Dissenting Opinion Filed August 18, 2020 

# S

In The 

### Court of Appeals Fifth District of Texas at Dallas No. 05-20-00021-CV MICHAEL J. PETER, Appellant

v. JOSHUA STERN, Appellee On Appeal from the 160th Judicial District Court Dallas County, Texas Trial Court Cause No. DC-18-18146
DISSENTING OPINION Before Chief Justice Burns 1 and Justices Pedersen, III, and Evans Dissenting Opinion by Justice Evans Appellant Michael J. Peter, a Flo rida resident, appeals the tri al court’s denial of his special appearance contesting personal jurisdiction rega rding appellee Joshua Stern’s claims for fraud and breach of contract pertaining to a failed business venture in the Republic of Panama. Stern has no evidence of any intent ional contact by Peter with Texas or evidence this transaction has any connection to T exas. Although it is uncontested Texas has jurisdic tion over others connected with S tern’s claims, Texas

1 The Honorable David L. Bridges, Justice, participated in the s ubmission of this case, however, he did not participate in the issuance of this opinion due to his deat h on July 25, 2020. Chief Justice Robert Burns has substituted for Justice Bridg es and has reviewed the briefs and the record before the Court.–2– does not have jurisdiction over Pe ter. Because Peter challenge s the legal and factual sufficiency of the evidence supporting the trial court’s denial of his special appearance and because I agree there is no evidence in this rec ord to support the trial court’s ruling, I would reverse th e trial court’s order and ren der judgment granting Peter’s special appearance. Because the majority concludes oth erwise, I respectfully dissent. We review de novo the trial court’s determination of a special appearance. Moki Mac River Expeditions v. Drugg , 221 S.W.3d 569, 574 (Tex. 2007). Where, as here, the trial court did not issue findings of fact and con clusions of law with its ruling, we imply all facts that are supported by the evidence t o uphold the trial court’s determination. Moki Mac , 221 S.W.3d at 574. The defendant bears the burden of negating all bases of persona l jurisdiction alleged by the plaintiff. See Kelly v. Gen. Interior Constr., Inc. , 301 S.W.3d 653, 658 (Tex. 2010). Once the defendant negates the bases alleged, the plaintiff must show, as a matter of law, that t he court has personal jurisdict ion over the nonresident defendant. Alliance Royalties, LLC v. Boothe , 329 S.W.3d 117, 120 (Tex. App.— Dallas 2010, no pet.); Assurances Generales Banque Nationale v. Dhalla , 282 S.W.3d 688, 695–96 (Tex. App. —Dallas 2009, no pet.). Jurisdiction may be negated on either factual or legal grounds. Kelly , 301 S.W.3d at 659. One factual ground that may be challenged in th e jurisdictional inquiry is an agency relationship by which the contacts of an a gent are sought to be–3– attributed to the principal. Novamerican Steel, Inc. v. Delta Brands, Inc. , 231 S.W.3d 499, 511 (Tex. App. —Dallas 2007, no pet.); see Davis v. Asano Bussan Co. , 212 F.2d 558, 563–64 (5th Cir. 1954). A principal must be shown to c ontrol another person’s conduct o f business or to have delegated to that other person management of some matte r for the other to be the principal’s agent. See Schott Glas v. Adame , 178 S.W.3d 307, 315 (Tex. App.—Houston [14th Dist.] 2005, pet. denied), disapproved of on other grounds by PHC–Minden, L.P. v. Kimberly-Clark Corp. , 235 S.W.3d 163, 169 (Tex. 2007);
Walker Ins. Servs. v. Bottle Rock Power Corp. , 108 S.W.3d 538, 549 (Tex. App.— Houston [14th Dist.] 2003, no pe t.). Courts do not presume an agency relationship exists, rather the party asserting an agency relationship exist s has the burden of proof. See Schott Glas , 178 S.W.3d at 315; Bottle Rock , 108 S.W.3d at 549. Discharging the burden of proof r equires proving an essential e lement of the principal

