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Lucas v. Ryan

Court of Appeals of Texas, Second District, Fort Worth

June 27, 2019

J. Curt Lucas and Invenias Partners LLC, Appellants
v.
Cyndi Ramirez Ryan, Appellee

          On Appeal from County Court at Law No. 2 Denton County, Texas Trial Court No. CV-2016-02101.

          Before Kerr and Pittman, JJ., and Gonzalez, J. [1]

          MEMORANDUM OPINION

          Elizabeth Kerr Justice.

         Following a bench trial, the trial court rendered a $43, 000 judgment for Cyndi Ramirez Ryan and against J. Curt Lucas and Invenias Partners, LLC. On appeal, Lucas (an Illinois resident) and Invenias (an Illinois company) argue that the trial court lacked personal jurisdiction over them and that the evidence is legally and factually insufficient to support the trial court's judgment. We will affirm in part, reverse and render in part, and reverse and remand in part.

         I.

         Background

         Texas resident Ryan is a highly experienced executive-search-and-talent-advisory-services professional with 20 years' experience in human resources in the healthcare field. In 2013 or 2014, Lucas-an Illinois resident and the managing partner and chairman of Invenias, a Chicago-based healthcare executive-search firm- contacted Ryan about a position as a chief human-resources officer with one of his firm's clients. Ryan did not get the job, but she worked with Lucas to explore other employment opportunities. Ryan ultimately chose not "to move forward with any of [those] roles," but Lucas occasionally contacted her about other positions.

         In early July 2015, Ryan sent an email announcement to her professional contacts-including Lucas-that she had left her job at Baylor Scott & White Health to start Mas Talent, LLC, a human-resources consulting firm that specializes in diversity and inclusion.[2] Lucas responded and suggested that they meet to discuss the possibility of working together. To that end, Ryan traveled to Chicago in late July 2015 to meet with him to discuss the consulting services that she and Mas Talent could provide to Lucas and Invenias.

         During their Chicago meeting, Lucas gave Ryan a company laptop computer, access to Invenias's database, business cards, and an Invenias email address. Lucas also gave Ryan a copy of Invenias's "Executive Search and Consulting Guide Partner Edition," which outlined and explained the executive-search process, a partner's responsibilities, and the partner-compensation structure. Ryan rejected the compensation model in the guide, but the parties continued compensation negotiations.

         On September 23, 2015, Scripps Health, a healthcare system in San Diego, California, retained Invenias to conduct a search for a Vice President, Chief Audit and Compliance. Invenias's search fee, which was based on the compensation estimate for the position, was $140, 834, and Scripps agreed to reimburse Invenias's expenses.

         A month later, Lucas called Ryan to ask her to help with the search. Ryan emailed Lucas a proposed compensation structure. Lucas responded with the following proposal: (1) 39% of the executive-search fee would be allocated to Invenias's overhead and expenses; (2) Ryan and Lucas would split the remaining 61%, provided that they "equally split all execution responsibilities"; and (3) the client would pay all search-related expenses. Ryan accepted Lucas's offer and asked him if he had an "independent contractor agreement or letter to formalize" their agreement. Lucas agreed to send Ryan an independent-contractor agreement outlining what they had discussed. Five days later, Ryan emailed Lucas to remind him to send her the independent-contractor agreement; Lucas responded that he was still working on it.

         In the meantime, Ryan and Lucas began working together on the Scripps search. Ryan participated in a conference call, and she and Lucas made travel plans to meet with Scripps executives in San Diego. In early November, Ryan and Lucas spent three days in San Diego meeting with Scripps executives and interviewing candidates. During the trip, Ryan learned that the executive-search fee for the project had increased to $148, 005.

         While in San Diego, Ryan asked Lucas if he had "drawn up" an independent-contractor agreement. Lucas admitted that he had not and asked Ryan if she had any sample contracts that she had used. Ryan said that she did and agreed to send samples to him. A few days after the San Diego trip, Ryan emailed Lucas two sample independent-contractor agreements and told him to "feel free to edit or use what works for you." Even though Lucas thanked Ryan for sending them, he never provided her with a proposed independent-contractor agreement, and the parties never signed a written contract memorializing their agreement.

         The day after Ryan sent Lucas the sample contracts, she emailed him about dividing up interviews of additional candidates for the Scripps position. Lucas assigned Ryan two candidates to interview. Ryan conducted those interviews by videoconference and wrote summaries for Lucas.

