanded $7,000.00 from Pennachietti to get
his car back, which he paid in two installments in August and October of 2014. (Id.)
Pennachietti filed his Complaint against Mansfield on June 8, 2017, alleging violations
of the Racketeer Influences and Corrupt Organizations Act (“RICO”), 18 U.S.C.
§ 1962(c)–(d) (id. at 5–9), and a violation of Pennsylvania’s Loan Interest and Protection
Law, 41 Pa. Cons. Stat. §§ 201, 502–504 (id. at 9–10).
In Count One, Pennachietti alleges Mansfield violated 18 U.S.C. § 1962(c), which
makes it a crime for “any person employed by or associated with an enterprise engaged
in, or the activities of which affect, interstate…commerce, to conduct or participate,
directly or indirectly, in the conduct of such enterprise’s affairs through a pattern of
racketeering activity….” Pennachietti identifies Sovereign as the RICO enterprise,
Mansfield as a prior manager of Sovereign, and alleges Mansfield conducted or
participated in the enterprise’s affairs by directing Sovereign to collect unlawful debt
from citizens of Pennsylvania, including Pennachietti. (Compl., at 6–7.) In Count Two,
Pennachietti alleges Mansfield violated 18 U.S.C. § 1962(d), which provides that “[i]t

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shall be unlawful for any person to conspire to violate any of the provisions of
subsection (a), (b), or (c) of this section.” 18 U.S.C. § 1962(d). Pennachietti contends
Mansfield violated § 1962(d) by conspiring with other individuals to operate an
enterprise and collect unlawful debt from Pennsylvania borrowers. (Id. at 8.) In Count
Three, Pennachietti alleges Mansfield collected interest above the statutory annual
maximum of six percent, in violation of the Loan Interest and Protection Law. (Id. at
9.) Mansfield argues that the Complaint should be dismissed because he enjoys tribal
sovereign immunity and that this Court lacks personal jurisdiction over him.
II
Courts address issues of tribal sovereign immunity pursuant to motions to
dismiss for lack of subject matter jurisdiction under Federal Rule of Civil Procedure
12(b)(1). E.F.W. v. St. Stephen's Indian High Sch., 264 F.3d 1297, 1302–03 (10th Cir.
2001) (“Tribal sovereign immunity is a matter of subject matter jurisdiction, which may
be challenged by a motion to dismiss under Fed. R. Civ. P. 12(b)(1)”)); cf. United States
v. Gov't of Virgin Islands, 363 F.3d 276, 284 (3d Cir.2004) (“Eleventh Amendment
immunity is relevant to jurisdiction....”). A motion to dismiss for lack of subject matter
jurisdiction may be asserted as either a facial or factual attack. A facial attack
challenges the sufficiency of the complaint because of a defect on its face, and the court
“must consider the allegations of the complaint as true.” Mortensen v. First Fed. Sav. &
Loan Ass'n, 549 F.2d 884, 891 (3d Cir. 1977). In a factual attack, the trial court “is free
to weigh the evidence and satisfy itself as to the existence of its power to hear the case.”
Id. Because Mansfield presents a factual attack, the Court may consider evidence

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outside the pleadings, and no presumptive truthfulness attaches to Pennachietti’s
allegations. See id.
Mansfield contends that he is entitled to tribal sovereign immunity because he
acted within the scope of his employment and in his official capacity as manager at
Sovereign, and thus Sovereign is the real party in interest. (Def.’s Mot. to Dismiss, 13–
16.)
A
In Lewis v. Clarke, 137 S.Ct. 1285 (2017), the most recent United State Supreme
Court case to address tribal sovereign immunity, the Court held that “[i]n a suit
brought against a tribal employee in his individual capacity, the employee… is the real
party in interest and the tribe’s sovereign immunity is not implicated.” 137 S.Ct. at
1288. Brian and Michelle Lewis were driving on an interstate highway when William
Clarke, an employee of the Mohegan Tribe of Indians of Connecticut transporting
Mohegan Sun Casino patrons, struck their car. Id. at 1286. The plaintiffs sued Clarke
in his individual capacity in state court, and Clarke moved to dismiss the case for lack
of subject-matter jurisdiction, arguing that he was entitled to tribal sovereign immunity
because he was acting within the scope of his employment at the time of the accident.
Id. The trial court denied Clarke’s motion because “the damages remedy sought was
solely against [the defendant] and would in no way affect the Tribe’s ability to govern
itself independently.” Id. at 1289. The Supreme Court of Connecticut reversed, holding
that “tribal sovereign immunity barred the suit because [the defendant] was acting
within the scope of his employment when the accident occurred.” Id. The Court
reasoned that “plaintiffs cannot circumvent tribal immunity by merely naming the

