DMB Fin. v. Symple Lending, LLC

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DMB FINANCIAL LLC, Plaintiff, v. SYMPLE LENDING LLC and BEYOND FINANCE LLC, Defendants.

Civil Action No. 21-12065-FDS

United States District Court, D. Massachusetts

June 1, 2022

MEMORANDUM AND ORDER ON DEFENDANT'S MOTION TO DISMISS

F. DENNIS SAYLOR IV., CHIEF JUDGE, UNITED STATES DISTRICT COURT.

This is a contract dispute between debt-settlement companies. Plaintiff DMB Financial LLC has sued Symple Lending LLC for breach of contract, violations of Mass. Gen. Laws ch. 93A and related claims. It also has sued one of its competitors Beyond Finance LLC, as a nominal defendant. Jurisdiction is based on diversity of citizenship.

Symple has moved to dismiss the complaint on different grounds including lack of personal jurisdiction under Fed.R.Civ.P 12(b)(2), improper venue under Fed.R.Civ.P. 12(b)(3), and failure to state a claim under Fed.R.Civ.P. 12(b)(6). For the following reasons, that motion will be granted in part and denied in part.

I. Background

A. Factual Background

The following facts are set forth as alleged in the complaint.

DMB Financial LLC is a Massachusetts-based limited liability company in the business of assisting consumers negotiate and settle their debts with credit-card companies. (Compl. ¶¶ 1, 4).

Symple Lending LLC is a Wyoming-based limited liability company that marketed DMB's services to consumers. (Id. ¶¶ 2, 6). Beyond Finance LLC is a Texas-based limited liability company that competes with DMB in the debt-settlement industry. (Id. ¶¶ 3, 14).

As part of its business, DMB enters into affiliate sales agreements with other companies to market and enroll consumers in its debt-settlement programs. (Id. ¶ 5). DMB and Symple signed such an agreement on May 13, 2021. (Id. ¶ 6; Ex. 1). That agreement stated in relevant part:

[Symple] acknowledges that the compensation provided in “Schedule A-Compensation” represents true and valuable consideration between the Parties and exceeds prevailing market rates. In exchange for such consideration, [Symple] agrees that it will not market or promote any other debt settlement program during the term of this Agreement without DMB's express written consent and all Consumers that [Symple] contacts regarding the Program will only be attempted to be enrolled in the Program.

(Compl. ¶ 6; Ex. 1 § 7.1).^[1] According to the complaint, DMB paid Symple rates in excess of its standard commission schedule because, in part, it asked Symple for exclusivity. (Compl. ¶ 8). It further contends that it only gave consent for Symple to promote one other debt-settlement program, ClearOne Advantage LLC in Illinois. (Id. ¶ 7).

Also on May 13, 2021, DMB and Symple agreed to terms expressed in a letter of intent, which contemplated that DMB would purchase 30% of Symple's equity. (Id. ¶ 9; Ex. 2). DMB then advanced $110, 000 toward that purchase. (Compl. ¶ 9). According to the complaint, Symple later backed out of that deal, but DMB informed Symple that it would not immediately demand reimbursement of the $110, 000 because their affiliate relationship was going well. (Id. ¶ 10).

To further that relationship, DMB contends that it took certain steps. It advanced Symple monthly commission payments on multiple occasions to assist Symple with cash flow, changed how it calculated commissions to ensure that Symple was paid faster, and agreed to reduce by 50% the cost of credit reports pulled by Symple. (Id. ¶ 11). It provided confidential information that helped Symple obtain a lending license in Utah, introduced Symple to digital media companies, and provided discounted access to its data scientist to improve Symple's direct-mail marketing. (Id.). It also provided access to its direct-mail design team, which offered input on Symple's direct mailers. (Id.). It customized, at its own cost, a customer relations management (“CRM”) system based on Symple's sales process, built custom reports and performance dashboards for Symple, and created custom email and SMS “drip campaigns” and templates for Symple. (Id.). Finally, it handled complaints made to the Better Business Bureau and American Fair Credit Council on Symple's behalf. (Id.). DMB contends that it would not have undertaken those actions if Symple had not agreed to the exclusivity provision. (Id. ¶ 12).

From June through October 2021, Symple enrolled the following debt in DMB programs:

June: $1, 698, 529.98

July: $1, 913, 348.88

August: $1, 988, 038.81

September: $2, 081, 531.40

October: $687, 842.00

(Id. ¶ 13). The last enrollment took place on October 8, 2021; no amounts were reported for November 2021. (Id.).

Between late October and early November, DMB learned that Symple's new client enrollment had fallen because Symple was marketing for Beyond, a direct competitor of DMB. (Id. ¶ 14). It also learned that Symple had been soliciting consumers who signed up with DMB in an effort to get them to move to Beyond's program. (Id.).

Since then, DMB has paid Symple all of its owed commission, except for approximately $6, 000. (Id. ¶ 15). It has withheld that amount in light of Symple's alleged failure to abide by the affiliate sales agreement and because Symple has not reimbursed it for the $110, 000 advance. (Id.).

