Nancy D. Twyman v. William Earl Twyman

  Opinion issued May 14, 2009  

In The  

Court of Appeals

For The  

First District of Texas

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NO. 01-08-00888-CV

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NANCY D. TWYMAN, Appellant

V.

WILLIAM EARL TWYMAN, Appellee

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On Appeal from the Probate Court No. 1

Harris County, Texas

Trial Court Cause No. 382,408

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MEMORANDUM OPINION

In this interlocutory appeal, appellant, Nancy Twyman, appeals the trial court's order that denied her motion for special appearance. In her sole issue on appeal, Nancy argues that the trial court erroneously exerted personal jurisdiction over her both in her individual capacity and as trustee of the Edna H. Twyman Trust. ⁽¹⁾

We affirm.

Background

On September 13, 1999, Edna executed a trust that named her as the primary beneficiary. Edna's trust named her daughters, Nancy Twyman and Kathy Twyman Compton, as trustees. Section 7.08 of the trust contains a choice-of-law provision which states, "This trust instrument has been executed in the State of Texas, and all questions pertaining to its validity, construction and administration shall be determined in accordance with the laws of the State of Texas." The trust assets primarily resided in Texas, maintained by a Texas branch of Merrill Lynch.

On March 16, 2006, Nancy executed a promissory note payable to Kathy Twyman Compton, as a Trustee of the Trust, for $153,419 payable on or before May 31, 2007. Although the note contained a signature block for Edna, she did not sign it. Nancy later had Edna write her a note, saying that Edna was extending the promissory note for another year at the same terms as the original agreement. Merrill Lynch account documents in the record show that multiple checks were written from the trust to Nancy that total $99,100.

On August 18, 2008, appellee, William Earl Twyman, filed an "Application for Temporary Restraining Order, Temporary Injunction, For Removal of Trustee, Declaratory Judgment and Lawsuit for Damages." ⁽²⁾ William, Edna's son, filed the pleading as agent under power of attorney for Edna and sought to remove Nancy as trustee. William brought the suit pursuant to section 37.005 of the Texas Civil Practice and Remedies Code ⁽³⁾ to determine theft and conversion by Nancy and whether Nancy inflicted elder abuse on Edna. The pleadings asserted that Nancy has "illegally" acted as trustee, "converted hundreds of thousands of dollars from the Trust for her own use," and "built herself a home [and] paid contractors/suppliers to do work in her home, all using [Edna's] Trust funds." William further alleged that Nancy "has threatened, begged, and intimidated [Edna] into signing legal documents to make her actions appear justified and as though the theft was a legitimate loan, under a pretense of being done with [Edna's] knowledge and consent."

Nancy filed a special appearance stating that she is not a resident of Texas, does not engage and has not engaged in business in Texas, has not committed a tort in Texas, does not maintain a place of business in Texas and has no connection with Texas. Nancy attached her affidavit to her special appearance, stating that during the period of the trust administration (1999-present) she has lived outside of Texas. She further stated,

8. Since the Trust was created, my only contacts with the State of Texas have been occasional personal visits with my mother, telephone calls, and exchanging cards and letters. No Trust business has been transacted in the State of Texas.

9. All of the acts I perform as Trustee take place in the State of Georgia.

10. The assets of the Trust are (i) an investment portfolio maintained in an investment/brokerage account with the firm of Horner Townsend & Kent, Inc., of Horsham, Pennsylvania, and (ii) a promissory note dated March 16, 2006, executed in the State of Georgia, and according to its terms is to be ". . . construed under and enforced in accordance with the laws of the State of Georgia."

William filed a response, alleging that Nancy had committed a tort in Texas and had breached her fiduciary duty as trustee by wrongfully converting Texas trust funds for her own use and benefit. William further alleged that Nancy executed the trust agreement; the trust agreement provides that jurisdiction over the trust and its assets is in Texas; Nancy chose a Texas attorney for Edna and took her to see that attorney; Nancy has held and managed property in and through Texas; the trust's main account is located and managed by a Texas branch of Merrill Lynch; and Nancy accessed trust funds from Texas and transferred the funds to herself. Attached to the response is Edna's affidavit, in which she states:

2. The Trust attached to this Response to Special Appearance was drafted by Betty Adkins. Nancy Twyman traveled to Houston, chose her as the lawyer, had her draft the trust and asked me to sign it. I had no input in the choice of Betty Adkins or the jurisdiction of the trust being Texas. In fact, I had very little input in the trust at all, but executed it to hopefully buy peace in my family.