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defendant, an employee of the tribe, when the complaint concerns actions taken within
the scope of his duties….” Id. (quoting Lewis v. Clarke, 320 Conn. 706, 717 (2016)).
The United States Supreme Court reversed, holding that tribal sovereign
immunity is not implicated in a suit brought against a tribal employee in his individual
capacity because the employee is the real party in interest. Id. at 1288. That the
defendant “was acting within the scope of his employment…is not, on its own, sufficient
to bar a suit against that employee on the basis of sovereign immunity.” Id. Instead,
courts must determine whether tribal sovereign immunity applies by evaluating the
principles of common-law sovereign immunity to decide “whether the sovereign is the
real party in interest….” Id. at 1290.
The Court explained that common-law sovereign immunity distinguishes
between individual and official capacity suits when determining the real party in
interest. Id. at 1291. In an official capacity claim, “the relief sought is only nominally
against the official and in fact is against the official’s office and thus the sovereign
itself.” Id. (citing Will v. Michigan Dept. of State Police, 491 U.S. 58, 71 (1989)).
Because official capacity claims are essentially actions against the sovereign, the
sovereign is the real party in interest and immunity may be asserted. Id.; see also
Kentucky v. Graham, 473 U.S. 159, 167 (1985).
Personal capacity suits, however, “seek to impose individual liability upon a
government officer for actions taken under color of state law.” Lewis, 137 S.Ct at 1291
(emphasis added) (quoting Hafer v. Melo, 502 U.S. 21, 25 (1991)). Upon taking office,
newly elected Pennsylvania Auditor General Barbara Hafer fired eighteen employees
who she believed obtained their positions by paying a former employee of the Auditor

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General’s office. The employees sued Hafer in her personal capacity, seeking money
damages under 42 U.S.C. § 1983. Hafer, 502 U.S. at 21. Hafer argued that she was
entitled to sovereign immunity because “liability turns not on the capacity in which
state officials are sued, but on the capacity in which they acted when injuring the
plaintiff.” Id. at 27. The Court rejected this argument, reasoning that “officers sued in
their personal capacity come to court as individuals,” and “may be held personally liable
for damages…based upon actions taken in their official capacities.” Id. at 21, 27.
Individuals are the real party in interest where the plaintiff “seeks to impose personal
liability upon an individual [to] recover from the personal assets” of that individual,
and sovereign immunity is not implicated because the sovereign is not the real party in
interest. Garden State Electrical Inspection Services, Inc. v. Levin, 144 Fed. Appx. 247,
251 (3d Cir. 2005); cf. Carter v. City of Philadelphia, 181 F.3d 399, 347–48 (3d Cir.
1999) (whether sovereign immunity applies, “the source of funding—i.e., whether
payment of any judgment would come from the state’s treasury,” is “the most important
factor to be consider” and is generally accorded “dispositive weight”).
B
Mansfield first contends that he is not the real party in interest because he acted
within the scope of his employment as manager at Sovereign, and “Pennachietti never
alleged that Mansfield acted independently to incur individual liability….” (Def.’s Mot.
to Dismiss, at 14.) For his part, Pennachietti alleges that Mansfield is liable for
participating and directing the conduct of Sovereign’s affairs and engaging in conduct
which occurred while he was acting within the scope of his employment as manager of
Sovereign. Both arguments miss the mark; Mansfield acting within the scope of his

