Sanjay Chavda v. Bhaumik Solanki

• Court: Court of Appeals of Kentucky
• Decided: October 6, 2022
• Docket: 2020 CA 000304
• Status: Unknown

Opinion

RENDERED: OCTOBER 7, 2022; 10:00 A.M. NOT TO BE PUBLISHED

Commonwealth of Kentucky Court of Appeals

NO. 2020-CA-0304-MR

SANJAY CHAVDA AND GEETA CHAVDA APPELLANTS

APPEAL FROM CHRISTIAN CIRCUIT COURT v. HONORABLE JOHN L. ATKINS, JUDGE ACTION NO. 19-CI-00497

BHAUMIK SOLANKI APPELLEE

OPINION AFFIRMING IN PART, REVERSING IN PART, AND REMANDING

** ** ** ** **

BEFORE: GOODWINE, MAZE, AND MCNEILL, JUDGES.

MCNEILL, JUDGE: Sanjay and Geeta Chavda (“Chavdas”) appeal from the order

of the Christian Circuit Court dismissing their claims against Bhaumik Solanki

(“Solanki”) for lack of jurisdiction. For the reasons below, we affirm in part,

reverse in part, and remand. According to the complaint, the Chavdas and Solanki are business

partners in an Indian partnership, SAI Developers, which owns and operates rental

properties in India. The Chavdas, who reside in Kentucky, contributed most of the

financing to the partnership, while Solanki is responsible for managing the

properties in India. For reasons unclear from the record, at some point, Solanki left

India and came to Kentucky, leaving the properties unattended. While in

Kentucky, the relationship between the partners deteriorated. The Chavdas allege

that Solanki is misappropriating partnership assets and withholding partnership and

personal documents. The Chavdas claim that they have taken steps in India to

terminate Solanki’s interest in the partnership.

The Chavdas’ complaint states claims for extortion, misappropriation,

theft by failure to make required disposition of property, and fraud. The prayer for

relief seeks a judgment requiring Solanki to return deeds to partnership and

personal property, as well as powers of attorney, and for damages for Solanki’s

alleged misappropriation of partnership assets. Solanki moved to dismiss the

complaint, arguing that the trial court lacked personal jurisdiction because he is a

resident of Alabama. He further argued the court lacked subject matter and

particular case jurisdiction because the Chavdas’ claims concern foreign property

and a foreign partnership. The trial court granted the motion to dismiss with

prejudice, finding that “the remedy for any valid dispute contained in the

-2- Complaint must be resolved under the laws of the nation of India.” This appeal

followed.

The Chavdas argue the trial court erred in dismissing their complaint

for lack of jurisdiction. They contend the trial court applied the wrong evidentiary

standard and that the court has both subject matter and personal jurisdiction over

their claims. Solanki responds that the trial court correctly dismissed the Chavdas’

complaint because it lacked personal, subject-matter, and particular-case

jurisdiction.

“When considering a motion to dismiss under Kentucky Rules of

Civil Procedure (CR) 12.02, the pleadings should be liberally construed in a light

most favorable to the plaintiff and all allegations taken in the complaint to be true.”

Worrell v. Stivers, 523 S.W.3d 436, 439 (Ky. App. 2017) (citation omitted).

Further, the question of jurisdiction is an issue of law, so our review is de novo.

Appalachian Regional Healthcare, Inc. v. Coleman, 239 S.W.3d 49, 53-54 (Ky.

2007) (citations omitted).

There are three separate types of jurisdiction: (1) subject-

matter jurisdiction involving authority over the nature of a case and the general

type of controversy, (2) jurisdiction over a particular case involving authority to

decide a specific case, and (3) personal jurisdiction involving authority over

specific persons. See Nordike v. Nordike, 231 S.W.3d 733, 737-38 (Ky.

-3- 2007) (citing Milby v. Wright, 952 S.W.2d 202, 205 (Ky. 1997) and Covington

Trust Co. of Covington v. Owens, 278 Ky. 695, 129 S.W.2d 186, 190 (1939)). The

trial court’s order only addressed jurisdiction generally, finding that “the remedy

for any valid dispute contained in the Complaint must be resolved under the laws

of the nation of India.” Based upon this language, it is unclear which type of

jurisdiction the trial court believed it lacked. Therefore, to determine whether the

trial court erred, we will analyze each type separately.