3. Recently Nancy took me to another lawyer named David Munson. She traveled to Texas, took me to this lawyer and had me write him a check for $5,000. A copy of the check is attached to this response to Special Appearance. She took me to him stating he was going to protect me and the lawyer proceeded to file a document which I paid for, to have me declared incompetent.

4. The hand written document which purports to be an extension of the promissory note created by Nancy Twyman was dictated by her to me. She wanted me to write it in my own handwriting. This document was dictated by her to me in Texas.

5. Nancy should be accountable as my Trustee in Texas. I should not have to travel to Georgia to get the money back that she took as my Trustee. She freely travels to Texas each time that she wants me to sign a document or go to a lawyer.

Also attached to the response is Williams's affidavit in which he states:

3. Since the execution of the Trust Agreement in 2000, Nancy Twyman, Individually and as Trustee has engaged in business in Texas by managing and handling Trust assets and has committed a tort, in its entirety by converting funds from that account in Harris County, Texas. The tort was, therefore, committed in whole or in part within the state. She is happy to convert assets of my mother in this state but not be held accountable in the state where she allegedly served as Trustee and used and abused that position to convert these funds.

4. I am personally familiar with Nancy Twyman's actions as Trustee. She has converted Trust funds for her own use by withdrawing funds from my mother's account. She has personally admitted to me that she took the funds, that she cannot pay them back. She has further had my mother execute documents in the State of Texas purporting to be loan documents to Nancy Twyman. The funds for the alleged loan came from the Texas Trust account.

On October 1, 2008, the trial court denied Nancy's special appearance.

Personal Jurisdiction

Whether a court has personal jurisdiction over a defendant is a question of law subject to de novo review. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002); Glattly v. CMS Viron Corp., 177 S.W.3d 438, 445 (Tex. App.--Houston [1st Dist.] 2005, no pet.). The trial court, however, must frequently resolve questions of fact before deciding the jurisdiction question. BMC Software, 83 S.W.3d at 794. If the trial court enters an order denying a special appearance and issues findings of fact and conclusions of law, we may review the findings of fact on legal and factual sufficiency grounds and review the conclusions of law de novo as a legal question. Silbaugh v. Ramirez, 126 S.W.3d 88, 94 (Tex. App.--Houston [1st Dist.] 2002, no pet.) (citing BMC Software, 83 S.W.3d at 794).

If the trial court does not issue findings of fact and conclusions of law, as here, "all facts necessary to support the judgment and supported by the evidence are implied." BMC Software, 83 S.W.3d at 795. In other words, if the trial court does not issue findings of fact, a reviewing court should presume that the trial court resolved all factual disputes in favor of its judgment. Tri-State Bldg. Specialties, Inc. v. NCI Bldg. Sys., L.P., 184 S.W.3d 242, 246 (Tex. App.--Houston [1st Dist.] 2005, no pet.) (citing American Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 806 (Tex. 2002)). These findings are not conclusive when the appellate record includes both the reporter's and clerk's records, and they may be challenged for legal and factual sufficiency on appeal. Id. To the extent that the underlying facts are undisputed, however, we conduct a de novo review. Glattly, 177 S.W.3d at 445.

Two requirements must be met before a Texas court can exercise personal jurisdiction over a nonresident defendant. First, the Texas long-arm statute must authorize the exercise of jurisdiction, and, second, the exercise of jurisdiction must be consistent with the guarantees of due process. Coleman, 83 S.W.3d at 806; Tri-State, 184 S.W.3d at 248.

The long-arm statute permits Texas courts to exercise personal jurisdiction over a nonresident ⁽⁴⁾ defendant who "does business" in Texas. Tex. Civ. Prac. & Rem. Code Ann. § 17.042 (Vernon 1997); BMC Software, 83 S.W.3d at 795. The statute lists three activities that constitute "doing business": (1) contracting with a Texas resident when either party is to perform the contract in whole or in part in Texas; (2) committing a tort in whole or in part in Texas; and (3) recruiting Texas residents for employment inside or outside of Texas. Tex. Civ. Prac. & Rem. Code Ann. § 17.042. This list, however, is not exclusive, ⁽⁵⁾ and the statute's "doing business" requirement is limited only by the requirements of federal due process guarantees. Koll Real Estate Group, Inc. v. Purseley, 127 S.W.3d 142, 146 (Tex. App.--Houston [1st Dist.] 2003, no pet.) (citing Schlobohm v. Schapiro, 784 S.W.2d 355, 356 (Tex. 1990)).

