Ajamie LLP v. Podesta Group, INC., A/K/A Podesta Group LLC

• Court: Court of Appeals of Texas
• Decided: February 13, 2020
• Docket: 01-19-00503-CV
• Status: Published

Opinion

Opinion issued February 13, 2020

In The

Court of Appeals For The

First District of Texas ———————————— NO. 01-19-00503-CV ——————————— AJAMIE LLP, Appellant V. PODESTA GROUP, INC., A/K/A PODESTA GROUP LLC, Appellee

On Appeal from the County Civil Court at Law No. 1 Harris County, Texas Trial Court Case No. 1121669

MEMORANDUM OPINION

This is an interlocutory appeal from an order granting a special appearance.

See TEX. CIV. PRAC. & REM. CODE § 51.014(a)(7). A Texas-based law firm, Ajamie

LLP, hired a Washington, D.C.-based lobbying and public affairs firm, Podesta

Group, Inc., to lobby the United States Congress and Federal Communications Commission on behalf of a group of clients litigating claims in Delaware Chancery

Court. The parties memorialized their agreement in a written contract with a three-

year term.

Dissatisfied with Podesta’s alleged failure to perform during the final six

months of the contract, Ajamie refused to pay Podesta’s final invoice, and Podesta

sued Ajamie in D.C. Superior Court to recover the unpaid balance. Ajamie

countersued in Texas state court, and Podesta filed a special appearance, which the

trial court granted.

On appeal, Ajamie argues that the trial court erred in granting the special

appearance because Podesta established minimum contacts with Texas by soliciting

Ajamie for business, entering into the contract, regularly communicating with

Ajamie’s lawyers, and receiving monthly payments from Ajamie’s bank account.

Assuming these contacts are sufficient to show Podesta purposefully availed itself

of the privilege of conducting activities in Texas, they are not substantially

connected to the operative facts of the litigation, which concern what Podesta did

(and did not do) in Washington, D.C., not Texas.

We hold that Podesta’s Texas contacts do not support an exercise of personal

jurisdiction in this case. Accordingly, we affirm.

2 Background

In this appeal from the trial court’s order granting a special appearance, the

underlying dispute involves a simple claim for breach of contract. There are two

parties. The first is Ajamie LLP, a law firm organized under the laws of Texas with

its principal place of business in Houston, Texas. The second is Podesta Group, Inc.,

a lobbying and public affairs firm organized under the laws of Delaware with its

principal place of business in Washington, D.C.

Ajamie is retained to represent the Clients in lawsuits in Delaware Chancery Court

In 2011, Ajamie was retained by a group of over 60 former minority partners

in AT&T’s mobile phone business who were embroiled in a dispute with AT&T

(“the Clients”). Two of the Clients were residents of Texas, and the rest were

residents of other states. Collectively, they filed 11 separate lawsuits against AT&T

in Delaware Chancery Court (“the AT&T Litigation”).

Ajamie hires Podesta to lobby Congress and the FCC on the Clients’ behalf

Because the AT&T Litigation had a public policy dimension, Ajamie decided

to hire a lobbying firm to help with the cases. Ajamie ultimately decided on Podesta,

in part because Ajamie’s managing partner, Tom Ajamie, was a friend of Podesta’s

founder and president, Tony Podesta.

Ajamie executed a Consulting Agreement with Podesta on behalf of the

Clients. Under the Consulting Agreement, Podesta agreed to “render government

3 relations services with the U.S. Congress and at the Federal Communications

Commission to the Clients with respect to public policy matters related to the AT&T

litigation.” And the Clients agreed to pay Podesta a $15,000 monthly retainer fee

and a percentage of any money damages recovered in the AT&T Litigation.

The Consulting Agreement had a three-year term, starting June 15, 2014, and

ending June 14, 2017, with the option to terminate at any time upon 30 days’ notice.

Although the Consulting Agreement was between Podesta and the Clients, it

provided that Podesta would “not communicate with the Clients directly” but would

instead “communicate with and take direction from” Ajamie. It further provided that

Podesta could send notice concerning the agreement to Ajamie’s office in Houston

and that the Clients could send such notice to Podesta’s office in D.C., among other

specified methods.

Ajamie refuses to pay Podesta’s final invoice

Things went well for the first two-and-a-half years. But, Ajamie alleges,

during the final six months, Podesta’s services began to decline and then ceased

altogether. As a result, at the end of the term, Ajamie did not renew the contract and

refused to pay Podesta’s final invoice.

Podesta and Ajamie sue each other

4 In November 2018, Podesta filed suit against Ajamie in D.C. Superior Court,

asserting a claim for breach of contract to recover the final unpaid invoice. In its

complaint, Podesta alleged that jurisdiction was proper because Podesta “provided

government relations consulting services to Ajamie, primarily in the District of

Columbia.”

