Sell v. Gerald Peters Gallery, Inc.
Filing
61
Memorandum Opinion and Order denying 44 Motion to Dismiss for Lack of Jurisdiction and 42 MOTION to Dismiss for Lack of Jurisdiction. (Ordered by Senior Judge A. Joe Fish on 7/9/2012) (ctf)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
STEVE SELL,
Plaintiff,
VS.
GERALD PETERS GALLERY, INC.,
ET AL.,
Defendants.
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CIVIL ACTION NO.
3:10-CV-2553-G
MEMORANDUM OPINION AND ORDER
Before the court are the motions of the defendants Addison Rowe Fine Art,
LLC (“Addison Rowe”) and American Illustrators Gallery, Inc. (“AIG”) to dismiss for
lack of personal jurisdiction. For the following reasons, the motions are denied.
I. BACKGROUND
Plaintiff Steve Sell (“Sell”) is a citizen and resident of Texas. Plaintiff’s Second
Amended Complaint (“Complaint”) ¶ 1.01.
Addison Rowe is a New Mexico limited liability company with its principal
place of business in Santa Fe, New Mexico. Id. ¶ 1.05.
AIG is a Pennsylvania corporation with its principal place of business in New
York City, New York. Id. ¶ 1.04.
In March 2008, Sell purchased a painting by artist N.C. Wyeth titled “The
Sheriff” from defendants Gerald Peters Gallery, Inc. (“GPG-NM”) and AIG for
$1,500,000. Id. ¶ 3.01. Sell purchased the painting as an investment partially based
on misrepresentations made by defendant Peters Gallery of New York, Inc. (“GPGNY”) and its commonly owned and controlled affiliate and agent, Peter’s Fine Art
Ltd. (“GPG-TX,” and together with GPG-NY and GPG-NM, “the Gerald Peters
Entities”). Id.
On or about December 27, 2007, GPG-NM obtained a 50% ownership
interest in “The Sheriff” from AIG, in exchange for transferring to AIG a 50% interest
in another N.C. Wyeth painting titled “Plains Indian Signaling Peace.” Id. ¶ 3.03.
Thus, at the time of the sale of “The Sheriff” to Sell, the painting was equally owned
by AIG and GPG-NM. Id. AIG placed “The Sheriff” in the possession of the Gerald
Peters Entities for sale, and thus Sell alleges that the Gerald Peters Entities acted as
agents for AIG in connection with the sale of “The Sheriff.” Id.
Sell maintains that each of the Gerald Peters Entities misrepresented that “The
Sheriff” had appeared on the front cover of the August 1, 1908 issue of The Saturday
Evening Post and had been used to illustrate two different stories in two different
publications. Id. ¶ 3.01. In fact, according to Sell, the painting had not appeared on
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any cover of The Saturday Evening Post, had only appeared in Scribners, and was not
used to illustrate any story. Id. These misrepresentations were allegedly ratified by
GPG-NM and AIG, the owners of “The Sheriff” at the time Sell’s purchase of the
painting. Id.
Prior to agreeing to purchase the painting, Sell sought a neutral third party to
conduct a second appraisal. Id. ¶ 3.10. Sell relied on Ashley Tatum Casson, an
employee of GPG-TX, to arrange the third party appraisal. Id. Thereafter, Casson
informed Sell that she had contacted Victoria Addison with Addison Rowe. Id.
Based on Casson’s recommendation, Sell contracted with Addison Rowe to conduct
an independent appraisal of the painting. Id. In that appraisal, Victoria Addison and
Addison Rowe repeated the alleged misrepresentations. Id. ¶ 3.12. Addison Rowe
purportedly failed to discover these were false representations and based its
overstated appraisal on them. Id.
On December 14, 2010, Sell filed the instant case. Against AIG, he asserts
claims for breach of contract, fraud, and rescission/restitution, and against Addison
Rowe, Sell asserts claims of negligent misrepresentation, negligence, and breach of
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contract. See generally Complaint.* Addison Rowe and AIG now move to dismiss
Sell’s claims against them for lack of personal jurisdiction.
II. ANALYSIS
A. The Factual Standard: A Prima Facie Case
When a nonresident defendant moves to dismiss for lack of personal
jurisdiction, the plaintiff bears the burden of establishing the district court’s
jurisdiction over the nonresident. Wilson v. Belin, 20 F.3d 644, 648 (5th Cir.), cert.
denied, 513 U.S. 930 (1994); Gardemal v. Westin Hotel Company, 186 F.3d 588, 592
(5th Cir. 1999). If the district court chooses to decide the matter without an
evidentiary hearing, the plaintiff may meet his burden by presenting a prima facie case
for personal jurisdiction. Wilson, 20 F.3d at 648; Gardemal, 186 F.3d at 592.