Because the language of the long-arm statute is broad, its requirements are considered satisfied if the exercise of personal jurisdiction comports with federal due process limitations. CSR, Ltd. v. Link, 925 S.W.2d 591, 594 (Tex. 1996). In practice, the two conditions are combined into one requirement of due process. Wright v. Sage Eng'g, Inc., 137 S.W.3d 238, 247 (Tex. App.--Houston [1st Dist.] 2004, pet. denied). Thus, the true determinative inquiry is one of federal constitutional due process. See id.; see also Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex. 1991).

With respect to personal jurisdiction, federal due process requires two things. First, the nonresident defendant must have purposefully established such minimum contacts with the forum state that the defendant could reasonably anticipate being sued there. Glattly, 177 S.W.3d at 447 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475-76, 105 S. Ct. 2174, 2183-84 (1985)). Second, if the nonresident defendant has purposefully established minimum contacts with the forum, the exercise of personal jurisdiction must also comport with traditional notions of fair play and substantial justice. Id. (citing Burger King, 471 U.S. at 475-76, 105 S. Ct. at 2183-84). As to fairness, the defendant bears the burden of presenting a "compelling case" that exercising jurisdiction over him would not be fair and just. See id. at 450. Only in rare cases, however, will a Texas court's exercise of personal jurisdiction not comport with fair play and substantial justice when the nonresident defendant has purposefully established minimum contacts with the forum state. Guardian Royal Exch. Assurance, 815 S.W.2d at 231.

A nonresident establishes minimum contacts with Texas by purposefully availing itself of the privileges and benefits inherent in conducting business in the state. Michiana Easy Livin'Country, Inc. v. Holten, 168 S.W.3d 777, 784 (Tex. 2005); Koll, 127 S.W.3d at 146. The touchstone of jurisdictional due process is "purposeful availment," i.e., "it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Michiana, 168 S.W.3d at 784 (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 1240 (1958)) (emphasis in Michiana). Three aspects of the requirement are important in this case, as in Michiana: (1) only the defendant's contacts with the forum count, not the unilateral activity of another party or person; (2) the acts relied on to establish jurisdiction must be "purposeful" rather than fortuitous; and (3) the defendant must seek some benefit, advantage, or profit by "availing" itself, or himself, of the jurisdiction. Id. at 785. It is the quality and nature of the defendant's contacts, rather than their number, that is important to the minimum-contacts analysis. Trigeant Holdings, Ltd. v. Jones, 183 S.W.3d 717, 725 (Tex. App.--Houston [1st Dist.] 2005, pet. denied). Random, fortuitous, or attenuated acts, or the unilateral acts of a third party, are not sufficient to confer personal jurisdiction. Id. Although not determinative, foreseeability is an important consideration in deciding whether a nonresident defendant has purposefully established minimum contacts. Glattly, 177 S.W.3d at 446-47.

The minimum contacts element of due process is further divided into specific and general personal jurisdiction. Id. at 447. A court may exercise specific jurisdiction over a nonresident defendant if his alleged liability arises from, or is related to, an activity conducted within the forum. Id. (citing CSR, 925 S.W.2d at 595). The contacts must be purposefully directed at the forum and have a "substantial connection" that results in the alleged injuries. Shell Compañia Argentina de Petroleo, S.A. v. Reef Exploration, Inc., 84 S.W.3d 830, 837 (Tex. App.--Houston [1st Dist.] 2002, pet. denied). We focus our analysis on the relationship among the defendant, the forum, and the litigation.  Id.

A court may exercise general jurisdiction over a nonresident defendant if the defendant's contacts with the forum state are continuous and systematic, even if the cause of action did not arise from or relate to the defendant's contacts with the forum. Glattly, 177 S.W.3d at 447. In confining one's activities to another forum, "a nonresident may purposefully avoid a particular jurisdiction by structuring its transactions so as neither to profit from the forum's laws nor be subject to its jurisdiction." Michiana, 168 S.W.3d at 785. For the court to have specific jurisdiction, the nonresident defendant must have established minimum contacts by purposefully availing itself of the privilege of conducting activities in Texas, and there must be a substantial connection between those contacts and the operative facts of the litigation. Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 576, 585 (Tex. 2007).

