Opinion
14-24-00434-CV
12-10-2024
DALTON LICAUSE, TAYLOR LICAUSE, JEANETTE LICAUSE AS NEXT FRIEND OF A MINOR A.G.L., MANIFESTONE, LLC, AND THE RETREAT AT BEAVER LAKE, LLC, Appellants v. AVANGARD INNOVATIVE, LP, Appellee
On Appeal from the 281st District Court Harris County, Texas Trial Court Cause No. 2021-17018
Panel consists of Chief Justice Christopher and Justices Bourliot and Wilson.
MEMORANDUM OPINION
Tracy Christopher Chief Justice
In this interlocutory appeal, the Arkansas defendants contend that they lack the minimum contacts with Texas necessary to support the exercise of personal jurisdiction, and thus, the trial court erred in denying their special appearances. We agree. Because personal jurisdiction cannot be supported solely on the basis that a particular Texas plaintiff was harmed by the Arkansas residents' allegedly fraudulent transfer, in Arkansas, of Arkansas assets to other Arkansas residents, we reverse the trial court's ruling and render judgment dismissing the appellants from the case.
I. Background
Plaintiff Avangard Innovative, LP, is a Texas limited partnership with its principal place of business in Harris County, Texas. Avangard contracted to sell face masks to Heypex Global, Inc., an Arkansas corporation with its principal place of business in Arkansas. Heypex is solely owned by Arkansas resident Mattias "Jack" Licause. Jack's two adult children, Dalton and Taylor Licause, are also Arkansas residents, as is Jack's minor child A.G.L. and A.G.L.'s next friend Jeanette Licause. We refer to Dalton, Taylor, and A.G.L. collectively as "the Licause Children."
The company is now known as Innova Innovative, LLC, but it is still a Texas company with its principle place of business in Texas.
At all times relevant to this appeal, Jack also owned minority membership interests in two Arkansas limited liability companies known as ManifestOne, LLC, and The Retreat at Beaver Lake, LLC (collectively, "the Arkansas LLCs").
According to Avangard's pleadings, Heypex failed to pay Avangard all it was owed, and despite the outstanding debt, Jack caused Heypex to loan millions of dollars to the Arkansas LLCs, later releasing the loans, or the liens securing the loans, for little or no consideration. Avangard further alleged that Jack transferred his minority membership interest in The Retreat to the Licause Children for inadequate consideration.
Avangard sued Heypex, Jack, and others, asserting claims arising from Heypex's unpaid debt. Avangard later added claims under the Texas Uniform Fraudulent Transfer Act against the Arkansas LLCs and the Licause Children, alleging that Heypex fraudulently transferred assets to the Arkansas LLCs and that Jack fraudulently transferred his membership interest in The Retreat to the Licause Children. Avangard did not allege that the Arkansas LLCs or the Licause Children had any presence in Texas or performed any act in Texas or that any property was transferred to them in Texas.
The Arkansas LLCs and the Licause Children filed verified special appearances challenging the jurisdictional facts alleged. The trial court denied the special appearances, and the Arkansas LLCs and the Licause Children brought this interlocutory appeal to contest that ruling.
II. Standard of Review
The plaintiff bears the initial burden to plead facts bringing a nonresident defendant within reach of the Texas long-arm statute. BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 793 (Tex. 2002). The defendant may then challenge personal jurisdiction by filing a special appearance. See Tex. R. Civ. P. 120a. To prevail, the defendant must negate all bases of personal jurisdiction alleged. Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 658 (Tex. 2010). The defendant can defeat jurisdiction on factual or legal grounds. Id. at 659. To defeat jurisdiction on factual grounds, the defendant can present evidence contradicting the plaintiff's factual allegations that support personal jurisdiction, and the plaintiff can respond with its own evidence. Id. To defeat jurisdiction on a legal basis, the defendant can show that the facts as alleged are insufficient to establish personal jurisdiction. Id.
See Tex. Civ. Prac. & Rem. Code §§ 178.041-.045.
Whether a court has personal jurisdiction over a defendant is a question of law, which we review de novo. LG Chem Am., Inc. v. Morgan, 670 S.W.3d 341, 346 (Tex. 2023). However, jurisdiction may depend on the resolution of questions of fact. BMC Software, 83 S.W.3d at 794. If the trial court does not issue findings of fact and conclusions of law, we imply all factual findings that are supported by the evidence and necessary to support the trial court's ruling. Id. at 795. If the appellate record includes the reporter's and clerk's records, then the implied factual findings can be challenged for legal and factual sufficiency. Id. We review the trial court's legal conclusions de novo, but if the trial court's ruling on the special appearance is correct, the erroneous conclusion of law is not reversible error. Id. at 794.
