Xenos Yuen v. Fisher

• Decision Date: 22 February 2007
• Docket Number: No. 01-06-00010-CV.,01-06-00010-CV.
• Citation: 227 S.W.3d 193
• Parties: XENOS YUEN, Appellant, v. Barry A. FISHER and Fleishman & Fisher, Appellees.
• Court: Texas Court of Appeals

227 S.W.3d 193

XENOS YUEN, Appellant, v. Barry A. FISHER and Fleishman & Fisher, Appellees.

No. 01-06-00010-CV.

Court of Appeals of Texas, Houston (1st Dist.).

February 22, 2007.

Allecia Yuvette Lindsey, Stephen E. Menn, Law Office of Stephen E. Menn, Houston, TX, for Appellant.

Jeremiah J. Anderson, Penn Christopher Huston, King & Spalding, Houston, TX, for Appellee.

Panel consists of Chief Justice RADACK and Justices JENNINGS and BLAND.

OPINION

JANE BLAND, Justice.

Xenos Yuen appeals the trial court's order granting a special appearance filed by appellees, Barry Fisher and his law firm, Fleishman & Fisher (collectively "Fisher"). We conclude that (1) the trial court properly set aside a default judgment entered against Fisher, after learning that Fisher had specially appeared in the case but did not receive notice of the default judgment hearing; (2) Fisher did not waive his special appearance; (3) viewing the facts in a light favorable to the trial court's ruling, the record does not satisfy the requirements of due process and the Texas long-arm statute so as to confer personal jurisdiction on the trial court; and (4) the trial court did not abuse its discretion in denying Yuen's motion for new trial. We therefore affirm the order of the trial court.

I. BACKGROUND

Chinese Arbitration Case

In 2002, Yuen, a Texas attorney, brought a proceeding in California federal court to confirm and enforce an arbitration award obtained by a Chinese company against a California business ("the Chinese arbitration case"). Yuen decided to retain local counsel in the Central District of California. One of Yuen's Texas-based employees, Charles Hunter, knew Fisher, an attorney licensed in California. Hunter asked Fisher if he would be interested in serving as local counsel. Fisher accepted and, by 2004, assumed full responsibility for the case. All of Fisher's work for the case occurred in California, although he occasionally communicated with Hunter and Yuen regarding the status of the case.

Fisher eventually moved to withdraw as local counsel because Yuen refused to pay for his services. In opposition to Fisher's motion to withdraw, Yuen filed a declaration with the California court, dated June 24, 2004, in which he stated as follows:

My relationship with Mr. Fisher was never about money, but about friendship and mutual interests in developing business in the Orient. We worked together on several international matters without ever asking for or receiving compensation. The one time we tried to form a business relationship, we failed. However, this failure should not be allowed to harm plaintiff.

The California court granted Fisher's motion to withdraw, and Fisher later sued Yuen in Los Angeles superior court for his unpaid fees. The parties subsequently agreed to arbitrate the fee dispute. During the arbitration, Yuen claimed that he was entitled to an offset for fees Fisher owed him pursuant to a second business relationship. Specifically, Yuen asserted that Fisher had asked him to recruit clients for a potential lawsuit against the largest monosodium glutamate ("MSG")¹ manufacturer in Japan, and that he had incurred $35,000 of time and expenses in doing so. The arbitrator granted Fisher his fees and denied Yuen any offset.

The MSG Case

Soon thereafter, Yuen filed the present case against Fisher in Texas state court, alleging a gamut of claims: breach of contract, quantum meruit, unjust enrichment, tortious interference with existing and prospective business relationships, promissory estoppel, fraud, violations of the Deceptive Trade Practices Act, fraudulent inducement, and negligent misrepresentation. Factually, Yuen avers in his affidavit in opposition to Fisher's special appearance that Fisher called him and asked him to perform an investigation in China, Hong Kong, and Taiwan concerning the degree to which Japanese manufacturers had monopolized the market for imported MSG. He asserts that it was his understanding that Fisher would compensate him and his associates for their time spent conducting the investigation, which spanned a period of two months, but Fisher never did so.

Fisher responded to the lawsuit by filing a special appearance, supported with his affidavit and one from Hunter. In them, both men aver that, in the spring of 2003, during a telephone call between Hunter and Fisher concerning the Chinese arbitration case, Fisher mentioned to Hunter that a Washington, D.C. law firm was interested in locating a business in Asia that could serve as a plaintiff in a proposed lawsuit complaining of price fixing in the international MSG market. Fisher inquired in passing whether Yuen had any clients that might have been affected by the alleged anti-competitive activity. Hunter subsequently conveyed Fisher's inquiry to Yuen, who told Hunter that he did not have time to check into it. That summer, Yuen traveled to China, and upon returning, he told Hunter that a friend had informed him that the MSG markets in Asia did not suffer from monopolistic pricing and that Fisher should look elsewhere for his plaintiff. Hunter conveyed this information to Fisher. Both men aver in their affidavits that Fisher never spoke directly with Yuen regarding the MSG matter, and that Fisher never mentioned any sort of payment.

