Summary
The Arkansas Supreme Court answered a certified question from the U.S. District Court for the Eastern District of Arkansas concerning whether applying the conspiracy theory of personal jurisdiction violates Arkansas Code Annotated section 16-4-101. The court held that the theory does not violate the statute because Arkansas's long-arm statute extends jurisdiction to the maximum extent permitted by federal due process, and concluded that conspiracy-based jurisdiction is constitutionally permissible.
Topics
Practice areas
Questions Presented
- Whether use of the conspiracy theory of in personam jurisdiction violates Arkansas Code Annotated section 16-4-101.
- Whether conspiracy-based personal jurisdiction is consistent with the Due Process Clause of the Fourteenth Amendment.
Holdings
- The use of the conspiracy theory of in personam jurisdiction does not violate Arkansas Code Annotated section 16-4-101.
Key quotations
“We answer in the negative.” (381 S.W.3d at 829)
“We conclude that jurisdiction based on the conspiracy theory does not violate due process. As such, the use of the conspiracy theory of in personam jurisdiction does not violate Arkansas Code Annotated section 16-4-101.” (381 S.W.3d at 833-34)
Factual background
The Gibbses agreed to refinance their home after being redirected from Morgan Stanley to PrimeLending. Their refinancing was routed through title and escrow entities involved in an alleged kickback and licensing scheme, and eLender Escrow handled the transaction despite the revocation of its California escrow license. The loan proceeds intended to pay off the existing Morgan Stanley mortgage were misappropriated, leaving the Gibbses with two mortgages and total indebtedness of approximately $2.7 million.
Procedural history
The Gibbses filed federal claims arising from an allegedly fraudulent mortgage-refinancing and escrow transaction. Several defendants argued that the federal court lacked personal jurisdiction because Arkansas's long-arm statute did not permit conspiracy jurisdiction. The federal district court certified the question to the Arkansas Supreme Court under Arkansas Supreme Court Rule 6-8, and the Arkansas Supreme Court accepted the question on December 16, 2010.
Remand instructions
The certified question was answered in the negative; the case was returned to the federal district court for further proceedings.