Geo-Chevron Ortiz Ranch #2, a Texas Joint Venture, et al. v. T.C. Woodworth, et al.--Appeal from 111th Judicial District Court of Webb County

MEMORANDUM OPINION
No. 04-06-00412-CV

GEO-CHEVRON ORTIZ RANCH #2, A JOINT VENTURE,

Geo-Chevron Ortiz Ranch #3, A Joint Venture, Geo-Chevron Ortiz Ranch #4,

A Joint Venture, The Geo Companies of North American, Inc., Geo Securities, Inc.,

Geonatural Resources, Inc., Hartmut ("Hardy") Theodor Rose, and James Patrick Reedy,

Appellants
v.

T.C. WOODWORTH, Kathleen Woodworth, LTW Partnerships, L.P., Kenneth Leipman, Kathleen Leipman, R. Stan Hodges, Kim C. Hodges, J. Robert Howard, Nall & Miller, L.L.P., Terry R. Howell, Robert J. Mottern, and Weizenecker, Rose, Mottern & Fisher, P.C.,

Appellees
From the 111th Judicial District Court, Webb County, Texas
Trial Court No. 2004-CVF-000431-D2
Honorable Raul Vasquez, Judge Presiding

Opinion by: Rebecca Simmons, Justice

 

Sitting: Karen Angelini, Justice

Phylis J. Speedlin, Justice

Rebecca Simmons, Justice

 

Delivered and Filed: March 7, 2007

 

REVERSED AND REMANDED IN PART, AFFIRMED AS MODIFIED

 

This interlocutory appeal arises from the granting of all the appellees' special appearance motions after the case was remanded from federal court.

Background

Appellees T.C. Woodworth, Kathleen Woodworth, LTW Partnerships, L.P., Kenneth Leipman, Kathleen Leipman, R. Stan Hodges, and Kim C. Hodges (collectively "WLH") were the original plaintiffs in a federal securities fraud action filed in Georgia in 2000 ("Georgia litigation") against Appellants Geo-Chevron Ortiz Ranch #2 A Joint Venture, Geo-Chevron Ortiz Ranch #3, A Joint Venture, Geo-Chevron Ortiz Ranch #4, A Joint Venture, The Geo Companies of North American, Inc., Geo Securities, Inc., Geonatural Resources, Inc., Hartmut ("Hardy") Theodor Rose, and James Patrick Reedy (collectively "Geo-Chevron"). WLH was represented by Robert Howard and his firm, Nall & Miller ("N&M"). Geo-Chevron was represented by Robert J. Mottern and his firm, Weizenecker, Rose, Mottern & Fisher, P.C ("WRM&F"), and later, Terry R. Howell. After a mediated settlement, a dispute arose regarding attorneys' fees generated in the Georgia litigation.

On March 30, 2004, Geo-Chevron filed suit in Webb County state court against WLH for fraud, abuse of process, breach of fiduciary duty, and breach of contract. WLH timely filed an original answer. On September 2, 2004, Geo-Chevron filed its first amended petition, adding Howard, N&M, Howell, Mottern, and WRM&F as defendants, (1) and adding claims for negligence, malpractice, tortious interference, slander of title, respondeat superior, Racketeer Influenced and Corrupt Organizations Act (RICO) violations, and civil conspiracy. WLH removed the case to federal court before any additional answers were filed in the state court proceeding.

On March 23, 2005, Geo-Chevron filed its second amended petition, omitting the federal racketeering charge, whereupon the federal court remanded the case to state court. Upon remand, all appellees filed motions for special appearance. Thereafter, the Webb County trial court advised the parties that the special appearances would be considered by written submission. After the date for submissions, but before the special appearance ruling, Geo-Chevron filed its third amended petition, alleging only breach of fiduciary duty, legal malpractice, and tortious interference. The trial court sustained the special appearances with regard to all of the appellees and dismissed the claims against some appellees with prejudice. Geo-Chevron now appeals the court's ruling on the special appearance motions, the dismissal of some claims "with prejudice," and the implied findings of fact necessary to support the dismissals. No findings of fact or conclusions of law were filed by the trial court.

Due order of pleading with regard to WLH

In its first issue, Geo-Chevron asserts WLH waived its right to contest in personam jurisdiction by filing a general denial in state court before filing a special appearance after the case was remanded to state court. We agree.

Rule 120a requires that a special appearance be filed before any other pleading. Tex. R. Civ. P. 120a. Any other responsive pleading waives the party's right to object to the lack of personal jurisdiction. "[O]nce a party has filed an answer or otherwise appeared, he is before the court for all purposes . . . . Because [defendant] was already before the court by virtue of its answer to [plaintiff]'s petition, it waived any objection to personal jurisdiction" with regard to a subsequently filed cross-claim. Von Briesen, Purtell & Roper, S.C. v. French, 78 S.W.3d 570, 575 (Tex. App.--Amarillo 2002, pet dism'd w.o.j.). Here, WLH filed an answer in state court, submitting itself to the court's jurisdiction, more than one year before filing its special appearance in state court. Therefore, we reverse the judgment of the trial court concerning WLH and remand the cause for further proceedings.

