i i i i i i



### OPIN ION No
. 04 -0 8- 00 24 4- CV Kenne th RA TTN ER , Appellant
v . J ohn CO NT OS and

the Con tos F a mil y

Tr us t, Appellee s Fr om the 407th J udicial District Court, Be x ar County , Texas

Trial Court No. 2007-CI -09491 Honora ble Kar en H. Pozz a, Judge Pre siding OP INION ON AP P ELL ANT’S MOTION F OR REHEARING Opinion by : Phy lis J . Speedlin, J ustice Sitt ing: Catherine Stone, Chief Justice

Phy lis J . Speedlin, J ustice Steven C. Hilbig, Just ice Deliver ed and F iled: May 20, 2009 REVERSED AND REMANDED I n light of the rec ent dec isi o n o f t h e T ex as Supreme Court in Retamc o Operating, Inc., v

. Republic Drilling Co., 278 S.W .3d 333 (Tex. 2009), we g rant Ken n et h R at t n er’ s motion for rehe aring . This court’s memora ndum opinion and judgment dated Febr u ar y 11, 2009, are withdrawn, a

nd this opini on and judg ment are substitut ed.04

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1 ... T h e T e x a s re a l p ro p e rty a t i ssu e is l o c a te d in G u a d a lup e C o u n ty, H a rr is C o u n ty, a n d B e x a r C o u n ty.

- 2- Kenne th Rattner cha lleng es the trial c ourt’s orde r g ranting the speci al ap p earanc e by nonresident de fenda

nts, J ohn Contos and the Contos Family Trust. I n two issues, Rattner conte nds the trial cour

t erre d by concludingthat it could not properly exercise jurisdiction over Contos and the Con tos F a mil y Tr

us t. B e c a us e we c on c lud e that Co nto s’ a c tio ns su bje c te d h im a

nd the Tr us t to the jur isd ic tio n o f T e xas c ourt s, we re ve rs e the tr ia l c ourt ’s jud g me nt a nd re mand fo r t ri a l. F ACT UAL AND P R OC EDU R A L B ACKG ROUND Kenneth Rattner sued John C ontos and the Contos Family Trust for br eac h of an a lleg ed partne rship or j oint venture a g ree ment, fra ud, and dec laratory

relief . I n his pleading s, Rattner alleg ed that he and Contos, both Ca lifornia residents, enter ed into a n oral ag ree ment to find, acquire , hold, manag e, deve lop, and sell rea l e state, principally in the Texas rea l estate mar ket. Rattner a sserted that he, in larg e par

t, developed a

plan wher e Contos would trade his prior inve s t m en t s i n Neva da re al estate f or similar investments in Texas. Rattner would contribute time and e ffo rt in locating the proper tie s an d C o n tos would provide the fina ncing . The two men a lleg edly ag ree d to share in the profits and losses gen er at ed by this endeavor . After

sever al prope rties had be en ac quired, Rattner be c a me c on c e rn e d a

bo ut his bu sin e ss arr ang e me nt w ithCon tos . Rattn e r f ile d s uit in B e xar County seekinga dec laratory

judgme nt that Rattner and Contos had ente red into a partne rship or j oint venture with reg ard to Te x as prope rties, an a ccountingof par tnership profits and losses, and dis solution of the partnership or j oint venture with a dis tribution of t he assets. Rattner asse rted that he fea red a nd be lie ve d Cont os wo uld se ll all or pa rt of the Te xas r e a l e state 1 to third parties and then f ail to acc ount to Rattner for Rattner’s share of the profits from any such sale. Rattner also asse rted fr aud, bre ach of contra ct, and unjust enric hment claims.04

