Hotel Partners v. Craig, 05-92-01625-CV

• Decision Date: 30 December 1994
• Docket Number: No. 05-92-01625-CV,05-92-01625-CV
• Citation: 993 S.W.2d 116
• Court: Texas Court of Appeals
• Parties: (Tex.App.-Dallas 1999) HOTEL PARTNERS, AMERICANA OCHO RIOS CORPORATION, and AMERICANA EDEN II CORPORATION, Appellants v. BERNARD D. CRAIG AND LEVY & CRAIG, P.C., Appellees

Page 116

993 S.W.2d 116 (Tex.App.-Dallas 1999)

HOTEL PARTNERS, AMERICANA OCHO RIOS CORPORATION, and AMERICANA EDEN II CORPORATION, Appellants v. BERNARD D. CRAIG AND LEVY & CRAIG, P.C., Appellees

No. 05-92-01625-CV

In The Court of Appeals Fifth District of Texas at Dallas

December 30, 1994.

Rehearing Overruled September 23, 1998.

On Appeal from the 298th District Court Dallas County, Texas Trial Court Cause No. 92-04466-M

[Copyrighted Material Omitted] Before Chief Justice McGarry and Justices Preslar¹ and Carver²

O P I N I O N

McGARRY, CHIEF JUSTICE

This appeal is from an order granting special appearances filed by the Missouri law firm of Levy & Craig, P.C. and its named principal attorney, Bernard D. Craig, Jr., a Missouri resident. The trial court found that the Missouri defendants had insufficient contacts with Texas to warrant the exercise of personal jurisdiction. We affirm.

BACKGROUND

Americana Ocho Rios Corporation ("Ocho Rios"), Americana Eden II Corporation ("Eden II") and Americana Jamaica Limited Partnership ("Jamaica L.P.") formed a partnership called Hotel Partners to lease a Jamaican resort. Hotel Partners retained Savoy Resort Management Services, Inc. ("Savoy") to manage the resort. Craig and his law firm provided legal services to Savoy and Jamaica L.P.

Hotel Partners, Ocho Rios and Eden II sued Savoy, Craig, Levy & Craig, and Jamaica L.P. for fraud, deceptive trade practices and conspiracy in connection with the alleged diversion of funds from the resort. Craig and his law firm filed special appearances and engaged in discovery proceedings. The trial court subsequently held an evidentiary hearing on the special appearances, and dismissed the action against Craig and his law firm for want of personal jurisdiction. The judgment in favor of Levy & Craig, P.C. was severed. This appeal followed.

PERSONAL JURISDICTION

Appellant's first point of error complains of the trial court's ruling on jurisdiction. Personal jurisdiction is composed of two elements: (1) the defendant must be amenable to the jurisdiction of the court; and (2) if the defendant is amenable to the jurisdiction of the court, the plaintiff must validly invoke that jurisdiction by valid service of process on the defendant. Kawasaki Steel Corp. v. Middleton, 699 S.W.2d 199, 200 (Tex. 1985). It is undisputed that service of process was effected in this case in accordance with the long-arm statute. Tex. Civ. Prac. & Rem. Code §§ 17.041 et. seq. (Vernon 1986).

Jurisdiction under the Texas long-arm statute reaches as far as the federal constitutional requirements of due process will permit. U-Anchor Advertising, Inc. v. Burt, 553 S.W.2d 760 (Tex. 1977), cert. denied, 434 U.S. 1063 (1978). Thus the issue is whether subjecting Craig and his law firm to the jurisdiction of Texas courts would violate the federal due process clause. See Kawasaki, 699 S.W.2d at 200.

Federal constitutional requirements of due process limit the power of the state to assert personal jurisdiction over nonresident defendants. Guardian Royal Exch. Assurance Ltd. v English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex. 1991). Due process imposes two requirements: (1) the nonresident defendant must have purposely established "minimum contacts" with the forum state; and (2) the exercise of jurisdiction must comport with "fair play and substantial justice." Id.

"Minimum contacts" requires a substantial connection between the nonresident defendant and Texas, arising from action or conduct by the nonresident defendant purposefully directed toward Texas. Id., at 230. When specific jurisdiction is asserted, the cause of action must arise out of or relate to the nonresident defendant's contacts with Texas. Id. When general jurisdiction is alleged, there must be continuous and systematic contacts between the nonresident defendant and Texas. Id. General jurisdiction requires a showing of substantial activities by the nonresident defendant in Texas. Id.

The "fair play and substantial justice" requirement of due process imposes upon the defendant the burden to present a compelling case that the presence of some consideration would render jurisdiction unreasonable. Id, at 231. The following factors, when appropriate, should be considered: (1) the burden on the defendant; (2) the interests of the forum state in adjudicating the dispute; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the interstate judicial system's interest in obtaining the most efficient resolution of controversies; and (5) the shared interest of the several states in furthering fundamental substantive social policies. Id. Only in rare cases will the exercise of jurisdiction not comport with fair play and substantial justice when the nonresident defendant has purposefully established minimum contacts with the forum state. Id.

