Companion Prop and Cslty Co. v. Anthony Palermo, e , 723 F.3d 557 ( 2013 )

Case: 12-11255 Document: 00512311028 Page: 1 Date Filed: 07/17/2013
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
July 17, 2013
No. 12-11255
Summary Calendar Lyle W. Cayce
Clerk
COMPANION PROPERTY AND CASUALTY INSURANCE COMPANY,
Plaintiff - Appellant
v.
ANTHONY PALERMO; JAMES R. RAINES; BREAZEALE, SACHSE &
WILSON, L.L.P.;
Defendants - Appellees
Appeal from the United States District Court
for the Northern District of Texas
Before REAVLEY, JOLLY, and DAVIS, Circuit Judges.
E. GRADY JOLLY, Circuit Judge:
Companion Property and Casualty Insurance Company (Companion)
appeals the district court’s dismissing, for lack of personal jurisdiction, its
complaint alleging legal malpractice against Anthony Palermo, James R. Raines,
and Breazeale, Sachse & Wilson, LLP (BSW) (collectively, Defendants).
Companion contends that the Defendants – all of whom are present in Louisiana
– are subject to either general or specific jurisdiction of the Texas court. We
AFFIRM.
Case: 12-11255 Document: 00512311028 Page: 2 Date Filed: 07/17/2013
No. 12-30227
I.
Companion is a South Carolina insurer with its principal place of business
there. Palermo and Raines are Louisiana residents and attorneys at BSW, a
Louisiana law firm.
In February 2006, a loaned employee to State Roofing, an insured of
Companion, was injured on the job in Louisiana; he subsequently brought a
personal injury action against State Roofing. In that lawsuit, State Roofing
pleaded Companion, who had issued a worker’s compensation policy to State
Roofing, as a third-party defendant, and it sought indemnification and
contribution from Companion.
Companion then retained Aspen Administrators, Inc. (Aspen), a Texas-
based third-party claims administrator, to oversee the employee’s claim. Aspen,
in turn, retained on Companion’s behalf the legal services of BSW to defend the
indemnification claim. From that point, BSW communicated solely with Aspen;
and it corresponded regularly with Aspen via email, telephone, and letter mails.
In August 2009, BSW determined a policy issued by a separate insurer
was the proper policy to cover the worker’s compensation claim, and it informed
State Roofing’s attorney of its determination. That October, however, BSW
negligently allowed a consent judgment to be entered against Companion in the
injured employee’s lawsuit, which stated Companion agreed fully to indemnify
State Roofing. That consent judgment was signed by BSW attorneys. As a
result, Companion incurred damages of over $400,000, which it alleges should
have been paid by another insurer to settle the worker’s compensation claim.
Companion sued Palermo, Raines, and BSW in federal district court in
Texas, asserting a claim for legal malpractice. It alleged that each defendant
was subject to personal jurisdiction in Texas because they had sufficient
minimum contacts there and the malpractice claim arose from or related to those
contacts. In the alternative, it alleged that each defendant had continuous and
systematic contacts in Texas; and further that venue was proper in the Northern
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District of Texas. Defendants filed a Federal Rule of Civil Procedure 12(b)(2)
motion to dismiss for lack of personal jurisdiction, and a Rule 12(b)(3) motion to
dismiss for improper venue.
That November, the district court dismissed the action without prejudice
for lack of personal jurisdiction and entered final judgment; it did not rule on the
improper-venue motion. Companion timely appealed.
II.
A.
A district court’s granting a Rule 12(b)(2) motion to dismiss for lack of
personal jurisdiction is reviewed de novo. Latshaw v. Johnston, 167 F.3d 208,
210-11 (5th Cir. 1999). In determining whether a defendant is subject to
personal jurisdiction, a district court must accept as true the uncontroverted
factual allegations in the plaintiff’s complaint, id.; a prima facie showing is all
that is required, Luv N’ Care, Ltd., 428 F.3d 465, 469 (5th Cir. 2006).
