MBM Family Trust No. 1 and Dalis Waguespack, in Her Capacity as Trustee of MBM Family Trust No. 1 v. GE Oil & Gas, LLC

AFFIRMED and Opinion Filed September 17, 2021
S In The
Court of Appeals
Fifth District of Texas at Dallas
No. 05-20-01103-CV
MBM FAMILY TRUST NO. 1 AND DALIS WAGUESPACK, IN HER
CAPACITY AS TRUSTEE OF MBM FAMILY TRUST NO. 1, Appellants
V.
GE OIL & GAS, LLC, Appellee
On Appeal from the 192nd Judicial District Court
Dallas County, Texas
Trial Court Cause No. DC-18-07164
MEMORANDUM OPINION
Before Chief Justice Burns, and Justices Reichek and Carlyle
Opinion by Chief Justice Burns
MBM Family Trust No. 1 and its trustee Dalis Waguespack appeal the denial
of their special appearance. In two issues, the Trust and Waguespack argue the trial
court erred in exercising personal jurisdiction over them, and the exercise of personal
jurisdiction over them violates traditional notions of fair play and substantial justice.
Based on ample evidence supporting the trial court’s order, including its credibility
determination, we affirm.
In June 2018, GE Oil & Gas, LLC filed its original petition in Dallas County
district court. The petition alleged that, in August 2016, GE obtained a
$39,846,575.34 judgment in New York against Michel B. Moreno, a Texas resident,
and other business entities GE characterized as the “Moreno Entities.” GE
domesticated the judgment in Texas in February 2017. GE’s petition alleged the
Moreno Entities were alter egos of Moreno, and he used the Moreno Entities to
shield assets and evade creditors, including GE.
In November 2019, GE filed its third amended petition adding the Trust and
Waguespack as defendants. The petition alleged, among other things, Moreno used
the Trust to evade GE’s collection efforts while directing transfers of money for his
personal benefit. The petition alleged jurisdiction and venue were proper in Dallas
County, Texas, because the Trust and Waguespack “conduct business there, own
property there, and/or negotiated transactions there.” Attached to the petition,
among other things, was a copy of a March 2018 document establishing a $6.24
million home equity line of credit secured by Moreno’s residence in Dallas and
listing Moreno as borrower and Waguespack as lender. The line of credit established
the place of payment as an address in Dallas and provided that the “indebtedness
evidenced hereby shall be construed and enforced in accordance with and governed
by the laws of the State of Texas.” The line of credit stated it was secured by a deed
of trust from Moreno to “Dalis M. Waguespack, trustee.”
In May 2020, the Trust and Waguespack filed a special appearance asserting
the trial court had no general or specific jurisdiction over “the Trust Defendants.”
The special appearance alleged the Trust was created under Louisiana law, and
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Waguespack is a Louisiana resident. The special appearance further asserted that
the Trust “does not conduct business anywhere, including in Texas”; the Trust does
not own property, maintain offices or facilities, or employ employees in Texas; and
the Trust Defendants did not participate in “any of the transactions at issue.”
At a hearing on the special appearance in November 2020, counsel for the
Trust and Waguespack first noted that he would continue to refer to the Trust and
Waguespack as “the Trust Defendants,” but technically the pleadings were styled as
being filed against Waguespack in her capacity as trustee. Counsel argued that
Waguespack is a Louisiana resident, and the Trust is a Louisiana trust. Counsel
argued the Trust has “engaged in very limited transactions” but, “despite that fact,
GE says that the Trust is subject to general jurisdiction, specific jurisdiction, and
alter ego jurisdiction in this case.” Counsel cited Waguespack’s statement that the
trust does not maintain an office or employees in Louisiana or conduct any day-to-
day business and criticized GE’s attempt to rely on Waguespack’s statement as
evidence the Trust was “at home in Texas because that’s where MOR KM’s located
and its manager Mr. Moreno.”
