Iwasaki v. P&G Rare Violins Inc et al

Filing 42

MEMORANDUM OPINION AND ORDER: The court directs the clerk of court to transfer this action to the United States District Court for the Northern District of Illinois (Eastern Division) and that the transfer not be stayed. (Ordered by Judge Sam A. Lindsay on 1/6/2025) (agc) [Transferred from Texas Northern on 1/6/2025.]

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
KO IWASAKI,
Plaintiff,
v.
P&G RARE VIOLINS, INC.
(“d/b/a BEIN & FUSHI, INC.”)
and BEN-DASHAN, INC.,
Defendants.

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Civil Action No. 3:24-cv-00164-L

MEMORANDUM OPINION AND ORDER
Before the court is Defendants Ben-Dashan Inc. (“BDI”) and P&G Rare Violins, Inc.’s
(“P&G”) Motion to Dismiss (“Motion to Dismiss”) (Doc. 24), filed March 4, 2024, pursuant to
Federal Rules of Civil Procedure 12(b)(2), 12(b)(3) and 12(b)(6). On May 14, 2024, the court
referred Plaintiff Ko Iwasaki’s (“Plaintiff” or “Mr. Iwasaki”) Opposed Motion for Leave to
Amend Complaint (“Motion for Leave”) (Doc. 29) to Magistrate Judge Rebecca Rutherford
(Doc. 37) for hearing, if necessary, and to submit to the court proposed findings and
recommendations for disposition of the Motions (Docs. 24 and 29). On June 3, 2024, she granted
the Motion for Leave (Doc. 40). The United States Magistrate Judge filed her Findings,
Conclusions, and Recommendation (“Report”) (Doc. 41) on December 13, 2024, recommending
that the court grant the Motion to Dismiss pursuant to 12(b)(2), transfer this action to the
United States District Court for the Northern District of Illinois (Eastern Division), and decline
to consider the Motion to Dismiss under Rules 12(b)(3) and 12(b)(6).
No objections to the Report have been filed, and the 14-day period to object after service
of it has expired. Fed. R. Civ. P. 72(b)(1)(2); 28 U.S.C. § 636(b)(1)(C). The court, after

Memorandum Opinion and Order – Page 1

considering the Report, Third Amended Complaint, Motion to Dismiss, record, and applicable
law, accepts the Report in part and rejects it in part. The court accepts the Report insofar as it
relates to the factual and legal analysis. The court rejects the Report insofar as it recommends
that the court grant the Motion to Dismiss.
I.

Factual and Procedural History
On October 5, 2023, Mr. Iwasaki filed Plaintiff’s Original Petition (“Petition”) in the 44th

Judicial District Court of Dallas County, Texas, asserting claims for fraud, gross negligence, and
violations of the Texas Deceptive Trade Practices Act (“DTPA”). Doc 1-5. This action was
removed to federal court on January 22, 2024 (Doc. 1), pursuant to 28 U.S.C. §§ 1332, 1441, and
1446. On June 3, 2024, Mr. Iwasaki filed Plaintiff’s Third Amended Complaint (“Third
Amended Complaint”) (Doc. 40), which is the operative pleading. The lawsuit between the
parties arises from the sale of an antique cello bow (the “Bow”) made by renowned bow-maker
Francois Xavier-Tourte. Report 2. In his Third Amended Complaint, he brings claims for breach
of contract, negligent misrepresentation, negligence, gross negligence, fraud, fraud by nondisclosure, and violations of the DTPA. Id. (citing Doc. 40).
In 2016, Mr. Iwasaki indicated that he wanted to purchase the Bow from Gabriel BenDashan (“Mr. Ben-Dashan”), the president of BDI and P&G and part owner, controlling
manager, and/or principal decision-maker of Bein & Fushi prior to P&G’s purchase of
substantially all of Bein & Fushi’s assets in 2021. Id. at 3- 4 (citation omitted). Mr. Ben-Dashan
let him borrow the Bow and take it from Chicago back to his home in Dallas, Texas, to test it, to
which he agreed and did. Id. (citation omitted). On behalf of BDI and Bein & Fushi, Mr. BenDashan negotiated the sale of the Bow over the telephone in two separate states. Id. (citation
omitted). During the call, he told Mr. Iwasaki that the sales price accounted for a passing of title,

