Opinion
No. 05-05-01246-CV
Opinion Filed August 15, 2006.
On Appeal from the County Court at Law No. 4, Dallas County, Texas, Trial Court Cause No. cc-03-15194-D.
Reverse and Render.
Before Justices MOSELEY, RICHTER, and FRANCIS.
MEMORANDUM OPINION
In this interlocutory appeal, appellant William J. Nagle challenges the trial court's order denying his special appearance. We reverse the trial court's order denying Nagle's special appearance and render judgment dismissing the cause against him for lack of personal jurisdiction.
BACKGROUND
Nagle is a lawyer who resides and practices in Hawaii. Bill Brody, a Texas resident and representative for Global Commercial Ltd., contacted Nagle about performing legal work for Global Commercial in connection with an underlying foreign investment transaction by Oppedisano, an Australian resident. Specifically, Brody asked Nagle to review a contract ("`the principal agreement") between Global Commercial, which purported to be a Bahaman corporation, and the Gryffin Corporation, a California corporation, of which California resident Cynthia Ritter was the principal.
Nagle completed his review and revision of the principal agreement in his Hawaii office. Six months later, Brody again contacted Nagle to ask that he serve as an escrow agent for the Global Commercial transaction. Nagle performed the duties associated with his role as escrow agent at his office in Hawaii.
Oppedisano subsequently filed suit in Texas, claiming that he had been the victim of a scam perpetrated by Nagle, Brody, Global Commercial, and others. Oppedisano raised numerous causes of action, all predicated on the allegedly fraudulent nature of the foreign investment program put together by Global Commercial and the Gryffin Corporation. Nagle filed a verified special appearance and general denial subject to his special appearance, arguing that Texas courts do not have jurisdiction over him. The trial court held a hearing on the special appearance, but did not rule. The lawsuit was then transferred to another court, which denied Nagle's special appearance.
This appeal ensued. Nagle lists multiple "issues" in the "Issues Presented" section of his brief. However, these are in reality subissues of his sole issue: the trial court erred in denying Nagle's special appearance.
THE LAW
A Texas court may exercise jurisdiction over a nonresident defendant if the Texas long-arm statute authorizes the jurisdiction and the exercise of jurisdiction is consistent with constitutional guarantees of due process. Schlobohm v. Schapiro, 784 S.W.2d 355, 356 (Tex. 1990). The long-arm statute authorizes the exercise of jurisdiction over a nonresident defendant that does business in Texas. Tex. Civ. Prac. Rem. Code Ann. § 17.042. In addition to other acts that may constitute doing business, a nonresident does business in Texas if he commits a tort in whole or in part in Texas. Tex. Civ. Prac. Rem. Code Ann. § 17.042(2). The broad language of the Texas long-arm statute has been interpreted to reach as far as the federal constitutional requirements of due process will permit. Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex. 1991)
Federal due process requirements mandate that the defendant must have purposefully established minimum contacts with Texas such that the nonresident could reasonably anticipate being sued in Texas. See National Indus. Sand Ass'n v. Gibson, 897 S.W.2d 769, 772 (Tex. 1995). Personal jurisdiction over nonresident defendants is constitutional when:
1. The quality and quantity of defendant's business in Texas has conferred on Texas courts either:
a. Specific jurisdiction, which is established when the defendant purposefully did some act or completed some transaction in Texas that gave rise to or was connected with plaintiff's cause of action; or
b. General jurisdiction, which is established when the defendant had continuing and systematic contacts with Texas even if the cause of action did not arise from or relate to activities conducted with the forum state; and
2. The assumption of jurisdiction by Texas courts does not offend traditional notions of fair play and substantial justice.
BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 795-96 (Tex. 2002).
The touchstone of jurisdictional due process analysis is "purposeful availment." Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 784-85 (Tex. 2005) (it is essential that there be some act by which the defendant purposefully avails itself of the privileges of conducting activities within the forum State, thus invoking the benefits and protection of its laws). The Texas Supreme Court set forth three clear requirements. First, only the defendant's contacts with the forum matter. Id. at 785. A defendant will not be haled into a jurisdiction solely as a result of the unilateral activity of another party or third person. Id. Secondly, the acts relied on must be purposeful. Id. A defendant will not be haled into a jurisdiction solely based on contacts that are random, isolated, or fortuitous. Id. Third, a defendant must seek some benefit, advantage, or profit by availing itself of the jurisdiction. Id.