Subject-matter jurisdiction refers to a court’s authority “to hear and

rule on a particular type of controversy.” Nordike, 231 S.W.3d at 737. “Whether a

court has subject-matter jurisdiction is determined at the beginning of a case, based

on the type of case presented.” Commonwealth v. Steadman, 411 S.W.3d 717, 722

(Ky. 2013). “The court has subject matter jurisdiction when the ‘kind of case’

identified in the pleadings is one which the court has been empowered, by statute

or constitutional provision, to adjudicate.” Daugherty v. Telek, 366 S.W.3d 463,

467 (Ky. 2012) (citation omitted). “[G]enerally speaking, circuit courts are courts

of general jurisdiction, capable of hearing ‘all justiciable causes not vested in some

other court.’” Commonwealth v. Hamilton, 411 S.W.3d 741, 746 (Ky. 2013)

(citing KY. CONST. § 112(5); Kentucky Revised Statute (“KRS”) 23A.010).

The Chavdas’ complaint asserts civil claims for extortion,

misappropriation, theft by failure to make required disposition of property, and

-4- fraud. The trial court, as a court of general jurisdiction, has the authority to hear

these types of claims. Solanki’s sole argument to the trial court was that the court

lacked subject-matter jurisdiction because there “is no statute or constitutional

provisions which allows this Court to adjudicate matters arising under the laws of

the country of India or to adjudicate rights regarding an entity organized by Indian

law.” However, the Chavdas’ claims do not require the trial court to adjudicate

any rights concerning the Indian partnership. The Chavdas’ claims concern

Solanki’s actions and are the proper subject of the trial court’s general subject-

matter jurisdiction.

Particular-case jurisdiction “refers to a court’s authority to determine

a specific case (as opposed to the class of cases of which the court has subject

matter jurisdiction).” Steadman, 411 S.W.3d at 722 (citation omitted). “This kind

of jurisdiction often turns solely on proof of certain compliance with statutory

requirements and so-called jurisdictional facts, such as that an action was begun

before a limitations period expired.” Nordike, 231 S.W.3d at 738. Solanki has

made no allegation that the Chavdas failed to comply with any statutory

requirement to implicate particular-case jurisdiction. Solanki’s only argument is

that the trial court has no ability to adjudicate disputes under Indian law. But

again, the Chavdas’ complaint does not require the trial court to adjudicate any

-5- dispute under Indian law.1 Therefore, the trial court had particular-case

Finally, personal jurisdiction concerns “the court’s authority to

determine a claim affecting a specific person.” Milby, 952 S.W.2d at 205. It is

undisputed that Solanki was residing in Alabama at the time the complaint was

filed and has been since August of 2018. The Chavdas argue that the trial court

has personal jurisdiction over Solanki pursuant to Kentucky’s long-arm statute,

KRS 454.210. “The purpose of Kentucky’s long-arm statute, KRS 454.210, is to

permit Kentucky courts to exercise personal jurisdiction over nonresident

defendants while complying with federal constitutional due process.” Caesars

Riverboat Casino, LLC v. Beach, 336 S.W.3d 51, 54 (Ky. 2011) (internal quotation

marks and citation omitted).

Determining whether the long-arm statute applies consists of a two-

step process. Caesars Riverboat Casino, LLC, 336 S.W.3d at 57. First, review

must proceed under KRS 454.210 to determine if the cause of action arises from

conduct or activity of the defendant that fits into one of the statute’s enumerated

categories. Id. If not, then personal jurisdiction cannot be exercised. Id. But if

1 We note that Solanki’s argument is also incorrect. Kentucky recognizes the doctrine of comity where “the courts of one state or jurisdiction give effect to the laws . . . of another . . . as a matter . . . of deference and respect.” State of Ohio v. Great Lakes Mins., LLC, 597 S.W.3d 169, 173 (Ky. 2019) (citing 16 AM. JUR. 2D Conflict of Laws § 11 (2019)).

-6- the statute is applicable, a second step is necessary to ascertain whether the

exercise of personal jurisdiction over the nonresident defendant offends the

nonresident’s federal due process rights. Id.

