Court Opinion

ID: 40396
Source: CourtListenerOpinion
Date Created: 2010-04-25 20:44:33+00
Date Added: 2024-06-11T17:16:30.269459
License: Public Domain

United States Court of Appeals
                                                                Fifth Circuit
                                                             F I L E D
                   UNITED STATES COURT OF APPEALS
                        For the Fifth Circuit                January 13, 2006

                                                         Charles R. Fulbruge III
                                                                 Clerk
                            No. 04-11512

                           MALCOLM KELSO,

                                               Plaintiff-Appellant,

                               VERSUS

                  LYFORD CAY MEMBERS CLUB LIMITED,

                                                Defendant-Appellee.

             Appeal from the United States District Court
         For the Northern District of Texas, Dallas Division
                          ( 3:04-CV-1823 )

Before HIGGINBOTHAM, DeMOSS, and OWEN, Circuit Judges.

PER CURIAM:*

     Malcolm Kelso appeals the district court’s order dismissing

his complaint for lack of personal jurisdiction over Defendant-

Appellee Lyford Cay Members Club, Ltd. (the “Club”).    Kelso argues

the court erred in concluding that it lacked both specific and

general personal jurisdiction over the Club.    We AFFIRM.

                             BACKGROUND

     *
      Pursuant to 5TH CIR. R. 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
     The   Club   is   a   private    club      located      in   Nassau    in    the

Commonwealth of the Bahamas.         Only members may use the facilities

of the Club.    Kelso is a former Club member who filed suit against

the Club in Texas state court, asserting breach of contract and a

claim for quantum meruit.        The complaint arose from the Club’s

cancellation of Kelso’s membership for failure to pay dues.

     Kelso alleges his membership was improperly cancelled because

the Club failed to give notice of the cancellation.                   According to

Kelso, in approximately 1991, the Club contacted Kelso and his

former wife in Texas to inquire into their interest in membership.

Kelso claims the membership forms were mailed to him, completed by

him, and returned to the Club.          Kelso alleges the Club conducted

membership   interviews    of   Kelso      in   New   York    City.        Upon   his

acceptance into the Club, Kelso claims that he paid his membership

dues by personal check drawn upon his Texas bank account and that

all membership and billing information was mailed to his Texas home

through 1998.     Kelso acknowledges receipt of notice in 1997 from

the Club that he was not entitled to either continued membership or

renewal of his membership.      Kelso claims the Club later entered a

new agreement by means of a letter to Kelso’s counsel, permitting

Kelso’s reinstatement to the Club on the condition he pay back dues

owed from the time of Kelso’s divorce through 1999.                   Kelso claims

he forwarded the owed monies to the Club from his Texas bank but

that he never received a membership card or any evidence the

membership had been reinstated.              Kelso claims he subsequently

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received an additional bill for 1999-2000 for $4,600 and that he

paid this final bill as well.

      The Club removed Kelso’s complaint to federal court on the

basis of diversity jurisdiction.2             There, the Club moved to dismiss

Kelso’s complaint for lack of personal jurisdiction or for forum

non conveniens. Kelso responded, and the court dismissed the cause

for lack of personal jurisdiction.              Kelso appeals.

                                DISCUSSION

      This Court reviews de novo a district court’s dismissal for

lack of personal jurisdiction.                Allred v. Moore & Peterson, 117

F.3d 278, 281 (5th Cir. 1997); see also FED. R. CIV. P. 12(b)(2).

“When a nonresident defendant presents a motion to dismiss for lack

of   personal   jurisdiction,       the   plaintiff     bears    the    burden   of

establishing     the     district     court’s        jurisdiction       over     the

nonresident.    The court may determine the jurisdictional issue by

receiving affidavits, interrogatories, depositions, oral testimony,

or   any   combination   of   the    recognized       methods    of    discovery.”

Allred, 117 F.3d at 281 (quoting Stuart v. Spademan, 772 F.2d 1185,

1192 (5th Cir. 1985)).          The district court shall resolve all

factual disputes, however, in favor of the plaintiff.                    Wilson v.

Belin, 20 F.3d 644, 648 (5th Cir. 1994).              The plaintiff need only

establish a prima facie case for personal jurisdiction.                   See D.J.

