The opinion of the court was delivered by: Hon. Jeffrey T. Miller United States District Judge
ORDER GRANTING MOTION TO DISMISS FOR LACK OF PERSONAL JURISDICTION; GRANTING JOINT MOTION TO PRUDENTIAL
Defendant Prudential Texas Realty ("Prudential"), erroneously sued as Prudential Owens Realty, moves to dismiss the complaint for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b)(2). Defendant Anthony Goodall separately moves to dismiss the complaint for lack of personal jurisdiction or, alternatively, for a convenience venue transfer to the Western District of Texas, Austin Division. Plaintiffs oppose these motions in whole or in part. Defendant Stephen V. Lyons has yet to appear in this action. The only other Defendant, BBVA Compass Bank ("Compass Bank"), has stipulated with Plaintiffs and Defendant Goodall to transfer the action to the Western District of Texas, Austin Division. Pursuant to Local Rule 7.1(d)(1), the court finds the matters raised appropriate for decision without oral argument. For the reasons set forth below, the court grants Defendant Prudential's motion to dismiss for lack of personal jurisdiction and grants the joint motion of Plaintiffs and Defendants Goodall and Compass Bank to transfer the action to the Western District of Texas, Austin Division.
On April 16, 2009 Plaintiffs commenced this federal question action alleging four claims for violation of RICO, securities fraud, fraud and deceit, and negligent supervision. Plaintiffs Louis and Deyette Perry are citizens of the State of Oregon, Paul Tullius a citizen of California, and Austin 620 LP a citizen of the State of Texas. Plaintiffs Louis and Deyette Perry and Paul Tullius are members of the Austin 620 LP limited partnership. (Compl. ¶8). Defendants Lyons, Goodall, and Prudential are citizens of Texas and Compass Bank maintains its principal place of business in Alabama and operates offices throughout the State of Texas. (Id. ¶11).
In the summer of 2005, Defendant Lyons, aided by Goodall, allegedly caused advertisements to be placed in newspapers in California, Oregon, Arizona and Nevada seeking potential investors for the purchase of 10.7 acres of real property located in Austin, Texas. (Compl. ¶16). Defendant Lyons allegedly provided potential investors with an appraisal of the property indicating a value of $5.8 million for the property. Id. Defendant Goodall, an attorney licensed to practice law in the State of Texas, allegedly prepared the partnership documents for Austin 620. Id. Armed with the appraisal, Plaintiffs allege that Defendant Lyons obtained a $2.0 million loan from Compass Bank to finance the bulk of the $2.8 million purchase price. Id.
Plaintiffs allege that Compass Bank knew or should have known that the $5.8 million "appraisal was bogus but made a 'liars loan' anyway." (Compl. ¶17). Plaintiffs allege that Defendants engaged in a pattern of lending transactions similar to the transaction described herein in order "to deceive unsophisticated persons into financing Lyons' and Goodall's lifesyle which included private jets and extravagant trips." (Compl. ¶18). Plaintiffs further allege that Defendants knew that the true value of property was only $1.5 million but, in an effort to raise more money from investors, provided a new appraisal showing the land to be worth $11 million. (Compl. ¶21).
In or around 2007 Plaintiffs allege that they began to discover that Defendants Lyons and Goodall had not been truthful in representing the terms of the Compass Bank loan. During this same period of time, Defendants "extracted personal guarantees from" Defendants. (Compl. ¶23). The loan is now in foreclosure and Austin 620 LP has filed for bankruptcy protection.
Defendant Prudential argues that the court lacks personal jurisdiction and therefore this action must be dismissed. The court may "exercise personal jurisdiction over a non-resident if jurisdiction is proper under California's long-arm statute and if that exercise accords with federal constitutional due process principles." Fireman's Fund Ins. Co. v. National Bank of Cooperatives, 103 F.3d 888, 893 (9th Cir. 1996). As the Ninth Circuit has explained:
California's long-arm statute authorizes the court to exercise personal jurisdiction over a non-resident defendant on any basis not inconsistent with the California or federal Constitution. Cal.Code Civ. Proc. § 410.10. The statutory and constitutional requirements therefore merge into a single due process test.
Id. at 893. "Due process requires only that... [the defendant] have certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). Where the court does not conduct an evidentiary hearing, a plaintiff need only establish a prima facie case of personal jurisdiction. Sher v. Johnson, 911 F.2d 1357, 1361 (9th Cir. 1990).
There are two types of personal jurisdiction: general and specific. "General personal jurisdiction, which enables a court to hear cases unrelated to the defendant's forum activities, exists if the defendant has 'substantial' or 'continuous and systematic' contacts with the forum state." Fields v. Sedgwick Associated Risks, Ltd., 796 F.2d 299 (9th Cir.1986). Specific jurisdiction allows the court to exercise jurisdiction over a defendant whose forum-related acts gave rise to the action before the court.
On a motion to dismiss for lack of personal jurisdiction, the party seeking to invoke the court's jurisdiction bears the burden of establishing contacts by the non-resident defendant sufficient to establish personal ...