1

Four months ago, Ingenious named Addictionology Corp. of

America, Inc., Pathways to Recovery, Inc., and A-1 The Family, Inc.

as defendants to this suit. See Pl.'s Am. Compl. at 2-3, ¶¶ 9-11. 

The record, however, does not reflect service on these entities. 

Ingenious's failure to file proof of proper service of summons on

these entities will be addressed by separate order. 

IN THE UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF TEXAS

FORT WORTH DIVISION

INGENIOUS INVESTMENTS, INC., §

§

Plaintiff, §

§

VS. § NO. 4:05-CV-535-A

§

ALLEN BOMBART, ET AL., §

§

Defendants. §

MEMORANDUM OPINION

and

ORDER

Plaintiff, Ingenious Investments, Inc. ("Ingenious"),

initiated this suit against Allen Bombart ("Bombart"), a citizen

and resident of Florida, and six Florida corporations in which

Bombart is the sole shareholder. The corporations are: (1) AAAB,

Inc. ("AAAB"); (2) Continuum Care Services, Inc. ("Continuum");

(3) Cowcat Services, Inc. ("Cowcat"); (4) Doctors Corporation of

America ("DCA"); (5) Human Beings Anonymous, Inc. ("HBA"); and

(6) Middle Earth, Inc. ("MEI").1 With the sole exception of

AAAB, all defendants have joined in a motion to dismiss for lack

of personal jurisdiction. After careful consideration of the

motion, the response, the reply, the record, and the applicable

authorities, the court concludes that the motion should be

denied. 

 

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2

Eventually, plaintiff must prove by a preponderance of the

evidence that jurisdiction exists. See DeMelo v. Toche Marine, Inc.,

711 F.2d 1260, 1271 n.12 (5th Cir. 1983).

2

I.

Factual Background

Ingenious contends that AAAB, Bombart, and Continuum reneged

on an agreement to pay Ingenious $300,000.00, plus expenses, in

return for Ingenious's creation of several websites. See Pl.'s

Am. Compl. at 1-4, ¶¶ 1-17. Personal jurisdiction over Bombart,

AAAB and Continuum is premised on their direct dealings with

Ingenious in Texas. Personal jurisdiction over Cowcat, DCA, HBA,

MEI, as well as Bombart, is premised on various piercing-thecorporate-veil theories, including alter ego, single business

enterprise, and sham to perpetrate fraud on Ingenious. 

II.

Applicable Legal Authorities

A. General Standards for Exercise

of Personal Jurisdiction

When a nonresident defendant presents a motion to dismiss

for lack of personal jurisdiction, the plaintiff bears the burden

of establishing that in personam jurisdiction exists. Wilson v.

Belin, 20 F.3d 644, 648 (5th Cir.), cert. denied, 513 U.S. 930

(1994); Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985);

D.J. Investments, Inc. v. Metzeler Motorcycle Tire Agent Gregg,

Inc., 754 F.2d 542, 545-46 (5th Cir. 1985). The plaintiff need

not, however, establish personal jurisdiction by a preponderance

of the evidence; at this stage,2 prima facie evidence of personal

 

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3

jurisdiction is sufficient. WNS, Inc. v. Farrow, 884 F.2d 200,

203 (5th Cir. 1989); Wyatt v. Kaplan, 686 F.2d 276, 280 (5th Cir.

1982). The court may resolve a jurisdictional issue by reviewing

pleadings, affidavits, interrogatories, depositions, oral

testimony, exhibits, any part of the record, and any combination

thereof. Command-Aire Corp. v. Ontario Mechanical Sales & Serv.,

Inc., 963 F.2d 90, 95 (5th Cir. 1992). Allegations of the

plaintiff's complaint are taken as true except to the extent that

they are contradicted by defendant's affidavits. Wyatt, 686 F.2d

at 282-83 n.13 (citing Black v. Acme Markets, Inc., 564 F.2d 681,

683 n.3 (5th Cir. 1977)). Any genuine, material conflicts

between the facts established by the parties' affidavits and

other evidence are resolved in favor of plaintiff for the

purposes of determining whether a prima facie case exists. Jones

v. Petty-Ray Geophysical Geosource, Inc., 954 F.2d 1061, 1067

(5th Cir.), cert. denied, 506 U.S. 867 (1992); Bullion v.

Gillespie, 895 F.2d 213, 217 (5th Cir. 1990).

