Court Opinion

ID: 9890810
Source: CourtListenerOpinion
Date Created: 2023-10-16 15:09:32.078859+00
Date Added: 2024-06-11T13:35:24.497876
License: Public Domain

Opinion issued October 12, 2023

                                     In The

                              Court of Appeals
                                    For The

                         First District of Texas
                            ————————————
                              NO. 01-22-00561-CV
                           ———————————
                       DAVID L. SHUMAN, Appellant
                                       V.
   DECLAN JAMES GANLEY, SEAN P. TRACEY, & SEAN P. TRACEY
     ESQ., P.C. D/B/A TRACEY FOX KING & WALTERS, Appellees

                   On Appeal from the 113th District Court
                            Harris County, Texas
                      Trial Court Case No. 2020-61864

               MEMORANDUM OPINION ON REHEARING

      Appellee Declan James Ganley filed a motion for en banc reconsideration of

our April 27, 2023 memorandum opinion. See TEX. R. APP. P. 49.5 (En Banc

Reconsideration). Treating the en banc motion as a request for panel rehearing, we

deny rehearing but withdraw our opinion of April 27, 2023, vacate our judgment of
the same date, and substitute this opinion and judgment in their stead. Ganley’s

motion for en banc reconsideration of our prior opinion is moot.1

      In this interlocutory appeal,2 appellant David Shuman challenges the trial

court’s order denying his special appearance in the case brought by appellees

Declan Ganley, Sean Tracey, and Sean P. Tracey Esq., P.C. d/b/a/ Tracey Fox

King & Walters. Shuman contends that the trial court erred in denying his special

appearance because the court lacks specific jurisdiction over him and in denying

his motion to transfer venue.

      We reverse and remand with instructions to the trial court to dismiss

Shuman from the suit for lack of personal jurisdiction.

                                   Background

      Declan Ganley, an Irish citizen living in Ireland, sued Sean Tracey, a Texas

resident, who also has a home and office in Michigan, and Shuman, a New York

1
      Because we issue a new opinion, the Motion for En Banc Reconsideration is moot.
      In re Wagner, 560 S.W.3d 311, 312 (Tex. App.—Houston [1st Dist.] 2018, orig.
      proceeding) (“Because we issue a new opinion in connection with denial of
      rehearing, the motion for en banc reconsideration is rendered moot.”); see also
      Poland v. Ott, 278 S.W.3d 39, 41 (Tex. App.—Houston [1st Dist.] 2008, pet.
      denied) (noting that motion for en banc reconsideration rendered moot by
      withdrawal and reissuance of opinion and judgment); Brookshire Bros., Inc. v.
      Smith, 176 S.W.3d 30, 40 n.4 (Tex. App.—Houston [1st Dist.] 2004, pet. denied)
      (supp. op. on reh’g) (noting that motion for en banc reconsideration moot when
      motion for rehearing granted and new opinion and judgment issue).
2
      TEX. CIV. PRAC. & REM. CODE § 51.014(a)(7).
                                         2
resident. Ganley sued Tracey in Texas and alleged claims for breach of contract,

fraud, and breach of fiduciary duty. Tracey, in turn, filed a third-party petition

against Shuman for the same claims. The underlying controversy revolves around a

debt owed by Ganley and guaranteed by Shuman.

A.      Shuman guarantees a loan between Ganley and Worth.

        Ganley owned 235,000 shares in Rivada Networks, Inc., a Delaware

corporation with its principal place of business in Virginia. Ganley used his shares

as collateral for a $3 million loan from Worth Capital Holdings (“Worth”). Worth

is a Delaware entity that, at the time, had its principal place of business in New

York.

        A few months after the original loan agreement was executed, Ganley and

Worth entered into an amended agreement that increased the principal by $1.5

million. On the same day, Shuman, who was Ganley’s friend and occasional

business partner, personally guaranteed Ganley’s $4.5 million loan obligation.

Ganley and Worth modified the loan agreement several times, including extending

the maturity date and increasing the amount of the initial obligation in return for

extension fees. The modifications included a list of various payoff amounts and

dates whereby Worth would acquire Rivada stock at certain prices. After all

modifications, Ganley owed Worth $9 million.

