Stevens v. Reliance Financial Corporation

Filing 24

MEMORANDUM OPINION AND ORDER: It is hereby ORDERED that Defendant Reliance Financial's 7 Motion to Dismiss is GRANTED as further set out in the order and that Plaintiff William Slay Steven's claims against it are DISMISSED without PREJUDICE. Plaintiff William Slay Steven's 22 Request to Conduct Jurisdictional Discovery is DENIED as further set out in the order. Signed by Honorable Judge Mark E. Fuller on 2/18/2014. (Attachments: # 1 Civil Appeals Checklist)(dmn, )

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF ALABAMA
NORTHERN DIVISION
WILLIAM SLAY STEVENS,
Plaintiff,
v.
RELIANCE FINANCIAL
CORPORATION,
Defendant.

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CASE NO. 2:13-cv-416-MEF
(WO -- Do Not Publish)

MEMORANDUM OPINION AND ORDER
Before the Court is Defendant Reliance Financial Corporation’s (“Reliance
Financial”) Motion to Dismiss (Doc. #7) wherein Reliance Financial argues that personal
jurisdiction is lacking and, even if this Court has personal jurisdiction over it, Plaintiff
William Slay Stevens (“Stevens”) has failed to assert viable claims against it. Stevens
opposes Reliance Financial’s motion (Doc. #22), arguing that Reliance Financial has
contractually consented to personal jurisdiction in this Court and that, if this Court finds
otherwise, Stevens should at least be permitted to conduct jurisdictional discovery on the
issue of whether Reliance Financial simply acted as the alter ego of one of its Alabama
subsidiaries, thus subjecting it to the personal jurisdiction of this Court. Finally, Stevens
argues that his claims have been adequately pled for purposes of Rule 12(b)(6). For the
reasons set forth below, the Court finds that Reliance Financial’s motion is due to be
GRANTED.

I. FACTUAL AND PROCEDURAL BACKGROUND
A.

Factual History
Prior to April 16, 2009, Stevens was employed by an investment advisory firm in

Montgomery, Alabama called Legacy Financial Group (“Legacy Financial”), which was
owned by Henry E. Walker (“Walker”). Reliance Securities, LLC (“Reliance Securities”)
was the broker/dealer for Legacy Financial, meaning that each broker employed by Legacy
Financial, including Stevens, was licensed through Reliance Securities. Stevens maintained
his license through, and was a registered representative of, Reliance Securities from
September 2008 until February 2010.
Reliance Financial, a Georgia corporation, owned 100% of its broker/subsidiary,
Reliance Securities, prior to April 16, 2009. The complaint alleges that, during this time,
Reliance Financial “fully controlled” Reliance Securities and its Representatives “through
the Board of Directors of Reliance Securities, which was comprised of, and controlled by
directors and officers of Reliance Financial[,] . . . the internal audit department of Reliance
Financial, as well as through its legal department, who had authority to direct management
and were responsible for oversight of Reliance Securities’ and its Representatives’ adherence
to and compliance with regulatory guidelines set forth by the SEC and The Financial Industry
Regulatory Authority (FINRA).” (Doc. #1-1, ¶ 7.)
In an effort to grow his business, Walker formed an entity named First Legacy
Investors, Inc. (“First Legacy”). In December 2008, First Legacy and Reliance Financial
began negotiating a deal for First Legacy to purchase 90% of the membership interests of
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Reliance Securities. Negotiations continued over the course of several months and ended
with an April 16, 2009 closing in Atlanta, Georgia, at which time Reliance Financial and
First Legacy executed a Membership Interest Purchase Agreement (the “Agreement”),
whereby First Legacy purchased 90% of Reliance Financial’s membership interests in
Reliance Securities.1 Stevens was not involved in the negotiations of this deal, nor was he
a party to the Agreement. Indeed, the only parties to this transaction and the only signatories
to the Agreement were Reliance Financial and First Legacy.
During this same time, but before the April 16, 2009 closing, First Legacy began
contemplating the sale of First Legacy promissory notes and preferred stock to fund First
Legacy’s purchase of Reliance Securities. First Legacy began putting the preferred stock
offering together prior to April 16, 2009, and began to issue promissory notes around
February 19, 2009.
On April 15, 2009, at Walker’s direction, Stevens sold two of the First Legacy
promissory notes to James C. Little, III (“Little”), in his capacity as trustee for the Susan B.
Little Family Trust (the “Trust”). These promissory notes were not registered with the
Alabama Securities Commission, nor were they subject to an exemption from registration.
Stevens also sold First Legacy preferred stock to Little and the Trust.
Ultimately, First Legacy and its subsidiaries floundered financially and Little lost the
money invested in the First Legacy promissory notes and preferred stock. Investigations

