Court Opinion

ID: 4112450
Source: CourtListenerOpinion
Date Created: 2016-12-30 18:01:32.537321+00
Date Added: 2024-06-11T07:46:12.311817
License: Public Domain

FILED
                                                                      United States Court of Appeals
                      UNITED STATES COURT OF APPEALS                          Tenth Circuit

                             FOR THE TENTH CIRCUIT                         December 30, 2016
                         _________________________________
                                                                          Elisabeth A. Shumaker
                                                                              Clerk of Court
DORIS RACHER, SANDRA CISPER,
EARLENE ADKISSON, co-personal
representatives of the estate of Eryetha
Mayberry, deceased; JAMES
KINGSBURY, personal representative of
the estate of and next of kin to Rachel
Mary Kingsbury, deceased,

      Plaintiffs - Appellees,

v.                                                          No. 16-6055
                                                    (D.C. No. 5:13-CV-00665-M)
RON LUSK, an individual; WESTLAKE                          (W.D. Okla.)
MANAGEMENT COMPANY, a Texas
corporation,

      Defendants - Appellants,

and

WESTLAKE NURSING HOME
LIMITED PARTNERSHIP, an Oklahoma
limited partnership, formerly d/b/a Quail
Creek Nursing and Rehabilitation Center,

      Defendant.
                         _________________________________

                             ORDER AND JUDGMENT*
                         _________________________________

      *
        After examining the briefs and appellate record, this panel has determined
unanimously to honor the parties’ request for a decision on the briefs without oral
argument. See Fed. R. App. P. 34(f); 10th Cir. R. 34.1(G). The case is therefore
submitted without oral argument. This order and judgment is not binding precedent,
except under the doctrines of law of the case, res judicata, and collateral estoppel. It
may be cited, however, for its persuasive value consistent with Fed. R. App. P. 32.1
and 10th Cir. R. 32.1.
Before TYMKOVICH, Chief Judge, PHILLIPS and McHUGH, Circuit Judges.
                 _________________________________

       In this appeal, Defendant Ron Lusk raises a single issue: whether the district

court erred in concluding it had personal jurisdiction over him. Exercising

jurisdiction under 28 U.S.C. § 1291, we affirm.

                                           I

       Eryetha Mayberry and Rachel Mary Kingsbury both died in residence at the

Quail Creek Nursing Home in Oklahoma City (Nursing Home), which was owned by

the Westlake Nursing Home Limited Partnership (the “Partnership”), an Oklahoma

limited partnership. The Partnership was, in turn, owned by Westlake Management

Company (“Westlake”), a Texas corporation, as its general partner and 1% owner,

and Defendant Ron Lusk, a Texas resident, as its limited partner and 99% owner.

Mr. Lusk is the president, director, and 100% owner of Westlake; Westlake has no

other officers, directors, or agents.

       Mr. Lusk was employed as the highest ranking employee of the Nursing

Home, and received a salary of $291,000, which he set. In exchange for that

compensation, Mr. Lusk assisted in the day-to-day operations and financial

management of the Nursing Home. He also made the decision not to obtain liability

insurance to cover the claims of injured residents.

       James Kingsbury brought suit against the Partnership in Oklahoma state court

to redress Rachel Mary Kingsbury’s death. While that suit was pending, Mr. Lusk

negotiated the sale of the Nursing Home for approximately $5.8 million, executed the

                                           2
documents consummating that sale from his home in Texas, and directed that the

proceeds of the sale be deposited in Westlake’s Texas bank account and disbursed

between Westlake and Mr. Lusk in accordance with their respective partnership

shares. A jury later rendered a verdict in favor of Mr. Kingsbury and awarded him

$355,484.89 (the Kingsbury Judgment). This judgment remains unpaid.

      Ms. Mayberry’s daughters brought suit in federal court to redress her mental

and physical abuse and eventual death while in residence at the Nursing Home. They

ultimately obtained a jury award of approximately $1.2 million against the

Partnership and Westlake (the Mayberry Judgment).1 Like the Kingsbury Judgment,

the Mayberry Judgment has not been satisfied.