                                         3
      Ganley never repaid Worth. Worth foreclosed on Ganley’s debt, including

the Rivada stock that Ganley had used to secure the loan. Worth obtained Rivada

common stock for $100,000. Worth sued Shuman in federal court in New York on

Shuman’s personal guarantee of Ganley’s loan.

B.    Ganley attempts to settle the lawsuit between Worth and Shuman.

      While Worth’s suit against Shuman was pending, Ganley contacted Shuman

and told him that Tracey was an investor in Rivada and a close acquaintance.

Ganley told Shuman that he had been working with Tracey to obtain funding to

resolve Worth’s claims against Shuman so that the Rivada shares Worth had

acquired could be recouped.

      Ganley suggested that Shuman speak by phone with Tracey about his efforts

to obtain settlement funding. Shuman and Tracey spoke by phone and email

periodically for a few months regarding Shuman’s efforts to negotiate a settlement

with Worth and Tracey’s efforts to obtain investment funds in Rivada for a

settlement. The men never met in person.

      Tracey found two investors, one of whom was in Texas. Ultimately, Shuman

and Worth entered into a settlement agreement. In his capacity as Chairman and

CEO of Rivada, Ganley approved the transfer of Rivada stock from Worth to

Shuman, pursuant to the settlement agreement, and from Shuman to the two

investors in return for their settlement funding.

                                           4
      Following the settlement, Shuman assigned his rights under the loan

agreement, which he acquired from Worth through the settlement, to a third party,

Astrea NYNY LLC, which sued Ganley in state court in New York. The New

York court rendered a default judgment against Ganley.

C.    Ganley and Tracey sue Shuman.

      Ganley and Tracey argue that Shuman did not follow through on their

agreement regarding Rivada shares after the settlement. They argue that Shuman

retained Rivada shares that the three men had agreed would be dispersed to each of

them. A few weeks after the settlement agreement, Ganley sued Tracey in Texas

alleging that he breached various duties by failing to secure the return of the

Rivada stock collateral. Tracey filed a third-party claim against Shuman. Tracey

asserted that Shuman was subject to personal jurisdiction in Texas because “the

acts and omissions giving rise to this cause of action occurred in Texas and/or

Shuman engaged the services of Tracey in Houston, Texas.” Shuman filed a

special appearance and motion to dismiss or transfer venue pursuant to the

contractual forum-selection clauses in the underlying loan and settlement

documents.

      Ganley amended his petition to add claims against Shuman. Ganley alleged

that Shuman was subject to personal jurisdiction in Texas because Shuman

“engaged and purposefully availed himself of services by and through Defendant

                                        5
Tracey in Houston, Texas. A substantial portion of the acts and omission

complained of occurred in Harris County, Texas.” Shuman filed an additional

special appearance and motion to dismiss or transfer venue as to Ganley’s claims.

      Both Ganley’s and Tracey’s claims against Shuman allege that Shuman

improperly retained 46,000 shares of 253,000 shares of Rivada stock that Worth

assigned to Shuman through the settlement. Ganley and Tracey argue that Shuman

previously agreed not to retain any of the stock. The trial court denied Shuman’s

special appearance and motion to dismiss or transfer. The trial court did not make

any findings of fact or conclusions of law. Shuman appeals.

                               Personal Jurisdiction

      In his first issue, Shuman argues that the trial court erred in denying his

special appearance because he did not have the minimum contacts with Texas

necessary for Texas to assert jurisdiction over him.

      The existence of personal jurisdiction is a question of law, which must

sometimes be preceded by the resolution of underlying factual disputes. BMC

Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002); Paul Gillrie

Inst., Inc. v. Universal Comput. Consulting, Ltd., 183 S.W.3d 755, 759 (Tex.

