# GETTING GRACE FILM, LLC v. HANNOVER HOUSE, INC.

> District Court, W.D. Arkansas · September 4, 2020

URL: https://www.frixlaw.com/law-library/cases/10632174

## Case

- **Court:** District Court, W.D. Arkansas
- **Decided:** September 4, 2020
- **Opinion:** 100trialcourt
- **Cited by:** 0 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/10632174

## How later opinions describe it (automated extraction)

- concluding that the court did not have personal jurisdiction over a corporate officer who signed a contract in Pennsylvania in his corporate, not individual capacity

## Opinion text

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF PENNSYLVANIA
GETTING GRACE FILM, LLC,
Plaintiff,
CIVIL ACTION
V. No. 19-1607
HANNOVER HOUSE, INC., et al.,
Defendants.

MEMORANDUM
SCHMEHL, J. /s/ JLS SEPTEMBER 3, 2020

This matter arises out of disputes over the proceeds from the production and release of a
feature film, “Getting Grace.” (ECF No. 1, Ex. 1.) Plaintiff Getting Grace is a Pennsylvania
limited liability company organized as “. . . the authorized owner and/or copyright proprietor and
licensing source for the original, feature film .. . ‘Getting Grace.’” (ECF No. 1, Ex. 1, 99 1, 9.)
On December 18, 2017, Plaintiff entered into a Worldwide Distribution Agreement (“Agreement”)
with “. . . [all] Defendants to this lawsuit, whether individually or as a principal, representative,
owner and/or agent of [(an)other] Defendant(s).” (d., 4 10.)
Pursuant to this Agreement, Defendants Hannover House, Inc. (“Hannover”) and
Medallion Releasing, Inc. (“Medallion”) were to represent the film for a nationwide theatrical
engagement. (/d., § 12.) The Agreement obligated Hannover and Medallion to enter into a
separate contract with Sony Pictures Home Entertainment (“SPHE”) to release the film “. . . to
physical home video [devices] for resale, for sales to retailers, online-seller[s], and other
appropriate outlets in the United States and Canada, as well as for television and Video-On-
Demand.” (/d., § 13.) The Agreement also included terms defining a “preliminary theatrical

release and marketing plan and budget .. .” for the film’s release. Ud., § 14.) As part of this,
Plaintiff agreed to provide $50,000 of Publicity and Advertising funds to finance a bus tour and an
additional $150,000 for the film’s release to targeted markets. (/d., § 15-16.)
Additionally, in the Agreement, Hannover and Medallion agreed to pay Plaintiff a
minimum guarantee of $250,000 for the United States and Canadian markets, as well as a $200,000
minimum guarantee for the international market, “following full delivery of the Picture and
advance payment by [Plaintiff] to [Hannover and Medallion] of the total . . . aforementioned
amounts.” (/d., 17.) These minimum guarantees were to be paid to Plaintiff against its net
revenues and were to be paid, at the latest, by December 30, 2018. (/d., { 18.) These components
of the parties’ arrangement were also memorialized in two Promissory Notes, appended to the
Agreement and executed by Defendant Erik Parkinson. (/d., 4] 19-20.)
The first Promissory Note (“P&A Note”) was issued by Hannover and Medallion, as
borrowers, to Plaintiff, as creditor, with a principal of $200,000 for the film’s distribution pursuant
to the Agreement. (/d., § 21.) Plaintiff paid this amount in full according to the agreed-upon
payment schedule. (d., 22-23.) Plaintiff also filed and recorded a“... U.C.C. Security Interest
in and to all the revenues to be derived from the distribution...” (/d., § 25.) Under this Note,
Plaintiff's Security Interest would survive “. . . until such a time that the principal, applicable
interest, and IAF were fully and indefeasibly paid to [Plaintiff].” (d., 926.) As such, Hannover
and Medallion were required to instruct all licensors, sub-licensors, customers, purchasers,
exhibitors, and distributors of the film to direct all revenue payments to a specifically designated,
segregated bank account for Plaintiff's benefit. (/d., § 27.) This Note also provided that Hannover
and Medallion would pay all of Plaintiff's “. . . reasonable expenses incurred to enforce or collect
any of the obligations under the P&A Note, including, without limitation, reasonable attorney’s