Counsel for GE argued the Trust acquired a fifty percent interest in MOR
KM, a Texas holding company managed by Moreno, a Texas resident. Thus, the
trust acquired its interest in MOR KM from Moreno, which GE argued amounted to
“doing business in Texas.” Counsel for GE argued two distributions that MOR KM
made to the Trust did not appear on the bank statements the Trust produced or the
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Trust’s general ledger. One of the distributions was allegedly to repay a loan that
the Trust owed to Moreno, but GE’s counsel pointed out that the Trust had produced
no promissory note related to the loan. As soon as the Trust received the
distributions, counsel argued, it sent the money to Moreno or entities under
Moreno’s control. Counsel for GE argued that one of the distributions the Trust
made to Moreno was a $2.3 million loan with no repayment date. GE’s counsel
further argued that the $2.3 million loan was not reflected on the Trust’s balance
sheet, which listed “no accounts receivable whatsoever” in 2016.
GE’s counsel recounted Moreno’s testimony in a prior hearing that he went to
the Trust as a “lender of last resort” when he could not get a loan elsewhere, and the
Trust opened a $6 million home equity line of credit secured by Moreno’s homestead
in Dallas. GE’s counsel argued that the home equity loan of credit was formed under
the Texas Home Equity Line of Credit regulations, subject to Texas law, enforceable
in Texas, and secured by a deed of trust in Texas. GE’s counsel also cited
Waguespack’s testimony in her deposition that Moreno called her about being the
lender on the home equity line of credit, and “she knew then that she would never
loan a dollar to Mr. Moreno and she would only be the nominal lender on that loan.”
GE’s counsel argued Waguespack therefore had knowledge that the home equity
line of credit would just use her name nominally to skirt the home equity line of
credit regulations.
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GE’s counsel cited Moreno’s testimony at a prior hearing that the “family
trust” was Moreno’s “lender of last resort.” Moreno had testified that he could not
get a certified lender and therefore needed a blood relative to act as the lender for
the home equity line of credit. In response to questioning by his own counsel,
Moreno had testified it was “correct” that Waguespack, Moreno’s sister, “stepped
in” to act as the lender. Moreno had testified he and his sister “took the transaction
seriously and wanted to make sure that the Trust was protected for its investment
and its risk, and took out a deed of trust securing his home equity – his home.”
In response to questioning by the trial judge, Waguespack’s counsel stated the
$2.3 million loan was “reflected in the general ledger for MOR KM” that showed
the assets being distributed from MOR KM to the Trust, but the Trust “does not have
its own general ledger.” The trial court asked what records were available, and
Waguespack’s counsel answered that “it’s an undocumented loan.” The trial judge
stated that he “question[ed] the credibility of both the trustee and Mr. Moreno in
this.” On November 30, 2020, the trial court signed an order denying the Trust and
Waguespack’s special appearance. This appeal followed.
In their first issue, the Trust and Waguespack argue the trial court erred in
exercising jurisdiction over them because Waguespack is a Louisiana citizen, the
Trust was created in Louisiana, and Waguespack had no purposeful contacts with
Texas that underlie any of GE’s claims against the Trust. In their second issue, the
Trust and Waguespack argue the exercise of jurisdiction over them violates
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traditional notions of fair play and substantial justice. Because of the interrelated
nature of these issues, we address them together.
As a question of law, we review a trial court’s personal jurisdiction
determination de novo. M & F Worldwide Corp. v. Pepsi-Cola Metro. Bottling Co.,
Inc., 512 S.W.3d 878, 885 (Tex. 2017). The trial court, however, is the sole arbiter
of the witnesses’ credibility and the weight afforded their testimony, Pritchett v.
Gold's Gym Franchising, LLC, No. 05-13-00464-CV, 2014 WL 465450, at *2 (Tex.
