Dunn v. Mortenson

839 So. 2d 1007, 2003 WL 729293
CourtLouisiana Court of Appeal
DecidedMarch 5, 2003
Docket36,878-CA
StatusPublished
Cited by4 cases

This text of 839 So. 2d 1007 (Dunn v. Mortenson) is published on Counsel Stack Legal Research, covering Louisiana Court of Appeal primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Dunn v. Mortenson, 839 So. 2d 1007, 2003 WL 729293 (La. Ct. App. 2003).

Opinion

839 So.2d 1007 (2003)

Leslie DUNN and Gloria Dunn, Plaintiffs-Appellants,
v.
Janet MORTENSON, Temporary Receiver of Austin Forex International, Inc.; International Foreign Exchange Corp.; and Ausforex International, L.L.C., Defendants-Appellees.

No. 36,878-CA.

Court of Appeal of Louisiana, Second Circuit.

March 5, 2003.

*1008 David A. Hamilton, Baton Rouge, Baum & Baum, by Brian Baum, for Appellants.

Lemle, Kelleher, Barlow & Hardtner, by Michael B. Donald, Shreveport, Robert W. Kyle, Bickerstaff, Heath, Smiley, Pollan Kever & McDaniel, L.L.P., by Michael Shaunessy, Ann Greenberg, for Appellees.

Before BROWN, CARAWAY & PEATROSS, JJ.

PEATROSS, J.

This appeal arises from a summary judgment granted by the trial court in favor of the defendant, Janet Mortenson ("Mortenson"), Temporary Receiver of Austin Forex International, Inc., International Foreign Exchange Corporation and Ausforex International, L.L.C., and against the plaintiffs, Leslie Dunn and Gloria Dunn (collectively "the Dunns"). The Dunns now appeal. For the reasons stated herein, we reverse and remand.

FACTS

In 1998, the State of Texas and the Texas State Board of Securities investigated the activities of three companies, Austin Forex International, Inc., International Foreign Exchange Corporation and Ausforex International, L.L.C. (collectively referred to as "AFI"). Operating in Austin, Texas, AFI was in the business of selling securities to the public in the form of investment contracts involving foreign currency. In the early part of September 1998, the President of AFI, Russell Erxleben ("Erxleben"), began making payments to company investors who were either his family or friends.[1] From September 8, *1009 1998, to September 11, 1998, Erxleben made payments of over $1.2 million to various family and friends. Subsequently, AFI closed its doors on September 14, 1998. Erxleben later pled guilty to securities fraud and was sentenced to serve time in a federal penitentiary. As a result of the securities and pyramid/Ponzi scheme operated by Erxleben and AFI, its investors lost more than $36 million in principal. The instant case arose out of funds that Erxleben paid out to the Dunns before AFI ceased doing business. The Dunns are the parents of Kimberly Erxleben, wife of Russell Erxleben.

On September 18, 1998, proceedings began in Travis County, Texas, district court against AFI and Erxleben. At the request of the Texas Attorney General and the Texas Securities Commissioner, Mortenson was appointed by the district court as temporary receiver over AFI.[2] On April 30, 1999, Mortenson issued a demand letter to the Dunns advising them to return the payments they had received from AFI and Erxleben or they would face being added as parties defendant in the action against AFI and Erxleben.[3] After receiving the demand letter, the Dunns and Mortenson engaged in negotiations concerning the funds at issue; however, on June 10, 1999, the Dunns, residents of Caddo Parish, filed suit against Mortenson in Caddo Parish district court. The Dunns sought a judgment declaring that they were not obligated to return the funds received from AFI and Erxleben. On June 15, 1999, Mortenson filed suit against, among others, the Dunns, in Travis County, Texas.

In the Texas action, the Dunns filed a pleading to make a special appearance in order to assert the defense of lack of personal jurisdiction and a general denial of Mortenson's allegations.[4] They further asked the court to sever and abate the action against them pending resolution of the Louisiana action, since the Texas action was between the identical parties and presented the same issues as those in the Louisiana action.[5] Subsequently, the Texas court severed the action against the Dunns and consolidated it with a separate action that Mortenson had initiated against Kimberly Erxleben. The Dunns made no other appearances and filed no other documents with the Texas court. On January 31, 2002, Mortenson filed in Caddo Parish district court her responsive pleading containing her answer, defenses and counterclaims. Mortenson asked the court to dismiss or stay the instant case while the Texas action proceeded. Mortenson formally *1010 moved for this relief on March 8, 2002; and, on May 26, 2002, the district court denied Mortenson's motions to dismiss or stay the Louisiana action. The Louisiana and Texas actions proceeded simultaneously.

The Texas action was set for trial on May 13, 2002, and the Louisiana action was set for trial on July 23, 2002. On April 2, 2002, the Dunns filed a petition for bankruptcy in the United States Bankruptcy Court, Western District of Louisiana. Mortenson promptly filed a motion to lift the automatic stay in the bankruptcy action to allow her to liquidate her claim against the Dunns. The Bankruptcy Court granted this motion on May 2, 2002. On May 13, 2002, Mortenson appeared for trial in the Texas action, but the Dunns did not make an appearance. Although the record is devoid of any indication that the Texas court made a finding on either the waiver of the Dunns' special appearance or the issue of whether or not the court had personal jurisdiction over the Dunns, the Texas district court found that the Dunns had received adequate notice of the trial on the merits and Mortenson was allowed to proceed, offering testimony of witnesses and introducing evidence. Based upon the evidence, the Texas court rendered judgment in favor of Mortenson and against the Dunns, ordering the Dunns to pay $70,581 in actual damages and $20,536.17 as prejudgment interest on the actual damages; ordering Gloria Dunn to pay $141,162 in exemplary damages for her willful and malicious retention of other investors' money; and ordering Leslie Dunn to pay the same amount for the same reason. The trial court also ordered the Dunns to pay Mortenson $30,000 in attorney fees through trial; $20,000 in the event of an appeal to the Texas Court of Appeals; and $10,000 in the event of an appeal to the Texas Supreme Court. The Dunns did not appeal the Texas court judgment.

Following entry of the Texas judgment, Mortenson sought to amend her answer in the Louisiana action by adding the defense of res judicata to her answer. The court granted leave for her to amend her answer; and, on June 28, 2002, Mortenson moved for summary judgment on her defense of res judicata, attaching a certified copy of the judgment from the Texas court. The Dunns argued against the motion, asserting that the Texas court had no jurisdiction over them because they did not make a general appearance in the Texas court and they properly objected to its lack of jurisdiction.[6] The district court granted summary judgment in favor of Mortenson on July 25, 2002, and dismissed the Dunns' suit for declaratory judgment against Mortenson with prejudice. The Dunns now appeal, raising the following assignment of error:

The district court erred when it granted defendant's motion for summary judgment dismissing Leslie Dunn and Gloria Dunn (sic) (plaintiffs) demands against Janet Mortenson, permanent receiver for Austin Forex International Inc.; International Foreign Exchange Corp.; and Ausforex International, L.L.C. (Defendant) based upon the res judicata of the Texas judgment because the Texas judgment is not res judicata in that it does not involve the same causes of action between the same parties and it was not rendered by a court which had proper jurisdiction.

*1011 DISCUSSION

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Bluebook (online)
839 So. 2d 1007, 2003 WL 729293, Counsel Stack Legal Research, https://law.counselstack.com/opinion/dunn-v-mortenson-lactapp-2003.