III. Personal Jurisdiction
Texas courts have personal jurisdiction over a nonresident defendant when the Texas long-arm statute provides for it, and the exercise of jurisdiction is consistent with federal and state due-process guarantees. Spir Star AG v. Kimich, 310 S.W.3d 868, 872 (Tex. 2010). The long-arm statute authorizes Texas courts to exercise personal jurisdiction over a nonresident defendant who "commits a tort in whole or in part in this state." See Tex. Civ. Prac. & Rem. Code § 17.042(2). However, the statute reaches only "as far as the federal constitutional requirements of due process will allow." Guardian Royal Exch. Assur., Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex. 1991). Due process requires that the nonresident defendant have sufficient minimum contacts with the forum state "such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 85 L.Ed. 278 (1940)).
In a suit against a nonresident, the plaintiff bears the initial burden to plead sufficient facts to bring the nonresident defendant within the reach of Texas's long-arm statute. Kelly, 301 S.W.3d at 658 (reversing denial of special appearance absent allegations and evidence that nonresident defendant committed a tortious act in Texas). If that burden is satisfied, the burden shifts to the nonresident to negate all bases of personal jurisdiction alleged. Id. If the plaintiff has failed to allege that the nonresident committed any act in Texas, then the defendant can satisfy its burden merely by showing that it does not live in Texas. See id. at 659. The burden then shifts back to the plaintiff to respond with evidence supporting personal jurisdiction. See id.
A. Minimum Contacts
The "constitutional touchstone" of personal jurisdiction over a nonresident is "whether the defendant purposefully established 'minimum contacts' in the forum State." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (quoting Int'l Shoe Co., 326 U.S. at 316). The "minimum-contacts test is intended to ensure that the defendant could 'reasonably anticipate' being sued in the forum's courts." TV Azteca v. Ruiz, 490 S.W.3d 29, 46 (Tex. 2016) (quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980)).
A nonresident defendant's contacts with the forum state may give rise to general or specific jurisdiction. Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 575 (Tex. 2007). A trial court may exercise general jurisdiction over a nonresident defendant that has continuous and systematic contacts with the forum state, regardless of whether the defendant's alleged liability arises from those contacts. Id. (citing BMC Software, 83 S.W.3d at 796). Avangard has not alleged that the Licause Children or the Arkansas LLCs have continuous and systematic contacts with Texas so as to support the exercise of general jurisdiction.
Where, as here, the plaintiff alleges specific jurisdiction, we focus our minimum-contacts analysis on the relationship among the defendant, the forum, and the litigation. Moki Mac, 221 S.W.3d at 576. "Specific jurisdiction is established on a claim-by-claim basis unless all the asserted claims arise from the same forum contacts." Cent. Petroleum Ltd. v. Geoscience Res. Recovery, LLC, 543 S.W.3d 901, 911 (Tex. App.-Houston [14th Dist.] 2018, pet. denied). To exercise specific jurisdiction, (1) the defendant must have engaged in some act by which it "purposefully avails itself of the privilege of conducting activities within the forum State," and (2) the plaintiff's claims must "arise out of or relate to" those forum contacts. Ford Motor Co. v. Montana Eighth Judicial Dist. Court, 592 U.S. 351, 359, 141 S.Ct. 1017, 209 L.Ed.2d 225 (2021).
1. Purposeful Availment
In determining whether a defendant's contacts amount to purposeful availment so as to satisfy the first element of the test for specific jurisdiction, (1) only the defendant's contacts with the forum are relevant, not another person's unilateral activity; (2) the contacts must be purposeful rather than random, fortuitous, or attenuated; and (3) the defendant must seek some benefit, advantage, or profit by availing itself of the forum state. Moki Mac, 221 S.W.3d at 575. We focus on the quality and nature of the defendant's contacts, rather than their number. Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 339 (Tex. 2009).
We do not determine the underlying merits of the claim in order to decide whether personal jurisdiction exists. Old Republic Nat'l Title Ins. Co. v. Bell, 549 S.W.3d 550, 562 (Tex. 2018). Thus, the purposeful-availment inquiry cannot be satisfied merely by alleging that the defendant directed a tort from outside the forum against a resident. See id.
2. Relatedness
Turning to relatedness, which is the second element of the test for specific jurisdiction, a plaintiff's claims "arise out of or relate to" a nonresident defendant's contacts with the forum if there is a substantial connection" between those contacts and the operative facts of the litigation. Morgan, 670 S.W.3d at 347. Stated differently, there must be an "'affiliatio[n] between the forum and the underlying controversy,' principally, [an] activity or an occurrence that takes place in the forum State and is therefore subject to the State's regulation." Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011) (quoting von Mehren & Trautman, Jurisdiction to Adjudicate: A Suggested Analysis, 79 Harv. L. Rev. 1121, 1136 (1966)) (first alteration in original). In a claim under the Texas Uniform Fraudulent Transfer Act, the place where the allegedly fraudulent transfer occurred and the location of the transferred assets have a substantial connection to the operative facts of the claim. See Retamco, 278 S.W.3d at 341 (allegedly fraudulent assignment in California of real-property interests in Texas held sufficient to establish minimum contacts for the purpose of specific jurisdiction).
