Title: Ex parte Keith Barton. PETITION FOR WRIT OF MANDAMUS: CIVIL (In re: Martha Ann Cooper and Kenneth Lambert v. Stephen A. Shannon et al.)

State: alabama

Issuer: Alabama Supreme Court

Document:

REL:6/15/2007 Ex parte Barton
Notice: This opinion is subject to formal revision before publication in the advance
sheets of Southern Reporter.  Readers are requested to notify the Reporter of Decisions,
Alabama Appellate Courts, 300 Dexter Avenue, Montgomery, Alabama 36104-3741 ((334) 229-
0649), of any typographical or other errors, in order that corrections may be made before
the opinion is printed in Southern Reporter.
SUPREME COURT OF ALABAMA
OCTOBER TERM, 2006-2007
____________________
1050303
____________________
Ex parte Keith Barton
PETITION FOR WRIT OF MANDAMUS
(In re: Martha Ann Cooper and Kenneth Lambert
v.
Stephen A. Shannon et al.)
(Baldwin Circuit Court, CV-04-1186)
SMITH, Justice.
Keith Barton, a defendant in an action pending in the
Baldwin Circuit Court, petitions for a writ of mandamus
directing that court to vacate its order denying Barton's
1050303
2
motion to dismiss the claims asserted against him by Martha
Ann Cooper and Kenneth Lambert ("the plaintiffs") and to enter
an order dismissing all claims against him on the basis of
lack of personal jurisdiction.  We deny the petition.
Facts and Procedural History
According to the complaint, the plaintiffs, Alabama
residents, were approached by Stephen A. Shannon, an Alabama
resident and owner of Shannon Systems, Inc. ("SSI").  Shannon
proposed that he and the plaintiffs enter into a joint venture
to acquire a certain parcel of property in Perdido Key,
Florida, and develop it into a condominium complex ("the
project"), which they would subsequently sell for a profit. 
In November 2002, the plaintiffs and Shannon executed a
letter of intent to form a limited liability partnership named
Gulf Development, L.L.P. ("Gulf Development"), the stated
purpose of which was to acquire and develop land in Alabama
and Florida.  Gulf Development was to purchase the Perdido Key
property ("the property"); the plaintiffs were to fund the
purchase; and SSI and Shannon were to "package" and manage the
construction project.  The plaintiffs together were to receive
50% of the "final proceeds" after completion of the project,
1050303
3
and Shannon and SSI were to receive the remaining 50%.  Gulf
Development was subsequently formed and registered in the
State of Florida.  Its "chief executive office" was located in
Gulf Shores, Alabama, apparently in SSI's offices.  
Shannon selected The Bank of Pensacola ("the bank"),
located in Pensacola, Florida, from which to acquire a loan
for the purchase of the property.  The plaintiffs assert that
on the "eve" of the closing on the property, Shannon falsely
represented to them that the bank required additional obligors
on the loan because, he told them, the plaintiffs and Shannon
were not sufficiently creditworthy.  Shannon further allegedly
represented that they had to act immediately or they would
lose the property and certain earnest money.  Shannon
suggested that "he had a friend in Mississippi," David Kelly,
who could bring in a "Utah group" as an additional investor in
the project.
In reliance on Shannon's representations, the plaintiffs
agreed to allow Greenway Properties, L.L.C. ("Greenway")--an
entity owned by Kelly--and KMJ Commercial Funding, LLC
("KMJ"), to become partners in Gulf Development.  The
plaintiffs asserted in the complaint that Barton--a Utah
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4
resident--was the principal owner and officer of KMJ and that
KMJ was a Utah company conducting business in Alabama.  A new
partnership agreement for Gulf Development was executed in
January 2003, adding Greenway and KMJ as partners.  It appears
from the materials submitted to this Court that KMJ and
Greenway contributed no capital and together were granted a
25% interest in the partnership.  The plaintiffs' ownership
interest in Gulf Development was thereby reduced from 50% to
37.5%.  