1

After April 16, 2009, Reliance Financial retained a 10% ownership interest in Reliance
Securities.
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ensued, and it was ultimately determined by the Alabama Securities Commission that the
First Legacy promissory notes were securities offered in violation of the Alabama Securities
Act. The Alabama Securities Commission further determined that the First Legacy preferred
stock was unsuitable for Little and the Trust and, therefore, was sold in violation of the
Alabama Securities Act. As a result of these findings, Stevens’s securities licenses were
revoked, and the Alabama Securities Commission barred him from working in the securities
industry in the State of Alabama. Stevens also entered into a Letter of Waiver, Acceptance
and Consent with FINRA.
On July 13, 2010, Little sued Stevens, among others, in the Circuit Court of
Montgomery County, Alabama, asserting violations of the Alabama Securities Act as well
as other state law claims. On February 25, 2011, Little amended his complaint to add
Reliance Financial as a defendant. An arbitration before FINRA was also conducted, but
because Reliance Financial is not a member of FINRA, it litigated Little’s claims in state
court, while the FINRA arbitration proceeded simultaneously. Reliance Financial did not
defend Stevens in either the state court proceeding or the FINRA arbitration. In late July
2012, the arbitration panel issued an award against Stevens and others and in Little’s favor
in the amount of $835,000. To the Court’s knowledge, Little has not attempted to collect
the award from Stevens, who, along with others, was held jointly and severally liable for
Little’s award.
B.

Procedural History
On June 14, 2013, Stevens filed this lawsuit in the Circuit Court of Montgomery
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County, Alabama, seeking indemnification from Reliance Financial for the $835,000
arbitration award entered against him, in addition to claims for wantonness and fraud.
Stevens claims that, as part of the Agreement, Reliance Financial agreed to indemnify him
for all of his pre-April 16, 2009 actions, including his own unlawful conduct in selling the
First Legacy promissory notes and preferred stock to Little and the Trust. Stevens also
claims that Reliance Financial acted wantonly and fraudulently when Reliance Financial
failed to disclose to Stevens that it had agreed to indemnify him for this conduct in the
Agreement. (Doc. #1-1.)
Jurisdiction for Stevens’s action is based on Section 10.6(d) of the Agreement, which
states:
Seller (Reliance Financial) hereby consents to the non-exclusive jurisdiction
of any court in the United States in which a Proceeding is brought against an
Indemnified Person for purposes of any claim that an Indemnified Person may
have under this Agreement with respect to such Proceeding or the matters
alleged therein.
(Doc. #1-2, Section 10, ¶ 10.6(d)) (alteration to original). Thus, according to Stevens,
because he was sued by Little in the Montgomery County Circuit Court, Reliance Financial
is subject to the jurisdiction of that court (and, presumably, any court to which such action
is removed) for purposes of any claim that Stevens, as a purported Indemnified Person, has
under the Agreement with respect to those proceedings.
On July 17, 2013, Reliance Financial removed the case to this Court. Reliance
Financial has now filed a motion to dismiss, alleging that this Court lacks personal
jurisdiction over it and that, even if such jurisdiction exists, Stevens has failed to allege
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viable claims against it. Reliance Financial denies that it contractually consented in the
Agreement to the personal jurisdiction of this Court and claims that, in the absence of
contractual consent, it lacks sufficient minimum contacts with this forum to satisfy due
process. Reliance Financial further argues that, even if personal jurisdiction exists in this
case, Stevens does not qualify as an Indemnified Person under the Agreement and, as a
result, his claims for indemnification, wantonness, and fraud, all of which stem from his
alleged status as an “Indemnified Person” under the Agreement, fail as a matter of law.
II. STANDARDS OF REVIEW
A.

