The BAR Group LLC v. Business Intelligence Advisors
OPINION AND ORDER OF DISMISSAL WITHOUT PREJUDICE. BIA's motion to dismiss for lack of personal jurisdiction over BIA under Rule 12(b)(2) is GRANTED. (Signed by Judge Melinda Harmon) Parties notified.(rhawkins)
United States District Court
Southern District of Texas
February 22, 2017
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
BUSINESS INTELLIGENCE ADVISORS, §
David J. Bradley, Clerk
THE BAR GROUP, LLC,
CIVIL ACTION H-16-0428
OPINION AND ORDER OF DISMISSAL WITHOUT PREJUDICE
Pending before the Court in the above referenced cause,
removed from the 112th Judicial District Court of Harris County,
Texas on diversity jurisdiction pursuant to 28 U.S.C. §§ 1332(a),1
1441, and 1446, and seeking damages for tortious interference with
contract and with prospective contract and defamation per se, are
(1) Defendant Business Intelligence Advisors, Inc.’s (“BIA’s”)
The BAR Group, LLC (“TGB”) is a Delaware Limited Liability
Company with its principal place of business in Harris County,
Texas. All of the circuit courts of appeals that have addressed
the citizenship of a limited liability company for diversity
purposes have concluded that “‘like limited partnerships and
other unincorporated associations or entities, the citizenship of
an LLC is determined by the citizenship of all its members.’”
Greenville Imaging, LLC v. Washington Hosp. Corp., 326 Fed. Appx.
797, 798 (5th Cir. June 15, 2009)(per curiam), citing Harvey v.
Grey Wolf Drilling Co., 542 F.3d 1077 (5th Cir. 2008). TGB’s
members are citizens of Texas, Georgia, and California.
Business Intelligence Advisors, Inc. (“BIA”) is a Delaware
company with its principal place of business in Boston
KPMG, which is not a party here, but is the defendant in
BIA’s suit against it in New York, is a Delaware limited
liability with its headquarters in New Jersey.
motion to dismiss for lack of personal jurisdiction and/or failure
to state a claim under Federal Rules of Civil Procedure 12(b)(2)
(instrument #8), and (2) Plaintiff The BAR Group, LLC’s (“TBG’s”)
motion for leave to file first amended complaint (#18).
Background Facts As Alleged in the Original Petition
presentations, and discussion, with anecdotes from presenters,
developed in part by the Central Intelligence Agency (“CIA”) and
the Federal Bureau of Investigation (“FBI”) to train FBI Special
Agents, with academic research integrated by TBG, TBG provides
programs and training sessions designed to teach attendees to
insists that the TBG Course Material is public information, neither
Two TBG principals, Robert Bettes (“Bettes”) and Lee Howell
(“Howell”), both former special agents of the FBI, in that capacity
took the Deception Detection Training Course provided to special
agents of the FBI by members of the CIA.
They subsequently were
given governmental approval to commercialize privately the CIA
Deception Training Course’s methods and content.
In 2001 the CIA
Course Authors sold that commercial entity to Defendant BIA.
information and belief, TBG states that the course was not, and is
not, proprietary; it was funded by U.S. taxpayers and has always
been in the public domain.
BIA then recruited Bettes, Howell, and
another principal of TBG, Dennis Matko (“Matko”), to provide the
deception detection training for TBG in the private sector.
these men were employed by BIA, BIA prominently advertised that it
was offering training in a course developed and used by the CIA to
After their employment with BIA was over, Bettes, Howell and
Matko joined with former CIA employees, who gave them slides and
employees, to provide training to private industry organizations,
separate from BIA.
A short period later Bettes, Howell, and Matko
were granted the right to use the former CIA employees’ Deception
Detection Training Course and their slides and written materials.
Furthermore TBG obtained a Foundational Interview course from the
FBI and incorporated a segment, called “Active Listening,” into
TBG’s course. Thus TBG’s Deception Training Course was composed of
materials from the former CIA and/or FBI employees along with
publicly available information and content from sources other than
While some TBG course materials appear very similar to BIA
available materials presented in the Detection Deception Course by
both TBG and BIA, TBG maintains that neither the principals of TBG,
incorporated any BIA course material nor used any proprietary or
confidential information of BIA.
BIA has not sued TBG or any of the former employees now
associated with TBG, but BIA has sued KPMG, BIA’s former client and
TBG’s present client, in New York State, after KPMG used TBG to
BIA alleges that KPMG breached and continues to breach
its contracts with BIA by “permitting BAR Group to provide training
Collection Materials (the “BIA Course Materials”) provided pursuant
to those Agreements.”
TBG insists that BIA knows that TBG has not
and does not incorporate any BIA course materials in those it
provided to KPMG, that the basics of its program and its material
provided to KPMG are not proprietary and confidential, but are
public information, that TBG’s employees learned the basics of the
materials provided to KPMG through training they had received as
special agents of the FBI, not from BIA, and that TBG has not at
any time incorporated any BIA materials, including those alleged to
be the basis of BIA’s suit against KPMG.
TBG points out that at the time BIA filed
its suit against KPMG, TBG was actively negotiating a new contract
with KPMG to provide TBG’s course to KPMG. TBG contends that BIA’s
lawsuit against KPMG in New York “is a willful and transparent
attempt to interfere with the existing contract and/or future
contracts between TBG and KPMG and to cause damage to TBG.
TBG’s second cause of action against BIA is for defamation per
Under Texas law, to prevail on a claim for tortious
interference with contract, the plaintiff must establish “(1) the
existence of a contract subject to interference, (2) willful and
intentional interference, (3) that proximately causes damage, and
(4) actual damage or loss.” Engenium Solutions, Inc. v.
Symphonic Technologies, Inc., 924 F. Supp. 2d 747, 798 (S.D. Tex.
2013). “‘To show tortious interference, a plaintiff is not
required to prove intent to injure, but rather ‘only that the
actor desires to cause the consequences of his act, or that he
believes that the consequences are substantially certain to
result from it.’‘” Id., quoting Amigo Broad., LP v. Spanish
Broad. Sys., Inc,, 521 F.3d 472, 489 (5th Cir. 2008). “‘To show
proximate cause, a plaintiff must allege that the defendant took
an active part in persuading a party to a contract to breach
it.’” Id., quoting M-I LLC v. Stelly, 733 F. Supp. 2d 759, 775
(S.D. Tex. 2010). “‘It is necessary that there be some act of
interference or of persuading a party to breach, for example by
offering better terms or other incentives, for tort liability to
arise.’” Id., citing id.
To prevail on a claim under Texas law for tortious
interference with prospective business relations or prospective
contract, the plaintiff must prove that “(1) there was a
reasonable probability that the parties would have entered into a
contractual relationship; (2) the defendant committed a malicious
and intentional act that prevented the relationship from
occurring, with the purpose of harming the plaintiff; (3) the
defendant lacked privilege or justification to do the act; and
(4) actual harm or damage resulted from the defendant’s
interference.” Steward Glass & Mirror, Inc. v. U.S. Auto Glass
Discount Centers, Inc., 200 F.3d 307, 316 (5th Cir. 2000).
principals, Bettes, Howell, and Matko, of improperly incorporating
or otherwise using BIA’s course materials and harming TBG in its
business and reputation.
Because the Court’s jurisdiction is the threshold issue, the
Court addresses BIA’s motion to dismiss first.
“To prevail on a defamation claim under Texas law, the
plaintiff must prove that the defendant (1) published a
statement; (2) that defamed the plaintiff; (3) while either
acting with actual malice (if the plaintiff was a public official
or a public figure) or with negligence (if the plaintiff was a
private individual) regarding the truth of the statement.’”
Charalambopoulos v. Grammar, Civ. A. No. 3:14-CV-2424-D, 2015 WL
390664, *15 (N.D. Tex. Jan. 29, 2015), citing Neely v. Wilson,
418 S.W. 3d 52, 61 (Tex. 2013). “‘A statement is defamatory if
‘it tends to injure a living person’s reputation and thereby
expose the person to public hatred, contempt or ridicule, or
financial injury or to impeach any person’s honesty, integrity,
virtue, or reputation.’” Id., citing id. “‘Defamatory
statements are ‘published’ if they are communicated orally, in
writing, or in print to some third person capable of
understanding their defamatory import and in such a way that the
third person did so understand.’” Id., citing Austin v. Inet
Techs., Inc., 118 S.W. 3d 491, 496 (Tex. App.–-Dallas 2003, no
writ). “To establish actual malice, a plaintiff must prove the
defendant made a statement with ‘knowledge of, or reckless
disregard for, [its] falsity.’” Id., citing Waste Management of
Texas, Inc. v. Tex. Disposal Sys. Landfill, Inc., 434 S.W. 3d
142, 157 (Tex. 2014).
Defamation per se involves a statement that is so obviously
hurtful to a plaintiff’s reputation that the jury may presume
general damages, including loss of reputation and mental
anguish.” Id. at *16, citing Hancock v. Variyam, 400 S.W. 3d
599,63 (Tex. 2013). ‘[A] statement is defamatory per se only if
it falls within one of the following categories: (1) imputation
of a crime; (2) imputation of a loathsome disease; (3) injury to
a person’s office, business, profession, or calling; or (4)
imputation of sexual misconduct.’” Id., citing Memon v. Shaikh,
401 S.W. 3d 407, 421 (Tex. App.--Houston [14th Dist.] 2013),
judgment withdrawn on other grounds, No. 14-12-00015-CV, (Tex.
App.--Houston [14th Dist.] Nov. 25, 2014).
Standards of Review
Personal Jurisdiction and Rules 8, 12(b)(2), and 12(b)(6)
A court must find that it has personal jurisdiction over that
defendant before it makes any decision on the merits.
Int’l Co. v. Malaysia Int’l Shipping Corp., 549 U.S. 422, 430
(2007); Guidry v. U.S. Tobacco Co., 188 F.3d 619, 623, n.2 (5th Cir.
jurisdiction of a district court, without which it is powerless to
proceed to an adjudication.”).
When a defendant files a motion to dismiss for lack of
12(b)(2), the plaintiff bears the burden of demonstrating that the
court has jurisdiction over the defendant.
Luv N’ Care, Ltd. v.
Insta-Mix, Inc., 438 F.3d 465, 469 (5th Cir. 2006), citing Wyatt v.
Kaplan, 686 F.2d 276, 280 (5th Cir. 1982).5
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,
“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).
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
Johnston, 523 F.3d at 609.6
When a defendant disputes the factual bases for personal
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.
The panel further opined, id. at 241.
If the court determines that it will receive 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.
jurisdiction, the district court may consider the record before it,
discovery.” Quick Technologies, Inc. v. Sage Group PLC, 313 F.3d
338, 344 (5th Cir. 2002)(quoting Thompson v. Chrysler Motors Corp.,
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 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.
Haydel, 517 F.3d at 241.
On a motion to dismiss under Rule
12(b)(2), uncontroverted allegations in plaintiff’s complaint are
affidavits must be resolved in plaintiff’s favor for purposes of
the prima facie case of personal jurisdiction. Johnston, 523 F.3d
at 609; Kelly Law Firm, 679 F. Supp. 2d at 762; Revell v. Lidov,
317 F.3d 467, 469 (5th Cir. 2002).
Nevertheless, the court is not
uncontroverted. Panda Brandywine Corp. v. Potomac Elec. Power Co.,
253 F.3d 865, 869 (5th Cir. 2001).
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).
