ACCEPTED 03-15-00335-CV 6898529 THIRD COURT OF APPEALS AUSTIN, TEXAS 9/11/2015 11:56:18 PM JEFFREY D. KYLE CLERK
NO. 03-15-00335-CV FILED IN 3rd COURT OF APPEALS AUSTIN, TEXAS 9/11/2015 11:56:18 PM IN THE THIRD COURT OF APPEALS JEFFREY D. KYLE AUSTIN, TEXAS Clerk
HERBERT ROLNICK, Appellant
v.
SIGHT’S MY LINE, INC. A FLORIDA CORPORATION; STEWART LANTZ; RIGGS, ALESHIRE & RAY; BLAZIER, CHRISTENSEN, BIGELOW & VIRR; AND ADAMS & GRAHAM, Respondent
Interlocutory Appeal from the 200th Judicial District Court in Travis County, Texas, The Honorable Tim Sulak, Presiding
APPELLANT’S REPLY BRIEF
Ruth G. Malinas Texas Bar No. 08399350 Tim T. Griesenbeck, Jr. Texas Bar No. 08454450 Scott M. Noel Texas Bar No. 00797158 Plunkett & Griesenbeck, Inc. Catholic Life Building, Suite 900 1635 N.E. Loop 410 San Antonio, Texas 78209 (210) 734-7092 (telephone) (210) 734-0379 (facsimile) rmalinas@pg-law.com
ATTORNEYS FOR APPELLANT HERBERT ROLNICK TABLE OF CONTENTS
Page
PRELIMINARY STATEMENT ................................................................. 1 ARGUMENT AND AUTHORITIES ......................................................... 2 I. The Waiver Arguments Have No Merit........................................... 2 A. Subsequent Controlling Authority Precludes Reliance on Casino Magic Corp. v. King or Other Cases Holding an Unsworn Special Appearance Is a General Appearance ............................................................. 2 B. Likewise, Adams’ Waiver Argument Is Meritless .................. 9 II. Appellees’ “Minimum Contacts” Analysis Is Fundamentally Flawed .................................................................. 10 A. Appellees Ignore Walden v. Fiore ......................................... 11 B. Only Contacts Rolnick Himself Created Count.................... 12 C. Only the Defendant’s Contacts with the Forum State Itself Count, Not the Defendant’s Contacts with Persons Who Reside There ........................................... 16 D. Rolnick Did Not Purposefully Avail Himself of the Privilege of Conducting Activities in Texas that Invoked the Benefits and Protections of Texas Laws ...................................................................................... 19 E. Appellees Cannot Rely on Any Effects in Texas of Rolnick’s Florida Conduct or Where Rolnick Supposedly Directed a Tort................................................... 21 III. Appellees Have No Answer for Rolnick’s Cases Involving Nonresident Attorneys and Law Firms......................... 24 IV. SML’s “Agency” Theory Is Meritless.............................................. 25
i TABLE OF AUTHORITIES
Page
CASES Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 806 (Tex. 2002) ..................................................................................... 11 Brocail v. Anderson, 132 S.W.3d 552 (Tex. App.—Houston [14th Dist.] 2004, pet. denied) .................................................................................................. 24 Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S. Ct. 2174, 85 L. Ed.2d 528 (1985) ......................................................... 12, 17 Calder v. Jones, 465 U.S. 783, 104 S. Ct. 1482, 79 L. Ed. 2d 804 .... 21, 22 Casino Magic Corp. v. King, 43 S.W.3d 14, 18 (Tex. App.— Dallas 2001, pet. denied)............................................................ 2, 3, 6, 8 Dawson-Austin v. Austin, 968 S.W.2d 319, 322 (Tex. 1998) .......... passim Exito Electronics Co., Ltd v. Trejo, 42 S.W.3d 302 (Tex. 2004) ....... 6, 7, 8 Guardian Royal Exch. Assur., Ltd. v. English Chinia Clays, P.L.C., 815 S.W2d 223, 226 (Tex. 1991) .............................................. 11 Guyton v. Pronav Ship Mgmt., Inc., 139 F. Supp.2d 815, 818 (S.D. Tex. 2001) .................................................................................... 11 Haddad v. ISI Automation Int’l, Inc., No. 04-09-00562-CV, 2010 WL 1708275, at *2 (Tex. App.—San Antonio 2010, no pet.) ......................................................................................................... 8 Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 417, 104 S. Ct. 1868, 80 L. Ed.2d 404 (1984)....................................... 12 Howell v. Tex. Workers’ Comp. Comm’n, 143 S.W.3d 416, 439 (Tex. App.—Austin 2004, pet. denied) ............................................. 9, 10 J. McIntyre Mach., Ltd. v. Nicastro, ___ U.S. ___, 131 S. Ct. 2780, 180 L. Ed.2d 765 (2011) ............................................................. 11 Jackson v. Dean, No. 14-23-01044-CV, 2015 WL 224964 (Tex. App.—Houston [14th Dist.] Jan. 15, 2015, no pet) ........................................................................... 14 Kroll Ontrack, Inc. v. Devon IT, Inc., No. CIV. 13-302 DWF/TNL, 2014 WL 2922646, at *4 (D. Minn. June 27, 2014) .......... 13 Kytel Int’l Group, Inc. v. Rent-A-Center, Inc., 132 S.W.3d 717, 719 (Tex. App.—Dallas 2004, no pet.) ................................................... 6
