ACCEPTED 03-15-00335-CV 6286512 THIRD COURT OF APPEALS AUSTIN, TEXAS 7/30/2015 9:54:05 AM JEFFREY D. KYLE CLERK NO. 03-15-00335-CV FILED IN IN THE THIRD COURT OF APPEALS 3rd COURT OF APPEALS ____________________________________________ AUSTIN, TEXAS 7/30/2015 9:54:05 AM JEFFREY D. KYLE HERBERT ROLNICK Clerk
v.
SIGHT’S MY LINE, INC, et al
____________________________________________ Accelerated Appeal from the 200th District Court Travis County, Texas
Brief of Appellee Riggs, Aleshire & Ray, P.C. ______________________________________________
KIDD LAW FIRM 819 West 11th Street Austin, TX 78701 512-330-1709 (fax) Scott R. Kidd State Bar No. 11385500 512-330-1713 scott@kiddlawaustin.com Scott V. Kidd State Bar No. 24065556 512-542-9895 svk@kiddlawaustin.com
TABLE OF CONTENTS
Table of Contents i
Index of Authorities ii
Caption 1
Statement of Facts 1
Summary of Argument 7
Argument & Authorities 8
Standard of Review 8
No Error In Denial Of Unsworn Special Appearance 9
Rolnick’s Contacts Meet The “Minimum Contacts” Test For Jurisdiction in Texas 12
Analysis Of The Jurisdictional Facts 15
Fair Play And Substantial Justice 22
Conclusion 25
Prayer 26
Certificate of Compliance 26
Certificate of Service 27
i
INDEX OF AUTHORITIES
Cases
Abilene Diagnostic Clinic, PLLC v. Paley, Rothman,
Goldstein, Rosenberg, Eig & Cooper, Chartered,
364 S.W.3d 359 (Tex. App.—Eastland 2012, no pet.)
Ahrens & DeAngeli v. Flinn, 318 S.W.3d 474 (Tex.App.—
Dallas 2010, pet. denied)
Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d
801 (Tex. 2002)
BMC Software Belgium, N.V. v. Marchand,
83 S.W.3d 789 (Tex. 2002)
8, 9, 13
Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985)
22, 23
Casino Magic Corp. v. King, 43 S.W.3d 14 (Tex. App.—
Dallas 2001, pet. denied)
10, 11
CSR Ltd v. Link, 925 S.W.2d 591 (Tex. 1996)
Guardian Royal Exch. Assurance, Ltd v. English
China Clays, P.L.C., 815 S.W.2d 223 (Tex. 1991)
15, 23
Kelly v. Gen. Interior Construction, Inc.,
301 S.W.3d 653 (Tex. 2010)
12, 13
Kytel International Group, Inc. v. Rent-‐A-‐Center, Inc.,
132 S.W.3d 717 (Tex. App.—Dallas 2004, no pet.)
Markette v. X-‐Ray X-‐Press Corp., 240 S.W.3d 464
Tex. App.—Houston[14th Dist.] 2007, no pet.)
Michiana Easy Livin’ Country, Inc. v. Holten,
168 S.W.3d 777 (Tex. 2005)
14, 15, 19, 20
ii
Moki Mac River Expeditions v. Drugg,
221 S.W.3d 569 (Tex. 2007)
12, 13, 14
Moncrief Oil International, Inc. v. OAO Gazprom,
414 S.W.3d 142 (Tex. 2013)
13, 15
Proskauer Rose LLP v. Pelican Trading, Inc.,
2009 WL 242993 (Tex. App.—Houston [14th Dist.] 2009)
20, 22
Prosperous Maritime Corp. v. Farwah, 189 S.W.3d 389
(Tex. App.—Beaumont 2006, no pet.)
10, 11
Retamco Operating, Inc. v. Republic Drilling,
278 S.W.3d 333 (Tex. 2009)
Siemens AG v. Houston Casualty Company,
127 S.W.3d 436 (Tex. App.—Dallas 2004, no pet.)
Villapando v. De La Garza, 793 S.W.2d 274
(Tex. App.—Corpus Christi 1990, no writ)
York v. State, 73 Tex. 651, 11 S.W. 869 (1889),
aff’d 137 U.S. 15, 11 S.Ct. 869 (1889)
Statutes and Rules
TEX. CIV. PRAC. & REM. CODE §17.41
TEX. R. CIV. P. 120a
iii
NO. 03-15-00335-CV
IN THE THIRD COURT OF APPEALS ____________________________________________
HERBERT ROLNICK
v.
