John E. Deaton and Deaton Law Firm, L.L.C. v. Barry Johnson, Steven M. Johnson and Law Offices of Steven M. Johnson ( 2017 )

Affirmed and Opinion Filed July 14, 2017
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-16-01221-CV
JOHN E. DEATON AND DEATON LAW FIRM, L.L.C., Appellants
V.
BARRY JOHNSON, STEVEN M. JOHNSON AND LAW OFFICES OF STEVEN M.
JOHNSON, Appellees
On Appeal from the County Court at Law No. 1
Dallas County, Texas
Trial Court Cause No. CC-16-01668-A
MEMORANDUM OPINION
Before Justices Bridges, Lang-Miers, and Evans
Opinion by Justice Bridges
John E. Deaton and Deaton Law Firm, L.L.C. appeal the trial court’s denial of Deaton’s
special appearance. In four issues, Deaton argues the trial court erred in denying his special
appearance; a stipulation Deaton signed did not constitute “knowing” consent to jurisdiction in
Texas; the stipulation did not bind Deaton to the forum-selection clause in an attorney
representation agreement between Steven M. Johnson and the law offices of Steven M. Johnson
(JLF) and Rickie Patton, a Louisiana resident; and the trial court did not have subject matter
jurisdiction over the claims asserted by JLF. We affirm the trial court’s order.
On April 27, 2007, Patton, a Louisiana resident, signed an attorney representation
agreement retaining JLF as counsel in litigation involving claims against the manufacturer of the
Kugel Mesh abdominal hernia patch. The representation agreement provided, in part, that it
“shall be construed in accordance with the laws of the State of Texas, and all obligations of the
parties are performable in Tarrant County, Texas.” The agreement specified that any disputes
arising from the agreement would be resolved by final and binding arbitration conducted in Fort
Worth, Texas. The agreement provided that associate counsel could be employed at the
discretion and expense of JLF, and any attorney so employed might be designated to appear on
Patton’s behalf or undertake representation of Patton. All of JLF’s attorney representation
agreements contained the same clauses directing that the agreements were to be construed in
accordance with Texas law; making all obligations performable in Tarrant County, Texas; and
specifying that any disputes would be subject to binding arbitration in Fort Worth, Texas.
JLF initially filed Patton’s case in federal court in Houston on December 18, 2007. JLF
represented several hundred additional clients who had been implanted with the Kugel Mesh and
litigated their cases in three separate courts for approximately eight years. The Kugel Mesh
manufacturer was located in Rhode Island, and certain federal-filed cases were designated for
multi-district litigation in United States District Court for the District of Rhode Island. JLF
determined that some of the individual Kugel Mesh claims should be filed in state court in Rhode
Island, and JLF associated Deaton to file these claims in Rhode Island state court. As JLF’s
local counsel in Rhode Island, Deaton represented JLF clients between 2007 and 2015. Patton’s
case was transferred to Rhode Island for pretrial proceedings as part of the multi-district
litigation, after which it was to be transferred back to Houston for trial. Deaton offered to take
Patton’s case to trial in Houston, and JLF agreed to finance the case. Deaton signed a referral
agreement with JLF in 2012. Deaton recommended that Patton’s case be sent back to Houston
for trial, and Deaton hired Houston CPA Dr. James Mandel to testify as an expert regarding
Patton’s economic losses due to his Kugel Mesh problems. Deaton had subpoenas issued by the
court in Houston to obtain discovery and trial testimony from one of the Kugel Mesh
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manufacturer’s employees in Texas. Before Patton’s case went to trial, however, the court struck
an expert report Deaton failed to file within the time allowed by the scheduling order, and the
case did not proceed to trial due to lack of an expert.
In 2014, JLF negotiated a possible settlement of its state and federal cases with the Kugel
Mesh manufacturer and hired Garretson Resolution Group to oversee the settlement. Once the
requirements for settlement were met, JLF set about preparing a stipulation establishing a
qualified settlement fund and submitting the stipulation to the Rhode Island court and other
counsel for signature so that the settlement could be funded. Deaton refused to sign the
settlement fund documents because his requests for information regarding the settlement were
not answered to his satisfaction. In October 2015, Deaton asserted a $1,000,000 lien on the
settlement fund. In November 2015, all but five of JLF’s Kugel Mesh clients discharged Deaton.
Patton did not discharge Deaton but did discharge JLF. Instead of withdrawing from the cases in
which he had been discharged, Deaton filed a motion on behalf of “the plaintiffs” to compel
settlement information from JLF. Following a hearing, the judge in Rhode Island state court
ultimately ordered the Kugel Mesh manufacturer to fund the settlement, provide settlement
information to Deaton, and segregate $1,000,000 of the settlement funds. The judge also ordered
JLF to produce all of the Rhode Island clients’ attorney representation agreements with JLF.
