United States Court of Appeals
Fifth Circuit
F I L E D
Revised July 25, 2003
July 22, 2003
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT Charles R. Fulbruge III
_________________ Clerk
No. 02-40783
RELIGIOUS TECHNOLOGY CENTER,
Plaintiff - Appellee,
v.
DELL LIEBREICH, Individually and
as personal representative of
the Estate of Lisa McPherson,
Defendant - Appellant,
THOMAS J. DANDAR; KENNAN G. DANDAR,
Appellants,
-------------------
consolidated with
No. 02-40786
-------------------
RELIGIOUS TECHNOLOGY CENTER,
Plaintiff - Appellant,
v.
DELL LIEBREICH, as personal
representative of the Estate
of Lisa McPherson,
Defendant - Appellee,
-------------------
consolidated with
No. 02-40964
-------------------
RELIGIOUS TECHNOLOGY CENTER,
1
Plaintiff - Appellee,
v.
DELL LIEBREICH, as personal
representative of the Estate
of Lisa McPherson,
Defendant - Appellant.
Appeal from the United States District Court
for the Eastern District of Texas
Before KING, Chief Judge, DAVIS and BENAVIDES, Circuit Judges.
BENAVIDES, Circuit Judge:
This consolidated appeal arises from a breach of contract
suit instigated by Plaintiff-Appellee-Cross-Appellant Religious
Technologies Center (RTC) against the estate of Lisa McPherson
(the Estate).1 We find the district court lacked personal
jurisdiction over the Estate, and we herein vacate the judgment
of the district court.2
I.
A. The Florida Wrongful Death Action
In 1997, the Estate of Lisa McPherson filed a wrongful death
action in state court in Tampa, Florida against various
1
RTC’s motion to file a supplemental memorandum of law is
granted.
2
All three of the appeals at bar stem from rulings entered
by the district court in the course of adjudicating the breach of
contract claim, and consequently, the issue of personal
jurisdiction is dispositive of all the issues presented to the
Court in this appeal. Consequently, we confine our analysis to
the question of personal jurisdiction.
2
corporations and individuals affiliated with the Church of
Scientology. Among those named in the complaint were the Church
of Scientology, Flag Service Organization, Inc. (a corporation
associated/affiliated with the Church of Scientology), and
several individual Scientologists. Upon being served with the
complaint, and ostensibly as a cost-saving measure, Defendant
Flag Service Organization (Flag) proposed to the Estate that they
enter into an agreement to limit the number of
Scientology-related corporate entities and individuals that would
be named in the suit. The Estate and Flag consequently entered
into a contract in which the Estate agreed to forego adding
certain enumerated corporate defendants, and Flag agreed to
forego encumbering its assets.
In 1999, the Estate moved the Florida court to add David
Miscavige (the "worldwide ecclesiastical leader of Scientology")
to the list of named defendants in its wrongful death action.
Miscavige is the Chairman of the Board of RTC, a Scientology
corporation, and while RTC was listed among the parties which the
Estate was contractually bound to exclude from its action, the
Estate sought to add Miscavige under the theory that it was not
contractually precluded from adding Miscavige in his personal
capacity. The Florida court was presented with the
defendant-limiting contract between the Estate and Flag, and
entered an interlocutory ruling that the contract did not
prohibit the Estate from adding Miscavige as a defendant in his
3
personal capacity.3
No appeal from the order in which the court permitted the
Estate to add Miscavige in his personal capacity was attempted,
nor was an appeal necessary in that on June 16, 2000, the Florida
court granted Miscavige's motion to dismiss the complaint with
respect to him due to insufficient service of process. Miscavige
also sought attorneys’ fees, and the Florida court denied
Miscavige's motion with respect to fees. Miscavige appealed the
fee issue to the Florida appellate court. The Florida appellate
court affirmed the trial court's ruling on the issue of
attorneys’ fees.
B. The Breach of Contract Action
While Miscavige's appeal of the attorneys’ fee issue was
still pending, RTC filed suit against the Estate for breach of
the Estate-Flag defendant-limiting contract, and against
Liebreich personally for tortiously interfering with the contract
between the Estate and Flag. RTC filed in United States District
Court in the Eastern District of Texas under a diversity of
citizenship jurisdictional theory. RTC claimed standing as a
3
The order itself appears to be conditional. In ruling from
the bench, the court stated, “[a]ll right. Subject to my ruling
on the insufficiency of service of process issue, I will go ahead
and rule that the 1997 agreement does not bar the plaintiff from
trying to bring in Mr. Miscavige as an individual outside his
capacity as an officer of RTC.”
