Cushman & Wakefield U.S., Inc. and Darrin Boyd v. Sharestates Investments, LLC and Pallasite REO 2018-1, LLC ( 2023 )

Reversed and Memorandum Opinion filed June 27, 2023
In The
Fourteenth Court of Appeals
NO. 14-22-00155-CV
CUSHMAN & WAKEFIELD U.S., INC. AND DARRIN BOYD, Appellants
V.
SHARESTATES INVESTMENTS, LLC AND PALLASITE REO 2018-1,
LLC, Appellees
On Appeal from the 152nd District Court
Harris County, Texas
Trial Court Cause No. 2020-04844
MEMORANDUM OPINION
Appellee Sharestates Investments, LLC (“Sharestates”) lent money to a
borrower who defaulted on at least two of its loans; one pertaining to a property in
Texas, another in New Jersey. Though the underlying action pertains to both
loans, this appeal only relates to the loan on the New Jersey property. In tandem
with conventional avenues to recover its loss on the New Jersey Property loan,1
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Sharestates has also pursued other actions in connection with the New Jersey loan.
Sharestates pursued the borrower and others in Texas for fraud related to both
loans to recover funds Sharestates disbursed to the two escrow agents after title
transferred from seller to borrower. Sharestates added claims against the out-of-
state seller of the New Jersey property, the seller’s out-of-state agents (natural and
corporate) and the corporate out-of-state agent’s parent company, all of whom filed
special appearances.
After an evidentiary hearing, the trial court sustained the special appearances
filed by the seller and the corporate out-of-state agent’s parent company but denied
the special appearances filed by the out-of-state agents, Darrin Boyd and Cushman
& Wakefield U.S., Inc. (CWUS), appellants. Boyd and CWUS filed this
interlocutory appeal. We reverse and remand with instructions to the trial court to
dismiss appellants for lack of personal jurisdiction.
I. FACTUAL AND PROCEDURAL BACKGROUND
This case involves two back-to-back real estate transactions and
accompanying financing of property located in New Jersey (“New Jersey
Property”) on Dec. 28, 2017. The first conveyance involved Ardagh Glass
Container, Inc., a Delaware corporation based in Muncie, Indiana (“Ardagh”),
when it charitably gifted (pursuant to Section 170 of the Internal Revenue Code
(“Section 170”)) the New Jersey Property to Mineral County Development
Authority (“MCDA”), a non-profit political subdivision of Mineral County, West
Virginia (the “Ardagh Transaction”). Almost immediately thereafter, MCDA sold
the New Jersey Property to 83 Griffith, LLC, a company owned by Harold Polk
(“Polk”). The two transactions can be summarized as follows:
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Appellee Sharestates agreed to fund a loan of
$3,830,000.00 to 83 Griffith to enable it to
purchase the New Jersey Property for an alleged
purchase price of $5,900,000.00 from MCDA
(“New Jersey Property Sale”, or “the Flip Sale”).
The Flip Sale was the second of two back-to-back
conveyances of the same parcel on the same day.
Appellants Boyd and CWUS participated in
both the Ardagh Transaction and the Flip Sale.
After it became clear that MCDA would be the
recipient in the Ardagh Transaction, CWUS
entered into a Consulting Agreement with MCDA,
to consult with MCDA for the purpose of selling the property after the Ardagh
Transaction, and at MCDA’s request, ensured that any sale occurred on the same
day following the Ardagh Transaction. To this end Boyd and CWUS publicized
the sale for a potential buyer on Loopnet, a national web-advertising service used
to list commercial properties. The property was listed for a purchase price of 2.95
million dollars, the amount from which pursuant to the Consulting Agreement,
CWUS would be entitled to 65%.
In response to the Loopnet listing, Texan Harold Polk (“Polk”) reached out
to Boyd and CWUS expressing interest in purchasing the New Jersey Property.
Polk, through his various corporate counterparts, entered an agreement and
ultimately consummated the sale with MCDA to purchase the New Jersey Property
for $5.9 million, twice the listed price. Polk secured financing from appellee
Sharestates and a second lender, BDFI, allegedly unbeknownst to Sharestates.
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Sharestates agreed to loan Polk roughly 65% of the acquisition price, which at
closing resulted in its wire transmission of $3,740,070.00 to the Sharestates-
selected title company in New York, Atlantis National Services, Inc., acting as the
settlement agent. Likewise, at closing BDFI wired $2,317,500.00 to the settlement
agent.
Through contract amendments, Polk and MCDA agreed that purchase funds
in excess of the list price of $2.95 million would be devoted to improvements to be
set up in escrow accounts. Amendments also established that Polk’s New Jersey
company, 83 Griffith Street, LLC would be designated as the buyer.
