Evergreen Media Holdings, LLC et al v. Safran et al
Filing
20
OPINION AND ORDER TO TRANSFER CASE to Central District of California 5 MOTION to Dismiss For Lack of Personal Jurisdiction and alternatively Motion to Transfer Venue (Signed by Judge Melinda Harmon) Parties notified.(rhawkins, 4)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
EVERGREEN MEDIA HOLDINGS, LLC
AND TONY DEROSA-GRUND,
Plaintiffs,
VS.
THE SAFRAN COMPANY AND PETER
SAFRAN,
Defendants.
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§
§
§
§
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§
§
§
CIV. A. NO. H-14-1634
OPINION AND ORDER OF TRANSFER
The above referenced cause, removed from Texas state court on
diversity jurisdiction1 and alleging breach of contract and breach
of covenant of good faith and fair dealing,2 and seeking damages
1
It is undisputed that for jurisdictional purposes both
Plaintiffs are citizens of Texas, while both Defendants are
citizens of California.
2
Although the Court does not address the merits of the
case in deciding whether it has personal jurisdiction over Safran
and The Safran Company, for clarity here the Court observes that
under Texas law there are four elements for a claim of breach of
contract: (1) an enforceable valid contract between the parties;
(2) performance by plaintiff of its contractual obligation; (3)
breach of the contract by the defendant; and (4) injury to
plaintiff caused by the breach. American Gen. Life Ins. Co. v.
Kirsch, 378 Fed. Appx. 379, 383 (5th Cir. 2010); Southwell v. Univ.
of the Incarnate Word, 974 S.W. 2d 351, 354-44 (Tex. App.--San
Antonio 1998, pet. denied).
Plaintiffs assert that “[u]nder Texas law, there is an
implied covenant of good faith and fair dealing in every contract
that neither party will do anything that will injure the right of
the other to receive the benefits of the agreement.”
Orig.
Petition, #1-2 at p. 8. The Court notes that the Texas Supreme
Court has declined to imply a general duty of good faith and fair
dealing in all contracts. English v. Fisher, 660 S.W. 2d 521, 522
(Tex. 1983)(opining that there is no general duty of good faith
and
fair
dealing
in
ordinary,
arms-length
commercial
transactions). An exception is recognized where the parties have
certain “special relationships,” e.g., the relationship between an
insured and insurer, principal and agent, joint venturers or
partners, in which case a duty of good faith and fair dealing may
arise based on trust or unequal bargaining power. Natividad v.
and declaratory relief, is a dispute between movie producers over
payment rights to a Hollywood horror movie, “The Conjuring,” which
was filmed in North Carolina.
Pending before the Court is
Defendants The Safran Company and Peter Safran’s motion to dismiss
for lack of personal jurisdiction under Fed. Rule of Civ. P.
12(b)(2) and, alternatively, motion to transfer to the Central
District of California pursuant to 28 U.S.C. § 1404(a)(instrument
#5).
After a careful review of the record and the applicable law,
for the reasons stated below, the Court finds that it lacks
personal jurisdiction over Defendants and that a transfer to the
Central District of California under § 1404 is appropriate.
Factual Allegations of the Original Petition (#1-2)
Plaintiffs Evergreen Media Holdings, LLC (“Evergreen”) and
Tony DeRosa-Grund (“DeRosa-Grund”), a motion picture producer,
purchased
the
rights
to
case
files
of
two
paranormal
investigators, Ed and Lorraine Warren, from which DeRosa-Grund
wrote the story and developed the motion picture, “The Conjuring.”
On
or
around
March
2010,
Plaintiffs
entered
into
an
Option
Quitclaim Agreement with New Line Productions, Inc. (“New Line”),
pursuant to which New Line obtained from Plaintiffs an option on
the rights to produce “The Conjuring” and a theatrical sequel or
remake of it or additional films based on the Warrens’ case files.
Alexsis, Inc., 875 S.W. 2d 695, 697-98 & n.5 (Tex. 1983), citing
Arnold v. Nat’l County Mut. Fire Ins. Co., 725 S.W. 2d 165, 167
(Tex. 1987).
-2-
On or around March 31, 2010 Evergreen and New Line also entered
into a Producer Loanout Agreement pursuant to which DeRosa-Grund
would produce “The Conjuring.”
Under both agreements Plaintiffs
were to be compensated by New Line with a percentage of the
adjusted gross receipts of “The Conjuring,” which turned out to be
one of the most profitable movies of 2013.
While “The Conjuring” was being filmed, but before it was
released, in or around February 13, 2012 DeRosa-Grund and Peter
Safran (“Safran”), who is president and owner of The Safran
Company, entered into an oral agreement in Montgomery County,
Texas pursuant to which Defendants would provide customary
producer services (e.g., securing writers, directors and other
talent for and developing Plaintiffs’ projects in the marketplace
and obtaining financial sources, for ultimate sale and production)
to Plaintiffs’ motion picture products other than “The Conjuring,”
for which DeRosa-Grund would pay Safran fifty percent of the
contingent compensation paid to Plaintiffs by New Line on “The
Conjuring.”
Nevertheless, claim Plaintiffs, not only did Safran not
provide any producer services to Plaintiffs with respect to the
other
entertainment
Plaintiffs’
efforts
projects,
in
the
but
Defendants
entertainment
undermined
industry.
Since
Defendants did not provide consideration for the oral agreement,
Plaintiffs insist that no valid and binding agreement exists
between the parties. Even if it did, Plaintiffs contend that
Safran breached the agreement and the implied covenant of good
-3-
faith and fair dealing by failing to provide the producer services
relating to the other entertainment projects and by his actions
undermining Plaintiffs’ efforts.
Therefore Plaintiffs claim they
have no obligation to pay Safran any portion of the contingent
compensation connected to “The Conjuring.”
Furthermore New Line purportedly failed to pay the profit
participation it promised to Plaintiffs.
Applicable Law
Whether the court has personal jurisdiction over a defendant
is a question of law subject to de novo review.
In re Chinese-
Manufactured Drywall Products Liability Litig., 753 F.3d 521, 52829 (5th Cir. 2014). When a defendant files a motion to dismiss for
lack
of
jurisdiction
under
Federal
Rule
of
Civil
Procedure
12(b)(2), the plaintiff bears the burden of demonstrating that the
court has personal jurisdiction over the defendant.
Luv N’ Care,
Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 469 (5th Cir.)(citing Wyatt
v. Kaplan, 686 F.2d 276, 280 (5th Cir. 1982)), cert. denied, 548
U.S. 904 (2006).3
Personal jurisdiction must be determined on an
individual basis for each defendant.
Rush v. Savchuk, 444 U.S.
320, 332 (1980); Best Little Promohouse in Texas, LLC v. Yankee
3
“Absent any dispute as to the relevant facts, the
issue of whether personal jurisdiction may be exercised over a
nonresident defendant is a question of law . . . .” Ruston Gas
Turbines, Inc. v. Donaldson Co., 9 F.3d 415, 418 (5th Cir. 1993).
Where the facts are disputed, the party seeking to invoke the
court’s jurisdiction bears the burden of establishing sufficient
contacts with the forum state by the nonresident defendant to
invoke the court’s jurisdiction. Bullion v. Gillespie, 895 F.2d
213, 216-17 (5th Cir. 1990).
-4-
Pennysaver, Inc., No. 3:14-CV-1824-BN, 2014 WL 5431630, at *2
(N.D. Tex. Oct. 27, 2014).