App.—Houston [1st Dist.] 2005, no pet.). When the underlying facts are

undisputed or otherwise established, we review a trial court’s denial of a special

appearance de novo. Paul Gillrie Inst., 183 S.W.3d at 759. Where, as here, a trial

                                          6
court does not issue findings of fact or conclusions of law with its

special-appearance ruling, all fact findings necessary to support the judgment and

that are supported by the evidence are implied. Marchand, 83 S.W.3d at 795; Paul

Gillrie Inst., 183 S.W.3d at 759.

      A trial court determines a “special appearance on the basis of the pleadings,

any stipulations made by and between the parties, such affidavits and attachments

as may be filed by the parties, the results of discovery processes, and any oral

testimony.” TEX. R. CIV. P. 120a(3). The plaintiff bears the initial burden of

pleading allegations sufficient to bring the nonresident defendants within the

provisions of the Texas long-arm statute. Am. Type Culture Collection v. Coleman,

83 S.W.3d 801, 807 (Tex. 2002); Paul Gillrie Inst., 183 S.W.3d at 759. The burden

of proof then shifts to the nonresident defendants to negate all the bases of

jurisdiction alleged by the plaintiff. Kawasaki Steel Corp. v. Middleton, 699

S.W.2d 199, 203 (Tex. 1985); see also Kelly v. Gen. Interior Constr., Inc., 301

S.W.3d 653, 658 (Tex. 2010) (“Because the plaintiff defines the scope and nature

of the lawsuit, the defendant’s corresponding burden to negate jurisdiction is tied

to the allegations in the plaintiff’s pleading.”).

      A single basis for personal jurisdiction is sufficient to confer jurisdiction

over a nonresident defendant. See Citrin Holdings, LLC v. Minnis, 305 S.W.3d

269, 279 (Tex. App.—Houston [14th Dist.] 2009, no pet.). If a nonresident

                                            7
defendant is subject to specific jurisdiction, this is sufficient. See Am. Express

Centurion Bank v. Haryanto, 491 S.W.3d 337, 346 n.8 (Tex. App.—Beaumont

2016, no pet.); Minnis, 305 S.W.3d at 279. A court need not assess the nonresident

defendant’s contacts on a claim-by-claim basis where, as here, all claims

essentially arise from the same forum contacts. See Moncrief Oil Int’l Inc. v. OAO

Gazprom, 414 S.W.3d 142, 150–51 (Tex. 2013); Proppant Sols. LLC v. Delgado,

471 S.W.3d 529, 537 (Tex. App.—Houston [1st Dist.] 2015, no pet.).

      A court may assert personal jurisdiction over a nonresident defendant only if

the requirements of both the Fourteenth Amendment’s due process clause and the

Texas long-arm statute are satisfied. See U.S. CONST. amend. XIV, § 1; TEX. CIV.

PRAC. & REM. CODE § 17.042; Guardian Royal Exch. Assurance, Ltd. v. English

China Clays, P.L.C., 815 S.W.2d 223, 226–27 (Tex. 1991). The Texas long-arm

statute allows a court to exercise personal jurisdiction over nonresident defendants

who do business in Texas. TEX. CIV. PRAC. & REM. CODE § 17.042. A nonresident

defendant “does business” in Texas if he “contracts by mail or otherwise with a

Texas resident and either party is to perform the contract in whole or in part” in

Texas, he “commits a tort in whole or in part” in Texas, or he “recruits Texas

residents, directly or through an intermediary located in [Texas], for employment

inside or outside the state.” Id. The Texas Supreme Court has repeatedly

interpreted this statutory language “to reach as far as the federal constitutional

                                         8
requirements of due process will allow.” Guardian Royal, 815 S.W.2d at 226.

Therefore, the requirements of the Texas long-arm statute are satisfied if the

exercise of personal jurisdiction comports with federal due process limitations. Id.

      The United States Constitution permits a state to assert personal jurisdiction

over a nonresident defendant only if he has some minimum, purposeful contacts

with the state and if the exercise of jurisdiction will not offend traditional notions

of fair play and substantial justice. Dawson-Austin v. Austin, 968 S.W.2d 319, 326

(Tex. 1998). Nonresident defendants who have purposefully availed themselves of

the privileges and benefits of conducting business in the state have sufficient

contacts with the state to confer personal jurisdiction. See Guardian Royal, 815

S.W.2d at 226.