Rule 12(b)(2) – Lack of Personal Jurisdiction
A Rule 12(b)(2) motion to dismiss attacks the district court’s ability to assert

jurisdiction over the defendant’s person. See Fed. R. Civ. P. 12(b)(2). In determining
whether personal jurisdiction exists, a federal court sitting in diversity must undertake a
two-step inquiry: “the exercise of jurisdiction must (1) be appropriate under the state
long-arm statute and (2) not violate the Due Process Clause of the Fourteenth Amendment
to the United States Constitution.” Un. Techs. Corp. v. Mazer, 556 F.3d 1260, 1274 (11th
Cir. 2009). Where a district court does not conduct an evidentiary hearing, “[t]he plaintiff
bears the burden of establishing personal jurisdiction over the defendant [but] ‘need only
make a prima facie showing.’” S & Davis Int’l, Inc. v. The Republic of Yemen, 218 F.3d
1292, 1303 (11th Cir. 2000) (quoting Taylor v. Phelan, 912 F.2d 429, 431 (10th Cir. 1990)).
A prima facie case is established if the plaintiff presents enough evidence to withstand a
motion for directed verdict. Consol. Dev. Corp. v. Sherritt, Inc., 216 F.3d 1286, 1291 (11th
6

Cir. 2000). The district court must accept the allegations in the complaint as true to the
extent they are uncontroverted by the defendant’s affidavits. Id. “Where, as here, the
defendant challenges jurisdiction by submitting affidavit evidence in support of its position,
‘the burden traditionally shifts back to the plaintiff to produce evidence supporting
jurisdiction.’” Mazer, 556 F.3d at 1274 (quoting Meier ex rel. Meier v. Sun Int’l Hotels, Ltd.,
288 F.3d 1264, 1269 (11th Cir. 2002)). If “the plaintiff’s complaint and supporting evidence
conflict with the defendant’s affidavits, the court must construe all reasonable inferences in
favor of the plaintiff.” Meier, 288 F.3d at 1269.
B.

Rule 12(b)(6) – Failure to State a Claim
In considering a Rule 12(b)(6) motion to dismiss, “the court accepts the plaintiff’s

allegations as true . . . and construes the complaint liberally in the plaintiff’s favor.” Whitson
v. Staff Acquisition, Inc., 41 F. Supp. 2d 1294, 1297 (M.D. Ala. 1999). Further, a district
court must favor the plaintiff with “all reasonable inferences from the allegations in the
complaint.” Stephens v. Dep’t of Health & Human Servs., 901 F.2d 1571, 1573 (11th Cir.
1990).
To survive a Rule 12(b)(6) motion to dismiss, “a complaint must contain sufficient
factual matter, accepted as true, to state a claim to relief that is plausible on its face.”
Ashcroft v. Iqbal, 556 U.S. 662, 678 (internal quotations omitted). A complaint states a
facially plausible claim for relief “when the plaintiff pleads factual content that allows the
court to draw a reasonable inference that the defendant is liable for the misconduct alleged.”
Id. A complaint does not state a facially plausible claim for relief if it shows only “a sheer
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possibility that the defendant acted unlawfully.” Id. While a complaint need not contain
detailed factual allegations to survive a Rule 12(b)(6) motion, “[a] pleading that offers labels
and conclusions or a formulaic recitation of the elements of a cause of action will not do.”
Id. (internal quotation and citations omitted). Absent the necessary factual allegations,

