Evergreen Media Holdings, LLC and Tony DeRosa-Grund v. FilmEngine Entertainment, LLC

Court of Appeals of Texas·Decided September 22, 2016·No. 09-14-00364-CV·Published

Opinion

In The

Court of Appeals

Ninth District of Texas at Beaumont

NO. 09-14-00364-CV

EVERGREEN MEDIA HOLDINGS, LLC AND TONY DEROSA-GRUND, Appellants

V.

FILMENGINE ENTERTAINMENT, LLC, Appellee

On Appeal from the 284th District Court Montgomery County, Texas

Trial Cause No. 14-02-01508-CV

MEMORANDUM OPINION

In this appeal, the appellants, Evergreen Media Holdings, LLC and Tony DeRosa-Grund (collectively “Evergreen) contend the trial court erred by granting a special appearance filed by the appellee, FilmEngine Entertainment, LLC. (“FilmEngine”). Evergreen raises two issues on appeal: (1) whether the trial court abused its discretion in denying Evergreen’s motion for continuance to conduct

jurisdictional discovery; and (2) whether the trial court erred by granting FilmEngine’s special appearance. We affirm.

I. Background

Evergreen is a Texas limited liability company, and Tony Derosa-Grund is its executive chairman. FilmEngine is a Delaware company licensed to do business in California. Anthony Rhulen is its chief executive officer. In July 2013, Evergreen entered into a contract with FilmEngine regarding two film projects. On February 7, 2014, Evergreen sued FilmEngine for breach of contract, breach of an implied covenant of good faith and fair dealing, and for declaratory judgment. Evergreen alleged that it entered into agreements with FilmEngine in connection with two movie productions wherein Evergreen would provide script-writing services to FilmEngine. Evergreen further alleged that it performed under the agreements, but FilmEngine failed to pay Evergreen for the writing services and thus materially breached its agreements with Evergreen.

On March 21, 2014, FilmEngine filed a special appearance and asked the trial court to dismiss the lawsuit for lack of personal jurisdiction because FilmEngine had no purposeful contacts with the State of Texas. Evergreen filed its response on May 8, 2014. On August 22, 2014, the trial court granted FilmEngine’s special appearance and dismissed the case. Evergreen appealed. See

Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(7) (West Supp. 2015) (providing for interlocutory appeal of grants or denials of a special appearance of a defendant).

II. Motion for Continuance In its first issue, Evergreen contends the trial court abused its discretion in denying its request for a continuance to allow it to conduct jurisdictional discovery before the trial court ruled on FilmEngine’s special appearance. An appellate court will not disturb the trial court’s ruling on a motion to continue a special appearance hearing to obtain discovery absent a showing of a clear abuse of discretion. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 800 (Tex. 2002); Barron v. Vanier, 190 S.W.3d 841, 847 (Tex. App.—Fort Worth 2006, no pet.) (op. on reh’g).

Texas Rule of Civil Procedure 120a(3) governs jurisdictional discovery. The rule provides that “[t]he court shall determine the special appearance on the basis of the pleadings, any stipulations made by and between the parties, such affidavits and attachments as may be filed by the parties, the results of discovery processes, and any oral testimony.” Tex. R. Civ. P. 120a(3). Rule 120a(3) further states that if it should appear from reasons stated in the opposing party’s affidavits that he cannot “present by affidavit facts essential to justify his opposition, the court may

order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or may make such other order as is just.” Id. In deciding whether a trial court abused its discretion by denying a motion for continuance seeking additional time to conduct discovery, the Texas Supreme Court has considered the following non-exclusive factors: (1) the length of time the case has been on file; (2) the materiality and purpose of the discovery sought; and (3) whether the party seeking the continuance has exercised due diligence to obtain the discovery sought. Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150, 161 (Tex. 2004) (considering these factors in the summary judgment context); Barron, 190 S.W.3d at 847 (considering these factors in the special appearance context).

Evergreen filed its lawsuit on February 7, 2014. FilmEngine filed its special appearance on March 21, 2014. According to the parties’ appellate briefing, FilmEngine’s special appearance was originally set for submission on April 30, 2014. Evergreen filed its response to FilmEngine’s special appearance on May 8, 2014. The trial court issued its ruling on FilmEngine’s special appearance on August 22, 2014. Evergreen argues that the length-of-time factor weighs in its favor because it had less than two months to conduct discovery before it was required to file a response. FilmEngine responds that Evergreen actually had over five months to conduct discovery because the trial court did not grant the special

appearance until August 22, 2014. FilmEngine contends this was sufficient time for Evergreen to conduct jurisdictional discovery.

In its original petition, Evergreen alleged that the court had personal jurisdiction over FilmEngine “because this lawsuit arises from, was connected with an act or transaction, and relates to the purposeful acts of the non-resident Defendant in Texas, and those purposeful acts directed towards Texas.” Thus, Evergreen alleged only specific jurisdiction against FilmEngine. See Searcy v. Parex Res., Inc., Nos. 14-0293, 14-0295, 2016 WL 3418248, at *5, 9 (Tex. June 17, 2016) (internal citations and quotations omitted) (explaining that general jurisdiction arises when the defendant’s contacts with the forum state are so continuous and systematic as render the defendant essentially at home in the forum state, whereas specific jurisdiction exists when the plaintiff’s claims arise out of or are related to the defendant’s contact with the forum state). However, in Evergreen’s motion for continuance, it asked the court for a continuance to conduct additional discovery “evidencing FilmEngine’s general contacts with Texas.” Evergreen explained that it would seek discovery of evidence that FilmEngine “purposefully markets their movies to Texas residents, advertises in Texas, sells their movies to Texas residents, and otherwise engages in significant business with Texas residents.”

Evergreen did not allege in its motion for continuance that it had exercised due diligence in conducting discovery. There is no evidence in the appellate record that Evergreen attempted to engage in discovery related to the special appearance, and Evergreen admitted in its motion for continuance that it had not conducted any jurisdictional discovery.

Evergreen relies on Barron v. Vanier to support its position that it was entitled to a continuance. In Barron, the appellate court held that the trial court abused its discretion in denying the plaintiff’s motion for continuance of a special appearance hearing to permit him to conduct further discovery on the issue of personal jurisdiction where the special appearance hearing was held two months after the filing of the special appearance, and the plaintiff sought information which, if it existed and was discovered, could support his allegations of specific personal jurisdiction over the defendants. 190 S.W.3d at 847-51.

This case is distinguishable from Barron. In Barron, all three factors weighed in favor of granting the motion for continuance, while, here, the application of the factors is not so clearly defined. See id. The first factor does tend to support a continuance. Evergreen had less than two months to conduct discovery before its response to the special appearance was due. See id. at 847-48.

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Evergreen Media Holdings, LLC and Tony DeRosa-Grund v. FilmEngine Entertainment, LLC, (Tex. Ct. App. 2016).

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