Y. Gina Lisitsa and Lisitsa Law Corporation v. Florina Flit

Reversed and Remanded and Opinion filed December 10, 2013.
In The
Fourteenth Court of Appeals
NO. 14-13-00126-CV
Y. GINA LISITSA AND LISITSA LAW CORPORATION, Appellants
V.
FLORINA FLIT, Appellee
On Appeal from the 333rd District Court
Harris County, Texas
Trial Court Cause No. 2011-51599
OPINION
In this dispute with a client over settlement proceeds, the trial court denied
the special appearance of a California lawyer and her law firm, appellants Y. Gina
Lisitsa and Lisitsa Law Corporation. In five issues, appellants complain that the
trial court erred in denying the special appearance because it lacks specific
jurisdiction over appellants. We reverse and remand for proceedings consistent
with this opinion.
Background
Lisitsa is a California resident and a partner of Lisitsa Law Corporation, a
law firm in Los Angeles, California. Lisitsa represented appellee Florina Flit, then
a California resident, in a landlord-tenant dispute in California. The case settled in
2006, and the proceeds were deposited into Lisitsa’s client trust account.
According to Flit, Lisitsa represented that she would retain the settlement proceeds
and distribute the funds to Flit at her request.
In September 2008, Flit informed Lisitsa she was moving to Texas. Flit
asserts she requested the remainder of the settlement funds from Lisitsa, but Lisitsa
insisted on maintaining the funds in the client trust account and making deposits
into Flit’s Bank of America account upon Flit’s request. To assist Flit in buying a
home in Texas, Lisitsa sent a letter to a Texas mortgage company confirming that
Flit’s funds were being held in trust. After she moved to Texas, Flit asked Lisitsa
several times to deposit funds into Flit’s Bank of America account.1 Flit eventually
requested an accounting from Lisitsa, which Lisitsa prepared in California and
mailed to Flit in Texas.
Flit was dissatisfied with the accounting and filed suit against appellants,
bringing claims for breach of fiduciary duty, fee forfeiture, and an accounting.
Appellants filed a special appearance, asserting that the trial court lacked specific
jurisdiction over them. Lisitsa submitted an affidavit in support of her special
appearance, attesting that:
She is a California resident and an attorney licensed to practice law in
California.
She is a partner and member of Lisitsa Law Corporation, which has
1
Although Flit pleaded the funds were deposited into a Texas bank account, she later
conceded the funds were deposited in California into Flit’s California bank account.
2
only one office, located in Los Angeles, California.
Neither she nor the law firm maintains a place of business, owns real
estate or personal property, or maintains bank accounts, telephone
numbers, or post office boxes in Texas.
Neither she nor the law firm has advertised in Texas, represented
Texas residents, or solicited business within Texas.
Flit subsequently amended her petition to add claims for negligence and
gross negligence, but did not otherwise respond to the special appearance. Flit
argued at the hearing on the special appearance and in a post-submission brief that
the trial court had personal jurisdiction over Lisitsa based on (1) correspondence
Flit and her counsel sent from Texas to Lisitsa, (2) Lisitsa’s deposits made in
California into Flit’s bank account, (3) Lisitsa’s response to Flit’s request for an
accounting that Lisitsa mailed to Flit in Texas, (4) damages Flit allegedly sustained
in Texas resulting from Lisitsa’s alleged conduct, and (5) deemed admissions
against Lisitsa. The trial court denied the special appearance.
Discussion
In five issues, appellants challenge the trial court’s denial of their special
appearance because (1) appellants did not waive their special appearance, (2) Flit
failed to plead sufficient jurisdictional allegations, (3) Lisitsa’s purported contacts
with Texas were all the result of Flit’s unilateral decision to move there, and
(4) deemed admissions do not support a finding of jurisdiction. We conclude
appellants did not waive their special appearance by making a general appearance
and appellants’ purported contacts with Texas are not sufficient to confer specific
jurisdiction on the trial court. Because this holding is dispositive, we need not
address whether Flit pleaded sufficient jurisdictional facts to bring appellants
3
within the terms of the Texas long-arm statute.2 See Tex. Civ. Prac. & Rem. Code
§ 17.042.
