Matthew A. Wilson v. Brian Baker and Stephen R. Walker

• Court: Court of Appeals of Texas
• Decided: December 29, 2011
• Docket: 03-10-00507-CV
• Status: Published

Opinion

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-10-00507-CV

Matthew A. Wilson, Appellant

v.

Brian Baker and Stephen R. Walker, Appellees

FROM THE COUNTY COURT AT LAW NO. 2 OF HAYS COUNTY, NO. 12932-C HONORABLE LINDA RODRIGUEZ, JUDGE PRESIDING

MEMORANDUM OPINION

Matthew Wilson appeals the trial court’s denial of his special appearance in the suit

brought against him by Brian Baker and Stephen R. Walker. Appellees, both Texas attorneys, allege

that Wilson, an Oregon attorney, promised and failed to pay them fully for legal services rendered

in Texas to Wilson’s friends. Wilson filed a special appearance contending that he lacked sufficient

contacts with Texas to justify its court’s exercise of jurisdiction over him. We will affirm the trial

court’s denial of Wilson’s special appearance.

BACKGROUND

The following summary of events underlying this appeal is drawn from pleadings and

exhibits on file at the time of the special appearance hearing.1 It is not intended to be binding

regarding the resolution of any issue in future litigation.

1 Personal jurisdiction is determined based on the plaintiff’s pleadings, both parties’ legal arguments, and any evidence the parties submit proving or disproving jurisdiction. Kelly v. General Interior Constr., Inc., 301 S.W.3d 653, 659 (Tex. 2010). Appellees allege that Wilson contacted them to represent Kevin and Valerie Elliott,

who Wilson said he considers like family. The Elliotts, former Texas residents living in Arizona,

were charged with a crime in Travis County, Texas. Appellees each agreed to represent one of the

Elliotts for a total payment of $20,000. Although there is no formal, signed document in the record

entitled “Contract” in which Wilson expressly states that he is obligated to pay the full $20,000, he

paid appellees approximately $11,000 and appellees submitted to the trial court printouts of emails

in which Wilson repeatedly thanks appellees for their work and expresses his intention to pay more.

In his responses to interrogatories, Wilson repeatedly “denies ever agreeing or contracting to be

responsible primarily, or secondarily, for the obligation of paying of the Elliotts’ fees.”

Appellees sued when the payments stopped, alleging that they have provided legal

services to the Elliotts in exchange for and reliance on Wilson’s promise to pay $20,000 for those

services. They allege theories of breach of contract, promissory estoppel, and quantum meruit.

Wilson filed a special appearance, contending that he is not subject to either general

or specific jurisdiction in Texas courts. He does not reside in Texas, denied entering into a contract

with appellees, and alleged that he has no purposeful business contacts with Texas. He filed an

affidavit denying that he ever agreed to be responsible for the Elliotts’ fees, although he did pay

some of them. He contended that he lacks sufficient minimum contacts with Texas and that a Texas

court would offend traditional notions of fair play and substantial justice by exercising jurisdiction

over him. He also contended that defending the suit in Texas would be inconvenient and costly.

Appellees replied that Wilson initiated contact with them in Texas and that his contact

and payment of them induced them to perform work in Texas that benefitted Wilson. Their lawsuit

arose directly from those contacts and provided a basis for a Texas court to exercise jurisdiction.

2 They submitted their own affidavits as well as printouts from email correspondence with Wilson to

support their allegations.

Wilson supplemented his special appearance with his affidavit and deposition

testimony that he urged showed a lack of jurisdiction. He details in his affidavit his lack of contacts

with Texas in this case, such as the fact that he signed no contract agreeing to pay appellees, has not

met either attorney about the Elliotts’ case, and has never met Baker in person. (He had met Walker

in conjunction with an unrelated case.) He also relies on the professional services agreement

between Baker and Kevin Elliott that is signed only by Elliott.

The trial court held a hearing on the special appearance at which it admitted exhibits

and heard argument. It then denied the special appearance without stating a basis for its ruling.

