11500 SPACE CENTER, L.L.C., SPACE CENTER BOULEVARD LAND DEVELOPMENT, L.P., CULLEN'S, L.L.C. AND BERMUDA DUNES DEVELOPMENT, L.P., Appellants
PRIVATE CAPITAL GROUP, INC., Appellee
Appeal from the 270th District Court Harris County, Texas
Trial Court Case No. 2017-00594.
consists of Justices Keyes, Higley, and Landau.
V. Keyes, Justice.
11500 Space Center, L.L.C., Space Center Boulevard Land
Development, L.P., Cullen's, L.L.C., and Bermuda Dunes
Development, L.P. ("Developers"), sued appellee,
Private Capital Group, Inc. ("PCG"), for deceptive
trade practices, fraud, negligent misrepresentation, and
money had and received. PCG filed a special appearance, which
the trial court granted. In four issues, Developers argue
that the trial court erred in granting PCG's special
appearance because Developers pleaded and proved sufficient
jurisdictional facts, which PCG failed to negate; the
exercise of jurisdiction would not offend the traditional
notions of fair play and substantial justice; and the trial
court relied on PCG's legally insufficient affidavit.
brought this action against loan servicer PCG, alleging PCG
made misrepresentations that caused them to overpay certain
fees and interest on their loan.
to their pleadings, Houston-based Developers borrowed $11,
450, 000.00 for a four-month period from PCG Credit Partners,
L.L.C. ("Lender"),  a Delaware entity with its
principle place of business in Alpine, Utah, under the terms
of a Loan Agreement secured by a promissory note granting
interests in both personal and real property. The Loan
Agreement provided that Developers would bear all of
Lender's cost and expenses in connection with the loan,
including servicing, legal, and brokerage fees.
engaged PCG to service the loan. According to Developers, PCG
falsely represented to them and to First American Title
Company (the "Title Company") the amount of costs
and expenses Lender incurred, which costs and expenses the
Loan Agreement obligated Developers to bear.
months after Lender and Developers closed on the loan, PCG,
in accordance with its role as loan servicer, issued pay-off
statements to Developers. According to Developers, the
pay-off statements falsely represented that they owed Lender
additional sums not reflected in the closing statement.
Developers also alleged that PCG represented to them that
Lender would not release liens against their property unless
they paid in full.
paid according to the pay-off statements. Over a year later,
Developers' counsel sent PCG and Lender a letter
requesting documentation establishing the service, legal, and
brokerage fees, and resolving the "discrepancies"
regarding the pay-off balances. PCG responded by email and
provided the pay-off statements as accountings.
sued PCG for deceptive trade practices, fraud, negligent
misrepresentation, and money had and received.
filed a special appearance, in which it stated that it is not
a resident of Texas, but a Delaware corporation with its
principal place of business in Alpine, Utah; it has "no
office, place of business, staff, team members, or any other
affiliations with the State of Texas"; and it
"neither engaged in continuing relationships and
obligations with citizens of Texas, profited from Texas'
laws, [n]or subject[ed] itself to Texas'
jurisdiction." PCG also stated that Developers reached
out from Texas to obtain the loan in Utah, and every one of
Developers' allegations, if true, "occurred in the
State of Utah either before or at the time that the [Loan
Agreement] was executed."
attached the affidavit of its vice president, Benjamin
Schramm. In it, Schramm stated that PCG's principal place
of business is "solely in the State of Utah" and
that PCG has "no connections with the State of
Texas." He also stated that Developers "reached
out" to PCG in Utah "to obtain the loan" and
that "[a]ny and all" of the negotiations occurred
in Utah, as did "the work related to this
relationship." And while, to make signing the Loan
Agreement easier, Developers were permitted to sign documents
in Texas, both PCG and Lender executed all agreements
including the closing documents, in Utah. Further,
"[p]ayments on the loan were to be made through Wells
Fargo Bank in Highland, Utah," and "[m]onies lent
were escrowed with Charger Title Insurance Agency located in
special appearance included, in the alternative, a motion to
transfer venue, in which PCG argued that venue is mandatory
in Salt Lake County, Utah, because the Loan Agreement stated
that Developers "submit to the jurisdiction of the
Federal and District Courts located in Salt Lake County,
response, Developers argued that PCG is subject to personal
jurisdiction in Texas because this suit arises from its
misrepresentations to Texas residents regarding a loan
secured (under the promissory note) by Texas property. They
alleged two misrepresentations. The first is the amount of
Lender's costs and expenses. Other than providing the
affidavit of Kevin Munz stating that PCG
"represented" the amount of Lender's costs and
expenses to him and to the Title Company at the loan closing
in Texas, Developers do not specify how PCG communicated this
amount from Utah to them in Texas. The second
misrepresentation Developers alleged is the loan pay-off
amount reflected in the pay-off statements. Here again,
Developers do not indicate how PCG transmitted the pay-off
statements to them in Texas.
also alleged that PCG sent correspondence to them in Texas
and was paid for its services with funds sent to Utah from
Texas. They further alleged that, after they paid off the
loan, PCG repeatedly solicited their business. Finally,
Developers asserted that because PCG is not a party to the
Loan Agreement, it may not invoke the Loan Agreement's
forum selection and choice of law clauses providing for
jurisdiction in Utah.
included in their response a motion to strike Schramm's
affidavit, arguing that his testimony was not based on
personal knowledge and that he was not competent to testify.
See Tex. R. Civ. P. 120a(3) (affidavits in support
of special appearance "shall be made on personal
knowledge"). They asked, in the alternative, for a
continuance to conduct jurisdictional discovery.
there is nothing in the record indicating that the trial
court ruled on any part of PCG's special appearance
(including the motions to transfer venue and for a
continuance), the record reflects that the parties conducted
jurisdictional discovery including Schramm's deposition.
Thereafter, Developers filed a supplemental response to
PCG's special appearance, asserting that by testifying at
his deposition that PCG agreed to service the loan "from
inception through funding through default," including
the possibility of foreclosure, Schramm "acknowledged
that [PCG] agreed to perform its loan servicing obligations
in Texas." They also asserted that PCG's discovery
responses showed that it prepared legal documents and
perfected Lender's security interest by filing a
"financing statement" with the Texas Secretary of
State and instructing the Title Company to record the real
property deed of trust with the Harris County Clerk. And they
averred that Schramm's deposition confirmed the assertion
they made in their original response that he lacked personal
knowledge to support his prior affidavit testimony.
response, PCG filed an amended special appearance, adding the
argument that, pursuant to the Loan Agreement's forum
selection clause, venue was mandatory in Utah.
trial court granted PCG's special appearance and
dismissed the case for lack of personal jurisdiction without