Court of Appeals of Texas, Fifth District, Dallas
FRIED, FRANK, HARRIS, SHRIVER & JACOBSON LLP AND RICHARD A. WOLFE, Appellants
MILLENNIUM CHEMICALS INC., MILLENNIUM AMERICA HOLDINGS, LLC AND MILLENNIUM HOLDINGS, LLC, Appellees
Appeal from the 116th Judicial District Court Dallas County,
Texas, Trial Court Cause No. DC-12-13422
Justices Lang, Myers, and Stoddart.
DOUGLAS S. LANG JUSTICE.
interlocutory appeal, the law firm of Fried, Frank, Harris,
Shriver & Jacobson LLP ("Fried Frank") and
attorney Richard A. Wolfe (collectively,
"appellants" or "defendants") challenge
the trial court's order denying their special appearance.
In twelve issues on appeal, appellants contend this Court
should reverse the trial court's order and render
judgment dismissing this case because the trial court lacked
specific jurisdiction over them and, alternatively, they
"are immune from suit and personal jurisdiction under
the longstanding doctrine of attorney
decide in favor of appellants on their first and twelfth
issues. We need not reach appellants' remaining issues.
We reverse the trial court's order denying
appellants' special appearance and render judgment
dismissing the claims of appellees Millennium Chemicals Inc.;
Millennium America Holdings, LLC; and Millennium Holdings,
LLC (collectively, "Millennium" or
"plaintiffs") against appellants for lack of
FACTUAL AND PROCEDURAL CONTEXT
filed this lawsuit against appellants and Millennium's
former corporate parent, Hanson,  in November 2012. In its
live petition at the time of the order complained of,
Millennium stated in part that Wolfe is a tax partner at
Fried Frank and the principal business offices of both
appellants are located in New York. According to
Millennium's petition, prior to 1996, Hanson and
Millennium were "part of the same corporate family,
" for which Wolfe and others at Fried Frank performed
legal services. In approximately September 1996, Hanson
completed a "demerger transaction" (the
"Demerger") in which it "divided itself into
four parts by business line" and "spun off each
line into a separate company." Millennium, which was
based in New Jersey at that time, was one of those separate
companies. As part of the Demerger, Wolfe drafted a "tax
sharing agreement" (the "Agreement"), which
was executed in September 1996 and "allocated tax
responsibilities between the companies for pre-and
post-Demerger years." According to the petition, (1)
"[o]ver the next decade, Wolfe served as
Millennium's principal outside tax advisor and provided
advice concerning Millennium's rights under the
[Agreement]" and (2) "Millennium never terminated
its relationship with Fried Frank and Wolfe."
2002, the IRS audited Millennium's pre-Demerger tax
returns, disallowed use of $65 million in tax deductions
relating to certain environmental expenses incurred by
Millennium prior to the Demerger, and determined that those
deductions could be claimed by Hanson in later years as
related insurance proceeds were received. Consequently,
pursuant to the Agreement, Hanson was obligated to pay
Millennium for the tax benefit obtained from Hanson's
post-Demerger use of the $65-million tax deduction.
Millennium stated that "following Wolfe's advice,
" the head of Millennium's tax department, Corey
Siegel, "demanded payment from Hanson, " but
"Hanson, after also consulting with Wolfe . .
., refused and provided disingenuous reasons for not
paying." (emphasis original). According to Millennium,
(1) Hanson "instead promised that it would make payment
in the future" if Millennium entered into a
"clarifying" amendment to the Agreement respecting
tax benefits (the "TBA"); (2) again relying on
Wolfe's advice, "Siegel was duped into signing the
TBA, " which was drafted by Wolfe; and (3) although
Wolfe had advised Millennium that "the TBA would create
'certainty' that Hanson would make the tax benefit
payment, " Hanson and Wolfe "used the agreement to
avoid paying Millennium for over a decade."
