Lichtenstein v. Aspect Computer Corporation et al

1 The third defendant Chien-Ho Chu (“Chu”) did not join in this Motion, and the docket
does not reflect an answer having been filed or an extension to answer granted on his behalf. If Chu
has been properly served, Plaintiff shall forthwith take the appropriate action in light of his failure
to timely respond.
UNITED S TATES B ANKRUPTCY COURT
FOR T HE E ASTERN DISTRICT O F PENNSYLVANIA
In re 	: 	Chapter 7
:
COMPUTER PERSONALITIES SYSTEMS, : 	Bankruptcy No. 01-14231DWS
INC., 	:
:
Debtor. 	:
:
LAWRENCE J. LICHTENSTEIN, Trustee, 	: 	Adversary No. 05-0006
Trustee for the Estate of Computer Personali- :
ties Systems, Inc., 	:
:
Plaintiff, 	:
:
v. 	:
:
ASPECT COMPUTER CORPORATION, 	:
CHU-WEN TSENG, 	:
CHIEN-HO CHU aka Jonathan Chu, 	:
FREMONT BONAVENTURE, 	:
:
Defendants. 	:
ORDER
AND NOW, this 4th day of May 2005, upon consideration of the Motion of
Defendants Chu-Wen Tseng (“Tseng”) and Fremont Bonaventure (“Fremont”) (together
“Movants”) to Dismiss Complaint for Lack of Jurisdiction (the “Motion”);1
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And the basis of the Motion being two-fold: 	(1) this Court has no subject matter
jurisdiction as the Complaint is not either a core matter or “related to” the pending
bankruptcy case so as to confer jurisdiction pursuant to 28 U.S. § 1334; (2) this Court has
no personal jurisdiction over Tseng and Fremont as they have no contacts with this
jurisdiction;
And after notice and hearing;
And the Complaint in this matter having alleged that (1) the plaintiff Lawrence
Lichtenstein, Chapter 7 trustee (the “Trustee”) is a creditor of Aspect Computer Corporation
(“Aspect”) having secured a judgment in the amount of $1,036,912 from this Court on
July 2, 2004; (2) on or about July 13, 2004 Fong Joe Hou (“Hou”),counsel to Aspect, filed
UCC-1 Financing Statements (“UCC-1”) to perfect a lien on Aspect’s assets in favor of
Tseng, the sister of Aspect’s President Chu, in the county and state recording offices in
New Jersey; (3) the UCC-1's were filed in connection with a purported loan by Tseng to
Aspect which, based on the deposition of Hou, the Trustee alleges bears none of the
hallmarks of an arm’s length transaction; (4) Aspect and Tseng are residents of New Jersey;
(5) Hou also filed UCC-1 Financing Statements in the county and state offices in New Jersey
on behalf of Aspect, on July 13 and 14, 2005 to perfect a lien on Aspect’s assets in favor of
Fremont Bonaventure (“Fremont”); and (6) the Trustee believes that Fremont may be owned
in whole or part by Aspect or insiders of Aspect;
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2 Notably the affidavit is silent as to Wang’s position or the identity of the other officers of
Fremont.
3 I reject Movants’ position that Fed.R.Bank.P. 7004(d) may not validly provide for
nationwide service of process. While I agree that service of process may not be the equivalent of
constitutional in personam jurisdiction, I have no doubt that a procedural rule (versus statute) may
be the basis for authorizing service of process.
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And for the reasons stated on the record, this Court easily concluding that there is at
least “related to” subject matter jurisdiction in that the collection of the judgment, which is
an asset of the estate, impacts the recoveries to be provided to creditors;
And the Motion attaching the affidavit of Jen Wang (“Wang”), an officer of
Fremont, 2 stating that (1) Fremont, a California corporation, has not and does not conduct
business in the State of Pennsylvania; (2) Fremont does not own any real or personal
property nor maintain any accounts of any kind in the State of Pennsylvania; (3) Fremont
has no employees nor does it advertise in Pennsylvania; and (4) with respect to the
security transaction at issue, all contacts and transactions took place either in California
or New Jersey;
And Movants contending that this court has no personal jurisdiction over Tseng and
Tremont because neither has any contacts with this jurisdiction;
And in support of that position Movants failing to address those cases that have held
that where parties are properly served in accordance with Federal Rule of Bankruptcy
Procedure 7004(d) authorizing nationwide service of process, 3 the bankruptcy court can
exercise personal jurisdiction so long as such parties had requisite minimum contacts with
the United States, Federal Fountain, Inc. v. KR Entertainment, Inc. (In re Federal Fountain,
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Inc.), 165 F.3d 600 (8th Cir. 1999); Owens-Illinois Inc. v. Rapid American Corp. (In re
Celotex), 124 F.3d 619 (4th Cir. 1997); Enron Corp. v. Arora (In re Enron Corp.), 316 B.R.
