Court Opinion

ID: 4449070
Source: CourtListenerOpinion
Date Created: 2019-10-23 06:10:26.361899+00
Date Added: 2024-06-11T14:45:34.616916
License: Public Domain

Opinion issued October 22, 2019

                                    In The

                             Court of Appeals
                                   For The

                         First District of Texas
                           ————————————
                             NO. 01-19-00036-CV
                          ———————————
             LLOYD R. CUNNINGHAM, TRUSTEE, Appellant
                                      V.
                         CARLOS GOMEZ, Appellee

                   On Appeal from the 269th District Court
                            Harris County, Texas
                      Trial Court Case No. 2016-65188

                         MEMORANDUM OPINION

      Lloyd R. Cunningham, as Trustee for Cunningham Interests II, Ltd., appeals

an interlocutory order granting a special appearance to Carlos Gomez, a New York

resident.
      In one issue, Cunningham contends the trial court erred in granting Gomez’s

special appearance because the jurisdictional evidence supports a conclusion of

specific jurisdiction over Gomez based on his attendance at a business meeting

with Cunningham in Texas at which the two entered into a business agreement and

Gomez made statements supporting Cunningham’s fraud claim.

      The parties’ affidavits and documentary evidence presented                  two

incompatible versions of events. The trial court, as factfinder, had sufficient

evidence and the discretion to accept one version of events and reject the other. We

will not substitute our judgment for the trial court’s on issues of evidentiary weight

or factfinding. Accordingly, we affirm.

                                    Background

      Lloyd R. Cunningham, as Trustee for Cunningham Interests II, Ltd., became

interested in investing in the prepaid-calling-card market. He was introduced to

individuals associated with Unlimited Recharge Inc., a company that provided

international long distance services through a distributor network. Cunningham

avers that he met with Carlos Gomez and Johnny Rodriguez in Houston in 2011 to

discuss investing in Unlimited. According to Cunningham, at the Houston meeting,

Gomez claimed to be the majority owner of Unlimited. Johnny Rodriguez claimed

to have a minority ownership interest in Unlimited.

                                          2
      Cunningham avers that he agreed to loan Unlimited $1 million with a right

to convert the loan principal into 10% equity in Unlimited. He avers that he and

Rodriguez signed a convertible note in November 2011 in connection with the

$1 million loan from the trust to Unlimited. Cunningham further avers that Gomez

agreed to repay the trust’s investment, on demand, if Cunningham ever requested

he do so. 1

      Over the next two years, Cunningham, as Trustee, loaned an additional

$300,000 to Unlimited under the terms of the 2011 convertible note, and,

according to Cunningham, with the same assurances from Gomez that the loan

would be repaid by Gomez, personally, on demand.

      The calling-card business was not successful. Cunningham demanded that

Unlimited repay the $1.3 million loan. It did not. He demanded that Gomez repay

the loan. Gomez did not either.

      In 2016, Cunningham, as Trustee, sued Unlimited and Gomez.2 He sued

Unlimited for breach of contract; he sued Gomez for breach of contract and fraud.

Regarding the fraud claim, Gomez specifically alleged he relied on Gomez’s

agreement to repay the loan on demand in deciding to extend the loan to

Unlimited.

1
      Neither party produced a signed copy of the convertible note or promise to repay.
2
      Unlimited is not a party to this appeal.
                                             3
      Gomez, who is a resident of New York, filed a special appearance. His

affidavit, filed in support of his jurisdictional plea, directly disputing

Cunningham’s description of events. He denied that he had any ownership interest

in Unlimited. He denied he met with Cunningham in Texas to discuss a loan to

Unlimited. He denied he guaranteed Unlimited’s debt.

      Gomez admitted he met with Cunningham in Houston once, but he averred

the meeting was about the possibility of buying a boat for an unrelated business

venture. Gomez argued specific jurisdiction did not exist on such a limited contact

with the state unconnected to the litigation.