      2
      It is undisputed that Kelso is a resident of Texas and the
Club is a resident of the Bahamas.

                                          3
Invs., Inc. v. Metzeler Motorcycle Tire Agent Gregg, Inc., 754 F.2d

542, 545 (5th Cir. 1985).

     “A federal district court sitting in diversity may exercise

personal jurisdiction only to the extent permitted a state court

under applicable state law.”    Allred, 117 F.3d at 281.   “[I]t is

well-established that the Texas long-arm statute authorizes the

exercise of personal jurisdiction to the full extent allowed by the

Due Process Clause of the Fourteenth Amendment,” so the relevant

question is whether Texas can exercise personal jurisdiction over

the Club consistent with the Due Process Clause.   See Cent. Freight

Lines Inc. v. APA Transp. Corp., 322 F.3d 376, 380 (5th Cir. 2003).

     The exercise of personal jurisdiction over a nonresident
     will not violate due process principles if two
     requirements are met. First, the nonresident defendant
     must have purposefully availed himself of the benefits
     and protections of the forum state by establishing
     “minimum contacts” with that forum state. And second, the
     exercise of jurisdiction over the nonresident defendant
     must not offend “traditional notions of fair play and
     substantial justice.”

Wilson, 20 F.3d at 647 (citations omitted). “Minimum contacts” may

arise by virtue of contacts that give rise to specific personal

jurisdiction or general personal jurisdiction.     Id.

I. The district court lacked specific personal jurisdiction over
the Club.

     When a nonresident defendant’s contacts with the forum state

arise from or are directly related to the cause of action, specific

personal jurisdiction exists.   Wilson, 20 F.3d at 647.    A single

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act of the defendant may support specific personal jurisdiction.

Bearry v. Beech Aircraft Corp., 818 F.2d 370, 374 (5th Cir. 1987).

The minimum contacts query with respect to specific personal

jurisdiction     is   satisfied      when    the     nonresident     defendant

‘purposefully’    avails    itself    of    the    privilege   of   conducting

activities within the forum state, thus invoking the benefits and

protections of its laws.”      Ruston Gas Turbines, Inc. v. Donaldson

Co., 9 F.3d 415, 419 (5th Cir. 1993) (quoting Burger King Corp. v.

Rudzewicz, 471 U.S. 462, 475 (1985)).

     Kelso argues that the Club’s contacts are directly related to

the cause because the Club solicited his membership by contacting

him in Texas and by interviewing him for membership in New York

City.   Kelso argues that by placing the application materials in

the mail the Club solicited Kelso’s business and purposefully

availed itself of conducting business in the forum state by using

the U.S. Postal Service. In support of this argument, Kelso relies

upon our prior decision in Thorington v. Cash, 494 F.2d 582 (5th

Cir. 1974).    There, the tortious activity provision of Georgia’s

long-arm statute controlled, and we concluded that the plaintiff

established    personal    jurisdiction      based    upon   the    nonresident

defendant’s actions of mailing material misrepresentations to the

plaintiff in the forum state “with the evident intention that they

there be relied upon and by further mailing the contract in

question into Georgia for execution.” Id. at 587 (emphasis added).

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Thorington’s holding is expressly limited “to the application of

[Georgia’s long-arm statute] subsection (b) (tortious act within)

to conduct which occurs prior to . . . the effective date of

subsection (c) (act without/tortious injury within).”                Id. at 586.

Thorington is inapposite to this dispute.

      Kelso also points to the Texas long-arm statute that defines

the conduct of business in Texas to include (1) contracting by mail

or otherwise with a Texas resident with performance by either party

in whole or part in Texas and (2) commission of a tort in whole or

in part in Texas.       TEX. CIV. PRAC. & REM. CODE § 17.042 (Vernon 2000).

The   district    court    determined       that    Kelso   failed   to    produce

sufficient evidence to support a prima facie case of specific

personal jurisdiction over the Club.