434 (Bankr. S.D.N.Y. 2004);
And in Peay v. Bellsouth Medical Assistance Plan, 205 F.3d 1206 (10th Cir. 2000),
the Court, while leaving open the question of whether permitted nationwide service of
process could ever offend constitutional due process, providing a framework to analyze
the issue before me which I adopt:
To establish that jurisdiction does not comport with Fifth Amendment due
process principles, a defendant must first demonstrate “that his liberty interests
actually have been infringed.” [Republic of Panama v. BCCI Holdings, 119
F.3d 935, 946 (11th Cir1997]. The burden is on the defendant to show that the
exercise of jurisdiction in the chosen forum will “make litigation so gravely
difficult and inconvenient that [he] unfairly is at a severe disadvantage in
comparison to his opponent.” Burger King Corp.[v. Rudzewicz], 471 U.S.
462, 478, 105 S.Ct. 2174 (1985)...
However, as Judge Becker has pointed out, given the “practical considerations
emanating from the realities of contemporary litigation, ... any constitutional
due process limitations upon a federal extraterritorial (nationwide) service of
process statute must be broadly defined.” 	Oxford First Corp. v. PNC
Liquidating Corp., 372 F.Supp. 191, 201 (E.D. Pa.1974). Thus, in evaluating
whether the defendant has met his burden “of establishing constitutionally
significant inconvenience,” Republic of Panama, 119 F.3d at 946, courts
should consider the following factors: 	(1) the extent of the defendant's
contacts with the place where the action was filed; (2) the inconvenience to the
defendant of having to defend in a jurisdiction other than that of his residence
or place of business, including (a) the nature and extent and interstate
character of the defendant's business, (b) the defendant's access to counsel, and
(c) the distance from the defendant to the place where the action was brought;
(3) judicial economy; (4) the probable situs of the discovery proceedings and
the extent to which the discovery proceedings will take place outside the state
of the defendant's residence or place of business; and (5) the nature of the
regulated activity in question and the extent of impact that the defendant's
activities have beyond the borders of his state of residence or business.
[citation omitted]
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4 Indeed Movants have not even alleged that the exercise of jurisdiction in this forum will
make litigation difficult or inconvenient at all, not to mention so gravely difficult and inconvenient
to severely disadvantage them in comparison to the Trustee whose sole resources are drawn from
the estate and thus funded from creditor recoveries. 	The individual defendant is from the
neighboring state of New Jersey where the corporate defendant admits to having done business and
presumably is susceptible to service. While Movants’ counsels’ easy answer was that the Trustee
could proceed in state court against all defendants, it is hard to see how suit in Pennsylvania is
unduly burdensome as compared to New Jersey. 	Moreover, where the allegations are that the
Movants have conspired with Aspect to encumber its assets to obstruct collection of the judgment,
the policy underpinnings of the Bankruptcy Code are served by prompt and cost-effective litigation.
Creditors, including many consumers, have been injured by the Debtor. Their redress can best be
(continued...)
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“We emphasize that it is only in highly unusual cases that inconvenience will
rise to a level of constitutional concern.” 	Republic of Panama, 119 F.3d
at 947. 	Certainly, “[i]n this age of instant communication,” Oxford First
Corp., 372 F.Supp. at 201, and modern transportation, the burdens of litigating
in a distant forum have lessened, Republic of Panama, 119 F.3d at 947-48. If
a defendant successfully demonstrates that litigation in the plaintiff's chosen
forum is unduly inconvenient, then “jurisdiction will comport with due
process only if the federal interest in litigating the dispute in the chosen forum
outweighs the burden imposed on the defendant.” Republic of Panama, 119
F.3d at 948. To determine whether infringement on the defendant's liberty is
justified sufficiently by government interests,
courts 	should 	examine 	the 	federal 	policies 	advanced 	by
the statute, the relationship between nationwide service of
process and the advancement of these policies, the connection
between the exercise of jurisdiction in the chosen forum and
the plaintiff's vindication of his federal right, and concerns
of judicial efficiency and economy. 	Where ... Congress has
provided for nationwide service of process, courts should
presume that nationwide personal jurisdiction is necessary to
further congressional objectives.
Id. at 1212-13 (quoting Republic of Panama, 119 F.3d at 948.);
And the Court concluding that Movants have not met their burden to prove that
litigation in the Eastern District of Pennsylvania offends due process so as to deprive this
Court of personal jurisdiction over them;4
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Adversary No. 05-0006
(...continued)
achieved in this court which supervises the administration of this Chapter 7 estate to achieve the
statutory objective of maximum and expeditious recovery of claims.
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It is hereby ORDERED that the Motion is DENIED. Movants shall file their answer
by May 18, 2005.
DIANE WEISS SIGMUND
Chief U.S. Bankruptcy Judge
Copies to:
D. Alexander Barnes, Esquire
Obermayer, Rebmann, Maxwell & Hipple LLD
1617 JFK Boulevard, 19th Floor
Philadelphia, PA 19103-4210
Jeffrey C. McCullough, Esquire
Bond & McCullough
16 North Franklin Street, Suite 300
Doylestown, PA 18901
Franklin C. Steinberg, Esquire
98 Grove Street
Somerville, NJ 08876
Dave P. Adams, Esquire
Office of the U.S. Trustee
833 Chestnut Street, Suite 500
Philadelphia, PA 19107
Lawrence Lichtenstein, Esquire
127 The Mews
Haddonfield, NJ 08033
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