Opinion
05-22-00446-CV
03-21-2023
RANA SHIPPING TRANSPORT, INDUSTRY, AND TRADE, LTD. AND TR MARITIME SHIPPING, LLC, Appellants v. DAVEY & BROGAN, P.C., Appellee
On Appeal from the 134th Judicial District Court Dallas County, Texas Trial Court Cause No. DC-20-17955
Before Justices Partida-Kipness, Smith, and Breedlove
MEMORANDUM OPINION
CRAIG SMITH JUSTICE
Appellants Rana Shipping Transport, Industry, & Trade, Ltd. (Rana Shipping) and TR Maritime Shipping, LLC (TRMS) challenge the trial court's orders denying a continuance for jurisdictional discovery and sustaining the special appearance of appellee Davey & Brogan, P.C. (D&B). For the following reasons, we affirm the trial court's orders.
Background
In April 2018, Rana Shipping, a firm organized in Istanbul, Turkey, entered into an agreement with Terra Master in which Terra Master would provide maritime financing. Pursuant to the agreement, Rana Shipping made a deposit of $600,000 in a business trust account at a Wells Fargo & Co. bank in Flower Mound, Texas. The agreement provided that, once the deposit was made, Terra Master would extend funding to Rana Shipping within ninety days. If Terra Master did not extend the contemplated funding, the deposit would be returned to Rana Shipping within fifteen days following the ninety-day period.
In their pleadings, appellants refer to Terra Master USA, a Kansas company, and Terra Master, Inc., a Texas company, collectively, as Terra Master. Rana Shipping and Terra Master USA were the parties to the agreement, but it was signed by William Stephens as Managing Director of Terra Master, Inc.
According to appellants' Second Amended Petition, the ninety-day period was extended multiple times. However, in late spring or early summer 2018, Paul Calixto, a Dallas attorney who served as trustee, withdrew the deposit and released it to William Stevens, a Terra Master director, without notice to appellants. No portion of the contemplated funding was extended to appellants.
Appellants allege that they relied on the advice of D&B, a Virginia law firm, and, specifically, Phillip Davey, a D&B attorney, throughout the transaction. Davey recommended making the $600,000 deposit after reviewing the agreement and communicating via email and telephone with Stevens, Calixto, and Mark Dickson, a Wells Fargo & Co. account manager.
In this action, appellants assert a legal malpractice claim against D&B.Specifically, appellants allege that they established an attorney-client relationship with D&B in Virginia; Davey conducted "practically all" of the negotiations with Stephens, Calixto, and Dickson; D&B was negligent in not drafting a proper escrow agreement or any other similar agreement; and, as a result, appellants lost the deposit.
Appellants also asserted various claims against Terra Master USA, LLC, Terra Master, Inc., Stephens, Mohammad Busefi, another Terra Master director, Wells Fargo & Co., and Calixto.
D&B specially appeared, asserting the trial court should dismiss appellants' claims against it for lack of personal jurisdiction. In response, appellants amended their petition to include the following jurisdictional paragraph:
Furthermore, the Court has Specific Jurisdiction over the Virginia Defendant DAVEY & BROGAN, P.C. because this law firm is alleged to have been Negligent and to have committed Legal Malpractice "in whole or in part" through Attorney Philip DAVEY's "minimum contacts" with Texas, which were "relevant" (not the unilateral activities of others) and "purposeful" (rather than random or fortuitous), and through which Defendant "sought some benefit" (contingency-based attorney's fees). Thus, Defendant gave its "implied consent" and "availed" itself to the personal jurisdiction of Texas courts.Appellants also moved for a continuance so they could depose Davey on "the substance of his contacts with people or entities that either reside or do business in the State of Texas."
Following a hearing, the trial court entered an order denying appellants' motion for continuance and, in a separate order, sustained D&B's special appearance and dismissed appellants' claim against it. This appeal followed.
Personal Jurisdiction
In their first issue, appellants contend the trial court erred in sustaining D&B's special appearance because the court had specific jurisdiction over D&B. Whether a trial court has personal jurisdiction over a nonresident defendant is a question of law that appellate courts review de novo. Old Republic Nat'l Title Ins. Co. v. Bell, 549 S.W.3d 550, 558 (Tex. 2018). Often, however, a trial court must resolve questions of fact before deciding the question of jurisdiction. BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). When a trial court does not issue findings of fact and conclusions of law in conjunction with its special appearance ruling, as in this case, all facts necessary to support the judgment that are supported by the evidence are implied. Id. at 795. These implied findings may be challenged for legal and factual sufficiency when the appellate record includes the reporter's and clerk's records. Id. If the relevant facts are undisputed, the appellate court need not consider any implied findings of fact and considers only the legal question of whether the undisputed facts establish personal jurisdiction. Old Republic, 549 S.W.3d at 558.
