Craig Schubiner v. Mitchell R. Julis and Joshua S. Friedman

• Court: Court of Appeals of Texas
• Decided: December 27, 2023
• Docket: 05-23-00434-CV
• Status: Published

Opinion

AFFIRM; and Opinion Filed December 27, 2023

S In The Court of Appeals Fifth District of Texas at Dallas No. 05-23-00434-CV

CRAIG SCHUBINER, Appellant V. MITCHELL R. JULIS AND JOSHUA S. FRIEDMAN, Appellees

On Appeal from the 44th Judicial District Court Dallas County, Texas Trial Court Cause No. DC-22-17649

MEMORANDUM OPINION Before Justices Carlyle, Smith, and Kennedy Opinion by Justice Smith Appellant Craig Schubiner appeals the trial court’s denial of his special

appearance in this case, which appellees Mitchell R. Julis and Joshua S. Friedman

initiated to obtain a protective order against Schubiner. In a single issue, Schubiner

contends the trial court erred in concluding that it had personal jurisdiction over him.

We affirm the trial court’s order.

Background

Appellees are Dallas residents and co-CEOs of Canyon Partners, LLC, a

lending and investment management company headquartered in Dallas. Schubiner, a New York resident, and Canyon Partners were involved in years of multi-

jurisdictional litigation. In this case, appellees claim that Schubiner has engaged in

a “harassment campaign” against them and seek a protective order on behalf of

themselves and their immediate family members pursuant to Chapter 7B of the

Texas Code of Criminal Procedure.

According to appellees, the harassment began in July 2021 when Schubiner,

with an “aggressive demeanor,” approached Julis and Julis’s son on a street in

Colorado and, the next day, attempted to gain an in-person meeting with Julis under

false pretenses. In April 2022, Schubiner incorporated Canyon Partners News, Inc.

(CPN), a California entity. Appellees alleged that Schubiner has used the CPN

website, CanyonPartnerNews.com, and an email, texting, and social media

campaign to harm them, their wives and other family members, multiple Canyon

Partners executives, and Canyon Partners’ outside counsel. In November 2022,

Schubiner hired individuals to disrupt a private professional event in Dallas at which

Friedman was speaking. Appellees alleged that Schubiner’s actions constituted the

offenses of stalking and harassment and have caused them and their family members

to fear for their personal safety.

Schubiner responded to appellees’ application for protective order, in part, by

filing a special appearance to challenge the trial court’s exercise of personal

jurisdiction over him. Following a hearing, the trial court denied the special

appearance. This interlocutory appeal followed.

–2– Personal Jurisdiction

Texas courts may exercise personal jurisdiction over a nonresident defendant

if jurisdiction is (1) authorized by the Texas long-arm statute and (2) consistent with

federal and state constitutional due process guarantees. TEX. CIV. PRAC. & REM.

CODE ANN. §§ 17.041–.045; Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569,

574 (Tex. 2007). The Texas long-arm statute is satisfied when a nonresident

defendant “does business in this State,” which includes, among other things,

“commit[ing] a tort in whole or in part” in Texas. TEX. CIV. PRAC. & REM. CODE

ANN. § 17.042(2); Luciano v. SprayFoamPolymers.com, LLC, 625 S.W.3d 1, 8 (Tex.

2021). The statute’s broad language allows Texas courts to exercise personal

jurisdiction “as far as the federal constitutional requirements of due process will

permit.” BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002).

Federal due process limits a trial court’s jurisdiction over a nonresident

defendant unless the defendant has “sufficient minimum contacts with the forum

state such that the maintenance of the suit is reasonable and does not offend

traditional notions of fair play and substantial justice.” LG Chem Am., Inc. v.

Morgan, 670 S.W.3d 341, 346 (Tex. 2023) (internal quotation marks and citation

omitted). “A defendant establishes minimum contacts with a [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.’” Retamco Operating,

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

–3– Denckla, 357 U.S. 235, 253 (1958)). There are three parts to a purposeful availment

inquiry: (1) only the defendant’s contacts with the forum state, and not the unilateral

activity of another party or third person, are relevant; (2) the contacts must be

purposeful instead of merely fortuitous; and (3) the defendant must be seeking some

benefit, advantage, or profit through the contacts. Michiana Easy Livin’ Country,

Inc. v. Holten, 168 S.W.3d 777, 785 (Tex. 2005). “The defendant’s activities,

whether they consist of direct acts within Texas or conduct outside Texas, must

justify a conclusion that the defendant could reasonably anticipate being called into

a Texas court.” Am. Type Culture Collections, Inc. v. Coleman, 83 S.W.3d 801, 806

(Tex. 2002).

