United States District Court, D. Maryland
KEVIN D. RYAN Plaintiff,
TEV CORPORATION, et al., Defendants.
L. Hollander United States District Judge
family feud, plaintiff Kevin Ryan filed suit against
defendants TEV Corporation (“TEV”) and his
father, T. Anthony Ryan, the sole officer and director of
TEV, alleging fraud and conversion. ECF 1 (the
“Complaint”). Plaintiff, one of TEV's four
shareholders, claims that Mr. Ryan diverted dividends to
himself that were owed to plaintiff, and purposely concealed
his conduct by conveying false and misleading information to
plaintiff and the Internal Revenue Service
(“IRS”) with respect to TEV's finances.
Complaint contains three counts lodged under Maryland law.
Count I, lodged against Mr. Ryan, sets forth a claim for
constructive fraud. ECF 1, ¶¶ 24-30. In Count II,
plaintiff asserts a conversion claim against Mr. Ryan.
Id. ¶¶ 31-37. Count III, raised against
both defendants, seeks an “accounting of TEV's
assets and finances.” Id. ¶ 44.
Jurisdiction is premised on diversity of citizenship under 28
U.S.C. § 1332. Id. ¶¶ 4, 6.
have filed a motion to dismiss, pursuant to Fed.R.Civ.P.
12(b)(2), for lack of personal jurisdiction (ECF 15),
supported by a memorandum of law. ECF 15-1 (collectively, the
“Motion”). Plaintiff opposes the Motion (ECF 16,
“Opposition”), supported by the affidavit of
Kevin. ECF 16-1. Defendants have replied. ECF 19.
hearing is necessary to resolve the Motion. See
Local Rule 105.6. For the reasons that follow, I shall deny
is a citizen of Maryland. ECF 1, ¶ 1. Mr. Ryan is a
citizen of Florida. Id. ¶ 3. TEV was
incorporated under the laws of the state of Rhode Island, but
it wound up operations in 2017. Id. ¶¶ 2,
12. On April 17, 2018, the Secretary of State of Rhode Island
revoked TEV's “Certificate of
Incorporation/Authority to transact business in Rhode
Island” due to its failure to maintain a registered
office in the state. Id. ¶ 13.
“business operations were limited to owning and leasing
certain real property . . . .” Id. ¶ 14.
TEV, a closely-held corporation, had four shareholders: Mr.
Ryan; plaintiff; and plaintiff's siblings, Shane T. Ryan
and Christopher A. Ryan. Id. ¶¶ 8, 10, 11.
Mr. Ryan owned 19.879 percent of the total outstanding shares
of TEV. Id. ¶ 8. Plaintiff and his siblings
held the remaining shares, each owning 26.707 percent of TEV.
Id. ¶ 10. Plaintiff alleges that TEV was
required by its “governing documents” to make
annual “distributions to shareholders of profits it
earned from its real property (the “Annual
Distributions”).” Id. ¶ 14. And,
TEV was required “to account properly for the same in
IRS tax filings.” Id.
noted, Mr. Ryan served as TEV's sole officer and
director. Id. ¶ 8. In that capacity, Mr. Ryan
owed fiduciary duties to TEV and its shareholders.
Id. ¶ 9. However, according to plaintiff, TEV,
“acting through Mr. Ryan, failed to make complete and
accurate Annual Distributions to Plaintiff[.]”
Id. ¶ 17. Instead, Mr. Ryan “caused TEV
to disburse funds to himself, which he used for his
personal benefit[.]” Id. ¶ 19 (emphasis
in original). Further, Mr. Ryan took steps to “conceal
from [plaintiff] the actual Annual Distributions owed to
him.” Id. ¶ 18. He withheld from
plaintiff “complete and accurate information regarding
[the Annual Distributions], including, but not limited to,
accurate tax information.” Id. ¶ 17. And,
according to plaintiff, Mr. Ryan “deliberately provided
false and misleading information regarding TEV's
finances” to plaintiff and the IRS. Id. ¶
February 26, 2018, plaintiff demanded that defendants produce
authenticated copies of TEV's governing documents,
financial statements, income tax returns, and all records
related to the Annual Distributions made between 2012 and
2018. Id. ¶ 21. However, defendants refused to
furnish the requested information. Id. ¶ 22.
According to plaintiff, his Annual Distributions “for
all years prior to 2016 remain unpaid” and
“unaccounted for.” Id. ¶ 23.
facts are included, infra.
