Anadarko E&P Onshore, LLC v. Mary Marshall Smith Trust Under Will Dated October 24, 1977, Fbo Katharine M. Marshall, Wells Fargo Bank, N.A.

• Decision Date: 12 August 2016
• Docket Number: Civ. A. H-14-3168
• Parties: ANADARKO E&P ONSHORE, LLC, Plaintiff, v. MARY MARSHALL SMITH TRUST UNDER WILL DATED OCTOBER 24, 1977, FBO KATHARINE M. MARSHALL, WELLS FARGO BANK, N.A., TRUSTEE; MARY MARSHALL SMITH TRUST UNDER WILL DATED OCTOBER 24, 1977, FBO MARGARET MURDOCH, WELLS FARGO BANK, N.A., TRUSTEE; MARY MARSHALL SMITH TRUST UNDER WILL DATED OCTOBER 24, 1977, WELLS FARGO BANK, N.A., TRUSTEE; PETE AND SALLY SMITH FOUNDATION; and MICHIGAN 4-H FOUNDATION, Defendants.
• Court: U.S. District Court — Southern District of Texas

ANADARKO E&P ONSHORE, LLC, Plaintiff, v. MARY MARSHALL SMITH TRUST UNDER WILL DATED OCTOBER 24, 1977,FBO KATHARINE M. MARSHALL, WELLS FARGO BANK, N.A.,TRUSTEE; MARY MARSHALL SMITH TRUST UNDER WILL DATED OCTOBER 24, 1977,FBO MARGARET MURDOCH, WELLS FARGO BANK, N.A.,TRUSTEE; MARY MARSHALL SMITH TRUST UNDER WILL DATED OCTOBER 24, 1977,WELLS FARGO BANK, N.A., TRUSTEE; PETE AND SALLY SMITH FOUNDATION;and MICHIGAN 4-H FOUNDATION, Defendants.

Civ. A. H-14-3168

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF TEXAS HOUSTON DIVISION

August 12, 2016

OPINION AND ORDER OF DISMISSAL

Pending before the Court in the above referenced cause, alleging breach of contract, money had and received, and fraudulent transfer under Texas Uniform Fraudulent Transfer Act ("TUFTA" or "UFTA"), Texas Business & Commerce Code §§ 24.005 and 24.006(a), or, alternatively, under South Carolina Code Ann. § 27-23-10,¹ and seeking to recover mistaken payments of mineral royalties to the Trust Defendants² and organizations, is DefendantMichigan 4-H Foundation's ("Michigan 4-H's") amended motion to dismiss all claims against it in Plaintiff Anadarko E&P Onshore's ("Anadarko's") Second Amended Complaint³ for lack of personal jurisdiction⁴ under Federal Rule of Civil Procedure 12(b)(2), and, alternatively, dismissal of the breach of contract cause of action for failure to state a claim upon which relief can be granted under Fed. R. of Civ. P. 12(b)(6)(instrument #30).

Michigan 4-H, a Michigan charity with its principal place of business in Michigan (Affidavit of Cheryl Howell ("Howell"), Executive Director of Michigan 4-H, #30, Ex. A, ¶ 3), states that Anadarko concedes that it made the mistaken payments to the Trust Defendants, but not to Michigan 4-H. It further maintains that its only connection to the payments, if any, is that it participated in a South Carolina litigation with two South Carolina entities, in which the Trust Defendants paid Michigan 4-H $2.25 million in cash and a 33.33252 percent portion of a royalty interest in mineral leases⁵ in Dimmit County, Texas as part of the settlement of the case. Michigan 4-H contends that it is not subject to specific or general personal jurisdiction in Texas.While it admits that, as a result of the South Carolina settlement agreement, it now owns a fractional share of a Texas mineral interest, its only contact with Texas, Michigan 4-H did not receive that interest until after Anadarko made the mistaken payments to the Trust Defendants. Michigan 4-H further states that Anadarko's new allegation that Michigan 4-H hired Texas legal counsel to evaluate the mineral interests before the settlement of the South Carolina case is not true. Ex. A, Howell Affidavit at ¶ 16.

Moreover, for the first time, in its Second Amended Complaint, Anadarko now conclusorily asserts that Michigan 4-H in some way "adopted" the Trust Defendants' division orders⁶ withAnadarko, and that the breach of contract claim against Michigan 4-H "arises out of" Anadarko's division orders with the Trust Defendants. Michigan 4-H objects that the record clearly demonstrates that there was no such contract between Anadarko and Michigan 4-H and that the terms of the division orders do not apply to Michigan 4-H because it never availed itself of anything in Texas that relates to Anadarko's claimed prior mistaken payments to the Trust Defendants.