fees and expenses...” (/d., § 28.)
The second Promissory Note (“Minimum Guarantee Note”) established a minimum
guarantee of $450,000, promised by Hannover and Medallion to Plaintiff in exchange for the rights
to distribute the film. (U/d., J 29-30.) As with the first Note, Plaintiff filed and recorded a U.C.C.
Security Interest in and to all revenues to be derived from the film’s distributions. (/d., § 32.) This
Security Interest was to survive until such a time that the principal and applicable interest under
the Minimum Guarantee Note were paid in full to Plaintiff. (/d., 933.) As such, and as with the
first Note, Hannover and Medallion were required to instruct all licensors, sub-licensors,
customers, purchasers, exhibitors, and distributors of the film to direct all revenue payments to a
specifically designated, segregated bank account for Plaintiff's benefit. (d., 9 34.) A similar
provision regarding enforcement expenses was also included. (/d., 35.)
Both the P&A Note and the Minimum Guarantee Note provide that “. . . failure of
[Hannover and Medallion] to pay on the note when due, plus a ten (10) day cure period, entitled
[Plaintiff] to provide written notice .. . of the total unpaid principal, accrued interest, and IAF
immediately due and payable.” (/d., {¥ 36, 38.) Additionally, both notes provide that Hannover
and Medallion’s failure to pay would entitle Plaintiff to a consent judgment against them. (/d.,
37, 39.) In the aggregate, the P&A Note and the Minimum Guarantee Note had principal
amounts of $650,000 and were both subject to 7% interest per annum. (/d., 441.) The P&A
Note further required payment of a $16,000 IAF fee. (/d., § 42.)
On or around October 29, 2018, Daniel Roebuck personally paid, on behalf of Plaintiff to
Signature Media, approximately $11,628.50 for the film’s DVD replication costs. (/d., 943.) He
also paid shipment costs to Walmart on behalf of Hannover. (/d.) Hannover, via an email from
Erik Parkinson, agreed to fully reimburse Roebuck from the proceeds of a “. . . Michael Kahn

stock venture within approximately one week.” (/d., § 44.) The same day, Roebuck confirmed
to Parkinson and co-defendant D. Frederick Shefte that he expected payment in full by November
13, 2018, or thereafter with interest. (/d., § 45.) Parkinson responded the following day, stating
“Tujnderstood and agreed . . . we are closing the corp. finance portion to cover thisnow...” (d.,
446.) Plaintiff later loaned this money to Roebuck, and Plaintiff now contends that this amount
is now due directly to Plaintiff and not Roebuck. (/d., § 47.)
On November 29, 2018, Plaintiff, by and through representatives and/or agents,
participated in a conference call with Defendants Parkinson and Shefte, who “. . . were acting
individually and/or as principals, representatives, and/or agents of [Hannover and Medallion].”
§ 48.) During this call, Parkinson stated that “. . . he was going [to] get the ‘rest of the
theatrical collected’ from the [film] so that he could use that [money] to ‘retire a portion of the
P&A funding.’” (d., J 49.)
Both Promissory Notes matured on December 30, 2018. (d., 950.) Having not received
payments due under both the Agreement and the Promissory Notes, Plaintiff's counsel filed a
Notice of Default on January 11, 2019. (Ud.,951.) Later, on January 25, 2019, Plaintiff's counsel
also filed U.C.C. liens against Hannover and Medallion in accordance with the Agreement and
both Promissory Notes. (/d., 4 52.)
Stemming from these allegations of nonpayment under the Agreement and Promissory
Notes, Plaintiff has now brought the following claims before the Court:
I. Breach of Contract (against all defendants);
II. Unjust Enrichment (against all defendants);
IL. Violation of the Pennsylvania Securities Act of 1972 (against all defendants);
IV. Fraud and Misrepresentation (against all defendants);
V. Piercing the Corporate Veil (against defendants Parkinson, Shefte, Sims, and Sargent');

Former defendant Bobby Sargent was dismissed from this matter, without prejudice, by stipulation. (See ECF No.

VI. Declaratory Judgment pursuant to Pennsylvania Rule of Civil Procedure 1602.
(ECF No. 1, Ex. 1, 9 54-136.)
This matter is now before the Court on Defendants’ Motions to Dismiss for Lack of
Personal Jurisdiction, Improper Venue, and Failure to State a Claim, or, in the alternative, Motion
to Transfer Venue pursuant to 28 U.S.C. § 1404. (ECF No. 46.) For the following reasons, and
lacking personal jurisdiction, we transfer all claims against Defendants Parkinson, Shefte, and
Sims to the United States District Court for the Western District of Arkansas. We also transfer, to
the same court, venue as to all claims asserted against Defendants Hannover and Medallion
pursuant to § 1404(a).