Yuen responded to the special appearance with a business records affidavit attaching telephone messages from his secretary that reflect phone calls from Fisher to either Yuen or Hunter beginning in September 2003, as well as e-mail communications among all three men beginning in September 2003. Yuen avers in his affidavit that all of these communications concerned the MSG matter.

A month and a half after Fisher filed his special appearance, Yuen moved for a default judgment on the ground that Fisher had not answered the lawsuit. Yuen did not serve the motion on Fisher or notify him of the default judgment hearing. The trial court subsequently entered a default judgment against Fisher.

Subject to his special appearance, Fisher moved to set aside the default judgment. In the same motion, he asked the court to rule on the special appearance, and, in the event the court denied the special appearance, he requested sanctions against Yuen. The trial court, on its own motion, set aside the default judgment and continued the special appearance hearing so that Yuen could depose Fisher. The court subsequently granted Fisher's special appearance and dismissed the case with prejudice for refiling in Texas.

Yuen moved for a new trial, attaching to his motion additional cellular telephone records and e-mail communications that allegedly demonstrate Fisher's contacts with Texas. The trial court denied the motion and this appeal followed.

II. ANALYSIS

A. Default Judgment

Yuen contends the trial court erred in setting aside the default judgment against Fisher, on its own motion, after learning that Fisher had filed a special appearance in the case. Yuen maintains that a special appearance is not an answer, and cites LBL Oil Co. v. International Power Services, Inc. for the proposition that "[t]he Texas Supreme Court only requires that notice be served of a hearing on a post-appearance motion for default judgment." 777 S.W.2d 390 (Tex.1989).

In LBL, characterized by the Texas Supreme Court as a "post-appearance default judgment case," the plaintiff had sued "LBL Oil Company, a Texas corporation," on a sworn account. Id. at 390. R.H. Lindley, an Oklahoma citizen, filed a pro se motion to dismiss, alleging that he was the sole owner of the unincorporated business "LBL Oil Company," an "Oklahoma `dba,'" and that the Texas court did not have jurisdiction over him. Id. Lindley did not file an answer. Id. The plaintiff subsequently moved for a default judgment, but did not serve the motion on Lindley. Id. Nor did he serve Lindley with notice of the default judgment hearing. Id.

The Texas Supreme Court reversed the default judgment, stating as follows:

Once a defendant has made an appearance in a cause, he is entitled to notice of the trial setting as a matter of due process under the Fourteenth Amendment to the federal constitution, as set forth in Peralta v. Heights Medical Center, Inc., 485 U.S. 80, 108 S.Ct. 896, 99 L.Ed.2d 75 (1988). See Lopez v. Lopez, 757 S.W.2d 721, 723 (Tex.1988). The record here establishes that Lindley had no actual or constructive notice of the hearing on the motion for default judgment, which effectively was his trial setting since it was dispositive of the case.

Id. at 390-91.

Here, Fisher's special appearance constituted an "appearance," similar to that made by Lindley in LBL, sufficient to entitle him to notice of the default judgment hearing. Id.; see also In re Brilliant, 86 S.W.3d 680, 693 (Tex.App.-El Paso 2002, no pet.) (concluding that appellant's "plea to the jurisdiction constituted an appearance" sufficient to entitle her to notice of default judgment hearing); Santex Roofing & Sheet Metal, Inc. v. Venture Steel, Inc., 737 S.W.2d 55, 56 (Tex.App.-San Antonio 1987, no writ) ("Texas courts have always been reluctant to uphold a default judgment without notice where some response from the defendant is found in the record."). As in LBL, there is no certificate of service on Yuen's motion for default judgment, and Fisher's affidavit confirms that Yuen did not serve him with the default judgment motion. Likewise, there is no notice of the default judgment hearing in the record. Fisher avers in his affidavit that he first learned of the default judgment when he received a postcard notice from the trial court informing him that it had signed a default judgment.

Because the record establishes that Fisher had no actual or constructive notice of the default judgment hearing, we conclude that the trial court did not abuse its discretion in setting aside the default judgment. LBL, 777 S.W.2d at 391; Brilliant, 86 S.W.3d at 693.

B. Special Appearance

Yuen contends the trial court...