– agent relationship that the alleged principal had the right to control the actions of the alleged agent. See Exxon Corp. v. Tidwell , 867 S.W.2d 19, 21 (Tex. 1993). To prove the right to cont rol more must be proven than merely the right to assign tasks; there must be proof of the right to dictate the m eans and details of the process by which an agent will accomplish the task. See Ross v. Tex. One P’ship , 796 S.W.2d 206, 210 (Tex. App.—Dallas 1990), writ denied , 806 S.W.2d 222 (Tex. 1991) (per curiam). If there is proof only of the right to con trol the end sought to be accomplished, but not the means and details of how it should be accomplished, then–4– what has been proven is that the alleged agent is merely employ ed as an independent contractor and not as an agent. Schott Glas , 178 S.W.3d at 315; First Nat’l Bank v.
Bullock , 584 S.W.2d 548, 551–52 (Tex. A pp.—Austin 1979, writ ref’d n.r .e.). These concepts are distilled in the pa ttern jury charge as follows: An “employee” is a person in the service of another with the understanding, express or implied, that such other person has t he right to direct the details of the work and not merely the result to be accomplished. Agency and Special Relationships, ¶ 10.1, T EX

. P ATTERN J URY C HARGE (2018). A person is not acting as an employee if he is acting as an “in dependent contractor.” An independent cont ractor is a person who, in pur suit of an independent business, undertakes to do specific work for ano ther person, using his own means and methods without submitting hims elf to the control of such other person with respect to the details of the work, and who represents the w ill of such other person only as to the result of his work and not as to the means by which it is accomplished. Id . at ¶ 10.8. In the context of personal jurisd iction, this distinction betwe en agent and independent contractor is outcome determinative because only an agent’s contacts with the forum are attributable t o the principal, not the conta cts of an independent

contractor. See Schott Glas , 178 S.W.3d at 315; Bottle Rock , 108 S.W.3d at 549 n.4 (citing Daynard v. Ness, Motley, Loadhol t, Richardson & Poole, P.A. , 290 F.3d 42, 55 (1st Cir. 2002)). I focus on specific jurisdiction because Stern limited his plea ding and arguments to specific jurisdiction. We analyze specific jurisd iction on a claim-byclaim basis. See Moncrief Oil Int’l Inc. v. OAO Gazprom , 414 S.W.3d 142, 150–5– (Tex. 2013). But when the parties provide no pleading, argumen t, or analysis regarding the claims arising from different forum contacts, we analyze all the claims together on the same jurisdictional facts. Id . at 150

– 51 (“[A] court need not assess contacts on a claim-by-claim basis if all claims arise from the same forum contacts.”). Specific jurisdiction exists only when the nonresident defendan t’s alleged liability arises out of or is re lated to his activity conducted within the forum. See
Moki Mac , 221 S.W.3d at 576. The contacts with the forum that we are t o analyze for jurisdictional purposes are those where the contacts proxim ately result from actions by the defendant himself that create a substantial conn ection with the forum
State. See Moncrief Oil , 414 S.W.3d at 151 (citing Burger King Corp. v. Rudzewicz , 471 U.S. 462, 473, 475 (1985)). A substantial connection can r esult from even a single act. See id . (citing McGee v. Int’l Life Ins. Co. , 355 U.S. 220, 223 (1957)). But there must be a substantia l connection between those contac ts and the operative facts of the litigation. See id . at 156 (quoting Moki Mac , 221 S.W.3d at 585). The operative facts are those on which the trial will focus to prov e the liability of the defendant who is challe nging jurisdiction. See id . at 156, 157 (citing Moki Mac , 221 S.W.3d at 585). Important to this case is the Texas Supreme Court’s application of these principles in Moncrief Oil . There the court declined to exercise specific jurisdiction over a foreign company on the tortious interference claims agai nst it. See id . at 156

––6– 57. The supreme court reasoned t hat when the alleged communica tions on which liability was based occurred at a meeting in California, even t hough individuals from Texas participated in the meeti ng and the alleged result of the meeting was the decision to breach a contract performable in Texas, those opera tive facts were not substantially connected to Texas for the jurisdictional analysi s. Id

. So, I begin by pointing out Stern’s three trips to Florida—simi lar to the California trip in Moncrief Oil —his conversations in Flor ida with Peter, Peter’s allegedly fraudulent statements in Florida to Stern, and the cl ub in Panama are not jurisdictional facts conn ecting Peter to Texas. See id

. Stern appears to recognize this b ecause he claims, “Peter carri ed out his scheme through two agents – Edwin(“Eddy”) Maldonado and David Sebag.” Stern relies on the following evidence to prove Maldonado and Sebag w ere agents, as opposed to independent cont ractors, of Peter:

 Maldonado lived in Texas;

 Sebag lived on Peter’s yacht in Florida;

 “Both agents were financi ally supported by Peter”;

 “Seeking prospective investors in Texas, Peter told Maldonado t hat Maldonado would be rewarded 5% of any investments he obtained f rom Texas investors”;

 “Sebag helped carry out the sch eme by writing Stern emails”;–7–  “Eventually, Sebag acted as Pete r’s bagman by coming to Texas a nd personally collecting cash for Peter's scheme.”