      The Kingsbury and Mayberry plaintiffs later joined forces in this action, by

suing Mr. Lusk and the related entities for fraudulent transfer in connection with the

sale of the Nursing Home. Mr. Lusk moved to dismiss the action for lack of personal

jurisdiction. Based on the pleadings and affidavits on file, the district court denied

the motion. A jury then found for the plaintiffs and entered judgment against

Mr. Lusk.2 He filed this timely appeal challenging the district court’s personal

jurisdiction over him. Because the facts support a finding of specific personal

jurisdiction, we affirm.

      1
        Westlake’s appeal of this judgment is Appeal No. 16-6011, which was argued
before this court on November 16, 2016.
      2
        In a related federal suit, Mr. Kingsbury asserted partnership liability against
Westlake and Mr. Lusk for the judgment entered by the state court against the
Partnership on the Kingsbury wrongful death case. That matter is the subject of
Appeal No. 16-6087, also pending before this court.

                                           3
                                           II

      We review de novo the district court’s personal jurisdiction determination,

“taking as true all well-pled (that is, plausible, non-conclusory, and non-speculative)

facts alleged” in the plaintiffs’ complaint. Dudnikov v. Chalk & Vermilion Fine Arts,

Inc., 514 F.3d 1063, 1070 (10th Cir. 2008) (citation omitted). “We also must resolve

any factual disputes in the plaintiff’s favor.” Shrader v. Biddinger, 633 F.3d 1235,

1239 (10th Cir. 2011). Ultimately, the “plaintiff bears the burden of establishing

personal jurisdiction.” Id.

                                             A

       “Where a district court considers a pre-trial motion to dismiss for lack of

personal jurisdiction without conducting an evidentiary hearing, the plaintiff need

only make a prima facie showing of personal jurisdiction to defeat the motion.” AST

Sports Sci., Inc. v. CLF Distribution Ltd., 514 F.3d 1054, 1056–57 (10th Cir. 2008).

This showing is “light.” Wenz v. Memery Crystal, 55 F.3d 1503, 1505 (10th Cir.

1995). “Of course, even if personal jurisdiction is contested and found initially on

the pleadings and by affidavit, it may be reviewed again at subsequent stages in the

trial court proceedings as evidence accumulates.” Dudnikov, 514 F.3d at 1069–70

n.3; see also FDIC v. Oaklawn Apts., 959 F.2d 170, 174 (10th Cir. 1992)

(“[W]hatever degree of proof is required initially, a plaintiff must have proved by the

end of trial the jurisdictional facts by a preponderance of the evidence.” (internal

quotation marks and alterations omitted)).

                                             4
      In response to Mr. Lusk’s motion to dismiss, the plaintiffs presented the

following jurisdictional facts: (1) the Partnership is based in Oklahoma, Aplt. App.

Vol. 1 at 74; (2) the Nursing Home was located in Oklahoma City; (3) Mr. Lusk

was listed as the registered agent for the Partnership, with an Oklahoma

address identified, id.; (4) Mr. Lusk was a salaried employee of the Nursing Home,

id. at 96–97; (5) Mr. Lusk was a member of the Nursing Home’s governing body,

“legally responsible for establishing and implementing policies regarding the

management and operation” of the Nursing Home according to regulations, id. at 52

& n.11; (6) at the time, Mr. Lusk had other contacts with Oklahoma, including

50% ownership of a hospice enterprise, for which his designated mailing address was

in Oklahoma, id. at 98–99; and (7) Mr. Lusk had been sued before in Oklahoma and

did not claim the court was without personal jurisdiction over him.

      The district court held that the plaintiffs had made a prima facie showing that

the court could exercise personal jurisdiction over Mr. Lusk, “particularly specific

personal jurisdiction.” Id. Vol. 2 at 154. The court found that, in light of the

purported intentionally tortious conduct, the location of the Nursing Home, and the

fact that it was controlled by Mr. Lusk, both Westlake and Mr. Lusk “should have

reasonably anticipated being haled into court in Oklahoma.” Id. The court noted that

Westlake and Mr. Lusk availed themselves of the benefits and protections of

Oklahoma law. The court also concluded that its finding did not offend the notions

of fair play and substantial justice because, among other things, Oklahoma has “an

important interest in providing a forum in which its residents can seek redress for the

                                           5
intentional injuries caused by out-of-state actors who allegedly, through a fraudulent

transfer, sought to leave tort creditors without a means to collect any judgment they

might obtain,” and because “the states share an interest in enforcing statutes that

allow tort creditors . . . to efficiently collect any judgment they might receive.”

Id. at 155.