The record shows, and no party disputes, that Boyd and CWUS played a
central role in ensuring that the Ardagh Transaction and the Flip Sale occurred.
This included among other tasks, drafting and circulating the contracts and contract
amendments for signature. Boyd served as the self-designated point person for
many communications between the respective buyers and sellers, their agents, and
the title company.
It is also undisputed in the record that neither Boyd nor CWUS ever
communicated with appellees or any of their agents, were involved in appellees’
lending agreement with Polk, nor were ever provided a copy of the Sharestate/83
Griffith lending agreement.
After four payments 83 Griffith stopped making payments under the loan
and Sharestates foreclosed on the property, but was unable to retrieve the money
devoted to the improvement escrow accounts.2
CWUS is organized under the laws of Missouri and allegedly has its
principal place of business in Chicago. Appellant Boyd lives in Indiana and
2
Sharestates obtained title to this property by a foreclosure action in New Jersey and
secured an agreed judgment in a federal lawsuit for monies due under the mortgage loan.
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allegedly is an independent contractor to CWUS. Boyd was a consultant to
Ardough in the first transaction and was a consultant to MCDA in the second
transaction.
Sharestates asserts that CWUS and Boyd committed common-law and
statutory fraud (and fraudulent inducement), alleging the two were engaged in a
joint venture with MCDA and that they were involved in a civil conspiracy with
BDFI, Ehlert Law PC, and MCDA.
The core of Sharestates’s claims depend on allegations that various
information was misrepresented or concealed from it concerning the closing of the
New Jersey property, including:
“[New Jersey Property] Loan AP%” and “Real [New Jersey
Property] Purchase Price” - Sharestates alleges that its underwriting
requirements restricted its loan on the New Jersey property to 65% of
the acquisition price. Sharestates’s loan was based on the
representation that the purchase price for the property was
$5,900,000.00. Accordingly, Sharestates authorized a loan of
$3,830,000.00 (it ultimately wired $3,740,070.00). But the funds
actually paid to the seller, MDCA, to acquire the New Jersey property
were $2,604,710.00; thus, Sharestates contends that it unknowingly
funded 100% of the purchase.
“True source of [Non-Sharestates] Cash at Closing”- Sharestates’s
alleges that “Defendants” (including CWUS or Boyd) represented that
Polk would personally provide the cash at closing; however, the
difference between the alleged sale price of $5,900,000.00 and
Sharestates’ agreed contribution was provided by an additional loan
from BDFI.
“MDCA flip profit”- Sharestates alleges that the seller, MDCA,
received $1,492,799.75 in profits per Griffith HUD-1 Lines 603 and
506. Sharestates alleges that the fact that MDCA made a profit for
flipping the property was undisclosed.
“BDFI fake Improvement Escrow” and “Ehlert fake Improvement
Escrow” - Sharestates alleges that “BDFI was the trustee of a
Construction Trust created expressly for the purpose of remediation of
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environmental contamination to the Griffith Property, but was in
reality created to funnel the Lender’s funds to an undisclosed third-
party.” Sharestates alleges that “the trustee and/or escrow agent of a
second Construction Trust/escrow agreement ostensibly created for
the sole purpose of remediation of environmental contamination to the
Griffith Property, was in reality created to funnel Sharestates’sfunds
to Polk without Sharestates knowledge.”
Sharestates claims that it would not have approved the loan to Polk/83
Griffith Street had such information been provided.
