The opinion of the court was delivered by: MICHAEL MUKASEY, Chief Judge
Plaintiff Brooks Banker sues his former legal clients Esperanza
Health Systems, Ltd., Hunt Health Systems, Ltd., P&G Enterprises,
Inc., MHTJ Investments, Inc., and Friendship, Inc. (collectively,
the "Business Defendants"), for unpaid attorney's fees under the
Retainer Agreement between Banker and the Business Defendants.
His legal theories are breach of contract, quantum meruit, and
unjust enrichment. Banker also sues Jose Martinez Lilliard, Jose
Luis Perez Rios, Enrique Lopez Vergara, Particia McDonough, Gail
Gaines, Gary Davidson, and Lori Dittmar (collectively, the
"Individual Defendants"), alleging common law fraud and
fraudulent transfer in violation of N.Y. Debt. & Cred. §§ 273,
276 (McKinney 2001). Defendants filed a motion to dismiss
Banker's claims pursuant to Fed.R.Civ.P. 12(b) (2) for lack of
personal jurisdiction, pursuant to Fed.R.Civ.P. 12(b) (3) for
improper venue or, in the alternative, to transfer this case to
the District Court for the Western District of Texas, and
pursuant to Fed.R.Civ.P. 12(b) (6) for failure to state a
claim upon which relief can be granted. For the reasons explained
below, defendants' motion to dismiss for lack of personal
jurisdiction is granted.
The following facts are drawn from the complaint and affidavits
of all parties, because a motion to dismiss pursuant to Fed.R.Civ.P. 12(b) (2) requires the resolution of factual
issues that arise outside of the pleadings. CutCo Indus. Inc.
v. Naughton, 806 F.2d 361, 365 (2d Cir. 1986); Pilates, Inc.
v. Pilates Inst., Inc., 891 F. Supp. 175, 178 n. 2 (S.D.N.Y.
1995). The facts are construed in the light most favorable to the
plaintiff non-movant. CutCo Indus., 806 F.2d at 365.
Banker is an attorney admitted to practice in New York. (Compl.
¶ 1) Esperanza and Hunt are both Texas limited partnerships that
maintain offices at La Hacienda Treatment Center in Hunt, Texas.
(Compl. ¶¶ 2, 3) Esperanza owns the operating assets of La
Hacienda Treatment Center. (Compl. ¶ 14) Defendants P&G, MHTJ,
and Friendship are all Texas corporations. (Compl. ¶¶ 4, 5, 6)
Martinez, Perez, and Lopez maintain offices at La Hacienda
Treatment Center and are on the executive committee of Esperanza.
(Compl. ¶¶ 7, 8, 9, 15, 16) McDonough and Gaines maintain offices
in Boerne, Texas, are on the executive committee of Esperanza,
and are principals of Hunt, P&G, MHTJ, and Friendship. (Compl. ¶¶
10, 11, 15, 16; Holland Aff. ¶¶ 24, 25) Davidson and Dittmar are
certified public accountants with places of business in Texas who
provide professional advice to Esperanza's executive committee.
(Compl. ¶¶ 23, 25, 26, 27)
Beginning in 1993, Banker, as an attorney at the law firm
Abberly Kooiman, LLP, served as counsel for Esperanza, Hunt, P&G, MHTJ, and Friendship in Wechsler v. Hunt Health, a civil
action in this court in which they are defendants. (Compl. ¶ 33)
Abberly Kooiman dissolved in 2003 and, on June 1, 2003, McDonough
and Gaines, on behalf of Esperanza, Hunt, P&G, MHTJ, and
Friendship, entered into a written retainer agreement with Banker
as a solo practitioner. (Compl. ¶¶ 28, 29, 37) Under the Retainer
Agreement, Banker continued to represent Esperanza, Hunt, P&G,
MHTJ, and Friendship in Wechsler. (Compl. ¶ 32, 37)
Banker met with Martinez, Lopez, Perez, McDonough and Gaines in
Texas on September 28, 2003, and September 30, 2003, to discuss
Weschler, and they did not suggest to Banker that they were
dissatisfied with his work. (Compl. ¶¶ 86, 87) In October 2003,
Martinez, Lopez, Perez, McDonough, and Gaines retained the law
firm of Graves, Dougherty, Hearon & Moody ("Graves") in
connection with Wechsler, and Graves requested from Banker
documents and information concerning the case. (Compl. ¶¶ 88, 89)
Graves attempted to negotiate a settlement with the Wechsler
plaintiff without Banker's participation. (Compl. ¶¶ 92, 93) When
Graves did not reach a settlement, McDonough and Gaines
instructed Banker to represent Esperanza, Hunt, P&G, MHTJ, and
Friendship in the bench trial. (Compl. ¶¶ 94, 102) Banker did so
over a three-week period in October and November 2003, as well as
throughout three months of post-trial submissions. (Compl. ¶ 48)
During the bench trial, Davidson traveled to New York at Banker's request to consult with the Business Defendants and
Banker. (Davidson Decl. at 3) Davidson also spoke by telephone
with Banker while Banker was in New York, and sent mail and email
to Banker in New York; while the litigation was active, the
correspondence was daily, when it was inactive there was no
communication. (Davidson Decl. at 3-4) Dittmar has never been to
New York, and her only contact with Banker was providing him with
documents. (Dittmar Aff. at 1) The only time McDonough, Gaines,
and Lopez were physically present in New York was to attend the
Wechsler trial. (Banker Aff. ¶¶ 19, 20) None of the other
Individual Defendants ever have been physically present in New
In September 2004, McDonough and Gaines retained Texas attorney
Kristine Arlitt ("Arlitt") to represent them as individuals.