B. Traditional Notions of Fair Play and Substantial Justice
If the minimum-contacts requirement is satisfied, only rarely will the exercise of jurisdiction fail to comport with traditional notions of fair play and substantial justice. Moncrief Oil Int'l Inc. v. OAO Gazprom, 414 S.W.3d 142, 154 (Tex. 2013). If the defendant is the resident of another state within the United States, the factors we consider in this part of the analysis include (1) the burden on the defendant, (2) the forum state's interests in adjudicating the dispute, (3) "the plaintiff's interest in obtaining convenient and effective relief, (4) "the interstate judicial system's interest in obtaining the most efficient resolution of controversies," and (5) "the several States' shared interest in furthering fundamental substantive social policies." Guardian, 815 S.W.2d at 228.
IV. Analysis
Avangard's only jurisdictional allegation against the Arkansas LLCs and the Licause Children is its global allegation that all defendants "committed statutory fraud on Plaintiff [Avangard] located in Texas when they transferred assets, incurred obligations, or were transferees of assets as more particularly described below." But nowhere in its pleading does Avangard allege that the Arkansas LLCs or the Licause Children performed or received any transfers in Texas, or performed or received any transfers of Texas assets, or incurred any obligations in or to Texas. Avangard's only asserted basis for personal jurisdiction over the Arkansas LLCs and the Licause Children is that the transfer of Arkansas assets from an Arkansas company (Heypex) and an Arkansas resident (Jack) to other Arkansas companies (the Arkansas LLCs) and other Arkansas residents (the Licause children) constituted fraud on a company "located in Texas." This is no more than an assertion that the "effects" of the defendants' alleged torts fall upon a Texas plaintiff, or stated differently, that the defendants "directed a tort" at a particular Texas entity. See Bell, 549 S.W.3d at 564- 65. The Supreme Court of Texas has specifically rejected that approach as a basis for personal jurisdiction. See id. at 565 (citing Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 790-92 (Tex. 2005)).
Avangard neither pleaded facts nor offered evidence that the Arkansas LLCs and the Licause Children purposefully established minimum contacts in Texas. Despite amending its petition three times after the special appearances were filed, Avangard has never identified any act that any of these defendants allegedly performed in Texas, or any way in which they sought "some benefit, advantage, or profit by 'availing' [themselves] of the jurisdiction." Michiana Easy Livin' Country, 168 S.W.3d at 785. Nevertheless, all of the Arkansas LLCs and the Licause Children provided evidence that they reside in Arkansas, not in Texas; that they have never had Texas offices, agents, employees, addresses, phone numbers, or bank accounts; that they have never entered into a contract with a Texas business or resident or paid taxes here; that they have never purchased any personal property from a Texas business, citizen, or resident; and that they have never owned, leased, rented, or controlled any real property, personal property, or other assets in Texas.
Avangard nevertheless maintains that the trial court can properly exercise jurisdiction over the Arkansas LLCs because Texas resident Tia Nayar owns 51% of the membership interests in both companies. But a limited liability company is a separate legal entity from its members, and Avangard alleged no basis for imputing Tia Nayar's contacts to either company. Thus, we consider the Texas contacts of the Arkansas LLCs themselves, not the contacts of its members. See Bell, 549 S.W.3d at 559; see also Stocksy United v. Morris, 592 S.W.3d 538, 548 (Tex. App.- Houston [1st Dist.] 2019, no pet.) (contacts of Texas shareholder not imputed to company).
See, e.g., Spates v. Office of Attorney Gen., Child Support Div., 485 S.W.3d 546, 550-51 (Tex. App.-Houston [14th Dist.] 2016, no pet.).
Avangard also asserts on appeal that "Manifest[O]ne purchased two vehicles in Texas in August 2020 from two different Texas dealerships with over $136,000 of Heypex money." This statement mischaracterizes the evidence. According to Avangard's own uncontroverted evidence, Heypex purchased the vehicles and only later transferred them to ManifestOne. Indeed, even Avangard's vice president correctly declared that Heypex's purchase of vehicles in Texas were examples of "Heypex contacts with Texas." Heypex's subsequent transfer of the vehicle to ManifestOne was a transfer from one Arkansas company to another.
Avangard did not raise this allegation in its pleading, but in a supplemental response to all of the special appearances.
Emphasis added. In pointing out that there is no evidence ManifestOne purchased vehicles in Texas, we do not suggest that if there were such evidence, it would have supported the exercise of personal jurisdiction over the company in Texas. We simply do not reach that point in the analysis.
Because the Arkansas LLCs and the Licause Children do not have the minimum contacts with Texas necessary to support general or specific jurisdiction, we sustain the sole issue presented.
V. Conclusion
For the foregoing reasons, we reverse the trial court's denial of the Arkansas LLCs' and the Licause Children's respective special appearances and render judgment dismissing them from the case for lack of personal jurisdiction.