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Central Petroleum Ltd. v. Geoscience Resource Recovery, LLC

Court of Appeals of Texas, Fourteenth District

December 14, 2017

CENTRAL PETROLEUM LIMITED, Appellant
v.
GEOSCIENCE RESOURCE RECOVERY, LLC, Appellee

         On Appeal from the 152nd District Court Harris County, Texas Trial Court Cause No. 2015-42477.

          Panel consists of Justices Christopher, Brown, and Wise.

          OPINION

          Tracy Christopher Justice

         In this suit for breach of contract and related claims, defendant Central Petroleum, an Australian company, appeals the denial of its special appearance. Because the evidence is sufficient to support the trial court's implied finding that a Central employee acting within the scope of his apparent authority executed a contract containing a Texas forum-selection clause with plaintiff Geoscience Resource Recovery, LLC ("GRR"), we conclude that the trial court has specific jurisdiction over GRR's breach-of-contract claim against Central. We further conclude that the operative facts of GRR's related quantum-meruit and fraudulent-misrepresentation claims have a substantial connection to Texas. Finally, we hold that the trial court's exercise of specific jurisdiction over all of GRR's claims against Central does not offend traditional notions of fair play and substantial justice. We accordingly affirm the trial court's denial of Central's special appearance.

         I. Background

         Central is an Australian corporation that owns approximately 70 million acres of petroleum and mineral rights in that country. Needing a farmout partner "to develop a significant portion of that acreage with a substantial drilling and seismic program, " Central's then-managing director John Heugh attended the North American Prospect Expo ("NAPE") in Houston in February 2011. There Heugh met Niraj Pande, sole owner of GRR. Later that year, Central retained GRR's services in helping Central find a suitable farmout partner.

         A. The First Agreement

         Central and GRR agreed in their 2011 contract that their agreement would be governed by the laws of Western Australia, and that any dispute in connection with the agreement must be settled before a sole arbitrator in Perth. GRR agreed to assist in finding a farmout partner; to assist "in negotiations relating to the documentation and the memorializing of the Transaction (i.e., an agreement);" and to "provide advice to [Central] as to strategy and attend any negotiation sessions or meetings with the intent of resolving any issues and also act as an intermediary for [Central] providing advice and direction on any Transactions contemplated." For these services, GRR was to be paid $10, 000 (Australian dollars) per month, plus expenses. The agreement additionally provided that

GRR may negotiate and require the potential farm-in partner[1] to pay GRR a commission fee being up to 2% of all acquisition costs and capital development costs provided directly by such potential farm-in partner in the event a farm-in is arranged. . . . [I]t is within GRR's sole and absolute discretion whether to negotiate such payment. [Central] shall have no liability or obligation whatsoever to pay any portion of any said "commission fee" payable by the potential farmin partner . . . . GRR shall from time-to-time promptly disclose to [Central] the detail and progress of any negotiations in respect to the said "commission fee", including, but not limited to, if a Transaction was likely not to proceed with a potential farm-in partner . . . because the said "commission fee" was being required to be paid to GRR.

         The agreement stated that it would expire on December 31, 2011 unless the parties otherwise agreed in writing. Because GRR postponed some of its services, the agreement was extended to February 10, 2012. Well before that, however, both parties to the contract realized that no potential partner would agree to enter into a farmout agreement that required the partner to pay GRR's commission. Pande and Heugh therefore began discussing the need to amend or replace the agreement.

         B. The Second Agreement

         After the First Agreement expired, Pande emailed Heugh to ask if Center wanted GRR "to continue work desc[r]ibed in our signed agreement." Heugh answered, "Yes, until otherwise advised." Heugh then advised Pande that Central's exploration manager Trevor Shortt would be representing Central at the upcoming NAPE conference. In an email copied to Central's secretary and general counsel Daniel White, Heugh wrote to Pande and Shortt that Shortt "has been given all responsibility for farmouts, pls contact him with any enquiries." Later that day, Heugh emailed Central's chairman of the board Henry Askin and Pande, "Niraj [Pande] be aware that all farmout deals discussions promotions and negotiations are to be managed exclusively on our side by Trevor Shortt." White and at least two of Central's directors were copied on the email.