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employment does not determine whether he or Sovereign is the real party in interest.
See Lewis, 137 S.Ct. at 1288. This is a personal capacity suit to recover money damages
solely from Mansfield for his personal actions, and extending tribal sovereign immunity
to him simply because he was acting within the scope of his employment would extend
that immunity beyond what common-law sovereign immunity principles would
recognize for government employees. See id. at 1291–92.2
Mansfield also contends that he is not the real party in interest because he only
ever acted in his official capacity as manager while employed at Sovereign. (Def.’s Mot.
to Dismiss, at 15.) Because he was acting in his official capacity when the loan issued
to Pennachietti, Mansfield argues that this is an official capacity suit and that he may
not be held personally liable for those actions. That Mansfield was acting in his official
capacity, however, does not make this an official capacity suit. Rather, as Hafer made
clear, what matters is not the capacity in which Mansfield acted while employed by
Sovereign, but rather the capacity in which he is currently being sued. See Hafer, 502
U.S. at 27. Here, Mansfield was sued in his individual capacity to recover for his
actions of participating and directing the conduct of Sovereign’s affairs, conspiring to
violate § 1962 and collecting usurious interest in excess of six percent annually.
Although Counts One and Two of Pennachietti’s Complaint (violations of § 1962(c) and (d))
are substantially different than the negligence claim in Lewis, Pennachietti seeks to hold Mansfield
responsible for his own actions. To state a claim under § 1962(c), “the plaintiff must allege that (1) a
person conducted (2) an enterprise through (3) a pattern of (4) racketeering activity.” Kolar v.
Preferred Real Estate Investments, No. 07–3864, 2008 WL 2552860 at *4 (E.D. Pa. June 19, 2008)
(citing Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 496 (1985)). Pennachietti asserts that
Mansfield, as manager responsible for day-to-day operations at Sovereign, conducted or participated
in Sovereign’s affairs in a manner forbidden by RICO by collecting unlawful debt from Pennsylvania
residents. See Cedric Kushner Productions, Ltd. V. King, 533 U.S. 158, 163 (2001). Thus,
Pennachietti seeks to hold Mansfield responsible for his own act of conducting or participating in the
affairs of Sovereign. See id. As to the § 1962(d) claim, Pennachietti alleges Mansfield conspired with
other individuals to commit a RICO violation by collecting unlawful debt. Again, Pennachietti seeks
to hold Mansfield responsible for his own act of agreeing to commit a RICO violation with other
individuals.
2

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Pennachietti seeks to impose personal liability only upon Mansfield. Sovereign
has not been named as a defendant, and any judgment against Mansfield will not
require action by Sovereign. See Lewis, 137 S.Ct. at 1291 (quoting Larson v. Domestic
and Foreign Commerce Corp., 337 U.S. 682, 687 (1949)). The principles of common-law
sovereign immunity typically treat the source of funding as the most important factor
to consider when determining whether sovereign immunity applies. Here, any
judgment against Mansfield will implicate his personal assets and will not disturb the
property or treasury of Sovereign. See id.; see also Carter, 181 F.3d at 347–48. For
these reasons, Mansfield is the real party in interest and he is not entitled to tribal
sovereign immunity.
III
A
Mansfield also argues that the Complaint should be dismissed because this
Court lacks personal jurisdiction over him under Federal Rule of Civil Procedure
12(b)(2). A motion made pursuant to Rule 12(b)(2) “is inherently a matter which
requires resolution of factual issues outside the pleadings.” Time Share Vacation Club
v. Atl. Resorts, Ltd., 735 F.2d 61, 66 n.9 (3d Cir. 1984). “Once a defendant raises the
question of personal jurisdiction, the plaintiff bears the burden to prove, by a
preponderance of the evidence, facts sufficient to establish personal jurisdiction.”
Carter et Sav. Bank, FA v. Shushan, 954 F.2d 141, 146 (3d Cir. 1992). If the Court does
“not hold an evidentiary hearing…. 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.” Miller Yacht Sales, Inc. v. Smith, 384 F.3d

