Tuscano v. Osterberg

• Decision Date: 11 April 2002
• Docket Number: No. 08-01-00001-CV.,08-01-00001-CV.
• Citation: 82 S.W.3d 457
• Parties: Ronald TUSCANO, Appellant, v. Robert OSTERBERG and Olga Osterberg, Appellees.
• Court: Texas Court of Appeals

82 S.W.3d 457

Ronald TUSCANO, Appellant, v. Robert OSTERBERG and Olga Osterberg, Appellees.

No. 08-01-00001-CV.

Court of Appeals of Texas, El Paso.

April 11, 2002.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

John R. Jones, Delgado, Acosta, Braden & Jones, P.C., El Paso, for Appellant.

William A. Elias, El Paso, for Appellees.

Before Panel No. 1 LARSEN, McCLURE, and CHEW, J.J.

OPINION

SUSAN LARSEN, Justice.

Texas residents Robert and Olga Osterberg sued New York resident Ronald Tuscano in Texas for various causes of action associated with the Osterbergs' claimed ownership interest in a New York corporation. The trial court denied Ronald Tuscano's special appearance, from which he brings this interlocutory appeal. Finding no evidence that Texas courts possessed personal jurisdiction over Tuscano in this litigation, we reverse and render.

Facts

In 1977, Ronald Tuscano and Robert Osterberg met in New York to discuss the possibility of doing business together. No written records exist of the partnership which they formed as a result of that meeting. Pursuant to this partnership, Tuscano and Osterberg created a series of Texas corporations over the years to conduct their used clothing enterprise.¹ In 1982, Tuscano formed Tierra Development Corporation, incorporated under the laws of New York and doing business in New York.

In September 1998, Robert and Olga Osterberg filed a declaratory judgment action against Tierra and Tuscano seeking the trial court's ruling that the Osterbergs owned 50 percent of Tierra's stock.² The Osterbergs also pleaded causes of action for breach of fiduciary duty, breach of the covenant of good faith and fair dealing, civil conspiracy, breach of contract, promissory estoppel, fraud, conversion, and intentional infliction of emotional distress. Tuscano filed a special appearance alleging the trial court had no personal jurisdiction over him.

Immediately prior to hearing on the special appearance, the Osterbergs non-suited Tierra. The trial court denied the special appearance, retained jurisdiction over Tuscano, and filed Findings of Fact and Conclusions of Law in support of its decision. The trial court found Tuscano conducted substantial business activities in the State of Texas from 1982 through 2000, and had continuous and systematic contacts with Texas. Its ruling thus eliminated specific jurisdiction as a basis for personal jurisdiction over Tuscano.³ The trial court based its long-arm analysis on TEX. CIV. PRAC. & REM.CODE ANN. § 17.042(2), that is that Tuscano was alleged to have committed a tort in Texas. Tuscano appeals in five interrelated points of error.

Standards of Review

A defendant challenging a court's exercise of personal jurisdiction through a special appearance carries the burden of negating all bases of personal jurisdiction. Kawasaki Steel Corp. v. Middleton, 699 S.W.2d 199, 203 (Tex.1985); Siskind v. Villa Found. for Educ., Inc., 642 S.W.2d 434, 438 (Tex.1982); Nikolai v. Strate, 922 S.W.2d 229, 236 (Tex.App.-Fort Worth 1996, writ denied); Hayes v. Wissel, 882 S.W.2d 97, 99 (Tex.App.-Fort Worth 1994 no writ). Where, as here, a complete reporter's record is filed, the trial court's factual findings are not conclusive and an appellant may challenge the sufficiency of the evidence. Roberson v. Robinson, 768 S.W.2d 280, 281 (Tex.1989). Where such points are raised, the standard of review to be applied is the same as that to be applied in the review of jury findings or a trial court's findings of fact. Id.⁴

In 1997, the Texas legislature expanded the jurisdiction of the appellate courts to permit the interlocutory appeal of a trial court's decision to deny a special appearance. See TEM Cry. PRAC. & REM. CODE ANN. § 51.014(a)(7) (Vernon Supp. 2002). Since then, this Court along with other intermediate appellate courts, has adopted a factual sufficiency standard of review without discussing the reasons for doing so. See MacMorran v. Wood, 960 S.W.2d 891, 894-95 (Tex.App.-El Paso 1997, writ denied); Nikolai, 922 S.W.2d at 236; Hall, Standards of Review in Texas, 29 ST. MARY'S L.J. 351, 374-77 (1998). Only the San Antonio Court of Appeals has chosen differently, adopting an abuse of discretion analysis, reasoning that "[t]rial court decisions derived from both factual determinations and legal conclusions are generally reviewed for an abuse of discretion," and upon interlocutory review at least, this is the standard that should be applied. Magnolia Gas. Co. v. Knight Equipment & Mfg. Corp., 994 S.W.2d 684, 689 (Tex.App.-San Antonio 1998, no pet.). For the reasons set out below, we now reject both factual sufficiency and abuse of discretion review, concluding instead that legal sufficiency is the best fit for reviewing the ruling on a special appearance on interlocutory appeal.