“unadorned, the-defendant-unlawfully-harmed-me accusation[s]” will not suffice. Id.
Courts are also not “bound to accept as true a legal conclusion couched as a factual
allegation.” Papasan v. Allain, 478 U.S. 265, 286 (1986). Granting a motion to dismiss is
appropriate only “when it is demonstrated beyond a doubt the plaintiff can prove no set of
facts in support of his claim that would entitle him to relief.” Reeves v. DSI Sec. Servs., 331
Fed. App’x 659, 661 (11th Cir. 2009).
III. DISCUSSION
Reliance Financial is seeking dismissal of Stevens’s complaint on two separate
grounds. Reliance Financial first argues that Stevens’s complaint is due to be dismissed
under Rule 12(b)(2) because the Court lacks personal jurisdiction over it, either through
contractual consent or under a traditional due process analysis. Reliance Financial next
argues that, even if the Court does exercise personal jurisdiction over it, Stevens’s complaint
is still due to be dismissed because he has failed to state any claims against Reliance
Financial for which relief can be granted under Rule 12(b)(6). The Court will address
Reliance Financial’s Rule 12(b)(2) motion first, as challenges to jurisdiction must be resolved
before a district court can consider a Rule 12(b)(6) motion. See Thompson v. Greyhound
Lines, Inc., 2012 WL 6213792, at *1 (S.D. Ala. Dec. 13, 2012) (citing Republic of Panama
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v. BCCI Holdings (Luxembourg) S.A., 119 F.3d 935, 940 (11th Cir. 1997); Jones v. State of
Georgia, 725 F.2d 622, 623 (11th Cir. 1984)).
There are essentially two issues for the Court to resolve with respect to personal
jurisdiction in this case: (1) whether Reliance Financial contractually consented to the
personal jurisdiction of this Court in the Agreement, and (2) if not, whether the Court can
exercise personal jurisdiction over Reliance Financial under a traditional due process
analysis. The Court resolves both issues in the negative.
First, the Court finds that Reliance Financial did not contractually consent to be
subject to the personal jurisdiction of this Court when it entered into the Agreement with
First Legacy. The particular clause of the Agreement at issue, and which Stevens claims
confers personal jurisdiction on this Court, reads as follows:
Seller [Reliance Financial] hereby consents to the non-exclusive jurisdiction
of any court in the United States in which a Proceeding is brought against an
Indemnified Person for purposes of any claim that an Indemnified Person may
have under this Agreement with respect to such Proceeding or the matters
alleged therein.
(Doc. #1.2, ¶10.6(d)) (alteration to original). According to Stevens, he qualifies as an
Indemnified Person under the Agreement because he was a Registered Representative of
Reliance Securities (then owned by Reliance Financial) when he sold the First Legacy
promissory notes and preferred stock to Little and the Trust. Therefore, based on Stevens’s
logic, because Little filed a lawsuit against him in Montgomery County Circuit Court arising
out of those sales, Reliance Financial consented to the jurisdiction of that court, and thus, this
Court by way of removal, for purposes of any claim that Stevens has under the Agreement
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arising from Little’s lawsuit. This, according to Stevens, encompasses all of his claims in
this lawsuit (indemnification, wantonness, and fraud) because they arise out of the Little
proceedings.2
Stevens’s argument fails for several reasons. First, the Court agrees with Reliance
Financial that the provision at issue in the Agreement is a limited consent to personal
jurisdiction, rather than a blanket consent. While Stevens argues that Reliance Financial
“agreed that it would submit to the jurisdiction in any state where an individual claiming
‘Indemnified Person’ status was sued[,]” his interpretation of Section 10.6(d) is much too
broad. Reliance Financial only agreed that it would submit to the personal jurisdiction of any
court in which a proceeding is brought against an Indemnified Person for purposes of any
claim that an Indemnified Person may have under the Agreement with respect to that
particular proceeding. Thus, even assuming that Stevens qualifies as an Indemnified Person
under the Agreement (which is a disputed issue the Court will not resolve at this time),
Section 10.6(d) would confer personal jurisdiction over Reliance Financial to the
Montgomery County Circuit Court–the court in which the Little proceeding was brought–for
purposes of any claim that Stevens may have under the Agreement with respect to that
particular proceeding. However, as Reliance Financial points out, Stevens never asserted his
pending indemnification, wantonness, and fraud claims in the Little action before the
2

