Preferred Capital, Inc. v. Ward, Asel and Associates, P.C., No. 05-05-01309-CV (Tex. App. 11/14/2006)

• Decision Date: 14 November 2006
• Docket Number: No. 05-05-01309-CV.,05-05-01309-CV.
• Citation: Preferred Capital, Inc. v. Ward, Asel and Associates, P.C., No. 05-05-01309-CV (Tex. App. 11/14/2006), No. 05-05-01309-CV. (Tex. App. Nov 14, 2006)
• Parties: PREFERRED CAPITAL, INC., Appellant, v. WARD, ASEL AND ASSOCIATES, P.C., Appellee.
• Court: Texas Court of Appeals

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PREFERRED CAPITAL, INC., Appellant, v.WARD, ASEL AND ASSOCIATES, P.C., Appellee.

No. 05-05-01309-CV.

Court of Appeals of Texas, Fifth District, Dallas.

Opinion Filed November 14, 2006..

On Appeal from the 116^th Judicial District Court, Dallas County, Texas, Trial Court CauseNo. DV-05-05985-F.

Affirm.

Before Justices BRIDGES, FRANCIS, and MAZZANT.

MEMORANDUM OPINION

Opinion By Justice FRANCIS.

Preferred Capital, Inc. appeals the trial court's order vacating a domesticated foreign judgment obtained against Ward, Asel and Associates, P.C.In four issues, appellant argues the evidence is sufficient to subject appellee to personal jurisdiction in Ohio and the trial court abused its discretion in failing to sustain objections to appellee's affidavit and by allowing appellee to block postjudgment discovery.We affirm.

Appellee is a tax accounting office in Dallas, Texas.On November 26, 2003, appellee entered into two separate telecommunications equipment leases with NorVergence, Inc., a New Jersey corporation.Five days later, NorVergence notified appellee that the agreements had been transferred to appellant and provided appellant's address in Ohio to make the lease payments.Appellee made payments to appellant at its Ohio address for six months but then defaulted.Appellant sued appellee in Summit County, Ohio to collect the sums due on the leases.Ultimately, the Ohio court granted a nunc pro tunc default judgment against appellee, awarding appellant $46,524.94 plus interest.

Appellant filed an authenticated copy of the judgment, along with notice of its filing, with the district clerk of Dallas County in accordance with chapter 35 of the Texas Civil Practice and Remedies Code.SeeTex. Civ. Prac. & Rem. Code Ann. § 35.003(Vernon 1997).Appellee responded with a motion to vacate the judgment arguing, among other things, that it was not subject to the jurisdiction of the Ohio court.Attached to the motion was the affidavit of appellee's vice president, Tom Asel.

In the affidavit, Asel swore that appellee is a small tax accounting office in Dallas and "has absolutely no connection to the State of Ohio."Asel asserted that appellee"was not and has not been a resident of the state of Ohio or had ever done any business there;" was not personally served with process in Ohio, and was not personally "amenable to process isued in that state because [appellee] did not purposefully engage in any activities in the State of Ohio."Further, Asel asserted that appellee did not appear in the proceedings or otherwise consent to jurisdiction in Ohio.

Asel also alleged that the equipment rental agreements, "along with thousands of others," were "procured by a fraudulent scheme of grant [sic] proportion by Norvergence, Inc."Asel alleged that appellant was "fully aware" of the "fraudulent scheme" but nevertheless purchased appellee's leases and thousands of others.Asel also attested that at the time the agreements were executed, it did not know that the agreements would be assigned, to whom they would be assigned, or that such new entity would be located in Ohio and had the sole option of "picking the forum."Asel asserted that appellant"never anticipated it would be sued in Ohio because it lacked any notice that Norvergence would assign the contracts to [appellant]."