Gulf Development began operating out of Shannon's offices
in Baldwin County.  In January 2003, Gulf Development executed
a note with the bank for a loan in the amount of $1,331,168.88
and used the proceeds to purchase the property.  Gulf
Development, the plaintiffs, and Barton were listed on the
note as borrowers and their address was shown as Gulf Shores,
Alabama.  Barton states in his petition that he provided the
bank with a personal balance sheet and personally guaranteed
the loan.
Subsequently, a dispute arose between the plaintiffs and
Shannon concerning the management of the construction project
and Gulf Development.  The plaintiffs filed a complaint, which
1050303
5
was later amended, seeking damages against Shannon, SSI,
Greenway, Kelly, KMJ, and Barton, for, among other things,
fraud, suppression, and civil conspiracy.  Specifically, the
plaintiffs alleged that Shannon falsely represented that
additional investors were necessary to obtain financing for
the project, that they relied on that representation, and that
they executed a new partnership agreement adding Greenway and
KMJ as partners, thus reducing the plaintiffs' interests in
the partnership and allowing Greenway and KMJ to have an
ownership interest in the partnership without contributing any
capital.  The plaintiffs further alleged that Greenway, Kelly,
KMJ, and Barton were aware of and ratified the representation
made by Shannon and that all the defendants intended that the
plaintiffs' ownership interests would be diluted to the
defendants' benefit.  The complaint states:
"19. All of the Defendants conspired together,
aided and abetted each other and agreed with the
stated 
information 
to 
the 
Plaintiffs 
and
suppress[ed] the truth regarding the lack of any
true credit deficit. All of the Defendants acted in
concert 
and 
conspired 
with 
each 
other 
to
affirmatively 
make, 
through 
Shannon, 
the
misrepresentations 
and 
suppressions 
outlined 
herein.
"20. All of the Defendants intended or had
reason 
to 
expect 
that 
the 
described
misrepresentations to which they all agreed and/or
1050303
6
ratified would be conveyed or repeated or its
substance communicated to the Plaintiffs by Shannon,
that Plaintiffs' conduct would be influenced thereby
to their detriment. Indeed, these misstatements were
material 
and 
Plaintiffs 
did 
justifiably 
and
reasonably rely upon these misrepresentations and
were in fact harmed as a result.
"21. All of the Defendants aided and abetted the
suppressions of truth either negligently, recklessly
or intentionally, with the intent that Plaintiff
rely upon this failure to disclose. Each of these
Defendants 
had 
a 
duty 
to 
provide 
accurate
information and not suppress this information from
Plaintiffs. This omitted information was material
and was reasonably and justifiably relied upon by
Plaintiffs. As a result of this concealment and the
wrongful conduct perpetrated by these Defendants,
Plaintiffs did not discover, and could not have
discovered, this wrongful conduct until damages were
already incurred and were continuing to be incurred.
"22. Defendants' duty to disclose arose from the
fact that these material facts were peculiarly in
the knowledge of Defendants and not within the fair
and reasonable reach of the Plaintiffs. Further,
Defendants intended and acted to deceive Plaintiffs
with their superior knowledge.
"....
"24. Each of the Defendants had actual knowledge
and 
substantive 
knowledge that Plaintiffs and
Shannon had adequate credit for the acquisition loan
and that giving any interest to KMJ or Greenway
would dilute the ownership of the Plaintiffs. All of
the Defendants, at all relevant times, had unique
and superior knowledge unavailable to Plaintiffs.
Each 
of 
the 
Defendants 
was 
aware 
of 
the
misrepresentations and suppressions and was aware of
their respective roles in promoting, aiding and
1050303
KMJ filed its own motion to dismiss for lack of personal
1
jurisdiction.  The trial court denied that motion.  KMJ also
petitioned this Court for a writ of mandamus, and we denied
its petition.  Ex parte KMJ Commercial Funding, LLC (No.
1050270), February 17, 2006.
7
abetting this fraudulent conduct and designed,
contributed to and participated in this wrongful
conduct. Defendants had this knowledge at the time
they assisted one another. Each of the Defendants
knowingly and intentionally aided and abetted and
provided substantial assistance to each other in the
described misrepresentations and suppressions of
information. Each of the Defendants had a specific
agreement to defraud and suppress information from
the Plaintiffs."
