the-re-family-trust-and-shea-ungar-aka-hershey-ungar-trustee-of-the-re ( 2012 )

Fourth Court of Appeals
San Antonio, Texas
MEMORANDUM OPINION
No. 04-12-00325-CV
THE RE FAMILY TRUST and Shea Ungar a/k/a
Hershey Ungar, Trustee of the Re Family Trust,
Appellants
v.
THE CONESTOGA SETTLEMENT TRUST and
American National Insurance Company,
Appellees
From the 408th Judicial District Court, Bexar County, Texas
Trial Court No. 2011-CI-17464
Honorable David A. Berchelmann, Jr., Judge Presiding
Opinion by: Phylis J. Speedlin, Justice
Sitting: Karen Angelini, Justice
Phylis J. Speedlin, Justice
Marialyn Barnard, Justice
Delivered and Filed: December 5, 2012
AFFIRMED
The Conestoga Settlement Trust (“Conestoga”), a Texas trust, filed suit in Bexar County,
Texas against Appellants the RE Family Trust and Shea Ungar a/k/a Hershey Ungar, Trustee of
the Re Family Trust ( “Ungar”), located in New York and New Jersey respectively. Appellants
filed a special appearance alleging a lack of personal jurisdiction. The trial court denied the
special appearance.
04-12-00325-CV
On appeal, Appellants argue: (1) the purchase of a life insurance policy by a nonresident
from an insurance company headquartered in Texas does not subject the nonresident to general
or specific jurisdiction in Texas; (2) limited correspondence by a nonresident to a Texas resident
does not subject the nonresident to personal jurisdiction in Texas even if one of the letters is
allegedly tortious in nature; and (3) a single tortious communication from a nonresident to a
Texas resident does not subject the New York resident to personal jurisdiction in Texas. We
affirm the judgment of the trial court.
FACTUAL BACKGROUND
The RE Family Trust, owner of several life insurance policies on the life of Rachel
Einhorn, was created in New York on July 15, 2007. One of these policies was issued by
American National Insurance Company (“ANICO”) in the amount of $10 million. ANICO’s
offices were located in Texas and all payments and documents were forwarded to Texas. Rachel
Einhorn signed the contract in New York and Ungar signed the contract in New Jersey. In June
of 2010, the RE Family Trust entered into acquisition negotiations regarding the ANICO policy
with the James Settlement Trust (“James”), a Nevada corporation. On June 21, 2010, James
acquired ownership of the ANICO policy. Approximately one year later, on July 19, 2011,
James transferred ownership to Conestoga.
On August 22, 2011, approximately one month after Conestoga obtained ownership of
the ANICO policy, Rachel Einhorn passed away. On September 28, 2011, Gary Sazar, a New
York attorney representing the RE Family Trust, faxed a letter to ANICO, at its Texas offices,
advising the insurer he was investigating the policy transfer to James and requesting ANICO not
pay out death benefits prior to the completion of his investigation.
On October 3, 2011, Thomas Legrand, a Texas ANICO employee, contacted Sazar by
telephone requesting additional information. Legrand faxed Sazar a follow-up correspondence
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ten days later. Conestoga also faxed Sazar a letter on October 13, 2011 requesting Sazar advise
ANICO that the RE Family Trust was relinquishing all rights and benefits to the ANICO policy.
On October 16, 2011, Sazar faxed further correspondence to ANICO stating the
investigation was waiting for receipt of the James Settlement Trust transfer documents. On
October 18, 2011, ANICO responded with the requested documents. On October 19, 2011,
Conestoga sent another letter to Sazar certifying Sazar was in possession of the necessary
documents and renewing its earlier demand that Sazar withdraw his request that ANICO
withhold payment of the policy proceeds. That same day, Sazar sent correspondence indicating
he would not withdraw his request prior to finalizing his investigation. Shortly thereafter,
Conestoga filed suit alleging: (1) ANICO’s failure to pay policy benefits; and (2) the RE Family
Trust’s tortious interference with Conestoga’s rights to those benefits.
On December 27, 2011, the RE Family Trust and Ungar filed a special appearance
arguing Texas lacked personal jurisdiction over them. More specifically, Appellants asserted
Conestoga failed to prove either significant contacts within Texas or the conducting of business
in Texas. The trial court denied the special appearance. This appeal ensued.
