Prospect Funding Holdings, LLC v. Vinson
256 F. Supp. 3d 318
S.D.N.Y.2017Background
- Prospect Funding (NY LLC) entered two funding agreements with plaintiff Vinson in Dec 2013 and Jan 2014 advancing pre-settlement funds; agreements included attorney acknowledgements and a New York forum-selection clause.
- Jonathan Speiser (then Vinson’s attorney) signed the attorney acknowledgements; later Vinson retained Georgia attorney Jerry Pilgrim (a Georgia citizen) after the funding deals were executed.
- Vinson’s Georgia personal-injury case settled in June 2014; Pilgrim disbursed settlement funds from his trust account to Vinson and others and did not pay Prospect despite notice sent by Prospect shortly before disbursement.
- Prospect sued Pilgrim (and others) in the Southern District of New York asserting contract and related claims; Pilgrim moved to dismiss for lack of personal jurisdiction (Rule 12(b)(2)) and alternatively for failure to state a claim.
- Prospect sought leave to amend to add a tortious-interference claim based on testimony in Pilgrim’s deposition that he knew of the funding agreements and that Vinson did not want to pay Prospect.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the NY court has personal jurisdiction over non‑signatory Georgia attorney Pilgrim via forum‑selection clause in funding agreements | Forum clause should bind Pilgrim because he is closely related to Vinson and the dispute; it was foreseeable he would be bound | Pilgrim is a non‑signatory who had no role in the funding transactions, learned of the agreements only immediately before disbursement, and is not "closely related" to the signatories | Court: No personal jurisdiction; Pilgrim not sufficiently "closely related" to be bound by the forum clause; 12(b)(2) dismissal granted |
| Whether Pilgrim forfeited jurisdictional challenge by participating in litigation | Prospect: Pilgrim substantially participated and therefore submitted to jurisdiction | Pilgrim: raised personal‑jurisdiction defense promptly in his answer and did not engage in the kind of extensive forum activity that waives the defense | Court: No waiver/forfeiture — Pilgrim timely asserted defense and limited participation did not constitute submission |
| Whether leave to amend to add tortious interference should be allowed | New deposition facts show Pilgrim knew of the agreements and Vinson intended not to pay, supporting intentional procurement element | Pilgrim: amendment futile because allegations do not plead intentional and improper procurement of breach | Court: Denied amendment as futile — allegations show knowledge but not intentional procurement of breach |
| Whether court should reach 12(b)(6) merits of original claims | Prospect: substantive claims asserted against Pilgrim | Pilgrim: alternatively moved to dismiss for failure to state a claim | Court: Did not reach 12(b)(6) because dismissal on jurisdictional grounds was dispositive |
Key Cases Cited
- Aguas Lenders Recovery Grp. v. Suez, S.A., 585 F.3d 696 (2d Cir.) (forum‑selection clauses may be enforced against non‑signatories in appropriate circumstances)
- Magi XXI, Inc. v. Stato della Citta del Vaticano, 714 F.3d 714 (2d Cir.) (non‑signatory enforcement of forum clause where closely related to signatory)
- Whitaker v. American Telecasting, Inc., 261 F.3d 196 (2d Cir.) (plaintiff bears burden to make prima facie showing of personal jurisdiction)
- Datskow v. Teledyne, Inc., 899 F.2d 1298 (2d Cir.) (distinguishing waiver of service defenses from substantive long‑arm jurisdiction challenges)
- Hamilton v. Atlas Turner, Inc., 197 F.3d 58 (2d Cir.) (extensive participation may forfeit personal‑jurisdiction defense)
- Foman v. Davis, 371 U.S. 178 (U.S.) (leave to amend should be freely given absent justification such as futility)
- Kirch v. Liberty Media Corp., 449 F.3d 388 (2d Cir.) (elements of tortious interference under New York law)