I. No General Appearance
In their fifth issue,3 appellants argue they did not waive their special
appearance by making a general appearance in the case first. Flit argues that
appellants waived their jurisdictional challenge when Lisitsa sent a letter to a court
reporting service in Texas and filed a motion to quash in California.4
A party may file a special appearance challenging the personal jurisdiction
of the court, provided that the party does not make a general appearance in the case
first. Tex. R. Civ. P 120a(1); see also Exito Electronics Co. v. Trejo, 142 S.W.3d
302, 305 (Tex. 2004). Every appearance, prior to judgment, not in compliance
with Texas Rule of Civil Procedure 120a is a general appearance. Tex. R. Civ. P.
120a(1). The Supreme Court of Texas has stated that a party enters a general
appearance whenever it invokes the judgment of the court on any question other
than the court’s jurisdiction, engages in acts that recognize an action is properly
pending, or seeks affirmative action inconsistent with a jurisdictional challenge.
See Trejo, 142 S.W.3d at 306-07; see also Knight Corp. v. Knight, 367 S.W.3d
2
Texas courts may exercise personal jurisdiction over a nonresident if the Texas long-
arm statute authorizes the exercise of jurisdiction and the exercise of jurisdiction is consistent
with federal and state constitutional due-process guarantees. Moncrief Oil Int’l Inc. v. OAO
Gazprom, No. 11-0195, 2013 WL 4608672, at *3 (Tex. Aug. 30, 2013). Under the Texas long-
arm statute, the plaintiff bears the initial burden of pleading allegations sufficient to confer
jurisdiction. Id. The long-arm statute allows the exercise of personal jurisdiction over a
nonresident defendant who “commits a tort in whole or in part in this state.” Id. (citing Tex. Civ.
Prac. & Rem. Code § 17.042(2)).
3
We discuss the issues out of order for organizational purposes.
4
Flit had subpoenaed Lisitsa’s Bank of America records for the purpose of obtaining
discovery in this lawsuit. Lisitsa sent the letter to the court reporter on November 12, 2011 and
filed the motion to quash in December 2011. Lisitsa filed her special appearance on January 11,
2012. The letter and motion to quash both were in response to the subpoena.
4
715, 723 (Tex. App.—Houston [14th Dist.] 2012, no pet.). When correspondence
from a party, its agent, or attorney does none of these things, it is not a general
appearance and does not waive a special appearance under Rule 120a. See, e.g.,
N803RA, Inc. v. Hammer, 11 S.W.3d 363, 367 (Tex. App.—Houston [1st Dist.]
2000, no pet.) (holding even though letter to district court clerk constituted answer
to suit, it did not waive special appearance because it challenged jurisdiction);
Moore v. Elektro-Mobil Technik GmbH, 874 S.W.2d 324, 327 (Tex. App.—El
Paso 1994, writ denied) (holding letter from defendant’s insurer purporting to
quash service of process was not a general appearance because it “contain[ed]
nothing acknowledging the court’s jurisdiction or requesting affirmative action
from the court”). Although an act of a defendant may have some relation to the
case, it does not constitute a general appearance if it in no way recognizes that the
case is properly pending, or that the court has jurisdiction, and no affirmative
action is sought from the court that is inconsistent with a jurisdictional challenge.
Moore, 874 S.W.2d at 327 (citing Investors Diversified Servs., Inc. v. Bruner, 366
S.W.2d 810, 814–15 (Tex. Civ. App.—Houston 1963, writ ref’d n.r.e.)); cf. Trejo,
142 S.W.3d at 306-07 (holding motions related to discovery on special appearance
did not constitute general appearances because they were not “request[s] for
affirmative relief inconsistent with the jurisdictional challenge”).
In her letter, Lisitsa asked the court reporter to “please accept this letter as a
Special Appearance for purposes of quashing any service of process on me
personally and on behalf of Lisitsa Law Corp.” Lisitsa included a “Waiver of
Notice” that was sent to her by Flit’s attorney, to be returned to the court reporter.5
Lisitsa signed the Notice of Waiver and checked boxes that state, “I do not agree to
waive the notice period” and “We will be issuing cross-questions, filing objections,
5
It is unclear from the form whether the notice is given, or to be waived, under California
law or Texas law. See Cal. Civ. Proc. Code § 1985.3(e).