SIGHT’S MY LINE, INC, et al
____________________________________________ Accelerated Appeal from the 200th District Court Travis County, Texas
Brief of Appellee Riggs, Aleshire & Ray ______________________________________________
Comes now Appellee Riggs, Aleshire & Ray and files this
Appellee’s Brief.
OF FACTS
Appellant’s of Facts includes many characterizations of
the facts and omits certain important evidence. Accordingly, Appellee
Riggs, Aleshire & Ray offers its own of Facts.
Sight’s My Line, Inc., (“SML”) is a Florida corporation that was
engaged in the retail optical business in Texas. (CR 389, 390).
SML had
locations in several South Texas cities, and it did business only in Texas.
(CR 390, 514).
The sole stockholder of SML was Stewart Lantz
(“Lantz”), a resident of Florida.
(CR 391)
Herbert Rolnick (“Rolnick”) is a lawyer living in Coral Gables,
Florida. (CR 502).
He has represented Lantz and entities in which Lantz
has been involved for over twenty years. (CR 382).
Rolnick represented
Lantz in the formation of SML.
(CR 390, 503).
In 2009, SML came under investigation by the Texas Health &
Human Services Commission related to a possible overcharge claim.
(CR 389, 548).
To represent SML in that investigation, Lantz retained
Jason Ray (“Ray”), a member of Riggs, Aleshire & Ray (“RAR”).
(CR 548).
Ray is Board Certified in Administrative Law by the Texas Board of
Legal Specialization. (CR 548).
Lantz had engaged in some initial negotiations with American
Optical Services (“AOS”) about a potential sale of the assets of SML to
AOS, but those negotiations had not progressed and Lantz had
abandoned the process. (CR 503-‐504). However, in June 2012, Lantz
decided that he should again pursue sale of the SML business due to his
perception of the regulatory climate related to the business. (CR 382).
Negotiations with AOS began again. (CR 504).
AOS is a Delaware Corporation with its principal place of business
in Nevada.
The parties did negotiate a contract for sale of the assets of
SML to AOS, and that contract was dated October 5, 2012.
Rolnick
represented SML in the negotiations and sale for a flat fee of between
$40,000.00 and $50,000.00. (CR 394, 514). The negotiations for the sale
were all handled by Rolnick. (CR 391, 505, 559).
On or about October 1, 2012, Lantz and Rolnick telephoned Ray.
(CR 384, 391, 505, 549-‐550).
They explained to Ray that Lantz had
contracted to sell the assets of SML, and they wanted a Texas lawyer to
review some of the documents. (CR 549).
There is a dispute in the
evidence concerning whether Ray informed Lantz and Rolnick that Ray
did not feel qualified to review documents related to an asset sale.
Ray
testified that he did inform them of that fact and indicated that he did
not want to undertake the review. (CR 549,551)
According to Ray’s
testimony, Lantz and Rolnick stated that they wanted him involved in
the transaction anyway. (CR 549).
According to Lantz and Rolnick, they
were not informed of any limitations on Ray’s ability to review the
documents. (CR 385, 506).
Ray also testified that he informed Lantz and
Rolnick that he would have another lawyer, Paul Browder, an attorney
with Blazier, Christensen, Bigelow & Virr (“BCBV”), review the
documents-‐-‐testimony that Lantz and Rolnick dispute. (CR 549).
Ray had one more conversation with Rolnick shortly after the
initial conversation with Lantz and Rolnick.
Ray then received an email
from Rolnick’s legal assistant with instructions as to what Rolnick
wanted Ray to do. (CR 506-‐507, 552).
“Mr. Rolnick is out of the country this week, however,
pursuant to your previous conversation with him, he asked
that I forward you a copy of the Security Agreement and
Promissory Note (which are attached to this email).
Also
attached you will find a copy of the fully executed copy of
the Agreement so you have some understanding of the
transaction.
Mr. Rolnick would like you to review the
Security Agreement and Promissory Note and confirm that
these are acceptable for Texas law, i.e. that they can be
recorded and that they would enable us to foreclose in the
event of a default.” (CR 424)
Ray received the executed contract, draft security agreement, and draft
promissory note.
Ray then forwarded those documents to Browder for
his review. (CR 550).