Four days later, Ajamie filed the underlying suit against Podesta in Texas state

trial court, asserting its own claim for breach of contract based on Podesta’s alleged

repudiation of the Consulting Agreement. In its petition, Ajamie alleged that

jurisdiction was proper because its claim arose out of Podesta’s business in Texas.

Podesta files a special appearance in the Texas lawsuit

In response to Ajamie’s suit, Podesta filed a special appearance, arguing that

it is not subject to personal jurisdiction in this case because the Consulting

Agreement required it to provide services in Washington, D.C., not Texas. Podesta

asserted that the proper forum for resolving the parties’ dispute was Washington,

D.C., where its own lawsuit was already pending.

Podesta supported its special appearance with Tony Podesta’s sworn

declaration. In it, he asserted that: (1) the Consulting Agreement called for Podesta

to engage in a variety of activities in Washington D.C.; (2) the Consulting

Agreement never required any activity of Podesta Group in Texas; (3) in performing

under the Consulting Agreement, Podesta took actions in Washington D.C. and

5 never took any action in Texas; and (4) at no time from the formation of the

Consulting Agreement to the present did Podesta engage in any activity in Texas in

furtherance of the Consulting Agreement.

Ajamie filed a verified response to Podesta’s special appearance. In it, Ajamie

asserted that Podesta established sufficient minimum contacts by touting its

connections to the Texas congressional delegation and well-known Texas lobbyists

as part of its bid to win Ajamie’s business; entering into the Consulting Agreement,

which created a continuous relationship between Podesta and Ajamie; constantly

communicating with Ajamie’s Houston-based lawyers during the first two years of

the Consulting Agreement; sending monthly invoices to Ajamie’s Houston office;

and accepting as payment for those invoices deposits from Ajamie’s Houston bank

account. Ajamie further observed that the D.C. Superior Court had dismissed

Podesta’s lawsuit for want of prosecution and that the Texas lawsuit was the only

live proceeding.

Ajamie supported its response with a number of exhibits, including the

Consulting Agreement, an April 2017 invoice from Podesta to Ajamie, bank records

showing monthly payments to Podesta from Ajamie’s bank account, and an order

from the D.C. Superior Court denying Podesta’s motion to reinstate the D.C. lawsuit.

In June 2019, the trial court held a hearing on Podesta’s special appearance.

Tom Ajamie testified as a fact witness. Mr. Ajamie testified that Mr. Podesta had

6 “solicited [his] business here in Texas,” touting his connections with the Texas

congressional delegation and Texas lobbyists as a reason for hiring his firm. Mr.

Ajamie further testified that these connections were “one of multiple” reasons he

hired the firm. Notably, Mr. Ajamie denied Mr. Podesta’s sworn statement that he

did no work in Texas, testifying that, sometime “within the first year” after the

parties signed the Consulting Agreement, Mr. Podesta came to Texas to do work “on

a number of things, including this contract . . . .” However, Mr. Ajamie did not

specify the nature of that work, and his testimony conflicted with Ajamie’s own

petition, which alleged that Mr. Podesta “performed none” of the work under the

Consulting Agreement “and instead delegated the work to others at the firm.”

After the hearing, the trial court granted Podesta’s special appearance. Ajamie

appeals.

Special Appearance

In its sole issue, Ajamie contends that the trial court erred in granting

Podesta’s special appearance.

A. Applicable law and standard of review

A nonresident defendant is subject to personal jurisdiction in Texas if (1) the

Texas long-arm statute authorizes the exercise of jurisdiction, and (2) the exercise

of jurisdiction does not violate the due process guarantees of the federal and state

constitutions. Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 657 (Tex. 2010).

7 The Texas long-arm statute allows the exercise of personal jurisdiction to reach as

far as the federal constitutional requirements of due process will allow. Id.; see TEX.

CIV. PRAC. & REM. CODE § 17.042.

The exercise of personal jurisdiction is consistent with due process when the

nonresident defendant has established minimum contacts with the forum state, and

the exercise of jurisdiction comports with traditional notions of fair play and

substantial justice. Kelly, 301 S.W.3d at 657. A nonresident defendant establishes

minimum contacts with the forum state when it purposefully avails itself of the

privilege of conducting activities within the state, thus invoking the benefits and

protections of its laws. Id. at 657–58.

Depending on the nature of a nonresident’s contacts, personal jurisdiction may

be either general or specific. TV Azteca v. Ruiz, 490 S.W.3d 29, 37 (Tex. 2016).

