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Graff v. The Owings Gallery, Inc.

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

May 16, 2017

STANLEY V. GRAFF, Plaintiff,
v.
THE OWINGS GALLERY, INC., and NATHANIEL O. OWINGS, Defendants.

          MEMORANDUM OPINION AND ORDER

          ED KINKEADE UNITED STATES DISTRICT JUDGE

         Before the Court are: (1) Defendants' Motion to Dismiss (Doc. No. 4); and (2) Plaintiff's Contingent Motion for Leave to Conduct Jurisdictional Discovery (Doc. No. 13). After careful consideration of the motions, the responses, the replies, the supporting appendices, and the applicable law, the Court GRANTS Defendants' motion to dismiss and DENIES Plaintiff's contingent motion for leave to conduct jurisdictional discovery.

         I. Factual and Procedural Background

         Plaintiff Stanley Graff (“Plaintiff”) is a citizen of Texas, residing in Dallas. Defendant Owings Gallery (“Gallery”) is a corporation organized under the laws of the state of New Mexico, with its principal place of business in Santa Fe, New Mexico. Defendant Gallery operates two (2) art galleries in Santa Fe, New Mexico. Defendant Nathaniel O. Owings (“Owings”) is a citizen of New Mexico, residing in Santa Fe. Defendant Owings is the president and sole shareholder of Defendant Gallery.

         In 2006, Plaintiff purchased a painting by William Victor Higgins (“Higgins painting”). In 2012, Plaintiff and his wife, Deborah Graff (“Deborah”) began divorce proceedings. Plaintiff alleges the divorce court prohibited Deborah from selling assets of the marital estate unless she received permission from Plaintiff and the divorce court. Despite this restriction, Plaintiff alleges that Deborah took the Higgins painting without his and the divorce court's knowledge or permission, and pawned it in Arizona. When Deborah defaulted on the loan, the pawn shop sent the painting to an auction house in Chicago, Illinois, where it was ultimately put up for auction on September 15, 2015. Defendant Gallery bought the Higgins painting at this auction, and it was delivered to Defendant Gallery in Santa Fe, New Mexico, where it was displayed. On October 23, 2015, a customer of Defendant Gallery bought the Higgins painting after seeing it in the Santa Fe gallery. The buyer was then invoiced for the Higgins painting on November 2, 2015, but the painting had not yet been delivered.

         On November 18, 2015, Defendant Owings spoke with Plaintiff on the telephone. Plaintiff told Defendant Owings that he was in the process of divorcing his wife and she had stolen the Higgins painting and sold it without Plaintiff's knowledge. Plaintiff asked Defendant Owings to return the painting to him. On Defendant Owings' request, Plaintiff indicated he would provide some type of proof that the Higgins painting belonged to him and was stolen. After this phone call, Defendant Owings contacted the purchaser of the Higgins painting. The painting had not yet been delivered to the purchaser, and Defendant Owings put the purchaser on notice that the sale was suspended because of Plaintiff's theft claim.

         Defendant Owings called Plaintiff twice more to inquire about any information Plaintiff could provide to substantiate his theft claim. Both times, Plaintiff told Defendant Owings he was working on getting the information. By November 25, 2015, a week after the first phone call, Defendant Owings still had not received any proof of the theft or ownership of the Higgins painting. Ultimately, the sale of the Higgins painting was reinstated and the painting delivered to the buyer.

         Defendant Owings' next communication with Plaintiff was a letter dated July 29, 2016, in which Plaintiff notified Defendants that Plaintiff would be issuing a subpoena related to the Higgins painting. Plaintiff filed this lawsuit against Defendants in Texas state court on January 24, 2017. Defendants removed the case to this Court on February17, 2019.

         II. Motion to Dismiss

         A. Legal Standard

         When a nonresident defendant moves to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing the district court's jurisdiction over the nonresident. See Monkton Ins. Services, Ltd. v. Ritter, 768 F.3d 429, 431 (5th Cir. 2014); Gardemal v. Westin Hotel Co., 186 F.3d 588, 592 (5th Cir. 1999). When there is no evidentiary hearing, the plaintiff may establish personal jurisdiction by presenting a prima facie case that personal jurisdiction exists; proof by a preponderance of the evidence is not required. Int'l Truck & Engine Corp. v. Quintana, 259 F.Supp.2d 553, 556 (N.D. Tex. 2003)(Lindsay, J.)(citing WNS, Inc. v. Farrow, 884 F.2d 200, 203 (5th Cir. 1989)). The plaintiff satisfies his burden by producing admissible evidence which, if believed, would support the existence of personal jurisdiction. WNS, 884 F.2d at 203-04. In making its determination, the court may consider affidavits, interrogatories, depositions, oral testimony, or any combination of recognized discovery methods. Allred v. Moore & Peterson, 117 F.3d 278, 281 (5th Cir. 1997). The court will take the allegations of the complaint as true, except where they are controverted by opposing affidavits, and all factual conflicts are resolved in favor of the plaintiff. Gardemal, 186 F.3d at 592; Wilson v. Belin, 20 F.3d 644, 648 (5th Cir. 1994). While this is a liberal standard, it “does not require the court to credit conclusory allegations, even if uncontroverted.” Panda Brandywine Corp. v. Potomac Elec. Power Co., 253 F.3d 865, 869 (5th Cir. 2001).

         In considering whether the court has personal jurisdiction over a nonresident defendant, the court must consider: (1) whether the long-arm statute of the state in which it sits confers personal jurisdiction over the defendant; and, if so, (2) whether the exercise of personal jurisdiction is consistent with due process under the United State Constitution. Mink v. AAAA Dev. LLC, 190 F.3d 333, 335 (5th Cir. 1999). The Supreme Court of Texas has interpreted the state's long-arm statute “to reach as far as the federal constitution permits.” Schlobohm v. Schapiro, 784 S.W.2d 355, 357 (Tex. 1990). Therefore, this Court need only address whether the exercise of personal jurisdiction over the nonresident defendant would be consistent with the Due Process Clause of the Fourteenth Amendment. Mink, 190 F.3d at 335-36.

         A court may exercise personal jurisdiction over a nonresident defendant under the Due Process Clause “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.'” Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir. 1999)(quoting Int'l Shoe Co. v. State of Washington, 326 U.S. 310, 316 (1945)).

         A nonresident defendant's “minimum contacts” can give rise to general or specific personal jurisdiction. Mink, 190 F.3d at 336. When the cause of action either arises from or is directly related to the nonresident defendant's contacts with the forum state, there is specific personal jurisdiction. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 n. 9 (1984). In contrast, when the nonresident defendant's contacts with the forum state are unrelated to the plaintiff's cause of action but are, instead, “continuous and systematic”, there is general personal jurisdiction. Helicopteros, 466 U.S. at 414 n. 8; see Mink, 190 F.3d at 336. The nonresident defendant's availment of the benefits and protections of the forum state must be such that the defendant “should reasonably anticipate being haled into court” there. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). This requirement of purposeful availment acts to ensure that a defendant's “‘random, ...


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