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93, 97 (3d Cir. 2004); see also Time Share, 735 F.2d at 67 n.9 (once personal jurisdiction
is challenged, “plaintiff must sustain its burden of proof in establishing jurisdictional
facts through sworn affidavits or other competent evidence.”).
There are two type of personal jurisdiction: general and specific. General
jurisdiction is proper when a defendant’s contacts with the forum state are “continuous
and systematic,” whether or not those contacts are related to the plaintiff’s cause of
action. See Remick v. Manfredy, 238 F.3d 248, 255 (3d Cir. 2001). Specific jurisdiction
exists when the “non-resident defendant has ‘purposefully directed’ his activities at a
resident of the forum and the injury arises from or is related to those activities.” Gen.
Elec. Co. v. Deutz, 270 F.3d 144, 150 (3d Cir. 2001) (citing Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 472 (1985)).
Under Federal Rule of Civil Procedure 4(e), a district court typically exercises
personal jurisdiction according to the law of the state where it sits. See O’Connor v.
Sandy Lane Hotel Co., Ltd., 496 F.3d 312, 316 (3d Cir. 2007). Pennsylvania’s long-arm
statute permits courts to exercise personal jurisdiction “to the fullest extent allowed
under the Constitution of the United States and . . . based on the most minimum
contact with this Commonwealth allowed under the Constitution of the United States.”
42 PA. C.S.A. § 5322(b). To exercise personal jurisdiction over Mansfield, the Court
must therefore determine whether, under the Due Process Clause, Mansfield has
“certain minimum contacts with . . . [Pennsylvania] such that the maintenance of the
suit does not offend traditional notions of fair play and substantial justice.” O’Connor,
496 F.3d at 316–17 (citing Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

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B
Mansfield avers that this Court lacks personal jurisdiction because he is a
resident of Wisconsin, Sovereign was located on Indian lands in Michigan, Sovereign’s
website did not target any particular state, and the transaction between Pennachietti
and Sovereign was consummated in Michigan. (Def.’s Mot. to Dismiss, 18–19.) This
Court has personal jurisdiction over Mansfield because he oversaw Sovereign’s
purposeful direction of activities to Pennsylvania residents, those actives serve as the
basis of this lawsuit, and the exercise of jurisdiction over Mansfield comports with fair
play and substantial justice based on his contacts with the forum.
Specific jurisdiction does not require physical presence in the forum state, but is
instead established when a defendant reaches out beyond his own state to “create
continuing relationships and obligations with citizens of another state.” Burger King,
417 U.S. at 473. Contemporary business relationships are typically developed through
electronic communication, Deutz, 270 F.3d at 150, and “[w]here these types of long-term
relationships have been established, actual territorial presence become less
determinative,” id. (citing Burger King, 417 U.S. at 476). When commercial activity
occurs over the internet, as here, the plaintiff must show that “the defendant
‘purposefully availed’ itself of conducting activity in the forum state, by directly
targeting its website to the state, knowingly interacting with residents of the forum
state via its web site, or through sufficient other contacts.” Toys “R” Us, Inc. v. Step
Two, S.A., 318 F.3d 446, 454 (3d Cir. 2003).
Mansfield oversaw the loan application process by which long-term relationships
were created between Sovereign and Pennsylvania residents. Sovereign directed

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consumers to fill out a loan application online and electronically sign that document.
(Ex. 1, at 2–3, ECF No. 7-1.) Sovereign then transferred funds to the consumer’s bank
account, secured the loan with the consumer’s car title, and filed a lien on the car with
the Pennsylvania Department of Transportation (“PennDOT”). (Id.) Acting as
manager of Sovereign, Mansfield used this process to develop continuing relationships
with citizens of Pennsylvania, including Pennachietti.
Although the loan application process occurred online, Mansfield purposefully
availed himself of the forum by conducting activity in Pennsylvania and knowingly
interacting with Pennsylvania residents via the website. Mansfield knowingly
interacted with Pennsylvania residents; by July 2015, PennDOT had 371 liens
registered in the name of Sovereign, thus invoking the benefits and protections of
Pennsylvania laws. (Id.) Although Mansfield’s employment with Sovereign
purportedly ended in 2014, during his time as manager he oversaw Sovereign’s use of
the website to intentionally interact with Pennsylvania residents and execute loans,
including the loan Pennachietti took out in July 2013.3

An appropriate Order follows.
BY THE COURT:

/s/ Gerald J. Pappert
GERALD J. PAPPERT, J.
That this Court has personal jurisdiction also supports denying the Motion to Dismiss for
improper venue. Mansfield argues that because “there is no personal jurisdiction over [him], venue
is improper under Fed. R. Civ. P. 12(b)(3).” (Def.’s Mot. to Dismiss, at 22.) Since “a motion to
dismiss for improper venue is not an attack on jurisdiction but only an affirmative dilatory defense,”
the burden of proving improper venue is on the moving party. Myers v. Am. Dental Ass’n, 695 F.3d
716, 724 (3d Cir. 1983). Because this Court has personal jurisdiction over Mansfield, he as the
moving party failed to satisfy his burden of proving improper venue.
3

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