The plaintiff bears the initial burden of pleading sufficient allegations to bring a nonresident defendant within the provisions of the Texas long-arm statute. BMC Software, 83 S.W.3d at 793. A nonresident defendant challenging the court's exercise of personal jurisdiction through a special appearance carries the burden of negating all grounds for personal jurisdiction alleged by the plaintiff. Id.; Glattly, 177 S.W.3d at 446.

Analysis

In her first issue, Nancy argues that she is not amenable to jurisdiction in Texas. She specifically asserts that she is not a resident of Texas, that she has not done anything to establish minimum contacts with Texas, and that "all of her actions with regard to the Trust at issue and the allegations on which this action is founded occurred outside of the state of Texas." ⁽⁶⁾ Nancy further argues that the choice of law provision in the trust agreement is "simply expressing that Texas Law should apply to any questions or issues related to the Trust."

William relies on Burger King v. Rudzewicz to show that although a choice-of-law provision is not dispositive, it is an important indicator. See 471 U.S. 462, 105 S. Ct. 2174 (1985). In Burger King, the Supreme Court upheld jurisdiction in Florida over a Michigan franchisee because the franchise dispute arose directly from a contract that would have yielded numerous benefits in Florida, a substantial amount of information was transmitted to and from Florida, and the contract provided that the parties would be governed by Florida law. The Supreme Court stated,

Nothing in our cases . . . suggests that a choice-of-law provision should be ignored in considering whether a defendant has 'purposefully invoked the benefits and protections of a State's laws' for jurisdictional purposes. Although such a provision standing alone would be insufficient to confer jurisdiction, we believe that, when combined with the 20-year interdependent relationship Rudzewicz established with Burger King's Miami headquarters, it reinforced his deliberate affiliation with the forum State and the reasonable foreseeability of possible litigation there.

Id. at 482, 105 S. Ct. at 2187.

In Alenia Spazio, S.P.A. v. Reid, 130 S.W.3d 201 (Tex. App.--Houston [14th Dist.] 2003, pet. denied), the court discussed a contract between an Italian company and a Texas corporation that contained a Texas choice-of-law provision. Reid had asserted that, by agreeing to a Texas choice-of-law provision, Alenia availed itself of the benefits and protections of Texas law and consented to being sued in Texas. Our sister court disagreed, determining that agreeing to a Texas choice-of-law provision, without more, did not mean a party availed itself of any protection from Texas courts or voluntarily submitted to personal jurisdiction in Texas courts, absent an express understanding to that effect. Id. at 219; see also 3-D Elec. Co. v. Barnett Constr. Co., 706 S.W.2d 135, 145 n.9 (Tex. App.--Dallas 1986, writ ref'd n.r.e.) ("[A]lthough a 'choice of law' provision in a contract is significant in determining whether jurisdiction should be had in the forum state, such a provision cannot be construed as a voluntary submission by a defendant to the personal jurisdiction of the courts of the state in the absence of any express understanding to that effect.") (citations omitted). There was no evidence in Reid of an express understanding that Alenia submitted to the jurisdiction of Texas courts by executing the contract.

We agree that a choice-of-law provision, by itself, does not establish personal jurisdiction, although it is a consideration. See Burger King, 471 U.S. at 482, 105 S. Ct. at 2187; Preussag Aktiengesellschaft v. Coleman, 16 S.W.3d 110, 125 (Tex. App.--Houston [1st Dist.] 2000, pet. dism'd w.o.j.). Here, in addition to the choice-of-law provision requiring Texas law, and contrary to Nancy's assertions in her brief, the evidence also shows that Nancy came to Texas for the purpose of setting up a trust and taking Edna to a Texas attorney to sign the trust. It is alleged that Nancy managed the Texas trust, and its primary assets were held by a company doing business in Texas. She also signed a promissory note, payable to a co-trustee, that allegedly affects Edna's trust assets located in Texas. Nancy also traveled to Texas to have Edna sign a document extending the terms of the promissory note that Edna never signed. Nancy again traveled to Texas to take Edna to see a Texas attorney so that Edna could be declared incompetent, an act which, had it been successful, would have had ramifications for the trust. The allegations and evidence further show that Nancy received extensive trust funds from Edna's trust, the receipt of which could be a breach of her fiduciary duty. After considering all of this evidence, we conclude that Nancy established minimum contacts with Texas by purposefully availing herself of the benefits of Texas law.