         While Shortt was in Houston for the NAPE conference later that month, he and Pande allegedly negotiated the Second Agreement between Central and GRR. At Shortt's suggestion, the Second Agreement stated, "The parties agree to keep this agreement confidential and not to transmit, email, fax or discuss the contents of this agreement, particularly with John Heugh or any other parties." They agreed that GRR would continue its work and continue to draw a retainer, but because no major company would pay GRR's "success" fee, Central would pay it. The agreement required Central to present a formal agreement through its board of directors by April 15, 2012, concerning the percentage of the farmout partner's investment that would be paid to GRR as a success fee, but that if Central failed to present a formal agreement by that date, then GRR would be entitled to the success fees and retainer "that are usual and customary in the energy industry that investment banking firms and petroleum engineering firms charge for the services that GRR is providing on a gross basis." They agreed that if the farmout partner was a company that GRR had contacted independently, GRR would receive 100% of the success fee, and that if the farmout partner instead was a company that had stopped by Central's NAPE booth, GRR would receive only half of that amount. The Second Agreement stated that it would be governed by Texas law and that "any dispute will be resolved by suit either in Texas or California." After Shortt and Pande signed the Second Agreement, Shortt left with the document.

         The next day, Shortt went with Pande to a meeting Pande had arranged with Total E&P New Ventures, Inc. The meeting led to a joint venture between Central and Total E&P Activités Pétrolièrs in which, according to GRR's live pleading, Total agreed to the expenditure of $190 million (Australian dollars). In the meantime, however, Central required GRR to cease performing services for it. Central has not paid GRR in accordance with the Second Agreement.

         GRR sued Central Petroleum, pleading claims alternatively for breach of contract, quantum meruit, and fraudulent misrepresentation. Central filed a special appearance, which the trial court denied. In four issues, Central challenges the trial court's denial of its special appearance.

         II. Issues Presented

Central states the following four issues for review:
1. Did Central purposefully avail itself of Texas by twice attending NAPE, a global convention for companies seeking global partners for global exploration?
2. Did Central purposefully avail itself of Texas by allegedly signing a contract in Texas with a Nevada company for services to be performed anywhere needed in the world?
3. Can a trial court base specific jurisdiction on a contract allegedly signed in Texas that is lost, unsigned, unauthorized, incomplete, and bears signs of fabrication-all issues that must be resolved by a jury?
4. Would traditional notions of fair play and substantial justice be offended by Texas courts deciding a dispute between an Australian company (doing business solely in Australia) and a Nevada entity (doing business wherever its sole employee happens to be) where (a) the parties' original contract chose Australian law and arbitration in Australia, (b) most witnesses reside in Australia and some can be compelled to attend only in Australia; (c) any judgment must be collected in Australia; and (d) trial or judgment could hamper development of millions of acres of oil and gas resources in Australia?

         Much of Central's briefing, however, does not track its stated issues. We therefore will address the arguments we identify in Central's brief without attempting to link them to specific issues.

         III. Standard of Review

         The existence of personal jurisdiction is a question of law, which we review de novo. See Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 805- 06 (Tex. 2002). In determining whether personal jurisdiction exists, however, the trial court may have to resolve factual disputes. See id. at 806 (citing BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002)). Where, as here, the trial court issues no factual findings, we presume that the trial court resolved all factual disputes in favor of the judgment. See id. (citing BMC Software, 83 S.W.3d at 795). If the record includes the clerk's and reporter's records, a litigant may challenge the trial court's implied factual findings for legal and factual sufficiency. See BMC Software, 83 S.W.3d at 795. But, because the factfinder is the sole judge of the witnesses' credibility and the weight to be given to their testimony, we will not substitute our judgment for that of the trial court, even if we might reach a different answer in similar circumstances. See Thu Thuy Huynh v. Thuy Duong Nguyen, 180 S.W.3d 608, 615 (Tex. App.-Houston [14th Dist.] 2005, no pet.).

         IV. Governing Law

         The state long-arm statute "extends Texas courts' personal jurisdiction 'as far as the federal constitutional requirements of due process will permit.'" M & F Worldwide Corp. v. Pepsi-Cola Metro. Bottling Co., 512 S.W.3d 878, 885 (Tex. 2017) (quoting BMC Software, 83 S.W.3d at 795). Federal due-process requirements are satisfied if (a) the nonresident defendant has "minimum contacts" with the forum state, and (b) the court's exercise of jurisdiction "does not offend 'traditional notions of fair play and substantial justice.'" Id. (quoting Walden v. Fiore, ___U.S.___, 134 S.Ct. 1115, 1121, 188 L.Ed.2d 12 (2014)).