STANDARD OF REVIEW

The Texas Supreme Court recited the analytical framework for jurisdiction over

non-resident defendants under the Texas long-arm statute and the constitution in Retamco Operating,

Inc. v. Republic Drilling Co., 278 S.W.3d 333, 337 (Tex. 2009). Personal jurisdiction is a question

of law that we review de novo. Id. When, as here, the trial court does not make findings of fact and

conclusions of law in support of its ruling, “all facts necessary to support the judgment and supported

by the evidence are implied.” BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex.

2002). The jurisdictional inquiry must be distinct from the underlying merits; a court that equates

the substantive merits with personal jurisdiction violates the fairness considerations that form the

basis of due-process mandates. Capital Fin. & Commerce AG v. Sinopec Overseas Oil & Gas, Ltd.,

260 S.W.3d 67, 81 (Tex. App.—Houston [1st Dist.] 2008, no pet.).

3 “Texas courts may assert in personam jurisdiction over a nonresident if (1) the Texas

long-arm statute authorizes the exercise of jurisdiction, and (2) the exercise of jurisdiction is

consistent with federal and state constitutional due-process guarantees.” Moki Mac River

Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex. 2007). Under the Texas long-arm statute, the

plaintiff has the initial burden to plead sufficient allegations to confer jurisdiction. American Type

Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 807 (Tex. 2002). The defendant seeking to

avoid being sued in Texas then has the burden to negate all potential bases for jurisdiction pled by

the plaintiff. Id.

The Texas long-arm statute “allows the statute to reach as far as the federal

constitutional requirements of due process will allow.” Moki Mac, 221 S.W.3d at 575; accord

Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 788 (Tex. 2005). Under

constitutional due-process analysis, the exercise of personal jurisdiction is proper when (1) the

nonresident defendant has established minimum contacts with the forum state, and (2) the assertion

of jurisdiction complies with “traditional notions of fair play and substantial justice.” Moki Mac,

221 S.W.3d at 575 (citing International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). Once

a court determines that a nonresident defendant has purposefully established minimum contacts, only

in rare instances will the exercise of jurisdiction not comport with fair play and substantial justice.

Petrie v. Widby, 194 S.W.3d 168, 175 (Tex. App.—Dallas 2006, no pet.) (citing Guardian Royal

Exch. Assurance, Ltd., 815 S.W.2d 223, 231 (Tex. 1991). In a special appearance, a defendant bears

the burden of presenting “a compelling case that the presence of some consideration would render

4 jurisdiction unreasonable.” Guardian, 815 S.W.2d at 231 (quoting Burger King Corp. v. Rudzewicz,

471 U.S. 462, 477 (1985)).

A defendant establishes minimum contacts with a state when it “purposefully avails

itself of the privilege of conducting activities within the forum state, thus invoking the benefits and

protections of its laws.” Hanson v. Denckla, 357 U.S. 235, 253 (1958) (citing International Shoe

Co., 326 U.S. at 319). “The defendant’s activities, whether they consist of direct acts within Texas

or conduct outside Texas, must justify a conclusion that the defendant could reasonably anticipate

being called into a Texas court.” American Type, 83 S.W.3d at 806 (citing World-Wide Volkswagen

Corp. v. Woodson, 444 U.S. 286, 297 (1980)). A nonresident’s contacts can give rise to either

specific or general jurisdiction. American Type, 83 S.W.3d at 806. General jurisdiction arises when

the defendant’s contacts with the forum are continuous and systematic. Id. at 807. Specific

jurisdiction arises when (1) the defendant purposefully avails itself of the privilege of conducting

activities within the forum State, thus invoking the benefits and protections of its laws, and (2) the

cause of action arises from or is related to those contacts or activities. Burger King, 471 U.S. at 472;

National Indus. Sand Ass’n v. Gibson, 897 S.W.2d 769, 774 (Tex. 1995). In a specific jurisdiction

analysis, we focus on the relationship among the defendant, the forum, and the litigation. Moki Mac,

221 S.W.3d at 575-76 (citing Guardian, 815 S.W.2d at 228).

We consider three factors in determining whether a defendant purposefully availed

itself of the privilege of conducting activities in Texas:

First, only the defendant’s contacts with the forum are relevant, not the unilateral activity of another party or a third person. Second, the contacts relied upon must be purposeful rather than random, fortuitous, or attenuated. Thus, sellers who reach out

5 beyond one state and create continuing relationships and obligations with citizens of another state are subject to the jurisdiction of the latter in suits based on their activities. Finally, the defendant must seek some benefit, advantage or profit by availing itself of the jurisdiction.