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- 3- Contos filed a verif

ied spec ial appea

ranc e, both individual l y an d o n behalf of the Contos Family Trust, asser

ting they are not amenable to personal j u ri sdiction beca use Contos is a resident of California, the Contos Family Trust was c reated an d is operate d under the laws of Califor nia, neither de fenda

nt maintains (nor has e ver ma intained) off ices, e mploy ees, b u s iness rec ords, or a n ag ent for s e r

v ic e o f p r o c e s s in T e xa s , an d n e it h e r d e f e n d an t h a s e v e r o w n e d o r le a s e d b u il d ing s or f a c i l i t i e s i nT e x a s , a d v e rt i s e d t o r e s i d e n t s i nT e x a s , o r r e c r u i t e d T e x a s r e s i d e n t s f

o r e mp l o y m e n t
. In
re sp on se , Rattn e r s ub mit te d thre e a ff ida vit s: the a ff

ida vit of his a tto rn e y

Rob e rt J. My e rs ; th e a ff

ida vit of Richar d D. Smith, who traveled to Texas on at lea st one occ asion with Ratt n er and Contos; and Ra ttn e r’ s o wn

a ff ida vit . Co nto s and

the Con tos F a mil y Tr

us t ob je c te d to po rt ion s o f a ll the a ff ida vit s filed in opposition to t heir spec ial appea ranc e on the g rounds o f hearsay and conc lusory , vag ue, or sp e c ulativ e state me nts . A ft e r a he ari ng , the tr ia l court su sta ine d Cont os ’ o bje c tio ns to t he a ff ida vit s of My ers, Smit h, and Rattner, sustaine d the def endants’ spe cial appe ara

nce, a nd dismiss ed Rattner’ s suit. This appeal followed. A PP LI C A BLE L AW The plaintiff be ars t h e i n i tial burden of ple ading fac ts sufficient to bring a nonre sident defe ndant within the provisions of the long -ar m statute. Republic Drilling Co., 278 S.W .3d at 337

. Upon filing a special appea ranc e, the nonresident defenda nt then assumes the burde n to neg ate a ll the bases of persona l jurisdiction alleg ed by the plaintiff. Id. Whether a c ourt has per sonal jurisdiction
over a no n resident de fenda

nt is a question of law; howe ver, the trial court f reque ntly must resolve questions of fac t before d ec i d i n g the jurisdictional question. BMC Software Belgium, N.V. v. Marchand , 83 S.W .3d 789, 794 (Tex. 2002)

. On appeal, we r eview the trial court’ s findings of fac t for leg al and f

actua l sufficienc y . Id. at 794-95. I n conducting a leg al sufficie ncy analy sis, we re view04

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- 4- the e vid e nc e in t

he lig ht m os t f

a vo ra ble to t he c ha lle ng e d f

ind ingand in du lge ever

y re a so na ble inferen ce t h at wo uld support it. City of Keller v. W ilson , 1 6 8 S. W. 3 d

8 0 2 , 8 2 2 ( T e x. 2 0 0 5 )
. We
c re dit fa vo ra ble e vid e nc e if

a re a so na ble fa c t f ind e r c ou ld, and dis re g ard c on tr ary e vid e nc e un le ss a
rea sonable fa ct finder

could not. Id. at 827. I f there is more than a sc intill a of e vidence to support the findi ng , the l eg al s ufficie ncy challeng e fa ils. BM

C So ftwa re , 83 S.W .3d at 795. I n revie wing for fa c tua l su ff

ic ie nc y , we e xami ne a ll e vid e nc e in t he re c or d a

nd re ve rs e on ly

if the fi nd ingis s o a g a ins t the g reat weig ht and pre pondera nce of the evidenc e as to be manifestly wrong or unjust. Carone v. Retamc o Operating, Inc ., 138 S.W .3d 1, 7 (Tex. A pp.—San Antonio 2004, pet. denied) . We review the tr ia l c ourt ’s c on c lus ion s o f l aw d ra wn fr om t he fi nd ings of fa c t de novo
. BM C So ftwa re , 83 S.W .3d at 794. Due Pr oc ess C

ons tra ints Texas courts may

exercise in personam ju r is d ic ti o n o v e r a n o n r e s id e n t d e f e n d a nt as authorized under the Texas long- arm statute pr ovided that the exerc ise of such personal jurisdiction
me e ts f e de ra l and

