OPINION AND ORDER
Plaintiff Prospect Funding Holdings, LLC (“Prospect”) brings this diversity action alleging breach of contract, unjust enrichment, promissory estoppel, breach of the duty of good faith and fair dealing, negligent misrepresentation, money had and received, and conversion. Pending before the Court is Defendant Jerry Pilgrim’s Motion to Dismiss under Rule 12(b)(2), or in the alternative, 12(b)(6) of the Federal Rules of Civil Procedure. Doc. 32. Also pending is Prospect’s Motion to Amend under Rule 15(a). Doc. 63. For the reasons set forth below, Defendant Pilgrim’s Motion to Dismiss under Rule 12(b)(2) is GRANTED. Because the Court grants dismissal under Rule 12(b)(2), the Court does not reach the Rule 12(b)(6) issue. Prospect’s Motion to Amend under Rule 15(a) is DENIED.
I. Factual Background
Prospect is a New York limited liability company. First Amended Complaint (“Am.
Prospect alleges that Howard Vinson (“Vinson”) requested funding from Prospect in connection with a personal injury action in Georgia in December 2013. See id. ¶¶ 11-12. Prospect agreed to advance the sum of $10,560.00 plus $1,800.00 in fees to Vinson. Id. ¶ 20. This transaction was memorialized in a funding agreement signed on December 30, 2013, that consisted of three documents: (1) an agreement to assign proceeds, (2) an irrevocable letter of direction, and (3) an attorney acknowledgment (the “First Funding Agreement”). Id. ¶¶ 21-22. Vinson’s personal injury attorney at the time, Jonathan Speiser (“Speiser”), signed the attorney acknowledgment on December 30, 2013. Id. At that time, Speiser was an attorney at the Law Offices of Neil Flit, which Prospect has also named as a defendant in this action. Id. ¶ 3.
The First Funding Agreement described the obligations of the parties pursuant to the contract, namely that if Vinson recovers in the personal injury litigation, he instructs his attorney to pay Prospect the amount it is due prior to any final distribution of money to Vinson.
In January 2014, Vinson requested additional funding from Prospect. Id. ¶ 27. Prospect agreed to advance an additional sum of $2,625.00 and $525.00 in fees, and the parties memorialized the transaction'in a second funding agreement dated January 24, 2014 (the “Second Funding Agreement”). Id. ¶¶ 28-29. The Second* Funding Agreement is substantially similar to the First Funding Agreement, including the same terms regarding priority of payment to Prospect, as well as an identical forum selection clause. See id. ¶¶ 7, 29-30.
Vinson changed lawyers in June 2014, dismissing Speiser and the Law Offices of Neil Flit while retaining Pilgrim. Doc. 33 at 1. Prospect learned about the change in representation shortly thereafter. See Am. Compl. ¶ 38. Prospect alleges that on July 9, 2014, it notified Pilgrim via facsimile and U.S. mail that Prospect had provided Vinson pre-settlement advances against his personal injury claims on two occasions and that Prospect held a priority lien in any settlement. Id. ¶ 39.
Meanwhile, according to Pilgrim, the personal injury action settled for the sum of $62,000 during a mediation that took
Sometime before July 24, 2014, Prospect learned that a settlement-may-have been reached in the personal injury action. Am. Compl, ¶ 40. Prospect again contacted Pilgrim to inform him about the Funding Agreements.
Upon settlement, . Pilgrim placed the settlement money in a trust account, then disbursed, some of the settlement amount to Vinson, See Doc. 33 at 2; Doc, 53 at 6. According to Prospect, Pilgrim retained a portion of the settlement money held in trust to pay another obligation Vinson owed. Doc. 53 at 6. Vinson did not pay Prospect any portion of the amount it was due pursuant to the Funding Agreements. Doc. 12 ¶ 47.
II. Procedural Background
Prospect filed " suit -against Pilgrim, Speiser, and Vinson on April 29, 2015, alleging, inter alia, that the Defendants failed to pay Prospect in accordance with the Funding Agreements. Doc. 1. Pilgrim filed his answer to the Complaint on May 29, 2015, Doc. 5, asserting that the Court lacked personal jurisdiction over him. Id.. ¶ 1. Prospect filed an amended complaint on September 10, 2015, naming, Neil Flit and the Law Offices of Neil Flit as additional defendants. Doc. 12. Prospect brought a separate action against Neil Flit and the Law Offices of Neil Flit on February 12, 2016, alleging attorney malpractice, breach of fiduciary duty, constructive fraud, breach of written contract, unjust enrichment, promissory estoppel, breach of the duty of good faith- and fair dealing, negligent misrepresentation, money had and received, and conversion. Prospect Funding Holdings, LLC v. Flit, et al., 16 Civ. 1101 (ER). The Court granted a motion , by Prospect to consolidate the two actions on July 28,2016. Doc. 30.