In diversity cases under 28 U.S.C. § 1332, the exercise of personal
jurisdiction over a non-resident defendant must comport with both federal
constitutional due process requirements and the long-arm statute of the state in
which the district court is located. Paz v. Brush Engineered Materials, Inc., 445
F.3d 809, 812 (5th Cir. 2006). Because Texas’s long-arm statute extends to the
limits of federal constitutional due process, only one inquiry is required.
Latshaw, 167 F.3d at 211.
Personal jurisdiction comports with due process when first, the defendant
has the requisite minimum contacts with the forum state and second, requiring
the defendant to submit to jurisdiction in the forum state would not infringe on
“traditional notions of fair play and substantial justice.” Asahi Metal Indus. Co.
v. Superior Court, 489 U.S. 102, 105 (1987); Internat’l Shoe Co. v. Washington,
326 U.S. 310, 316 (1945). A non-resident defendant establishes such minimum
contacts by purposefully availing himself of the benefits of the forum state, so
that he “should reasonably anticipate being haled into court” there. Rudzewicz,
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471 U.S. at 475; World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297
(1980).
Personal jurisdiction may be “specific” or “general”. For specific personal
jurisdiction, a plaintiff makes a prima facie showing of minimum contacts when
his claim arises from the defendant’s contact with the forum. Helicopteros
Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408 (1984). For general personal
jurisdiction, a plaintiff makes the requisite showing when that defendant’s
contacts are “continuous and systematic,” so that the exercise of jurisdiction is
proper irrespective of the claim’s relationship to the defendant’s contact with the
forum. Perkins v. Benguet Consol. Mining Co., 342 U.S. 437 (1952).
B.
Companion contends Defendants purposefully directed activities toward
Texas by transacting business, and communicating, with the Texas-based Aspen
regarding Companion’s defending a worker’s compensation indemnification
claim. It further contends Defendants’ ongoing business relationship with
Aspen, which spanned several years, is sufficient to support a finding of either
specific or general personal jurisdiction of the Texas forum. To substantiate its
contentions, Companion principally relies on, inter alia, Trinity Industries, Inc.
v. Myers & Associates, 41 F.3d 229 (5th Cir. 1995) and Steber v. Hunter, 221 F.3d
701 (5th Cir. 2000).
Defendants contend Trinity and Steber are distinguishable on their facts,
further arguing that personal jurisdiction in Texas is improper because South
Carolina-based Companion was their client, not Texas-based Aspen. In other
words, Defendants assert specific personal jurisdiction is lacking because any
injury flowing from legal malpractice of the Louisiana lawyers could not have
occurred in Texas. Finally, Defendants maintain their contacts in Texas will not
support general personal jurisdiction.
The general-personal-jurisdiction theory has no substance under these
facts. Defendants maintained no offices in Texas; they had no personnel
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stationed there; they paid no Texas taxes and had no registered agent for service
of process; and, although sustained over an appreciable period, transacted only
limited and discrete business there. See Benguet Consol., 342 U.S. 437.
C.
Thus, the only remaining question for us to decide is whether Defendants’
contacts with Texas are sufficient to submit them to specific personal jurisdiction
of the Texas court in this action. We now turn to the cases that Companion
relies on.
In Trinity, a Texas corporation brought suit in Texas against its Illinois-
based patent attorneys, alleging those attorneys had breached their fiduciary
duty by assisting a direct competitor of the corporation to secure a patent. 41
F.3d 229. The attorneys moved to dismiss for lack of personal jurisdiction,
contending the alleged breach of fiduciary duty occurred in Pennsylvania, and
thus did not arise from or relate to their contact with Texas, the forum state. Id.Noting the long-established and substantial relationship between the Illinois law
firm and the Texas corporation, this court disagreed; it held: “[a]ssuming
minimum contacts exist, as they do herein, a lawyer accused of violating his or
her professional obligations to a client is answerable not only where the alleged
breach occurred but also where the professional obligations attached.” Id. at 232(emphasis added).1
In Steber, two Texas plaintiffs sued their Louisiana attorneys in Texas
courts for legal malpractice and breach of fiduciary duty, alleging they had
received poor tax advice. 221 F.3d 701. One attorney moved to dismiss the
claim against him for lack of personal jurisdiction. Id. On appeal, our court held
the attorney was subject to specific personal jurisdiction in Texas because: he
1
Noting the use of the term “attached,” we think it clear that it cannot be reasonably
said BSW’s professional obligations attached in Texas. Rather, said obligations attached in
Louisiana, when and where BSW agreed to represent Companion, and in South Carolina,
when and where Companion agreed to be represented. In short, there was no attachment of
professional obligations in Texas between BSW and Aspen, a third party to this action.