On April 12, 2016, Deaton signed a “stipulation as to non-disclosure of protected JLF
attorney client information” which provided Deaton was considered associated counsel pursuant
to the attorney representation agreements and agreed the representation agreements were
protected by attorney client privilege and would “not be disclosed, shared or disseminated to any
other person or entity.” To this sentence, Deaton added the following handwritten language:
“not employed by the Deaton Law Firm.” The stipulation also provided as follows:
John Deaton of the Deaton Law Firm was hired pursuant to the [attorney
representation agreements] and authorized by the [attorney representation
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agreements] to act as counsel for clients in the Superior Court of Rhode Island
and the United States District Court for the District of Rhode Island, Deaton seeks
the benefits of the [attorney representation agreements] contingency fee and to
recover a portion of the contingent fee owed to JLF under the [attorney
representation agreements] for the work he purports to have done as counsel
pursuant to the authority to do so granted in the [attorney representation
agreements].
Meanwhile, one of JLF’s Kugel Mesh clients sued JLF in Tarrant County alleging causes
of action against JLF and Deaton. JLF filed an answer and cross claim against Deaton.
On April 4, 2016, Barry Johnson, who worked with JLF in Texas on Patton’s case, filed
his original petition in this case against JLF and Patton seeking declaratory judgment regarding
the parties rights, status, and legal relationships arising from the underlying representation
agreement and an order compelling the parties to arbitrate all disputes between the parties,
including legal malpractice claims asserted by Patton against Barry Johnson or JLF.
On April 12, 2016, JLF filed its original answer, petition for declaratory judgment, and
cross claim against Deaton. JLF argued, among other things, Deaton breached his fiduciary duty
to Patton and all other JLF clients for whom Deaton served as counsel; Deaton breached the
Patton referral agreement; Deaton tortuously interfered with the attorney representation
agreement between Patton and JLF; Deaton committed fraud by inducing JLF to enter into local
counsel agreements and/or the Patton referral agreement, which Deaton did not intend to honor
or fulfill. JLF also sought an order compelling arbitration.
On May 10, 2016, Deaton filed a special appearance in which he argued he is a Rhode
Island resident, he is not licensed to practice law in Texas, and his law firm maintains only one
office which is located in Rhode Island. Deaton alleged he did not have sufficient minimum
contacts with Texas to confer jurisdiction on Texas courts. Even assuming he did have minimum
contacts, Deaton argued, the exercise of jurisdiction over him in Texas would offend traditional
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notions of fair play and substantial justice. The trial court denied Deaton’s special appearance,
and this appeal followed.
We first address Deaton’s second and third issues arguing the stipulation Deaton signed
did not constitute “knowing” consent to jurisdiction in Texas and the stipulation did not bind
Deaton to the forum-selection clause in the attorney representation agreement between JLF and
Patton. In his brief, Deaton asks this Court to first address this issue because the presence of a
valid and enforceable forum-selection clause circumvents the need to conduct a due-process and
minimum-contacts analysis because such a clause acts as consent to jurisdiction in the
contracted-for forum, citing Carlile Bancshares, Inc. v. Armstrong No. 02-14-00014-CV, 2014
WL 3891658, at *5 (Tex. App.—Fort Worth Aug. 7, 2014, no pet.)
The plaintiff bears the initial burden of pleading sufficient allegations to bring a
nonresident defendant within the personal jurisdiction of a Texas court. BMC Software Belgium,
N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002). When this burden is met, the burden shifts
to the nonresident to negate all bases of personal jurisdiction asserted by the plaintiff. Id. A
defendant may negate jurisdiction on a legal basis by showing that even if the plaintiff’s
allegations are true, they do not establish jurisdiction. Kelly v. General Interior Constr., Inc.,
301 S.W.3d 653, 658 (Tex. 2010). A defendant may also negate jurisdiction on a factual basis
by introducing evidence that rebuts the allegations in the pleadings. Id.
The determination of whether a court has personal jurisdiction over a defendant is a
question of law. Moncrief Oil Int’l, Inc. v. OAO Gazprom, 414 S.W.3d 142, 150 (Tex. 2013).
