Opinion
Civil Action No. 3:00-CV-1900-D
April 18, 2001
MEMORANDUM OPINION AND ORDER
Defendant Nye Lavalle ("Lavalle") moves the court to dismiss this action for lack of personal jurisdiction or, alternatively, to dismiss it based on improper venue, or to transfer it to the Northern District of Georgia for the convenience of the parties and witnesses. He also moves for summary judgment. Plaintiffs The Bear Stearns Companies, Inc. ("Bear Stearns") and EMC Mortgage Corporation ("EMC") move for leave to file a first amended and first supplemental complaint and application for permanent injunction ("amended complaint"). For the reasons that follow, the court denies Lavalle's motions and grants plaintiffs' motion.
Lavalle moves the court to dismiss the case with prejudice. See D. Mot. Dis. at 1. A dismissal for lack of personal jurisdiction, however, is without prejudice because it is not based on the merits.
To the extent that Lavalle by his motion seeks to dismiss this action for failure to state a claim on which relief can be granted, see Mot. Dis. at 1, or on the ground that the court lacks jurisdiction because he will consent to a permanent injunction, thus eliminating any justiciable controversy, id. at 2, or to transfer back to Lavalle all domain names that have been deposited in the court's registry and that are not confusingly similar, see id., the court denies the motion. Because the court is today granting plaintiffs' motion for leave to amend, they seek broader relief than that to which Lavalle consents. Additionally, Lavalle has not established at this preliminary stage that he is entitled to obtain final relief in the form of the transfer of domain names from the court registry.
I
The relevant background facts of this action are set out in the court's October 27, 2000 memorandum opinion and need not be repeated at length. In his opposition to plaintiffs' application for a preliminary injunction, Lavalle included assertions that, liberally construed based on his pro se status, the court considered to be challenges to this court's personal jurisdiction over him and to venue. See Oct. 27, 2000 Mem. Op. at 3-4 3 n. 3. The court held, in pertinent part:
Although Lavalle has apparently preserved a challenge to this court's personal jurisdiction, he has not adequately briefed the issue. He addresses neither the controlling legal authorities nor the evidence that is relevant to whether plaintiffs have established a prima facie case. Therefore, if he intends to seek dismissal for lack of personal jurisdiction, he must, within 20 days of the date this memorandum opinion is filed, file a separate brief and, if he intends to challenge the jurisdictional allegations of plaintiffs' complaint, file his evidentiary materials in the required appendix.Id. at 4.
This objection may also be intended as a challenge to this court's venue. Although Lavalle has not waived dismissal on this basis, he must adequately brief the issue by filing a brief within 20 days of the date this memorandum opinion is filed.Id. at 3 n. 3. Lavalle thereafter filed on November 20, 2000 the briefing required by the court's opinion. He also included an alternative motion for summary judgment. The court now addresses his challenges to jurisdiction and venue, his alternative motion for summary judgment, and plaintiffs' motion for leave to amend.
II
EMC and Bear Stearns have shown good cause to file an amended complaint. Based on conduct that Lavalle has undertaken since plaintiffs filed this lawsuit, plaintiffs seek leave to allege additional claims under Texas law for assault, intentional infliction of emotional distress, stalking, trespass, and tortious interference with prospective business relations. They contend that Lavalle has stepped up his campaign of harassment and intimidation and seek to add claims to prevent and seek compensation for torts he has committed in the course of undertaking such conduct.
Plaintiffs are not adding these claims for strategic delay. The conduct on which they rely occurred after they filed their complaint on August 29, 2000. This constitutes sufficient good cause to grant leave to amend. Accordingly, plaintiffs' motion is granted. They shall file their amended complaint within 15 days of the date this memorandum opinion and order is filed.
III
Lavalle moves to dismiss this action on the ground that the court lacks personal jurisdiction. He contends that he is a Georgia resident who sent e-mail from Georgia and Florida to Bear Stearns at Bear.com and Bear Stearns' principal place of business is in New York, and its servers are located in New York and New Jersey. Lavalle argues that he traveled to Texas to participate in litigation that plaintiffs undertook illegally, criminally, and fraudulently, and that all e-mails that he sent were directed to New York, not Texas.
