Ennis v. Loiseau

• Decision Date: 05 May 2005
• Docket Number: No. 03-04-00748-CV.,03-04-00748-CV.
• Citation: 164 S.W.3d 698
• Parties: Gene ENNIS, Appellant, v. Robert LOISEAU, Special Deputy Receiver of American Benefit Plans, et. al., Appellee.
• Court: Texas Supreme Court

Page 698

164 S.W.3d 698

Gene ENNIS, Appellant, v. Robert LOISEAU, Special Deputy Receiver of American Benefit Plans, et. al., Appellee.

No. 03-04-00748-CV.

Court of Appeals of Texas, Austin.

May 5, 2005.

COPYRIGHT MATERIAL OMITTED

Toni Hunter, Douglas M. Becker, Gray & Becker, PC, Austin, TX, for appellant.

Jane M.N. Webre, Cynthia S. Connolly, S. Abraham Kuczaj, Scott, Douglass & McConnico, LLP, Austin, TX, for appellee.

Before Chief Justice LAW, Justices PATTERSON and PURYEAR.

OPINION

JAN P. PATTERSON, Justice.

After being appointed by the Texas Insurance Commissioner to serve as a Special Deputy Receiver for a conglomerate of entities¹ accused of participating in a multi-state scheme of insurance fraud, appellee Robert Loiseau brought suit, as the assignee of the victims' claims, to liquidate and collect the entities' assets on behalf of the victims. Among the 140 defendants sued in the receivership action, Gene Ennis was named in his individual capacity as a "general agent," and two companies for which Ennis is president, Fidelity Benefit Administrators and NetPay USA, were named as corporate defendants. Ennis filed a special appearance, which was denied. He appeals, claiming in four issues that the trial court erred by denying his special appearance, admitting certain affidavits and exhibits offered by Loiseau, sustaining objections to Ennis's affidavit, and failing to enter findings of fact and conclusions of law. Because the evidence in the record is legally and factually sufficient to support the trial court's denial of Ennis's special appearance and no reversible error was committed, we affirm the trial court's order.

BACKGROUND

In 2002, the State of Texas began the process of shutting down a multi-state network of fraudulent insurers based in Fort Worth and primarily operated by Fort Worth resident Robert David Neal and his companies, American Benefit Plans (ABP), United Employers Voluntary Employees Beneficiary Association (UEVEBA), and National Association of Working Americans (NAWA). In May 2002, a final judgment and a permanent injunction were entered against many of the fraudulent insurers and Loiseau was appointed as the Special Deputy Receiver. The receiver took over and ceased all operations at Neal's Fort Worth offices. Thereafter, hundreds of victims of the scheme assigned their claims to Loiseau, and he filed the underlying receivership action to liquidate and collect the assets on their behalf.

Gene Ennis, Fidelity Benefit Administrators, and NetPay USA were three of the defendants sued in the receivership action. Ennis is a Florida resident and is president of Fidelity and NetPay, both of which are incorporated in Florida. Loiseau's petition named Ennis as a "General Agent who engages in business in the State of Texas" and claimed that, despite the duties of care owed to "the employers, employee groups, enrollees, and insureds that purchased health insurance plans marketed by ABP, et al.," many general agents operated without a license and all "negligently failed to use due diligence to determine whether the ABP programs were properly authorized and licensed," including the "fail [ure] to discover, through readily available open records, that ABP/NAWA was not licensed, that Robert David Neal was subject to numerous complaints," and "the true nature of any alleged reinsurance or other financial backing for the programs." Loiseau further alleged that each of the defendants "committed torts in the State of Texas and entered into contracts with one or more of the Receivership Defendants in the State of Texas" and profited from its involvement in the insurance scheme to the detriment of Texas and its residents. Finally, Loiseau asserted that there were "numerous communications between the Defendants in this case and the ABP/NAWA headquarters in Texas by way of telephone, fax, United States Postal Service, internet, and overnight courier services." Based on these allegations, Loiseau asserted that the defendants were subject to personal jurisdiction in Texas and were liable for negligence, gross negligence, negligent misrepresentation, conspiracy, violation of Texas Insurance Code section 101.201,² and breach of fiduciary duty. Loiseau also sought disgorgement and exemplary damages, asserting that "the defendants had and/or should have had actual, subjective awareness of the risk involved, but proceeded with conscious indifference to the rights, safety, or welfare of others."