       After the jury found for plaintiffs, Mr. Lusk moved for judgment as a matter of

law and again claimed the district court lacked personal jurisdiction over him. The

district court denied Mr. Lusk’s motion, relying on additional jurisdictional facts the

plaintiffs proved at trial: (1) Mr. Lusk formed the Partnership in 1992 to acquire and

manage the Nursing Home, Aplee. App. Vol. 2 at 384, 386; (2) Mr. Lusk was the

highest ranking employee of the Partnership, id. Vol. 1 at 129; (3) Mr. Lusk managed

the Nursing Home’s finances and capital expenditures, id. at 146; (4) Mr. Lusk made

or participated in the decision not to carry insurance that would have covered the

plaintiffs’ claims, id. at 19; (5) Mr. Lusk transferred the proceeds from the Nursing

Home’s sale to a bank account in Dallas belonging to Westlake, not the Partnership,

with knowledge of the plaintiffs’ claims against the Partnership, id. at 21, 33; and

(6) after the Nursing Home’s sale, Mr. Lusk, still a signator on one of the Nursing

Home’s bank accounts, transferred funds out of the account to himself in Dallas due

to a disagreement with the buyer, id. at 61–62, 197–98. This appeal followed.

       As an initial matter, the plaintiffs argue that Mr. Lusk “cannot appeal the trial

court’s finding of a prima facie case when his motion is denied and the case proceeds

to trial.” Response Br. at 2. In response, Mr. Lusk contends that he “is entitled on

                                            6
appeal to review of the record made on his preliminary motion to dismiss for lack of

personal jurisdiction . . . and Plaintiffs are similarly confined to that record.” Reply

Br. at 8. We disagree on both counts. Nothing in our precedent bars an appellant

from raising an error at the motion-to-dismiss stage of the proceedings in the district

court. But a personal jurisdiction ruling on pleadings and affidavits is essentially a

provisional ruling under our precedent, as a plaintiff still must prove personal

jurisdiction by a preponderance of the evidence by the time of trial, see Dudnikov,
514 F.3d at 1069 n.3; Oaklawn, 959 F.2d at 174. As a result, we look to the entire

record to determine whether the plaintiff indeed established personal jurisdiction,

including the jurisdiction facts introduced at trial. And we are not confined to the

pleadings and affidavits that the district court used in making its initial determination

as Mr. Lusk proposes.

                                            B

      Because Oklahoma’s long-arm statute contemplates personal jurisdiction to the

fullest constitutional extent, “the personal jurisdiction inquiry under Oklahoma law

collapses into a single due process inquiry.” Intercon, Inc. v. Bell Atl. Internet

Solutions, Inc., 205 F.3d 1244, 1247 (10th Cir. 2000). In turn, we use a two-step

inquiry to evaluate whether the court can exercise personal jurisdiction consistent

with the due process requirements of the Fourteenth Amendment: (1) “whether the

nonresident defendant has ‘minimum contacts’ with the forum state such that he

should reasonably anticipate being haled into court there,” and (2) “whether the

exercise of personal jurisdiction over the defendant offends traditional notions of fair

                                            7
play and substantial justice.” AST Sports Sci., 514 F.3d at 1057 (internal quotation

marks omitted). “Such contacts may give rise to personal jurisdiction . . . either

generally,” if the contacts are so “continuous and systematic” that the non-resident

defendant may be subject to suit in any situation, or specifically, where jurisdiction is

premised on the defendant obtaining a benefit in exchange for purposeful conduct

directed at the forum state. Shrader, 633 F.3d at 1239. Here, the district court found

it had specific jurisdiction over Mr. Lusk.

                                              1

       In the specific-jurisdiction context, the minimum-contacts standard requires

that a court assert such jurisdiction “if the defendant has purposefully directed his

activities at residents of the forum, and the litigation results from alleged injuries that

arise out of or relate to those activities.” Burger King Corp. v. Rudzewicz, 471 U.S.
462, 472 (1985) (citations and internal quotation marks omitted). Not any

purposefully directed contact suffices for minimum contacts — “it is essential in each

case that there be some act by which the defendant purposefully avails itself of the

privilege of conducting activities within the forum State, thus invoking the benefits

and protections of its laws.” Id. at 475 (internal quotation marks omitted). “[T]he

purposeful availment requirement also ensures that a defendant will not be subject to

the laws of a jurisdiction solely as a result of random, fortuitous, or attenuated

contacts, or of the unilateral activity of another party or a third person.” AST Sports

Sci., 514 F.3d at 1058 (internal quotation marks omitted). Where a defendant’s

intentionally tortious actions are aimed at the forum state and most of the harm is felt

                                              8
in the forum state, minimum contacts are established. Calder v. Jones, 465 U.S. 783,

787–90 (1984).

