Transfirst Grp., Inc. v. Magliarditi

• Decision Date: 15 February 2017
• Docket Number: Civil Action No. 3:16–CV–1918–L
• Citation: 237 F.Supp.3d 444
• Parties: TRANSFIRST GROUP, INC. f/k/a TransFirst Holdings, Inc., et al., Plaintiffs, v. Dominic J. MAGLIARDITI; Francine Magliarditi, in her individual capacity, and as trustee of FRM Trust, DJM Irrevocable Trust and the Fane Trust; ATM Enterprises, LLC; DII Capital, Inc.; DFM Holdings, Ltd. ; DFM Holdings, LP; DII Properties LLC; and Spartan Payment Solutions, LLC, Defendants.
• Court: U.S. District Court — Northern District of Texas

237 F.Supp.3d 444

TRANSFIRST GROUP, INC. f/k/a TransFirst Holdings, Inc., et al., Plaintiffs,

v.Dominic J. MAGLIARDITI; Francine Magliarditi, in her individual capacity, and as trustee of FRM Trust, DJM Irrevocable Trust and the Fane Trust; ATM Enterprises, LLC; DII Capital, Inc.; DFM Holdings, Ltd. ; DFM Holdings, LP; DII Properties LLC; and Spartan Payment Solutions, LLC, Defendants.

Civil Action No. 3:16–CV–1918–L

United States District Court, N.D. Texas, Dallas Division.

Signed February 15, 2017

Adam Cooper Sanderson, Peter D. Marketos, Tyler J. Bexley, Reese Gordon Marketos LLP, Dallas, TX, for Plaintiffs.

Brian N. Hail, Gruber Hurst Johansen & Hail, Robert C. Wiegand, Melissa J. Swindle, Stewart Wiegand & Owens, PC, Dallas, TX, for Defendants.

MEMORANDUM OPINION AND ORDER

Sam A. Lindsay, United States District Judge

On February 9, 2017, the court issued a memorandum opinion and order finding that Plaintiffs had established a prima facie case that the court has personal jurisdiction over Defendants Dominic Magliarditi ("Mr. Magliarditi"); Francine Magliarditi, as sued in her capacity as trustee of FRM Trust, DJM Irrevocable Trust, and Fane Trust (the "Trust Defendants"); DII Capital, Inc., ATM Enterprises, LLC, and Spartan Payment Solutions, LLC (the "Shell Company Defendants"). See Mem. Op. & Order 14 (Doc. 32). The court also stated: "Whether [it] has personal jurisdiction over Mrs. Magliarditi, sued in her individual capacity, DFM Holdings, Ltd., and DFM Holdings, LP, will be addressed in a separate order, which will also address the remainder of Defendants' arguments presented in their respective motions." Id. at 14–15. After careful consideration of the motions, pleadings, record, and applicable law, the court finds that it lacks personal jurisdiction over Mrs. Magliarditi, as sued in her individual capacity ("Mrs. Magliarditi"), as well as DFM Holdings, Ltd. and DFM Holdings, LP (the "Partnership Defendants"). Rather than dismiss Mrs. Magliarditi and the Partnership Defendants for lack of personal jurisdiction, and for the reasons set forth below, the court determines that this case should be transferred to the District of Nevada for the convenience of the parties and witnesses and in the interest of justice pursuant to 28 U.S.C. §§ 1631 and 1404(a).

I. Factual and Procedural Background

A. The 2006 Action & Entry of Judgment Against Dominic Magliarditi

Plaintiffs are TransFirst Group, Inc. f/k/a TransFirst Holdings, Inc. ("Transfirst"), a Delaware corporation with its principal place of business in Hauppauge, New York; and two Delaware limited liability companies, TransFirst Third Party Sales, LLC and Payment Resources International, LLC, whose sole member is TransFirst. Plaintiffs have a judgment in the amount of $4,486,725 against Defendant Mr. Magliarditi. The judgment was obtained in a separate lawsuit brought by Plaintiffs against Mr. Magliarditi and others in 2006. See TransFirst Holdings, Inc., et al. v. Dominic J. Magliarditi, et al. , Case No. 3:06–CV–2303–C, in the United States District Court for the Northern District of Texas (the "2006 Action").¹ Following a three-week bench trial in 2009, the Honorable Jorge A. Solis adjudged Mr. Magliarditi and other entities liable for mail and wire fraud in violation of the Racketeer Influenced and Corrupt Organizations Act ("RICO") and found that Mr. Magliarditi had lied under oath in sworn interrogatory responses and affidavits. On August 30, 2011, Judge Solis entered a final judgment and, after several amendments, on April 22, 2013, entered the Third Amended Final Judgment (the "Judgment") against Mr. Magliarditi and the other entities and in favor of Plaintiffs in the amount of $4,486,725.

In June 2014, the United States Court of Appeals for the Fifth Circuit affirmed the Judgment. TransFirst Holdings , Inc. v. Magliarditi , 574 Fed.Appx. 345 (5th Cir. 2014). Between entry of the Judgment, and continuing until the present, Plaintiffs have sought to uncover Mr. Magliarditi's assets and to enforce the Judgment in this District, as well as in California and Nevada. Among other things, a postjudgment discovery dispute between Plaintiffs and Mr. Magliarditi was referred to Magistrate Judge Paul D. Stickney who, on August 6, 2015, overruled Mr. Magliarditi's objections to postjudgment discovery requests, sanctioned him, and ordered him to travel to Texas at his own expense to testify in a postjudgment deposition in the magistrate judge's chambers in Dallas, which took place on September 16, 2015. That litigation is ongoing, as evidenced by recent docket entries in 2016 and 2017.