When, as in this case, the trial court does not issue findings of fact and conclusions of law, all
facts necessary to support the judgment and supported by the evidence are implied. BMC
Software, 83 S.W.3d at 795. When the appellate record includes the reporter’s record and clerk’s
record, these implied findings are not conclusive and may be challenged for legal and factual
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sufficiency. Id. When the trial court’s findings are supported by sufficient evidence, or when
the material facts are undisputed, we review the trial court’s ruling on a special appearance de
novo. Baker Hughes Inc. v. Brooks, 405 S.W.3d 246, 249 (Tex. App.—Houston [14th Dist.]
2013, pet. denied).
We review the validity and enforceability of a forum-selection clause under an abuse of
discretion standard. My Cafe–CCC, Ltd. v. Lunchstop, Inc., 107 S.W.3d 860, 864 (Tex. App.—
Dallas 2003, no pet.); Phoenix Network Techs. v. Neon Sys., 177 S.W.3d 605, 610 (Tex. App.—
Houston [1st Dist.] 2005, no pet.). We review the trial court’s interpretation of a contract
containing a forum-selection clause de novo. Phoenix, 177 S.W.3d at 610. A forum-selection
clause obtained through freely negotiated agreements does not offend due process, provided it is
not unreasonable and unjust. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473 n. 14, (1985);
CNOOC S.E. Asia Ltd. v. Paladin Res. (SUNDA) Ltd., 222 S.W.3d 889, 894 (Tex. App.—Dallas
2007, pet. denied).
A consent to jurisdiction clause is one of several ways a litigant may consent to personal
jurisdiction in a forum. Alattar v. Kay Holdings, Inc., 485 S.W.3d 113, 117 (Tex. App.—
Houston [14th Dist.] 2016, no pet.). If a litigant signs a contract containing such a clause, then
that litigant either has consented to personal jurisdiction or waived the requirements for personal
jurisdiction in the forum or forums within the scope of the clause. Id.
Here, Deaton represented JLF clients from 2007 until 2015. All of JLF’s attorney
representation agreements, including Patton’s agreement with JLF, contained clauses directing
that the agreements were to be construed in accordance with Texas law; making all obligations
performable in Tarrant County, Texas; and specifying that any disputes would be subject to
binding arbitration in Fort Worth, Texas. Deaton argues he was not a signatory to Patton’s
attorney representation agreement and the contracts that referred JLF cases to Deaton were
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between only Deaton and JLF and were prepared in Rhode Island for execution by JLF.
However, Deaton’s attorney-client relationship with Patton was established by the attorney
representation agreement. The agreement provided that JLF could employ associate counsel at
the discretion and expense of JLF, and any attorney so employed might be designated to appear
on Patton’s behalf or undertake representation of Patton. This is what JLF did when it referred
Patton’s case to Deaton as local counsel. Thus, before Deaton signed the stipulation as to non-
disclosure, Deaton was already “associate counsel” for Patton under the attorney representation
agreement. The stipulation as to non-disclosure does, however, provide an additional basis for
concluding Deaton knew he was hired pursuant to the attorney representation agreement between
Patton and JLF and understood his position as “associate counsel” under the agreement. We
conclude that, by undertaking to represent Patton as “associate counsel” under the attorney
representation agreement and reaffirming his status by signing the stipulation as to non-
disclosure, Deaton consented to personal jurisdiction in Texas under the terms of the attorney
representation agreement. See id. We further conclude the trial court correctly denied Deaton’s
special appearance. We overrule Deaton’s issues to the extent he argues the stipulation Deaton
signed did not constitute “knowing” consent to jurisdiction in Texas and the stipulation did not
bind Deaton to the forum-selection clause in the attorney representation agreement between JLF
and Patton. Because of our disposition of these issues, we need not further address Deaton’s
issues.
We affirm the trial court’s judgment.
/David L. Bridges/
DAVID L. BRIDGES
JUSTICE
161221F.P05
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
JOHN E. DEATON AND DEATON LAW On Appeal from the County Court at Law
FIRM, L.L.C., Appellant No. 1, Dallas County, Texas
Trial Court Cause No. CC-16-01668-A.
No. 05-16-01221-CV V. Opinion delivered by Justice Bridges.
Justices Lang-Miers and Evans participating.
BARRY JOHNSON, STEVEN M.
JOHNSON AND LAW OFFICES OF
STEVEN M. JOHNSON, Appellee
In accordance with this Court’s opinion of this date, the judgment of the trial court is
AFFIRMED.
It is ORDERED that appellee BARRY JOHNSON, STEVEN M. JOHNSON AND
LAW OFFICES OF STEVEN M. JOHNSON recover their costs of this appeal from appellant
JOHN E. DEATON AND DEATON LAW FIRM, L.L.C..
Judgment entered July 14, 2017.
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