Plaintiff bears the initial burden of pleading sufficient allegations to bring the nonresident defendant within the provisions of the long-arm statute. Hotel Partners v. KPMG Peat Marwick, 847 S.W.2d 630, 633 (Tex.App.-Dallas 1993, writ denied). When a nonresident defendant challenges a trial court's exercise of personal jurisdiction through a special appearance, it carries the burden of negating all bases for personal jurisdiction alleged by the plaintiff. Kawasaki Steel Corp. v. Middleton, 699 S.W.2d 199, 203 (Tex. 1985).
On appeal, the reviewing court conducts a factual sufficiency review of all the evidence before the trial judge on the question of jurisdiction. Hotel Partners v. Craig, 993 S.W.2d 116, 120 (Tex.App.-Dallas 1994, pet. denied). Once all factual disputes are resolved, the appropriate standard of review of a trial court's order denying a special appearance is de novo. BMC, 83 S.W.3d at 794.
DISCUSSION
Oppedisano conceded at the special appearance hearing that general jurisdiction did not exist over Nagle. The only issue before this Court is whether specific jurisdiction exists.
Oppedisano contended that specific jurisdiction existed over Nagle for the following reasons: (1) the performance and communication of Nagle's duties and obligations under a legal services agreement and an escrow agreement; (2) the performance and communication, in Texas, of Global Commercial's duties and obligations under the same legal services agreement and escrow agreement; (3) the participation and communication of Nagle and Global Commercial in carrying out an alleged scam, in part, from Texas; and (4) the commission of a tort by Nagle and Global Commercial in Texas. Nagle claims that there is no evidence in the record to support these claims. We agree.
We have determined, after abating this case for clarification, that the evidence that was before the trial court that made the ruling on Nagle's special appearance includes: (1) the May 18, 2004 deposition of Nagle, with exhibits; (2) the October 15, 2001 deposition of Nagle; (3) the September 18, 2001 deposition of Cindy Ritter; and (4) various letters, faxes, and e-mails from and to Nagle's law firm.
Nagle and the Agreements: Oppedisano's first basis for jurisdiction
The Legal Services Agreement
Oppedisano alleged that Nagle entered into a legal services agreement with Global Commercial through Global Commercial's representative Brody, who was a Texas resident, and that Brody's residence in Texas meant that Global Commercial was likewise a Texas resident. See Tex. Civ. Prac. Rem. Code Ann. § 17.042(1) ("doing business" in Texas consists of entering into a contract with a Texas resident). There is no evidence that Global Commercial's principal office is located in Texas. Thus, it does not appear from the record that Nagle's agreement to perform legal services for Global Commercial constituted doing business with a Texas resident.
However, even if we construe Nagle's agreement with Global Commercial as an agreement with a Texas resident, we cannot agree that Nagle purposefully availed himself of the privileges of conductin g business in Texas. Nagle was initially contacted by Brody regarding the legal services. During the course of Nagle's work on the underlying transaction, his contacts were limited to approximately eight e-mails, nine faxes, and five phone calls with Brody, who was acting as Global Commercial's representative. Nagle made one visit to Texas. However, according to his deposition testimony, this was a social visit with Brody, who was an old friend. Moreover, all of Nagle's work was performed in Hawaii. There is no evidence in the record that Nagle took any steps to promote business or his law practice within the state of Texas- or to otherwise purposefully avail himself of the privileges of conducting activities within the Texas. Oppedisano, however, asserts that Nagle knew that Brody would use Nagle's legal work in Texas. Assuming this allegation is true, we still must conclude that Nagle's knowledge is insufficient as a matter of law to warrant haling Nagle into a Texas court. See D.H. Blair Investment Banking Corp. v. Reardon, 97 S.W.3d 269, 274-75 (Tex.App.-Houston [14th Dist.] 2002, pet. dism'd w.o.j.). In Reardon, the plaintiffs likewise argued that the defendant knew its conduct would have an effect on Texas, despite the fact that its conduct occurred outside of Texas. Id. The Reardon court rejected this argument, recognizing the well-settled principle in Texas that a defendant cannot be haled into a Texas court based on the unilateral activity of a third party. Id. at 275. Thus, Nagle cannot be haled into a Texas court based upon Brody's subsequent use of the product of Nagle's legal services.
