Graff v. Owings et al

Filing 20

MEMORANDUM OPINION AND ORDER: The Court grants Defendants' 4 motion to dismiss this case for lack of personal jurisdiction as to both Defendants. The Court denies Plaintiff's contingent 13 motion for jurisdictional discovery. The Court need not address any alternative grounds for dismissal, nor any other pending motions. The case is hereby dismissed without prejudice. (Ordered by Judge Ed Kinkeade on 5/16/2017) (sss)

IN THE UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
STANLEY V. GRAFF,
Plaintiff,
v.
THE OWINGS GALLERY, INC., and
NATHANIEL O. OWINGS,
Defendants.

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Civil Action No. 3:17-CV-0459-K

MEMORANDUM OPINION AND ORDER
Before the Court are: (1) Defendants’ Motion to Dismiss (Doc. No. 4); and
(2) Plaintiff’s Contingent Motion for Leave to Conduct Jurisdictional Discovery
(Doc. No. 13). After careful consideration of the motions, the responses, the replies,
the supporting appendices, and the applicable law, the Court GRANTS Defendants’
motion to dismiss and DENIES Plaintiff’s contingent motion for leave to conduct
jurisdictional discovery.
I.

Factual and Procedural Background
Plaintiff Stanley Graff (“Plaintiff”) is a citizen of Texas, residing in Dallas.

Defendant Owings Gallery (“Gallery”) is a corporation organized under the laws of
the state of New Mexico, with its principal place of business in Santa Fe, New
Mexico. Defendant Gallery operates two (2) art galleries in Santa Fe, New Mexico.

ORDER – PAGE 1

Defendant Nathaniel O. Owings (“Owings”) is a citizen of New Mexico, residing in
Santa Fe. Defendant Owings is the president and sole shareholder of Defendant
Gallery.
In 2006, Plaintiff purchased a painting by William Victor Higgins (“Higgins
painting”). In 2012, Plaintiff and his wife, Deborah Graff (“Deborah”) began divorce
proceedings. Plaintiff alleges the divorce court prohibited Deborah from selling assets
of the marital estate unless she received permission from Plaintiff and the divorce
court. Despite this restriction, Plaintiff alleges that Deborah took the Higgins
painting without his and the divorce court’s knowledge or permission, and pawned it
in Arizona. When Deborah defaulted on the loan, the pawn shop sent the painting
to an auction house in Chicago, Illinois, where it was ultimately put up for auction on
September 15, 2015. Defendant Gallery bought the Higgins painting at this auction,
and it was delivered to Defendant Gallery in Santa Fe, New Mexico, where it was
displayed. On October 23, 2015, a customer of Defendant Gallery bought the
Higgins painting after seeing it in the Santa Fe gallery. The buyer was then invoiced
for the Higgins painting on November 2, 2015, but the painting had not yet been
delivered.
On November 18, 2015, Defendant Owings spoke with Plaintiff on the
telephone. Plaintiff told Defendant Owings that he was in the process of divorcing

ORDER – PAGE 2

his wife and she had stolen the Higgins painting and sold it without Plaintiff’s
knowledge. Plaintiff asked Defendant Owings to return the painting to him. On
Defendant Owings’ request, Plaintiff indicated he would provide some type of proof
that the Higgins painting belonged to him and was stolen. After this phone call,
Defendant Owings contacted the purchaser of the Higgins painting. The painting
had not yet been delivered to the purchaser, and Defendant Owings put the
purchaser on notice that the sale was suspended because of Plaintiff’s theft claim.
Defendant Owings called Plaintiff twice more to inquire about any information
Plaintiff could provide to substantiate his theft claim. Both times, Plaintiff told
Defendant Owings he was working on getting the information. By November 25,
2015, a week after the first phone call, Defendant Owings still had not received any
proof of the theft or ownership of the Higgins painting. Ultimately, the sale of the
Higgins painting was reinstated and the painting delivered to the buyer.
Defendant Owings’ next communication with Plaintiff was a letter dated July
29, 2016, in which Plaintiff notified Defendants that Plaintiff would be issuing a
subpoena related to the Higgins painting. Plaintiff filed this lawsuit against
Defendants in Texas state court on January 24, 2017. Defendants removed the case
to this Court on February17, 2019.