App.—Dallas Feb. 4, 2014, pet. denied), and we “will not disturb a trial court’s
resolution of conflicting evidence that turns on the credibility or weight of the
evidence.” Ennis v. Loiseau, 164 S.W.3d 698, 706 (Tex. App.—Austin 2005, no
pet.); Shannon v. Memorial Drive Presbyterian Church U.S., 476 S.W.3d 612, 620
(Tex. 2015) (If evidence raises a fact issue as to jurisdiction, appellate court must
affirm denial of plea because only fact finder should decide factual issues). When
no findings of fact and conclusions of law are issued following denial of a special
appearance, all facts supported by the record are implied in support of the order.
BMC Software Belg., N.V. v. Marchland, 83 S.W.3d 789, 795 (Tex. 2002).
For all intents and purposes, general jurisdiction exists only over individuals
who reside in the forum or corporations that maintain their principal place of
business in the forum. Daimler AG v. Bauman, 571 U.S. 117, 137 (2014) (“For an
individual, the paradigm forum for the exercise of general jurisdiction is the
individual’s domicile; for a corporation, it is an equivalent place, one in which the
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corporation is fairly regarded as at home.”) (internal quotation omitted); Old
Republic Nat'l Title Ins. Co. v. Bell, 549 S.W.3d 550, 565(Tex. 2018) (“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 State.”).
On the other hand, the exercise of specific personal jurisdiction over a
nonresident defendant comports with due process if a nonresident defendant has
“minimum contacts” with Texas and the exercise of jurisdiction does not offend
traditional notions of fair play and substantial justice. M & F Worldwide, 512
S.W.3d at 885. A defendant’s minimum contacts with a forum, i.e., Texas, are
established when the defendant purposefully avails itself of the privilege of
conducting activities within the forum state, thus invoking the benefits and
protections of its laws. Id. Three principles govern this 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 fortuitous; 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.
Id. (quotations omitted).
A nonresident defendant’s minimum contacts will give rise to specific
personal jurisdiction if the plaintiff’s cause of action arises from or relates to those
contacts. Id. at 886. For a nonresident defendant’s contacts with Texas to support
an exercise of specific jurisdiction, “there must be a substantial connection between
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those contacts and the operative facts of the litigation.” Moncrief Oil Int’l Inc. v.
OAO Gazprom, 414 S.W.3d 142, 156 (Tex. 2013) (quotation omitted). A
nonresident’s “directing a tort at Texas from afar is insufficient to confer specific
jurisdiction.” Id. at 157. The proper focus is on the extent of the defendant’s
activities in the forum, not the residence of the plaintiff. Id.However, the absence of physical contacts with Texas does not defeat
personal jurisdiction so long as the defendant’s efforts are purposefully directed
towards residents of Texas. See Retamco Operating, Inc. v. Rep. Drilling Co., 278
S.W.3d 333, 339 (Tex. 2009) (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462,
476 (1985)). A defendant who reaches out beyond one state and creates continuing
relationships and obligations with a citizen of another state is subject to the
jurisdiction of the latter state in suits based on those activities. Id.The exercise of personal jurisdiction must also comply with traditional
notions of fair play and substantial justice. Moncrief, 414 S.W.3d at 154. If a
nonresident has minimum contacts with the forum, rarely will the exercise of
jurisdiction not comport with traditional notions of fair play and substantial justice.
Id. at 154–55. We consider the following factors if appropriate: (1) the burden on
the defendant; (2) the interest 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 controversies;
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and (5) the shared interest of the several states in furthering fundamental social
policies. Retamco, 278 S.W.3d at 341.
