Today’s opinions involved jurisdiction over out-of-state corporate officers, the reasons that a trial court must give to grant a new trial, and what happens if a district court with exclusive jurisdiction tries to transfer away a trust case.
Today’s only signed opinion was authored by Justice Guzman — her first on the Texas Supreme Court.
Personal jurisdiction over corporate officers requires an allegation that they committed tortious acts connected Texas
Dan Kelly and Laura Hofstatter v. General Interior Construction, Inc., No. 08?0669 [more info]
In this case, the Texas Supreme Court addressed when a Texas court has personal jurisdiction over officers of an out-of-state corporation who are alleged to have violated a Texas statute. Justice Guzman wrote the opinion for a unanimous Court.
The two petitioners were the “sole shareholders and officers” of Diva, an Arizona-based corporation that was hired to help renovate a Houston hotel. Because the job was based in Texas, there were several contacts between Diva and the state:
Diva then entered into subcontracting agreements with various companies, including Texas-based GIC, to perform the work. During construction Kelly made several trips to Houston to oversee the project. Diva also sent change orders and payments to and received invoices from these Texas companies, while receiving funds from Meristar to pay for the work.
Disputes over the quality of work led to a lawsuit in Texas. And one of the claims alleged was aimed at the corporate officers individually — a claim under the Texas Trust Fund Act, which makes corporate officers “trustees” for certain funds that pass through their hands during a construction project. (( The Texas Trust Fund Act can be found in Chapter 162 of the Texas Property Code. ))
The corporate officers filed a special appearance, arguing that the Texas courts did not have personal jurisdiction over them (as distinguished from Diva, their corporation).
The court of appeals held that there was personal jurisdiction over these corporate officers because the statute imposed individual liability on them.
With today’s opinion, the Texas Supreme Court reversed. Although the Court agreed that the statute in question could impose individual liability on corporate officers, it noted that “the mere existence of a cause of action does not automatically satisfy jurisdictional due process concerns.”
Instead, the Court explained that the wrongful acts must be alleged to have Texas connections:
GIC failed to plead facts within the reach of the long-arm statute because it did not allege that the Officers committed any tortious acts in Texas. As noted, GIC’s live pleading contains no allegations that the Officers’ wrongdoing occurred in Texas. Regarding the fraud claim, GIC did allege several fraudulent acts (e.g., providing false affidavits to Meristar and misrepresenting to GIC that it would be paid in full), but it did not allege that any fraudulent acts occurred in Texas. Regarding the trust-fund claims, GIC did not allege that the Officers used or retained the trust funds in Texas, nor that they submitted false affidavits to Meristar in Texas. Thus, although GIC has alleged two claims of wrongdoing, it has not alleged that any acts giving rise to these two claims occurred in Texas.
Because the plaintiff here had failed to carry its burden, the Texas Supreme Court reversed and rendered judgment of dismissal for these corporate officers for lack of personal jurisdiction.
Because district courts have “exclusive jurisdiction” over certain trust actions, judgments rendered by other trial courts are void
Johnny Carroll, Individually and as Trustee of the Johnny Carroll Trust v. Letha Frances Carroll and Donald Carroll, No. 08?0644 [more info]
In this per curiam opinion, the Texas Supreme Court applies the statute vesting “exclusive jurisdiction” over certain trust actions in the district courts.
This action was originally filed in district court in Hill County, but it was then transferred to the county court at law. (( Texas has several different types of trial courts, as established by the Legislature. The district court is the one that is the most familiar. There are county courts at law, and some counties have statutory probate courts or family courts. The homepage of the Texas state court system features a rough diagram showing some of these possibilities [or see a PDF]. ))
The county court at law rendered a partial summary judgment removing the trustee, and then ultimately awarded $1 million in damages and $2.8 million in exemplary damages.
The trustee appealed. The court of appeals struck the exemplary damage award but affirmed the rest.
For the first time in the Texas Supreme Court, the trustee argued that the underlying judgment was void because the county court at law never had subject-matter jurisdiction over the case. The Texas Supreme Court agreed, concluding that the statute vested “exclusive” jurisdiction in the district court.
Because this was a question of subject-matter jurisdiction, it could be raised for the first time even in the Texas Supreme Court. The Court thus reversed and vacated the county court’s judgment, sending the case back to the district court.
Another application of Columbia Medical Center, requiring trial courts to specify their reasons for granting new trial of a jury verdict
In re United Scaffolding, Inc., No. 09?0403 [more info]
In this per curiam opinion, the Texas Supreme Court granted mandamus relief against a trial court’s order granting a new trial because the order did not adequately specify its reasons.
In today’s opinion, the Court reiterated that it cannot “presume the trial court granted the new trial on grounds asserted in the motion.” Instead, the trial court must specify its own reasons for granting new trial.