A nonresident defendant’s contacts with the forum state can give rise to either

general or specific jurisdiction. Luciano, 625 S.W.3d at 8. General jurisdiction is

established when the defendant has continuous and systematic contacts with the

forum state, regardless of whether the defendant’s alleged liability arises from those

contacts. TV Azteca v. Ruiz, 490 S.W.3d 29, 37 (Tex. 2016). Specific jurisdiction

is established when the nonresident defendant’s alleged liability arises from or is

related to its activity within the forum state. Marchand, 83 S.W.3d at 796. The

defendant’s contacts with the forum state may be more sporadic or isolated, Spir Star

AG v. Kimich, 310 S.W.3d 868, 873 (Tex. 2010), but there must be “a substantial

connection between those contacts and the operative facts of the litigation.” Moki

Mac, 221 S.W.3d at 585.

–4– A nonresident defendant may challenge a trial court’s personal jurisdiction

over him by filing a special appearance. TEX. R. CIV. P. 120a. The plaintiff bears

the initial burden to plead sufficient allegations to bring a nonresident defendant

within the provisions of the Texas long-arm statute. Morgan, 670 S.W.3d at 346

(citing Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 658 (Tex. 2010)). If the

plaintiff pleads sufficient jurisdictional facts, the defendant bears the burden to

negate all alleged bases of personal jurisdiction. Id. If the defendant presents

evidence contradicting the plaintiff’s factual allegations supporting jurisdiction, the

plaintiff may respond with its own evidence supporting the allegations.

Alternatively, the defendant can prevail by showing that even if the plaintiff’s

allegations are true, the evidence is legally insufficient to establish personal

jurisdiction. Id. Only relevant jurisdictional facts, rather than the ultimate merits of

the case, should be considered in deciding the issue. See Moncrief Oil Int’l, Inc. v.

OAO Gazprom, 414 S.W.3d 142, 156 n.15 (Tex. 2013).

Whether the trial court has personal jurisdiction is a question of law that we

review de novo. Old Republic Nat’l Title Ins. Co. v. Bell, 549 S.W.3d 550, 558 (Tex.

2018). A trial court, however, often must resolve questions of fact before deciding

the question of jurisdiction. Marchand, 83 S.W.3d at 794. When a trial court does

not issue findings of fact and conclusions of law in conjunction with its special

appearance ruling, as in this case, all facts necessary to support its order that are

supported by the evidence are implied. Id. at 795. The defendant may challenge

–5– these implied findings for legal and factual sufficiency when the appellate record

includes the reporter’s and clerk’s records. Id. If the relevant facts are undisputed,

we need not consider any implied findings of fact and consider only the legal

question of whether the undisputed facts establish personal jurisdiction. Old

Republic, 549 S.W.3d at 558.

In his sole issue, Schubiner contends the trial court lacked personal

jurisdiction because appellees failed to establish that Schubiner has “certain

minimum contacts” with Texas. Specifically, he asserts that his alleged contacts

with Texas were “negligible” and insufficient to support personal jurisdiction and

were on CPN’s behalf.

Appellees brought this case pursuant to Texas Code of Criminal Procedure

chapter 7B, which authorizes a trial court to enter orders to protect victims of certain

offenses, including stalking. See TEX. CODE CRIM. PROC. arts. 7B.001–.03; Mu v.

Tran, No. 05-21-00288-CV, 2022 WL 1314949, at *1 (Tex. App.—Dallas May 3,

2022, no pet.) (mem. op.). In their amended application, appellees alleged that their

request for protection arose out of “Schubiner’s actions directly or indirectly aimed

at harassing, stalking, embarrassing, tormenting, and/or annoying” appellees and

their family members and “[s]everal of such incidents have occurred within Dallas

County.” We conclude that appellees’ allegations that Schubiner committed

unlawful acts in Texas satisfied their initial pleading burden of bringing him within

the provisions of the Texas long-arm statute. See TEX. CIV. PRAC. & REM. CODE

–6– ANN. § 17.042(2). Accordingly, the burden shifted to Schubiner to negate appellees’

bases for personal jurisdiction. Appellees do not assert that general jurisdiction

applies, so we consider only whether the trial court had specific jurisdiction over

Schubiner.