At the pretrial stage of litigation,
if the district court does not conduct a hearing on personal
jurisdiction, the plaintiff need only present a prima facie case
of personal jurisdiction.
Wilson v. Belin, 20 F.3d 644, 648 (5th
Cir.), cert. denied, 513 U.S. 930 (1994); Felch v. Transportes
Lar-Mex S.A. DE CV, 92 F.3d 320, 325 (5th Cir. 1996); Johnston v.
Multidata Systems Intern. Corp., 523 F.3d 602, 609 (5th Cir. 2008).
Proof by preponderance of the evidence is not required. Johnston,
523 F.3d at 609.4
When a defendant disputes factual bases for
4
As the Fifth Circuit explained in Walk Haydel &
Associates, Inc. v. Coastal Power Production Co. , 517 F.3d 235,
241-42 (5th Cir. 2008),
Ultimately, the plaintiff must show by a
preponderance
of
the
evidence
that
jurisdiction
is
proper. Often, the
determination of whether this standard is met
is resolved at trial along with the merits.
This
is
especially
likely
when
the
jurisdiction issue is intertwined with the
merits and therefore can be determined based
on jury fact findings. In this situation it
is often “preferable that [the
jurisdictional] determination be made at
trial, where a plaintiff may present his case
in a coherent, orderly fashion and without
the risk of prejudicing his case on the
merits.” But this court has said that after
a pretrial evidentiary hearing confined to
the jurisdictional issue, where both sides
have the opportunity to present their cases
fully, the district court can decide whether
the plaintiff has established jurisdiction by
a preponderance of the evidence. [footnotes
omitted]
The panel further opined, id. at 241,
If the court determines that it will receive
-5-
personal jurisdiction, the district court may consider the record
before it, including “affidavits, interrogatories, depositions,
oral testimony, or any combination of the recognized methods of
discovery.”
Quick Technologies, Inc. v. Sage Group PLC, 313 F.3d
338, 344 (5th Cir. 2002)(quoting Thompson v. Chrysler Motors Corp.,
755 F.3d
1162, 1165 (5th Cir. 1985)), cert. denied, 540 U.S. 814
(2003); Kelly Law Firm, P.C. v. An Attorney for You, 679 F. Supp.
2d 755, 762 (S.D. Tex. 2009).
The Court ‘’must accept the
plaintiff’s uncontroverted allegations, and resolve in [his] favor
all
conflicts
between
the
facts
contained
in
the
parties’
affidavits and other documentation’” for purposes of the prima
facie case of personal jurisdiction.
Monkton Ins. Services, Ltd.
v. Ritter, 768 F.3d 429, 431 (5th Cir. 2014), quoting Revell v.
Lidov, 317 F.3d 467, 469 (5th Cir. 2002).
Nevertheless, the court
is not required to credit conclusory allegations even if they are
uncontroverted.
Panda Brandywine Corp. v. Potomac Elec. Power
Co., 253 F.3d 865, 869 (5th Cir. 2001).
The court had discretion whether to allow jurisdictional
discovery.
Monkton Ins., 768 F.3d at 429, citing Davila v. U.S.,
only affidavits or affidavits plus discovery
materials, these very limitations dictate
that a plaintiff must make only a prima facie
showing of jurisdictional facts through the
submitted materials in order to avoid a
defendant’s motion to dismiss. Any greater
burden such as proof by a preponderance of
the evidence would permit a defendant to
obtain a dismissal simply by controverting
the facts established by a plaintiff through
his own affidavit and supporting materials.
-6-
713 F.3d 248, 263-64 (5th Cir. 2013).
As the party opposing
dismissal and requesting jurisdictional discovery, the plaintiff
bears the burden of showing that discovery is needed.
Id.
As
recently opined by the district court in National Surety Corp. v.
Ferguson Enterprises, Inc., No. 3:13-CV-2045-M, 2014 WL 5472436,
at *1 (N.D. Tex. Oct. 29, 2014),
When seeking discovery on personal jurisdiction, a
plaintiff must make a “preliminary showing of
jurisdiction” before being entitled to such discovery.
Fielding v. Hubert Burda Media, Inc., 415 F.3d 419, 429
(5th Cir. 2005). The decision to allow jurisdictional
discovery is within the district court’s discretion.
See id. at 419. “[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)(citation omitted). A plaintiff seeking discovery
on matters of personal jurisdiction is expected to
identify the discovery needed, the facts expected to be
obtained thereby, and how such information would support
personal jurisdiction. See Mello Hielo Ice, Ltd. v. Ice
Cold Vending LLC, No. 4:11-cv-629-A, 2012 WL 104980, at
*7 (N.D. Tex. Jan. 11, 1012)(citing Kelly, 213 F.3d at
855).
A court is entitled to deny leave to conduct
discovery where the movant fails to specify what facts
it believes discovery would uncover and how those facts
would support personal jurisdiction. See id.; see also
King v. Hawgwild Air, LLC, No. 3:08-cv-153-L, 2008 WL
2620099, at *8 (N.D. Tex. June 17, 2008).
The court has discretion as to the type and amount of discovery it
will allow, but unless there is a full and fair hearing, it should
not act as a factfinder and must construe all disputed facts in
favor of the plaintiff.
Walk Haydel, 517 F.3d at 241.
“When a
district court makes factual determinations decisive of a motion
to dismiss for lack of jurisdiction, it must give plaintiffs an
opportunity for discovery and a hearing that is appropriate to the
-7-
nature of the motion to dismiss.”
McCallister v. FDIC, 87 F.3d
762, 766 (5th Cir. 1996).
Under the federal rules, except where a federal statute
provides for broader personal jurisdiction, the district court’s
personal jurisdiction is coterminous with that of a court of
general jurisdiction of the state in which the district court
sits.
Submersible Sys., Inc. v. Perforadora Cent., S.A. de C.V.,
249 F.3d 413, 418 (5th Cir. 2001).
A federal court sitting in
diversity may exercise personal jurisdiction over a nonresident
defendant if the forum state’s long-arm statute confers personal
jurisdiction over that nonresident defendant and if the exercise
of personal jurisdiction satisfies due process under the United
States Constitution.
McFadin v. Gerber, 587 F.3d 753, 759 (5th
Cir. 2009), citing Moncrief Oil Int’l, Inc. v. OAO Gasprom, 481
F.3d 309, 311 (5th Cir. 2007).
Civil
Practice
and
Remedies
The Texas long-arm statute, Texas
Code
§§
17.0421-.045,5
extends
5
Section 17.042, the Texas long-arm statute, provides
in relevant part,
In addition to other acts that may constitute
doing business, a nonres1dent does business
in this state if the nonresident: (1)
contracts by mail or otherwise with a Texas
resident and either party is to perform the
contract in whole or in part in this state;
(2) commits a tort in whole or in part in
this state; or (3) recruits Texas residents,
directly or through an intermediary located
in this state, for employment inside or
outside this state.
Simply contracting with a Texas resident or communicating with him
during the performance of the contract is not sufficient to
subject a nonresident to personal jurisdiction in a Texas court.
-8-
jurisdiction to the limits of federal due process.
Schlobohm v.
Schapiro, 784 S.W. 2d 355, 357 (Tex. 1990); Gonzalez v. Bank of
America Ins. Servs., Inc., No. 11-20174, 2011 WL 6156856 *3 (5th
Cir. Dec. 12, 2011), citing Stroman Realty, Inc. v. Antt, 528 F.3d
382, 385 (5th Cir. 2008).
