Date: 07-10-2017

Case Style:

Case Number: 02-16-00313-CV

Judge: Terrie Livingston

Court: Texas Court of Appeals, Second District on appeal from the 17th District Court of Tarrant County

Plaintiff's Attorney: James Pikl and Byron Henry for Ashok B. Patel, et al.

Defendant's Attorney: Jules Peter Slim for Roger Pate

Description: The resolution of this interlocutory appeal from the denial of special
appearances turns on an application of the burden-shifting standards described
in Kelly v. General Interior Construction, Inc., 301 S.W.3d 653, 658–59 (Tex.
1See Tex. R. App. P. 47.4.
2
2010). Because the appellees in this case brought forward legally and factually
sufficient evidence in support of their jurisdictional allegations, we affirm.
Factual and Procedural Background
Roger Pate, through his company Pate Development, Inc. (together, Pate),
is a general contractor who invested in and helped develop several hotel
properties with Ramesh, Amrit, Naresh, Ashok, and Manilal Patel. In 2005 and
2007, they formed various entities to own and invest in these projects, including
Nextgen Hospitality, LLC, Lotustel Group, LLC, Premier Hotels Group, Inc.,
Bridged Hybrid Financing, LLC, and Premium Hotel Management, Inc. (the Hotel
Entities). According to Roger, all of the Hotel Entities engaged Pate to develop
hotels.
Around 2011, an accounting dispute arose among Pate and the members
of the Hotel Entities. Eventually, Pate sued the Hotel Entities and the Patels
individually alleging that they engaged him “for procurement, development, or
rehabilitation” of hotel property and did not pay him what they promised. He also
sought reimbursement of part of his capital contribution to Nextgen, which he
contended that he had overpaid. Pate brought causes of action for breach of
contract, quantum meruit, fraud by representation and omission, negligent
misrepresentation, an accounting of all capital contributions to the Hotel Entities,
a declaratory judgment of his rightful ownership interests in each respective
entity, and dissolution of all the Hotel Entities; Pate also sought attorney’s fees
and exemplary damages.
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Nonresidents2 Ramesh, Naresh, Ashok, and Manilal (the Nonresidents)
each filed a special appearance, in which they denied ever conducting business
in Texas in their individual capacities and denied ever committing a tort in
Texas.3 The trial court held a series of evidentiary hearings on the special
appearances, and––in between the second and third hearings––Pate filed a
second amended petition alleging facts to support the exercise of personal
jurisdiction over the Nonresidents. After the third evidentiary hearing, the trial
court denied the special appearances as to all of the Nonresidents, and they filed
this accelerated interlocutory appeal. See Tex. Civ. Prac. & Rem. Code
Ann. § 51.014(a)(7) (West Supp. 2016). Neither party requested findings of fact
and conclusions of law.
Standard of Review
Whether a trial court has personal jurisdiction over a defendant is a
question of law, which we review de novo based on all of the evidence. Moki
Mac River Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex. 2007); TravelJungle
v. Am. Airlines, Inc., 212 S.W.3d 841, 845 (Tex. App.––Fort Worth 2006, no pet.).
We may review the trial court’s resolution of disputed fact issues for legal and
factual sufficiency under the same standards of review that we apply in reviewing
2It is undisputed that none of the four reside in Texas.
3As the Nonresidents’ counsel acknowledged at the first hearing, “They
came [to Texas] in their capacity as members of the four companies. They didn’t
come in their individual capacities. . . . That is the gravamen of our special
appearance . . . .”
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a jury’s or trial court’s findings of fact at trial. TravelJungle, 212 S.W.3d at 845.
When, as in this case, the trial court does not issue findings of fact and
conclusions of law, all facts necessary to support the trial court’s order that are
supported by the evidence are implied. BMC Software Belgium, N.V. v.
Marchand, 83 S.W.3d 789, 795 (Tex. 2002).
The supreme court has explained how the burdens shift between the
plaintiff and defendant in a special appearance:
Our special-appearance jurisprudence dictates that the
plaintiff and the defendant bear shifting burdens of proof in a
challenge to personal jurisdiction. We have consistently held that
the plaintiff bears the initial burden to plead sufficient allegations to
bring the nonresident defendant within the reach of Texas’s longarm
statute. Once the plaintiff has pleaded sufficient jurisdictional
allegations, the defendant filing a special appearance bears the
burden to negate all bases of personal jurisdiction alleged by the
plaintiff. Because the plaintiff defines the scope and nature of the
lawsuit, the defendant’s corresponding burden to negate jurisdiction
is tied to the allegations in the plaintiff’s pleading.
