JPMorgan Chase Bank, N.A. v. Thomas N. Campbell, Christy W. Kolva, Foster Management LLC, Foster Timber, LTD, Neil F. Campbell Jr., Robin S. Rouse, Terrill A. Scatena, and Sabrina Rouse ( 2021 )

In The
Court of Appeals
Ninth District of Texas at Beaumont
________________
NO. 09-20-00161-CV
________________
JPMORGAN CHASE BANK, N.A., Appellant
V.
THOMAS N. CAMPBELL, CHRISTY W. KOLVA, FOSTER
MANAGEMENT, L.L.C., FOSTER TIMBER, LTD, NEIL F. CAMPBELL
JR., ROBIN S. ROUSE, TERRILL A. SCATENA, AND SABRINA ROUSE,
Appellees
________________________________________________________________________
On Appeal from the 284th District Court
Montgomery County, Texas
Trial Cause No. 18-12-15871-CV
________________________________________________________________________
MEMORANDUM OPINION
In this interlocutory appeal, JPMorgan Chase Bank, N.A., appeals the trial
court’s denial of its special appearance.1 In two issues, JPMorgan argues that its
appearance as a “nominal defendant” in a lawsuit in Texas did not waive its right to
challenge the court’s exercise of personal jurisdiction over JPMorgan concerning a
1
See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(7).
1
“new and separate claim” asserted in an amended petition, where the evidence does
not otherwise support personal jurisdiction over JPMorgan in a Texas court. For the
following reasons, we reverse the trial court’s order and remand to the trial court for
further proceedings in compliance with this opinion.
I. Background
Upon her father’s death, Letitia Foster Campbell inherited a 50% interest in
timber acreage located in Montgomery, San Jacinto, Polk, Trinity, and Walker
Counties. Letitia later transferred her interest into a trust entitled the Letitia Foster
Campbell 46 Trust (LFC 46 Trust), created by Declaration of Trust and Agreement
filed in California in 1946. Letitia’s son, Neil, Sr. was named as Trustee. After the
death of Letitia’s children, the beneficial interest in the trust was allocated among
Letitia’s grandchildren as follows: 25% for Robin S. Rouse, 25% for Terrill A.
Scatena, 16.66% for Neil Campbell, Jr., 16.66% for Christy Kolva, and 16.66% for
Thomas Campbell. The Trust will reportedly terminate upon the deaths of Letitia’s
grandchildren, 2 and the presumptive remainder beneficiaries of the trust are Letitia’s
great-grandchildren, Ben Campbell, Ashley Gates, Isabelle Campbell, Sabrina
Rouse, Morgan Peterson, and Ryan Peterson. 3 JPMorgan is the current Trustee of
the LFC 46 Trust.
2
Thomas Campbell was not a measuring life under the Trust.
3
Robin Rouse, Sabrina S. Rouse, and Terrill Scatena filed an amicus brief
stating they are not parties to this appeal.
2
A California state court order modified the Trust to create business entities
designed to allow the family to manage the timber holdings through closely held
business entities, rather than having a corporate trust manage these timber holdings.
A Texas limited partnership, Foster Timber, and a Texas limited liability company,
Foster Management, were formed to own and manage the timberlands. Under this
arrangement, the Trustee would contribute Trust timber property to the limited
partnership, which would be owned 1% by Foster Management as general partner
and 99% by the Trustee of the Trust as a limited partner of the LLC. The five
grandchildren hold membership interests in Foster Management, L.L.C. Per the
partnership agreement, Foster Management has “full, exclusive, and complete
discretion in the management and control of Partnership affairs and business.” The
LFC 46 Trust, is the sole limited partner of Foster Management and, “shall not take
any part in the management or control of the business[.]”
In 2018, Christy Kolva and Thomas Campbell sent a dispute notice to Robin,
Terrill, and Neil, and sought, among other things, the dissolution of Foster
Management, L.L.C. due to “[g]eneral dysfunction, [d]issension, and [d]eadlock[.]”
This dissolution was conducted under the ADR of the partnership agreement. In
December 2018, Thomas, Christy, Foster Management, and Foster Timber filed suit
against Neil, Robin, Terrill, Sabrina, and JPMorgan, Trustee as a “Nominal
Defendant” asking for declaratory relief and injunctive relief from the court pending
3
the ADR process. JPMorgan filed a “Nominal Defendant’s Answer[.]” In April
2019, the trial court stayed the case and ordered arbitration. In August 2019,
JPMorgan then filed a Petition for Declaratory Judgment arguing that it, as a limited
partner, should not be required to participate in the arbitration. Plaintiffs Thomas,
Christy, Foster Timber and Foster Management disagreed and asked the trial court
to deny JPMorgan’s request. They also asked that the trial court order JPMorgan to
comply with the arbitration provisions. Subsequently, JPMorgan sought an
emergency protective order with the trial court.