STANDARD OF REVIEW

The trial court presumably applied the foregoing jurisdictional formula and concluded that neither Craig nor his law firm had purposefully established minimum contacts with Texas. Appellate review requires the trial court's decision to be measured against a specific standard of review. The parties disagree as to what that standard should be.

The federal courts have held that absent any dispute as to the relevant facts, the issue of whether personal jurisdiction may be exercised over a nonresident defendant is a question of law to be determined de novo by the reviewing court. See e.g., Ruston Gas Turbines, Inc. v. Donaldson Co., Inc., 9 F.3d 415, 418 (5th Cir. 1993). However, the circuits are divided on the standard to be applied when the underlying jurisdictional facts are disputed. The Fifth Circuit simply resolves all conflicts in favor of the party seeking to invoke the court's jurisdiction. Id. The Ninth Circuit, on the other hand, would apply an ordinary evidentiary review to the trial court's fact findings. See Reebok Intern., Ltd. v. Marnatech Enterprises, Inc., 970 F.2d 552, 554 (9th Cir. 1992) (accepting trial court findings unless clearly erroneous).

The Supreme Court of Texas has implicitly treated in personam jurisdiction as a question of law. For example, in Guardian Royal Exchange, the court clearly decides both the "minimum contacts" and "fair play and substantial justice" requirements de novo. See Guardian Royal Exch. Assur. Ltd., 815 S.W.2d at 231, 232. However, the supreme court has also presumed disputed fact issues relating to jurisdiction found in support of the trial court's judgment. Zac Smith & Co., Inc., v. Otis Elevator Co., 734 S.W.2d 662, 666 (Tex. 1987), cert. denied, 484 U.S. 1063 (1988). This is not inconsistent with the Ninth Circuit approach, because the Supreme Court of Texas cannot review fact issues. See Cropper v. Caterpillar Tractor Co., 754 S.W.2d 646, 648 (Tex. 1988). All that ever remains before the supreme court is the application of the controlling legal principles.

The exercise of in personam jurisdiction clearly requires the trial court to resolve any factual disputes presented before applying the supreme court's jurisdictional formula. This Court has held that the correct standard of review of the evidence is a factual sufficiency review. Hotel Partners v. KPMG Peat Marwick, 847 S.W.2d 630, 632 (Tex. App.-- 1993, writ denied). We conclude that on jurisdictional issues, Texas courts review questions of fact and questions of law separately, as in the Ninth Circuit. Consequently, we hold that the appropriate standard of review of a trial court's order granting a special appearance is a de novo review, applying the supreme court's jurisdictional formula. Guardian Royal Exch. Assurance Ltd., 815 S.W.2d at 231, 232. The trial court's resolution of disputed fact questions is subject to an ordinary review of the sufficiency of the evidence. Hotel Partners v. KPMG Peat Marwick, 847 S.W.2d at 832.

APPLICATION OF LAW TO THE FACTS

Both Craig and his law firm were required to negate all bases of in personam jurisdiction. See Kawasaki Steel Corp., 699 S.W.2d at 201. In determining whether they carried this burden, we review all the evidence that was before the trial court. Bellair, Inc., v. Aviall of Texas, Inc., 819 S.W.2d 895, 898 (Tex. App.--Dallas 1991, writ denied). Absent findings of fact, we presume that any factual disputes were resolved in support of the trial court's order. Zac Smith & Co., Inc., 734 S.W.2d at 666.

Minimum Contacts

Craig and his law firm represented Savoy for over three years. Savoy was headquartered in Texas, and Craig effectuated a change of Savoy's state of incorporation to Texas. Craig travelled to Texas on at least four occasions to represent Savoy in matters relating to the resort hotel that is the subject of this suit. Craig and another attorney with his firm also travelled to Texas on at least five additional occasions to represent Savoy in other matters. Levy & Craig, P.C. billed Savoy over $250,000 for legal services over three years, of which more than $100,000 was paid.

Maurice Collins testified that Craig also provided legal services to Hotel Partners. Collins was a vice-president of both Ocho Rios and Eden II. Craig denied representing Hotel Partners. Collins admitted there was no written contract for legal services, and that Levy & Craig, P.C. never billed Hotel Partners, Ocho Rios or Eden II for legal services. Craig did admit holding himself out as counsel for the resort hotel to persons and entities in Jamaica. He did also meet with Collins in Texas, and corresponded with him. The meetings and correspondence concerned the resort and the other legal affairs of Savoy. Craig also admitted being a limited partner in Jamaica, L.P., the third member of Hotel Partners. Jamaica, L.P. was registered in Missouri but headquartered in Texas. Craig apparently had also previously represented Jamaica, L.P. as it attorney, but there was no evidence of the actions taken on its behalf.

We presume that the trial court found that Levy & Craig, P.C....