dugas-limited-partnership-dugas-1998-irrevocable-trust-william-bruce ( 2011 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-09-00463-CV
DUGAS LIMITED PARTNERSHIP, APPELLANTS
DUGAS 1998 IRREVOCABLE
TRUST, WILLIAM BRUCE DUGAS
GRANDCHILD TRUST, JAMES
STEPHEN TURNER AND HURLEY
CALISTER TURNER, JR.,
CO-TRUSTEES OF THE DUGAS
1998 IRREVOCABLE TRUST F/B/O
WILLIAM BRUCE DUGAS
V.
DONNA NEAL GOODE DUGAS APPELLEES
AND LAURA NICOLE DUGAS
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FROM THE PROBATE COURT OF DENTON COUNTY
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OPINION
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I. INTRODUCTION
In this accelerated, interlocutory appeal, Appellants Dugas Limited
Partnership (Dugas, LP); Dugas 1998 Irrevocable Trust (Dugas 1998 Trust);
William Bruce Dugas Grandchild Trust (Grandchild Trust); and James Stephen
Turner (Steve) and Hurley Calister Turner, Jr. (Cal), Co-Trustees of the Dugas
1998 Irrevocable Trust f/b/o William Bruce Dugas (Bruce) challenge the trial
court‘s order denying their special appearances. In three issues, Appellants
argue that general jurisdiction does not exist over Dugas, LP; that specific
jurisdiction does not exist over the Dugas 1998 Trust, the Grandchild Trust, and
Cal and Steve as co-trustees of the Dugas 1998 Trust; and that the trial court
erred by denying their plea to the jurisdiction and plea in abatement. We will
affirm in part and reverse and render in part.
II. FACTUAL1 AND PROCEDURAL BACKGROUND
Bruce died in January 2008. Appellee Donna Neal Goode Dugas married
Bruce in 1984 and is his surviving spouse. Bruce and Donna had two children,
Appellee Laura Nicole Dugas and William Bruce Dugas, II (William). Bruce‘s
mother was Laura Jo Turner Dugas. Laura Jo‘s siblings are Cal and Steve.
H. Calister Turner, Sr.—Laura Jo, Cal, and Steve‘s father—founded Dollar
General.
1
The members of the Turner and Dugas families and the entities that are
the subject of this appeal are set out in the Appendix attached to this opinion.
2
Bruce and Donna moved to Aubrey, Texas, in 1995 and resided at 4801
South Highway 377 until 1999. According to Donna, she and Bruce ―acquired a
joint undivided fee simple interest in the Double D Ranch, located at 5932
Wildcat Road, Aubrey, Denton County Texas 76227 and 6032 Wildcat Road,
Aubrey, Denton County Texas‖ in 1999. In July or September 2005, Bruce and
Donna ceased living together at the Double D Ranch.2 Bruce resided in
Kentucky at the time of his death. Donna and Laura continue to reside at the
Double D Ranch, and William resides in Corinth, Texas.
In December 1989, H. Calister Turner, Sr. and Steve entered into a trust
agreement for the creation of the Grandchild Trust. H. Calister Turner, Sr. signed
the trust agreement as grantor, and Steve signed as trustee. The Grandchild
Trust was created ―for the benefit of the Grantor‘s grandchild, [Bruce],‖ called for
Steve to make income distributions to Bruce ―as [Steve] deems advisable,‖ and
among other things, to make discretionary corpus distributions for Bruce‘s
comfort, health, maintenance, and support. The Grandchild Trust gave Bruce a
general testamentary power to appoint the assets remaining therein upon his
death to any individual or entity. If Bruce did not so appoint any person or entity
before his death, the assets were to be allocated pro rata among Bruce‘s children
after taxes. From 1998 to 2007, and at other times during Bruce‘s lifetime,
2
Donna filed an original petition for divorce in November 2005 in Denton
County. The petition was still pending at the time of Bruce‘s death, according to
Donna.
3
distributions were made to him from the Grandchild Trust by wire transfer and by
check. The Grandchild Trust was executed in Kentucky.
In November 1998, Laura Jo, as settlor, created the Dugas 1998 Trust.
The Dugas 1998 Trust identified Cal and Steve as trustees and provided that
they are responsible for dividing and allocating the principal among three
separate trusts named for Laura Jo‘s three children, including Bruce. It stated
that Laura Jo‘s primary concern during the life of the named beneficiary was for
the beneficiary‘s health, support, and education, and it gave Bruce the power to
appoint by will his interest therein and provided that the principal was to be
allocated among his then-living descendants upon his death if he did not exercise
the appointment. The Dugas 1998 Trust made distributions to Bruce during his
lifetime, including distributions from 2003 to 2007. Laura Jo, Cal, and Steve
executed the trust in Florida.3
In February 1998, the LJWD Limited Partnership was formed by the
Limited Partnership Agreement of the LJWD Limited Partnership. In April 1998,
the LJWD Limited Partnership‘s name was changed to ―Dugas Limited
Partnership.‖ Dugas, LP is ―governed by the Uniform Limited Partnership Act of
the State of Delaware.‖ The purposes of Dugas, LP are ―to buy, sell, invest in,
operate[,] and manage such securities, real estate, and other assets as the
3
Both the Grandchild Trust and the Dugas 1998 Trust provide that property
identified in attached schedules belongs to the trusts, but no schedule is attached
to the Grandchild Trust, and no property is identified on the schedule attached to
the Dugas 1998 Trust.
4
General Partner may determine‖; to consolidate investments; and to pool and
protect assets. The partnership agreement lists Dugas, LP‘s principal place of
business and principal office as ―4801 South Highway 377, Aubrey, Texas
76227.‖ Dugas, LP‘s general partner is Dugas Asset Management Corp. Bruce
signed the partnership agreement as ―President‖ of Dugas Asset Management
Corp., and an exhibit to the partnership agreement identified Dugas Asset
Management Corp.‘s address as:
Dugas Asset Management
Corp.
c/o William B. Dugas
Double D Ranch, 4801 South
Highway 377
Aubrey, Texas 76227
As of December 31, 2008, Dugas, LP had fifteen limited partners. The
partnership agreement listed only one asset of Dugas, LP: Dugas Family
Partners, a Texas General Partnership.
The Family Office, L.L.C. is a Tennessee limited liability company that the
Turner and Dugas families established to provide services to Turner and Dugas
family members, their trusts, and the entities that they control. David Wilds is the
chief executive officer of The Family Office, and Amy Freeny is the tax manager.
The distributions that the Grandchild Trust and the Dugas 1998 Trust made to
Bruce during his lifetime were transferred by the Family Office. The Family
Office has no offices outside of Nashville, Tennessee.
5
A petition to probate Bruce‘s will was filed in Kentucky in February 2008.
In February 2009, Donna sued Dugas, LP; the Grandchild Trust; the Dugas 1998
Trust; Ernest Pardue, in his capacity as the executor of Bruce‘s estate; Laura;
William; and the Wayne F. Dugas, Sr. 1998 Trust in Texas.4 Donna sought
(1) an accounting of the assets of Bruce‘s estate and of the assets and
distributions of the trusts; (2) a partition of the Double D Ranch; and
(3) declarations regarding the character of the trusts for which Bruce was a
beneficiary, whether certain distributions made to Bruce were advancements or
loans, and whether Donna is entitled to recover as community property any
income from appreciation of the trusts‘ assets.5
In March 2009, Pardue filed a ―Verified Petition for the Settlement of the
Estate of William Bruce Dugas, Deceased, and Complaint for Declaratory
Judgment‖ in Kentucky. According to Donna, the petition sought relief similar to
the relief that she seeks in her suit against Bruce‘s estate and the trusts.
In July 2009, Laura filed cross-claims against Cal and Steve as co-trustees
of the Dugas 1998 Trust in Texas. She sought an accounting of the Dugas 1998
Trust and alleged that Cal and Steve breached fiduciary duties that they owed to
4
Donna subsequently nonsuited the Wayne F. Dugas, Sr. 1998 Trust.