STANDARD OF REVIEW
Whether a trial court has personal jurisdiction over a defendant is a question of law and
subject to de novo review. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794
(Tex. 2002); see also Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 337
(Tex. 2009). When a factual dispute exists, as it does here, an appellate court is called upon to
review the trial court’s resolution of the factual dispute. BMC Software, 83 S.W.3d.at 794; Am.
Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 806 (Tex. 2002). “When a trial court
does not issue findings of fact and conclusions of law with its special appearance ruling, all facts
necessary to support the judgment and supported by the evidence are implied.” BMC Software,
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83 S.W.3d at 795; see also Coleman, 83 S.W.3d at 806 (reviewing court presumes the trial court
resolved all factual disputes in favor of its judgment); Spir Star AG v. Kimich, 310 S.W.3d 868,
871-72 (Tex. 2010). These implied findings, however, are not conclusive and may be challenged
for sufficiency based on the clerk’s and reporter’s records. BMC Software, 83 S.W.3d at 795.
PERSONAL JURISDICTION
The parties agree that both the RE Family Trust and Ungar are nonresidents of Texas.
The question is whether there were sufficient business contacts to satisfy the Texas long-arm
statute. See TEX. CIV. PRAC. & REM. CODE ANN. §§ 17.041-.045 (West 2010). More
specifically, Texas Civil Practices and Remedies Code section 17.042 provides that “a
nonresident does business in this state if the nonresident: (1) contracts by mail or otherwise with
a Texas resident and either party is to perform the contract in whole or in part in this state. . . .”
TEX. CIV. PRAC. & REM. CODE ANN. § 17.042 (West 2011).
Texas courts may exercise personal jurisdiction over a nonresident defendant, as
authorized under the Texas long-arm statute, provided the exercise of such personal jurisdiction
meets federal and state constitutional due process guarantees. Retamco, 278 S.W.3d at 337;
Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex. 2007). To meet constitutional
due process guarantees, the court must find that (1) the nonresident defendant has purposefully
availed itself of the privilege of conducting activities within the forum state, thus invoking the
benefits and protections of its laws, and (2) the court’s assertion of jurisdiction meets “traditional
notions of fair play and substantial justice.” Retamco, 278 S.W.3d at 338.
The federal standard for personal jurisdiction requires two conditions: (1) establishing
minimum contacts with the forum state; and (2) traditional notions of fair play and substantial
justice. Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945); see also U-Anchor Adver., Inc.
v. Burt, 553 S.W.2d 760, 762 (Tex. 1977) (holding Texas long-arm statute extends Texas courts’
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personal jurisdiction as far as federal due process standard permit, and thus Texas courts rely on
precedent set by the United States Supreme Court and other federal courts, as well as Texas’
courts, for questions of personal jurisdiction). “A nonresident defendant that has ‘purposefully
availed’ itself of the privileges and benefits of conducting business in the foreign jurisdiction has
sufficient contacts with the forum to confer personal jurisdiction.” BMC Software, 83 S.W.3d at
795 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474–76 (1985)).
As plaintiff, Conestoga bore the initial burden of pleading sufficient facts to invoke
personal jurisdiction over the RE Family Trust and Ungar under the Texas long-arm statute.
Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 658 (Tex. 2010); GJP, Inc. v. Ghosh, 251
S.W.3d 854, 870 (Tex. App.—Austin 2008, no pet.). Upon the plaintiff’s allegations of personal
jurisdiction, the Kelly Court explained the defendant’s burden requires negating each of the bases
for personal jurisdiction either (1) factually, by disproving the plaintiff’s allegations, or (2)
legally, by showing that the plaintiff’s allegations, even if true, are insufficient to establish
jurisdiction. Kelly, 301 S.W.3d at 658S59.
Conestoga’s Second Amended Petition alleged jurisdiction based on the RE Family Trust
doing business in Texas. More specifically, Conestoga alleged the RE Family Trust contracted
with a Texas resident when either party was to perform the contract in whole or in part in Texas,
and committed a tort in whole or in part in Texas. Based on these allegations, the burden then
shifted to the RE Family Trust to negate all forms of personal jurisdiction alleged by Conestoga.