         The principle underlying minimum-contacts analysis is that "[t]he defendant's activities, whether they consist of direct acts within Texas or conduct outside Texas, must justify a conclusion that the defendant could reasonably anticipate being called into a Texas court." M & F Worldwide, 512 S.W.3d at 886 (quoting Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 338 (Tex. 2009)). A defendant has established minimum contacts with the forum state if it has "purposefully avail[ed] itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws." Id. (quoting Moncrief Oil Int'l, Inc. v. OAO Gazprom, 414 S.W.3d 142, 150 (Tex. 2013)). When determining whether the defendant has purposefully availed itself of the privilege of conducting activities in Texas, three rules are paramount. First, only the defendant's contacts are relevant, not the unilateral activity of someone else. See id. (citing Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 785 (Tex. 2005)). Second, the defendant's acts must be purposeful and not random or fortuitous. See id. And third, the defendant "must seek some benefit, advantage, or profit by 'availing' itself of the jurisdiction" such that it impliedly consents to suit in the forum state. Id. (quoting Michiana, 168 S.W.3d at 785).

         The minimum contacts sufficient to establish personal jurisdiction varies depending on whether general jurisdiction or specific jurisdiction is alleged. See Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 658 (Tex. 2010) (pointing out that the burden borne by a defendant who files a special appearance is to "negate all bases of personal jurisdiction alleged by the plaintiff"). A court may exercise general jurisdiction over a nonresident defendant if the defendant's contacts with the forum state "are so 'continuous and systematic' as to render [it] essentially at home in the forum State." M & F Worldwide, 512 S.W.3d at 885 (quoting Goodyear Dunlop Tires Operations, SA v. Brown, 564 U.S. 915, 919, 131 S.Ct. 2846, 2851, 180 L.Ed.2d 796 (2011)) (alteration in original). A court may exercise specific jurisdiction if the nonresident defendant's "alleged liability arises from or is related to an activity conducted within the forum, " even if the defendant's contacts with the forum state are isolated or sporadic. Spir Star AG v. Kimich, 310 S.W.3d 868, 873 (Tex. 2010) (citing CSR Ltd. v. Link, 925 S.W.2d 591, 595 (Tex. 1996)). GRR has alleged only specific jurisdiction in this case.

         A single act can support specific jurisdiction as long as there is a substantial connection with the forum state. See Phillips v. Phillips, 826 S.W.2d 746, 748 (Tex. App.-Houston [14th Dist.] 1992, no writ). However, a single act or occasional acts may be insufficient to establish jurisdiction if the nature, quality, and circumstances surrounding their commission only create an attenuated connection with the state, diminishing the reasonable foreseeability of litigation there. See id. Specific jurisdiction therefore exists only if there is a "substantial connection" between the defendant's forum contacts and the operative facts of the litigation. Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 585 (Tex. 2007).

         Specific jurisdiction is established on a claim-by-claim basis unless all the asserted claims arise from the same forum contacts. M & F Worldwide, 512 S.W.3d at 886 (citing Moncrief Oil, 414 S.W.3d at 150). Central has addressed the minimum contacts related to each of GRR's causes of action separately, but has not distinguished among claims when arguing that the exercise of personal jurisdiction over Central in Texas offends traditional notions of fair play and substantial justice. We will do the same.

         V. GRR's Contract Claims[2]

         Central contends that because minimum-contacts analysis looks at the defendant's contacts, "the only issue is whether Central knew it was contracting with a Texas company, or reasonably thought it was not . . . ." Central maintains that it had no reason to expect that GRR was a Texas resident because (1) GRR was organized under the laws of Nevada; (2) GRR was not registered to do business in Texas; and (3) in its emails and correspondence with Central, GRR listed a physical address only in California. Although GRR was organized under Nevada law, GRR presented evidence that (1) its principal place of business is in Houston, (2) Central hired GRR to make use of GRR's Houston contacts, (3) Central intended GRR to partially (or even substantially) perform its work in Texas, and (4) GRR's claims arise from Central's use of GRR's Houston contacts.