Boyd and CWUS challenged personal jurisdiction. Appellees responded
(asserting general and specific jurisdiction) and the parties provided the trial court
with numerous exhibits to support their respective positions. In support of specific
jurisdiction Sharestates alleges the following:
• CWUS/Boyd drafted and coordinated the execution of the sales
contract and amendments, including
-multiple iterations and drafts, with Polk in Texas, and his
companies Grove Enterprises, LLC and subsequently 83
Griffith, LLC in Port Arthur again through Polk; and
-the two “bogus” escrows to and with BDFI and Ehlert in
Texas;
• CWUS/Boyd (including a series of unexecuted iterations and
drafts) negotiated or ensured the execution of two fraudulent
escrow agreements via sales contract amendments with at least
six Texans to benefit five Texans totaling $2,950,000;
• CWUS/Boyd drafted, negotiated or ensured a material false sales
price inflated by $2,950,000 in the sales contract with the straw
“buyer” Texan Polk;
• CWUS/Boyd participated in dozens of communications to and
with Texans while they were located in Texas to further the
fraudulent transaction;
• CWUS/Boyd located Texan straw buyer Texan Polk and his
related entities;
• CWUS/Boyd ensured the Texas straw purchaser executed and
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exchanged the bogus contract and fraudulent amendments;
• CWUS/Boyd advertised in Texas for straw buyer;
• CWUS/Boyd orchestrated and ingratiated Boyd/CWUS as the
central hub of all communications, drafts and execution of the
contracts, contract amendments, and related fake escrow
agreements between people and entities located in Texas (Polk,
Grove Enterprises, LLC, Paul Simon, Esq., BDFI, and Jetall
Companies). Boyd and Katie Blastick were both employed by
CWUS and enabled the mortgage fraud scheme involving at least
(10) Texans and/or entities. CWUS/Boyd transmitted these
documents into Texas to Ehlert, Paul Simon, BDFI, Jetall
Companies, Polk, Grove Enterprises and 83 Griffith, LLC;
• CWUS/Boyd caused the setup of the fraudulent escrows to occur
in Texas by Texas Capital & Title and Texan Kellie Owens, and
execution of Texan BDFI’s hidden second mortgage which was
executed in Texas, notarized by a Texas Notary. As a result,
-CWUS/Boyd diverted $2,520,000 of Sharestates’s funds into
Texas for the benefit of BDFI;
-CWUS/Boyd diverted $430,000 of Sharestates’s funds into
Texas for the benefit of Polk/Ehlert;
-CWUS/Boyd diverted $76,600 of Sharestates’s funds into
Texas for the benefit of H-Capital Real Estate;
• CWUS/Boyd used BDFI’s Texas funds of $2,317,500 to trick
Sharestates into funding a $3,830,000 loan by falsely identifying
these funds, which were located in Texas, as belonging to Polk;
and
• CWUS/Boyd manipulated and directed the 83 Griffith HUD-1
Settlement Statement to contain material false information
enabling the fake escrow funds to move into Texas.
In support of general jurisdiction, Sharestates alleges that fictions between
parent and subsidiaries should be ignored based on CWI’s Chief Operations
Officer’s testimony that he regularly made decisions for “multiple entities”, and
further alleges:
• CWUS’s affiliations with Texas are so ‘continuous and
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systematic’ as to render them essentially CWUS are “at home in
Texas;”
• CWI handled funds owed not only to CWUS, but most if not all
CWI-related legal entities from virtually all transactions across
the country, including, upon information and belief, all Texas
closings. These acts included receiving funds from Texas and
disbursing funds into Texas;
• CWUS’s Chief Operations Officer lives in Texas, has his office
in Texas, and performs his duties for CWI primarily in his Texas
office;
• CWI website states that Lou Cushman joined “Cushman and
Wakefield, Inc. (C&W) in 1976 . . . [and] relocated from New
York . . . to open and head up C&W’s new office in Houston;”
and
• CWI’s acquisitions of brokerage firms in Texas after the lawsuit
filed “to take a virtual stranglehold on Commercial Real Estate
Brokerage in Texas.”
Cushman & Wakefield, Inc. (“CWI”) and CWUS filed a Joint Verified
Amended Special Appearance which included the affidavit of Kathy Williams,
operations director for the Western Region of CWUS, clarifying the relationships
between the various Cushman & Wakefield entities. Williams explained that
CWI—a company that provides real estate services to its clients in the New York
tri-state area, including valuation and brokerage services—was organized under the
laws of the State of New York, maintained its principal place of business in New
York and was the parent company of Cushman & Wakefield Global, Inc., a
Delaware corporation with its principal place of business in Chicago, Illinois. She
explained Cushman & Wakefield Global, Inc. is the parent of CWUS. She further
explained that Cushman & Wakefield of Texas, Inc. ("CW Texas") is an entity
separate and apart from CWI and CWUS; CW Texas is a wholly-owned subsidiary
of CWI and an affiliate of CWUS. Williams provided that there was a clear legal
and formal differentiation among the various Cushman entities and, specifically,
8
between CWI and CWUS, and that it was not uncommon for an executive at CW
Texas, to provide professional services for others in the group of companies, such
as CWI or CWUS. She explained that performing services and serving as an
officer for multiple Cushman family companies, including CWUS, while working
as an employee for CW Texas, did not render Richard Cenkus an employee of any
of the companies for whom he performed such services.
Following the evidentiary hearing, the trial court denied Boyd’s and
CWUS’s special appearances. Findings of fact and conclusions of law were
requested but not issued. Boyd and CWUS timely filed this appeal.