In a diversity action, such as this one, personal

jurisdiction over a nonresident may be exercised if (1) the

nonresident defendant is amenable to service of process under the

law of a forum state, and (2) the exercise of jurisdiction under

state law comports with the due process clause of the Fourteenth

Amendment. Wilson, 20 F.3d at 646-47; Thompson v. Chrysler

Motors Corp., 755 F.2d 1162, 1166 (5th Cir. 1985) (quoting Smith

v. DeWalt Prods. Corp., 743 F.2d 277, 278 (5th Cir. 1984)). 

Since the Texas long-arm statute has been interpreted as

 

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3

See, e.g., Guardian Royal Exchange Assurance Ltd. v. English

China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex. 1991); Schlobohm v.

Schapiro, 784 S.W.2d 355, 357 (Tex. 1990); Kawasaki Steel Corp. v.

Middleton, 699 S.W.2d 199, 200 (Tex. 1985).

4

extending to the limits of due process,3 the only inquiry is

whether the exercise of jurisdiction over the nonresident

defendant would be constitutionally permissible. Bullion, 895

F.2d at 216; Stuart, 772 F.2d at 1189.

For due process to be satisfied, (1) the nonresident

defendant must have "minimum contacts" with the forum state

resulting from an affirmative act on the defendant's part, and

(2) the contacts must be such that the exercise of jurisdiction

over the person of the defendant does not offend "traditional

notions of fair play and substantial justice." International

Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (quoting

Milliken v. Meyer, 311 U.S. 457, 463 (1940)).

The minimum contacts prong of the due process requirement

can be satisfied by a finding of either "specific" or "general"

jurisdiction over the nonresident defendant. Bullion, 895 F.2d

at 216. For specific jurisdiction to exist, the foreign

defendant must purposefully do some act or consummate some

transaction in the forum state and the cause of action must arise

from or be connected with such act or transaction. Burger King

Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985). Even if the

controversy does not arise out of or relate to the nonresident

defendant's purposeful contacts with the forum, general

 

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5

jurisdiction may be exercised when the nonresident defendant's

contacts with the forum are sufficiently continuous and

systematic as to support the reasonable exercise of jurisdiction. 

See, e.g., Helicopteros Nacionales de Colombia, S.A. v. Hall, 466

U.S. 408, 416 (1984); Keeton v. Hustler Magazine, Inc., 465 U.S.

770, 779 (1984); Perkins v. Benguet Consol. Mining Co., 342 U.S.

437 (1952). When general jurisdiction is asserted, the minimum

contacts analysis is more demanding and requires a showing of

substantial activities within the forum state. Jones, 954 F.2d

at 1068.

The second prong of the due process analysis is whether

exercise of jurisdiction over the nonresident defendant would

comport with traditional notions of fair play and substantial

justice. International Shoe, 326 U.S. at 316. In determining

whether the exercise of jurisdiction would be reasonable such

that it does not offend traditional notions of fair play and

substantial justice, the Supreme Court has instructed that courts

look to the following factors: (1) the burden on the defendant,

(2) the interests of the forum state, (3) the plaintiff's

interest in obtaining relief, (4) the interstate judicial

system's interest in obtaining the most efficient resolution of

controversies, and (5) shared interest of the several states in

furthering fundamental substantive social policies. Asahi Metal

Indus. Co. v. Superior Court, 480 U.S. 102, 113 (1987) (citing

World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292

(1980)).

 

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B. The Fiduciary Shield Doctrine

The fiduciary shield doctrine holds that an individual's

transaction of business within the state solely as a corporate

officer does not create personal jurisdiction over the individual

even though the state has in personam jurisdiction over the

corporation. Stuart, 772 F.2d 1185; House v. 22 Tex. Servs.,

Inc., 60 F. Supp. 2d 602, 609 (S.D. Tex. 1999). The doctrine is

based upon the idea that "it is unfair to force an individual to

defend a suit brought against him personally in a forum with

which his only relevant contacts are acts performed not for his

own benefit but for the benefit of his employer." Saktides v.

Cooper, 742 F. Supp. 382, 385 (W.D. Tex. 1990) (quoting Marine

Midland Bank, N.A. v. Miller, 664 F.2d 899, 902 (2d Cir. 1981)). 

An exception to the fiduciary shield doctrine exists, however,

where the corporation is the alter ego of the individual. 

Stuart, 772 F.2d at 1997. 

