Opinion
04-21-00241-CV
03-30-2022
Lucia SALDIVAR, Individually and as Representative of the Estate of Mark Anthony Saldivar, Appellant v. Joshua F. WHITE, Individually and d/b/a 88 Classic Records, and 88 Classic LLC, Appellees
From the 131st Judicial District Court, Bexar County, Texas Trial Court No. 2018-CI-11437 Honorable Cathleen M. Stryker, Judge Presiding
Rebeca C. Martinez, Chief Justice Beth Watkins, Justice Liza A. Rodriguez, Justice
MEMORANDUM OPINION
Rebeca C. Martinez, Chief Justice
AFFIRMED
This is an appeal from an order granting appellees' special appearances and dismissing claims against them for lack of personal jurisdiction. We affirm.
Background
Appellant Lucia Saldivar filed a wrongful death suit on her own behalf and as representative of the estate of Mark Anthony Saldivar ("Saldivar"), her son. Appellant alleges in her original petition that, on or about April 23, 2017, Taymor Travon McIntyre killed Saldivar in San Antonio, Texas during a robbery. McIntyre then fled the state. He remained at large for several months, and was apprehended later in New Jersey. McIntyre was listed as the only defendant in the original petition.
Appellant filed an amended petition adding as defendants appellees Joshua F. White, individually and doing business as 88 Classic Records, and 88 Classic, LLC. In the amended petition, appellant alleges that appellees "encouraged and/or manipulated" McIntyre to commit crimes to promote sales of his music. Further, appellant alleges that 88 Classic, LLC purchased McIntyre's music and that payment for the music rights was placed in an irrevocable spendthrift trust with White, a principal of 88 Classic, LLC, as the manager of the trust. Appellant asserts that the sale of music rights constitutes a fraudulent conveyance of assets to avoid claims by creditors. Appellant requests all relief available under the Texas Uniform Fraudulent Transfer Act ("TUFTA"). See Tex. Bus. & Com. Code Ann. §§ 24.001-24.013.
Appellant also added another defendant, Ezra Averill, but claims against Averill are not relevant to this appeal.
Appellees filed special appearances to contest the trial court's exercise of personal jurisdiction and submitted an affidavit by White. Appellant filed a response and attached the trust formation document and emails regarding a loan from the trust. The trial court held a non-evidentiary hearing, and after the hearing, signed an order granting the special appearances and dismissing the claims against appellees. Appellant appeals from this order. See Tex. Civ. Prac. & Rem. Code § 54.014(a)(7) (allowing for interlocutory appeal from order granting special appearance).
Standard of Review & Applicable Law
"A court must have both subject matter jurisdiction over a case and personal jurisdiction over the parties to issue a binding judgment." Luciano v. SprayFoamPolymers.com, LLC, 625 S.W.3d 1, 7-8 (Tex. 2021). Personal jurisdiction involves a court's ability to bind a particular party to that judgment. Luciano, 625 S.W.3d at 8. A special appearance allows a nonresident to appear in a Texas court for the limited purpose of challenging the court's exercise of personal jurisdiction. See Tex. R. Civ. P. 120a(1). Whether a court has personal jurisdiction over a defendant is a question of law we review de novo. Kelly v. Gen. Interior Const., Inc., 301 S.W.3d 653, 657 (Tex. 2010). Resolving this question of law, however, may require a court to decide questions of fact. Luciano, 625 S.W.3d at 8. When, as here, the trial court does not issue findings of fact and conclusions of law, we presume all factual disputes were resolved in favor of the trial court's decision unless they are challenged on appeal. Id.
The plaintiff bears the initial burden of alleging facts that establish the trial court's jurisdiction. Searcy v. Parex Res., Inc., 496 S.W.3d 58, 66 (Tex. 2016). If the plaintiff fails to plead facts to bring the defendant within the reach of the court's jurisdiction, the defendant need only prove that it does not live in Texas to negate personal jurisdiction. See Kelly, 301 S.W.3d at 658-59. Once the plaintiff has met its burden to plead sufficient jurisdictional allegations, the burden shifts to the defendant to negate all potential bases for personal jurisdiction that exist in the plaintiff's pleadings. Id. at 658. The defendant can negate jurisdiction on either a factual or legal basis. Id. at 659. Factually, the defendant can present evidence that it has no contacts with Texas, and the plaintiff can respond with its own evidence to affirm its allegations. Id. Legally, the defendant can show that even if the plaintiff's allegations are true, the evidence is legally insufficient to establish jurisdiction. Id.
Texas courts may exercise personal jurisdiction over a nonresident if the Texas long-arm statute authorizes the exercise of jurisdiction, and the exercise of jurisdiction is consistent with federal and state due process guarantees. Moncrief Oil Intern. Inc. v. OAO Gazprom, 414 S.W.3d 142, 149 (Tex. 2013). Under Texas's long-arm statute, Texas courts may exercise personal jurisdiction over a nonresident defendant that "does business" in Texas. See Tex. Civ. Prac. & Rem. Code Ann. § 17.042; PHC-Minden, L.P, v. Kimberly-Clark Corp., 235 S.W.3d 163, 166 (Tex. 2007). A nonresident "does business" in Texas if, among other things, it "commits a tort in whole or in part" in the state. Tex. Civ. Prac. & Rem. Code Ann. § 17.042(2). The list, however, is not exclusive, and "Texas's long-arm statute 'extends Texas courts' personal jurisdiction as far as the federal constitutional requirements of due process will permit." M&F Worldwide Corp. v. Pepsi-Cola Metro. Bottling Co., 512 S.W.3d 878, 885 (Tex. 2017); see PHC-Minden, 235 S.W.3d at 166.