I. LEGAL STANDARDS
a. Personal Jurisdiction
Exercising general jurisdiction over a defendant is appropriate where a defendant’s
activities within a state are “so substantial and of such a nature as to justify suit against it on causes
of action arising from dealings entirely distinct from those activities.” Daimler AG v. Bauman,
571 U.S. 117, 118 (2014) (citing Int’! Shoe Co. v. Wash., 326 U.S. 310, 318 (1945)). The Supreme
Court has clarified that “‘. . . the paradigm forum for the exercise of general jurisdiction is the
individual’s domicile; for a corporation, it is an equivalent place, one in which the corporation is
fairly regarded as at home.’” Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773, 1780
(2017) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 924 (2011)).
Generally, for corporations, this is the place of incorporation and the corporation’s principal place
of business, although general jurisdiction may be exercised where a corporation’s affiliations with
a forum state are so continuous and systematic as to render it essentially at home there. Daimler,

571 USS. at 137-139 (citing Goodyear, 564 U.S. at 919).
The exercise of specific jurisdiction, in contrast, turns on the connection between the forum
jurisdiction and the underlying controversy; it is limited to issues arising out of or related to the
controversy establishing jurisdiction. Goodyear, 564 U.S. at 923-24 (citations omitted). Indeed,
the Supreme Court has long held that, to exercise specific jurisdiction, there must be “some act by
which the defendant purposefully avail[ed] itself of the privilege of conducting activities within
the forum State, thus invoking the benefits and protections of its laws.” Jd., 564 U.S. at 924
(quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958); World-Wide Volkswagen Corp. v.
Woodson, 444 U.S. 286, 297 (1980) (holding that an Oklahoma court could not exercise personal
jurisdiction “over a nonresident automobile retailer and its wholesale distributor in a products-
liability action, when the defendants’ only connection with Oklahoma [was] the fact that an
automobile sold in New York to New York residents became involved in an accident in
Oklahoma.”); Asahi Metal Indus. Co. v. Superior Court of Cal., 480 U.S. 102, 112 (1987) (holding
that the “substantial connection” between a defendant and the forum, necessary for a finding of
minimum contacts, must derive from an action purposefully directed toward the forum state and
that “a defendant's awareness that the stream of commerce may or will sweep the product into the
forum State does not convert the mere act of placing the product into the stream into an act
purposefully directed toward the forum State.’’).
Pennsylvania’s long-arm statute allows us to exercise jurisdiction over nonresident
defendants to the full extent permitted by the United States Constitution. FED. R. Civ. P. 4(k)(2);
42 PA. CONS. STAT. § 5322(b). When a defendant challenges the court’s personal jurisdiction, the
plaintiff then bears the burden “to come forward with sufficient facts to establish that jurisdiction
is proper.” Danziger & De Llano, LLP vy. Morgan Verkamp LLC, 948 F.3d 124, 129 (3d Cir. 2020)

(quoting Mellon Bank (E.) PSFS, Nat’l Ass’n v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992)). To
analyze these facts, we rely upon the three-part framework established by our Third Circuit Court
of Appeals. First, the plaintiff must show that the defendant purposefully directed its activities at
the forum. Allaham v. Naddaf, 635 F. App’x 32, 39 (3d Cir. 2015) (citations omitted). Second,
the litigation must arise out of or relate to at least one of those activities. /d. Third, if the plaintiff
fulfills the first two requirements, we may consider whether the exercise of jurisdiction
“comport[s] with fair play and substantial justice.” /d. (quoting Burger King Corp., 471 U.S. at
476.)
b. Venue
Venue in United States District Courts is governed by 28 U.S.C. §1391. The statute
provides that, generally, venue for civil actions is proper in:
(1) a judicial district in which any defendant resides, if all defendants are residents of the
State in which the district is located;
(2) a judicial district in which a substantial part of the events or omissions giving rise to
the claim occurred, or a substantial part of property that is the subject of the action is
situated; or
(3) if there is no district in which an action may otherwise be brought as provided in this
section, any judicial district in which any defendant is subject to the court’s personal
jurisdiction with respect to such action.
28 U.S.C. §1391(b).
In this analysis, residency is determined differently for natural persons and “entit[ies]
with the capacity to sue and be sued in [their] common name[s] under applicable law...” 28
U.S.C. §1391(c)(1)-(2). A natural person is deemed to reside in the judicial district in which
that person is domiciled. 28 U.S.C. §1391(c)(1). A defendant business entity, however, is
deemed to reside “. . . in any judicial district in which such defendant is subject to the court’s
personal jurisdiction...” 28 U.S.C. §1391(c)(2).
Venue may be transferred to another District Court when the original venue is improper,

or for the convenience of parties and witnesses where both the original and the requested venue
would be proper. 28 U.S.C. § 1404(a); 28 U.S.C. § 1406. Ifthe original venue is proper, transfers
of venue for the convenience of parties and witnesses are rested in the discretion of the District
Court. Lafferty v. Riel, 495 F.3d 72, 77 (3d Cir. 2007). Where the original venue is improper,
however, the District Court may transfer the case to a proper venue, rather than dismiss the case,
if the “interest of justice” so requires. Id. at 75; See also 28 U.S.C. § 1406.