See also Wyatt v. Kaplan, 686 F.2d 276,
279 (5th Cir. 1982)(“Under the Federal Rules of Civil Procedure, a
federal district court in a diversity case may exercise personal
jurisdiction over a defendant residing outside the state in which
it sits only to the extent permitted by state law.”).
court sitting in diversity may exercise personal jurisdiction over
a nonresident defendant if (1) the forum state’s long-arm statute
confers personal jurisdiction over that nonresident defendant and
(2) 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).
The Texas long-arm
statute, Texas Civil Practice and Remedies Code §§ 17.0421-.045,7
extends 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
Section 17.042 provides in relevant part,
In addition to other acts that may constitute doing
business, a nonresident 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.
*3 (5th Cir. Dec. 12, 2011), citing Stroman Realty, Inc. v. Antt,
528 F.3d 382, 385 (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.” Johnston
v. Multidata Sys. Int’l Corp., 523 F.3d 602, 609 (5th Cir. 2008).
Thus a plaintiff in a diversity action in federal court in Texas
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 offend traditional notions of fair play and
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).
Mink v. AAAA Develop., LLC., 190 F.3d 333, 336 (5th
Cir. 1999). “Where a defendant ‘has continuous and systematic
general business contacts’ with the forum state, the court may
exercise ‘general jurisdiction over any action brought against the
defendant [regardless of whether the action is related to the forum
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
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 a showing of substantial activities in the forum state.
Jones v. Petty-Ray Geophysical Geosource, Inc., 954 F.2d 1061, 1068
(5th Cir.), cert. denied, 506 U.S. 867 (1992).
The test is a
“difficult one to meet, requiring extensive contacts between a
defendant and a forum.”
Johnston, 523 F.3d at 609 (discussing
A court need not credit a plaintiff’s conclusory
jurisdictional allegations, even if they are not controverted.
Panda Brandywine Corp. v. Potomac Elec. Co., 253 F.3d 865, 869 (5th
“[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
In Johnston, the Fifth Circuit discussed how extremely
difficult it is to establish general jurisdiction over a
nonresident defendant. 523 F.3d at 610-11. The panel examined
the Supreme Court’s ruling in Helicopteros, 466 U.S. at 418-19,
in which it found that defendant’s contacts with Texas purchasing
helicopters, spare parts, and accessories for more than $4
million over a six-year period from a Texas company, sending
management and maintenance personnel to Texas for technical
consultations and prospective pilots to Texas for training, and
receiving a check for more than $5 million drawn on a Texas bank
were insufficient to support personal jurisdiction. Among other
If the defendant has relatively few contacts, the court may
still exercise personal jurisdiction over that party if the suit
“‘arises out of’ or is related to the defendant’s contacts with the
Helicopteros, 466 U.S. at 414 & n.8.
Fifth Circuit has concluded that specific jurisdiction is “a claimspecific 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).
cases from this Circuit, Johnston cited Cent. Freight Lines, Inc.
v. APA Transp. Corp., 322 F.3d 376, 381 (5th Cir. 2003), in which
the Fifth Circuit concluded that general jurisdiction did not
exist even though the defendant regularly arranged and received
interline shipments to and from Texas and sent sales people to
Texas to develop business, negotiate contracts and service
national accounts; Wilson v. Belin, 20 F.3d 644, 651 (5th Cir.
1994)(“Even if [the defendant’s] contacts with Texas via his
short-lived malpractice insurance arrangement through a Texas law
firm and his multi-year pro bono association with the historical
society were arguably continuous, we hold that they were not
substantial enough to warrant the imposition of general personal
jurisdiction over him.”); Access Telecom, 197 F.3d at 717 (in
order to confer general jurisdiction it is not sufficient that a
corporation do business in Texas; it must have a business
presence in Texas); Alpine View Co. v. Atlas Copco AB, 205 F.3d
208, 218 (5th Cir. 2000)(holding that general jurisdiction did
not exist where the defendant occasionally sold products to
entities in Texas that used the defendant’s products for projects
in Texas and the defendant’s employees made field visits to Texas
between December 1992 and December 1993). Johnston, 523 F.3d at
610-12 (concluding that Multidata’s sale of approximately
$140,000 worth of goods over a five-year period to Texas
customers and its employees’ occasional travels to Texas to
service equipment or attend trade conventions did not support
general jurisdiction over Multidata).
Moreover, the Fifth Circuit has 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 there9; (2) whether the plaintiff’s cause of
action arises out of or results from the defendant’s forum-related
contacts10; 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’”
The “‘purposeful availment’ requirement ensures that a
defendant will not be haled into a jurisdiction solely as a result
of ‘random,’ ‘fortuitous,’ or ‘attenuated’ contacts . . . or the
‘unilateral activity of another party or a third person.’”
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).
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 Corp. v.
Rudzewicz, 471 U.S. 462, 472 (1985). 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.
King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985); 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)), and
Electrosource, Inc. v. Horizon Battery Tech., Ltd., 176 F.3d 867,
871-72 (5th Cir. 1999). 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.
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
“‘(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
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 mere fact that a party contracted with a resident of Texas
is insufficient to establish minimum contacts necessary to support
Moncrief Oil Int’l, Inc. v. OAO Gasprom,
481 F.3d 309, 311 (5th Cir. 2007)(“Merely contracting with a
resident of the forum state does not establish minimum contacts.”);
Cardinal Health Solutions, Inc. v. St. Joseph Hosp. of Port
Charlotte, Fla. Inc., 314 Fed. Appx. 744, 745 (5th Cir. 2009).
performing of a contract constitute purposeful availment of the
Freudensprung v. Offshore Technical Services, Inc., 379 F.3d 327,
344 (5th Cir. 2004). “[Purchases and related trips, standing alone,
jurisdiction may not be based on the fortuity of one party residing
foreseeability, by itself, does not create personal jurisdiction.
Moncrief Oil, 481 F.3d at 313.
A choice of law provision may be a relevant factor for
determining purposeful activity directed toward the forum state,
but is not necessarily determinative, and standing alone, it is
insufficient to confer jurisdiction.
Santander Consumer USA, Inc.
v. Shults Ford, Inc., 2011 WL 2601520 at *4, citing Petty-Ray
Geophysical, 954 F.2d at 1069, and Burger King, 471 U.S. at 482.
The court must examine the quality and nature of the defendant’s
activities in the forum in their totality to decide whether the
defendant purposely availed itself of the privileges offered by the
Id., citing Electrosource, Inc. v. Horizon Battery
Techs., Ltd., 176 F.3d 867, 871 (5th Cir. 1999).
Personal jurisdiction can be waived by an enforceable forum
jurisdiction in a specified forum.
Burger King, 471 U.S. at 473
Federal law governs the enforceability of forum selection
and choice of law clauses.
Haynesworth v. The Corporation, 121
F.3d 956, 962 (5th Cir. 1997), citing
M/S Bremen v. Zapata Off-
shore Co., 407 U.S. 1 (1972), and Scherck v. Alberto-Culver Co.,
417 U.S. 506, 518-21 (1974).
to be valid.
Forum selection clauses are presumed
M/S Bremen v. Zapata Off-shore Co., 407 U.S. at 9;
Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528,
A party seeking to bar enforcement of a forum
selection clause bears a heavy burden of demonstrating that the
clause is unreasonable under the circumstances, i.e., “that the
clause results from fraud or overreaching, that it violates a
strong public policy, or that the enforcement of the clause
deprives the plaintiff of his day in court.”.
Bremen, 407 U.S. at
12-13, 15, 18; Mitsui & Co. (USA), Inc. v. MIRA M/V, 111 F.3d 33,
35 (5th Cir. 1997).
Allegations of conspiracy will not establish a prima
facie case of personal jurisdiction; a plaintiff must show that
each defendant individually, and not as part of a conspiracy,
satisfy due process. Guidry v. U.S. Tobacco, 188 F.3d 619, 625 (5th
Cir. 1999), cited for that proposition, Moncrief Oil Intern., 332
S.W. 3d at 11 n.7; Paolino v. Argyll Equities, LLC , 401 F. Supp.
2d 712, (W.D. Tex. 2005), citing Nat’l Industrial Sand Ass’n v.
S.W. 2d 769, 773 (Tex. 1995); Alert 24 Sec., LLC v.
Tyco Intern., Ltd.,
F. Supp. 2d
, Civ. A. No. 5:11-cv-21,,
2011 WL 4948981, * 3 (S.D. Tex. 2011)(“”[A] conclusory allegation
of conspiracy is insufficient as a matter of law to support an
exercise of personal jurisdiction.”).
Whether a court has personal jurisdiction over a nonresident
defendant is a question of law for the court.
Moncrief Oil Inter.
v. OAO Gazprom, 414 S.W. 3d 142, 150 (Tex. 2012).
Federal Rule of Civil Procedure 8(a) provides,
(a) Claim for Relief. A pleading that states a claim
for relief must contain:
(1) a short and plain statement of the grounds for
the court’s jurisdiction, unless the court already
has jurisdiction and the claim needs no new
showing that the pleader is entitled to relief; and
(3) a demand for the relief sought, which may
include relief in the alternative or different
types of relief.
The purpose of Rule 8(a) is “‘to give the defendant fair notice of
what the . . . claim is and the grounds upon which it rests.’”
Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007). The court
must accept as true all facts the plaintiff alleges in support of
its claims and must construe those allegations in the light most
favorable to the plaintiffs.
Bowlby v. City of aberdeen, Miss.,
681 F.3d 215, 219 (5th Cir. 2012). The factual allegations must “be
enough to raise a right to relief above the speculative level.”
Twombly, 550 U.S. at 555..
“[D]etailed factual allegations” are
Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009).
If the allegations
“state a claim to relief that is plausible on its face” and “raise
a right to relief above the speculative level,” the complaint is
sufficient and “will survive a motion to dismiss.”
Birnberg, 667 F.3d 591, 595 (5th Cir. 2012), quoting Twombly, 550
U.S. at 570.
When a district court reviews a motion to dismiss pursuant to
Fed. R. Civ. P. 12(b)(6), it must construe the complaint in favor
of the plaintiff and take all well-pleaded facts as true. Randall
D. Wolcott, MD, PA v. Sebelius, 635 F.3d 757, 763 (5th Cir. 2011),
citing Gonzalez v. Kay, 577 F.3d 600, 603 (5th Cir. 2009).
assumption. Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)(“The tenet
that a court must accept as true all of the allegations contained
in a complaint is inapplicable to legal conclusions.”), citing Bell
Atlantic Corp. v. Twombly, 556 U.S. 662, 678 (2007); Hinojosa v.
U.S. Bureau of Prisons, 506 Fed. Appx. 280, 283 (5th Cir. Jan. 7,
“While a complaint attacked by a Rule 12(b)(6) motion to
dismiss does not need detailed factual allegations, . . . a
conclusions, and a formulaic recitation of the elements of a cause
of action will not do . . . .”
Bell Atlantic Corp. v. Twombly, 550
U.S. 544, 555 (2007)(citations omitted). “Factual allegations must
be enough to raise a right to relief above the speculative level.”
Id. at 1965, citing 5 C. Wright & A. Miller, Federal Practice and
Procedure § 1216, pp. 235-236 (3d ed. 2004)(“[T]he pleading must
contain something more . . . than . . .
a statement of facts that
merely creates a suspicion [of] a legally cognizable right of
requirement of Conley v. Gibson, 355 U.S. 41 . . . (1957)[“a
complaint should not be dismissed for failure to state a claim
unless it appears beyond doubt that the plaintiff can prove no set
of facts in support of his claim which would entitle him to
relief”], and instead required that a complaint allege enough facts
to state a claim that is plausible on its face.”
St. Germain v.
Howard,556 F.3d 261, 263 n.2 (5th Cir. 2009), quoting In re Katrina
Canal Breaches Litig., 495 F.3d 191, 205 (5th Cir. 2007). “‘A claim
has facial plausibility when the pleaded factual content allows the
court to draw the reasonable inference that the defendant is liable
for the misconduct alleged.’”