Motions for Special Appearance of the Remaining Appellees

The remaining appellees did not file answers in state court before the case was removed to federal court. Geo-Chevron urges that the trial court improperly sustained the special appearances of the other appellees because Howard, N&M, Howell, Mottern, and WRM&F had sufficient minimum contacts to confer personal jurisdiction on the trial court.

A. Standard of review

Whether a court has jurisdiction over the parties is a question of law, and thus, a grant or denial of a special appearance is reviewed de novo. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). The plaintiff bears the initial burden of pleading allegations sufficient to bring a non-resident defendant within the provisions of the long-arm statute. Id. at 793. A non-resident defendant is then required to negate all jurisdictional bases. Kawasaki Steel Corp. v. Middleton, 699 S.W.2d 199, 203 (Tex. 1985).

B. Personal jurisdiction

The Texas long-arm statute reaches as far as the federal and state constitutional guarantees of due process allow. CSR Ltd. v. Link, 925 S.W.2d 591, 594 (Tex. 1996). The due process clause permits a state to exert personal jurisdiction over a non-resident defendant if the defendant has had minimum contacts with the state and the exercise of jurisdiction will not offend traditional notions of fair play and substantial justice. Int'l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945); Dawson-Austin v. Austin, 968 S.W.3d 319, 326 (Tex. 1998). The minimum contacts analysis requires that a defendant "purposefully avail" itself of the privilege of conducting activities within Texas, thus invoking the benefits and protections of our laws. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985).

Minimum contacts may give rise to specific jurisdiction or general jurisdiction. Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 806 (Tex. 2002). Specific jurisdiction may be established by purposeful contact giving rise to the cause of action. Id. General jurisdiction over a non-resident may only be exercised when the non-resident's contacts with the forum are continuous and systematic. Id. at 806-07. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416 (1984). While a single act may be enough to give rise to general jurisdiction, that lone contact with the forum is subject to a more demanding analysis than for specific jurisdiction. BMC, 83 S.W.3d at 797. Specific jurisdiction requires that a defendant purposefully direct his activities toward residents of the forum state and that the cause of action arise out of or relate to those activities. Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 230 (Tex. 1991).

We now turn to each of the attorney appellees to address Geo-Chevron's particular issues relating to each attorney.

C. J. Robert Howard and N&M

1. Minimum contacts

Geo-Chevron first argues that, as counsel involved in the Georgia litigation, Howard and his firm N&M are subject to Texas' jurisdiction by virtue of representing clients who live in Texas. Merely representing clients who live in the forum state, however, does not supply sufficient contacts to bring appellees within Texas' jurisdiction. See, e.g., Myers v. Emery, 697 S.W.2d 26, 32 (Tex. App.--Dallas 1985, no writ) (sustaining special appearance when an Oklahoma lawyer representing a Texas client: phoned his client from Oklahoma; worked in a firm with two attorneys licensed to practice in Texas; occasionally visited Texas for business and pleasure; and occasionally provided legal services to Texas clients). Howard's contacts with the state were two litigation-related trips to Texas and communicating with his clients primarily by telephone. N&M does not advertise in Texas, have a physical presence in Texas, or maintain a bank account or mailing address in Texas. See CSR Ltd., 925 S.W.2d at 595 (nonresident defendant did not have continuous and systematic contacts with Texas where the defendant: had no offices, employees, or bank accounts in Texas; had not solicited business in Texas; never owned property or paid taxes in Texas; and never entered into a contract in Texas). As in Myers, these sporadic contacts are not sufficient to confer general jurisdiction over Howard or N&M. Myers, 697 S.W.2d at 32.

Geo-Chevron also alleges Howard and N&M, by virtue of respondeat superior, submitted to Texas' jurisdiction by "doing business" in the state. Tex. Civ. Prac. & Rem. Code Ann. 17.042 (Vernon 2006) (permitting long-arm jurisdiction over non-resident defendants doing business in Texas). The Code provides that a "nonresident does business in this state . . . if the nonresident commits a tort in whole or in part in this state." Tex. Civ. Prac. & Rem. Code Ann. 17.042(2) (Vernon 2006). Geo-Chevron argues Howard tortiously interfered with Geo-Chevron's business relationships during telephone calls between Howard and Marathon, a Texas oil company not party to the Georgia litigation. Because Marathon was situated in Texas, Geo-Chevron reasons, the tort was committed in part in Texas.

