Cooke v. Karlseng

• Decision Date: 22 January 2021
• Docket Number: No. 19-0829,19-0829
• Citation: 615 S.W.3d 911
• Parties: H. Jonathan COOKE, Individually and on Behalf of Escrow Partners Dallas, L.P.; Escrow Partners Dallas, GP, Inc.; Escrow Partners Houston, L.P.; Escrow Partners Houston, GP, Inc.; Escrow Partners Austin, L.P.; Escrow Partners Austin, GP, Inc.; Escrow Partners San Antonio, L.P.; Escrow Partners San Antonio, GP, Inc.; Title Partners, L.L.P.; North American Management, L.L.P.; TJ Partners I, LLC ; and TJ Partners II, LLC, Petitioners, v. Robert C. KARLSENG; Karlseng Law Firm, P.C. ; Ashley Brigham Patten; Patten & Karlseng Law Firm, P.C.; Jacques Yves LeBlanc; and LeBlanc, Patten and Karlseng Law Firm, P.C., Respondents
• Court: Texas Supreme Court

615 S.W.3d 911

H. Jonathan COOKE, Individually and on Behalf of Escrow Partners Dallas, L.P.; Escrow Partners Dallas, GP, Inc.; Escrow Partners Houston, L.P.; Escrow Partners Houston, GP, Inc.; Escrow Partners Austin, L.P.; Escrow Partners Austin, GP, Inc.; Escrow Partners San Antonio, L.P.; Escrow Partners San Antonio, GP, Inc.; Title Partners, L.L.P.; North American Management, L.L.P.; TJ Partners I, LLC ; and TJ Partners II, LLC, Petitioners,

v.Robert C. KARLSENG; Karlseng Law Firm, P.C. ; Ashley Brigham Patten; Patten & Karlseng Law Firm, P.C.; Jacques Yves LeBlanc; and LeBlanc, Patten and Karlseng Law Firm, P.C., Respondents

No. 19-0829

Supreme Court of Texas.

OPINION DELIVERED: January 22, 2021

David B. Conrad, Michael A. Vincent, Ricardo J. Bonilla, Scott Cashion Thomas, Fish & Richardson P.C., Geoffrey Scott Harper, Katrina G. Eash, Winston & Strawn LLP, Dallas, for Petitioners.

Ashley Brigham Patten, Patten Law Firm, P.C., Houston, Susan Lea Hays, Law Office of Susan Hays, P.C., Austin, C. Gregory Shamoun, Kenneth J. Lambert, Shamoun & Norman, LLP, Farmers Branch, for Respondents Ashley Brigham Patten, Patten & Karlseng Law Firm, P.C., n/k/a Patten Law Firm, P.C.

Susan Lea Hays, Law Office of Susan Hays, P.C., Austin, C. Gregory Shamoun, Kenneth J. Lambert, Shamoun & Norman, LLP, Farmers Branch, Ross Howard Parker, Munsch Hardt Kopf & Harr, P.C., Dallas, for Respondent Jacques Yves LeBlanc.

Susan Lea Hays, Law Office of Susan Hays, P.C., Austin, Brian Keith Norman, C. Gregory Shamoun, Kenneth J. Lambert, Shamoun & Norman, LLP, Farmers Branch, for Respondents Robert C. Karlseng, Karlseng Law Firm, P.C., Patten LeBlanc, and Karlseng Law Firm, P.C., n/k/a LeBlanc & Karlseng, P.C.

PER CURIAM

A central issue in this case is whether the court of appeals erred in holding that the trial court lacked jurisdiction over claims of a limited partner for harm done to the partnership because he lacked standing to bring those claims individually. Because the court of appeals' decision is inconsistent with our recent opinion in Pike v. Texas EMC Management, LLC , 610 S.W.3d 763 (Tex. 2020), we conclude the appeal should be reconsidered in light of that opinion. We therefore reverse the court of appeals' judgment and remand for further proceedings.

H. Jonathan Cooke formed multiple real estate related partnerships with Robert Karlseng, Ashley Brigham Patten, and Jacques Yves LeBlanc. In 2006, Cooke sued Karlseng, Patten, and LeBlanc, along with new business entities they had formed without him (collectively, the defendants). He alleged that the individual defendants moved partnership assets to the new business entities without compensating him. The parties went to arbitration and the trial court affirmed an award in Cooke's favor. The court of appeals vacated the award and remanded the case for further proceedings. Karlseng v. Cooke , 346 S.W.3d 85, 100 (Tex. App.—Dallas 2011, no pet.).

Over the next several years, Cooke added new claims—including derivative claims on behalf of the partnerships—and added the partnerships as plaintiffs. The defendants filed various motions and defenses in response. As relevant here, the defendants filed a plea to the jurisdiction, asserting that Cooke individually lacked standing to bring claims against the individual defendants because his claims belonged to the partnerships. The trial court denied the plea. The defendants also moved for summary judgment on their defenses of illegality and business judgment. The trial court granted that motion regarding certain claims. But the trial court denied the defendants' motion for summary judgment on their defense of limitations. The trial court granted the parties' agreed motion for an interlocutory appeal, and the court of appeals granted them permission to appeal. See TEX. CIV. PRAC. & REM. CODE § 51.014(d), (f) ; TEX. R. APP. P. 28.3.

On appeal, the defendants challenged the trial court's denial of their plea to the jurisdiction and their motion for summary judgment based on limitations. 617 S.W.3d 570, 573 (Tex. App.—Dallas 2019). Cooke challenged the trial court's order granting the defendants' motion for summary judgment on the defenses of illegality and business judgment. Id. at 573.

The court of appeals first addressed the defendants' plea to the jurisdiction. Id. at 575. It agreed with the defendants that Cooke's individual claims pleaded only an injury to the partnerships and thus did not belong to him individually. Id. at 575. The court explained that while Cooke felt the economic impact of the defendants' failure to compensate him for the partnership assets and businesses, those damages belong to the partnerships. Id. at 576. The court thus concluded that "Cooke lacked standing to assert his individual claims. If a plaintiff lacks standing to assert a claim, the court lacks jurisdiction over that claim and must dismiss it." Id. at 577.

The court of appeals also addressed the trial court's denial of the defendants' motion for summary judgment based on limitations. The defendants argued that the derivative claims Cooke filed in 2014 were barred by limitations because they were based on allegations that occurred in 2005 and 2006. Id. at 577. Cooke responded that all the derivative allegations related back to his original filing in 2006. Id. at 578. Based on its holding that Cooke lacked standing to assert his original individual claims, and therefore the trial court never obtained jurisdiction over them, the court held that the doctrine of relation back could not create jurisdiction where none existed. Id. at 578 (citing Goss v. City of Houston , 391 S.W.3d 168, 175 (Tex. App.—Houston [1st Dist.] 2012, no pet.) ). The court therefore reversed the trial court's orders, dismissed Cooke's individual claims for lack of jurisdiction, and dismissed his derivative claims because they were barred by limitations. Id. at 580. It did...