II. ISSUES AND ANALYSIS
A. Issues Presented
On appeal, Boyd and CWUS raise two questions: whether the trial court
erred in denying CWUS’s special appearance and whether the trial court erred in
denying Boyd’s special appearance. We consider subordinate questions necessary
for our disposition.
B. Standard of Review
We review de novo a trial court’s denial of a special appearance. M & F
Worldwide Corp. v. Pepsi-Cola Metro. Bottling Co., 512 S.W.3d 878, 885 (Tex.
2017). When, as in today’s case, the trial court does not issue findings of fact and
conclusions of law, we imply all relevant facts necessary to support the trial court’s
ruling that are supported by evidence. Luciano v. SprayFoamPolymers.com, LLC,
625 S.W.3d 1, 8 (Tex. 2021); Cont’l Alloys & Services (Delaware) LLC v.
YangZhou Chengde Steel Pipe Co., Ltd., 597 S.W.3d 884, 891 (Tex. App.—
Houston [14th Dist.] 2020, pet. denied).
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C. Law Governing Personal Jurisdiction
The Texas long-arm statute authorizes Texas courts to exercise jurisdiction
over a nonresident defendant who “does business” in the state. Tex. Civ. Prac. &
Rem. Code § 17.042. The Supreme Court of Texas has interpreted the broad
language of the Texas long-arm statute to extend Texas court’s personal
jurisdiction “as far as the federal constitutional requirements of due process will
permit.” M & F Worldwide, 512 S.W.3d at 885. A plaintiff bears the initial burden
of pleading allegations sufficient to bring a nonresident defendant within the scope
of the long-arm statute. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d
789, 794–95 (Tex. 2002). A defendant challenging a Texas court’s personal
jurisdiction must negate all jurisdictional bases alleged. Id.A trial court may constitutionally exercise personal jurisdiction over a party
when (1) the nonresident defendant has minimum contacts with the forum state and
(2) the assertion of jurisdiction complies with traditional notions of fair play and
substantial justice. Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945); Peters
v. Top Gun Exec. Grp., 396 S.W.3d 57, 62 (Tex. App.—Houston [14th Dist.] 2013,
no pet.).
1. Minimum Contacts
Minimum contacts are sufficient for personal jurisdiction when the
nonresident defendant purposefully avails itself of the privilege of conducting
activities within the forum state, thus invoking the benefits and protections of its
laws. M & F Worldwide, 512 S.W.3d at 886. “The defendant’s activities, whether
they consist of direct acts within Texas or conduct outside Texas, must justify a
conclusion that the defendant could reasonably anticipate being called into a Texas
court.” Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 806 (Tex.
2002) (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297
10
(1980)). A nonresident defendant’s contacts with a forum state can give rise to
either general or specific jurisdiction. Id.a. General Jurisdiction
A company is subject to general jurisdiction in the state of its principal place
of business. Ascentium Capital LLC v. Hi-Tech the Sch. of Cosmetology Corp.,
558 S.W.3d 824, 829 (Tex. App.—Houston [14th Dist.] 2018, no pet.). General
jurisdiction also arises when a defendant’s contacts with the forum state “are so
‘continuous and systematic’ as to render [it] essentially at home in the forum
State.” M & F Worldwide, 512 S.W.3d at 885 (quoting Goodyear Dunlop Tires
Operations, SA v. Brown, 564 U.S. 915, 919 (2011)); see also Daimler AG v.
Bauman, 571 U.S. 117, 138 (2014). General jurisdiction concerns a court’s ability
to exercise jurisdiction over a nonresident defendant as to any claim, including
claims unrelated to the defendant’s contacts with the forum. Id. The test for general
jurisdiction requires substantial activities within the forum and is a “high bar,”3
presenting a more demanding minimum contacts analysis than for specific
jurisdiction. TV Azteca v. Ruiz, 490 S.W.3d 29, 37 (Tex. 2016). Even when a
defendant’s contacts may be continuous and systematic, they are insufficient to
confer general jurisdiction if they fail to rise to the level of rendering a defendant
“essentially at home in the forum [s]tate.” Old Republic Nat’l Title Ins. Co. v. Bell,
549 S.W.3d 550, 565 (Tex. 2018).
b. Specific Jurisdiction
Specific jurisdiction through minimum contacts with the forum state is
established when the defendant (1) purposefully avails itself of the privilege of
conducting activities in the forum state, and (2) the lawsuit arises or relates to the
defendant’s contacts with the forum. Luciano, 625 S.W.3d at 8–9. “Although not
3
Searcy v. Parex Resources, Inc., 496 S.W.3d 58, 72 (Tex. 2016).
