GLADSTONE ASSOCIATES, LLC v. FINTRUST CAPITAL ADVISORS, LLC

Filing 9

ORDER-MEMORANDUM. ORDER THAT DEFENDANT'S MOTION TO DISMISS OR TRANSFER VENUE 5 IS DENIED AND IT SHALL ANSWER THE COMPLAINT NO LATER THAN 4/30/18. SIGNED BY HONORABLE MARK A. KEARNEY ON 4/16/18. 4/16/18 ENTERED & E-MAILED.(fdc)

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

GLADSTONE ASSOCIATES, LLC

CIVIL ACTION

v.

N0.18-1050

FINTRUST CAPITAL ADVISORS, LLC

ORDER-MEMORANDUM
AND NOW, this 16th day of April 2018, upon considering Defendant's Motion to
dismiss or transfer venue (ECF Doc. No. 5) and Plaintiffs Opposition (ECF Doc. No. 8) with
supporting competent proof, it is ORDERED Defendant's Motion (ECF Doc. No. 5) is

DENIED and it shall answer the Complaint no later than April 30, 2018.
Analysis
Gladstone Associates, LLC provides "high-end business and transaction advisory
consultation to independent financial advisory firms." 1

Gladstone is located in Plymouth

Meeting, Pennsylvania. 2
Gladstone provided consulting services to Broad Street Capital Advisors, LLC, which has
its principal place of business in Georgia. No owner-member of Broad Street is a Pennsylvania
citizen. 3 Gladstone learned of Broad Street through a mutual contact. 4 Broad Street sought
Gladstone's help on its acquisition strategy to grow its business. 5

1

Complaint, ECF Doc. No. 1-2, ~ 5.

2

Id.~ 1.

Affidavit of R. Patrick Sheridan, ECF Doc. No. 5-2, ~ 5. Where a defendant raises jurisdiction
as a defense, we may examine affidavits and other competent evidence outside the complaint to
3

Gladstone agreed to provide "corporate planning advice" to Broad Street for its
acquisition strategies. 6

Broad Street's chief executive officer R. Patrick Sheridan signed

Gladstone's engagement contract and returned it to Gladstone's Pennsylvania office. 7 Gladstone
and Broad Street agreed Pennsylvania law would govern their agreement. 8 Under this first work
agreement, Gladstone employees completed their work for Broad Street "almost entirely" from
their office in Pennsylvania. 9 Broad Street's Mr. Sheridan visited Gladstone's Pennsylvania
office to meet with Gladstone employees on this first assignment. 10
After Gladstone completed its first consulting assignment for Broad Street, Broad Street
again asked Gladstone to provide advice regarding a business combination with FinTrust
Investment Advisors, LLC, located in South Carolina. I I Broad Street agreed to pay Gladstone
$7,500 a month and a closing fee if Broad Street and FinTrust successfully combined. I 2 The

determine if jurisdiction exists. See Streamline Bus. Services, LLC v. Vidible, Inc., No. 14-1433,
2014 WL 4209550, at *8 (E.D. Pa. Aug. 26, 2014) (citing Dayhoff Inc. v. HJ. Heinz Co., 86
F.3d 1287, 1302 (3d Cir.1996)) ("Once a jurisdictional defense is raised, the plaintiff bears the
burden of proving, through affidavits, or competent evidence, sufficient contacts with the forum
state to establish personal jurisdiction.").
4

Affidavit of Paul T. Lally, ECF Doc. No. 8-1, ~ 6.

5

Id~ 7.

6

ECF Doc. No. 1-2, ~ 7.

7

ECF Doc. No. 8-1, ~ 9.

8

Exhibit B, ECF Doc. No. 8-2 at 6.

9

ECF Doc. No. 8-1, ~ 12.

JO

Id~ 13.

II

Id~ 14.

12

ECF Doc. No. 1-2, ~ 10.
2

parties agreed the successful closing fee would be equal to the total monthly fees paid to
Gladstone (the number of months times $7 ,500

=

closing fee ). 13

Gladstone employees did

"nearly all" the work for Broad Street on the FinTrust transaction from its Plymouth Meeting,
Pennsylvania office. 14
Approximately fifteen months later, Broad Street and FinTrust Investment Advisors
successfully combined and renamed their combined businesses FinTrust Capital Advisors, LLC
("FinTrust"). 15

FinTrust's principal place of business is in Athens, Georgia. 16

Gladstone

requested the now combined FinTrust pay the $112,500 closing fee but FinTrust refused. 17
Gladstone sues FinTrust alleging breach of contract or quantum meruit for failing to pay
a $112,500 closing fee. FinTrust moves to dismiss for lack of personal jurisdiction or, in the
alternative, to transfer venue to the Middle District of Georgia.
A.