On July 12, 2016, Pilgrim filed the instant motion to dismiss, alleging lack of personal jurisdiction and, in the'alternative,-that'Prospect failed to state a claim. Doc. 33.
On November 30, 2016, Prospect filed a motion to amend its complaint pursuant to Federal Rule. of Civil Procedure 15(a), Doc. 66, seeking to add a claim for tortious interference with contractual relations against Pilgrim. Id. at 1. Prospect alleges that, it, discovered facts during Pilgrim’s deposition that support the claim, namely that Pilgrim had knowledge of the Funding Agreements before disbursing the settlement proceeds and that Vinson had expressed to Pilgrim his desire to not satisfy his legal obligations, under the Funding Agreements. Id. at 3.
III. Legal Standards
A. Rule 12(b)(2) Motion to Dismiss: Lack of Personal Jurisdiction
“A plaintiff opposing a motion to dismiss under Rule 12(b)(2) for lack of personal jurisdiction has the burden of es
When the Court is confronted by a motion raising a combination of Rule 12(b) defenses, it will pass on the jurisdictional issues before considering whether a claim was stated by the complaint. See Darby Trading,
B. Rule 15(a) Motion to Amend
Parties are entitled to amend their pleadings once, as a matter of course, within 21 days after serving the pleading or, if a responsive pleading is required, within 21 days after service of a responsive pleading or a Rule 12 motion. Fed. R. Civ. P. 15(a)(1). A party may not otherwise amend its pleading without either the written consent of the opposing party or .leave of the court. Fed. R. Civ. P. 15(a)(2). “The court should freely give leave when justice so requires.” Id. The- Supreme Court has held that it would be an abuse of discretion, “inconsistent with the spirit of the Federal . Rules,” for a district court to deny leave without some justification, “such as undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of, amendment,, etc.” Foman v. Davis,
Leave to amend may be denied on the basis of futility if the proposed claims would not withstand a Rule 12(b)(6) motion to dismiss. Dougherty v. Town of N. Hempstead Bd. of Zoning Appeals,
IV. Discussion
A. Rule 12(b)(2) Motion to Dismiss: Lack of Personal Jurisdiction
Prospect asserts that the Court has personal jurisdiction over Pilgrim because
While the Second Circuit has not reached the question of when a signatory may enforce a forum selection clause against a non-signatory, a number of district court cases in this Circuit have embraced the “closely related” standard in cases analogous to this one. See, e.g., MGM Studios Inc. v. Canal & Distrib. S.A.S., No. 07 Civ. 2918 (DB),
In determining when a non-signatory is bound, courts in this Circuit “look at whether the non-signatory is so closely
Prospect argues that Pilgrim is so closely related to Vinson and his dispute with Prospect that he should have reasonably foreseen that his disbursement of the settlement proceeds to Vinson would involve him in a contract dispute with Prospect. See Doc. 53 at 7. As a preliminary matter, the Court notes that Prospect misstates the “closely related” standard as developed in this Circuit. The relevant question in deciding whether a non-signatory is “closely related” is whether it was reasonably foreseeable that the non-signatory would be bound by the forum selection clause, not whether a contractual dispute with a signatory was reasonably foreseeable, as Prospect suggests.
Nonetheless, the Court finds that Pilgrim is not sufficiently “closely related” to the signatories and their dispute so that enforcement of the forum selection clause was foreseeable by Pilgrim. Pilgrim played no role in the funding transactions between Prospect and Vinson, and came to represent Vinson months' after the Funding Agreements had been finalized. Indeed, Prospect’s own pleadings and submissions suggest that Pilgrim learned of the existence of the Funding Agreements only a few days before Vinson settled his personal injury action in Georgia.
The vast majority of cases that have found a non-signatory bound by a forum selection clause under the theory that they are “closely related” to the signatory or the dispute have done so where the non-signatory ha'd an active role in the transaction between the signatories or where the non-signatory had an active role in the company that was the signatory. See Leviton
Prospect also asserts an alternative basis for personal jurisdiction — that Pilgrim has submitted to the Court’s jurisdiction by substantially participating in the litigation. Doc. 53 at 11. Prospect relies on two New York state cases to argue that “when a defendant participates in the merits of a lawsuit, they submit to the court’s jurisdiction.” Doc. 53 at 11. However, the cases that Prospect cites are, distinguishable from this case in important, ways,.