2004, Millennium was acquired by a Houston-based company and
Millennium's ongoing business activities were
"transitioned" to Houston, where they currently
remain. Also, according to Millennium, "Hanson's
headquarters moved from New Jersey to Dallas in 2006, where
it has remained."
alleged that "[a]fter the execution of the TBA,
Millennium believed that payment from Hanson would be
forthcoming in short order, and it continued to rely on Wolfe
for advice concerning the issue." In 2005, the IRS began
an audit of certain post-Demerger tax returns of Hanson.
Pursuant to that audit, and consistent with its 2002
determinations described above, the IRS issued a report that
permitted Hanson to use the $65-million expenditures
described above to exclude several specified insurance
payments from income. At that time, Millennium again demanded
payment. However, according to Millennium, "Hanson chose
to again manufacture excuses for not paying, with Hanson
(after consulting with Wolfe and Wolfe participating in
crafting the message to Millennium) instead promising that
payment would be made at the conclusion of any appeal."
Millennium stated (1) in 2006, "Hanson and Wolfe"
appealed the 2005 adjustments by the IRS described above (the
"Appeal") and (2) "[t]hrough the substantial
majority of the Appeal, Hanson was located in Texas, Wolfe
frequently communicated with Hanson's employees, and
Wolfe sent his invoices to Texas."
November 2008, a settlement agreement was executed respecting
the Appeal and Hanson subsequently notified Millennium of
that settlement (the "IRS Settlement"). However,
according to Millennium, (1) "Hanson, at Wolfe's
direction, refused to provide Millennium with complete
settlement documentation"; (2) Wolfe
"directed" John Hutchinson, "Hanson's head
of tax, located in Dallas, " to "refuse all
requests for a call, withhold additional documents and
information, and provide deceptive answers concerning the IRS
Settlement" in the hope that Millennium "would not
suspect" that Hanson "had used the $65M
Expenditures to obtain a tax benefit" and thus had a
payment obligation to Millennium; and (3) "[i]n the
course of this cover-up, Wolfe repeatedly ghostwrote and
approved misleading emails for Hutchinson (located in Texas)
to send [Millennium]."
2009, the IRS commenced another audit of Hanson, this time
focused on its 2002- 2003 tax returns (the "2009
Audit"). According to Millennium, "Wolfe again
represented Hanson during this audit, despite the clear
conflict with Millennium, and continued to take positions
that were adverse to Millennium's interests."
Specifically, Millennium stated, (1) "Wolfe participated
in a telephone conference with IRS officials in Dallas where
he provided misleading factual information that blamed
Millennium's prior tax director (Frank Lloyd) for
wrongfully failing to include all four of the [insurance
payments] into income on Millennium's 1995 tax return,
rather than taking positions that would enable Millennium to
be paid under the [Agreement and TBA], " and (2) after
Hanson appealed the proposed adjustment resulting from the
2009 Audit, Wolfe attended a June 2010 meeting with "IRS
Appeals" and Hanson in Dallas, where Wolfe
"continued to advance these arguments concerning
Millennium's prior alleged misconduct, failed to
acknowledge or utilize the $65M Expenditures (which he knew
Millennium wanted in order to secure the tax benefit
payment), and failed to disclose relevant information and
documents from the prior audits." Further, Millennium
alleged that "[b]y continuing to represent Hanson and
take these positions before the IRS, Wolfe directly violated
fiduciary obligations that he owed to Millennium."
approximately summer 2010, Millennium retained Jasper G.
Taylor III, a tax lawyer at a Houston law firm, to
"represent its interests in the 2009 Audit."
Millennium stated (1) "Taylor reached out to Wolfe to
gather information and documents and had several calls with
Wolfe in the summer of 2010"; (2) during the course of
those communications, "many of which Wolfe instigated,
" Wolfe "repeatedly made false representations and
omitted material facts to Taylor and other Millennium
representatives (all located in Texas), " "refused
to share material information and documents, " and
"steadfastly refused to take any steps that would assist
Millennium-his longstanding client-in learning what had
happened during the Hanson audits or gain the long owed tax
benefit payment." Shortly thereafter, Fried Frank
withdrew from its representation of Hanson in the 2009 audit.
