Smith v. Cutler

Decision Date18 July 2007
Docket NumberCivil No. 07-78 WJ/DJS.
Citation504 F.Supp.2d 1162
PartiesRoderick and Sarah SMITH, Plaintiffs, v. Jeff CUTLER, and Your-Best-Rate Financial, LLC, Defendants.
CourtU.S. District Court — District of New Mexico

Susan M. Warren, Feferman & Warren, Albuquerque, NM, for Plaintiffs.

Edward F. Messett, Elizabeth A. Jaenicke, Civerolo, Gralow, Hill & Curtis, PA, Albuquerque, NM, for Defendants.


WILLIAM P. JOHNSON, District Judge.

THIS MATTER comes before the Court upon Defendant Cutler's Motion to Dismiss for Lack of Personal Jurisdiction, filed March 12, 2007 (Doc. 10). Having considered the parties' briefs and the applicable law, I find that Defendant's motion is not well-taken and will be denied.


This case is brought under the Federal Fair Credit Reporting Act, 15 U.S.C. § 1681 et seq. ("FCRA") and the New Mexico Unfair Practices Act, NMSA 1978 57-12-1 et seq. ("UPA"), for impermissible access and use of Plaintiffs' credit reports.

In August 2005, Plaintiffs, who are New Mexico residents ("the Smiths"), obtained a mortgage through a Georgia-based mortgage broker, "Your Best Rate Financial, LLC" ("YBRF"). Mr: Jeff Cutler ("Defendant" for purposes of this motion) is a Georgia resident and the President and Chief Executive Officer of YBRF. According to the Complaint, the Smiths paid off the mortgage the following year, and re-financed the mortgage with another entity. They subsequently filed a lawsuit in New Mexico state court, Bernalillo County, alleging fraud and violations of the UPA, regarding their mortgage transaction with YBRF.1

Plaintiffs allege that after Defendants were served with the state court lawsuit, YBRF and Mr. Cutler accessed and obtained the Smiths' credit reports,' then used the credit reports by sending them via e-mail to the Smiths' attorney in the state court lawsuit. Plaintiffs allege that use of their credit reports violated the FCRA and also constitutes an unfair or deceptive trade practice under the UPA.

The instant motion concerns only Defendant Cutler, in which he moves for his dismissal from the case based on lack of personal jurisdiction.


A motion to dismiss is an appropriate procedural vehicle for resolving personal jurisdiction and venue issues. See Fed.R.Civ.P. 12(b)(2) & (3). Affidavits, depositions, answers to interrogatories, and similar evidentiary matter may be presented and are freely considered on a motion attacking jurisdiction. See Sunwest Silver, Inc. v. Ina Connection, Inc., 4 F.Supp.2d 1284, 1285 (D.N.M.1998); Jones v. 3M Company, 107 F.R.D. 202, 204 (D.N.M.1984).

I. Legal Standard

"Federal courts sitting in diversity have personal jurisdiction over nonresident defendants to the extent permitted by the law of the forum." Benally v. Amon Carter Museum of Western, Art, 858 F.2d 618, 621 (10th Cir.1988) (citations omitted). Plaintiffs have the burden of establishing personal jurisdiction over Mr. Cutler. See, Kuenzle v. HTM Sport-Und Freizeitgerate AG, 102 F.3d 453, 456 (10th Cir.1996).

New Mexico applies a three-part test to determine whether personal jurisdiction lies over non-residents. The Court must determine whether: (1) the defendant committed an act or omission specifically set forth in New Mexico's long-arm statute;2 (2) the cause of action arises out of that act or omission; and (3) the defendant has sufficient minimum contacts to satisfy due process concerns. Tercero v. Roman Catholic Diocese of Norwich, Conn., 132 N.M. 312, 318, 48 P.3d 50 (2002).

Due process requires that a defendant must have sufficient "minimum contacts" with the forum state such that allowing the action to be brought there will not "offend traditional notions of fair play and substantial justice." Trierweiler v. Croxton & Trench Holding Corp., 90 F.3d 1523, 1532 (10th Cir.1996) (quoting International Shoe Co. v. Washington, 326 U.S. 310, 319-20, 66 S.Ct. 154, 90 L.Ed. 95 (1945)); see also, Bell Helicopter Textron, Inc. v. Heliqwest Intern., Ltd., 385 F.3d 1291, 1296 n. 1 (10th Cir.2004) ("A finding of minimum contacts with the forum is necessary, but is not sufficient for the exercise of personal jurisdiction. A district court must also consider whether personal jurisdiction is reasonable in light of the circumstances surrounding the case").