If the Court does not dismiss the claims for lack of personal jurisdiction, alternatively Michigan 4-H urges the Court to dismiss the breach of contract claim against Michigan 4-H for failure to state a claim.

Standards of Review

Fed. R. Civ. P. 12(b)(2)

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 jurisdiction over the defendant. Luv N' Care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 469 (5^th Cir. 2006), citing Wyatt v. Kaplan, 686 F.2d 276, 280 (5^th Cir. 1982). "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 (5^th 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 (5^th Cir. 1990).

At the pretrial stage of litigation, if the district court does not conduct a hearing on personal jurisdiction, the plaintiff need only present a prima facie case of personal jurisdiction. Wilson v. Belin, 20 F.3d 644, 648 (5^th Cir.), cert. denied, 513 U.S. 930 (1994); Felch v. Transportes Lar-Mex S.A. DE CV, 92 F.3d 320, 325 (5^th Cir. 1996); Johnston v. Multidata Systems Intern. Corp., 523 F.3d 602, 609 (5^th Cir. 2008). Proof by preponderance of the evidence is not required. Johnston, 523 F.3d at 609.⁷ When a defendant disputes factual bases for personaljurisdiction, the district court may consider the record before it, including "affidavits, interrogatories, depositions, oral testimony, or any combination of the recognized methods of discovery." Quick Technologies, Inc. v. Sage Group PLC, 313 F.3d 338, 344 (5^th Cir. 2002)(quoting Thompson v. Chrysler Motors Corp., 755 F.3d 1162, 1165 (5^th 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. Walk Haydel, 517 F.3d at 241. On a motion to dismiss under Rule 12(b)(2), uncontroverted allegations in plaintiff's complaint are taken as true, and conflicts between facts in the parties' affidavits must be resolved in plaintiff's favor for purposes of the prima facie case of personal jurisdiction. Johnston, 523 F.3dat 609; Kelly Law Firm, 679 F. Supp. 2d at 762; Revell v. Lidov, 317 F.3d 467, 469 (5^th Cir. 2002). Nevertheless, the court is not required to credit conclusory allegations even if they are uncontroverted. Panda Brandywine Corp. v. Potomac Elec. Power Co., 253 F.3d 865, 869 (5^th Cir. 2001).

A court must find that it has personal jurisdiction over that defendant before it makes any decision on the merits. Sinochem 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 (5^th Cir. 1999)("Personal jurisdiction is an essential element of the jurisdiction of a district court, without which it is powerless to proceed to an adjudication.").

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 (5^th Cir. 2001). A federal court sitting in diversity, as is the case in this action, may exercise personal jurisdiction over a nonresident defendant if the forum state's long-arm statute confers personal jurisdiction over that nonresident defendant and if the exercise of personal jurisdiction satisfies due process under the United States Constitution. McFadin v. Gerber, 587 F.3d 753, 759 (5^th Cir. 2009), citing Moncrief Oil Int'l, Inc. v. OAO Gazprom, 481 F.3d 309, 311 (5^th Cir. 2007). The Texas long-arm statute, Texas Civil Practice andRemedies Code §§ 17.0421-.045,⁸ 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 *3 (5^th Cir. Dec. 12, 2011), citing Stroman Realty, Inc. v. Antt, 528 F.3d 382, 385 (5^th Cir. 2008). Thus a plaintiff in a diversity action in federal court in Texas⁹ 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 substantial justice. 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 (5^th Cir. 2000); Moncrief Oil Int'l, Inc. v. OAO Gazprom, 481 F.3d 309, 311 (5^th Cir. 2007).

Personal jurisdiction can be either specific or general jurisdiction. Mink v. AAAA Develop., LLC, 190 F.3d 333, 336 (5^thCir. 1999). "Where a defendant 'has continuous and systematic general business contracts' 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 contacts]." Luv N' Care, 438 F.3d at 469, citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415 (1984). See also Access Telecom, Inc. v. MCI Telecomms. Corp., 197 F.3d 694, 717 (5^th Cir. 1999)("General jurisdiction can be assessed by evaluating contacts of the defendant with the forum over a reasonable number of years, up to the date the suit was filed."), cert. denied, 531 U.S. 917 (2000). "[T]he minimum contacts inquiry is broader and more demanding when general jurisdiction is alleged, requiring a showing of substantial activities in the forum state. Jones v. Petty-Ray Geophysical Geosource, Inc., 954 F.2d 1061, 1068 (5^th Cir.), cert. denied, 506 U.S. 867 (1992). "[V]ague and overgeneralized assertions that give no indication as to the extent, duration, or frequency of contacts are insufficient to support general jurisdiction." Johnston, 523 F.3d at 610.¹⁰

If the defendant has relatively few contacts, the court may still exercise specific personal jurisdiction over that par...