Texas courts may assert personal jurisdiction over a nonresident defendant if (1) the Texas long-arm statute authorizes the exercise of jurisdiction and (2) the exercise of jurisdiction is consistent with federal and state constitutional due process guarantees. Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex. 2007). The Texas long-arm statute is satisfied when a nonresident defendant does business, which includes "commit[ing] a tort in whole or in part" in Texas. Tex. Civ. Prac. & Rem. Code Ann. § 17.042(2); Luciano v. SprayFoamPolymers.com, LLC, 625 S.W.3d 1, 8 (Tex. 2021); Moki Mac, 221 S.W.3d at 574. The exercise of personal jurisdiction over a nonresident defendant is constitutional when (1) the nonresident defendant has established minimum contacts with the forum state and (2) the exercise of jurisdiction comports with traditional notions of fair play and substantial justice. BMC Software, 83 S.W.3d at 795.
A nonresident defendant's contacts with the forum state can give rise to general or specific jurisdiction. Luciano, 625 S.W.3d at 8. General jurisdiction is established when the defendant has continuous and systematic contacts with the forum, rendering it essentially at home in the forum state, regardless of whether the defendant's alleged liability arises from those contacts. TV Azteca v. Ruiz, 490 S.W.3d 29, 37 (Tex. 2016). Specific jurisdiction is established when the nonresident defendant's alleged liability arises from or is related to the defendant's activity conducted within the forum state. BMC Software, 83 S.W.3d at 796.
The plaintiff bears the initial burden to plead sufficient allegations to bring a nonresident defendant within the provisions of the Texas long-arm statute. Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 658 (Tex. 2010). Once the plaintiff has met the initial burden of pleading sufficient jurisdictional allegations, the defendant bears the burden to negate all bases of personal jurisdiction alleged by the plaintiff. Id. "Because the plaintiff defines the scope and nature of the lawsuit, the defendant's corresponding burden to negate jurisdiction is tied to the allegations in the plaintiff's pleading." Id. If the defendant presents evidence in its special appearance disproving the plaintiff's jurisdictional allegations, the burden shifts back to the plaintiff to establish that the court has personal jurisdiction. Id. at 659. The plaintiff should amend the petition if it lacks sufficient allegations to bring the defendant under the long-arm statute or if the plaintiff presents evidence that supports a different basis for jurisdiction in the special appearance response. Id. at 659, 659 n.6. Raising jurisdictional allegations for the first time in a response to the special appearance is not sufficient. Steward Health Care Sys. LLC v. Saidara, 633 S.W.3d 120, 128-29 (Tex. App.-Dallas 2021, no pet.) (en banc); see also Kelly, 301 S.W.3d at 658 n.4 ("additional evidence merely supports or undermines the allegations in the pleadings").
Appellants' live pleading at the time D&B's special appearance was heard alleged that D&B was negligent and committed malpractice "in whole or in part" through Davey's minimum contacts with Texas. We conclude appellants met their initial pleading burden to bring D&B within the provisions of the Texas long-arm statute. See Saidara, 633 S.W.3d at 129 ("A plaintiff's petition satisfies the long-arm statute when it alleges the defendant did business, which includes committing a tort in whole or in part in Texas."); Civ. Prac. & Rem. § 17.042(2). Accordingly, the burden shifted to D&B to negate the alleged basis for exercising jurisdiction. Here, appellants contend only that there is specific jurisdiction.
For the trial court to exercise specific jurisdiction in this case (1) D&B, through Davey, must have made minimum contacts with Texas by purposefully availing itself of the privilege of conducting activities here, and (2) D&B's liability must have arisen from or related to those contacts. See Moki Mac, 221 S.W.3d at 576. There are three parts to a "purposeful availment" inquiry. Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 785 (Tex. 2005); Johns Hopkins Univ. v. Nath, 238 S.W.3d 492, 497 (Tex. App.-Houston [14th Dist.] 2007, pet. denied). First, only the defendant's contacts with the forum are relevant, not the unilateral activity of another party or a third person. Michiana, 168 S.W.3d at 785; see also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985). Second, the contacts must be purposeful instead of merely fortuitous. Michiana, 168 S.W.3d at 785. Finally, through the contacts, the defendant must be seeking some benefit, advantage, or profit. Id.