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appraisal services, and certificates of authenticity, which Mr. Ben-Dashan knew was false. Id.
(citation omitted). Relying on these representations, Mr. Iwasaki agreed to purchase the Bow. Id.
at 5 (citation omitted). Mr. Ben-Dashan did not inform Mr. Iwasaki that Defendants did not have
title to the Bow. Id. (citation omitted). In May 2016, he received an invoice stating that he owed
$275,000 with an initial deposit due immediately and the remaining $250,000 to be paid by June
17, 2016. Id. (citation omitted). “Enclosed with the invoice was an insurance appraisal, signed by
Gabriel Ben-Dashan, wherein Bein & Fushi determined that the Bow’s replacement value and
amount of insurance coverage were $350,000.” Id. (citation omitted).
Upon receipt of the invoice, Mr. Iwasaki sent a check to Bein & Fushi for the initial
deposit wire and transferred the remaining balance shortly thereafter. Id. at 6 (citation omitted).
“In the Certificate of Authenticity, Bein & Fushi represented that the Bow bore no marks of
ownership.” Id. (citation omitted). “More than five years later, on January 30, 2023, Iwasaki
received an e-mail from the U.S. Department for Homeland Security (DHS), informing him that
it was strongly believed that the Bow had been stolen from Lauxerrois, its legal owner.” Id.
(citation omitted). Before being e-mailed by the DHS, he had no knowledge that the Bow was
possibly stolen and that BDI and Bein & Fushi did not have good title. Id. (citation omitted). “On
or about April 14th of 2023, [Mr.] Iwasaki’s counsel signed a stipulation with the District
Attorney of the County of New York (DANY) acknowledging the Bow’s status as stolen
property and waived all claims related to the Bow as to the DANY or the DHS under federal
law.” Id. at 6-7 (citation omitted). As a result of this stipulation, the DHS took the Bow. Id. at 7
(citation omitted). The Bow was returned to its owner, and Mr. Iwasaki has not received
compensation. Id.

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II.

Magistrate Judge’s Report (Doc. 41)
Magistrate Judge Rutherford determined that the court lacks jurisdiction over P&G and

BDI regarding any claims. Report 12.
In Defendants’ Motion to Dismiss, they argue that Mr. Iwasaki failed to plead successor
liability. The magistrate judge agreed and permitted him to file his Third Amended Complaint to
cure the deficiencies relating to successor liability. Id. at 15. In the Report, the magistrate judge
first analyzed successor liability. Id. She determined that Illinois substantive law applies because
Defendants are Illinois corporations. Id. at 16. Viewing all nonconclusory factual allegations as
true, the magistrate judge determined that Plaintiff pleaded sufficient factual allegations to state a
plausible claim that P&G is a continuation of Bein & Fushi and that they constitute a single
entity. Id. at 18. Accordingly, she treated P&G and Bein & Fushi as the same for jurisdictional
purposes. Id.
Next, Magistrate Judge Rutherford analyzed whether the court has personal jurisdiction
over each Defendant. Id. at 19. She determined that as an initial matter, the court “does not have
general jurisdiction over any Defendant in this case because no Defendant is essentially ‘at
home’ in Texas.” Id. (citations omitted). The magistrate judge notes that despite all of the claims
arising from similar facts, the minimum contacts test differs for some claims. Id. at 20. For the
breach of contract claim, she determined that negotiating a contract on the telephone with an
entity in the forum state is insufficient for purposeful availment to establish specific jurisdiction.
Id. at 23 (citation omitted). Next, she analyzed the breach of contract claim for each Defendant.
Regarding P&G, she determined that Mr. Iwasaki “failed to carry his burden of making out a
prima facie case that P&G is subject to the [c]ourt’s specific jurisdiction with respect to his
breach-of-contract claim.” Id. at 26. Similarly, the magistrate judge determined that Mr. Iwasaki