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“purposefully availed himself of Texas laws” by directing tax advice toward a
Texas client; and the alleged malpractice occurred while the attorney was
physically present in Texas. Id. at 718.
The distinction between this action and Trinity is obvious and, we think,
material. Companion does not allege BSW or its attorneys owed fiduciary duties
of any sort to Aspen in Texas; nor does it allege Aspen suffered any injury; and
Aspen is not a party to this action. Although BSW’s contacts with Aspen are
factually related – and perhaps integral – to the substance of Companion’s claim,
the alleged malpractice does not arise from a breach of some duty owed to Aspen.
Cf. Tex. Civ. Prac. & Rem. Code § 17.042 (“a nonresident does business in this
state if the nonresident . . . commits a tort in whole or in part in this state”)
(emphasis added). Moreover, and unlike Steber, the alleged malpractice
occurred in Louisiana, not Texas. Under Steber and Trinity, the defendants in
this action more plausibly could be subject to personal jurisdiction where the
malpractice occurred (Louisiana) or the place where their professional
obligations attached (South Carolina). But in any event, the district court here
properly dismissed Companion’s complaint against these defendants for lack of
personal jurisdiction in a Texas forum in this legal malpractice claim.2
2
Our opinion is consonant with the holdings of other circuits, even though the
underlying facts are slightly different. For example, in Sawtelle v. Ferrell, 70 F.3d 1381 (1st
Cir. 1995), a New Hampshire plaintiff sued in New Hampshire attorneys he had retained in
Virginia and Florida. The district court granted defendants’ motion to dismiss the malpractice
claim for lack of personal jurisdiction; the First Circuit affirmed, holding inter alia: the claim
was unrelated to the attorneys’ contacts with New Hampshire, because the malpractice arose
only from decisions reached and actions taken in Florida and Virginia; and neither attorney
purposefully availed themselves of New Hampshire, because they were engaged by the
unilateral action of the plaintiff. In FDIC v. Malmo, 939 F.2d 535 (8th Cir. 1991), a Tennessee
attorney solicited the FDIC in Missouri to represent it in an action to collect on notes. The
FDIC sued the attorney in Missouri for intentional malpractice, arguing the attorney solicited
business from Missouri and the injury occurred there. The Eighth Circuit affirmed the district
court’s dismissing for lack of personal jurisdiction, and adopted with approval the latter’s
stating “sporadic mail correspondence alone usually does not constitute minimum contacts.”
Id. at 537. We doubt either court would find personal jurisdiction on the present facts. See
also Clemens v. McNamee, 615 F.3d 374 (5th Cir. 2012) (defendant not subject to personal
jurisdiction in Texas for defamation claim arising from interview with national sports
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III.
Companion contends venue under 28 U.S.C. § 1391 lies in the Northern
District of Texas. Although Defendants challenged Companion’s choice of venue
in district court, that issue was never decided. Appellate “powers are limited to
reviewing issues raised in, and decided by, the [district] court.” Masat v. United
States, 745 F.2d 985, 988 (5th Cir. 1984) (emphasis added). Further, because we
affirm the dismissal on personal-jurisdiction grounds, the venue issue is
unnecessary for a decision in this case.
IV.
For the foregoing reasons, the district court’s judgment, dismissing the
complaint for lack of personal jurisdiction, is
AFFIRMED.
publication when Texas was not “focal point of the story,” despite defendant’s having
physically traveled there to train plaintiff).
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