5
According to Donna, she and Pardue (on behalf of Bruce‘s estate) have
engaged in settlement discussions in Texas but have not finalized a settlement
agreement.
6
her as trustees of the Dugas 1998 Trust by failing to investigate her needs and
by failing to make sufficient distributions to her.
Dugas, LP; the Dugas 1998 Trust; the Grandchild Trust; and Cal and
Steve as co-trustees of the Dugas 1998 Trust filed special appearances
challenging the trial court‘s personal jurisdiction over them.6 The trial court
ultimately signed an order denying Dugas, LP‘s special appearance on the basis
that general jurisdiction exists over it ―based, in part, on the documentary proof
showing that it had a principal place of business in Texas.‖ The trial court denied
the other defendants‘ special appearances because ―specific jurisdiction exists
over [each of them]. The facts of this case are directly on point with those set
forth in Steen Seijo v. Miller, 425 F. Supp. 2d 194 (D.P.R. 2006).‖ The trial court
denied any plea in abatement for each of the claims asserted by Laura against
Cal and Steve as co-trustees of the Dugas 1998 Trust but granted any plea in
abatement for the claims asserted by Donna against Dugas, LP, the Dugas 1998
Trust, and the Grandchild Trust, staying those claims ―in the interest of comity,‖
―pending resolution in the Kentucky proceedings.‖ Dugas, LP, the Dugas 1998
Trust, the Grandchild Trust, and Cal and Steve as the Dugas 1998 Trust‘s co-
trustees appeal.
6
With the exception of whether Dugas, LP‘s principal place of business is
Texas, the material facts relied upon by each side in support of, or in opposition
to, the special appearances are undisputed.
7
III. STANDARD OF REVIEW, BURDEN OF PROOF, AND PERSONAL JURISDICTION
Whether a trial court has personal jurisdiction over a defendant is a
question of law, which we review de novo. Moki Mac River Expeditions v. Drugg,
221 S.W.3d 569, 574 (Tex. 2007); Luxury Travel Source v. Am. Airlines, Inc., 276
S.W.3d 154, 160 (Tex. App.—Fort Worth 2008, no pet.). In a suit against a
nonresident defendant, the initial burden of proof is on the plaintiff to plead
sufficient allegations to bring the defendant within the provisions of the Texas
long-arm statute. Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 658 (Tex.
2010). ―This minimal pleading requirement is satisfied by an allegation that the
nonresident defendants are doing business in Texas.‖ Huynh v. Nguyen, 180
S.W.3d 608, 619 (Tex. App.—Houston [14th Dist.] 2005, no pet.). The plaintiff‘s
original pleadings as well as its response to the defendant‘s special appearance
can be considered in determining whether the plaintiff satisfied that burden.
Flanagan v. Royal Body Care, Inc., 232 S.W.3d 369, 374 (Tex. App.—Dallas
2007, pet. denied). Once the plaintiff has pleaded sufficient jurisdictional
allegations, the defendant filing a special appearance bears the burden to negate
all bases of personal jurisdiction alleged by the plaintiff. Kelly, 301 S.W.3d at
658. In other words, the defendant must disprove the existence of minimum
contacts sufficient to establish personal jurisdiction over it—general, specific, or
8
both—as alleged by the plaintiff.7 Am. Type Culture Collection, Inc. v. Coleman,
83 S.W.3d 801, 806–07 (Tex. 2002), cert. denied, 537 U.S. 1191 (2003).
When a trial court enters an order denying a special appearance and
issues findings of fact and conclusions of law, the appellant may challenge the
fact findings on legal and factual sufficiency grounds. BMC Software, 83 S.W.3d
at 794. Here, the trial court did not issue separate findings of fact and
conclusions of law, but it detailed in its order denying Appellants‘ special
appearances the factual and legal bases for its ruling. We may review the trial
court‘s resolution of disputed fact issues for legal and factual sufficiency under
the same standards of review that we apply in reviewing a jury‘s or trial court‘s
findings of fact at trial.8 Id.; Luxury Travel Source, 276 S.W.3d at 161; see Kelly,
301 S.W.3d at 659. We review a trial court‘s conclusions of law as a legal
question; the appellant may not challenge a trial court‘s conclusions of law for
factual insufficiency. BMC Software, 83 S.W.3d at 794.
A nonresident defendant is subject to the personal jurisdiction of Texas
courts if (1) the Texas long-arm statute authorizes the exercise of jurisdiction and
7
We may rely on precedent from federal courts in determining whether a
nonresident defendant has met its burden to negate all bases of jurisdiction.
BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002).
8
See Cent. Ready Mix Concrete Co. v. Islas, 228 S.W.3d 649, 651 (Tex.
2007); City of Keller v. Wilson, 168 S.W.3d 802, 807, 827 (Tex. 2005); Uniroyal
Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 334 (Tex. 1998), cert. denied,
526 U.S. 1040 (1999); Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex. 1986)
(op. on reh‘g); Garza v. Alviar, 395 S.W.2d 821, 823 (Tex. 1965); In re King’s
Estate, 150 Tex. 662, 244 S.W.2d 660, 661 (1951).
9
(2) the exercise of jurisdiction does not violate federal and state constitutional
due process guarantees. Kelly, 301 S.W.3d at 657 (citing Scholobohm v.
Schapiro, 784 S.W.2d 355, 356 (Tex. 1990)). The broad language of the long-
arm statute‘s ―doing business‖ requirement permits the statute to reach as far as
the federal constitutional requirements of due process will allow. Guardian Royal
Exchange Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226
(Tex. 1991). The exercise of personal jurisdiction will not violate due process
―when the nonresident defendant has established minimum contacts with the
forum state, and the exercise of jurisdiction comports with ‗traditional notions of
fair play and substantial justice.‘‖ Moki Mac, 221 S.W.3d at 575 (citing Int’l Shoe
Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158 (1945)).
A nonresident defendant establishes minimum contacts when it
purposefully avails itself of the privilege of conducting activities within the forum
state, thus invoking the benefits and protections of its laws. Kelly, 301 S.W.3d at
657–58 (citing Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333,
338 (Tex. 2009)). The factors important in determining whether a defendant has
purposefully availed itself of the forum are (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 upon must be purposeful rather than merely
fortuitous; and (3) the defendant must seek some benefit, advantage, or profit by
availing itself of the forum. Michiana Easy Livin’ Country, Inc. v. Holten, 168
S.W.3d 777, 785 (Tex. 2005). Although not determinative, foreseeability is an
10
important consideration in deciding whether the nonresident defendant
purposefully has established minimum contacts with Texas. BMC Software, 83
S.W.3d at 795.
A nonresident‘s contacts can give rise to either general or specific
jurisdiction. Retamco, 278 S.W.3d at 338. General jurisdiction arises when a
defendant‘s contacts with the forum are continuous and systematic so that the
exercise of jurisdiction is proper even if the cause of action did not arise from or
relate to the defendant‘s forum contacts. Moki Mac, 221 S.W.3d at 575; Luxury
Travel Source, 276 S.W.3d at 162. In contrast, specific jurisdiction is established
if the defendant‘s alleged liability arises from or is related to an activity performed
in the forum. Moki Mac, 221 S.W.3d at 576. A Texas court may assert specific
jurisdiction over an out-of-state defendant if the defendant‘s contact with the state
is purposeful and the injury arises from or relates to those contacts. Id. at 572.
Once it has been determined that the nonresident defendant purposefully
established minimum contacts with the forum state, the contacts are evaluated in
light of other factors to determine whether the assertion of personal jurisdiction
comports with fair play and substantial justice. Guardian Royal, 815 S.W.2d at
228 (citing Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 113–15, 107
S. Ct. 1026, 1033–34 (1987)). These factors include (1) ―the burden on the
defendant,‖ (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 most efficient resolution of
11
controversies,‖ and (5) ―the shared interest of the several States in furthering
fundamental substantive social policies.‖ Id. The burden is on the defendant to
―present ‗a compelling case that the presence of some consideration would
render jurisdiction unreasonable.‘‖ Guardian Royal, 815 S.W.2d at 231 (quoting
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477, 105 S. Ct. 2174, 2185
(1985)). Only in rare circumstances will the exercise of jurisdiction not comport
with fair play and substantial justice when the nonresident defendant has
established minimum contacts. Id.