Browder made comments and raised questions
with regard to the documents. (CR 550).
Ray then took those comments
and questions, incorporated them into an email, and forwarded them to
Rolnick.
(CR 550).
Among the provisions of the promissory note was a reference that
the security interest would be recorded in Delaware.
The specific
language in the promissory note stated “Holder may file a Form UCC-‐1
with the Secretary of State of the State of Delaware to perfect such lien
of record.” (CR 486).
Contrary to the assertion by Appellant in his
of Facts that “comments by Ray sent back to Rolnick in
Florida, however, included one indicating the UCC-‐1 instead should be
filed in Texas where the assets at issue were located,” what Browder
actually raised, and what was passed on in Ray’s email, was a question.
The actual question that was raised was as follows:
“Where will the assets be held?
Texas, right?
Shouldn’t the
UCC-‐1 be filed where the assets are located?”
Rolnick never contacted Ray to resolve those questions. (CR 508, 553)
Rolnick proceeded to close the transaction on November 1, 2012, and
Ray had no knowledge of or participation in the drafting of the final
documents or the closing. (CR 508-‐510, 560).
The next time Ray had any participation in the transaction at all
(or even knew that it had closed) was when he was contacted by Rolnick
with a direction to record the UCC-‐1 in Texas approximately two
months after the transaction had closed. (CR 555-‐556, 560, 562).
Ray at
first declined because he did not know procedurally how to do so. (CR
562).
Rolnick prevailed on Ray to do so for him since Ray was in Austin.
(CR 562).
Rolnick sent the UCC-‐1 to Ray, and Ray forwarded it to
Browder for recordation at the office of the Secretary of State.
(CR 558).
Ray had no further contact with Lantz or Rolnick until over a year
later when he was contacted about AOS’s default. (CR 560).
Rolnick
contacted him about pursuing litigation to foreclose on the assets. (CR
560).
Again, that was not Ray’s area of practice, and SML was referred
to Adams & Graham (“A&G”) to pursue the litigation.
(CR 387).
SML filed suit against AOS on the debt and to foreclose on the
security, to the extent the collateral still existed.
At that time, AOS’s
parent company, MacEyser Holdings, filed for bankruptcy protection in
Delaware.
SML filed a motion to lift stay in the bankruptcy proceeding.
That motion was denied on the basis that SML had not perfected its
security interest by recording the UCC-‐1 in Delaware.
In light of that
ruling, Lantz contacted Rolnick and Ray concerning the issue of
perfection of the security interest. (CR 512).
At that time, Rolnick was
successful in diverting Lantz’s attention from him to Ray. (CR 512-‐513).
SML and Lantz then filed suit in Travis County District Court
against RAR, BCBV, and A&G. (CR 3).
RAR immediately joined Rolnick as
a third-‐party defendant, and plaintiffs then amended their pleadings to
add Rolnick as a defendant. (CR 17, 137).
In answer to both RAR’s third-‐
party petition and plaintiffs’ First Amended Original Petition, Rolnick
filed unsworn special appearances. (CR 23, 147).
Rolnick’s special
appearance was heard and overruled by the trial court. (CR 697).
SUMMARY OF ARGUMENT
The requirements for filing a special appearance are stated in
Rule 120a, Texas Rules of Civil Procedure.
Strict compliance with the
rule is required.
Rule 120a requires that the special appearance be
made by sworn motion.
The special appearances filed by Rolnick were
not sworn, and therefore were not in compliance with Rule 120a.
The
trial court does not commit error in overruling an unsworn special
appearance.
Jurisdiction of nonresident defendants is determined based on
whether the defendant has sufficient minimum contacts with Texas to
support jurisdiction under the Texas Long-‐Arm Statute.
Those
minimum contacts exist if the nonresident defendant has availed
himself of the privilege of conducting activities in Texas.
The contact
with Texas must have been purposeful, and the defendant must have
sought some benefit from the contact.
In addition, the assertion of such
jurisdiction must comport with traditional notions of fair play and
substantial justice.
SML’s business was entirely a Texas operation.
All of its business
activity was in Texas, and all of its assets (including its real estate
interests) were in Texas.
When SML sold its assets, Rolnick negotiated
the contract and closed the transaction.
He had Jason Ray review the
promissory note and security agreement, but all decisions about
perfection of the security interest were made by Rolnick.
