Nusret Dall. v. Regan

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NUSRET DALLAS LLC, Appellant v. STEVE REGAN, Appellee

No. 05-21-00739-CV

Court of Appeals of Texas, Fifth District, Dallas

June 23, 2023

On Appeal from the 68th Judicial District Court Dallas County Texas Trial Court Cause No. DC-21-00902

Before Justices Molberg, Pedersen, III, and Kennedy

MEMORANDUM OPINION

BILL PEDERSEN, III JUSTICE

In this accelerated appeal, Nusret Dallas LLC ("Nusret") seeks reversal of the trial court's interlocutory order granting the special appearance of appellee Steve Regan.^[1] We reverse the trial court's order. Regan seeks damages against Nusret pursuant to Rule 45 of the Texas Rules of Appellate Procedure. See Tex. R. App P. 45.^[2] We deny the motion for damages. We remand the case to the trial court for further proceedings.

BACKGROUND

In May 2019, BengeTexas, Inc., agreed with Nusret to provide construction services as general contractor.^[3] The agreement was for buildout and other work necessary for opening Nusret's new restaurant in Dallas, Texas. Regan was not party to the agreement. Nusret designated Regan, its employee, to facilitate and oversee the project on its behalf. Nusret alleged Regan was responsible for all aspects of the Dallas project, including overseeing payments to BengeTexas, reporting the project's progress to Nusret and ensuring that Nusret's rights and interests were protected. Nusret alleged, "In this role, Regan, traveled to and spent extended time on the ground in Dallas, Texas opening the Nusret Steakhouse." Nusret alleged that during Regan's time in Dallas, he established ongoing, long term relationships with Texas citizens and companies, including vendors, contractors, landlords, attorneys, and Nusret employees.

On January 5, 2021, counsel for BengeTexas first advised Nusret in a letter that BengeTexas had paid $182,880.50 to Regan. According to the letter, Regan told BengeTexas that Nusret had agreed to pay him $2,250.00 per week. Regan directed BengeTexas to wire payments for that amount-from funds it received from Nusret-to Regan's Penult Projects, Inc., bank account. Regan directed BengeTexas to not report the payments as BengeTexas had routinely reported other payments. Regan directed BengeTexas to send all communications via his Penult Projects, Inc., email address unless he specifically directed BengeTexas to email him via his Nusret email address. The letter stated BengeTexas was apparently "duped" by Regan and that Nusret ". . . may not have been aware of the weekly management fees that Steve [Regan] was receiving from Benge . . . ." Nusret did not authorize the payments, which BengeTexas referred to as Regan's possible "double dipping."

On January 21, 2021, BengeTexas filed a lawsuit against Nusret in Dallas County. BengeTexas alleged breach of contract, quantum meruit, and violation of the Prompt Payment Act. It also sought foreclosure of a mechanic's and materialman's lien, and attorney's fees.

Nusret filed a second amended verified counterclaim and second amended verified third-party petition against "counter-defendants" BengeTexas, Inc. d/b/a Benge General Contracting, Jim Benge, Steve Regan, and Penult Projects Inc. d/b/a/ Penult Consulting, Inc. Nusret alleged claims for violation of the Texas Construction Trust Fund Act, fraud, negligent misrepresentation, and conspiracy against all "counter-defendants." It alleged breach of contract and sought declaratory relief solely against BengeTexas.

Regan filed a special appearance with a supporting brief and affidavit. Nusret filed an affidavit and response to the special appearance. Regan filed a supplemental brief and affidavit in support of the special appearance. Smith attached a document captioned "Mutual Agreement to Arbitrate Claims" to his supplemental brief. The trial court heard argument on the special appearance, requested additional briefing, and took the matter under advisement. The trial court signed an order sustaining Regan's special appearance. Findings of fact and conclusions of law were not requested or filed. Nusret filed its accelerated appeal pursuant to Texas Rule of Appellate Procedure 28.1(a) and section 51.014(a)(7) of the Texas Civil Practice and Remedies Code. See Tex. R. App. P. 28.1(a); Civ. Prac. & Rem. § 51.014(a)(7).