1. Specific Jurisdiction

To demonstrate specific jurisdiction, appellees relied on affidavits they

submitted with their amended application and the affidavit of Allen Azran, Canyon

Partners’ Senior VP and Director of Security, submitted with appellees’ response to

Schubiner’s special appearance. The affidavits described the conduct by Schubiner

that caused appellees to seek a protective order. That conduct includes the following

contacts with Texas:

(1) CanyonPartnersNews.com identified Friedman’s Dallas home and urged others who had “lost all of [their] money and property . . . due to Canyon [Partners]” to “stop by and discuss” it with Freidman and his wife;

(2) appellees received at least six CPN emails, including emails advertising a book, “Hedge Fund Scum: True Stories About Canyon Partners”, which contains photos of appellees and their homes, publishes their addresses, and “spreads . . . falsehoods and fabricated conspiracies” about appellees and Canyon Partners;

(3) CPN sent dozens of messages to email addresses and/or personal phone numbers of appellees’ family members, other Canyon employees, and personal and professional contacts, many of which were not generally publicly available; the messages included links to CanyonPartnersNews.com and attacks on appellees’ integrity and business practices; and

–7– (4) Schubiner communicated with and hired Texas residents to distribute copies of “Hedge Fund Scum: True Stories about Canyon Partners” to individuals attending an event in Texas at which Friedman spoke.

Schubiner submitted an affidavit in support of his special appearance. Among

other things, he averred that:

(1) he had not been in Texas in at least six years;

(2) CPN was formed to report on the “activities and transgressions” of Canyon Partners and actions of its affiliates, owners and employees;

(3) many people, independent contractors, and attorneys have been actively involved in CPN’s work (i.e., its website, books, marketing emails, social medial, media relations and in-person events);

(4) CPN maintains a database of over 7,000 email addresses of people who may be “involved with or interested in the actions of Canyon Partners, its owners, and employees” and periodic email news and marketing updates are sent to all of the email addresses;

(5) Schubiner had not emailed CPN emails news and marketing updates to appellees or their family members in his individual capacity;

(6) to Schubiner’s knowledge, CPN had never sent an email newsletter to appellees or their family members other than as part of its mass email campaign;

(7) CPN has published two books, “Hedge Fund Scum: True Stories About Canyon Partners” and “Worse than Madoff: True Stories about Joshua Friedman’s Canyon Partners”; and

(8) Schubiner hired three individuals as independent contractors of CPN to distribute copies of “Hedge Fund Scum: True Stories about Canyon Partners” outside a Dallas building in November 2022. –8– Schubiner asserts that the complained-of conduct was too “attenuated” and

“isolated” to establish personal jurisdiction. He contends that “[m]erely maintaining

a ‘passive website’” and sending an email newsletter to a list of recipients, a small

fraction of whom may reside in Texas, is insufficient to establish personal

jurisdiction. The only allegation that could “be considered to have been targeted at

Texas,” according to Schubiner, is his hiring of independent contractors to distribute

books in Texas. Schubiner, however, asserts that his actions, which were limited to

engaging the independent contractors, also were insufficient to establish personal

jurisdiction.

The jurisdictional evidence shows that Schubiner personally arranged for

Texas residents to distribute copies of “Hedge Fund Scum: True Stories about

Canyon Partners” to attendees as they entered an event in Texas at which Friedman

was speaking. Schubiner communicated with the Texas residents by text message

to discuss the terms of the job. He directed them to hand a book to each person

attending the event and arranged for the books to be delivered to them in Texas via

Amazon. He also arranged and paid, via his personal Venmo account, for one of the

Texas resident’s transportation to the event.