IV. GENERAL JURISDICTION—DUGAS, LP
In the first issue, Dugas, LP challenges the trial court‘s finding that general
jurisdiction exists over it ―based, ‗in part, on the documentary proof showing that
it had a principal place of business in Texas.‘‖ Dugas, LP argues that the
evidence is legally and factually insufficient to support the finding that its principal
place of business is in Texas because, contrary to the statement in the
partnership agreement identifying Dugas, LP‘s principal place of business in
Texas, Freeny stated in her affidavit that Dugas, LP has always had its principal
place of business in Nashville, Tennessee, and has never had its principal office
in Texas. Dugas, LP additionally argues that the exercise of jurisdiction over it
does not comport with fair play and substantial justice. Donna responds that
general jurisdiction exists over Dugas, LP because it is present in Texas.
12
A. Minimum Contacts
In Cardinal States Gathering Co. v. Conoco, Inc., Conoco sued several
entities to recover cost overruns for a pipeline that it had built in Virginia and
West Virginia. No. 14-00-00537-CV, 2001 WL 82322, at *1 (Tex. App.—Houston
[14th Dist.] Feb. 1, 2001, no pet.) (not designated for publication). The trial court
denied Cardinal States‘s special appearance. Id. at *2. On appeal, Conoco
argued that the trial court had jurisdiction over Cardinal States because its
partnership agreement identified Houston as Cardinal States‘s place of business.
Id. at *4. Cardinal States did not challenge that its principal place of business
was Houston, but it argued that its only activities related to a single gas gathering
system on the East Coast. Id. The court of appeals held that general jurisdiction
existed over Cardinal States, reasoning as follows:
Cardinal States cites no authority for the proposition that, even
though the Partnership Agreement plainly states its principal place of
business is Texas, it is not subject to jurisdiction in Texas.
Under Texas law, venue is proper against a partnership
wherever its principal office is located. Although a particular court
may have jurisdiction over a defendant even though the county in
which that court is situated is not proper for venue purposes, the
converse is not true, at least not where venue is based upon the
defendant‘s presence in the county. Physical presence is sufficient
to vest a court with jurisdiction over a defendant. By designating
Houston as Cardinal States‘ place of business, Cardinal States is
present in Texas regardless of where it actually carries on the
partnership business, and therefore, we hold that the trial court did
not err in finding Cardinal States is amenable to jurisdiction in Texas.
Id. (citations omitted) (citing Burnham v. Superior Court of Cal., 495 U.S. 604,
619, 110 S. Ct. 2105, 2115 (1990)) (―The short of the matter is that jurisdiction
13
based on physical presence alone constitutes due process because it is one of
the continuing traditions of our legal system that define the due process standard
of ‗traditional notions of fair play and substantial justice.‘‖).
This case is factually similar to Cardinal States because, like Conoco‘s
argument that general jurisdiction existed over Cardinal States because its
partnership agreement identified Houston as its principal place of business,
Donna argues here that general jurisdiction exists over Dugas, LP because its
partnership agreement identified Aubrey, Texas, as its principal place of
business. But unlike in Cardinal States, in which Cardinal States did not
challenge Conoco‘s contention that its principal place of business was Houston,
here, Dugas, LP disputes that its principal place of business is Texas, directing
us to Freeny‘s affidavit in which she states that Dugas, LP‘s principal place of
business is Tennessee, not Texas. Dugas, LP thus contends that ―Freeny‘s
affidavit establishes that no overt acts were taken by Dugas, LP in Texas and the
trial court‘s conclusion of law that general jurisdiction rests on such alleged
conduct is erroneous.‖
Contrary to Dugas, LP‘s argument, the evidence is not legally or factually
insufficient to support the trial court‘s determination to resolve the place-of-
business dispute in favor of Donna simply because Dugas, LP points to a single
piece of evidence that contradicts the declaration in its own partnership
agreement that its principal place of business is Texas. This is because there is
other evidence relevant to the special appearance inquiry that supports the trial
14
court‘s finding. Specifically, the address listed in Dugas, LP‘s partnership
agreement—4801 South Highway 377, Aubrey, Texas 76227—is the exact
same address where Bruce and Donna lived when they moved to Texas in 1995.
Dugas, LP‘s general partner is Dugas Asset Management Corp., whose address
is also identified in the partnership agreement as 4801 South Highway 377,
Aubrey, Texas 76227. Bruce—not Cal or Steve or any of Bruce‘s other
siblings—signed the partnership agreement as ―President‖ of Dugas Asset
Management Corp. Under the terms of the partnership agreement, Dugas Asset
Management Corp., as general partner, was tasked with the responsibility of
managing Dugas, LP,9 which exists as a result of the limited partnership
agreement entered into between its general partner and its limited partners.10
Significantly, the purposes of Dugas, LP are ―to buy, sell, invest in,
operate[,] and manage such securities, real estate, and other assets as the
General Partner may determine‖; to consolidate those investments; and to pool
and protect those assets. The only asset of Dugas, LP that is identified in the
partnership agreement is Dugas Family Partners, a Texas General Partnership.
9
The partnership agreement states that ―[t]he General Partner alone shall
be responsible for the management of the Partnership‘s business‖ and shall
―(i) contribute its time, skill, energy, advice[,] and experience to the management
of the Partnership‘s business; (ii) determine all matters relating to the financing,
management, and operation of the assets and property of the Partnership; and
(iii) manage the Partnership.‖
10
The partnership agreement expressly provides that Dugas, LP was
formed by its general partner, Dugas Asset Management Corp., and Dugas,
L.P.‘s limited partners.
15
The partnership agreement lists the fair market value of Dugas Family Partners
at over $164 million. Therefore, based on this record, Dugas, LP‘s only function
is to manage the valuable assets of a Texas General Partnership—an activity
that requires Dugas, LP to utilize Texas-based assets. See Retamco, 278
S.W.3d at 339–40 (reasoning that jurisdiction exists over nonresident in part
based on nonresident‘s management of a Texas asset).
Dugas, LP argues that the principal-place-of-business declaration was not
an overt act of the entity itself but a unilateral act performed by the individuals
who formed the entity and that the declaration is not a relevant contact to
consider in the minimum contacts analysis because it was made more than ten
years before suit was filed. Unlike Donna, who cited and relied on Cardinal
States, Dugas, LP does not direct us to any authority holding that we may not
consider the provision in the partnership agreement for purposes of determining
whether personal jurisdiction exists over the limited partnership formed by the
agreement.11 The partnership agreement that Donna directs us to governs
Dugas, LP, not some other limited partnership. Aside from Freeny‘s affidavit,
there is no evidence that Dugas, LP has not operated under the partnership
11
The two cases that Dugas, LP cites are inapposite. See BMC Software,
83 S.W.3d at 798 (considering whether nonresident entity was alter ego of
corporation headquartered in Houston); Tuscano v. Osterberg, 82 S.W.3d 457,
466–67 (Tex. App.—El Paso 2002, no pet.) (addressing fiduciary shield doctrine).
16
agreement since 1998.12 And unlike with its name, Dugas, LP has never
amended the principal-place-of-business declaration. The principal-place-of-
business declaration is, therefore, a proper contact to consider for purposes of
considering personal jurisdictional.
