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Dalton v. Ferris

United States District Court, E.D. Kentucky, Central Division, Lexington

October 29, 2019

MELISSA DALTON, on behalf of the heirs of the estate of William Ruben Meadors, Plaintiff,
v.
RICHARD FERRIS, et al., Defendants.

          MEMORANDUM OPINION AND ORDER

          Danny C. Reeves. Chief Judge United States District Court

         Plaintiff Melissa Dalton claims that her father Dan Profitt is heir to the elusive Spindletop oil fortune.[1] The defendant attorneys were involved in litigation in the 1980s and 1990s concerning oil proceeds from Spindletop. Dalton asserts a host of claims against the defendants arising out of their representation of (or opposition to) Profitt during this litigation. The defendants have filed motions to dismiss based on lack of personal jurisdiction, improper venue, and failure to state a claim upon which relief can be granted. [Record Nos. 20, 26] Because the Court does not have personal jurisdiction over the defendants, the motions will be granted, and the case will be dismissed.

         I.

         Brothers James and William Meadors moved to Beaumont, Texas in the early 1900s and drilled for oil in the Spindletop oil field during the Lucas Gusher. [Record No. 19 ¶ 16] According to the plaintiff, the brothers acquired portions of Spindletop, which eventually became worth billions of dollars. Id. ¶¶ 17-20.

         The Meadors brothers disappeared in the early 1930s without having married or having produced children. Id. ¶ 21. But countless individuals claimed that they were heirs to the brothers' fortune in the years that followed. Cousins Dan Profitt and David Clark were two such persons. Id. ¶ 23. Profitt and Clark were named administrators of the Meadors estate in Allegheny, Pennsylvania in 1983. See Clark v. Amoco Prod. Co., 794 F.2d 967, 969 (5th Cir. 1986). That same year, Profitt and Clark hired the Pennsylvania law firm Ferris, DiPaolo, and Russo to probate the estate. [Record No. 19. ¶ 26] ¶ 1984, attorneys Ferris, DiPaolo, and George also represented Profitt and Clark in a civil action against four Texas oil companies for the value of oil that had been extracted from the Meadors property without payment. See Clark, 794 F.2d 967. Defendant Cynthia Timms represented the oil companies during that litigation. Id. ¶ 28.

         The United States District Court for the Eastern District of Texas eventually granted summary judgment in favor of the oil companies. Profitt and Clark appealed to the United States Court of Appeals for the Fifth Circuit and oral argument was held in New Orleans, Louisiana, on June 6, 1990. Clark v. Amoco Prod. Co., 908 F.2d 29 (5th Cir. 1990); [Record No. 19 ¶ 41] Profitt and Clark lost the appeal.

         Now, jump forward a couple of decades. Jerry Kohake found two letters in his deceased father's safe and gave them to Profitt in the “fall of 2014.” Id. ¶ 57. The first letter dated January 22, 1987, purports to be from Defendant Ferris to an oil company attorney, rejecting a settlement offer of $25, 000, 000.00. Id. ¶ 58. The second letter dated May 28, 1990, purports to be from Ferris to Defendant Timms, accepting a settlement offer of $50, 000, 000.00. Id. ¶ 60. The letter also provides: “This Court action is essential for settlement and will eliminate the matter concerning heirs. We must be convincing in our performance to insure a successful outcome.” [Record No. 19-8] Despite discovery of the letters and pre-existing suspicions about Ferris, Profitt apparently took no action. [Record No. 19 ¶¶ 47, 57] However, in May or June 2018, Dalton “discovered the letters in her father's possessions and immediately sought legal advice.” Id. ¶ 65.

         Dalton claims that Profitt and Clark were never informed of the settlement offers. In summary, she alleges that Ferris, DiPaolo, and George threw the case at the Fifth Circuit and absconded with $50, 000, 000.00 that was intended to settle Profitt's and Clark's claims against the oil companies. The defendants vigorously deny these allegations. Plaintiff Dalton brings claims of fraud, unjust enrichment, civil conspiracy, conversion, legal malpractice, and breach of fiduciary duty. Timms and the other defendants have filed separate motions to dismiss based on lack of personal jurisdiction, improper venue, and failure to state a claim pursuant to Rule 12(b) of the Federal Rules of Civil Procedure. [Record Nos. 20, 26]

         II.

         Personal jurisdiction over a defendant is an essential element of jurisdiction, without which the Court may not proceed to an adjudication. Ruhrgas AG v. Marathon Oil Co., 526 U.S. 583, 584 (1999). And a plaintiff has the burden of proving that personal jurisdiction exists. Theunissen v. Matthews, 935 F.2d 1454, 1458 (6th Cir. 1991) (citing McNutt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936)). “[I]n the face of a properly supported motion for dismissal, the plaintiff may not stand on [her] pleadings but must, by affidavit or otherwise, set forth specific facts showing that the court has jurisdiction.” Id. Because this issue will be decided based on written submissions, the plaintiff need only make a prima facie showing that personal jurisdiction exists. See Serras v. First Tenn. Bank Nat. Ass'n, 875 F.2d 1212, 1214 (6th Cir. 1989). A prima facie showing of jurisdiction may be established based on the plaintiff's presentation of specific facts, by affidavit or otherwise. Theunissen, 935 F.2d at 1458. The court must accept the plaintiff's factual allegations as true. Bird v. Parsons, 289 F.3d 865, 871 (6th Cir. 2002).

         Personal jurisdiction can be general or specific. General jurisdiction arises when “a defendant's contacts with the forum state are of such a ‘continuous and systematic' nature that the state may exercise personal jurisdiction over the defendant even if the action is unrelated to the defendant's contacts with the state.” Third Nat. Bank in Nashville v. WEDGE Grp., Inc., 882 F.2d 1087, 1089 (6th Cir. 1989) (citing Perkins v. Benguet Cons. Mining Co., 342 U.S. 437 (1952)). However, specific jurisdiction is established when the suit arises out of or is related to the defendant's contacts with the forum state. Id. (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 455 U.S. 408, 414 n.8 (1984)). The plaintiff has not alleged that any defendant has carried on systematic conduct within the state of Kentucky and appears to concede that if jurisdiction over the defendants exists, it must be based upon specific jurisdiction.

         For specific personal jurisdiction to exist in a diversity case, the exercise of jurisdiction must comport with the forum state's long-arm statute and constitutional due process. Miller v. AXA Winterthur Ins. Co., 694 F.3d 675, 679 (6th Cir. 2012). Kentucky's long-arm statute does not reach the outer limits of federal due process. Caesars Riverboat Casino, LLC v. Beach, 336 S.W.3d 51, 56-57 (Ky. 2011) (discussing K.R.S. § 454.210). It provides that “[a] court may exercise personal jurisdiction over a person who acts directly or by an agent, as to a claim arising from the person's:

1. Transacting business in this Commonwealth;
2. Contracting to supply services or goods in this ...

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