Kelly, 301 S.W.3d at 658; GJP, 251 S.W.3d at 870.
A. Specific Jurisdiction
To establish specific jurisdiction in this case, (1) the RE Family Trust must have
undertaken minimum contacts with Texas by purposefully availing itself of the privilege of
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conducting activities here, and (2) the RE Family Trust’s liability must have arisen from or been
related to those contacts. Retamco, 278 S.W.3d at 338; Moki Mac, 221 S.W.3d at 576.
Specific jurisdiction may be asserted even where contacts are isolated or sporadic, if the
lawsuit’s claims arise out of those contacts. Spir Star, 310 S.W.3d at 873. Physical presence in
the state is not necessary. See Burger King, 471 U.S. at 476 (stating that so long as acts are
purposefully directed toward the plaintiff “. . . we have consistently rejected the notion that an
absence of physical contacts can defeat personal jurisdiction there”). The notion of purposeful
availment insures the nonresident defendant’s contacts result from its own purposeful activity
and not the unilateral activity of the plaintiff or a third party. Experimental Aircraft Ass’n, Inc. v.
Doctor, 76 S.W.3d 496, 504 (Tex. App.—Houston [14th Dist.] 2002, no pet.). Although not
determinative, foreseeability is an important consideration in deciding whether the nonresident
defendant has purposefully established “minimum contacts” with the forum state. BMC
Software, 83 S.W.3d at 795.
B. Purposeful Availment
For the purpose of determining if a nonresident defendant purposefully availed itself of
the privilege of conducting activities in Texas, (1) only the defendant’s contacts with the forum
are relevant, (2) the contacts 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. Retamco, 278 S.W.3d at 338–39; Moki Mac, 221 S.W.3d at 575 (recognizing there
are three parts to a “purposeful availment” inquiry). More specifically, Appellants’ activities,
whether direct acts within Texas or conduct outside Texas, must justify a conclusion that the
Appellants could reasonably anticipate being called into a Texas court. Retamco, 278 S.W.3d at
338; World–Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). Therefore, our
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application of this analysis focuses not on the number of contacts, but the quality of the RE
Family Trust’s contacts. Retamco, 278 S.W.3d at 339.
Much of Appellants’ argument is based on Michiana Easy Livin’ Country, Inc. v. Holten,
168 S.W.3d 777 (Tex. 2005), in which Holten, a Texas resident, contacted Michiana, an RV
“factory outlet” located in Indiana with no employees or property in Texas and not authorized to
do business in Texas. Id.at 783. Michiana did not advertise in Texas or on the Internet, and did
not solicit business from Holten or any other Texas resident. Id. Holten initiated the call to
Michiana, in Indiana, and entered into an agreement to purchase an RV. Id. He sent payment to
Indiana and took delivery in Texas, paying for delivery himself. Dissatisfied with his RV,
Holten subsequently sued Michiana in Texas, alleging misrepresentations by the company during
the phone call. The Texas Supreme Court held Michiana lacked minimum contacts with Texas
because it had not purposefully availed itself of the privilege of conducting activities in Texas.
Id., at 786–87; see also Moki Mac, 221 S.W.3d at 577 (“the mere sale of a product to a Texas
resident will not generally suffice to confer specific jurisdiction upon our courts. . . . the facts
alleged must indicate that the seller intended to serve the Texas market.”).
In the present case, Appellants purchased the original policy from ANICO, a Texas
corporation. Although Appellants argue lack of knowledge as to where ANICO was located, the
forms signed by Ms. Einhorn and Ungar all specifically provide ANICO with an address in
Galveston, Texas. From July 2007 to June 2010, all premiums were paid to ANICO in Texas.
During that time, the policy provided the RE Family Trust with continuous, systematic and
ongoing benefits, advantages and legal rights that Appellants could have enforced in Texas. See
Michiana, 168 S.W.3d at 784. When the policy was transferred to James, in June of 2010, a
change of ownership and beneficiary were sent to Texas. Although Appellants questioned the
transfer and blamed their delayed investigation on the lack of James documents, Ungar himself
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signed the documents transferring the life insurance policy to the James Settlement on June 21,
2010.