Montoya v. FedEx Ground Package
System, Inc., 614 F.3d 145, 148 (5th Cir. 2010), quoting Ashcroft
v. Iqbal, 556 U.S. 662, 678 (2009).
The plausibility standard is
not akin to a “probability requirement,” but asks for more than a
“possibility that a defendant has acted unlawfully.”
U.S. at 556.
In Ashcroft v. Iqbal, 556 U.S. 662, 679 (2009), the Supreme
Court stated that “only a complaint that states a plausible claim
for relief survives a motion to dismiss,” a determination involving
“a context-specific task that requires the reviewing court to draw
on its judicial experience and common sense.”
recitals of the elements of a cause of action, supported by mere
conclusory statements do not suffice” under Rule 12(b). Iqbal, 556
U.S. at 678.
The plaintiff must plead specific facts, not merely
conclusory allegations, to avoid dismissal.
Collins v. Morgan
Stanley Dean Witter, 224 F.3d 496, 498 (5th Cir. 2000). “Dismissal
is proper if the complaint lacks an allegation regarding a required
element necessary to obtain relief . . . .“
Rios v. City of Del
Rio, Texas, 444 F.3d 417, 421 (5th Cir. 2006), cert. denied, 549
U.S. 825 (2006).
Dismissal under Rule 12(b)(6) is proper not only where the
plaintiff fails to plead sufficient facts to support a cognizable
legal theory, but also where the plaintiff fails to allege a
cognizable legal theory.
Kjellvander v. Citicorp, 156 F.R.D. 138,
140 (S.D. Tex. 1994), citing Garrett v. Commonwealth Mortgage
Corp., 938 F.2d 591, 594 (5th Cir. 1991).
“A complaint lacks an
‘arguable basis in law’ if it is based on an indisputably meritless
legal theory’ or a violation of a legal interest that does not
Ross v. State of Texas, Civ. A. No. H-10-2008, 2011 WL
5978029, at *8 (S.D. Tex. Nov. 29, 2011).
As noted, on a Rule 12(b)(6) review, although generally the
court may not look beyond the pleadings, the Court may examine the
complaint, documents attached to the complaint, and documents
attached to the motion to dismiss to which the complaint refers and
which are central to the plaintiff’s claim(s), as well as matters
of public record.
Lone Star Fund V (U.S.), L.P. v. Barclays Bank
PLC, 594 F.3d 383, 387 (5th Cir. 2010), citing Collins, 224 F.3d at
498-99; Cinel v. Connick, 15 F.3d 1338, 1341, 1343 n.6 (5th Cir.
See also United States ex rel. Willard v. Humana Health
Plan of Tex., Inc., 336 F.3d 375, 379 (5th Cir. 2003)(“the court may
consider . . . matters of which judicial notice may be taken”).
Taking judicial notice of public records directly relevant to the
issue in dispute is proper on a Rule 12(b)(6) review and does not
transform the motion into one for summary judgment.
Stryker Corp., 631 F.3d 777, 780 (5th Cir. 2011).
noticed fact must be one not subject to reasonable dispute in that
jurisdiction of the trial court or (2) capable of accurate and
ready determination by resort to sources whose accuracy cannot
reasonably be questioned.”
Fed. R. Evid. 201(b).
“‘[D]ocuments that a defendant attaches to its motion to
dismiss are considered part of the pleadings if they are referred
to in the plaintiff’s complaint and are central to [its] claim.’”
Collins v. Morgan Stanley Dean Witter, 224 F.3d 496, 498-99 (5th
Cir. 2000), quoting Venture Assocs. Corp. v. Zenith Data Sys.
Corp., 987 F.2d 429, 431 (7th Cir. 1993).
By such attachments the
defendant simply provides additional notice of the basis of the
suit to the plaintiff and aids the Court in determining whether a
claim has been stated.
Id. at 499.
The attachments may also
provide the context from which any quotation or reference in the
motion is drawn to aid the court in correctly construing that
quotation or reference.
In re Enron Corp. Securities, Derivative
& “ERISA” Litig., No. H-04-0087, 2005 WL 3504860, at 11 n.20 (S.D.
Tex. Dec. 22, 2005). “Where the allegations in the complaint are
contradicted by facts established by documents attached as exhibits
Martinez v. Reno, No. 3:97-CV-0813-P, 1997 WL
786250, at *2 (N.D. Tex. Dec. 15, 1997), citing Nishimatsu Const.
Co. v. Houston Nat’l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975).
When conclusory allegations and unwarranted deductions of fact are
contradicted by facts disclosed in the appended exhibit, which is
treated as part of the complaint, the allegations are not admitted
Carter v. Target Corp., 541 Fed. Appx. 413, 417 (5th Cir.
Oct. 4, 2013), citing Associated Builders, Inc. v. Alabama Power
Co., 505 F.2d 97, 100 (5th Cir. 1974), citing Ward v. Hudnell, 366
F.2d 247 (5th Cir. 1966). See Northern Indiana Gun & Outdoor Shows,
Inc. v. City of South Bend, 163 F.3d 449, (7th Cir. 1996)(“It is a
well settled rule that when a written instrument contradicts
allegations in the complaint to which it is attached, the exhibit
trumps the allegations.”); Roth v. Jennings, 489 F.3d 499, 509 (2d
contradict the allegations in the complaint, the documents control
and the court need not accept as true the allegations contained in
BIA’s Alternative Motion to Stay
Without citing any legal authority, BIA asks the Court to stay
or dismiss the instant federal court suit to allow the New York
state court suit that BIA filed against KPMG to go forward.
It has long been established that “federal courts have a
strict duty to exercise the jurisdiction that is conferred upon
them by Congress.” Quackenbush v. Allstate Insurance Co., 517 U.S.
706, 715 (1996), citing Colorado River Water Conservation District
‘virtually unflagging obligation . . . to exercise the jurisdiction
In Colorado River, 424 U.S. at 813-14,11 the
given to them.’”).
Supreme Court opined,
Abstention from the exercise of federal jurisdiction is
the exception, not the rule.
“The doctrine of
abstention, under which a District Court may decline to
exercise or postpone the exercise of its jurisdiction, is
an extraordinary and narrow exception to the duty of a
District Court to adjudicate a controversy properly
before it. Abdication of the obligation to decide cases
can be justified under this doctrine only in exceptional
circumstances where the order to the parties to repair to
the state court would clearly serve an important
countervailing interest.” County of Allegheny v. Frank
Mashuda Co., 360 U.S. 185, 188-89 . . . (1959). “[I]t
was never a doctrine of equity that a federal court
should exercise its judicial discretion to dismiss a suit
merely because a State court would entertain it.”
Alabama Pub. Serv. Comm’n v. Southern R. Co., 341 U.S.
341, 361 . . . (1953)(Frankfurter, J., concurring in
presenting a federal constitutional issue which might be mooted or
presented in a different posture by a state court determination of
pertinent state law,” (Railroad Commission of Tex. v. Pullman Co.,
Quoted in Moses H. Cone Memorial Hosp., U.S. 1, 14 (1982).
312 U.S. 496 (1941)(“Pullman abstention”)), Frank Mashuda Co., 341
U.S, at 189; (2) “where there have been presented difficult
questions of state law
bearing on policy problems of substantial
public import whose importance transcends the result in the case
(1943)(“Burford abstention”), Louisiana Power & Light Co. v. City
of Thobodaux, 360 U.S. 25 (1859); and (3)”where, absent bad faith,
jurisdiction has been invoked for the purpose of restraining state
(1971)(“Younger abstention”)). Colorado River, 424 U.S. at 814-16.
The instant case does not fall into any of the three categories of
disposition of litigation,” which have given rise to the rule for
generally, “the pendency of an action in the state court is no bar
to proceedings concerning the same matter in the Federal court
Id. at 817.
the controversy in the
two courts is simply an issue of personal liability not involving
independently without reference to the other suit and if a judgment
On the other hand, under the Colorado River doctrine,
only in the “most extraordinary circumstances” may the federal
court stay its case where the state court’s duplicative proceedings
go forward based on considerations of wise judicial administration.
permitting the dismissal of a federal suit due to the presence of
administration are considerably more limited than the circumstances
appropriate for abstention.”
The first step and a necessary prerequisite in applying the
Colorado River doctrine is to determine if the federal and state
court actions are parallel or concurrent proceedings.
and state proceedings are ‘concurrent’ or ‘parallel’ for purposes
of abstention when the two proceedings are essentially the same;
that is, there is an identity of parties, and the issues and relief
sought are the same.’”
Mosley v. Baker, No. 10 Civ. 165(NRB), 2011
WL 2693513, *2 (S.D.N.Y. June 30, 2011), quoting Colorado River,
424 U.S. at 817, and Marcus v. Quattrocchi, 715 F. Supp. 2d 524,
‘substantially the same parties are contemporaneously litigating
substantially the same issues in different forums.”).
requirement, finding that “there need not be applied in every
instance a mincing insistence on precise identity of parties and
“The critical determination is whether the non-federal
litigation will dispose of all claims raised in the federal court
Mosley, 2011 WL 2693513, *2.
In the action in this Court and in the New York case, not only
are the parties not identical, with only BIA being involved in
both, here as a defendant and in New York as a plaintiff, but the
causes of action are quite different. The New York litigation will
not dispose of all the claims in this federal action.
concludes that they are clearly not parallel and concurrent.
Even if the actions were considered to be concurrent, the
court must balance the six factors, with no one controlling to
determine whether to stay or dismiss the concurrent federal suit in
deference to a state action:
(1) “the court first assuming
jurisdiction over property may exercise that jurisdiction to the
exclusion of other courts”; (2) “the inconvenience of the federal
“the desirability of avoiding piecemeal litigation”;
and (4) “the order in which jurisdiction was obtained by the
“[T]he decision whether to dismiss a
federal action because of parallel state-court does not rest on a
mechanical checklist, but on careful balancing of the important
factors as they apply in a given case, with the balance heavily
weighted in favor of the exercise of jurisdiction” in the federal
Moses H. Cone Memorial Hosp., 460 U.S. at 16.
Both actions are in personam and there is no assumption by
either this Court or the New York state court of any res or
property, so this factor does not favor either.
As for the
inconvenience factor focuses on the ‘physical proximity of the
federal forum to the evidence and witnesses.’‘”
relationship between BIA and KPMG was centered in New York, where
the suit was filed and most of the conduct occurred, and most of
the witnesses and documents are in New York. KPMG “consented to
jurisdiction and venue” in the New York Court, with the additional
factors of the choice of New York forum clause and the choice of
New York law clause in the contract at issue.
New York Complaint,
#8-1, ¶ 3; Agreement for Services Independent Contractor, #12-5, ¶
Another factor, avoiding piecemeal litigation, does not work
in favor of staying the federal action because the causes of action
contract and with prospective contract and defamation per se claims
against BIA in this Court, and BIA’s claim of breach of the
contract between BIA and KPMG against KPMG in the New York court.
Last, the New York case was filed first and its proceedings are far
ahead of those in this Court. Other factors that Courts have taken
into consideration include which law provides the rule of decision.
Dali (USA), Inc. v. Lee, No. 96 Civ. 3305 (MBM), 1996 WL 592723, at
*5 (S.D.N.Y. Oct. 16, 1996).
Here since both states apply their
own state law, the result does not favor either, since the New York
case applies New York law in part because of the choice of law
clause in the contract, and in this case, Texas law because the
dispute occurred in this state.
Another factor, whether the
federal plaintiff’s rights will be protected in state court, is
irrelevant since the causes of action and BIA’s rights in this suit
are so different from those in New York.