If the plaintiff fails to plead facts bringing the defendant within
reach of the long-arm statute (i.e., for a tort claim, that the defendant
committed tortious acts in Texas), the defendant need only prove
that it does not live in Texas to negate jurisdiction. When the
pleading is wholly devoid of jurisdictional facts, the plaintiff should
amend the pleading to include the necessary factual allegations,
thereby allowing jurisdiction to be decided based on evidence rather
than allegations, as it should be.
The defendant can negate jurisdiction on either a factual or
legal basis. Factually, the defendant can present evidence that it
has no contacts with Texas, effectively disproving the plaintiff’s
allegations. The plaintiff can then respond with its own evidence
that affirms its allegations, and it risks dismissal of its lawsuit if it
cannot present the trial court with evidence establishing personal
jurisdiction. Legally, the defendant can show that even if the
plaintiff’s alleged facts are true, the evidence is legally insufficient to
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establish jurisdiction; the defendant’s contacts with Texas fall short
of purposeful availment; for specific jurisdiction, that the claims do
not arise from the contacts; or that traditional notions of fair play and
substantial justice are offended by the exercise of jurisdiction.
Kelly, 301 S.W.3d at 658–59 (footnotes omitted) (citations omitted).
We may sustain a legal sufficiency challenge only when (1) the record
discloses a complete absence of evidence of a vital fact, (2) the court is barred
by rules of law or of evidence from giving weight to the only evidence offered to
prove a vital fact, (3) the evidence offered to prove a vital fact is no more than a
mere scintilla, or (4) the evidence establishes conclusively the opposite of a vital
fact. Ford Motor Co. v. Castillo, 444 S.W.3d 616, 620 (Tex. 2014); Uniroyal
Goodrich Tire Co. v. Martinez, 977 S.W.2d 328, 334 (Tex. 1998), cert. denied,
526 U.S. 1040 (1999). In determining whether there is legally sufficient evidence
to support the finding under review, we must consider evidence favorable to the
finding if a reasonable factfinder could and disregard evidence contrary to the
finding unless a reasonable factfinder could not. Cent. Ready Mix Concrete Co.
v. Islas, 228 S.W.3d 649, 651 (Tex. 2007); City of Keller v. Wilson, 168 S.W.3d
802, 807, 827 (Tex. 2005).
When reviewing an assertion that the evidence is factually insufficient to
support a finding, we set aside the finding only if, after considering and weighing
all of the evidence in the record pertinent to that finding, we determine that the
credible evidence supporting the finding is so weak, or so contrary to the
overwhelming weight of all the evidence, that the answer should be set aside and
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a new trial ordered. Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex. 1986)
(op. on reh’g); Cain v. Bain, 709 S.W.2d 175, 176 (Tex. 1986); Garza v. Alviar,
395 S.W.2d 821, 823 (Tex. 1965).
Applicable Law
A Texas court may assert personal jurisdiction over a nonresident
defendant only if the requirements of due process under the Fourteenth
Amendment and the Texas long-arm statute are satisfied. U.S. Const. amend.
XIV, § 1; Tex. Civ. Prac. & Rem. Code Ann. §§ 17.041–.045 (West 2015);
Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 413–14, 104 S.
Ct. 1868, 1871–72 (1984); Moki Mac, 221 S.W.3d at 574.
A. Long-arm Statute
The Texas long-arm statute governs Texas courts’ exercise of jurisdiction
over nonresident defendants. Tex. Civ. Prac. & Rem. Code Ann. §§ 17.041–
.045; BMC Software, 83 S.W.3d at 795; TravelJungle, 212 S.W.3d at 845. That
statute permits Texas courts to exercise jurisdiction over a nonresident defendant
who “does business” in Texas. Tex. Civ. Prac. & Rem. Code Ann. § 17.042;
BMC Software, 83 S.W.3d at 795; TravelJungle, 212 S.W.3d at 845. The statute
lists some activities that constitute “doing business” in Texas, including
committing a tort, in whole or in part, in Texas. Tex. Civ. Prac. & Rem. Code
Ann. § 17.042; Moki Mac, 221 S.W.3d at 574; TravelJungle, 212 S.W.3d at 845.
