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Note: Two hundred thirty-nine (239) investors (Investors) in the Washington Supermall development project, many of whom were German nationals, brought suit in Texas against a number of corporations, partnerships, and individuals (Defendants), including Farallon Capital Partners, L.P. (Farallon), alleging that they had defrauded the Investors of US$30,000,000. The partnership that was to develop the mall was Washington Supermall Interests, L.P. (WSI). Allegedly, the defendants diverted the invested funds through charging fees, "loans" to other Investors and unrelated entities, and the purportedly unauthorized sale of 70% of the partnership. The investment was characterized by the Investors as a "Ponzi Scheme/ Shell Game." In connection with the funding of the partnership, Farallon guaranteed issuance of a letter of credit by an unnamed senior lender.

The Defendants who were not situated in Texas claimed that the Texas court had no personal jurisdiction over them under the Texas long-arm statute in that there were not sufficient minimum contacts with Texas in a manner that comported with U.S. Constitutional due process requirements and traditional notions of fair play and substantial justice. For there to be personal jurisdiction, a person must have engaged in activities in the forum, had continuous and systematic contacts, or have been the "alter ego" for a Texas entity. Defendants moved for and were granted the right to make a special appearance without submitting to the jurisdiction of the Texas court in order to challenge its jurisdiction.

On the motion of some Defendants, the 162nd Judicial District Court, Dallas County granted Defendants' motion and dismissed the action for want of personal jurisdiction. Investors' objection was overruled. On appeal, the Court of Appeals of Texas, Dallas affirmed in an opinion by Moseley, J.

[JEB/plc]

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