Rolnick made
the decision to record the UCC-‐1 in Texas, and Rolnick sent it to Ray
with instructions to record it in Texas.
When SML’s purchaser sought
bankruptcy protection it was discovered that Rolnick had recorded the
UCC-‐1 in the wrong state to properly perfect that interest.
Since the suit
by SML and its owner is over the failure to properly perfect that security
interest, Rolnick has sufficient contacts with Texas to be subject to the
jurisdiction of the Texas courts.
ARGUMENT & AUTHORITIES
Standard of Review
Whether a trial court has personal jurisdiction over a defendant is
a matter of law and is reviewed de novo.
BMC Software Belgium, N.V. v.
Marchand, 83 S.W.3d 789, 794 (Tex. 2002).
If the trial court does not
issue findings of fact and conclusions of law, all facts necessary to
support the judgment and supported by the evidence are implied.
BMC
at 795.
No Error In Denial of Unsworn Special Appearance
Rule 120a was adopted to address the issue presented by York v.
State, 73 Tex. 651, 11 S.W. 869 (1889), aff’d 137 U.S. 15, 11 S.Ct. 869
(1889).
The court in York held that any appearance, even one to
challenge service or jurisdiction, constituted a general appearance.
This
resulted in there being no direct way that a nonresident defendant
could challenge the court’s jurisdiction over that defendant.
That
continued to be the law in Texas until the Supreme Court of Texas
adopted Rule 120a in 1962.
Rule 120a provided a vehicle for a
defendant to challenge the court’s in personam jurisdiction without the
challenge itself constituting a general appearance.
Rule 120a provides specific requirements to which the special
appearance must conform.
These requirements include, among others,
that the “special appearance shall be made by sworn motion filed prior
to motion to transfer venue or any other plea, pleading, or motion….”
The motion must be heard before a motion to transfer venue or any
other plea or pleading.
RAR was an original defendant in the Plaintiffs’ Original Petition.
(CR 3).
Upon filing its original answer, Herbert Rolnick was
immediately added as a third-‐party defendant by RAR. (CR 17).
Rolnick
filed a special appearance to the third-‐party petition filed by RAR, and
the plaintiffs then amended and added Rolnick as an additional
defendant. (CR 137).
Rolnick again filed a special appearance as to the
plaintiff’s First Amended Original Petition. (CR 147).
Neither of the
special appearances filed by Rolnick were sworn as required by Rule
120a.
Rolnick did file two nearly identical affidavits in conjunction with
the special appearances he filed.
However, in those affidavits Rolnick
swears to the facts stated in the affidavits but does not swear to the
facts stated in the special appearances he filed.
(CR 35, 159).
Strict compliance with the rule governing special appearances is
required.
Casino Magic Corp. v. King, 43 S.W.3d 14 (Tex. App.—Dallas
2001, pet. denied).
A trial court does not commit error in denying an
unsworn special appearance.
Casino Magic Corp at 18; Villapando v. De
La Garza, 793 S.W.2d 274, 276 (Tex. App.—Corpus Christi 1990, no
writ);
Prosperous Maritime Corp. v. Farwah, 189 S.W.3d 389, 392 (Tex.
App.—Beaumont 2006, no pet.).
When the affidavits attached to the
special appearance pleadings do not state that the facts set out in the
pleadings are true and correct, but instead state only that the facts in
the affidavits are true and correct, the affidavits do not verify the special
appearance.
Prosperous Maritime at 393-‐394; Casino Magic at 18.
The
courts have routinely upheld the denial of a special appearance on the
basis that the nonresident failed to file a sworn motion.
See Kytel
International Group, Inc. v. Rent-‐A-‐Center, Inc., 132 S.W.3d 717, 719 (Tex.
App.—Dallas 2004, no pet.); Siemens AG v. Houston Casualty Company,
127 S.W.3d 436, 439 (Tex. App.—Dallas 2004, no pet.).
Rolnick did not file a sworn motion as required by Rule 120a.
(CR
23, 147).
While Rolnick did file affidavits in support of his motion, all
that the affidavits did was swear to the facts stated in the affidavits. (CR
35, 159).
Rolnick’s affidavits did not swear to the facts stated in his
special appearance.
Rolnick’s special appearance was not in compliance
with the Rule, and therefore the trial court did not commit any error in
denying the special appearance.
