Mark J. Wattles v. Minerva Partners, Ltd

• Court: Court of Appeals of Texas
• Decided: September 19, 2012
• Docket: 07-12-00096-CV
• Status: Published

Opinion

NO. 07-12-0096-CV

IN THE COURT OF APPEALS

FOR THE SEVENTH DISTRICT OF TEXAS

AT AMARILLO

PANEL B

SEPTEMBER 19, 2012 _____________________________

MARK J. WATTLES,

Appellant v.

MINERVA PARTNERS, LTD.,

Appellee _____________________________

FROM THE 99TH DISTRICT COURT OF LUBBOCK COUNTY;

NO. 2011-557,807; HONORABLE WILLIAM C. SOWDER, PRESIDING _____________________________

Memorandum Opinion _____________________________

Before QUINN, C.J., and CAMPBELL and HANCOCK, JJ.

Mark J. Wattles (Wattles) appeals from an order denying his special appearance

in a lawsuit filed by Minerva Partners, Ltd. (Minerva). The latter sued Wattles to recover

upon a personal guaranty. We affirm the order.

Background

Minerva is a limited partnership with its principal place of business in Dallas,

Texas. It entered into a lease agreement with Ultimate Acquisition Partners, L.P.

(Ultimate), a Delaware limited partnership, for space in a Lubbock, Texas, shopping center. Wattles, who resided in Las Vegas, Nevada, and was both an equity holder of

Ultimate and chairman of its general partner, executed a personal guaranty in favor of

Minerva. Through the document, he guaranteed repayment of the financial obligation

incurred by Ultimate under the lease agreement.

Minerva eventually assigned the lease to Gill Holdings (Gill), but not the

guaranty. Gill later reassigned the lease to Minerva so that the latter could enforce the

guaranty. Apparently, Ultimate defaulted on the lease after making one payment.

Upon Minerva suing Wattles, Wattles filed a special appearance claiming he was not

subject to the personal jurisdiction of the Texas court. The trial court denied the plea,

which led to this interlocutory appeal.

Authority and Its Application

The standard of review is de novo. Moki Mac River Expeditions v. Drugg, 221

S.W.3d 569, 574 (Tex. 2007). We further note that the defendant had the burden of

negating all bases of jurisdiction alleged by the plaintiff. Id. at 574.

Next, personal jurisdiction may arise from the execution of one contract.

Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 787 (Tex. 2005), and it is

not necessary that the non-resident appear on Texas soil for the one contract to suffice.

Retamco Operating, Inc. v. Republic Drilling, Inc., 278 S.W.3d 333, 339-40 (Tex. 2009).

However, there must be a showing that 1) the non-resident purposefully availed himself

of the privilege of conducting activities in Texas, 2) the cause of action relates to or

arises from those activities, and 3) the exercise of jurisdiction over the non-resident

comports with traditional notions of fair play and substantial justice. Id. at 339-41.

Incidentally, the exercise of personal jurisdiction over a non-resident seldom offends

2 traditional notions of fair play and substantial justice when the non-resident has

purposefully established minimum contacts with the forum state. Id. at 341.

Here, the evidence illustrates that 1) the property subject to the lease was

located in Lubbock, Texas, 2) Minerva relied upon Wattles’ execution of the guaranty in

leasing the property to Ultimate, 3) the guaranty recites that it was given to induce the

execution of the lease, 4) Wattles, who signed the guaranty in his individual capacity,

represented in it that he would “derive substantial direct benefits from the transactions

contemplated by the Lease,” 5) a representative of Wattles negotiated the terms of the

guaranty on behalf of Wattles while the representative was in Dallas, 6) Wattles mailed

a signed copy of the guaranty to Dallas, 7) Wattles agreed, via the guaranty, that the

instrument would be “construed and enforced in accordance with the laws of the State

in which the Premises are located,” that state being Texas, 8) Wattles’ obligation

consisted of “absolutely, irrevocably and unconditionally guarantee[ing] that he will, on

demand of Landlord, make the prompt and full payment of the Guaranteed Obligation”

which includes “all amounts arising under the Lease that are owed by Tenant to

Landlord accruing under the Lease,” up to a limited amount, 9) Wattles agreed that the

obligations under the guaranty “are independent of the obligations of the Tenant and of

the obligations of any other guarantor or person” and the guaranty is “continuing and

irrevocable,” and 10) the controversy arises from and is founded upon the obligations

allegedly imposed by the guaranty. The foregoing circumstances permit one to

reasonably conclude that Wattles not only purposefully availed himself of the privilege of

doing business in Texas but also had sufficient minimum contacts with that state which

should have led him to reasonably expect to answer a suit in Texas. See J. D. Fields &

3 Co. v. W. H. Streit, Inc., 21 S.W.3d 599, 604 (Tex. App.–Houston [1st Dist.] 2000, no

pet.) (finding personal jurisdiction when the defendant guarantor telephoned a Houston

office with the offer of guaranty to induce execution of a contract, personally guaranteed

an indebtedness that was payable in Houston, and faxed a letter of guaranty to

Houston); Gubitosi v. Buddy Schoellkopf Products, Inc., 545 S.W.2d 528, 536 (Tex. Civ.

App.–Tyler 1976, no writ) (finding personal jurisdiction when a guaranty agreement was

mailed to Texas and the signing of the guaranty was a deliberate act which formed an

inducement to execution of note agreements which were payable in Texas); Mitchell v.

Simpro, Inc., No. 14-01-0623-CV, Tex. App. LEXIS 7567, at *15-16 (Tex. App.–Houston

[14th Dist.] November 8, 2001, no pet.) (not designated for publication) (holding that a

guarantor submitted himself to the personal jurisdiction of Texas courts when he

contacted the prospective recipient of a guarantee, executed the guarantee to induce

Simpro to continue selling its products to an Atlanta business, sent it to Texas, and

agreed that Texas law should control its enforcement). Moreover, we find nothing of

record suggesting that the exercise of personal jurisdiction over Wattles would

contravene traditional notions of fair play or substantial justice.

To defeat the trial court’s exercise of jurisdiction, however, Wattles argues that

the guaranty is void. And, because it is void, he is somehow shielded from the authority

of a Texas court. To adopt such a contention as defeating personal jurisdiction would

be akin to “putting the cart before the horse.” The issue in question is whether the trial

court can exercise personal jurisdiction over Wattles given his contacts with the state,

not whether Minerva has a viable cause of action against him. Personal jurisdiction

may exist even if the plaintiff ultimately loses his suit or has less than a certain claim. If

4 this was not so, then the trial court could effectively require Wattles to defend against or

otherwise adjudicate the merits of the claim even if no personal jurisdiction existed.

Simply put, the presence of personal jurisdiction is not dependent upon the merits of the

underlying cause of action. See Michiana Easy Livin' Country, Inc. v. Holten, 168

S.W.3d at 790 (cautioning against “equating the jurisdictional inquiry with the underlying

merits”). Nor does the authority cited by Wattles, that is In re Modern Textile, Inc. v. P.

M. Holdings Corporation, 900 F.2d 1184 (8th Cir. 1991), suggest otherwise. Indeed, the

existence of personal jurisdiction was not even an issue there.

We overrule Wattles’ complaints and affirm the order of the trial court.

Brian Quinn Chief Justice