5
and/or a motion.” The letter and its attachment do not seek affirmative action from
the court or acknowledge the court’s jurisdiction. See Hammer, 11 S.W.3d at 367;
see also Moore, 874 S.W.2d at 327. Similarly, it is unclear how a motion to quash
filed in California could seek affirmative action from the Texas trial court or
acknowledge its jurisdiction. The motion sought to quash a subpoena served on
Bank of America seeking Lisitsa’s bank records on the ground that the subpoena
did not comply with California law
Under Rule 120a, “[t]he issuance of process for witnesses, the taking of
depositions, the serving of requests for admissions, and the use of discovery
processes, shall not constitute a waiver of such special appearance.” Tex. R. Civ. P.
120a(1). This language is not limited to jurisdictional discovery. The two
Houston-based courts of appeals have held that a defendant’s participation in
merits discovery without having any motions regarding that discovery heard before
the special appearance does not constitute a general appearance waiving that
defendant’s special appearance. See Horowitz v. Berger, 377 S.W.3d 115, 123–24
(Tex. App.—Houston [14th Dist.] 2012, no pet.); Silbaugh v. Ramirez, 126 S.W.3d
88, 93 (Tex. App.—Houston [1st Dist.] 2002, no pet.). Presuming for the sake of
argument that the letter and motion to quash filed in California related to merits
discovery, such participation in merits discovery would not constitute a general
appearance. See Horowitz, 377 S.W.3d at 123–24; Silbaugh, 126 S.W.3d at 93.
Flit also asserts that Lisitsa waived her special appearance because she filed
the letter and motion to quash before her special appearance and because these
documents are pleas, pleadings, or motions filed before the special appearance.
See Tex. R. Civ. P. 120a(1) (“Such special appearance shall be made by sworn
motion filed prior to motion to transfer venue or any other plea, pleading or
motion.”) (emphasis added). But the letter to the court reporter was not filed in any
6
court, and the motion to quash was filed in a California proceeding rather than in
the Texas lawsuit. Lisitsa did not waive her special appearance by failing to
observe the due-order-of-pleading requirement. See Trejo, 142 S.W.3d at 305;
Horowitz, 377 S.W.3d at 123.
We conclude appellants did not waive their special appearance by sending a
letter to a court reporter in Texas or filing a motion to quash a subpoena seeking
bank records in California. We sustain appellants’ fifth issue.
II. No Specific Jurisdiction
Whether a court has personal jurisdiction over a defendant is a question of
law we review de novo. Moncrief Oil Int’l Inc. v. OAO Gazprom, No. 11-0195,
2013 WL 4608672, at *3 (Tex. Aug. 30, 2013). When, as here, the trial court does
not issue findings of fact or conclusions of law, we imply all facts necessary to
support the trial court’s ruling that are supported by the evidence. Id.
Personal jurisdiction over nonresident defendants satisfies the constitutional
requirements of due process when the defendant has purposefully established
minimum contacts with the forum state and the exercise of jurisdiction is
consistent with traditional notions of fair play and substantial justice. Id.; Retamco
Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 337 (Tex. 2009). A
defendant establishes minimum contacts with a forum if the defendant has
purposely availed itself of the privilege of conducting activities within the forum
state, thus invoking the benefits and protections of its laws. Moncrief, 2013 WL
4608672, at *3; Retamco, 278 S.W.3d at 337. A defendant’s minimum contacts
may give rise to either specific jurisdiction or general jurisdiction. Moncrief, 2013
WL 4608672, at *3; Retamco, 278 S.W.3d at 337. Here, Flit’s asserted basis for
jurisdiction is specific jurisdiction.
