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Philadelphia-based law firm Schnader Harrison Segal & Lewis has won the right to sue a group of Canadian companies in federal court for refusing to pay its bill for the firm’s work on an initial public offering now that a federal judge has ruled that a series of telephone calls, faxes, e-mails and letters showed the defendants had “sufficient minimum contacts” with Pennsylvania. In the suit, the Schnader firm claims it was hired by Basic Capital Funds Inc. of Ontario to prepare an IPO of a real estate investment trust. In its answer to the suit, Basic Capital claimed that Schnader’s true clients were Basic U.S. REIT and Basic Advisors Inc. Schnader’s lawyer, Jordan W. Felzer of Hudson & Felzer in Turnersville, N.J., amended the suit to add those two companies and claimed that the firm was owed for legal services rendered between March 1996 and December 1997. The suit alleged that the firm received only three payments totaling $82,000. Basic Capital’s lawyer, Thomas P. Stevens of Corr Stevens & Fenningham in Trevose, Pa., moved to dismiss the suit for lack of personal jurisdiction, arguing that the Canadian companies had insufficient contact with Pennsylvania to justify being hailed into court there. Senior U.S. District Judge Louis C. Bechtle found that under Pennsylvania’s long-arm statute, the court’s analysis of such questions involves a two-prong test that looks first to whether there were sufficient contacts with the state and next whether “fair play and substantial justice” support retaining jurisdiction. When a defendant challenges personal jurisdiction, Bechtle said, it is the plaintiff who has the burden of establishing facts to show that jurisdiction is proper. Schnader met that burden, Bechtle found, by submitting a declaration from senior partner Clinton Stuntebeck, who outlined the telephone calls, mail, faxes and e-mails between the Schnader firm and Basic Capital. Bechtle also noted that Schnader received three initial payments for its work in the form of checks from “Basic Capital Funds, an Ontario limited partnership by its General Partner Basic Capital Funds Inc.” Turning to the fair-play prong of the test, Bechtle found that “the burden on a defendant who wishes to show an absence of fairness or lack of substantial justice is heavy.” Basic Capital failed to meet the burden, Bechtle said, because it could not assert “any grounds as to how it would be unfairly burdened by litigating this action in Pennsylvania.” By contrast, Bechtle said he recognized that the Schnader firm “has an interest in obtaining relief in this action and that the court is well-suited to provide such relief.” The state of Pennsylvania also has an interest in the dispute, Bechtle said, since the Schnader firm is located here. As a result, Bechtle concluded that asserting personal jurisdiction over Basic Capital “will not offend traditional notions of fair play and substantial justice.”

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