Under the appropriate standards of review, the evidence is legally and
factually sufficient to support the trial court‘s finding that Dugas, LP‘s principal
place of business is Texas. In light of the sufficient evidence connecting Dugas,
LP with Texas, we cannot conclude that Dugas, LP‘s listing the principal place of
business as Aubrey, Texas, was merely fortuitous and not made for the purpose
of deriving some benefit or advantage therefrom. See Michiana, 168 S.W.3d at
785; see also Retamco, 278 S.W.3d at 339–40 (reasoning that the minimum
contacts analysis is focused on the quality and nature of the defendant‘s
contacts, rather than their number). Considering this and the relevant caselaw,
the trial court‘s conclusion that general jurisdiction exists over Dugas, LP
because its principal place of business is in Texas is not erroneous. See
Cardinal States, 2001 WL 82322, at *4. Accordingly, we hold that the trial court
did not err by determining that Dugas, LP failed to negate all bases of personal
jurisdiction, particularly, general jurisdiction.
12
Indeed, the number of limited partners climbed to fifteen as of December
31, 2008.
17
B. Fair Play and Substantial Justice
Dugas, LP contends that it would be unduly burdened by a trial in Texas
because all of the actions and omissions that are the bases of Donna‘s claims
against Dugas, LP occurred in Tennessee. We cannot completely agree
because we held above that the evidence is legally and factually sufficient to
support the trial court‘s finding that Dugas, LP‘s principal place of business is
Texas. Further, Dugas, LP argues that the interests of Texas in adjudicating the
dispute are minimal, but part of Donna‘s claims against Dugas, LP concern a
partition of real property in Texas, and Texas has a substantial interest in
adjudicating probate disputes, including property held in Texas. See Brittingham-
Sada de Powers v. Ancillary Estate of Brittingham-McClean, 158 S.W.3d 518,
525 (Tex. App.—San Antonio 2004, pet. denied). Dugas, LP contends that there
is a risk of inconsistent rulings or judgments if the trial court exercises jurisdiction,
but the trial court granted Dugas, LP‘s plea in abatement and stayed the claims
that Donna asserted against Dugas, LP, ―pending resolution in the Kentucky
courts.‖ We cannot conclude that Dugas, LP presented a compelling case that
other considerations would render exercising jurisdiction unreasonable. See
Guardian Royal, 815 S.W.2d at 231.
We hold that the trial court did not err by denying Dugas, LP‘s special
appearance. Accordingly, we overrule Dugas, LP‘s first issue.
18
V. SPECIFIC JURISDICTION
In the second issue, the Dugas 1998 Trust, the Grandchild Trust, and Cal
and Steve as co-trustees of the Dugas 1998 Trust argue that specific jurisdiction
does not exist over each of them. They contend that Donna and Laura failed to
meet their burden of pleading facts necessary to support specific jurisdiction, that
they have no contacts with Texas that are sufficient to support an exercise of
specific jurisdiction, and that the Seijo decision referenced in the trial court‘s
order is distinguishable from the facts of this case.
The Supreme Court in Burger King discussed purposeful availment and
reasoned that
where the defendant ―deliberately‖ has engaged in significant
activities within a State, or has created “continuing obligations”
between himself and residents of the forum, he manifestly has
availed himself of the privilege of conducting business there, and
because his activities are shielded by ―the benefits and protections‖
of the forum‘s laws it is presumptively not unreasonable to require
him to submit to the burdens of litigation in that forum as well.
471 U.S. at 475–76, 105 S. Ct. at 2184 (emphasis added) (citations omitted).
Several courts have subsequently considered a nonresident defendant‘s
―continuing obligations‖ between himself and the residents of the forum in
determining whether the defendant was amenable to personal jurisdiction. See,
e.g., Seijo v. Miller, 425 F. Supp. 2d 194, 200 (D. P.R. 2006); Cummings v.
Pittman, 239 S.W.3d 77, 87 (Ky. 2007).
In Seijo, the district court addressed whether the plaintiffs had established
the existence of specific jurisdiction over two nonresident defendants who were
19
the trustees of a trust in which the plaintiffs were the sole beneficiaries of its
undistributed income. 425 F. Supp. 2d at 197. The trust was established in
Louisiana for the benefit of the plaintiffs‘ mother, Mrs. Seijo. Id. Mrs. Seijo was a
resident of Puerto Rico when the trust was executed and received several trust
disbursements while in Puerto Rico. Id. at 197, 200. After she died, the
plaintiffs, her children, sued the trustees, who were both residents of Louisiana,
for an accounting and damages. Id. at 197. The district court noted that the
litigation arose out of the defendants‘ actions in administering the trust, which
was established for the benefit of Mrs. Seijo, a resident of Puerto Rico; that the
plaintiffs‘ specific allegations were that the defendants, as trustees of the 1996
trust, did not make proper disbursements to Mrs. Seijo; that Mrs. Seijo was a
resident and domiciliary of Puerto Rico at the time the trust was established; that
the grantor of the trust was a domiciliary of Puerto Rico at the time of his death;
and that several trust disbursements were indeed sent to Mrs. Seijo in Puerto
Rico. Id. at 200–01. Concluding that the trustee defendants had purposefully
availed themselves of the forum, the district court reasoned,
These circumstances are sufficient to establish purposeful availment
on the part of the defendants in this case. As trustees, they
voluntarily took on the responsibility of administering a trust
established for the benefit of a resident of Puerto Rico. Entering into
this agreement, which had a substantial connection to Puerto Rico,
made it foreseeable that the defendants may be brought before a
federal court in Puerto Rico.
20
Id. at 200.13
In Cummings, the Supreme Court of Kentucky relied on Seijo as
persuasive authority. 239 S.W.3d at 87 (Ky. 2007). There, the court held that
the nonresident defendant lawyer—who conceded that he was subject to
personal jurisdiction in Kentucky for claims arising from legal services performed
but challenged the exercise of jurisdiction over him in his role as trustee of a trust
that he had drafted—was amenable to personal jurisdiction in Kentucky as a
trustee. Id. at 89–90. Relying in part on Burger King, the court stated,
One may reasonably infer that from the outset Mr. Boose anticipated
performing ongoing fiduciary services with respect to the trust.
Necessarily, such services were to be performed for benefit of
Kentucky citizens and would require an extended period of time.
Burger King recognized that intentionally creating continuing
obligations with residents of the forum would be sufficient to subject
the nonresident to the burden of litigating in the forum.
Id. at 87.
Burger King, Seijo, and Cummings are instructive on the arguments that
Appellants raise in the second issue.
13
Appellants argue that Seijo does not support the trial court‘s conclusion
that specific jurisdiction exists over them because ―the standards applied by a
federal court in considering a motion to dismiss for lack of personal jurisdiction
differ[] from that employed by our state court.‖ They point out that the district
court accepted evidence as true and, unlike in this case, did not have to resolve
factual disputes before conducting the minimum contacts analysis. To the extent
this is a distinction between the standard applied by the district court in Seijo and
the standard we apply in this case, it does not render Seijo inapposite. We rely
on Seijo only for its substantive (persuasive) authority regarding the exercise of
specific jurisdiction over a nonresident trustee who voluntarily accepted the
responsibility of administering a trust for the benefit of a resident of the forum.