First, the defendants in the cases that Prospect cites challenged personal jurisdiction because they were not served with process. See Taveras v. City of New York,
Second, the defendants in Taveras and Feola actively participated in the lawsuits before raising any jurisdictional challenges. See Taveras,
Moreover, to the extent that Prospect intended to allude to Second Circuit case law regarding forfeiture of personal juris
For these reasons, the Court finds that Prospect has failed to plead facts sufficient for a prima facie showing of jurisdiction. Accordingly, Pilgrim’s motion to dismiss for lack of personal jurisdiction is GRANTED.
B. Rule 15(a) Motion to Amend
Prospect seeks to Amend its complaint to include a claim for tortious interference with contractual relations against Pilgrim. Doc. 63. Pilgrim argues •that allowing Prospect to amend its complaint to add a claim for tortious interference would be an “exercise in futility.” Doc. 62 at 3. “Under New York law, the elements of tortious interference with contract are (1) the existence of. a valid contract between the plaintiff and a third party; (2) the defendant’s knowledge of the contract; (3) the. defendant’s-intentional procurement of the third party’s breach of the contract without justification; (4) actual breach of the contract; and (5) damages resulting therefrom.” See Kirch v. Liberty Media Corp.,
To satisfy this element, it is not enough that a defendant engaged in conduct with a third-party that happened to constitute a breach of the third party’s contract with the plaintiff; instead a plain-
Prospect asserts that it discovered new facts during Pilgrim’s deposition that support a claim for tortious interference: (1) Pilgrim knew of the Funding Agreements before disbursing the settlement money to Vinson, and (2) Vinson told Pilgrim that he did not want to pay Prospect as required under the Funding Agreements. See Doc. 66 at 9. Pilgrim’s alleged interference, according to Prospect, was his “disbursement of [the settlement] funds with knowledge of the Agreements.... ” Id. at 24.
Accepting the allegations in Prospect’s proposed pleading as true and drawing all reasonable inferences in Prospect’s favor, the Court finds that allowing Prospect to amend its complaint would be futile. Prospect’s proposed pleading fails to sufficiently allege that Pilgrim intentionally procured Vinson’s breach. Indeed, Prospect’s proposed pleading ignores Pilgrim’s intent altogether, and merely alleges that Pilgrim disbursed the settlement money knowing that the Funding Agreements existed and that Vinson did not want to pay Prospect. Even if factually true, the act of disbursing the settlement money with knowledge of Vinson’s possible — or even likely — future breach does not amount to intentional procurement of the breach.
An illustration from comment n to the Restatement (Second) of Torts § 766 is particularly illuminating:
n. Making agreement with knowledge of the breach. One does not induce another to commit a breach of contract with a third person ... when he merely enters into an agreement with the other with knowledge that the other cannot perform both it and his contract with the third person. For instance, B is under contract to sell certain goods to C. He offers to sell them to A, who knows of the contract. A accepts the offer and receives the goods. A has not induced the breach and is not subject to liability under the rule stated in this Section.
As Prospect points out, this illustration is not directly on point because the alleged interference was not a conflicting contract between Pilgrim and Vinson. Nevertheless, comment n demonstrates that merely acting with knowledge that a third party may breach a contract with some other party is not sufficient to constitute procurement of the breach. Pilgrim may have been aware that Vinson intended to breach his contract with Prospect, but that alone does not imply that Pilgrim targeted the Funding Agreements.
The Court finds that Prospect’s proposed pleading fails to sufficiently plead the element of intentional and improper procurement, and would therefore not withstand a Rule 12(b)(6) motion to dismiss. For this reason, the Court denies without prejudice Prospect leave to amend on the basis of futility.
V. Conclusion
For the reasons set forth above, Pilgrim’s motion to dismiss is GRANTED and Prospect’s motion to amend is DE
It is SO ORDERED.
Notes
. The following facts are drawn from allegations contained in the Amended Complaint (Doc. 12), which the Court accepts as true for purposes of the instant motion. See Koch v.
. The instruction is part of the “Irrevocable Letter of Direction” in the Funding Agreement. In the letter, Vinson directs Flit to pay Prospect the amount it is due in the event of settlement.
. According to Pilgrim, he reviewed and approved a “General Release and Indemnity Agreement” for Vinson in connection with the settlement on July 15, 2014.
. During his deposition, Pilgrim testified that he first learned about the Funding Agreements from Prospect after the June 26, 2014 mediation and settlement of the personal injury action, but before he disbursed the settlement money to Vinson. See Doc. 57, Exhibit A at 3.
. The Second Circuit has held that a “delay in challenging personal jurisdiction by motion to dismiss” may result in waiver, "even where ,., the defense was asserted in a timely answer,” Hamilton v. Atlas Turner, Inc.,