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Watamar Holding S.A. v. SFM Holdings, S.A.

Court of Appeals of Texas, Fourteenth District

August 1, 2019

WATAMAR HOLDING S.A., Appellant
v.
SFM HOLDINGS, S.A., SOLLY LAWI, & ALBERT LAWI, Appellees

          On Appeal from the 129th District Court Harris County, Texas Trial Court Cause No. 2015-30636

          Panel consists of Chief Justice Frost and Justices Spain and Poissant.

          OPINION

          MARGARET "MEG" POISSANT, JUSTICE

         This is an interlocutory appeal[1] from an order sustaining nonresident defendants SFM Holdings, S.A. ("SFM"), Solly Lawi, and Albert Lawi's (collectively "nonresident defendants") objections to jurisdiction and special appearances and dismissing nonresident defendants for want of jurisdiction. In its sole issue on appeal, appellant Watamar Holding, S.A. ("Watamar") contends that the trial court erred in granting the special appearances and in sustaining objections to an exhibit Watamar submitted in response to the special appearances. We affirm.

         I. Background

         Watamar is a company incorporated under the laws of the Republic of Panama. In 1981, Watamar acquired a 10% interest in the Mirelis group of companies (known as the "Mirelis Group") which included Société Financierè Mirelis, S.A. (founded in 1949 in Geneva, Switzerland) which is presently SFM Holdings, S.A., (a Swiss company), and Mirelis Investments, Ltd. (established in 1957 in Montreal, Canada) which is presently Mirelis Investment Properties, Inc. (a Canadian corporation). The Mirelis Group owns numerous real properties and itself has ownership interests in third party entities that own real properties all over the world.

         None of the appellees are residents of the State of Texas. SFM is organized under the laws of Switzerland with its principal place of business in Geneva, Switzerland. Solly Lawi is a Canadian citizen who resides in Geneva. Albert Lawi is a Canadian citizen who resides in Geneva.

         Watamar alleges in its Fourth Amended Petition that around 1997 it decided to liquidate its ownership interest in the Mirelis Group. As alleged, in 1998, Watamar entered a contract for the sale of that interest called the "Agreement of Sale of Financial Interests and Real Estate Call Options" (identified by Watamar as the "1998 Agreement"). The 1998 Agreement purportedly[2] stipulated the sale of Watamar's 10% holding interest in the Mirelis Group covering two elements: 1) the sale of its financial interest held in Mirelis Group Finance companies; and 2) the sale of its interest in Mirelis Group-held participations in real estate investments (the "Mirelis Group Real Estate Investments"), subject to a buyback or call option. The 1998 Agreement was signed in Geneva, with a clause choosing Swiss law, and a clause providing for arbitration in Switzerland, subject to change of venue only at the discretion of the arbitral tribunal.

         A dispute arose regarding the exact value of Watamar's 10% interest in the Mirelis Group Real Estate Investments. Watamar exercised its call option in June 2003 and, pursuant to the requirements of the 1998 Agreement, the parties entered into arbitration in Switzerland in April 2005.[3] At the time of the arbitration, only some of the 29 real properties had been sold. After five years in arbitration, in 2010, Watamar was awarded monetary compensation for 16 properties that had been sold. In addition, Watamar was awarded a 10% pro rata percentage of interest in the 13 unsold properties. One of the 13 properties that had not been sold, the Ashford Willowbrook Property, is located in Houston, Harris County, Texas, and forms the basis of this lawsuit.

         In 2012, the parties entered a second arbitration in Switzerland to resolve how to transfer the pro rata percentage of the real property interests to Watamar, because some of the unsold properties were majority-held by third parties, who would not agree to transfer the awarded percentages or were not directly owned by the Mirelis Group (i.e., the Mirelis Group only had an ownership interest in the third-party entities that owned the real property). In 2014, the arbitrator determined that Watamar could not obtain a direct interest in those properties if the third-party owners would not agree to the transfer. Thus, Watamar received monetary compensation for the estimated value of those real estate interests as opposed to a direct ownership interest in the real properties. Ashford Willowbrook Property was a property where the Mirelis Group had ownership in a third-party entity but did not have a direct ownership in the property. In relation to Ashford Willowbrook Property, Watamar received $27, 640.00 for its previously awarded 2.764% interest in the property.