21
A. Pleadings
Regarding Appellants‘ challenges to Appellees‘ pleadings, Donna alleged
in part the following: the Dugas 1998 Trust ―is doing business in the State of
Texas by, for example, entering into contracts, making distributions and/or loans
to individuals in Texas . . . , and negotiating payments in Texas‖; the Grandchild
Trust ―is doing business in the State of Texas by, for example, entering into
contracts, making distributions and/or loans to individuals in Texas . . . , and
negotiating payments in Texas‖; ―the Siblings [Laura Jo, Cal, and Steve] created
reciprocal trusts for the benefit of each of their respective children. The siblings
agreed to serve as trustee and co-trustee of each others‘ trusts. One of these
reciprocal trusts was the Dugas 1998 Trust‖; Bruce ―was the beneficiary of
several grantor trusts, including the [Grandchild Trust] and Dugas 1998 Trust
[from] which he was and is entitled to receive distributions.‖
Laura alleged in part the following: ―[A]ssuming Bruce failed to exercise
his power of appointment granted in the [Dugas 1998 Trust], Laura . . . became
[a] current beneficiar[y] of the [Dugas 1998 Trust]‖; ―At the time that the [Dugas
1998 Trust] was executed, and Cal and Steve Turner agreed to serve as Bruce‘s
Co-Trustees, Bruce was a longtime resident of Texas. Cal and Steve Turner
knew that their duties would involve significant contacts with Texas and with a
Texas beneficiary‖; ―The terms of the [Dugas 1998 Trust] require that Steve and
Cal Turner investigate the beneficiary‘s circumstances to determine how much
should be distributed for the beneficiary‘s health, support, and education. That
22
investigation necessarily requires regular contact with Texas‖; and ―Despite her
significant rights in the [Dugas 1998 Trust] . . . , Laura is forced to live in
borderline poverty due to the neglect of her Co-Trustees. . . . [A]s far as she
knows[,] the Co-Trustees have personally made no investigation regarding her
health, education, or support.‖
We hold that Donna and Laura pleaded sufficient allegations to bring the
defendants within the provisions of the Texas long-arm statute. See Burger King,
471 U.S. at 475–76, 105 S. Ct. at 2184; Seijo, 425 F. Supp. 2d at 200;
Cummings, 239 S.W.3d at 87; Huynh, 180 S.W.3d at 619; see also Retamco,
278 S.W.3d at 337 (reasoning that because the Texas long-arm statute‘s broad
doing-business language allows the statute to reach as far as the federal
constitutional requirements of due process will allow, ―we only analyze whether
[appellee‘s] acts would bring [appellee] within Texas‘[s] jurisdiction consistent
with constitutional due process requirements‖). We overrule this part of
Appellants‘ second issue.
B. Dugas 1998 Trust, Cal, and Steve—Minimum Contacts
The special appearance evidence demonstrates that Bruce was a resident
of Texas when both Cal and Steve agreed to become co-trustees of the Dugas
1998 Trust, which was created in November 1998. Cal testified in his deposition
that when he agreed to become a co-trustee, he knew that Bruce was a resident
of Texas and he understood that he would have obligations to Bruce under the
trust. Cal agreed that he currently has obligations under the trust to both Laura
23
and William, but he stated that he relied on the Family Office for processing
distribution requests.
Steve testified that he knew Bruce was a resident of Texas at some point
from 1998 until his death, and he agreed that he accepted continuing obligations
to the beneficiaries of the Dugas 1998 Trust when he became a co-trustee in
1998 and that he has continuing obligations to Laura as a beneficiary of the trust.
Among other things, the Dugas 1998 Trust required Cal and Steve to
distribute to any one or more of the named beneficiary and his or her
descendants living at the time of the distribution as much of the net
income and principal of the trust named for the named beneficiary
. . . as the trustee from time to time determines to be required for
their respective health, support[,] and education, and the trustee . . .
believes desirable for their respective interests. [Emphasis added.]
The Dugas 1998 Trust thus required Cal and Steve as co-trustees to make
ongoing determinations concerning the amount of distributions necessary for
Bruce‘s health, support, and education. The record shows that the Dugas 1998
Trust made numerous distributions to Bruce during his lifetime, including from
2003 to 2007. Wilds, however, stated in his affidavit that the Dugas 1998 Trust
―does not do business in Texas, and has never done business in Texas.‖
The Dugas 1998 Trust, Cal, and Steve rely on Balken v. Mellon Bank,
N.A., and the authorities cited therein to support their argument that specific
jurisdiction does not exist. No. 05-97-01520-CV, 2000 WL 979705, at *4 (Tex.
App.—Dallas 2000, no pet.) (not designated for publication) In that case, Balken,
a ―remaining‖ beneficiary of a trust of which Mellon Bank was the trustee, sued
24
Mellon Bank in Texas for negligence. Id. at *1. The court of appeals affirmed the
trial court‘s judgment sustaining Mellon Bank‘s special appearance, stating in
part that the distribution of trust assets to the primary beneficiary, who had been
a Texas resident, was insufficient to establish minimum contacts. Id. at *3–4.
But Balken is distinguishable from this case because the plaintiff there was a
nonresident of Texas. Id. at *1. Balken thus involved a nonresident of Texas
suing a nonresident of Texas in Texas. In this case, Laura and Donna are both
Texas residents and have been so since the Dugas 1998 Trust was created.
We hold that the evidence is sufficient to support the trial court‘s implied
findings for specific jurisdiction. Because Cal and Steve purposefully created
ongoing obligations between themselves and Bruce, a Texas resident, when they
agreed to become co-trustees of the Dugas 1998 Trust, which made numerous
distributions to Bruce during his lifetime, each could have reasonably anticipated
being haled into a Texas court to defend against Donna‘s and Laura‘s claims
arising from or relating to those contacts. Therefore, we hold that the trial court
did not err by determining that the Dugas 1998 Trust, Cal, and Steve failed to
negate all bases of personal jurisdiction and by denying the special appearances
of the Dugas 1998 Trust and of Cal and Steve as co-trustees of the Dugas 1998
Trust. See Burger King, 471 U.S. at 475–76, 105 S. Ct. at 2184; Seijo, 425 F.
Supp. 2d at 200; Moki Mac, 221 S.W.3d at 572, 576; Cummings, 239 S.W.3d at
87. We overrule this part of Appellants‘ second issue.
25
C. Grandchild Trust—Minimum Contacts
Unlike the Dugas 1998 Trust, which was created in part for the benefit of
Bruce, a resident of Texas in 1998, the Grandchild Trust was created in 1989—
before Bruce moved to Texas.14 Although Wilds‘s affidavit confirms that
distributions were made to Bruce from the Grandchild Trust while Bruce lived in
Texas, those distributions were made to Bruce in Texas only as a result of his
unilateral act of moving to Texas several years after the creation of the trust.
Unlike the trusts in Seijo and Cummings, which were created for the benefit of a
beneficiary who was a resident of the forum, the Grandchild Trust was not
created for the benefit of a Texas resident, nor did its trustee voluntarily
undertake continuing obligations for the benefit of a Texas resident. See Seijo,
425 F. Supp. 2d at 200–01; Cummings, 239 S.W.3d at 86–87; see also Hanson
v. Denckla, 357 U.S. 235, 251–52, 78 S. Ct. 1228, 1238–39 (1958). Donna
directs us to no other evidence supporting the trial court‘s conclusion that specific
jurisdiction exists over the Grandchild Trust. Accordingly, we hold that the
Grandchild Trust negated all bases of personal jurisdiction asserted by Donna
and that the trial court erred by concluding that specific jurisdiction exists over the
Grandchild Trust. We sustain this part of Appellants‘ second issue.
14
Donna states in her brief, ―For the [Grandchild Trust], the beneficiaries
resided in Texas on the date the Trustees agreed to take on the duties set forth
in the Trusts.‖ But we have not found any evidence in the record to support this
statement. Instead, Donna testified in her deposition that she and Bruce moved
to Texas sometime around 1995.
26
D. Fair Play and Substantial Justice
The Dugas 1998 Trust, Cal, and Steve argue that asserting personal
jurisdiction over them does not comport with fair play and substantial justice.
Their arguments mirror those made by Dugas, LP above. With one exception,
our analysis remains unchanged. Cal and Steve‘s father founded Dollar General.
Cal testified that he has a lease agreement for a private jet that he uses maybe
fifty hours a year, and Steve testified that he owns a Turbo Prop jet that flies
about sixty hours a year. Both have visited Texas numerous times in the course
of working for Dollar General, and both are residents of Tennessee, not
Kentucky, where Pardue filed his ―Verified Petition for the Settlement of the
Estate of William Bruce Dugas, Deceased, and Complaint for Declaratory
Judgment.‖15 Laura, on the other hand, states that she is a ―high school student
of very limited personal means.‖ We cannot conclude that the Dugas 1998 Trust,
Cal, and Steve presented a compelling case that other considerations would
render exercising specific jurisdiction unreasonable. See Guardian Royal, 815
S.W.2d at 231. Therefore, we overrule the remainder of Appellants‘ second
issue.