Thus a plaintiff in a diversity action
in federal court in Texas6 need only demonstrate that (1) the
defendant
purposely
availed
himself
of
the
benefits
and
protections of the forum state by establishing that the defendant
had minimum contacts with the forum state, and (2) the exercise of
personal
jurisdiction
over
that
defendant
does
not
traditional notions of fair play and substantial justice.
offend
Int’l
Shoe Co. v. Washington, 326 U.S. 310, 316 (1945); Alpine View Co.,
Ltd. v. Atlas Copco AB, 205 F.3d 208, 214 (5th Cir. 2000);
Moncrief Oil Int’l, Inc. v. OAO Gasprom, 481 F.3d 309, 311 (5th
Cir. 2007).
Personal jurisdiction can be either specific or general
jurisdiction.
Mink v. AAAA Develop., LLC., 190 F.3d 333, 336 (5th
Cir. 1999). “Where [an individual] defendant ‘has continuous and
systematic general business contracts’ with the forum state, the
court may exercise ‘general jurisdiction over any action brought
Max Protetch, Inc. v. Herrin, 340 S.W. 3d 878, 886 (Tex. App.-Houston [14th Dist. 2011, no pet.), citing Olympia Capital Assocs.,
LP v. Jackson, 247 S.W. 3d 399, 417 (Tex. App.--Dallas 2008, no
pet.), and Credit Commercial de France, S.A. v. Morales, 195 S.W.
3d 209, 220-21 (Tex. App.--San Antonio 2006, pet. denied).
6
See Johnston v. Multidata Sys. Int’l Corp. , 523 F.3d
602, 609 (5th Cir. 2008)(“Because the Texas long-arm statute
extends to the limits of federal due process, the two-step inquiry
collapses into one federal due process analysis.”).
-9-
against the defendant [regardless of whether the action is related
to the forum contacts].”
Luv N’ Care, 438 F.3d at 469, citing
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408,
415 (1984).
See also Access Telecom, Inc. v. MCI Telecomms.
Corp., 197 F.3d 694, 717 (5th Cir. 1999)(“General jurisdiction can
be assessed by evaluating contacts of the defendant with the forum
over a reasonable number of years, up to the date the suit was
filed.”), cert. denied, 531 U.S. 917 (2000).
“[T]he minimum
contacts inquiry is broader and more demanding when general
jurisdiction
is
alleged,
requiring
activities in the forum state.
a
showing
of
substantial
Jones v. Petty-Ray Geophysical
Geosource, Inc., 954 F.2d 1061, 1068 (5th Cir.), cert. denied, 506
U.S. 867 (1992).
An out-of-state defendant that merely does
business with Texas businesses or customers will not be subject to
general jurisdiction if it does not have a lasting physical
presence in the state.
Best Little Promohouse, 2014 WL 5431630,
at *3, citing MCI Telecommunications Corp., 197 F.3d 694, 717 (5th
Cir. 1990).
“[V]ague and overgeneralized assertions that give no
indication as to the extent, duration, or frequency of contacts
are insufficient to support general jurisdiction.”
Johnston, 523
F.3d at 610.
Recently
the
Supreme
Court
opined
that
the
appropriate
consideration in determining general jurisdiction of a foreign
corporation is whether the defendant’s “‘affiliations with the
State
are
so
continuous
and
systematic
essentially at home in the forum State.”
- 10 -
as
to
render
[it]
Daimler AG v. Bauman,
134
S.
Ct.
746,
761
(2014),
quoting
Goodyear
Dunlop
Tires
Operations, S.A. v. Brown, 131 S. Ct. 2846, 2851 (2011).
“For an
individual,
general
the
paradigm
forum
for
the
exercise
of
jurisdiction is the individual’s domicile; for a corporation . .
. the place of incorporation and principal place of business . .
. .”
Id. at 760, citing Goodyear at 2853-54.
“It is therefore
incredibly difficult to establish general jurisdiction [over a
corporation] in a forum other than the place of incorporation or
principal place of business.”
Monkton Ins. Services, 768 F.3d at
432, citing Goodyear, 131 S. Ct. at 851, and Helicopteros, 466
U.S. at 411-12.
It is undisputed that The Safran Company is a
California corporation, organized and existing under the laws of
California with its principal place of business in Beverly Hills,
California 90210.
#1, Notice of Removal at p.3.
A defendant’s presence in Texas is not “continuous and
systematic
nationally.
merely
because
it
advertises
in
that
state
or
Brother of the Leaf, LLC v. Plastic Products Co.,
Inc., 2014 WL 3824209, at * (W.D. Tex. Aug. 1, 2014), citing
Johnston v. Multidata Systems Intern. Corp., 523 F.3d 602, 609 (5th
Cir. 2008), and Bearry v. Beech Aircraft Corp., 818 F.3d 370, 376
(5th Cir. 1987).
“[P]urchases and related trips, standing alone,
are not a sufficient basis for a State’s assertion of [general
personal] jurisdiction.”
Helicopteros, 466 U.S. at 417.
If the defendant has relatively few contacts, the court may
still exercise specific personal jurisdiction over that party if
the suit “‘arises out of’ or is related to the defendant’s
- 11 -
contacts with the forum.”
Helicopteros, 466 U.S. at 414 & n.8.
Thus in this action, Defendants’ contacts with Texas must relate
to or arise from the alleged breach of contract and duty of good
faith and fair dealing.
Id.
“Although a nonresident’s physical
presence within the territorial jurisdiction of the court is not
required, the nonresident generally must have ‘certain minimum
contacts . . . such that the maintenance of the suit does not
offend
‘traditional
notions
of
fair
play
and
substantial
justice.’‘” Walden v. Fiore, 134 S. Ct. 1115, 1121 (2014), citing
International Shoe, 326 U.S. at 316.
“[T]he relationship must
arise out of contacts that the “defendant himself’ creates with
the forum State.”
Id. at 1122, citing Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 475 (1985).
The plaintiff cannot be the
sole link between the defendant and the forum; instead the
defendant’s conduct must constitute the necessary connection with
the forum state for specific personal jurisdiction over him.
at 1122.
Id.
The court must examine “the relationship among the
defendant, the forum, and the litigation.”
Id. at 1121, citing
Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 775 (1984), and
Shaffer v. Heitner, 433 U.S. 186, 204 (1977).
The Fifth Circuit has concluded that specific jurisdiction is
“a claim-specific inquiry:
‘A plaintiff bringing multiple claims
that arise out of different forum contacts of the defendant must
establish specific jurisdiction for each claim.’“
McFadin, 587
F.3d at 759, quoting Seiferth v. Helicopteros Atuneros, Inc., 472
F.3d 266, 271 (5th Cir. 2006).
Moreover, the Fifth Circuit has
- 12 -
established a three-step analysis for determining whether specific
jurisdiction exists:
“‘(1) whether the defendant has minimum
contacts with the forum state, i.e., whether it purposely directed
its activities toward the forum state or purposely availed itself
of the privileges of conducting activities there7; (2) whether the
plaintiff’s cause of action arises out of or results from the
defendant’s forum-related contacts8; and (3) whether the exercise
of personal jurisdiction is fair and reasonable.’”
Seiferth, 472
F.3d at 271, quoting Nuovo Pignone, SpA v. STORMAN ASIA M/V, 310
F.3d 374, 378 (5th Cir. 2002).
