Opinion
No. 05-05-01309-CV
Opinion Filed November 14, 2006.
On Appeal from the 116th Judicial District Court, Dallas County, Texas, Trial Court Cause No. DV-05-05985-F.
Affirm.
Before Justices BRIDGES, FRANCIS, and MAZZANT.
MEMORANDUM OPINION
Preferred Capital, Inc. appeals the trial court's order vacating a domesticated foreign judgment obtained against Ward, Asel and Associates, P.C. In four issues, appellant argues the evidence is sufficient to subject appellee to personal jurisdiction in Ohio and the trial court abused its discretion in failing to sustain objections to appellee's affidavit and by allowing appellee to block postjudgment discovery. We affirm.
Appellee is a tax accounting office in Dallas, Texas. On November 26, 2003, appellee entered into two separate telecommunications equipment leases with NorVergence, Inc., a New Jersey corporation. Five days later, NorVergence notified appellee that the agreements had been transferred to appellant and provided appellant's address in Ohio to make the lease payments. Appellee made payments to appellant at its Ohio address for six months but then defaulted. Appellant sued appellee in Summit County, Ohio to collect the sums due on the leases. Ultimately, the Ohio court granted a nunc pro tunc default judgment against appellee, awarding appellant $46,524.94 plus interest.
Appellant filed an authenticated copy of the judgment, along with notice of its filing, with the district clerk of Dallas County in accordance with chapter 35 of the Texas Civil Practice and Remedies Code. See Tex. Civ. Prac. Rem. Code Ann. § 35.003 (Vernon 1997). Appellee responded with a motion to vacate the judgment arguing, among other things, that it was not subject to the jurisdiction of the Ohio court. Attached to the motion was the affidavit of appellee's vice president, Tom Asel.
In the affidavit, Asel swore that appellee is a small tax accounting office in Dallas and "has absolutely no connection to the State of Ohio." Asel asserted that appellee "was not and has not been a resident of the state of Ohio or had ever done any business there;" was not personally served with process in Ohio, and was not personally "amenable to process isued in that state because [appellee] did not purposefully engage in any activities in the State of Ohio." Further, Asel asserted that appellee did not appear in the proceedings or otherwise consent to jurisdiction in Ohio.
Asel also alleged that the equipment rental agreements, "along with thousands of others," were "procured by a fraudulent scheme of grant [sic] proportion by Norvergence, Inc." Asel alleged that appellant was "fully aware" of the "fraudulent scheme" but nevertheless purchased appellee's leases and thousands of others. Asel also attested that at the time the agreements were executed, it did not know that the agreements would be assigned, to whom they would be assigned, or that such new entity would be located in Ohio and had the sole option of "picking the forum." Asel asserted that appellant "never anticipated it would be sued in Ohio because it lacked any notice that Norvergence would assign the contracts to [appellant]."
In response, appellant filed the affidavit of its recovery and litigation specialist, Joseph Pringle, who attested that appellee made payments to appellant for six months at its Ohio address. Appellant urged that the "voluntary" lease payments to Ohio constituted "sufficient minimum jurisdictional contacts with Ohio for the prior suit seeking the remaining unpaid debt." Additionally, appellant complained that one statement in Asel's affidavit (that appellant "was not amenable to process" because appellee "did not purposefully engage in any activities in the state of Ohio") was conclusory and should be stricken from the record. After a hearing on the motion, the Texas trial court granted appellee's motion and vacated the domesticated judgment. This appeal ensued.
The law regarding the full faith and credit clause of the United States Constitution, chapter 35 of the civil practive and remedies code, the burden of proof when challenging a foreign judgment, recognized exceptions to full faith and credit requirements, and our standard of review in such appeals has been previously sufficiently explained. See Karstetter v. Voss, 184 S.W.3d 396, 401-02 (Tex.App.-Dallas 2006, no pet.); Navarro v. San Remo Mfg., Inc., 2006 WL 10093, * 1-2 (Tex.App.-Dallas Jan. 3, 2006, no pet.). In brief, once an authenticated copy of a judgment has been filed, the defendant has the burden of attacking the judgment and establishing a recognized exception to the full faith and credit requirements, such as lack of jurisdiction. Karstetter, 184 S.W.3d at 401; Navarro, 2006 WL 10093, *2. The presumption of the judgment's validity can only be overcome by clear and convincing evidence. Navarro, 2006 WL 10093, *2.
Whether a court has personal jurisdiction over a defendant is a question of law. Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 805-06 (Tex. 2002) (citing BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002); Karstetter, 184 S.W.3d at 402. In resolving this question of law, a trial court must frequently resolve questions of fact. Coleman, 83 S.W.3d at 806 (citing BMC Software, 83 S.W.3d at 794).
In its first issue, appellant contends the trial court's order was improper because there was "uncontroverted evidence" that appellee was subject to personal jurisdiction in Ohio. In particular, appellant argues that once NorVergence assigned it the leases and notified appellee that payments were to be sent to Ohio, appellee "accepted these contract obligations by voluntarily making its first six monthly payments" to appellant in Ohio. Appellant argues these facts give rise to specific jurisdiction in Ohio. As support, it relies on Kentucky Oaks Mall Co. v. Mitchell's Formal Wear, Inc., 53 Ohio St. 3d 73, 559 N.E.2d 477, 480 (Ohio 1990). We disagree.
