Allied World Ins. Co. v. Perdomo Indus., CIVIL ACTION NO. 19-2467

• Decision Date: 15 April 2020
• Docket Number: CIVIL ACTION NO. 19-2467
• Parties: ALLIED WORLD INSURANCE COMPANY v. PERDOMO INDUSTRIAL, LLC, et al.
• Court: U.S. District Court — Eastern District of Pennsylvania

ALLIED WORLD INSURANCE COMPANY v. PERDOMO INDUSTRIAL, LLC, et al.

CIVIL ACTION NO. 19-2467

UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

April 15, 2020

MEMORANDUM

KEARNEY, J.

Philadelphia insurer Allied World Insurance Company is pursuing recovery on a September 25, 2018 Judgment we entered in its favor against non-party Orlando Perdomo, Jr. and Perdomo Industrial, LLC on a defaulted performance bond for a construction project in Washington D.C. Orlando Perdomo, Jr. then filed bankruptcy in the Eastern District of Virginia where he resides. The insurer is now alleging fraudulent conveyances before us and before the bankruptcy court including Mr. Perdomo's father Orlando Perdomo, Sr. and several entities related to Mr. Perdomo, Jr. fraudulently conveyed assets to hinder the insurer's collection on the performance bond and eventually this Court's Judgment. Mr. Perdomo, Sr. now moves to dismiss claims against him for three pre-Judgment transactions arguing we lack personal jurisdiction over him, this is not the proper venue for claims against him, and the insurer cannot plead he is a transferee under the fraudulent conveyance law. The insurer sought no discovery on personal jurisdiction over Mr. Perdomo, Sr. It does not allege or offer evidence Mr. Perdomo, Sr. knew transactions in early 2017 would frustrate a Pennsylvanian's rights. We have no present basis to exercise personal jurisdiction over Mr. Perdomo, Sr. We sever and transfer claims against him to the United States District Court for the Eastern District of Virginia.

I. Background of our underlying Judgment.

Orlando Perdomo, Sr. and his son, Orlando Perdomo, Jr. owned and operated a series of limited liability companies and corporations through which they conducted business in the Northern Virginia and Washington D.C. metro area. Mr. Perdomo, Sr. and Mr. Perdomo, Jr. formed and jointly owned Perdomo Industrial, LLC until January 2015 when Mr. Perdomo, Sr. assigned his ownership interests to his son.¹ Around this time, a general contractor, Hensel Phelps, hired Perdomo Industrial to perform "services in connection with a certain construction project located in Washington D.C. known as 'Freedom Plaza.'"² Mr. Perdomo, Jr. and Perdomo Industrial sought to guarantee performance on its subcontract by securing a performance bond.³

Four months after his father turned over his ownership interests, Mr. Perdomo, Jr. and Perdomo Industrial secured a $2,184,275 performance bond from Allied World Insurance Company for a construction project in Washington, D.C.⁴ Allied World named Perdomo Industrial as principal and the general contractor Hensel Phelps as obligee.⁵ To secure this performance bond, Mr. Perdomo, Jr. and Perdomo Industrial executed an Indemnity Agreement agreeing to "save harmless and indemnify Allied World for any and all liability, loss, damages, costs, counsel and attorney[s] fees incurred by Allied World by reason or in consequence of having issued any bonds[.]"⁶

Perdomo Industrial then defaulted on the subcontract.⁷ In December 2016, Hensel Phelps noticed Perdomo Industrial of its default, terminated it from the subcontract, and demanded Allied World pay its obligations under the performance bond.⁸ On January 30, 2017, Allied World issued a Demand for Collateral to Mr. Perdomo, Jr. and Perdomo Industrial amounting to $2,750,000.⁹ Allied World requested Mr. Perdomo, Jr. and Perdomo Industrial deliver the collateral to its Philadelphia office.¹⁰ Hensel Phelps then commenced AAA arbitration proceedings against Mr.Perdomo, Jr. and Perdomo Industrial under the subcontract.¹¹ The arbitrator found for Hensel Phelps and awarded it $3,056,095.05.¹² Allied World paid Hensel Phelps the total amount of the award.¹³ In July 2017, Allied World sued Mr. Perdomo, Jr. and Perdomo Industrial in this Court to enforce its rights under the Agreement.¹⁴ After confirming the propriety of venue given their contract with a Pennsylvania based insurer, we entered Judgment in favor of Allied World for $4,010,344.92 on September 25, 2018.¹⁵

II. Fraudulent conveyance allegations in two federal courts.

In two different cases pending here and in the United States Bankruptcy Court for the Eastern District of Virginia, Allied World alleges after it issued its January 30, 2017 Demand for Collateral to Mr. Perdomo, Jr. and Perdomo Industrial,¹⁶ Mr. Perdomo, Sr., Mr. Perdomo, Jr., and entities they owned allegedly conducted a series of transfers to separate their assets and liabilities.