First, a factual sufficiency review normally results in a remand to the trial court for further proceedings. See Elias v. Mr. Yamaha, Inc., 33 S.W.3d 54, 64 n. 6 (Tex. App.-El Paso 2000, no pet.). Nevertheless, although specifically engaging in such a review, this Court has reversed and rendered judgment finding a lack of personal jurisdiction, as have other courts. In re Estate of Judd, 8 S.W.3d 436, 444-45 (Tex. App.-El Paso 1999, no pet.); Valsangiacomo v. American Juice Import, Inc., 35 S.W.3d 201, 210 (Tex.App.-Corpus Christi 2000, no pet.) (reversing and dismissing case for lack of personal jurisdiction). We know of only one other extremely limited situation where reversal based on factual sufficiency review results in a rendition or dismissal, rather than remand. See In re Doe, 19 S.W.3d 249, 253 (Tex.2000) (factual sufficiency is appropriate standard of review in parental notification appeals, and court of appeals' judgment rendered upon reversal). If we wish to maintain consistency of review sought with relief obtained, we believe factual sufficiency is not the proper method of analyzing special appearances.

A second problem inherent in using a factual sufficiency review for special appearance review is the question of Supreme Court jurisdiction. The Texas Constitution provides that the decisions of the courts of appeals "shall be conclusive on all questions of fact brought before them on appeal or error." TEX. CONST. art. V, 6 (amended 1891). This provision restricts the jurisdiction of the Texas Supreme Court to questions of law. The absence or conclusiveness of evidence is a legal question within the ambit of the Supreme Court, but the weight and preponderance of evidence is a factual question within the exclusive jurisdiction of the courts of appeals. See Universe Life Ins. Co. v. Giles, 950 S.W.2d 48, 73 (Tex.1997) (Hecht, J. concurring); Continental Coffee Products Co. v. Cazarez, 937 S.W.2d 444, 450 (Tex. 1996). Thus, utilizing the factual sufficiency standard in special appearance appeals would effectively preclude our high court from giving guidance in this area of the law.

The abuse of discretion standard poses a different set of problems. We believe that the great deference afforded the trial court in abuse of discretion review cuts against the intent of the legislature in providing interlocutory appeal. Although special appearances are inherently fact-driven, they arise from an equally inherent legal question: whether the forum state has authority to adjudicate claims against a nonresident. Resolution of legal questions is a task peculiarly within the ambit of appellate courts. We believe that an abuse of discretion standard, at least as to the legal issues involved, is too deferential to the trial court's conclusions.

Legal sufficiency review, in contrast, strikes a balance between the fact-finding role of the trial court and the oversight role of the appellate court. Legal sufficiency review of special appearance rulings permits us to question the legal basis for the trial court's decision without reaching the drastic conclusion that the decision was arbitrary and without reference to guiding principles. It also avoids the inconsistency of finding factual insufficiency without the usual remand for further proceedings (which would be meaningless where we have found a lack of personal jurisdiction). Further, legal sufficiency review eliminates any argument that our Supreme Court is without authority to review an intermediate court's conclusions on the issue.

Finally, in legal sufficiency review, we must consider all the evidence in a light most favorable to the prevailing party, making every reasonable inference in favor of the trial court's ruling. Associated Indemnity Corp. v. CAT Contracting, Inc., 964 S.W.2d 276, 285-86 (Tex.1998). That a legal sufficiency challenge requires a review of all record evidence is consistent with the scope of review used by this and other appellate courts in our earlier special appearance decisions. Valsangiacomo, 35 S.W.3d at 205; Judd, 8 S.W.3d at 440-41; Nikolai, 922 S.W.2d at 236; Kawasaki Steel Corp., 699 S.W.2d at 203. We conclude this is yet another reason why it should be adopted as the correct standard of review.

We therefore adopt legal sufficiency review as the appropriate standard, and accordingly overrule our prior opinions, Judd, 8 S.W.3d at 441 and MacMorran, 960 S.W.2d at 894, to the extent that they conflict with this opinion.

Thus, if there is any evidence of probative force to support the special appearance ruling, we will affirm it. ACS Investors, Inc. v. McLaughlin, 943 S.W.2d 426, 430 (Tex.1997). Stated another way, if there is more than a scintilla of evidence to support the finding, the no evidence challenge fails. McLure v. Tiller, 63 S.W.3d 72, 80 (Tex.App.-El Paso 2001, pet. filed). "More than a scintilla of evidence" exists when the evidence supporting the finding, as a whole, rises to the level that would enable reasonable and fair-minded people to differ in their conclusions. Merrell Dow Pharmaceuticals, Inc. v. Havner, 953 S.W.2d 706, 711 (Tex.1997).

...