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determinative, foreseeability is an important consideration in deciding whether the
nonresident defendant has purposefully established “minimum contacts” with the
forum state.” BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 795
(Tex. 2002).
Three principles govern the purposeful-availment analysis: (1) only the
defendant’s contacts with the forum are relevant, not the unilateral activity of
another party or third person; (2) the defendant’s acts must be purposeful and not
random, isolated, or attenuated; and (3) the defendant must seek some benefit,
advantage, or profit by availing itself of the jurisdiction such that it impliedly
consents to suit there. Retamco Operating, Inc. v. Republic Drilling Co., 278
S.W.3d 333, 338 (Tex. 2009). The defendant’s activities, whether they consist of
direct acts within Texas or conduct outside Texas, must justify a conclusion that
the defendant could reasonably anticipate being called into a Texas court. Id.
2. Fair Play & Substantial Justice
“Once minimum contacts have been established, we must still consider
whether, for other reasons, exercising jurisdiction over the nonresident defendant
would nevertheless run afoul of ‘traditional notions of fair play and substantial
justice.’ Luciano, 625 S.W.3d at 18 (quoting Int’l Shoe, 326 U.S. at 316; TV
Azteca, 490 S.W.3d at 55). “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.”
Id. (quoting Spir Star AG v. Kimich, 310 S.W.3d 868, 878 (Tex. 2010); TV Azteca,
490 S.W.3d at 55.
We consider the nonresident defendant’s contacts in light of (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
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judicial system’s interest in obtaining the most efficient resolution of
controversies; and (5) the shared interest of several states in furthering fundamental
substantive social policies.
D. Analysis
Because the trial court did not issue findings and conclusions, we imply all
findings in favor of its positive jurisdictional findings.
Because Sharestates failed to allege any facts in support of establishing that
Boyd is subject to general jurisdiction in Texas, we briefly address general
jurisdiction as to Boyd. “For an individual, the paradigm forum for the exercise of
general jurisdiction is the individual’s domicile.” Goodyear Dunlop Tires
Operations, S.A. v. Brown, 564 U.S. 915, 924 (2011); accord Chow v. San Pedro,
No. 14-18-00429-CV, 2019 WL 4021908, at *4 (Tex. App.—Houston [14th Dist.]
Aug. 27, 2019, pet. denied) (mem. op.). The evidence was that Boyd is a lifelong
citizen and resident of Indiana. Because there is no evidence that Boyd holds a
license in Texas or ever even traveled to Texas for any purpose in connection with
the MCDA Transaction, and instead the only evidence is that he is a lifelong
citizen and resident of Indiana who works in Indiana under an Indiana license,
Boyd’s domicile is not Texas and he is not subject to general jurisdiction in Texas.
Fisher v. First Chapel Dev. LLC, No. 14-19-00111-CV, 2021 WL 2154108, at *4
(Tex. App.—Houston [14th Dist.] May 27, 2021, no pet.) (explaining under Texas
law, a “domicile” is (1) an actual residence that is (2) intended to be a permanent
home). We conclude that to the extent that the trial court concluded Boyd was
subject to personal jurisdiction based on a theory of general jurisdiction, the trial
court erred.
1. Did the trial court err by its implicit holding that CWUS’s contacts with
Texas were sufficient minimum contacts under a theory of general
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jurisdiction?
In response to Sharestates’ allegations in support of general jurisdiction,
CWUS submitted evidence including affidavits and deposition testimony
establishing that
• CWUS was a Missouri corporation with its principal place of
business in Chicago, Illinois at all relevant times;
• 611 of CWUS’s 11,683 employees are based in Texas;
conversely, 95% percent of CWUS’s employees—11,072
people—are based outside of Texas;
• CWUS’s does not own a Texas bank account;
• There is no evidence that CWUS owns any real property in
Texas;
• Richard Cenkus, the employee of CW Texas and Chief Operating
Officer of CW, Inc. testified that he lives and has a home office in
Dallas and that he regularly made high level decisions for all
Cushman entities, also testified that he worked from Texas only a
couple of days per week and thus performed most of his work
outside of Texas;
• Cenkus testified that he traveled “every week, multiple times a
week, to multiple offices;” and
• At the time the lawsuit was filed, two of CWUS’s officers—
Cenkus and Armour Hollman, II—lived in Texas.