(Compl. ¶ 198) In November 2004, McDonough and Gaines retained
Arlitt to represent Esperanza, Hunt, P&G, MHTJ, and Friendship.
(Compl. ¶ 200) Banker believes that, beginning in November 2004,
Arlitt met with Martinez, Lopez, Perez, McDonough, Gaines,
Davidson, and Dittmar to discuss Weschler and formulate a plan
to avoid paying Banker after inducing him to provide information
about the case to Arlitt. (Compl. ¶¶ 212, 213, 217, 218) Banker
alleges Davidson and Dittmar created the plan to defraud him,
because a December 4, 2004 email from McDonough and Gaines to
Banker stated "Davidson and [Arlitt] have arrived at a plan." (Compl. ¶¶ 214, 215) Banker believes that as part of this
plan, Martinez, Lopez, Perez, McDonough, Gaines, Davison, and
Dittmar agreed to mislead Banker by making him believe he would
be paid for his work. (Compl. ¶¶ 219, 220) Banker alleges also
that, as a part of the plan, Martinez, Lopez, Perez, McDonough,
Gaines, Davidson, and Dittmar agreed that Arlitt would settle
Weschler without Banker's knowledge or participation. (Compl. ¶
224) Banker also believes that Davidson and Dittmar advised
Esperanza not to pay Banker, with the intention of keeping for
themselves a share of the money owed to him for legal services.
(Compl. ¶¶ 240-43) Banker does not allege that any of the events
involved in this plan to defraud him took place in New York.
On January 14, 2005, Martinez, Lopez, Perez, McDonough, and
Gaines attended a mediation of Weschler in San Francisco before
a mediator who Banker believes Arlitt located. (Compl. ¶¶ 244,
246) The mediation was planned, scheduled, and held without
Banker's knowledge or participation. (Compl. ¶¶ 247, 244) During
the mediation, an attorney in Arlitt's office contacted Banker to
request information and advice. (Compl. ¶¶ 250, 252) On January
14, 2005, Banker believes that McDonough and Gaines, while in
California, executed a settlement agreement with Wechsler in the
presence of Martinez, Lopez, and Perez, which provides that
Banker will not be paid for his legal services. (Compl. ¶¶ 255,
257) The day the Weschler settlement was executed, Eseperanza, Hunt Health, P&G, MHTJ, and Friendship
wrote a letter to Banker firing him as their counsel; it was
mailed on January 18, 2005. (Compl. ¶ 190, 193)
Neither Arlitt nor any of the defendants have communicated with
Banker since January 21, 2005, and Banker was never told the
terms and conditions of the January 14, 2005, settlement. (Compl.
¶¶ 263, 264) On January 21, 2005, Michael Kennedy appeared in
Wechsler as counsel for Esperanza, Hunt, P&G, MHTJ, and
Friendship and Banker was granted leave to withdraw as counsel of
record for Esperanza, Hunt, P&G, MHTJ, and Friendship. (Compl. ¶¶
Banker and Esperanza, Hunt, P&G, MHTJ, and Friendship entered
into an installment payment plan for Banker's attorney's fees in
connection to Wechsler in 2003, because the defendants did not
have sufficient assets to pay Banker immediately. (Compl. ¶¶ 105,
106, 151) However, Banker alleges that during the time he was
receiving partial payments, Martinez, Lopez, Perez, McDonough,
and Gaines each received direct or indirect income from Esperanza
of at least $400,000 a year. (Compl. ¶ 114) Esperanza, Hunt, P&G,
MHTJ, and Friendship regularly made payments to Banker for his
legal services between July 28, 2003, and January 4, 2005.
(Compl. ¶¶ 151-179) Esperanza, Hunt, P&G, MHTJ, and Friendship
never paid Banker's attorney's fee statements of January 4, 2005,
and January 18, 2005, which are for the legal services rendered from December 1, 2004, until January 14, 2005.
(Compl. ¶¶ 178, 183, 188). The last payment Banker received from
defendants was on December 10, 2004. (Banker Aff. ¶ 13) Banker
claims Martinez, Lopez, Perez, McDonough, and Gaines each
received financial distributions from Esperanza from November
2004 through March 2005. (Compl. ¶¶ 272-276)
Banker filed the summons and verified complaint in this action
in March 24, 2005, in the Supreme Court of the State of New York,
County of New York. (Holland Aff. ¶ 3) Gaines and McDonough were
served in their individual capacities by mail on March 25, 2005,
and in person on April 11, 2005. (Holland Aff. ¶¶ 7, 8) Gaines
was served by mail at the offices of P&G, MHTJ, and Friendship.
(Holland Aff. ¶¶ 7, 18, 19, 20) Davidson was served individually
by mail on March 25, 2005, and served personally on April 8,
2005. (Holland Aff. ¶ 9) Dittmar was personally served on April
11, 2005 (Holland Aff. ¶ 10).
On April 25, 2005, all defendants filed a Notice of Removal
Pursuant to 28 U.S.C. § 1446(a). (Holland Aff. ¶ 11) As of May 2,
2005, McDonough and Gaines were not aware that Banker had served
papers upon any of the Business Defendants. (McDonough Aff.,
Gaines Aff.) Martinez, Perez, and Lopez are all residents of
Mexico who maintain offices at La Hacienda Treatment Center in
Hunt, Texas; ...