A state's exercise of jurisdiction comports with federal due process guarantees if the nonresident defendant has "minimum contacts" with the state and the exercise of jurisdiction does not offend traditional notions of fair play and substantial justice. M&F Worldwide, 512 S.W.3d at 885; PHC-Minden, 235 S.W.3d at 166 . When a nonresident defendant purposefully avails itself of the privileges and benefits of conducting business in Texas, its contacts are sufficient to confer Texas courts with personal jurisdiction over the nonresident defendant. Moncrief Oil, 414 S.W.3d at 150. Only the defendant's purposeful contacts are relevant to the inquiry; unilateral activity of another party or third person, as well as random, isolated, or fortuitous contacts by the defendant, are insufficient to prove the defendant purposefully availed itself of the forum. Cornerstone Healthcare Grp. Holding, Inc. v. Nautic Mgmt. VI, L.P., 493 S.W.3d 65, 70 (Tex. 2016). Once minimum contacts have been established, the exercise of jurisdiction will typically comport with traditional notions of fair play and substantial justice. Spir Star AG v. Kimich, 310 S.W.3d 868, 878 (Tex. 2010).
A defendant's contacts with the forum can give rise to either general or specific jurisdiction. Cornerstone Healthcare, 493 S.W.3d at 71. Here, appellant argues only for specific jurisdiction. The central inquiry under specific jurisdiction is the relationship between the defendant, the forum state, and the plaintiff's claim. Id. Specific jurisdiction is appropriate when the plaintiff's claim "arises from or relates to the defendant's contacts" with the forum state. Id. (citing Spir Star, 310 S.W.3d at 873). To satisfy this requirement, "there must be a substantial connection between those contacts and the operative facts of the litigation." Old Republic Nat'l Title Ins. Co. v. Bell, 549 S.W.3d 550, 560 (Tex. 2018). "The touchstone of jurisdictional due process is 'purposeful availment.'" Spir Star, 310 S.W.3d at 873 (citation and brackets omitted). First, "only the defendant's contacts with the forum are relevant, not the unilateral activity of another party or a third person." Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 575 (Tex. 2007). Second, "the contacts relied upon must be purposeful rather than random, fortuitous, or attenuated." Id. Third, "the defendant must seek some benefit, advantage, or profit by availing itself of the [forum's] jurisdiction." Id. (citation omitted). In a specific jurisdiction analysis, we analyze a defendant's contacts on a claim-by-claim basis. TV Azteca v. Ruiz, 490 S.W.3d 29, 37 (Tex. 2016).
Analysis
We begin our analysis with the pleadings. Appellant bore the initial burden of alleging facts that establish the trial court's personal jurisdiction over appellees. Searcy, 496 S.W.3d 58 at 66; Kelly, 301 S.W.3d at 658-59.
Appellant alleges, in her amended petition, that White may be served in New York and that 88 Classic, LLC is registered in New York and may be served with process in Georgia. The relevant allegations as to appellees are as follows:
Upon information and belief McIntyre was encouraged and/or manipulated by his manager and/or 88 Classic Records to commit crimes in order to promote sales of his music. McIntyre was eventually arrested in New Jersey. Thereafter, McIntyre entered into an agreement with Defendant 88 Classic, LLC, under which the rights to McIntyre's music were purchased by 88 Classic, LLC. Payment for the music rights was placed in an irrevocable spendthrift trust. Joshua White, a principal with 88 Classic, LLC, is the manager of the trust.
The sale of music rights by McIntyre to Joshua White and 88 Classic, LLC constitutes a fraudulent conveyance of assets in order to avoid claims by creditors, including the Plaintiffs herein. In addition to being liable for assault and conspiracy, McIntyre, Joshua White, 88 Classic, LLC and McIntyre's manager, Ezra Averill, conspired to fraudulently transfer assets in order to avoid the Plaintiffs' claims. This lawsuit against Defendants White, Averill, 88 Classic, LLC and McIntyre is brought under the Texas Uniform Fraudulent Transfer Act, codified as Chapter 24 of the Texas Business and Commerce Code. Defendants were transferees of transfers made by McIntyre after the claims of the Plaintiff creditors accrued. The Defendants were insiders with respect to McIntyre, as such term is defined in the Texas Business and Commerce Code. The transfers were made with the intention to defraud creditors and without McIntyre receiving reasonably equivalent value in exchange for the transfers. As a result of the transfers at issue, Defendants Averill, 88 Classic, LLC and White have profited or stand to profit greatly from McIntyre's music, while leaving McIntyre with insufficient funds to satisfy the claims of the Plaintiffs. Plaintiffs request all relief available under the Texas Uniform Fraudulent Transfer Act.