Dali, 1996 WL 592723, at
extraordinary case in which a federal action should be dismissed or
stayed while the state court action is pending, and because of the
presumption that the federal case should continue, the Court
concludes that the Colorado River doctrine does not apply.
A final possible source for authority to stay or dismiss this
federal case is Landis v. North American Co., 299 U.S. 248 (1936).
In Landis, Justice Cardozo, writing for the majority, rejected the
proposition that “before proceedings in one suit may be stayed to
abide the proceedings in another, the parties to the two causes
must be shown to be the same and the issues identical.”
[T]he power to stay proceedings is incidental to the
power inherent in every court to control the disposition
of the causes on its docket with economy of time and
effort for itself, for counsel, and for litigants. How
this can best be done calls for the exercise of judgment,
which must weigh competing interests and maintain an even
balance. True, the suppliant for a stay must make out a
clear case of hardship or inequity in being required to
go forward, if there is even a fair possibility that the
stay for which he prays will work damage to some one
else. Only in rare circumstances will a litigant in one
cause be compelled to stand aside while a litigant in
another settles the rule of law that will define the
rights of both. Considerations such as these, however,
are counsels of moderation rather than limitations upon
299 U.S. at 254-55 (citations omitted).
This discretionary power
of a court “to stay proceedings before it in the control of its
docket and in the interests of justice” is not unlimited.
Beebe, 56 F.3d 1384, No. 95-20244, 1995 WL 337666, at *2 & nn. 9
and 10 (5th Cir. May 15, 1995), citing
McKnight v. Blanchard, 667
F.2d 477, 479 (5th Cir. 1982)(Before granting a stay pending
resolution of another case, the court must carefully consider the
time reasonably expected for the resolution of the other case.
“immoderate or of an indefinite duration.”); In re Ramu Corp., 903
F.2d 312, 318 (5th Cir. 1990)(“The stay of a pending matter is
ordinarily within the trial court’s wide discretion to control the
course of litigation, which includes authority to control the scope
and pace of discovery.”); and Wedgeworth v. Fibreboard Corp., 706
F.2d 541, 545 (5th Cir. 1983)(Proper use of the court’s broad
discretion to stay proceedings in the interest of justice and in
control of their dockets “‘calls for the exercise of judgment,
which must weigh competing interests and maintaining an even
balance.’”)(citing Landis, 299 U.S. at 254-55).
Nevertheless because the parties before this Court and before
the New York court are not identical, Landis does not authorize
staying or dismissing the instant action.
Limited Jurisdictional Discovery before Ruling on the Motion to
jurisdiction, TBG asks the Court for an opportunity to conduct
discovery to develop jurisdictional facts before the Court rules on
BIA’s motion to dismiss.
When a plaintiff requests discovery on personal jurisdiction
facts, it must make a “preliminary showing of jurisdiction.”
Fielding v. Hubert Burda Media, Inc., 415 F.3d 419, 429 (5th Cir.
2005), citing Toys “R” Us, Inc. v. Step Two, S.A., 318 F.3d 446,
456 (3d Cir. 2003)(“If a plaintiff presents factual allegations
that suggest with reasonable particularity the possible existence
of the requisite contacts . . . the plaintiff’s right to conduct
jurisdictional discovery should be sustained.”).
The decision to
permit such discovery is within the court’s discretion.
“[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 v. B.V., 213 F.3d 841, 855 (5th Cir. 2000)(denying
discovery where plaintiffs failed to “describe the discovery they
contend should have been allowed, what facts they hoped to obtain
from such discovery, or how it would produce information that would
support specific jurisdiction”), citing Wyatt v. Kaplan, 686 F.2d
276, 284 (5th Cir. 1982); Bonner v. Triple-S Management Corp.,
, No. 16-40284, 2016 WL 4784030, at *1 (5th Cir. Sept.
“A court may also deny jurisdictional discovery where
the plaintiff only offers speculation as to jurisdiction” and “is
waging a ‘fishing expedition’ into jurisdictional facts.”
Strategic Global Inv. Capital, Inc. v. Burger King Europe GmbH,
Civ. A. No. 3:14-CV-3300-B, 2015 WL 41622599, at *6 (N.D. Tex. July
plaintiff must make a ‘preliminary showing of jurisdiction’ before
being entitled to such discovery.”)(citing Fielding v. Hubert Burda
Media, Inc., 415 F.3d 419, 429 (5th Cir. 2005)).
BIA’s Motion for Dismissal (#8)
BIA represents that it is a Delaware corporation with its
principal place of business in Boston, Massachusetts.
It is not
“nonresident” as that term is defined in
Practice & Remedies Code.
17.041(2) of the Texas
Nevertheless TBG conclusorily claims in its Original Petition
at p. 2 (#1 under Notice of Removal) that
BIA has, however, done business in Texas, as defined in
§ 17.042(1)-(3), Tex. Civ. Prac. & Rem. Code. BIA has
contracted to do business, and has done business, with
Texas residents, has contacted and hired employees in the
State of Texas, and has enjoyed the benefits of doing
business in Texas with Texas residents.
committed a tort, in whole or in part, in the State of
Texas . . . .
establishing either general or specific jurisdiction over BIA in
Regarding general jurisdiction, BIA clearly lacks continuous
and systematic contacts with, nor has it purposefully availed
itself of the benefits and protections of, the State of Texas.
does not maintain an office or any employees, bank accounts, or
other business operations in Texas.
Ex. A) at ¶ 5.
Affidavit of Amber Wert (#8,
Between 2011 and 2015 only 0.7% of BIA’s revenues
has been obtained in providing services in Texas, and most of that
was related to clients located outside of Texas who unilaterally
requested that BIA’s training sessions be delivered in Texas
Id. at ¶¶ 6,7,9.
BIA had a commercial relationship with
only a single client in Texas, accounting for 0.3% of its revenues.
Id. at ¶7.
In two of the last five years, BIA provided no services
in Texas and had no other activities in the state.
Id. at ¶6.
As for specific jurisdiction, BIA argues that this dispute has
no nexus to Texas, but instead relates to a lawsuit filed by BIA in
Partnership with headquarters in New Jersey, for breach of a
contract that requires all disputes to be filed in New York and
governed by New York law.
Id. at ¶¶ 8,10.12
BIA maintains that TBG
cannot point to any conduct by BIA that gave rise to TBG’s claims
that involves, or in any way is directed to, Texas.
As to any allegation of libelous statements, BIA emphasizes
that “the tort of libel is generally held to occur whenever the
offending material is circulated.”
Tabor, Chhlabra & Gibbs, P.A.
v. Medical Legal Evaluations, Inc. (“Tabor”), 237 S.W. 3d 762, 774
reputation suffered in Texas is not enough to establish specific
jurisdiction over BIA because the charge is completely unrelated to
TBG’s claims against BIA here (when BIA filed suit against KPMG in
New York, TBG was actively negotiating a new contract with KPMG to
provide TBG’s course to KPMG and BIA’s New York suit allegedly
interfered with existing and/or prospective contracts between TBG
and KMPG; and the New York suit purportedly constituted defamation
Indeed, the dispute in this suit has no nexus to Texas.
Furthermore, BIA contends that it is BIA’s New York case
against KPMG that gives rise to this dispute. In Tabor, 237 S.W.3d
A copy of BIA’s complaint filed in the Supreme Court of
New York against KPMG is attached to the Affidavit of Amber Wert.
Ex. A (#8-1).
Mississippi to Pennsylvania and concerned an inadequate expert
witness testimony given in a Mississippi court by a Texan, the
court explained in relevant part,
While some of [plaintiff’s] alleged reputational injury
may be suffered in Texas, Texas is not the focus of the
allegedly defamatory statement.
Thus there is not a
substantial connection between the defendants’ alleged
conduct and the state of Texas sufficient to warrant the
exercise of specific jurisdiction. See [Moki Mac River
Expeditions v. Drugg, 221 S.W.3d 569, 575 (Tex. 2007)].
The mere fact that it was forseeable that an alleged
libelous letter would have some effect in Texas is not a
sufficient basis for an assertion of jurisdiction over a
nonresident defendant. See [De Prins v. Van Damme, 953
S.W.2d 7, 14 (Tex. App.--Tyler 1997, writ denied), cert.
denied, 524 U.S. 904 (1998).] The record contains no
evidence of any marketing efforts directed to Texas by
[defendants] in connection with the use of [the
plaintiff’s] services of the type that creates a nexus
with the state of Texas sufficient to warrant the
exercise of specific jurisdiction.
The basis of TBG’s defamation claim is the allegations made in the
New York suit between BIA and KPMG.
material” was not “circulated” in Texas.
The alleged “offending
Thus there is no nexus
between this claim and Texas to warrant the exercise of personal
jurisdiction over BIA.
Nor is there any relationship to Texas to support BIA’s claim
in the instant suit for intentional interference with contract.
The court in Tabor, 237 S.W.3d at 775-76, noted that a claim for
intentional interference requires proof that the plaintiff was
harmed “by conduct on the part of [defendants], which was either
independently tortious or unlawful.”
Id. at 776, citing Wal-Mart
Stores, Inc. v. Sturge, 52 S.W.3d 711, 713 (Tex. 2001).
As was the
case in Tabor, BIA’s allegedly defamatory statement is pleaded as
an “independently tortious or willful and intentional act of
The same conclusory allegations support both the
claim for defamation and the claim for tortious interference with
existing and prospective contractual relations, but are factually
insufficient to support the exercise of specific jurisdiction in
Texas in this suit.
In addition, argues BIA, the exercise of personal jurisdiction
over BIA by a Texas court would offend traditional notions of fair
play and substantial justice. The contractual relationship between
BIA and KPMG was centered in New York, where the suit was filed and
most of the conduct occurred, and most of the witnesses and
appropriate to enforce an agreement governed by New York law.
In sum, BIA lacks sufficient minimum contacts to be subject to
the jurisdiction of a court in the State of Texas, and it would be
a violation of due process to subject BIA to litigation in Texas.
Instead the Court should dismiss the claims against BIA under Fed.
R. Civ. P. 12(b)(2) for lack of personal jurisdiction over it.
dismissed under Rule 12(b)(6) because TBG failed to state a claim
upon which relief can be granted.
The only illegal conduct of
which TBG complains is BIA’s filing the New York lawsuit against
its former customer, KPMG, for breach of a series of agreements
that prevented any third party from providing training to KPMG that
incorporated BIA’s material.
TBG claims in the instant suit that
interference with contract, prospective contract, and defamation
The result, contends BIA, is that TBG fails to state a
claim for which relief can be granted for several reasons.
First, the filing of a lawsuit is absolutely privileged and
cannot be the basis of civil liability.
As the court in Front v.
Khali, 24 N.Y.3d 713, 718, 28 N.E.3d 15, 18 (2015), opined,
Commencing with this Court’s 1897 decision in Ambiance v.
Smith, 153 N.Y. 214, 47 NE 265 (1897), we have held that
absolute immunity from liability for defamation exists
for oral or written statements made by attorneys in
connection with a proceeding before a court “when such
words and writings are material and pertinent to the
questions involved” (id. at 219, 47 NE 265). There we
stated that to allow such statements to be a basis for a
defamation action “would be an impediment to justice,
because it would hamper the search for truth and prevent
making inquiries with that freedom and boldness which the
welfare of society requires” (id. at 220, 47 N.S. 265).