         The same day Ryan contacted Lucas about the candidate interviews, she emailed him an invoice from Mas Talent for $15, 047.18, the first third of her 30.5% fee.[3] Lucas refused to pay the invoice because, according to him, Ryan had failed to equally split the execution responsibilities for the Scripps search. Lucas and Invenias never paid Ryan for any of her work.

         Ryan and Mas Talent sued Lucas and Invenias for breach of contract and, alternatively, for promissory estoppel and quantum meruit. In support of personal jurisdiction over Lucas and Invenias, Ryan and Mas Talent alleged in relevant part that Texas had specific jurisdiction over Lucas and Invenias because they had conducted business in Texas by

• entering into a contract with Ryan and Mas Talent that was performable in whole or in part in Texas;
• requesting and using Ryan's and Mas Talent's services to expand Lucas's and Invenias's Texas operations, to reap profits and benefits, and to solicit and serve Texas clients;
• recruiting Texas residents directly or through an intermediary located in Texas for employment inside or outside of Texas;
• using Ryan's name and business expertise in advertising and promotional materials without her consent; and
• falsely claiming on the Invenias website that Ryan's home was Invenias's Texas office and that Ryan's personal cellphone number was the contact number for that office.

Ryan and Mas Talent further alleged that other than the San Diego trip, she performed the majority of her services for Invenias in Texas.

         Lucas and Invenias specially appeared, challenging both general and specific jurisdiction. See Tex. R Civ. P. 120a. After a non-evidentiary hearing, the trial court found that it had specific jurisdiction over Lucas and Invenias and denied their special appearances. No findings of fact and conclusions of law were requested or filed, and Lucas and Invenias did not file an interlocutory appeal. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(7) (permitting an interlocutory appeal from an order granting or denying a special appearance).

         Ryan and Mas Talent later amended their petition to add a negligent-misrepresentation claim against Lucas. After a day-long bench trial, the trial court entered judgment for Ryan against Lucas and Invenias for $43, 000.[4] No findings of fact and conclusions of law were requested or filed. See Tex. R Civ. P. 296, 297. Lucas and Invenias have appealed, challenging the trial court's order denying their special appearances (issue 5) and the sufficiency of the evidence supporting the judgment (issues 1-4).

         II.

         Lucas's and Invenias's Special Appearances

         Because it is potentially dispositive of this appeal, we start by addressing Lucas and Invenias's fifth issue, which challenges the trial court's exercise of personal jurisdiction over them.[5] Invenias contends its Texas contacts were not purposeful and that Ryan's claims did not arise from those contacts. Lucas asserts that because all of his Texas contacts were on Invenias's behalf, the fiduciary-shield doctrine protects him from the trial court's exercise of personal jurisdiction.

         A. Applicable Law

         1. Personal-jurisdiction principles

         A Texas court has personal jurisdiction over a nonresident defendant when the Texas long-arm statute permits the exercise of such jurisdiction and the exercise of jurisdiction is consistent with federal and state constitutional due-process guarantees. TV Azteca v. Ruiz 490 S.W.3d 29, 36 (Tex. 2016) (citing Moncrief Oil Int'l, Inc. v. OAO Gazprom, 414 S.W.3d 142, 149 (Tex. 2013)), cert, denied 137 S.Ct. 2290 (2017). The Texas long-arm statute allows a Texas court to exercise jurisdiction over a nonresident defendant who "does business" in Texas, which includes contracting with a Texas resident for performance in whole or in part in Texas and recruiting Texas residents for employment inside or outside the state. Tex. Civ. Prac. & Rem. Code Ann. § 17.042(1), (3). Because the long-arm statute reaches "as far as the federal constitutional requirements for due process will allow," a Texas court may exercise personal jurisdiction over a nonresident so long as doing so "comports with federal due process limitations." Spir Star AG v. Kimich, 310 S.W.3d 868, 872 (Tex. 2010) (quoting Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 806 (Tex. 2002)). Federal due process is satisfied when (1) the defendant has established minimum contacts with the state and (2) the exercise of jurisdiction comports with traditional notions of fair play and substantial justice. BNSF Ry. Co. v. Tyrrell, 137 S.Ct. 1549, 1558 (2017); TV Azteca, 490 S.W.3d at 36.