The Ohio long-arm statute authorizes Ohio courts to exercise jurisdiction over a nonresident defendant who "acts directly or by an agent, as to a cause of action arising from the person's . . [t]ransacting any business" in Ohio. Ohio Rev. Code Ann. § 2307.382(A)(1) (West 1994). In Kentucky Oaks Mall, the Ohio Supreme Court construed this statute and, specifically, the meaning of "transacting any business":
It is clear that R.C. 2307.382(A)(1) and Civ.R. 4.3(A)(1) are very broadly worded and permit jurisdiction over nonresident defendants who are transacting any business in Ohio. `Transact' as defined by Black's Law Dictionary . . . means to prosecute negotiations; to carry on business; to have dealings * * *. The word embrases in its meaning the carrying on or prosecution of business negotiations but it is a broader term than the word `contract' and may involve business negotiations which have been either wholly or partly brought to a conclusion * * *.'
Kentucky Oaks Mall, 559 N.E.2d at 480 (emphasis in original).
The case involved Kentucky Oaks Mall, an Ohio lessor, which sued Mitchell's Formal Wear, a Georgia corporation, for allegedly defaulting on a lease agreement. The undisputed evidence showed that Mitchell's conducted at least part of the negotiations of the lease terms by telephone calls to and from Ohio. In addition, Mitchell's signed the lease in Georgia, mailed the document to Ohio, where Kentucky Oaks Mall signed the contract. The lease was for ten years and required that all communications be sent to Kentucky Oaks Mall's home office in Youngstown, Ohio, and all lease payments were to be sent to a Cleveland, Ohio address.
In ultimately concluding that Mitchell's had transacted business in the state, the Ohio Supreme Court held that "a commercial nonresident lessee, for purposes of personal jurisdiction, is `transacting any business' within the plain and common meaning of the phrase, where the lessee negotiates, and through the course of dealing becomes obligated, to make payments to its lessor in Ohio." Kentucky Oaks Mall, 559 N.E.2d at 480.
Unlike Mitchell's, however, appellee did not negotiate any contract with appellant. Rather, one week after entering two agreements with NorVergence, it received notice that the contracts had been assigned to appellant. As Asel swore in his affidavit, at the time it executed the agreements, it did not know "that the agreements would be assigned, to whom they would be assigned, or that such new entity would be located in Ohio or would have the sole option of picking the forum." Asel further asserted that appellee "never anticipated that it would be sued in Ohio because it lacked any notice that Norvergence would assign the contracts to [appellant]."
Under these circumstances, we cannot conclude that appellee's conduct — sending six checks to Ohio — constituted "transacting any business" within the Ohio long-arm statute and therefore the statute did not permit the exercise of personal jurisdiction over appellee. In making our review and reaching this conclusion, we did not consider paragraph five of Asel's affidavit, which appellant complains in its second and third issues is conclusory and should be stricken from the record. (Paragraph five asserts appellee "was not amenable to process issued in [Ohio] because [appellee] did not purposefully engage in any activities in the state of Ohio.")
Additionally, we note the lease agreements contained "floating" forum selection clauses providing that the agreements would be "governed, construed and enforced in accordance with the laws of the State in which [NorVergence's] principal offices are located or, if the lease is assigned by [NorVergence], the laws of the state in which the assignee's principal offices are located. . . ." Although appellee devoted a good portion of its responsive brief arguing that this clause was not an appropriate basis upon which to impose jurisdiction, appellant did not raise this issue in its original brief and we therefore do not address it. Issues one through three are without merit.
In its fourth issue, appellant argues the trial court abused its discretion "by allowing [a]ppellee to block discovery" on jurisdictional facts.
The record shows that after appellee filed its motion to vacate judgment, appellant noticed appellee on July 29 of its intent to depose Asel on August 19 (five days before the dispositive hearing). In response on August 3, appellee filed a motion for protective order. Appellant waited until the day the deposition was to be taken to respond to the motion and file its own motion to compel.
At the hearing on the motion, most of the discussion involved issues related to the jurisdiction of the Ohio court and the validity of the judgment. The subject of discovery was addressed only briefly when appellant asked the court for leave to take Asel's deposition if the court were "inclined" to leave the Asel affidavit in evidence. Appellant's counsel then stated, "But I don't feel that's necessary on the record before you because the — the record evidence, almost — the only specific facts on contacts with Ohio are clearly and specifically described in the Jerry Pringle affidavit, and they are that the notices said Ohio and — and these people made their payments for the first six months in Ohio." The trial court did not rule on appellant's motion to compel or request for leave either orally or in writing.
Assuming for purposes of this opinion that discovery of jurisdictional facts would be appropriate in this type of proceeding and assuming the trial court's order granting the motion to vacate was an implicit denial of appellant's request, reversal is not warranted.
We review the trial court's discovery rulings under an abuse of discretion standard. Prodigy Commc'ns Corp. v. Agric. Excess Surplus Ins. Co., 195 S.W.3d 764, 770 (Tex.App.-Dallas 2006, pet. filed). The scope of discovery largely rests within the discretion of the trial court. Id. The trial court is allowed "great latitude" in its discovery orders. Id. Unless there is a clear abuse of discretion, the trial court's ruling should not be disturbed on appeal. Id.
Here, once appellee filed its motion for protective order to prevent the deposition of Asel, appellant waited sixteen days — until five days before the hearing — to file a response and to file a motion to compel. At the hearing, appellant made any request for discovery contingent on the trial court's decision regarding Asel's affidavit and ultimately the disposition of appellee's motion. Under these circumstances, we cannot say the trial court clearly abused its discretion in denying discovery when appellant waited until the day of the dispositive hearing (and thirteen days before the trial court lost plenary power) to address the discovery issue. The fourth issue is without merit.
We affirm the trial court's order.