This undisputed evidence, either alone or in combination with the emails

disparaging appellees’ integrity and business practices sent to Texas residents,

including appellees, their family members, their employees, and their employees’

family members, supports the trial court’s implied conclusion that Schubiner had

–9– direct contacts with Texas that were purposeful—not random, fortuitous or

attenuated—and were directed at seeking a benefit by the contacts. See, e.g.,

Innovative Therapies, Inc. v. Kinetic Concepts, Inc., 328 S.W.3d 545, 554, 557–58

(Tex. App.—San Antonio 2010, pet. denied) (finding purposeful availment when

defendant recruited a Texas resident through an intermediary to perform work in

Texas and compensated the Texas resident for that work); Keller v. Keller, No. 03-

21-00309-CV, 2023 WL 2169490, at *12–13 (Tex. App.—Austin Feb. 23, 2023, no

pet.) (mem. op.) (finding non-resident defendant subject to specific jurisdiction

when she initiated contact with Texas resident by sending harassing emails and text

messages and “sought to benefit personally from [the] communications by

intentionally causing [the plaintiff] to be fearful or agitated”). Accordingly, under

the appropriate three-part analysis, we conclude that the record supports the trial

court’s conclusion that Schubiner purposefully availed himself of the privilege of

conducting business in Texas.

In order for a nonresident defendant’s contacts in a forum state to support an

exercise of specific jurisdiction, there also must be a substantial connection between

those contacts and the operative facts of the litigation. See Moki Mac, 221 S.W.3d

at 585. Schubiner asserts that none of his alleged actions “can reasonably be

construed as a threat of violence” against appellees and, instead of stalking,

constitute protected speech. His argument, however, addresses the merits of

appellees’ application for protective order, which are not a consideration in this

–10– jurisdictional inquiry. See Old Republic, 549 S.W.3d at 563; e.g., Moncrief Oil, 414

S.W.3d at 156 n.15 (although nonresident defendants ultimately may prevail on their

theory that the information they received from plaintiff did not constitute trade

secrets, it was “a merits issue that [was] inappropriate at the jurisdiction stage”).

Schubiner’s course of conduct, which included arranging for Texas residents

to distribute books at Freidman’s speaking engagement and, through CPN, sending

disparaging electronic communications to people, including Texas residents who

may be “involved with or interested in” appellees’ and Canyon Partners’ actions, is

the foundation supporting appellees’ request for a protective order. Appellees

alleged that Schubiner’s stalking campaign seemed intended to harass and torment

them, their families, and their employees and it has had that effect. Accordingly, we

conclude that the pleadings and evidence also support the trial court’s implied

conclusion that Schubiner’s alleged liability is related to his activity within the forum

state. See, e.g., Keller, 2023 WL 2169490, at *3 (plaintiff’s claim for a protective

order arose from or related to non-resident defendant’s sending e-mails, texts, phone

calls, postcards, and packages to plaintiff in Texas).

Because Schubiner purposefully availed himself of the forum and there is a

substantial connection between his contacts with the forum and the operative facts

of this litigation, the trial court did not err when it concluded that Schubiner had

minimum contacts with Texas sufficient to allow the exercise of specific jurisdiction

over him.

–11– 2. Fiduciary Shield Doctrine

Schubiner nevertheless asserts that his contacts with Texas cannot be

attributed to him for jurisdictional purposes because he performed them in his “role

as an officer of [CPN].” The fiduciary shield doctrine protects a nonresident

corporate officer or employee from the exercise of personal jurisdiction when all of

his contacts with Texas were made on behalf of the corporation. Tabacinic v.

Frazier, 372 S.W.3d 658, 668 (Tex. App.—Dallas 2012, no pet.). However, “a

corporate officer is not protected from the exercise of specific jurisdiction, even if

all of his contacts were performed in a corporate capacity, if the officer engaged in

tortious or fraudulent conduct directed at the forum state for which he may be held

personally liable.” Id.; Nusret Dallas LLC v. Regan, No. 05-21-00739-CV, 2023

WL 4144748, at *8 (Tex. App.—Dallas June 23, 2023, no pet.) (mem. op.)

(“fiduciary shield doctrine does not protect a corporate agent who is alleged to have

personally committed a tort and at least some of the agent’s tortious conduct

involved contacts with Texas”). Indeed, the general rule in Texas is that corporate

agents are individually liable for tortious acts committed while in the service of the

corporation. Nevada Nat’l Advert., Inc. v. Silverleaf Resorts, Inc., No. 05-16-00694-

CV, 2017 WL 655949, at *9 (Tex. App.—Dallas Feb. 17, 2017, no pet.) (mem. op.).