The Plaintiffs then filed the first of two counterclaims against JPMorgan. In
the first counterclaim, the Plaintiffs filed a first amended answering statement,
motion to compel compliance with arbitral orders . . . and counterclaims against
JPMorgan Chase Bank, N.A.” In its counterclaims, the Plaintiffs argued that
JPMorgan’s attempts to avoid the arbitration breached its fiduciary duty to the
Trust. 4 In March of 2020, Plaintiffs filed an application with the trial court to confirm
the arbitration award and included another counterclaim against JPMorgan seeking
to modify and reform the LFC 46 Trust. That counterclaim is the subject of this
appeal. In response to the amended counterclaim, JPMorgan filed a special
appearance contesting the trial court’s jurisdiction to consider the subject of trust
4
The trial court later dismissed these claims after JPMorgan filed a Motion to
Dismiss pursuant to the Texas Citizens Participation Act. See Tex. Civ. Prac. & Rem.
Code Ann. § 27.003. Neither party has appealed this order.
4
modification. On June 3, 2020, the trial court held a hearing regarding JPMorgan’s
special appearance and plea to the jurisdiction. 5 After the hearing, the trial court
denied JPMorgan’s special appearance finding that
J.P. Morgan Chase generally appeared in this Court on January 9, 2019
via a filed general denial, as well as by filing its own Petition for
Declaratory Judgment on August 1, 2019. As a result, the Court finds
that J.P. Morgan Chase waived its Special Appearance.
In a separate order, the trial court granted JPMorgan’s plea to the jurisdiction with
regard to these same claims. JPMorgan then timely appealed the trial court’s order
denying its special appearance. Foster also timely filed a cross appeal of the trial
court’s “Order on [JPMorgan] Chase’s Special Appearance[]” (“June 4th Order”),
being the same order from which JPMorgan appeals herein. 6
II. Personal Jurisdiction
JPMorgan challenges the trial court’s ruling that it waived its right to
challenge the trial court’s exercise of personal jurisdiction over JPMorgan with
regard to a new and independent counterclaim filed in March 2020 by an amended
petition, after JPMorgan had entered a general appearance in the underlying lawsuit
as a nominal defendant and filed a declaratory judgment action seeking affirmative
5
The trial court heard jointly the special appearances filed by JPMorgan and
Defendants Neil F. Campbell Jr., Robin S. Rouse, Terrill A. Scatena, and Sabrina
Rouse. Only the interlocutory appeal of the trial court’s order denying JPMorgan’s
special appearance is before the Court.
6
We refer to the appellees collectively as “Foster.”
5
relief in the lawsuit. JPMorgan further contends the amended pleadings and evidence
do not support the trial court’s exercise of personal jurisdiction over JPMorgan
regarding the new and independent claim.
A. Standard of Review
Whether a court has personal jurisdiction over a defendant is a question of law
we review de novo. See Spir Star AG v. Kimich, 310 S.W.3d 868, 871 (Tex. 2010).
When, as here, a trial court does not issue findings of fact and conclusions of law in
support of its ruling, we presume the trial court resolved all disputed facts in a
manner that favors its ruling. See id. at 871–72; Retamco Operating, Inc., v. Republic
Drilling Co., 278 S.W.3d 333, 337 (Tex. 2009); see also BMC Software Belg., N.V.
v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002).
B. Waiver
First, we will address whether JPMorgan, having made a general appearance
in the lawsuit and by filing the declaratory judgment action, waived its right to
challenge personal jurisdiction by special appearance after Plaintiffs filed a
counterclaim asserting a “new and independent” claim. In denying JPMorgan’s
special appearance, the trial court found that JPMorgan had waived its right to
contest personal jurisdiction by special appearance when it generally appeared in the
underlying lawsuit and by seeking declaratory relief.
6
Rule 120a allows a party to file a special appearance in any severable action
of a lawsuit. See Tex. R Civ. P. 120a (“A special appearance may be made as to an
entire proceeding or as to any severable claim involved therein.”).
A claim is properly severable if (1) the controversy involves more than
one cause of action, (2) the severed claim is one that would be the
proper subject of a lawsuit if independently asserted, and (3) the
severed claim is not so interwoven with the remaining action that they
involve the same facts and issues.
F.F.P. Operating Partners, L.P. v. Duenez, 237 S.W.3d 680, 693 (Tex. 2007)
(citation omitted).