VI. DOMINANT JURISDICTION
In their third issue, Appellants argue that the trial court erred by denying
their plea to the jurisdiction because the ―Allen Circuit [C]ourt‖ in Kentucky has
15
Cal and Steve, as co-trustees of the Dugas 1998 Trust, are defendants in
that action.
27
dominant jurisdiction over the matters pertaining to the administration of Bruce‘s
estate.
The general rule of dominant jurisdiction is that where a suit would be
proper in more than one county, the county in which the suit was first filed
acquires dominant jurisdiction to the exclusion of other counties of equal stature.
Curtis v. Gibbs, 511 S.W.2d 263, 267 (Tex. 1974). However, ―the mere
pendency of an action in one state will not be a ground for abating a suit in
another state between the same parties and involving the same subject matter.‖
Crown Leasing Corp. v. Sims, 92 S.W.3d 924, 927 (Tex. App.—Texarkana 2002,
no pet.). This is because ―[c]ourts of sister states are considered foreign to each
other, and a suit pending in another state may not be pleaded in abatement of
another suit involving the same subject matter brought in another state.‖ Id.
Appellants did not argue in their plea to the jurisdiction that a Kentucky
court has dominant jurisdiction over the claims asserted by Donna; instead, they
raised the complaint in their plea in abatement. See Tex. R. App. P. 33.1. The
trial court specifically granted any plea in abatement for the claims asserted by
Donna against Dugas, LP; the Dugas 1998 Trust; and the Grandchild Trust,
staying those claims ―in the interest of comity,‖ ―pending resolution in the
Kentucky proceedings.‖ To the extent Appellants preserved this argument for
appellate review, the only petition pending in ―Allen Circuit [C]ourt‖ is Pardue‘s
―Verified Petition for the Settlement of the Estate of William Bruce Dugas,
Deceased, and Complaint for Declaratory Judgment,‖ which was filed after
28
Donna filed her original petition in Texas.16 Nor do Appellants direct us to any
authority contrary to Crown Leasing‘s reasoning that dominant jurisdiction
generally does not apply to suits in different states. We overrule this part of
Appellants‘ third issue.
Appellants also argue that the trial court erroneously denied their plea in
abatement in regard to the claims brought by Laura because of the possibility of
conflicting rulings. We fail to see how there is any possibility of conflicting
rulings, however, because the claims that Laura has asserted against the co-
trustees—seeking an accounting of the Dugas 1998 Trust and alleging that Cal
and Steve breached fiduciary duties that they owed to her as trustees of the
Dugas 1998 Trust by failing to investigate her needs and by failing to make
sufficient distributions to her—have not been raised in the Kentucky litigation.
We overrule Appellants‘ third issue.
16
The petition to probate Bruce‘s will was filed in an Allen ―District/Probate‖
court.
29
VII. CONCLUSION
Having sustained part of Appellants‘ second issue, we reverse the part of
the trial court‘s order denying the Grandchild Trust‘s special appearance and
render judgment dismissing Donna‘s claims against the Grandchild Trust.
Having overruled Appellants‘ remaining issues, we affirm the remainder of the
trial court‘s order.
BILL MEIER
JUSTICE
PANEL: DAUPHINOT, WALKER, and MEIER, JJ.
WALKER, J. filed a concurring and dissenting opinion.
DELIVERED: March 31, 2011
30
APPENDIX
Families
•H. Calister Turner, Sr.‘s Children:
-Hurley Calister Turner, Jr. (Cal).
-James Stephen Turner (Steve).
-Laura Jo Turner Dugas.
•Laura Jo Turner Dugas‘s Children:
-Wayne F. Dugas, Jr.
-Stephen H. Dugas.
-William Bruce Dugas (Bruce).
•William Bruce Dugas and Donna Neal Goode Dugas:
-Married 1984.
-Children: William Bruce Dugas, II and Laura Nicole Dugas.
-Moved to Texas 1995.
-Ceased living together 2005.
-Bruce lived in Kentucky at his death.
-Donna, Laura, and William live in Texas.
Entities
•William Bruce Dugas Grandchild Trust (Grandchild Trust):
-December 1989.
-H. Calister Turner, Sr. and Steve entered into trust agreement for the
creation of the Grandchild Trust.
-H. Calister Turner, Sr. signed trust agreement as grantor. Steve signed
as trustee.
-Created ―for the benefit of the Grantor‘s grandchild, [Bruce].‖
•Dugas 1998 Irrevocable Trust (Dugas 1998 Trust):
-November 1998.
-Laura Jo, as settlor, created the Dugas 1998 Trust.
-Cal and Steve are trustees.
-Trustees responsible for dividing and allocating the principal among three
separate trusts named for Laura Jo‘s three children, including Bruce.
•Dugas Limited Partnership (Dugas, LP):
-February 1998.
-General partner is Dugas Asset Management Corp.
-Bruce signed as ―President‖ of Dugas Asset Management Corp.
-Partnership agreement listed only one asset of Dugas, LP: Dugas Family
Partners, a Texas General Partnership.
-Purposes is ―to buy, sell, invest in, operate[,] and manage such securities,
real estate, and other assets as the General Partner may determine‖; to
consolidate investments; and to pool and protect assets.
-Principal place of business and principal office is ―4801 South Highway
377, Aubrey, Texas 76227.‖
•The Family Office L.L.C.:
-Tennessee limited liability company.
-Established by Turner and Dugas families to provide services to Turner
and Dugas family members, their trusts, and the entities that they control.
2
COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-09-00463-CV
DUGAS LIMITED PARTNERSHIP, APPELLANTS
DUGAS 1998 IRREVOCABLE
TRUST, WILLIAM BRUCE DUGAS
GRANDCHILD TRUST, JAMES
STEPHEN TURNER AND HURLEY
CALISTER TURNER, JR., CO-
TRUSTEES OF THE DUGAS 1998
IRREVOCABLE TRUST F/B/O
WILLIAM BRUCE DUGAS
V.
DONNA NEAL GOODE DUGAS APPELLEES
AND LAURA NICOLE DUGAS
----------
FROM THE PROBATE COURT OF DENTON COUNTY
----------
CONCURRING AND DISSENTING OPINION
----------
I. INTRODUCTION
I agree with the Majority Opinion‘s holdings that specific jurisdiction exists
concerning Appellees Donna Neal Goode Dugas and Laura Nicole Dugas‘s
claims against Appellants Dugas 1998 Irrevocable Trust, William Bruce Dugas
Grandchild Trust, and James Stephen Turner and Hurley Calister Turner, Jr., Co-
Trustess of the Dugas 1998 Irrevocable Trust f/b/o William Bruce Dugas. I
concur with the Majority Opinion‘s affirmance of the trial court‘s order denying the
special appearances of these Appellants.
I cannot agree, however, with the Majority Opinion‘s holding that Texas
courts may exercise general jurisdiction over Appellant Dugas Limited
Partnership (Dugas LP). The special appearance evidence conclusively
established that, despite a ten-year-old principal-place-of-business statement in
Dugas LP‘s initial partnership agreement, in fact Dugas LP never had its principal
place of business in Texas and never did business in Texas. The minimum
contacts required by the United States Constitution in order to comport with
federal due process in subjecting Dugas LP to the general jurisdiction of Texas
courts must be based on factual reality, not on an untrue statement in a ten-year-
old partnership agreement. Because Dugas LP itself possesses no minimum
contacts with Texas, the Majority Opinion looks to the contacts of an entity
owned by Dugas LP in its minimum contacts analysis. But the minimum contacts
required by the United States Constitution in order to comport with federal due
process in subjecting Dugas LP to the general jurisdiction of Texas courts must
be based on the contacts of Dugas LP itself, not upon a third party‘s contacts
with Texas. Because the majority holds that Dugas LP is subject to the general
jurisdiction of Texas courts based solely on a ten-year-old principal-place-of-
2
business statement in Dugas LP‘s initial partnership agreement and on Dugas
LP‘s ownership of an entity that possesses some contacts with Texas, I am
forced to dissent.