The list of activities set forth in section 17.042 is not exclusive, however. BMC
Software, 83 S.W.3d at 795; TravelJungle, 212 S.W.3d at 845.
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Because the long-arm statute reaches “as far as the federal constitutional
requirements for due process will allow,” a Texas court may exercise jurisdiction
over a nonresident if doing so “comports with federal due process limitations.”
TV Azteca v. Ruiz, 490 S.W.3d 29, 36 (Tex. 2016) (quoting Spir Star AG v.
Kimich, 310 S.W.3d 868, 872 (Tex. 2010)), cert. denied, 2017 WL 2722433
(June 26, 2017). Therefore, in determining whether such requirements have
been met, we rely on precedent from the United States Supreme Court and other
federal courts, as well as our own state’s decisions. BMC Software, 83 S.W.3d
at 795; TravelJungle, 212 S.W.3d at 845–46.
B. Due Process
Due process is satisfied when (1) the defendant has established minimum
contacts with the forum state and (2) the exercise of jurisdiction comports with
traditional notions of fair play and substantial justice. Int’l Shoe Co. v.
Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158 (1945); TV Azteca, 490
S.W.3d at 36; TravelJungle, 212 S.W.3d at 846. A nonresident defendant who
has “purposefully availed” himself of the privileges of conducting business in a
foreign jurisdiction, invoking the benefits and protections of its laws, has sufficient
minimum contacts with the forum to confer personal jurisdiction on a court in that
forum. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474–76, 105 S. Ct. 2174,
2183–84 (1985); Moki Mac, 221 S.W.3d at 575. Three factors important in
determining whether a defendant has purposefully availed itself of the forum are
(1) only the defendant’s contacts with the forum count, (2) the acts relied on must
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be purposeful rather than merely fortuitous, and (3) the defendant must seek
some benefit, advantage, or profit by availing itself of the forum. Michiana Easy
Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 785 (Tex. 2005); TravelJungle,
212 S.W.3d at 846.
C. General v. Specific Jurisdiction
Personal jurisdiction exists if the nonresident defendant’s minimum
contacts give rise to either specific jurisdiction or general jurisdiction.
Helicopteros Nacionales de Colombia, 466 U.S. at 413–14, 104 S. Ct. at 1872;
TV Azteca, 490 S.W.3d at 37; TravelJungle, 212 S.W.3d at 846. A trial court has
general jurisdiction over a nonresident defendant when that defendant’s contacts
in a forum are continuous and systematic so that the forum may exercise
personal jurisdiction over the defendant even if the cause of action did not arise
from or relate to activities conducted within the forum state. Moki Mac, 221
S.W.3d at 575; TravelJungle, 212 S.W.3d at 846. In contrast, specific jurisdiction
is present if the nonresident defendant’s alleged liability arises from or is related
to an activity conducted within the forum. Moki Mac, 221 S.W.3d at 576;
TravelJungle, 212 S.W.3d at 846–47. In other words, “there must be a
substantial connection between those contacts and the operative facts of the
litigation.” Moki Mac, 221 S.W.3d at 585. When a plaintiff asserts that a trial
court has specific jurisdiction over a nonresident defendant, the minimum
contacts analysis focuses on the relationship among the defendant, the forum,
and the litigation. Moki Mac, 221 S.W.3d at 575–76; Guardian Royal Exch.
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Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 228 (Tex.
1991); TravelJungle, 212 S.W.3d at 847.
Here, Pate’s second amended petition alleged that the trial court had
specific jurisdiction over the Nonresidents because they made negligent or
fraudulent misrepresentations while physically present in the State of Texas.
Jurisdictional Facts in Second Amended Petition and
Brief in Support Sufficient
In their first issue, the Nonresidents contend that Pate did not allege
sufficient facts in his original and amended petitions; therefore, their proof of
nonresidency conclusively defeated the exercise of jurisdiction. See Kelly, 301
S.W.3d at 658. The Nonresidents argue, alternatively, that (1) the trial court
erred by considering the jurisdictional facts alleged in Pate’s second amended
petition because it was not filed until after the evidentiary hearings had begun
and Pate neither sought nor obtained leave from the trial court to file it, and
(2) even if the trial court did not err by considering the second amended petition,
Pate did not allege sufficient jurisdictional facts in that petition.