ii Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569 (Tex. 2007) ........................................................... 19, 20 Prosperous Maritime Corp. v. Farwah, 189 S.W.3d 389, 392-93 (Tex. App.—Beaumont 2006, no pet.) .................................................... 6 Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d (Tex. 2009) ................................................................. 20, 21 Rowland & Roland, P.C. v. Texas Employers Indem. Co., 973 S.W.2d 432 (Tex. App.—Austin 1998, no pet.) ............................ 2, 9, 25 Siemens AG v. Houston Cas. Co., 127 S.W.3d 436, 439 (Tex. App.—Dallas 2004, pet. dism’d)............................................................. 6 Villalpando v. De La Garza, 793 S.W.2d 274, 276 (Tex. App.— Corpus Christi 1990, no writ) ................................................................ 3 Walden v. Fiore, ___ U.S. ___, 134 S. Ct. 1115, 188 L. Ed.2d 12 (2014) ............................................................................................ passim Washington DC Party Shuttle, LLC v. Iguide Tours, 406 S.W.3d 723 (Tex. App.—Houston [14th Dist.] 2013, pet. denied) .................................................................................................... 8 STATUTES Tex. Civ. Prac. & Rem. Code § 17.042(1) ................................................ 17 RULES Tex. R. App. P. 33.1(a)(1) .......................................................................... 9 Tex. R. App. P. 33.1(a)(2) .......................................................................... 9 Tex. R. App. P. 38.1(f).............................................................................. 10 Tex. R. App. P. 9.4(i)(1) ........................................................................... 27 Tex. R. App. P.9.4(i)(2)(C) ....................................................................... 27 Tex. R. App. P.9.4(i)(3) ............................................................................ 27 Tex. R. Civ. P. 120a ....................................................................... 3, 4, 5, 8 Tex. R. Civ. P. 120a(3) ............................................................................... 7
iii PRELIMINARY STATEMENT The following appellees filed briefs: (1) plaintiffs Sight’s My Line,
Inc. and Stewart Lantz (collectively “SML”); (2) defendant Riggs, Aleshire
& Ray, Inc. (“Riggs”); and (3) defendant Adams & Graham, L.L.P.
(“Adams”). Appellee/defendant Blazier, Christensen, Bigelow & Virr did
not file a brief or, to appellant Rolnick’s knowledge, an answer to the
Court’s August 5, 2015 notice of late brief.
The three separate appellees’ briefs are not identical, but share
many arguments and flaws. Two of the briefs make meritless waiver
arguments. All of the appellees’ briefs misstate facts and ignore
uncontroverted evidence they do not like. Some supposed “facts” stated
in the briefs have no record references and thus cannot be considered.
Tex. R. App. P. 38.1(g). As for the law, appellees rely on cases using
reasoning and analytical frameworks that have been called into question
by more recent authority appellant Rolnick cites. Appellees also distort
or misconstrue cases they do cite. To the extent appellees acknowledge
some of Rolnick’s authorities, appellees are unable to distinguish them.
In sum, none of the appellees’ briefs calls into doubt the arguments
Rolnick has made or provide applicable support for the trial court’s denial
of Rolnick’s special appearance.
1 ARGUMENT AND AUTHORITIES I. The Waiver Arguments Have No Merit Riggs and Adams claim waiver, but there is none. Riggs asserts that
Rolnick’s special appearances were not sworn and thus the trial court’s
denial of Rolnick’s special appearance cannot be error. Riggs Br. at 10-
11. The cases Riggs cites, however, demonstrate that its argument is
waiver in disguise. Adams claims that Rolnick has waived any argument
that Rowland & Roland, P.C. v. Texas Employers Indem. Co., 973 S.W.2d
432 (Tex. App.—Austin 1998, no pet.) is not applicable and/or controlling.
Adams Brief at 11.
A. Subsequent Controlling Authority Precludes Reliance on Casino Magic Corp. v. King or Other Cases Holding an Unsworn Special Appearance Is a General Appearance Riggs argues a trial court cannot err by denying an “unsworn”
special appearance. When the cases Riggs cites are examined, however,
the Court should conclude Riggs is really making a waiver argument in
disguise. Those cases rely upon the now-discredited view that an
unsworn special appearance is a general appearance, which waives any
challenge to personal jurisdiction. At least two courts of appeals have
disagreed with the arguments made in the Riggs Brief. Moreover, two
Texas Supreme Court opinions preclude adopting Riggs’s position.
The primary case upon which Riggs relies is Casino Magic Corp. v.
King, 43 S.W.3d 148 (Tex. App.—Dallas 2001, pet. denied). In that case,
2 the special appearance pleading did not include a verification, but an
affidavit was attached to it. See id. The court of appeals held the affidavit
did not “verify” the special appearance, because it did not state that the
facts in the special appearance pleading were true and correct; rather,
the affidavit stated the facts in the affidavit were true and correct. See
id.1 The court then held this defect made the special appearance “unsworn” and in violation of Rule 120a.
The Casino Magic court did not cite any authority for its holding
that a defective affidavit makes a special appearance “unsworn.” The
court, however, did cite Villalpando v. De La Garza, 793 S.W.2d 274, 276
(Tex. App.—Corpus Christi 1990, no writ) as support for the following
holding: “Because the special appearance was not ‘sworn’ or ‘verified’ as
required by Rule 120a, . . . the trial judge did not err in denying the
special appearance.” Casino Magic, 43 S.W.3d at 18.
The Villalpando opinion’s analysis rests on its holding that an
unsworn special appearance is a general appearance. See 793 S.W.2d at
276. The Villalpando court further held that, once a special appearance
is overruled, a defendant consents to jurisdiction if he appears at trial
through counsel. See id. In the twenty-five years since Villalpando was
1 The opinion does not quote any part of the affidavit or the special appearance, but states that the special appearance included “a number of jurisdictional ‘facts’ which the witness failed to attest to in the affidavit.” Casino, 43 S.W.3d at 18. There is no way to tell what those unverified “jurisdictional facts” were.