      We have no difficulty affirming the district court’s finding that Mr. Lusk

purposely availed himself of the privilege of conducting activities within the State of

Oklahoma. Specifically, Mr. Lusk: (1) organized the Partnership in Oklahoma;

(2) owned the controlling interest in the Partnership, which owned and operated a

Nursing Home located in Oklahoma; (3) listed himself as the registered agent for the

Partnership, using an Oklahoma address; (4) collected a salary from the Nursing

Home as its highest ranking employee in exchange for participating in its day-to-day

operations and financial management. These contacts were substantial and persistent

over the course of the 21 years he managed the Partnership and Nursing Home.

Furthermore, Mr. Lusk has directed the activities at residents of the State of

Oklahoma and this fraudulent transfer action is the result of the injuries arising out of

those activities. See Burger King, 471 U.S. at 479. By dispersing all of the proceeds

from the sale of the Nursing Home while plaintiffs actions were pending, Mr. Lusk

has left the Partnership with no assets, thereby preventing satisfaction of the

Kingsbury and Mayberry Judgments entered by the Oklahoma state and federal

courts against the Partnership. See Calder, 465 U.S. at 790 (the plaintiffs “need not

go to [Texas] to seek redress from persons who, though remaining in [Texas],

knowingly cause the injury in [Oklahoma].”). Mr. Lusk “deliberately reached out

beyond” his home forum to conduct business in Oklahoma, and he deliberately

stripped the Partnership of assets and delivered the proceeds to a Texas account to

                                            9
deprive the plaintiffs from satisfying the judgments obtained in Oklahoma. In light

of Mr. Lusk’s long-term and “wide-reaching contacts” with Oklahoma via the

Nursing Home, “the quality and nature of his relationship” to the Partnership in

Oklahoma “can in no sense be viewed as random, fortuitous, or attenuated.” See id.

at 480 (internal quotation marks omitted).

                                             2

      Having found sufficient contacts between Mr. Lusk and Oklahoma, “we must

still determine whether exercising personal jurisdiction would offend traditional

notions of fair play and substantial justice.” AST Sports Sci., 514 F.3d at 1061

(internal quotation marks omitted). “This inquiry requires a determination of

whether the district court’s exercise of personal jurisdiction over defendant is

reasonable in light of the circumstances surrounding the case.” Intercon, 205 F.3d

at 1247. In reaching that conclusion, we consider the following factors:

      (1) the burden on the defendant, (2) the forum state’s interest in
      resolving the dispute, (3) the plaintiff’s interest in receiving convenient
      and effective relief, (4) the interstate judicial system’s interest in
      obtaining the most efficient resolution of controversies, and (5) the
      shared interest of the several states in furthering fundamental social
      policies.

Trujillo v. Williams, 465 F.3d 1210, 1221 (10th Cir. 2006) (internal quotation marks

omitted). “[A]n especially strong showing of reasonableness may serve to fortify a

borderline showing of minimum contacts.” Pro Axess, Inc. v. Orlux Distrib., Inc.,

428 F.3d 1270, 1280 (10th Cir. 2005) (alterations and internal quotation marks

omitted).

                                           10
         Again, we have no difficulty concluding that the district court’s exercise of

jurisdiction was reasonable. The burden on Mr. Lusk to appear in Oklahoma City

was minimal, given that he routinely conducted business there and that Dallas is

roughly 200 miles away. We agree with the district court that Oklahoma has a strong

“interest in providing a forum in which its residents can seek redress for the

intentional injuries caused by out-of-state actors.” Aplt. App. Vol. 2 at 155. Finally,

it is more efficient and just for judgment creditors such as the plaintiffs to seek

collection where their judgment was obtained and not chase the defendant to another

state.

         We therefore AFFIRM the district court’s exercise of personal jurisdiction

over and entry of judgment against Mr. Lusk.

                                              Entered for the Court

                                              Carolyn B. McHugh
                                              Circuit Judge

                                            11