         We disagree, however, with Central's contention that the question of whether a court has specific jurisdiction over contract claims against a nonresident defendant turns on whether the defendant reasonably thought that the plaintiff also was a nonresident. Where, as here, the defendant is sued on a contract containing a Texas forum-selection clause, the clause operates as the defendant's consent to Texas jurisdiction. See Michiana, 168 S.W.3d at 792 ("Generally, a forum-selection clause operates as consent to jurisdiction in one forum . . . ."). Thus, to determine whether Central agreed to Texas jurisdiction over GRR's contract claims against it, the question to be answered is whether the trial court could or could not rely on the Second Agreement's terms. We therefore begin by addressing Central's arguments that the trial court could not rely on the terms of the contract.

         A. The Authenticity of the Second Agreement

         To avoid the Second Agreement's forum-selection clause, Central argues that the trial court could not base specific jurisdiction on the existence of the alleged Second Agreement because the question of whether Shortt in fact signed the contract is a matter for a jury to decide. In support of this contention, Central states in its brief that in Michiana Easy Livin' Country, Inc. v. Holten, the Texas Supreme Court "noted that basing jurisdiction on a trial judge's view of contested facts crosses the constitutional line between judges and jury." But the Michiana court actually said the opposite: "Personal jurisdiction is a question of law for the court, even if it requires resolving questions of fact." Michiana, 168 S.W.3d at 790-91 (emphasis added). In the cited section of Michiana, the Texas Supreme Court also pointed out problems that "arise if jurisdiction turns not on a defendant's contacts, but on where it 'directed a tort, '" id. at 790 (emphasis added), but that language provides no support for Central's contention the trial court cannot base specific jurisdiction over a plaintiff's contract claims against a foreign defendant on the language of the contract itself if the defendant denies executing it.

         Central also asserts that the statute of frauds prohibits commissions on the sale of oil-and-gas leases absent a signed writing, [3] and that the Second Agreement is "lost" and "unsigned." The assertions that "[t]here is no signed contract" and that the contract was "lost" present no jurisdictional barrier; if an original writing was lost or destroyed, then unless the proponent lost or destroyed the original in bad faith, the proponent can present other evidence of the writing's existence and content. See Tex. R. Evid. 1004. GRR presented such evidence. Pande and his then-assistant William McGinnis testified that after Shortt and Pande signed the Second Agreement, Shortt retained possession of it. This testimony is legally sufficient to support the trial court's implied finding that Shortt executed the Second Agreement as alleged. This evidence is not rendered factually insufficient by Shortt's verification of the conclusory statement in Central's special appearance, "There is no 2012 Contract between Central and GRR." Notably, Shortt did not deny that he signed the Second Agreement.

         In a related argument, Central contends that there is sufficient evidence to allow a jury to find that Shortt did not sign the Second Agreement with GRR. Cf. Tex. R. Evid. 1008 (stating that in a jury trial, the jury decides whether an asserted writing ever existed). We agree that if the evidence at trial is inconclusive, then the question of whether Shortt signed the Second Agreement can be submitted to the jury, because a trial court's resolution of facts for jurisdictional purposes does not prevent a jury from resolving the same factual disputes differently when determining the case on the merits. See Tex. R. Civ. P. 120a(2) ("No determination of any issue of fact in connection with the objection to jurisdiction is a determination of the merits of the case or any aspect thereof."). At this point, however, we are reviewing only the trial court's jurisdictional ruling, and the standard of review requires us to presume that the trial court resolved factual disputes in favor of its judgment if it reasonably could do so. And here, the evidence supports the trial court's implied findings that Shortt had apparent authority to, and did in fact, (1) negotiate the 2012 contract in Texas; (2) execute the contract in Texas; (3) agree that the contract is to be construed under Texas law; (4) consent to a Texas forum-selection clause; and (5) agree that GRR's compensation is to be determined in part by events in Texas, such as whether a representative of Central's farmout partner stopped by Central's NAPE booth.

         B. Shortt's Authority to Bind Central to the Second Agreement

         Central additionally maintains that Shortt had no authority to execute the Second Agreement with GRR. Central expands on this point in its reply brief, arguing that signing the Second ...


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