3 decided, subsequent cases have made reliance on its holdings and
reasoning misplaced.
First, the Texas Supreme Court has held an unsworn special
appearance is not a “general appearance” and thus does not waive the
defendant’s challenge to personal jurisdiction. See Dawson-Austin v.
Austin, 968 S.W.2d 319, 322 (Tex. 1998). In Dawson-Austin, the defendant’s first responsive pleading combined a special appearance, a
motion to quash service of citation, a plea in abatement, a plea to the trial
court’s jurisdiction, and an original answer subject to all of the above. See
id. at 321. The defendant verified each part of the combined responsive pleading, except the special appearance, an omission she claimed was a
typographical error. See id. The trial court denied the special appearance,
in part because it was unsworn. See id. The next day, the defendant filed
a motion to reconsider and an amended special appearance, but the trial
court denied the amended special appearance. See id. The court of
appeals affirmed.
The Texas Supreme Court reversed, relying on Rule120a’s express
contemplation of amendments to “cure defects” and lack of any limitation
on the type of defects that can be cured. See Dawson-Austin, 968 S.W.2d
at 322. The court further rejected the plaintiff’s “general appearance”
arguments:
4 Austin's arguments are not only contradicted by both the language and silence of Rule 120a, they misperceive what constitutes a general appearance. One court has explained:
A party enters a general appearance whenever it invokes the judgment of the court on any question other than the court's jurisdiction; if a defendant's act recognizes that an action is properly pending or seeks affirmative action from the court, that is a general appearance.
[citation omitted] Another court has stated the same proposition in the negative:
“[A]lthough an act of defendant may have some relation to the cause, it does not constitute a general appearance, if it in no way recognizes that the cause is properly pending or that the court has jurisdiction, and no affirmative action is sought from the court.”
[citations omitted]. These courts have accurately restated the principle underlying a general appearance. An unverified special appearance neither acknowledges the court's jurisdiction nor seeks affirmative action. While it cannot be used to disprove jurisdiction, it certainly does not concede it. Id. (emphasis added). The court concluded a defendant does not make a general appearance by filing an unsworn special appearance. See id.
None of the appellees’ briefs mention Dawson-Austin, despite its clear
5 applicability. Instead, they rely on Casino Magic, which also ignores the
Dawson-Austin opinion decided almost three years earlier.2 Six years later, the Texas Supreme Court decided Exito Electronics
Co., Ltd v. Trejo, 42 S.W.3d 302 (Tex. 2004). In that case, the defendant filed a verified special appearance and attached a supporting affidavit.
See id. at 304. The plaintiff did not object to the verification, which did not reveal how the affiant had obtained the requisite personal knowledge
of the facts described in the special appearance. See id. The plaintiff also
did not object to a defective jurat on the affidavit. See id. The trial court
denied the special appearance. See id. The court of appeals affirmed,
finding the defendant waived its special appearance by: (1) filing a Rule
11 agreement before filing its special appearance and thus making a
general appearance;3 (2) participating in a hearing on discovery matters
before the trial court ruled on the special appearance, which also
constituted a general appearance; and (3) not presenting evidence to
support the special appearance, because the verification and affidavit
were defective and inadmissible. See id.
2 Riggs also relies upon three cases following Casino Magic: Prosperous Maritime Corp. v. Farwah, 189 S.W.3d 389, 392-93 (Tex. App.—Beaumont 2006, no pet.), Kytel Int’l Group, Inc. v. Rent-A-Center, Inc., 132 S.W.3d 717, 719 (Tex. App.—Dallas 2004, no pet.); and Siemens AG v. Houston Cas. Co., 127 S.W.3d 436, 439 (Tex. App.— Dallas 2004, pet. dism’d). Kytel and Siemen’s AG do not mention Dawson-Austin. The remaining case cites Dawson-Austin, but then refuses to follow it. Prosperous, 189 S.W.3d at 393. 3 The Rule 11 agreement in Exito extended the defendant’s time to file its first responsive pleading. See id. at 304.
6 The Texas Supreme Court disagreed with the entirety of the court
of appeals’ waiver analysis. The court noted the plaintiff’s failure to object
to the affidavit and verification in the trial court. See id. at 307. Relying
on Rule 120a(3),4 the court explained:
Assuming without deciding that the verification and affidavit are defective, we nevertheless disagree with the court of appeals' conclusion. We held in Dawson–Austin that an unverified special appearance does not concede jurisdiction. [footnote omitted] In addition, there was more in the record for the trial court's consideration at the time of the special appearance hearing than the verification and affidavit, including the pleadings and the deposition of Exito's corporate representative. If Exito did not provide sufficient evidence in support of its jurisdictional challenge, about which we express no opinion, the trial court should have denied the motion, which it did. That does not, however, absolve the court of appeals from reviewing the merits of Exito's appeal of that ruling. Any defect in proof goes to the merits; it is simply not a waiver issue. The court of appeals therefore erred in holding that a defective verification and affidavit resulted in a waiver of Exito's special appearance. Id. at 307-08.5 Riggs’ failure to acknowledge Dawson-Austin or Exito is troublesome, since those cases taken together preclude any reliance on 4 Rule 120a(3) states in pertinent part: “The 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.” 5 Relying on Dawson-Austin, the supreme court held the Rule 11 agreement was not a general appearance, as it did not ask the trial court to take any action. See id. at 306. Participation in the discovery hearing did not effect a waiver either, because the discovery was related to the special appearance and participation was not inconsistent with the jurisdictional challenge. See id. at 306-307.
