Van Rooyen v. Greystone Home Builders, LLC

• Decision Date: 14 March 2018
• Docket Number: Civil Action No. 3:17–CV–2298–D
• Citation: 295 F.Supp.3d 735
• Parties: Cathrine VAN ROOYEN and Cornelius Johannes Van Rooyen, Plaintiffs, v. GREYSTONE HOME BUILDERS, LLC, et al., Defendants.
• Court: U.S. District Court — Northern District of Texas

295 F.Supp.3d 735

Cathrine VAN ROOYEN and Cornelius Johannes Van Rooyen, Plaintiffs,

v.GREYSTONE HOME BUILDERS, LLC, et al., Defendants.

Civil Action No. 3:17–CV–2298–D

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

Signed March 14, 2018

Michael H. Myers, The Silvera Firm, Dallas, TX, for Plaintiffs.

Joseph F. Coniglio, Allison Marie Stewart, Greenberg Traurig LLP, Dallas, TX, for Defendants.

MEMORANDUM OPINION AND ORDER

SIDNEY A. FITZWATER, UNITED STATES DISTRICT JUDGE

Defendants¹ move to dismiss this action under Fed. R. Civ. P. 12(b)(2) for lack of personal jurisdiction, or under Rule 12(b)(3) for improper venue. Alternatively, they move to transfer venue under 28 U.S.C. § 1404(a) for the convenience of the parties and witnesses and in the interest of justice. For the following reasons, the court denies the motions to dismiss for lack of personal jurisdiction or improper venue, grants the alternative motion to transfer venue under 28 U.S.C. § 1404(a), and transfers this action to the Eastern District of Michigan.

I

Plaintiffs Cathrine Van Rooyen and Cornelius Johannes Van Rooyen ("the Van Rooyens" or "plaintiffs"), both residents of the Republic of South Africa, were approached by Peter Weaver ("Weaver") in early 2016 about purchasing rental property in Dallas.² The Van Rooyens received marketing materials advertising new construction rental properties built in high demand areas by defendant Greystone Home Builders, LLC ("Greystone"). The marketing materials advertised a three-year rental guarantee, completed construction within six months, and "clear title" to the property. Defendant Angela Reiter ("Reiter") directed and facilitated the transaction, and plaintiffs signed a property management agreement ("First PropertyManagement Agreement") with defendant Phillip Ryan, LLC ("Phillip Ryan").

In February 2016 the Van Rooyens executed a Real Estate Purchase and Sale Agreement ("Real Estate Agreement") to purchase a piece of property referred to as the "Bumelia property," and wired a deposit to Phillip Ryan (the designated escrow agent). Greystone provided a deposit receipt to the Van Rooyens, however, that identified a different property (the Devilwood property) than was the subject of the Real Estate Agreement. Reiter represented to the Van Rooyens that the Bumelia property had been purchased by another investor, and that the Devilwood property had been substituted. Weaver then offered the Van Rooyens the option to purchase a third property (the Shortleaf property) because the Devilwood property had also already been sold. The Van Rooyens allege that the Bumelia and Devilwood properties do not actually exist.

In March 2016, per defendants' advice, the Van Rooyens created an entity called Jasmine Green, LLC ("JGL") and opened a bank account in the United States to facilitate the transaction for the Shortleaf property. The Van Rooyens paid Phillip Ryan and Greystone, respectively, the relevant fees for creating JGL and the bank account. Phillip Ryan Texas, LLC ("Ryan Texas") was designated as JGL's registered agent.

In May 2016 Reiter sent the Van Rooyens photographs depicting a residence under construction. Reiter then convinced the Van Rooyens to sign JGL's initial operating agreement, which transferred operational control of JGL to Ryan Texas. Defendant David Clemons ("Clemons") assured the Van Rooyens that construction would close around July 19, 2016. Over the next several months, Clemons requested and received several addenda to the Real Estate Agreement reflecting later closing dates.

In September 2016 the Van Rooyens executed another property management agreement ("Second Property Management Agreement") naming Clemons, a manager of Ryan Texas, as the property manager. Later, defendant Sean Tissue ("Tissue") sent the Van Rooyens a lease guarantee promising three years of lease payments. In October 2016 Clemons sent the Van Rooyens photographs of a nearly completed residence.

In November 2016 Greystone sent the Van Rooyens an email canceling the Real Estate Agreement. Further investigations revealed that Greystone never owned the Shortleaf property. Phillip Ryan, on behalf of Greystone, executed a promissory note ("Note") under which Greystone promised to pay back the deposit amount with interest. Suspecting that defendants were engaged in a fraudulent scheme, the Van Rooyens paid a fee to remove Ryan Texas as the registered agent of JGL. Defendants have failed to return any money or make any payments on the Note.