The Texas Supreme Court has expressly rejected jurisdiction based solely upon where the tort was "directed." Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 789 (Tex. 2005) (disapproving findings of specific jurisdiction by "allegations or evidence that a nonresident committed a tort in a telephone call from a Texas number or that specific jurisdiction turns on whether a defendant's contacts were tortious rather than the contacts themselves"). Id. at 791-92. The Court emphasized that the proper analysis for finding jurisdiction remains the purposeful availment test. Id. at 784 (asking whether the defendant purposefully availed itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws). After Geo-Chevron made allegations sufficient to satisfy the Texas long-arm statute, the burden shifted to Howard to negate that specific basis. Kawasaki Steel Corp., 699 S.W.2d at 203. Howard's burden is not to negate the tort, but to negate the sufficiency of the contacts. Howard did not purposefully direct his activities toward Texas, but towards the Georgia litigation. In reviewing the evidence, we conclude Howard established that he did not do business in Texas and thus, his contacts are insufficient to support jurisdiction. Because Geo-Chevron bases its claim against N&M on Howard's actions under a theory of respondeat superior, we conclude N&M's contacts are also insufficient to support jurisdiction.

Finally, Geo-Chevron contends that the granting of Howard and N&M's special appearance implies that Howard and N&M negated all bases of personal jurisdiction, and that the contacts with Texas were relevant to the Georgia litigation, or alternately, assumes that Marathon did not have a business relationship in Texas. Geo-Chevron argues these implied findings of fact regarding Howard and N&M's special appearance are against the great weight and preponderance of the evidence so as to be manifestly wrong.

When the trial court does not issue findings of fact and conclusions of law, all the facts that are necessary to support the judgment and are supported by the evidence are implied. BMC, 83 S.W.3d at 795. As discussed above, we agree that Howard and N&M negated all bases of personal jurisdiction. The record supports the trial court's implied finding of no minimum contacts. Geo-Chevron provides no insight into why the trial court's judgment is against the great weight and preponderance of the evidence so as to be manifestly unjust. We therefore affirm the judgment of the trial court on the factual sufficiency of the evidence.

2. Dismissal

Geo-Chevron also argues that N&M entered a general appearance by filing its special appearance motion and praying for dismissal with prejudice. When a party seeks affirmative relief from a court, it waives its special appearance. Dawson-Austin, 968 S.W.2d at 322-23. However, praying for dismissal with prejudice in a special appearance does not amount to a waiver. (2) The cases cited by Geo-Chevron do not support a waiver of jurisdiction by N&M.

Geo-Chevron next complains that the trial court erred when it granted N&M's special appearance "with prejudice." We agree. A dismissal with prejudice for want of jurisdiction functions as a judgment on the merits of the suit. See Att'y Gen. of Tex. v. Sailer, 871 S.W.2d 257, 258 (Tex. App.--Houston [14th Dist.] 1994, writ denied). In ruling on a special appearance, the trial court must refrain from rendering a judgment on the merits of the suit. Although dismissing the special appearance with prejudice was error, the proper remedy is to reform the judgment, not to reverse it. Nguyen v. Desai, 132 S.W.3d 115, 119 (Tex. App.--Houston [14th Dist.] 2004, no pet.). Because we conclude that N&M did not waive its special appearance, but the trial court erred in sustaining the special appearance with prejudice, we modify the order granting N&M's special appearance motion to dismiss the action without prejudice.

D. Terry R. Howell

In the fall of 2001, Howell was a partner at Lord, Bissell & Brook and was assigned to work on the Georgia litigation, representing Geo-Chevron. (3)

In addition to telephone calls and mail from Georgia, Howell traveled to Dallas once to meet with his clients. Howell and his firm withdrew from representing Geo-Chevron in the summer of 2003. Geo-Chevron asserts four bases for jurisdiction over Howell: (1) representing Texas residents in out-of-state litigation; (2) making a single trip to Dallas; (3) breaching his fiduciary duty to his clients and committing malpractice by not disclosing critical information relating to the Georgia litigation, and (4) acting as "National Coordinating Counsel" on behalf of an insurance defense association where he is coordinating four Texas lawsuits. This engagement began after he ceased representing the appellants.

Geo-Chevron alleges specific jurisdiction is established by virtue of Howell's breach of fiduciary duty to Geo-Chevron and legal malpractice. Tex. Civ. Prac. & Rem. Code Ann. 17.042 (Vernon 2006). (4) Again, simply alleging tortious acts were directed at Texas is insufficient to confer specific jurisdiction. Michiana, 168 S.W.3d at 789-90. We must examine whether Howell's contacts themselves give rise to jurisdiction. As previously discussed in connection with Howard and N&M, the mere representation of Geo-Chevron and a single litigation-related trip to Texas will not supply minimum contacts. Myers, 697 S.W.2d at 32. Howell is not, and never has been, a Texas resident, or held a license to practice law in Texas. He has not appeared in any Texas court and prior to his representation of Geo-Chevron, had not represented any Texas resident. Howell did not solicit Geo-Chevron as a client or generally advertise his services in Texas. See Id. Whether Howell committed torts by malpractice or breach of a duty, his contacts with Texas do not evidence the "purposeful availment" necessary for finding jurisdiction. After reviewing the record, we agree Howell negated all bases of jurisdiction, and therefore affirm the trial court's dismissal.