state c on sti tut ion a l du e pr oc e ss gua ra nte e s. Republic Drilling Co., 278 S.W .3d at 33 7; Moki Mac Riv er Expe ditions v. Drugg , 221 S.W .3d 569, 574 (Tex. 2007). To meet constitutional du e pr oc e s s g u ar an t e e s , t h e c o u rtm u s tf i n d t h a t( 1 ) t h e n o n r e s i d e n td e f e n d an th a s p u r

p o s e fu lly availed itself of

the privileg e of c onducting activities within the forum state, t h u s i n v o king the benef its and prote ctions of its laws, and (2) the cour t’s asser tion of jurisdiction meets “traditional notions of fair play

and substantial justice.” Republic Drilling Co., 278 S.W .3d at 338. (A ) M inimum Conta c ts Personal jurisdiction has bee n descr ibed as e ither g ener al—pre dicated on a party ’s “continuous and sy stematic” c ontacts with the for um, or specific—that i s, based on contac ts arising from the dispute at issue. PHC-Minden, L.P. v. Kimberly- Clark Corp. , 2 3 5 S. W. 3 d 1 6 3 , 1 6 6 ( T e x.04

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- 5- 20 07 ); BM

C So ftwa re , 83 S.W .3d at 795-96. Her e, although his pleading s claimed both g ener al and sp e c if ic jur isd ic tio n, Ra ttn e r m a ke s n o s ub sta nti ve argume nt o n a

pp e a l th a t th e tr ia l c ourt

e rr e d in concludingthat g ener al jurisdiction did not ex ist. See T EX . R. A PP . P. 38.1(i) (re quiring appellant’ s brief to c ontain “a c lear

and conci se ar g ument for the c ontentions made, with appropr iate citations to authorities and to the re cord” ). Acc ording ly , we focus our analy sis on specific jurisdiction and whether Contos and the Contos Family Trust met t h ei r b u rden of neg ating specific jurisdiction. Specific jurisdiction arises whe n “(1) the def endant pur

posefully avails itself of c onducting activities in the forum state, a

nd (2) the c ause of

action ar ises from or is related t o those contac ts or activities.” Republic Drilling Co., 278 S.W .3d at 338. Her e, assumin g

w it h o ut d e c id in g

th at the trial c ourt corr ectly sustained Contos’ objections and excluded the af

fidavits Rattner filed in opposition to the spec ial appea ranc es, the trial c ourt had be fore it Rattn e r’ s v e ri fi e d p e tit ion and Con tos ’ a ff

ida vit in su pp or t of the sp e c ia l a

pp e ara nc e . Re le va

nt t o specific jurisdiction, Rattner ’s pleading s alleg e that he and Contos, both California reside nts, entere d into an oral a g ree ment to find, acquire , hold, manag e, deve lop, and sell rea l estate princ ipally in the Te xas r e a l e state mark e t. His ple a din g s d o n ot a lle g e that th e a g re e me nt b e tw e e n th e se tw o Ca lif or nia
re sid e nts wa s fo rm e d in Te xas and do no t de ta il the “ sig nif

ic ant c on ta c ts” that Co nto s h a d w ithTe xas. To the con t ra ry , Rattner’s plea dings a ffirmatively state that in exchang e for Contos providing financ ing, Rattner, not Contos, would identify investment opportunities, principally in the Texas rea l estate ma rket. Additionally , Rattner’s plea dings set forth no spec ific alleg ations ag ainst the Contos Family Trust, except to state t hat t he Trust owns Texas rea l estate. Rattner’s suit seeks a de clar atory judgme nt that Rattner and Contos had ente red into a pa rtnership or joint venture with reg ard to Te x as04

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2 ... C o nt o s’ af

f i d avi t al so st at es he i s a res i d ent o f a nd a li censed a t t o rney in t he Stat e o f C al i f o rni a; t hat t he Cont os Fa mi l y T r u s t w as c r ea t ed i n Cal i f or n i a an d i s domi ci l ed i n Cal i f or n i a; an d t h at Cont os i n di v i du al l y does n ot n ow own, an d has ne ver owned, an y r eal proper t y i n T exa s . N ei t her t he C o nto s F ami l y T r us t nor Co nt os i ndi vi dual l y ha s of f i c e s or e mp l oy e e s i n T e x a s , ow n s or l e a s e s pr op e r t y i n T e x a s , a dv e r t i s e s i n T e x a s , r e c r u i t s T e x a s r e s i den t s as em p l o yee s, o r ha s ap p o i nted an ag en t f o r service o f

p ro ce ss i n T ex as.

