McDonald v. Executive Financial Consultants

Filing 15

Memorandum Opinion and Order granting 6 Motion to Dismiss: The court ORDERS that all claims and causes of action asserted by plaintiff against defendant in the above-captioned action be, and are hereby, dismissed for want of personal jurisdiction over defendant. (Ordered by Judge John McBryde on 8/20/2014) (mdf)

NORTHERt'li

IN THE UNITED STATES DISTRICT CO(JRT
NORTHERN DISTRICT OF TEXA
FORT WORTH DIVISION
DERRICK McDONALD,

§

VS.

1

820

-

By _ _-;;Depmy

§
§
§

FILED

r--":::::"';:;'::::":::"::::'---.

CLERK, U.S. DISTRICT COURT

§

Plaintiff,

mSTRI~?~i~;EXAS--1

_

'-----~::...-.-- _ .~.--i
_

NO. 4:14-CV-284-A

§

EXECUTIVE FINANCIAL CONSULTANTS,§
Defendant.

§
§

MEMORANDUM OPINION
and
ORDER
Before the court for consideration and decision is the
motion of defendant, Executive Financial Consultants, to dismiss.
After having considered such motion, the response thereto of
plaintiff, Derrick McDonald, defendant's reply, the allegations
of the complaint, and pertinent legal authorities, the court has
concluded that plaintiff has failed to establish that this court
has in personam jurisdiction over defendant and that, therefore,
this action should be dismissed for want of personal
jurisdiction.
1.

Pertinent Allegations of Plaintiff's Complaint
To the extent relevant to defendant's request for dismissal
for lack of personal jurisdiction, the unverified complaint filed
by plaintiff on April 28, 2014, makes the following allegations:
SUbject matter jurisdiction is alleged to be conferred by
15 U.S.C. § 1692k(d) and 28 U.S.C. § 1331 and, as to state law

claims, 28 U.S.C. § 1367.

Plaintiff alleged that defendant is a

debt collector as defined by the federal Fair Debt Collection Act
and that defendant engaged in conduct in violation of that Act by
reporting a debt owed by plaintiff on plaintiff's credit report.
In addition, plaintiff claims that defendant violated provisions
of Texas statutes by attempting to collect a debt owed by
plaintiff by reporting the debt on plaintiff's credit report.
The allegations of the complaint that have potential
relevance to the issue of whether defendant's person is subject
to this court's jurisdiction appear to be the allegation, which
is repeated three times, that "[d]efendant falsely held
themselves out to Plaintiff that they are able to legally collect
debts in Texas," Compl. at 3, , 13, and at 6 and 9, the
allegation that "[d]efendant is a For-Profit Corporation
conducting debt collection in the state of Texas," id. at 2, , 4,
and the allegation that "[d]efendant is attempting to collect
this debt in the state of Texas," id., , 7.
II.
Pertinent Legal Principles
When a nonresident defendant presents a motion to dismiss
for lack of personal jurisdiction, the plaintiff bears the burden
of establishing that in personam jurisdiction exists.

Wilson v.

Belin, 20 F.3d 644, 648 (5th Cir.), cert. denied, 513 U.S. 930

2

(1994) i Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985) i

D.J. Investments, Inc. v. Metzeler Motorcycle Tire Agent Gregg,
Inc., 754 F.2d 542, 545-46 (5th Cir. 1985).

The plaintiff need

not, however, establish personal jurisdiction by a preponderance
of the evidence; at this stage,l prima facie evidence of personal
jurisdiction is sufficient.
203

WNS, Inc. v. Farrow, 884 F.2d 200,

(5th Cir. 1989) i Wyatt v. Kaplan, 686 F.2d 276, 280 (5th Cir.

1982).

The court may resolve a jurisdictional issue by reviewing

pleadings, affidavits, interrogatories, depositions, oral
testimony, exhibits, any part of the record, and any combination
thereof.

Command-Aire Corp. v. Ontario Mechanical Sales & Serv.,

Inc., 963 F.2d 90, 95 (5th Cir. 1992).

Allegations of the

plaintiff's complaint are taken as true except to the extent that
they are contradicted by defendant's affidavits.
at 282-83 n.13
683 n.3

Wyatt, 686 F.2d

(citing Black v. Acme Markets, Inc., 564 F.2d 681,

(5th Cir. 1977)).

Any genuine, material conflicts

between the facts established by the parties' affidavits and
other evidence are resolved in favor of plaintiff for the
purposes of determining whether a prima facie case exists.

Jones

v. Petty-Ray Geophysical Geosource, Inc., 954 F.2d 1061, 1067

1 Eventually, plaintiff must prove by a preponderance of the evidence that jurisdiction exists.
See DeMelo v. Toche Marine, Inc., 711 F.2d 1260, 1271 n.l2 (5th Cir. 1983).

