Alliance Royalties, LLC v. Boothe

329 S.W.3d 117, 178 Oil & Gas Rep. 855, 2010 Tex. App. LEXIS 9344, 2010 WL 4751815
Court of Appeals of Texas·Decided November 24, 2010·No. 05-09-01471-CV·Published·Cited by 18 cases

Opinion

OPINION

Opinion By

Justice FITZGERALD.

This is an interlocutory appeal from the denial of appellant Alliance Royalties, LLC’s (Alliance LLC’s) special appearance. We conclude 'that Alliance LLC’s contacts with Texas are sufficient to support the trial court’s exercise of jurisdiction. Accordingly, we affirm the trial court’s order.

Background

This complex multi-party, multi-claim lawsuit began as an interpleader action by Compass Royalty Management, L.L.C. Compass alleged it had received competing claims to certain oil and gas royalty interests, and requested that the court declare the parties’ rights and duties with respect to the royalty payments. Compass has paid the disputed funds into the registry of the court.

Appellant Alliance LLC was incorporated in Nevis, an island in the West Indes. Alliance Royalties, Inc. (Alliance Inc.), a separate company, was incorporated in the Caribbean island of Anguilla. Alliance Inc. is a party in the proceedings below but did not contest the trial court’s jurisdiction. Duane Crithfield is the President of Alliance Inc. and is also a party to the proceedings below. Crithfield specifically disclaims any connection with Alliance LLC. While Alliance Inc. and Crithfield are not parties to this appeal, the facts regarding their relationship to Alliance LLC are hotly disputed and highly relevant to Alliance LLC’s special appeai-ance.

Appellees William A. Boothe, M.D., Wendy J. Boothe, and W.A. Boothe Family Ltd. (collectively the Boothes) are residents of Dallas, Texas. Appellees GVLP, LLC, DVLP, LLC, NVLP, LLC, and RVLP, LLC (collectively the Vento entities) are Nevis corporations. The Boothes and the Vento entities separately invested funds that, through a series of complicated transactions, were used to purchase oil and gas mineral interests from Noble Royalties, an entity headquartered in Dallas, Texas. Compass is a wholly-owned subsidiary of Noble.

The Boothes and the Vento entities have filed cross-claims and third-party actions against Alliance Inc., Alliance LLC, and Crithfield, alleging fraud and other causes of action. Alliance LLC filed a special appearance to challenge the trial court’s jurisdiction and requested dismissal of all claims asserted against it. After a hearing, the trial court denied Alliance LLC’s special appearance, and filed findings of fact and conclusions of law. This interlocutory appeal followed.

Standard of Review and Burden of Proof

On review of an order deciding a special appearance, we review the trial court’s factual findings for sufficiency of the evidence, but we review de novo its ultimate conclusion as to the propriety of personal jurisdiction as a conclusion of law. Capital Tech. Info. Servs., Inc. v. Arias & Arias Consultores, 270 S.W.3d 741, 747-48 (Tex.App.-Dallas 2008, pet. denied) (en banc). The supreme court has explained our standard of review where, as here, the trial court has entered findings of fact and conclusions of law:

If a trial court enters an order denying a special appearance, and the trial court issues findings of fact and conclusions of law, the appellant may challenge the fact *120 findings on legal and factual sufficiency grounds. Our courts of appeals may review the fact findings for both legal and factual sufficiency.
Appellate courts review a trial court’s conclusions of law as a legal question. The appellant may not challenge a trial court’s conclusions of law for factual insufficiency; however, the reviewing court may review the trial court’s legal conclusions drawn from the facts to determine them correctness. If the reviewing court determines a conclusion of law is erroneous, but the trial court rendered the proper judgment, the erroneous conclusion of law does not require reversal.

BMC Software Belgium, N.V. v. Marchano, 83 S.W.3d 789, 794 (Tex.2002) (citations omitted).

The plaintiff bears the initial burden of pleading jurisdictional facts sufficient to bring the defendant within the reach of the Texas long-arm statute. Capital Tech. Info. Servs., Inc., 270 S.W.3d at 748. The specially appearing defendant must then negate all bases for personal jurisdiction alleged by the plaintiff. Id,. If the nonresident defendant produces evidence negating personal jurisdiction, the burden returns to the plaintiff to show, as a matter of law, that the court had personal jurisdiction over the nonresident defendant. Assurances Générales Banque Nationale v. Dhalla, 282 S.W.3d 688, 695-96 (Tex.App.-Dallas 2009, no pet.).

Alliance LLC’s first issue on appeal relates to this burden of proof. Citing Kelly v. General Interior Construction, Inc., 301 S.W.3d 653 (Tex.2010), Alliance LLC argues that appellees’ pleading asserting their cross-claims must allege the basis for the trial court’s exercise of jurisdiction. Alliance LLC argues appellees’ pleadings did not allege facts to satisfy this initial burden; rather, them jurisdictional allegations were contained only in their response to Alliance LLC’s special appearance. Alliance LLC further maintains that appellees’ response to the special appearance is not a “pleading” under rule 120a(3) of the Texas Rules of Civil Procedure, and therefore, the burden never shifted to Alliance LLC to negate jurisdiction beyond presenting evidence that it is a nonresident. See Dhalla, 282 S.W.3d at 695.

While there is some language in Kelly 1 to support Alliance LLC’s argument, we conclude the trial court correctly considered the response to the special appearance as well as the appellees’ pleadings. We have held that a plaintiff may carry its initial burden of pleading sufficient allegations to invoke jurisdiction in its “original pleadings as well as its response to the defendant’s special appearance.” Flanagan v. Royal Body Care, Inc., 232 S.W.3d 369, 374 (Tex.App.-Dallas 2007, pet. denied) (citing Tex.R. Civ. P. 120a(3) and Ennis v. Loiseau, 164 S.W.3d 698, 705 (Tex.App.-Austin 2005, no pet.)). In Flanagan, we specifically noted that we disagreed “with Flanagan’s argument that our review is limited only to the jurisdictional allegations made in RBC’s third-party petition.” Flanagan, 232 S.W.3d at 374 n. 5. The Kelly court did not overrule or discuss these cases permitting jurisdictional alle *121 gations to be included in a response to a special appearance. In fact, the Kelly

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Alliance Royalties, LLC v. Boothe, 329 S.W.3d 117, 178 Oil & Gas Rep. 855, 2010 Tex. App. LEXIS 9344, 2010 WL 4751815 (Tex. Ct. App. 2010).

329 S.W.3d 117 (Alliance Royalties, LLC v. Boothe) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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