Appellees have alleged that they are entitled to a protective order against

Schubiner based on his personal conduct, which constituted violations of the stalking

and harassment statutes and at least some of which involved contacts with Texas.

–12– Because the fiduciary shield doctrine does not protect a nonresident defendant from

the exercise of specific jurisdiction if he engaged in tortious conduct directed at

Texas, we conclude it does not protect Schubiner in this case. See Nevada Nat’l

Advert., 2017 WL 655949, at *9 (“A corporate officer may not escape liability where

he had direct, personal participation in the wrongdoing, as to be the guiding spirit

behind the wrongful conduct or the central figure in the challenged corporate

activity.”) (internal quotation marks and citation omitted).

3. Fair Play and Substantial Justice

Finally, we must consider whether, for other reasons, exercising jurisdiction

over Schubiner runs afoul of “traditional notions of fair play and substantial justice.”

State v. Volkswagen Aktiengesellschaft, 669 S.W.3d 399, 432 (Tex. 2023) (quoting

Luciano, 625 S.W.3d at 18). The exercise of personal jurisdiction over a nonresident

defendant rarely will not comport with due process guarantees when the nonresident

defendant has purposefully availed itself of the forum state and established minimum

contacts with the forum. Id. “To avoid jurisdiction, the defendant would have to

present a compelling case that the presence of some consideration would render

jurisdiction unreasonable.” Id. (internal quotation marks and citations omitted).

To determine whether exercising personal jurisdiction comports with

traditional notions of fair play and substantial justice, we consider the following

factors, if applicable: (1) the burden on the defendant; (2) the forum state’s interests

in adjudicating the dispute; (3) the plaintiff’s interests in obtaining convenient and

–13– effective relief; (4) the interstate judicial system’s interest in obtaining the most

efficient resolution of controversies; and (5) the shared interest of the states in

furthering fundamental substantive social policies. Burger King v. Rudzewicz, 471

U.S. 462, 476–77 (1985). On appeal, Schubiner does not address these factors, but

asserts generally that “the relief sought would have global ramifications for his and

other non-parties’ rights to freely express themselves on matters of public concern.”

After considering the relevant factors, we conclude that the exercise of

personal jurisdiction over Schubiner is consistent with traditional notions of fair play

and substantial justice. Schubiner will be burdened, and may incur greater expense,

by defending this suit in Texas because he is not a Texas resident. Texas, however,

has a significant interest in adjudicating this dispute in which Texas residents seek

to obtain a protective order. And, litigating appellees’ application for protective

order in the trial court best advances their interests in obtaining convenient and

effective relief. Accordingly, we conclude that this is not one of those rare cases in

which exercising personal jurisdiction over a nonresident defendant with established

minimum contacts with the forum state does not comport with traditional notions of

fair play and substantial justice. See Moncrief Oil, 414 S.W.3d at 156.

Based on the pleadings, the evidence, and the trial court’s implied findings

and conclusions, which the record supports, we conclude the trial court did not err

in concluding that it could exercise specific jurisdiction over Schubiner and denying

his special appearance. We overrule Schubiner’s sole issue.

–14– Conclusion

We affirm the trial court’s order denying Schubiner’s special appearance.

/Craig Smith/ CRAIG SMITH 230434F.P05 JUSTICE

–15– S Court of Appeals Fifth District of Texas at Dallas JUDGMENT

CRAIG SCHUBINER, Appellant On Appeal from the 44th Judicial District Court, Dallas County, Texas No. 05-23-00434-CV V. Trial Court Cause No. DC-22-17649. Opinion delivered by Justice Smith. MITCHELL R. JULIS AND Justices Carlyle and Kennedy JOSHUA S. FRIEDMAN, Appellees participating.

In accordance with this Court’s opinion of this date, the trial court’s order denying appellant CRAIG SCHUBINER’s special appearance is AFFIRMED.

It is ORDERED that appellees MITCHELL R. JULIS AND JOSHUA S. FRIEDMAN recover their costs of this appeal from appellant CRAIG SCHUBINER.

Judgment entered this 27th day of December 2023.

–16–