 Stern alleged Sebag and Peter we re in the “Panama Project” or o ne or more related entities and that Sebag’s actions on behalf of the enti ty were, therefore, on behalf of Peter. 2 Even if Stern proved all of these matters with competent eviden ce, which it is doubtful he did on this record, none of these amount to evidenc e that Peter had the right to control the means and details of how Maldonado or Seba g should work towards the goal sought to be accomplished. See Ross , 796 S.W.2d at 210. What Stern’s proof does show is Peter offered 5% compensation for ac quiring investors, and then Maldonado or Sebag worked to acquire investors. Stern ’s proof further shows that Peter was involved when Stern visited him in Florida three times and there made statements on which Stern predicates his claims. In stead, Stern proved at most Maldonado and Sebag were merely employed as independent contractors and not as agents. See Schott Glas , 178 S.W.3d at 315; Bullock , 584 S.W.2d at 551–
52.

2 There is a significant dispute between Peter and Stern about d ifferent entities and their relationship to each of them, Sebag, and the project to develop the club in Pan ama. We need not resolve these tangential matters because even if Sebag acted on behalf of an entity in w hich Peter owned an interest, Stern still must show Peter had the right to control Sebag’s manner and means of his activities for Sebag’s jurisdictional contacts to be attributable to Peter. See, e.g., Olympia Capital Assocs. , L.P. v. Jackson , 247 S.W.3d 399, 412–13 (Tex. App.—Dallas 2008, no pe t.) (agency not shown, just independent contractor relationship, so jurisdictional contacts of independent contractor not attributa ble to non-resident defendant).–8– Stern was obligated to do more than simply label Maldonado and Sebag as Peter’s agents. For Stern to be able to attribute the jurisdic tional acts of Maldonado or Sebag to Peter, Stern had to prove Peter had the right to co ntrol the actions of Maldonado or Sebag. See Tidwell , 867 S.W.2d at 21. This required Stern to prove more than Peter’s right merely to assign tasks; Stern had to pr ove Peter had the right to dictate the means and details of the process by which Maldon ado or Sebag would accomplish the task. See Ross , 796 S.W.2d at 210. Instead, Stern proved at most Maldonado or Sebag were independent contractors and not agents. Schott Glas , 178 S.W.3d at 315; Bullock , 584 S.W.2d at 551–52. Stern’s l ack of any evidence of the critical aspect of agency is outcome determinative because only an agent’s contacts with the forum are attributable t o the principal, not the conta cts of an independent

contractor. See Schott Glas , 178 S.W.3d at 315; Bottle Rock , 108 S.W.3d at 549 n. 4. Courts do not presume an agency relationship exists; rather the party asserting an agency relationship exists has the burden of proof. See Schott Glas , 178 S.W.3d at 315; Bottle Rock , 108 S.W.3d at 549. This is longstanding precedent:

 “Texas law does not presume agenc y, and the party who alleges i t has the burden of proving it. . . . N othing in this record shows t hat IRA Resources even had knowledge, muc h less control, over Martinez or his employer, whose independent actions cannot subject IRA Resources to specific jurisdiction in Texas. Griego’s jurisdic tional argument fails at the most threshold level.” IRA Res., Inc. v. Griego , 221 S.W.3d 592, 596–97 (Tex. 2007) (citing Buchoz v. Klein , 184 S.W.2d 271, 271 (1944));

 “Seeking to establish the purposeful availment prong of the spe cific jurisdiction inquiry, O’Quinn fi rst contends that personal juri sdiction–9– over World is proper in Texas because a principal-agent relatio nship existed between World and Merit when Merit established recruiti ng offices and performed recruiting services in Texas. According to wellestablished law, a defendant m ay be found subject to personal jurisdiction as a result of the actions of an agent. Davis v. Asano Bussan Co. , 212 F.2d 558, 563 (5th Cir. 1954); Sher v. Johnson , 911 F.2d 1357, 1362 (9th Cir. 1990). Under Texas law, in order for a principal-agent relationship to b e established, the principal must have the right to control both the means and the details of the proc ess by which the agent accomplishes the actions at issue. First Nat’l Bank of Fort Worth v. Bullock , 584 S.W.2d 548, 551-52 (Tex. App.-