In essence, these claims are that Reliance Financial should indemnify Stevens for the
arbitration award entered against him in the Little proceedings and that Reliance Financial wantonly
and fraudulently failed to disclose that it had a duty to indemnify and defend Stevens in the Little
proceedings under the terms of the Agreement between Reliance Financial and First Legacy. (Doc.
#1-1.)
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Montgomery County Circuit Court. Instead, Stevens filed an entirely separate lawsuit
against Reliance Financial, but the jurisdictional provision on which he relies simply does
not confer to this federal court personal jurisdiction over Reliance Financial in an entirely
new action that Stevens initiated himself.
The Eleventh Circuit has also held that a third-party, like Stevens, cannot enforce a
conferral of personal jurisdiction clause that is contained in a contract to which he is not a
party. See Meyer v. Carnival Corp., 938 F. Supp. 2d 1251, 1256 (11th Cir. 2013) (holding
that third-party could not enforce a conferral of jurisdiction clause contained in a contract to
which he was not a party); Barnett v. Carnival Corp., 2007 WL 1526658, at *4 (S.D. Fla.
May 23, 2007) (holding that a plaintiff could not enforce a forum selection clause in an
independent contractor agreement to which she was not a party). There is no dispute that
Stevens is not a party to the Agreement, nor was he a signatory. The only parties and
signatories to the Agreement were Reliance Financial and First Legacy. (Doc. #1-2.)3 Thus,
because Stevens is neither a party nor a signatory to the Agreement, he cannot enforce a
waiver of personal jurisdiction clause contained therein.
Stevens likewise cannot enforce the waiver of personal jurisdiction as a third-party
beneficiary to the Agreement. Indeed, Section 11.10 states:
Nothing expressed or referred to in this Agreement will be construed to give

