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BANKER v. ESPERANZA HEALTH SYSTEMS

November 17, 2005.

BROOKS BANKER, Plaintiff,
v.
ESPERANZA HEALTH SYSTEMS, LTD., HUNT HEALTH SYSTEMS, LTD., P&G ENTERPRISES, INC., MHTJ INVESTMENTS, INC., FRIENDSHIP, INC., JOSE MARTINEZ LILLIARD, JOSE LUIS PEREZ RIOS, ENRIQUE LOPEZ VERGANA, PATRICIA McDONOUGH, GAIL GAINES, GARY DAVIDSON and LORI DITTMAR, Defendants.



The opinion of the court was delivered by: MICHAEL MUKASEY, Chief Judge

OPINION & ORDER

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.

  I.

  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 York.

  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. ¶¶ 266, 270)

  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; ...


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