Barton filed a motion to dismiss pursuant to Rule
12(b)(1) and (2), Ala. R. Civ. P., on the grounds that the
trial court had no personal jurisdiction over him.  The trial
court denied the motion, and Barton filed this petition for
the writ of mandamus.1
Standard of Review
"A petition for a writ of mandamus is the
appropriate 
remedy 
by 
which 
to 
challenge 
an
interlocutory order on the issue of personal
jurisdiction, and a writ will issue only upon a
showing of '(a) a clear legal right in the
petitioner to the order sought, (b) an imperative
duty upon the respondent to perform, accompanied by
a refusal to do so, (c) the lack of another adequate
remedy, and (d) the properly invoked jurisdiction of
the court.'  Ex parte McInnis, 820 So. 2d 795, 798
(Ala. 2001).
1050303
8
"'In considering a Rule 12(b)(2), Ala.
R. Civ. P., motion to dismiss for want of
personal 
jurisdiction, 
a 
court 
must
consider as true the allegations of the
plaintiff's complaint not controverted by
the defendant's affidavits, Robinson v.
Giarmarco & Bill, P.C., 74 F.3d 253 (11th
Cir. 1996), and Cable/Home Communication
Corp. v. Network Productions, Inc., 902
F.2d 829 (11th Cir. 1990), and "where the
plaintiff's complaint and the defendant's
affidavits conflict, the ... court must
construe all reasonable inferences in favor
of the plaintiff."  Robinson, 74 F.3d at
255 (quoting Madara v. Hall, 916 F.2d 1510,
1514 (11th Cir. 1990)).  "For purposes of
this appeal [on the issue of in personam
jurisdiction] the facts as alleged by the
... plaintiff will be considered in a light
most favorable to him [or her]."  Duke v.
Young, 496 So. 2d 37, 38 (Ala. 1986).'
"Ex parte McInnis, 820 So. 2d at 798."
Ex parte Puccio, 923 So. 2d 1069, 1072 (Ala. 2005).
Discussion
In his petition, Barton argues that he did not have
sufficient contacts with the State of Alabama for the trial
court to have personal jurisdiction over him.  We disagree. 
"'A physical presence in Alabama is not a
prerequisite 
to 
personal 
jurisdiction 
over 
a
nonresident.' Sieber v. Campbell, 810 So. 2d 641,
644 (Ala. 2001). What is required, however, is that
the defendant have such contacts with Alabama that
it '"should reasonably anticipate being haled into
court [here]."' Dillon Equities v. Palmer & Cay,
Inc., 501 So. 2d 459, 462 (Ala. 1986) (quoting
1050303
9
World-Wide Volkswagen Corp. v. Woodson, 444 U.S.
286, 297, 100 S. Ct. 559, 62 L. Ed. 2d 490 (1980)).
"Depending on the quality and quantity of the
contacts, jurisdiction may be either general or
specific. Leventhal v. Harrelson, 723 So. 2d 566,
569 (Ala. 1998). 'General jurisdiction applies where
a defendant's activities in the forum state are
"substantial" 
or 
"continuous 
and 
systematic,"
regardless of whether those activities gave rise to
the lawsuit.... A court has specific jurisdiction
when a defendant has had few contacts with the forum
state, but those contacts gave rise to the lawsuit.'
Id.
"But regardless of whether jurisdiction is
alleged to be general or specific, the nexus between
the defendant and the forum state must arise out of
'"an action of the defendant [that was] purposefully
directed toward the forum State."' Elliott [v. Van
Kleef, 830 So. 2d 726, 731 (Ala. 2002)] (quoting
Asahi Metal Indus. Co. v. Superior Court of
California, 480 U.S. 102, 112, 107 S. Ct. 1026, 94
L. Ed. 2d 92 (1987)). 'This purposeful-availment
requirement assures that a defendant will not be
haled into a jurisdiction as a result of "'the
unilateral activity of another person or a third
person.'"' Elliott, 830 So. 2d at 731 (quoting
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475,
105 S. Ct. 2174, 85 L. Ed. 2d 528 (1985))."
Ex parte Dill, Dill, Carr, Stonbraker & Hutchings, P.C., 866
So. 2d 519, 525-26 (Ala. 2003) (emphasis omitted).