      Thus, the trial court was presented with party affidavits that contained

irreconcilable statements of fact regarding the out-of-state defendant’s contacts

with the state in connection with the litigation.

      Two additional affidavits were submitted. Gomez submitted an affidavit by

Rodriguez in which Rodriguez averred that he attended a meeting in Houston with

Cunningham but that Carlos Gomez was not there. According to Rodriguez, the

majority owner of Unlimited is Gomez’s brother, Antonio Gomez. Rodriguez

asserted he had no knowledge of defendant Carlos Gomez ever traveling to Texas

to discuss a loan from Cunningham or guaranteeing the loan. Rodriguez also

averred that Cunningham eventually converted the $1 million loan into a 10%

equity in Unlimited.

                                           4
      Cunningham submitted an affidavit from J. Brent Baker, who averred that he

was at part of the Houston meeting with Cunningham and Carlos Gomez at which

the two men discussed Unlimited. According to Baker, Gomez stated at that

meeting that he was a principal owner of Unlimited and discussed his experience in

the telephone industry. Baker left the meeting before it concluded. Later, in 2016,

Cunningham confided in Baker that he was having trouble getting repaid by

Gomez. According to his affidavit, Baker called Gomez on Cunningham’s behalf,

and Gomez indicated he intended to pay Cunningham back but needed more time.

      Gomez moved to strike Baker’s affidavit because Cunningham had not

previously disclosed Baker as a person with knowledge of relevant facts. Gomez

alternatively requested to depose Baker. The trial court issued an interlocutory

order on October 29, 2018. In it, the trial court noted the conflicting affidavits of

Cunningham and Gomez, denied Gomez’s motion to strike Baker’s affidavit, but

granted Gomez’s motion to allow a jurisdictional deposition of Baker. The trial

court set the special appearance for submission on December 3, 2018, thereby

allowing time to depose Baker.

      Almost two weeks after the submission date, the trial court issued an

interlocutory order granting Gomez’s special appearance. The December 15 order

noted that neither party had submitted supplemental evidence or briefing regarding

any deposition testimony from Baker. The order granted Gomez’s special

                                         5
appearance, dismissed Cunningham’s claims against Gomez, and stated that

Cunningham’s claims against Unlimited remained pending.

      Cunningham requested findings of fact and conclusions of law, but the trial

court denied his request. See Waterman Steamship Corp. v. Ruiz, 355 S.W.3d 387,

428 (Tex. App.—Houston [1st Dist.] 2011, pet. denied) (“A trial court may, but is

not required to, file findings of fact and conclusions of law after it enters an

interlocutory order such as an order denying a special appearance.”); Blair

Commc’ns, Inc. v. SES Survey Equip. Servs., Inc., 80 S.W.3d 723, 725 (Tex.

App.—Houston [1st Dist.] 2002, no pet.); see also TEX. R. APP. P. 28.1(c).

      Cunningham appeals the interlocutory order granting Gomez’s special

appearance and dismissing Cunningham’s claims against Gomez.

                               Personal Jurisdiction

      In his sole issue, Cunningham argues the trial court erred in granting

Gomez’s special appearance because Cunningham established specific jurisdiction

over Gomez and, to the extent Gomez denied jurisdictional facts, his denials were

conclusory and no evidence. Within his single issue, Cunningham argues the

evidence was legally and factually insufficient to support the trial court’s ruling.

                                           6
A.    Applicable law and standard of review

      We review an order granting or denying a special appearance de novo. Moki

Mac River Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex. 2007); Lensing v.

Card, 417 S.W.3d 152, 155 (Tex. App.—Dallas 2013, no pet.).

      In a special appearance, “the plaintiff bears the initial burden of pleading

sufficient facts to bring a nonresident defendant within the reach of the Texas long-

arm statute” that grants personal jurisdiction over a nonresident defendant.