         A nonresident defendant "establishes minimum contacts with a forum when it 'purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.'" Moncrief Oil, 414 S.W.3d at 150 (quoting Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 338 (Tex. 2009)). Three principles govern our purposeful-availment analysis: (1) only the defendant's contacts with Texas are relevant, not the unilateral activity of another party or third person; (2) the defendant's acts must be purposeful and not random, isolated, or fortuitous; and (3) the defendant must seek some benefit, advantage, or profit by availing itself of Texas's jurisdiction so that it impliedly consents to suit here. M &F Worldwide Corp. v. Pepsi-Cola Metro. Bottling Co., 512 S.W.3d 878, 886 (Tex. 2017) (citing Michiana Easy Eivin' Country, Inc. v. Holten, 168 S.W.3d 777, 785 (Tex. 2005)). "The 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." Retamco, 278 S.W.3d at 338 (quoting Am. Type Culture Collection, 83 S.W.3d at 806).

         Minimum contacts can give rise to either specific or general jurisdiction. TV Azteca, 490 S.W.3d at 37. Here, Ryan contends (and the trial court agreed) that Texas has specific jurisdiction over Lucas and Invenias.[6] A trial court may exercise specific jurisdiction over a nonresident defendant only if the suit arises from or relates to the defendant's forum contacts. Id.; see Moncrief Oil, 414 S.W.3d at 150 ("[S]pecific jurisdiction exists when the cause of action arises from or is related to purposeful activities in the state."); Guardian Royal Exch. Assurance, Etd. v. English China Clays, P.E.C., 815 S.W.2d 223, 226 (Tex. 1991) (explaining that a specific-jurisdiction analysis requires review of the "relationship among the defendant, the forum[, ] and the litigation"). 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. Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 585 (Tex. 2007). Specific jurisdiction requires us to analyze a nonresident defendant's contacts on a claim-by-claim basis unless all claims arise from the same forum contacts. Moncrief Oil, 414 S.W.3d at 150-51 (citing Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 274-75 (5th Cir. 2006)).

         But even when a nonresident has established minimum contacts with Texas, due process permits Texas to assert personal jurisdiction over the nonresident only if doing so comports with traditional notions of fair play and substantial justice. TV Azteca, 490 S.W.3d at 55. Typically, "[w]hen a nonresident defendant has purposefully availed itself of the privilege of conducting business in a foreign jurisdiction, it is both fair and just to subject that defendant to the authority of that forum's courts." Id. (quoting Spir Star, 310 S.W.3d at 872). Thus, "[i]f a nonresident has minimum contacts with the forum, rarely will the exercise of jurisdiction over the nonresident not comport with traditional notions of fair play and substantial justice." Id. (quoting Moncrief Oil, 414 S.W.3d at 154-55).

         2. The parties' shifting trial-court burdens and our standard of review

         In the trial court, the plaintiff has the initial burden to plead sufficient allegations to bring the nonresident defendant within the reach of the Texas long-arm statute. Kelly v. Gen. Interior Constr, Inc., 301 S.W.3d 653, 658 (Tex. 2010). Once the plaintiff has done so, the burden shifts to the defendant to negate all potential bases for personal jurisdiction pleaded 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 plaintiffs pleading." Id.

         The defendant can negate jurisdiction on a factual basis by presenting evidence that it has no contacts with Texas, effectively disproving the plaintiffs allegations; the plaintiff risks dismissal of its suit if it does not present the trial court with evidence affirming its jurisdictional allegations and establishing personal jurisdiction over the defendant. Id. at 659. The defendant can also negate jurisdiction on a legal basis by showing that even if the plaintiffs alleged jurisdictional facts are true, (1) those facts are not sufficient to establish jurisdiction, (2) the defendant's Texas contacts fall short of purposeful availment, (3) the claims do not arise from the defendant's Texas contacts, or (4) exercising jurisdiction over the defendant would offend traditional notions of fair play and substantial justice. Id.

         In reviewing a trial court's order denying a special appearance, we review the trial court's factual findings-express or implied-for legal and factual sufficiency and its legal conclusions de novo because whether a trial court has personal jurisdiction over a defendant is a legal question. BMC Software Belg., N. V. v. Marchand, 83 S.W.3d 789, 794-95 (Tex. 2002). When, as here, the trial court does not issue findings and conclusions with its special-appearance ruling, we infer all facts that are necessary to support the judgment and are supported by the evidence. Id. at 794.