Davey presented a declaration in support of D&B's special appearance establishing, in part, the following. D&B is a Virginia professional corporation organized under Virginia law and, during the period relevant to this lawsuit, had one office located in Norfolk, Virginia. Davey is not and never has been licensed to practice law in Texas.
Serdar Erdogan, Managing Member of TRMS, first contacted Davey by email in December 2016. They met in Davey's office in Norfolk to discuss Erdogan engaging D&B to advise regarding establishing a consulting and shipping business in Norfolk. Davey communicated with Erdogan via email from Virginia and met with Erdogan in Davey's office on a few occasions. He never met, or communicated, with, Erdogan in Texas.
Davey opened five files while working with Erdogan. In April 2018, he opened a file when Erdogan asked for assistance and research in connection with Erdogan's effort to assist Rana Shipping in obtaining financing from Terra Master (the Terra Master matter). Davey conferred with Erdogan on the Terra Master matter in Davey's Norfolk office and by phone and email. When they spoke by phone, Davey was in Virginia and understood Erdogan to be in Virginia too. Davey performed research related to the Terra Master matter from his Norfolk office and sent invoices for his services to Erdogan at a Norfolk address. Davey provided no services to appellants in Texas; nor did he travel to Texas to provide any service in connection with the Terra Master matter.
According to his declaration, Davey was not engaged by TRMS in connection with the Terra Master matter. And, the Texas Comptroller of Public Accounts website reflects that TRMS, a Texas company, was not formed until September 2020.
Davey phoned and emailed Stephens from Davey's Norfolk office. Erdogan also urged Davey to speak with Calixto, and Davey phoned Calixto from Davey's Norfolk office. On April 27, 2018, Davey communicated for the first and only time with Captain Mustafa Hazer, Rana Shipping's Managing Director, by telephone. That same day, Hazer executed the agreement. Erdogan advised Davey that Rana Shipping had transferred the $600,000 deposit to the Wells Fargo & Co. bank account.
Erdogan submitted an affidavit in response to D&B's special appearance. According to the affidavit, Erdogan and Hazer, as partners, were required to make the $600,000 deposit, with Calixto as its only trustee, "[a]s a condition of the Terra Matter endeavor." Davey was involved with the Terra Master matter "from the beginning to the end." Erdogan and Hazer had an oral agreement with Davey to pay D&B a $5,000 flat fee plus an additional $5,000 per vessel that Rana Shipping purchased with the Terra Master funding. The initial $5,000 was due when Rana Shipping obtained the funding or, if there was no funding, when the $600,000 deposit was returned. Davey was appellants' only contact with Dickson, Calixto, and Terra Master's counsel. He also communicated with Stephens. Davey knew that these individuals, as well as one of the two Terra Master companies, were Texas-based. Davey gave Erdogan and Hazer the "go-ahead" to make the deposit. Davey never indicated any lack of expertise, but Erdogan and Hazer later learned there were no written agreements binding Calixto. Instead, they were relying on Calixto's oral representation and an oral agreement.
Legal work performed outside Texas is not a proper basis for personal jurisdiction. See Ahrens & DeAngeli, P.L.L.C. v. Flinn, 318 S.W.3d 474, 484-85 (Tex. App.-Dallas 2010, pet. denied), overruled on other grounds by Saidara, 633 S.W.3d at 127-29, 127 n.8. A non-resident attorney's telephone calls and correspondence directed to the State also are insufficient. Id. Instead, for purposeful availment, non-resident attorneys generally must take affirmative action to promote their business in the forum state. Id. (trial court lacked specific personal jurisdiction over Washington law firm where the legal work at issue was performed in Washington or Idaho and relevant communications were made from there to Texas); Bergenholtz v. Cannata, 200 S.W.3d 287, 295 (Tex. App.-Dallas 2006, no pet.).