We also noted that where an attorney’s statements are “so
needlessly defamatory as to warrant the inference of
express malice,” the privilege has been abused and
“protection withdrawn” (id.). Nearly a century later in
Park Knoll Assoc. v. Schmidt, 59 N.Y.2d 205, 464 N.Y.S.2d
424, 451 N.E.2d 182 (1983), this Court held that relevant
statements made in judicial or quasi-judicial proceedings
are afforded absolute protection so that those
discharging a public function may speak freely to
zealously represent their clients without fear of
reprisal or financial hazard (see id. at 209, 464
N.Y.S.2d 424, 451 N.E.2d 182). The privilege attaches to
such statements irrespective of an attorney’s motive for
making them (see Wiener v. Weintraub, 22 N.Y.2d 330, 331,
292 N.E.2d 667, 239 N.E.2d 540 ).
Texas law is similar.
See, e.g., James v. Brown, 637 S.W.2d 914,
916-17 (Tex. 1982)(holding that communications during a judicial
proceeding cannot serve as the basis for a civil action for libel
In addition, TBG fails to state a claim to recover damages for
a claim for tortious interference with contract, the elements of
plaintiff] and a third party, the defendant’s knowledge of that
contract, the defendant’s intentional procurement of the third
Notaro v. Performance Team, 136 A.D.3d 997, 999, 26
Collision, Inc. v. Allstate Ins. Co., 129 A.D.3d 1041, 1043, 13
N.Y.S.3d 137 (N.Y.A.D. 2015).
Texas law is similar.13
Ford Motor Co., 84 S.W.3d 198, 207 (Tex. 2002); Holloway v.
“[O]nce a plaintiff makes out a prima facie case of
tortious interference, a defendant can avoid liability by
establishing some type of privilege or justification for its
actions, such as the exercise of its own rights or its good faith
assertion of rights it believes it has, even if that belief is
mistaken.” U.S. Enercorp, Ltd. v. SDC Montana Bakken
Exploration, LLC, 966 F. Supp. 2d 690, 705 (W.D. Tex. 2013),
citing Prudential Ins. Co. of Am. v. Fin. Review Servs., Inc., 29
S.W. 3d 74, 77-78 (Tex. 2000).
Under New York law, “[t]he elements of a claim of tortious
interference with contract are ;the existence of a valid contract
between the plaintiff and a third party, defendant’s knowledge of
that contract, defendant’s intentional procurement of the third
party’s breach of the contract without justification, actual
breach of contract, and damages therefrom.” Berman v. Sugo LLC,
580 F. Supp. 2d 191, 207 (S.D.N.Y. 2008), citing Lama Holding Co.
v. Smith Barney, Inc., 88 N.Y. 2d 413, 646 N.Y.S. 2d 76, 668 N.E.
2d 1370 (1996).
Skinner, 898 S.W.2d 793, 795-96 (Tex. 1995)(“Texas jurisprudence
has long recognized that a party to a contract has a cause of
action for tortious interference against any third person (a
stranger to the contract) who wrongly induces another contracting
party to breach the contract.”).
Applying these elements here, BIA argues that TBG has not
alleged any conduct by BIA that caused KPMG to breach any contract
with TBG nor that KPMG has refused to enter into any contract with
TBG because of BIA’s conduct. Nor has TBG alleged that it suffered
any damages as a result of BIA’s conduct.
Finally, the tortious
interference claim depends on the validity of the defamation per se
claim, which, as discussed, fails because the allegations in a
interference claim. Front v. Khalil, 24 N.Y.3d 713, 718, 28 N.E.3d
15, 18 (2015); James v. Brown, 637 S.W. 2d at 916-17.
TBG’s intentional interference claim also fails because TBG
cannot show that BIA’s actions were not justified.
It is black
interference. White Plains Coat & Apron Co., Inc. v. Cintas Corp.,
835 N.Y.S.2d 530, 867 N.E.2d 381 (2007)(In response to a claim of
contract interference, “a defendant may raise the economic interest
defense–-that it acted to protect its own legal or financial stake
in the breaching party’s business.”); Texas Beef Cattle Co. v.
Green, 921 S.W.2d 203, 211 (Tex. 1996)(“[T]he justification defense
is based on either the exercise of (1) one’s own legal rights or
(2) a good-faith claim to a colorable legal right, even though that
claim ultimately proves to be mistaken.
Thus, if the trial court
finds as a matter of law that the defendant had a legal right to
interfere with a contract, then the defendant has conclusively
established the justification defense.” (citations omitted)).
BIA contends that TBG fails to state
per se under New York law.
a claim for defamation
As noted, to state a claim for
defamation per se requires the publication of an untrue statement
to (1) charge a person with a serious crime; (2) to injure another
in his or her trade, business or profession; (3) to claim that the
plaintiff has a loathsome disease; or (4) to impute unchastity to
Liberman v. Gelstein, 80 N.Y.2d 429, 435, 605 N.E.2d 344,
348 (1992); Thompson v. Bosswick, 855 F. Supp. 2d 76, 76-77
Here the second category appears applicable.
Observing that “[d]efamation has long been recognized to arise from
‘the making of a false statement which tends to ‘expose the
plaintiff to public contempt, ridicule, aversion or disgrace, or
induce an evil opinion of him in the minds of right-thinking
persons, and to deprive him of their friendly intercourse in
society,’” the court opined that the plaintiff must allege a false
statement about the plaintiff, published to a third party without
authorization or privilege, through fault amounting to at least
negligence on [the] part of the publisher, and it must either cause
Restatement (Second) of Torts § 558.14 “Special harm means economic
or pecuniary loss.”
Thompson v. Bosswick, 855 F. Supp. 2d 67, 76
(S.D.N.Y. 2012). “Special harm ‘must flow directly from the injury
to reputation caused by the defamation[,] not from the effects of
When, as here, the statement is one tending
“to injure another in his trade, business or profession, the
statement must be made with reference to a matter of significance
and importance for [the operation of the business], rather than a
Id. at 77, quoting Pure Power Boot Camp, Inc. v.
Warrior Fitness Boot Camp, LLC, 813 F. Supp. 2d 489, 550 (S.D.N.Y.
“The statement must be targeted at the specific standards
of performance relevant to the plaintiff’s business and must impute
conduct that is ‘of a kind incompatible with the proper conduct of
the business, trade, profession or office itself.’” Id., citing id.
BIA contends that TBG has not alleged sufficient facts to
Section 558 states, “To create liability for defamation
there must be (a) a false and defamatory statement concerning
another; (b) an unprivileged publication to a third party; (c)
fault amounting at least to negligence on the part of the
publisher; and (d) either actionability of the statement
irrespective of special harm or the existence of special harm
caused by the publication.”
support a claim for defamation per se.15
Consolidated Laws of New York Annotated § 3016(a) requires that
complained of shall be set forth in the complaint, but their
application to the plaintiff may be stated generally.”
complaint must also allege the time, place and manner of the false
statement and to specify to whom it was made.”
Dillon, 261 A.D.2d
Truth is a complete defense to defamation claims.
Whether statements constitute fact or opinion, which is
constitutionally protected, is a question of law for the court.
Id. at 39.
TBG objects to the allegation that KPMG breached its contract
with BIA by “permitting BAR Group to provide training sessions to
KPMG employees ‘incorporating’ Foundational Interviewing Skills
Strategic Information Collection Materials . . .
provided pursuant to those Agreements.”
at 6, ¶ IV.
Pl.’s Orig. Petition (#1)
The allegation that KPMG breached its contract with
BIA does not allege any wrongdoing or improper conduct by TBG, and
it is not a defamatory statement.
The claim that TBG’s training
incorporated BIA material in the New York complaint merely tracks
agreements that were purportedly breached and to which TBG was not
Defamation per se is an exception to the requirement that
a plaintiff must prove special harm. Pure Power Boot Camp at
Today a suit claiming breach of contract is not a
remarkable or scandalous event and does not constitute defamation
per se. Thus TBG’s claims should be dismissed under Rule 12(b)(6).
Alternatively, BIA requests a stay pending resolution of the
earlier filed New York suit, which may moot this action.
A copy of
the New York petition is attached as Exhibit 1 to the Affidavit of
Amber Wert, attached to this motion.
A federal district court has
wide discretion in deciding whether to stay a case before it.
McKnight v. Blanchard, 667 F.2d 477, 479 (5th Cir. 1982)(“A district
court, in its discretion, may stay proceedings before it for docket
control purposes or in the interests of justice.
stay orders will be reversed when they are found to be immoderate
or of an indefinitie duration.”).16
TBG’s Original Petition in the
instant action shows that its claims here in a Texas federal court
are in retaliation for, and derivative of, the contractual claims
BIA has asserted against KPMG in New York state court. BIA asserts
that TBG is using the New York suit as a strategic tool to obtain
leverage; TBG would not have filed this suit had BIA not sought to
pursue its legal right to file a breach of contract claim against
KPMG in New York.
The issues in the two suits overlap to a
substantial degree and are directly correlated, and discovery
This case is not on point because it deals with staying a
prisoner’s civil case until he is released from prison, not
staying a federal case to allow an identical or similar state
court case with the same parties to go forward.
relating to TBG’s claims and BIA’s defenses would significantly
overlap with the discovery already commenced in the New York suit.
The success of TBG’s claims here depends on the New York suit, as
it is the sole basis of TBG’s allegations.
and depositions would be duplicative.
The discovery, issues,
Furthermore the New York
case is far advanced compared to this one.
TBG’s Opposition (#12)
seminars and training programs for auditors and other professionals
on how to spot deception in others.
#12-2, Howell Affid. ¶ 3.
basic principles of this training were developed by employees of
the CIA and are in the public domain as well as the subject of Spy
Former CIA Officers Tell You how to Detect Deception by
Philip Houston, et al. (St. Martin’s Press 2013).
The former BIA
employees, who are now employees of TBG, each had a non-competition
and a non-disclosure agreement with BIA, but BIA has not sued them
or TBG for breach of those agreements. Instead BIA sued its former
client, KPMG, because in 2015 KPMG hired TBG, instead of BIA, to
provide training to its employees.
TBG accuses BIA of having a tortious, vindictive scheme to put
its former employees and TBG out of business by means of a sham,
baseless, retaliatory suit against KPMG in New York.
BIA aims to
interfere with TBG’s relationship with KPMG and to preclude any
other business that has ever been a client of BIA from hiring KPMG,
for fear it will also be sued by BIA because it dared to compete
legally and legitimately against BIA.
BIA seeks to make this
litigation more difficult, expensive, and time-consuming by suing
TBG in New York, a jurisdiction with almost no connection to this
cause of action.
TBG argues unpersuasively that BIA has continuous, systematic,
substantial minimum contacts with Texas for this Court to have
general jurisdiction over this case or that this suit arises out of
and is related to defendant’s contact with the forum.
examples of minimum contacts that BIA omitted.
The Court observes
that the asserted contacts are often limited to a single employee
or are distant in time or are so vague as to offer little
connection to the State of Texas.
“Vague and over-generalized
assertions that give no indication as to the extent, duration, or
frequency of contacts with the forum state are insufficient to
support general jurisdiction.”
Clemons v. WPRJ, LLC, 928 F. Supp.
2d 885, 894 (S.D. Tex. 2013), quoting Johnston v. Multidata Systems
Intern. Corp., 523 F.3d 602, 610 (5th Cir. 2008).