In response to Plaintiffs’ counterclaim for the trust modification, JPMorgan
filed a special appearance contesting the trial court’s exercise of personal jurisdiction
over it regarding that specific claim. This was filed before any other pleading after
Foster filed the trust modification counterclaim. JPMorgan argues that although it
sought declaratory relief under the initial lawsuit, the trust modification is a
severable action under 120a, and therefore, it timely filed its special appearance. See
Tex. R. Civ. P. 120a. Foster expressly advocates for and admits in Plaintiffs’ Rule
41 Motion to Sever Application to Confirm Final Arbitration Award filed in this
cause that the Counterclaim for Trust Modification is a severable action stating
“[p]laintiffs’ [a]pplication to confirm the Final Award under the Texas Arbitration
Act is also separate and distinct from their Counterclaim for Trust Modification
under the Texas Property Code . . . [p]laintiffs’ claim for trust modification was not
7
arbitrated but rather for [the trial court] to decide in the first instance.” See
Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 905 (Tex. 2002) (citations
omitted) (stating a judicial admission must be “‘clear, deliberate, and unequivocal[,]
occurs when an assertion of fact is conclusively established in live pleadings, making
the introduction of other pleadings or evidence unnecessary, [and] relieves [an]
adversary from making proof of the fact admitted but also bars the party himself
from disputing it.’”). Additionally, actions of a limited partner and the administration
of a trust are “distinct concepts[,]” supporting the severability of the claims under
Rule 120a. Gonzales v. De Leon, No. 04-14-00751-CV, 2015 WL 5037396, at *7
(Tex. App.—San Antonio Aug. 26, 2015, pet. dism’d) (mem. op.) (explaining that
“there is no evidence to establish that the administration of the . . . Trust affects
. . . the Alexander the Limited Partnerships”); see also Tex. R. Civ. P. 120a.
Therefore, we hold that the trust modification claim is a severable action, and that
JPMorgan did not waive its challenge to the trial court’s exercise of personal
jurisdiction over it by appearing in and seeking declaratory relief in the underlying
arbitration suit.
8
C. Specific Jurisdiction
Because the parties do not challenge general jurisdiction, we only address the
question of specific jurisdiction. 7
First, JPMorgan contends that Foster did not plead sufficient facts as to invoke
long-arm jurisdiction under Texas Rule of Civil Procedure 120a. See Tex. R. Civ. P.
120a; see also Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 660 (Tex. 2010).
(in reviewing long-arm jurisdiction “the requirements of due process must be upheld,
particularly the connection between the defendant, the forum, and the litigation in
the specific jurisdiction context.”).
A plaintiff has the initial burden to plead sufficient allegations to bring a
nonresident defendant within the provisions of the long-arm statute. Moncrief Oil
Int’l, Inc. v. OAO Gazprom, 414 S.W.3d 142, 149 (Tex. 2013); Kelly, 301 S.W.3d
at 658. If the plaintiff pleads sufficient jurisdictional allegations, the nonresident
defendant filing a special appearance then has the burden to negate all bases of
personal jurisdiction alleged by the plaintiff. Moncrief Oil, 414 S.W.3d at 149; BMC
Software, 83 S.W.3d at 793. Once the defendant produces evidence negating
jurisdiction, the burden shifts to the plaintiff to establish the court’s jurisdiction over
the defendant. Kelly, 301 S.W.3d at 658–59. If, however, a plaintiff fails to plead
7
In its brief, Foster does not argue that JPMorgan is subject to personal
jurisdiction under general jurisdiction, but rather argues that JPMorgan purposely
availed itself to Texas by its activities with the Trust.
9
sufficient facts to bring the defendant within the long-arm statute, the defendant must
only prove it does not live in Texas to negate jurisdiction. Id.; Booth v. Kontomitras,
485 S.W.3d 461, 476 (Tex. App.—Beaumont 2016, no pet.). In determining whether
the plaintiff met its initial burden, we may consider the plaintiff's original pleadings
as well as its response to the defendant’s special appearance. Touradji v. Beach
Capital P’ship, L.P., 316 S.W.3d 15, 23 (Tex. App.—Houston [1st Dist.] 2010, no
pet.).
In its trust modification counterclaim, Foster alleges personal jurisdiction
facts regarding the grandchildren and great grandchildren of Letitia but fails to
include JPMorgan in those allegations. Rather, the allegations against JPMorgan
pertain to venue.