3

(5th Cir.), cert. denied, 506 U.S. 867 (1992); Bullion v.
Gillespie, 895 F.2d 213, 217 (5th Cir. 1990).
Personal jurisdiction over a nonresident may be exercised if
(1) the nonresident defendant is amenable to service of process
under the law of a forum state, and (2) the exercise of
jurisdiction under state law comports with the due process clause
of the Fifth Amendment. 2
F.2d 290, 293

Max Daetwyler Corp. v. R. Meyer, 762

(3d Cir. 1985); Wilson, 20 F.3d at 646-47; Thompson

v. Chrysler Motors Corp., 755 F.2d 1162, 1166 (5th Cir. 1985)
(quoting Smith v. DeWalt Prods. Corp., 743 F.2d 277, 278 (5th
Cir. 1984)).

Since the Texas long-arm statute has been

interpreted as extending to the limits of due process,3 the only
inquiry is whether the exercise of jurisdiction over the
nonresident defendant would be constitutionally permissible.
Bullion, 895 F.2d at 216; Stuart, 772 F.2d at 1189.
For due process to be satisfied,

(1) the nonresident

defendant must have "minimum contacts" with the forum state

2The same minimum contacts test applies under both the Fifth and Fourteenth Amendments
where there is no federal statute authorizing nationwide service of process. Point Landing, Inc. v. Omni
Capital Int'l, Ltd., 795 F.2d 415,427 (5th Cir. 1986), affd, 484 U.S. 97 (1987) ("absent specific
congressional authority, a federal district court has no personal jurisdiction over a defendant who cannot
be reached by the long-arm statute of the state in which the district court sits"); Max Daetwyler Corp. v.
R. Meyer, 762 F.2d 290, 293 (3d Cir. 1985); Whistler Corp. v. Solar Elec., Inc., 684 F. Supp. 1126, 112829 (D. Mass. 1988). Accordingly, the court cites to Fourteenth Amendment cases herein as appropriate.
3See, e.g., Guardian Royal Exchange Assurance Ltd. v. English China Clays, P.L.C., 815 S.W.2d
223,226 (Tex. 1991); Schlobohm v. Schapiro, 784 S.W.2d 355, 357 (Tex. 1990); Kawasaki Steel Corp.
v. Middleton, 699 S.W.2d 199,200 (Tex. 1985).
4

resulting from an affirmative act on the defendant's part, and
(2) the contacts must be such that the exercise of jurisdiction
over the person of the defendant does not offend "traditional
notions of fair play and substantial justice."

International

Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)
Milliken v. Meyer, 311 U.S. 457, 463

(quoting

(1940)).

The minimum contacts prong of the due process requirement
can be satisfied by a finding of either "specific" or "general"
jurisdiction over the nonresident defendant.
at 216.

Bullion, 895 F.2d

For specific jurisdiction to exist, the foreign

defendant must purposefully do some act or consummate some
transaction in the forum state and the cause of action must arise
from or be connected with such act or transaction.
Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985).

Burger King

Even if the

controversy does not arise out of or relate to the nonresident
defendant's purposeful contacts with the forum, general
jurisdiction may be exercised when the nonresident defendant's
contacts with the forum are sufficiently continuous and
systematic as to support the reasonable exercise of jurisdiction.
See, e.g., Helicopteros Nacionales de Colombia, S.A. v. Hall, 466
U.S. 408, 416 (1984); Keeton v. Hustler Magazine, Inc., 465 U.S.
770, 779 (1984); Perkins v. Benguet Consolo Mining Co., 342 U.S.
437 (1952).

When general jurisdiction is asserted, the minimum
5

contacts analysis is more demanding and requires a showing of
substantial activities within the forum state.

Jones, 954 F.2d

at 1068.
The second prong of the due process analysis is whether
exercise of jurisdiction over the nonresident defendant would
comport with traditional notions of fair play and substantial
justice.

International Shoe, 326 U.S. at 316.

Once the

plaintiff establishes existence of minimum contacts, the
defendant then has the burden to show that the assertion of
jurisdiction would be unfair or unreasonable.

See Cent. Freight

Lines, Inc. v. APA Transp. Corp., 322 F.3d 376, 384
2003).

(5th Cir.

In determining whether the exercise of jurisdiction would

be reasonable such that it does not offend traditional notions of
fair play and substantial justice, the Supreme Court has
instructed that courts look to the following factors:
burden on the defendant,

(1) the

(2) the interests of the forum state,

(3) the plaintiff's interest in obtaining relief,

(4) the

interstate jUdicial system's interest in obtaining the most
efficient resolution of controversies, and (5) shared interest of
the several states in furthering fundamental substantive social
pOlicies.

