Opinion
Law No. 2010-2022
11-22-2010
Joaquin Gonzalez v. Diana Stout, et al.
DENNIS J. SMITH, CHIEF JUDGE
MARCUS D. WILLIAMS
JANE MARUM ROUSH
LESLIE M. ALDEN
JONATHAN C. THACHER
R. TERRENCE NEY
RANDY I. BELLOWS
CHARLES J. MAXFIELD
BRUCE D. WHITE
ROBERT J. SMITH
DAVID S. SCHELL
JAN L. BRODIE
LORRAINE NORDLUND
BRETT A. KASSABIAN
MICHAEL F. DEVINE
JUDGES
BARNARD F. JENNINGS
THOMAS J. MIDDLETON
THOMAS A. FORTKORT
RICHARD J. JAMBORSKY
JACK B. STEVENS
J. HOWE BROWN
F. BRUCE BACH
M. LANGHORNE KEITH
ARTHUR B. VI eregg
KATHLEEN H. MACKAY
ROBERT W. WOOLDRIDGE, JR.
MICHAEL P. McWEENY
GAYLORD L. FINCH, JR.
STANLEY P. KLEIN
RETIRED JUDGES
November 22, 2010
Melinda L. VanLowe, Esquire
Greenspun Shapiro Davis & Leary, P.C.
Counsel for Plaintiff, Joaquin Gonzalez
Peter J. Schwartz, Esquire
The Duff Law Firm
Counsel for Defendants, Cara and Amanda Stout
Dear Counsel:
This matter came before the Court on November 12, 2010. After considering the pleadings, memoranda, and arguments of counsel, the Court took the matter under advisement. The following embodies the Court's ruling.
FACTS
On February 17, 2010, Plaintiff, Joaquin Gonzalez ("Gonzalez") filed his eight-count Complaint against three Defendants: Diana Stout ("Diana"), Amanda Stout, and Cara Stout (Amanda and Cara, collectively, the "Daughters").
Amanda and Cara Stout are Diana Stout's daughters.
The Complaint alleges that Gonzalez is a Virginia resident living in Fairfax County. Amanda Stout is a Maryland resident, and Cara Stout is a South Carolina resident.
Kitchen v. City of Newport News, 275 Va. 378, 385-86, 657 S.E.2d 132, 136 (2008) (citing Welding, Inc. v. Bland County Serv. Auth., 261 Va. 218, 226, 541 S.E.2d 909, 914 (2001)).
Gonzalez asserts that he and Diana lived together in his home in Fairfax, Virginia. He also alleges that Diana, for her own benefit and the benefit of her children, misappropriated and converted assets from his bank account in excess of $1,000,000.00.
The Complaint alleges that the Daughters were fully aware of Diana's theft. Diana allegedly used much of the money to pay for the Daughters' tuition. She also allegedly used the money to help Cara Stout purchase a home in Charleston, South Carolina.
There are three counts which are applicable to the Daughters.
Count I is for Conversion - Financial Assets. Gonzalez asserts that the Daughters were aware of Diana's thefts and took the money given to them. Count II is for Common Law Conspiracy. It is asserted that the Daughters were aware of the theft and actively kept this information from Gonzalez. Count III is for Fraud.
On June 17, 2010, counsel for Gonzalez attempted service through the Secretary of the Commonwealth on the Daughters. After this service attempt, no responsive pleading was filed by either of the Daughters within twenty-one days.
On September 3, 2010, a Default Judgment was entered against the Daughters. This Order was not final. The Order states that the matter is continued until a later date for ex parte proof of damages.
The Daughters filed the present Demurrer asserting that the Default Judgment was void for lack of personal jurisdiction.
The only issue before the Court is whether an allegation of a civil conspiracy is enough to establish in personam jurisdiction.