General jurisdiction is party-focused, whereas specific jurisdiction is transaction-

focused. Gulf Coast Int’l, L.L.C. v. Research Corp. of the Univ. of Hawaii, 490

S.W.3d 577, 584 (Tex. App.—Houston [1st Dist.] 2016, pet. denied). This case

concerns specific jurisdiction.

Specific jurisdiction arises when (1) the defendant purposefully avails itself

of the privilege of conducting activities in the forum state, and (2) the cause of action

arises from or is related to those contacts or activities. Retamco Operating, Inc. v.

Republic Drilling Co., 278 S.W.3d 333, 338 (Tex. 2009).

8 When a nonresident defendant is subject to specific jurisdiction, the trial court

may exercise jurisdiction over the defendant even if the defendant’s forum contacts

are isolated or sporadic. TV Azteca, 490 S.W.3d at 37.

The first prong of specific jurisdiction, purposeful availment, is the

“touchstone of jurisdictional due process.” Michiana Easy Livin’ Country, Inc. v.

Holten, 168 S.W.3d 777, 784 (Tex. 2005). It requires the nonresident defendant to

have purposefully availed itself of the privilege of conducting activities in the forum

state. Id.

In determining whether a nonresident defendant has purposefully availed

itself of the privilege of conducting activities in Texas, we consider the defendant’s

own actions without considering the unilateral activity of any other party and ask (1)

whether the defendant’s actions were purposeful rather than random, isolated, or

fortuitous, and (2) whether the defendant sought some benefit, advantage, or profit

by availing itself of the jurisdiction. Id. at 785.

The second prong of specific jurisdiction, relatedness, “lies at the heart of

specific jurisdiction by defining the required nexus between the nonresident

defendant, the litigation, and the forum.” Moki Mac River Expeditions v. Drugg, 221

S.W.3d 569, 579 (Tex. 2007). It requires that there be a “substantial connection”

between the defendant’s forum contacts and the operative facts of the litigation. Id.

at 585.

9 In determining whether there is a substantial connection, we do not require

proof that the plaintiff would have no claim “but for” the contacts or that the contacts

were a “proximate cause” of the liability. TV Azteca, 490 S.W.3d at 52–53. Instead,

we consider what the claim is “principally concerned with,” whether the contacts

will be “the focus of the trial” and “consume most if not all of the litigation’s

attention,” and whether the contacts are “related to the operative facts” of the claim.

Id. at 53.

If the defendant’s alleged actionable conduct occurred entirely outside the

forum state, the defendant’s in-state contacts will generally be insufficiently related

to the operative facts of the plaintiff’s claim to satisfy the second prong. See, e.g.,

Moki Mac, 221 S.W.3d at 585 (“[A] nonresident’s in-state advertising is generally

insufficiently related to a negligence claim based on personal injury that occurs out

of state to support an exercise of specific jurisdiction.”); Ashdon, Inc. v. Gary Brown

& Assocs., Inc., 260 S.W.3d 101, 113 (Tex. App.—Houston [1st Dist.] 2008, no pet.)

(“Generally, a contract calling for performance outside of Texas does not subject a

party to jurisdiction here.”); Univ. of Alabama v. Suder Found., No. 05-16-00691-

CV, 2017 WL 655948, at *6 (Tex. App.—Dallas Feb. 17, 2017, no pet.) (mem. op.)

(“Even a sustained contractual relationship with a Texas resident does not support

the exercise of jurisdiction if the contract is centered around the nonresident’s

10 ‘operations outside Texas.’” (quoting McFadin v. Gerber, 587 F.3d 753, 760 (5th

Cir. 2009)).

Whether a court has personal jurisdiction over a nonresident defendant is a

question of law, which we review de novo. Kelly, 301 S.W.3d at 657.

In a special appearance, the plaintiff and the defendant have shifting burdens

of proof. Id. at 658. The plaintiff has the initial burden to plead sufficient facts to

bring a defendant within the reach of the Texas long-arm statute. Id. If the plaintiff

meets its initial burden, the burden then shifts to the defendant to negate all bases of

personal jurisdiction alleged by the plaintiff. Id. If, however, the plaintiff fails to

meet its initial burden, the defendant need only prove that it is not a Texas resident

to negate jurisdiction. See id. at 658–59.

Because the plaintiff defines the scope and nature of the lawsuit, the

defendant’s corresponding burden to negate jurisdiction is tied to the allegations in

the plaintiff’s pleading. Id. at 658. The defendant has no burden to negate a potential

basis for personal jurisdiction when it is not pleaded by the plaintiff. See id.

The defendant can negate jurisdiction on either a factual or legal basis.