New Mexico law merges the analysis of whether a defendant has transacted business or committed a tortious act within New Mexico with the inquiry regarding whether such activities constitute minimum contacts sufficient to satisfy due process concerns. Tercero, 132 N.M. at 316, 48 P.3d 50 (citing Telephonic, Inc. v. Rosenblum, 88 N.M. 532, 534, 543 P.2d 825 (1975)). However, this is true only if the cause of action arises from the particular transaction of business or commission of a tortious act, and if the minimum contacts were purposefully initiated by the defendant. 132 N.M. at 317, 48 P.3d 50. Thus, Mr. Cutler's conduct under both elements of the long-arm statute must be analyzed within the context of due process. See, Doe v. Roman Catholic Diocese of Boise, Inc., 121 N.M. 738, 742, 918 P.2d 17 (Ct. App.1996), cert. denied, 121 N.M. 693, 917 P.2d 962 (N.M. May 30, 1996); CABA Ltd. Liability Co. v. Mustang Software, Inc., 127 N.M. 556, 984 P.2d 803, 807 (Ct.App. 1999) ("meaning of [terms in long-arm statute] is to be equated with the minimum contacts sufficient to satisfy due process.") (internal quotes omitted).

The International Shoe "minimum contacts" standard may be met in either of two ways: specific jurisdiction, or general jurisdiction. Specific jurisdiction is based on a matter occurring in the forum state, and exists when the defendant "purposely avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958). General jurisdiction lies when the defendant's contacts with the forum state are so "continuous and systematic" that the state may exercise personal jurisdiction over the defendant, even if the suit is unrelated to the defendant's contacts with the state. Id. at 1532-33. The defendant's conduct and connection with the forum state must be such that defendant "should reasonably anticipate being haled into court there." Id. at 1534 (internal quotation marks omitted).

II. Analysis
A. Personal Jurisdiction in FCRA Cases

Defendant Cutler contends that his only role in this matter arose from his position as an officer of YBRF, which is a named co-Defendant in this case. He asserts that he does not have the requisite contacts with New Mexico to satisfy due process requirements, and that he is not subject to jurisdiction under New Mexico's long-arm statute because he did not transact business or commit a tort in New Mexico. Mr Cutler maintains that all negotiations, agreements, preparation and performance of the actions alleged in the Complaint took place in Georgia.

Defendant concedes that he requested Plaintiffs' credit reports from First American Credco ("Credco"), a Washington state-based corporation with its principal place of business in San Diego, California, but points out that he was not personally involved in Plaintiffs' loan application. Mr. Cutler also concedes that after the state court lawsuit was filed against YBRF, he corresponded by e-mail to Plaintiffs' attorney, including a copy of Plaintiffs' credit reports. The e-mail correspondence can best be described as an offer by Mr. Cutler to negotiate some kind of compromise or settlement with Plaintiffs.3 Defendant contends that one request for a credit reports does not constitute doing business in New Mexico.

However, it seems that courts which have addressed the issue of personal jurisdiction in cases involving alleged FCRA violations resulting from authorized credit inquiries, view these cases sui generis. Personal jurisdiction can be found to exist in a forum where a non-resident defendant obtains credit reports without the permission of the resident plaintiff. The reasoning used by courts is that defendant's conduct in conducting the unauthorized credit inquiry is purposefully directed at the resident in the forum state, and causes injury to that individual. See, e.g., Cole v. American Family Mutual Ins. Co., et al., 333 F.Supp.2d 1038 (D.Kan.2004) (where Kansas resident alleged emotional injuries and distress resulting from defendant's intentionally obtaining plaintiffs credit report knowing plaintiff resided in Kansas, it was reasonable to conclude that defendant knew his actions would have specific impact in Kansas);4 Andrews v. Prestige Ford Garland Ltd. Partnership, 2005 WL 3297339 (W.D.Ok.2005) (plaintiff made showing of specific jurisdiction over defendant where Texas defendant accessed credit reports of Oklahoma resident without authorization, stole his credit identity and used it to lease and purchase certain vehicles for other customers, and where the court found substantial connection with the forum state existed due to the nature of the personal information being accessed, and defendant's knowledge that plaintiff was a resident of the forum state); Myers v. Bennett Law Offices, 238 F.3d 1068 (9th Cir.2001) (in requesting credit reports on Nevada residents, defendant Utah law firm engaged in conduct expressly aimed at forum state); Bils v. Nixon, Hargrave, Devans & Doyle, 179 Ariz. 523, 880 P.2d 743 (Ct.App.1994) (court found that there was personal jurisdiction over out-of-state law firm that illegally accessed plaintiffs credit report where firm representing former wife in child visitation dispute used husband's credit report to obtain evidence against him in dispute).

These cases have found that the exercise of personal jurisdiction in situations does not offend notions of "fair play and substantial justice," in light of the...

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