Glattly v. Cms Viron Corp.
| Decision Date | 05 May 2005 |
| Docket Number | No. 01-04-00998-CV.,01-04-00998-CV. |
| Citation | 177 S.W.3d 438 |
| Parties | Craig GLATTLY, Appellant, v. CMS VIRON CORPORATION f/k/a Viron Energy Services, Appellee. |
| Court | Texas Supreme Court |
Ronald D. Cohen, Houston, for appellant.
Joe W. Redden, Jr., Russell S. Post, Felicia Harris Kyle, Beck, Redden & Secrest, L.L.P., Lucas Thomas Elliot, Fulbright & Jaworski LLP., Houston, for appellees.
Michael J. Yanochik, Houston, for other interested party State Street Bank and Trust Company.
Panel consists of Justices TAFT, KEYES, and HANKS.
Appellant, Craig Glattly, appeals from the denial of his special appearance. See TEX. CIV. PRAC. & REM.CODE ANN. § 51.014(a)(7) (Vernon Supp.2004-2005). We affirm.
Glattly, who is not a Texas resident, wore several corporate hats. First, he was the president and CEO of Academic Capital, L.L.C. Second, Glattly was a principal shareholder, the president, and the CEO of Academic Capital Group, Inc. ("ACG"), which was incorporated in 1999 to succeed to the business of Academic Capital, L.L.C. Third, Glattly was a principal shareholder, the president, and the CEO of Academic Capital Services, Inc. ("ACS").1 In this opinion, we refer to ACG and ACS together as "the Academic entities." None of the Academic entities was a Texas corporation.
ACG's business was to underwrite and to finance certain leases, which ACG accomplished with capital provided under lines of credit with third-party lenders. ACS completed the lease transactions and administered the agreements' lease payments.
Appellee, CMS Viron Corporation ("Viron"), was a Missouri corporation that was awarded a contract by Texas Southern University ("TSU") to construct an energy-savings project on TSU's Houston campus ("the TSU project"). To consummate this agreement, Viron and TSU entered into a "Master State and Municipal Lease/Purchase Agreement" ("the Master Lease") in 1998. Viron was the lessor under the Master Lease, and TSU was the lessee. Under the Master Lease, Viron was to lease the TSU project's equipment to TSU, and TSU was to make rental payments to Viron. To finance the TSU project, Viron assigned its rights under the Master Lease to ACG's predecessor ("the Lease Assignment"). To service the amount financed, Viron, ACS, and TSU entered into an escrow agreement ("the Escrow Agreement"), under which ACS was the escrow agent for the TSU project. In transactions such as that between Viron and TSU, ACG and its predecessor functioned as interim lenders, assigning their rights to the stream of rental payments under such leases to permanent lenders interested in receiving the income stream. Accordingly, ACG's predecessor assigned its rights under the Master Lease to State Street Bank and Trust of Boston ("State Street Bank").
The Master Lease between Viron and TSU provided that it was to be construed in accordance with the laws of Texas. The Lease Assignment between Viron and ACG's predecessor provided, in part, that
If [Viron] has performance responsibilities under the Master Lease, and [TSU] abates payment of rent due to [Viron]'s lack of performance (as determined by [TSU]), then, upon notice to [Viron] from [ACG's predecessor], [Viron] will remit such abated amount within 10 days of [ACG predecessor's] notice.
The Escrow Agreement signed by Viron, TSU, and ACS provided, in part, as follows:
1. This Escrow Agreement relates to and is hereby made part of the [Master Lease] dated August 22, 1998 between [Viron] and [TSU], . . . .
. . .
3. [Viron, TSU, and ACS] agree that [ACS] will act as sole escrow agent under the [Master] Lease and this Escrow Agreement. . . . [ACS] shall not be deemed to be a party to the [Master] Lease, and this Escrow Agreement shall be deemed to constitute the entire agreement between [Viron, TSU, and ACS].
. . .
7. Moneys in the [escrow fund] shall be used for the cost of acquisition of the Equipment and related delivery, engineering and installation costs. Payment shall be made from the [escrow fund] for the cost of acquisition of part or all Equipment upon presentation to [ACS] of one or more properly executed Payment Request Forms executed by [TSU]. . . .
[TSU] agrees that, should the final acceptance of the Equipment not occur prior to December 30, 1999, the unspent funds in the [Escrow account] shall become the property of [TSU], and that the [Master] Lease and Lease Payments will commence as if Acceptance had occurred on December 30, 1999, pursuant to sections 2 and 4 of the [Master] Lease.