      Kelso has not produced any evidence that a contract exists

between the parties but has so alleged by arguing that a membership

application was mailed to him in Texas, that he completed and

returned the application, and that an agreement with the Club was

thereby created.        The Club disputes that a contract exists but

argues in the alternative that even if a contract did exist, no

performance    occurred     in   Texas.       The   Club    argues   it    has   not

purposefully directed its activities at Texas and points to facts

in the record supporting this conclusion, including: (1) the

private nature of the Club; (2) the closed nature of membership

application,     that    is,   applicants     are    accepted   only      upon   the

                                        6
recommendation of a current Club member; (3) outside travel agents

may not book the use of the Club or apply for membership; (4) the

Club does not advertise or conduct any business in the United

States or anywhere outside of the Bahamas; and (5) the Club

maintains no website and cannot be accessed by the Internet.                  The

Club also responds to Kelso’s argument that the Club purposefully

availed itself     of   the    forum    state   when   it   solicited   Kelso’s

membership.      According to the Club, Kelso’s bare allegation of

solicitation is insufficient to support a prima facie showing of

specific personal jurisdiction.

       The Club also relies on Stuart v. Spademan, 772 F.2d 1185 (5th

Cir.    1985).    There,      Texan    plaintiffs    sued   a   nonresident   in

diversity for breach of contract where it was undisputed the

parties had contracted. The panel found that both the existence of

the contract and the negotiations between the parties leading up to

the agreement were insufficient to permit exercise of specific

personal jurisdiction.        Id. at 1193-94.       The panel relied upon the

“quality of the contacts” in resolving the question of purposeful

availment, rather than the mere existence of the contacts.               Id. at

1194.    “The random use of interstate commerce to negotiate and

close a particular contract, the isolated shipment of goods to the

forum at the instigation of the resident plaintiffs, and the

mailing of payments to the forum do not constitute the minimum

contacts necessary to constitutionally exercise jurisdiction . . .

                                         7
.”   Id.   Stuart instructs that the nature of the Club’s contacts on

this record are properly considered in determining whether the Club

purposefully availed itself of Texas’s laws, even when it is

assumed, as it must be given the disputed fact, that a contract

existed between Kelso and the Club.

      Even resolving the dispute over the contract’s existence in

Kelso’s favor, Kelso has failed to meet his burden of making a

prima facie showing that the Club directed its activities to Texas

in such a manner that Kelso’s cause of action arises from the

Club’s activities in the forum state.       See id. at 1193-94.   We

affirm the district court’s conclusion that it lacked specific

personal jurisdiction over the Club.

II. The district court lacked general personal jurisdiction over
the Club.

      General jurisdiction . . . will attach, even if the
      nonresident defendant’s contacts with the forum state are not
      directly related to the cause of action, if the defendant's
      contacts with the forum state are both “continuous and
      systematic.”

Wilson, 20 F.3d at 647 (citations omitted).

      Kelso argues the Club mailed membership information and bills

for years via the U.S. Postal Service and received payment by the

postal service and banks within Texas.      Kelso alleges that more

than sixty percent of the Club’s members are U.S. citizens and that

twenty-nine members hail from Texas.    Kelso relies solely on Bruno

Corp. v. Turbo Research, Inc., 2003 U.S. Dist. LEXIS 524 (N.D. Tex.

Jan. 15, 2003).     There, the district court found the exercise of

                                   8
general personal jurisdiction proper over a nonresident defendant

because contacts were systematic and continuous where the defendant

admitted it had visited Texas for trade shows over a period of

years, made visits to Texas utilities, discussed potential business

with a Texas company, and sent to a Texas company a proposal for

the sale of a product.       Id. at *11-12.      In addition, the defendant

there admitted to its execution of contracts in Texas aside from

the one at issue in the litigation.          Id. at *12.

       Again, based upon the dispute as to the existence of a

contract, we resolve that factor in Kelso’s favor.               Even with the

existence     of   a   membership    contract    between   the   parties,   any

contacts with Texas that might exist based upon that agreement are

not sufficiently continuous and systematic to support general

personal jurisdiction.       The mere use of the postal service and the

acceptance of checks drawing up on accounts with a Texas bank are

insufficient to make the showing required of Kelso.              Furthermore,

Kelso’s reliance upon the mailing addresses of Club members from

outdated records is unavailing for the purpose of establishing the

Club’s systematic or continuous contacts with Texas.              We affirm as

well    the   district    court’s     conclusion    that   general    personal

jurisdiction over the Club was lacking.

                                    CONCLUSION

       After thorough review of the briefs and relevant portions of

the record, we affirm the district court’s dismissal of Kelso’s

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complaint   for   lack   of   personal   jurisdiction   over   the   Club

essentially for the reasons provided by the district court.

AFFIRMED.

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