ORDER – PAGE 3

II.

Motion to Dismiss
A. Legal Standard
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. See Monkton Ins. Services, Ltd. v. Ritter, 768 F.3d
429, 431 (5th Cir. 2014); Gardemal v. Westin Hotel Co., 186 F.3d 588, 592 (5th Cir.
1999). When there is no evidentiary hearing, the plaintiff may establish personal
jurisdiction by presenting a prima facie case that personal jurisdiction exists; proof by
a preponderance of the evidence is not required. Int’l Truck & Engine Corp. v.
Quintana, 259 F.Supp.2d 553, 556 (N.D. Tex. 2003)(Lindsay, J.)(citing WNS, Inc. v.
Farrow, 884 F.2d 200, 203 (5th Cir. 1989)). The plaintiff satisfies his burden by
producing admissible evidence which, if believed, would support the existence of
personal jurisdiction. WNS, 884 F.2d at 203-04. In making its determination, the
court may consider affidavits, interrogatories, depositions, oral testimony, or any
combination of recognized discovery methods. Allred v. Moore & Peterson, 117 F.3d
278, 281 (5th Cir. 1997). The court will take the allegations of the complaint as
true, except where they are controverted by opposing affidavits, and all factual
conflicts are resolved in favor of the plaintiff. Gardemal, 186 F.3d at 592; Wilson v.
Belin, 20 F.3d 644, 648 (5th Cir. 1994). While this is a liberal standard, it “does not

ORDER – PAGE 4

require the court to credit conclusory allegations, even if uncontroverted.” Panda
Brandywine Corp. v. Potomac Elec. Power Co., 253 F.3d 865, 869 (5th Cir. 2001).
In considering whether the court has personal jurisdiction over a nonresident
defendant, the court must consider: (1) whether the long-arm statute of the state in
which it sits confers personal jurisdiction over the defendant; and, if so, (2) whether
the exercise of personal jurisdiction is consistent with due process under the United
State Constitution. Mink v. AAAA Dev. LLC, 190 F.3d 333, 335 (5th Cir. 1999).
The Supreme Court of Texas has interpreted the state’s long-arm statute “to reach as
far as the federal constitution permits.” Schlobohm v. Schapiro, 784 S.W.2d 355, 357
(Tex. 1990). Therefore, this Court need only address whether the exercise of
personal jurisdiction over the nonresident defendant would be consistent with the
Due Process Clause of the Fourteenth Amendment. Mink, 190 F.3d at 335-36.
A court may exercise personal jurisdiction over a nonresident defendant under
the Due Process Clause “when (1) that defendant has purposefully availed himself of
the benefits and protections of the forum state by establishing ‘minimum contacts’
with the forum state; and (2) the exercise of jurisdiction over that defendant does not
offend ‘traditional notions of fair play and substantial justice.’” Latshaw v. Johnston,
167 F.3d 208, 211 (5th Cir. 1999)(quoting Int’l Shoe Co. v. State of Washington, 326
U.S. 310, 316 (1945)).

ORDER – PAGE 5

A nonresident defendant’s “minimum contacts” can give rise to general or
specific personal jurisdiction. Mink, 190 F.3d at 336. When the cause of action
either arises from or is directly related to the nonresident defendant’s contacts with
the forum state, there is specific personal jurisdiction. Helicopteros Nacionales de
Colombia, S.A. v. Hall, 466 U.S. 408, 414 n. 9 (1984). In contrast, when the
nonresident defendant’s contacts with the forum state are unrelated to the plaintiff’s
cause of action but are, instead, “continuous and systematic”, there is general
personal jurisdiction. Helicopteros, 466 U.S. at 414 n. 8; see Mink, 190 F.3d at 336.
The nonresident defendant’s availment of the benefits and protections of the forum
state must be such that the defendant “should reasonably anticipate being haled into
court” there. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980).
This requirement of purposeful availment acts to ensure that a defendant’s “‘random,
fortuitous, or attentuated’ contacts” or the “unilateral activity of another party or a
third person” will not result in the defendant being haled into a jurisdiction. Burger
King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)(internal citations omitted).
As for the second question of whether the traditional notions of fair play and
substantial justice would be offended, the court considers: (1) the burden of the
defendant; (2) any interests of the forum state; (3) the plaintiff’s interest in
convenient and effective relief; (4) the judicial system’s concern and interest in

