United States District Court, N.D. Texas, Dallas Division
MEMORANDUM OPINION AND ORDER
J. BOYLE UNITED STATES DISTRICT JUDGE
the Court is Defendant Einbinder & Dunn, L.L.P.'s
Motion to Dismiss for Lack of Personal Jurisdiction (Doc.
11). For the reasons that follow, the Court
DENIES the motion (Doc. 11) and
TRANSFERS the case to the Southern District
of New York. Plaintiff Edgefield Holdings, L.L.C.'s
Objection to Einbinder's Reply (Doc. 19) is
DENIED in part and MOOTED in
August 5, 2015, the United States District Court for the
Southern District of Florida entered a Final Judgment in
favor of The Learning Experience Systems, L.L.C. against
Creative American Education and K. and B.
Loganathan (collectively, the Judgment Debtors) in
the amount of $984, 074.31. Doc. 17, Second Am. Compl.,
¶ 5. The defendant here, Einbinder, represented Creative
American and the Loganathans in the Florida action.
Id. ¶ 6. After judgment was entered in that
action, the Florida court certified the Final Judgment for
filing in Colorado, Texas, and California. Id.
¶ 8; see also Id. Ex. B (the order granting
certification of judgment).
September 2, 2015, The Learning Experience filed a Motion for
Charging Order in the Northern District of Texas
(hereinafter, the Texas action), Id. ¶ 9,
“in aid of enforcement” of the Final Judgment.
Id., Ex. D, ¶ 5 (Motion for Charging Order).
The motion explained that the Judgment Debtors held shares in
Aces Creative American Investments LLC and listed Aces's
Texas properties. Id. ¶¶ 2-3. The Learning
Experience Systems sought any interest that the Judgment
Debtors received from their membership interests in Aces.
Id. Ex. D, ¶ 5. On September 9, 2015, Aces
Creative sold one of its properties in Texas for $94, 635.34,
which was wired to Einbinder. Id. ¶ 10. Then,
on October 29, 2015, Judge Lindsay of the Northern District
of Texas entered a charging order in the Texas Action, which
gave The Learning Experience “the right to receive any
distribution to which [the Judgment Debtors] would otherwise
be entitled in respect of the membership interest held by
[the Judgment Debtors] in Aces Creative . . . .”
Id. ¶ 11; see also id., Ex. F, 3-4
(Agreed Charging Order).
September 23, 2016, The Learning Experience assigned all of
its rights, title, and interest to the Final Judgment in the
Florida Action to Edgefield. Id. ¶ 16. But
earlier, on January 11, 2016, Aces Creative sold another one
of its Texas properties. Id. ¶ 12. Edgefield
alleges that the funds from the sale of the two Texas
properties should have been distributed to The Learning
Experience under the charging order but were instead
fraudulently transferred to Einbinder. Id.
¶¶ 10, 13-14. And finally, on May 4, 2017, an
attorneys' fee award of $83, 958.76 was awarded in favor
of The Learning Experience against Creative American and the
Loganathans in the Florida Action as well. Id.
¶¶ 15, 17.
learning of Aces Creative's transfers to Einbinder,
Edgefield contacted Einbinder, who allegedly refused to
return or transfer over the proceeds to Edgefield.
Id. ¶ 17. Subsequently, Edgefield brought two
causes of action pursuant to the Texas Uniform Fraudulent
Transfer Act (TUFTA) against Einbinder: (1) Fraudulent
Transfer under Texas Business and Commerce Code §
24.005(A)(1)-(2), and (2) Fraudulent Transfer under Texas
Business and Commerce Code § 24.006(A). Id.
then brought this Motion to Dismiss for Lack of Personal
Jurisdiction (Doc. 11). All briefing has been submitted, and
the motion is now ripe for review.
Rule of Civil Procedure 12(b)(2) allows for the dismissal of
an action in which the court lacks personal jurisdiction over
the defendant. A federal court may assert jurisdiction over a
nonresident defendant in a diversity suit if the state's
long-arm statute applies and due process is satisfied under
the Fourteenth Amendment to the United States Constitution.
Cycles, Ltd. v. W.J. Digby, Inc., 889 F.2d 612, 616
(5th Cir. 1989). Texas courts have interpreted the Texas
long-arm statute as “extending to the limits of due
process.” Bullion v. Gillespie, 895 F.2d 213,
215 (5th Cir. 1990). Accordingly, to determine whether it may
assert jurisdiction under the Texas long-arm statute, a
federal court must determine whether jurisdiction comports
with federal constitutional guarantees of due process.
Id. at 216.
due process clause of the Fourteenth Amendment, as
interpreted by the Supreme Court, permits the exercise of
personal jurisdiction over a nonresident defendant when (1)
that defendant has established ‘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.'”
Ruston Gas Turbines, Inc. v. Donaldson Co., Inc., 9
F.3d 415, 418 (5th Cir. 1993) (quoting Int'l Shoe Co.
v. Washington, 326 U.S. 310, 316 (1945)). “Both
prongs of the due process test must be met” for the
Court to exercise personal jurisdiction over a defendant.
nonresident defendant's minimum contacts may either
support an assertion of specific or general jurisdiction.
WNS Inc. v. Farrow, 884 F.2d 200, 202 (5th Cir.
1989). A court may exercise specific jurisdiction when a
cause of action arises out of a defendant's purposeful
contacts with the forum. Dalton v. R & W Marine,
Inc., 897 F.2d 1359, 1361-62 (5th Cir. 1990).
Alternatively, a court is said to have general jurisdiction
when a defendant has engaged in continuous and systematic
contacts with the forum. Id.
party seeking to invoke federal jurisdiction bears the burden
of establishing the requisite minimum contacts. WNS,
884 F.2d at 203. Further, “uncontroverted allegations
in the plaintiff's complaint must be taken as true, and
conflicts between the facts contained in the parties'
affidavits must be resolved in the plaintiff's favor for
purposes of determining whether a prima facie case
for personal jurisdiction exists.” D.J. Invs.,
754 F.2d at 546 (citations omitted).
parties dispute whether the Court has personal jurisdiction
over Einbinder. Specifically, Einbinder argues that it was a
mere passive transferee of the proceeds the Judgment Debtors
received from the sale of Aces's Texas properties, and
thus this Court cannot assert specific personal jurisdiction
over it. Doc. 12, Def.'s Br., 8. On the other hand,
Edgefield argues that, at the very least, Einbinder was
willfully blind to the fact that the ...