The Nonresidents contend that rule of civil procedure 63 should govern
which pleading the trial court may consider for purposes of measuring the
sufficiency of evidence supporting jurisdictional allegations. See Tex. R. Civ.
P. 63. Rule 63 allows parties to freely amend their pleadings until seven days
before trial; after that, a party may amend pleadings only upon leave of court. Id.
At least two intermediate court opinions hold that even if rule 63 applies to the
10
amendment of pleadings before the resolution of special appearances, a party
must object to the trial court’s consideration of an amended pleading filed less
than seven days before the evidentiary hearing. Lombardo v. Bhattacharyya,
437 S.W.3d 658, 665 (Tex. App.––Dallas 2014, pet. denied); Hale v. Richey, No.
10-11-00187-CV, 2012 WL 89920, at *5–6 (Tex. App.––Waco Jan. 11, 2012, no
pet.) (mem. op.); see Nichols v. Bridges, 163 S.W.3d 776, 782–83 (Tex. App.––
Texarkana 2005, no pet.) (applying rule 63 to special appearance proceedings
but concluding that “[w]hen the record is silent of any basis to conclude that the
amended pleading was not considered by the trial court and when no surprise or
prejudice is shown, leave of court is presumed.”). Not only did the Nonresidents
fail to object to the trial court’s consideration of the second amended petition,
they asked the trial court to take judicial notice of it at the third evidentiary
hearing. Accordingly, we conclude and hold that the Nonresidents did not
preserve any complaint that the jurisdictional allegations at issue should be those
in either the original or first amended––but not the second amended––petitions.
See Lombardo, 437 S.W.3d at 665; Hale, 2012 WL 89920, at *5–6; Johnson v.
Coca-Cola Co., 727 S.W.2d 756, 759 (Tex. App.––Dallas 1987, writ ref’d n.r.e.)
(holding that plaintiff could not complain on appeal about trial court’s
consideration of pleadings in summary judgment proceeding when plaintiff asked
the trial court to take judicial notice of them); see also Kelly, 301 S.W.3d at 658
n.4 (“While the pleadings are essential to frame the jurisdictional dispute, they
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are not dispositive. . . . [A]dditional evidence merely supports or undermines the
allegations in the pleadings.”).
The Nonresidents further argue that even if the pleading by which the
sufficiency of the jurisdictional evidence must be measured is the second
amended petition, that petition did not allege sufficient jurisdictional facts; thus,
their evidence of nonresidency was all that was needed to defeat its allegations.
In the second amended petition, Pate claimed as a basis for jurisdiction that
[f]or each entity named as a defendant, each member met in Texas,
negotiated each respective hotel development agreement with
Roger [Pate] and Pate Development, except for Premier Hotels
Group, Inc., which was developed in Missouri. These meetings
occurred in Texas prior to creation of each respective entity.
Thereafter, each entity ratified the individuals’ agreements and what
turned out to be misrepresentations. Each individual therefore
established specific contacts in Texas sufficient for this Court to
exercise personal jurisdiction.
He raised the following claims against the Nonresidents and the Hotel Entities:
Fraud by Representation and Omission
21. Defendants have made material misrepresentations or
failed to disclose material information to Pate despite having a duty
to do so, relating to the subject projects. The Defendants knew of
the falsity of their misrepresentations and/or omissions, or exercised
a reckless disregard for such representations and/or omissions, with
the specific intent that Pate rely on same. As a result, Pate relied to
his detriment. Such fraud was intentional and malicious thereby
justifying an award of punitive damages in the maximum amount
allowed by law.
Negligent Misrepresentation
22. Defendants misrepresented their ability and willingness to
fairly and properly compensate Pate for Pate’s services, advances,
and contributions. Pate had an exclusive pecuniary interest. The
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Defendants supplied false information to Pate and failed to exercise
reasonable care in communicating the information to Pate. As a
result, Pate suffered compensable monetary harm.