7
When specific jurisdiction is asserted, our analysis focuses on the
relationship among the defendant, Texas, and the litigation to determine whether
the plaintiff’s claim arises from Texas contacts. Moncrief, 2013 WL 4608672, at
*3. We analyze minimum contacts for specific jurisdiction on a claim-by-claim
basis, unless all claims arise from the same forum contacts. Id. at *4. Here, Flit’s
claims for breach of fiduciary duty, negligence and gross negligence, fee forfeiture,
and accounting are all based on the same purported contacts with Texas.6
To assess whether a nonresident defendant has purposely availed itself of the
privilege of conducting activities in Texas, we consider three factors. Id.;
Retamco, 278 S.W.3d at 338. First, only the defendant’s own actions are relevant,
not the unilateral activities of another party or a third party. Moncrief, 2013 WL
4608672, at *4; Retamco, 278 S.W.3d at 339. Second, a showing of random,
isolated, or fortuitous contacts is insufficient. Moncrief, 2013 WL 4608672, at *4;
Retamco, 278 S.W.3d at 339. Third, a defendant must seek some benefit,
advantage, or profit by availing herself of the jurisdiction. Moncrief, 2013 WL
4608672, at *4; Retamco, 278 S.W.3d at 339. We assess the quality and nature of
the contacts, not the quantity. Moncrief, 2013 WL 4608672, at *5; Retamco, 278
S.W.3d at 339. At its core, the purposeful availment analysis seeks to determine
whether a nonresident’s conduct and connection to a forum are such that she could
reasonably anticipate being haled into court there. Moncrief, 2013 WL 4608672, at
*5.
A. Torts Directed at Texas Not a Basis for Jurisdiction
In their second and third issues, appellants argue their contacts with Texas
arose from Flit’s unilateral decision to move to the state and Flit is asking the court
6
Flit supplemented her petition after this interlocutory appeal was filed to add claims for
fraudulent transfer and conspiracy. These claims are not the subject of this appeal.
8
to sustain jurisdiction based on appellants’ purportedly “directing a tort” at Texas.
Flit contends appellants made sufficient minimum contacts with Texas to support
the trial court’s exercise of specific jurisdiction by (1) agreeing to provide
“ongoing fiduciary financial services” to Flit in Texas; (2) “soliciting” contacts
from Flit in Texas by telephone, fax, or email; (3) providing a “false, incorrect and
incomplete accounting of fiduciary funds” to Flit in Texas and sending a letter to a
mortgage company in Texas on Flit’s behalf; and (4) engaging in the unauthorized
practice of law in Texas. Appellants assert their relationship with Flit “arose from
[Lisitsa’s] representation of Flit in California litigation that resulted in a settlement
in California while Flit was a California resident.”
Texas’s interest in protecting its citizens against torts is insufficient to
automatically exercise personal jurisdiction upon an allegation that a nonresident
directed a tort from outside the forum against a resident. Id.; Michiana Easy Livin’
Country, Inc. v. Holten, 168 S.W.3d 777, 789–90 (Tex. 2005). The focus is
properly on the extent of the defendant’s activities in the forum, not the residence
of the plaintiff. Moncrief, 2013 WL 4608672, at *9; Michiana, 168 S.W.3d at
789-90. Thus, alleged tortious conduct outside of Texas against a Texas resident is
insufficient to confer specific jurisdiction. Moncrief, 2013 WL 4608672, at *9;
Michiana, 168 S.W.3d at 789-90.
Fiduciary Financial Services. Flit argues that Lisitsa committed a tort in
Texas by providing fiduciary financial services to Flit in Texas. The underlying
basis for this claim is that when both parties were still in California, Lisitsa said
she would continue to maintain Flit’s settlement proceeds in the law firm’s trust
account and send funds to Flit when requested. Thus, the only change to the
parties’ relationship was the direct result of Flit’s unilateral decision to move to
Texas. We cannot consider this unilateral activity of Flit in our jurisdictional
9
analysis. See Moncrief, 2013 WL 4608672, at *9; Michiana, 168 S.W.3d at 789.
However, Flit argues this purported provision of fiduciary financial services
to Flit in Texas was a new contract “intended to generate multiple contacts with
Texas.” The mere act of contracting with a Texas resident does not give rise to
specific jurisdiction in Texas: performance must be due in Texas. See Bryan v.
Gordon, 384 S.W.3d 908, 917-18 (Tex. App.—Houston [14th Dist.] 2012, no pet.).
Here, Flit has not alleged any performance of fiduciary financial services by Lisitsa
in Texas. Flit’s settlement proceeds were kept in a bank account in California, and
all of the deposits into Flit’s bank account were made in California. These are not
Texas contacts. See id. Moreover, an allegation of wrongdoing by a fiduciary
against a Texas resident is not, by itself, enough to support specific jurisdiction.