19. Venue is also proper in Montgomery County because JPMorgan
fixed venue with regard to trust issues in its Petition for Declaratory
Judgment, filed on August 1, 2019, to which Plaintiffs’ request for trust
modification is a counterclaim. TEX. CIV. PRAC. & REM. CODE §
15.062 (“Venue of the main action shall establish venue of a
counterclaim ….”).
20. Venue is also proper in this Court because this Court previously
compelled the parties to arbitrate the suit, and stayed the action pending
the issuance of a Final Award, which has now been issued. As set out
below, Plaintiffs seek the confirmation of said Final Award, and the
conversion of the Final Award into a final judgment. Further, as set out
below, Plaintiffs seek a modification of the LFC46 in order to give
effect to, and implement, the Final Award.
21. Through their previous acts and omissions, all Defendants have
previously agreed and consented to this Court’s proper venue of this
matter. For instance, the Scatena Defendants previously consented to
10
this Court’s proper venue over a temporary injunction hearing that took
place in January 2019, and affirmatively sought various forms of relief
in this Court, including an order compelling arbitration and staying the
case pending arbitration. For its part, Defendant JPMorgan entered into
a binding Rule 11 Agreement, filed of record with the Court, in which
JPMorgan agreed to comply with, and not to interfere with, the
alternative dispute resolution process set out in Article 13 of the
Regulations of Foster Management. JPMorgan even agreed to a
modification of that ADR Process, including an informal mediation
conducted through outside counsel, in the first instance. Further,
Defendant JPMorgan has sought relief in this Court, including through
its Petition for Declaratory Judgment dated August 1, 2019, which
expressly fixed venue in this Court. JPMorgan also appeared through
counsel at two separate hearings in this Court without any objection to
venue.
In support of its counterclaim, Foster alleges jurisdiction to modify the LFC 46 Trust
exists under Texas Property Code section 112.054. 8 See generally Tex. Prop. Code
Ann. § 112.054 (allowing for court to modify or terminate trust if its purposes have
become impossible due to unanticipated circumstances by settlor). Foster states that
this modification is necessary to “further the Trust’s purposes because of
circumstances not known to or anticipated by the settlor under Section 112.054(2).”
In the same petition, Foster identifies that Foster Timber owns thousands of acres of
timber in Texas, Foster Management owns 1% of Foster Timber and is comprised
of the Letitia’s five grandchildren, and that JPMorgan is the LFC 46 Trustee, and the
8
“Trusts are governed by Texas Trust Code, found within the Texas Property
Code[,] and [t]hat code includes a specific provision for the judicial modification of
a trust.” In re Troy S. Poe Tr., 591 S.W.3d 168, 176 (Tex. App.—El Paso 2019, pet.
filed) (citing Tex. Prop. Code Ann. § 112.054).
11
Trust owns 99% of Foster Timber. Foster alleges that JPMorgan advises Foster and
cited to the irreconcilable differences between the grandchildren in Foster
Management leading to JPMorgan recommending the dissolution of the LFC 46
Trust and to let each family branch manage their ownership of the timberland.
Ultimately, the parties could not agree on the dissolution of the timberlands and
Trust which led to arbitration and this litigation. The arbitrator ordered the
dissolution of Foster Timber and Foster Management. Foster alleges that JPMorgan
has made it clear it will liquidate the assets in the Foster entities then invest those
proceeds in marketable securities the JPMorgan will solely control. Foster further
alleges such liquidation of Trust assets would risk incurring large tax liabilities.
More simply, when the LFC 46 Trust was created and later modified, it was
unanticipated that the grandchildren as Foster Management would be unable to agree
and properly manage the timberlands, necessitating the sale of the timberlands per
arbitration. They further allege that modification of the trust is necessary to avoid
“waste of Trust resources” by JPMorgan’s sale of the timber.
Foster’s argument regarding venue and facts about attempting to circumvent
waste to the Trust are insufficient to invoke long-arm jurisdiction. In fact, Foster’s
petition clearly states that JPMorgan “has repeatedly indicated that it does not
manage timber and will not hold timber assets in the LFC 46 Trust.” None of these
statements demonstrate that JPMorgan “does business” in Texas as required by the
12
long-arm statute. See Energy Search Co., Inc. v. RLI Ins. Co., No. 14-18-00747-CV,
2019 WL 6711427, at *2 (Tex. App.—Houston [14th Dist.] Dec. 10, 2019, no pet.)
(mem. op.) (explaining that none of the pleaded facts demonstrated the nonresident
defendant did business in Texas); see also Kelly, 301 S.W.3d at 660 (plaintiff failed
to establish long-arm jurisdiction under 120a because the pleaded facts failed to
demonstrate the defendant committed torts in Texas). But our review of Foster’s
later filed response to JPMorgan’s special appearance elaborates JPMorgan’s
contacts with Texas. See Munz v. Schreiber, No. 14-17-00687-CV, 2019 WL
1768590, at *5 n.4 (Tex. App.—Houston [14th Dist.] Apr. 23, 2019, no pet.) (mem.
op.) (considering plaintiff’s response to a special appearance in addition to pleadings
in determining bases for personal jurisdiction). In its response, Foster argues that
JPMorgan has benefitted from the sale of timber located in Texas as a trustee.