7 Casino Magic, the cases upon which Casino Magic relies, or any cases relying upon Casino Magic.
In the instant case, none of the appellees objected in the trial court
to the lack of verification on the special appearances. CR:261-282, 659-
670.. That is not surprising, since Rolnick’s affidavit verified all of the
factual statements in the special appearances. See Washington DC Party
Shuttle, LLC v. IGuide Tours, 406 S.W.3d 723, 730-31 (Tex. App.— Houston [14th Dist.] 2013, pet. denied) (when attached affidavit verifies
facts contained in special appearance but not special appearance itself,
Rule 120a satisfied even though no verification on special appearance);
Haddad v. ISI Automation Int’l, Inc., No. 04-09-00562-CV, 2010 WL 1708275, at *2 (Tex. App.—San Antonio 2010, no pet.). (rejecting
plaintiff’s argument based on Casino Magic, because affiant repeated and
testified to facts stated in special appearance).
Even though Riggs is an appellee, its failure to object to the lack of
verification on the special appearance waived the complaint. See
Haddad, 2010 WL 1708275, at *2, (holding appellee waived complaint, reasoning “[i]t is axiomatic that any complaint that a special appearance
is not verified must be brought to the trial court’s attention to give the
moving party an opportunity to cure the defect.”). Moreover, at the
special appearance hearing in the instant case, the trial court, like the
trial court in Exito, had before it numerous documents and the entire
8 depositions of three witnesses. Under the holdings and reasoning in
Dawson-Austin and Exito, Riggs’s waiver arguments must be rejected.
B. Likewise, Adams’ Waiver Argument Is Meritless Adams claims that Rolnick has waived “any argument over the
application of Rowland to this case” and asserted the Court “should not
permit [Rolnick] to challenge Rowland’s application in any reply brief.”
Adams’s argument demonstrates a fundamental misunderstanding of
appellate preservation of error and waiver.
Texas Rule of Appellate Procedure 33 governs preservation of
appellate complaints. An appellant must have presented its complaint to
the trial court by making “a timely request, objection, or motion” that
states the grounds for the ruling the appellant is seeking from the trial
court. See Tex. R. App. P. 33.1(a)(1). In addition, the appellant must have
obtained an explicit or implied ruling from the trial court on his request,
objection, or motion. See id. 33.1(a)(2). The type of error that must be
preserved is trial court error, not an alleged error by the opposing party
in citing inapplicable or distinguishable cases.
The only case Adams cites for its waiver argument is Howell v. Tex.
Workers’ Comp. Comm’n, 143 S.W.3d 416, 439 (Tex. App.—Austin 2004, pet. denied), which does not support it. The issue in Howell was whether
the appellant had waived challenges to the trial court’s findings of fact
concerning whether a jury demand had been made solely to delay the
9 trial and violated a local rule. See id. The appellant did not challenge the
findings of fact until its reply brief. See id. The appellant’s complaint was
directed to the trial court’s ruling striking its jury demand and claimed
trial court error. The case does not mention a need to preserve arguments
about its opposing party’s reliance upon specific cases. Howell thus
cannot support the proposition for which it is cited.
In any event, while an appellant generally cannot add new issues
in his reply brief, the appellate rules and the cases construing them do
not preclude the appellant from responding to and arguing against cases
relied upon by the appellees. Adopting Adams’ view of error preservation
would require a complaining party to object to each case his opponent
cites or relies upon in the trial court and obtain a ruling on each of those
objections. Moreover, the objections would have to be repeated in that
party’s opening brief. It is thus not surprising that Adams cites no
applicable support for its argument.
In this case, Rolnick claims error with regard to the trial court’s
ruling denying his special appearance. Under Texas Rule of Appellate
Procedure 38.1(f), that issue covers “every subsidiary question that is
fairly included.” The Court should reject this waiver argument.
II. Appellees’ “Minimum Contacts” Analysis Is Fundamentally Flawed As all appellees acknowledge, the Texas Long-Arm Statute “reaches
‘as far as the federal constitutional requirements of due process will
10 allow.’” Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 806
(Tex. 2002) (quoting Guardian Royal Exch. Assur., Ltd. v. English Chinia
Clays, P.L.C., 815 S.W2d 223, 226 (Tex. 1991). As a result, “the jurisdictional inquiry under the Texas long-arm statute collapses into a
single due-process inquiry.” Guyton v. Pronav Ship Mgmt., Inc., 139 F.
Supp.2d 815, 818 (S.D. Tex. 2001). The Texas Supreme Court has told
appellate courts (and litigants) to rely on United States Supreme Court
precedent and other federal cases as well Texas cases. Am. Type Culture,
83 S.W.3d at 806.
A. Appellees Ignore Walden v. Fiore Walden v. Fiore, ___ U.S. ___, 134 S. Ct. 1115, 188 L. Ed.2d 12 (2014) is the United States Supreme Court’s most recent specific
jurisdiction case. In fact, Walden is one of only two 6 specific jurisdiction
cases decided by the Court since 1990. Walden is significant, because it
expounds on which contacts are jurisdictionally significant and restricts
the “effects test” to intentional torts and intentional conduct. Riggs and
SML do not even cite Walden. Adams cites the case once (Adams Brief at
10-11) for its holding that “a defendant’s contacts with the forum State
may be intertwined with his transactions or interactions with the
plaintiff or other parties.” Walden, 134 S. Ct. at 1123.
6The other specific jurisdiction case is J. McIntyre Mach., Ltd. v. Nicastro, ___ U.S. ___, 131 S. Ct. 2780, 180 L. Ed.2d 765 (2011), which is a stream-of-commerce case.
