Court of Appeals of Texas, Second District, Fort Worth
NORTHWEST CATTLE FEEDERS, LLC; RILEY LIVESTOCK, INC.; AND JEFF COX APPELLANTS
JASON O'CONNELL AND TOM O'CONNELL APPELLEES
THE 271ST DISTRICT COURT OF JACK COUNTY TRIAL COURT NO.
WALKER, MEIER, and BIRDWELL, JJ.
appeal arises from a modern-day cattle rustling scheme. It
stems, according to Jason O'Connell, from a "problem
Northwest Cattle Feeders, LLC (Northwest); Riley Livestock,
Inc. (Riley); and Jeff Cox appeal the trial court's order
that granted the special appearance of appellees Jason
O'Connell and Tom O'Connell and that dismissed claims
against the O'Connells for lack of personal jurisdiction.
Appellants contend that the trial court's order is
erroneous because the record establishes that Texas has
personal jurisdiction over the O'Connells on a theory of
specific jurisdiction. We affirm the trial court's order
in part, reverse it in part, and remand this case to the
trial court for further proceedings.
Cattle Marketing, LLC (Midwestern) was a Nebraska cattle
brokering company; the company matched cattle producers with
cattle buyers and made a profit on the difference between the
buying and selling prices. Tom O'Connell was
Midwestern's chief financial officer; his nephew, Jason
O'Connell, was Midwestern's president.
reached an agreement with Tony Lyon, a Texas resident, to buy
and sell cattle on Midwestern's behalf. Tony kept the
cattle on Lyon Farms in Perrin, Texas. He had a criminal
history: in 2001, he was convicted and imprisoned for bank
fraud. At some point, to facilitate Tony's buying cattle
on Midwestern's behalf, Midwestern gave Tony one of its
checkbooks along with a stamp of Jason's signature to
endorse the checks.
2015, Northwest, through its managing member Jeff Cox, agreed
to buy 554 steers from Midwestern. Midwestern issued an
invoice that stated that Northwest was buying the steers for
$798, 351.19. It recited that the steers were at Lyon Farms.
Riley, an investor in Northwest's business, issued
Midwestern a check for the full amount of the sale, and
Midwestern deposited the check into its account at Points
West Community Bank (Points West). Cox went to Lyon Farms and
saw the 554 steers.
Northwest bought the cattle, Cox let them graze in Perrin
with the intention of retrieving them later. He understood
that Tony would responsibly care for the cattle during the
interim period and would be compensated for doing so.
Northwest had previously bought cattle from Midwestern and,
on those occasions, Cox had likewise allowed them to remain
under Tony's control on Lyon Farms to graze before
sending them to another location.
2015, Points West called Tom and told him that
Midwestern's account had been overdrawn by over $1
million. Tony had led the O'Connells to believe that
Midwestern would soon receive $5 million from a check written
from George Cattle Company to buy cattle from Midwestern. But
when Tom went to the bank, the bank's president expressed
his concern that Midwestern was the victim of a check-kiting
scheme by Tony, who had control over his own account in Texas
and over Midwestern's account in Nebraska. As explained
[Midwestern] had given [Tony] our checking account. [Tony
was] writing a number of checks on our account, and we would
. . . deposit it back to our account to cover those checks. .
. . And everything was fine as long as . . . deposits came
back into [Midwestern's] checking account.
Once the music stopped, . . . there [were] no seats to be sat
in, and Midwestern was left holding the bag on a $5, 020, 000
deposit that was no good. So it drained all of the money that
we had in our account [and] left us with a $1.3 million
informed Jason about the overdraft, and after meeting with
Tom in Nebraska, Jason told Tom that he was "going to
head to Texas and see if [he could] get to the bottom of
this." Jason asked Tim Correll, a business associate, to
go with him to Texas to "get this figured out."
drove all night to reach Texas. On the way, Correll advised
Jason to inform Midwestern's customers about what was
happening. While on his way to Texas, Jason called Cox, told
him that there was a "problem in Texas, " and asked
him to come to Tony's property.
morning of July 1, 2015, Jason confronted Tony at his
property. Tony confessed to Jason that "there [was] no
money, [that] he had committed fraud, [and that] there was no
George Cattle Company." Jason, with Correll's
assistance, decided to seize all of the cattle on Tony's
property. That day, Tony and Jason signed a handwritten
Approx 850 head of cows, calves, bulls located in and around
Perrin[, ] Texas are owned by [Midwestern and] Points West .
. . . Cattle are roaming on pasture land owned or leased by
Lyon Farms agrees to provide care in a husbandly fashion and
not move any cattle off pasture without the knowledge of
Jason O'Connell or Tom O'Connell[, ] owners of
later testified in a deposition,
As soon as [Jason] got to Perrin he sat down . . . and wrote
this up and had [me] sign it, which I would not have signed
if I had known the cattle [were] not going to Brule,
. . . .
. . . [Jason] knew what he was wanting to do and he just
[sat] down and wrote everything out. And he said, . . .
I'm going to write this out, I need you to start
gathering the cattle, bring them into this set of pens,
we're going to have trucks, we're going to start
sending all this stuff to Nebraska to Jeff's Northwest
Cattle Feeders, and we're going to let it all wash itself
out in Nebraska. And I said, that's fine.