         In May 2015, Watamar filed suit allegedly seeking to obtain accurate financial information pertaining to its real estate investments in Texas and to enforce its contractual rights to purchase property located in Harris County, Texas. In its Fourth Amended Petition, Watamar requested the remedy of specific performance of contract, constructive trust, and injunctive relief. Watamar asserted claims for breach of contract, breach of fiduciary duty, unjust enrichment, an accounting, and money had and received. Watamar alleged the vicarious liability theories of aiding and abetting breach of fiduciary duty, civil conspiracy to breach fiduciary duty, joint venture, and piercing the corporate veil. Watamar requested an award of attorney fees pursuant to Chapter 38 of the Texas Civil Practice & Remedies Code.

         While several defendants conceded jurisdiction, others did not.[4] On February 14, 2016, nonresident defendants SFM, Solly Lawi, and Albert Lawi filed special appearances with supporting affidavits.[5] Following the filing of the special appearance, the parties agreed to postpone any hearing on special appearance issues until Watamar had an opportunity to conduct discovery on jurisdictional issues.

         After the completion of the jurisdictional discovery, on April 28, 2017, the nonresident defendants filed a brief in support of their special appearances. In addition, a notice of oral hearing was filed and the hearing set for May 8, 2017. The hearing was postponed and subsequently reset for June 12, 2017.

         On June 9, 2017, Watamar filed its response to the special appearances by the nonresident defendants. Attached to Watamar's response as Exhibit A is, according to Watamar, an English translation of the "1998 Agreement." The 1998 Agreement is written in a language other than English. Though the parties do not specify which language, the record indicates that the 1998 Agreement is written in French.

         On June 12, 2017, the nonresident defendants filed their objection to Exhibit A of Watamar's response to the special appearances, pursuant to Rule 1009 of the Texas Rules of Evidence. The nonresident defendants argued that Exhibit A was inadmissible because it did not comply with Rule 1009(a), based on Watamar's failure to serve a copy of the 1998 Agreement (written in French) and failure to provide an affidavit from a qualified translator certifying the accuracy of the translation of the 1998 Agreement submitted by Watamar. On June 12, 2017, a hearing was conducted on the special appearances and the objection to Exhibit A was raised during the hearing.

         On October 6, 2017, the trial court sustained the nonresident defendants' objection to Exhibit A. Additionally, on October 6, 2017, in an Order Sustaining Objection to Jurisdiction, the trial court granted the special appearances for the nonresident defendants SFM, Solly Lawi, and Albert Lawi and dismissed all claims against them for want of personal jurisdiction.

         Watamar timely filed this interlocutory appeal.

         II. Special Appearance: standard of review and relevant law

         A. Standard of review.

         Whether a court has personal jurisdiction over a defendant is a question of law. Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 805-06 (Tex. 2002). The trial court's decision to grant or deny a special appearance is subject to de novo review on appeal. Id. at 806. However, the trial court's factual findings supporting its ruling on the special appearance may be challenged for legal and factual sufficiency. BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002). When, as here, the trial court did not issue findings of fact, all facts necessary to support the trial court's ruling and supported by the evidence are implied in favor of the trial court's ruling. Id.

         When examining a legal-sufficiency challenge, we review the evidence in the light most favorable to the challenged finding and indulge every reasonable inference that would support it. City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005). We credit favorable evidence if a reasonable fact finder could, and disregard contrary evidence unless a reasonable fact finder could not. Id. at 827. The evidence is legally sufficient if it would enable reasonable and fair-minded people to reach the verdict under review. Id. The fact finder is the sole judge of witness credibility and the weight to give their testimony. See id. at 819.