We may exercise personal jurisdiction over FinTrust.

FinTrust challenges our exercise of personal jurisdiction arguing we lack general and
specific jurisdiction over it. In deciding FinTrust's challenge to personal jurisdiction, Gladstone
"bear[s] the burden to prove, by preponderance of the evidence, facts sufficient to establish

13

Id.

iJ 12.

14

ECF Doc. No. 8-1, iJ 17.

15

ECF Doc. No. 1-2, iJiJ 13-14.

16

ECF Doc. No. 5-2, iJ 5.

17

ECF Doc. No. 1-2, iJ 16.
3

personal jurisdiction." 18 Gladstone needs "affidavits or other competent evidence" to prove
personal jurisdiction is proper. 19 When assessing personal jurisdiction, we accept Gladstone's
allegations as true and resolve fact disputes in its favor. 20
We may exercise two kinds of jurisdiction over FinTrust, specific jurisdiction and general
jurisdiction.

We assess FinTrust's contacts with Pennsylvania based on allegations in the

Gladstone's complaint and declarations. Following close review, Gladstone establishes FinTrust
had sufficient minimum contacts with Pennsylvania to warrant specific jurisdiction.
1.

We lack general jurisdiction over FinTrust.

To exercise general jurisdiction over FinTrust, we must find its "affiliations with
[Pennsylvania] are so 'continuous and systemic' as to render them essentially at home in
[Pennsylvania]. "'21 The Supreme Court stressed our general jurisdiction injury "is not whether
that foreign corporation's in-forum contacts can be said to be in some sense 'continuous and
systemic.' It is whether that corporation's 'affiliations with the State are so continuous and
systematic as to render [it] essentially at home in the forum State."22 The traditional paradigms

18

Control Screening LLC v. Technological Application and Production Co. (I'ecapro), HCMCVietman, 687 F.3d 163, 167 (3d Cir. 2012) (quoting Carteret Sav. Bank v. Shushan, 954 F.2d
141, 146 (3d Cir. 1992)).

19

Metcalfe v. Renaissance Marine, Inc., 566 F.3d 324, 330 (3d Cir. 2009) (quoting Dayhoff, 86
F.3d at 1302).
20

See Esposito v. Las Vegas Sands Corp., No. 17-2936, 2018 WL 1010627, at *2 (E.D. Pa. Feb.
21, 2018) (citing Pinker v. Roche Holdings, Ltd, 292 F.3d 361, 368 (3d Cir. 2002)).
21

Daimler AG v. Bauman, 571 U.S._, 134 S. Ct. 746, 754 (2014) (quoting Goodyear Dunlop
Tires Operations, S.A. v. Brown, 564 U.S. 915, 919 (2011) and Helicopteros Nacionales de
Colombia, SA. v. Hall, 466 U.S. 408, 414 n.9 (1984)).

22

Id. at 762 (quoting Goodyear, 564 U.S. at 919).
4

of general jurisdiction for corporations are "the place of incorporation and principal place of
business. " 23
Under the traditional paradigms of general jurisdiction, FinTrust is "at home" in Georgia
and South Carolina, the location of its principal place of business and where its members are
citizens. 24

We have no facts to show FinTrust's "affiliations with [Pennsylvania] are so

continuous and systematic as to render [it] essentially at home in the forum State."25 We cannot
exercise general jurisdiction over FinTrust because it is not at home in Pennsylvania.
2.

We may exercise specific jurisdiction over FinTrust.

To exercise specific jurisdiction over FinTrust, we must find FinTrust has sufficient
minimum contacts with Pennsylvania "such that the maintenance of the suit does not offend
'traditional notions of fair play and substantial justice."26 We analyze constitutional due process
concerns together with Pennsylvania's Long Arm Statute because it authorizes specific
jurisdiction "to the fullest extent allowed under the Constitution of the United States and may be
based on the most minimum contact with this Commonwealth allowed under the Constitution of
the United States."27
Our Supreme Court instructs our specific jurisdiction analysis focuses on "the
relationship among the defendant, the forum, and the litigation" to decide if FinTrust's "suit-

23

Id. at 760 (internal citations omitted).

24see
25

'd
z.

Id. at 762 (quoting Goodyear, 564 U.S. at 919).

26

Walden v. Fiore, 571 U.S._, 134 S. Ct. 1115, 1121 (2014) (quoting International Shoe Co. v.
Washington, 326 U.S. 310, 316 (1945)).