ORDER – PAGE 6

efficiently resolving controversies; and (5) the shared interest of the states in
advancing fundamental substantive social policies. Asahi Metal Indus. Co., Ltd. v.
Superior Court of California, Solano County, 480 U.S. 102, 113 (1987).
B. Application of the Law
Plaintiff contends that Defendants are subject to both specific and general
personal jurisdiction in this case.
1. Defendants’ Contacts with Texas
Defendants admit to the following contacts with the state of Texas:
1. In 2004, Defendant Gallery, along with three others, participated in a purchase
and sale of one (1) painting in Texas. Defendant Gallery never took
possession of the painting, and the painting never left Texas.
2. In 2007, Defendant Owings, on behalf of Defendant Gallery, traveled to Texas
to view a private art collection. No transactions occurred during this visit.
3. In 2013, Defendant Owings attended an auction in Dallas, Texas, on behalf of
Defendant Gallery, and purchased three (3) paintings. Defendant Owings was
in Texas for approximately 24 hours.
4. In 2015, Defendant Owings attended an auction in Dallas, Texas, on behalf of
Defendant Gallery, and purchased three (3) paintings. Defendant Owings was
in Texas for approximately 24 hours.

ORDER – PAGE 7

5. During the last fifteen (15) years, Defendant Gallery has purchased twenty-one
(21) paintings from an auction house in Dallas, Texas, via absentee bid. No
representative from Defendant Gallery was in attendance.
6. In 2016, Defendant Gallery consigned two (2) paintings for sale with an
auction house in Dallas, Texas. Both paintings were sold at auction, and no
representative of Defendant Gallery was in attendance. Proceeds from the sales
were delivered to Defendant Gallery in New Mexico.
7. Defendant Owings has traveled to Texas for personal reasons on three (3)
occasions. In 2010 and again in 2015, Defendant Owings attended a funeral
in Texas, spending approximately twenty-four (24) hours in Texas for each
visit. In 2014, Defendant Owings attended a wedding in Texas, spending
approximately 48 hours in Texas.
Other than these contacts, neither Defendant Owings nor Defendant Gallery have
any other contacts with Texas.
2. Specific Jurisdiction
In their motion, Defendants argue they are not subject to specific jurisdiction
because Plaintiff’s claims do not arise from or relate to any of Defendants’ contacts
with Texas. Plaintiff responds that Defendants could have reasonably anticipated
being haled into Texas courts when they “undertook a purposeful act” of

ORDER – PAGE 8

“maintaining possession of, and then selling and delivering to a purchaser, artwork
known to be contested as stolen property in a pending Texas litigation.”
In his Original Petition, Plaintiff asserts causes of action against Defendants
for conversion, unlawful appropriation under Texas Theft Liability Act, promissory
estoppel, fraud, and unjust enrichment. These claims all arise from Defendants’ sale
of the Higgins painting to a buyer when that painting was allegedly stolen.
Specific jurisdiction can be exercised over nonresident defendants where the
causes of action arise out of or relate to the nonresident defendants’ contact(s) with
the forum state. Helicopteros Nacionales, 466 U.S. at 414 n.8; see Goodyear Dunlop Tires
Operations, S.A. v. Brown, 564 U.S. 923-924 (2011). “[M]ere purchases, even if
occurring at regular intervals, are not enough to warrant a State’s assertion of in
personam jurisdiction over a nonresident corporation in a cause of action not related
to those purchase transactions.” Helicopteros Nacionales, 466 U.S. at 418.
The record establishes that the Higgins painting was purchased from an auction in
Chicago, Illinois. Defendant Owings’ sworn declaration establishes that neither
Defendant knew the background of the Higgins painting other than it came from a
private collection and had been sold at auction in Nevada in 2004. Additionally,
once Defendant Gallery purchased this painting, it was delivered to Santa Fe, New