The court will take the allegations of the complaint as true, except where they
are controverted by opposing affidavits, and all conflicts in the facts are resolved in
favor of the plaintiff. Wilson, 20 F.3d at 648; Gardemal, 186 F.3d at 592. In making
its determination, the court may consider affidavits, interrogatories, depositions, oral
testimony, or any combination of recognized discovery methods. Allred v. Moore &
*
As to all of the defendants, Sell brings the following claims – breach of
contract against GPG-NM, AIG, and Addison Rowe; fraud against GPG-NM, GPGNY, and AIG; negligent misrepresentation against GPG-NY and Addison Rowe;
rescission/restitution against GPG-NM and AIG; civil conspiracy against GPG-NM
and GPG-NY; and negligence against Addison Rowe. See generally Complaint.
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Peterson, 117 F.3d 278, 281(5th Cir. 1997), cert. denied, 522 U.S. 1048 (1998);
Thompson v. Chrysler Motors Corporation, 755 F.2d 1162, 1165 (5th Cir. 1985).
B. The Legal Standard
A federal district court may exercise personal jurisdiction over a nonresident
defendant if (1) the long-arm statute of the forum state permits the exercise of
personal jurisdiction over the defendant; and (2) the exercise of such jurisdiction by
the forum state is consistent with due process under the United States Constitution.
Revell v. Lidov, 317 F.3d 467, 469 (5th Cir. 2002). A defendant is amenable to the
personal jurisdiction of a federal court sitting in diversity to the same extent that it
would be amenable to the jurisdiction of a state court in the same forum. Pedelahore v.
Astropark, Inc., 745 F.2d 346, 347 (5th Cir. 1984). Applying state law, this court
must first determine whether Texas, the forum state, could assert long-arm
jurisdiction. Id. Because the Texas long-arm statute confers jurisdiction to the limits
of the federal constitution, Access Telecom, Inc. v. MCI Telecommunications Corporation,
197 F.3d 694, 716 (5th Cir. 1999), cert. denied, 531 U.S. 917 (2000); Hall v.
Helicopteros Nacionales de Colombia, S.A., 638 S.W.2d 870, 872 (Tex. 1982), rev’d on
other grounds, 466 U.S. 408 (1984), the court need only concern itself with the federal
due process inquiry. Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir. 1999); Wilson,
20 F.3d at 647 n.1; see also TEX. CIV. PRAC. & REM. CODE ANN. § 17.041 et seq.
(Vernon 1997) (Texas long-arm statute).
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C. Due Process Requirements
Due process requires the satisfaction of two elements to exercise personal
jurisdiction over a nonresident defendant: (1) the nonresident must have some
minimum contact with the forum that results from an affirmative act on its part such
that the nonresident defendant could anticipate being haled into the courts of the
forum state; and (2) it must be fair or reasonable to require the nonresident to defend
the suit in the forum state. Burger King Corporation v. Rudzewicz, 471 U.S. 462, 47478 (1985); Gulf Consolidated Services, Inc. v. Corinth Pipeworks, S.A., 898 F.2d 1071,
1073 (5th Cir.), cert. denied, 498 U.S. 900 (1990). The Due Process Clause ensures
that persons have a “fair warning that a particular activity may subject [them] to the
jurisdiction of a foreign sovereign.” Burger King, 471 U.S. at 472 (quoting Shaffer v.
Heitner, 433 U.S. 186, 218 (1977) (Stevens, J., concurring)).
To establish minimum contacts with the forum, a nonresident defendant must
do some act by which it “purposefully avails itself of the privilege of conducting
activities within the forum State, thus invoking the benefits and protections of its
laws.” Burger King, 471 U.S. at 474-75 (quoting Hanson v. Denckla, 357 U.S. 235,
253 (1958)). However, the unilateral activity of one asserting a relationship with the
nonresident defendant does not satisfy this requirement. Burger King, 471 U.S. at
474 (quoting Hanson, 357 U.S. at 253); Helicopteros Nacionales de Colombia, S.A. v.
Hall, 466 U.S. 408, 417 (1984) (citing Kulko v. California Superior Court, 436 U.S. 84,
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93-94 (1978); Hanson, 357 U.S. at 253). In determining whether the exercise of
jurisdiction is appropriate, the Supreme Court has focused less on presence in the
forum state as a means to establish jurisdiction and looked increasingly to whether a
defendant’s contacts with the forum state make it reasonable to require the defendant
to defend the particular suit in that forum. Quill Corporation v. North Dakota, 504
U.S. 298, 307 (1992).