The plaintiffs argue that the trial court had personal
jurisdiction over Barton because, they allege, he was involved
in a civil conspiracy and fraud scheme with the other
1050303
10
defendants, which scheme was directed toward and impacted
Alabama residents, viz., the plaintiffs. 
Allegations of fraud or a civil conspiracy, in certain
circumstances, have been held to be sufficient to establish
personal 
jurisdiction 
over 
an 
alleged 
out-of-state
conspirator.  Ex parte United Ins. Cos., 936 So. 2d 1049,
1054-56 (Ala. 2006).  See also Duke v. Young, 496 So. 2d 37
(Ala. 1986) (holding that an Alabama court had personal
jurisdiction over certain nonresident corporate board members
whose allegedly intentional and fraudulent acts were expressly
"aimed" at Alabama); and Shrout v. Thoren, 470 So. 2d 1222
(Ala. 1985) (holding that the trial court had personal
jurisdiction over an alleged out-of-state conspirator in a
fraud scheme because the alleged conspirator acted to further
a plan that contemplated the injury of an Alabama resident).
In Duke v. Young, six nonresident directors of a Georgia
corporation purchased a business from Duke, an Alabama
resident.  Duke subsequently alleged that the directors acted
in concert to fraudulently conceal a scheme to limit payments
for the purchase of the business.  Duke sued the directors in
Alabama, seeking damages for fraudulent concealment of a
1050303
11
material fact with the intent to induce Duke to enter into the
contract for the sale of his business.
The directors challenged the personal jurisdiction of the
Alabama trial court.  This Court, in ruling that the trial
court had personal jurisdiction, stated:  
"The focal point of the analysis is the alleged
'contacts' which a defendant has with the forum
state. Courts look to 'the relationship among the
defendant, the forum, and the litigation.' Shaffer
v. Heitner, 433 U.S. 186, 204, 97 S. Ct. 2569, 2579,
53 L. Ed. 2d 683 (1977). ... [A] presence or absence
from the forum state is not the foundation upon
which a determination [of personal jurisdiction] is
made. Physical presence merely provides strong,
objective evidence of sufficient contacts. The
fundamental question is, did the defendant act in
such a manner that he reasonably ought to anticipate
the direct consequences of his actions to be felt by
another person residing in another state?
"This same point was established by the United
States Supreme Court in Calder v. Jones, 465 U.S.
783, 104 S. Ct. 1482, 79 L. Ed. 2d 804 (1984). There
the plaintiff was a resident of California. The
defendants were residents of Florida. ... The
defendants were alleged to have authored and edited
an article injurious to plaintiff, that article
having been disseminated in, among other places,
California. The Court did not find it necessary to
look for physical contacts between the defendants
and the forum state. It was the nature of the
defendant's activities rather than the place of
their 
occurrence 
that 
the 
Court 
considered:
'[P]etitioners are not charged with mere untargeted
negligence. Rather, their intentional, and allegedly
tortious, 
actions 
were 
expressly 
aimed 
at
California.... [T]hey knew [the article] would have
1050303
12
a potentially devasting impact upon respondent. And
they knew that the brunt of that injury would be
felt by respondent in the State in which she
lives....' Id., 465 U.S. at 789-90, 104 S. Ct. at
1487, 79 L. Ed. 2d at 812.
"Crucial to the analysis is the element of
foreseeability 
of 
the 
consequences 
of 
the
defendant's activities. There must be a clear, firm
nexus between the acts of the defendant and the
consequences complained of in order to establish the
necessary 
contacts. 
Explicitly 
approving 
the
'effects' tests employed by the California court,
the Supreme Court concluded, '[P]etitioners are
primary 
participants in an alleged wrongdoing
intentionally directed at a California resident, and
jurisdiction over them is proper on that basis.'
Id., 465 U.S. at 790, 104 S. Ct. at 1487, 79 L. Ed.
2d at 813.
"....