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The first paragraph of the Agreement states: “This Membership Interest Purchase
Agreement (“Agreement”) is made as of April 16, 2009, by and between First Legacy Investors, Inc.,
a North Carolina corporation (“Buyer”), and Reliance Financial Corporation, a Georgia corporation
(“Seller”)).”
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any Person other than the parties to this Agreement any legal or equitable
right, remedy, or claim under or with respect to this Agreement or any
provision of this Agreement. This Agreement and all of its provisions and
conditions are for the sole and exclusive benefit of the parties to this
Agreement and their successors and assigns.
(Doc. #1-2.) Thus, as Reliance Financial argues, because Stevens is not a party to the
Agreement, he has no “legal or equitable right, remedy, or claim” under the Agreement,
which includes the right to invoke a waiver of personal jurisdiction contained in the
Agreement. See Ex parte Cintas Corp., 958 So. 2d 330 (Ala. 2006) (refusing to allow
nonsignatories to enforce a forum selection clause, as language in the agreement similar to
the language contained in Section 11.10 of the Agreement prevented nonsignatories from
being “entitled to enforce the forum-selection clause”).
Because the Court has found that Reliance Financial did not contractually consent to
the personal jurisdiction of this Court as part of the Agreement, it must now determine
whether it can exercise personal jurisdiction over Reliance Financial under a traditional due
process analysis. “Jurisdiction consistent with the Constitution and the laws of the United
States is that which comports with due process.” Sherritt, 216 F.3d at 1291 (citing BorgWarner Acceptance Corp. v. Lovett & Tharpe, Inc., 786 F.2d 1055, 1057 (11th Cir. 1996),
quoting Int’l Shoe v. Washington, 326 U.S. 310, 316 (1945)) (internal quotations omitted).
“Considerations of due process require that a non-resident defendant have certain minimum
contacts with the forum, so that the exercise of jurisdiction does not offend traditional notions
of fair play and substantial justice.” Id. (internal footnote omitted). “The nature and quality
of these contacts, however, vary depending upon whether the type of personal jurisdiction
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being asserted is specific or general.” Id.
Specific jurisdiction arises out of a party’s activities in the forum that are related to
the cause of action alleged in the complaint. Id. (citing Madara v. Hall, 916 F.2d 1510, 1516
n.7 (11th Cir. 1990), citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408,
414 n.8 & 9 (1984)). “It has long been recognized that a court has the minimum contacts to
support specific jurisdiction only where the defendant ‘purposefully avails itself of the
privilege of conducting activities within the forum State, thus invoking the benefits and
protections of its laws.’” Id. (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)).
“General jurisdiction, on the other hand, arises from a defendant’s contacts with the forum
that are unrelated to the cause of action being litigated.” Id. at 1292. “The due process
requirements for general personal jurisdiction are more stringent than for specific personal
jurisdiction, and require a showing of continuous and systematic general business contacts
between the defendant and the forum state.” Id. (citing Borg-Warner, 786 F.2d at 1057;
Hall, 466 U.S. at 412–13).
There are no allegations in the complaint suggesting that Reliance Financial, a
Georgia corporation, conducted or purposefully directed its activities toward the State of
Alabama. Nor does Stevens present any evidence to this effect. Indeed, the only evidence
before the Court comes in the form of affidavit testimony from Bryant N. Jones (“Jones”),
Executive Vice President and Chief Administrative Officer of Reliance Financial, which
Stevens has not disputed or otherwise challenged. Jones’s uncontroverted testimony
establishes that Reliance Financial is not licensed to do business in Alabama, does not
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maintain a registered agent in Alabama, and has never provided any services in Alabama.
(Doc. #8-1, ¶ 3.) Reliance Financial has no offices, mail receptacles, or telephone listings
in Alabama. (Doc. #8-1, ¶ 3.) Reliance Financial has no real estate, bank accounts, or
property interests in Alabama. (Doc. #8-1, ¶ 3.) Reliance Financial has not paid, or been
required to pay, taxes in Alabama. (Doc. #8-1, ¶ 3.) Reliance Financial has no employees
in Alabama. (Doc. #8-1, ¶ 3.) Reliance Financial has not marketed, sold, or advertised its
services or products in Alabama. (Doc. #8-1, ¶ 3.) And, finally, Reliance Financial has
never filed suit in any Alabama court. (Doc. #8-1, ¶ 3.) This uncontroverted testimony,
coupled with the allegations in the complaint, establishes that Reliance Financial does not
have sufficient minimum contacts with this forum such that this Court could exercise
personal jurisdiction over it, whether general or specific, and still comport with the
requirements of due process.
Stevens, apparently anticipating this conclusion, has not argued that Reliance
Financial has minimum contacts with this Court sufficient to warrant the exercise of personal
jurisdiction in this case. Instead, Stevens requests that the Court allow him to conduct
jurisdictional discovery before resolving the question of personal jurisdiction. Stevens’s first
basis for this request is that he needs to “test” Jones’s affidavit testimony and actual
knowledge to assess whether Reliance Financial is “withholding information on its contacts
with” Alabama from Stevens and the Court. (Doc. #22.) The Court finds no merit in this
particular basis for Stevens’s jurisdictional discovery request. There is no indication that
Jones is withholding information from Stevens or the Court with respect to Reliance
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Financial’s contacts with Alabama. Moreover, Stevens’s claims that Jones’s affidavit
contains only “mere statements,” “self-denials,” and “conclusory assertions” that Reliance
Financial is not subject to the personal jurisdiction of this Court is misplaced. Perhaps if
Jones’s affidavit consisted only of a statement along the lines of “Reliance Financial has no
contacts with Alabama,” the Court would be more persuaded by this argument. But Jones’s
affidavit provides much more substance than this with respect to Reliance Financial’s
contacts, or lack thereof, with Alabama, and falls outside the category of “conclusory” or
“self-denying” affidavits.

