Personal Jurisdiction Notes

Posted on April 22, 2010 by Mike Northrup

Personal Jurisdiction challenges is one area of the law that I've found interesting since I took Dean Frank Newton's conflicts of law class in law school.  Recently there have been a number of personal jurisdiction opinions that have come out.   I've summarized what I see as the highlights of some of those cases below:

  • In Jackson v. Hoffman, the Fourteenth Court of Appeals held that the filing of a faulty affidavit by the defendant did not waive the jurisdiction challenge.  The court also held that the defendant did not waive the jurisdiction challenge by filing a motion for sanctions in the court of appeals after the plaintiff appealed the order granting the defendant's special appearance.  The court's opinion may be found here.
  • In Zinc Nacional, S.A. v. Bouche Trucking, Inc., the Texas Supreme Court held that the mere act of sending goods through Texas does not establish personal jurisdiction under a specific contacts analysis.  The court's opinion may be found here.
  • In Touradji v. Beach Capital Partnership, L.P., the First Court of Appeals held that jurisdiction must be examined on a claim-by-claim basis insofar as examining specific jurisdiction.  The court further held that if the plaintiff does not plead sufficient jurisdictional facts, a defendant can meet its burden of negating jurisdiction merely by proving that it is not a Texas resident.  Finally, the court holds that unilateral acts of the plaintiff cannot be used to establish jurisdiction; it must be the defendant's purposeful conduct that established personal jurisdiction.  The court examines a number of individual claims pleaded in this case, and in that regard the opinion may be of interest for those wanting a more detailed review.  The court's opinion may be found here.
  • In 2007 East Meadows, L.P. v. RCM Phoenix Partners, L.L.C., the Dallas Court of Appeals holds that specific jurisdiction is "dispute-specific."   The court futher holds that RCM Phoenix did not purposefully avail itself of Texas by using a third-party broker to market real property that was located in Indiana.  Finally, the court holds that where a contract gave the plaintiff the unilateral decision to select the location of the closing of the sale which never closed, the nonresident defendant could not be said to have purposefully availed itself of Texas law.  The court's opinion may be found here.

 

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Lack of Consideration Revisited

Posted on January 26, 2010 by Byron Henry

The Twelfth Court of Appeals recently held that lack of consideration is an affirmative defense that must be plead.  In this case involving a will contest, the court reversed an order granting a no-evidence motion for summary judgment on the basis that the agreement at issue lacked consideration.  The court ruled that consideration for a written instrument is presumed.  The Court also held, however, that lack of consideration is an affirmative defense.  Thus, the court concluded, it was improper for a movant to utilize a no-evidence motion regarding a claim on which the movant has the burden of proof.  The court's opinion in Burges v. Mosley can be found here. 

In my opinion, there is a problem with treating lack of consideration as an affirmative defense.

Here is a list of propositions with which I have no disagreement:

  • existence of a valid and enforceable agreement is an element of a claim for breach of contract;
  • consideration is an essential element of a valid and enforceable agreement;
  • plaintiff has the burden to prove all of the elements of his claim;
  • in order to allege lack of consideration with respect to a written instrument, a defendant must file a verified denial under TRCP 93(9);
  • failure of consideration occurs after a contract is formed and is an affirmative defense under TRCP 94;
  • an affirmative defense is a matter of confession and avoidance, i.e., it does not seek to defend by denying the plaintiff's claims, but seeks to establish an independent reason why the plaintiff cannot recover

Thus, courts err by placing the burden on defendants to prove lack of consideration simply because the agreement is in writing.  While consideration is presumed for a written instrument, the presumption should not survive a verified denial.  Further, based on the foregoing propositions, lack of consideration should not be considered an affirmative defense.  It is true that the Texas Supreme Court said otherwise in Lakeway Co. v. Leon Howard, Inc., 585 S.W.2d 660, 662 (Tex. 1979).  But the only authority cited for this proposition is TRCP 94, which lists failure of consideration as an affirmative defense, which is in keeping with the nature of defenses as matters in confession and avoidance.  The difference between lack of consideration and failure of consideration is significant and was discussed in a previous post here.  While TRCP 93(9) requires a verified denial for lack of consideration and failure of consideration for written instruments, only failure of consideration is an affirmative defense.  Suffice it to say that the defendant should not bear the burden of proving lack of consideration so long as a verified denial is filed regarding written agreements.  Accordingly, a defendant should be able to use a no-evidence motion for summary judgment to challenge the absence of a valid and enforceable agreement, including the element of consideration.  At some point, the Texas Supreme Court should take up this issue, overrule Lakeway Co., and resove this simple, though pervasive, misunderstanding.
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