Asahi Metal Indus. Co. v. Superior Court, 480 U.S.

102, 113 (1987)

(citing World-Wide Volkswagen Corp. v. Woodson,

444 U.S. 286, 292 (1980)).
6

III.
Evidence Presented by the Parties
on the In Personam Jurisdiction Issue
Defendant's motion was accompanied by the affidavit of
Richard LaBoute.

The affiant identifies himself as custodian of

records of defendant (which is referred to in the affidavit as
"Executive").

Mot., Aff. at 1.

The evidence provided by the

affidavit that is relevant to the in personam jurisdiction
question was as follows:
Executive is in the business of collecting
consumer and commercial debt.
It is incorporated in
the state of Missouri and its principal place of
business is Kansas City, Missouri.
It maintains no
offices outside of Missouri.
Executive collects consumer debt in the state of
Missouri.
Executive does not conduct debt collection
in the state of Texas. Executive has intentionally not
collected debt in the state of Texas or that originated
in the State of Texas since 1997. Executive only
collected debt for that single year because it had a
client with accounts/debts in Texas. Executive
obtained a surety bond that year to comply with Texas
law. After 1997, Executive ceased work for that client
and ceased any collections in Texas. Because Executive
ceased all debt collection activity in Texas in 1997,
Executive has not obtained a surety bond or filed one
with the state of Texas since that year.
Executive received a debt account for Derrick
McDonald on August 28, 2012 from Clay Platte Family
Medical Center located in Missouri in the amount of
$217.00. The address provided by Clay Platte Family
Medical Center for Derrick McDonald was 3333
Montgall[,] Kansas City, Missouri 64128. Executive
reported this debt to credit bureaus.
In Executive's
normal course of business it began collections
7

August 28, 2012 and sent its initial demand letter to
the Kansas City address provided by Plaintiff to Clay
Platte Family Medical Center. The letter was never
returned to Executive.
In a continuance of collection
efforts between August 28, 2012 and November 2, 2012,
Executive called Plaintiff's provided contact number,
three times and sent two additional collection letters.
The two additional letters were never returned to
Executive. November 2, 2012 was the last collection
attempt to Plaintiff.
On March 19, 2014 a credit bureau requested
verification on the balance of the debt.
It is
Executive's pOlicy and procedure to respond to all
verification requests from credit bureaus. Executive
verified the balance of the debt to the credit bureaus'
inquiry.
Id. at 1-2.
The only evidence adduced by plaintiff in support of his
contention that the court has personal jurisdiction over
defendant was in the form of an affidavit of Gerald E. Smith
("Smith") that was submitted as an exhibit to plaintiff's
response to defendant's motion.

Nothing in smith's affidavit

appears to be based on personal knowledge, with the consequence
that virtually everything in the affidavit is meaningless as
evidence.

Smith purports to provide information as an expert on

debt collection activities, but the affidavit does not contain
sufficient information for the court to conclude that Smith's
opinions qualify as probative expert testimony within the meaning
of Rule 702 of the Federal Rules of Evidence.

To whatever extent

information contained in the affidavit has potential relevance to
8

defendant's state of knowledge of plaintiff's place of residence
when it reported plaintiff's debt to the credit reporting agency,
the contents of the affidavit amount to nothing more than
speculation.

Moreover, even if the court were to accept on face

value everything said in Smith's affidavit, plaintiff still would
not have met his burden of proof.
Also attached to plaintiff's response as an exhibit is an
unverified copy of a document that is presented by plaintiff as a
"screen shot of plaintiff's credit report account trade line."
Resp., App. Cover Sheet.
IV.

Analysis
The court has concluded that plaintiff has failed to meet
his burden of establishing that the court has in personam
jurisdiction over defendant.

There is doubt in the court's mind

that the allegations of the complaint, even if accepted as true,
would establish in personam jurisdiction.

Conclusory allegations

of the kind made by plaintiff in his complaint are not
persuasive.
In contrast, the affidavit presented by defendant in support
of its motion provides persuasive evidence that at pertinent
times defendant did not engage in any collection activity in the
State of Texas, or purposefully do an act or consummate a
9

transaction in Texas from which plaintiff's cause of action arose
or with which the cause of action is connected.

Much less is

there evidence that defendant had contacts with the state of
Texas that were sufficiently continuous and systematic as to
support the reasonable exercise of jurisdiction over defendant.
The court has concluded that there is no evidence that exercise
of jurisdiction over defendant would comport with traditional
notions of fair play and substantial justice.

v.
Order
For the reasons stated above,
The court ORDERS that all claims and causes of action
asserted by plaintiff against defendant in the above-captioned
action be, and are hereby, dismissed for want of personal
jurisdiction over defendant.
SIGNED August 20, 2014.

10