A
The determination whether a federal district court has personal jurisdiction over a nonresident defendant is bipartite: the court first ascertains whether the law of the state in which it sits confers jurisdiction over the person of the defendant; if it does, the court then decides whether the exercise of jurisdiction would comport with the basic due process requirements of the United States Constitution. Inter First Bank Clifton v. Fernandez, 844 F.2d 279, 282 (5th Cir.), modified on other grounds, 853 F.2d 292 (1988). Because the Texas long-arm statute extends to the limits of due process, Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex. 1991), the court considers only whether exercising jurisdiction over Lavalle satisfies the due process requirements imposed by the Constitution. See Inter First Bank, 844 F.2d at 282.
The due process inquiry further divides into two parts: the first is whether the nonresident defendant purposefully established "minimum contacts" with Texas; and, if so, the second is whether the exercise of jurisdiction results in "fair play and substantial justice." Id. (citing Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 105 (1987); Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476 (1985)).
A defendant's contacts with the forum may support either specific or general jurisdiction over the defendant. See id at 283. A court has specific jurisdiction if the suit arises out of or is related to the defendant's contacts with the forum state. Id. A court may exercise general jurisdiction, even if the suit does not arise out of contacts with the forum state, if the defendant has maintained "continuous and systematic" contacts with the forum. Id. In the present case, Bear Stearns and EMC maintain that the court has both general and specific jurisdiction over Lavalle.
The unilateral activity of a plaintiff cannot form the basis for the exercise of jurisdiction over a nonresident defendant. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 298 (1980) (citing Hanson v. Denckla, 357 U.S. 235, 253 (1958)). Rather, the nonresident must purposefully avail itself of the benefits and protections of the forum's laws. Id. at 297. The defendant's contacts with the forum state must be such that it should "reasonably anticipate being haled into court there." Id; Union Carbide Corp. v. UGI Corp., 731 F.2d 1186, 1190 (5th Cir. 1984).
Where, as here, the court considers the motion to dismiss without conducting an evidentiary hearing, plaintiffs, as the parties who seek to invoke this court's jurisdiction, shoulder only the burden of proving a prima facie case for jurisdiction. Bullion v. Gillespie, 895 F.2d 213, 216-17 (5th Cir. 1990). See Ham v. La Cienega Music Co., 4 F.3d 413, 415 (5th Cir. 1993) ("Plaintiffs typically carry the burden of proof on personal jurisdiction by making a prima facie showing. The district court usually resolves the jurisdictional issue without conducting a hearing." (footnote omitted)). The uncontroverted allegations of plaintiffs' amended complaint are to be taken as true, and conflicts between the facts contained in the parties' affidavits must be resolved in plaintiffs' favor for the purpose of determining whether a prima facie case for personal jurisdiction exists. See Brown v. Flowers Indus., Inc., 688 F.2d 328, 332 (5th Cir. 1982).
B
In Calder v. Jones, 465 U.S. 783 (1984), "the Supreme Court held that when an alleged tort-feasor's intentional actions are expressly aimed at the forum state, and the tort-feasor knows that the brunt of the injury will be felt by a particular resident in the forum, the tort-feasor must reasonably anticipate being haled into court there to answer for its tortious actions." Southmark Corp. v. Life Investors, Inc., 851 F.2d 763, 772 (5th Cir. 1988) (citing Calder, 465 U.S. at 789-790). The Fifth Circuit recently applied this principle in Wien Air, holding that "even a single act" directed toward a forum state that gives rise to a cause of action "can support a finding of minimum contacts." Wien Air Alaska, Inc. v. Brandt, 195 F.3d 208, 211 (5th Cir. 1999).
Plaintiffs have introduced prima facie evidence that Lavalle made numerous harassing telephone calls and sent harassing e-mails to plaintiffs' employees, amounting to deliberate tortious acts aimed at Texas. See Ps. Br. at 7-8 (citing Ps. App.) These facts support specific jurisdiction. Plaintiffs have also established a prima facie case that Lavalle damaged EMC's property after EMC had been given the right to repossess it. See id. 8. This damage supports plaintiffs' claim for trespass. At a minimum, this combination of activity intentionally harmed plaintiffs in Texas and therefore subjects Lavalle to specific jurisdiction in this forum.