II. PERSONAL JURISDICTION
a. No Defendant Is Subject to General Jurisdiction Within the Commonwealth
of Pennsylvania
Defendants first argue that this Court lacks general personal jurisdiction over all
Defendants. (ECF No. 46, ff 13-26.) It is uncontested that no defendant in this matter is a resident
of Pennsylvania, a company organized under Pennsylvania law, or a company with its principal
place of business in Pennsylvania.” (See ECF No. 1 Ex. 1, §] 2-7.) Defendants, however, further
contend that “[n]o Defendant in the present action conducts continuous or systematic business of
a substantial nature in the present forum, thus this Court cannot exercise general personal
jurisdiction over Defendants.” (ECF No. 46, § 14.)
In response, Plaintiff argues that Defendants do have systematic and continuous contacts
with Pennsylvania as they “. . . distribute films on a national and international scale, including to

* At present, five defendants remain in this action:
1. Hannover House, Inc. is a Wyoming corporation with its principal place of business in Arkansas;
2. Medallion Releasing, Inc. is an Arkansas corporation with its principal place of business also in Arkansas;
3. Eric F. Parkinson is a resident of Arkansas;
4. D. Frederick Shefte is a resident of Arkansas; and
5. Tom Sims is a resident of Arkansas.
(ECF No. 1, Ex. 1, §§ 2-7.)

Pennsylvania, and the entire film on which this lawsuit is based, Getting Grace, was filmed in the
Lehigh Valley, Pennsylvania. Additionally, the contract at issue was entered into with a
Pennsylvania company for a Pennsylvania film, and the securities at issue were issued to a
Pennsylvania company.” (ECF No. 48, § 14.) Plaintiff repeats this argument verbatim numerous
times throughout its brief. (See id., J¥ 14-17, 19, 23, 26, 36, 42, 45-46, 60.)
The exercise of general jurisdiction mandates a strong nexus between a defendant’s
essential business activities and its contacts with the forum. Jn re Chocolate Confectionary
Antitrust Litig., 674 F. Supp. 2d 580, 597 (M.D. Pa. 2009). Moreover, when a defendant challenges
a court’s personal jurisdiction, the plaintiff bears the burden “to come forward with sufficient facts
to establish that jurisdiction is proper.” Danziger & De Llano, LLP v. Morgan Verkamp LLC, 948
F.3d 124, 129 (3d. Cir. 2020) (quoting Mellon Bank (E.) PSFS, Nat'l Ass’n v. Farino, 960 F.2d
1217, 1223 (3d Cir. 1992)).
Here, Plaintiff has not presented facts that establish continuous and systematic contacts
between any defendant and Pennsylvania. See In re Chocolate Confectionary Antitrust Litig., 674
F. Supp. at 597 (“In the corporate context, courts have historically applied general jurisdiction to
organizations that hire employees, hold real property, maintain bank accounts, apply for business
licenses, advertise, and regularly solicit sales within the relevant forum.”); See also Provident Nat’l
Bank v. Cal. Fed. Sav. & Loan Ass’n, 819 F.2d 434, 438 (3d Cir. 1987) (upholding general personal
jurisdiction because the defendant’s contacts with Pennsylvania were “. . . the bread and butter of
its daily business.”).
Indeed, Plaintiff has only provided argument as to ties between Defendants and
Pennsylvania that relate to the current dispute and has not met its burden of proof. As such, we
find that this Court cannot exercise general personal jurisdiction over any defendant in this dispute.

b. Corporate Defendants Hannover and Medallion Are Subject to Specific
Personal Jurisdiction in This Dispute; Defendants Parkinson, Sims, and Shefte
Are Not
Defendants then collectively argue that this Court cannot exercise specific personal
jurisdiction over any defendant in this action. (ECF No. 46, §[ 27-50.) Specifically, Defendants
aver that only two named defendants—Hannover and Medallion—‘could have possible directed
any actions, commercial or otherwise . . .” toward Pennsylvania as they are the only named parties
to the Worldwide Distribution Agreement and the corollary Promissory Notes. (/d., § 34-35.)
Even then, Defendants claim that Hannover and Medallion’s only connection with Pennsylvania
in this matter was the intent to contract with a Pennsylvania LLC. (/d., 36.) In so arguing, they
highlight that Plaintiff only claims that “Defendant Hannover entered into a contract with [an]
LLC organized in Pennsylvania . . . and subsequently agreed to send payments due...” to an
address in Pennsylvania. (Id., 45.)
Moreover, Defendants aver that the Agreement in dispute 1s governed by the laws of
Arkansas, and that the “Promissory Notes evidence a contractual agreement by both parties to have
their relationship governed by Arkansas law and to adjudicate any disputes thereof in an Arkansas
court.” CUd., 37-38.) To further emphasize their argument, Defendants emphasize that neither
the Agreement nor the Promissory Notes provided them notice of Plaintiffs organization under
Pennsylvania laws. (d., § 39.) Additionally, they note that “Dan Roebuck, the only agent of
Plaintiff known to defendants at the time of contract, met several times with agents of Defendants

... all at locations outside the [C]ommonwealth of Pennsylvania.” (/d., §/ 40.) Defendants also
claim that, given the facts of this case, “[t]he state of Arkansas has a far greater interest in this case
[than Pennsylvania], as an Arkansas court would properly be afforded the opportunity to adjudicate
contract formation/interpretation and the exercise of the Arkansas-filed U.C.C. Security Interest.”