II. SPECIAL APPEARANCE BURDENS OF PLEADING AND PROOF
The plaintiff and the defendant bear shifting burdens of proof in a special
appearance. Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 658 (Tex.
2010). The plaintiff bears the initial burden to plead sufficient allegations to bring
the nonresident defendant within the reach of Texas‘s long-arm statute. Id.
Once the plaintiff has pleaded sufficient jurisdictional allegations, the defendant
filing a special appearance bears the burden to negate all bases of personal
jurisdiction alleged 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 plaintiff‘s pleading. Id. The defendant
can negate jurisdiction on either a factual or legal basis. Id. at 659. Factually,
the defendant can present evidence that it has no contacts with Texas, effectively
disproving the plaintiff‘s allegations. Id. The plaintiff can then respond with its
own evidence that affirms its allegations, and it risks dismissal of its lawsuit if it
cannot present the trial court with evidence establishing personal jurisdiction. Id.
Legally, the defendant can show that even if the plaintiff‘s alleged facts are true,
the evidence is legally insufficient to establish jurisdiction; that the defendant‘s
contacts with Texas fall short of purposeful availment; or that traditional notions
of fair play and substantial justice are offended by the exercise of jurisdiction. Id.
3
III. THE PLEADINGS AND THE EVIDENCE
In their original petition, Appellees pleaded,
Defendant Dugas Limited Partnership (―Dugas, LP‖), is a
limited partnership incorporated under the laws of the State of
Delaware, with a corporate general partner, Dugas Asset
Management Corp., a Delaware Corporation. Dugas LP may be
served with process pursuant to the Texas Long Arm Statute.
Dugas, LP is doing business in the State of Texas by, for example,
entering into agreements, making distributions and/or loans to
individuals in Texas, retaining counsel in Texas, negotiating
payments in Texas, and asserting rights to real and personal
property in Texas, but has not designated a resident agent in the
State of Texas upon whom service of process can be made.1
In its special appearance, Dugas LP pleaded,
Defendant Dugas Limited Partnership is a limited partnership
established under the laws of Delaware. Dugas Limited Partnership
does not do business in the State of Texas. Dugas Limited
Partnership owns no assets in the State of Texas. Dugas Asset
Management Corp., a Delaware corporation, is its general partner.
Dugas Asset Management Corp. does not do business in the State
of Texas. Dugas Asset Management Corp. does not own assets in
the State of Texas.
In their response to Dugas LP‘s special appearance, Appellees pleaded,
Dugas LP is a resident of Texas, and is therefore subject to
jurisdiction on all claims asserted against it in this case.
....
By designating Aubrey, Texas as Dugas LP‘s principal place
of business, Dugas LP is present in Texas regardless of where it
1
In an amended petition filed after Dugas LP filed its special appearance,
Appellees added a sentence, pleading that Dugas LP‘s general partner was
Dugas Asset Management Corporation, a Delaware Corporation, and that Dugas
LP was doing business in Texas by ―designating its principal place of business in
Texas.‖
4
actually carries on the partnership business. The Dugas LP
Agreement sets out clearly that its principal place of business is in
Denton County, Texas. Under Texas law, venue is proper against a
partnership wherever its principal office is located. Personal
jurisdiction is proper where venue is based on the defendant‘s
presence in the county. [Internal citations omitted.]
At the special appearance hearing, Dugas LP proffered the affidavits of
David M. Wilds and Amy Freeney. Wilds‘s affidavit indicates that since 1998, he
has served as the Chief Financial Officer for The Family Office, L.L.C., a
Tennessee limited liability company established by the Turners and the Dugases
to provide services to their family members and their trusts. Wilds explained,
The Dugas Limited Partnership is a limited partnership
organized under Delaware law. It was created in 1998. Its general
partner is Dugas Asset Management Corporation, a Delaware
corporation. Dugas Asset Management Corporation owns no real
estate in Texas, it has no bank accounts in Texas, it has never filed
suit in Texas, nor has it ever sought protection from creditors in
Texas. Dugas Asset Management Corporation has no offices, no
employees, and does not do business in Texas. Dugas Limited
Partnership owns no real estate in Texas, it has no assets in Texas,
it has no bank accounts in Texas, it has never filed suit in Texas, nor
has it ever sought protection from creditors in Texas. Other than
retaining counsel in Texas for representation in the lawsuit filed by
[Appellees] against it in the Denton County Probate Court, the
Dugas Limited Partnership does not do business in Texas.
Freeney‘s affidavit stated that she is the tax manager for The Family Office
and that
Dugas Limited Partnership is a limited partnership organized
under Delaware law. It was created in 1998. Its general partner is
Dugas Asset Management Corporation, a Delaware corporation.
Dugas Limited Partnership has always had its principal place of
business in Nashville[,] Tennessee, all of its books and records have
always been kept there and I have been the custodian of such
records since the inception. Dugas Limited Partnership has never
5
maintained another office and has never employed any employees.
It has never had its principal office in Texas. All the business of
Dugas Limited Partnership is conducted in and through The Family
Office in Nashville, Tennessee, since 1998. Dugas Limited
Partnership has never designated a registered agent for service of
process in Texas.
IV. THE LAW CONCERNING GENERAL JURISDICTION
A nonresident defendant is subject to the personal jurisdiction of Texas
courts if (1) the Texas long-arm statute authorizes the exercise of jurisdiction,
and (2) the exercise of jurisdiction does not violate federal and state
constitutional due process guarantees. Id. at 657; Schlobohm v. Schapiro, 784
S.W.2d 355, 356 (Tex. 1990). The broad ―doing business‖ language in Texas‘s
long-arm statute allows the trial court‘s jurisdiction to ―reach as far as the federal
constitutional requirements of due process will allow.‖ Moki Mac River
Expeditions v. Drugg, 221 S.W.3d 569, 575 (Tex. 2007) (quoting Guardian Royal
Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex.
1991)). The Due Process Clause protects a defendant‘s liberty interest in not
being subject to the binding judgments of a forum with which it has established
no meaningful ―contacts, ties, or relations,‖ that is ―minimum contacts.‖ Burger
King Corp. v. Rudzewicz, 471 U.S. 462, 471–72, 105 S. Ct. 2174, 2181–82
(1985). A defendant establishes minimum contacts with a state when it
purposefully avails itself of the privilege of conducting activities within the forum
state, thus invoking the benefits and protections of its laws. Retamco Operating,
Inc. v. Republic Drilling Co., 278 S.W.3d 333, 338 (Tex. 2009). The focus of a
6
due process minimum contacts analysis is on the nonresident defendant‘s
activities and expectations. Michiana Easy Livin’ Country, Inc. v. Holten, 168
S.W.3d 777, 790 (Tex. 2005); Am. Type Culture Collection, Inc. v. Coleman, 83
S.W.3d 801, 806 (Tex. 2002), cert. denied, 537 U.S. 1191 (2003). There are
three parts to a purposeful availment inquiry: (1) only the nonresident
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 nonresident defendant
must seek some benefit, advantage, or profit by availing itself of the jurisdiction.
See Moki Mac River Expeditions, 221 S.W.3d at 575; Michiana Easy Livin’
Country, Inc., 168 S.W.3d at 784–85.
A nonresident defendant‘s contacts with a forum state can give rise to (a)
general jurisdiction or (b) specific jurisdiction. See PHC-Minden, L.P. v.
Kimberly-Clark Corp., 235 S.W.3d 163, 166 (Tex. 2007); Moki Mac River
Expeditions, 221 S.W.3d at 575–76. General jurisdiction is a more demanding
minimum-contacts analysis, requiring a showing that the defendant conducted
substantial activities within the forum. CSR, Ltd. v. Link, 925 S.W.2d 591, 595
(Tex. 1996). General jurisdiction exists when the defendant in question has
―continuous and systematic general business contacts‖ with the forum state.