In 2017 the Van Rooyens brought this lawsuit against Greystone, Phillip Ryan, Ryan Texas, Sycamore Homes, LLC, Sean Ryan, Clemons, Tissue,³ Justin McRae, and Reiter, alleging a civil RICO⁴ claim and claims for statutory fraud, common law fraud, money had and received, breach of contract, declaratory judgment for a constructive trust, piercing the corporate veil, and conspiracy. All defendants except Reiter now move to dismiss under Rule 12(b)(2) for lack of personal jurisdiction, or under Rule 12(b)(3) for improper venue, or, alternatively, to transfer venue under 28 U.S.C. § 1404(a) for the convenience of the parties and witnesses and in the interest of justice. The Van Rooyens oppose the motions.⁵

II

The court begins by addressing defendants' Rule 12(b)(2) motion to dismiss for lack of personal jurisdiction.

A

"When a nonresident defendant presents a motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing the district court's jurisdiction over the nonresident." Stuart v. Spademan , 772 F.2d 1185, 1192 (5th Cir.1985) (citing Thompson v. Chrysler Motors Corp. , 755 F.2d 1162, 1165 (5th Cir.1985) ; D.J. Invs., Inc. v. Metzeler Motorcycle Tire Agent Gregg, Inc. , 754 F.2d 542, 545 (5th Cir.1985) ). The determination whether a federal district court has in personam jurisdiction over a nonresident defendant is bipartite. The court first decides whether the long-arm statute of the state in which it sits confers personal jurisdiction over the defendant. If it does, the court then resolves whether the exercise of jurisdiction is consistent with due process under the United States Constitution. See Mink v. AAAA Dev. LLC , 190 F.3d 333, 335 (5th Cir.1999).⁶ Because the Texas long-arm statute extends to the limits of due process, the court need only consider whether exercising jurisdiction over defendants would be consistent with the Due Process Clause of the Fourteenth Amendment. See id. ; Alpine View Co. v. Atlas Copco AB , 205 F.3d 208, 214 (5th Cir.2000).

The Due Process Clause of the Fourteenth Amendment permits the exercise of personal jurisdiction over a nonresident defendant when (1) that defendant has purposefully availed himself of the benefits and protections of the forum state by establishing "minimum contacts" with the forum state; and (2) the exercise of jurisdiction over that defendant does not offend "traditional notions of fair play and substantial justice." To comport with due process, the defendant's conduct in connection with the forum state must be such that he "should reasonably anticipate being haled into court" in the forum state.

Latshaw v.Johnston , 167 F.3d 208, 211 (5th Cir.1999) (footnotes omitted). To determine whether exercising jurisdiction would satisfy traditional notions of fair play and substantial justice, the court examines (1) the defendant's burden, (2) the forum state's interests, (3) the plaintiff's interests in convenient and effective relief, (4) the judicial system's interest in efficient resolution of controversies, and (5) the states' shared interest in fundamental social policies. Ruston Gas Turbines, Inc. v. Donaldson Co. , 9 F.3d 415, 421 (5th Cir.1993).

A defendant's contacts with the forum may support either specific or general jurisdiction over the defendant. Mink , 190 F.3d at 336. "For the court properly to assert specific personal jurisdiction, the defendant must have 'purposefully directed' his activities at residents of the forum, and the litigation must result from alleged injuries that 'arise out of or relate to' the defendant's activities directed at the forum." Archer & White, Inc. v. Tishler , 2003 WL 22456806, at *2 (N.D. Tex. Oct. 23, 2003) (Fitzwater, J.) (citing Burger King Corp. v. Rudzewicz , 471 U.S. 462, 472, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) ; Helicopteros Nacionales de Colombia, S.A. v. Hall , 466 U.S. 408, 414, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984) ). "General jurisdiction exists when a defendant's contacts with the forum state are unrelated to the cause of action but are 'continuous and systematic.' " Id. (citations omitted). "[A] court may assert jurisdiction over a foreign corporation 'to hear any and all claims against [it]' only when the corporation's affiliations with the State in which suit is brought are so constant and pervasive 'as to render [it] essentially at home in the forum State.' " Daimler AG v. Bauman , 571 U.S. 117, 134 S.Ct. 746, 751, 187 L.Ed.2d 624 (2014) (first brackets added) (quoting Goodyear Dunlop Tires Operations, S.A. v. Brown , 564 U.S. 915, 919, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011) ).

"The district court usually resolves the jurisdictional issue without conducting a hearing." Ham v. La Cienega Music Co. , 4 F.3d 413, 415 (5th Cir. 1993) (footnote omitted).

When a court rules on a motion to dismiss for lack of personal jurisdiction without holding an evidentiary hearing, it must accept as true the uncontroverted allegations in the complaint and resolve in favor of the plaintiff any factual conflicts posed by the affidavits. Therefore, in a no-hearing situation, a plaintiff satisfies his burden by presenting a prima facie case for personal jurisdiction.

" Latshaw , 167 F.3d at 211 (footnotes omitted). This liberal standard, however, does not require the court to credit conclusory allegations, even if they remain uncontradicted." Panda Brandywine Corp. v. Potomac Elec. Power Co. , 2000 WL 35615925, at *2 (N.D. Tex. Sept. 15, 2000) (Fitzwater, J.) (citing ...