- 6- proper ties, an ac counting of partne rship profits and losses, and dissolution of the par tnership or joint
ve ntu re wi th a dis tr ibutio n o f t

he a sse ts. Contos’ affidavit offer ed to ne g a te ju r is d ic ti o n d o e s not deny

Rattner’s a lleg ations that Rattner
and Con tos e nte re d in to a

n o ra l ag re e me nt to fin d, a c qu ir e , hold , man a g e , de ve lop , a nd se ll r e a l e state pr inc ipa lly

in t he Te xas r e a l e state mark e t. C on tos do e s d e ny c on tin uo us or sy ste ma tic bu sin e ss i n Te xas, 2 but admits that he trave led in and out of Te x as for the purpose of

identifying a

nd purcha sing proper ty on behalf of the Contos F amily Trust beg inning during the Fa ll of 2006 and continuing f or an appr ox imately

nine-month period. Contos also admits that the Contos Family Trust, which he descr ibes as an estate planning trust, ow ns proper ty in thr ee Texas c ounties: G uadalupe , Be x ar, a nd Har ris counties. B a s e d o nt h e p l e a d i n g s an d

C o n t o s ’ a f

f i d a v i t , R a t t n e r

ar g u e s t h a tt h e t r i a l c o u rte r r e d i ni ts fi nd ing s o f f

a c t th a t Co nto s and

the Con tos F a mil y

Tr us t di d not have min imum c on ta c ts w ithTe xas, that th e su it d oe s n ot i nv olv e owne rs hip or tit le to r e a l pr op e rt

y loc a te d in

Te xas, and that the e xer c ise of per sonal jurisdiction over either defe ndant would o ff

end traditional noti ons of fa ir play and substantial justi ce. F or the re asons set for th below, we a g ree . 1. Pur po se fu l Av ail ment For the purpose of d et er m i n ing if a nonre sident defe ndant purposef ully availed itself of

the privileg e of c onducting activities within the forum state, “only the def endant’ s contac ts with the forum
are rele vant,” the c ontacts “must be purpose ful rathe r than ra ndom, fortuitous, or attenuate d,” and the04

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- 7- defe ndant must “seek some benef it, advantag e o r p ro fi t by ‘ava iling’ itself of

the jurisdiction.” R e p u b li c D r il li n g

Co ., 27 8 S. W.3 d at 33 8- 39 ; Moki Mac , 221 S.W .3d at 575 (re cog nizi ng there are thr e e pa rt s to a “ purp os e fu l ava ilm e nt” inq uir y ). “ Ad dit ion a lly , th e min imum- c on ta c ts a na ly sis is focuse d on the quality

and natur e of the de fenda nt’s contac ts, rather

than their number .” Re

pu bli c Drilling Co., 278 S.W .3d at 339. B a se d o n th e un d i s p ut e d e vid e nc e be fo re the tr ia l c ourt , w e c on c lud e that Co nto s’ c on ta c ts w ith Texas meet the purposeful-ava ilment standard. Contos admitted that he willing ly trave led in and out of Te xas o ve r a

nin e -m on th pe ri od in or de r to fi nd and purc ha se Te xas re a l pr op e rt y on be ha lf of

his F a mil y Tr us t. B a se d on Cont os ’ mul tip le c on ta c ts with Te xas, thr e e se pa rate pie c e s o f r e a l pr op e rt y
we re ult imate ly

purc ha se d in Gu a da lup e , Harr is, and B e xar Counti e s, Te xas. Con tos ’ c on ta c ts w ith Te xas w e re purp os e fu l, n ot r and om, fo rt uit ou s, or a tte nu a te d, and

sp e c if ic a lly so ug ht a “ be ne fi t, advanta g e or pr ofit” in Texas. Id . Additionally , by taking owner ship of Texas rea l property , the Con tos F a mil y