. . .
12. This Escrow Agreement shall be governed by and construed in accordance with the laws of the State of Illinois. . . . .
(Emphasis added.)
ACS made three of four payments from the escrow account to Viron for the TSU project. However, in December 1999, before the fourth payment was requested or made, ACS learned, from communications between TSU and Glattly, that TSU was alleging problems with Viron's performance on the TSU project. TSU soon stopped making rental payments under the Master Lease. After TSU stopped making rental payments, Glattly directed that the funds in the escrow account be paid to State Street Bank, rather than to Viron.2 Suffice it to say that the parties disputed below and dispute on appeal both Glattly's motivation for ordering payment to State Street Bank and the legal significance of that decision.3 In a nutshell, the underlying litigation arose out of both the failed TSU project and the payment of the escrow funds to State Street Bank, rather than to Viron.
In October 2002, State Street Bank sued Viron for breach of contract, negligence, and breach of warranty relating to Viron's alleged faulty performance under the Master Lease and related matters. In December 2002, Viron counterclaimed against State Street Bank for breach of contract, conversion, and breach of fiduciary duty; asserted third-party claims against TSU for breach of contract and quantum meruit; and asserted third-party claims against the Academic entities for breach of contract, conversion, and breach of fiduciary duty relating to the payment of escrow funds to State Street Bank, rather than to Viron. Viron also sought indemnification from TSU if State Street Bank prevailed in its claims against Viron. In December 2003, the Academic entities asserted third-party claims against State Street Bank, seeking indemnification if Viron prevailed on its claims against the Academic entities.
By February 2004, Viron had amended its petition to assert claims against Glattly, Dennis Stephans,4 and Eric Harkness5 in their individual capacities (collectively, "the individual defendants") for breach of fiduciary duties, conversion, negligence (including gross negligence), fraud, breach of contract, tortious interference with contractual relationships, and misapplication of fiduciary property, all apparently relating to the payment of the escrow funds to State Street Bank.6 Among other things, Viron alleged that the individual defendants were personally liable to it because they (1) had "knowingly authorized, directed, participated in and ratified" the Academic entities' breach of fiduciary duties, breach of contract, and conversion; (2) had been "negligent in the performance of their duties as officers and directors of [the Academic entities], and in the supervision and management of the Acquisition Fund"; and (3) had tortiously interfered with the Academic entities' and Viron's contractual relationship "by causing the escrowed funds to be transferred to State Street Bank."7 Separately and alternatively, Viron also alleged that the individual defendants were liable on all causes of action asserted against the Academic entities by virtue of those entities' being the individual defendants' alter egos. Each individual defendant specially appeared to contest personal jurisdiction over him.
The trial court granted the special appearances of Harkness and Stephans, but denied the special appearance of Glattly. Glattly appeals.8
Although a legal conclusion concerning the existence of personal jurisdiction is a question of law subject to de novo review, that conclusion must sometimes be preceded by the resolution of underlying factual disputes. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex.2002); Am. Type Culture Collection v. Coleman, 83 S.W.3d 801, 805-06 (Tex.2002). When, as here, the trial court does not issue fact findings, we presume that the trial court resolved all factual disputes in favor of its ruling. Am. Type Culture Collection, 83 S.W.3d at 805-06. When the appellate record contains the applicable trial record, these implied factual findings are not conclusive, and an appellant may challenge them for evidentiary sufficiency. BMC Software Belgium, 83 S.W.3d at 794; Preussag Aktiengesellschaft v. Coleman, 16 S.W.3d 110, 113 (Tex.App.-Houston [1st Dist.] 2000, pet. dism'd w.o.j.); Wright v. Sage Eng'g, Inc., 137 S.W.3d 238, 248 (Tex.App.-Houston [1st Dist.] 2004, pet. denied). However, we apply a de novo review to the extent that the underlying facts are undisputed. Preussag Aktiengesellschaft, 16 S.W.3d at 113.
In two issues, Glattly argues that the trial court erred in denying his special appearance because the court had no specific personal jurisdiction over him, it had no general personal jurisdiction over him, and it could not assert personal jurisdiction over him based on the corporate defendants' being his alter egos.
The plaintiff bears the initial burden of pleading allegations sufficient to bring a non-resident defendant within the terms of the Texas long-arm statute.9 Am. Type Culture Collection, 83 S.W.3d at 807. When a non-resident defendant files a special appearance, however, the defendant assumes the burden of negating all bases of personal jurisdiction that the plaintiff has alleged. Id.
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