C. Personal Jurisdiction and

Piercing the Corporate Veil

 

As defendants concede, the Fifth Circuit has recognized that

personal jurisdiction may be established over an individual 

or corporation through a piercing-the-corporate-veil theory. 

See Def.'s Reply at 4-5. For example, according to the Fifth

Circuit:

[F]ederal courts have consistently acknowledged that it

is compatible with due process for a court to exercise

personal jurisdiction over an individual or a

 

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7

corporation that would not ordinarily be subject to

personal jurisdiction in that court when the individual

or the corporation is an alter ego . . . of a

corporation that would be subject to personal

jurisdiction in that court. The theory underlying

these cases is that, because the two corporations (or

the corporation and its individual alter ego) are the

same entity, the jurisdictional contacts of one are the

jurisdictional contacts of the other for purposes of

the International Shoe due process analysis.

Patin v. Thoroughbred Power Boats, Inc., 294 F.3d 640, 653 (5th

Cir. 2002) (citations omitted). 

Further, the piercing-the-corporate-veil test for

attribution of contacts, i.e. personal jurisdiction, "is less

stringent than that for liability." House, 60 F. Supp. 2d at 610

n.5 (citing Stuart, 772 F.2d at 1198 n.12). Whether the

corporate entity can be disregarded is determined by the law of

the state of incorporation for each defendant, which here is

Florida. House, 60 F. Supp. 2d at 609.

 

III.

Analysis

A. The Court Has Specific Jurisdiction

Over Bombart and Continuum

Ingenious urges only specific, not general, jurisdiction

over Bombart and Continuum. In particular, Ingenious alleges

that, in August 2004, it was contacted at its principal place of

business in Arlington, Texas by Dave Lauer ("Lauer"), who

represented himself to be, inter alia, Bombart's marketing

 

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4

Exhibit B to defendants' brief in support of their motion to

dismiss is a purported affidavit of Bombart in which he concedes the

payment of $50,000.00 to Ingenious. See Ex. B to Defs.' Br. at ¶ 16. 

Bombart's affidavit is not signed. Nonetheless, the court did

consider Bombart's affidavit in reaching its conclusion regarding

personal jurisdiction over movants in this case. 

8

manager. See Pl.'s Am. Compl. at 3, ¶ 13; Ex. A to Pl.'s App. at

¶ 7. Lauer stated that he was "interested in pricing Ingenious

to write, design and place websites on the internet for AAAB and

Continuum." Pl.'s Am. Compl. at 3, ¶ 13. According to

Ingenious, an agreement was, in fact, reached with Bombart, AAAB,

and Continuum for Ingenious to develop fifty websites in return

for $300,000.00, plus expenses, to be paid in six $50,000.00

installments. Id. at 3-4, ¶¶ 14-15. Further, per Ingenious,

Lauer, Bombart, and others contacted it hundreds of times in

Texas regarding the status of the project. Ex. A. to Pl.'s App.

at ¶ 8. Despite its purported near completion of all the work

after approximately 500 hours of labor performed at Ingenious's

office in Arlington, Texas, only one installment of $50,000.00

has been paid to Ingenious. Pl.'s Am. Compl. at 4, ¶¶ 16-17; Ex.

A to Pl.'s App. at ¶¶ 7-8; Ex. B. to Defs.' Br. at 6, ¶ 16.4 

Notably, Ingenious's version of events is largely

corroborated by an affidavit from Lauer, who, among other things,

confirms that he, in his capacity as a consultant for Bombart,

AAAB and Continuum, actively solicited Ingenious's services and

personally attended a meeting in Dallas with Ingenious

representatives regarding the project. See Ex. C to Pl.'s App.

at ¶¶ 2-3 and 5. Lauer further states that he was present when

 

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9

Bombart called Ingenious in Texas and said that funding was in

place pursuant to the agreement. Id. at ¶ 5. 

The court is satisfied that Ingenious has made a prima facie

showing of specific personal jurisdiction over Bombart and

Continuum. Though these defendants dispute some of Ingenious's

allegations, conflicts between the facts are to be resolved in

Ingenious's favor in determining whether a prima facie case

exists. Jones, 954 F.2d at 1067; Bullion, 895 F.2d at 217. 