JPMorgan solicited business from the beneficiaries stating it would “maximize the
value of the Texas property,” and holds the “responsibilities of an owner[.]” Foster
states that JPMorgan participated in business meetings of Foster Management and
sent representatives to Texas on “nearly half a dozen occasions[,]” meeting with
Christy in her Conroe home. We conclude that Foster’s pleadings, including its
response to the special appearance, allege sufficient facts that required JPMorgan to
file a sworn denial or its equivalent responding to its allegations that JPMorgan
13
“does business” in Texas. See Tex. Civ. Prac. & Rem. Code Ann. § 17.042(1); Tex.
R. Civ. P. 120a(1).
While we conclude that Foster alleges facts that overcome the first prong of
the analysis, that is not necessarily enough to satisfy due process as required under
the long-arm statute. “Asserting personal jurisdiction comports with due process
when (1) the nonresident defendant has minimum contacts with the forum state, and
(2) asserting jurisdiction complies with traditional notions of fair play and
substantial justice.” Moncrief, 414 S.W.3d at 149–50 (citations omitted).
Recently the United States Supreme Court addressed specific jurisdiction.
Specific jurisdiction is different [than general jurisdiction]: It covers
defendants less intimately connected with a State, but only as to a
narrower class of claims. The contacts needed for this kind of
jurisdiction often go by the name “purposeful availment.” The
defendant, we have said, must take “some act by which [it] purposefully
avails itself of the privilege of conducting activities within the forum
State.” The contacts must be the defendant’s own choice and not
“random, isolated, or fortuitous.” They must show that the defendant
deliberately “reached out beyond” its home—by, for example,
“exploi[ting] a market” in the forum State or entering a contractual
relationship centered there. Yet even then—because the defendant is
not “at home”—the forum State may exercise jurisdiction in only
certain cases. The plaintiff’s claims, we have often stated, “must arise
out of or relate to the defendant’s contacts” with the forum. Or put just
a bit differently, “there must be ‘an affiliation between the forum and
the underlying controversy, principally, [an] activity or an occurrence
that takes place in the forum State and is therefore subject to the State’s
regulation.’”
Ford Motor Co. v. Mont. Eighth Jud. Dist. Ct., 141 S. Ct. 1017, *1024–25 (2021)
(citations omitted). For a Texas court to exercise specific jurisdiction, the
14
nonresident defendant must have made minimum contacts with Texas by
purposefully availing itself of the privilege of conducting business here, and its
liability must have arisen from or be related to those contacts. Moki Mac River
Expeditions v. Drugg, 221 S.W.3d 569, 576 (Tex. 2007). “[T]here must be a
substantial connection between those contacts and the operative facts of the
litigation.” Id. at 585. A “purposeful availment” inquiry involves three parts: (1)
consideration of the defendant’s contacts with the forum, but “not the unilateral
activity of another party or a third person[;]” (2) “the contacts relied upon must be
purposeful rather than random, fortuitous, or attenuated[;]” and (3) the defendant
must seek a benefit, advantage, or profit by availing itself of the jurisdiction. Id. at
575 (citations omitted). “In contrast, a defendant may purposefully avoid a particular
forum by structuring its transactions in such a way as to neither profit from the
forum’s laws nor subject itself to jurisdiction there.” Id. (citing Burger King Corp.
v. Rudzewicz, 471 U.S. 462, 472 (1985)).