ANALYSIS
Standard On Demurrer
"A demurrer tests the legal sufficiency of a pleading and can be sustained if the pleading, considered in the light more favorable to the plaintiff, fails to state a valid cause of action." The sole question to be decided by the court is whether the facts pleaded, implied, and fairly and justly inferred are legally sufficient to state a cause of action against the Defendant. On demurrer, the court must admit the truth of all material facts that are properly pleaded, facts which are impliedly alleged, and facts which may be fairly and justly inferred from the alleged facts. A demurrer does not admit the correctness of any conclusions of law.
Thompson v. Skate America, Inc., 261 Va. 121, 540 S.E.2d 123 (2001).
Cox Cable Hampton Roads, Inc. v. City of Norfolk, 242 Va. 394, 410 S.E.2d 652 (1991).
Ward's Equip., Inc. v. New Holland North America, Inc., 254 Va. 379, 382, 493 S.E.2d 516, 518 (1997).
DeSantis v. Hafner Creations, Inc., 949 F. Supp. 419, 422-23 (E.D. Va. 1996) (citations omitted).
In Personam Jurisdiction
"The first step in analyzing the exercise of personal jurisdiction is to determine whether Virginia's long-arm statute reaches the non-resident defendant given the cause of action alleged and the nature of the defendant's Virginia contacts."
Witt v. Reynods Metals Co., 240 Va. 452, 454, 397 S.E.2d 873, 875 (1990).
The second step is to ensure that the exercise of in personam jurisdiction over a non-resident defendant complies with the "due process requirements of the Fourteenth Amendment to the United States Constitution."
Young v. New Haven Advocate, 315 F.3d 256, 261 (4
Although there are two steps, "because Virginia's long-arm statute extends personal jurisdiction to the extent permitted by the Due Process Clause ... the statutory inquiry necessarily merges with the constitutional inquiry, and the two inquiries essentially become one." "The question, then, is whether the defendant has sufficient minimum contacts with [the forum] such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice."
Cir. 2002) (quotations omitted).
Id. at 261 (quoting Int'l Shoe Co., 326 U.S. 310, 316 (1945)).
For a defendant to be subject to suit in a forum where it is not physically present, due process demands certain "minimum contacts" with the forum "as make it reasonable ... to require the [defendant] to defend the particular suit which is brought there." Ordinarily these contacts should be "continuous and systematic," as opposed to "casual... single or isolated." This requirement springs from the essential principle "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."
International Shoe Co. v. Washington, 326 U.S. 310, 316-17 (1945).
Id. at 317.
Hanson v. Denckla, 357 U.S. 235, 253 (1958).
It is axiomatic that a judgment rendered by a court that lacked in personam jurisdiction over a defendant is void.
O'Connell v. Bean, 263 Va. 176, 179-80, 556 S.E.2d 741, 742 (2002).
There Is No Personal Jurisdiction Over The Daughters Because There Are Insufficient Minimum Contacts Alleged.
Here, the only allegations of contact between the Daughters and the Commonwealth of Virginia are an alleged civil conspiracy. Gonzalez asserts that the mere knowledge and receipt of the fruits of the theft are sufficient to establish minimum contacts.
A defendant is protected by due process against being bound in personam by judgments of a forum with which it lacks meaningful relations.
Burger King Corp. v. Rudzewicz, 105 U.S. 462 (1985).
"The significant contacts considered are those actually generated by the defendant." It is firmly established that "the unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State." But where contacts are of an "isolated" nature, the "reasonable foreseeability of litigation in the forum is substantially diminished."The same can be said about the acts committed by the Daughters. The only meaningful links are their alleged knowledge of a theft and the receipt of funds from this crime. These cannot be sufficient for in personam jurisdiction.
Choon Young Chung v. NANA Development Corporation, 783 F.2d 1124, 1126-27 (4
Cir. 1986). (emphasis added).
Hanson v. Denckla, 357 U.S. 235, 253 (1958).
In a minimum contacts analysis, a court looks to the nature of the defendant's contacts with the forum, particularly the quantity and quality of those contacts. Factors relevant to "fair play and substantial justice" include "the burden on the defendant, the forum State's interest in adjudicating the dispute, the plaintiff's interest in obtaining convenient and effective relief, the interstate judicial system's interest in obtaining the most efficient resolution of controversies, and the shared interest of the several States in furthering fundamental substantive social policies."