A liberal construction of Pate’s second amended petition is that it alleges
the Nonresidents made either negligent or fraudulent misrepresentations related
to the projects for which the Hotel Entities were formed while physically present
in the State of Texas. See Roark v. Allen, 633 S.W.2d 804, 809 (Tex. 1982)
(holding that we are to liberally construe allegations in pleadings). A nonresident
who, while physically present in the State of Texas, either makes statements
alleged to be fraudulent or fails to disclose material information that he is under a
duty to disclose is subject to specific jurisdiction in Texas in a subsequent action
arising from the statement or nondisclosure. Jani-King Franchising, Inc. v. Falco
Franchising, S.A., No. 05-15-00335-CV, 2016 WL 2609314, at *4 (Tex. App.––
Dallas May 5, 2016, no pet.) (mem. op.); Petrie v. Widby, 194 S.W.3d 168, 175
(Tex. App.––Dallas 2006, no pet.) (citing Stein v. Deason, 165 S.W.3d 406, 415
(Tex. App.––Dallas 2005, no pet.) (op. on reh’g)).
Additionally, Pate contended in a brief in support of the exercise of
personal jurisdiction4 that even if the Nonresidents had made the alleged
4Courts may consider jurisdictional grounds alleged in responses to special
appearances as well as the plaintiff’s petition. See, e.g., Mi Gwang Contact Lens
Co. v. Chapa, No. 13-13-00306-CV, 2015 WL 3637846, at *3 n.2 (Tex. App.––
Corpus Christi June 11, 2015, no pet.) (mem. op.); Accelerated Wealth, LLC v.
Lead Generation & Mktg., LLC, No. 04-12-00647-CV, 2013 WL 1148923, at *2
(Tex. App.—San Antonio Mar. 20, 2013, no pet.) (mem. op.); Alliance Royalties,
LLC v. Boothe, 329 S.W.3d 117, 120–21 (Tex. App.—Dallas 2010, no pet.);
Ennis v. Loiseau, 164 S.W.3d 698, 705 (Tex. App.—Austin 2005, no pet).
13
misrepresentations while in Texas after the formation of the Hotel Entities, the
Nonresidents could nevertheless be held liable in their individual capacities for
making those misrepresentations. See Jani-King, 2016 WL 2609314, at *1–2
(declining to apply fiduciary shield doctrine to shareholders and director because
corporate agents may be held liable for tortious acts committed while in service
of corporation); Atiq v. CoTechno Grp., Inc., No. 03-13-00762-CV, 2015 WL
6871219, at *4–5 (Tex. App.––Austin Nov. 4, 2015, pet. denied) (mem. op. on
reh’g); SITQ E.U, Inc. v. Reata Rests., Inc., 111 S.W.3d 638, 651 (Tex. App.––
Fort Worth 2003, pet. denied).
Accordingly, we conclude and hold that the allegations in Pate’s second
amended petition and brief in support are sufficient to shift the burden to the
Nonresidents to attempt to negate those allegations. We overrule the
Nonresidents’ first issue.
Jurisdictional Allegations Supported by Sufficient Evidence
In their second issue, the Nonresidents contend that if Pate met the
pleading burden, they nevertheless conclusively disproved Pate’s allegations,
and Pate’s evidence was therefore legally and factually insufficient to support the
allegations.
The Nonresidents’ Evidence About Contacts
The evidence showed that the Hotel Entities were formed on the following
dates:
• July 26, 2005 Premium
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• November 1, 2005 Premier
• May 17, 2007 Lotustel
• June 13, 2007 Nextgen
• November 7, 2007 Bridged Hybrid
The evidence also included deposition testimony from Ashok, Naresh,
Ramesh, and Manilal. Ashok testified that the first time he was in Texas was in
November 2007 for a wedding; after the wedding, he and Amrit, Ramesh,
Manilal, and Naresh met with Roger about the Premium project. Everyone but
Naresh also met with Roger about the Premier project. Ashok initially testified
that he could not recall attending any meetings in Texas for the purpose of
discussing the formation of the Premier, Premium, or Lotustel entities, but he
later denied attending any such meetings. He also denied attending any
meetings in Texas for the purpose of discussing the formation of Nextgen and
Bridged Hybrid. Ashok admitted meeting in Texas regarding Nextgen, but only in
2010-2012. Finally, Ashok testified that he, Amrit, Manilal, Ramesh, Naresh, and
Roger met in 2011 and 2012 to discuss an accounting problem with Lotustel;
they also talked a little about Premium. Ashok contended that he was a “silent
partner” who was not involved with any of the construction or financing.