A company’s principal place of business, often referred to as a company’s
“nerve center,” is the place where the company’s officers “direct, control, and
coordinate” the company’s activities. Hertz Corp. v. Friend, 559 U.S. 77, 92–93,
130 S.Ct. 1181, 175 L.Ed.2d 1029 (2010); Ascentium Capital LLC v. Hi-Tech the
Sch. of Cosmetology Corp., 558 S.W.3d 824, 829 (Tex. App.—Houston [14th
Dist.] 2018, no pet.). The company’s nerve center normally is its headquarters,
unless that is not the actual center of direction, control and coordination. Hertz,
559 U.S. at 93, 130 S.Ct. 1181.
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Sharestates presented some testimony suggesting that some important
CWUS’s decisions were made by Cushman & Wakefield, Inc.’s chief operating
officer in Texas and that Cushman & Wakefield, Inc. or its Texas affiliate (not
CWUS) maintained a home office in Texas. However, Sharestates did not present
any substantial evidence to contradict the assertion that CWUS’s principal place of
business remains in Illinois, i.e., not Texas. We thus consider whether
Sharestates’s proof elevates it to an exceptional case, such that CWUS had
“continuous and systematic contacts” of an extent and nature that render CWUS
“essentially at home” in Texas.
Two cases that Sharestates relies upon to support its contention that this is
such an exceptional case and general jurisdiction is proper over CWUS, Perkins v.
Benguet Consol. Mining Co.4 and Devon Energy Corp. v. Moreno,5 help illustrate
the problem with its contention. In Perkins, the court determined the facts of the
corporate defendant’s residence were “exceptional” because of the company’s
displacement was caused by World War II, the foreign corporation’s principal
place of business was Ohio, not the Philippines, and because the evidence showed
that the president of the corporation was exclusively located in Ohio, and he
discharged all executive duties in running the company during the war in the Ohio
office. Perkins, 342 U.S. at 447. But CWUS connection to Texas is, by
comparison, unlike the relocated mining company’s connection to Ohio. The only
evidence concerning CWUS’s principal place of business was that it was in Illinois
not in Texas, and there was no evidence adduced that CWUS was ever
headquartered or exclusively located in Texas. No evidence shows that CWUS
was run from Texas or that CWUS solicits business from such office. Moreover,
4
Perkins v. Benguet Consol. Mining Co., 342 U.S. 437, 447, 72 S. Ct. 413, 419 (1952).
5
Devon Energy Corp. v. Moreno, No. 01-21-00084-CV, 2022 WL 547641, at *8 (Tex. App.—
Houston [1st Dist.] Feb. 24, 2022)
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even if the trial court were to, as Sharestates’s argument suggests, credit Cenkus’s
self-proclaimed decision-making power to be so singular and essential to CWUS as
the president of the mining company in Perkins, Cenkus’s regular travel schedule
and limited in-state presence does not lend to the conclusion that these corporate
decisions are being made in Texas; Texas cannot reasonably be found to be a
harbor to CWUS’s “nerve center”.
Sharestates also refers to our sister court’s recent Moreno decision to
contend that a “permanent general office” from which the company “solicits
business in Texas” supports a finding of general jurisdiction. Devon Energy Corp.
v. Moreno, 2022 WL 547641, at *8. Although some testimony established that
Cushman & Wakefield, Inc., the related entity which the trial court dismissed for
lack of personal jurisdiction, maintained an office in Dallas where Cenkus would
work one or two days of the week, the record does not contain evidence that
CWUS had a “permanent general office” in Texas.
Even if the “home office” in Dallas described in the record was attributed to
CWUS, the record contains too little evidence about the type and nature of the
office and CWUS’s other offices by comparison to justify a general-jurisdiction
finding on the basis of a “permanent general office”. See id. (finding no general
jurisdiction despite significant business presence and activity in Texas and office in
Texas where there was “no evidence of the type and nature of the offices
maintained”). The Court must appraise CWUS’s “activities in their entirety.” See
BNSF Ry. Co. v. Tyrrell, 581 U.S. 402, 414, 137 S. Ct. 1549, 1559, 198 L. Ed. 2d
36 (2017).
Under the applicable standard of review, we conclude that the evidence is
legally insufficient to support an implied finding that (1) Texas is CWUS’s
principal place of business, or (2) CWUS’s contacts are so continuous and
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systematic as to render CWUS “essentially at home” in Texas. See BNSF Ry. Co.
v. Tyrrell, 581 U.S. 402, 414, 137 S. Ct. 1549, 1559, 198 L. Ed. 2d 36 (2017);
Yahsi v. Visor Muhendislik Insaat Turizm Gida Ve Mekanik Taahhut Ticaret Ltd.
Sirketi, 651 S.W.3d 79, 95 (Tex. App.—Houston [14th Dist.] 2021, no pet.).
