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U.S. District Court Explores The Conspiracy Theory of Personal Jurisdiction

Joel Gold v. Scott Gold, et al.
Civil Action No. JKB-17-483 (United States District Court for the District of Maryland)

by Richard J. Medoff, Associate
Semmes, Bowen & Semmes (www.semmes.com)

Available at: http://www2.mdd.uscourts.gov/Opinions/Opinions/MTD%20memo%20FOR%20WEBSITE.pdf

Plaintiff Joel Gold (“Plaintiff”) filed a lawsuit for fraud and civil conspiracy against Defendants, Scott Gold, Plaintiff’s son, and Doris Gold, Plaintiff’s ex-wife (collectively, “Defendants”), alleging that Defendants conspired to conceal Scott Gold’s assets after Plaintiff obtained a civil judgment against him. Doris Gold subsequently filed a motion to dismiss for lack of personal jurisdiction, pursuant to Fed. R. Civ. P. 12(b)(2). The U.S. District Court for the District of Maryland (the “Court”) found that Plaintiff failed to establish the required elements for the “conspiracy theory of personal jurisdiction.” Thus, the Court granted Doris Gold’s motion to dismiss.

By way of factual background, Plaintiff’s Complaint alleged that on June 6, 2014, Scott Gold purchased a boat, which he docked in Ocean City, Maryland. On December 4, 2015, Plaintiff obtained a judgment against Scott Gold in the Superior Court of New Jersey in the amount of $248,777.54. Plaintiff alleged that Scott Gold knew that Plaintiff would seek to attach the boat, so he sold the boat for $170,000 to third-parties. Scott Gold allegedly arranged for the sale to be structured such that the buyers paid a total of $90,000 to the parties holding security interests in the boat, $10,000 to Scott Gold himself, and a total of $70,000 in eight (8) different checks made out to Scott Gold’s mother, Doris Gold. According to the Complaint, these payments represented an agreement between Doris Gold and her son that she would help him to conceal the assets and protect them from being attached by Plaintiff. Plaintiff alleged that Doris Gold knew of the judgment, knew of the sale, and understood that by accepting the proceeds on Scott Gold’s behalf, she would help him to keep that money beyond Plaintiff’s reach.

Doris Gold subsequently moved to dismiss Plaintiff’s Complaint for lack of personal jurisdiction, pursuant to Fed. R. Civ. P. 12(b)(2). Plaintiff alleged that the Court had specific jurisdiction over Doris Gold through the “conspiracy theory of personal jurisdiction.”

The Court began its analysis by noting that under Rule 12(b)(2), if a court “decides jurisdiction on the motion papers alone,” rather than resolving a jurisdictional dispute at a separate evidentiary hearing or during trial, “the plaintiff need only make a prima facie showing of a sufficient jurisdictional basis to prevail. See Perdue Foods LLC v. BRF S.A., 814 F.3d 185, 188 (4th Cir. 2016). The Court explained that “in considering a challenge on such a record, the court must construe all relevant pleading allegations in the light most favorable to the plaintiff, assume credibility, and draw the most favorable inferences for the existence of jurisdiction.” See Combs v. Bakker, 886 F.2d 673, 676 (4th Cir. 1989).

The Court noted that Maryland’s long-arm statute provides personal jurisdiction over any person who “transacts any business or performs any character of work or service in Maryland” or “causes tortious injury in Maryland by an act or omission in Maryland.” See Md. Code Ann., Courts & Jud. Proc. § 6-103(b). The Court explained that the statute “provides jurisdiction over someone who performs such acts directly or through an agent,” and that the Maryland Court of Appeals “has adopted the conspiracy theory of personal jurisdiction,” under which a co-conspirator is considered an “agent” within the meaning of the statutory text. See Mackey v. Compass Mktg., Inc., 391 Md. 117, 144 (2006). Under this theory, “certain actions done in furtherance of a conspiracy by one co-conspirator may be attributed to another co-conspirator for jurisdictional purposes.” Id. The Court explained that in order to establish personal jurisdiction under the conspiracy theory of personal jurisdiction, a plaintiff must make a threshold showing that:

(1) two (2) or more individuals conspire to do something,
(2) that they could reasonably expect to lead to consequences in a particular forum, then
(3) one (1) co-conspirator commits an overt act in furtherance of the conspiracy, and
(4) those acts are of a type which, if committed by a non-resident, would subject the non-resident to personal jurisdiction under the long-arm statute of the forum state.

Id. at 129.

To satisfy the second element, the Court noted that “the required showing is that a reasonable person in the defendant’s position would have anticipated a co-conspirator committing an act in furtherance of the conspiracy within the forum jurisdiction.” Id. The Court explained that “no proof of actual knowledge is necessary,” however, “the hypothetical reasonable person must form the pertinent expectation at the time the agreement with the co-conspirator was formed.” Id. at 134. According to the Court, satisfaction of the second element is “necessary to ensure that the out-of-forum co-conspirator has ‘purposely availed‘ herself of the privilege of conducting activities in the forum and therefore has fair warning that she could be subject to suit there,” which “is crucial to making the conspiracy theory of jurisdiction constitutional.” Id.

Turning to the facts of the case, the Court found that Plaintiff never alleged that “Doris Gold should reasonably have known at the time of her agreement with her son that any portion of the conspiracy was likely to occur in Maryland.” The Court explained that Plaintiff did “not allege at what time his ex-wife became aware of the locations of the boat, the buyers, or the sale, nor did he allege when the Defendants formed their alleged agreement to defraud him.” Accordingly, the Court found that Plaintiff failed to satisfy the second element of the conspiracy theory of personal jurisdiction. Thus, the Court granted Doris Gold’s motion to dismiss for lack of personal jurisdiction.

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