United States District Court, N.D. Texas, Dallas Division
JAMES R. REIS 1999 REVOCABLE LIVING TRUST and JAMES R. REIS, Trustee, Plaintiffs, Counterclaim Defendants,
CITIBANK, N.A., Defendant, Counterclaim Plaintiff,
JAMES R. REIS, in his individual capacity, and I. SAMUEL REYES, Third-Party Defendants.
FINDINGS, CONCLUSIONS, AND RECOMMENDATION OF THE
UNITED STATES MAGISTRATE JUDGE
L. HORAN UNITED STATES MAGISTRATE JUDGE
third-party defendants filed motions to dismiss, which were
referred to the undersigned United States Magistrate Judge
for recommendation by United States Chief District Judge
Barbara M. G. Lynn. See Dkt. No. 21-1 (under seal)
& 23 (redacted). Third-Party Defendant I. Samuel Reyes
(“Reyes”) filed a motion to dismiss for lack of
personal jurisdiction under Federal Rule of Civil Procedure
12(b)(2), see Dkt. No. 36, and Third-Party Defendant
James R. Reis, in his individual capacity
(“Reis”), filed a motion to dismiss for failure
to state a claim under Federal Rule of Civil Procedure
12(b)(6), see Dkt. No. 41.
undersigned now issues the following findings of fact,
conclusions of law, and recommendation.
case is based on credit card payments received from a
trust's checking account.
and Reyes were married in California in 2008 and thereafter
lived in Texas and Arizona. See Dkt. Nos. 21-1 &
23 at 14. Prior to their marriage, Reis and Reyes were
friends and in a personal relationship with each other.
established the James R. Reis 1999 Revocable Living Trust
(the “Reis Trust”) in 1999. See Dkt. No.
23 at 15. Reis is the sole Trustee of the Reis Trust and
Reyes was a beneficiary. See id.
Citibank credit card accounts were issued to Reyes (the
“Citibank Accounts”). See Id. at 14, 28,
42. Reyes is the primary card member for the Citibank
Accounts, and Reis was an authorized user until January 7,
2017. See id.
December 2005, Reis moved the Reis Trust's checking
account to Frost Bank (the “Frost Account”).
See Id. at 16. Frost Bank is located in San Antonio,
Texas. See Dkt. No. 49-1 at 33. The Account
Agreement includes a Texas choice of law provision and
provides for arbitration in Texas. See Id. at 32-36.
January 9, 2009, Reis added Reyes as an authorized user of
the Reis Trust's checking account at Frost Bank so that
Reyes could pay their expenses out of the Frost Account.
See Id. at 14, 28, 42; Dkt. No. 49-1 at 19.
in 2009, Reis and Reyes began paying the Citibank Accounts
through both paper checks and Citibank's online bill
payment service using funds from the Frost Account and
Citibank's online bill payment service. See id.
moved to Arizona in 2012 and he is currently an Arizona
resident. He has not been domiciled in Texas since 2012, and
he does not own any real or personal property in the state of
Texas. See Dkt. No. 38 at 4.
on the Citibank Accounts originating from the Frost Account
were made by Reyes and Reis from 2009 through 2017.
See Dkt. No. 23 at 14, 28, 42; Dkt. No. 49-1 at
19.There is a dispute between Reis and Reyes as to whether
Reyes had authority to use the funds in the Frost Account in
2016 when Reyes used the account to pay his Citibank credit
card. See Dkt. No. 46 at 3. During periods of time
when Reis claims that he and Reyes were broken-up and not
co-habitating, Reyes continued to use the Citibank Accounts
for expenses to maintain homes owned by the couple, pay his
other living expenses and attorneys' fees. Reis also
wrote checks from the Frost Account to pay the Citibank
Accounts. See See Dkt. No. 23 at 16-17.
filed a petition for divorce against Reyes in Dallas County,
Texas on February 25, 2016. See Dkt. No. 37 at 5,
11; Dkt. No. 38 at 4.