Along with the allegations in the counterclaim pleaded by Foster, the trial
court held a hearing regarding JPMorgan’s special appearance in June 2020. Sabrina
Rouse, daughter of beneficiary Robin Rouse, testified that she is currently the
Secretary of Foster Management and has been since 2018. Sabrina testified that
when the LFC 46 Trust was created, Letitia lived in California, and all the
beneficiaries lived in California at the time of the modification. Sabrina stated that
15
when the LFC 46 Trust was modified in the 1990’s, the modification was ordered
through a California court. The Trust has never been administered in the State of
Texas. According to Sabrina, the money from Foster Timbers “goes 99 percent to
the LFC 46 Trust and 1 percent to Foster Management[.]” JPMorgan then distributes
the money to the beneficiaries of the Trust in compliance with its terms. Sabrina
testified that JPMorgan as the Trustee has distributed money from the Trust to her
mother. Sabrina confirmed that Foster Management has staff in Texas, Georgia,
California, and Arizona, and that all timber harvested by Foster Timber comes from
Texas. She explained that “historically” Foster Management’s foresters have been
located in Conroe. Sabrina also clarified that although the trust has Texas trees as
assets, it has other assets including stocks and marketable securities held in
companies throughout the world and not exclusively in Texas. She testified that once
the funds are received by JPMorgan as the Trustee in Illinois, neither she nor her
mother, as a beneficiary of the LFC 46 Trust, have any control over the activities of
the LFC 46 Trust, nor to her knowledge does the administration of the Trust “have
anything . . . to do with the state of Texas[.]”
Christy Kolva testified she is one of the Plaintiffs and lives in Montgomery
County, Texas. She is Letitia Foster’s grandchild and a beneficiary of the LFC 46
Trust. For over 20 years, she served as Treasurer of Foster Management. Documents
were admitted at trial that showed a handwritten notation titled “Texas Trust” with
16
the date April 7, 1950 at the top of the LFC 46 Trust, which Christy identified as her
grandfather, Letitia’s husband’s handwriting. She also testified that the document
with the handwritten notation titled “Texas Trust” was filed and recorded in Harris
County in 1952. Christy stated that the LFC 46 Trust has connections to Texas
because “[a]ll the assets, with the exception of a little over a million in financial
assets, are in the state of Texas.” She stated the family “always talked about the
Texas property, Texas timberlands[,]” and that her grandmother and grandfather had
no connection to Illinois, where the Trust is currently administered. According to
Christy, before the Trust was modified in the 1990’s, JPMorgan solicited her father,
the Trustee at that time, and sought to be named as Successor Trustee. A JPMorgan
representative sent correspondence to her father offering specific assistance
regarding the Trust modification in the 1990’s. Christy testified that the 1990’s Trust
modification resulted in the formation of Foster Timber and Foster Management to
help control the activities of the successor corporate Trustee once her father stepped
down. A California Court modified the Trust to make two Texas entities for the
Texas timber and gave Foster Management a 1 percent interest and LFC 46 Trust a
99 percent interest in Foster Timber. The modification required the Trustee to give
“Trust timber property to the [limited partnership] sufficient to entitle him in his
fiduciary capacity to a 99 percent interest in the [limited partnership].” Christy
testified that the principal offices of Foster Management are in Conroe, Montgomery
17
County, Texas, and Foster Timber and Foster Management are organized under
Texas laws. According to Christy, from a “practical standpoint” the revenue from
the timber operations flows from the partnership to the Trust, then to the
beneficiaries.
JPMorgan argues that it did not purposely avail itself in Texas because the
Trust was not created or modified in Texas, it administers the Trust in Illinois and
never in Texas, the beneficiaries live in California, and one beneficiary’s move to
Texas does not demonstrate that it is doing business in Texas. JPMorgan also
contends that although the timber is located in Texas, JPMorgan does not hold legal
title to the land, but that “an interest in a partnership for the benefit of third parties
does not constitute ‘purposeful activity.’” We agree.
“A nonresident who has purposefully availed himself of the privileges and
benefits of conducting business in the state has sufficient contacts with the state to
confer personal jurisdiction.” Loya v. Taylor, No. 01-14-01014-CV, 2016 WL
6962312, at *2 (Tex. App.—Houston [1st Dist.] Nov. 29, 2016, pet. denied) (mem.
op.) (citation omitted). In Loya, the 1st Court of Appeals held that there were not
sufficient minimum contacts to demonstrate that Texas had specific jurisdiction over
a foreign trustee. See id. at *8. The court noted that although the plaintiff alleged the
trustee engaged in multiple contacts in Texas, including executing contracts and
being a signatory to a shareholder agreement, the court stated it was not “concerned
18
with the quantity of the contacts; instead, we are concerned with the nature and
quality of those contacts.” Id. The court found that the trustee was merely passive in
its presence, its “participation” was passive, and it existed for the benefit of the
shareholders and did not conduct business in Texas. See id. Similarly, JPMorgan is
a trustee with a passive role. Testimony showed that although JPMorgan owns 99%
of Foster Timber, the operations of Foster Management and the decisions regarding
Foster Timber remained with the five grandchildren. Exhibits admitted during the
hearing show JPMorgan solicited Christy’s father to become successor trustee, but
our review of the exhibits does not demonstrate that JPMorgan was attempting to
conduct business in Texas. In each letter, JPMorgan outlines its duties and limits its
activities stating that it would not participate in the day-to-day operational activities
and that it was going to act as a “company director, acting in a consulting or review
role rather than initiating or directly conducting such negotiations.” And while there
may have been contacts by JPMorgan representatives in Texas since the 1990’s Trust
modification, these actions do not demonstrate that JPMorgan was doing business in
Texas to show purposeful availment. See RE Family Tr. v. Conestoga Settlement Tr.,
No. 04-12-00325-CV, 2012 WL 6030266, at *3 (Tex. App.—San Antonio Dec. 5,
2012, no pet.) (mem. op.) (our focus is not on the number of contacts a defendant
has with Texas, but rather the quality of contacts).
