363 F. Supp. 3d 569
E.D. Pa.2019Background
- Conrail sold a portion of the Harsimus Branch to eight LLC developers in 2005 without STB abandonment authority; each LLC received title insurance from Chicago Title.
- Jersey City and others challenged whether the Harsimus Branch was a federally regulated "line of railroad"; the Special Court later accepted a stipulation that it was a line subject to STB authority.
- Chicago Title disclaimed coverage, lost in state court, and later settled with the LLCs for $5 million, waiving subrogation rights against Conrail; Chicago Title’s third-party suit against Conrail remained.
- Plaintiff Riffin claims he obtained the LLCs’ (or Chicago Title’s) subrogation rights via a December 12, 2017 assignment executed by Steve Hyman (husband of the LLCs’ sole member) and filed this suit against Conrail relying solely on that assignment for standing.
- The Assignment Agreement obligates Riffin to fund the litigation, provides that the LLCs incur no expenses, and entitles Riffin to a portion of any recovery.
- Conrail moved to dismiss under Rule 12(b)(6), arguing the assignment is invalid under Pennsylvania’s champerty doctrine; Riffin argued New Jersey law (which does not recognize champerty) governs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law for validity of assignment | New Jersey law applies; New Jersey does not recognize champerty | Pennsylvania law applies; Pennsylvania prohibits champertous assignments | Pennsylvania law applies (forum choice‑of‑law analysis, greater interest) |
| Validity of the Assignment Agreement under champerty doctrine | Assignment is valid and confers standing on Riffin | Assignment is champertous because assignee has no interest except funding and sharing proceeds | Assignment is unenforceable as champertous; Riffin lacks standing |
| Standing to sue based on the Assignment Agreement | Riffin has standing via the assigned subrogation/claims | No standing because assignment is void under champerty | Riffin lacks standing; dismissal granted |
| Pleading standard on motion to dismiss | Complaint pleads sufficient facts for plausibility | Court may consider public records attached to the motion and dismiss if assignment invalid | Court accepted well‑pleaded facts but considered public records; dismissal appropriate after applying law |
Key Cases Cited
- Richette v. Pennsylvania R.R., 410 Pa. 6, 187 A.2d 910 (Penn. 1963) (establishes champerty doctrine invalidating certain assignments)
- Dougherty v. Carlisle Transp. Products, Inc., [citation="610 F. App'x 91"] (3d Cir. 2015) (applies Pennsylvania champerty factors)
- Griffith v. United Air Lines, 416 Pa. 1, 203 A.2d 796 (Pa. 1964) (adopts flexible choice‑of‑law analysis focusing on governmental interests)
- Koro Co., Inc. v. Bristol‑Myers Co., 568 F. Supp. 280 (D.D.C. 1983) (applies forum interest and analogous public‑policy analysis to choose law on champerty)
- Hammersmith v. TIG Ins. Co., 480 F.3d 220 (3d Cir. 2007) (three‑step conflict‑of‑laws inquiry referenced)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading standard; plausibility requirement)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (pleading standard; plausibility test)
- Conrail v. Surface Transp. Bd., 571 F.3d 13 (D.C. Cir. 2009) (background on Conrail and conveyances under the Final System Plan)