ORDER – PAGE 9

Mexico, where it was viewed and then purchased by the private buyer. None of
either Defendants contacts involved the painting at issue in this case.
Plaintiff argues that Defendants are subject to personal jurisdiction because of
their “purposeful act” of maintaining possession of the Higgins painting and then
delivering it to a private buyer despite knowing the painting was being “contested as
stolen property in a pending Texas litigation.” Plaintiff cites the Court to Kelly Inv.,
Inc. v. Basic Capital Mgmt., Inc., 85 S.W.3d 371 (Tex.App.—Dallas 2002) as
instructive. In Kelly, the Dallas Court of Appeals concluded the appellant had
sufficient minimum contacts with Texas based on, among other things, appellant’s
purchase of contracts with Texas residents which appellant knew at the time of the
purchase that these contracts were the subject of pending litigation in Texas.
The Kelly case is easily distinguishable from this case. In Kelly, the appellant
bought contracts with Texas residents knowing that, at the time of the purchase,
those contracts were the subject of pending litigation in Texas. Unlike the Kelly case,
these Defendants had no knowledge of the Higgins painting’s background related to
Texas, Plaintiff, or his ex-wife when Defendants purchased it at a Chicago-based
auction, or even when it was later sold in Santa Fe to a private buyer (but before it
was delivered). Despite Plaintiff’s suggestion to the contrary, the mere fact that the
Higgins painting may have been involved in a divorce court proceeding in Texas

ORDER – PAGE 10

would not alone be sufficient when Defendants were entirely unaware of the
painting’s Texas entanglement until after they had purchased and then sold the
painting. Furthermore, the record establishes that Defendant Owings delayed
delivery of the painting and suspended the sale to the private buyer once Defendant
Owings learned of the ownership dispute and alleged theft from Plaintiff. Defendant
Owings asked Plaintiff to produce proof of the theft, such as a police report, or an
order from the divorce court regarding ownership, or any other such proof, so
Defendant Owings could verify the situation. Despite his assurance he would
produce proof as requested, Plaintiff never did produce anything to prove ownership.
Defendant Owings contacted Plaintiff at least two more times for proof of the
contested ownership or theft, all the while delaying delivery to the private purchaser.
Plaintiff again failed to produce any proof. Ultimately, Defendants reinstated the
sale and delivered the Higgins painting to the buyer.
Plaintiff’s argument that Defendants are subject to specific jurisdiction of this
Court because they purposefully acted to “maintain[ ] possession of, and then sell[ ]
and deliver[ ] to a purchaser, artwork known to be contested as stolen property in a
pending Texas litigation” is wholly without merit. Plaintiff’s causes of action do not
arise from or relate to Defendants’ contacts with Texas. In this case, the Court finds
there is no basis for specific jurisdiction over either Defendant. See Helicopteros

ORDER – PAGE 11

Nacionales, 466 U.S. at 418 (“[M]ere purchases, even if occurring at regular intervals,
are not enough to warrant a State’s assertion of in personam jurisdiction over a
nonresident corporation in a cause of action not related to those purchase
transactions.”).
3. General Jurisdiction
Plaintiff contends that even if Defendants are not subject to this Court’s
personal jurisdiction, they have sufficient “continuous and systematic” contacts with
Texas for the Court to exercise general jurisdiction over Defendants.
If a nonresident defendant has continuous and systematic contacts with the
forum state, general jurisdiction may be asserted. Schlobohm v. Shapiro, 784 S.W.2d
355, 357 (Tex. 1990). “When general jurisdiction is asserted, the minimum contacts
analysis is more demanding and requires a showing of substantial activities in the
forum state.” Guardian Royal, 815 S.W.2d at 228.
Plaintiff argues the facts of this case are similar to those in Project Eng’g USA
Corp. v. Gator Hawk, Inc., 833 S.W.2d 719 (Tex.App.—Houston [1st Dist.] 1992). In
that case, the Houston Court of Appeals concluded that appellant had sufficient
continuous and systematic contacts with Texas to establish sufficient “minimum
contacts” with Texas for general jurisdiction. Id. at 722. In that case, the record
established the appellant was a sales representative or distributor in California for