Two types of in personam jurisdiction may be exercised over a nonresident
defendant: specific jurisdiction and general jurisdiction. Specific jurisdiction exists if
the cause of action is related to, or arises out of, the defendant’s contacts with the
forum state and those contacts meet the due process standard. J.R. Stripling v. Jordan
Production Company, LLC, 234 F.3d 863, 871 (5th Cir. 2000) (quotations and
citations omitted). “When a court exercises personal jurisdiction over a defendant
based on contacts with the forum related to the particular controversy, the court is
exercising ‘specific jurisdiction.’” Holt Oil & Gas Corporation v. Harvey, 801 F.2d 773,
777 (5th Cir. 1986) (citations omitted), cert. denied, 481 U.S. 1015 (1987). General
jurisdiction, on the other hand, may be found when the nonresident’s contacts with
the forum are “continuous and systematic,” even though the claim is unrelated to
those contacts. Helicopteros Nacionales, 466 U.S. at 415-16.
Under either a specific or general jurisdiction analysis, however, “the
constitutional touchstone remains whether the defendant purposefully established
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‘minimum contacts’ in the forum [s]tate.” Burger King, 471 U.S. at 474 (quoting
International Shoe Company v. Washington, 326 U.S. 310, 316 (1945)). The
“purposeful availment” requirement of the minimum contacts inquiry “ensures that a
defendant will not be haled into a jurisdiction solely as a result of ‘random,’
‘fortuitous,’ or ‘attenuated’ contacts . . . or of the ‘unilateral activity of another party
or a third person.’” Id. at 475 (citations omitted). A plaintiff must establish a
substantial connection between the nonresident defendant and the forum state. Jones
v. Petty-Ray Geophysical, Geosource, Inc., 954 F.2d 1061, 1068 n.9 (5th Cir.), cert.
denied, 506 U.S. 867 (1992); Bearry v. Beech Aircraft Corporation, 818 F.2d 370, 374
(5th Cir. 1987) (citing Burger King, 471 U.S. at 475 n.18; McGee v. International Life
Insurance Company, 355 U.S. 220, 223 (1957)).
A court must consider all factors when making the purposeful availment
inquiry: “no single factor, particularly the number of contacts, is determinative.”
Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985). “[W]hether the minimum
contacts are sufficient to justify subjection of the non-resident to suit in the forum is
determined not on a mechanical and quantitative test, but rather under the particular
facts upon the quality and nature of the activity with relation to the forum state.”
Mississippi Interstate Express, Inc. v. Transpo, Inc., 681 F.2d 1003, 1006 (5th Cir. 1982);
see also Coats v. Penrod Drilling Corporation, 5 F.3d 877, 884 (5th Cir. 1993), cert.
denied, 510 U.S. 1195 (1994).
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D. Discussion
1. Minimum Contacts
a. AIG
Sell maintains that GPG-TX acted as AIG’s agent with respect to the sale of
“The Sheriff” to him. Plaintiff’s Consolidated Response to Motions to Dismiss for
Lack of Personal Jurisdiction (“Response”) (docket entry 52) at 4. Thus, Sell argues,
GPG-TX’s acts in Texas are imputed to AIG for the establishment of personal
jurisdiction over AIG. Id. at 4-6. For example, Sell alleges that AIG held a 50%
ownership interest in “The Sheriff” at the time of sale and agreed to pay a
commission to the Gerald Peters Entities if they were able to sell the painting, a
commission that was later paid upon successful sale of the painting to the plaintiff.
Id. at 4-5. Sell further alleges that AIG granted the Gerald Peters Entities possession
of “The Sheriff” so that the painting could be marketed and sold and the authority to
take the necessary and appropriate steps to accomplish the task. Id. at 5.
Additionally, Sell contends, AIG granted GPG-TX authority for the sale of the
painting and GPG-NM could not have contracted for the sale of, and AIG’s interest
in “The Sheriff” could not have been transferred, without AIG’s express authority. Id.
at 6.
A principal can be subject to a forum’s jurisdiction based on the actions of its
agent. See Akerblom v. Ezra Holdings Ltd., No. 4:11-CV-0694, 2012 WL 253376, *15
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(S.D. Tex. Jan. 25, 2012) (“‘Under Texas law, [a]gency is the consensual relationship
between two parties when one, the agent, acts on behalf of the other, the principal,
and is subject to the principal’s control.’”) (citations omitted); Stripling, 234 F.3d at
870-872. As a general proposition, Texas law does not presume agency and, when
claiming agency, the alleging party has the burden of proving its existence. Buchoz v.
Klein, 184 S.W.2d 271, 286 (Tex. 1944). A principal is liable for the acts of its agent
when “the agent has actual or apparent authority to do those acts or when the
principal ratifies those acts.” Spring Garden 79U, Inc. v. Stewart Title Co., 874 S.W.2d
945, 948 (Tex. App.--Houston[1st Dist.] 1994, no writ)(citations omitted). Actual
authority arises when the principal intentionally confers authority upon an agent, or
intentionally allows the agent to believe it has authority, or by want of due care
allows the agent to believe himself to possess authority. Id. Apparent authority arises
when a principal’s conduct would lead a reasonably prudent person to believe that the
agent possessed the authority to act on behalf of the principal. See Maccabees Mutual
Life Insurance Company v. McNeil, 836 S.W.2d 229, 232-33 (Tex. App.--Dallas 1992,
no writ).