Proppant Sols., LLC v. Delgado, 471 S.W.3d 529, 536 (Tex. App.—Houston [1st

Dist.] 2015, no pet.). A defendant negates jurisdiction on a factual basis by

presenting evidence showing an absence of contacts with Texas, thus disproving the

plaintiff’s jurisdictional allegations. Id. A defendant negates the legal basis for

11 jurisdiction by showing, as relevant here, that even if the plaintiff’s alleged facts are

true, the plaintiff’s claims do not arise from the contacts. Id.

When, as here, the trial court does not issue findings of fact or conclusions of

law, we imply all facts that are necessary to support the ruling and supported by the

evidence. Guam Indus. Servs., Inc. v. Dresser-Rand Co., 514 S.W.3d 828, 832 (Tex.

App.—Houston [1st Dist.] 2017, no pet.). We will affirm the trial court’s ruling on

any legal theory that finds support in the record. Id.

B. Analysis

Ajamie argues that the trial court erred in granting Podesta’s special

appearance because Podesta established sufficient minimum contacts to support an

exercise of specific jurisdiction in this case. Ajamie bases its argument on two

principal contacts.

First, Podesta solicited Ajamie for business in Texas, touting its connections

to the Texas congressional delegation and well-known Texas lobbyists as a reason

for Ajamie to hire the firm.

Second, and more fundamental to Ajamie’s argument, Podesta entered into

the Consulting Agreement, which Ajamie describes as a “long-term” contract that

created an “ongoing business relationship” between the two parties. Throughout the

contract’s term, Podesta “regularly communicated” with Ajamie’s Texas-based

lawyers, mailed its monthly invoices to Ajamie’s Texas office, and accepted

12 payment for those invoices from deposits from Ajamie’s Texas bank account.

Ajamie emphasizes that Podesta entered into the Consulting Agreement knowing its

work would be used by Ajamie in Texas to develop its strategy for the AT&T

Litigation. Ajamie contends that the present dispute “arises directly” from the

Consulting Agreement and therefore establishes the minimum contacts necessary for

a Texas court to exercise specific jurisdiction over Podesta.

Podesta’s Texas contacts may be sufficient to show that Podesta purposefully

availed itself of the privilege of conducting activities in Texas. But they are not

substantially connected to the operative facts of the litigation.

Podesta’s contacts, though marginally relevant, do not concern facts that are

in dispute. Podesta’s alleged liability does not arise from them. Instead, Podesta’s

liability arises from his alleged failure to perform his contractual duties during the

final six months of the Consulting Agreement’s term. The operative facts of the

litigation therefore concern whether Podesta performed under the contract during

this time. The evidence shows that Podesta would have performed his duties in

Washington, D.C., not Texas.

This evidence starts with the Consulting Agreement itself, which required

Podesta to “render government relations services with the U.S. Congress and at the

Federal Communications Commission.” Congress and the FCC are both located in

13 Washington, D.C. Podesta is also located in Washington, D.C. This indicates that

Washington, D.C. is where Podesta would have rendered the services.

The evidence also includes Tony Podesta’s sworn declaration, in which he

stated that (1) the Consulting Agreement required Podesta to engage in a variety of

activities in Washington D.C.; (2) the Consulting Agreement never required any

activity of Podesta in Texas; (3) in performing under the Consulting Agreement,

Podesta took actions in Washington D.C. and never took any action in Texas; and

(4) at no time from the formation of the Consulting Agreement to the present did

Podesta engage in any activity in Texas in furtherance of the Consulting Agreement.

Mr. Podesta’s statement that he did not work in Texas conflicts with Mr.

Ajamie’s testimony that Mr. Podesta did at least some work in Texas during the first

year of the contract. A fact dispute therefore exists over whether Podesta performed

part of the contract in Texas. Because we must imply all findings of fact that are

supported by the evidence in favor of the trial judge’s ruling, we assume the trial

court resolved this dispute in favor of Podesta.

The evidence shows that Podesta would have performed its contractual duties

during the final six months of the Consulting Agreement in Washington, D.C.

Because Podesta would have performed in Washington, D.C., that is where its

alleged breach would have occurred. Because Podesta’s alleged actionable conduct

occurred entirely outside of Texas, we hold that Podesta’s Texas contacts are

14 insufficiently related to the operative facts of Ajamie’s claim to satisfy the second

prong of specific jurisdiction. See Univ. of Alabama, 2017 WL 655948, at *8

(breach-of-contract claim asserted by private foundation that provided funding to

out-of-state public university did not arise from or relate to university’s Texas

contacts when university’s alleged breaches were of contractual obligations to be

performed in foreign state, not Texas).

Accordingly, we overrule Ajamie’s sole issue.

Conclusion

We affirm.

Gordon Goodman Justice

Panel consists of Justices Keyes, Goodman, and Countiss.