Id.; see also Bergenholtz v. Cannata, 200 S.W.3d 287, 291-92, 295-97 (Tex.
App.—Dallas 2006, no pet.) (holding Texas courts lacked specific jurisdiction over
plaintiff’s breach of fiduciary duty and other tort claims against his California
lawyers, despite fact that plaintiff was located in Texas when he received lawyers’
communications and advice, signed a fee agreement, and paid the lawyers’ bills).
Flit also argues Lisitsa refused to give Flit her money before she moved to
Texas because Lisitsa “wanted to have Flit as a client in Texas.” Assuming the
truth of this allegation, the fact that an attorney has a client in Texas does not give
rise to personal jurisdiction in Texas. See, e.g., Proskauer Rose LLP v. Pelican
Trading, Inc., No. 14-08-00283-CV, 2009 WL 242993, at *4 (Tex. App.—Houston
[14th Dist.] Feb. 3, 2009, no pet.) (mem. op.) (“[N]either the mere existence of an
attorney-client relationship between a resident client and an out-of-state attorney
nor the routine correspondence and interactions attendant to that relationship are
enough to confer personal jurisdiction.”); Markette v. X-Ray X-Press Corp., 240
S.W.3d 464, 468 n.2 (Tex. App.—Houston [14th Dist.] 2007, no pet.) (same). Flit
10
argues that Proskauer and Markette are distinguishable because here Lisitsa
purposely solicited a relationship with Flit in Texas.7 That characterization does
not fit the facts. Flit moved to Texas when the parties had a preexisting
relationship, and Flit requested payments from the trust account along with the
accounting, which Lisitsa subsequently mailed to her. The fortuity of where Flit
was located when that happened is irrelevant to our analysis. See Bryan, 384
S.W.3d at 917 (concluding “disposition of the jurisdictional question should not
turn on” where a plaintiff signed a contract and noting “the purposeful-availment
analysis should not turn on the fortuity of where the Texas resident was physically
located when the defendant e-mailed the contract or when the defendants made
allegedly actionable misrepresentations by e-mail”); see also Moncrief, 2013 WL
4608672, at *9 (holding defendants’ alleged tortious conduct in California against
a Texas resident was insufficient to confer specific jurisdiction over defendants as
to plaintiff’s tortious interference claims).
Flit’s Contacts with Lisitsa. Flit also argues that Lisitsa “solicited”
contacts from Flit by instructing her to contact Lisitsa from Texas by telephone,
fax, or email. The fact that Flit communicated with Lisitsa while Flit was in Texas
is also the direct result of Flit’s unilateral decision to move to Texas. We cannot
agree that Lisitsa “solicited” contacts with Texas by continuing the parties’
relationship that originated in California. See Proskauer Rose, 2009 WL 242993,
at *4; Markette, 240 S.W.3d at 468 n.2. Lisitsa merely instructed Flit to contact
her when she needed funds, without regard to where Flit was located.
Accordingly, Flit’s contacts with Lisitsa do not support a finding of specific
7
We conclude the facts in the present case are sufficiently similar to those presented in
Proskauer and Markette. See Proskauer Rose, 2009 WL 242993, at *4 (“[T]he Markette
appellee and the appellees in this case make the same argument—that an out-of-state attorney’s
communication into Texas . . . containing alleged misrepresentations or omissions, constitutes
purposeful availment. We rejected this argument in Markette, and we do so again today.”).
11
jurisdiction. See Moncrief, 2013 WL 4608672, at *9; see also Falcon Crest
Aviation Supply, Inc. v. Jet Mgmt., LLC, No. 14-11-00789-CV, 2012 WL 4364661,
at *3 (Tex. App.—Houston [14th Dist.] Sept. 25, 2012, no pet.) (mem. op.) (“We
must disregard any unilateral activities of [the plaintiff] for purposes of our
minimum contacts analysis.”).