Rolnick’s Contacts Meet the “Minimum Contacts” Test
for Jurisdiction in Texas
Jurisdiction over nonresident defendants is governed by the Texas
Long-‐Arm Statute, TEX. CIV. PRAC. & REM. CODE §17.41 et seq.
The
extent of the jurisdictional grant in the Texas Long-‐Arm Statute is to the
fullest extent permitted by the federal constitutional requirements of
due process.
Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 575
(Tex. 2007).
A Texas court may exercise personal jurisdiction over a
nonresident defendant only if the requirements of both the due process
clause of the Fourteenth Amendment to the United States Constitution
and the Texas Long-‐Arm Statute are satisfied.
CSR Ltd. v. Link, 925
S.W.2d 591, 594 (Tex. 1996).
The assertion of jurisdiction over a
nonresident is proper and 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 v. Gen. Interior
Construction, Inc., 301 S.W.3d 653 (Tex. 2010).
The defendant has
established minimum contacts with the forum state when the defendant
has purposefully availed himself of the privilege of conducting activities
within the forum state, and has thus invoked the benefits and
protections of the forum state’s laws.
Retamco Operating, Inc. v.
Republic Drilling, 278 S.W.3d 333 (Tex. 2009); Moncrief Oil
International, Inc. v. OAO Gazprom, 414 S.W.3d 142 (Tex. 2013).
The plaintiff (and third-‐party plaintiff) bears the initial burden of
pleading sufficient allegations to bring the nonresident defendant
within the provisions of the Texas long-‐arm statute.
Moki Mac at 574;
BMC Software at 793.
Once the plaintiff satisfies this burden, the burden
shifts to the nonresident defendant to negate all bases for personal
jurisdiction alleged by the plaintiff.
Kelly v. Gen. Interior Constr., Inc., 301
S.W.3d 653, 658 (Tex. 2010).
As noted in Retamco Operating, Inc, a nonresident’s contacts can
give rise to either specific jurisdiction or general jurisdiction.
Specific
jurisdiction exists when the defendant purposefully avails himself of
conducting activities in the forum state, and the cause of action arises
from or is related to those contacts or activities.
In a specific jurisdiction analysis, the court must focus on the
relationship between the defendant, the forum, and the litigation.
Moncrief Oil, 414 S.W.3d at 150.
There must be a substantial connection
between the defendant’s contacts with the forum and the operative facts
of the litigation itself.
Moki Mac, 221 S.W.3d at 585.
In the specific
jurisdiction analysis, the court must focus on only the defendant’s
contacts with the forum.
The defendant’s contacts must be purposeful
and not random, isolated, or fortuitous, and the defendant must seek
some benefit, advantage, or profit by availing himself of the jurisdiction.
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 haled into a Texas
court.
Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 806
(Tex. 2002).
Jurisdiction is premised on the notions of implied consent
that, by invoking the benefits and protections of a forum’s laws, the
nonresident consents to suit there.
Michiana at 785.
It is the quality
and nature of the defendant’s contacts with the forum state, rather than
their number, that are important in analyzing minimum contacts.
Am.
Type Culture Collection at 806.
Specific jurisdiction is established if the defendant’s alleged
liability arises out of or is related to an activity conducted within the
forum state.
Moki Mac at 575-‐576.
When specific jurisdiction is
asserted, the minimum-‐contacts analysis focuses on the relationship
among the defendant, the forum, and the litigation.
Moncreif Oil at 150;
Guardian Royal Exch. Assurance, Ltd v. English China Clays, P.L.C., 815
S.W.2d 223, 228 (Tex. 1991).
The focus is on the defendant’s conduct
and connections with the forum state in relation to the alleged liability.
Michiana at 788-‐790.
Analysis Of The Jurisdictional Facts
Rolnick was the person in charge of negotiating and closing the
sale of SML’s assets. (CR 391, 392).
All of those assets were located in
Texas, including SML’s real property interests. (CR 390).
Ray’s
participation in the transaction was minimal—he was asked to review a
note and security agreement to see if they could be recorded in Texas
and if SML would be able to foreclose upon default.
Rolnick directed
what Ray was to do, and the limitations on Ray’s engagement.
Ray felt
that he had been engaged by Rolnick. (CR 556).
After forwarding comments and questions to Rolnick, Ray was not
contacted again by Rolnick to answer any of the questions that had been
raised about the documents. (CR 555-‐556).