The minimum contacts review is
fact-intensive and no single contact is decisive; “the touchstone
is whether the defendant’s conduct shows that it ‘reasonably
anticipates being haled into court” in the forum.
The defendant
‘must 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 third party.’‘” McFadin,
587
F.3d at 759, citing Luv N’ Care, 438 F.3d at 470 (citing
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)),
7
Purposeful availment requires a defendant to seek some
benefit, advantage or profit by “availing” itself of the
jurisdiction. Michiana Easy Livin’ Country, Inc. v. Holten, 168
S.W. 3d 777, 785 (Tex. 2005).
8
The litigation must also “result from the alleged
injuries that ‘arise out of or relate’ to those activities.”
Guardian Royal Exch. Assurance Ltd. v. English China Clays,
P.L.C., 815 S.W. 2d 223, 228 (Tex. 1991), citing Burger King, 471
U.S. at 472. For specific jurisdiction, there “must be a
substantial connection” between the nonresident defendant’s
contacts with the forum state and the “operative facts of the
litigation.” Guardian Royal, 815 S.W. 2d at 229-33.
- 13 -
and Electrosource, Inc. v. Horizon Battery Tech., Ltd., 176 F.3d
867, 871-72 (5th Cir. 1999)(quoting Burger King Corp. v. Rudzewicz,
471 U.S. 462 (1985)). Thus specific jurisdiction may not be based
upon the mere fortuity that a plaintiff is a Texas resident.
Santander Consumer USA, Inc. v. Shults Ford, Inc., Civ. A. No.
3:11-CV-614-L, 2011 WL 2601520, *4 (N.D. Tex. June 30, 2011),
citing Holt Oil & Gas Corp. v. Harvey, 801 F.2d 773, 778 (5th Cir.
1986). Mere foreseeability that a party might perform many of its
duties in Texas, by itself, does not create personal jurisdiction,
although it would support a finding of jurisdiction if it were
combined with the fact that “the forum was ‘clearly the hub of the
parties’ activities.’”
Moncrief Oil, 481 F.3d at 312-13.
“[M]erely contracting with a resident of the forum state is
insufficient
jurisdiction.”
to
subject
the
nonresident
to
the
forum’s
Hold Oil & Gas Corp. v. Harvey, 801 F.2d 773, 778
(5th Cir. 1986), cert. denied, 481 U.S. 1015 (1987). See also
Freudensprung v. Offshore Technical Services, Inc., 379 F.3d 327,
344 (5th Cir. 2004).
It is black letter law that communications
between parties during contract negotiations, by themselves, are
insufficient to support personal jurisdiction. Holt Oil, 801 F.2d
at
778.
“An
exchange
of
communications
in
the
course
of
developing and carrying out a contract . . . does not, by itself,
constitute the required purposeful availment of the benefits and
protections of Texas law.”
Moncrief Oil Intern., Inc. v. OAO
Gazprom, 481 F.3d 309, 312 (5th Cir. 2007).
See also Cardinal
Health Solutions, Inc. v. St. Joseph Hosp. of Port Charlotte, Fla.
- 14 -
Inc., 314 Fed. Appx. 744, 745 (5th Cir. 2009); Freudensprung v.
Offshore Technical Services, Inc., 379 F.3d 327, 344 (5th Cir.
2004).
Indeed, where the exchange of communications between Texas
and another state, including extensive emails and telephone calls,
rests on nothing except “the mere fortuity that [plaintiff]
happens to be a resident of the forum,” it is insufficient to
establish specific jurisdiction.
MH Outdoor Media, LLC v. Am.
Outdoor Advertising, LLC, No. Civ. H-14-898, 2014 WL 4537959, at
*3 (S.D. Tex. Sept. 10, 2014), citing Holt, 801 F.2d at 778, and
Freudensprung, 379 F.3d at 344.
Jurisdiction may not be based on
the fortuity of one party residing in the forum state.
McFadin,
587 F.3d at 760.
Once the plaintiff has established that the defendant has
minimum contacts with the forum state, the burden shifts to the
defendant to show that assertion of jurisdiction would be unfair.
Walk Haydel, 517 F.3d at 245. In determining whether the exercise
of jurisdiction is fair and reasonable, the court examines five
factors:
“‘(1) the burden on the nonresident defendant, (2) the
forum state’s interests, (3) the plaintiff’s interest in securing
relief, (4) the interest of the interstate judicial system in the
efficient administration of justice, and (5) the shared interest
of the several states in furthering fundamental social policies.’”
McFadin, 587 F.3d at 759-60, quoting Luv N’ Care, 438 F.3d at 473.
If the plaintiff fails to establish the existence of minimum
contacts with the forum state, the court need not reach the
- 15 -
question of whether personal jurisdiction would offend traditional
notions of fair play and substantial justice. Renoir v. Hantman’s
Associates, Inc., 230 Fed. Appx. 357, 360 (5th Cir. 2007).
The
fiduciary
corporation
in
shield
their
doctrine
individual
protects
officers
capacity
from
of
a
personal
jurisdiction when he acts on behalf of his corporation. Generally
under
the
“fiduciary
shield
doctrine,”
“an
individual’s
transaction of business within the state solely as a corporate
officer does not create personal jurisdiction over that individual
though
the
state
corporation[.]”
has
in
personam
jurisdiction
over
the
Stuart v. Spademan, 772 F.2d 1185, 1197 (5th Cir.
1985); Fairchild v. Barot, 946 F. Supp. 2d 573.
(N.D. Tex.
2013)(“With limited exceptions, the fiduciary shield doctrine
prohibits a court from exercising personal jurisdiction over an
individual based solely on jurisdiction over the company with
which the individual is associated,”(citing Stuart v. Spademan).
Although the Texas Supreme Court has not adopted the doctrine,
intermediate appellate courts have used it to defeat general
jurisdiction over a nonresident defendant.
Quality Leasing and
Rental Holdings, LLC v. Mobley, No. 13-14-00064-CV, 2014 WL
3738653, at * n.9 (Tex. App.--Corpus Christi June 19, 2014, pet.
for review abated); Urban v. Barker, No. 14-06-00387-CV, 2007 WL
665118,
at
*5
n.7
(Tex.
App.--Houston
2007)(and cases cited therein).
[14th
Dist.]
Mar.
6,
An exception is recognized where
the individual is shown to have used the corporation as a mere
alter ego, but there are no such allegations regarding Safran
- 16 -
here.
Tabacinic v. Frazier, 372 S.W. 3d 658, 669 (Tex. App.--
Dallas 2012, no pet.).9
officer
from
liability
The doctrine does not protect a corporate
for
his
own
tort,
but
there
are
no
allegations of tortious conduct against Safran. Ennis v. Loiseau,
164 S.W. 3d 698, 707 (Tex. App.–-Austin 2005, no pet.)
The Fifth Circuit has held that, as an alternative to
dismissal without prejudice, a federal court lacking personal
jurisdiction may transfer the case to another court under 28
U.S.C. § 1404(a), the venue transfer statute, if the transferee
court meets that statute’s requirements, i.e., to any district or
division in which it could have been brought if the court finds
that transfer is in the interest of justice.
Bentz v. Recile, 778
F.2d 1026, 1027 (5th Cir. 1985); Herman v. Cataphora, Inc., 730
F.3d 460, 466 (5th Cir. 2013).