10

(Id., | 43-44.)
In response, Plaintiff offers the following facts. First, Plaintiffrebuts Defendants argument
that only Hannover and Medallion could have possibly directed any activities toward
Pennsylvania. (ECF No. 48, 7 34-35.) In so arguing, it notes that Defendant Erik Parkinson signed
the Agreement and Promissory Notes on behalf of Hannover and that Plaintiff has a claim to pierce
the corporate veil “. . . which imparts individual liability.” (Ud., § 34.) Further, Plaintiff asserts
that “[t]he individual [d]efendants, who were officers, directors, and/or employees of the corporate
[defendants likewise repeatedly availed themselves of the laws of this Commonwealth by
contracting with Pennsylvania companies . . . target[ing] Pennsylvania audiences through
marketing and advertising on a repeated basis[,] and by failing to adhere to proper corporate
formalities.” (Ud., 435.) They also assert that specific jurisdiction in this action is appropriate as
the individual Defendants “. . . fraudulently induced a Pennsylvania business to enter into
contractual relations with their shell companies .. .” (/d.) Lastly, Plaintiffs maintain that this
Court can exercise specific jurisdiction over all defendants as Defendants “. . . repeatedly
communicated with Plaintiff in Pennsylvania...” (/d., 4 49.)
When assessing a motion to dismiss for lack of personal jurisdiction, the Court must
consider the pleadings and affidavits offered in the light most favorable to the non-moving party.
Lieb v. Am. Pac. Int’l Inc., 489 F. Supp. 690, 694 (E.D. Pa. 1980) (citing Oxford First Corp. v.
PNC Liquidating Corp., 372 F. Supp. 191, 193 (E.D. Pa. 1974)). However, the plaintiff bears the
burden of proving that personal jurisdiction is proper, with reasonable particularity, through sworn
affidavits or other competent evidence. Brown vy. AST Sports Sci., Inc., No. 02-1682, 2002 U.S.
Dist. LEXIS 12294, at *9 (E.D. Pa. June 28, 2002) (citations omitted).
The Third Circuit Court of Appeals has determined that, in certain circumstances, personal

11

jurisdiction over nonresident defendants may be “. . . premised largely on the defendant’s contract
with a resident of the forum state.” Remick v. Manfredy, 238 F.3d 248, 256 (3d Cir. 2001) (quoting
Vetrotex CertainTeed Corp. v. Consol. Fiber Glass Prod. Co., 75 F.3d 147, 152-53 (3d Cir. 1996)).
In one such representative case, the Third Circuit upheld personal jurisdiction over nonresident
defendants on a breach of contract claim because the defendant (1) sought out the plaintiffs
business by calling plaintiff's Philadelphia office; (2) signed a fee arrangement which was returned
to Pennsylvania; (3) sent at least one payment to Philadelphia; (4) performed the majority of his
services at plaintiff's Philadelphia office; and (5) had repeated “informational communications”
with the plaintiff at his Philadelphia office. (/d. at 256.)
Similarly, the facts of the present matter allow us to exercise specific jurisdiction over the
business entity defendants, Hannover and Medallion. These defendants contracted with a
Pennsylvania company to create a film in Pennsylvania. They further marketed and advertised
this film to Pennsylvania audiences, agreed to send payment to a Pennsylvania address, and
maintained repeated communications with Plaintiff in Pennsylvania. As such, we find that
Plaintiff has shown that Defendants Hannover and Medallion have sufficient minimum contacts
with this Commonwealth to be subject to specific personal jurisdiction in this dispute.
However, Plaintiff has not met its burden proving that this Court may exercise specific
jurisdiction over the remaining natural person defendants in this matter: Erik F. Parkinson, D.
Frederick Shefte, and Tom Sims. First, Plaintiff suggests that this Court has personal jurisdiction
over Parkinson as he “. . . signed the Agreement and the Promissory Notes on behalf of Hannover
House...” (ECF No. 48, 9 34.) Generally, under the “fiduciary shield doctrine,” a court cannot
exercise personal jurisdiction over an individual defendant whose only contacts with the forum
state are as an officer or agent of a corporation. Sneberger v. BTI Americas, Inc., No. 98-932,

