Carlin appears to be the only defendant contesting this action. Default judgments have been entered 1

against defendants Pacho’s Bail Bonds and Elizabeth MacPherson. Plaintiffs have been unable to serve defendants

Tri-State Bail Bonds and David R. Morgan.

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

SURETY ADMINISTRATORS, INC.,

ET AL.

:

:

 Plaintiffs : CIVIL ACTION

 :

vs. :

: NO. 05-CV-5851

PACHO’S BAIL BONDS, ET AL. :

:

 Defendants :

MEMORANDUM OPINION & ORDER

GOLDEN, J. MARCH 29, 2007

Before the Court is Defendant Montgomery R. Carlin’s motion to dismiss. The Court 1

will deny the motion to dismiss for lack of personal jurisdiction, grant the motion to dismiss as to

plaintiffs’ breach of fiduciary duty claims (Counts IV and XI), and otherwise deny the motion. 

FACTS

This is a case concerning the attempts of creditors of a bankrupted bonding company to

recover debts under the bond company’s subagency agreements. Capital Bonding Corporation

(“CBC”) subcontracted with defendants Pacho’s Bail Bonds, Tri-State Bail Bonds, and allegedly

with their agent, Montgomery R. Carlin. CBC and its creditors, Surety Administrators, Inc. and

Harco National Insurance Company, now seek to recover debts from Pacho’s and Tri-State. The

debts arise primarily from unremitted bond premiums and service charges. Plaintiffs claim that

Carlin is a legal alter ego of Pacho’s and Tri-State, and that Carlin is an owner and director of

another Pennsylvania corporation, Capital Financial Group, Inc. (“CFG”). Carlin moves to

Case 2:05-cv-05851-TMG Document 35 Filed 03/30/07 Page 1 of 9
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dismiss for lack of personal jurisdiction and failure to state a claim.

PERSONAL JURISDICTION

When a defendant raises the defense of lack of personal jurisdiction, the plaintiff must

make a prima facie case for the exercise of personal jurisdiction by establishing with reasonable

particularity sufficient contacts between defendant and the forum state. See Mellon Bank (East)

PSFS v. Farino, 960 F.2d 1217, 1223 (3d Cir. 1992) (internal citations omitted). Federal Rule of

Civil Procedure 4(e) allows federal district courts to assert personal jurisdiction to the extent

permissible under the law of the state where the court sits, and Pennsylvania’s Long Arm Statute

provides for the exercise of jurisdiction to the constitutional limits of the due process clause. 

See 42 Pa. Cons. Stat. § 5322(b). The due process clause requires that defendant have

“minimum contacts” with the forum state such that the exercise of jurisdiction does not upset

“traditional notions of fair play and substantial justice.” Remick v. Manfredy, 238 F.3d 248, 255

(3d Cir. 2001) (citing Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). This

requirement means that the defendant must have purposefully directed his conduct toward the

forum state and availed himself to the protections of its law. See Burger King Corp. v.

Rudzewicz, 471 U.S. 462, 472 (1985). 

Carlin alleges that his contacts with Pennsylvania were limited such that this Court lacks

personal jurisdiction. He provides a personal affidavit stating that he was never an owner of

Pacho’s or Tri-State, and acted solely as counsel and/or agent of these companies. Carlin further

states that he never contracted with CBC on Pacho’s or Tri-State’s behalf or otherwise. Carlin

also makes the somewhat cryptic assertion that, although the president of Capital Bonding led

him to believe that he was an owner and director of Capital Financial, he “subsequently came to

Case 2:05-cv-05851-TMG Document 35 Filed 03/30/07 Page 2 of 9
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realize that [CBC’s president] never made [him] a director nor had any intention of allowing

[him] to perform as a director.” Decl. of Montgomery R. Carlin at ¶ 14. 

Carlin also attempts to avoid personal jurisdiction via the “fiduciary shield doctrine,”

which is the principle that the actions of corporate employees and agents taken within their

corporate capacity cannot provide contacts with the forum sufficient to create personal

jurisdiction. See, e.g., D&S Screen Fund II v. Ferrari, 174 F. Supp. 2d 343, 347 (E.D. Pa. 2001). 