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“failed to carry his burden of making out a prima facie case that BDI is subject to the [c]ourt’s
specific jurisdiction with respect to his breach-of-contract claim.” Id. at 28.
Third, Magistrate Judge Rutherford analyzed his fraud claims. Id. She determined that
Mr. Iwasaki alleges that Gabriel Ben-Dashan and Paige Ben-Dashan made representations while
knowing of their falsity or recklessly without knowledge of their truth. Id. at 29 (citations
omitted). The magistrate judge determined that neither Gabriel Ben-Dashan nor Paige BenDashan is a party to this action, and that Mr. Iwasaki “failed to provide any evidence that
demonstrates that P&G or BDI, themselves, made any misrepresentations or had any personal
contacts with Iwasaki in Texas related to the negotiation of the Bow’s sale.” Id. As a result, the
magistrate judge addressed whether Gabriel Ben-Dashan’s or Paige Ben-Dashan’s Texas
contacts may be imputed by either Defendant. Id. at 30. Further, the magistrate concluded that
“the court need not decide whether Texas law does, in fact, apply because the key inquiry under
the laws of Texas and Illinois is whether the principal exercises ‘control’ over the purported
agent.” Id. n. 7 (citing In re Chinese Manufactured Drywall Prod. Liab. Litig., 753 F.3d 521, 529
(5th Cir. 2014) (citations omitted)). She determined that Mr. Iwasaki’s Third Amended
Complaint included conclusory statements with no specific facts or evidence to support his
allegations of imputation by virtue of an agency relationship. Id. at 31-32 (citations omitted). The
magistrate judge determined that merely asserting that Defendants, through Gabriel Ben-Dashan
and Paige Ben-Dashan, made false representations is not enough for the court to impute their
contacts to the Defendants. Id. at 31. Accordingly, she recommended that for the purpose of
personal jurisdiction, the court decline to impute the contacts of Gabriel Ben-Dashan and Paige
Ben-Dashan to P&G and BDI. Id. at 32.

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Next, addressing his DTPA claim, the magistrate judge determined that for the same
reasons set forth in the breach-of-contract discussion, there are insufficient minimum contacts by
P&G or BDI for the DTPA claim. Id. at 33. Finally, the magistrate judge analyzed Plaintiff’s
negligence-based claims. She concluded that neither Defendant is alleged to have committed any
negligent act within Texas. Id. at 34. The magistrate judge determined that the alleged tortious
conduct appears “as nothing more than untargeted negligence, which cannot establish purposeful
availment under the effects test.” Id. (citing Trois v. Apple Tree Auction Ctr., Inc., 882 F.3d 485,
489 (5th Cir. 2018)). Accordingly, she determined that Plaintiff did not carry his burden of
making out a prima facie case that Defendants are subject to the court’s specific jurisdiction with
respect to his negligence-based claims.
The magistrate judge recommends that, in the interest of justice, the court should transfer
the case to the Northern District of Illinois rather than dismiss it. Id. at 35. She concluded that the
witnesses, evidence, and Defendants can be found in the Northern District of Illinois Id.
III.

Conclusion
Having considered the Report, Third Amended Complaint, Motion to Dismiss, record,

and applicable law, the court accepts the Report in part and rejects it in part. The court accepts
the Report insofar as it relates to the factual and legal analysis. The court rejects the Report
insofar as it recommends that the court grant the Motion to Dismiss.
While the court agrees that it lacks jurisdiction over Defendants BDI and P&G, rather
than dismiss the action against them, the court determines that this action should be and is
hereby transferred to the United States District Court for the Northern District of Illinois
(Eastern Division), pursuant to 28 U.S.C. §§ 1631 and 1406(a), and directs the clerk of court to
effect the transfer in accordance with the usual procedure. Further, because the court lacks

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personal jurisdiction, it declines to consider the Motion to Dismiss (Doc. 24) under Rule
12(b)(2), 12(b)(3), or 12(b)(6).
As a final act, the court addresses Local Civil Rule 62.2. This rule provides as follows:
“Unless all affected parties consent to the transfer, an order that transfers a case to a district court
outside of the Fifth Circuit is stayed for 21 days from the date the order is entered on the docket.”
Id.
The court expressly determines that this rule is inapplicable to this case. First, no affected
party has objected to the transfer recommended by the magistrate judge. The time to object has
expired; thus, all objections are waived.
Second, the court determines that Local Civil Rule 62.2 unnecessarily hampers and
impedes the court from exercising its discretion, as none of the applicable statutes or Federal
Rules of Civil Procedure even suggest, much less require, that an action falling within the
purview of Local Civil Rule 62.2 be stayed for any period of time.
Third, Local Civil Rule 62.2 attempts to create an avenue for litigants to appeal to the
Fifth Circuit for appellate review of district court transfer orders. The jurisdiction of a federal
court to exercise appellate review is established by Congress and the United States Supreme
Court, not a district court.
Finally, Local Civil Rule 83.1 provides, “Notwithstanding the local civil rules, a
presiding judge may direct the parties to proceed in any manner that the judge deems just and
expeditious.” Given that the Motion to Dismiss has been pending since March of this year, the
just and expeditious thing to do is to order that this action not be stayed for 21 days. For all of the
reasons previously stated, the court directs the clerk of court to transfer this action to the
previously mentioned district and division forthwith, and that the transfer not be stayed.

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It is so ordered this 6th day of January 2025.
________________________________
Sam A. Lindsay
United States District Judge

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