A trust has no legal existence; thus, claims intended to recover trust assets can
only be asserted against the trust’s legal representative—its trustee. Ray Malooly
Tr. v. Juhl, 186 S.W.3d 568, 570 (Tex. 2006). The Trust and Waguespack argue that
Waguespack has not taken any action in her capacity as trustee purposefully directed
towards Texas. They argue GE “anchor[s] its personal-jurisdiction allegations to
third parties’ contacts with Texas and then attributes those contacts to the Trust
Defendants.” The Trust and Waguespack concede that the Trust owns fifty percent
of MOR KM, which is managed by Moreno. However, they assert that minimum
contacts and purposeful availment cannot be established by “the mere fact that the
targeted foreign defendant owns or has indirectly invested in entities that have assets
in or contacts with Texas.”
In arguing that the Trust and Waguespack have not had minimum contacts
with Texas that would support specific personal jurisdiction, they argue that
Waguespack participated in the home equity line of credit transaction only in her
individual capacity as Moreno’s sister and did not participate in the transaction in
her capacity as trustee. Thus, they argue, the Trust holds no interest in the home
equity line of credit.
In making this argument, the Trust and Waguespack cite no evidence to
support their assertion that Waguespack, solely in her individual capacity, had the
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wherewithal to extend a home equity line of credit to Moreno in excess of six million
dollars. Further, this argument ignores the fact that the trial court had before it
evidence that the “family trust” was Moreno’s “lender of last resort”; Waguespack
“stepped in” to act as the lender in the home equity line of credit transaction;
Waguespack knew that “she would never loan a dollar to Mr. Moreno and she would
only be the nominal lender”; the home equity line of credit documents provided the
line of credit was secured by a deed of trust from Moreno to Waguespack, “trustee”;
and, separate from the home equity line of credit transaction, the Trust made a $2.3
million “undocumented loan” to Moreno. Moreover, the trial judge expressly stated
that he “[q]uestioned the credibility of both the trustee and Mr. Moreno.” We
conclude that the evidence before the trial court, at the very least, raised a fact issue
as to specific jurisdiction; accordingly, we must affirm the trial court’s denial of the
plea to the jurisdiction in this case. See Shannon, 476 S.W.3d at 620; M & F
Worldwide, 512 S.W.3d at 885.
In light of this conclusion, we reject the Trust and Waguespack’s argument
that the exercise of jurisdiction over them violates traditional notions of fair play and
substantial justice. The record supports a determination that the Trust does not
maintain an office or employees in Louisiana or conduct any day-to-day business;
instead, the record indicates the Trust and Waguespack are involved in providing
funds to Moreno, a Texas resident, in Texas. The burden on the Trust and
Waguespack in adjudicating the underlying dispute in Texas is therefore minimal.
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Further, it appears that Texas has a considerable interest in adjudicating the
underlying dispute in its entirety, and such an adjudication will aid GE in obtaining
convenient and effective relief in Texas and result in an efficient resolution of the
claims between the parties. See Retamco, 278 S.W.3d at 341. We overrule the Trust
and Waguespack’s first and second issues.
We affirm the trial court’s order denying the Trust and Waguespack’s special
appearance.
/Robert D. Burns, III/
ROBERT D. BURNS, III
CHIEF JUSTICE
201103F.P05
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S
Court of Appeals
Fifth District of Texas at Dallas
JUDGMENT
MBM FAMILY TRUST NO. 1 AND On Appeal from the 192nd Judicial
DALIS WAGUESPACK, IN HER District Court, Dallas County, Texas
CAPACITY AS TRUSTEE OF Trial Court Cause No. DC-18-07164.
MBM FAMILY TRUST NO. 1, Opinion delivered by Chief Justice
Appellants Burns. Justices Reichek and Carlyle
participating.
No. 05-20-01103-CV V.
GE OIL & GAS, LLC, Appellee
In accordance with this Court’s opinion of this date, the judgment of the trial
court is AFFIRMED.
It is ORDERED that appellee GE OIL & GAS, LLC recover its costs of this
appeal from appellants MBM FAMILY TRUST NO. 1 AND DALIS
WAGUESPACK, IN HER CAPACITY AS TRUSTEE OF MBM FAMILY
TRUST NO. 1.
Judgment entered September 17, 2021.
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