United States District Court, W.D. Arkansas, Texarkana Division
O. Hickey United States District Judge
the Court is Separate Defendant William Hallack, Jr.'s
Motion to Dismiss Complaint. (ECF No. 11). Plaintiffs have
filed a response and supplement in opposition. (ECF Nos. 14,
27). William Hallack, Jr. has filed a reply. (ECF No. 17).
The Court finds this matter ripe for consideration.
residents of Arkansas, received $460, 738.00 in December 2010
from the United States Department of Agriculture
("USDA") in a civil rights action for racial
discrimination. Contractual issues surrounding the funds from
the civil rights action are at issue in the present case.
Defendant Dennis Chase, a resident of Louisiana, represented
Plaintiffs in the civil rights action as a non-lawyer
advocate. Near the conclusion of the civil rights action,
Chase contacted Defendant William Hallack, Jr.-an
attorney-and proposed that Hallack keep any funds awarded
from Chase's USDA cases in escrow. Hallack is a
resident of Louisiana and is not licensed to practice law in
Arkansas. Hallack issued an engagement letter to Chase on
October 26, 2010. (ECF No. 14, Exh. 2). The letter was
addressed only to Chase and stated that Hallack would
"represent [Chase's] principal claimants" in
"reviewing and revising settlement documents, assisting
principal claimants in execution of settlement documents, and
escrowing and disbursing settlement
proceeds." Hallack contends that he did not know the
identity of any "principal claimants" at the time
the engagement letter was issued.
August 2011, Plaintiffs allege that, under the guise of an
investment opportunity, Defendant Chase defrauded Plaintiffs
of $110, 000 from the settlement funds. Plaintiffs claim that
Defendant Hallack disbursed the $110, 000 to Defendant Chase
without performing any investigation concerning the
circumstances or propriety of the disbursal.
effort to recover the settlement funds, Plaintiffs originally
filed suit against Defendants Chase and Hallack in the
Circuit Court of Little River County, Arkansas. Defendant
Hallack filed a motion to dismiss in that case, arguing that
the Circuit Court lacked personal jurisdiction over him. A
hearing on the motion was held before the Honorable Charles
Yeargan. In the hearing, Judge Yeargan stated his intent to
grant the motion to dismiss. (ECF No. 13, Exh. 1, p. 33).
Prior to an order of dismissal being issued, Plaintiffs
non-suited their case. (ECF No. 14, Exh. 3) Thereafter,
Plaintiffs re-filed their claims in this Court. (ECF No. 1).
Plaintiffs' Complaint alleges breach of contract,
promissory estoppel, unjust enrichment, conversion, breach of
fiduciary duty, and fraud claims against Defendants Dennis
Chase and Chasemaster Corporation. Plaintiffs allege legal
malpractice and breach of fiduciary duty against Defendant
William Hallack. Plaintiffs assert that this Court has
jurisdiction to hear this action pursuant to 28 U.S.C. §
1332 because the amount in controversy in this action exceeds
$75, 000 and is between citizens of different states.
present Motion to Dismiss, Defendant Hallack reasserts the
arguments made in his motion before the Circuit Court of
Little River County. Hallack maintains that Plaintiffs'
Complaint is devoid of facts which could support an exercise
of personal jurisdiction over him. Specifically, Hallack
claims that he has no relevant contacts with the state of
Arkansas and that all of his legal work related to
Plaintiffs' funds was carried out in Louisiana.
survive a motion to dismiss for lack of jurisdiction, the
burden is on the plaintiff to plead facts sufficient to
support a reasonable inference that a court possesses
personal jurisdiction over the defendant. Creative
Calling Solutions, Inc. v. LFBeauty Ltd., 799 F.3d 975,
979 (8th Cir. 2015). An action should not be dismissed for
lack of personal jurisdiction at the motion to dismiss stage
if the facts, viewed in the light most favorable to the
plaintiff, are sufficient to support a conclusion that
personal jurisdiction exists over a defendant. Id.
