Azar & Associates, P.C. v. Bryant et al
Filing
169
MEMORANDUM ADOPTING 158 REPORT AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE. Because Plaintiff's Amended Complaint states sufficient facts to establish a prima facie showing of the Law Firm Defendants' contacts in Texas, the Motions (Dkts. # 106 , 110 , 125 , 128 ) are DENIED. Signed by District Judge Amos L. Mazzant, III on 12/4/2018. (rpc, )
United States District Court
EASTERN DISTRICT OF TEXAS
SHERMAN DIVISION
FRANKLIN D. AZAR &
ASSOCIATES, P.C.,
Plaintiff,
v.
JERRY L BRYANT, ET AL.,
Defendant.
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Case No. 4:17-cv-00418-ALM-KPJ
MEMORANDUM ADOPTING REPORT AND RECOMMENDATION
OF UNITED STATES MAGISTRATE JUDGE
Came on for consideration the Report of the United States Magistrate Judge in this
action, this matter having been referred to the United States Magistrate Judge pursuant to 28
U.S.C. § 636. On October 1, 2018, the Report of the Magistrate Judge was entered (see Dkt.
#158) containing proposed findings of fact and recommendation that The Law Office of Bruce
M. White, LLC, Gruber Law Offices, LLC, Foy and Associates P.C., and Richard Schwartz
and Associates, P.A.’s (collectively, the “Law Firm Defendants”) motions to dismiss (Dkts.
106, 110, 125, 128) (the “Motions”) be denied.
The Law Firm Defendants filed Joint Objections to the Magistrate Judge’s October 1,
2018 Report and Recommendation (the “Objections”) (Dkt. #160). Franklin D. Azar &
Associates, P.C. (“Plaintiff”) filed a Response to the Objections (Dkt. #161). The Court has
made a de novo review of the Objections and is of the opinion that the findings and conclusions
of the Magistrate Judge are correct and the Objections are without merit as to the ultimate
findings of the Magistrate Judge. The Court hereby adopts the findings and conclusions of the
Magistrate Judge as the findings and conclusions of the Court.
I.
BACKGROUND
Plaintiff brings this lawsuit in connection with an underlying judgment issued by the M298th Judicial District Court of Dallas County, Texas (the “State Court”), on April 3, 2012 (the
“Judgment”). See Dkt. #77-1 at ¶ 35. The Judgment provided that IMGRP Productions, Inc., PI
Advertising, Inc. (“PI Advertising”), Law Ads, Inc., and Jerry Bryant (collectively, the
“Debtors”) shall pay Plaintiff, jointly and severally, $1,000,000.00, by June 6, 2013. See id.
The Debtors never satisfied the Judgment, and Plaintiff has made various efforts to collect,
including this lawsuit. Plaintiff originally filed this lawsuit against Jerry Bryant, various close
associates, and alleged alter-ego entities of PI Advertising, all of whom Plaintiff alleges were
involved in hindering the collection of the Judgment. See Dkt. #1. Through discovery, Plaintiff
learned that Jerry Bryant was using different bank accounts to continue operating PI
Advertising after the Judgment was entered. See Dkt. #89-2 at 11–12. With this information,
Plaintiff filed an Amended Complaint to Avoid Fraudulent Transfers, for Damages, and for
Declaratory Relief (the “Amended Complaint”) (Dkt. #77-1). In the Amended Complaint,
Plaintiff alleges, inter alia, that Jerry Bryant breached his fiduciary duty to PI Advertising by
facilitating the diversion of income intended for PI Advertising (which had yet to fulfill the
Judgment). See Dkt. #77-1 at ¶¶ 144–45. Plaintiff also alleges the Law Firm Defendants aided
and abetted Jerry Bryant by paying for services provided by PI Advertising to other, ungarnished bank accounts affiliated with Jerry Bryant, with knowledge of the Judgment and the
Debtors’ insolvency, thereby avoiding collection on the Judgment. See Dkt. #77-1 at ¶¶ 27, 28,
30, 144–45.
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In the Motions (Dkts. #106, #110, #125, #128), the Law Firm Defendants argue the
claims asserted against them should be dismissed pursuant to Federal Rule of Civil Procedure
12(b)(2) because the Court does not have personal jurisdiction over them.