For the trial court to exert specific jurisdiction over Nancy, there must be a substantial connection between Nancy's contacts with Texas and the operative facts of the litigation. See Moki Mac, 221 S.W.3d at 576. The operative facts of the litigation surround Nancy's alleged breach of fiduciary duty, which involves taking Edna's trust assets for herself. The situs of the trust is Texas. Nancy traveled to Texas a number of times to facilitate business with the trust, and the evidence suggests that she came to Texas to further her alleged breaches of fiduciary duty. It is further alleged that Nancy withdrew funds from Texas to pay herself and that the promissory note that may affect the trust was illegal. None of these allegations have been contradicted. We conclude that a substantial connection exists between Nancy's contacts with Texas and the operative facts of the litigation. We further conclude that Nancy had the requisite minimum contacts with Texas to be subject to specific jurisdiction.

Because Nancy had the requisite minimum contacts with Texas, we next determine whether the exercise of jurisdiction comports with traditional notions of fair play and substantial justice. Nancy had the burden to present a "compelling case" that exercising personal jurisdiction over her would not comport with fair play and substantial justice. See Guardian Royal Exchange Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 231 (Tex. 1991). The fairness inquiry is judged by a "stringent standard" and is met only in "rare cases." Id. On appeal, Nancy makes no argument that exercising jurisdiction over her would offend traditional notions of fair play and substantial justice. Accordingly, we conclude that this point is waived. See Tex. R. App. P. 33.1; Glattly, 177 S.W.3d at 451. Even if the point were not waived, we would necessarily conclude that, based on her contacts with Texas, exercising jurisdiction over Nancy would not offend traditional notions of fair play and substantial justice.

We overrule Nancy's sole issue.

Conclusion

We affirm the trial court's order that denied Nancy's special appearance.

Evelyn V. Keyes

Justice

Panel consists of Justices Jennings, Keyes, and Higley.

1.

Although Nancy asserts that the trial court erred in exerting jurisdiction over her both in her individual capacity and as trustee, in her brief, Nancy does not explain her argument regarding capacity. Rather, her brief is limited to a general complaint that the trial court erred in exerting jurisdiction over her.

2. On August 20, 2008, the trial court granted a temporary restraining order. At a later hearing, the trial court granted a temporary injunction and appointed a receiver for the trust funds. The appeal of the injunction order and the receiver order is currently pending in this Court in cause number 01-08-00904-CV.

3. See Tex. Civ. Prac. & Rem. Code Ann. § 37.005 (Vernon 2008). Section 37.005 provides,

A person interested as or through an executor or administrator, including an independent executor or administrator, a trustee, guardian, other fiduciary, creditor, devisee, legatee, heir, next of kin, or cestui que trust in the administration of a trust or of the estate of a decedent, an infant, mentally incapacitated person, or insolvent may have a declaration of rights or legal relations in respect to the trust or estate:

(1) to ascertain any class of creditors, devisees, legatees, heirs, next of kin, or others;

(2) to direct the executors, administrators, or trustees to do or abstain from doing any particular act in their fiduciary capacity;

(3) to determine any question arising in the administration of the trust or estate, including questions of construction of wills and other writings; or

(4) to determine rights or legal relations of an independent executor or independent administrator regarding fiduciary fees and the settling of accounts.

Id.

4. A "nonresident" includes "an individual who is not a resident of [Texas]" and "a foreign corporation, joint-stock company, association, or partnership." Tex. Civ. Prac. & Rem. Code Ann. § 17.041 (Vernon 1997).

5. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002)

.

6.

In her brief, Nancy argues that the "record does not support a finding that the trust situs is located in Harris County, Texas." Nancy relies on section 115.002(b) of the Texas Property Code. See Tex. Prop. Code Ann. § 115.002 (Vernon 2007). In his response to Nancy's special appearance motion, William stated, "Venue over Nancy Twyman is proper pursuant to Section 115.002 in that during the period of the conversion by Nancy, multiple trustees were serving and the situs of the Trust was Kingwood, Harris County, Texas." We decline to address Nancy's challenge to venue because no venue challenge was made to the trial court.