Burger King, 471 U.S. at 472.
Helicopteros Nacionales De Colombia v. Hall, 466 U.S. 408, 414-15 (1984).
Gonzalez asserts in his Complaint that the Daughters were aware that Diana was illegally converting funds from his bank account to hers. He states that the Daughters withheld this information from him. Moreover, he contends that they received some of these monies.
There is no allegation, though, that the Daughters came to Virginia to conspire with Diana. There is no allegation that letters were sent or telephone calls made from the Daughters to Diana in Virginia. There is no allegation that the Daughters were actually ever in Virginia. There is no allegation that there were any contacts ever generated by the Daughters in Virginia.
Burger King, 471 U.S. at 477 (quoting World-Wide Volkswagen v. Woodson, 444 U.S. 286, 292 (1980).
It is well settled that this factor alone would be insufficient to assert a lack of personal jurisdiction. As the Supreme Court explained in Burger King, "[j]urisdiction . . . may not be avoided merely because the defendant did not physically enter the forum State . . . we have consistently rejected the notion that an absence of physical contacts can defeat personal jurisdiction there." 471 U.S. 462, 476, (1985) (citations omitted).
The burden on the Daughters to defend in Virginia would be substantial. One daughter lives in Maryland and the other in South Carolina. Virginia's interest in adjudicating this issue is plainly tangential considering that all of the actionable conduct, namely, the knowledge of this theft and the receipt of the funds, occurred elsewhere. Moreover, though it may be more efficient to try both Daughters at one time in Virginia, the quality and nature of their activities are not such that it is "reasonable" and "fair" to require them to conduct their defense here.
The law of in personam jurisdiction is sufficiently clear as to these allegations. The facts asserted here do not establish sufficient minimum contacts to show that the Daughters purposefully availed themselves of the laws and protections of the Commonwealth of Virginia.
CONCLUSION
Gonzalez has failed to establish the minimum contacts required for personal jurisdiction over the Daughters. Because permitting the default judgment to stand would be a violation of the Daughters' Fourteenth Amendment Due Process rights, the Default Judgment entered on September 3, 2010 is vacated and the Demurrer is sustained with leave to amend.
An Order is enclosed.
Very truly yours,
Enclosure
ORDER
This matter came before the Court on Defendants' Demurrer;
IT APPEARING TO THE COURT that the Default Judgment should be vacated and the Demurrer sustained with leave to amend for the reasons stated in the November 22, 2010 Opinion Letter; it is hereby
ORDERED that the Default Judgment is VACATED, and the Demurrer is SUSTAINED with leave to amend;
ENTERED this 22 day of November, 2010. _____________________
JUDGE R. TERRENCE NEY
ENDORSEMENT OF THIS ORDER BY COUNSEL OF RECORD FOR THE PARTIES IS WAIVED IN THE DISCRETION OF THE COURT PURSUANT TO RULE 1: 13 OF THE RULES OF THE VIRGINIA SUPREME COURT. _______________________________________________ On April 28, 2010, Diana Stout filed a Suggestion of Bankruptcy with this Court. This Opinion Letter pertains only to Cara and Amanda Stout.
The Fairfax County Circuit Court in Massey Energy Co. v. UMW stated that "[o]nce [a] prima facie showing of conspiracy is adequately alleged, and where 'co-conspirators have sufficient contacts with the forum, so that due process would not be violated,' these contacts are imputed against the foreign coconspirator." 69 Va. Cir, 188 (Fairfax County 2005), citing Siu Ming Hong v. Chum Moon Tong, 61 Va. Cir. 439, 441 (Winchester 2003) (quoting Verizon Online Services v. Ralsky, 203 F.Supp. 2d 601, 622 (E.D. Va. 2002). Although the Daughters here are allegedly foreign coconspirators, neither has sufficient contacts with the forum.