Standard of Review
Motion for lack of personal jurisdiction is predicated on
Fed.R.Civ.P. 12(b)(2). ECF 15. “[A] Rule 12(b)(2)
challenge raises an issue for the court to resolve, generally
as a preliminary matter.” Grayson v. Anderson,
816 F.3d 262, 267 (4th Cir. 2016). Under Rule 12(b)(2), the
burden is “on the plaintiff ultimately to prove the
existence of a ground for jurisdiction by a preponderance of
the evidence.” Combs v. Bakker, 886 F.2d 673,
676 (4th Cir. 1989); see Grayson, 816 F.3d at 267.
“the existence of jurisdiction turns on disputed
factual questions the court may resolve the [jurisdictional]
challenge on the basis of a separate evidentiary hearing, or
may defer ruling pending receipt at trial of evidence
relevant to the jurisdictional question.”
Combs, 886 F.2d at 676. In its discretion, a court
may also permit discovery as to the jurisdictional issue.
See Mylan Labs., Inc. v. Akzo, N.V., 2 F.3d 56, 64
(4th Cir. 1993). However, neither discovery nor an
evidentiary hearing is required in order for the court to
resolve a motion under Rule 12(b)(2). See generally
4A Wright & A. Miller, Federal Practice & Procedure
§ 1351 (4d ed. 2019).
plaintiff's burden in establishing jurisdiction varies
according to the posture of a case and the evidence that has
been presented to the court.” Grayson, 816
F.3d at 268. “When personal jurisdiction is addressed
under Rule 12(b)(2) without an evidentiary hearing, the party
asserting jurisdiction has the burden of establishing a
prima facie case of jurisdiction.” Hawkins
v. i-TV Digitalis Tavkozlesi zrt., 935 F.3d 211, 226
(4th Cir. 2019); see Grayson, 816 F.3d at 268. In
that circumstance, “the district court must determine
whether the facts proffered by the party asserting
jurisdiction-assuming they are true-make out a case of
personal jurisdiction over the party challenging
jurisdiction.” Hawkins, 935 F.3d at 226;
accord Sneha Media & Entm't, LLC. v. Assoc.
Broad. Co. P Ltd., 911 F.3d 192, 196 (4th Cir. 2018);
Carefirst of Md., Inc. v. Carefirst Pregnancy Ctrs.,
Inc., 334 F.3d 390, 396 (4th Cir. 2003). However,
“[u]nlike under Rule 12(b)(6), the court may also
consider affidavits submitted by both parties, although it
must resolve all factual disputes and draw all reasonable
inferences in favor of the party asserting
jurisdiction.” Hawkins, 935 F.3d at 226;
see Consulting Eng'rs Corp. v. Geometric Ltd.,
561 F.3d 273, 276 (4th Cir. 2009); Grayson, 816 F.3d
at 268; Mylan Labs., 2 F.3d at 62.
“‘[a] threshold prima facie finding that
personal jurisdiction is proper does not finally settle the
issue; plaintiff must eventually prove the existence of
personal jurisdiction by a preponderance of the evidence,
either at trial or at a pretrial evidentiary
hearing.'” Wellington Fin. Corp. v. Flagship
Resort Dev. Corp., 416 F.3d 290, 294 n.5 (4th Cir. 2005)
Civ. P. 4(k)(1) permits a federal district court to exercise
personal jurisdiction over a defendant in accordance with the
law of the state in which the district court is located.
Carefirst, 334 F.3d at 396. Therefore, “to
assert personal jurisdiction over a nonresident defendant,
two conditions must be satisfied: (1) the exercise of
jurisdiction must be authorized under the state's
long-arm statute; and (2) the exercise of jurisdiction must
comport with the due process requirements of the Fourteenth
Amendment.” Id.; accord Planet Aid, Inc.
v. Reveal, Ctr. for Investigative Reporting,
GLR-16-2974, 2017 WL 2778825, at *4 (D. Md. June 26, 2017).
Maryland's Long-Arm Statute
long-arm statute is codified at Md. Code (2013 Repl. Vol.,
2017 Supp.), § 6-103(b) of the Courts & Judicial
Proceedings Article (“C.J.”). It authorizes
“personal jurisdiction over a person, who directly or
by an agent, ” id.:
(1) Transacts any business or performs any character of work
or service in the State;
(2) Contracts to supply goods, food, services, or
manufactured products in the State;
(3) Causes tortious injury in the State by an act or omission
in the State;
(4) Causes tortious injury in the State or outside of the
State by an act or omission outside the State if he regularly
does or solicits business, engages in any other persistent
course of conduct in the State or derives substantial revenue
from goods, food, ...