– Dallas 1979, writ ref’d n.r.e.). Although the World-Merit contract sp ecifies that Merit is to provide the labor and local facilities necessa ry to process applications, World simply does not have contractual au thority to determine where such facilities are to be located. When Mer it established its office in Texas City, Merit purposefully availe d itself of the laws and protections of Texas. However, World did not have sufficient control over the means or details of Merit’s actions to establish an agency relationship.” O’Quinn v. World Indus. Constructors , No. 95-40258, 1995 WL 581830, at *2 (5th Cir. Sept. 19, 1995);

 “Shareholder status is not ipso facto proof of agency. Instead , the ‘essential feature’ of agency is the ‘right of control.’ . . . Here, the evidence presented by Stocksy shows that it did not have a righ t to control Curette when she phot ographed Morris, edited the photographs, and uploaded them onto her Stocksy profile.” Stocksy United v. Morris , 592 S.W.3d 538, 548 (Tex. App.—Houston [1st Dist.] 2019, no pet.) (quoting Capital Fin. & Commer ce AG v. Sinopec Overseas Oil & Gas, Ltd. , 260 S.W.3d 67, 85 (Tex. App.—Houston [1st Dist.] 2008, no pet.));

 “The requirement that Blue Endo keep Trokamed informed of its activities and the market conditions of the territory, and that Blue Endo advise Trokamed if approval, permits, or consents are lacking, is not evidence that Trokamed had an actual right of control over Blue Endo sufficient to attribute Blue Endo’s contacts with Texas to Trok amed. See Greenfield Energy , Inc. v. Duprey , 252 S.W.3d 721, 733 (Tex. App.—Houston [14th Dist.] 2008, no pet.) (concluding that in assessing whether one party’s contacts can be imputed upon anot her, critical test focuses on right and/or exercise of control). To the–10– contrary, the distribution agre ement reflects the parties’ expr ess agreement that Blue Endo would preserve its independent status . . . .” Trokamed GmbH v. Vieira , No. 01-17-00485-CV, 2018 WL 2436610, at *8 (Tex. App.—Houston [1st D ist.] May 31, 2018, no pet.) (me m. op.);

 “Bluesky alleges that Edge was an agent of 21st Century and Geo rgas. Bluesky provides no support for h is position, however . . . . Furthermore, the Edge Solutions Marketing Agreement (‘Agreement ’) between Edge and 21st Century . . . expressly states that Edge is an ‘independent contractor.’ . . . Indeed, the Agreement displays no direction as to when, where, or how Edge was to perform its wor k for 21st Century and Georgas, which implies an independent contract or relationship.” Blueskygreenland Envtl. Sols., LLC v. Rentar Envtl. Sols., Inc. , No. 4:11-CV-01745, 2011 WL 5553706, at *5 (S.D. Tex. Nov. 14, 2011). Requiring Stern to prove Peter’s right to control the manner an d details of Maldonado and Sebag’s work in orde r to prove an agency relation ship is neither trivial nor a mere hyper-technicality. It in fact relates to the foundational structure of our United States and determ ines the negligence liability of employers. In the absence of any evidence of agency, the majority opinion authorizes the extension of the jurisdictional power of Texas to hale into a T exas court a Floridian who never came to Texas and dealt with the Texan when the Texan traveled to Florida three times. This viola tes the Floridian’s due process rights when Texas exercises sovereignty over conduc t that occurred in Florida. See Burger King Corp. v. Rudzewicz , 471 U.S. 462, 472 n.13 (1985) ( “Although this protection oper ates to restrict state power, it must be seen as ultimately a function of the individual liberty interest preserved by the Due Pr ocess Clause rather than as a f unction of federalism–11– concerns.”) (internal quotation deleted). And even if Peter structured his effort to raise investment funds in the Pa nama club by using independent contractors to avoid jurisdiction outside of Florida, he is allowed to do so thereby conforming his conduct to the rule of law. A nonresident is entitled to rely on the c onstitutional limit of Texas’s personal jurisdiction im posed by the requirement that t he nonresident must purposefully avail himself of the benefits of Texas law and str ucture his transactions so as to not profit from Texas’s laws nor subject himself to Te xas’s jurisdiction. See Michiana Easy Livin’ Country, Inc. v. Holten , 168 S.W.3d 777, 785 (Tex. 2005) (“[A] nonresident may purposefully avoid a particular jurisdict ion by structuring its transactions so as neither to profit from the forum’s laws nor be subject to its jurisdiction.” (citing Burger King , 471 U.S. at 463)). There is nothing sinister about doing so just as when individuals and businesses structure thei r conduct to minimize or avoid tax liability. See Ratzlaf v. United States , 510 U.S. 135, 145