         In a factual-sufficiency review, we consider and weigh all the evidence, both supporting and contradicting the finding. Mar. Overseas Corp. v. Ellis, 971 S.W.2d 402, 406-07 (Tex. 1998). We set aside the finding only if it is so contrary to the overwhelming weight of the evidence as to be clearly wrong and unjust. Id. at 407. We may not substitute our own judgment for that of the trier of fact or pass upon the credibility of the witnesses. Id. The amount of evidence necessary to affirm a judgment is far less than that necessary to reverse a judgment. Yeng v. Zou, 407 S.W.3d 485, 489 (Tex. App.-Houston [14th Dist.] 2013, no pet.).

         B. Special appearance law.

         Texas courts may exercise personal jurisdiction over a nonresident if "(1) the Texas long-arm statute authorizes the exercise of jurisdiction, and (2) the exercise of jurisdiction is consistent with federal and state constitutional due-process guarantees." Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex. 2007). Under the Texas long-arm statute, the plaintiff bears the initial burden of pleading allegations sufficient to confer jurisdiction. Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 337 (Tex. 2009). When the plaintiff meets this initial burden, the burden shifts to the defendant to negate all potential bases for personal jurisdiction pleaded by the plaintiff. Id. The Texas long-arm statute extends Texas courts' personal jurisdiction as far as the federal constitutional requirements of due process will permit. Marchand, 83 S.W.3d at 795.

         Personal jurisdiction over a nonresident defendant is constitutional when two conditions are satisfied: (1) the defendant has established minimum contacts with the forum state; and (2) the exercise of jurisdiction comports with traditional notions of fair play and substantial justice. Marchand, 83 S.W.3d at 795 (citing Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). Minimum contacts are sufficient for personal jurisdiction when the nonresident defendant purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws. Moki Mac, 221 S.W.3d at 575. There are three factors relevant to a purposeful-availment inquiry: (1) only the defendant's contacts with the forum are relevant, not the unilateral activity of another party or a third person; (2) the contacts relied on must be purposeful rather than random, fortuitous, or attenuated; and (3) the defendant must seek some benefit, advantage or profit by "availing" itself of the jurisdiction. Id. This three-part inquiry assesses the quality and nature of the contacts, not the quantity. Retamco, 278 S.W.3d at 339. A defendant may purposefully avoid a particular forum by structuring its transactions in such a way as to neither profit from the forum's laws nor subject itself to jurisdiction there. Moki Mac, 221 S.W.3d at 575. At its core, the purposeful-availment analysis seeks to determine whether a nonresident's conduct and connection to a forum are such that it could reasonably anticipate being haled into court there. Moncrief Oil Int'l Inc. v. OAO Gazprom, 414 S.W.3d 142, 152 (Tex. 2013).

         Personal jurisdiction exists if the nonresident defendant's minimum contacts give rise to either specific jurisdiction or general jurisdiction.[6] Marchand, 83 S.W.3d at 795-96. When specific jurisdiction is alleged, as here, we focus the minimum-contacts analysis on the relationship among the defendant, the forum, and the litigation. Moki Mac, 221 S.W.3d at 575-76. Specific jurisdiction is established if the defendant's alleged liability arises out of or is related to an activity conducted within the forum. Id. at 576; Marchand, 83 S.W.3d at 796. 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, 221 S.W.3d at 585.

         III. Evidentiary Issues

         On appeal, we must determine what evidence the trial court considered in ruling on the special appearances. See Max Protetch, Inc. v. Herrin, 340 S.W.3d 878, 884 (Tex. App.-Houston [14th Dist.] 2011, no pet.) ("[W]e consider all of the evidence before the trial court on the question of [personal] jurisdiction.").

         A. Exhibit A to Watamar's response to the ...


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