11 Appellant Rolnick discusses Walden extensively in his opening
brief at pages 13-14, which makes appellees’ silence telling indeed.
Walden reaffirms that the minimum contacts inquiry “focuses on ‘the relationship among the defendant, the forum, and the litigation’” (id. at
1121) and then explains rules governing that analysis. As explained
below, the appellees’ arguments violate these rules.
B. Only Contacts Rolnick Himself Created Count Walden reaffirms that the defendant-forum-litigation relationship “must arise out of contacts that the ‘defendant himself’ creates with the
forum State.” Id. at 1122 (quoting Burger King Corp. v. Rudzewicz, 471
U.S. 462, 475, 105 S. Ct. 2174, 85 L. Ed.2d 528 (1985)) (emphasis in
original). Thus, the contacts plaintiffs or third parties have with the
forum State are not relevant. See Walden, 134 S. Ct. at 1122. In other
words, another party’s or a third party’s unilateral activity in the forum
cannot be considered. See Helicopteros Nacionales de Colombia, S.A. v.
Hall, 466 U.S. 417, 104 S. Ct. 1868, 80 L. Ed.2d 404 (1984). The reason for this rule is sound and explained by the unanimous
Walden Court as follows: “Due process limits on the State’s adjudicative authority principally protect the liberty of the non-resident defendant—
not the convenience of the plaintiffs or third parties.” Walden, 134 S. Ct.
at 1122. A plaintiff’s contacts with Texas, no matter how significant,
cannot determine whether a Texas court violates a non-resident
12 defendant’s due process rights by exercising personal jurisdiction over
him.
A corollary to the rule is that the forum contacts of an agent or
employee acting solely for his principal’s or employer’s benefit do not
count as contacts of the agent individually. See Kroll Ontrack, Inc. v.
Devon IT, Inc., No. CIV. 13-302 DWF/TNL, 2014 WL 2922646, at *4 (D. Minn. June 27, 2014) (Pennsylvania lawyers’ contacts with Minnesota
made at a client’s behest and for client’s benefit are made “in a purely
representative capacity.”). Thus, only contacts Rolnick had with Texas in
his individual capacity can be considered. And that is the biggest flaw in
Appellees’ arguments. Everything Rolnick did with regard to the
transaction he did in the course of representing SML and/or Lantz.
Rolnick has had no other contacts with Texas.
None of the contacts upon which appellees rely can be attributed to
Rolnick, who was hired by Lantz (a Florida resident) in Florida to
represent SML (a Florida corporation Lantz owned) in its sale of all its
Texas assets to a Delaware corporation having its principal place of
business in Nevada. CR:137, 139, 166, 382, 383, 502. All of the work
Rolnick did in relation to the transaction took place in Florida.
Appellant’s Brief at 18-20; CR:37, 160-161. Lantz admits that all of
Rolnick’s contacts with Ray (a Texas lawyer) were as SML’s lawyer for
SML’s and/or Lantz’s benefit. CR:386-387. Contacts of an agent on behalf
13 of his principal cannot be considered when deciding if there is jurisdiction
over the agent individually. See Jackson v. Dean, No. 14-23-01044-CV,
2015 WL 224964 (Tex. App.—Houston [14th Dist.] Jan. 15, 2015, no pet).
Stated another way, all of Rolnick’s contacts as SML’s lawyer are SML’s
contacts, and cannot be used to subject Rolnick to the jurisdiction of a
Texas court.
Appellees contend that Rolnick’s role in the negotiation of the sale
subjects him to jurisdiction in Texas, but they are wrong. There is no
evidence that any of the negotiations took place in Texas. Appellees do
not identify where Rolnick was when the conduct ascribed to him
occurred, since doing so would defeat their position. The buyer’s
representatives were in Nevada when Rolnick spoke with them about the
sale. CR:515. The buyer 7 provided the first draft of the Asset Purchase
Agreement to Rolnick in Florida. CR:504.
Appellees also rely heavily on the fact that the assets being sold
were in Texas. SML owned the assets and made the decision to sell them.
There is no evidence that Rolnick had any right to all or part of the sales
proceeds.
7 Appellees either refer to the buyer as a “Texas buyer” or imply the buyer is from Texas, but there is no evidence to support this position. The buyer and obligor under the Promissory Note was AOS, a Delaware corporation with its principal place of business in Nevada. CR:444, 575. The fact that AOS was purchasing assets in Texas does not make it a “Texas buyer.” The record references given for this contention do not support it.
14 The presence of SML assets in Texas is a contact of SML and/or
Lantz, SML’s sole owner. This contact is irrelevant with respect to
personal jurisdiction over Rolnick. Walden, 134 S. Ct. at 1122 (“We have
consistently rejected attempts to satisfy the defendant-focused ‘minimum
contacts’ inquiry by demonstrating contacts between the plaintiff (or
third parties) and the forum State).
Just as irrelevant is Rolnick’s knowledge that the assets were in
Texas or that SML had strong contacts with Texas. The Court in Walden
rejected this argument:
Rather than assessing petitioner's own contacts with Nevada, the Court of Appeals looked to petitioner's knowledge of respondents' “strong forum connections.” [citation omitted] In the court's view, that knowledge, combined with its conclusion that respondents suffered foreseeable harm in Nevada, satisfied the “minimum contacts” inquiry. [footnote and citation omitted]
This approach to the “minimum contacts” analysis impermissibly allows a plaintiff's contacts with the defendant and forum to drive the jurisdictional analysis. Petitioner's actions in Georgia did not create sufficient contacts with Nevada simply because he allegedly directed his conduct at plaintiffs whom he knew had Nevada connections. Such reasoning improperly attributes a plaintiff's forum connections to the defendant and makes those connections “decisive” in the jurisdictional analysis. [citation omitted] It also obscures the reality that none of petitioner's challenged conduct had anything to do with Nevada itself.