Further, for the reasons stated below, the court concludes that

Bombart cannot benefit from the fiduciary shield doctrine and

thereby escape personal jurisdiction, because there is sufficient

evidence, at least at this stage of the litigation, that Bombart

is the alter ego of all the corporate defendants. Stuart, 772

F.2d at 1997.

B. There is Sufficient Evidence to

Disregard the Corporate Shields of

Continuum, Cowcat, DCA, HBA, and MEI

For Jurisdictional Purposes

 

Because all of the corporate defendants were incorporated in

Florida, the court looks to Florida law to determine whether the

corporate form should be disregarded. House, 60 F. Supp. 2d at

609. The Florida Supreme Court, in turn, has held that, to

pierce the corporate veil, one must prove that the corporation is

a mere instrumentality or alter ego of the defendant and that the

defendant engaged in improper conduct in the formation or use of

the corporation. Dania Jai-Ali Palace, Inc. v. Sykes, 450 So. 2d

1114, 1120-21 (Fla. 1984); see also Merkin v. PCA Health Plans of

Florida, Inc., 855 So. 2d 137, 141 (Fla. 3d Dist. Ct. App. 2003). 

 

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The court acknowledges that typically a plaintiff seeks to

pierce the corporate form to hold a shareholder liable individually

for corporate acts. Here, the situation is reversed insofar that

Ingenious seeks, in addition to holding Bombart individually liable,

to hold the corporate defendants liable for Bombart's acts. That

this action involves a "reverse corporate veil piercing" is of "no

consequence, however, because the end result . . . is the same - two

separate entities merge into one for liability purposes." Maiz v.

Virani, 311 F.3d 334, 346 n.11 (5th Cir. 2002).

10

The court is persuaded that Ingenious has made a prima facie

case of jurisdiction over Continuum, Cowcat, DCA, HBA, and MEI

based on the evidence submitted that Bombart is their alter ego5

and further that he has engaged in improper conduct with respect

to their use or formation. Specifically, in addition to the

numerous allegations in the amended complaint in this regard, see

Pl.'s Am. Compl. at 7-9, ¶¶ 31-33, Ingenious has submitted the

affidavit of Carol Parks ("Parks"), a former chief executive

officer of Continuum, who attests to the co-mingling of funds

between Bombart and many, if not of all, of these corporations. 

See Ex. B. to Pl.'s App. at ¶ 6. Parks further states that the

corporations share the same physical address and many of the same

employees. Id. at ¶ 8. Indeed, Parks swears under oath that she

was personally privy to a conversation where Bombart announced

his intent to bankrupt AAAB in order to avoid obligations and

commitments to creditors, including Ingenious. Id. at ¶ 7. While

movants contest some, but not all, of these allegations, again

conflicts in facts are to be resolved, at this jurisdictional

 

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6

At this point, the court expresses no opinion on the issue of

the substantive liability of Continuum, Cowcat, DCA, HBA, and MEI. 

Rather, the court is only holding that Ingenious has made a prima

facie showing that the corporate forms of these defendants can

properly be disregarded in order for the court to exercise personal

jurisdiction over them. 

11

juncture, in Ingenious's favor.6 Jones, 954 F.2d at 1067;

Bullion, 895 F.2d at 217. 

C. The Exercise of Jurisdiction over Defendants

Does Not Offend Traditional Notions of Fair

Play and Substantial Justice

With respect to the second prong of the due process

analysis, the court concludes that exercise of jurisdiction over

movants would be constitutionally permissible. Asahi Metal, 480

U.S. at 113. AAAB is not contesting jurisdiction and therefore

will be participating in this litigation, presumably, at least in

part, through its sole shareholder Bombart, who is a key

participant in the dispute at hand. Because he is also the sole

shareholder of Continuum, Cowcat, DCA, HBA, and MEI, the court

cannot see how any of the movants can be burdened by the exercise

of personal jurisdiction over them, all of whom, at any rate, are

represented by the same counsel. Besides, any alleged burden on

any of the movants is outweighed by the interests of the forum

state, Ingenious's interest in obtaining relief, the interstate

judicial system's interest in obtaining the most efficient

resolution of controversies, and the furthering of fundamental

substantive social policies. Id.

Therefore,

The court ORDERS that the motion to dismiss for lack of

 

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12

personal jurisdiction of Bombart, Continuum, Cowcat, DCA, HBA,

and MEI be, and is hereby, denied. 

SIGNED January 20 , 2006.

 /s/ John McBryde 

JOHN McBRYDE

United States District Judge

 

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