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1998 U.S. Dist. LEXIS 18844, at *8 (E.D. Pa. Nov. 30, 1998) (citations omitted); Gross v.
Schnepper, 62 B.R. 323, 327 (E.D. Pa. 1986) (concluding that the court did not have personal
jurisdiction over a corporate officer who signed a contract in Pennsylvania in his corporate, not
individual capacity); Martin v. Sturm, Ruger & Co., 548 F. Supp. 1, 2 (E.D. Pa. 1981)
(“[e]stablishing personal jurisdiction over the individual on the basis of doing business requires
evidence showing not only that he did business within the state . . . but also that he conducted that
business ‘for himself and not for or on behalf of his corporation.’”) (citation omitted)). Here,
Plaintiff has not alleged any contacts between Parkinson—in his individual capacity—and the
Commonwealth of Pennsylvania. As such, we find that we cannot exercise jurisdiction over him
on this basis.
Second, Plaintiff suggests that this Court may exercise personal jurisdiction over all three
natural person defendants as Plaintiff has brought “. . . a claim to pierce the corporate veil which
imparts individual liability.” (ECF No. 48, 4 34.) For this Court to exert jurisdiction on this basis,
. Plaintiff must present sufficient facts to support a showing of piercing the corporate veil.”
Air Sea Int’l Forwarding, Inc. v. Global Imps. & Trading, Inc., No. 03-268, 2008 U.S. Dist. LEXIS
133087, at *25 (D.N.J. Apr. 18, 2008). Exercising personal jurisdiction based on“. . . piercing the
corporate veil is disfavored because piercing the corporate veil is a disfavored practice which
demands a specific and exacting showing.” Spotts Bros. v. Seraphim USA Mfg., No. 18-2235,
2019 U.S. Dist. LEXIS 142131, at *20 (M.D. Pa. Aug. 20, 2019). Indeed, in Pennsylvania, there
is a strong presumption against piercing the corporate veil. /d. (quoting Lumax Indus. v. Aultman,
669 A.3d 893, 895 (1995)). Thus, “[i]n practice, courts will consider piercing the corporate veil
only when the evidence reveals “undercapitalization, failure to adhere to corporate formalities,
substantial intermingling of corporate and personal affairs, and use of the corporate form to

13

perpetuate a fraud.’” Although Plaintiff has alleged in its Complaint that Defendants Parkinson,
Shefte, and Sims undercapitalized Hannover and Medallion and abused the corporate form to
further their personal interests, it has not produced any evidence to meet the aforementioned
exacting standard. (See ECF No. 1 Ex. 1, JJ 112-124.) As such, we find that we cannot exercise
personal jurisdiction over any of the natural person defendants in this action.

c. All Claims Against Defendants Parkinson, Shefte, and Sims are Transferred
to the United States District Court for the Western District of Arkansas
Even while viewing all evidence in the light most favorable to Plaintiff, we find that we
cannot properly exercise jurisdiction over Defendants Parkinson, Shefte, and Sims in this matter
for the foregoing reasons. However, in this Circuit, “. . . a district court that lacks personal
jurisdiction must at least consider a transfer.” Danziger & De Llano, LLP, 946 F.3d at 132. Indeed,
the applicable statute mandates that a district court “‘shall’ transfer the case rather than dismiss it
‘if [doing so] is in the interest of justice.’” Jd. (quoting 28 U.S.C. § 1631.) Although we may
transfer a case sua sponte, we need not investigate on our own all other courts in which the case
“might” or “could have” been brought. Jd. (citations omitted). Notwithstanding, we must make
some findings under § 1631, at least when the parties identify other courts that might be able to
hear the case. /d. Upon considering the balance of ongoing litigation and the interests of the
parties, we have determined that the interest of justice weighs heavily in favor of transferring,
rather than dismissing, the claims against Parkinson, Shefte, and Sims.
The Third Circuit has held that “where a case could have been brought against some
defendants in the transferee district, the claims against those defendants may be severed and
transferred while the claims against the remaining defendants, for whom transfer would not be
proper, are retained.” D ‘Jamoos ex rel. Estate of Weingeroff v. Pilatus Aircraft Ltd., 566 F.3d 94,

14

110 (3d Cir. 2009). Before doing so, however, we are directed to “weigh the factors favoring
transfer against the potential inefficiency of requiring the similar and overlapping issues to be
litigated in two separate forums.” /d. (citations omitted). We understand that by severing these
claims we are separating the individual defendants, who allegedly acted on behalf of the corporate
defendants that caused Plaintiffs’ injuries. We also recognize, however, that any inconvenience
Plaintiffs experience based on this transfer does not outweigh the cost of dismissing these claims
outright.
Defendants have identified the United States District Court for the Western District of
Arkansas as a court of competent jurisdiction to hear this dispute. (See ECF No. 46.) Indeed,
Defendants have admitted that the exercise of personal jurisdiction (and venue) would be proper
in that court. (See id.) Considering this, we thus transfer all claims asserted against Defendants
Parkinson, Shefte, and Sims to the United States District Court for the Western District of
Arkansas.