15 134 S. Ct. at 1124-1125. Rolnick did not own any part of SML or its assets
and did not himself have any assets in Texas. CR:35-36, 390-91. When
SML required legal assistance regarding the Texas assets or any of SML’s
activities in Texas, SML hired a Texas lawyer. CR:390. Appellees’
contention that Rolnick provided legal services to SML with respect to a
Medicaid investigation or the lease of property in Texas is simply false.
Lantz testified that he hired a Texas lawyer – Ray – to deal with the
Medicaid investigation. CR:389. There is no evidence that the lawsuit at
issue related to or arose from the Medicaid investigation. There is no
evidence that Rolnick provided services in Texas with respect to the
Medicaid investigation.
C. Only the Defendant’s Contacts with the Forum State Itself Count, Not the Defendant’s Contacts with Persons Who Reside There Appellees rely heavily on communications between Ray and
Rolnick, but again, Rolnick was not in Texas when those communications
occurred. Rather, the communications consisted of emails and a few
telephone calls between Ray, who was in Texas, and Rolnick, who was in
Florida. Although SML claims Rolnick testified to “numerous” phone
calls into Texas, the record references SML cites do not support that
claim at all. SML Brief at 9-10. Ray’s billing records reflect only 5
telephone calls with Rolnick. CR:322-330. With one exception, those
records, however, do not reflect who initiated the conversations. CR:322-
16 330. That exception reflects a call from Ray to Rolnick. CR:330.
Telephone calls from Ray to SML or Rolnick are not contacts of Rolnick
with Texas. The same is true with respect to emails.
Here again, appellees’ analysis runs afoul of Walden, which
unambiguously holds that it is the contacts between the defendant and
the forum State that are the relevant ones, not contacts between the
defendant and a plaintiff or co-defendant who are Texas residents. See
Walden, 134 S. Ct. at 1123. Under Walden, the communications between Rolnick and Ray, even if they had been in Rolnick’s individual capacity,
would not have subjected him to personal jurisdiction in Texas. When, as
here, the plaintiff or a third-party plaintiff is the only link between the
defendant and the forum, personal jurisdiction will not lie over the non-
resident defendant. See id. at 1122-23. 8
In order for contacts with Texas residents to be relevant to personal
jurisdiction over the defendant, those contacts must reflect that the
defendant purposefully reached out beyond his or her state and into
another. See Walden, 134 S. Ct. at 1122. The Walden court gave two
examples of such contacts with a forum State that would be sufficient for
jurisdictional purposes. First, a defendant that enters into a contractual
8This concept is the reason for the long-standing rule that a Texas resident’s contract with an out-of-state party alone will not automatically establish sufficient minimum contacts in Texas. See Burger King, 471 U.S. at 478. That is true even though the Texas long-arm statute states that contracting with a Texas resident is “doing business” in Texas. See Tex. Civ. Prac. & Rem. Code § 17.042(1).
17 relationship envisioning “continuing and wide-reaching contacts” in
Texas would have made contacts with Texas itself. See id. The second
example given was a defendant’s circulation of magazines or other
products to purposefully exploit a Texas market. See id. No such conduct
occurred here.
Rolnick has never sought clients in Texas. CR:36. Rolnick has never
appeared in court in Texas. CR:35. Rolnick is not and has never been
licensed to practice law in Texas. CR:35. Although Rolnick represented
SML over a period of years, all conduct in connection with that
representation occurred in Florida. CR:382, 503. Because SML is a
Florida corporation and its owner Lantz is a Florida resident, the
relationship among SML, Lantz, and Rolnick is and has always been
centered in Florida. Ray addressed and sent his bills to Lantz and sent
no bills to Rolnick. CR:556, 557.
In sum, appellees’ alleged Texas contacts boil down to the following:
(1) communications between Rolnick in Florida and Ray in Texas, (2)
Rolnick’s knowledge that assets of SML, a Florida corporation, were
located in Texas, (3) negotiations between Rolnick (while he was in
Florida) and the buyer’s representative (who was in Nevada), and (4)
Rolnick’s supposed “direction” to Ray (by correspondence sent from
Florida) to file the UCC-1 in Texas. These contacts taken singly or
18 together are not sufficient to allow a Texas court to exercise jurisdiction
over Rolnick.
D. Rolnick Did Not Purposefully Avail Himself of the Privilege of Conducting Activities in Texas that Invoked the Benefits and Protections of Texas Laws Texas Supreme Court cases over the past ten years demonstrate
that appellees’ purposeful availment arguments also fail. “Purposeful
availment” generally requires more than a sale of one or more products
or services in Texas. See Moki Mac River Expeditions v. Drugg, 221
S.W.3d 569, 578 (Tex. 2007); Michiana Easy Livin’ Country, Inc. v.
Holten, 168 S.W.3d 777, 785 (Tex. 2005). That “something more” must be purposeful, such as directing marketing efforts to Texas, operating a
sales and distribution network in Texas, and having an office providing
sales information and support. See id. at 787. Stated another way,
“[p]urposeful availment requires that ‘a defendant must seek some
benefit, advantage, or profit by availing itself of the jurisdiction.’” Moki
Mac, 221 S.W.3d at 578. In Moki Mac, the defendant actively sought to serve the Texas
market, established regular communication channels with its Texas
customers, utilized some of those Texas customers as de facto group
leaders “to plan, organize, and promote its trips” involving other Texas
residents. See id. Although the court found ample conduct amounting to
19 “purposeful availment,” it was not sufficiently related to the litigation to
justify specific jurisdiction. See id. at 588.