         B. Analysis

         As an initial matter, we note that when Lucas and Invenias specially appeared, Ryan and Mas Talent had not yet pleaded their negligent-misrepresentation claim against Lucas. Thus, we will not evaluate Lucas's and Invenias's jurisdictional contacts as to that claim. We also note that the special-appearance evidence differs slightly from the evidence developed at trial, but we will review the trial court's special-appearance ruling based on the live pleadings and the evidence on file at the time the trial court made its personal-jurisdiction ruling. See Tex. R. Civ. P. 120a(3). Finally, in reviewing this ruling, we consider only the quality and nature of Lucas's and Invenias's Texas contacts; the merits of Ryan and Mas Talent's claims are irrelevant. See Rubinstein v. Lucchese, Inc., 497 S.W.3d 615, 624 (Tex. App.-Fort Worth 2016, no pet.) ("The issue in question is whether the trial court can exercise personal jurisdiction over Rubinstein given his contacts with Texas, not whether Lucchese has a viable cause of action against him. Personal jurisdiction may exist even if the plaintiff ultimately loses his suit or has less than a certain claim.").

         1. Ryan and Mas Talent's Pleadings

         Without any argument or citing to any authority, Lucas and Invenias state in passing that Ryan and Mas Talent did not plead sufficient contacts with Texas. We have reviewed their pleadings and conclude that Ryan and Mas Talent satisfied their initial burden to plead sufficient allegations to bring Lucas and Invenias within the Texas long-arm statute. See Tex. Civ. Prac. & Rem. Code Ann. § 17.042(1), (3) (stating that acts constituting doing business include contracting with a Texas resident for performance in whole or in part in Texas and recruiting Texas residents for employment inside or outside the state); see also 0Z0 Capital, Inc. v. Syphers, No. 02-17-00131-CV, 2018 WL 1531444, at *6 (Tex. App.-Fort Worth Mar. 29, 2018, no pet.) (mem. op.); Griffith Techs, Inc. v. Packers Plus Energy Servs. (USA), Inc., No. 01-17-00097-CV, 2017 WL 6759200, at *3 (Tex. App.-Houston [1st Dist] Dec. 28, 2017, no pet.) (mem. op.). Because Ryan and Mas Talent met their initial pleading burden, the burden shifted to Lucas and Invenias to negate all potential bases for personal jurisdiction that Ryan and Mas Talent pleaded. See Kelly, 301 S.W.3d at 658.

         2. The special-appearance evidence

         According to Lucas's and Invenias's special-appearance evidence,

• Lucas is an Illinois resident.
• Invenias is incorporated in Illinois and has its principal place of business there.
• Invenias has never had an office in Texas.
• Invenias employs Lucas, and Lucas is its managing partner and chairman.
• Any contacts Lucas has had with Texas have been on behalf of Invenias or his previous employers.
• All jurisdictional grounds Ryan and Mas Talent alleged against Lucas are false or were "solely and exclusively related" to actions Lucas took on behalf of Invenias or his previous employers.
• Ryan approached and solicited Invenias for a business opportunity. Invenias did not solicit or approach Ryan.
• Neither Lucas nor Invenias has conducted business in Texas.
• Neither Lucas nor Invenias entered into a contract with Ryan and Mas Talent performable in whole or in part in Texas.
• Invenias anticipated entering into an agreement with Ryan and that Ryan would be Invenias's "Texas presence" but "the relationship never culminated, including through any sort of written agreement/contract."
• Invenias never "successfully used" Ryan's and Mas Talent's services to expand its Texas business operations, to reap profits or benefits, or to solicit or serve Texas clients.
• The parties never entered into a written agreement because they could not agree on its terms.
• Invenias never falsely claimed on its website that its Texas office was located at Ryan's home in Texas or listed her cellphone number as its contact number. Invenias anticipated entering into a contract with Ryan and that Ryan's address would be Invenias's Texas address. Toward that end, Invenias and Ryan agreed to allow the other to use their information on the other's website.
• Ryan's interaction with Invenias consisted of emails and telephone calls, but the majority of their interactions were in Illinois and California when Ryan traveled to Chicago to learn about Invenias and when she traveled to San Diego to observe Invenias's services with a client.
• Invenias has never used Ryan's name and business expertise in advertising and promotional materials without her consent. Invenias prepared materials based on an anticipated contract between Invenias and Ryan.
• Neither Lucas nor Invenias has recruited any Texas residents directly or through an intermediary located in Texas for ...

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