Federal Court Update
Western District of Texas Court Summaries By Soledad Valenciano, Melanie Fry, and Jeffrie Lewis If you are aware of a Western District of Texas order that you believe would be of interest to the local bar and should be summarized in this column, please contact Soledad Valenciano (svalenciano@svtxlaw.com, 210-787-4654) or Melanie Fry (mfry@dykema.com, 210-554-5500) with the style and cause number of the case, and the entry date and docket number of the order.
FRCP 4(k)(2); Personal Jurisdiction; Conspiracy Rusesabagina v. GainJet Aviation, S.A., SA20-CV-01422-XR (Rodriguez, X., July 28, 2023). After surviving an assassination attempt, Paul Rusesabagina fled Rwanda. In 2020, while residing in San Antonio, he received a call from an alleged bishop, inviting him to travel to churches in Burundi to talk about the Rwandan genocide. Rusesabagina traveled to Dubai where he boarded a jet chartered by Athens-based GainJet Aviation. From there, he was allegedly kidnapped, tortured for three days, and imprisoned in Rwanda. During his imprisonment, Rusesabagina and his family filed two federal court lawsuits: one in Washington, D.C. (“DDC”) against Rwandan officials related to the kidnapping, and one in San Antonio (“SA”) against the bishop and GainJet on conspiracy-related claims. In the DDC action, the DDC court concluded certain Rwandan officials were subject to jurisdiction under FRCP 4(k)(2), stating the rule “is essentially a federal long-arm statute.” Rule 4(k) (2) allows the exercise of personal jurisdiction for claims arising under federal law over a defendant who is not subject to the jurisdiction of any single state if the exercise of jurisdiction is consistent with the United States Constitution. The DDC court found the illegal monitoring of, and fraudulent statements to, Rusesabagina in the United States were sufficient minimum contacts. The SA action proceeded with jurisdictional discovery, uncovering facts suggesting GainJet was a willing participant in the kidnapping conspiracy. However, the SA court stated that the Fifth Circuit does not recognize a “conspiracy theory” basis for personal jurisdiction. The DDC case was dismissed in exchange for Rusesabagina’s safe return to San 26 San Antonio Lawyer® | sabar.org
Antonio. Rusesabagina then moved to transfer his SA case against GainJet to the DDC court because that court was familiar with the issues and had asserted personal jurisdiction over some of alleged co-conspirators who may serve as witnesses. The SA court denied the motion to transfer, holding that the DDC court might not come to the same conclusion about personal jurisdiction under Rule 4(k) as to GainJet as it did as to the Rwandan officials because the officials’ acts involved illegal surveillance in the United States, while GainJet’s actions appeared to have occurred in Dubai. The SA court pointed to the Fifth Circuit’s ruling in Douglass v. Nippon Yusen Kabushiki Kaisha, 46 F.4th 226 (5th Cir. 2022), that Rule 4(k)(2) does not expand the constitutional basis for the exercise of personal jurisdiction. Finally, the SA court explained that as to the claims against GainJet, Rusesabagina failed to identify any witnesses, evidence, or claims related to Washington, D.C.
Motion to Dismiss Micciche v. New Horizon Mortg. Inc., SA23-CV-00495-XR (Rodriguez, X., July 5, 2023). Borrower’s heirs sued banks and trustees for claims arising from the attempted foreclosure of a mortgage lien on property owner by the borrower prior to her death but where the plaintiffs resided. The plaintiffs asserted they were entitled to notice of default and acceleration under the terms of the deed of trust and the Texas Property Code, due to their status as heirs of the borrower, and asserted claims for trespass to chattel and for conversion. The current mortgagee filed a motion to dismiss, which the court granted. Because the plaintiffs are not yet responsible for paying the indebt-
edness at issue, they are not entitled to notice under the deed of trust or the Texas Property Code. Because the plaintiffs identified no physical entry onto their property by the bank, there was no trespass; and the conversion claim failed because real property cannot be converted under Texas law and no personal property was identified as allegedly converted.
Judgment on the Pleadings; Economic Loss Rule Guthrie v. Ocwen Loan Servicing, LLC, SA21-CV-01291-JKP (Pulliam, J., July 20, 2023). The plaintiff entered into a contract to purchase property owned by a loan servicing company. When the sale fell through, he sued the company and its agents, seeking a declaration of rights and remedies under the contract and alleging breach of contract and tort claims. The agent defendants moved for judgment on the pleadings as to the tort claims, arguing that the plaintiff did not allege any independent legal duty or injury beyond those arising from the contract and, thus, that the claims were barred by the economic loss rule, which precludes recovery in tort for economic losses resulting from the failure to perform under a contract. A motion for judgment on the pleadings is evaluated under the same standard as a motion to dismiss for failure to state a claim. The court rejected the plaintiff’s argument that his claim for fraudulent inducement survived because even though the economic loss rule does not preclude such a claim, the plaintiff had not actually pled a claim for fraudulent inducement. Because the plaintiff’s complaint alleged only the contract as the source of duties owed by the agents and the rights and remedies between the parties,