Secondly, Oppedisano is not a party to the legal services agreement. Thus, Nagle's contacts with Texas in relation to the legal services agreement are not relevant to the issue of specific jurisdiction regarding Oppedisano's claims. See Yfantis v. Balloun, 115 S.W.3d 175, 182-83 (Tex.App.-Fort Worth 2003, no pet.) (holding that agreements entered into between defendant and the third party cannot form the basis of specific jurisdiction); Shell Compania Argentia De Petroleo, S.S. v. Reef Exploration, Inc., 84 S.W.3d 830, 838 (Tex.App.-Houston [1st Dist.] 2002, pet. denied) (holding that agreements entered into by defendant whereby plaintiff was not a party are irrelevant to a determination of specific jurisdiction); Garner v. Furmanite Australia Pty., Ltd., 966 S.W.2d 798, 802 (Tex.App.-Houston [1st Dist.] 1998, pet. denied) (holding that a contract negotiated between defendant and a third party, not the plaintiff, could not form the basis for personal jurisdiction). Thus, any agreement between Nagle and co-defendant Global Commercial may not form the basis of specific jurisdiction for the claims asserted by Oppedisano, who never entered into a legal services agreement with Nagle.
The Escrow Agreement
Oppedisano claims on appeal that he was a party to the escrow agreement through an agency relationship with Gryffin Corporation. Assuming that Oppedisano is correct, we must still reject his assertion that the escrow agreement and Nagle's performance pursuant to its terms confer jurisdiction over Nagle. Oppedisano claims that, because the escrow agreement was performed in part in Texas, jurisdiction over Nagle is proper. However, the record demonstrates that Nagle performed his duties as escrow agent in Hawaii. Global Commercial, through its agent Brody, performed its obligations under the escrow agreement from Brody's office in Texas. Brody's and/or Global Commercial's performance in Texas cannot be used to form a basis for jurisdiction over Nagle. See Reardon, 97 S.W.3d at 274-75.
Nagle could not have reasonably foreseen being haled into a Texas court based on the legal services agreement, the escrow agreement, and/or his performance of his duties pursuant to those agreements. See Guardian Royale, 815 S.w.2d at 227 (the concept of foreseeability is implicit in the requirement that there be a substantial connection between the nonresident defendant and Texas arising from actions or conduct of the nonresident defendant purposefully directed toward Texas). Because a substantial connection between Nagle and Texas is lacking here, Oppedisano's first basis for specific jurisdiction fails.
The Conduct of Global Commercial and/or Brody: The second basis for jurisdiction
Oppedisano claims that the actions of Global Commercial in Texas pursuant to and/or as a result of the legal services agreement and escrow agreement imputed specific jurisdiction onto Nagle. We have already noted that the record demonstrates that Nagle performed his duties as escrow agent in Hawaii, while Global Commercial, through its agent Brody, performed its obligations under the escrow agreement from Brody's office in Texas. No alter ego jurisdiction was pled, nor is there any evidence to support a claim of alter ego jurisdiction. Specific jurisdiction over Nagle cannot be based on the actions of Global Commercial or Brody, as its agent. See Reardon, 97 S.W.3d at 274-75. Oppedisano's second basis for specific jurisdiction likewise fails.
Commission of a Tort in Texas: The third and fourth bases for jurisdiction
Oppedisano next claimed that specific jurisdiction exists because Nagle committed a tort in Texas by conspiring with Brody and Global Commercial to conduct a fraudulent investment scam from Texas. Oppedisano's assertion is based on the assumption that Nagle traveled to Texas to discuss business and to conspire with Brody. Having reviewed the record, we conclude that there is not sufficient evidence that Nagle committed the alleged tort in Texas. The only evidence before the trial court regarding Nagle's visit to Texas is his deposition testimony. Nagle testified that his wife had been diagnosed with a brain tumor and given a short time to live and that they traveled to Texas to visit Brody, who was an old friend. According to Nagle, the subject of his legal work for Global Commercial was never discussed.
Oppedisano merely speculated to the trial court, without producing any supporting evidence, that Nagle must have discussed business with Brody during this visit. However, speculation does not amount to evidence refuting Nagle's testimony. See Le Meridien Hotels Resorts v. LaSalle Hotel Operating Partnership, I, L.P., 141 S.W.3d 870, 879-80 (Tex.App.-Dallas 2004, no pet.) (refusing to allow speculation defeat evidence denying jurisdictional allegations). Therefore, without further evidence, Oppedisano's speculations do not support haling Nagle to court in Texas. Oppedisano's third and fourth bases for specific jurisdiction fail.
CONCLUSION
We conclude that Nagle is not subject to specific jurisdiction in Texas with respect to Oppedisano's claims. We need not address Nagle's remaining subissues.
Accordingly we sustain Nagle's sole issue, reverse the trial court's order denying Nagle's special appearance, and render judgment dismissing the cause against Nagle for lack of personal jurisdiction.