I. VENUE
a. Venue is Proper in the Eastern District of Pennsylvania Pursuant to 28 U.S.C.
§1391(b)(3)
As previously state, venue is proper in civil actions in:
(1) a judicial district in which any defendant resides, if all defendants are residents of the
State in which the district is located;
(2) a judicial district in which a substantial part of the events or omissions giving rise to
the claim occurred, or a substantial part of property that is the subject of the action is
situated; or
(3) if there is no district in which an action may otherwise be brought as provided in this
section, any judicial district in which any defendant is subject to the court’s personal
jurisdiction with respect to such action.
28 U.S.C. §1391(b).

15

Here, it is undisputed that no natural person defendant is a Pennsylvania resident. See
supra note 2. However, for purposes of venue, Hannover and Medallion are deemed to reside in
the Eastern District of Pennsylvania as they are subject to specific personal jurisdiction in this
dispute. See 28 U.S.C. §1391(c)(2). Since all defendants in this dispute cannot be deemed
residents, however, venue is improper under 28 U.S.C. §1391(b)(1).
Accordingly, we must then analyze venue under 28 U.S.C. §1391(b)(2). In their Motion,
Defendants assert that “[t]he omission Plaintiff cites giving rise to its claims [is] Defendants’
failure to remit the full guaranteed amount under the Promissory Notes, occurred in Arkansas,
where Defendant[s] Hannover and Medallion maintain their principal place of business, not
Pennsylvania.” (ECF No. 46, 7 58.) Plaintiff has responded to this assertion by stating that all of
Defendants alleged acts “. .. were directed against a Pennsylvania [c]ompany over a contract for
the marketing and distribution of a Pennsylvania-produced film...” (ECF No. 48, 4 58.)
When assessing whether events of omissions giving rise to a plaintiff's claims are
substantial under 28 U.S.C. §1391(b)(2), we must look at the nature of the dispute. Cottman
Transmission Sys., Inc. v. Martino, 36 F.3d 291, 295 (3d Cir. 1994). Here, we find that the acts or
omissions that gave rise to Plaintiff's claims all occurred in Arkansas, not Pennsylvania. While
“Getting Grace” was filmed in Pennsylvania, and Pennsylvania audiences may have been targeted
through advertisements and marketing, these acts are not what gave rise to this action. This action
arises from Defendants’ alleged failure to pay monies owed to Plaintiff pursuant to the Agreement
and associated Promissory Notes. See id. (“Even though the result was Plaintiff's non-receipt of
those items [and payment] in Pennsylvania, the omissions bringing about this result actually
occurred in Michigan.”’). As such, we agree with Defendants. Proper venue cannot be established
under 28 U.S.C. §1391(b)(2).

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Under 28 U.S.C. §1391(b)(3), if there is no district in which an action may otherwise be
brought, venue is proper in any judicial district in which any defendant is subject to the court’s
personal jurisdiction with respect to such action. As discussed above, Defendants Hannover and
Medallion are subject to this Court’s jurisdiction with respect to this action. As such, venue is
proper in this action under 28 U.S.C. §1391(b)(3).

b. Venue for All Claims Asserted Against Hannover and Medallion is
Transferred to the Western District of Arkansas
In the alternative, Defendants have moved to transfer venue, pursuant to 28 U.S.C. §
1404(a), to the United States District Court for the Western District of Arkansas. (ECF No. 46,
64-80.) We have already determined that we do not have personal jurisdiction over Defendants
Parkinson, Shefte, and Sims, and we have transferred claims against them accordingly to the
Western District of Arkansas. We now consider whether to transfer venue for the remaining
claims—against Defendants Hannover and Medallion—to that same court.
District Courts may order a transfer of venue under 28 U.S.C. § 1404(a) “[flor the
convenience of parties and witnesses, in the interest of justice .. . to any other district or division
where it might have been brought.” 28 U.S.C. § 1404(a). In this analysis, “the district court is
vested with a wide discretion, which is rarely disturbed .. .” Plum Tree, Inc. v. Stockment, 488
F.2d 754, 756 (3d Cir. 1973) (citations omitted). Accordingly, in its analysis, the Court must first
determine that venue would be proper in another district. Cable v. Allied Interstate, Inc., No. 12-
96, 2012 U.S. Dist. LEXIS 67111, at *3 (E.D. Pa. May 11, 2012). Then, the Court must consider
“all relevant factors to determine whether on balance the litigation would more conveniently
proceed and the interests of justice be better served by a transfer to a different forum.” J/d., at *3
(citing Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995).