19
Testimony regarding Christy’s residency in Texas also does not sway our
opinion. As Loya noted, the presence of a beneficiary in the state does not in itself
confer jurisdiction over a trustee. See 2016 WL 6962312, at *8. Significantly,
Christy testified that when the Trust was created, no beneficiary lived in Texas, and
she only moved to Texas in 2014. See Lisitsa v. Flit, 419 S.W.3d 672, 681 (Tex.
App.—Houston [14th Dist.] 2013, pet. denied) (explaining in a jurisdictional
analysis it is irrelevant that the plaintiff moved to Texas in the midst of a preexisting
relationship between the parties).
Foster argues that the timber is in Texas and that subjects JPMorgan to
personal jurisdiction in Texas. In its brief to the Court, Foster argues that “a
nonresident holding Texas-real-property interests is subject to Texas jurisdiction
where that nonresident ‘enter[s] into a business relationship to share in the profits
and losses associated with’ Texas real estate.” The fact that the timber, being the
majority of the Trust corpus, is located in Texas does not in itself demonstrate
purposeful availment. In Alexander v. Marshall, the 14th Court of Appeals held that
Texas has specific jurisdiction over a trust when the trust was settled in Texas, all
the trust’s corpus was located in Texas, and the trust was run administratively in
Texas. No. 14-18-00425-CV, 2021 WL 970760, at *6 (Tex. App.—Houston [14th
Dist.] Mar. 16, 2021, no pet.) (mem. op.). Moreover, the former trustee was a Texas
resident and appointed the new trustees in Texas. See id. These actions, according to
20
our sister court, are “additional facts [that] support a conclusion that the co-trustees
have reached out beyond their state and created continuing relationships and
obligations with citizens of another state.” Id. The record before us is
distinguishable. While a portion of the Trust corpus in the form of real property is
located in Texas, as well as the administrative offices of Foster Timber, the Trust is
not involved in Foster Timber’s operation and does not perform its administrative
functions in Texas. While Foster points to JPMorgan’s contacts in Texas, Christy
testified that Paul Cress, the current administrator of the Trust for JPMorgan, and
other JPMorgan points of contact for LFC 46 Trust distributions, were never located
in Texas. Although Christy testified that she had regular contact with JPMorgan in
Texas, her testimony did not show that such contacts were for the Trust’s
administration. Additionally, any evidence presented merely identifying the LFC 46
Trust as a “Texas Trust” as dictated by the handwritten notation at the top of the
Trust document and evidence it was filed in Harris County in the 1950’s, does not
overcome testimony from both sides that: (1) Letitia created this Trust in California;
(2) while she resided in California; and (3) the 1990’s Trust modification occurred
in California by agreement of all the beneficiaries who all lived in California when
JPMorgan became Trustee.
Finally, Foster’s argument that JPMorgan benefitted from the sale of the
timber because it was paid from the funds from timber sales also lacks merit. See
21
Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 788 (Tex. 2005)
(internal quotations omitted) (“[F]inancial benefits accruing to the defendant from
a collateral relation to the forum State will not support jurisdiction if they do not
stem from a constitutionally cognizable contact with that State.”); GJP, Inc., v.