In response, appellant filed the affidavit of its recovery and litigation specialist, Joseph Pringle, who attested that appellee made payments to appellant for six months at its Ohio address.Appellant urged that the "voluntary" lease payments to Ohio constituted "sufficient minimum jurisdictional contacts with Ohio for the prior suit seeking the remaining unpaid debt."Additionally, appellant complained that one statement in Asel's affidavit (that appellant"was not amenable to process" because appellee"did not purposefully engage in any activities in the state of Ohio") was conclusory and should be stricken from the record.After a hearing on the motion, the Texas trial court granted appellee's motion and vacated the domesticated judgment.This appeal ensued.

The law regarding the full faith and credit clause of the United States Constitution, chapter 35 of the civil practive and remedies code, the burden of proof when challenging a foreign judgment, recognized exceptions to full faith and credit requirements, and our standard of review in such appeals has been previously sufficiently explained.SeeKarstetter v. Voss,184 S.W.3d 396, 401-02(Tex. App.-Dallas 2006, no pet. );Navarro v. San Remo Mfg., Inc.,2006 WL 10093, * 1-2(Tex. App.-Dallas Jan. 3, 2006, no pet. ).In brief, once an authenticated copy of a judgment has been filed, the defendant has the burden of attacking the judgment and establishing a recognized exception to the full faith and credit requirements, such as lack of jurisdiction.Karstetter,184 S.W.3d at 401;Navarro,2006 WL 10093, *2.The presumption of the judgment's validity can only be overcome by clear and convincing evidence.Navarro,2006 WL 10093, *2.

Whether a court has personal jurisdiction over a defendant is a question of law.Am. Type Culture Collection, Inc. v. Coleman,83 S.W.3d 801, 805-06(Tex.2002) (citing BMC Software Belg., N.V. v. Marchand,83 S.W.3d 789, 794(Tex.2002);Karstetter,184 S.W.3d at 402.In resolving this question of law, a trial court must frequently resolve questions of fact.Coleman,83 S.W.3d at 806(citingBMC Software,83 S.W.3d at 794).

In its first issue, appellant contends the trial court's order was improper because there was "uncontroverted evidence" that appellee was subject to personal jurisdiction in Ohio.In particular, appellant argues that once NorVergence assigned it the leases and notified appellee that payments were to be sent to Ohio, appellee"accepted these contract obligations by voluntarily making its first six monthly payments" to appellant in Ohio.Appellant argues these facts give rise to specific jurisdiction in Ohio.As support, it relies on Kentucky Oaks Mall Co. v. Mitchell's Formal Wear, Inc.,53 Ohio St. 3d 73, 559 N.E.2d 477, 480(Ohio1990).We disagree.

The Ohio long-arm statute authorizes Ohio courts to exercise jurisdiction over a nonresident defendant who "acts directly or by an agent, as to a cause of action arising from the person's . . [t]ransacting any business" in Ohio.Ohio Rev. Code Ann. § 2307.382(A)(1)(West 1994).In Kentucky Oaks Mall, the Ohio Supreme Court construed this statute and, specifically, the meaning of "transacting any business":

It is clear that R.C. 2307.382(A)(1)andCiv.R. 4.3(A)(1) are very broadly worded and permit jurisdiction over nonresident defendants who are transacting any business in Ohio.'Transact' as defined by Black's Law Dictionary . . . means to prosecute negotiations; to carry on business; to have dealings * * *.The word embrases in its meaning the carrying on or prosecution of business negotiations but it is a broader term than the word 'contract' and may involve business negotiations which have been either wholly or partly brought to a conclusion * * *.'

Kentucky Oaks Mall,559 N.E.2d at 480(emphasis in original).

The case involved Kentucky Oaks Mall, an Ohio lessor, which sued Mitchell's Formal Wear, a Georgia corporation, for allegedly defaulting on a lease agreement.The undisputed evidence showed that Mitchell's conducted at least part of the negotiations of the lease terms by telephone calls to and from Ohio.In addition, Mitchell's signed the lease in Georgia, mailed the document to Ohio, where Kentucky Oaks Mall signed the contract.The lease was for ten years and required that all communications be sent to Kentucky Oaks...