Instead, Rolnick made all of
the decisions about the sale of the Texas assets and closed the
transaction without Ray even being informed that the transaction had
closed.
Approximately two months after closing, Rolnick contacted Ray
and requested that Ray record the UCC-‐1 for Rolnick in Texas. (CR 555-‐
556).
The UCC-‐1 had been drafted or approved by Rolnick, and Ray had
never seen it.
At first resistant, Ray eventually agreed to record the
document for Rolnick with the Secretary of State. (CR 561).
The
decision to record it in Texas was Rolnick’s decision, and Ray was
merely performing a favor upon Rolnick’s request. (CR 393, 562).
It is
no different than if Rolnick had himself recorded the UCC-‐l at the
Secretary of State.
None of this analysis focuses on the conduct of anyone but
Rolnick.
He negotiated the contract for the sale of Texas assets.
He
negotiated the sale of Texas real estate interests.
He decided how to
obtain the security interest in the Texas assets.
And most importantly,
Rolnick directed the recordation of the UCC-‐1 in Texas.
The plaintiffs’ claims here are focused on their claimed losses
from the loss of those Texas assets.
Their complaints relate to their
claimed security interests in those assets, and their particular complaint
is that the recordation of that security interest in Texas was negligence.
Rolnick negotiated and closed the transaction, and he made all of the
decisions related to obtaining and protecting the plaintiffs’ security
interests.
Most specifically, Rolnick is the one who had the UCC-‐1
recorded in Texas.
These are not fortuitous contacts with Texas.
Rolnick was
certainly aware where all of the assets, including the real property, were
located when he undertook the representation.
Rolnick made the
conscious decision to record the UCC-‐1 in Texas, and he is the one who
sent it to Texas for filing.
That was certainly a purposeful contact, and
was not random, fortuitous, or attenuated.
These are only Rolnick’s
contacts with Texas, and this analysis does not consider any other
person’s contacts or activities.
Rolnick certainly sought to benefit from these contacts.
Not only
had he represented Lantz and his entities for a number of years, Rolnick
made a fee of over $40,000.00 for handling this Texas sale.
To say that
Rolnick did not seek or obtain any benefit from his contacts with Texas
(including the recordation of the UCC-‐1) is to turn a blind eye to the
realities of the practice of law.
These contacts are directly related to the pending litigation.
The
plaintiffs’ claimed damages are the loss of the Texas assets that were to
serve as security.
The specific act about which the plaintiffs’ complain is
the recording of the UCC-‐1 in Texas, an act specifically directed by
Rolnick.
Jurisdiction of Rolnick is obvious based on his conduct and
connections with Texas in relation to this alleged liability.
Appellant seems to argue that the conventional analysis of
personal jurisdiction that applies to all other defendants does not apply
to Rolnick solely because he is a lawyer.
According to the argument by
Appellant, there is a special “Lawyer Rule.”
Under that “rule” as
advanced by Appellant, as long as the nonresident lawyer sits in his
office in another State, he simply cannot be subject to jurisdiction in
Texas no matter how much he has contact with Texas and no matter
how much those contacts are the source of the Texas litigation.
That is
not and cannot be the law.
Lawyers do not get a free pass.
The cases cited by Appellant for
his odd argument are all distinguishable on their facts.
In fact, each of
those cases analyzes the jurisdictional issues just as Appellee has done
in this brief.
In those cases, the court has analyzed the quality and
nature of the lawyer’s contacts with Texas.
In each of those cases, the
court has analyzed the connections with Texas in relation to the alleged
liability.
Those courts did not decide that simply because the lawyer
was not physically in Texas he could not be subject to jurisdiction in
Texas.
In Abilene Diagnostic Clinic, PLLC v. Paley, Rothman, Goldstein,
Rosenberg, Eig & Cooper, Chartered, 364 S.W.3d 359 (Tex. App.—
Eastland 2012, no pet.), a Texas clinic sued a Maryland law firm for
alleged malpractice in the preparation of a defined benefit plan.
The
claim of specific jurisdiction in that case was that all of the defendants
“purposefully availed themselves of the benefits of Texas law by doing
business with a Texas entity.”
In sum, what the defendant had done is
prepare several defined benefit plans in Maryland and send them to the
plaintiff in Texas.
As the court noted, this is the “direct-‐a-‐tort”
jurisdictional theory that was rejected in Michiana.