A principal thrust of Lavalle's jurisdictional challenge rests on the premise that he did not purposely avail himself of the privilege of conducting activities in Texas because he sent e-mail messages from Georgia and Florida to Bear Stearns, whose principal place of business is located in New York and whose routers, systems, and servers are situated in New York and New Jersey. He maintains that his communications were directed at New York, not Texas. As the court has already explained, Lavalle directed at least some conduct toward Texas and these tortious acts are sufficient to sustain specific jurisdiction here even if the court disregards other alleged contacts.
Moreover, this is not a case like the hypothetical one that Lavalle posits, in which a defendant makes a threatening call to one telephone number, and because the recipient has forwarded his calls to another forum, he brings suit in the forum where he received the forwarded call. In that instance, jurisdiction would be impermissible in the forum to which the call was forwarded because it would be based on the unilateral act of the plaintiff in forwarding his calls, and the defendant could not reasonably anticipate being haled into that forum. The better analogy is this one. A defendant places a threatening call to the New York telephone number of a plaintiff who he knows, before he initiates the call, has forwarded his calls to Texas and is answering them there. Despite the fact that the call is made to a New York telephone number, the defendant can reasonably anticipate being haled into court in Texas because the defendant has knowingly aimed his intentional actions at Texas and knows that the plaintiff will feel the brunt of the injury in Texas.
Because plaintiffs have established a prima facie case of specific jurisdiction, the court need not address whether they have demonstrated general jurisdiction.
C
The court must next decide whether exercising personal jurisdiction over Lavalle in this forum will offend traditional notions of fair play and substantial justice.Lavalle first offers what in essence is a merits-based argument, in which he contends that he is willing to abide permanently by the terms of the preliminary injunction entered against him and to honor other conditions to end the lawsuit, and contends that plaintiffs' desire to continue the litigation against him is unwarranted. This argument is inadequate to support a finding in Lavalle's favor. Despite his agreement to abide permanently by the terms of the preliminary injunction, plaintiffs seek broader relief than the injunction alone would provide.
Lavalle asserts second that Texas does not have a strong interest in providing plaintiffs a remedy. When minimum contacts have been established, often the interests of the plaintiffs and the forum state justify burdens on the defendant. See Kervin v. Red River Ski Area, Inc., 711 F. Supp. 1383, 1394 (E.D.Tex. 1989) (citing Asahi, 480 U.S. at 114). When the plaintiffs are residents of the forum state, and some or all of the predicate tortious actions took place in that state, the forum state has a strong interest in providing a remedy to the aggrieved plaintiffs. Holt Oil Gas Corp. v. Harvey, 801 F.2d 773, 779-780 (1986). A defendant may defeat personal jurisdiction, however, by presenting a compelling case that the presence of some other considerations would render jurisdiction unreasonable. Burger King, 471 U.S. at 477. Lavalle must show that conducting litigation in this court would be so gravely difficult and inconvenient that he would be at a severe disadvantage in comparison to plaintiffs. Id at 478.
The State of Texas has an interest in providing its residents with a convenient forum for redressing injuries allegedly inflicted by out of state actors. See id. at 473. Lavalle has not demonstrated that he will incur a burden that outweighs the interests of Texas and the plaintiffs in litigating this matter in this forum. See Gundle Lining Constr. Corp. v. Adams County Asphalt, Inc., 85 F.3d 201, 207 (5th Cir. 1996). The court therefore holds that exercising jurisdiction over Lavalle will not offend traditional notions of fair play and substantial justice.
Accordingly, this court denies Lavalle's motion to dismiss for lack of personal jurisdiction.
IV
Lavalle moves in the alternative to dismiss this case for improper venue, pursuant to 28 U.S.C. § 1406(a), or to transfer venue to the Northern District of Georgia, pursuant to 28 U.S.C. § 1404(a).
A
Section 1406(a) provides that "[t]he district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought." A defendant moving to dismiss under Fed.R.Civ.P. 12(b)(3) on the ground of improper venue bears the burden of demonstrating that the plaintiff filed the lawsuit in an improper venue. See Myers v. American Denial Ass'n, 695 F.2d 716, 724-25 (3d Cir. 1982). Lavalle has not met this burden. Venue is proper in Texas because it is a "judicial district in which a substantial part of the events or omissions giving rise to the claim occurred." 28 U.S.C. § 1391(a)(2). Lavalle's motion to dismiss under § 1406(a) is denied.