The district court has broad
discretion to transfer a case under 28 U.S.C. 1404(a)10 where the
moving party shows it is for the convenience of parties and
witnesses and in the interest of justice.11
In re Volkswagen of
9
An exception is when the corporation is the alter ego
of the individual officer (a facade for the individual officer’s
interests and activities), when “courts attribute to the
individual the corporation’s contacts with the forum state.”
Stuart v. Spademan, 772 F.2d at 1198.
10
Section 1404(a) provides, “For the convenience of
parties and witnesses, in the interest of justice, a district
court may transfer any civil action to any other district or
division where it might have been brought or to any district or
division to which all parties have consented.”
11
It is improper for the court to consider the
convenience of counsel, which is irrelevant, in reviewing a
transfer of venue under § 1404(a). In re Volkswagen AG, 371 F.3d
201, 206 (5th Cir. 2004).
- 17 -
America, Inc., 545 F.3d 304, 311 (5th Cir. 2008).
Whether a civil
action “‘might have been brought’ in the destination venue is
determined by applying the general venue statute, 28 U.S.C. §
1391, which governs a plaintiff’s choice of venue.
Under §
1391(b),
A civil action may be brought in(1) a judicial district in which any defendant resides,
if all defendants are residents of the State in which
the district is located;
(2) a judicial district in which a substantial part of
the events or omissions giving rise to the claim
occurred, or a substantial part of the property that is
the subject of the action is situated; or
(3) if there is no
otherwise be brought
judicial district in
the court’s personal
action.
district in which an action may
as provided in this section, any
which any defendant is subject to
jurisdiction with respect to such
“[W]hile a plaintiff has the privilege of filing his claims in any
judicial division appropriate under the general venue statute, §
1404(a) tempers the effects of the exercise of this privilege.”
In re Volkswagen, 545 F.3d at 313.
The Fifth Circuit has adopted the private and public interest
factors set forth in Gulf Oil Corp. v. Gilbert, a forum non
conveniens case, and applied them to determine whether a transfer
is for the convenience of the parties and witnesses and in the
interest of justice under 28 U.S.C. § 1404(a).
In re Volkswagen,
545 F.3d at 313 & nn.9 and 10 (citing Humble Oil & Refining Co. v.
Bell Marine Service, Inc., 321 F.3d 53, 56 (5th Cir. 1961)), cert.
denied, 555 U.S. 1172 (2009).
The moving party must show good
- 18 -
cause for the transfer.
Id. at 314.
“when the transferee venue
is not clearly more convenient than the venue chosen by the
plaintiff, the plaintiff’s choice should be respected.”
Id.
The
private interest factors are “‘(1) the relative ease of access to
sources of proof; (2) the availability of compulsory process to
secure the attendance of witnesses; (3) the cost of attendance for
willing witnesses; and (4) all other practical problems that make
trial of a case easy, expeditious and inexpensive.”
Id. at 315.
The public interest factors include “‘(1) the administrative
difficulties flowing from court congestion; (2) the local interest
in having localized interests decided at home; (3) the familiarity
of the forum with the law that will govern the case; and (4) the
avoidance of unnecessary problems of conflict of laws [or in] the
application
of
foreign
law.’”
Id.
These
factors,
while
appropriate for most cases, are not exhaustive or exclusive, and
none is dispositive.
Id.
Under § 1404(a) the court is not authorized to dismiss the
case, as it is under 28 U.S.C. § 1406(a).
Id.
If the transferee
court is not clearly more convenient, the court must defer to the
plaintiff’s choice of venue.
In re Volkswagen, 545 F.3d at 315.
Defendants’ Motion To Dismiss or To Transfer
Arguing that everything to do with “The Conjuring” occurred
in California or North Carolina and that the sole connection with
Texas is that Plaintiffs reside here, a fortuitous
occurrence,
Defendants, supported by Peter Safran’s affidavit (Exhibit A),
emphasize that they are citizens of California and they do not
- 19 -
have any substantial, continuous or systematic contact with Texas
for purposes of general jurisdiction.
Furthermore they do not do
business in Texas, have offices in Texas, own, lease or control
any real or personal property in Texas, do not maintain bank
accounts in Texas, have not paid any real or personal property
taxes in Texas, do not have a telephone listing in Texas, do not
have any employees or any agents in Texas, and do not promote or
advertise any of their services in Texas.
Peter Safran has made
four isolated visits to Texas over forty-eight years, each time in
response to an invitation.
Nor are Defendants subject to specific personal jurisdiction
in Texas because the only connection this case has to Texas is
that
Plaintiffs
reside
here.
Plaintiffs’
jurisdiction are vague and conclusory.
allegations
of
The only allegation
potentially related to Texas is that Plaintiffs entered into an
oral agreement in Montgomery County, Texas, a legal conclusion
with no factual support and which Defendants insist is false; they
maintain that the agreement was negotiated while De-Rosa-Grund and
Peter Safran were in North Carolina. Plaintiffs do not and cannot
identify any specific actions of Defendants that occurred in Texas
or that relate to the alleged agreement.
Alternatively, Defendants urge the Court to transfer this
case
under
28
U.S.C.
§
1404(a)
to
the
Central
District
of
California, the judicial district in which they reside and where
The Safran Company has its principal place of business.
The
private interest factors favor transfer of this action: Safran is
- 20 -
a resident of that district and The Safran Company’s principal
place of business is there.
Safran’s affidavit, Ex. A.
There is
easy access to sources of proof in California, including a related
arbitration between New Line and DeRosa-Grund.
Moreover if the
case goes to trial experts may be necessary on compensation
methods, legal issues, business models and other industry-specific
practices unique to the film industry which are more plentiful in
California than in Texas.
Moreover most, if not all, potential
third-party witnesses are located in the Central District of
California, including the following who are not parties to the
suit and not within the control of either party:
Walter Hamada,
a New Line executive based in Los Angeles; David Neustadter, a New
Line executive based in Los Angeles; Carey Hayes, co-writer of
“The Conjuring,” based in Los Angeles; Chad Hayes, co-writer of
“The Conjuring,” based in Los Angeles; Craig Alexander, a New Line
business affairs executive, based in Los Angeles; Paul Brooks,
Gold Circle CEO, based in Los Angeles, who introduced Safran to
DeRosa-Grund; and John Gatti, Plaintiffs’ California counsel who
was involved in the negotiations of the parties’ relationship and
the agreement at issue.
In California they are amenable to
service of process to secure their attendance, but not in Texas.
Lastly, Plaintiffs will not be burdened by having to litigate in
California, where they do business, where they have legal counsel,
- 21 -
and where they are already participating in the arbitration of a
related dispute.12
Defendants urge that the public factors also support a
transfer.
Regarding court congestion, the Central District of
California has 28 authorised active judgeships, the Southern
District of Texas only 19.
Furthermore the Southern District of
Texas has ten times more vacant judgeships. The Southern District
of Texas has almost five times the number of criminal cases, which
take precedence, as the Central District of California. Moreover,
this case is focused on and will affect the film-making industry,
which
is
centered
in
the
Central
District
of
California.
Asserting that this Court will likely decide that California law
applies
to
this
appropriate.
action,
Defendants
urge
that
transfer
is
Since Plaintiffs seek a declaratory judgment based
on a contractual claim, the dispute can be decided in either
state.
Plaintiffs’ Opposition (#9)
Insisting
Defendants
have
misrepresented
and/or
omitted
material facts and with a supporting declaration from DeRosa-Grund
(#9-1), Plaintiffs spend a considerable amount of time emphasizing
that
they
reside
and
work
within
Texas,
including
on
“The
Conjuring,” that Defendants were fully aware that they did, that
12
Plaintiffs respond that neither Safran nor Defendants
are parties to the California arbitration, which is between New
Line and Warner Brothers Entertainment. #9 at p.14 n.1.