Carlin argues that his only contact with Pennsylvania was pursuant to his duties as counsel and

agent for Pacho’s and Tri-State. A Court may look past the fiduciary shield doctrine if “the

defendant had a major role in the corporate structure, the quality of his contacts with the state

were significant, and his participation in the tortious conduct alleged was extensive.” TJS

Brokerage & Co., Inc. v. Mahoney, 940 F. Supp. 784, 789 (E.D. Pa. 1996).

For their part, plaintiffs produce sworn testimony from three CBC employees stating that

Carlin visited CBC’s office in Reading, Pennsylvania on many occasions to conduct and discuss

business, as well as substantial correspondence between Carlin and CBC in Carlin’s various

capacities with Pacho’s and Tri-State. Plaintiffs also produce corporate documents from Pacho’s

and Tri-State demonstrating that Carlin was counsel for Tri-State and had check writing authority

for Pacho’s. These materials include a document from Tri-State signed by Carlin, in which

Carlin’s signature bloc identifies him as Tri-State’s general counsel. The document is dated

March of 2001, which is significant because it contradicts Carlin’s sworn statement that he was

only counsel for Tri-State during 2000. Plaintiffs’ evidence also suggests that Carlin held

himself out as director of CFG, as the signature bloc of a May 2003 Carlin email identifies Carlin

as “Director, Capital Financial Group.” Pls.’ Opp’n at Ex. A.

Case 2:05-cv-05851-TMG Document 35 Filed 03/30/07 Page 3 of 9
 The full email, from Carlin to Bruce Gaston at CBC, reads: 

2

Bruce, In light of the chaotic situation in NJ and in light of the total lack of

authority I have over my agents. Anytime I try to discipline or control my agents

they merely sell their bails to other Capital Agents you MUST think I am a total

RETARD to universally indemnify the [contract with Tri-State’s successor]. I

would agree to be responsible for actions caused by MY negligence but a

blanket indemnification is not possible. I would pull out of the market before I

did that. Pleased be man enough to tell me if that is the desired result.

Montgomery Carlin, Director, Capital Financial Group.

-4-

Plaintiffs have also produced evidence suggesting that Carlin falls within the exception to

the fiduciary shield doctrine. The materials show he acted as counsel for Pacho’s and Tri-State

and that he was authorized to enter into contracts with CBC in his individual capacity. 

Moreover, plaintiffs provided an email from Carlin suggesting that some of their allegations of

tortious conduct on his part are true. On one occasion, it appears that Carlin wrote to CBC that

he had a “total lack of authority” over his agents, thus giving credence to plaintiffs’ claim that

Carlin failed to satisfy some of the debts Pacho’s and Tri-State owed to plaintiffs. Pls.’ Opp’n at

Ex. A. Even assuming that Carlin’s Pacho’s and Tri-State-related conduct was subject to the 2

fiduciary shield doctrine, plaintiffs have also produced evidence that he was a director and owner

of CFG, a Pennsylvania corporation. Carlin’s ownership of a Pennsylvania business is a good

indicator that he purposefully directed his conduct towards Pennsylvania and availed himself of

protections under Pennsylvania law. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472

(1985). 

Given the breadth of evidence plaintiffs have marshaled from various sources, and the

contradictions with Carlin’s affidavit that evidence suggests, the Court finds that plaintiffs have

made the prima facie case necessary for this Court to exercise personal jurisdiction. 

Case 2:05-cv-05851-TMG Document 35 Filed 03/30/07 Page 4 of 9
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MOTION TO DISMISS FOR FAILURE TO STATE A CLAIM

Federal Rule of Civil Procedure 12(b)(6) allows courts to screen out cases “where a

Complaint states a claim based upon a wrong for which there is clearly no remedy, or a claim

which the plaintiff is without right or power to assert and for which no relief could possibly be

granted.” Port Auth. v. Arcadian Corp., 189 F.3d 305, 311-12 (3d Cir. 1999). The Third Circuit

Court of Appeals instructs that “the complaint will withstand a Fed. R. Civ. P. 12(b)(6) attack if

the material facts as alleged, in addition to inferences drawn from those allegations, provide a

basis for recovery.” Menkowitz v. Pottstown Mem’l Med. Ctr., 154 F.3d 113, 124-25 (3d Cir.