ORDER – PAGE 12

three different Texas companies for several years; the president of appellant company
had traveled to Texas at least four times regarding appellant’s contracts with those
three Texas companies; the Texas companies paid appellant commission checks;
appellant’s written contract with one of the Texas companies was signed in Texas and
the contract provided that Texas law was controlling and any litigation must be
brought in Houston, Texas. Id. The Houston Court of Appeals also stated that it
was reasonable to infer appellant “necessarily had to keep in regular communication
with the Texas companies it represented.” Id. The appellate court concluded those
contacts were “continuous and systematic” to establish general jurisdiction over
appellant. Id.
This Court finds the Project Engineering case is easily distinguishable from this
case. Defendants’ contacts with Texas consist of one-off transactions involving the
purchase of three paintings in 2013 and again in 2015 at Texas-based auction where
Defendant Owings represented Defendant Gallery; Defendant Gallery’s participation
in a group purchase and then sale of a single painting located in Texas; the purchase
of 21 paintings via absentee bid at Texas-based auction over a 15-year period; the
consigned sale of two painting through a Texas-based auction house where neither
Defendant Owings or a representative of Defendant Gallery was present; Defendant
Owings single trip to Texas to view a private art collection as representative of

ORDER – PAGE 13

Defendant Gallery during which no transactions occurred; and finally, Defendant
Owings personal trips to Texas on three separate occasions for two funerals and a
wedding, staying at most 48 hours. Neither Defendant Owings nor Defendant
Gallery has had any other contacts with Texas. These contacts are not even remotely
similar to those in Project Engineering in which business agreements were executed
between the nonresident party and three Texas companies, choice of law provisions
selecting Texas courts and law were contained in at least one of those contracts, the
nonresident party acted continuously as a representative or distributor on behalf of
three Texas-based businesses over an extended period of time, and presumably the
nonresident party kept in regular contact with the three Texas companies on whose
behalf the nonresident party acted.
The Court finds that both Defendant Owings’ and Defendant Gallery’s
contacts with Texas are attenuated, isolated or sporadic, at best. Burger King, 471
U.S. at 475 (“This ‘purposeful availment’ requirement ensures that a defendant will
not be haled into a jurisdiction solely as a result of ‘random.’ ‘fortuitous,’ or
‘attenuated’ contacts.”). Defendant Owings and/or Defendant Gallery have not
“‘deliberately’ [ ] engaged in significant activities” with Texas or “created ‘continuing
obligations’ between” themselves and Texas residents, such that either Defendant has
“availed himself of the privilege of conducting business” in Texas. Id. at 475-476.

ORDER – PAGE 14

The Court cannot find that either Defendant Owings or Defendant Gallery
purposefully established minimum contacts with Texas.
III.

Motion for Jurisdictional Discovery

Plaintiff filed a “contingent” motion seeking leave to conduct jurisdictional
discovery. In his motion, Plaintiff states that he “has identified [in his response to
Defendants’ motion to dismiss] authority supporting the exercise of personal
jurisdiction over Defendants on the known facts. But if the Court concludes that it
needs more information to rule on personal jurisdiction, discovery may reveal further
bases for exercising personal jurisdiction over Defendants.”
This Court has broad discretion in deciding whether to allow a party to
conduct jurisdictional discovery. See Wyatt v. Kaplan, 686 F.2d 276, 283 (5th Cir.
1982). A plaintiff must make a “preliminary showing of jurisdiction” to be entitled
to conduct jurisdictional discovery. Fielding v. Hubert Burda Media, Inc., 415 F.3d 419,
429 (5th Cir. 2005); see Freeman v. US, 556 F.3d 326, 341 (5th Cir.), cert. denied,
558 U.S. 826 (2009) (“The party seeking discovery bears the burden of showing its
necessity.”). The plaintiff must put forward what facts she believes discovery would
reveal and how those facts would support personal jurisdiction. Kelly v. Syria Shell
Petroleum Dev. B.V., 213 F.3d 841, 855 (5th Cir. 2000); see Mello Hielo Ice, Ltd. v. Ice
Cold Vending LLC, Civ. No. 4:11-CV-629-A, 2012 WL 104980, at *7 (N.D.Tex. Jan.