None of these statements place appellees' conduct within Texas.
Beyond the pleadings, Rule 120a of the Texas Rules of Civil Procedure allows a trial court to determine a special appearance on the basis of attachments and the results of the discovery process. See Tex. R. Civ. P. 120a(3); Cirrus Design Corp. v. Berra, 633 S.W.3d 640, 647 (Tex. App.-San Antonio 2021, no pet.); but see Steward Health Care Sys. LLC v. Saidara, 633 S.W.3d 120, 129 (Tex. App.-Dallas 2021, no pet.) (concluding plaintiff must meet its burden "by pleading, in its petition, sufficient allegations to invoke jurisdiction under the Texas long-arm statute").
Appellant attached to its response to the special appearances the trust formation document and an email chain produced through the discovery process. The trust formation document was executed by White, as trustee, in New York. The trust formation document states that the trust was established for the benefit of McIntyre. The document was executed by McIntyre and his father in Texas. The document further states that McIntyre and his father are Texas residents and that the trust property consists of a "Bank account in Texas." The attached email chain indicates that White, on behalf of McIntyre, loaned McIntyre's father $30,000.00 from the trust for the purchase of a commercial truck to be repaid through periodic payments. The emails do not indicate a connection with Texas. Cf. Kelly, 301 S.W.3d at 660 (remarking that affidavit did not state where conversation occurred or make any connection with Texas).
Neither the trust formation document nor the email chain establishes the trial court's personal jurisdiction over appellees. Appellant asserts that these transactions indicate that appellees "committed purposeful acts that availed them of Texas law by entering into contracts with Texas residents, and receiving assets from the State of Texas." However, the fact that appellees entered into contracts with Texas residents is inapposite; our focus is on appellees' acts, not the residence of another party or third person. See Moncrief Oil, 414 S.W.3d at 157; Moki Mac, 221 S.W.3d at 575. As to appellees' acts, the trust formation document reflects that White executed this document in New York. White averred that he negotiated and executed the contract for the sale of music rights in New York. See M & F Worldwide, 512 S.W.3d 878, 887-88 (Tex. 2017) (remarking that fraudulent transfer tort "hinge[d] on the effect of the parties' execution" of a settlement and related conduct that occurred outside of Texas). The trust formation document states that the property of the trust is a "Bank account in Texas" and that the property has been accepted by White, as trustee, in the State of New York and that all questions concerning the trust shall be determined in accordance with New York law. "[T]he mere act of accepting the transfer of money drawn on a Texas bank is of negligible significance for purposes of determining whether a foreign defendant had sufficient contacts in Texas." Old Republic, 549 S.W.3d at 564 (citation and brackets omitted). We hold the trust formation document fails to establish that appellees purposefully availed themselves of Texas's jurisdiction. As to the emails, they do not place any conduct within Texas and, consequently, do not establish purposeful availment.
Appellant's reliance on Dugas Limited Partnership v. Dugas, 341 S.W.3d 504 (Tex. App.-Ft. Worth 2011, rev'd and remanded by agreement) is misplaced because the claims in that case were for an accounting of the trust and for breach of fiduciary duty for failure to make sufficient trust distributions. Although that case involved a trust and out-of-state trustee, it provides little guidance for the specific jurisdiction analysis relevant to a TUTFA claim which hinges on the allegedly fraudulent sale of music rights. Cf. TV Azteca, 490 S.W.3d at 37 (specific jurisdiction analyzed on claim-by-claim basis).
Appellant's reliance on Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 340 (Tex. 2009) and Trigeant Holdings, Ltd. v. Jones, 183 S.W.3d 717 (Tex. App.-Houston [1st Dist.] 2005, pet. denied) is misplaced. These cases offer little guidance because "the determining facts in both cases were . . . the transfers of Texas-based business operations and real property"-facts that are not present in the instant case. Old Republic, 549 S.W.3d at 563-64 (discussing Retamco and Trigeant).
Finally, Appellant asserts that it made a prima facie case under TUFTA against appellees. However, even assuming appellant alleged a prima facie case, that does not supplant its need to establish appellees' purposeful availment of Texas's jurisdiction. See Old Republic, 549 S.W.3d at 562 ("We recognize that a state has a special interest in exercising jurisdiction over those who commit torts within its territory[; h]owever, that interest cannot and must not displace the purposeful-availment inquiry[.]"); see also Moncrief Oil, 414 S.W.3d at 157 ("[A] nonresident directing a tort at Texas from afar is insufficient to confer specific jurisdiction.").
Because appellant failed to establish jurisdiction based on the allegations in its amended petition or the documents attached to her response to the special appearances, appellees had only to prove that they did not live in Texas to negate personal jurisdiction. See Kelly, 301 S.W.3d at 658-59. White's affidavit proved that he resides in New York and that 88 Classic, LLC is organized under the laws of New York, maintains a registered agent in Georgia, and maintains a principal place of business in New York. Appellant did not contest these averments. Consequently, appellees negated all bases for personal jurisdiction. See id.
Conclusion
We affirm the trial court's order granting appellees' special appearances.