The court held that
to determine specific jurisdiction, the court had to focus on whether
there was a substantial connection between the defendant’s purposeful
contacts with the forum state and the operative facts of the litigation.
The court noted that Texas authority had focused on where the legal
work was performed, but the jurisdictional analysis on which the court
determined the case was the traditional analysis of specific jurisdiction.
In Ahrens & DeAngeli v. Flinn, 318 S.W.3d 474 (Tex. App.—Dallas
2010, pet. denied), a Washington and Idaho law firm was sued, along
with others, for promoting an abusive tax shelter.
The law firm had
provided representation to one of the other defendants in the
developing and marketing of the tax shelter.
However, the legal work
had all been performed in Washington or Idaho, and only
communicated to a codefendant in Texas.
The court utilized the
traditional analysis in determining that there were not sufficient
contacts with Texas to support personal jurisdiction.
Performing legal
work in one state and merely communicating with persons in another
state is not enough in itself to support jurisdiction.
However, in the
present case, Rolnick actually took action in Texas with regard to
perfecting the security interest in the collateral, and that is at the core of
plaintiffs’ claims in this case.
Proskauer Rose LLP v. Pelican Trading, Inc., 2009 WL 242993 (Tex.
App.—Houston [14th Dist.] 2009, no pet.) also involved an abusive tax
shelter.
The plaintiffs had been introduced to the concept of the tax
shelter by their accounting firm.
The accounting firm had
recommended that the plaintiffs use Proskauer Rose to prepare and
deliver an opinion letter on the proposed tax shelter.
Proskauer Rose
prepared drafts of the opinion letter, communicated with the plaintiffs
(Texas residents) and ultimately prepared the opinion letter and sent it
to the Texas residents.
However, all of Proskauer Rose’s work was in
New York.
Again, the court conducted a traditional specific
jurisdictional analysis.
Routine correspondence from the out-‐of-‐state
lawyer is not the kind of purposeful contacts that support personal
jurisdiction, and the sending of the opinion letter to Texas could not
support jurisdiction as “directing a tort to Texas” under the holding in
Michiana.
The present case differs markedly from the facts in Proskauer
Rose.
In the present case, Rolnick’s filing of the UCC-‐1 in Texas is the
basis on which the plaintiffs claim liability.
Markette v. X-‐Ray X-‐Press Corp., 240 S.W.3d 464 (Tex. App.—
Houston [14th Dist.] 2007, no pet.) involved an Indiana attorney
representing a Texas resident in an Indiana lawsuit.
The client had
challenged the jurisdiction of the Indiana court, and that challenge had
been denied.
The attorney wrote the Texas client and reviewed the
three alternatives available to it, one of which was to allow a default
judgment in Indiana and challenge the Indiana court’s jurisdiction when
the plaintiff in the Indiana case sought to enforce the judgment in Texas.
The client adopted that strategy, and it ultimately proved unsuccessful.
When the client sued the Indiana lawyer for malpractice in Texas, the
court again applied a traditional specific jurisdiction analysis and
determined that it had to focus on the connection between the contacts
and the litigation, and it rejected the “direct-‐a-‐tort” theory.
The mere
sending of a letter from one jurisdiction to another, as in Proskauer,
differs markedly from the filing of a legal document such as a UCC-‐1,
especially when the filing of that UCC-‐1 is at the core of the litigation.
Under the controlling decisions by the Supreme Court of Texas
and the evidence in this record, Rolnick had sufficient minimum
contacts with Texas to subject him to jurisdiction in this case.
Accordingly, the District Court of Travis County has personal
jurisdiction of him, and the trial court correctly decided that the
minimum-‐contacts requirements of the Texas Long-‐Arm statute had
been satisfied.
Fair Play and Substantial Justice
Even if a defendant has the minimum contacts with Texas to
justify the assertion of jurisdiction under the long-‐arm statute, the court
cannot exercise jurisdiction if doing so would offend traditional notions
of fair play and substantial justice.
Burger King Corp. v. Rudzewicz, 471
U.S. 462, 477 (1985).
Only in “rare cases” will the exercise of
jurisdiction not comport with fair play and substantial justice when the
nonresident defendant has minimum contacts with the forum state.
Burger King at 471.