II.
DISCUSSION
When determining whether a plaintiff has proven sufficient facts to establish minimum
contacts, the plaintiff bears the burden of proof; however, the plaintiff need only make a prima
facie showing of the defendant’s contact with the forum state. Johnston v. Multidata Sys. Int’l
Corp., 523 F.3d 602, 609 (5th Cir. 2008). The court must resolve any disputed facts in favor of
the plaintiff and a finding of jurisdiction. Id. (citing Bullion v. Gillespie, 895 F.2d 213, 217 (5th
Cir. 1990)). Any uncontroverted allegations in the plaintiff’s complaint must be taken as true
and conflicts between the factual allegations of the parties must be resolved in the plaintiff’s
favor when determining whether a prima facie case for personal jurisdiction exists. Bullion, 895
F.2d at 217.
Defendants first argue the Report improperly relies on third party contacts in
determining personal jurisdiction. See Dkt. #160 at 3–4. Here, the Magistrate Judge explained
the contacts analyzed were those of the Law Firm Defendants, not the Debtors. See Dkt. #158
at 5. The Law Firm Defendants allegedly acted with knowledge of the Debtors’ insolvency,
when they allegedly aided and abetted the Debtors by misdirecting payments owed to PI
Advertising and allowing PI Advertising’s alter-egos to assume and fulfill their contracts,
thereby assisting Debtors in avoiding the Judgment. See Dkt. #158 at 5–6. The Law Firm
Defendants allegedly took purposeful action to aid and abet the Debtors that was not random,
fortuitous, or attenuated. Plaintiff alleges the Law Firm Defendants altered contracts or allowed
other forum-resident companies, alter-egos of the Debtors, to fulfill existing contracts for the
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purpose of aiding a Texas debtor in avoiding payment on the Texas Judgment. See Dkt. #89-2
at 11–12. Accordingly, this objection is OVERRULED.
Law Firm Defendants also claim that Walden v. Fiore, 571 U.S. 277 (2014), “calls into
question the reliability of Mullins and Dontos[,]” which were both cited in the Report. See Dkt.
#160 at 6. However, Walden was decided by the Supreme Court almost seven months after
Dontos v. Vendomation NZ Limited, 582 F. App’x 338 (5th Cir. 2014). Mullins v.
TestAmerica, Inc., 564 F.3d 386, 402 (5th Cir. 2009), and Dontos both rely on the “effects
test” set forth in Calder v. Jones, 456 U.S. 783, 789–90 (1984). The Walden Court did not
eliminate the Calder effects test; rather, it relied on the “well established principles” of
Calder, simply reframing the effects test in intentional-tort settings. See Walden, 571 U.S. at
291 (citing Calder, 465 U.S. at 788). Accordingly, reliance by the Dontos and Mullins Courts
on Calder reflect well established principles of personal jurisdiction. This objection is
OVERRULED.
The Law Firm Defendants finally argue the facts in this case are distinguishable from
Mullins and Dontos. See Dkt. #160 at 7. Like the defendants in Mullins and Dontos, the Law
Firm Defendants are alleged to have acted: (1) with knowledge of a specific creditor, the
Texas Judgment; (2) with knowledge that their existing contracts with PI Advertising were
subject to the Judgment; (3) by diverting payments under the contract with Texas company PI
Advertising to alter-ego companies; and (4) by allowing other alter-ego companies to
perform PI Advertising’s contracts and accept PI Advertising’s payments. See Dkt. #77-1 at
8–9. Taking Plaintiff’s allegations as true, Plaintiff has made a prima facie showing that
the Law Firm Defendants’ tortious acts intentionally targeted a specific creditor, Plaintiff,
seeking to enforce the Judgment, in the forum state. Accordingly, this objection is
OVERRULED.
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III.
.
CONCLUSION
Because Plaintiff’s Amended Complaint states sufficient facts to establish a prima facie
showing of the Law Firm Defendants’ contacts in Texas, the Motions (Dkts. #106, 110, 125,
128) are DENIED.
IT IS SO ORDERED.
SIGNED this 4th day of December, 2018.
___________________________________
AMOS L. MAZZANT
UNITED STATES DISTRICT JUDGE
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