The analysis in Retamco Operating, Inc. v. Republic Drilling Co.,
278 S.W.3d 333 (Tex. 2009) further explains what “purpose availment”
really means. Retamco, a Texas corporation sued another Texas
corporation and obtained a $16,000,000 interlocutory default judgment.
Id. at 336. Retamco then added a fraudulent transfer claim against a California corporation after learning the defaulted defendant had
transferred 72% of certain assets to the California corporation. Id. The
trial court denied the California defendant’s special appearance, but the
court of appeals reversed. See id. at 337. The Texas Supreme Court
reversed. See id. at 342.
The court based its reversal on a purposeful availment analysis,
reasoning as follows:
Republic's contacts with Texas were purposeful, not random, fortuitous, or attenuated. Oil and gas interests are real property interests. [citations omitted]. Republic was aware that the oil and gas interests it received were located in Fayette, Dimmit, and Webb Counties, Texas. Thus, Republic purposefully took assignment of Texas real property. And while Republic may not have actually entered the state to purchase this real property, “[j]urisdiction ... may not be avoided merely because the defendant did not physically enter the forum state.” [citation omitted] Republic, by taking assignment of Texas real property, reached out and created a continuing relationship in Texas. Under the assignment, it is liable for
20 obligations and expenses related to the interests. This ownership also allows Republic to “enjoy ... the benefits and protection of [Texas laws.]” [citation omitted]. Unlike personal property, Republic's real property will always be in Texas, which leaves no doubt of the continuing relationship that this ownership creates. Id. at 339 (emphasis added). There is no evidence that Rolnick created or even sought such a continuing relationship with Texas. There is no
evidence that the flat fee Rolnick received from SML for all the work done
on the transaction was a benefit or protection of Texas law. Indeed, the
evidence instead conclusively demonstrated that Rolnick’s only contacts
with Texas were with another lawyer chosen by SML to advise on Texas
law. The analysis in Retamco defeats appellees’ assertions of purposeful
availment.
E. Appellees Cannot Rely on Any Effects in Texas of Rolnick’s Florida Conduct or Where Rolnick Supposedly Directed a Tort Appellees also contend that the effects of Rolnick’s alleged legal
malpractice were felt in Texas, because the assets were lost there. That
argument has a number of flaws. First, Walden rejects the “effects”
analysis some lower courts had adopted based on Calder v. Jones, 465
U.S. 783, 104 S. Ct. 1482, 79 L. Ed. 2d 804 (1984). Calder was a libel suit
brought by a California actress in a California state court against a
reporter and editor employed by the National Enquirer in Florida. The
article at issue had been written and edited by the defendants in Florida.
See Walden, 134 U.S. at 1123. The crux of Calder was not that the
21 reputation-based effects of the libelous publication were felt by the
plaintiff in California. Walden, 134 U.S. at 1123-1124. Instead, the
Walden Court “recognized that the defendant’s activities” had focused on the plaintiff, but explained that the Court’s jurisdictional analysis
focused on more than that. See id at 1123. The contacts the Calder court
had relied upon included phone calls by the reporters to California
sources for the information in the article, the focus of the article on the
plaintiff’s activities in California, the wide circulation of the publication
in California, and the fact that the “brunt” of the reputational injury was
suffered by the plaintiff there. See id.
The Walden court then explained:
The crux of Calder was that the reputation-based “effects” of the alleged libel connected the defendants to California, not just to the plaintiff. The strength of that connection was largely a function of the nature of the libel tort. However scandalous the newspaper article might be, it can lead to a loss of reputation only if communicated to (and read and understood by) third persons. [citation omitted.] Accordingly, the reputational injury caused by the defendants’ story would not have occurred but for the fact that the defendants wrote an article for publication in California that was read by a large number of California citizens. Indeed, because publication to third persons is a necessary element of libel, [citation omitted], the defendants’ intentional tort actually occurred in California. [citation omitted.] In this way, the “effects” caused by the defendants’ article - i.e., the injury to the plaintiff’s reputation in the estimation of the California public - connected the
22 defendants’ conduct to California, not just to the plaintiff who lived there. That connection, combined with the various facts that gave the article a California focus, suffice to authorize the California court’s exercise of jurisdiction. Walden, 134 U.S. at 1124 (emphasis in original). The Walden court then emphatically rejected the argument that personal jurisdiction over a non-
resident can rest on mere injury to a foreign resident. See id at 1125.
“The proper question is not where the plaintiff experienced a
particular injury or effect but whether the defendant’s conduct connects
him to the forum in a meaningful way.” It is the existence of a meaningful
connection between Rolnick and Texas that is missing in this case.
Prior to Walden, the Texas Supreme Court also had rejected the
notion that committing a tort “in” Texas or a tortfeasor’s knowledge that
the injury will be felt by a particular Texas resident was enough to
sustain personal jurisdiction over a non-resident. See Michiana, 168
S.W.3d. at 788-89. Despite appellees’ contentions to the contrary, there
is no evidence that Rolnick “committed a tort in Texas.”
Appellees rely on Rolnick’s out-of-state conduct in Florida in
claiming that he committed legal malpractice in Texas. This is nothing
more that the “direct-a-tort” theory Michiana also rejected. If jurisdiction
turns on where a defendant directed a tort, the focus shifts to the
relationship among the plaintiff (rather than the defendant), the forum
and the litigation. See id. at 790. Moreover, “directed-a-tort jurisdiction
23 [equates] the jurisdictional inquiry with the underlying merits.” Id.
