Guy v. Layman

932 F. Supp. 180, 1996 U.S. Dist. LEXIS 15533, 1996 WL 431075
CourtDistrict Court, E.D. Kentucky
DecidedJune 7, 1996
Docket2:09-misc-00008
StatusPublished
Cited by2 cases

This text of 932 F. Supp. 180 (Guy v. Layman) is published on Counsel Stack Legal Research, covering District Court, E.D. Kentucky primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Guy v. Layman, 932 F. Supp. 180, 1996 U.S. Dist. LEXIS 15533, 1996 WL 431075 (E.D. Ky. 1996).

Opinion

OPINION AND ORDER

FORESTER, District Judge.

I. INTRODUCTION

This matter is before the Court on the motion of Defendant George E. Layman, Sr. to dismiss for lack of personal jurisdiction pursuant to Fed.R.Civ.P. 12(b). This matter having been fully briefed, it is ripe for review.

II. DEFENDANT’S MOTION TO DISMISS

Essentially, Defendant George E. Layman, Sr. (“Layman, Sr.”) argues' that he lacks sufficient contacts with Kentucky for this Court to exercise personal jurisdiction over him. In support of his motion, Layman, Sr. asserts that he does not now nor has he ever owned property in Kentucky, that he has never transacted business in Kentucky, and that he has only visited Kentucky twice, both times to see the Kentucky Derby. Layman, Sr. admits that in 1974 he became one of four partners in Defendant Forest Acres Partnership (“Forest Acres”), a Washington partnership, and that this partnership purchased shares of Spendthrift Farms, a farm located in Kentucky, in 1983. However, Layman, Sr. contends that he was not personally involved in any negotiations, that he did not have any contact with anyone at Spendthrift Farms, and that he does not recall signing a subscription agreement. Layman, Sr. also admits that in 1986 Forest Acres and twelve other investors filed suit against Plaintiff Garth Guy and others in the District Court for the Northern District of California alleging misrepresentations in connection with the stock offering. However, Layman, Sr. asserts that the following year he withdrew as a partner of Forest Acres and assigned his rights in the lawsuit to the remaining partners.

In response, Plaintiff argues that the issue does not concern Layman, Sr.’s personal contacts with Kentucky. Instead, Plaintiff contends that Defendant Forest Acres purposefully availed itself of the privilege of acting in Kentucky when it entered the Subscription Agreement and bought shares of Spendthrift Farms, as a result of which Forest Acres obtained a seat on the Spendthrift Farms board of directors through which Defendant George Layman, Jr. actively participated in the management of Spendthrift Farms. Plaintiff argues that his claims arise from breach of the contract that establishes Forest Acres’ contacts with Kentucky, thus giving this Court personal jurisdiction over Forest Acres Partnership. Therefore, because under partnership law each partner is jointly and severally liable for everything chargeable to the partnership as a result of the acts *182 of any of the partners, Plaintiff argues that Layman, Sr. is personally liable for the acts of the partnership. Consequently, Plaintiff contends that jurisdiction over Forest Acres is sufficient to establish jurisdiction over Layman, Sr. and the other individual partners.

III. ANALYSIS

Plaintiff has not disputed Layman, Sr.’s lack of personal contacts with Kentucky. Rather, Plaintiff relies on this Court’s jurisdiction over Forest Acres to establish personal jurisdiction over Layman, Sr. In support of this argument, Plaintiff relies on Felicia Ltd. v. Gulf American Barge Ltd., 555 F.Supp. 801, 806 (N.D.Ill.1983), which determined that because “[Gjeneral partners as well as partnership employees or agents are agents for all other general partners,” jurisdiction over a partnership establishes jurisdiction over the individual partners. Plaintiff also relies on a similar decision in First Interstate Bank of Oregon v. Tex-Ark Farms Ltd., 71 Or.App. 427, 692 P.2d 678 (1984). The Defendant argues that these cases reflect the mistaken belief that general partners are agents for other general partners. Application of this mistaken reasoning leads to the exercise of personal jurisdiction over a defendant without first establishing jurisdiction over each defendant individually.

In opposing Plaintiffs argument that jurisdiction over a partnership is sufficient to establish jurisdiction over the individual partners, the Defendant directs the Court to Sher v. Johnson, 911 F.2d 1357 (9th Cir. 1990), which involved a legal malpractice lawsuit brought by a California resident in a federal district court in California against a Florida law firm and its partners stemming from the representation of the California client in a Florida criminal matter. The California client had sought out representation by the Florida firm in Florida. In connection with the representation, the firm and partners engaged in telephone communications with the client, received checks drawn on California banks, and one partner traveled to California to meet with the client on multiple occasions. In addition, as part of the retainer agreement, the client executed a deed of trust and promissory note in favor of the law firm encumbering the client’s California residence, although this deed was not recorded.

In reviewing the case, the Ninth Circuit concluded that the telephone calls, visits, and payments alone did not establish jurisdiction over the partnership. However, the deed of trust, in conjunction with the other contacts, was enough to establish jurisdiction over the partnership. The Ninth Circuit then considered whether jurisdiction over the partnership was sufficient to establish jurisdiction over the individual partners. The court rejected the argument that because the liability of the partnership would establish the liability of the individual partners that jurisdiction over the partnership also established jurisdiction over the partners, stating as follows:

Liability and jurisdiction are independent. Liability depends on the relationship between the plaintiff and the defendants and between the individual defendants; jurisdiction depends only upon each defendant’s relationship with the forum. Regardless of their joint liability, jurisdiction over each defendant must be established individually.
This is the rule of Rush v. Savchuk, 444 U.S. 320, 100 S.Ct. 571, 62 L.Ed.2d 516 (1980) ... The partners ... have potential liability, but they are independent for jurisdictional purposes.
* * * * * *
The Shers may have been misled into thinking that the contacts of the partnership may be imputed to the partners because the reverse is true: The contacts of the partners may establish jurisdiction over the partnership. This is so because each partner acts as an agent of the partnership when carrying on the business of the partnership in the usual way. However, while each partner is generally an agent of the partnership for the purpose of its business, he is not ordinarily an agent of his partners. Thus, a partner’s actions may be imputed to the partnership for the purpose of establishing minimum contacts, but ordinarily may not be imputed to the *183 other partners. In this case, the district court has jurisdiction over only those individual partners who personally established the requisite minimum contacts with California.

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Cite This Page — Counsel Stack

Bluebook (online)
932 F. Supp. 180, 1996 U.S. Dist. LEXIS 15533, 1996 WL 431075, Counsel Stack Legal Research, https://law.counselstack.com/opinion/guy-v-layman-kyed-1996.