1998). In deciding a motion to dismiss, a court is required to accept all of the plaintiff’s factual

allegations as true. Hishon v. King & Spalding, 467 U.S. 69, 73 (1984). Thus, a court should

grant a motion to dismiss only when it is “beyond doubt that the plaintiff can prove no set of

facts in support of his claim which would entitle him to relief.” Johnsrud v. Carter, 620 F.2d 29,

33 (3d Cir. 1980). In resolving a motion to dismiss, the court must primarily consider the

allegations contained in the complaint, although matters of public record, orders, and exhibits

attached to the complaint may also be considered. Pension Benefit Guar. Corp. v. White Consol.

Indus., Inc., 998 F.2d 1192, 1196 (3d Cir.1993).

1. Breach of Contract Claims

Plaintiffs allege breach of contract claims against Carlin and Pacho’s (Counts I through

III) and Carlin and Tri-State (Counts VIII through X). A valid contract requires offer,

acceptance, and consideration. See Morosetti v. Louisiana Land and Exploration, 564 A.2d 151,

152 (Pa. 1989). Plaintiffs assert that Carlin was involved in the offer, acceptance, and

consideration relating to the Pacho’s and Tri-State contracts. Carlin attacks those claims on the

Case 2:05-cv-05851-TMG Document 35 Filed 03/30/07 Page 5 of 9
 Carlin’s claim not to be a signatory references the assertions in his affidavit in support of his motion to 3

dismiss for lack of personal jurisdiction. If this Court were to consider the contents of Carlin’s affidavit in

connection with Carlin’s 12(b)(6) motion, it would become necessary to convert the motion to a motion for summary

judgment under Federal Rule of Civil Procedure 56. See Rose v. Bartle, 871 F.2d 331, 339 n.3 (3d Cir. 1988). The

Court will not take this approach because declining to address summary judgment now will allow the parties to make

appropriate motions for summary judgment without prejudice once the record in this matter has been more fully

developed. 

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grounds that he was not a signatory to the contracts. Such attacks are of no consequence because

this matter is before the court on a motion to dismiss, and the Court must accept as true all

factual allegations in plaintiffs’ Complaint. Hishon, 467 U.S. at 73. Having alleged a valid 3

contract, plaintiffs further alleged breach of that contract and resulting damages. See Omicron

Sys., Inc. v. Weiner, 860 A.2d 554, 564 (Pa. Super. Ct. 2004) (requiring a contract, breach, and

damages to sustain a breach of contract claim). Carlin’s motion to dismiss the contract counts of

plaintiffs’ Complaint therefore fails. 

2. Breach of Fiduciary Duty Claims

Plaintiffs allege breach of fiduciary duty claims against Carlin and Pacho’s (Count IV)

and Carlin and Tri-State (Count XI). A fiduciary relationship arises when “one person has

reposed a special confidence in another to the extent that the parties do not deal with each other

on equal terms, either because of an overmastering dominance on one side, or weakness,

dependence or justifiable trust, on the other.” Becker v. Chicago Title Ins. Co., 2004 WL

228672, at *8 (E.D. Pa. Feb. 4, 2004) (quoting Commw. Dep’t of Transp. v. E-Z Parks, Inc., 620

A.2d 712, 717 (Pa. Commw. Ct. 1993)). Plaintiffs have not alleged the necessary facts to create

a fiduciary relationship, instead merely stating that one existed. While the Court is required to

accept all of plaintiffs’ factual allegations as true at the pleadings stage, Hishon, 467 U.S. at 73,

the existence of a fiduciary relationship is a legal allegation that the Court is not required to

Case 2:05-cv-05851-TMG Document 35 Filed 03/30/07 Page 6 of 9
-7-

accept. Papasan v. Allain, 478 U.S. 265, 286 (1986). Plaintiffs’ fiduciary duty counts are

therefore dismissed.

3. Conversion Claims

Plaintiffs allege conversion claims against Carlin and Pacho’s (Count V) and Carlin and

Tri-State (Count XII). Conversion “is the deprivation of another’s right of property in, or use or

possession of, a chattel, without the owner’s consent and without lawful justification.” Fort

Washington Res., Inc. v. Tannen, 846 F. Supp. 354, 361 (E.D. Pa. 1994). Money “may be the

subject of conversion.” Shonberger v. Oswell, 530 A.2d 112, 114 (Pa. Super. Ct. 1987). 