Following the resolution of that audit, Hanson
"continued to refuse to pay Millennium" and
"[a]s a consequence, Millennium filed this suit."
Millennium asserted claims against appellants for breach of
fiduciary duty, tortious interference with a contract, fraud,
conspiracy, and legal malpractice.
claim for breach of fiduciary duty, Millennium stated in
part, (1) "Fried Frank and Wolfe acted as legal counsel
for Millennium in connection with the negotiation and
execution of both the [Agreement] and TBA, and advised
Millennium concerning its right to payment from Hanson after
the IRS Adjustment"; (2) "[a]s a result, Fried
Frank and Wolfe owed Millennium fiduciary duties"; and
(3) "Wolfe and Fried Frank breached these fiduciary
duties through extensive contacts with Texas, including
Wolfe's June 2010 meeting with the IRS, Wolfe directing
Hanson's Texas representatives to take steps that would
harm and deceive Millennium, and through deceptive
communications with Millennium's Texas representatives
either directly or by ghostwriting or approving them for
Hanson's Texas representatives to send."
Additionally, Millennium stated in part that Fried Frank and
Wolfe breached their fiduciary duties owed to Millennium when
they "represented Hanson during the 2005 and 2009
audits" and "took positions in the 2005 and 2009
Audits that were adverse to Millennium's interests."
its claim for tortious interference with a contract,
Millennium asserted "Fried Frank and Wolfe knew of the
[Agreement] and TBA (indeed, Wolfe drafted them), and
intentionally caused Hanson to breach its obligations under
those agreements by, among other things: (1) advising Hanson
to delay making required payments to Millennium; (2)
orchestrating the IRS Settlement; (3) directing a cover up
concerning the details of the IRS Settlement to enable Hanson
to delay making required payments to Millennium; (4) advising
Hanson to withhold material documents and information from
Millennium, in violation of the [Agreement]; and (5) making
false representations and omissions to Millennium concerning
the IRS Settlement and relevant Hanson audits."
fraud claim, Millennium contended in part "[d]efendants
made false, material representations and/or omissions to
Millennium, " including falsely representing to
Millennium "(1) the details of the 2005 Audit and IRS
Settlement; (2) that the $65M Expenditures were not utilized
as part of that settlement; (3) that IRS Appeals was
responsible for reversing the exclusion of the 1998 and 2001
[insurance] Payments from income during the IRS Settlement;
and (4) that Millennium had received all material documents
and information relating to the IRS Settlement." Also,
according to Millennium, "[d]efendants repeatedly failed
to disclose material facts to Millennium, " including
"facts concerning the details of the 2005 Audit and IRS
Settlement, " "the fact that IRS Appeals had
utilized the $65M Expenditures in reaching the IRS
Settlement, " and "material facts during a meeting
with the IRS in Dallas in June 2010 during the 2009
its conspiracy claim, Millennium alleged in part that
defendants conspired with Hanson respecting the three claims
described above and "took unlawful, overt acts during
this conspiracy to harm Millennium including through false
and deceptive communications with Millennium, representing
Hanson during the 2005 and 2009 Audits, and directing
Hanson's longstanding efforts to dodge and delay making
required tax benefit payments to Millennium."
as to its legal malpractice claim, Millennium stated in part
that Fried Frank and Wolfe "were, at all relevant times,
in an attorney-client relationship with Millennium" and
"committed legal malpractice by misrepresenting to
Millennium the purpose of the TBA, and omitting material
facts, to induce Millennium to enter into that agreement in
order to . . . lay the groundwork to subsequently deprive
Millennium of its tax benefit recovery rights under the
TSA" and benefit Hanson. Additionally, Millennium
asserted Fried Frank and Wolfe "committed legal
malpractice by representing Hanson in the IRS Settlement with
the IRS which deprived Millennium of the tax benefit recovery
to which it was entitled under the [Agreement] and TBA."