      The “purposeful availment” requirement has been characterized by the

Texas Supreme Court as the “touchstone of jurisdictional due process.” Michiana

Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 784 (Tex. 2005). In

Michiana, the Texas Supreme Court articulated three important aspects of the

purposeful availment inquiry. Id. at 785. First, only the nonresident defendant’s

contacts with the forum count. Id. This ensures that a nonresident defendant is not

haled into a jurisdiction solely by the unilateral activities of a third party. Id. (citing

Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)). Second, the acts

relied on must be purposeful; the nonresident defendant may not be haled into a

                                            9
jurisdiction solely based on contacts that are “random, isolated, or fortuitous.”

Michiana, 168 S.W.3d at 784 (quoting Keeton v. Hustler Mag., Inc., 465 U.S. 770,

774 (1984)). Third, the nonresident defendant “must seek some benefit, advantage,

or profit by ‘availing’ [himself] of the jurisdiction” because “[j]urisdiction is

premised on notions of implied consent” and by “invoking the benefits and

protections of a forum’s laws, . . . a nonresident consents to suit there.” Id. (citing

World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)).

      The nonresident defendant’s contacts with a forum can give rise to either

general or specific jurisdiction. Marchand, 83 S.W.3d at 795. Specific jurisdiction

is established if the nonresident defendant’s alleged liability arises from or relates

to an activity conducted within the forum. Id. at 796. When specific jurisdiction is

asserted, the minimum contacts analysis focuses on the relationship between the

nonresident defendant, the forum, and the litigation. Moki Mac River Expeditions

v. Drugg, 221 S.W.3d 569, 575–76 (Tex. 2007).

      Foreseeability is an important consideration in deciding whether a

nonresident defendant has purposefully established minimum contacts with the

forum state. Burger King Corp., 471 U.S. at 474; Guardian Royal, 815 S.W.2d at

227. The concept of foreseeability is implicit in the requirement that there be a

substantial connection between the nonresident defendant and Texas, arising from

                                          10
actions or conduct of the nonresident defendant purposefully directed toward

Texas. Guardian Royal, 815 S.W.2d at 227.

A.    Specific Jurisdiction3

      Shuman argues that the trial court erred in concluding that Texas has

specific jurisdiction over him because he did not have substantial contacts with

Texas, his interaction with a Texan was fortuitous rather than purposeful, and he

did not seek advantage or profit by availing himself of Texas.

      In determining whether Ganley and Tracey pleaded sufficient jurisdictional

facts, we consider their pleadings as well as their responses to the amended special

appearance. See TEX. R. CIV. P. 120a(3); Max Protetch, Inc. v. Herrin, 340 S.W.3d

878, 883 (Tex. App.—Houston [14th Dist.] 2011, no pet.); Touradji v. Beach Cap.

P’ship, L.P., 316 S.W.3d 15, 23 (Tex. App.—Houston [1st Dist.] 2010, no pet.). In

conducting our review, we accept as true the allegations in Tracey’s and Ganley’s

petitions. See Tex. Dep’t of Transp. v. Ramirez, 74 S.W.3d 864, 86 (Tex. 2002) (in

considering jurisdictional motions, reviewing court construes liberally pleadings in

plaintiff’s favor); Max Protetch, 340 S.W.3d at 883; Touradji, 316 S.W.3d at 23.

      Ganley asserted first-party claims against Tracey for failing to ensure that

the Rivada common stock was returned to Ganley. He also asserted claims against

Shuman for failing to return the common stock. Tracey, in turn, asserted first and

3
      Neither party argues the existence of general jurisdiction.
                                           11
third-party claims against Shuman claiming that Shuman was the true cause of

Ganley’s injuries.

      Both Ganley and Tracey allege the same contacts with Texas to justify

personal jurisdiction over Shuman. They each allege that Shuman purposefully

availed himself of services from Tracey in Houston and that a substantial portion

of the acts and omissions underlying their claims occurred in Harris County.

