Curocom Energy LLC v. Young-Sub Shim

Opinion issued November 14, 2013.
In The
Court of Appeals
For The
First District of Texas
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NO. 01-13-00462-CV
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CUROCOM ENERGY LLC, Appellant
V.
YOUNG-SUB SHIM, Appellee
On Appeal from the 165th District Court
Harris County, Texas
Trial Court Case No. 2009-06630
OPINION
In this dispute arising from the sale of oil and gas leases, Curocom Energy
LLC has sued, among others, Young–Sub Shim, a Korean businessman. The trial
court granted Shim’s special appearance. Curocom appeals, contending that the
trial court had personal jurisdiction over Shim. Finding no error, we affirm.
Background
In November 2006, Woolim Energy purchased oil and gas leases in the
Caliente Field, located in Karnes County, Texas. Woolim Energy is a Texas
company and a wholly–owned subsidiary of Woolim Resources, a Korean
company. Woolim Resources is a wholly–owned subsidiary of Woolim
Construction, another Korean company. Young–Sub Shim is the chairman, CEO,
and seventy percent shareholder of Woolim Construction. He was also a director
of Woolim Resources and personally negotiated Woolim Energy’s 2006 purchase.
In February 2007, he also traveled to Texas and visited the Caliente Field. He met
with its former owner, spending a few days in Texas.
In May 2007, another officer of Woolim Resources approached one of
Curocom’s officers to suggest a joint venture in the Caliente Field. After several
meetings, Curocom’s chairman traveled to Korea and met with Shim. There, Shim
allegedly touted the advantages of the Caliente Field and assured Curocom’s
chairman that a joint venture would succeed. Shortly thereafter, Woolim Energy
sold a ninety percent interest in the Caliente Field to Curocom. Curocom alleges
that Shim knew of an unfavorable production report regarding the Caliente Field
but failed to disclose it to Curocom. Curocom’s claims against Shim individually
stem from Shim’s non-disclosure of unfavorable information regarding the
Caliente Field during the meeting in Korea.
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Discussion
Curocom contends that the trial court should have exercised jurisdiction over
its claims against Shim, because Shim had engaged in contacts with Texas
sufficient to confer personal jurisdiction.
Standard of Review
We review de novo a trial court’s decision to grant or deny a special
appearance. Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 806
(Tex. 2002). A plaintiff bears the burden of pleading allegations that bring a
nonresident defendant within the provisions of the Texas long-arm statute. BMC
Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 793 (Tex. 2002). A nonresident
defendant challenging the court’s exercise of personal jurisdiction through a
special appearance carries the burden of negating those allegations. Id.; Glattly v.
CMS Viron Corp., 177 S.W.3d 438, 446 (Tex. App.—Houston [1st Dist.] 2005, no
pet.).
When a trial court issues findings of fact and conclusions of law in
connection with its ruling on a special appearance, we review the findings of fact
on legal and factual sufficiency grounds and the conclusions of law de novo. BMC
Software, 83 S.W.3d at 794. We set aside a finding of fact only if the evidence
would not enable a reasonable and fair minded finder of fact to make the finding
under review. City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005). If the
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trial court does not issue findings of fact, then “all facts necessary to support the
judgment and supported by the evidence are implied.” BMC Software, 83 S.W.3d
at 795.
Personal Jurisdiction
A Texas court has personal jurisdiction over a nonresident defendant if the
Texas long–arm statute authorizes the exercise of jurisdiction and it is consistent
with federal due process. Coleman, 83 S.W.3d at 806; Tri–State Bldg. Specialties,
Inc. v. NCI Bldg. Sys., L.P., 184 S.W.3d 242, 248 (Tex. App.—Houston [1st Dist.]
2005, no pet.). Federal due process requires that the nonresident defendant have
purposefully established minimum contacts with the forum state, such that the
defendant reasonably could anticipate being sued there. Glattly, 177 S.W.3d at
446 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475–76, 105 S. Ct.
2174, 2183–84 (1985)). The exercise of personal jurisdiction must also comport
with traditional notions of fair play and substantial justice. Id. at 447 (citing
Burger King, 471 U.S. at 475–76, 105 S. Ct. at 2183–84). If the nonresident
defendant has purposefully established minimum contacts with the forum state,
then only in rare cases will a Texas court’s exercise of personal jurisdiction not
comport with fair play and substantial justice. Guardian Royal Exch. Assur., Ltd.
v. English China Clays, P.L.C., 815 S.W.2d 223, 231 (Tex. 1991).
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A nonresident’s contacts can give rise to either specific or general personal
jurisdiction. Moncrief Oil Int’l, Inc. v. OAO Gazprom, No. 11–0195, 2013 WL
4608672, at *3 (Tex. Aug. 30, 2013). Specific jurisdiction exists when the cause
of action is related to the nonresident’s purposeful activities in the forum, whereas
general jurisdiction exists when the nonresident has continuous and systematic
contacts with the forum. Id.
Specific Jurisdiction
A court may exercise specific jurisdiction over a nonresident when he
purposefully conducts activities in the forum state, and the cause of action arises
from or relates to those contacts or activities. Retamco Operating, Inc. v. Rep.