Tr us t c re a te d a

c on tin uin g re la tio ns hip wi th T e xas t hat a ff or ds the Con tos F a mil y

Tr us t benef its a nd protec tions unde r Texas law. Id. (“r eal property will alway s be in Texas, which leaves no doubt of the continuing relationship t hat this ownership cr eate s”). Ac cording ly , we c onclude that the undisp u t edev i d en ce es t ab l i s h es t h at b o t h C o n t o s an d t h e C o n t o s Fa m i l y

T ru s tp u rp o s ef

u l l y av ail ed the mse lve s o f t

he pr ivi le g e of

c on du c tin g a c tiv iti e s in

Te xas. 2. Ari se s Fr om or R e lat

e d to Having found that Contos’ contac ts with Tex as mee t the purposef ul-ava ilment standard, we next m ust determine whe ther “ the def endant’ s liabilit y

arises f rom or is r elated to the forum conta cts.” Id. at 3 4 0 (q u o t i n g Moki Mac , 221 S.W .3d at 579) (“[P] urposef ul a vailment alone will not support an exercise of specific jurisdiction . . . unless the de fenda nt’s liability

arises f rom or re lates to the for

um04

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- 8- contac ts.”). He re, Rattner ’s pleading s alleg e that he and Contos entere d into an ag ree ment to share i nt h e p r o f

i t s an d l o s s e s a s s o c i a t e d

w i t h t h e p u r c h a s e an d

s a l e o r d e v e l o p m e n to f

T e x a s r e a l p r o p e rt y,
an a ll e g a ti o n n e v e r d e n ie d b y Co n to s . Ratt n e r ’ s s u it th e n s e ts f

o rth f o u r c a u s e s o f a c ti o n : (1) “ a judicial decla ra t i o n o f t he existence of the partne rship or joint venture be tween himself a nd Contos with reg ard to the Te x as re al estate projec ts;” (2) “ fra ud in a re al estate transac tio n ; ” (3) breac h of
c on tr a c t “ to ide nti fy , a c qu ir e , ho ld, de ve lop , mana g e and /or dis po se of c e rt a in re a l pr op e rt y int e re sts in T exas f or a pr ofit;” and (4) unjust enrichment base d on “Contos’ repr esentations that he would share in the profits of the Texas rea l estate ve ntures.” E ach of Rattner’s f

our ca uses of a ction ref

ere nce the
rea l pr o p e rty lo c ate d in T e xa s
— r e a l p r o p e rty a d mi tt e d ly p u r c h a s e d b y Co n to s in th e n a me o f the Contos Family

Trust. Contos arg ues that the trial c ourt corr ectly found that t h e curr ent litigation does not involve
owner ship or title to Tex as prope rty . Contos maintains this is a suit for mone y damag es betwe en two California re sidents over a claimed business re lationship that was formed in California. Relying on Potkovic k v. Regional Ventures, I nc. 904 S.W .2d 846 (Tex. App.—Eastland 1995, no wr it), Contos argues Texas pr operty must be the foca l point of the litigation to e x erc ise specific jurisdiction over the proper ty owner . Id. at 84 7 ( “ We c on c lud e that me re ow ne rs hip of the re a l pr op e rt

y a lon e is insufficient to bestow in personam jurisdiction: the ownership of the r eal proper ty must be the subject of the unde rly ing suit.”) . Be cause the prope rty at issue her e, instead of being at t he foc al point of the lit ig a tio n, is, a t mos t, a c la ime d a sse t of the bu sin e ss ve ntu re , Co nto s a

rgue s sp e c if

ic jur isd ic tio n f

a ils
. We disag ree . Contos is alleg ed to have enter ed into a business re lationship to share in the prof its and losses associate d with finding, de veloping , and sell i n g T ex as re al estate . As a re sult of this allege d
re la tio ns hip , T e xas p ro pe rt y wa s p ur c ha se d a