Appellants have not asserted that Davey or D&B sought clients or otherwise affirmatively promoted their business in Texas. Davey's only contacts with Texas were his communications with Texas-based individuals in furtherance of the legal work he was retained to do, and performed, in Virginia. And, these communications arose only because Rana Shipping happened to be negotiating with a Texas company and its Texas-based representative. Such fortuitous contacts are insufficient to establish that D&B purposefully availed itself of the benefits and protections of Texas law. See, e.g., Geo-Chevron Ortiz Ranch # 2 v. Woodworth, No. 04-06-00412-CV, 2007 WL 671340, at *3-5 (Tex. App.-San Antonio Mar. 7, 2007, pet. denied) (mem. op.) (lawyers' telephone, email, and mail communications with clients in Texas and travel to Texas to meet with clients did not establish jurisdiction when lawyers were not in Texas when making the communications and did not "do business" in Texas); Proskauer Rose LLP v. Pelican Trading, Inc., No. 14-08-00283-CV, 2009 WL 242993, at *2-5 (Tex. App.-Houston [14th Dist.] Feb. 3, 2009, no pet.) (mem. op.) (New York law firm's limited contacts, which included sending engagement letter and opinion letter drafts to client in Texas, client signing agreement in Texas, and client paying firm with funds drawn on Texas bank account, were not sufficient to confer specific jurisdiction over firm). Because the nature of Davey's contacts does not show purposeful availment, the trial court lacked specific jurisdiction over D&B. See, e.g., Ahrens, 318 S.W.3d 486.
Further, appellants' claim against D&B arises from and concerns Davey's legal advice and work, which he performed in Virginia. Because the operative facts of this litigation will focus primarily on that legal advice, and not Davey's limited contacts with Texas, we also conclude appellants did not establish the relatedness requirement of specific jurisdiction. See Markette v. X-Ray X-Press Corp., 240 S.W.3d 464, 468-69 (Tex. App.-Houston [14th Dist.] 2007, no pet.) (op. on reh'g) (although Indiana attorney communicated legal advice on Texas law to client in Texas, there was no specific jurisdiction where the operative facts of the litigation focused on the legal judgment he exercised and the legal opinions he formed in Indiana); see also Fried, Frank, Harris, Shriver & Jacobson LLP v. Millennium Chems. Inc., No 05-16-01132-CV, 2017 WL 3276010, at *10 (Tex. App.-Dallas July 31, 2017, pet. denied) (mem. op.). Because the trial court lacked specific jurisdiction over D&B, we need not determine whether the exercise of jurisdiction comports with traditional notions of fair play and substantial justice. See Markette, 240 S.W.3d at 469; Geo-Chevron Ortiz Ranch #2, 2007 WL 671340, at *6. We overrule appellants' first issue.
Continuance
In their second issue, appellants contend the trial court erred in denying their motion for continuance of the special appearance hearing. Noting that both parties filed their briefing without the benefit of any discovery, appellants believed that, if they could depose Davey on the substance of his Texas contacts, there would be sufficient facts to overrule the special appearance. Appellants, however, also believed that Erdogan's affidavit provided sufficient factual allegations to deny the special appearance.
A trial court may continue a special-appearance hearing if a party opposing the special appearance files an affidavit showing that the party cannot, for reasons stated, present its own countering affidavits showing facts essential to justify opposing the special appearance. Tex.R.Civ.P. 120a(3). Rule 120a(3), however, does not authorize postponement of a special appearance hearing to allow a party to obtain discovery that is unnecessary or irrelevant to establishing jurisdictional facts. See In re Stern, 321 S.W.3d 828, 840 (Tex. App.-Houston [1st Dist.] 2010, orig. proceeding).
We review a decision denying a motion for continuance for jurisdictional discovery under a clear abuse of discretion standard. See BMC Software, 83 S.W.3d at 800. A trial court abuses its discretion when it "reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law." Id. In reviewing whether a trial court abused its discretion in denying a motion for continuance, we consider the materiality and purpose of the discovery sought and whether the party seeking the continuance has exercised due diligence to obtain the discovery. See Windsor v. Round, 591 S.W.3d 654, 669 (Tex. App.-Waco 2019, pet. denied) (citing Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150, 161 (Tex. 2004)).
Appellants did not present an affidavit showing that they could not present facts essential to justify their opposition to the special appearance. To the contrary, appellants asserted their belief that Erdogan's affidavit sufficiently presented facts to support overruling the special appearance. Additionally, appellants fail to explain what specific jurisdictional testimony they hoped to gain from Davey's deposition and how that evidence would be material. Nor do they show that they made any attempt to obtain the information before filing their motion for continuance. Under these circumstances, we conclude that the trial court did not abuse its discretion in denying the motion. We overrule appellant's second issue.
Conclusion
We affirm the trial court's orders denying appellants' motion for continuance and sustaining appellee's special exception and dismissing appellants' claims against it.
JUDGMENT
In accordance with this Court's opinion of this date, the judgment of the trial court is AFFIRMED.
It is ORDERED that appellee DAVEY & BROGAN, P.C. recover its costs of this appeal from appellants RANA SHIPPING TRANSPORT, INDUSTRY, AND TRADE, LTD. AND TR MARITIME SHIPPING, LLC.
Judgment entered this 21st day of March 2023.