TBG lists the
following contacts: (1) Until 2009 BIA had a senior-level employee
who resided in the State of Texas (The Court notes it was seven
years before this suit was filed, dealt with a only a single
employee whose residency in Texas may well have been fortuitous,
and is unclear as to how long before that year and after it was
that employee was living in Texas); (2) BIA required the employee
to maintain a BIA office in his home office in Denton, Texas (a
single employee, a single office, with no indication of size,
amount of business it did, other employees); (3) BIA deposited
payroll funds into more than one bank account in Texas (which bank,
for how many employees, how much, how often, how long?); (4)
Through 2009, BIA employees, including its Texas employee and Texas
contractor, taught at least 16 seminars for BIA in Houston and
Dallas, Texas and charged BIA’s customers between $18,000 and
$22,000 for each full-day seminar (again, seven years before
commencement of this suit, how many years before 2009 did it take
to give 16 seminars, how many customers took a seminar, how long
independent contractors in the State of Texas (when, how many, for
how long, for what job); (6) A BIA representative taught at the FBI
Undercover School in Dallas, Texas (just one individual, how long,
how many times); (7) BIA actively recruited new customers in the
customers); (8) BIA continued to contract with and give seminars to
KPMG employees until KPMG hired TBG in early 2015; TBG admits
without discovery it does not have access to this information, but
BIA admits it taught seminars in Texas at least through 2011 (when,
how many, five years before filing of suit).
Examining these alleged contacts in toto, the Court finds that
there is insufficient detail about the number of people involved,
frequency, and duration to find that they are “continuous and
systematic,” or even “substantial” enough to warrant the imposition
of general personal jurisdiction over BIA, or whether instead these
contacts were brief, sporadic, and attenuated.
statements do not establish that BIA would reasonably have expected
to be sued in Texas, no less that it conducted regular business in
The Court observes how minimal BIA’s contacts with Texas
are, compared with those in Helicopteros and other cases cited by
the Court, which were still insufficient to support personal
jurisdiction in Texas over the nonresident defendants.
concludes that TBG fails to satisfy the burden of establishing
general personal jurisdiction in Texas over BIA.
jurisdiction over BIA because in addition to the listed contacts,
BIA entered into a long-term, continuing relationship with Robert
Bettes, a Texas resident.
Their employment agreement was entered
into in 2007 and continued through 2009 (Attachments 1 and 2 to
Bettes’ Affid. (#12-1)), had no time limit, argues TBG, and would
still be a continuing relationship with a Texas resident if Bettes
had not voluntarily left BIA in 2009.
The Court finds that the
very fact that Bettes chose to leave within two years, a very short
period, undermines TBG’s assertion of continuing obligations and a
personal specific jurisdiction.
Moreover, Bettes is the sole
Texas-resident employee with whom TBG has asserted to have a
Furthermore, this action is not limited to, and
certainly not focused upon, the acts of Bettes.
TBG contends that there is a sufficient nexus between BIA’s
contacts with Texas and this lawsuit, which asserts that (1) BIA
tortiously interfered with TBG’s contract with KPMG and with its
prospective contracts with KPMG and other companies with which BIA
previously or presently contracted and (2) defamation.
that BIA interfered with TBG’s business by filing a sham, meritless
lawsuit against KPMG, now TBG’s client.
TBG claims that essential
to the sham lawsuit, which it claims forms the basis of the instant
suit, is that BIA’s Texas employee, Bettes, was given access by BIA
in Texas to BIA’s purported proprietary information and taught BIA
training sessions primarily in Texas to KPMG and others.
charges Bettes and others with incorporating the materials taught
to BIA clients primarily in Texas into TBG’s training programs for
KPMG and claims that hiring TBG is therefore a breach of contract
Bettes and others left BIA, formed a competing company,
and entered into a contract with BIA’s former client, KPMG.
case has many more contacts with the State of Texas than with any
other state, insists TBG.
Last, BIA insists that it did not defame TBG in Texas, so the
defamation claims have no nexus to Texas.
TBG claims that without
obtaining discovery it cannot know in which jurisdictions the
defamatory material was circulated, but TBG maintains that the
tortious interference claim creates a sufficient nexus to Texas to
support specific jurisdiction.
It argues that New York is only
connected to this suit because BIA filed its suit against KPMG
there. BIA’s tortious conduct was allegedly committed against TBG,
which has its main offices here in Houston, Texas.
produced no evidence in support of its conclusory statement that
most witnesses and documents are located in New York and does not,
and cannot, specify which documents and witnesses are located
At least two of TBG’s witnesses are located in Texas, as
are TBG’s offices and most of its documents.
There is no evidence
that KPMG’s witnesses will not be found in one of its Texas
offices, rather than in a New York office. TBG further argues that
improbable that any of its witnesses and documents are located in
#12 at p. 11. TBG also argues that the choice-of-New-
York-law clause in the contract with KPMG is without significance
in this case because the point of the lawsuit was to strain the
relationship between KPMG and TBG and to prevent other clients of
BIA from contracting with TBG. It further claims that while BIA as
plaintiff has sued KPMG in New York, there is no evidence that BIA
as a defendant is more amenable to suit in New York than in Texas.
Allowing this suit to proceed against BIA in Texas, where BIA had
an office, an employee, and contractor, conducted numerous training
programs and derived substantial revenues, and where TBG’s main
offices are located, does not offend traditional notices of fair
play and substantial justice.
In response BIA reiterates that TBG’s cause of action for
tortious interference with contract fails as a matter of law
Claiming that this assertion was made to get around a
key provision of the contract between KPMG and BIA, TBG responds
that it is not the statements that are targeted, but the fact that
the lawsuit, as a whole, is a sham.17
Furthermore, the contract
Among the defenses and privileges to defamation claims
under common law and statutes is the defense of truth. The Texas
Supreme Court has
interpreted [Texas Civil Practice and Remedies Code §
73.005] to require defendants to prove the publication
was substantially true. Turner v. KTRK Television,
Inc., 38 S.W. 3d 103, 115 (Tex. 2000). Moreover
statements that are not verifiable as false cannot form
the basis of a defamation claim. Milkovich, 497 U.S.
at 21-22. . . . Further the common law has recognized a
judicial proceedings privilege since at least 1772 for
parties, witnesses, lawyers, judges, and jurors.
Neely v. Wilson, 418 S.W. 3d 52, 62 (Tex. 2013).
“Truth, even substantial truth, is a complete defense to
defamation.” Vincent v. Comerica Bank, 2006 WL 1295494, at *7
(S.D. Tex. May 10, 2006), citing Randall’s Food Mkts. v. Johnson,
891 S.W. 2d 640, 646 (Tex. 1995); McIlvain v. Jacobs, 794 S.W. 2d
14, 15 (Tex. 1990); David L. Aldridge Co. v. Microsoft Corp., 995
F. Supp. 728, 741 (S.D. Tex. 1998)(“The Fifth Circuit has
interpreted Texas law as requiring the plaintiff to prove falsity
as an element of a cause of action for defamation.”). “Whether a
publication is capable of a defamatory meaning is initially a
question for the court.” Turner v. KTRK Television, Inc., 38
S.W. 3d 103, 114 (Tex. 2000)(“[A]n allegedly defamatory
publication should be construed as a whole in light of the
between KPMG and BIA (#12-5, Ex. E, Taylor Affid. p. 6) provides,
During the term of this Agreement, KPMG may engage the
services of any individual or entity that competes with
[BIA] or offers services similar to those offered by
[BIA], and any such engagement shall not be considered a
breach of this Agreement.
Despite the clear and unambiguous language of this provision, BIA,
with the intent to harm TBG, still filed its meritless suit against
KPMG for hiring TBG.
BIA objects that TBG does not adequately plead a claim for
tortious interference because it does not assert any conduct of BIA
that caused KPMG to breach any contract and because it does not
allege any damages as a result of such conduct.
citing a wholly conclusory statement without any factual support in
its Original Petition at p. 7 (“BIA’s lawsuit against KPMG is a
willful and transparent attempt to interfere with the existing
contract and/or future contracts between TBG and KPMG and to cause
surrounding circumstances based upon how a person of ordinary
intelligence would perceive it.”), citing Musser v. Smith
Protective Servs., 723 S.W. 2d 653 (Tex. 1987). If the
publication is ambiguous, the jury decides its meaning. Id.
Moreover, to BIA’s correct assertion that statements made in
a pleading in a lawsuit are absolutely privileged as a matter of
law, TBG’s response is that “it is not the specific assertions in
the lawsuit that are the problem--it is that the entire lawsuit
is a sham. That admission demonstrates that TBG has failed to
state a claim of defamation and defamations per se.
“The issue of whether an alleged defamatory matter is
related to a proposed or existing judicial proceeding is a legal
question to be determined by the court. Communications subject
to this privilege ‘cannot constitute the basis of a civil action’
and may not form a basis for civil liability.” Aldous v. Bruss,
405 S.W. 3d 847, 859 (Tex. App.--Houston [14th Dist.] 2013).
damage to TBG.
BIA’s acts have caused damage to TBG for which BIA
TBG now states that it has suffered at least
$180,000 to date as a result of BIA’s actions.
Bettes Affid., ¶
16; Howell Affid. ¶8; Matko Affid. ¶11.
Last, BIA again insists that TBG’s cause of action for
tortious interference fails because BIA was justified in asserting
its legal rights against KPMG. TBG responds that BIA has failed to
cite to legal authority as support for the proposition that one is
justified in filing a meritless and sham lawsuit. Regardless, that
determination is for the finder of fact and should not be decided
on a Rule 12(b)(6) motion.
As for stating a claim for defamation
for which relief can be granted, BIA claims that its statements in
wrongdoing by TBG and therefore cannot be defamatory, and that it
TBG responds that BIA is ignoring that TBG pleads that
instructional materials are proprietary and were learned by these
three while employed by BIA, and that TBG incorporated BIA’s
proprietary materials in its training programs to KPMG. Instead of
appropriated BIA’s confidential and proprietary work for use in
their competing businesses.
The fact that BIA has not sued TBG or
its former employees demonstrates that these claims are false.
BAI’s request that the Court stay this case until the New York
action against KPMG is resolved should not be granted, argues TBG.
Not only is the outcome predictable given the express language in
the contract between KPMG and BIA, that it is not a breach of
contract for KPMG to hire competing third parties to offer similar
services, but the outcome of the New York suit does not dispose of
this case in any way.
Even if BIA prevails in trial in New York,
it would not show that the sole reason for, and intent behind,
filing that suit was to injure TBG and prevent TBG from continuing
to contract with KPMG or any other of BIA’s clients.
TBG states that if the Court finds it lacks both general and
specific jurisdiction, TBG requests an opportunity to conduct
discovery to develop jurisdiction facts before the Court rules on
BIA’s motion to dismiss.
BIA’s Reply (#13)
jurisdiction, and not recognized by any Circuit Courts of Appeals,
nonresident corporation to the general jurisdiction of a state
court, (2) has based its theory of jurisdiction almost completely
on events that occurred in 2009 or before, (3) does not demonstrate
that its claims arise out of any action by BIA in Texas, necessary
sufficient contacts to establish systematic and continuous contacts
of BIA with Texas for general jurisdiction.
Instead TBG asserts
that because BIA had contact with Texas before 2009, it is subject
to the jurisdiction of a federal court in Texas for this lawsuit
filed by TBG solely in retaliation for the suit BIA filed in New
York against a third party in late 2015.
BIA responds that TBG has conceded that it filed the suit in
Texas only because BIA filed its suit against KPMG in New York.
Citing #12 at 4 (“[I]t is not the specific allegations made in New
York that are the basis of this lawsuit, but the fact that a sham
lawsuit was brought at all.”).
BIA maintains that the instant
suit’s purpose is to impede BIA’s right to pursue its contractual
rights, that its claims in the New York suit are well founded, and
that BIA cannot be held liable to TBG merely for filing a lawsuit,
regardless of the strength of its merits.
BIA points out that TBG
failed to address the absolute privilege protecting the filing of
a lawsuit to vindicate contractual rights, that TBG conceded that
its defamation claim is based on the fact that the lawsuit was
filed and does not depend on the allegations made by BIA in Texas,
and that KPMG has not breached its contract with TBG.
concession is fatal to both its defamation claim and its tortious
interference with future business relationships claim, neither of
which is pleaded to the level required by Rule 8.