Subsequently, after Ms. Einhorn passed away and the policy came due, Appellants
submitted a Notice of Claim seeking the benefits under the life insurance policy to ANICO in
Texas. Appellants further directed at least three letters and one phone call to ANICO. The
explicit purpose of each of these communications was to deter ANICO from paying out the
proceeds of the policy. Conestoga specifically notified Appellants of its intent to sue if
Appellants further interfered with the contractual relationship between Conestoga and ANICO,
two Texas residents. We cannot conclude that Appellants’ continued contacts, in light of the
situation at hand, were merely random, fortuitous, or attenuated. Michiana, 168 S.W.3d at 785.
Accordingly, we hold that the RE Family Trust and Ungar purposefully availed themselves of
the privileges of conducting activities in the State of Texas. Retamco, 278 S.W.3d at 338.
C. Liability Resulting for Contacts
“[P]urposeful availment alone will not support an exercise of specific jurisdiction . . .
unless the defendant’s liability arises from or relates to the forum contacts.” Moki Mac, 221
S.W.3d at 579; see also Burger King, 471 U.S. at 472. Although Conestoga made several
requests on Appellants to withdraw their demand that ANICO withhold payment, Appellants
were steadfast in their allegations and continued interference. Based on the record before us,
there is little question the lawsuit arose from, or was at least related to, Appellants’ contacts with
Texas. The original letter dated September 28, 2011 prompted Conestoga’s tortious interference
claim. Additionally, Conestoga notified Appellants on at least two different occasions that their
continued actions would subject them to suit in Texas. In response, however, Appellants elected
to provide further correspondence to ANICO that Appellants were not withdrawing their demand
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that ANICO withhold payment. Accordingly, Appellants’ liability arose from or was related to
its contacts with Texas.
D. Federal Due Process Concerns
Having found personal jurisdiction under the Texas standards, we look to whether
Conestoga’s suit satisfies the dual prong federal standard for personal jurisdiction. The first
prong questions whether Appellants established minimum contacts with the forum state. Int’l
Shoe, 326 U.S. at 316; BMC Software, 83 S.W.3d at 795. For the same reasons that Appellants
“purposefully availed themselves of the privilege of conducting activities within [Texas],”
Appellants have satisfied the minimum contacts requirement. See Michiana, 168 S.W.3d at 784
(quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)).
We thus turn to the second prong inquiry of whether an assertion of jurisdiction over
Appellants comports with “traditional notions of fair play and substantial justice.” Int’l Shoe,
326 U.S. at 316; BMC Software, 83 S.W.3d at 795. “Only in rare cases, however, will the
exercise of jurisdiction not comport with fair play and substantial justice when the nonresident
defendant has purposefully established minimum contacts with the forum state.” Guardian
Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 231 (Tex. 1991)
(citing Burger King, 471 U.S. at 477S78). Our analysis is based on the consideration of the
following: (1) the burden on defendants; (2) the interests of the forum state in adjudicating the
dispute; (3) the plaintiff’s interest in obtaining convenient and effective relief; (4) the interstate
judicial system’s interest in obtaining the efficient resolution of controversies; and (5) the shared
interest of the several States in further fundamental substantive social policies. Retamco, 278
S.W.3d at 341.
Although an additional burden is obviously created on Appellants, it is not the only factor
we consider. Two of the three parties, and the majority of the witnesses, reside in Texas. Both
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Conestoga and ANICO have a strong interest in resolving the controversy in Texas,
predominantly that the litigation began in Texas. The origin of all the activities is based in
Appellants’ choice to purchase a policy from a Texas entity. We, therefore, conclude the Texas
trial court’s exercise of jurisdiction over Appellants does not offend traditional notions of fair
play and substantial justice.
CONCLUSION
Because Appellants the RE Family Trust and Ungar purposefully availed themselves of
conducting activities in Texas and the pending lawsuit arose from or was related to Appellants’
contacts with Texas, we conclude Conestoga established the Texas court’s possession of specific
jurisdiction over Appellants. Moreover, Conestoga established minimum contacts and Texas
jurisdiction over Appellants does not offend traditional notions for fair play and substantial
justice. Accordingly, we affirm the judgment of the trial court.
Phylis J. Speedlin, Justice
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