In response, Ennis and NetPay specially appeared. Fidelity did not challenge the court's jurisdiction. Ennis invoked the fiduciary shield doctrine by challenging that Texas lacked personal jurisdiction over him as an individual because all of his contacts with the state were performed in his corporate capacity as the president of Fidelity and NetPay. Ennis asserted that the jurisdictional pleadings were insufficient because they only named Ennis as an individual, while all of the receiver's evidence pertained to Ennis's corporate capacity, and because the pleadings did not establish alter ego or allege a cause of action for which Ennis could be held personally liable. However, Ennis acknowledged that he was the "man in charge" of both Fidelity and NetPay; he did not dispute the substantial connections between Fidelity and Texas-based Neal, ABP, UEVEBA, and NAWA; and he agreed that NetPay contracted with NAWA, collected funds from Texas employers to support a carrier that insured Texas employees, and sold insurance documents to Texas employers via its website. Loiseau contended that the evidence established "abundant" contacts made by Ennis as the agent of Fidelity and NetPay and argued that Ennis was not shielded from personal jurisdiction simply by wearing his "president of Fidelity hat" while committing torts and engaging in a conspiracy to defraud Texas consumers.

The trial court denied the special appearances. Ennis requested that the trial court issue findings of fact and conclusions of law, but the court declined to do so, stating that "[b]ased on this short evidentiary hearing, the Court finds that Findings of Fact would be unnecessary in this case." NetPay did not challenge the denial of its special appearance. Ennis filed this interlocutory appeal, claiming that it is not appropriate to exercise jurisdiction over him as an individual because he is protected by the fiduciary shield doctrine, and that the trial court also committed reversible error by admitting evidence that was untimely offered by Loiseau, by sustaining Loiseau's objections to Ennis's affidavit, and by not issuing findings of fact and conclusions of law.

ANALYSIS

Evidentiary Challenges

As an initial matter, we address Ennis's second and third issues, in which he asserts two evidentiary errors pursuant to Rule 120a: He claims that the trial court erred in admitting affidavits and exhibits that were untimely filed by Loiseau and in sustaining Loiseau's objections to portions of Ennis's affidavits. See Tex.R. Civ. P. 120a(3). We address these claims initially because Ennis's primary issue on appeal, whether he is subject to personal jurisdiction in Texas, relies in part on the contested evidence.

In support of his challenge to Ennis's special appearance, Loiseau offered seventy affidavits at the special appearance hearing; each affidavit was attested to by Loiseau, as the Special Deputy Receiver on behalf of Texas Insurance Commissioner Jose Montemayor, and each certified that the attached records were held by Loiseau "in the course of delinquency proceedings against American Benefit Plans, et. al." Ennis asserts that, because Loiseau did not provide copies to him until the day before the hearing, they were untimely filed and the trial court should have excluded them based on the requirement that, in a special appearance, "affidavits, if any, shall be served at least seven days before the hearing." Id.

At the hearing, Ennis objected by saying, "Your Honor, I'd like to address for a few minutes the response that [Loiseau] made to — in opposition to Gene Ennis's special appearance, and I'd like to object because it's not very — it's not timely, just last evening at 4:30 or so. But speaking to its content...." Ennis then continued with a lengthy challenge to the substance of the evidence; he never returned to the timeliness issue and never obtained a ruling, express or implied, on that objection. In order to preserve error for appeal, a party must make a timely objection "with sufficient specificity to make the trial court aware of the complaint" and obtain a ruling on the record. Tex.R.App. P. 33.1. Because Ennis failed to preserve error on whether Loiseau's exhibits were timely filed under Rule 120a(3), the seventy exhibits offered by Loiseau may be properly relied on as support for subjecting Ennis to personal jurisdiction. Ennis's second issue is overruled.

Ennis also claims that the trial court erred by sustaining Loiseau's objections that portions of Ennis's affidavit and supplemental affidavit were conclusory. The trial court sustained objections to the following statements, thereby excluding them as evidence to be considered in determining the special appearance:

• As an individual, I do not have any substantial connection with Texas arising from any of my actions or conduct purposefully directed toward Texas.

• The Plaintiffs' claims do not arise from and are not related to any activity conducted by me as an individual in Texas.

• As an individual, I do not have any continuing or systematic contacts with Texas.

• As an individual ... [I have not] committed any tort, in whole or in part, within the state.

Rule 120a(3) states that affidavits offered in a special appearance "shall be made on personal knowledge [and] shall set forth specific facts as would be admissible in evidence." Tex.R. Civ. P. 120a(3). Further, special appearance affidavits must be "direct, unmistakable, and unequivocal as to the facts sworn to."...