filed a verified special appearance with supporting
evidence and briefs. Plaintiffs filed a response
and opposing brief  supported by evidence. Additionally,
defendants filed "Objections to Plaintiffs'
Declarations and Exhibits." After a hearing, the trial
court denied defendants' special appearance, ordered that
defendants are subject to specific jurisdiction, and
overruled defendants' objections to plaintiffs'
declarations and exhibits. This interlocutory appeal timely
followed. See Tex. Civ. Prac. & Rem. Code Ann.
§ 51.014(a)(7) (West Supp. 2016).
DENIAL OF SPECIAL APPEARANCE
Standard of Review
a court can exercise jurisdiction over a nonresident is a
question of law. See, e.g., Univ. of Ala. v.
Suder Found., No. 05-16-00691-CV, 2017 WL 655948, at *2
(Tex. App.- Dallas Feb. 17, 2017, no pet.) (mem. op.) (citing
Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d
653, 657 (Tex. 2010)). Thus, we review de novo a trial
court's order granting or denying a special appearance.
Id. (citing Moki Mac River Expeditions v.
Drugg, 221 S.W.3d 569, 574 (Tex. 2007)).
the exercise of personal jurisdiction requires the trial
court to resolve any factual disputes before applying the
jurisdictional formula. Id. at *3 (citing Am.
Type Culture Collection, Inc., v. Coleman, 83 S.W.3d
801, 805-06 (Tex. 2002)). When, as here, the trial court does
not file findings of fact and conclusions of law in support
of its special appearance ruling, we infer all facts
necessary to support the judgment and supported by the
evidence. Id.; accord O'Daire v. Rowand
Recovery, LLC, No. 05-16-01097-CV, 2017 WL 930036, at *2
(Tex. App.- Dallas Mar. 9, 2017, no pet.) (mem. op.); see
also Hotel Partners v. Craig, 993 S.W.2d 116, 121 (Tex.
App.-Dallas 1994, pet. denied) ("Absent findings of
fact, we presume that any factual disputes were resolved in
support of the trial court's order."). When the
appellate record includes the reporter's record and
clerk's record, these implied findings are not conclusive
and may be challenged for legal and factual sufficiency.
See, e.g., Friend v. Acadia Holding Corp., No.
05-16-00286-CV, 2017 WL 1536503, at *3 (Tex. App.-Dallas Apr.
27, 2017, no pet.) (mem. op.) (citing BMC Software
Belgium, N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex.
2002)). A legal sufficiency challenge to a finding of fact
fails if there is more than scintilla of evidence to support
the finding. Ahrens & DeAngeli, P.L.L.C. v.
Flinn, 318 S.W.3d 474, 479 (Tex. App.- Dallas 2010, pet.
courts may exercise personal jurisdiction over a nonresident
defendant only if (1) the Texas long-arm statute permits the
exercise of jurisdiction and (2) the jurisdiction satisfies
constitutional due-process guarantees. Suder Found.,
2017 WL 655948, at *3 (citing Am. Type Culture, 83
S.W.3d at 806). Our long-arm statute allows jurisdiction over
a nonresident that does business in Texas. Id.
(citing Tex. Civ. Prac. & Rem. Code Ann. § 17.042
(West 2015)). That statute includes a list of acts that may
constitute doing business in this state, including committing
a tort in whole or in part in Texas. Id. (citing
Civ. Prac. & Rem. Code § 17.042(2)).