      In his special appearance, Shuman asserts that his only connection to Texas

is that he had phone and email communications with Tracey, which he argues are

insufficient to support personal jurisdiction. In his affidavit, Shuman states that it

was Ganley who sought assistance from Tracey for outstanding debt in New York.

Tracey first called Shuman at Ganley’s behest. Shuman spoke with Tracey by

phone and email, but he never met Tracey in person or conducted a video

conference.

      Shuman also argues that the dispute in the underlying case has nothing to do

with Texas. None of the transactions or occurrences involved in the case occurred

in Texas. Ganley’s loan was not executed or performed in Texas, nor was

Shuman’s guarantee. Shuman asserts that the only connection with Texas is

Tracey’s residency.

      In his response to Shuman’s special appearance, Ganley alleges that the trial

court has specific jurisdiction over Shuman because Shuman “sought counsel from

                                         12
a Texas resident and licensed attorney (Tracey), asked Tracey to raise settlement

funds from other Texas residents, regularly communicated with Tracey about the

lawsuit and settlement, promised payment of company shares to Tracey, and

converted shares rightly owned by Tracey.” Ganley attached an affidavit by Tracey

that states that Tracey was contacted by Ganley after a lender foreclosed on shares

of Rivada that Ganley had pledged for a loan and co-signed with Shuman. The

affidavit states that both Ganley and Shuman wanted Tracey’s help to find people

who could contribute to settling the litigation in exchange for a portion of Rivada

shares. In the affidavit, Tracey testifies that he found a Texas-based investor

willing to contribute, and that Shuman was not consulted because he had no

standing in the interest of the shares. Tracey states that he emailed with Shuman

and Shuman’s attorneys regularly between May and October 2020 regarding the

settlement and the funds raised for the settlement.

      Shuman filed a supplement in support of his special appearance and attached

another affidavit executed by Tracey in a separate action in New York. While

Shuman disputes much of the New York affidavit, he points out that in the New

York suit’s affidavit, Tracey represents that he was hired by Ganley, rather than as

a joint effort between Ganley and Shuman. The affidavit states that Tracey

represented Ganley in his dispute with Worth Capital concerning shares of Rivada

that collateralized a loan and were foreclosed upon. Tracey states that he brought

                                         13
two investors to Ganley’s attention and worked on a deal where the investors

would provide investment capital to Rivada which could be used to fund a

settlement with Worth Capital. Tracey’s affidavit in the New York action states:

“Mr. Shuman never spoke to either investor, and it was entirely due to my contacts

and work on behalf of Mr. Ganley that Mr. Shuman was in any position to settle

his lawsuit with Worth Capital at all.”

      Shuman also attached emails to the supplemental response showing that

Tracey was in Michigan during some of their communication. He asserts that he

had reason to believe that the lawyer Ganley hired was in Michigan rather than

Texas.

      On appeal, Shuman argues that communication with Tracey alone is not

enough to establish specific jurisdiction. He cites to Michiana and argues that

phone calls are not enough to establish purposeful availment. 168 S.W.3d at 791

(stating technology changes make reliance on phone calls obsolete as proof of

purposeful availment). He further argues that to the extent Ganley and Tracey

argue that Shuman entered into a contract with them, a contract formed by phone is

still insufficient to confer jurisdiction. See id. at 787 (holding contract formed by

phone with Texas resident insufficient to confer jurisdiction for disputes arising

from contract). Shuman asserts that the bulk of his communication with Tracey

occurred while Tracey was residing in his second home in Michigan. Shuman

                                          14
reiterates that the only connection between Shuman and Texas supported by the

record is the fact that Shuman communicated with Tracey by phone and email.

      Ganley and Tracey argue on appeal that Shuman sought financial benefit in

Texas by soliciting a Texas resident for a loan and that Tracey was Shuman’s agent

for doing so. Shuman responds that Tracey’s affidavit’s allegation that he acted as

Shuman’s agent in Texas is conclusory and that there is no evidence that Shuman

engaged in any conduct in or directed at Texas.