2. Did the trial court err by its implicit holding that Boyd’s and CWUS’s
contacts with Texas were sufficient minimum contacts under a theory of
specific jurisdiction?
In response to Sharestates’ allegations in support of specific jurisdiction,
CWUS and Boyd submitted evidence including affidavits and deposition testimony
establishing that
• CWUS entered a Consulting Agreement with MCDA to consult
with MCDA for the purpose of selling the New Jersey Property;
• Boyd’s interaction with Polk was prompted when Polk made an
inquiry through Loopnet about the property;
• Boyd did not market, advertise or sell services to Polk, Grove
Enterprises, LLC or 83 Griffith, LLC in Texas;
• Neither Boyd nor CWUS sought to sell the property or to be
compensated for the sale based on any sale price beyond the price
publicly listed, $2,950,000;
• Boyd was not a party to Polk/83 Griffth’s agreements or funding
arrangements with BDFI or Sharestates;
• Boyd did not establish any escrow. Rather he offered
uncontroverted testimony that in drafting documents at Polk’s
direction, Boyd and CWUS merely drafted amendments to the
purchase agreement that identified BDFI and Elhert as holders of
the escrow accounts;
• Boyd did not perform any service for Polk, 83 Griffith, LLC,
Ehlert Law, PC, BDFI, LLC or Jetall Companies;
• Boyd was not a party and never saw the Ehlert escrow agreement;
and
• Boyd offered uncontroverted testimony refuting any contact with
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H-Capital Real Estate.
The uncontradicted proof provided by Boyd and CWUS negated a
substantial portion of allegations Sharestates relied on in support of its specific
jurisdiction theory. Significantly, Boyd’s testimony clarifies and disproves
allegations about his role with respect to the escrow accounts. Sharestates
provided no evidence supporting the contention that CWUS or Boyd had any role
in the mortgage application process or collected any fee related to the mortgage
loan.
Additionally, many of the contacts alleged by Sharestates (and in some
instances supported by evidence) are legally insignificant. The unilateral conduct
by parties, like Polk, BDFI, and Ehlert, whom Sharestates contends that Boyd and
CWUS conspired with to defraud Sharestates, are not material to this jurisdictional
analysis. Guardian Royal Exch. Assurance, Ltd. v. English China Clays, Pub. Ltd.
Co., 815 S.W.2d 223, 227 (Tex. 1991) (“the contact must have resulted from the
nonresident defendant’s purposeful conduct and not the unilateral activity of the
plaintiff or others”). Specifically, CWUS and Boyd had no involvement in any
post-closing transactions or events regarding the other parties’ escrows by which
Sharestates asserts the mortgage fraud was accomplished. Relatedly, the fact that
Boyd and CWUS are alleged to have conspired with such parties is also irrelevant
to determine jurisdiction. Nat’l Indus. Sand Ass’n v. Gibson, 897 S.W.2d 769, 773
(Tex. 1995) (the mere existence or allegation of a conspiracy directed at Texas is
not sufficient to confer jurisdiction).
Specific jurisdiction could possibly be supported by the following
undisputed conduct:
• CWUS/Boyd advertised the New Jersey Property on Loopnet, a
national advertising website, and Polk made an inquiry through
Loopnet about the property;
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• CWUS/Boyd, as MCDA’s real estate consultants, played a
central role processing the paperwork of the transaction and
communicating with parties to accomplish that end. Boyd
facilitated the purchase and sale of the New Jersey Property
between MCDA and 83 Griffith, LLC and Boyd communicated
with Polk and other Texans in the course of representing MCDA
in connection with 83 Griffith, LLC’s purchase of the New Jersey
Property from MCDA. Boyd and CWUS directed the contract
and amendments to Polk, whom we presume, without deciding,
was located in Texas.
We consider the quality and nature of these acts to determine if they are
sufficiently purposeful.
The Loopnet posting was not targeted specifically towards potentially
interested Texans; it targeted potentially interested people everywhere. Though
they ran their advertising campaign through a third party, we presume for the sake
of argument that Boyd and CWUS ran the website listing page as their own, and as
occurred here, that the website permitted Polk, a Texas resident, a means of
reaching out and contacting Boyd and CWUS directly. Even under this
presumption, this functionality is not so “interactive” to deem the use of the
website sufficient to establish purposeful contacts. All Star Enter., Inc. v.