BIA challenges many factual allegations in TBG’s Response as
untrue and as not supported by any competent evidence, or as
contrary to the undisputed evidence, or in dispute, and lists them
in Appendix A to #13. BIA has submitted competent and unchallenged
proof that the claims asserted by TBG against BIA do not arise out
of any specific conduct of BIA in Texas and that BIA lacks
sufficient contacts with the State of Texas to subject BIA to the
general jurisdiction of Texas courts.
It is TBG’s burden to prove
that BIA is subject to jurisdiction in Texas courts, and not BIA’s
to prove it is not.
Luv N’ Care, 438 F.3d at 469; AllChem
Performance Prods., Inc. v. Aqualine Warehouse, LLC,878 F. Supp. 2d
779, 784 (S.D. Tex. 2012)(“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.”).
In its motion, BIA argued, and TBG did not contest, that BIA’s
presence in Texas over the last few years (1) has been minimal, (2)
customers who are not Texas residents, but who have occasionally
asked BIA to give one-day training seminars at locations in Texas,
and (3) has no relation to the claims made by TBG based only on
BIA’s conduct in filing the New York lawsuit.
TBG argued that the
Court may look back at least seven years for facts supporting
jurisdiction.18 “General jurisdiction can be assessed by evaluating
contacts of defendants with the forum over a reasonable number of
years, up to the date the suit was filed.”
Johnston v. Multidata
Sys. Intern. Corp., 523 F.3d 602, 610 (5th Cir. 2008), citing Access
Telecom, Inc. v. MCI Telecomms. Corp., 197 F.3d 694, 717 (5th Cir.
This suit was filed in state court on January 18, 2016.
#1, Notice of removal at p. 1, and Plaintiff’s Original Petition.
TBG urges the Court to ignore events of the last seven years and
focus on what happened eight to ten years ago, contrary to due
process limitations on personal jurisdiction and insufficient to
subject BIA to the jurisdiction of Texas courts.
TBG claims this Court has specific personal jurisdiction over
BIA based on its employment relationship with Bettes, a Texas
resident, from 2007-09. BIA emphasizes, correctly, that TBG causes
of action have nothing to do with Bettes’ employment nearly ten
years ago, and therefore do not support specific jurisdiction.
noted, TBG has admitted that it filed this action because it
believes the New York suit is a sham and that BIA’s decision to
file a breach of contract suit against KPMG in 2015 is unrelated to
the residence of Bettes in 2007.
The Court agrees with BIA that the two cases TBG cites for
the proposition that the Court may look back at least seven years
for contacts do not support that proposition: Wilson v. Belin,
20 F.3d 644, 650 (5th Cir. 1994), cert. denied, 513 U.S. 930
(1994), and Bearry v. Beech Aircraft Corp., 818 F.2d 370, 372-73
(5th Cir. 1987). They do not establish any specific number of
As for general jurisdiction, not only has BIA lacked any
significant presence in Texas since 2009, but, as opined in
Goodyear Dunlop Tires Operations, SA v. Brown, 564 U.S. 915, 927,
919 (2011), “A corporation’s ‘continuous activity of some sort
within a state is not enough to support the demand that the
corporation be amendable to suits unrelated to that activity’”; “A
corporations to hear any and all claims against them when their
affiliations with the State are so ‘continuous and systematic’ as
to render them essentially at home in the forum State.”[emphasis by
In addition in Daimler AG v. Bauman,
, 134 S. Ct.
746, 755, 758 (2014)(specific jurisdiction requires that the suit
“arose out of or relate to the defendant’s [specific] contacts with
the forum)(quoting Helicopteros, 466 U.S. at 414 n.8), the Supreme
Court refined its concept of general jurisdiction and reduced its
role “to occupy a less dominant place in the contemporary scheme,”
defendant, the forum, and the litigation, essential to specific
jurisdiction over a foreign corporation, that corporation must be
“at home” in the forum, i.e., “instances in which the continuous
corporate operations within a state [are] so substantial and of
such a nature as to justify suit . . . on causes of action arising
from dealings entirely distinct from those activities.” 134 S. Ct.
at 761, quoting International Shoe v. Washington World, 326 U.S.
Only in exceptional cases, a corporation may be
“at home” in places outside of its place of incorporation or
determination, however, “calls for an appraisal of a corporation’s
activities in their entirety, nationwide and worldwide,” because a
corporation operating in numerous fora could “scarcely be deemed at
home [or expected to be haled into court] in all of them.”
TBG now responds to BIA’s motion to dismiss the tortious
negotiations with KPMG, TBG was forced to give discounts of
$180,000. BIA observes that there could be a number of reasons why
KPMG was able to obtain a more favorable contract now than before,
but even assuming that TBG could read KPMG’s corporate mind and
discover why KPMG sought those monetary terms, it is very doubtful
that “discounts” constitute damages recoverable from BIA.
TBG does not respond to the element of tortious interference
requiring defendant to intentionally procure the third party’s
breach of the contract without justification.
717116, at *1.
Notaro, 2016 WL
TBG’s evidence demonstrates that KPMG did not
breach its contract with TBG, but KPMG has now signed a new
contract that is less favorable to TBG.
As a matter of law there
was no breach of the TBG contract as a result of the suit filed by
BIA, and the claim for tortious interference should be dismissed.
Describing TBG’s claim of tortious interference with future
contracts as “as paradigm of vagueness and conclusion,” BIA insists
it is insufficient for a number of reasons:
(1) there is no
interference with potential business relationships; (2) TBG has not
cited any authority that filing a breach of contract suit gives a
non-party to the contract a cause of action sounding in tort
against the party that filed the suit19; and (3) TBG has failed to
make any factual allegations about what potential business or
interference by BIA.
Instead its conclusory allegations do not
show that TBG is entitled to relief.
Should the Court find that dismissal in not appropriate, BIA
reiterates its request for a stay of this case until the New York
case is resolved.
This Court, in the interests of comity, should
TBG concedes that it has not found a case factually
identical to his scenario, but contends that “BIA cannot
plausibly deny that a lawsuit of any nature filed by a plaintiff
for the sole or primary purpose of harming a competing company-even though the competition is legal and legitimate--falls
squarely within the elements of tortious interference with
contract and with prospective business relationships.” BIA bears
the burden of proof on its affirmative defense of privilege or
justification, but they are not relevant to whether TBG had
adequately pleaded these claims.
not seize the authority to rule on the merits of a claim not before
Moreover, if this Court finds that BIA’s New York case is a
sham, KPMG would argue collateral estoppel or res judicata in the
New York case, leading to an appeal in New York over whether a
Texas federal court can properly rule on the merits of a New York
state claim pending in a New York state court.
efficiency supports the proposition that a New York state court is
in a better position to make rulings on the substantive law of New
TBG’s Sur-reply (#16)
With leave from Judge Stacy (#15), TBG filed a sur-reply
arguing that the Court should not consider the affidavits of Howell
and Matko, attached to the affidavit of Robert Bettes, in the
Appendix to BIA’s Reply (#12), because these documents are subject
TBG asserts that “BIA unequivocally concedes that this
“according to a number of cases cited and relied upon by BIA,
continuing contractual obligations to the resident of a forum state
establish specific jurisdiction in that state.”
#26 at p. 2.,
citing Central Freight Lines, Inc. v. APA Transport Corp., 322 F.2d
376 (5th Cir. 2003), citing Traveler’s Health Ass’n v. Virginia ex
rel. State Corp. Com’n, 339 U.S. 643, 647 (1950)(upholding personal
jurisdiction based on the fact that defendant created “continuing
obligations” between himself and a resident of the forum).
Central Freight Lines, BIA entered into an ongoing employment and
creating obligations that exist until this day. Like the defendant
in Central Freight Lines, BIA knowingly aligned itself with a
resident of Texas, required Bettes to work out of his home in
Denton Texas, and anticipated and required much of Bettes’ work to
be performed at their customers’ Texas office locations.
was foreseeable that hiring Bettes would result in BIA business
activity in the State of Texas.
It was not required that BIA be
physically present in Texas since it purposely directed actions
toward a resident of Texas, creating continuing obligations to that
extensive business activities in the State of Texas, which would
generate hundreds of thousands of dollars of revenue for BIA.
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475-76 (1985).20
In Burger King, 471 U.S. at 476, Justice Brennan wrote for
Jurisdiction . . . may not be avoided merely because
the defendant did not physically enter the forum state.
Although territorial presence frequently will enhance a
potential defendant’s affiliation with a State and
reinforce the reasonable foreseeability of suit there,
it is an inescapable fact of modern commercial life
that a substantial amount of business is transacted
solely by mail and wire communications across state
lines, thus obviating the need for physical presence
within a State in which business is conducted. So long
as a commercial actor’s efforts are “purposefully
directed” toward residents of another State, we have
In response to BIA’s assertion that the claim asserted by TBG
“against BIA has nothing to do with the employment of Mr. Bettes
almost a decade ago,” TBG disagrees and maintains that BIA’s
contacts with Bettes and the State of Texas are not only related,
but integral, to the causes of action asserted by TBG here.
keep TBG from competing against it, BIA has sued a major former
client because Bettes and others are also former employees of BIA
and BIA wants to keep Bettes from contracting with KPMG or any
BIA hired Bettes in Texas, shared its seminar and
teaching materials with Bettes in Texas, required Bettes to office
in Texas, sent Bettes to teach a number of seminars in Texas, and
required Bettes to help recruit BIA employees and independent
contractors in Texas.
TBG again contends that if it has not established general
jurisdiction over BIA in Texas, it should be allowed limited
discovery to ascertain jurisdictional facts since 2009 if the Court
finds that earlier years are too distant.
TBG asks the Court to
recognize that BIA admitted that it continued to work in Texas from
locations through 2015.
consistently rejected the notion that an absence of
physical contacts can defeat personal jurisdiction
In accord, Searcy v. Pares Resources, Inc., 496 S.W. 3d 58, 88
Arguing that BIA wrongly contends that TBG’s cause of action
for tortious interference cannot survive in the absence of a
showing that KPMG breached its contract with TBG, TBG objects to
BIA’s use of New York law (“the defendant must intentionally
procure the third party’s breach of contract without justification”
(Reply at p. 14)) for that tortious interference claim against a
company headquartered in Texas and maintains that New York law has
no connection to this case.
In contrast, the elements of tortious
interference with contract under Texas law are “(1) an existing
contract subject to interference, (2) a willful and intentional act
of interference with the contract, (3) that proximately caused the
plaintiff’s injury, and (4) caused actual damages.”
Ins. Co. v. America v. Financial Review Services, Inc., 29 S.W. 3d
74, 77 (Tex. 2000).
TBG maintains that it is unnecessary to show
that its contract with KPMG was intentionally and legally breached,
only that BIA intentionally interfered with the contract and caused
actual damage to TBG.
TBG has shown by affidavits that the
discounts required by KPMG to continue to do business with TBG were
a direct result of KPMG’s costs to defend the lawsuit filed by BIA,
i.e., the reduction in the contract price as a result of BIA’s
actions is both an interference with existing contract and an
actual loss to TBG.