Manilal testified that he visited Texas one time in 2005 or 2006 for a
wedding but did not discuss any hotel project with anyone. He also said he
attended the 2007 wedding; he admitted discussing the Premium project but
denied looking at any future construction sites on that trip. He believed everyone
15
was at that meeting but Naresh. According to Manilal, at that meeting, they
generally discussed how the construction was going and what it was costing;
they did not discuss the membership agreement for Premium or how any
members or partners were to be paid. Manilal also admitted visiting construction
sites in Texas in 2008. Manilal further testified to attending two meetings in
Texas in 2011 regarding Lotustel; the parties discussed accounting problems,
funding, and capital calls, but they did not discuss paying Roger. Finally, Manilal
attended meetings in Texas in 2012 and 2013 regarding the extent of each
members’ investment in Lotustel and a settlement between Roger and the
members to make up for Roger’s alleged failure to fully contribute to the Hotel
Entities.
Naresh testified that the first time he came to Texas was for a wedding in
2007 or 2008; when asked whether November 2007 sounded familiar, he
answered, “I believe so.” At that meeting, the members discussed the status of
construction plans for the Premium project as well as the Lotustel project but did
not discuss Pate’s5 compensation. The Premium entity had already been formed
and was almost complete. Naresh thought that he might have visited the
Premium construction site after construction had already been started. But he
also thought that he had been invited to participate as an investor in the Hotel
5Roger is the sole owner of Pate Development; he testified that when he
referred to the Nonresidents’ agreements with him, he meant with Pate
Development.
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Entities after they had already been formed, and he claimed to be only a passive
investor. Naresh admitted to attending a meeting in Texas in 2009 or 2010 to
discuss the Premium project and accounting issues; he denied ever discussing
whether Roger should be paid at any meetings.
Finally, Ramesh testified that the first time he recalled meeting regarding
the projects in Texas was in 2007 for the wedding; all of the members were there
except Naresh. Although Ramesh could not recall the content of the discussion,
he did testify that only the Premium project was discussed at that meeting, and
the group viewed the construction site. The parties did not discuss who was
going to invest what and how. The next time Ramesh went to Texas was about a
year and a half to two years later after the Premium hotel had opened. Naresh
was not at that meeting, but Manilal was there; Ramesh was not sure if Ashok
attended that meeting or not. At a 2010 meeting, the parties discussed the
Premium project, and everyone had to prove the extent of their investments.
Additionally, at a meeting in 2012, they discussed accounting matters regarding
the extent of each party’s investment. Ramesh also testified generally that he
met Naresh in Texas a total of four times: during three of those times, they
discussed the hotel projects, and during two of them, they attended a wedding.
Accordingly, the Nonresidents presented evidence meeting their burden to
negate Pate’s allegation that while they were physically present in Texas, either
before or after the formation of the Hotel Entities, they had made
misrepresentations to Pate about payment related to those projects and entities.
17
Thus, under the burden-shifting standard described in Kelly, we must review
whether Pate brought forward legally and factually sufficient evidence affirming
the allegations.
Roger’s Testimony About Contacts
Roger testified at two of the special appearance hearings and by
deposition. According to Roger, all of the Nonresidents––Manilal, Ashok,
Ramesh, and Naresh––“came to Texas every time [they] decided on selection of
land and selection of franchise to build a hotel. They physically came to Texas,
checked all the sites, every site [they] decided to build a hotel, and they came
here, stayed here for a week and did all the accounting for all the companies.”
With respect to any agreements to compensate Pate, Roger testified that
A. Whenever they all came first time and we decided to build
a hotel in Garland, which is owned by LotusTel Group, L.L.C., they
all came here, and that’s when I told them what kind of
compensation my company needs to develop the hotel, and they all
had a meeting here, and they all discussed and finalized that for
every hotel I develop the companies will pay $125,000, each hotel
that is developed or under development.
Q. And they were --
A. They were physically here and we discussed everything
here in Texas.
Q. And did they make the agreement here in Texas?
A. Yes, they did.
[Emphasis added.] Roger further stated that “[a]ll the deals for every hotel and
every company . . . were all made in Texas. Everybody flew in here and we had
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a meeting here and everything was discussed about the contribution of me and
my company, was finalized here in Texas.”