Buchanan, 298 S.W.3d 404, 427 (Tex. App.—Houston [14th Dist.] 2009, no
pet.)(finding interactive website soliciting online applications for jobs in Utah and
Colorado submitted online to anyone viewing for employment too passive to
support jurisdiction). Sharestates presented no evidence that Texas residents are
targeted on the website; to the contrary, the site is accessible by “[a]nybody in the
world.” All Star Enter., Inc. v. Buchanan, 298 S.W.3d 404, 427 (Tex. App.—
Houston [14th Dist.] 2009, no pet.); see also Wilkerson v. RSL Funding, L.L.C.,
388 S.W.3d 668, 681 (Tex. App.—Houston [1st Dist.] 2011, pet. denied) (holding
that the unilateral activities of internet users who might use the search functions of
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Yahoo! and Yelp to find business information in a particular geographic location
cannot be the basis for exercising jurisdiction). The listing and use of Loopnet’s
website to promote the New Jersey property to a nationwide audience does not
demonstrate purposeful contacts with Texas.
We next consider Boyd’s role in facilitating the sale of the property. Neither
Boyd nor any CWUS representative ever visited Texas in connection with the New
Jersey Property sale. Boyd met with Polk once in New Jersey regarding the
transaction. The only clear evidence of Boyd’s communication with Texas are
emails to Polk, a contract amendment drafted by Boyd or others at CWUS
containing a “Buyer’s” signature block for a Polk’s Texas-based company, and
Boyd’s own testimony about telephone calls he had with Polk. Even presuming
that Boyd was aware that each of his emails with Polk were received by Polk in
Texas, and that each time Boyd was on the phone with Polk, that Polk was on the
other end of the line in Texas,6 these contacts with Texas were fortuitous and not
purposeful. Alenia Spazio, S.p.A. v. Reid, 130 S.W.3d 201, 213 (Tex. App.—
Houston [14th Dist.] 2003, pet. denied) (holding that “numerous telephone and
facsimile communications with people in Texas relating to an alleged contract do
not establish minimum contacts”); Old Republic Nat’l Title Ins. Co. v. Bell, 549
S.W.3d 550, 560 (Tex. 2018)(“On their own, numerous telephone communications
with people in Texas do not establish minimum contacts, and we have noted that
changes in technology may render reliance on phone calls obsolete as proof of
purposeful availment.”).
6
Although Boyd had discussions with Polk and other Texas residents and although there was
sufficient information for the trial court conclude that Boyd knew or should have known he was
communicating with Texas residents and with entities located in Texas, the record did not clearly
illustrate that Boyd knew or should have known that his communications with Texans were
received in Texas.
20
We have previously found Texas-directed purposeful availment lacking
based on evidence of multiple communications made in furtherance of an out-of-
state real estate transaction that ultimately does not involve any Texas party. See
Bryan v. Gordon, 384 S.W.3d 908 (Tex. App.—Houston [14th Dist.] 2012, no
pet.)(holding nonresident real estate agents did not target Texas and the
relationship between the parties and their communications concerned a one-time
Oregon real estate transaction that had no connection to Texas other than the fact
that mortgagor happened to reside in Texas and was located there when she
received and signed the contract); see also Peredo v. M. Holland Co., 310 S.W.3d
468, 474–75 (Tex. App.—Houston [14th Dist.] 2010, no pet.)(holding –despite a
record of numerous communications with Texans by the defendant–that contacts
with Texas were not purposeful where none of the contracting parties were from
Texas in case where nonresident was sued on allegations of misrepresentations
about past and future payments to be made by a Mexican company that he
previously owned to secure contracts and continue business). Today’s case is not
materially different from these cases, which both illustrate that an out-of-state
defendant’s incidental contacts and communications with Texans made in the
course of carrying out or facilitating an out-of-state contract does not equate to
minimum contacts. Neither Boyd nor any CWUS’s contacts or communications
with Texans in this case amounted to any more than an incidental component of
the work and transaction centered elsewhere, in New Jersey.
Under the applicable standard of review, we conclude that the evidence is
legally insufficient to support an implied finding that any of the relevant contacts
between Boyd or CWUS with Texas or Texas entities was adequately purposeful.7
7
Because we conclude that purposeful availment requirement was not established, we
need not consider the “relatedness” component of the specific jurisdiction analysis or the fair
play and substantial justice component of the minimum contacts analysis.
21
To the extent the trial court concluded it could properly exercise personal
jurisdiction over Boyd or CWUS based on specific jurisdiction, the trial court
erred.
III. CONCLUSION
Because the trial court erred in denying Boyd and CWUS’s special
appearance, we sustain their respective issues, reverse the trial court's order, and
remand with instructions to the trial court to dismiss the claims against Boyd and
CWUS for lack of personal jurisdiction.
/s/ Randy Wilson
Justice
Panel consists of Chief Justice Christopher, Justice Bourliot and Justice Wilson.
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