"broad doing-business language allows the statute to
reach as far as the federal constitutional requirements of
due process will allow." Id. (quoting Moki
Mac, 221 S.W.3d at 575). Constitutional due process
permits a state to exercise jurisdiction only when a
nonresident defendant has sufficient minimum, purposeful
contact with the state, and the exercise of jurisdiction does
not offend traditional notions of fair play and substantial
justice. Id. (citing Stull v. LaPlant, 411
S.W.3d 129, 133 (Tex. App.-Dallas 2013, no pet.)).
focus on two prongs when considering specific jurisdiction:
(1) purposeful availment and (2) relatedness. Suder
Found., 2017 WL 655948, at *3 (citing Retamco
Operating, Inc. v. Republic Drilling Co., 278 S.W.3d
333, 338 (Tex. 2009)). The purposeful availment prong
analyzes (1) the defendant's own actions, but not the
unilateral activity of another party; (2) whether the
defendant's actions were purposeful rather than random,
isolated, or fortuitous; and (3) whether the defendant sought
some benefit, advantage, or profit by availing itself of the
privilege of doing business in Texas. Id.; see
also Jani-King Franchising Inc. v. Falco Franchising,
S.A., No. 05-15-00335-CV, 2016 WL 2609314, at *3 (Tex.
App.-Dallas May 5, 2016, no pet.) (mem. op.) (citing
Michiana Easy Livin' Country, Inc. v. Holten,
168 S.W.3d 777, 785 (Tex. 2005)). It is "essential in
each case that there be some act by which the defendant
purposefully avails itself of the privilege of conducting
activities within the forum State, thus invoking the benefits
and protections of its laws." Suder Found.,
2017 WL 655948, at *3 (quoting Hanson v. Denckla,
357 U.S. 235, 253 (1958)). Further, the defendant's
activities must justify a conclusion that the defendant could
reasonably anticipate being called into a Texas court.
Id. The "quality and nature of the
defendant's contacts, rather than their number"
governs the inquiry in the minimum contacts analysis.
Id. (citing Am. Type Culture, 83 S.W.3d at
"relatedness" prong analyzes the relationship among
the defendant, the forum, and the litigation. Id. at
*4 (citing Searcy v. Parex Res., Inc., 496 S.W.3d
58, 67 (Tex. 2016)). Courts may exercise specific
jurisdiction when the defendant's forum contacts are
"isolated or sporadic" only if the plaintiff's
cause of action arises from or relates to those contacts.
Id. (citing TV Azteca v. Ruiz, 490 S.W.3d
29, 37 (Tex. 2016); Moncrief Oil Int'l Inc. v. OAO
Gazprom, 414 S.W.3d 142, 150 (Tex. 2013)). Thus, for a
nonresident defendant's forum contacts to support an
exercise of specific jurisdiction, there must be a
"substantial connection between those contacts and the
operative facts of the litigation." Id.
(quoting Cornerstone Healthcare Grp. v. Nautic Mgmt. VI,
L.P., 493 S.W.3d 65, 73-74 (Tex. 2016)). "The
operative facts are those on which the trial will focus to
prove the liability of the defendant who is challenging
jurisdiction." Id. (quoting Leonard v.
Salinas Concrete, LP, 470 S.W.3d 178, 188 (Tex.
App.-Dallas 2015, no pet.)).
calls and correspondence as activities directed at the forum
state" are "generally insufficient" to
demonstrate purposeful availment. Ahrens, 318 S.W.3d
at 484; accord KC Smash 01, LLC v. Gerdes, Hendrichson,
Ltd., L.L.P., 384 S.W.3d 389, 393-94 (Tex. App.-Dallas
2012, no pet.) (contacts "through telephone and email
communications" do not "constitute a contact
demonstrating purposeful availment"); see also
O'Daire, 2017 WL 930036, at *3-4. Further,
"[s]pecific jurisdiction is not established merely by
allegations or evidence that a nonresident committed a tort
in the forum state or 'directed a tort' at the forum
state." Ahrens, 318 S.W.3d at 478; accord
Searcy, 496 S.W.3d at 69. "Even if a nonresident
defendant knows that the effects of its actions will
be felt by a resident, that knowledge alone is insufficient
to confer personal jurisdiction over the nonresident."
