Danziger & De Llano, L. L.P. v. Morgan Verkamp, L. L.C.

• Court: U.S. Court of Appeals — Fifth Circuit
• Writing for the Court: Stephen A. Higginson, Circuit Judge
• Citation: Danziger & De Llano, L. L.P. v. Morgan Verkamp, L. L.C., 24 F.4th 491 (5th Cir. 2022)
• Decision Date: 27 January 2022
• Docket Number: No. 21-20186,21-20186
• Parties: DANZIGER & DE LLANO, L.L.P., Plaintiff—Appellant, v. MORGAN VERKAMP, L.L.C.; Frederick M. Morgan, Jr., Esquire; Jennifer Verkamp, Esquire, Defendants—Appellees.

24 F.4th 491

DANZIGER & DE LLANO, L.L.P., Plaintiff—Appellant,

v.MORGAN VERKAMP, L.L.C.; Frederick M. Morgan, Jr., Esquire; Jennifer Verkamp, Esquire, Defendants—Appellees.

No. 21-20186

United States Court of Appeals, Fifth Circuit.

FILED January 27, 2022

Brian Douglas Melton, Adam Tisdall, Susman Godfrey, L.L.P., Houston, TX, for Plaintiff-Appellant.

Sarah Mary Frazier, Law Office of Sarah Frazier, P.L.L.C., Houston, TX, Tejinder Singh, Goldstein & Russell, P.C., Bethesda, MD, George D. Jonson, Esq., Montgomery Jonson, L.L.P., Cincinnati, OH, for Defendants-Appellees.

Before Davis, Higginson, and Engelhardt, Circuit Judges.

Stephen A. Higginson, Circuit Judge:

Danziger & De Llano, LLP, a Texas resident, sued Morgan Verkamp, LLC, and two of its members, all non-residents of Texas. The Texas-based district court granted the defendants' motion to dismiss for lack of personal jurisdiction. We AFFIRM.

I.

On January 15, 2020, Danziger & De Llano, LLP, ("Danziger") filed a complaint in the United States District Court for the Southern District of Texas against Morgan Verkamp, LLC, and two of its members, Frederick M. Morgan, Jr., and Jennifer Verkamp (collectively "Morgan Verkamp").¹ The complaint, which raises claims of fraud, unjust enrichment, tortious interference with prospective contractual relations, and breach of contract, alleges the following relevant facts.

Danziger is a Texas-based law firm. Frederick Morgan and Jennifer Verkamp are attorneys residing in Ohio, and Morgan Verkamp, LLC, is an Ohio-based law firm. In 2006, Danziger referred two qui tam matters to Morgan Verkamp. The parties agreed to split the attorneys' fees in both cases, with 33 percent going to Morgan Verkamp, 33 percent to Danziger, and the remaining 34 percent divided in proportion to the hours each firm worked on the case. The following year, Danziger referred a potential qui tam relator named Michael Epp to Morgan Verkamp.² The parties agreed to split the fees from the Epp matter in the same manner as the previous cases.

Danziger stopped hearing from Epp in January 2008. However, Danziger and Morgan Verkamp continued to work together on the other two qui tam matters. In January 2010, Danziger asked Morgan Verkamp if a recently publicized qui tam settlement was related to the Epp case, and Morgan Verkamp replied that it was not. Shortly thereafter, Morgan Verkamp emailed a fee agreement to Epp. Danziger was not included on that email, though Morgan Verkamp assured Epp that Danziger would be "reasonably compensated."

In March 2010, Morgan Verkamp filed suit on Epp's behalf in a Pennsylvania federal court. Morgan Verkamp never informed Danziger that it was representing Epp. In 2016, while investigating a lawsuit against Morgan Verkamp related to one of the other qui tam cases that the parties had worked on together,³ Danziger learned that Morgan Verkamp had received over $5 million in attorneys' fees as a result of its representation of Epp.

Danziger argues that Morgan Verkamp owes it $2,133,333, in accordance with the firms' alleged fee-sharing agreement. After Danziger filed this complaint, Morgan Verkamp moved to dismiss the case for both lack of personal jurisdiction and failure to state a claim. The district court concluded that dismissal was appropriate on personal jurisdiction grounds and accordingly granted the motion. Danziger appealed.

II.

"[O]n a motion to dismiss for lack of jurisdiction, uncontroverted allegations in the plaintiff's complaint must be taken as true." Bullion v. Gillespie , 895 F.2d 213, 217 (5th Cir. 1990). For purposes of this appeal, Morgan Verkamp does not dispute Danziger's factual allegations. "A district court's dismissal of a suit for lack of personal jurisdiction where the facts are not disputed is a question of law, which is reviewed de novo. " Herman v. Cataphora, Inc. , 730 F.3d 460, 464 (5th Cir. 2013). "The party invoking the court's jurisdiction bears the burden of establishing that a defendant has the requisite minimum contacts with the forum state to justify the court's jurisdiction." Id. "Where, as here, the court rules on a motion to dismiss for lack of personal jurisdiction without holding an evidentiary hearing, that burden requires only that the nonmovant make a prima facie showing." Id.