In determining whether the assertion of jurisdiction
comports with fair play and substantial justice, the court considers (1)
the burden on the defendant; (2) the interests of the forum state in
adjudicating the dispute; (3) the plaintiff’s interest in obtaining
convenient and effective relief; (4) the interstate judicial system’s
interest in obtaining the most efficient resolution of controversies; and
(5) the shared interest of the several States in furthering fundamental
substantive social policies.
Royal Guardian at 232.
The burden on this particular defendant is certainly no greater
than that on any nonresident defendant who must defend himself in
another jurisdiction.
However, defending himself in Texas would not
put a significantly higher burden on Rolnick than defending himself in
Florida, although he would probably have to travel to Texas for the trial.
While the initial discovery in this case was limited to the issue of
jurisdiction, Rolnick has already been deposed and it may not be
necessary to depose him again.
Therefore, the added burden of
defending himself in Texas would be minimal, especially when
compared to the additional burden on the plaintiff and other defendants
in pursuing Rolnick in Florida in a separate case.
The interests of Texas in adjudicating the dispute certainly
outweigh the interests of any other state in adjudicating this dispute.
This dispute involves interests in Texas assets, including real property.
The dispute involves the application of Texas law, and the dispute
involves the adjudication of the liability of three Texas entities.
Since
Rolnick is the one largely (if not solely) responsible for any failure to
comply with the standard of care, Texas has a significant interest in
adjudicating the liability of all the parties in one suit.
The plaintiff can only get jurisdiction of RAR, BCBV, and A&G in
Texas.
While the plaintiffs are Florida residents, the plaintiffs must
litigate their claim against the Texas defendants in Texas.
It is certainly
more convenient for the plaintiffs to litigate one case against all of the
defendants in Texas than to litigate one case in Texas against three
Texas defendants and one case in Florida against one Florida defendant.
Additionally, RAR is the party who initially joined Rolnick in this
litigation.
It is certainly more convenient and effective for RAR to
litigate one case in Texas than to have to defend the case in Texas, and if
an adverse result is reached, pursue a separate case against Rolnick in
Florida.
For the interstate judicial system, the most efficient resolution of
this dispute is to dispose of it in one trial.
Since the Texas defendants
are only amenable to jurisdiction in Texas, the most efficient resolution
is to try one case in Texas against all defendants, including Rolnick,
rather than try one case in Texas and potentially multiple cases in
Florida.
It is the rare case indeed when asserting jurisdiction over a
nonresident offends the traditional notions of fair play and substantial
justice if the defendant has sufficient minimum contacts to support
jurisdiction.
This is not that rare case.
Rolnick has sufficient minimum
contacts with Texas to support the assertion of jurisdiction, and the
assertion of that jurisdiction does not offend traditional notions of fair
play and substantial justice.
CONCLUSION
The transaction out of which this case grows was a Texas
transaction involving Texas assets and Texas real property interests.
Rolnick was the person who negotiated the contract, prepared all of the
documents, closed the transaction, and determined to record the
security interest in Texas.
Rolnick’s contacts with Texas, especially in
the all-‐important recording of the UCC-‐1 in Texas, were not fortuitous
but rather were deliberate.
If recording the UCC-‐1 in Texas, as Rolnick
did, is the basis of liability, then Rolnick certainly had minimum contacts
with Texas.
If the plaintiffs are going to assert that there was negligence
in the way the security interest was perfected by filing in Texas, then
Rolnick needs to answer for that act.
It is only fair and just that he be a
party to this proceeding.
PRAYER
Wherefore, Appellee Riggs, Aleshire & Ray prays that the court
affirm the order of the trial court denying Rolnick’s special appearance.
KIDD LAW FIRM 819 West 11th Street Austin, TX 78701 512-330-1709 (fax) /s/Scott R. Kidd Scott R. Kidd State Bar No. 11385500 512-330-1713 scott@kiddlawaustin.com Scott V. Kidd State Bar No. 24065556 512-542-9895 svk@kiddlawaustin.com
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This brief complies with the type-volume limitations of Texas Rule of Appellate Procedure 9.4. This brief was prepared using Microsoft Word for MAC, and exlusive of the exempted portions listed in Rule 9.4 contains 5157 words. /s/Scott R. Kidd
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A copy of this brief has been served on Ruth Malinas, J. Hampton Skelton, Michael Johnson, and Robert Valdez through the electronic filing system this 29th day of July, 2015.
/s/Scott R. Kidd