federal court sitting in diversity must look to the forum
state's long-arm jurisdictional statute to determine if
it can exert personal jurisdiction over an out-of-state
defendant. Id. Arkansas' jurisdictional statute
permits personal jurisdiction over a defendant to the extent
permitted by the due process clause of the Fourteenth
Amendment. Ark. Code Ann. §16-4-101(B). For a court to
exercise specific personal jurisdiction over an out-of-state
defendant, the defendant must have a minimum level of
contacts between himself and the forum state. World-Wide
Volkswagen Corp. v. Woodson, 444 U.S. 286, 291 (1980).
For these contacts to create jurisdiction, there must be
"some act by which the defendant purposefully avails
itself of the privilege of conducting activities within the
forum state, thus invoking the benefits and protections of
its laws." Burger King Corp. v. Rudzewicz, 471
U.S. 462, 474-475 (1985) (quoting Hansen v. Denckla,
357 U.S. 235, 253 (1958)).
Eighth Circuit uses a five-factor test for determining
whether this "purposeful availment" exists.
Dever v. Hentzen Coatings, Inc., 380 F.3d 1070,
1073-74 (8th Cir. 2004). The five factors are: the nature and
quality of a defendant's contacts with the forum state,
the quantity of such contacts, the relation of the cause of
action to the contacts, the interest of the forum state in
providing a forum for its residents, and convenience of the
parties. Id. The first three factors carry the most
weight, but all factors should be considered within the
totality of the circumstances in order to decide whether
personal jurisdiction complies with due process. See
K-VPharmaceutical Co. v. J. Uriach & CIA, S.A., 648
F.3d 588, 592-93 (8th Cir. 2011).
case, Hallack argues that his personal contact with
Plaintiffs was limited to a few phone calls and e-mails.
Further, Hallack maintains that the funds at issue were held
in escrow in Louisiana and that any distribution of those
funds was made by Hallack in Louisiana. In sum, no
substantive legal work was performed outside of Louisiana.
Plaintiffs do not dispute these facts. Rather,
Plaintiffs argue that Hallack's agreement to hold their
funds in escrow, as evidenced by the October 2010 engagement
letter, amounts to a continuing relationship or obligation
with Arkansas citizens that confers personal jurisdiction.
The Court disagrees with Plaintiffs' assessment.
contractual obligation is the alleged contact through which a
defendant has purposefully availed himself to a state's
privileges, a court can exert personal jurisdiction if the
interstate agreement creates a continuing relationship or
obligation with citizens in the forum state. See Burger
King, 471 U.S. at 473. However, the mere existence of a
contract with a citizen of a state is not enough on its own
to confer jurisdiction over the out-of-state party.
Id. at 478. Determining whether a contract creates a
sufficient basis for personal jurisdiction requires an
examination of the parties' negotiations, the
parties' course of dealing, and the contract itself.
Id. at 479.
all relevant factors, the Court finds that Plaintiffs have
failed to establish that Defendant Hallack has sufficient
contacts with the state of Arkansas to establish personal
jurisdiction. Stated another way, Hallack's engagement
letter and later contacts with Plaintiffs do not rise to the
level of a "continuing relationship" or obligation
with citizens of Arkansas. While the October 2010 engagement
letter makes reference to the "principal claimants"
from the civil rights action, Hallack did not speak with
Plaintiffs about his legal services prior to the agreement to
hold the funds in escrow. In fact, he testifies that he did
not know the identity of any principal claimants represented
by Chase at that time. Hallack's communications leading
up to the engagement were only with Defendant Chase, a
Louisiana resident, and the engagement letter was addressed
only to Chase. Plaintiffs do not dispute these facts. While
Hallack does appear to have later had a small amount of email
and phone contact with Plaintiffs, it is undisputed that his
work with escrow funds was done exclusively in Louisiana.
Under these circumstances, the Court finds that the agreement
to hold the funds in escrow and the course of dealing between