Bettes Affid. ¶16; Howell Affid. ¶8; Matko
TBG also insists that it has stated a claim for tortious
interference with prospective business relationships in alleging
that the pending sham lawsuit against KPMG made it impossible for
TBG to negotiate contracts with new clients. Since TBG has alleged
that in the New York lawsuit the members of TBG who were formerly
employed by BIA have improperly incorporated BIA’s proprietary
materials into its teaching materials, no new client will risk
being a party to the claimed improper actions of TBG.
stated all the elements of such a claim:
Thus it has
(1) there is a reasonable
probability that TBG could have contracted with a number of other
companies; (2) the filing of the lawsuit against KPMG, while not
illegal, is an abuse of process; (3) BIA would clearly know and
intend that suing its former client for hiring TBG would interfere
with TBG’s ability to do business; and (4) TBG has suffered actual
Next TBG insists it has stated a claim for defamation.
now claims that it has never been TBG’s contention that BIA
committed defamation by filing a sham lawsuit.
It claims that its
defamation claim is that BIA communicated outside of the lawsuit
with KPMG to claim the TBG misappropriated and used its proprietary
and confidential information.
Finally TBG opposes a stay as premature because KPMG has filed
a motion in the New York case to abate that suit and it has been
argued and taken under advisement, long before BIA filed its motion
Moreover a stay is nonsensical because TBG is not a
party to the New York action and does not appear to be amenable to
service in New York, so the New York Court would have to decide
what is before this court, i.e., whether TBG incorporated into its
training sessions KPMG BIA’s Strategic Information Collection
Materials without having TBG before the court.
The New York judge
in a hearing in New York (transcript Ex. A to #16 at p. 13, ll. 47) has declared, “If that is an issue the Texas court is going to
decide, I don’t want to decide it.
I am not going to make a
decision that is going to effect [sic] a company that is not in
Finally, TBG points out that BIA has not presented any
admissible evidence to dispute TBG’s factual allegations, but only
statements of counsel and unsworn testimony of witnesses.
BIA’s Last Reply (#17)
Also with leave of Judge Stacy, BIA’s “last reply” asserts
that TBG’s Sur-Reply fails to address any of the substantive
jurisdictional issues set forth previously by BIA, but makes new,
ineffective arguments, belatedly requests discovery, and rehashes
its old arguments.
BIA insists that a single factual statement about Bettes’
breach of his confidentiality agreement with BIA does not subject
BIA to the personal jurisdiction of Texas courts as a continuing
contractual obligation to the resident of the forum state. BIA has
not brought any claim for relief against Bettes, who is not a party
to this action and the propriety of whose conduct is not before the
Court, and there is no mention of Bettes and his confidentiality
agreement in the Original Petition. Specific jurisdiction requires
that the lawsuit arise out of or be related to the defendant’s
contact with the forum.
AllChem, 878 F. Supp. 2d at 786-87.
unilateral and which occurred after TBG filed this suit, so there
is no specific jurisdiction based on it.
The Court agrees.
Instead TBG’s claims are based solely on the New York lawsuit filed
BIA insists that additional discovery is both unnecessary and
TBG has not made a preliminary showing of
jurisdiction, nor identified the discovery needed, what it would
uncover, or how the discovery would support its claim that BIA is
subject to the personal jurisdiction of Texas courts.
agrees here, too.
The arguments on whether TBG has stated a claim are merely
rehashes of earlier submissions.
The one new claim, that BIA’s
suit against KPMG in New York is an abuse of process, does not meet
the elements of well established Texas law regarding such a claim:
“(1) that the defendant made an illegal, improper, perverted use of
the process; (2) that the defendant had an ulterior motive or
purpose in exercising such illegal, perverted, or improper use of
process; and (3) that damage resulted to the plaintiff from the
Detenbeck v. Koester, 886 S.W. 2d 477, 480 (Tex.
App.--Houston [1st Dist.] 1994).
BIA emphasizes that it has not
sued TBG nor had any process issued against TBG, so TBG lacks
Furthermore, “[t]o constitute an abuse of process, the process must
be used to accomplish an end which is beyond the purview of the
process, and which compels a party to do a collateral thing which
he would not be compelled to do. . . .
When the process is used
for the purpose for which it is intended even though accompanied by
an ulterior motive, no abuse of process occurs.”
Blackstock v. Tatum, 396 S.W. 2d 463, 468 (Tex. App.--Houston [1st
Dist.] 1965, no writ)(“As we understand it, abuse of process
consists not in the filing and maintenance of a civil action, but
rather in the perversion of some process issued in the suit after
The process referred to in the cases is not in the
filing and maintenance of a civil action, but in the wrongful use
of a writ issued in the suit.
The writ or process must be used in
a manner or for a purpose for which it is not by law intended and
the use must interfere with the person or property of another.
TBG has not pleaded that BIA improperly used any process
issued in the New York action, but only that BIA filed and is
maintaining the action.
TBG’s last-minute attempt to change its
theory of recovery does not cure the incurable defects in its
TBG also fails in its attempt to save its defamation claim by
alleging as defamation per se that “BIA intended to harm TBG in its
business and its reputation, to expose TBG to contempt, ridicule
and financial injury, and to impeach TBG’s honesty and integrity.”
BIA points out that neither Texas nor New York law recognizes a
claim for defamation per se on any of those grounds.
under both, defamation per se requires the publication of an untrue
statement (1) charging a person with a serious crime; (2) that
profession; (3) that the plaintiff has a loathsome disease; or (4)
imputing unchastity to a woman.
Liberman v. Gelstein, 80 N.Y. 2d
429, 435, 605 NE 2d 344, 348 (1992); In re Lipsky, 460 S.W. 3d 579,
596 (Tex. 20150.
TBG does allege that BIA intended to harm TBG in
its business, but not that any statement by BIA tended to injure
another or that TBG had actually been harmed by any of BIA’s
TBG’s intent allegation fails to state a claim for
defamation per se.
As for a stay of this action, BIA highlights the fact that
even though KPMG’s motion to dismiss has been pending for months in
the New York Court, that judge has not stayed the case nor limited
discovery, and has indicated that she would not do anything that
might prejudice a nonparty to the suit.
While TBG’s submission of
interests in the New York suit that need to be protected, BIA
disagrees and states that the New York judge can resolve the
contract action between BIA and KPMG without finding any wrongdoing
More to the point, TBG can move to intervene in that suit
to protect its interests; instead it is using the existence of two
suits to force BIA to litigate in two courts.
This Court has not held a hearing and has restricted its
materials submitted as attachments to the motion and the briefs
during the quite extensive dispute by the parties.
Thus TBG must
jurisdiction over BIA.
The Court construes all disputed and
uncontroverted facts in favor of TBG.
Nevertheless, there is
little in the way of factual allegations and many vague and
conclusory statements in its briefs.
After a careful review the
Court concludes that TBG has failed to satisfy its burden to show
that this Court has personal jurisdiction over the instant suit.
The Court agrees with BIA that BIA lacks continuous and
systematic contacts with Texas and that it has not purposefully
availed itself of the benefits and protections of Texas to warrant
personal jurisdiction over it in that state.
Even eight to ten
years ago when its had it most contacts with Texas, during the
short two-year employment of Bettes from 2007-2009, he was the sole
BIA employee in Texas, Bettes’ office in his home was the sole BIA
nonresident clients over years
are not substantial, no less
availed itself of the benefits and protections of Texas laws.
Compared with the far greater
number and durability of the
contacts in Helicoperos and other cases cited by the Court which
were determined to be insufficient to support personal jurisdiction
in Texas, these are woefully inadequate for such a purpose.
pp. 1-12 & n.8 of this Opinion and Order.
A court’s exercise of specific jurisdiction is appropriate
only when the non-resident defendant’s contacts with the forum
state arise from, or are directly related to each cause of action.
Helicopteros, 466 U.S. at 414 n.8; Gardemal v. Westin Hotel, 186
F.3d 588, 592 (5th Cir. 1999).
As BIA has shown in great detail,
TBG’s claims against BIA in this suit (tortious interference with
existing and prospective contract and defamation per se) were not
directed toward Texas, but were focused on alleged wrongdoing in
New York, and evidenced by allegations in BIA’s New York suit
against KPMG, contractual relationship (based on separate contracts
than those at issue in this Court) between the two parties arose,
and their contract contained a New York forum selection clause and
choice-of-New-York-law clause. Despite TBG’s efforts to obfuscate
the fact, the instant suit did not arise out of Bettes’ contacts
with Texas, which took place long before this suit was filed, which
did not name Bettes as a party, and in which Bettes is not only not
the focus, but a “bit player.”
jurisdictional facts before the Court rules on BIA’s motion to
dismiss, the Court finds that TGB has not met the “preliminary
showing of jurisdiction.”
Fielding, 415 F.3d at 429. TGB has When
the lack of personal jurisdiction is clear, discovery would serve
no purpose and should not be permitted.”
Kelly v. Syria Shell
Petroleum v. B.V., 213 F.3d 841, 855 (5th Cir. 2000)(denying
discovery where plaintiffs failed to “describe the discovery they
contend should have been allowed, what facts they hoped to obtain
from such discovery, or how it would produce information that would
support specific jurisdiction.
Wyatt, 686 F.2d at 284.
may also deny jurisdictional discovery where the plaintiff only
offers speculation as to jurisdiction and where the plaintiff is
waging a ‘fishing expedition’ into jurisdictional facts.”
Strategic Global Inv. Capital, Inc. v. Burger King Europe Gmbh,
2015 WL 41622599, at *6 (N.D. Tex. July 9, 2015)(”When seeking
‘preliminary showing of jurisdiction’ before being entitled to such
discovery.”)(citing Fielding v. Hubert Burda Media, Inc., 415 F.3d
419, 429 (5th Cir. 2005)). Instead TBG has only offered speculation
as to jurisdiction” and “is waging a ‘fishing expedition’ into
jurisdictional facts.” SGIC Strategic Global Inv. Capital, Inc. v.
Burger King Europe GmbH, Civ. A. No. 3:14-CV-3300-B, 2015 WL
41622599, at *6 (N.D. Tex. July 9, 2015).
Thus the Court denies
the motion for limited discovery of jurisdictional facts.
TBG has also filed a motion for leave to amend, well after the
personal jurisdiction issue was raised on April 4, 2016 and then
extensively briefed, giving TBG clear notice of a potential fatal
deficiency, and only on the last day that the docket control
schedule permitted the filing of an amended complaint.
was still open until January 30, 2017, but TBG apparently failed to
garner any new jurisdictional facts in that almost nine-month
The Court denies the request for leave to amend based on
futility and undue delay.
TBG’s proposed First Amended Complaint
(Ex. to #18) does not provide any new jurisdictional facts nor
state a prima facie case of personal jurisdiction over BIA in Texas
and thus does not cure the deficiency. In fact, the motion clearly
states, “The purpose of the amendment is, primarily, to comply with
federal formatting and pleading requirements,” which seemingly
ignored the personal jurisdiction issue despite the dispute.
“Where a complaint, as amended, would be subject to
dismissal, leave to amend need not be granted.”
Woodley, 405 F.2d 496, 497 (5th Cir. 1968), citing Foman v. Davis,
371 U.S. 178 (1962).
Since the Court denies additional discovery,
the motion for leave to amend is denied as futile.
The parties do not address the question what legal source
authorizes a federal court to stay or dismiss itself to allow a
state court action, with different parties and different issues, to
The Court’s research, discussed supra, has found none
and accordingly denies BIA’s motion to stay or dismiss this suit.
jurisdiction over BIA, and for that reason this case must be
dismissed without prejudice.
Because the Court lacks personal jurisdiction over BIA, it
does not reach the motion to dismiss under Rule 12(b)(6).
Accordingly, for the reasons state above, the Court
ORDERS that BIA’s motion to dismiss for lack of personal
jurisdiction over BIA under Rule 12(b)(2) is GRANTED.
SIGNED at Houston, Texas, this
February , 2017.
UNITED STATES DISTRICT JUDGE
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