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Within the Third Circuit, courts presented with a § 1404(a) analysis must consider several
public- and private-interest factors. See Jumara, 55 F.3d at 879-80. Private-interest factors
include the following:
(1) Plaintiff's forum preference as manifested in the original choice;
(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 the witnesses may
actually be unavailable for trial in one of the fora; and
(5) The location of books and records (similarly limited).
Id. at 879.
Public-interest factors to be considered are as follows:
(1) The enforceability of the judgment;
(2) Practical considerations that could make the trail 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 applicable state law in diversity cases.
Id. at 879-80.
Ordinarily, the “burden of establishing the need for transfer . . . rests with the movant.”
Jumara, 55 F.3d at 879. However, the presence of a valid forum selection clause, “. . . which
requires that there [has] been no fraud, influence, or overweening bargaining power, shifts to the
party seeking to avoid the forum selection clause, ‘the burden of demonstrating why they should
not be bound by their contractual choice of forum.’” Campanini v. Studsvik, Inc., No. 08-5910,
2009 U.S. Dist. LEXIS 28908, at *7 (E.D. Pa. Apr. 6, 2009) (quoting Jumara, 55 F.3d at 880).
Here, Plaintiff has met that burden. We find that, in consideration of both the valid forum
selection clauses and the Jumara factors, it is in the interest of justice to transfer venue for all
claims against Hannover and Medallion to the Western District of Arkansas.
In their Motion, Defendants concede that they are all subject to personal jurisdiction in the

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State of Arkansas. (/d., § 66.) Indeed, all Defendants are Arkansas residents. See supra note 2.
Defendants further note that both Promissory Notes in dispute contain a forum selection clause
indicating that “[j]urisdiction and [vJenue for any action or proceeding with regard to this
Promissory [N]ote shall be in Washington County, Arkansas.” (ECF No. | Ex. G, ¥ 13(c); ECF
No. 1 Ex. G-1, § 12(c).) Plaintiff, in response, argues that the Agreement itself does not contain a
forum selection clause, and that Defendants unilaterally drafted both the Agreement and the
Promissory Notes, and thus they should be construed against Defendants. (ECF No. 48, { 69.)
Plaintiff, however, provides no legal authority to support the position that the Agreement’s silence
as to venue indicates that “. .. Plaintiffis free to select a venue of its choosing.” (See id.) Indeed,
this Court has upheld forum selection clauses in similar matters where only one contract in dispute
contained a venue provision. See Campanini, 2009 U.S. Dist. LEXIS 28908, at *8-12 (upholding
and enforcing a mandatory forum selection clause, and transferring venue pursuant to § 1404(a),
in a dispute involving two contracts, only one of which contained a forum selection clause).
Considering the private-interest factors set forth in Jumara, we find that the omissions
leading to this dispute all occurred in the State of Arkansas. We further note that all defendants
either reside or have their principal place of business within the Western District of Arkansas.
Also, as stated above, jurisdiction over three other defendants in this matter has already been
transferred to the Western District of Arkansas. Additionally, Plaintiff's principal witness
maintains a residence in Burbank, California; Arkansas is centrally located within the United
States and closer to California than Pennsylvania. Lastly, books and records are likely to be located
at Hannover and Medallion’s offices—both in Arkansas. As such, the private-interest factors
clearly weigh in favor of transfer.
We then turn to an analysis of the Jumara public-interest factors. Most of these either

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do not apply or are neutral as to this dispute. Those that are relevant, however, also weigh in
favor of transfer. First, it would be relatively easier administratively to conduct this case in
the Western District of Arkansas as compared to the Eastern District of Pennsylvania, as the
former has a significantly lower volume of cases. See UNITED STATES COURTS, FEDERAL
COURT MANAGEMENT STATISTICS, 16, 55 (2020), available at
https://www.uscourts.gov/sites/default/files/data_tables/fems na_distprofile0331.2020.pdf.
Second, Arkansas has a greater interest in deciding this case as the omissions giving rise to the
dispute occurred in that state. Third, this dispute may be subject to Arkansas state law, as the
Agreement in dispute contains a choice of law provision indicating that Arkansas law governs.°
(ECF No. 48, ¥ 71.) Accordingly, of the relevant public-interest factors, all weigh in favor of
transfer.

IV. CONCLUSION
We conclude the Defendants Parkinson, Shefte, and Sims are not subject to this Court’s
jurisdiction. Thus, we sever and transfer all claims asserted against them to the United States
District Court for the Western District of Arkansas.
Furthermore, for the foregoing reasons, we transfer venue as to the claims asserted against
Defendants Hannover and Medallion to the United States District Court for the Western District
of Arkansas pursuant to 28 U.S.C. § 1404(a).
An appropriate Order follows.

> Plaintiff notes that while the Agreement provides that Arkansas law governs, the Promissory Notes state that New
York law governs. (ECF No. 48, 4 71.) This is not relevant to deciding whether venue is more appropriate within
this District or within the Western District of Arkansas as none of the agreements provide that Pennsylvania law
governs.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/10632174. Public record. Not legal advice.