27

42 Pa. Stat. Ann. § 5322.

5

related conduct [] create[s] a substantial connection with [Pennsylvania]."28 In Walden, the
Court instructed "the plaintiff cannot be the only link between the defendant and the forum ... it
is the defendant's conduct that must form the necessary connection with the forum State that is
the basis for its jurisdiction over him."29 FinTrust's contacts with Pennsylvania, however, "may
be intertwined with his transactions or interactions with [Gladstone] or other parties." 30
Our court of appeals directs us to analyze three factors in determining whether we may
exercise specific jurisdiction over FinTrust. 31

We must first determine whether FinTrust

"purposefully directed its activities at [Pennsylvania]."32

We then determine if FinTrust's

activities directed towards Pennsylvania arise from or relate to Gladstone's claims. 33 If the first
two factors are met, we then "consider whether the exercise of jurisdiction would comport with
traditional motions of fair play and substantialjustice."34

i.

Gladstone establishes FinTrust purposefully directed activities at
Pennsylvania.

Gladstone adduces evidence FinTrust purposefully directed its activities at Pennsylvania
because FinTrust, as "Broad Street," sought services from a Pennsylvania based company then

28

Walden, 134 S. Ct. at 1122.

29

Streamline, 2014 WL 4209550, at *8 (quoting Walden, 134 S. Ct. at 1123).

30

Walden, 134 S. Ct. at 1123.

31

Streamline, 2014 WL 4209550, at *8; see also D'Jamoos ex. rel. Estate of Weingeroff v.
Pilatus Aircraft Ltd., 566 F.3d 94, 102 (3d Cir. 2009).
32

Id. (citing D'Jamoos, 566 F.3d at 102 and Burger King Corp. v. Rudzewicz, 471U.S.462, 472
(1985)).

33

Id.

34

Id.
6

mailed the signed agreement to the Pennsylvania company and agreed Pennsylvania law would
govern their agreement. 35 Broad Street communicated and received work product produced by
Gladstone in Pennsylvania. Broad Street sent payment under the agreement to Pennsylvania over
the next four months. 36

Broad Street's chief executive officer traveled here to work with

Gladstone employees. 37 Broad Street then sought another agreement with Gladstone. 38 Broad
Street again signed and returned the second agreement to Pennsylvania, sent payment to
Pennsylvania, and agreed Pennsylvania law governs their relationship. 39 Broad Street employees
regularly contacted Gladstone employees in Pennsylvania over the course of the next twelve
months. 40 Gladstone completed the work requested by Broad Street in Pennsylvania. 41
FinTrust, as "Broad Street," purposefully directed its activities at Pennsylvania. For over
fifteen months, it sought and maintained a contractual relationship with a Pennsylvania company,
had work completed on its behalf in Pennsylvania, sent payments to Pennsylvania, had at least
one employee travel to Pennsylvania to further its work, and agreed Pennsylvania law governed
its business relationship with Gladstone.

35

ECF Doc. No. 8-1,

36

ECF Doc. No. 8-1, ifil 11-12.

37

Id.

38

ECF Doc. No. 8-1, ifif 16-18, ECF Doc. No. 8-3 at 2.

39

ECF Doc. No. 8-1, ilil 16-18, ECF Doc. No. 8-3 at 2.

40

ECF Doc. No. 8-1, ifif 17-19.

41

Id.

if 9; ECF Doc. No. 8-2 at 6.

if 13.

7

ii.

Gladstone's claims arise from FinTrust's activities in Pennsylvania.

Gladstone alleges FinTrust breached their second agreement by failing to pay
Gladstone's success fee after Broad Street and FinTrust successfully combined. Gladstone's
claim arises directly from FinTrust's activities in Pennsylvania because it arises from the second
agreement which it sought and paid for in Pennsylvania. Additionally, Gladstone completed the
allegedly successful work earning them the success fee from its Pennsylvania office.
iii.

Our exercise of specific jurisdiction over FinTrust comports with fair
play and substantial justice.

After finding FinTrust has sufficient minimum contacts with Pennsylvania because it
purposefully directed its activities here and the claim arises from those activities, we must ensure
our exercise of specific jurisdiction over FinTrust "comport[s] with fair play and substantial
justice."42 We consider "the burden on [FinTrust], [Pennsylvania's] interest in adjudicating the
dispute, [Gladstone's] interest in obtaining convenient and effective relief, [and] the interstate
judicial system's interest in obtaining the most efficient resolution of controversies ... " 43
Our exercise of jurisdiction comports with fair play and substantial justice. We have no
basis to find FinTrust is burdened by litigating in Pennsylvania because it sought a Pennsylvania
business to produce work product and already traveled here to further its business interests.
Pennsylvania also has an interest in adjudicating the dispute because the parties selected its law
to govern their relationship and FinTrust's conduct allegedly caused injury to a Pennsylvania
business.