Thus, Stevens has failed to show a sufficient need for

jurisdictional discovery based on Jones’s affidavit.
The Court also finds that Stevens’s alter-ego argument does not justify permitting
jurisdictional discovery. In support of his position, Stevens argues that Reliance Financial
was the “alter-ego” of Reliance Securities (at least prior to the April 16, 2009 sale), and
because Reliance Securities had significant contacts with the forum state, this Court can
exercise personal jurisdiction over Reliance Financial as Reliance Securities’s alter-ego.
While a court may pierce the corporate veil when a defendant is an alter-ego of another
entity, exercising such power is not done lightly. “It is well established that as long as a
parent and a subsidiary are separate and distinct corporate entities, the presence of one in a
forum state may not be attributed to the other.” Sherritt, 216 F.3d at 1293.
Generally, a foreign parent corporation is not subject to the jurisdiction of a
forum state merely because a subsidiary is doing business there. Where the
“subsidiary’s presence in the state is primarily for the purpose of carrying on
its own business and the subsidiary has presented some semblance of
independence from the parent, jurisdiction over the parent may not be acquired
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on the basis of the local activities of the subsidiary.”
Id. (citing Portera v. Winn Dixie of Montgomery, Inc., 996 F. Supp. 1418, 1423 (M.D. Ala.
1998)).
In this case, Stevens alleges that Reliance Financial “fully controlled” Reliance
Securities and that, through its ownership and control of Reliance Securities, Reliance
Financial was responsible for oversight of Reliance Securities’ and its representatives’
adherence to and compliance with regulatory guidelines. Stevens further alleges in the
complaint that Reliance Financial exercised control over Reliance Securities “through the
Board of Directors of Reliance Securities, which was comprised of and controlled by
directors and officers of Reliance Financial[,] . . . through the internal audit department. . .
, as well as through its legal department, who had authority to direct management and were
responsible for oversight of Reliance Securities’ and its Representatives’ adherence to and
compliance with regulatory guidelines[.]” (Doc. #1-1.) These allegation (rather than the
testimony contained in Jones’s affidavit) are more appropriately described as “conclusory”
and, standing alone, fail to establish a prima facie case of personal jurisdiction. Indeed, the
law recognizes that “a parent corporation can be directly involved in the activities of its
subsidiaries without incurring liability if the involvement is ‘consistent with the parent’s
investor status.’” Vogt v. Greenmarine Holding, LLC, 2002 WL 534542, at *6 (N.D. Ga.
Feb. 20, 2002) (quoting United States v. Bestfoods, 524 U.S. 51, 72 (1998)). “Such parental
involvement could include ‘monitoring of the subsidiary’s performance, supervision of the
subsidiary’s finance and capital budget decisions, and articulation of general polices and
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procedures.” Id. Also, it is “‘entirely appropriate for directors of a parent corporation to
serve as directors of its subsidiary’ . . . .” Id. (quoting Bestfoods, 524 U.S. at 69). In sum,
even taking the allegations contained in the complaint as true, including those relating to
piercing the corporate veil, all these allegations do is describe activities or a relationship
between Reliance Financial and Reliance Securities that is perfectly within the realm of
control a parent may exercise over a subsidiary without foregoing the protections afforded
by the corporate existence.
These allegations do not contend or provide any factual support suggesting that
Reliance Financial’s corporate existence was simply a formality. In the Court’s opinion,
Stevens’s alter-ego argument amounts to a theory or a hunch. Stevens has not demonstrated
that he will be able to supplement his jurisdictional allegations through discovery. Instead,
Stevens claims that he simply needs to explore and “test” this theory. However, the Court
is not obligated to permit jurisdictional discovery based on a party’s “mere ‘hunch that there
may be facts—or a desire to find out if there are any facts—that justify the exercise of
personal jurisdiction.’” Kason Indus., Inc. v. Dent Design Hardware, Ltd., 952 F. Supp. 2d
1334, 1352–53 (N.D. Ga. June 7, 2013); see also Atlantis Hydroponics, Inc. v. Int’l Growers
Supply, Inc., 915 F. Supp. 2d 1365, 1380 (N.D. Ga. 2013) (“The purpose of jurisdictional
discovery is to ascertain the truth of the allegations or facts underlying the assertion of
personal jurisdiction. It is not a vehicle for a fishing expedition in hopes that discovery will
sustain the exercise of personal jurisdiction) (internal quotations omitted). Based on this,
Stevens’s request to conduct jurisdictional discovery is DENIED, and Reliance Financial’s
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motion to dismiss for lack of personal jurisdiction is GRANTED.4
IV. CONCLUSION
For the foregoing reasons, it is hereby ORDERED that Defendant Reliance
Financial’s Motion to Dismiss (Doc. #7) is GRANTED and that Plaintiff William Slay
Stevens’s claims against it are DISMISSED without PREJUDICE. Plaintiff William Slay
Stevens’s request to conduct jurisdictional discovery (Doc. #22) is DENIED.
DONE this the 18th day of February, 2014.
/s/ Mark E. Fuller
UNITED STATES DISTRICT JUDGE

4

Because the Court has disposed of Reliance Financial’s motion on Rule 12(b)(2) grounds,
it is not necessary for the Court to discuss Reliance Financial’s alternative Rule 12(b)(6) arguments.
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