Lensing, 417 S.W.3d at 155. Once the plaintiff meets that burden, the defendant

must “negate all bases of personal jurisdiction that have been pleaded by the

plaintiff.” Id. “In determining whether a defendant has negated all bases, we

examine all the evidence in the record.” Fleischer v. Coffey, 270 S.W.3d 334, 337

(Tex. App.—Dallas 2008, no pet.).

      The trial court frequently must resolve questions of fact before deciding the

jurisdictional question. BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789,

794 (Tex. 2002). When the trial court does not issue findings of fact and

conclusions of law, as here, “all facts necessary to support the judgment and

supported by the evidence are implied.” Id. at 795. In other words, if the trial court

does not issue findings of fact, a reviewing court presumes the trial court resolved

all factual disputes in favor of its judgment. Tri–State Bldg. Specialties, Inc. v. NCI

Bldg. Sys., L.P., 184 S.W.3d 242, 246 (Tex. App.—Houston [1st Dist.] 2005, no

                                          7
pet.) (citing American Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801,

806 (Tex. 2002)). These findings are not conclusive when the appellate record

includes both the reporter’s and clerk’s records, and they may be challenged for

legal and factual sufficiency. Id.

      A nonresident defendant, like Gomez, is subject to personal jurisdiction in

Texas if Texas’s “long-arm” statute authorizes personal jurisdiction and personal

jurisdiction is consistent with federal and state constitutional due process. Moki

Mac, 221 S.W.3d at 574. Because the “long-arm” statute authorizes Texas courts

to exercise personal jurisdiction as far as federal constitutional requirements of due

process allow, the requirements of the statute are met if the constitutional tests are

satisfied. Id. at 575. “Consequently, in many cases, the analysis of whether a Texas

court may assert personal jurisdiction over a nonresident collapses into the single

inquiry of whether jurisdiction comports with federal due-process limitations.”

GJP, Inc. v. Ghosh, 251 S.W.3d 854, 868 (Tex. App.—Austin 2008, no pet.).

      Constitutional due process considerations are satisfied when the plaintiff

shows (1) the defendant has “minimum contacts” with Texas and (2) a Texas court

exercising personal jurisdiction over the defendant would not offend “traditional

notions of fair play and substantial justice.” BMC Software, 83 S.W.3d at 795

(citing Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

                                          8
      “The minimum-contacts test focuses on the question of whether the

defendant has purposefully availed himself of the privilege of conducting activities

in the forum state.” Lensing, 417 S.W.3d at 155. In determining whether the

defendant “purposefully availed himself” of the privilege of conducting activities

in Texas, (1) we must “disregard any forum contacts by the defendant that resulted

solely from the unilateral activity of another party or a third person”; (2) “the

defendant’s contacts with the forum state must be purposeful rather than random,

isolated, or fortuitous”; and (3) “the defendant must have sought some benefit,

advantage, or profit” from its in-state activities or invoke the benefits and

protections of Texas law. Id. at 156. “[I]t is only the defendant’s contacts with the

forum that count: purposeful availment ensures that a defendant will not be haled

into a jurisdiction solely as a result of the unilateral activity of another party or a

third person.” Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 785

(Tex. 2005) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985))

(internal quotation marks and ellipses omitted). “The courts consider the quality

and nature of the defendant’s contacts, not their number or the ubiquity of their

means.” Proppant Sols., LLC v. Delgado, 471 S.W.3d 529, 547 (Tex. App.—

Houston [1st Dist.] 2015, no pet.). The defendant’s “minimum contacts” should be

such that it can “reasonably anticipate being sued” in the state. Id. at 546 (citing

Burger King, 471 U.S. at 475–76).

                                          9
      A defendant’s contacts with the state are further divided into specific

jurisdiction and general jurisdiction. BMC Software, 83 S.W.3d at 795. Specific

jurisdiction is transaction specific; it “is established if the defendant’s alleged

liability arises from or is related to an activity conducted within the forum” state.