"... Given the nature of the claim, it is not
hard to envision how the acts of the ... six
directors 
were 
'a 
significant 
aspect 
of 
the
negotiations which occurred in Alabama and that it
was foreseeable that appellants' ... transaction
would have consequences in this state.' Alabama
Waterproofing Co. v. Hanby, 431 So. 2d 141, 145
(Ala. 1983). The alleged fraudulent scheme may have
been propounded, implemented, and directed by one or
all of [the directors].
"... The thrust of Duke's allegations is that
[the directors] conspired to fraudulently conceal a
material fact during the negotiations with Duke.
This is certainly not an example of mere untargeted
negligence. 
The 
defendants' 
'intentional, 
and
allegedly tortious, actions were expressly aimed at'
Alabama. Calder, supra, 465 U.S. at 789, 104 S. Ct.
at 1487, 79 L. Ed. 2d at 813."
1050303
13
496 So. 2d at 39-40 (footnote omitted).  
"'"Bald speculation" or a "conclusionary statement" that
individuals are co-conspirators is insufficient to establish
personal jurisdiction under a conspiracy theory. Instead, the
plaintiff must plead with particularity "the conspiracy as
well as the overt acts within the forum taken in furtherance
of the conspiracy." Dooley v. United Technologies Corp., 786
F. Supp. 65, 78 (D.D.C. 1992).'"  Ex parte McInnis, 820 So. 2d
795, 806-07 (Ala. 2001) (quoting Jungquist v. Sheikh Sultan
Bin Khalifa Al Nahyan, 115 F.3d 1020, 1031 (D.C. Cir. 1997)
(some citations omitted)).  However, in this case, the
plaintiffs allege that the defendants together conspired to
make certain misrepresentations, through Shannon, to convince
the plaintiffs to allow Greenway and KMJ into Gulf Development
as partners even though new partners were unnecessary.
Barton, who the plaintiffs alleged owned and operated KMJ,
personally guaranteed the loan with the bank even though the
plaintiffs' 
own 
creditworthiness was sufficient.  The
plaintiffs argue that they are Alabama residents and that Gulf
Development, though registered in Florida, operates in
Alabama.  The plaintiffs thus contend that Barton acted in
1050303
14
such a manner that he should have anticipated direct
consequences for the plaintiffs in Alabama and that Barton's
allegedly intentional and tortious actions were "expressly
aimed" at Alabama and Alabama residents.  The "thrust" of
their allegations is that Barton conspired with the other
defendants to misrepresent facts and to suppress information
to the plaintiffs in Alabama regarding a partnership operating
in Alabama.
In his motion to dismiss, Barton argued that he had not
visited Alabama or conducted any business in Alabama that
would create sufficient "minimum contacts" to bring him within
the jurisdiction of the Alabama courts.  In an affidavit filed
in support of the motion, Barton asserted that he was a
resident of Utah.  Barton further stated that he was not a
principal or shareholder of KMJ; instead, he said, KMJ is
wholly owned by National Contract Servicing, LC ("NCS"), a
limited liability company he formed in March 2003 but from
which he had resigned at a later, undisclosed point in time.
Barton stated that although he did agree to guarantee a loan
to Gulf Development relating to the project, he had had no
contact with Alabama and he had not transacted any business
1050303
15
here in connection with his business dealings with Gulf
Development.  Barton states that never met or spoke to either
of the plaintiffs and that has "never met" Shannon.
Therefore, he contends, his contacts with Alabama were
insufficient 
for 
the 
trial 
court 
to 
assert 
personal
jurisdiction over him.
"[I]f the defendant makes a prima facie evidentiary
showing that the Court has no personal jurisdiction, 'the
plaintiff is then required to substantiate the jurisdictional
allegations in the complaint by affidavits or other competent
proof, and he may not merely reiterate the factual allegations
in the complaint.'" Ex parte Covington Pike Dodge, Inc., 904
So. 2d 226, 229-30 (Ala. 2004) (quoting Mercantile Capital, LP
v. Federal Transtel, Inc., 193 F. Supp. 2d 1243, 1247 (N.D.
Ala. 2002)).  