B.    Analysis

      1.     Purposeful Availment

      The pleadings and evidence do not support the trial court’s implied findings

that Shuman had sufficient minimum contacts with Texas and that these contacts

were substantially connected to the operative facts of the litigation for the exercise

of specific jurisdiction over Shuman to be proper. See Moki Mac, 221 S.W.3d at

575–76. We conclude that Shuman has negated all bases for an assertion of

specific jurisdiction over him.

      Regarding agency, Tracey and Ganley did not meet their initial burden of

pleading allegations sufficient to confer jurisdiction. There is no pleading to

support Tracey’s or Ganley’s allegation that Tracey was Shuman’s agent. Ganley

alleged claims for breach of contract, fraud, and breach of fiduciary duty. Tracey

alleged claims against Shuman for breach of contract and breach of fiduciary duty.

                                         15
“[T]he plaintiff bears the initial burden of pleading allegations sufficient to confer

jurisdiction.” Moncrief Oil, 414 S.W.3d at 149. A defendant is obligated to “negate

all possible grounds for personal jurisdiction alleged by the plaintiff.” Capital Fin.

& Com. AG v Sinopec Overseas Oil & Gas, Ltd., 260 S.W.3d 67, 81 (Tex. App.—

Houston [1st Dist.] 2008, no pet.) (refusing to consider agency theory on appeal

when not pleaded). The defendant has no burden to negate a potential basis for

personal jurisdiction when it is not pleaded by the plaintiff. Kelly v. Gen. Interior

Constr., Inc., 301 S.W.3d 653, 658 (Tex. 2010). Tracey and Ganley waited until

appeal to assert agency as a basis for jurisdiction. Accordingly, Shuman is not

obligated to negate it.

      Moreover, the uncontroverted evidence does not establish an agency

relationship. Agency is a consensual relation between two parties “by which one

party acts on behalf of the other, subject to the other’s control.” Reliant Energy

Servs., Inc. v. Cotton Valley Compression, L.L.C., 336 S.W.3d 764, 782–83 (Tex.

App.—Houston [1st Dist.] 2011, no pet.) (internal quotation omitted).

Authorization to act and control of the action are the two essential elements of

agency. Id. at 783. Agency is never presumed and the party asserting the

relationship has the burden of proving it. Capital Fin. & Com., 260 S.W.3d 67 at

83. The evidence does not support that an agency relationship existed between

Shuman and Tracey. Tracey’s declarations establish that he did not consult

                                         16
Shuman regarding negotiations with investors and that the deal with the investors

was “exclusively negotiated” by Tracy through Ganley. Tracey also stated that he

represented Ganley, while Shuman had his own lawyers. There is no evidence to

support an agency theory, and therefore, no basis to impute Tracey’s conduct to

Shuman for jurisdictional purposes. See Suzlon Energy Ltd. v. Trinity Structural

Towers, Inc., 436 S.W.3d 835, 843 (Tex. App.—Dallas 2014, no pet.) (holding no

evidence to support agency-based theory of jurisdiction).

      Ganley’s and Tracey’s allegations that Shuman’s communication with

Tracey establishes jurisdiction is similarly deficient. Ganley and Tracey rely on the

fact that for a period of months, Tracey communicated by phone and email with

Shuman or his counsel. Communications, without more, cannot support

jurisdiction. See Old Republic Nat’l Title Ins. Co. v. Bell, 549 S.W.3d 550, 560

(Tex. 2018) (“On their own, numerous telephone communications with people in

Texas do not establish contacts.”). The fact that Shuman or his counsel discussed

with Tracey the progress toward settling the lawsuit with Worth by email or phone

on numerous occasions does not demonstrate the quality and nature of

communications to establish purposeful availment. Searcy v. Parex Res., Inc., 496

S.W.3d 58, 74–75 (Tex. 2016) (stating that discussions on acquiring non-Texan

assets do not establish purposeful contacts in Texas). As in Searcy, “the [Texas-

based defendant] involved could, quite literally, have been based anywhere in the

                                         17
world, and [the Canadian defendant company] would presumably have interacted

with it in the same way as they did with its employees [in Canada].” Id. (holding

no specific jurisdiction over Canadian defendant). The mere coincidence that

Tracey was in Texas does not demonstrate that Shuman purposefully availed

himself of Texas for jurisdictional purposes.

