Opinion filed No vember 13, 20 09



### In The 

# Eleven th Court of Appeals

____________ 

### No. 1 1- 08 -0 00 57 -CV

____ ____ __ IRN RE ALT Y C ORP ORA TION, Ap pellant

V.
VIC ENT A H ERN AN DEZ , A ppellee

On App eal from the 32nd District Court

Nolan Coun ty, Texas Trial Court Cause No. 18,704

O P I N I O N Vic e n ta H e r n an d e z f il e d s u it a g a in s t I RN Re a lt

y Co r p o r a ti o n( I RN Co r

p
. ) an d Sa lv a d or Nedue lan, alleg ing va

rious ca u s es o f action st emming f rom the purc hase of

rea l estate in Nolan County . Nedue lan did not file an a nswer or a notice of

appea l. I RN Corp., a California corpor ation, fi l eda s p ec i al a p p e a r a n ce ch al l en gi n g t h e t ri al co u rt ’s j u ri s d i ct i o n
. Ho we v er , b ef o re h o l d i n g a hear ing on the specia l appea ranc e, the tria l court struck I RN Corp.’s pleading s for its failure to make

a cor porate repr esentative available for de position. The trial court then r ender ed a de fault judg ment ag ainst the defe ndants jointly and seve rally

in the amount o f $ 5 , 9 1 4 , 360. The trial c ourt
su bs e qu e ntl y e nte re d a

n o rd e r r e g ard ingthe sp e c ia l a pp e ara nc e , o ve rr uli ngI RN Cor

p. ’s mot ion

to challeng e jurisdiction.2

I RN Corp. prese nts ten issues for re view. In the first four issues, I RN Corp. contends that the trial cour

t abused its discretion in (1) a bating and re fu s i n g t o conduct a hear ing on the specia l appea ranc e, (2) denying the motion to quash and compelling the deposit ion, (3) re fusing to consider I RN Corp.’s motion for continuanc e, and ( 4) aw ardingmonetary sanctions and striking I RN Corp.’s pleading s for failing to a

ppear for a deposition. I n its fif th a nd six th issues, I RN Corp. challeng es the trial cour

t’s denial of its special appe ara nce. I n the re maining issues, I RN Corp. contends that the awa rds for me ntal ang uish and attorney ’s fe es ar e not supported by the evidenc e. I RN Corp. responde d to Herna ndez’s discovery

reque sts but filed a motion to quash the de po sit ion

of its c or po rate re pr e se ntativ e in Swe e tw a te r, No lan Co un ty , T e xas, ur g ingthe c ourt to rule on its specia l appea

ranc e and c ontending that it would be unjust for a court without jurisdiction over it to requir e its corpor ate r epre sentative to appe ar f or deposition. I RN Corp.’s repr esentative failed to a

ppear in Sweetwate r for

a deposition that had be en re schedule d af t er a h ear ing on the motion to quash. Hernande z filed a m o t i o n to compel and r equeste d sanctions. The tria l court g rante d Her

nandez’s motion to compel, abated the specia l appea ranc e hea ring until after I RN Corp.

su bmi tte d a re pr e se ntativ e fo r d e po sit ion , a wa rd e d mo ne tary

sa nc tio ns , an d o rd e re d I RN Cor p. to

make a c or

po rate re pr e se ntativ e a va ila ble fo r de po sit ion in Swe e tw a te r. I RN Cor p. did no t c omp ly with the court orde r. Instead, maintaining t hat t he trial court had no jurisdiction over it, I RN Corp. ag ain urg ed the trial court to hold a hear ing and rule on its spec ial appea ranc e. Upon th e s econd failure to appea