Id. at 796. General jurisdiction is broader; it arises from the defendant’s

“systematic and continuous” presence within the forum state and does not hinge on

a link between a specific contact and the claim asserted. PHC–Minden, L.P. v.

Kimberly–Clark Corp., 235 S.W.3d 163, 166 (Tex. 2007). General jurisdiction

“involves a more demanding minimum contacts analysis.” Id. at 168.

      In addition to establishing that a defendant has “minimum contacts” with

Texas, the exercise of jurisdiction also must “comport with traditional notions of

fair play and substantial justice.” Lensing, 417 S.W.3d at 156. To determine

whether this test is met, we consider “(1) the burden on the nonresident defendant,

(2) the forum’s interest in adjudicating the dispute, (3) the plaintiff’s interest in

convenient and effective relief, (4) the interstate judicial system’s interest in the

most efficient resolution of controversies, and (5) the shared interest of the several

states in furthering substantive social policies.” Id.

      Cunningham has alleged specific jurisdiction. Texas courts have specific

personal jurisdiction over a nonresident defendant if “(1) the defendant has

purposefully availed himself of the privilege of conducting activities in the forum

                                           10
state, and (2) there is a substantial connection between those contacts and the

operative facts of the litigation.” Id. “Even a single contact can support

jurisdiction, as long as it creates a substantial connection with the forum state.” Id.

B.    The parties’ conflicting affidavits and the documentary evidence

      Cunningham’s affidavit describes a Houston meeting at which he and

Gomez negotiated a loan from the trust to Unlimited of $1 million and the

execution of a convertible note. Cunningham contends that, during the meeting in

Houston, Gomez asserted he was the majority owner of Unlimited and agreed to

repay the loan personally if Cunningham later demanded repayment. Cunningham

argues that specific jurisdiction exists because his claims arise from Gomez’s

assurances made at this Houston business meeting and the business agreement

between Unlimited and the trust that resulted from it.

      Gomez denies Cunningham’s factual assertions and maintains that he never

claimed to have an ownership interest in Unlimited, never came to Houston to

discuss Unlimited business, and never guaranteed the loan to Unlimited.

      There was documentary evidence in the record for the trial court’s

consideration. Cunningham presented evidence that Gomez had emailed with

Cunningham using an Unlimited email address, that Cunningham sent Gomez

several emails in 2013 expressing concerns about Unlimited’s viability and

                                          11
frustration with Gomez as a “business partner,” and that Gomez had personally

invested money in Unlimited.

      In response, Gomez described some of Cunningham’s evidence as favorable

to Gomez. First, several of the emails Cunningham relied on were with Rodriguez

and Gomez’s brother, not him. Second, one of the emails from Cunningham to

Rodriguez referenced the Houston meeting but made no reference to Gomez

having been there or made any representations.

      Neither party included in the record a signed copy of the convertible note on

which Cunningham based his breach-of-contract claims. Nor was there a signed

document evincing any agreement by Gomez to repay Unlimited’s debts.

      The record does not reveal whether Baker was deposed, as the trial court’s

October 2018 order allowed. No additional evidence was presented to the trial

court regarding the deposition, if it occurred.

C.    We will not substitute our judgment for the trial court’s resolution of
      conflicting evidence

      Trial courts frequently must resolve fact issues before deciding personal

jurisdiction questions. BMC Software, 83 S.W.3d at 794. In that circumstance, it is

the sole province of the trial court to determine the credibility of the witnesses,

weigh the evidence, and resolve conflicts in the evidence. Benoit v. Wilson, 239
S.W.2d 792, 796–97 (Tex. 1951); Huynh v. Nguyen, 180 S.W.3d 608, 615 (Tex.