. . . .
. . . I signed off because [the cattle were] supposed to be
going to Nebraska. If he would have said, we're going to
send them to here and there and yonder, I would not have
signed off . . . .
next several days, Jason managed the seizure of all of the
cattle- approximately 900 head-from Lyon Farms and moved them
away from there. The 554 steers that Northwest had bought
from Midwestern and that Cox had believed to be at Tony's
property were not among the cattle that Midwestern seized.
While the cattle were still being seized from Lyons Farms,
Cox arrived there and confronted Tony about the steers; Tony
said that he had sold them to another party. Midwestern
eventually sold most of the cattle that it seized; it
transferred forty-one of them to Northwest.
repay the overdraft to Points West, the O'Connells signed
a note on behalf of Midwestern and in their individual
capacities. They informed Points West that they
intended to use proceeds from the sales of the seized cattle
to help repay the overdraft.
and Riley sued several parties, including Midwestern and
Tony. In their original petition, among other causes of
action, they pleaded for a constructive trust over proceeds
from sales of cattle seized by Midwestern; alleged that
Midwestern had committed fraud and had unjustly enriched
itself; alleged that Midwestern had breached its contract for
the sale of the steers; pleaded that upon seizing cattle from
Tony, Midwestern had committed conversion; and alleged that
Tony had committed fraud for which Midwestern was liable
because Tony was Midwestern's agent. They further pleaded
that the O'Connells, acting for Midwestern, had seized
892 cattle from Tony while representing to Cox that the
"seized cattle would be used to try to 'make
whole' both Cox and Midwestern Cattle." They alleged
that Midwestern had delivered only 41 of the cattle to
Northwest, had sold the remaining cattle, and had retained
filed a special appearance, alleging that Northwest and
Riley's pleading did not establish personal jurisdiction
over Midwestern. After Northwest and Riley filed a response
to the special appearance, the trial court denied it.
joined Cox as a third-party defendant,  pleading for a
declaratory judgment that Midwestern had delivered the steers
under its contract with Northwest, that Cox had formed a
partnership with Tony for the steers to graze on Tony's
property, and that Cox was liable for any damages incurred by
Northwest for the loss of the steers. Cox answered
Midwestern's claims against him and brought counterclaims
under the Texas Theft Liability Act, for breach of contract,
and for quantum meruit. Additionally, he pleaded that because
Jason and Tom had denuded Midwestern of its corporate assets,
they were individually and derivatively responsible for any
liability upon Midwestern.
and Riley amended their petition multiple times. In their
third amended petition, they added the O'Connells as
defendants. They pleaded that the O'Connells had
sufficient contacts with Texas to support personal
jurisdiction and that jurisdiction over them would not offend
traditional notions of fair play and substantial justice.
They also alleged that the claims they asserted against the
O'Connells arose out of transactions that had occurred in
specifically, with respect to the events that occurred upon
the O'Connells' discovery of Tony's fraudulent
check-kiting scheme, Northwest and Riley pleaded the
Jeff Cox was told by representatives of [Midwestern] that
"we have a problem" in Texas. . . .
In several conversations that followed, Jeff Cox was led to
believe by Jason O'Connell that efforts were underway to
collect any cattle found in the possession of Lyon Farms in
Texas, and that the cattle collected would be used to help
try to make all those impacted by Tony Lyon's fraudulent
scheme whole, including [Northwest]. Specifically, Jeff Cox
was led to believe that [Midwestern], [Northwest, ] and other
victims would be acting together as a "team" in
order to recover any losses from the fraudulent scheme . . .
In reliance upon the representations by Jason O'Connell,
Jeff Cox (at all times acting as [Northwest and Riley's]
representative) refrained from taking any direct action to
take possession of cattle found at Lyon Farms. Instead,
acting consistently with what Jeff Cox was told by Jason
O'Connell, [Northwest] accepted shipment of approximately
41 head of cattle taken from Lyon Farms for feeding and care.
[Northwest] cared for the cattle, incurring approximately
$16, 193.11 in costs. After finish out, the cattle were sold
. . . . The net proceeds paid were $61, 268.20. In compliance
with the representations of Jason O'Connell that the
cattle seized were for the mutual benefit of [Northwest and
Midwestern], Jeff Cox directed that the checks issued by [the
buyer] be made payable to both [Northwest and Midwestern].
However, as it turns out, Jason O'Connell was not acting
for the mutual benefit of [Northwest and Midwestern].
Instead, Jason O'Connell headed to Texas following a late
June meeting with [Tom] and their bankers at Points West
Community Bank. As a result of this meeting, Jason
O'Connell [went] to Texas to confront Tony Lyon. His
actions confirm that Jason O'Connell [and] Tom
O'Connell . . . intended to take any cattle found in the
possession of Lyon Farms for the exclusive benefit of
By July 1, 2015, Jason O'Connell was in Texas . . .
taking inventory of the cattle found in the possession of
Lyon Farms. Jason O'Connell then drafted a document for
signature by . . . Tony Lyon in order to "confirm"
ownership of ...