r for deposition and the ref usal to comply

with the trial court’ s order on the motion to co m p el , the trial cour

t held a hea

ring and struck I RN Corp.’s pleading s. Although w e do not condone the actions of I RN Corp. in re fu s i n g t o obey a cour t order, w e hold that the trial c ourt abused its discre tion under the c ircumstance s of this case. T EX
. R. C IV
. P. 120a g overns specia l a ppear ance s. Rule 120a(2) provides that any motion to challeng e jurisdiction “ s h a ll b e h ear d and dete rmined bef ore a motion to t ransf

er ve nue or a

ny oth e r p le a or ple a din g may

be he ard ” (e mph a sis a dd e d) . Ru le 12 0a (3 ) p ro vid e s in pa rt : Th e c ourt sh a ll d e te rm ine the sp e c i a l a p pe ara nc e on the ba sis of

the ple a din g s, any stipulations m ade by and between the pa rties, such a ffidavits and attachments as m ay b e f i l e d b y t h e p art i e s , t h e r e s u l t s o f d i s c o v e r y p r o c e s s e s , an d

an y o r a l t e s t i m o n y. The a ffidavits, if any , shall be ser ved at lea st seven day s befor e the he aring , shall be ma de on pe rs on a l kn ow le dg e , s ha ll se t f or th s pe c if ic fa c ts a s w ou ld b e a dmi ssi ble in e v i d e n c e , an d

s h a l l s h o w a f

f i r m a t i v e l y t h a tt h e a f

f i an ti s c o mp e t e n tt o t e s t i f y.He rna ndeza ss er

ts that IR N Cor p. ha s w ai v ed this is sue by f ai lingto tim el y

f ile a noti ce of a ppea l f rom the orde r de ny ing 1 the special appearance. We disagre e. T his is no t an acc elerate d a pp eal f rom an interlo cuto ry

order bu t, rather, an app eal f rom a f inal judg m ent dis posi ng of

a ll par tie s and al l i ss ues
. See T EX
. R. A PP
. P. 26. 1(b) , 28.1 (r el at ing to dea dline s f or i nte rloc utory

a ppea ls ). Cons eque ntly , the notic e of a ppea l w as ti m el y

purs uant to T EX
. R. A PP
. P. 26.1. 3 Should it appea

r fr o m t h e affidavits of a pa rty opposing the motion that he cannot f or reasons s tated present by aff idavit fac ts essential to justify his oppositi on, the cour t may order a continuanc e to per

mit affidavits to be obtained or depositions to b e take n o r d isc ov e ry

to b e ha d o r m ay

make su c h o the r o rd e r a s is jus t. Thoug h Rule 120a(2) mandates that a hea ring on the spec ial ap p ear ance be hea rd and de termined befor e any

other plea

or plea ding, some discovery disputes may be re solved prior to a r uling on a specia l appea

ranc e without violating that mandate. Cf. Ex ito El e c s. Co. v . Tr e jo , 142 S.W .3d 302, 306-07 (Te x . 2004) (whe re the issue was not whe ther the tria l court abuse d its discretion but, rather , wh e the r a pa rt y wa ive d it s sp e c ia l a

pp e ara nc e by pa rt ic ipatin g in dis c ov e ry dis pu te s)

. Th e ru lin g in Ex ito was limited to discovery that related t o the s pecia l appea ranc e, and “ no opinion” was e x presse d as to discover

y that was not re lated to the spec ial appea ranc e. Id. at 306 n.24. Although Rule 120a

indicates that depositions may be conducte d prior to a ruling on a spec ial appea ranc e and Ex ito indicates that some discove ry disputes may be re solved prior to a r uling on a specia l appea

ranc e, the r

ule spec ifically

provides for

the means to obtain a continuance of the specia l appea ranc e so that a deposition ma y be conducte d: aff

idavits of the party opposi n g t h e special appea ranc e. In this case , Her

nandez di d not file any such affidavit stating that she could not present fa c ts e sse nti a l to jus tif