– 46 (1994) (absent anti-structuring law such as money-laundering statute, “Courts have noted many occasions on which persons, without violating any law, may structure transactions in order to avoid the impact of some regulation or tax.” (internal quotation deleted), providing example regarding Stamp Act of 18 62 and citing
United States v. Isham , 84 U.S. (17 Wall.) 496, 506 (1873)). This is, in fact, the purpose of the rule of law, to en able everyone to conform their conduct to the law with the expectation the law will be upheld in court. So, when a court decides the reach of one state’s jurisdic tional power crosses state boundar ies to govern conduct–12– that occurred in another state it should only do so carefully, in compliance with the constitutional constraints, and when supported by the facts in the record, which are lacking here. Additionally, failing to require proof of the right to control the manner and details of how work is accomplish ed in order to prove agency wi ll result in holding principals liable for the negligence of the independent contrac tors they hire. There is a reason the pattern jury charge places the jury submissions of agency and independent contractor—both quot ed above—among the general negl igence sections. See Agency and Special Relationships, ¶¶ 10.1, 10.8, T EX

. P ATTERN J URY C HARGE (2018). That is because the issue arises frequently in the co ntext of negligence cases. And just as in the jurisdictional context wh ere the absence of evidence of the right to control the manner and details of how work is done can be dispositive, the difference betw een agency and independent contractor status is liability determinative in negligence cases. That is, if the t ortfeasor is the agent of a principal, the principal is liable for the negligence of the ag ent; but if the tortfeasor is an independent contractor, the putative principal is not lia ble for his negligence. As this Court summarized, Under the doctrine of respondeat superior, an employer is vicar iously liable for the negligence of an agent or employee acting within the scope of his or her agency or e mployment, although the principa l or employer has not personally committed a wrong. Baptist Mem’l Hosp. Sys. v. Sampson , 969 S.W.2d 945, 947 (Tex. 1998); DeWitt v. Harris County , 904 S.W.2d 650, 654 (Tex. 1995). The justification for imposing such liability is that the principal or employer has the right–13– to control the means and methods of the agent or employee’s work

. Baptist Mem’l Hosp. Sys. , 969 S.W.2d at 947; see Newspapers, Inc. v. Love , 380 S.W.2d 582, 585–86 (Tex. 1964). In contrast, an individu al or entity that hires an indepe ndent contractor is generally not vicariously liable for the tortious acts or negligence of that person because the independent contractor has sole control over the me ans and methods of the work to be accomplished. See Baptist Mem’l Hosp. Sys. , 969 S.W.2d at 947; Enserch Corp. v. Parker , 794 S.W.2d 2, 6 (Tex. 1990); Redinger v. Living, Inc. , 689 S.W.2d 415, 418 (Tex. 1985). Espalin v. Children’s Med. Ctr. of Dallas , 27 S.W.3d 675, 683 (Tex. App.—Dallas 2000, no pet.) (emphasis added). So, if we water down the requ irement that there be proof that Peter had the right to control the means and deta ils of how Maldonado or Sebag should accomplish their goal of acquiring investors to nothing more than Peter had the right to control the goal or end sought to be acc omplished, that results in making principals liable for the negligent acts of the independent contractors they hire. This is not some hyper-technical requirement; it’s the w hole basis for a principal’s respondeat superior liability for the negligent act s of his agent: because the principal has the right to control how an agent performs th e manner and details of the work and should exercise that right to control in a reas onably prudent manner towards others. See id . (citing Baptist Mem’l Hosp. Sys. , 969 S.W.2d at 947 and
Love , 380 S.W.2d at 585–86). Reducing proof of agency to nothing m ore than independent contractor status, as the majority does, results in a massive expansion of liability for every individual (here, Peter) and every busin ess alleged to be the principal when its independent c ontractor is alleged to be its agent.–14– On this record, I conclude Stern failed to bring forward any ev idence Peter had the right to control the ma nner and details of how Maldonad o and Sebag were to go about their work to acquire investors. We should not ass ume an agency relationship by which Maldonado and Sebag’s jurisdictional cond uct (and their negligent conduct, too, if any) a re imputed to Peter. On this record, we should not denigrate Peter’s due process rights by aggrandizing the jurisd ictional power of Texas, we should not expand the liability of every alleged prin cipal in negligence cases beyond the common law respondeat superior liability for a gents, and we should reverse the trial court’s order and render judgment gran ting Peter’s special appearance. Because the majority opinion concludes otherwise, I respectfully dissent.

200021DF.P05 /David Evans/ DAVID EVANS JUSTICE