Correspondence Sent to Texas. Similarly, as discussed above, that Flit
requested an accounting that Lisitsa prepared in California and mailed to Flit in
Texas does not give rise to specific jurisdiction in Texas. See, e.g., Bryan, 384
S.W.3d at 917; Markette, 240 S.W.3d at 468 (“The operative facts of the
underlying litigation will focus primarily on [defendant attorney’s] legal advice,
not the communication of that advice to Texas, and thus specific jurisdiction does
not arise in this case.”). Moreover, Lisitsa’s letter that was sent to a Texas
mortgage company was at Flit’s behest and does not support a finding of personal
jurisdiction. See Falcon Crest, 2012 WL 4364661, at *2 n.3. Preparing the
accounting and letter reflect services Lisitsa performed in California, not Texas.
See Proskauer Rose, 2009 WL 242993, at *4. These contacts do not support a
finding of jurisdiction.
Practicing Law in Texas. Flit also argues that Lisitsa practiced law in
Texas by sending the letter to the court reporter on behalf of the law firm. Even if
this were true, it would not support a finding of specific jurisdiction because it
occurred after Flit filed her lawsuit, and thus Flit’s alleged liability did not arise out
of or relate to this contact with Texas. See Moncrief, 2013 WL 4608672, at *8.
We conclude the above purported contacts with Texas all arose from Flit’s
unilateral decision to move to Texas and Flit’s claims are based on appellants’
purportedly directing a tort at Texas, which does not support a finding of specific
jurisdiction. We sustain appellants’ second and third issues.
12
B. Deemed Admissions Not in Support of Jurisdiction
In their fourth issue, appellants argue that the deemed admissions in this case
do not support a finding of jurisdiction because they are germane only to the
ultimate issue of liability and the trial court abused its discretion in refusing to
strike the deemed admissions.8 Flit claims that the following deemed admissions
support the jurisdictional finding: Lisitsa admitted she failed to provide an
accounting and intentionally and knowingly breached fiduciary duties to Flit.9
These merit-based admissions do not support a finding of jurisdiction over Lisitsa.
See Weldon-Francke v. Fisher, 237 S.W.3d 789, 792 (Tex. App.—Houston [14th
Dist.] 2007, no pet.) (“In conducting a personal-jurisdiction analysis, we review the
claims in question and the evidence regarding the jurisdictional facts, but we do
not adjudicate the merits of the claims.”); see also Bryan, 384 S.W.3d at 918
(holding court could not consider “contentions concern[ing] the merits of
[plaintiff’s] cause of action rather than the minimum contacts requisite to personal
jurisdiction”).
We sustain appellants’ fourth issue with regard to the argument that the
deemed admissions do not support a finding of jurisdiction. We do not address
appellants’ challenge to trial court’s denial of appellants’ motion to strike the
deemed admissions because that is not necessary to the disposition of this
interlocutory appeal.10
8
Flit argues Lisitsa waived this issue because she did not object in the trial court to the
relevance of the deemed admissions. Lisitsa, however, does not argue that the trial court abused
its discretion in admitting the deemed admissions. Instead, she argues the deemed admissions
are not evidence of any contacts with Texas that would support a finding of jurisdiction.
9
“Texas” is not mentioned in the requests for admission.
10
Interlocutory orders of a district court denying a special appearance generally are
appealable. Tex. Civ. Prac. & Rem. Code § 51.014(a)(7). When a litigant challenges both
appealable and unappealable interlocutory orders, we review the portion of an order which is
13
Conclusion
We conclude that appellants did not waive their special appearance and their
purported contacts with Texas are not sufficient to confer specific jurisdiction on
the trial court. We reverse the trial court’s order denying appellants’ special
appearance and remand this case for further proceedings consistent with this
opinion.11
/s/ Martha Hill Jamison
Justice
Panel consists of Chief Justice Frost and Justices Boyce and Jamison.
appealable but do not consider the portion which is not. Waite v. Waite, 64 S.W.3d 217, 224 n.6
(Tex. App.—Houston [14th Dist.] 2001, pet. denied).
11
We do not render judgment dismissing the case for lack of personal jurisdiction
because Flit’s claims brought in her supplemental petition are not before us on appeal. See
Moncrief, 2013 WL 4608672, at *4 (“[S]pecific jurisdiction requires us to analyze jurisdictional
contacts on a claim-by-claim basis.”).
14