y he r o pp os iti on

to t he sp e c ia l app e ara

nc e or that she ne e de d to de po se I RN Corp.’s re prese ntative re g ardingjurisdiction. I n her motion to compel, Hernande z merely asser ted she had be en pre vented “ from discove ring fac ts nece ssary to pursue her

caus es i n t h is action.” Her nandez di d not comply with the provisi ons of Rule 120a. Conseque ntly , we hold that the tria l court abused i ts discretion in abating the hea ring on the spec ial appea

ranc e. See In re H & R Block, 159 S.W .3d 127, 131-32 (Tex

. App.—Corpus Christi 2004, orig

. proce eding ). There fore , the trial

c o u rt ’ s a c t i o n s

– i n g r an t i n g t h e m o t i o n t o c o mp e l , w h i c h w a s n o tl i m i t e d t o j u r i s d i c t i o n a l d i s c o v e r

y;
awa rdin g sanc tio ns ; stri kin g I RN Cor p. ’s ple a din g s; a

nd ult imate ly

e nte ri nga

de fa ult jud g me nt – constituted an abuse of discre tion. I ssues Nos. One, T wo, and F our ar e sustained. We also must consider the propr iety of the trial court’s order overruling I RN Corp.’s specia l appea ranc e and its asse rtion of persona l jurisdiction over I RN Corp. A cour t may exercise pe rsonal 14

jur isd ic tio n o ve r a

no nr e sid e nt de fe nd ant wh e n (1) the de fe nd ant ha s est a bli sh e d mi nim

um c on ta c ts with the forum state a

nd (2) the a ssertion of jurisdiction complies with traditional notions of fair play and substantial justice. Retamc o Op er a t i n g, Inc. v . Republic Drilling Co. , 278 S.W .3d 333, 338 (Tex. 2009). Whether a c ourt has persona l jur isdiction ove r a defe ndant is a question of law, w hich

we r eview de novo. Id. at 337; BMC Software Belgium, N.V. v. Marchand , 83 S.W .3d 789, 794 (Tex. 2002). I f a tria l court issues finding s of fa ct and c onclusions of law with re spect to its denial of a specia l a

ppear ance , an appe llant may challeng e the f

act f indings on leg al and f

actua l sufficienc y g rounds. B

MC , 8 3 S

. W.3d at 794. I n its brief, I RN Corp. argues that the e vidence is leg ally and fac tually insufficient to support “the trial court’s resolution of facts involving per sonal jurisdiction.” We ag ree
. I RN Corp. proper ly

filed a spe cial appear an ce challeng ing the trial court’ s jurisdiction. Attache d to the motion was the aff idavit of David Cheng , the pre sident of I RN Corp. Cheng aver red that I RN Co r

p
. w a s a Ca li f o r n ia c o r p o r a ti o nw it

h n o a u th o r it y to tr an s a c t b u s in e s s in

T e xa s , no lic e ns e or pe rm it t o e ng a g e in r e a l e state br ok e ri ngor sa le s in Te x as, and no e mpl oy e e s in Te xas. Cheng also stated that Ne duelan wa s not an employ ee, a g ent, or re prese ntative of I RN Corp. and that Chen g as pr e sid e nt o f t

he c or po ratio n w a s th e “ on ly ” e mpl oy e e , a g e nt, or re pr e se ntativ e of

I RN Corp. Cheng further

aver red that I R

N C orp. had not c onducted business in Texas and wa s not involved in the transac tion in which Herna ndez purcha sed re al prope rty in Sweetwate r. He rnande z had alleg ed in her p et i t i o n that she had r etained N eduela n and “I RN Realty ” to ac t as her buy er’ s ag ent in the purchase of a motel and r estaura