Id. at 575 (internal citations and quotations omitted). Additionally, the minimum-contacts analysis

is focused on the quality and nature of the defendant’s contacts, rather than their number. American

Type, 83 S.W.3d at 806.

When considering whether the forum’s exercise of jurisdiction is consistent with

traditional notions of fair play and substantial justice, courts must determine whether the relationship

between the defendant and the forum is such that requiring the defendant to defend a suit is

reasonable. World-Wide Volkswagen, 444 U.S. at 292. The burden on the defendant to defend the

suit in a foreign (to him) forum must be considered in light of the forum’s interest in adjudicating

the dispute, the plaintiff’s interest in obtaining convenient and effective relief, and the interstate

judicial system’s interest in obtaining the most efficient resolution. Id.

ANALYSIS

Wilson asserts by his sole issue on appeal that Texas courts have no personal

jurisdiction over him. He contends that his contacts with Texas are too sparse to support general

jurisdiction and do not satisfy the purposeful availment prong of the due process analysis. He argues

that he has consistently tried to avoid contact with Texas concerning the underlying case by referring

the case to appellees, not signing any formal agreement to pay, and contacting appellees only by

phone, email, mail, and fax. In his affidavit, he cites the statute of frauds defense he contends

invalidates any unwritten agreement to be responsible for the debt of another as evidence that no one

6 contemplated that he would be responsible for the Elliotts’ debt. He also relies on a case holding

that a California attorney who represented some Texas residents in a California bankruptcy case

did not subject herself to Texas jurisdiction by requesting that a Texas bankruptcy trustee send

her notices pertaining to a related Texas bankruptcy, advising the Texas clients concerning the

Texas bankruptcy, or signing a fee agreement and accepting their payments. Bergenholtz v. Cannata,

200 S.W.3d 287, 295-97 (Tex. App.—Dallas 2006, no pet.). The attorney in that case had no other

significant current contacts with Texas, however, and the Texas bankruptcy predated her

involvement with the clients. Id. at 296. She did her work almost exclusively in California. Id. at

291. The court of appeals concluded that the attorney’s contact with Texas was merely fortuitous

and a byproduct of her representation of her clients in the California bankruptcy. Id. at 296.

Wilson’s actions in this case differ crucially from those described in Bergenholtz.

Although he did not choose for the Elliotts to be prosecuted in Texas, he sought counsel for them

in Texas. Based on the allegations and documents on file in the appellate record, Wilson did not

simply refer their case to appellees or find counsel and step away. Instead, he allegedly stated over

the telephone on October 3, 2008 that he would pay appellees $20,000 to represent the Elliotts, who

were like family to him.2 In an email dated October 3, 2008, he stated to appellee Baker “[o]nce we

have some more information, I would like to set up a call with you and the Elliott’s (sic) and their

AZ attorney to develop a game plan.” Appellees allege that they agreed to represent the Elliotts

2 Wilson disputes these allegations, but the trial court was entitled to resolve them as they affect jurisdiction. See Texas Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 227 (Tex. 2004). We find no basis on which to overturn an implied finding of fact supporting the exercise of jurisdiction to consider the merits of this case.

7 because of Wilson’s assertions. They allege—and supplied correspondence allegedly from Wilson

supporting the allegation—that Wilson paid some of the $20,000 and asserted that more would be

forthcoming. A letter dated October 22, 2008 states that the first installment payment of fees for the

Elliott matter was enclosed, and asserts that Wilson would send additional sums “shortly.” A

December 3 email states that Wilson “will be sending another check . . . for the Elliott legal fees.”

In a December 22 email, Wilson states that he would send a check for $5,000 the next day and a

check for $10,000 in January 2009. A February 2009 email states that Wilson had hit an unexpected

cash crunch, but was “working on a solution” and was “committed to getting [appellees] paid.” In

a June 19, 2009 email, Wilson asked Baker to confirm that he had received $11,000 of the $20,000

fee. In a July 30, 2009 email, Wilson stated that he would be sending a $1,000 payment on Monday.