- 22 -
DeRosa-Grund was a “hugely successful motion picture producer” and
televison producer who had the connections and reputation to find
professional writers or studio producers for his projects without
the help of Safran, that DeRosa-Grund by himself made the key
decisions involving “The Conjuring” and agreements for future
projects, that DeRosa-Grund had only been to California three
times in the last twelve years, and that “The Conjuring” was not
based on “reports” of the Warrens, but on DeRosa-Grund’s dealings
and discussions over twenty-three years with the Warrens about
their case files, including the “Perron Farmhouse” Case File, from
which DeRosa-Grund created and wrote the original story and
treatment for “The Conjuring.”
While these matters may relate to the merits of Plaintiffs’
claims, the Court notes that none is relevant to whether this
Court has personal jurisdiction over Safran and The Safran Company
based on their contacts with Texas. Thus the Court addresses only
those claims of Plaintiffs that are material to the issue of
personal jurisdiction.
Plaintiffs allege that after Safran learned from Paul Brooks,
president of Gold Circle Films,13 about DeRosa-Grund’s story and
treatment
for
what
would
become
“The
Conjuring”
and
other
potential motion picture projects, Safran “tracked Mr. DeRosaGrund down in Texas to try to get himself linked to one or more of
Mr. DeRosa-Grund’s other projects” and “purposefully interjected
13
DeRosa-Grund had originally proposed the project with
Brooks that he ultimately entered into with Safran.
- 23 -
himself into the proceedings in Texas.”
#9 at pp. 7, 11.
As
evidence Defendants submit Ex. 3 to #9, a copy of an email
exchange
between
Safran
and
DeRosa-Grund.14
According to
14
Plaintiffs claim that this email exchange (#9-4 or Ex.
A) “show[s] that Mr. Safran reached out to Mr. DeRosa-Grund in
Texas to try to glom onto plaintiffs’ projects and future
successes.” #9 at p.8. The Court notes that the email actually
reflects that DeRosa-Grund initiated this email exchange.
Moreover DeRosa-Grund’s email, identifies its subject matter as
“newsreel footage of Babe Ruth-Jackie Mitchell” and raises the
issue of an agreement about working together on movie projects
almost as a second thought. Indeed DeRosa-Grund’s email appears
to invite and mold Safran’s response. DeRosa-Grund’s email to
“Peter” reads,
We actually managed to get a copy of some of
the original newsreel footage from 1931 of
Jackie Mitchell striking out Babe Ruth.
My IT guys are converting it to streaming
media and uploading it to our servers. I’ll
send you the link as soon as they finish.
On another note, I just wanted to let you
know that we are pulling out of the deal on
The Conjuring with Gold Circle as I have some
personal issues with Adam Mehr. I hope that
does not preclude us from working on some of
the other projects we discussed yesterday.
Cheers.
In response, Safran wrote,
That is amazing. I can’t wait to see
footage--must be fantastic.
As for The Conjuring--I am sure that if you
are pulling out there must be a good reason
for it. However, I think this is a unique
project and I suspect that I could be very
helpful in terms of setting it up. I have
strong relationships with all the financiers
and studios that would make sense for a
project of this nature and would love to be
the person championing it.
Best,
- 24 -
Plaintiffs, DeRosa-Grund did not reach an oral agreement with
Safran to pay Safran part of his “back-end compensation from ”The
Conjuring” in exchange for Safran’s services on future
entertainment
projects
being
developed
in Texas until after
DeRosa-Grund returned to Texas from North Carolina.
Grund’s
attorney,
John
Gatti,
then
prepared
a
DeRosa-
Notice
of
Irrevocable Authority (“NOIA”) (Ex. 5), which DeRosa-Grund and
Safran executed and which memorialized the agreement.
After the
agreement was reached, Safran introduced Plaintiffs to writers
Chad
and
Carey
Hayes,
with
whom
DeRosa-Grund,
from
Texas,
subsequently worked to refine the story and treatment for the
movie.
DeRosa-Grund, who claims that he alone held the right to
the underlying intellectual property, asserts that he, by himself,
chose New Line as the motion picture studio with which he would
negotiate for “The Conjuring.”.
The
key
contact
of
Defendants
with
Texas
claimed
by
Plaintiffs involves DeRosa-Grund’s personal bankruptcy proceedings
in 2009 in the United States Bankruptcy Court for the Southern
District of Texas, Case Number 4:09-bk-33264, presided over by the
Honorable Wesley Steen.
To satisfy the demands of potential
motion picture studios, including New Line, to make and release
“The Conjuring,” DeRosa-Grund had to clear the chain of title by
obtaining approval of the terms of the agreement with New Line by
both the bankruptcy trustee and the bankruptcy court in Texas and
- 25 -
by having the bankruptcy trustee, on behalf of the bankruptcy
estate,
enter
into
the
contract
with
New
Line giving the
bankruptcy estate’s interest in the life rights of the Warrens in
exchange for a payment from New Line to the bankruptcy estate.
Plaintiffs insist that “Safran’s involvement in the Bankruptcy
Court proceeding was not minimal.”
#9 at p.8.
They assert that
Safran directly participated in negotiating in Texas a deal with
New Line and the bankruptcy trustee, which months later produced
a
“Deal
Memo”
relating
to
the
underlying
rights
to
“The
Conjuring,” which was signed by the parties, including Safran.
The Deal Memo (Ex. A to Judge Steen’s Order, Ex. 4), with Safran’s
knowledge, was then submitted to and approved by the trustee and
Judge Steen and became an Order of the Bankruptcy Court (Ex. 4,
Order), and subsequently became the basis for long form coproducer agreements entered into by Plaintiffs and Defendants with
New Line for co-production of “The Conjuring.”
Plaintiffs
further
assert
that
Defendants
“continuously
interact[ed] by telephone and email-over hundreds of times-with
Plaintiffs in Texas as part of their co-production activities.”
#9 at p. 23.
Should the Court question its personal jurisdiction over
Defendants, Plaintiffs request leave to obtain jurisdictional
discovery and a continuance of the Court’s review of the motion to
dismiss.
- 26 -
Defendants Reply (#15)
To Plaintiffs’ contention that Defendants are subject to
personal
jurisdiction
because
they
contracted
with and did
business with Texas residents, Defendants respond that Plaintiffs’
residence
in
Defendants.
Texas
cannot
It is the latters’ purposeful contacts with Texas,
not Plaintiffs’ that matter.
were
bestow personal jurisdiction over
actively
Conjuring”
pursuing
before
Moreover, as evidenced, Plaintiffs
connections
Defendants
came
to
California
along
and
that
for
“The
whether
Defendants may have sent the first email or initiated the first
phone call is of no import.
So, too, is DeRosa-Grund’s personal bankruptcy insufficient
to support personal jurisdiction over Safran and The Safran
Company; even a person making a formal appearance in a bankruptcy
proceeding does not extend jurisdiction over that individual in
later litigation when the appearance is insignificant to the
bankruptcy proceedings.