      Ganley argues that jurisdiction is proper because not only did Shuman

deliberately correspond with Tracey in Texas, but he also sought “some benefit,

advantage, or profit by availing” himself of the jurisdiction. Michiana, 168 S.W.3d

at 785 (stating court must find that defendant sought “benefit, advantage, or profit

by availing himself of this State’s jurisdiction”). Ganley argues that Shuman

sought benefit of Texas by actively soliciting loans from Texans. The record does

not support this contention. The uncontroverted evidence establishes that Ganley

hired Tracey without Shuman’s involvement. In negotiating the lawsuit with

Worth, Tracey represented Ganley, and Shuman had his own counsel. Tracey

worked exclusively on behalf of Ganley, and Shuman was not consulted about

selecting or negotiating with any investors, whether based in Texas or elsewhere. It

is fortuitous that Tracey was in Texas when he called Shuman at Ganley’s request.

It is equally fortuitous that Ganley chose Tracey, a Texas resident, to help resolve

his litigation with Worth in New York and that one of the investors was a Texan.

                                         18
The record does not reflect that Shuman solicited business or sought the benefit of

Texas in a way that satisfies the long-arm statute. Michiana, 168 S.W.3d at 785.

      2.     Relatedness of Contacts to Litigation

      Finally, Ganley and Tracey have not pleaded jurisdictional facts to satisfy

the second prong of specific jurisdiction, which requires that there be a “substantial

connection” between the defendant’s forum contacts and the “operative facts of the

litigation.” Moki Mac, 221 S.W.3d at 585. We consider what the claims are

“principally concerned with,” whether the contacts will be “the focus of the trial”

and “consume most if not all of the litigation’s attention,” and whether the contacts

are “related to the operative facts” of the claim. TV Azteca v. Ruiz, 490 S.W.3d 29,

53 (Tex. 2016) (internal quotations omitted). Ganley’s and Tracey’s claims

concern alleged statements by Shuman about the return of Rivada stock. Shuman

denies making an agreement with Ganley or Tracey regarding the stock, but even if

their allegations are true, the facts do not have a nexus to Texas. There is no

allegation about the source of the funds used to satisfy Ganley’s debt to Worth and

to settle Worth’s suit against Shuman. There is no allegation or claim related to

Tracey’s efforts to obtain those funds. The investors are not parties to the lawsuit,

nor do the claims involve their participation in the settlement or their investment.

The fact that Tracey found a Texas investor is unrelated to whether Shuman

breached a contract, breached a fiduciary duty, or committed fraud against Tracey

                                         19
or Ganley. See Ajamie LLP v. Podesta Grp., Inc., No. 01-19-00503-CV, 2020 WL

716734, at *5 (Tex. App.—Houston [1st Dist.] Feb. 13, 2020, no pet.) (mem. op.)

(holding “marginally relevant” Texas contacts insufficient to satisfy substantial

connection between contacts and operative facts of litigation because contacts did

not concern disputed facts).

      Accordingly, we sustain Shuman’s issue regarding denial of his special

appearance. See Peredo v. M. Holland Co., 310 S.W.3d 468, 476 (Tex. App.—

Houston [14th Dist.] 2010, no pet.) (when minimum-contacts requirement not met,

unnecessary to address “fair play” portion of due-process test).

                               Motion to Transfer Venue

      Having reversed the trial court’s ruling on specific jurisdiction over Shuman,

we need not reach Shuman’s second issue that the trial court erred in denying his

motion to transfer venue. See TEX. R. APP. P. 47.1.

                                          20
                                  Conclusion

      Having concluded that Shuman lacks sufficient contacts with Texas to

support the trial court’s exercise of personal jurisdiction, we reverse the trial

court’s order denying his special appearance, render judgment dismissing the

claims against him.

                                            Peter Kelly
                                            Justice

Panel consists of Chief Justice Adams and Justices Kelly and Goodman.

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