At the second hearing, Roger testified that “[b]efore when these entities
were formed, all the individuals flew in here and decided that they wanted to
develop hotels. That’s how those entities were formed.” According to Roger, this
was in 2008. He said Ashok, Manilal, Ramesh, and Naresh individually promised
him that development costs would be paid to Pate by Lotustel for that project.
When asked if Naresh’s promise occurred in 2008, Roger replied, “I cannot
remember exact dates, but I have to look it up, and I can give you exact dates,
but it was 2007 or 2008.” He further narrowed the time frame to “late 2007 or
2008.” Still later, he said, “I can’t remember the exact date, but it was
somewhere 2007.” Finally, when asked whether the “conversations” with all of
the Nonresidents occurred “in 2007,” Roger answered, “Yes, if I recall correctly.”
Pate also offered Roger’s deposition, taken after the first two special
appearance hearings. Roger testified at the beginning that he had problems with
his short-term memory and had trouble remembering dates. However, he
unequivocally stated that, with respect to Lotustel, “I found the site, and then all
the members flew in and approved the site before even Lotustel was formed,”
and that “all the members, before even Lotustel was formed, agreed that I’ll be
compensated $125,000 to develop the project.” Furthermore, “When they
agreed to pay me, the company was not formed, and it was agreed that either
the members will pay it or the company will pay.”
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Roger testified that before Bridged Hybrid was formed in approximately
2007 or 2008, at a meeting in Texas, he told the other members, including the
Nonresidents, that he needed $125,000 for the project, and all of them told Roger
that he would be paid “[w]hen the company was formed and when [he] started
doing the work.”
But also according to Roger’s deposition testimony, the first meeting at
which the Nonresidents discussed the Premier project in Texas was in 2006 or
2007, and the last such meeting was in 2009 or 2010. Roger testified that the
Nonresidents did not make representations to Pate regarding payment at that
meeting. Instead, those representations were made at a meeting sometime in
between the first and last meeting.
Asked to describe the specific misrepresentations, Roger said, “[A]ll the
members agreed to pay me on development, and I didn’t know they had no
intentions to pay me.”
In his deposition, Amrit––one of the members of the Hotel Entities but a
Texas resident––testified that up until 2007, the Nonresidents had made “maybe
quite a few” visits to Texas “to discuss or go over [the] development deals.”
According to Amrit, all of the Nonresidents except Naresh had been to Texas in
2005 to look for land for the Premium project. The earliest he could remember
Naresh coming to Texas was for the wedding “sometime in Thanksgiving time” in
2007. He confirmed that the only project discussed at the wedding was the
Premium project. The Premium entity had already been formed.
20
When asked if the Nonresidents had come to Texas before Lotustel was
formed “to discuss creating Lotustel,” Amrit responded, “They came to see the
location.” Construction of the hotel had not begun at that point, but although
Amrit testified that Lotustel was formed in 2007, he did not say whether this trip
occurred before or after the formation date. Amrit denied that the Nonresidents
ever came to Texas to discuss the Bridged Hybrid project before formation of that
entity. When asked if any of the Nonresidents discussed Nextgen while
physically present in the State of Texas, Amrit answered, “I don’t know at that
time.”
Pate’s Evidence Sufficient
Although Pate did not refute the Nonresidents’ evidence that they did not
attend any meetings in Texas before at least November 2007 with evidence
about specific dates the pre-entity formation meetings Roger testified about
occurred, Roger did unequivocally testify that the Nonresidents made
misrepresentations while physically present for meetings in Texas regarding
whether Lotustel and Bridged Hybrid would reimburse Pate before those entities
were formed. And Amrit testified that the Nonresidents had made “maybe quite a
few” visits to Texas to discuss the deals before 2007. Moreover, even if the
Hotel Entities had already been formed by the time the meetings occurred, the
Nonresidents’ evidence that no misrepresentations were made at those meetings
is not conclusive proof in light of Roger’s directly contradictory testimony that all
of the Nonresidents made misrepresentations at those meetings about the intent
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to reimburse Pate. Thus, we conclude and hold that Pate presented sufficient
evidence of the existence of personal jurisdiction as pleaded in his second
amended petition and as set forth in the brief in support of jurisdiction. We
overrule the Nonresidents’ second issue.

Outcome: Having overruled both of the Nonresidents’ issues based upon an
application of the standard of review, we affirm the trial court’s order denying the special appearances.

Plaintiff's Experts:

Defendant's Experts:

Comments: