United States District Court, D. Massachusetts
MEMORANDUM OF DECISION
WILLIAM G. YOUNG, DISTRICT JUDGE
plaintiff, Sheena Grice (“Grice”), filed this
action against the defendants VIM Holdings Group, LLC
(“VIM”), its manager Michael D'Ambrose and
its member Hirsch Mohindra (“Mohindra”), B
Financial, LLC (“B Financial”) and its manager
John Bartlett (“Bartlett”), U Solutions Group,
LLC (“U Solutions”), its organizer Theresa
D'Ambrose and its owner Michael D'Ambrose, Global
Service Group, LLC (“Global”) and its manager
Ruth Poutanen (“Poutanen”), and KRW Attorneys
& Associates, LLC (“KRW”) and its member
attorney George Wahbeh (“Wahbeh”), asserting
violations of the Massachusetts Small Loan Laws
(“MSLL”), Massachusetts General Laws chapter 140,
sections 96-113 (Count I)(against VIM Holdings, LLC and B
Financial, LLC), the Massachusetts Debt Collection Practices
Act (“MDCPA”), Massachusetts General Laws chapter
93, section 24 (Count II), the Federal Debt Collection
Practices Act (“FDCPA”), 15 U.S.C. sections 1692,
et seq. (Count III)(against VIM Holdings Group, B Financial,
U Solutions Group, Global Service Group. KRW, and Wahbeh),
asserting fraud (Count IV), civil conspiracy to commit fraud
(Count V), and violations of the Consumer Protection Act
(“CPA”), Massachusetts General Laws chapter 93A,
section two (Count VI). The defendants filed a joint
motion to dismiss all counts for lack of personal
jurisdiction and moved to compel Grice to submit her claims
to the forum selection clause.
about April 21, 2017, Grice filed this suit against the
defendants in the Massachusetts Superior Court sitting in the
and for the County of Suffolk. Notice Removal, ECF No. 1. On
May 22, 2017, the defendants removed the suit to the United
States District Court for the District of Massachusetts on
diversity grounds. Id. Grice's complaint
contains six claims: (1) a MSLL claim against VIM and B
Financial, id. at ¶¶, 56-72, (2) a MDCPA
claim against all defendants, id. at ¶¶
73-86, (3) a FDCPA claim against VIM, B Financial, U
Solutions, Global, KRW and Wahbeh, id. at
¶¶ 87-110, (4) a claim for fraud against all
defendants, id. at ¶¶ 111-17, (5) a claim
for civil conspiracy to commit fraud against all defendants,
id. at ¶¶ 118-23, and (6) a CPA claim,
id. at ¶¶ 124-30.
October 10, 2017, the Defendants moved to dismiss all counts
for lack of jurisdiction, Joint Mot. Dismiss Lack of
Jurisdiction (“Defs.' Joint Mot. Lack of
Jurisdiction”), ECF No. 51; Joint Mem. Supp. Joint Mot.
Dismiss Lack of Jurisdiction (“Defs.' Joint Mem.
Lack of Jurisdiction”), ECF No. 52, and moved to
dismiss all counts for failure to state a claim or, in the
alternative, to transfer venue. Joint Mot. Dismiss Failure to
State a Claim, ECF No. 49; Joint Mem. Supp. Joint Mot.
Dismiss Failure to State a Claim (“Defs.' Joint
Mem. Failure to State a Claim”), ECF No. 50. On October
20, 2017, Grice filed her opposition to the defendants'
joint motions to dismiss. Pl.'s Opp'n Joint Mot.
Dismiss Lack of Jurisdiction (“Pl.'s Mem. Opp'n
Lack of Jurisdiction”), ECF No. 56; Pl.'s Opp'n
Joint Mot. Dismiss Failure to State a Claim (“Pl.'s
Mem. Opp'n Failure to State a Claim”), ECF No. 55.
The parties appeared before the Court for oral argument on
November 9, 2017, Electronic Notice, ECF No. 57.
is a single parent and resides in Roslindale, MA. Compl.
¶ 4. She earns less than $15.00 an hour -- her only
source of income to support herself and her minor child.
Id. at ¶ 49. VIM is a Delaware limited
liability company with a principal place of business in
Addison, Illinois. Id. at ¶ 5. It operates
several payday loan websites, including
Id. Michael D'Ambrose resides in Chicago,
Illinois and is the registered principal of VIM. Id.
at ¶ 6. Mohindra also resides in Illinois and is a
managing member of VIM. Id. at ¶ 7. B Financial
is a Delaware limited liability company with a principal
place of business in Bloomingdale, Illinois. Id. at
¶ 8. It is a payday lender affiliated with VIM.
Id. Bartlett is the registered principal and
managing member of B Financial. Id. at ¶ 9.
Through the Website, VIM and B Financial conduct business
together as Guaranteed Cash Now, a payday lender offering
small loans to low income consumers with poor credit at high
rates. Id. at ¶¶ 29-30.
Solutions is a Wyoming limited liability company with
principal places of business in Addison, Illinois and Wood
Dale, Illinois. Id. at ¶ 10. U Solutions
handles the debt collection for payday loans issued through
the Website. Id. Theresa D'Ambrose, who resides
in Chicago, Illinois, is the registered principal and
organizer of U Solutions and is also the wife of Michael
D'Ambrose. Id. Global is a Delaware limited
liability company with a principal place of business in
Chicago, Illinois. Id. at ¶ 12. It was
registered with the Secretary of the Commonwealth of
Massachusetts as a foreign limited liability company doing
business as a “collection company” in
Massachusetts. Pl.'s Mem. Opp'n Lack of
Jurisdiction at 10. Global handles the Automatic Clearing
House (“ACH”) transactions on behalf of VIM and B
Financial for loans issued through the Website. Compl. ¶
12. Poutanen, who resides in Wausau, Wisconsin, is the
managing member of Global and is also the mother of Theresa
D'Ambrose. Id. at ¶ 13. In addition, the
telephone number of Global is registered to Nascent Holdings,
LLC, which is owned by Michael D'Ambrose. Id. at
an Illinois law firm located in Chicago, Illinois, and is the
corporate counsel for Guaranteed Cash Now. Id. at
¶ 14. Wahbeh, who resides in Morton Grove, Illinois, is
an attorney licensed to practice in Illinois and is one of
the three members of KRW. Id. at ¶ 15.
14, 2015, Grice applied for and received a $200 loan
(“Loan”) through the Website using her
Massachusetts address. Id. at ¶¶ 31, 65.
Grice was directed to the Website after B Financial
successfully bid on a consumer's loan application.
Defs.' Joint Mem. Lack of Jurisdiction Ex. 2 at
¶¶ 7-8. After Grice submitted her loan application
through the Website, a loan specialist contacted her
regarding her application and then provided her with the
login information to the customer section of the Website.
Id. at ¶ 4.
after receiving the loan, Global began withdrawing money from
Grice's online account with Citibank, N.A., which was
registered with Grice's address in Massachusetts.
Compl. at ¶¶ 41, 65. Because such
withdrawals continued after Grice believed that she had fully
repaid the Loan, at some unspecified time, Grice closed her
account with Citibank, N.A., hoping to stop the withdrawals.
Id. at ¶ 42.
she closed the account, Grice received many telephone calls
from U Solutions, informing her that she could be arrested
and compelled to defend a lawsuit in Chicago, Illinois, if
she did not provide her new account number. Id. at
¶ 43. U Solutions sent emails to Grice's work place,
in which U Solutions threatened to garnish her wages if she
did not make timely payments, id. at ¶ 44, and
sent invoices to Grice for payments which she believed that
she did not owe, id. at ¶ 114. U Solutions also
left recorded messages for Grice stating that her balance
would be reset to start over if she missed a payment.
Id. On June 14, 2016, Wahbeh drafted and sent a
letter on KRW letterhead to Grice's work email, stating
that Guaranteed Cash Now had a right to garnish Grice's
wages without a court order and would sue her and potentially
add “thousands of dollars in attorney's fees, legal
expenses and court costs to the judgment amount.”
Id. at ¶¶ 45, 114; Pl.'s Mem.
Opp'n Lack of Jurisdiction Ex. 1. The letter was
addressed to “Employer of Sheena Grice” without
any specific mailing address. Pl.'s Mem. Opp'n Lack
of Jurisdiction Ex. 2. Wahbeh's name appeared at the
bottom of the letter. Id.
informed U Solutions of her new bank account number with
Account Now after she received the letter from Wahbeh.
Id. at ¶¶ 46-47. Between June 21, 2016 and
November 18, 2016, Global had withdrawn at least an
additional $982 from Grice's new bank account.
Id. at ¶ 47. Grice believes that she has paid
more than $1, 600 for the $200 loan. Id. at ¶
was not asked to sign any loan documents or contracts and did
not receive any agreement with regard to the Loan until U
Solutions sent a copy of a loan agreement to Grice upon
request on December 22, 2016. Id. at ¶ 32. The
“Consumer Line of Credit” agreement
(“Agreement”) governs the Loan and indicates that
B Financial is the lender. Id. at ¶ 33. The
Agreement specifies Utah law as the governing body of law and
the State of Illinois as the venue for any suits or
proceedings arising from or relating in any way to the
Agreement. Agreement, Ex. A, ECF No. 1-1 at 2.
Agreement also includes a list of fees and payment
(1) a $15.00 annual membership fee, a draw fee of $5.00 every
time money was taken out, and interest at 9.99% annually. The
billing cycle was two weeks and repayments would be drawn
from the borrower's account at the end of every billing
cycle. Id. at ¶ 35;
(2) only 3% of each bi-weekly minimum payment would be
applied toward the outstanding principal. Id. at
(3) a transaction fee of $30.00 for every $100.00 of
outstanding principal and a billing cycle fee of $2.50 would
be assessed at every billing cycle. Id. at ¶
(4) late fee of $10.00 for any billing cycle (two weeks), in
which a payment was not made timely, and a $25.00 penalty for
any payment that was dishonored. Id. at ¶ 38.
December 31, 2016, U Solutions emailed Grice an invoice
indicating that she had a balance of $1, 042.44 and an amount
of $848.44 would be due on January 13, 2017. Id. at
¶ 55. The effective interest rate of her Loan, including
all fees, exceeded 800% and totaled more than $1, 650.00 a
year. Id. at ¶¶ 39, 40. As a result of the
drafts from her account, Grice fell behind in car payments
(the car was repossessed on November 18, 2016), and in her
rent. Id. at ¶¶ 51, 52. A charitable
organization, Interfaith Social Services, paid her
outstanding rent of $800.00 to stop eviction proceedings.
Id. at ¶¶ 50-54.
Defendants claimed that Grice's complaint should be
dismissed in its entirety for lack of jurisdiction because
none of the Defendants were Massachusetts residents or had
sufficient in-forum contacts for this Court to assert
personal jurisdiction. Defs.' Joint Mem. Lack of
Jurisdiction at 5-6. This Court denied the motion with
respect to Wahbeh, KRW, VIM and Global and granted the motion
with respect to Bartlett, Theresa D'Ambrose, Michael
D'Ambrose and Poutanen.
Standard of Review
ruling on a motion to dismiss for lack of personal
jurisdiction without an evidentiary hearing under the Federal
Rules of Civil Procedure 12(b)(2), the plaintiff bears the
burden of proving to the Court that such jurisdiction exists,
Griffiths v. Aviva London Assignment Corp., 187
F.Supp.3d 342, 346 (D. Mass. 2016) (Gorton, J.) (citing
Massachusetts Sch. Of Law v. ABA, 142 F.3d 26, 34
(1st Cir. 1998)), and the district court must apply the prima
facie standard of review, Katz v. Spiniello Cos.,
244 F.Supp.3d 237, 241 (D. Mass. 2017) (Casper, J.) (citing
United States v. Swiss Am. Bank, Ltd., 274 F.3d 610,
618 (1st Cir. 2001)). The plaintiff must show that
“jurisdiction is 1) statutorily authorized and 2)
consistent with the Due Process Clause of the United States
Constitution.” Provanzano v. Parker View Farm,
Inc., 796 F.Supp.2d 247, 252 (D. Mass. 2011) (Gorton,
J.) (citing Astro-Med, Inc. v. Nihon Kohden Am.,
Inc., 591 F.3d 1, 9 (1st Cir. 2009)).
the plaintiff must “go beyond the pleadings and make
affirmative proof.” Id. at 253 (quoting
Swiss Am. Bank. Ltd., 274 F.3d at 619 (internal
citation and quotation marks omitted)). Conclusory
allegations or farfetched inferences in the pleading will not
be sufficient to make a prima facie showing of personal
jurisdiction. See Ticketmaster-N.Y., Inc. v. Alioto,
26 F.3d 201, 203 (1st Cir. 1994); Boit v. Gar-Tec Prods.,
Inc., 967 F.2d 671, 675 (1st Cir. 1992). In addition,
the Court must take all alleged facts as true and construe
them in the light most favorable to the plaintiff.
Griffiths, 187 F.Supp.3d at 346 (citing
Massachusetts Sch. of Law., 142 F.3d at 34).
the Due Process Clause, a 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.'”
Baskin-Robbins Franchising LLC v. Alpenrose Dairy,
Inc., 825 F.3d 28, 35 (1st Cir. 2016) (quoting
International Shoe Co. v. Washington, 326 U.S. 310,
316 (1945)). “[A] federal district court may exercise
either general or specific jurisdiction over a
defendant.” Id.; Mueller Sys., LLC v.
Robert Teti & Itet Corp., 199 F.Supp.3d 270, 278 (D.
Mass. 2016) (Gorton, J.).
Massachusetts, the Court may proceed directly to the
Constitutional analysis because the long-arm statute is
“coextensive with the limits allowed by the United
States Constitution.” Hannon v. Beard, 524
F.3d 275, 280 (1st Cir. 2008); see Acushnet Co. v.
Zimventures, LLC, 155 F.Supp.3d 97, 101 (D. Mass. 2015)
(noting that “the Court need only analyze the Due
Process component”); Provanzano, 796 F.Supp.2d
at 253 (“Massachusetts long-arm statute reaches to the
full extent that the Constitution allows” (internal
an individual, 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.”
Goodyear Dunlop Tires Operations, S.A. v. Brown, 564
U.S. 915, 924 (2011). In addition to domicile, a court may
also assert general jurisdiction over an individual when the
person offers explicit consent, J. McIntyre Mach., Ltd.
v. Nicastro, 564 U.S. 873, 880 (2011) (citing
Insurance Corp. of Ir. v. Compagnie des Bauxites de
Guinee, 456 U.S. 694, 703 (1982)), or is physically
present in the forum state, Burnham v. Superior Court of
California, County of Marin, 495 U.S. 604, 619 (1990)
(“[J]urisdiction based on physical presence alone
constitutes due process because it is one of the continuing
traditions of our legal system that define the due process
standard of ‘traditional notions of fair play and
may exercise general jurisdiction over foreign corporations
“when their affiliations with the State are so
‘continuous and systematic' as to render them
essentially at home in the forum State.”
Goodyear, 564 U.S. at 919 (citing International
Shoe Co., 326 U.S. at 317). Specifically, the paradigm
forum for all-purpose general jurisdiction are a
corporation's place of incorporation and principal place
of business. Daimler AG v. Bauman, 134 S.Ct. 746,
760 (2014) (citing Goodyear, 564 U.S. at 924).
none of the individual defendants are domiciled in
Massachusetts and none of the corporate defendants are
incorporated or have principal places of business in
Massachusetts. Compl. ¶¶ 5-15. In addition, Grice
did not make any allegations with regard to whether any
individual defendants have consented to the forum or are
physically present in the forum. Therefore, this Court
concluded that there was no general jurisdiction.
may exercise personal jurisdiction under the Due Process
Clause when “the defendant has maintained certain
minimum contacts with the forum state such that the
maintenance of the suit does not offend traditional notions
of fair play and substantial injustice.” Katz,
244 F.Supp. at 244 (quoting International Shoe Co.,
326 U.S. at 316 (internal quotation marks omitted)). The
First Circuit adopts a three-part inquiry to determine
whether a Court is authorized to assert specific jurisdiction
over an out-of-state defendant. EMC Corp. v. Petter,
104 F.Supp.3d 127, 133 (D. Mass. 2015) (Hillman, J.).
First, the legal claims must relate to or arise out of the
defendant's contacts in the forum. See Phillips
Exeter Acad. v. Howard Phillips Fund, Inc., 196 F.3d
284, 288 (1st Cir. 1999). Second, the defendant's
contacts must constitute “purposeful availment of the
benefits and protections” of the forum's laws.
Id. Third, the exercise of jurisdiction must be
reasonable, in light of the First Circuit's
“gestalt factors.” Id.
EMC Corp., 104 F.Supp.3d at 133. A plaintiff must
prevail on all three prongs to establish specific
jurisdiction. Mukarker v. City of Phila., 178
F.Supp.3d 8, 10-11 (D. Mass. 2016) (Saris, C.J.) (citing
C.W. Downer & Co. v. Bioriginal Food & Sci.
Corp., 771 F.3d 59, 65 (1st Cir. 2014)). A court need
not reach the reasonableness inquiry if the plaintiff fails
to succeed on the first two prongs. Id. at 11
(citing Sawtelle v. Farrell, 70 F.3d 1381, 1394 (1st
Specific Jurisdiction over Wahbeh and KRW
defendants claimed that this Court ought not assert personal
jurisdiction over Wahbeh and KRW because a single contact is
insufficient to confer personal jurisdiction. Defs.'
Joint Mem. Lack of Jurisdiction at 7. This Court disagreed.
relatedness inquiry is a “flexible, relaxed standard,
” which focuses on “whether the claim underlying
the litigation . . . directly arise[s] out of, or relate[s]
to, the defendant's forum-state activities.”
Katz, 244 F.Supp.3d at 244 (internal citations and
quotation marks omitted). It requires a “demonstrable
nexus” between the claims and the defendant's
in-forum contacts. Mukarker, 178 F.Supp.3d at 11
(internal citations omitted).
and KRW's only forum-based contact is that Wahbeh drafted
the letter on KRW's letterhead, which was later sent to
Grice's work email. Compl. ¶ 45. The letter stated
that KRW was the general counsel to Guaranteed Cash Now,
Guaranteed Cash Now had a right to garnish Grice's wages
without a court order, and would sue her and potentially add
“thousands of dollars in attorney's fees, legal
expenses and court costs to the judgment amount.”
Id. at ¶¶ 45, 114; Pl.'s Mem.
Opp'n Lack of Jurisdiction Ex. 1. Grice's claims
against Wahbeh and KRW were premised on the allegations that
they engaged in debt collecting activities on behalf of VIM
and B Financial by making false representations and
threatening to sue her in the letter. Compl. ¶¶ 79,
103, 113-14, 127.
and KRW argued that the single email addressed generically to
Grice's employer was insufficient to confer jurisdiction.
Defs.' Joint Mem. Lack of Jurisdiction at 7.
Specifically, they compared this case to the facts of
Krambeer v. Eisenberg, 923 F.Supp. 1170 (D. Minn.
1996), where a Connecticut attorney sent one debt collection
letter to the plaintiff in Minnesota on behalf of a third
party and the plaintiff alleged a violation of the FDCPA.
Id. at 1172-73. The District Court of Minnesota
ruled that a single debt collection letter was not sufficient
to establish personal jurisdiction over the nonresident
defendant because the very limited contact with one resident
of Minnesota did not ...