Taken to its logical end, a defendant would defeat personal jurisdiction
by establishing it had not committed a tort. See id. at 790-791.
In any event, there is no evidence that any of Rolnick work on the
transaction in question took place in Texas.
III. Appellees Have No Answer for Rolnick’s Cases Involving Nonresident Attorneys and Law Firms In his Appellant’s Brief at 16-17, Rolnick has cited numerous Texas
cases applying the rule that there is no specific jurisdiction over a
nonresident attorney or law firm who exercises legal judgment, forms
legal opinions, and does legal work for the client in states other than
Texas. The same analysis applies to nonresident physicians who send
prescriptions from another state to Texas and/or direct a Texas resident’s
care. See Brocail v. Anderson, 132 S.W.3d 552, 555-556 (Tex. App.—
Houston [14th Dist.] 2004, pet. denied). The Texas Supreme Court in
Moki Mac, 221 S.W.3d at 588, expressly approved Brocail’s holding that there was no jurisdiction over the nonresident physician, because “any
tort occurred in the exercise of medical judgment” in another state, rather
than communicating that judgment to Texas. See id. Although Rolnick
cited and discussed Brocail in his brief at 17-18, appellees do not mention
it.
24 Appellees rely on inapplicable cases. For example, SML relies on
Mountain States Employers Council, Inc. v. Cobb Mechanical Contractors, Inc., 2008 WL 2639711 (Tex. App.—Fort Worth July 3, 2008, no pet), in which the out-of-state attorney appeared at and represented
his client during an NLRB hearing held in Texas. Rolnick did not provide
any legal services in Texas.
The Tennessee law firm in Rowland v. Rowland, 973 S.W.2d 432
(Tex. App.—Austin 1998, no pet.) was subject to personal jurisdiction in
Texas because it paid the proceeds of a Tennessee wrong death suit to its
Texas clients without protecting a Texas insurer’s lien. Here again,
Rolnick had no similar contact with Texas.
IV. SML’s “Agency” Theory Is Meritless SML claims that jurisdiction over Rolnick can be based on an
agency theory under which Rolnick is the principal and Ray and BCBV
are the agents. None of the cases SML cites are even remotely applicable.
While Rolnick agrees with the rule that an agent’s Texas contacts are
attributed to his principal, there is no evidence of an agency relationship
between Ray and BCBV as the purported agents and Rolnick as the
principal. Ray and Rolnick were lawyers representing the same clients—
SML and Lantz. As explained earlier in this brief, Ray sent his bills to
SML, not Rolnick. Although Rolnick advised Lantz to hire Texas counsel
to ensure SML’s rights were protected under Texas law, Lantz admitted
25 he chose Ray based on previous work Ray had done for SML. CR:384-385.
Lantz also testified that he contacted Ray asked him to serve as Texas
counsel in the matter. CR:384. Upon checking the record references in
the agency portion of SML’s brief, the Court should find they do not
support the factual assertions made.
For all of the above reasons, the Court should reverse the trial
court’s denial of Rolnick’s special appearance and render judgment
dismissing the claims against him for lack of subject matter jurisdiction.
Respectfully submitted,
RUTH G. MALINAS Texas Bar No. 08399350 Plunkett & Griesenbeck, Inc. Catholic Life Building, Suite 900 1635 N.E. Loop 410 San Antonio, Texas 78209 (210) 734-7092 (telephone) (210) 734-0379 (facsimile) rmalinas@pg-law.com
/s/ Ruth G. Malinas RUTH G. MALINAS
COUNSEL FOR APPELLANT HERBERT ROLNICK
26 CERTIFICATE OF COMPLIANCE Pursuant to Texas Rule of Appellate Procedure 9.4, the
undersigned certifies this Appellant’s Reply Brief complies with the type-
volume limitations of the Rule. The undersigned prepared the Reply Brief
using Microsoft Word 2013 and relied on that software’s word-count
function.
Exclusive of the exempted portions listed in Texas Rule of Appellate
Procedure 9.4, the brief contains 6122 words.
/s/ Ruth G. Malinas RUTH G. MALINAS
CERTIFICATE OF SERVICE
This will certify that a true and correct copy of the foregoing Appellant’s Reply Brief has been forwarded this 11th day of September, 2015, to the following attorneys of record via electronic service:
J. Hampton Skelton Brandon Duane Gleason Skelton & Woody 248 Addie Roy Road, Suite B-302 Austin, TX 78746 hskelton@skeltonwoody.com bgleason@skeltonwoody.com Attorneys for Sight’s My Line, Inc., a Florida Corporation and Stewart Lantz
27 Scott R. Kidd Scott V. Kidd Kidd Law Firm 819 W. 11th Street Austin, TX 78701 scott@kiddlawaustin.com svk@kiddlawaustin.com Attorneys for Riggs, Aleshire & Ray
Michael B. Johnson Salvador Davila Thompson, Coe, Cousins & Irons, LLP 701 Brazos, Suite 1500 Austin, TX 78701 mjohnson@thompsoncoe.com sdavila@thompsoncoe.com Attorneys for Blazier, Christensen, Bigelow & Virr
Robert E. Valdez Jose “JJ” Trevino, Jr. Valdez, Jackson & Trevino, PC 1826 North Loop 1604 West, Suite 275 San Antonio, TX 78248 revaldez@vjtlawfirm.com jtrevino@vjtlawfirm.com Attorneys for Adams & Graham
/s/ Ruth G. Malinas RUTH G. MALINAS