ORDER – PAGE 15

11, 2012)(McBryde, J.)(plaintiff seeking discovery related to personal jurisdiction
must identify the discovery needed, facts expected to be learned from it, and how
that information would support personal jurisdiction). “‘[D]iscovery on matters of
personal jurisdiction need not be permitted unless the motion to dismiss raises issues
of fact. When the lack of personal jurisdiction is clear, discovery would serve no
purpose and should not be permitted.’” Kelly v. Syria Shell Petroleum Dev. B.V., 213
F.3d 841, 855 (5th Cir, 2000)(quoting Wyatt, 686 F.2d at 284). The Fifth Circuit
has upheld a district court’s denial of jurisdictional discovery when such discovery
“could not have added any significant facts.” Wyatt, 686 F.2d at 284.
The Court denies Plaintiff’s request for jurisdictional discovery. Initially, the
Court notes that it was able to rule on Defendants’ motion to dismiss based on the
known facts and the record. Plaintiff filed this motion as a “contingent” motion
seeking discovery “if the Court concludes that it needs more information to rule on
personal jurisdiction.” Plaintiff argues in his response to Defendants’ motion to
dismiss that Defendants’ known contacts are sufficient for this Court to exercise both
specific and general jurisdiction over Defendants. The record before the Court clearly
establishes neither specific or general personal jurisdiction can be exercised over either
of these Defendants. The Court cannot conclude that any additional information is
necessary to rule on personal jurisdiction, so discovery would serve no purpose. See

ORDER – PAGE 16

Kelly, 213 F.3d at 855. Therefore, denial of Plaintiff’s motion is appropriate on this
ground alone. See id.; Wyatt, 686 F.2d at 284.
Even if the Court considered the merits of the discovery request, the Court
would still deny the motion. Plaintiff failed to make the required preliminary
showing to be entitled to jurisdictional discovery. See Fielding, 415 F.3d at 429.
Plaintiff stated in his motion that “discovery may reveal further bases for exercising
personal jurisdiction over Defendants.” There is nothing in the record to even
suggest that Defendants’ contacts with Texas were more substantial than asserted in
Defendant Owings’ sworn declaration filed in support of Defendants’ motion to
dismiss. See Cable Elec., Inc. v. North Am. Cable Equip., Inc., Civ. No. 3:08-CV-433-M,
2009 Wl 2382561, at *3 (N.D.Tex. Aug. 10, 2009)(J. Lynn). Also, Defendants’
motion to dismiss did not raise any fact issues regarding personal jurisdiction related
to Defendants. The Fifth Circuit has made clear that “‘discovery on matters of
personal jurisdiction need not be permitted unless the motion to dismiss raises issues
of fact. When the lack of personal jurisdiction is clear, discovery would serve no
purpose and should not be permitted.’” See Kelly, 213 F.3d at 855 (quoting Wyatt,
686 F.2d at 284).

ORDER – PAGE 17

Based upon the record, the Court concludes the lack of personal jurisdiction is
clear, and discovery would not add any significant facts. See Wyatt, 686 F.2d at 284.
Plaintiff’s contingent motion for leave to conduct jurisdictional discovery is denied.
IV.

Conclusion

The Court finds that it cannot exercise in personam jurisdiction over either
Defendant in this case. Accordingly, the Court grants Defendants’ motion to dismiss
this case for lack of personal jurisdiction as to both Defendants. The Court denies
Plaintiff’s contingent motion for jurisdictional discovery. The Court need not address
any alternative grounds for dismissal, nor any other pending motions. The case is
hereby dismissed without prejudice.
SO ORDERED.
Signed May 16th, 2017.
______________________________________
ED KINKEADE
UNITED STATES DISTRICT JUDGE

ORDER – PAGE 18