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416, 104 S. Ct.
1868, 1873 (1984). General jurisdiction is based upon the concept of a bargain
between the nonresident defendant and the forum state. If the defendant has
7
established continuous and systematic general business contacts with the state,
it is deemed to have purposely availed itself of the protections and benefits of the
forum‘s law, and thereby to have consented to suit in the forum. See Bearry v.
Beech Aircraft Corp., 818 F.2d 370, 375 (5th Cir. 1987).
V. STANDARD OF REVIEW
Whether a court can exercise personal jurisdiction over nonresident
defendants is a question of law, and thus we review de novo the trial court‘s
determination of a special appearance. Moki Mac River Expeditions, 221 S.W.3d
at 574; BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex.
2002). ―When [as here] 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, 83 S.W.3d at 795.
VI. DUGAS LP IS NOT SUBJECT TO THE GENERAL JURISDICTION OF TEXAS COURTS
Once Appellees pleaded that Dugas LP was doing business in Texas by
entering into agreements, making distributions and/or loans to individuals in
Texas, retaining counsel in Texas, negotiating payments in Texas, and asserting
rights to real and personal property in Texas, the burden shifted to Dugas LP to
negate these bases of jurisdiction either factually or legally. See Kelly, 301
S.W.3d at 658. Dugas LP factually negated Appellees‘ pleaded bases for
jurisdiction through the affidavits of Wilds and Freeney. As set forth above,
Wilds‘s and Freeney‘s affidavit testimony specifically factually negated Appellees‘
8
allegations. The affidavits established that neither Dugas LP nor its general
partner Dugas Asset Management Corporation did business in Texas, owned
real estate in Texas, had any bank accounts in Texas, had ever filed suit in
Texas, or had ever sought protection from creditors in Texas. Freeney‘s affidavit
affirmatively stated that Dugas LP had never maintained an office outside of
Tennessee, had never had its principal place of business anywhere but
Tennessee, and conducted all business through its Tennessee office. Wilds‘s
affidavit stated that Dugas Asset Management Corporation has no offices, no
employees, and does not do business in Texas. Thus, the burden shifted back to
Appellees to respond with their own evidence that affirmed their pleaded
allegations. See id. at 659.
Appellees did not produce any evidence supporting their pleaded
allegations. Instead, Appellees simply pointed to the statement in Dugas LP‘s
ten-year-old initial partnership agreement that Dugas LP‘s principal place of
business was in Texas. The statement in Dugas LP‘s initial ten-year-old
partnership agreement, however, is legally insufficient to support general
jurisdiction over Dugas LP. That is, Dugas LP legally negated this purported
basis for jurisdiction by proving that although the fact is true—Dugas LP‘s initial
ten-year-old partnership agreement does state that its principal place of business
will be in Texas—this fact is legally insufficient to support personal general
jurisdiction over Dugas LP because its contacts with Texas nonetheless fall short
of purposeful availment. See id. (recognizing that defendant can legally negate
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plaintiff‘s alleged basis for jurisdiction by proving that even if plaintiff‘s alleged
facts are true, they fall short of establishing defendant‘s purposeful availment).
Dugas LP legally negated this basis for jurisdiction because a due process
minimum contacts analysis requires physical contacts with the forum state; words
on a ten-year-old piece of paper that are not true cannot satisfy the federal
consitutional due process minimum contacts analysis. See Alenia Spazio,
S.P.A., v. Reid, 130 S.W.3d 201, 212 (Tex. App.—Houston [14th Dist.] 2003, pet.
denied) (holding that, in absence of special appearance evidence of ―remaining
officers operating in Texas or of any activity by USRT [a limited liability company]
in Texas‖ after August 1999, special appearance evidence was legally insufficient
to support finding that USRT‘s principal place of business was in Texas after
August 1999 despite statement in limited liability company‘s agreement that ―as
of January 3, 1997‖ its principal place of business was in Houston), cert. denied,
549 U.S. 821 (2006); see also Burger King Corp., 471 U.S. at 471–72, 105 S. Ct.
at 2181–82 (recognizing that in order to subject a defendant to the binding
judgments of a forum, the defendant must have meaningful contacts, ties, or
relations with the forum).
Although no jurisdictional alter ego or veil-piercing theories were pleaded
or argued by the parties, the Majority Opinion notes that
[t]he only asset of Dugas, LP that is identified in the partnerhip
agreement is Dugas Family Partners, a Texas General Partnership.
The partnership agreement lists the fair market value of Dugas
Family Partners at over $164 million. Therefore, based on this
record, Dugas, LP‘s only function is to manage the valuable assets
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of a Texas General Partnership—an activity that requires Dugas, LP
to utilize Texas-based assets. [Citation omitted.]
The United States Supreme Court and the Texas Supreme Court have
repeatedly instructed us that only the nonresident defendant‘s contacts with the
forum are relevant, not the unilateral activity of another party or a third person.
See, e.g., Burger King Corp., 471 U.S. at 474, 105 S. Ct. at 2183 (―The unilateral
activity of those who claim some relationship with a nonresident defendant
cannot satisfy the requirement of contact with the forum State.‖); Hanson v.
Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 1239–40 (1958) (same); Moki Mac
River Expeditions, 221 S.W.3d at 575 (same); Michiana Easy Livin’ Country, Inc.,
168 S.W.3d at 784–85 (same). Thus, the fact that Dugas LP may own an entity
that does business in Texas is not relevant to a minimum contacts analysis in the
absence of some jurisdictional alter ego or veil-piercing allegations and proof,
which are not present in this case. See, e.g., PHC-Minden, L.P., 235 S.W.3d at
172–76 (discussing proof necessary for jurisdictional veil-piercing and concluding
that court of appeals ―erred in imputing Province‘s Texas contacts to Minden‖).
I cannot agree with the Majority Opinion‘s holding that two facts––a ten-
year-old, inaccurate statement in Dugas LP‘s initial partnership agreement that
Dugas LP‘s principal place of business was in Texas and Dugas LP‘s ownership
of a Texas general partnership, a non-real property asset––somehow constitute
―doing business in Texas‖ and somehow satisfy the rigorous minimum contacts
analysis required by the Due Process Clause of the United States Constitution to
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subject a defendant to the general jurisdiction of Texas courts. Neither of the
facts relied upon in the Majority Opinion show that Dugas LP purposefully availed
itself of the privilege of conducting activities within Texas. Neither of the facts
relied upon in the Majority Opinion show that Dugas LP invoked the benefits and
protections of Texas‘s laws. Neither of the facts relied upon in the Majority
Opinion show that Dugas LP actually conducted any activities in Texas, much
less substantial activities within Texas. Neither of the facts relied upon in the
Majority Opinion show continuous and systematic contact by Dugas LP with
Texas. Instead, the two facts relied upon in the Majority Opinion bear no
relevance to the required minimum contacts analysis.
VII. CONCLUSION
Because Dugas LP factually negated Appellees‘ pleaded bases for
jurisdiction by establishing that it did not do business in Texas; because
Appellees did not come forward with any evidence supporting their allegations
that Dugas LP did do business in Texas; because Dugas LP legally negated
Appellees‘ contention that the Texas courts possessed general jurisdiction over it
based on the inaccurate statement in its ten-year-old initial limited partnership
agreement; and because the majority‘s reliance on Dugas LP‘s ownership of a
Texas general partnership that has contacts with Texas is not relevant in the
absence of jurisdictional alter ego or veil-piercing pleadings, I would reverse the
trial court‘s denial of Dugas LP‘s special appearance. Because the majority does
not do so, I respectfully dissent to the Majority Opinion‘s holding that general
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jurisdiction exists over Dugas LP. I would reverse the trial court‘s order denying
Dugas LP‘s special appearance. I concur with the other holdings of the Majority
Opinion.
SUE WALKER
JUSTICE
DELIVERED: March 31, 2011
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