Turning to the first step, “personal jurisdiction is authorized under the

statute only if [the Chavdas’] claim[s] ‘arise[] from’ the statutory provision upon

which long-arm jurisdiction is predicated.” Caesars Riverboat Casino, LLC, 336

S.W.3d at 58. This means that there must exist “a reasonable and direct nexus

between the wrongful acts alleged in the complaint and the statutory predicate for

long-arm-jurisdiction[.]” Id. at 59. The Chavdas cite KRS 454.210(2)(a)3., which

permits long-arm jurisdiction against defendants “[c]ausing tortious injury by an

act or omission in this Commonwealth[.]” Therefore, we must consider whether

the Chavdas’ claims arise from Solanki’s causing tortious injury by an act or

omission in Kentucky.

The Chavdas have asserted claims for extortion, misappropriation,

theft by failure to make required disposition of property, and fraud. Looking at the

allegations in the complaint concerning the first three claims, they all concern

Solanki’s refusal to turn over partnership documents to the Chavdas. These

allegations do not arise from specific events occurring in Kentucky. In fact,

according to the complaint, Solanki placed these documents in a safety deposit box

in India prior to coming to Kentucky. Therefore, any wrongful deprivation would

-7- have occurred in India, not Kentucky. At the center of these claims is the question

of who is entitled to the partnership documents, which necessarily concerns acts

that occurred in India, where the Indian partnership was formed. The Chavdas

have not shown a reasonable and direct nexus between the conduct that caused

their injury (failure to return the partnership documents) and Solanki’s contacts

with Kentucky. Therefore, KRS 454.210(2)(a)3. does not confer personal

jurisdiction over Solanki as to those claims.

However, the Chavdas fraud claim does arise from Solanki’s actions

in Kentucky.2 According to the complaint, the Chavdas paid for Solanki’s two-

week trip to India based upon Solanki’s representations that he would retrieve and

turn over the partnership documents. There is a reasonable and direct nexus

between the fraud claim and Solanki’s conduct in Kentucky. Therefore, having

found that the long-arm statute applies, we proceed to determine whether this

application offends federal due process standards.

2 In Kentucky, a fraud claim “requires proof, by clear and convincing evidence, of the following six elements: (1) that the declarant made a material representation to the plaintiff, (2) that this representation was false, (3) that the declarant knew the representation was false or made it recklessly, (4) that the declarant induced the plaintiff to act upon the misrepresentation, (5) that the plaintiff relied upon the misrepresentation, and (6) that the misrepresentation caused injury to the plaintiff.” Flegles, Inc. v. TruServ Corp., 289 S.W.3d 544, 549 (Ky. 2009). While the Chavdas’ complaint seeks the return of the partnership and personal documents, the Chavdas’ remedy, if they prevail on their fraud claim, would be limited to those damages caused by Solanki’s misrepresentation.

-8- “[D]ue process requires . . . that in order to subject a defendant to a

judgment in personam, if he be not present within the territory of the forum, he

have certain minimum contacts with it such that the maintenance of the suit does

not offend ‘traditional notions of fair play and substantial justice.’” Hinners v.

Robey, 336 S.W.3d 891, 897 (Ky. 2011) (quoting International Shoe Co. v.

Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95 (1945)). “Where

a forum seeks to assert specific jurisdiction over an out-of-state defendant who has

not consented to suit there, this ‘fair warning’ requirement is satisfied if the

defendant has ‘purposefully directed’ his activities at residents of the forum, and

the litigation results from alleged injuries that ‘arise out of or relate to’ those

activities.” Id. (citations omitted).

Here, the Chavdas’ fraud claim “arise[s] out of” Solanki’s activities in

Kentucky. Further, Solanki lived in Kentucky during the time of many of the

allegations in the complaint, giving him fair warning that he might be sued there.

See Hinners, 336 S.W.3d at 898 (citation omitted) (“[T]erritorial presence

frequently will enhance a potential defendant’s affiliation with a State and

reinforce the reasonable foreseeability of suit there[.]”). Therefore, we find that

exercising personal jurisdiction over Solanki does not offend federal due process.

Based upon the foregoing, we affirm that part of the trial court’s order

dismissing the Chavdas’ claims for extortion, misappropriation, and failure to

-9- make required disposition of property for lack of jurisdiction, albeit for different

reasoning, specifically, lack of personal jurisdiction under Kentucky’s long-arm

statute. We reverse that part of the order dismissing the Chavdas’ fraud claim and

remand the case for further proceedings.

ALL CONCUR.

BRIEF FOR APPELLANT: BRIEF FOR APPELLEE:

Kenneth W. Humphries Elizabeth Teel Hopkinsville, Kentucky Russellville, Kentucky

-10-