Danziger does not allege that any of the defendants are residents of Texas. "A nonresident defendant is subject to personal jurisdiction in a federal diversity suit to the extent permitted by the laws of the forum state and considerations of constitutional due process." Command-Aire Corp. v. Ontario Mech. Sales & Serv. Inc. , 963 F.2d 90, 93 (5th Cir. 1992). "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." Sangha v. Navig8 ShipManagement Priv. Ltd. , 882 F.3d 96, 101 (5th Cir. 2018) (citation omitted). "Due process requires that the defendant have ‘minimum contacts’ with the forum state (i.e. , that the defendant has purposely availed himself of the privilege of conducting activities within the forum state) and that exercising jurisdiction is consistent with ‘traditional notions of fair play and substantial justice.’ " Id. (citation omitted). Because Danziger is "bringing multiple claims that arise out of different forum contacts of the defendant," it "must establish specific jurisdiction for each claim." Seiferth v. Helicopteros Atuneros, Inc. , 472 F.3d 266, 274 (5th Cir. 2006).

III.

Danziger asserts three intentional tort claims against Morgan Verkamp: fraud, unjust enrichment, and tortious interference with prospective contractual relations. To establish personal jurisdiction in intentional tort cases, it is "insufficient to rely on a defendant's ‘random, fortuitous, or attenuated contacts’ or on the ‘unilateral activity’ of a plaintiff. A forum State's exercise of jurisdiction over an out-of-state intentional tortfeasor must be based on intentional conduct by the defendant that creates the necessary contacts with the forum." Walden v. Fiore , 571 U.S. 277, 286, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014) (citation omitted).

A.

The Supreme Court most recently addressed the issue of personal jurisdiction over intentional tortfeasors in Walden v. Fiore . That case involved a Georgia law enforcement officer who seized cash from two Nevada residents passing through Georgia and refused to return it to them for a prolonged period. 571 U.S. at 279-80, 134 S.Ct. 1115. The defendant-petitioner "knew his allegedly tortious conduct in Georgia would delay the return of funds to plaintiffs with connections to Nevada." Id. at 279, 134 S.Ct. 1115. Nonetheless, the Court held that the officer "lack[ed] the ‘minimal contacts’ with Nevada that are a prerequisite to the exercise of jurisdiction over him." Id. at 288, 134 S.Ct. 1115 (citation omitted). After all, the Court explained, "no part of petitioner's course of conduct occurred in Nevada. Petitioner approached, questioned, and searched respondents, and seized the cash at issue, in the Atlanta airport.... Petitioner never traveled to, conducted activities within, contacted anyone in, or sent anything or anyone to Nevada." Id. at 288-89, 134 S.Ct. 1115. Thus, "when viewed through the proper lens—whether the defendant's actions connect him to the forum —petitioner formed no jurisdictionally relevant contacts with Nevada." Id. at 289, 134 S.Ct. 1115.

Walden also explained that the Court's prior decision in Calder v. Jones "illustrates the application of [the] principles" that govern this type of case. Id. at 286, 134 S.Ct. 1115. In Calder , a California resident sued two Florida residents for libel, based on an article that they wrote and edited in Florida and published in a national magazine with a large readership in California. 465 U.S. 783, 784-86, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984). Although they did not live in California, the Calder defendants nonetheless had significant contacts with the state:

The allegedly libelous story concerned the California activities of a California resident. It impugned the professionalism of an entertainer whose television career was centered in California. The article was drawn from California sources, and the brunt of the harm, in terms both of respondent's emotional distress and the injury to her professional reputation, was suffered in California. In sum, California is the focal point both of the story and of the harm suffered.

Id. at 788–89, 104 S.Ct. 1482. Given "the ‘effects’ of [the defendants'] Florida conduct in California," the Court concluded that jurisdiction is "proper in California." Id. at 789, 104 S.Ct. 1482.

Walden clarified and elaborated on Calder 's holding. "The crux of Calder ," the Court explained in Walden , "was that the reputation-based ‘effects’ of the alleged libel connected the defendants to California, not just to the plaintiff." Walden , 571 U.S. at 287, 134 S.Ct. 1115. Because "the reputational injury caused by the defendants' story would not have occurred but for the fact that the defendants wrote an article for publication in California that was read by a large number of California citizens," id. at 287-88, 134 S.Ct. 1115, "the ‘effects’ caused by the defendants' article—i.e. , the injury to the plaintiff's reputation in the estimation of the California public—connected the defendants' conduct to California , not just to a plaintiff who lived there," id. at 288, 134 S.Ct. 1115. "That connection, combined with the various facts that gave the article a California focus, sufficed to authorize the California court's exercise of jurisdiction." Id. Thus, under Calder and Walden , "mere injury to a forum resident is not a sufficient connection to the forum.... The proper question is not where the plaintiff experienced a particular injury or effect but whether the defendant's conduct connects him to the forum in a meaningful way." Id. at 290, 134 S.Ct. 1115.

We applied Walden in Sangha v. Navig8 ShipManagement...