In Ex parte Puccio, supra, the plaintiffs sued Cambridge
Credit Counseling Corporation ("Cambridge"), a nonprofit
credit-counseling service, and Puccio, one of Cambridge's
corporate officers.  The plaintiffs claimed that Cambridge
made certain false representations to them and that it
defrauded them.  They further alleged that Cambridge acted
1050303
16
essentially as an alter ego of Puccio, designed to generate
profits for him.
Puccio filed a motion to dismiss, arguing that he had no
contacts with Alabama and that personal jurisdiction over him
as a corporate officer could not be predicated upon the trial
court's jurisdiction over Cambridge.  Puccio produced an
affidavit stating that he had no financial interests in
Alabama, that he had never spoken to the plaintiffs, and that
he had executed an agreement between the plaintiffs and
Cambridge only in his capacity as president of Cambridge. 
In holding that Puccio had not established that the trial
court lacked personal jurisdiction over him, this Court noted
that Puccio did not address the factual allegations raised in
the complaint to the effect that Cambridge was Puccio's alter
ego.  Instead, Puccio merely asserted that he was not an
Alabama resident and that he had had insufficient contacts
with Alabama to subject him to its jurisdiction.  "In
construing the allegations in the [plaintiffs'] complaint not
controverted by Puccio as true, as we are required to do for
the purposes of Puccio's motion to dismiss, Ex parte Covington
Pike Dodge, supra, we cannot say that the trial court erred in
1050303
Beinhorn-PBG, 
LLC, 
is 
not 
mentioned 
in 
Barton's
2
affidavit.  
17
denying the motion."  Puccio, 923 So. 2d  at 1076.
As noted above, we consider as true the allegations of
the plaintiff's complaint that are not controverted by the
defendant's affidavits.  Ex parte Covington Pike Dodge, supra.
Barton's motion to dismiss and supporting affidavit do not
address any of the allegations by the plaintiffs that he
conspired with Greenway and Shannon to reduce the plaintiffs'
share in Gulf Development and that he joined with them in
misrepresenting and suppressing information as to whether
Greenway, KMJ, and Barton were necessary to secure the loan
for Gulf Development.  Barton does appear to claim in his
affidavit that his relationship with KMJ was only through his
ownership of NCS.  However, NCS was formed in March 2003,
after KMJ became a partner in Gulf Development in January
2003.  Before that time, KMJ was owned in part by Beinhorn-
PBG, LLC.  According to the materials presented in the
petition, Barton was a "principal" and "managing member" of
that entity.   Barton's affidavit does not deny that he was
2
involved in the operation of KMJ during the time the alleged
misrepresentations or conspiracy transpired in this case, and
1050303
On page eight of Barton's petition, he states that he
3
"has never met or spoken with [the plaintiffs] or Defendant
Stephen Shannon," and cites his affidavit.  However, although
the affidavit states that Barton had never met or spoken with
the plaintiffs, it states only that he had never met Shannon--
it does not say that he had never spoken with Shannon.    
"We 
note 
that 
the 
trial 
court's 
denial 
of 
the
4
petitioners' motions to dismiss for lack of personal
jurisdiction is interlocutory and preliminary only. The
petitioners can continue to challenge personal jurisdiction in
their answers to the complaint and by motions for a summary
judgment or at trial."  Ex parte United Ins. Cos., 936 So. 2d
1049, 1056 (Ala. 2006) (citing Ex parte McInnis, 820 So. 2d
795, 798 (Ala. 2001)).
18
he does not deny that he spoke with Shannon  or Greenway or
3
was otherwise not involved in any scheme to tortiously induce
the plaintiffs to reduce their partnership interest in Gulf
Development.  Instead, his evidence is similar to that
produced by the defendant in Puccio--generic evidence that he
had no contact with Alabama that does not address the factual
assertions in the complaint demonstrating sufficient contacts
with this state.  This leaves uncontroverted the plaintiffs'
allegations of contact through the conspiracy.  Therefore,
Barton has not established a prima facie case that the trial
court lacks personal jurisdiction and has not demonstrated a
clear legal right to mandamus relief.4
PETITION DENIED.
Cobb, C.J., and See, Woodall, and Parker, JJ., concur.