Geo-Chevron also complains that when Howell requested a dismissal with prejudice, Howell sought affirmative relief that subjected him to the jurisdiction of the court. Likewise, Geo-Chevron contends the trial court erred in dismissing with prejudice Howell's special appearance. For the same reasons discussed with regard to N&M, we modify the order to grant the special appearance without prejudice and affirm as modified. E. Robert J. Mottern and WRM&F

Geo-Chevron asserts Texas has general and specific jurisdiction over Mottern and WRM&F.

Robert J. Mottern is a Georgia resident and partner with WRM&F, a Georgia law firm. Mottern and WRM&F represented appellants in the Georgia litigation until September 2001, when they turned over their files to Lord, Bissell & Brook. Mottern and his firm did not recruit Geo-Chevron as a client, but were referred the litigation by another firm. During the course of representation neither Mottern nor any member of his firm traveled to Texas. Mottern attended depositions of the appellants in Texas by telephone while sitting in Georgia. Although Mottern and WRM&F communicated with their clients in Texas, the appellees were always in Georgia. In addition to claiming these facts are sufficient to establish minimum contacts, appellants argue that Mottern's inactive Texas law license and former Texas residency give rise to general jurisdiction over Mottern and his firm.

Geo-Chevron relies on Nikolai v. Strate, 922 S.W.2d 229 (Tex. App.--Fort Worth 1996, writ denied), for the proposition that as a former law practitioner in Texas, Mottern should remain subject to personal jurisdiction even after his move to Georgia. Geo-Chevron's reliance on Nikolai is misplaced. In Nikolai, the out-of-state attorney continued to hold himself out as a licensed Texas attorney and actively handled at least fifteen lawsuits in Texas courts during the period in question. Id. at 239. Although Mottern is a former Texas resident, he has not maintained a Texas residency, practice, business contacts, property, or bank account since 1991. He does maintain an inactive law license in Texas. However, since 1991, Mottern visited Texas only twice, both times after he ceased representing Geo-Chevron. These contacts are not so continuous and systematic as to confer Texas with general jurisdiction over Mottern and WRM&F.

Geo-Chevron also alleges Mottern's breach of fiduciary duty, from the failure to disclose important information, constituted a tort in Texas, thus subjecting him to specific jurisdiction. As discussed above, this "effects based" personal jurisdiction has been expressly refuted by Michiana. Michiana, 168 S.W.3d at 789. Based on the evidence in the record, we agree that Mottern sufficiently negated all jurisdictional bases. Therefore, we affirm the special appearance ruling as to Mottern and WRM&F.

F. Fair play and substantial justice

We conclude Geo-Chevron failed to demonstrate minimum contacts sufficient to give Texas jurisdiction over Howard, N&M, Howell, Mottern, or WRM&F. The appellees argue that even if there are minimum contacts sufficient to confer jurisdiction, the assertion of personal jurisdiction offends fair play and substantial justice. We must first find minimum contacts before moving to the second prong of the personal jurisdiction test. Guardian Royal Exch., 815 S.W.2d at 228. Because Geo-Chevron did not meet the minimum contacts test, we need not determine whether the assertion of personal jurisdiction comports with fair play and substantial justice. Conclusion

Because the WLH appellees did not comply with the due order of pleadings, and subjected themselves to the trial court's jurisdiction, we reverse the judgment of the trial court and remand the case for further action. We affirm as modified the dismissals regarding N&M and Howell, and affirm as written the dismissals of all remaining appellees.

 

Rebecca Simmons, Justice

1. Geo-Chevron included other parties, but we only address the parties before us on this appeal.

2. See Fretz v. Reynolds, No. 04-03-00854-CV, 2004 WL 2803201, at *2 (Tex. App.--San Antonio 2004, pet. denied) (mem. op.); Kemlite Co. v. Booker, No. 09-98-346 CV, 1999 WL 22722, at *1 (Tex. App.--Beaumont, no pet.) (per curiam) (not designated for publication).

3. Howell argues Geo-Chevron's briefing is inadequate because it lacks sufficient citations to the record, does not cite legal authority, and fails to present a legal argument under Tex. R. App. P. 38.1(h). However, we are to construe these briefing rules liberally. Tex. R. App. P. 38.9. As the briefing is adequate, we will address Geo-Chevron's points of error.

4. Geo-Chevron contends that Howell secreted critical and relevant information relating to the Georgia litigation, thus breaching his fiduciary duty to his clients.