Searcy, 496 S.W.3d at 69 (emphasis original).
special appearance law dictates that the plaintiff and the
defendant bear shifting burdens of proof in a personal
jurisdiction challenge. Kelly, 301 S.W.3d at 658;
see also Tex. R. Civ. P. 120a ("The court shall
determine the 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."). The plaintiff bears the initial burden to
plead sufficient allegations to bring the nonresident
defendant within the reach of Texas's long-arm statute.
Kelly, 301 S.W.3d at 658. "Once the plaintiff
has pleaded sufficient jurisdictional allegations, the
defendant filing a special appearance bears the burden to
negate all bases of personal jurisdiction alleged by the
plaintiff." Id. "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." Id. "The defendant can negate
jurisdiction on either a factual or legal basis."
Id. "Factually, the defendant can present
evidence that it has no contacts with Texas, effectively
disproving the plaintiff's allegations."
Id. "The plaintiff can then respond with its
own evidence that affirms its allegations, and it risks
dismissal of its lawsuit if it cannot present the trial court
with evidence establishing personal jurisdiction."
Id. "Legally, the defendant can show that even
if the plaintiff's alleged facts are true, the evidence
is legally insufficient to establish jurisdiction; the
defendant's contacts with Texas fall short of purposeful
availment; for specific jurisdiction, that the claims do not
arise from the contacts; or that traditional notions of fair
play and substantial justice are offended by the exercise of
Application of Law to Facts
preliminary matter, we note that appellants' argument in
their appellate brief is organized by headings that do not
directly correspond to each of their twelve stated issues.
Rather, in the argument portion of their appellate brief,
appellants primarily address what they describe as
Millennium's "legal theories for specific
jurisdiction" and, in doing so, address their appellate
issues as those issues pertain to Millennium's purported
theories. Millennium responds by providing a
"consolidated and reframed" set of issues in its
appellate brief, focused primarily on three "categories
of contacts" it contends are "sufficient to justify
jurisdiction." For purposes of clarity, we will, like
the parties, base the organization of our analysis on
Millennium's asserted bases for personal jurisdiction.
Additionally, for purposes of our analysis, we will assume
without deciding that the evidence offered by Millennium and
objected to by appellants in the trial court is properly
before this Court on appeal.
contends on appeal that "[i]n the course of his
multi-year scheme to enhance his standing with Hanson by
depriving Millennium of a tax benefit payment, Wolfe: (1)
came to Texas and breached duties owed to Millennium while
present in the state; (2) repeatedly induced Hanson's
Texas representatives to engage in tortious acts within Texas
that breached Wolfe's duties; and (3) continuously
communicated with Texas residents to orchestrate each
tortious step and garner ongoing benefits from the
state." Further, Millennium states that "[u]nder
Texas law, each of those categories of contacts is sufficient
to justify jurisdiction because each shows that (1) the
defendant has purposefully availed himself of the privilege
of conducting activities in the forum state, and (2) there is
a substantial connection between those contacts and the
operative facts of the litigation." We address those
three categories of contacts in turn.
Millennium asserts it "has alleged and shown through
evidence that, while physically present in Texas, Wolfe
breached fiduciary duties owed to Millennium" and
therefore Wolfe is "subject to jurisdiction here"
pursuant to section 17.042(2). See Civ. Prac. &
Rem. Code § 17.042(2) (nonresident does business in this
state if he "commits a tort in whole or in part in this
state"). According to Millennium, (1) "Wolfe admits
that he knew his [June 2010] Texas meeting would directly
impact Millennium's right to obtain a tax benefit
payment from Hanson" (emphasis original); (2)
"[n]onetheless, Wolfe came to Texas and took positions
adverse to Millennium"; and (3) "[d]efendants have
provided no evidence to negate those contacts with
Texas." In ...