Ghosh, 251 S.W.3d 854, 869 (Tex. App.—Austin 2008, no pet.) (“The bare fact that
a defendant receives some benefit, advantage, or profit from Texas does not
necessarily mean that it has purposefully availed itself of the state.”). Based on the
record before us, we cannot say that JPMorgan acquired a “benefit, advantage, or
profit” by availing itself of the forum. Moncrief, 414 S.W.3d at 154. The Texas
Supreme Court explained this is “implied consent” and a nonresident consents to the
jurisdiction by “invoking the benefits and protections of a forum’s laws.” Id. The
evidence does not demonstrate JPMorgan’s passive presence as the Trustee invoked
the “benefits or protections” of Texas law. The Trust was not modified in Texas, the
majority of beneficiaries do not live in Texas, the Trustee does not maintain its place
of business in Texas, the Trust is not administered in Texas, nor does the Trust
physically own the timberlands in Texas. Further, while evidence demonstrated that
JPMorgan owns a 99% partnership share in Foster Timber, it expressly has no role
in the day-to-day management of that partnership, as it is run by Foster Management,
which is comprised of family members. Additionally, there are other diversified
assets that comprise the Trust corpus, and its existence is not solely dependent on
22
timber in Texas. Compare to Zac Smith & Co. v. Otis Elevator Co., 734 S.W.2d 662,
665–66 (Tex. 1987) (The Texas Supreme Court has held there was personal
jurisdiction over nonresidents with no physical ties to Texas, because joint venture
of the parties “sole purpose of building a hotel in Texas, and the elevator contract is
related directly to the hotel enterprise,” and it was not unreasonable for the parties
to anticipate being hailed into court in Texas).
We conclude that the trial court erred in denying JPMorgan’s Special
Appearance because the counterclaimants failed to meet their burden to establish
that the Texas court had personal jurisdiction over JPMorgan with regard to the trust
modification counterclaim. 9
III. Conclusion
Having sustained JPMorgan’s first issue regarding personal jurisdiction, we
reverse the order of the trial court finding that JPMorgan waived personal
jurisdiction and render that the trial court may not exercise personal jurisdiction over
JPMorgan with regard to Foster’s counterclaim for trust modification. 10
9
As we have determined that JPMorgan does not have sufficient minimum
contacts with Texas, we need not address whether those contacts “compl[y] with
traditional notions of fair play and substantial justice.” Moncrief Oil Int’l, Inc. v.
OAO Gazprom, 414 S.W.3d 142, 149–50 (Tex. 2013) (citations omitted).
10
Foster directs this Court’s attention to appellate rule 29.6 allowing a court
to consider “[w]hile an appeal from an interlocutory order is pending, on a party’s
motion or on the appellate court’s own initiative, the appellate court may review the
following: [] further appealable interlocutory order concerning the same subject
matter; and [] any interlocutory order that interferes with or impairs the effectiveness
23
REVERSED AND REMANDED.
________________________________
CHARLES KREGER
Justice
Submitted on March 16, 2021
Opinion Delivered June 24, 2021
Before Kreger, Horton, and Johnson, JJ.
of the relief sought or that may be granted on appeal.” Tex. R. App. P. 29.6(a). While
this Court recognizes its ability to review other orders under this rule, the order
granting JPMorgan’s plea to the jurisdiction is not an appealable interlocutory order
under subsection (a) and Foster has not directed this court’s attention as to why the
order granting the plea to the jurisdiction “interferes with or impairs the effectiveness
of the relief sought or that may be granted on appeal[]” under subsection (2). The
trial court’s order granting JPMorgan’s plea to the jurisdiction does not interfere
with our review of JPMorgan’s personal jurisdiction. See Trenz v. Peter Paul
Petroleum Co., 388 S.W.3d 796, 805–07 (Tex. App.—Houston [1st Dist.] 2012, no
pet.) (A court of appeals jurisdiction does not extend to subject matter jurisdiction
review with an interlocutory challenge under section 51.014(a)(7) of the Texas Civil
Practice and Remedies Code absent an expressly enumerated grant of interlocutory
jurisdiction.); see also Tanguy v. Laux, 259 S.W.3d 851, 855 (Tex. App.—Houston
[1st Dist.] 2008, no pet.) (citations omitted) (noting it has jurisdiction to consider
another interlocutory order “because it is a further appealable interlocutory order
that concerns the same subject matter.”) (emphasis added); see also Dombart v.
Madla, No. 04-15-00605-CV, 2016 WL 1039106, at *2 (Tex. App.—San Antonio
Mar. 16, 2016, no pet.) (mem. op.) (declining to review an interlocutory appeal under
rule 29.6 because the trial court’s order does not interfere with the appellate court’s
ability to review the relief sought); Adams v. Harris Cty., No. 04-15-00287-CV,
2015 WL 8392426, at *4 (Tex. App.—San Antonio Dec. 9, 2015, no pet.) (mem.
op.) explaining the appellant’s interlocutory appeal is not authorized by section
51.014(a)(8) where plea to jurisdiction was not by a governmental unit). Thus, this
Court declines Foster’s invitation to consider any other order of the trial court for
which a notice of appeal was not timely and properly filed.
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