nd is n owow ne d b y

the Con tos F a mil y

Tr us t. C on tos ’04

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- 9- alleg ed liability , if any , stems from or is substantially connec ted to his purchase of the prope rty and h o w t h a tp r o p e rt y h a s b e e nh e l d , m an a g e d , d e v e l o p e d , an d / o r s o l d s i n c e i t s p u r c h a s e . A c c o r d i n g l y, the pr op e rt

y is n ot o nly

a c la ime d a sse t, b ut i s a lso the very su bj ect mat te r o f t he c la ime d b us ine ss relationship. Contos’ contac ts with Tex as ar e suff icient to demonstrate that this allege d tort occur red at least, in par

t, in Tex as. See R epublic Drilling Co., 278 S.W .3d at 341. (B) Traditional

Notions of Fai r Play and Su bstant ial Jus tice F ina lly , h avin g fo un d th a t Conto s and the Con tos F a mil y Tr us t hav e min imum con ta c ts w ith Texas suffici e nt to support specific jurisdiction, we ne x t determine w hether an asse rtion of jurisdiction over the se nonre sidents comports with “traditional notions of fair pla y and substantial justice.” Id. We consider: (1) “the burden on the defendant;” ( 2) the intere sts of the forum state in a djudicating the dis pu te ; (3 ) “ the pla int if

f’ s int e re st in ob ta ini ng c on ve nie nt and e ff e c tiv e re lie f; ” (4 ) “th e in terstate judicial sy stem’s interest in obtaining the most effic ient resolution of controve rsies;” a nd (5) “ the share d interest of the sever al S tates i n further ing fundamenta l substantive social pol icies.” Guardian Royal Exc hange Assur., Ltd. v. English China Clays , P. L.C. , 8 1 5 S
. W
. 2 d 2 2 3 , 2 2 8 ( T e x . 1 9 9 1 )
. “ In thi s in qu ir y , it is i nc umb e nt upo n the de fe nd ant to pr e se nt ‘a c omp e lli ng c a se that the pr e se nc e of so me consideration would render jurisdiction u n re as o n able.’” Id. at 2 3 1 (q u o t i n g Burger King Corp. v. Rudzewicz , 471 U.S. 462, 477 (1985)). Contos contends the t

r ia l c o u r t c o rre ctly found that exercise of jurisdiction over the nonr esident defe ndants would violate traditional noti o n s o f fa ir play and substantial justice. Contos arg ues that Ca lif or nia c ourt s h a ve mor e int e re st i n r e so lv in g t hi s d isp ute be c a us e it i s b e tw e e n tw o Ca lif or nia bu sin e ssm e n o ve r a pa

rt ne rs hip a lle g e dly

c re a te d und e r C a lif

or nia law. Al tho ug h w e a g re e Ca lif or nia may have some interest in this litigation, other f actor s weig h in favor of

Rattner and the forum state.04

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- 10- Rattner chose to resolve this controve rsy in T ex as beca

use the prope rty

at issue is located he re. Additionally , as noted by the cour t in Republic Drilling, Co., “Te x as ha s an interest in re solving controve rsies involving rea l pr operty within its border s . . . Moreove r, California ha s much less of an interest in re solving Te x as re al prope rty disputes than d o e s Texas.” Republic Drilling Co., 278 S.W .3d at 341-42. Ac cord ingly , althoug h we a g ree Contos and the Contos Family Trust are burdene d by litigation outside their home state of California, we ighingall fac tors, we c annot say that jurisdiction in Texas violates traditional notions of fair play and substantial justice. C ONCL US I ON I n su mm ar y , w e c o n c lu d e th a t C o n to s an d th e Co n to s F a mi ly

T r u s t h a v e e s ta

b li s h ed minimum contac ts with Tex as to support specif ic jurisdiction and that the exerc ise of jurisdiction over t h e s e n o n r e s i d e n t s d o e s n o t o f f e n d t r a d i t i o n a l n o t i o n s o f

f a i r p l ay an d s u b s t an t i a l j u s t i c e . A c c o r d i n g l y,
we r ever se the trial c ourt’s judg ment and re mand to the trial court f or fur ther proc eeding s consistent with this opi nion.
Phy lis J . Speedlin, J ustice