Bergenholtz v. Cannata, 200 S.W. 3d 287,
295-96 (Tex. App.--Dallas 2006, no pet.)(California attorney made
a
formal
special
appearance protesting lack of personal
jurisdiction)(“The fact that the bankruptcies were pending in
Texas . . . was fortuitous rather that the result of [the
Defendant’s]
law.”).15
‘purposeful
availment’
of
the benefit of Texas
Here Safran did not make an appearance in DeRosa-Grund’s
15
Plaintiffs object that Bergenholtz is distinguishable
because in it the California attorney did not deliberately inject
herself into the proceedings and did not negotiate or execute any
agreements in the proceedings. Here, knowing that without
- 27 -
bankruptcy proceeding, but only signed a contract related to a
business deal in California involving production of a movie in
California.
That Defendants entered into an oral contract with Plaintiffs
for future production of other theatrical motion pictures is not
sufficient
to
Defendants’,
relevant.
not
of
confer
not
jurisdiction
over
them
because
it
is
Plaintiffs’, contacts with Texas that are
Defendants insist that their contacts with Texas were
the
nature and quality
16
that
would
subject
them
to
agreement from all involved parties, the bankruptcy trustee would
not release the bankruptcy estate’s claims on “The Conjuring”
property rights, Defendants participated in negotiations with the
Trustee in Texas to create the Deal Memo, which they knew would be
filed in the Texas Bankruptcy Court and become an enforceable
order. According to Plaintiffs, Safran “willingly ‘ran’ into a
Texas Court when it suited his purposes on the very same deal and
property that is the subject of the instant action” and cannot
credibly claim that he had no idea he would be hauled into a Texas
court. Furthermore the Deal Memo was not for production of a
movie in California, but for a movie anywhere; in fact, “The
Conjuring” was filmed in North Carolina.
16
This Court observes that in Prejean v. Sonatrach,
Inc., 652 F.2d 1260, 1268-69 (5th Cir. 2981), the Fifth Circuit
opined,
The essence of due process cases, such as
International Shoe and Hanson v. Denckla, 357
U.S. 235 . . . (1958), is that the contact
with the forum state must not be fortuitous.
When a defendant purposefully avails himself
of the benefits and protection of the forum’s
laws by engaging in activity in the state or
engaging in activity outside the state that
has reasonably foreseeable consequence in the
state, maintenance of the lawsuit does not
offend traditional notions of fair play and
substantial justice. Considerations such as
the quality, nature, and extent of the
activity in the forum from activities outside
it, and the relationship between the cause of
- 28 -
jurisdiction in this Court.
Lansing Trade Group, LLC v. 3B
Biofuels GmbH & Co., KG, 612 F. Supp. 2d 813, 826-27 (S.D. Tex.
2009).
Nor is Plaintiffs’ residence in Texas relevant.
Reiterating that Defendants’ only connection to Texas was the
fortuitous fact that Plaintiffs reside there, Defendant emphasize
that, regardless, their performance of the oral agreement would
have occurred in California.
Although place of performance of the
contract is a “weighty consideration,” “[i]f . . . the forum
plaintiff’s decision to perform its contractual obligation within
its own forum state is totally unilateral, it cannot be viewed as
purposeful on the part of the nonresident and the weight is
necessarily diminished.” Command-Aire Corp. v. Ontario Mechanical
Sales and Service, Inc., 963 F.2d 90, 94 (5th Cir. 1992).
Finally, Defendants argue that Plaintiffs are not entitled to
jurisdictional discovery.
They fail to identify any question of
fact that could alter the specific jurisdiction analysis, but base
their allegations on facts already known to both parties.
also
failed
discovery.
to
identify
any
basis
for
general
They
jurisdiction
Alternatively, contend Defendants, venue should be
transferred.
The only objection Plaintiffs make is that it would
be inconvenient for them to litigate this dispute in California,
despite the fact that they are already arbitrating a case against
action and the contacts, relate to whether it
can be said that the defendant’s actions
constitute “purposeful availment. In other
words, a defendant’s activities in relation
to the state indicate he is on notice that he
could be haled into its courts.
- 29 -
New Line in California and that nearly all of the individuals they
name in their response are located in California.
Plaintiffs’ Surreply (#18)
Without requesting leave to file their Surreply, Plaintiffs
insist
that
they have made a colorable case for personal
jurisdiction (largely repeating their previous contentions, which
the Court does not reiterate) and that the Court “must accept as
true the uncontroverted allegations in the complaint and resolve
in favor of the plaintiffs any factual conflicts.”
Group,
612
F.
Supp.
indisputable that:
2d
at
819.
Lansing Trade
They insist that “it is
(i) Defendants deliberately sought out
Plaintiffs in Texas in order to attempt to convince Plaintiffs to
enter into a long-term agreement with Defendants; (ii) Defendants
deliberately injected themselves in Mr. DeRosa-Grund’s bankruptcy;
(iii) Defendants entered into an agreement with Plaintiffs whereby
Defendants knew they would be working with Plaintiffs in Texas;
(iv)
Defendants
routinely
and
continuously
communicated
with
Plaintiffs in Texas; and (v) Defendants routinely and continuously
communicated with Plaintiffs in Texas concerning critical aspects
of their business relationship.”
#18 at p.5.
Plaintiffs maintain
that they were looking for business relationships throughout the
United States and around the world, that they were not shopping
the market in California and never traveled to California but
remained in Texas, and were not looking to do business with
Defendants because Plaintiffs did not need or want them and would
- 30 -
not have entered a business relationship with Defendants had
Safran not contacted Plaintiffs in Texas.
Regarding
their
request
for
jurisdictional
discovery,
Plaintiffs state that they “anticipate[] that evidence will be
gathered showing that, among other things:
(i) Defendants entered
into a business relationship and/or agreements with Texas resident
and
citizen,
Armie
Hammer,
to
serve
as
the
lead
actor
and
executive producer in connection with the motion picture titled
‘Mine’; and (ii) Defendants have other contacts with Texas,
including
contracts
and/or
relationships
with
other
Texas
residents and citizens, including, but not limited to, Gene
William’s [sic] who played a role in Defendants’ motion picture
titled ‘The Starving Games.’”
#18 at p.9.
Finally, Plaintiffs maintain that venue is not proper in
California.
They conclusorily claim public and private interest
factors do not support a change in venue, but do not explain why.
As for the arbitration in which Plaintiffs are participating in
California, Plaintiffs state they have never conceded personal
jurisdiction in that proceeding and are participating only because
the arbitrator indicated that they would be defaulted if they do
not.
Court’s Decision
The existence of personal jurisdiction over a defendant is a
question of law.
In re Chinese-Manufactured Drywall Products
Liability Litig., 753 F.3d 521, 528-29 (5 th Cir. 2014).
Because
the Court did not hold an evidentiary hearing, Plaintiffs bear the
- 31 -
burden of establishing a prima facie case of personal jurisdiction
over Defendants.
The Court accepts Plaintiffs’ uncontroverted
allegations as true, but not conclusory assertions without factual
support and not necessarily Plaintiffs’ interpretation of the law
and its application to those alleged facts.
As a threshold matter in the personal jurisdiction analysis,
the Court observes that Plaintiffs fail to distinguish between the
two Defendants.
Indeed they have failed to specify any facts
regarding The Safran Company and its contacts with Texas.
While
Plaintiffs rely heavily on the Deal Memo, the negotiations for
which Safran participated in Texas, the Court observes that it is
signed in his individual name with no indication in the body or in
his signature that he did so on behalf of The Safran Company.
Ex. A to Ex. 4 (Judge Steen’s Order).
