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SE Property Holdings, LLC v. Welch

United States District Court, S.D. Alabama, Southern Division

December 6, 2019

RUSTON C. WELCH, et al., Defendants.



         This matter is before the Court on the defendants' motion to dismiss for lack of personal jurisdiction. (Doc. 14). The parties have filed briefs and evidentiary materials in support of their respective positions, (Docs. 14, 16-20, 21-1), [1] and the motion is ripe for resolution. After careful consideration, the Court concludes the motion is due to be granted.


         According to the complaint, (Doc. 1), the plaintiff's predecessor loaned money to non-party Neverve, LLC (“Neverve”). David A. Stewart is half owner of Neverve and a guarantor of the loans to Neverve. In 2015, the plaintiff foreclosed on the defaulted loans and received a deficiency judgment of almost $20 million.

         Stewart is also an owner or part owner of several other entities. In 2011, he and other individuals, along with most of these entities, entered an agreement to pledge all BP oil spill claims, and the proceeds therefrom, as collateral to the plaintiff's predecessor. Although Neverve is not named as a party to the agreement and is not within the defined term, “Affiliate, ” the plaintiff asserts that any BP claim and/or proceeds of Neverve were pledged as collateral under this agreement, giving rise to a security interest in any such proceeds.

         In early 2015, the plaintiff placed Stewart in involuntary bankruptcy in Alabama, which proceeding was transferred to Oklahoma. The defendants (collectively, “Welch”) are an Oklahoma attorney and his law firm. After his bankruptcy proceeding was transferred to Oklahoma, Welch became Stewart's bankruptcy counsel.

         In January 2016, Stewart executed an agreement pursuant to which Welch would provide bankruptcy and other representation to Stewart's entities, including Neverve, and the entities guaranteed payment of Welch's legal fees, including those associated with Stewart's bankruptcy case. The plaintiff believes the guaranty is invalid because the permission of the trustee in Stewart's bankruptcy case (standing in Stewart's shoes as owner or co-owner) was not sought or obtained.

         In 2016, Neverve retained an Alabama law firm (“Taylor Martino”) to pursue its BP claim. Welch then entered a fee-sharing agreement with Taylor Martino with regard to the BP claims of certain of Stewart's entities, purportedly including Neverve. The plaintiff believes this agreement is invalid for want of the trustee's authorization.

         The Neverve claim rapidly settled and, in August 2016, Taylor Martino wired from its IOLTA account to Welch's IOLTA account funds representing both Welch's share of the contingency fee on the BP claim and the net proceeds of the claim. Between August 2016 and September 2017, Welch transferred over $277, 000 from the Welch IOLTA account to the firm account to cover attorney's fees for Welch's bankruptcy representation of Stewart.

         The complaint asserts causes of action for fraudulent transfer under Alabama and Oklahoma law; conversion; civil conspiracy; unjust enrichment; constructive trust; and equitable lien.


         “A plaintiff seeking to establish personal jurisdiction over a nonresident defendant bears the initial burden of alleging in the complaint sufficient facts to make out a prima facie case of jurisdiction.” Louis Vuitton Malletier, S.A. v. Mosseri, 736 F.3d 1339, 1350 (11th Cir. 2013) (internal quotes omitted). “When a defendant challenges personal jurisdiction by submitting affidavit evidence in support of its position, the burden traditionally shifts back to the plaintiff to produce evidence supporting jurisdiction, ” unless “the defendant's affidavits contain only conclusory assertions that the defendant is not subject to jurisdiction.” Id. (internal quotes omitted). “Where the plaintiff's complaint and supporting evidence conflict with the defendant's affidavits, the court must construe all reasonable inferences in favor of the plaintiff.” Meier ex rel. Meier v. Sun International Hotels, Ltd., 288 F.3d 1264, 1269 (11th Cir. 2002); accord Diamond Crystal Brands, Inc. v. Food Movers International, Inc., 593 F.3d 1249, 1257 (11th Cir. 2010).

         An evidentiary hearing on a motion to dismiss for lack of personal jurisdiction is discretionary, not mandatory. E.g., Snow v. DirecTV, Inc., 450 F.3d 1314, 1317 (11th Cir. 2008). Because the parties have not requested an evidentiary hearing, the Court exercises its discretion not to conduct one. Absent such a hearing, a plaintiff's burden is to present enough evidence, construed most favorably to him, to withstand a motion for directed verdict. Id.

         A forum state's personal jurisdiction over a defendant may be either general or specific. The plaintiff does not invoke ...

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