Drilling Co., 278 S.W.3d 333, 338 (Tex. 2009). Directing a tort at the forum from
afar does not constitute purposeful availment. Moncrief, 2013 WL 4608672, at *9
(citing Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 790–92
(Tex. 2005)). The plaintiff must show a substantial connection between the
defendant’s contacts with the forum state and the operative facts of the litigation.
Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 585 (Tex. 2007).
A defendant’s purchase or sale of real property in the forum constitutes
purposeful availment. Retamco, 278 S.W.3d at 340. A defendant’s conversation
in another country about real property in the forum state, however, is not a
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sufficient contact if the defendant holds no interest in the property. Horowitz v.
Berger, 377 S.W.3d 115, 125 (Tex. App.—Houston [14th Dist.] 2012, no pet.).
In order to pierce the corporate veil for jurisdictional purposes, the plaintiff
must prove that the parent company “controls the internal business operations and
affairs of the subsidiary [and] the degree of control the parent exercises must be
greater than that normally associated with common ownership and directorship.”
PHC–Minden, L.P. v. Kimberly–Clark Corp., 235 S.W.3d 163, 175 (Tex. 2007)
(quoting BMC Software, 83 S.W.3d at 799).
General Jurisdiction
General jurisdiction requires continuous and systematic contacts with the
forum state. Moncrief, 2013 WL 4608672, at *3. Usually the defendant is
engaged in longstanding business in the forum state, such as marketing or shipping
products to the state, performing services within it, or maintaining one or more
offices there. PHC–Minden, 235 S.W.3d at 168; see Helicopteros Nacionales De
Colombia, S.A. v. Hall, 466 U.S. 408, 418, 104 S. Ct. 1868, 1874 (1984).
Analysis
As a preliminary matter, Curocom asserts that the trial court erred in
admitting Shim’s April 2013 affidavit in support of his special appearance, arguing
that it did not have sufficient opportunity to depose Shim regarding his affidavit.
A litigant must file his affidavit at least seven days before a special appearance
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hearing. TEX. R. CIV. P. 120a. Shim timely filed his affidavit because he filed it
seven days before the hearing. See Tempest Broad. Corp. v. Imlay, 150 S.W.3d
861, 869 (Tex. App.—Houston [14th Dist.] 2004, no pet.). Thus, the trial court did
not abuse its discretion in considering Shim’s affidavit.
Curocom first notes that Shim personally negotiated Woolim Energy’s
earlier purchase of the Caliente Field, and traveled to Texas to meet the former
owner of the Caliente Field soon after that purchase. But this lawsuit deals with a
different transaction: Woolim Energy’s later sale of a 90% interest in the Caliente
Field to Curocom. Shim’s alleged fraudulent conduct in connection with that sale
occurred in Korea, not in Texas. Because Shim allegedly committed the tort
outside of Texas, he has not purposefully availed himself of the benefits of doing
business in Texas. See Moncrief, 2013 WL 4608672, at *9; Michiana, 168 S.W.3d
at 790–92 (holding that directing a tort at the forum state from afar does not
constitute purposeful availment).
Relying on the Texas Supreme Court’s holding in Retamco, Curocom asks
that we extend the jurisdictional nexus of Texas real property to include a related
fraudulent inducement claim like the one it brings against Shim. See Retamco, 278
S.W.3d at 340. We decline to do so under these facts, because Shim individually
never owned or sold an interest in the Caliente Field—and some sort of an
ownership interest in Texas real property was the basis for jurisdiction in Retamco.
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See id. Rather, Woolim Energy (also a defendant in the trial court) is the entity
that purchased leases in the Caliente Field and later sold most of its interest to
Curocom. Although Shim is a director and shareholder in Woolim Energy’s parent
company, Curocom has not pleaded that Woolim Energy is Shim’s alter–ego or
any other basis for jurisdictional veil–piercing. See PHC–Minden, 235 S.W.3d at
175.
The facts here are instead analogous to those in the Horowitz case. There,
our sister court held that the trial court lacked personal jurisdiction over an Israeli
promoter of Texas real property. Horowitz, 377 S.W.3d at 128. Because the
promoter’s alleged fraud occurred exclusively in Israel, her activities did not create
sufficient minimum contacts with Texas to support personal jurisdiction. Id. The
Fourteenth Court of Appeals distinguished Retamco on the same grounds that
apply here, emphasizing that the Israeli promoter had never owned an interest in
Texas real property. Id. We hold that the trial court properly found that it lacked
specific jurisdiction over Shim as an individual defendant.
Finally, Curocom contends that Shim’s contacts with Texas support general
jurisdiction, but the trial court reasonably concluded that Shim lacked the
continuous and systematic contacts with Texas necessary to hale him into a Texas
court as an individual defendant. Shim has never resided or worked in Texas.
Shim has visited Texas only once. Thus, the trial court also properly found that it
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did not have general personal jurisdiction over Shim. See PHC–Minden, 235
S.W.3d at 168.
Conclusion
The trial court properly ruled that it did not have personal jurisdiction over
Shim. Accordingly, we affirm the order of the trial court.
Jane Bland
Justice
Panel consists of Chief Justice Radack and Justices Bland and Huddle.
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