In an August 12, 2009 email Wilson asserted that he would soon pay approximately $4,000 “towards

Mr. Elliott’s fees.” In an August 26, 2009 email, Wilson asserts that he would like to end his

involvement—particularly if appellees would “release him” for immediate payment of $5,000.

Otherwise, he would only pay $1,000 per month “until the full $20K is paid.” Appellees stated in

their affidavit that they “fully performed all obligations under their agreement and represented the

Elliotts to the conclusion of their cases in January 2010.”

These actions combine to demonstrate that Texas has jurisdiction over Wilson for the

causes of action alleged here. Unlike the defendant in Michiana, who defeated the exercise of

jurisdiction in large part by showing that its contact with a Texas resident was initiated by the Texas

resident, see 168 S.W.3d at 784-85, evidence shows that Wilson purposefully initiated contact with

Texas residents intending that they would perform work in Texas. Evidence in the record on appeal

shows that his contact with the Texas lawyers continued during their representation of the Elliotts.

8 Using the language of Michiana, we conclude that Wilson “reach[ed] out beyond one state and

create[d] continuing relationships and obligations with citizens of another state” and, therefore, is

“subject to the jurisdiction of the latter in suits based on [his] activities.” See id. (citing Burger King,

471 U.S. at 473). Finally, although there is no evidence that Wilson visited Texas regarding the

Elliotts’ case or that Wilson profited from their representation, evidence shows that he sought the

benefit of helping to protect his friends—who, according to Baker, Wilson said were “like family”

to him—by paying for licensed attorneys to represent them. While a party can structure transactions

to avoid a particular forum, see id., Wilson allegedly called Texans in Texas, induced them to

represent his friends in Texas courts by promising to pay them, and sent money to Texas addresses.

Other than not availing himself of a visit to Texas concerning the Elliotts’ case, Wilson did nothing

to avoid Texas jurisdiction. He purposefully availed himself of the privilege of conducting activities

in Texas, albeit purely through telephone conversations and written and electronic correspondence.

Because this lawsuit indisputably arises from the alleged contacts described in the evidence, the trial

court correctly concluded that it has specific jurisdiction over Wilson.

Allowing this suit to continue in Texas comports with traditional notions of fair play

and substantial justice. Wilson proposes that Oregon is the proper forum, contending that Texas is

an improper forum because the witnesses reside in Arizona and Oregon and that Texas is a

convenient forum only for the appellees. Wilson’s argument ignores the facts that he initiated the

relationships at issue here by contacting the Texas attorneys and that the bulk of the action

(representation of the Elliotts and receipt of some payments) occurred in Texas, and he minimizes

the likely role of appellees as witnesses. The only apparent relevant activity in Oregon is Wilson

corresponding and sending payments. Texas courts have a strong interest in resolving disputes over

9 whether Texas-based attorneys who have performed work have been paid for that work. Although

likely inconvenient and expensive for Wilson to travel to Texas, it would likely be equally

inconvenient and expensive for each appellee to travel to Oregon. (The Elliotts, residing in Arizona,

would be inconvenienced whether the suit is prosecuted in Texas or Oregon.) The trial court’s ruling

requires a person who initiated a request for legal services, allegedly promised to pay for those

services to be rendered, paid for some of the services that were rendered, then allegedly failed to pay

for the remainder of the services rendered to now defend a suit based on that alleged failure in the

state where the performance was sought, induced, and rendered. This scenario does not offend

traditional notions of fair play and substantial justice.

We conclude that the trial court has jurisdiction over this cause of action irrespective

of the merits of the underlying suit. This conclusion and any representations of fact in this opinion

are based solely on the record before us and do not bind future adjudicators reviewing revised

pleadings or additional evidence. Nothing in this opinion should be taken as a comment on the merit

of appellees’ causes of action or Wilson’s defenses to those causes.

Because we conclude that the trial court did not err by finding that it has jurisdiction

over this cause of action,3 we affirm the trial court’s denial of Wilson’s special appearance.

Jeff Rose, Justice

Before Justices Puryear, Rose and Goodwin

Affirmed

Filed: December 29, 2011

3 After concluding that the record shows that the trial court has specific jurisdiction over Wilson in this case, we need not consider whether it also has general jurisdiction over him.