B. Procedural Background

This case was originally filed in Massachusetts state court. On December 17, 2021, Symple removed the matter to this Court.

The complaint asserts seven claims. Counts 1 and 2 assert claims for breach of contract and breach of the implied covenant of good faith and fair dealing, respectively. (Compl. ¶¶ 1624). Counts 3 and 4 assert claims for unjust enrichment and promissory estoppel. (Id. ¶¶ 25-33). Counts 5 and 6 seek remedies of declaratory judgment and specific performance. (Id. ¶¶ 34-39). And Count 7 asserts a claim for violations of Mass. Gen. Laws ch. 93A. (Id. ¶¶ 40-44).

Symple has moved to dismiss the complaint on different grounds, including lack of personal jurisdiction under Fed.R.Civ.P. 12(b)(2), improper venue under Fed.R.Civ.P. 12(b)(3), and failure to state a claim under Fed.R.Civ.P. 12(b)(6).

II. Analysis

A. Personal Jurisdiction

Defendant first contends that the complaint must be dismissed under Fed.R.Civ.P. 12(b)(2) for lack of personal jurisdiction.

A plaintiff bears the burden of establishing that the court has personal jurisdiction over a defendant. See Daynard v. Ness, Motley, Loadholt, Richardson & Poole, P.A., 290 F.3d 42, 50 (1st Cir. 2002).

When considering a motion to dismiss under Fed.R.Civ.P. 12(b)(2), the court may use several standards to assess whether a plaintiff has carried that burden: the “prima facie” standard, the “preponderance of the evidence” standard, or the “likelihood” standard. See id. at 50-51, 51 n.5; Foster-Miller, Inc. v. Babcock & Wilcox Canada, 46 F.3d 138, 145-46 (1st Cir. 1995). Where, as here, the court is called to make that assessment without first holding an evidentiary hearing, the prima facie standard is applied. See United States v. Swiss Am. Bank, Ltd., 274 F.3d 610, 618 (1st Cir. 2001).

Under that standard, the court takes the plaintiff's “properly documented evidentiary proffers as true and construe[s] them in the light most favorable to [the plaintiff's] jurisdictional claim.” A Corp. v. All Am. Plumbing, Inc., 812 F.3d 54, 58 (1st Cir. 2016) (citing Phillips v. Prairie Eye Ctr., 530 F.3d 22, 26 (1st Cir. 2008)). The plaintiff may not “rely on unsupported allegations in its pleadings.” Id. (quoting Platten v. HG Bermuda Exempted Ltd., 437 F.3d 118, 134 (1st Cir. 2006)) (internal alteration omitted). Instead, the plaintiff “must put forward ‘evidence of specific facts' to demonstrate that jurisdiction exists.” Id. (quoting Platten, 437 F.3d at 134). “[T]he plaintiff . . . may rely on jurisdictional facts documented in ‘supplemental filings (such as affidavits) [ ] contained in the record' ....” Motus, LLC v. CarData Consultants, Inc., 23 F.4th 115, 123 (1st Cir. 2022) (quoting Baskin-Robbins Franchising LLC v. Alpenrose Dairy, Inc., 825 F.3d 28, 34 (1st Cir. 2016)). Facts offered by the defendant “become part of the mix only to the extent that they are uncontradicted.” Astro-Med, Inc. v. Nihon Kohden Am., Inc., 591 F.3d 1, 8 (1st Cir. 2009) (quoting Adelson v. Hananel, 510 F.3d 43, 48 (1st Cir. 2007)).

The exercise of personal jurisdiction over a defendant must be authorized by statute and consistent with the due-process requirements of the United States Constitution. See A Corp., 812 F.3d at 58 (citing Daynard, 290 F.3d at 52).^[2] Consistent with those requirements, a court may exercise either general or specific jurisdiction. See Baskin-Robbins, 825 F.3d at 35.

Specific jurisdiction exists when there is a demonstrable nexus between a plaintiff's claims and a defendant's forum-based activities. General jurisdiction exists when the litigation is not directly founded on the defendant's forum-based contacts, but the defendant has nevertheless engaged in continuous and systematic activity, unrelated to the suit, in the forum state.

Swiss Am. Bank, 274 F.3d at 618 (internal citations and quotation marks omitted).

1. General Jurisdiction

As to general jurisdiction, the complaint alleges that defendant is a Wyoming limited liability company with a principal place of business in Wyoming. (Compl. ¶ 2). Plaintiff does not contend that defendant has “affiliations with [Massachusetts] . . . so ‘continuous and systematic' as to render [it] essentially at home ....” Goodyear Dunlop Tires Operations, S.A. v Brown, 564 U.S. 915, 919 (2011) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 317 (1945)). Nor does plaintiff allege that defendant's affiliations with Massachusetts are so substantial that it is “comparable to a domestic enterprise in that State.” Daimler AG v. Bauman, 571 U.S. 117, 133 n.11 (2014...