In February 2017, Perdomo Industrial transferred $300,000 to Mr. Perdomo, Sr.¹⁷ On March 20, 2017, Perdomo Industrial entered an equipment purchase agreement with Perdomo National Wrecking Co., LLC and transferred approximately $600,000 of equipment for $1.00 in consideration.¹⁸ Perdomo National Wrecking Co., LLC is a limited liability company owned by Mr. Perdomo, Sr. and Mr. Perdomo, Jr.¹⁹ Mr. Perdomo, Sr. and Mr. Perdomo, Jr. formed Perdomo Realty, LLC in June 2017 and then Perdomo Development Corp. in July 2017.²⁰ Around this time, Perdomo Realty, LLC transferred a land parcel, worth approximately $653,400, to Perdomo Development Corp.²¹ We denied the defendants motion to dismiss the first amended complaint finding proper service, proper venue, sufficiently stated claims for fraudulent transfer, and personal jurisdiction as defendants only argued we lacked personal jurisdiction because Allied World failed to sufficiently state an intentional tort claim.²²

Allied World is bringing these same allegations against Mr. Perdomo, Sr. in the Eastern District of Virginia. In March 2019, Mr. Perdomo, Jr. filed for Chapter 7 bankruptcy in the United States Bankruptcy Court for the Eastern District of Virginia.²³ Allied World filed an adversary proceeding in the Bankruptcy Court requesting a denial of discharge under 11 U.S.C. § 727, based on fraudulent conveyance allegations similar to those later filed against Mr. Perdomo, Sr. in this case.²⁴ For instance, Allied World claims in its adversary action: "On February 9, 2017, [Mr. Perdomo, Jr.] signed a check to his father, Orlando M. Perdomo, Sr. in the amount of $300,000 from Perdomo Industrial, LLC. [Mr. Perdomo, Jr.] testified that his father 'started demanding he get paid for his commissions, and I paid him.' However, the Defendant no longer has any records relating to Perdomo Industrial, LLC or his substantial payments to his father."²⁵ Allied World objected to bankrupt debtor Mr. Perdomo, Jr.'s discharge of debts.²⁶ But Allied World does not sue Mr. Perdomo, Sr. or other entity defendants named in this suit in its adversary proceeding. This case appears to be in discovery, and we ordered Allied World to "in good faith coordinate to the fullest extent possible discovery efforts" in the two cases.²⁷

The Chapter 7 bankruptcy trustee is also suing Mr. Perdomo, Sr. based on these same allegations. On March 10, 2020, the bankruptcy trustee in Virginia filed an adversary complaint against Mr. Perdomo, Jr. and all Defendants in this case—including Mr. Perdomo, Sr.—based on these (and other) allegations of fraudulent conveyances.²⁸ For instance, the trustee alleges "[o]n January 1, 2017, the Debtor and [Mr. Perdomo, Sr.] executed the First Amendment purporting to transfer 50% of the ownership interest to [Mr. Perdomo, Sr.] in exchange for a $300,000 contribution."²⁹ The Honorable Brian F. Kenney entered a temporary restraining order on March 11, 2020 and preliminary injunction modifying the earlier order on March 27, 2020, which ordersthe Perdomo entities and individuals to comply with a number of conditions including not to execute further transfers of certain assets.³⁰

III. Analysis

A few months after Mr. Perdomo, Jr. filed for bankruptcy protection in Virginia, Allied World came back to this Court to sue Perdomo Industrial, LLC, Perdomo National Wrecking Co., LLC, Perdomo Development Corp., Perdomo Realty, LLC, Perdomo National Wrecking Group, LLC, Perdomo Workforce of NY, and Mr. Perdomo, Sr. in his individual capacity for alleged involvement in three fraudulent transfers. Allied World seeks a judgment voiding the alleged fraudulent transfers and compensatory and punitive damages. This appears to be the same claim the Trustee is pursuing in the Virginia bankruptcy adversary action.

Mr. Perdomo, Sr. now moves to dismiss for failure to state a claim as he is not a transferee under governing fraudulent conveyance law and for lack of personal jurisdiction.³¹ Mr. Perdomo, Sr. also argues we should dismiss because venue is improper or at least transfer because venue is inconvenient. Allied World did not ask for personal jurisdiction discovery in response to Mr. Perdomo, Sr.'s motion. The other Defendants challenged personal jurisdiction based solely on a failure to state a fraudulent conveyance claim. They did not raise the same arguments as Mr. Perdomo, Sr.

Absent Allied World pleading or adducing a basis for our exercise of personal jurisdiction over Mr. Perdomo, Sr. consistent with his due process rights, we cannot exercise personal jurisdiction over Mr. Perdomo, Sr. We must transfer Allied World's claims against him to the United States District Court for the Eastern District of Virginia under 28 U.S.C. § 1631.

A. We cannot exercise personal jurisdiction over Mr. Perdomo, Sr.

Mr. Perdomo, Sr. moves under Federal Rule of Civil Procedure 12(b)(2) arguing we may not assert personal jurisdiction over him. He submits an affidavit supporting his motion swearing he is a Virginia citizen, has lived in Virginia continuously for fifty years, has never lived or voted in Pennsylvania, and was not involved in entering the Indemnity Agreement for Perdomo Industrial with the Philadelphia-based insurer.³²

Allied World does not contest Mr. Perdomo, Sr.'s affidavit. It did not seek discovery. It relies entirely on its allegations, arguing it pleads sufficient facts supporting our exercise of personal jurisdiction over Mr. Perdomo, Sr. In its second amended...