nt in Sweetwater . Nedue lan alleg edly informed Hernandez th a t t

h e p r o p e rty

w a s w o rth

mu c h mo r e th a t i t a c tu a ll y w a s , an d H e r n an d e z r e li e d

on N e d u e l an ’ s m i s i n f

o r m a t i o n
. In t h e p e t i t i o n , H e r n an d e z a s s e rt e d

t h a tN e d u e l anw a s e mp l o ye d

b y, and wa s acting within the scope of his e mploy ment with, “I R

N Realty .” He rnande z testi fied that Nedue lan was h er “ broker ” in California, that she had done business with him before this transa ction, that sh e tho ug ht he wo rk e d f or “ I RN Re a lty ,” and

that sh e ha d v isi te d h im at “ I RN Re a lty ’s of fi c e s” in California. Documents obtaine d from the State of California Depa

rtment of Real Estate and introduce d in the trial court by

Her nandez show, however, that Nedue lan was a li cense d rea l estate sale sperson whose e mploy ing br oker at the time of the re al e s t at e t ransaction at issue in this case wa s YF L imited, In c
. an d th a t Y F L im it e d , I n c
. w a s a c o r p o r a ti o n th a t d id b u s in e s s a s “ I RN Re a lt y . ” As5

e vid e nc e d b y

a do c ume nt f

ro m th e Ca lif

or nia Se c re tary

of State , w hic h w a s als o in trod uc e d in to evidenc e by

Her nandez, I RN Corp. was a separ ate e ntity . The e vidence shows that Cheng was
a sso c ia te d wi th Y F , I RN Re a lty , a nd I RN Cor p. and that th e se bu sin e sse s w e re loc a te d at th e same addre ss. Other than this e v i d ence and the use of the names of I RN Corp. and I RN Realty by Her nandez, her counsel, and the trial court in a n intercha ng eable manner , no evidenc e indicate d that the cor porate distinctness of the companie s was not honore d. S ee B MC , 8 3 S

. W.3d at 799-800. J u r i s d i c t i o no v e r

ane n t i t y r e l a t e d t o IR N C o r p
. d o e s n o t a m o u n tt o j u r i s d i c t i o no v e r IR N C o r p
. In Te xas, c or

po rate e nti tie s are pr e su me d to be se pa ra te , d ist inc t e nti tie s; an d a pla int if f atte mpt ingto
asser t personal jurisdiction ag ainst one def endant ba sed on the co ntacts of a nother e ntity

has the burden to prove a basis for doing so. Id. at 798. Her nandez fa iled to meet this burden. I RN Corp.’s attorney , upon reque sting a h ea ring on the spec ial appea ranc e, explained that I RN Corp. was “just a shell corpor ation” and stated t hat “this defe ndant is not the corr ect de fenda nt to this l awsuit.” The evidenc e supports these statements. Contrary to the trial court ’s findi ng s of fac t, nothing in the re cord shows that I RN Corp. (as opposed to YF d/b/a I RN Realty ) employ ed Nedue lan, par

ticipated in the transac tion at issue, or otherwise subje cted itself to either g ener al or specific jurisdiction in Texas. I ssue No. 5 is sustained. The r emaining issues need not be addre ssed as they are not disposit ive of the a ppeal. T EX
. R. A PP
. P. 47.1. We vacate the awa

rd of sanctions and the final judgme nt of the trial cour t insofar a s it relates to I RN Realty

Corporation. I n s o fa r as it re lates to defe ndant Salvador N eduela n, the trial cour

t’s judgme nt r emains undisturbed. See Plas-Tex, Inc. v. U.S. Stee l Corp. , 772 S.W .2d 442 (Tex. 1989). The he aringon the spec ial appea ranc e plea should ha

ve been held as require d by Rule 120a. That rule provide d that depositions or discovery co u ld be orde red; howe ver, none was re quested by Her nandez. We r ever se the trial court’s order denying I RN Realty Corporation’s specia l appea ranc e, and we dismiss without prejudice the claims ag ainst I RN Realty Corporation.

J I M R. W RI GHT CH I EF JUSTI CE November

13, 2009 Panel consists of: Wright, C.J ., McCall, J ., and Strang e, J.