App.—Houston [14th Dist.] 2005, no pet.); Puri v. Mansukhani, 973 S.W.2d 701,

                                          12
711 (Tex. App.—Houston [14th Dist.] 1998, no pet.). The parties presented the

trial court with incompatible versions of events. Either Gomez came to Houston

and discussed a trust loan to Unlimited of $1 million or he did not. The trial court

implicitly resolved the conflicts in evidence against Cunningham and in favor of

Gomez when the trial court granted Gomez’s special appearance. We are not

factfinders and will not substitute our judgment for that of the factfinder, even if

there is conflicting evidence from which a difference conclusion could be

supported. Puri, 973 S.W.2d at 710–11; see Navasota Res., Ltd. v. Heep

Petroleum, Inc., 212 S.W.3d 463, 469 (Tex. App.—Austin 2006, no pet.).

      There was sufficient evidence to support the trial court’s implied findings of

fact. Gomez’s affidavit denies he attended a business meeting in Houston to

discuss Unlimited or the trust’s potential financial investment in the company.

Gomez denied any ownership interest in Unlimited. And he denied ever agreeing

to reimburse the trust any amounts loaned to Unlimited.3

3
      Cunningham argues these statements in Gomez’s affidavit are conclusory and
      therefore no evidence, but we cannot agree. “Conclusory” means “[e]xpressing a
      factual inference without stating the underlying facts on which the inference is
      based.” Arkoma Basin Exploration Co., Inc. v. FMF Assocs. 1990–A, Ltd., 249
S.W.3d 380, 389 n.32 (Tex. 2008) (quoting BLACK’S LAW DICTIONARY 308 (8th
      ed. 2004)); see Concierge Nursing Centers, Inc. v. Antex Roofing, Inc., 433
S.W.3d 37, 50 (Tex. App.—Houston [1st Dist.] 2013, pet. denied). Gomez did not
      merely state that he had no contacts with Texas or that his contacts were
      insufficient to establish personal jurisdiction. Instead, he averred that he did not
      come to Texas to meet with Cunningham to discuss Unlimited business, nor did he
      agree to guarantee any loan made to Unlimited by the trust. These are specific
      statements denying jurisdictional facts.
                                           13
      Rodriguez’s affidavit was consistent with Gomez’s version of events.

Rodriguez stated that Gomez’s brother is the majority owner of Unlimited, not

Gomez. Rodriguez averred that he negotiated with Cunningham in Houston and

that Gomez was not at the meeting. Further, Rodriguez had no knowledge of

Gomez ever discussing a $1 million loan with Cunningham or agreeing to

personally repay the loan.

      There is an unsigned copy of a convertible loan in the record. It contains a

generic signature line for Unlimited without identifying who might be the officer

or director to sign on the entity’s behalf. Nowhere in the document is an Unlimited

officer or director identified at all.4 Cunningham failed to present any document

tying Gomez to the meeting in Houston, the agreement to loan money to

Unlimited, or a personal obligation to repay the loan if Cunningham demanded

repayment.

      The trial court had sufficient evidence to support its implied findings in

Gomez’s favor. While there was evidence from which a contrary conclusion could

have been reached, we cannot conclude the trial court’s ruling was against the

great weight and preponderance of the evidence so as to be manifestly erroneous or

unjust. See Navasota Resources, 212 S.W.3d at 468–69. The disputed evidence

4
      Cunningham contends Rodriguez, not Gomez, signed the note on behalf of
      Unlimited, even though Gomez is alleged to be the majority owner who personally
      obligated himself to repay the loan on demand.
                                         14
allowed for the trial court’s factual resolution. We will not substitute our judgment

for the factfinder’s, even if some evidence supports a contrary conclusion. See

Puri, 973 S.W.2d at 710–11. Accordingly, we will not disturb the trial court’s

ruling on the special appearance.

                                    Conclusion

      We affirm the trial court’s order granting Gomez’s special appearance and

remand for further proceedings.

                                              Sarah Beth Landau
                                              Justice

Panel consists of Justices Lloyd, Goodman, and Landau.

                                         15