Our exercise of specific jurisdiction over FinTrust is also fair to Gladstone in

effectively and conveniently obtaining relief because the crux of Gladstone's complaint is the
42

Aozora New Zealand LTD. v. Fru-Veg Marketing, Inc., No. 17-2594, 2018 WL 1545585, at *3
(E.D. Pa. March 29, 2018).
43

Id. (quoting Mellon Bank (East) PSFS, Nat. Ass 'n v. Farino, 960 F.2d 1217, 1222 (3d Cir.
1992) (citations omitted)).
8

work it did in Pennsylvania earned it a fee under their agreement and the out-of-state business
refuses to pay the fee. For these same reasons, our efficient resolution of this dispute is in the
interests of the interstate judicial system and comports with fair play and substantial justice.

B.

We decline transfer to the Middle District of Georgia.

FinTrust moves in the alternative for transfer of venue to the United States District Court
for the Middle District of Georgia under 28 U.S.C. §1404(a). 44 FinTrust argues we should
transfer this case to the United States Court for the Middle District of Georgia because FinTrust
contends the conduct giving rise to Gladstone's claim occurred in Georgia and South Carolina,
and its witnesses and records are in Georgia and South Carolina. 45
We may only transfer to a venue where this case "might have been brought" and
FinTrust bears the burden of venue is proper in the alternative district.

46

This case could have

been brought in the United States District Court for the Middle District of Georgia because
FinTrust's principal place of business is in Athens, Georgia, and the Middle District of Georgia
has personal jurisdiction over FinTrust. Venue is proper in the Middle District of Georgia. 47
Section 1404(a) allows us to transfer a case to any other district where the suit "might
have been brought" "[f]or the convenience of the parties and witnesses" and "in the interest of

44

ECF Doc. No. 5-1 at 13.

45

Id.

46

See Aetna Inc. v. People's Choice Hospital, LLC, No. 17-4354, 2018 WL 1287491, at *3 (E.D.
Pa. March 13, 2018) (quoting 28 U.S.C. 1404(a)).
47

28 U.S.C. §§1391(b)(l), (c)(2); see also Lawman Armor Corp. v. Simon, 319 F. Supp. 2d. 499,
507 (E.D. Pa. 2004) (finding venue proper in the Eastern District of Michigan because the
defendant resided there).
9

justice. " 48

Our court of appeals instructs us to consider the "private and public interests

protected by the language of §1404(a)."49 We examine Jumara's private and public interest
factors and determine transfer does not serve the convenience of the parties and witnesses and
the interests of justice. 50
1.

Jumara private interest factors do not weigh in favor of transfer.

The private interests have included: (1) plaintiffs forum preference as manifested in the
original choice, (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 the books and records (similarly
limited to the extent that the files could not be produced in the alternative forurn). 51
The private interest factors weigh against transfer or are neutral except FinTrust's forum
preference. Plaintiffs forum preference weighs against transfer because Gladstone's choose
Pennsylvania because it is based here and suffered harm here.

Where the claim arose also

weighs against transfer because Gladstone suffered injury here. Its claim arose here because
Gladstone completed the work here which allegedly earned it the unpaid fee in Pennsylvania.
The convenience of the parties, convenience of the witnesses and the location of the books and
records are all neutral. While FinTrust argues the documents and witnesses to the combination
between Broad Street and FinTrust are located in Georgia, the merger is not the crux of
48

Lawman, 319 F. Supp. 2d at 506.

49

Id. (quoting Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995)).

50

Id.

51

Jumara, 55 F.3d at 879 (citations omitted).

10

Gladstone's claim. Instead, it is the work Gladstone allegedly completed in Pennsylvania for the
successful merger which earned it the alleged success fee which is relevant to its claim. The
private interest factors weigh against transfer because FinTrust's preference to litigate closer to
home is the only factor which weighs in favor of transfer.
2.

Jumara public interest factors do not weigh in favor of transfer.

The public interest factors are: (1) the enforceability of the judgment; (2) practical
considerations for trial; (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 with applicable state law in diversity cases. 52
FinTrust does not offer argument why the public interest factors weigh in favor of transfer. The
public interest factors are largely neutral except the final factor. Familiarity with applicable state
law weighs against transfer because this is a diversity case where the parties selected
Pennsylvania law to govern.
Because neither the private nor the public interests weigh in favor of transfer or are
neutral, we deny FinTrust's motion to transfer venue.
III.

Conclusion

We deny FinTrust's motion to dismiss for lack of personal jurisdiction because FinTrust
has sufficient contacts with Pennsylvania for our exercise of jurisdiction to comport with fair
play and substantial justice. We also deny FinTrust's motion to transfer venue under 28 U.S.C. §
1404 because neither Jumara private or public interests weigh in favor of transfer.

52

See Jumara, 55 F.3d at 879 (citations omitted).
11