B. The Current Lawsuit

On June 30, 2016, Plaintiffs filed this lawsuit against judgment debtor Mr. Magliarditi, as well as new Defendants who were not parties to the 2006 Action, namely, Mrs. Magliarditi, the Trust Defendants, the Shell Company Defendants, and the Partnership Defendants, alleging that Mr. Magliarditi fraudulently transferred assets to Mrs. Magliarditi and the other Defendants in an effort to frustrate Plaintiffs' ongoing efforts to collect on the Judgment.

In Plaintiffs' First Amended Complaint ("Complaint" or "Compl.") (Doc. 11), Plaintiffs allege that, to date, Mr. Magliarditi has only paid $62 toward the Judgment. Plaintiffs allege that Mr. Magliarditi and Mrs. Magliarditi "are working together to defraud Plaintiffs and prevent them from collecting on the Judgment by hiding and transferring assets through the use of a labyrinth of layered shell companies and trusts [which are] shams, existing for no reason other than to hide assets, defraud Transfirst, and otherwise act as the alter ego of [Mr. Magliarditi]." Id. at 2. Seeking to unwind the alleged fraudulent transfers and to hold Mrs. Magliarditi, the Trust Defendants, the Shell Company Defendants, and the Partnership Defendants liable for the Judgment entered in the 2006 Action, Plaintiffs assert the following causes of action: (1) fraudulent transfers under the Texas Uniform Fraudulent Transfer Act ("TUFTA"), Tex. Bus. & Com. Code §§ 24.006(b) and 24.005(a) ; (2) unjust enrichment; and (3) alter ego, alleging that Mrs. Magliarditi, as sued in her individual capacity, the Trust Defendants, the Shell Company Defendants, and the Partnership Defendants "are alter-egos of [Mr. Magliarditi] and, therefore, they should be held jointly and severally liable with [him] on the Judgment." Compl. at 2–3. Plaintiffs seek compensatory damages, restitution, punitive and exemplary damages, attorney's fees, injunctive relief, appointment of a receiver, and any other relief to which they are entitled. Id. at 30–31.

C. The Pending Motions and the Court's February 9, 2017 Ruling (Doc. 32)

Defendants have moved to dismiss the Complaint on a variety of grounds, including for lack of personal jurisdiction, improper venue, and for failure to state a claim; or, alternatively, they request that the court strike portions of the Complaint and direct Plaintiffs to file more particularizedaverments with regard to the fraudulent conveyance claim pursuant to Federal Rule of Civil Procedure 12(e). On February 9, 2017, the court issued a memorandum opinion and order finding that, contrary to Defendants' arguments in their pending motions to dismiss, Plaintiffs had established a prima facie case that the court has personal jurisdiction over Defendants Mr. Magliarditi, the Trust Defendants, and the Shell Company Defendants. See Mem. Op. & Order 14 (Doc. 32). The court also stated: "Whether [it] has personal jurisdiction over Mrs. Magliarditi, as sued in her individual capacity, DFM Holdings, Ltd., and DFM Holdings, LP, will be addressed in a separate order, which will also address the remainder of Defendants' arguments presented in their respective motions." Id. at 14–15.

II. Legal Standards for Rule 12(b)(2) —Lack of Personal Jurisdiction

On a motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing a prima facie case for the court's jurisdiction over a nonresident defendant. See Ham v. La Cienega Music Co. , 4 F.3d 413, 415 (5th Cir. 1993) ; Stuart v. Spademan , 772 F.2d 1185, 1192 (5th Cir. 1985). When the court rules on the motion without an evidentiary hearing, the plaintiff may establish personal jurisdiction by presenting a prima facie case that personal jurisdiction is proper, id. ; proof by a preponderance of the evidence is not required. International Truck and Engine Corp. v. Quintana , 259 F.Supp.2d 553, 556 (N.D. Tex. 2003) (citing WNS, Inc. v. Farrow , 884 F.2d 200, 203 (5th Cir. 1989) ). The court may determine the jurisdictional issue by receiving affidavits, interrogatories, depositions, oral testimony, or any combination of the recognized methods of discovery. Stuart , 772 F.2d at 1192. Uncontroverted allegations in a plaintiff's complaint must be taken as true, and conflicts between the facts contained in the parties' affidavits must be resolved in favor of the plaintiff. Bullion v. Gillespie , 895 F.2d 213, 217 (5th Cir. 1990). After a plaintiff makes his prima facie case, the burden then shifts to the defendant to present "a compelling case that the presence of some other consideration would render jurisdiction unreasonable." Burger King Corp. v. Rudzewicz , 471 U.S. 462, 477, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985).

A federal court has jurisdiction over a nonresident defendant if the state long-arm statute confers personal jurisdiction over that defendant, and if the exercise of jurisdiction is consistent with due process under the United States Constitution. Ruston Gas Turbines, Inc. v. Donaldson Co., Inc., 9 F.3d 415, 418 (5th Cir. 1993). Because the Texas long-arm statute extends to the limits of federal due process, Schlobohm v. Schapiro , 784 S.W.2d 355, 357 (Tex. 1990), the court must determine whether (1) the defendants have established "minimum contacts" with the forum state; and, (2) whether the exercise of personal jurisdiction over the defendants would offend "traditional...