The court concludes that the Gerald Peters Entities had the authority to act on
behalf of AIG. By granting possession and authority to sell a painting within one’s
possession, AIG intentionally conferred authority or at the very least took actions
that would lead a reasonably prudent person to believe that the agent possessed
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authority. Consequently, the court concludes that GPG-TX, as well as all of the
Gerald Peters Entities, were acting as agents of AIG. Accordingly, the contacts and
actions of the Gerald Peters Entities, including GPG-TX, are imputed to AIG for the
determining this court’s exercise of personal jurisdiction over AIG.
b. Addison Rowe
Sell further alleges that he has established that Addison Rowe has the
minimum contacts necessary for the court to exercise personal jurisdiction over it.
Response at 8. Specifically, Sell asserts that jurisdiction is proper over Addison Rowe
because he entered into a contract with Addison Rowe, the material relied upon in
formulating the misrepresentation were supplied from Texas, and the results of the
appraisal were sent by Addison Rowe by phone and email to Texas. Id. at 8-9.
There is a significant connection between Addison Rowe and Sell’s claim that
permits the exercise of specific jurisdiction in this case. The sum of this defendant’s
contacts with the forum state, when considered both qualitatively and quantitatively,
are sufficient to allow the exercise of specific jurisdiction in Texas. Addison Rowe’s
contacts with Texas, from which this suit arises, are not “random,” “fortuitous,” or
“attenuated.” See Burger King, 471 U.S. at 475. By entering into a contract with
Sell, a resident of Texas, Addison Rowe was purposefully availing itself of the
privileges and protections of doing business in Texas. This availment should have
alerted Addison Rowe to the possibility that it might be haled into court in Texas to
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answer complaints related to this contractual relationship. Although the initial
contact with Addison Rowe was brought about by a third party and the contracted
services were performed in New Mexico, the contract formed was between Addison
Rowe and Sell, a Texas resident. Furthermore, as the results of the appraisal were
sent to Texas, the services provided had a reasonably foreseeable consequence within
the forum state.
2. Fair Play and Substantial Justice
To determine whether personal jurisdiction comports with fair play and
substantial justice, the court must examine a number of factors, including: (1) the
defendant’s burden; (2) the forum state’s interests; (3) the plaintiff’s interest in
convenient and effective relief; (4) the interstate judicial system’s interest in efficient
resolution of controversies; and (5) the shared interests of the several states in
furthering fundamental substantive social policies. Asahi Metal Industry Co., Ltd. v.
Superior Court of California, 480 U.S. 102, 113 (1987). “[O]nce minimum contacts
are established, a defendant must present ‘a compelling case that the presence of
some consideration would render jurisdiction unreasonable.’” Enviro Petroleum, Inc. v.
Kondur Petroleum, 79 F.Supp.2d 720, 725 (S.D. Tex. 1999) (quoting Burger King, 471
U.S. at 477). In fact, “[o]nly in rare cases . . . will the exercise of jurisdiction not
comport with fair play and substantial justice when the nonresident defendant has
purposefully established minimum contacts with the forum state.” Id. (quoting
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Guardian Royal Exchange Assurance, Limited v. English China Clays, P.L.C., 815 S.W.2d
223, 231 (Tex. 1991)).
Neither AIG nor Addison Rowe has made a compelling case to establish that
specific jurisdiction in this case would not comport with traditional notions of fair
play and substantial justice. There would, in all likelihood, be some burden placed on
either defendant if it is forced to defend itself in Texas. As the court has already
noted, AIG’s principal place of business is in Pennsylvania, and Addison Rowe’s
principal place of business is in New Mexico. These burdens, however, are
outweighed by the interest of Texas in adjudicating this matter. Sell is a resident of
Texas, so Texas has an interest in ensuring that its residents can seek relief here.
This, combined with Sell’s interest in receiving convenient and effective relief,
outweighs any burden that either AIG or Addison Rowe might face.
Because any burden placed on Addison Rowe or AIG in this case is outweighed
by the state’s interest in the matter and by the plaintiff’s interest in receiving
convenient and effective relief, the exercise of specific jurisdiction in this case
comports with traditional notions of fair play and substantial justice. The court,
therefore, concludes that the exercise of specific jurisdiction is appropriate in this
case.
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III. CONCLUSION
For the reasons set forth above, the motions to dismiss for lack for personal
jurisdiction are DENIED.
SO ORDERED.
July 9, 2012.
___________________________________
A. JOE FISH
Senior United States District Judge
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