#9,
The NOIA between Assignor
Evergreen and Assignee The Safran Company provides that any
payment to The Safran Company under the Producer Loanout Agreement
between New Line and Evergreen with respect to the Warren files
project should be paid to The Safran Company at its Los Angeles,
California address.
#9, Ex. 6.
Plaintiffs fail to establish a prima facie case of general
jurisdiction over Safran and The Safran Company in Texas because
they
do
not
show
that
Defendants’
contacts
continuous, systematic and substantial.
475.
with
Texas
were
Burger King, 471 U.S.
They fail to controvert Safran’s affidavit stating that
Defendants had no employees, no agents, no office, no lease or
control of any real or personal property in Texas, do not maintain
- 32 -
bank accounts in Texas, have not paid any real or personal
property taxes in Texas, do not have a telephone listing in Texas,
and do not promote or advertise any of their services in Texas.
Nor
have
Plaintiffs
demonstrate
that
provided
Defendants
any
have
other
evidence
continuous,
that
would
systematic
or
substantial contacts with Texas.
As
for
specific
jurisdiction,
the
Court
has
examined
Plaintiffs’ factual allegations to determine whether the quality,
nature, and extent of Defendants’ activities in Texas and the
relation of those activities to Plaintiff’s suit is sufficient to
make
a
prima
facie
case
themselves of the benefits,
that
Defendants
purposely
availed
privileges, and protections of the
laws of Texas to the extent that they could reasonably anticipate
being haled into a Texas court.
In essence Plaintiffs argue first that Defendants established
minimum contacts with Texas by contracting with Texas Plaintiffs,
thus satisfying the long-arm statute permitting service of process
on nonresidents who have engaged in business in Texas.
Tex. Civ.
Prac. & Rem. Code § 17.042. Second, they claim that Safran’s
interjection of himself into DeRosa-Grund’s personal bankruptcy
proceedings, participation in negotiations resulting in the Deal
Memo, and execution of that document in Texas provide sufficient
contacts with Texas to support personal jurisdiction over him.
Regarding the contract between Plaintiffs and Defendants, the
Court agrees with Defendants that Plaintiffs incorrectly focus on
their own contacts with Texas when it is Defendants’ contacts that
- 33 -
are relevant to the jurisdictional inquiry.
Furthermore, as
discussed previously, the mere fact that a nonresident defendant
enters into a contract with a Texas resident plaintiff does not,
by itself, support the exercise of personal jurisdiction by a
Texas court over the nonresident.
Colwell Realty Investments,
Inc. v. Triple T Inns, Inc.,785 F.2d 1330, 1334 (5th Cir. 1986);
Stuart, 772 F.2d at 1192-93.
Nor do communications (including
emails and telephone calls) in developing or carrying out the
contract constitute adequate purposeful availment of the benefits
and protection of Texas law.
Holt Oil, 801 F.2d at 778.
See SMK
Painting Co. v. Flournoy Constr. Co., LLC, No. Civ. A. 3:99-CV0916-G, 1999 WL 1017779, at *4 (N.D. Tex. Nov. *4, 1999)(“The
Fifth Circuit has held that negotiating, executing, and even
partially performing an isolated contract with a resident of the
forum will not, without more, constitute the minimum contacts
necessary to confer jurisdiction.”), citing Gundle Lining Constr.
Corp. v. Adams County Asphalt, Inc., 85 F.3d 201, 205 (5th Cir.
1996), in turn citing Stuart, 772 F.2d at 1193, and Hydrokinetics,
Inc. v. Alaska Mechanical, Inc., 700 F.2d 1-26, 1029 (5th Cir.
1983), cert. denied, 466 U.S. 962 (1984). Defendants’ performance
or nonperformanc of the contract did not take place in Texas.
for
Safran’s
participation
in
DeRosa-Grund’s
As
bankruptcy
proceedings, in which he did not make an appearance but only
joined in negotiations for the Deal Memo (Ex. A to #9-5)(another
agreement subject to the same standards as the agreement at issue
between Plaintiffs and Defendants), the ultimate purpose of the
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memo was to clear the title by giving the bankruptcy estate’s
interest in the life rights of the Warrens to New Line for future
film project in exchange for a payment from New Line to the
bankruptcy estate, in other words, a condition precedent for the
movie studio’s participation in Plaintiffs’ future film projects.
The Deal Memo is tangential to the instant suit, especially
because
Plaintiffs
claim
that
Defendants
never
provided
the
promised producer services and thus was not owed money by New
Line.
Moreover,
courts
should
examine
the
totality
of
circumstances to determine if the defendant purposefully availed
itself of the forum state or merely engaged in contacts that were
random, fortuitous or attenuated in nature. Burger King, 471 U.S.
at 475.
The fact that Safran signed the Deal Memo in Texas is an
isolated factor in the totality of the facts.
In sum, the Court
finds that Plaintiffs also fail to establish a prima facie case of
specific personal jurisdiction over Safran and The Safran Company.
Thus the Court does not reach the question whether the exercise of
personal
jurisdiction
over
Defendant
would
comport
with
“traditional notions of fair play and substantial justice.
the
Int’l
Shoe, 326 U.S. at 316.
Plaintiffs have asked for a continuance and jurisdictional
discovery if the Court finds they have not met their burden of
establishing
a
prima
facie
case
of
personal
jurisdiction.
However, the Court finds they have also not met the standard for
such discovery. They have not described what facts they expect to
- 35 -
discover and how that information would support jurisdiction, but
only vaguely pointed to possible previous agreements with two
Texas residents, Armie Hammer and Gene Williams, which and who are
unrelated to this litigation.
Two isolated agreements with other
individual will not suffice to establish general jurisdiction over
Safran
and
The
Safran
Company.
As
noted,
an
out-of-state
defendant that merely does business with Texas businesses or
customers will not be subject to general jurisdiction if the
defendant
does
not
have
a
lasting
Telecommunications, 917 F.3d at 717.
presence
in
Texas.
MCI
Moreover vague, conclusory
assertions that do not indicate the extent or frequency of
contacts
are
insufficient
Johnston, 523 F.3d at 610.
fail
to
make
a
to
support
general
jurisdiction.
For the same reasons that Plaintiffs
preliminary
showing
of
specific
personal
jurisdiction over Safran and The Safran Company on their breach of
contract cause of action, they fail to do show how they can
establish personal jurisdiction over Defendants based on unrelated
contracts with Armie Hammer and Gene Williams.
Because
the
Court
concludes
that
it
lacks
personal
jurisdiction over Safran and The Safran Company, it addresses
Defendants’ motion to transfer under § 1404(a) as an alternative
to dismissal.
While Defendants have addressed in detail the
public and private factors that support a transfer to the Central
District of California, where this suit could have been brought
since all the defendants are residents of California, for the
convenience of the parties and the witnesses and in the interest
- 36 -
of justice, Plaintiffs have merely conclusorily denied them. Thus
the Court finds that Defendants have clearly met their burden and
that this case should be transferred pursuant to 28 U.S.C. §
1404(a).
Accordingly, finding that Plaintiffs have failed to meet
their burden of establishing a prima facie case of personal
jurisdiction over Safran and The Safran Company in Texas, the
Court
ORDERS that this case is TRANSFERRED pursuant to 28 U.S.C. §
1404(a) to the United States District Court in the Central
District of California.
SIGNED at Houston, Texas, this 18th day of December , 2014.
___________________________
MELINDA HARMON
UNITED STATES DISTRICT JUDGE
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