Carlin attacks the conversion claims on two grounds, both of which fail. He first argues

that plaintiffs are not entitled to recover monies owed pursuant to a contract via a conversion

claim. See Peoples Mortgage Co. v. Fed. Nat’l Mortgage Ass’n, 856 F. Supp. 910, 929-30 (E.D.

Pa. 1994). The Complaint pleads bases for recovery other than contract however, such as

insurance laws. Compl. at ¶¶ 88, 152. Carlin also seeks dismissal on the grounds that the

Complaint fails to allege that Carlin personally retained the monies sought. But the Complaint

alleges that Carlin “wrongfully fail[ed] to turn over” the monies. Compl. at ¶¶ 89, 153. 

Although it is true that the Complaint does not explicitly state that Carlin personally retained the

monies, it clearly implies that he kept them, and a Complaint will survive a motion to dismiss if

“inferences drawn from [its] allegations[] provide a basis for recovery.” Menkowitz, 154 F.3d at

125. 

4. Unjust Enrichment Claims

Plaintiffs allege unjust enrichment claims against Carlin and Pacho’s (Count VI) and

Carlin and Tri-State (Count XIII). Carlin argues that unjust enrichment is unavailable where a

Case 2:05-cv-05851-TMG Document 35 Filed 03/30/07 Page 7 of 9
 Although “for the time-being Plaintiffs may maintain their actions for unjust enrichment and breach of 4

contract, they may not recover under both theories, even if they ultimately prevail in their proofs.” Robinson, 2006

WL 2642323, at *8. 

-8-

relationship is governed by contract. That is not the case, however, as the “Federal rules allow

pleading in the alternative. Courts have permitted plaintiffs to pursue alternative theories of

recovery based both on breach of contract and unjust enrichment, even when the existence of a

contract would preclude recovery under unjust enrichment.” Robinson v. Holiday Universal,

Inc., 2006 WL 2642323, at *8 (E.D. Pa. Sept. 11, 2006) (quoting United States v. Kensington

Hosp., 760 F. Supp. 1120, 1135 (E.D. Pa. 1991)). The case Carlin relies on is also inapposite, as

it involved an insurance dispute where the existence of a contract was unchallenged. See Benefit

Trust Life Ins. Co. v. Union Nat’l Bank, 776 F.2d 1174, 1177 (3d Cir. 1985). Here, Carlin

disputes the existence of a contract – indeed, it is the primary basis for his motion to dismiss –

and plaintiffs have exercised their right under Federal Rule 8(e)(2) to allege alternative forms of

relief “regardless of consistency.” 

4

Carlin also argues that plaintiffs have failed to allege the elements necessary to state an

unjust enrichment claim: that a party received a benefit from plaintiffs, appreciated that benefit,

and that retention of that benefit would be inequitable. See Hershey Foods Corp. v. Ralph

Chapek, Inc., 828 F.2d 989, 999 (3d Cir. 1987) (citing Torchia v. Torchia, 499 A.2d 581, 582

(Pa. Super. Ct. 1985)). Plaintiffs’ Complaint alleges precisely these elements however, and

therefore Carlin’s attack fails. 

An appropriate order accompanies this Memorandum Opinion. 

Case 2:05-cv-05851-TMG Document 35 Filed 03/30/07 Page 8 of 9
IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

SURETY ADMINISTRATORS, INC.,

ET AL.

:

:

 Plaintiffs : CIVIL ACTION

 :

vs. :

: NO. 05-CV-5851

PACHO’S BAIL BONDS, ET AL. :

:

 Defendants :

ORDER

AND NOW, this 29th day of March, 2007, it is hereby ORDERED that:

 1. Defendant Montgomery R. Carlin’s Motion to Dismiss Plaintiffs’ Amended

Complaint (Document No. 25) is DENIED IN PART and GRANTED IN PART as described in

the above Memorandum Opinion. 

 2. Defendants are granted leave to renew their motion to dismiss for lack of personal

jurisdiction if they can produce additional evidence. 

 3. Plaintiffs are granted leave to amend the fiduciary duty counts of their complaint. 

 4. Defendant Carlin shall have twenty days from the date of this Order to file an

answer to the Amended Complaint. 

BY THE COURT:

/s/ Thomas M. Golden 

THOMAS M. GOLDEN, J.

Case 2:05-cv-05851-TMG Document 35 Filed 03/30/07 Page 9 of 9