B
Lavalle also moves to transfer venue pursuant to 28 U.S.C. § 1404(a). Section 1404(a) provides that "[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." The decision to transfer is made to prevent waste of time, energy, and money and to protect litigants, witnesses, and the public against unnecessary inconvenience and expense. Stabler v. New York Times Co., 569 F. Supp. 1131, 1137 (S.D. Tex. 1983). The court considers several non-exclusive factors in making its decision, including (1) plaintiff's choice of forum; (2) the availability of compulsory process for the attendance of unwilling witnesses; (3) the cost of obtaining the attendance of willing witnesses; (4) the accessibility and location of sources of proof; (5) the relative congestion of the courts' dockets; (6) the accessibility of the premises to jury view; (7) the relation of the community in which courts and the jurors are required to serve to the occurrence giving rise to the suit; and (8) the time, cost, and ease with which the trial can be conducted, and all other practical considerations relative to the trial and determination of the case. Fletcher v. Southern Pac. Transp. Co., 648 F. Supp. 1400, 1401 (E.D. Tex. 1986); Greiner v. American Motor Sales Corp., 645 F. Supp. 277, 278 (E.D. Tex. 1986). The moving party must make a particularized showing regarding why transfer is necessary, including identification of key witnesses and the general content of their testimony. Young v. Armstrong World Indus., Inc., 601 F. Supp. 399, 401-02 (N.D. Tex. 1984) (Sanders, J.). The court may not transfer venue where the result will be merely to shift the burden of the trial from one party to the other. Enserch Int'I Exploration, Inc. v. Attock Oil Co., 656 F. Supp. 1162, 1167 n. 15 (N.D. Tex. 1987) (Fitzwater, J.).
Under the rubric of his § 1404(a) motion, Lavalle advances arguments that are akin to his challenges to personal jurisdiction and venue in the Northern District of Texas. The court need not addresses these arguments because it has already determined that jurisdiction and venue are proper in this forum.
Lavalle has not demonstrated that the case should be transferred. He maintains that the majority of his witnesses, books, records, and evidence are located in Atlanta, but that the majority of plaintiffs' witnesses are located in New York. [D. Br. at 8] He does not, however, identify any witness other than himself and does not disclose the content of any witness' testimony. He has therefore failed to make the required showing to justify a transfer. See Young, 601 F. Supp. at 401-02 (holding that moving party must identify key witnesses and general content of their testimony).
Lavalle also argues that he is a pro se defendant who does not have the financial resources to litigate the case in Texas and will likely be required to accept a summary or default judgment. He argues that if the case is transferred to Atlanta, there is a greater likelihood that he can obtain counsel on a pro bono or reduced-fee basis to defend his First Amendment and shareholder rights. His financial condition does not warrant a § 1404(a) transfer under the circumstances of the present case. Plaintiffs make serious allegations of torts that Lavalle has committed in Texas. If these assertions prove to be true, it would be doubly unjust to reach a result that effectively requires that parties injured in Texas must seek a remedy in the forum that is convenient for the wrongdoer.
Lavalle maintains that because Bear Stearns is headquartered in New York City and EMC does business in Dallas, Atlanta is approximately equidistant, thus presenting a convenient forum. The proper comparison, however, is plaintiffs' choice of forum versus the forum to which defendant seeks a transfer. In this more relevant context, Lavalle has not met the § 1404(a) standard for obtaining a transfer.
Lavalle's motion to transfer is denied.
V
Lavalle moves in the alternative for summary judgment. Because he has not made the required showing to obtain such relief — regardless whether the court applies the standard that applies when the movant will have the burden of proof on an issue at trial, or the standard that governs when the movant will not have the burden of proof — his motion is denied.
* * *
Plaintiffs' January 12, 2001 motion to file an amended complaint is granted. Defendant's November 20, 2000 motion to dismiss or in the alternative for summary judgment or change of venue and transfer of domain names from registry of court is denied.