January 7, 2017, Reis contacted Citibank and advised that
payments made on the Citibank Accounts from the Reis Trust
checking account were not authorized and that Reyes (the
primary card member on the Citibank Accounts) had stolen
Reis' checking account number from settlement checks he
had sent him. See Id. At that time, Reis did not
disclose that he was married to Reyes. At no point prior to
January 7, 2017, did the Reis Trust or Reis inform or
otherwise notify Citibank that any payment made from the
Frost Account for the Citibank Accounts was unauthorized or
fraudulent or that it was not authorized to accept payments
from the Frost Account. See Id. at 17.
refunded $75, 085.67 to the Frost Account, which corresponds
to the sum of payments from the Reis Trust checking account
to C itibank on the Citibank Accounts from November 25, 2016
through January 5, 2017. See id.
Citibank Accounts then went into default. When the
Third-Party Complaint was filed, one of the Citibank accounts
had an outstanding balance due and owing of $61, 388.66 and
the other had an outstanding balance due and owing of $69,
424.64. The combined amount due and owing on the two Citibank
accounts is $130, 813.30. See id.
March 15, 2017, Reyes initiated a lawsuit against Reis,
individually and as Trustee of the Reis Trust, and others in
Dallas County state court, alleging claims related to a
transaction involving GAINSCO stock. See Dkt. No. 37
at 5; Dkt. No. 38 at 6-16.
brought this lawsuit against Citibank in Dallas County state
court on December 11, 2017. See Dkt. No. 1-5. Reis
sought to recover $225, 546.61 from Citibank. That amount
represents credit card payments received by Citibank from the
Reis Trust's checking account at Frost Bank from February
through November of 2016, which were credited to Reyes's
Citibank credit cards. See Id. Reis claims that
those payments were made by Reyes without his authority or
consent and constituted theft or conversion of funds. See
Id. Reis seeks to hold Citibank liable for Reyes'
alleged wrongful use of the Frost Bank account funds because
Reyes processed the withdrawals from the Frost Account using
Citibank's online bill payment website. See Id.
In his Original Petition, Reis did not disclose his
relationship with Reyes. See id.
January 10, 2018, Reis filed a lawsuit against Reyes in
Arizona state court alleging claims including conversion,
fraudulent misrepresentation and unjust enrichment, based on
Reyes' alleged unauthorized use of the Frost Account to
pay Reyes' Citibank credit card accounts. See
Dkt. No. 49-4 at 63-76.
removed this case to this Court on January 12, 2018.
See Dkt. No. 1.
and Reyes were divorced in Dallas County, Texas on January
24, 2018. See See Dkt. Nos. 21-1 & 23 at 18.
They entered a confidential settlement agreement incident to
divorce (“AID”) in which they agreed to release
certain claims against each other, resolve the GAINSCO stock
case, and dismiss with prejudice the Arizona action. The only
reference in the AID to Citibank is a clarification that Reis
was not releasing his ability to pursue claims against
Citibank in this lawsuit. See See Dkt. Nos. 21-1
& 23 at 18; Dkt. No. 37 at 5, 11; Dkt. No. 38 at 4; Dkt.
No. 48 at 4.
November 2, 2018, Citibank amended its answer, asserted
counterclaims against the Reis Trust and Reis in his role as
Trustee, and asserted third-party claims against Reis,
individually, and Reyes. See Dkt. No. 23. Citibank
asserts breach of contract and quantum meruit/unjust
enrichment claims against the Reis Trust, Reis and Reyes. It
asserts fraud and fraud by nondisclosure claims against
Reyes. It also seeks recovery of attorneys' fees from the
Reis Trust, Reis and Reyes. See id.
filed a motion to dismiss for lack of personal jurisdiction,
see Dkt. No. 36, and Citibank filed a response,
see Dkt. No. 46.
filed a motion to dismiss for failure to state a claim,
asserting that Citibank has failed to allege a claim against
him individually. See Dkt. No. 41. Citibank filed a
response, s ...