PERSONAL JURISDICTION: APPPLICABLE LAW, PROCEDURE, AND STANDARDS OF REVIEW

Texas courts may exercise personal jurisdiction over a nonresident defendant if (1) the Texas long-arm statute permits exercising jurisdiction and (2) asserting jurisdiction satisfies constitutional due process guarantees. See Cornerstone Healthcare Grp. Holding, Inc. v. Nautic Mgmt. VI, L.P., 493 S.W.3d 65, 70 (Tex. 2016). The Texas long-arm statute reaches "as far as the federal constitutional requirements of due process will allow." Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 806 (Tex. 2002). Personal jurisdiction over a nonresident defendant satisfies constitutional due process guarantees when (1) the nonresident defendant has established minimum contacts with the forum state and (2) exercising jurisdiction comports with traditional notions of fair play and substantial justice. See M & F Worldwide Corp. v. Pepsi-Cola Metro. Bottling Co., 512 S.W.3d 878, 885 (Tex. 2017) (citing Walden v. Fiore, 571 U.S. 277, 283 (2014)). Minimum contacts are established when the nonresident defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking its laws, benefits, and protections. Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 657-58 (Tex. 2010).

A nonresident defendant's contacts with the forum state can give rise to general or specific jurisdiction. Luciano v. SprayFoamPolymers.com, LLC, 625 S.W.3d 1, 8 (Tex. 2021); Chen v. Razberi Techs., Inc., No. 05-19-001551-CV, 2022 WL 16757346, at *2 (Tex. App.-Dallas Nov. 8, 2022, no pet.) (mem. op.). General jurisdiction is established when the defendant has continuous and systematic contacts with the forum, rendering it essentially at home in the forum state, regardless of whether the defendant's alleged liability arises from those contacts. See TV Azteca v. Ruiz, 490 S.W.3d 29, 37 (Tex. 2016); Chen, 2922 WL 16757346, at *2. Moreover, a nonresident defendant's forum-state contacts may give rise to specific jurisdiction. See Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 575 (Tex. 2007). Specific jurisdiction is established if a defendant purposefully avails itself of the privilege of conducting activities within Texas and its alleged liability arises out of or relates to its contacts with the forum state. See id. at 576.^[4]

Procedurally, the supreme court explained the shifting burdens of proof in a special appearance. First, "the plaintiff bears the initial burden to plead sufficient allegations to bring the nonresident defendant within the reach of Texas's long-arm statute." See Kelly, 301 S.W.3d at 658. The defendant then "bears the burden to negate all bases of personal jurisdiction alleged by the plaintiff." Id. "[T]he defendant's . . . burden to negate jurisdiction is tied to the allegations in the plaintiff's pleading." Id. If the defendant, in its special appearance, presents evidence that disproves the plaintiff's jurisdictional allegations, then the plaintiff should present evidence in support of the petition's allegations. Id.

A defendant can negate jurisdiction on either a factual or legal basis. Id. at 659. Factually, the defendant can present evidence that it has no contacts with Texas, effectively disproving the plaintiff's allegations. See id. A defendant who fails to negate jurisdiction on a factual basis may attempt to negate it on a legal basis. See id. A defendant negates jurisdiction on a legal basis by showing that even if plaintiff's alleged facts are true, the evidence is legally insufficient to establish jurisdiction; the defendant's contacts with Texas fall short of purposeful availment; for specific jurisdiction, that the claims do not arise from the contacts; or that traditional notions of fair play and substantial justice are offended by the exercise of jurisdiction. See id.; Colmen LLC v. Santander Consumer USA, Inc., No. 05-17-00101-CV, 2017 WL 5022700, at *4 (Tex. App.-Dallas Nov. 3, 2017, no pet.) (mem. op.).

Rule 120a of the Texas Rules of Civil Procedure requires that a special appearance be determined on the pleadings, any stipulations by the parties, affidavits and attachments filed by the parties, results of discovery, and any oral testimony. See Tex. R. Civ. P. 120a(3); Kelly, 301 S.W.3d at 658 n.4 (while pleadings frame the jurisdictional dispute, they are not dispositive, and the court must consider additional evidence cited in Rule 120a(3), though this additional evidence merely supports or undermines allegations in the pleadings).

Whether a trial court has personal jurisdiction over a nonresident defendant is a question of law we review de novo. Old Republic Nat'l Title Ins. Co. v. Bell, 549 S.W.3d 550, 558 (Tex. 2018). If, as in this case, the trial court does not issue findings of fact and conclusions of law with its special appearance ruling, we imply all findings of fact necessary to support its ruling that are supported by the evidence. See BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002). When jurisdictional facts are undisputed, whether those facts establish jurisdiction is a question of law. See Old Republic Nat'l Title Ins. Co., 549 S.W.3d at 558.

ANALYSIS

Nusret brings two issues on appeal:

1. Did the trial court err by sustaining appellee's special appearance?

2. Is Steve Regan subject to personal jurisdiction in the State of Texas with respect to claims arising out of Regan's management and oversight of the construction and build-out of Nusret's

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