4
third-party beneficiary of the Estate-Flag contract.
On the Estate's motion, the district court dismissed the
tortious interference count against Liebreich for failing to
state a claim. However, the district court denied the Estate's
motion to dismiss RTC's breach of contract claim.4
The district court next entertained the parties' dispositive
motions. The district court denied the Estate's motion for
summary judgment, finding that it embodied only points of law
which had already been addressed and rejected by the district
court in passing upon the Estate's motion to dismiss. The
district court also denied RTC's motion for partial summary
judgment on the issue of liability, finding that the contract was
ambiguous on the question of whether the contract precluded suit
against Miscavige in his personal capacity, and consequently
material facts were in dispute concerning liability.
RTC moved the district court to reconsider its motion for
partial summary judgment. In support of its motion to reconsider,
RTC attached extrinsic evidence which purported to demonstrate
that the contracting parties intended Miscavige to be protected
4
The Estate moved to dismiss the breach claim for want of
jurisdiction (subject matter and personal), for lack of capacity
to be sued in Texas, for lack of standing, and for improper
venue. The Estate also asked the district court to dismiss the
action based on multiple abstention doctrines, a theory of
litigation privilege, the doctrine of law of the case, and the
Constitutional requirements of the Full Faith and Credit Clause.
Finally, in rounding out its rather omnibus motion, the Estate
asserted the defenses of waiver and estoppel. The district court
rejected each of these theories of dismissal.
5
from suit in his personal capacity. In light of this evidence,
the district court reconsidered its previous ruling and granted
summary judgment in favor of RTC on the issue of liability.
The case then proceeded to trial on the issue of damages.
The Estate proposed to offer the testimony of Liebreich to
dispute the foreseeability of the damages incurred by RTC, under
the theory that prior to adding Miscavige - the sole act of
breach - Liebreich reasonably relied on the Florida court's order
permitting Liebreich to add Miscavige, but the district court
determined the evidence to be irrelevant and excluded it. RTC,
on the other hand, was permitted by the district court to
provide testimony concerning attorneys’ fees incurred by RTC in
moving to have Miscavige dismissed for want of service of
process, and in aiding Miscavige in his quest to recover
attorneys’ fees from the Florida trial and appellate courts.
At the close of testimony, the Estate moved for a directed
verdict asserting that RTC had failed to meet its burden at
trial. The district court denied the motion from the bench.
The Estate offered a proposed jury instruction regarding the
prevailing market rate for attorneys’ fees in Tampa, but the
district court rejected the instruction. The jury returned a
verdict for $258,697.10.
C. Post-Trial Motions
Upon completion of the trial the Estate filed a Rule 59
6
motion for a new trial, asserting, again, that the district court
erred in failing to dismiss the action prior to trial and
reasserting its previously adjudicated arguments that the
district court lacked both personal and subject matter
jurisdiction, that venue was improper, that the Estate enjoyed a
litigation privilege immunity, that RTC lacked standing, and so
forth. The Estate also chose to use its Rule 59 motion for a new
trial to reassert its opposition to the district court's
previous evidentiary rulings, jury instruction rulings, and the
ruling denying a directed verdict. The district court summarily
denied the Rule 59 motion. The Estate filed a notice of appeal.
RTC, on the other hand, moved to recover its costs and fees
as a prevailing party pursuant to the Estate-Flag contract. RTC
petitioned the district court for an award of $549, 015.84 in
costs and fees for the litigation of this single-issue breach of
contract case. The district court reduced the award to $327,
654.00.
RTC also moved the district court to impose sanctions
pursuant to 28 U.S.C. §1927 on the Estate's counsel, citing
vexatiously repetitive motions and filings on the part of the
Estate. The Estate responded with its own §1927 motion for
sanctions. The district court declined to sanction RTC’s
counsel, but the court did impose sanctions against the Estate's
counsel for 30% of the attorneys’ fees awarded, which totaled
$98, 296.00. The Estate’s counsel, Thomas and Kennan Dandar,
7
(the Dandars) filed a second, separate, appeal of the imposition
of §1927 sanctions against them.
Finally, RTC filed a cross-appeal challenging the district
court's decision to grant Liebreich's 12(b)(6) motion to dismiss
the tortious interference claim. The three appeals have been
consolidated and are pending now before this Court.
II.
This Court reviews de novo the district court's
determination regarding personal jurisdiction. Central Freight
Lines Inc. v. APA Transport Corp., 322 F.3d 376, 380 (5th Cir.
2003). To determine whether a federal district court sitting in
diversity has personal jurisdiction over a nonresident defendant,
the district court considers first whether exercising
jurisdiction over the defendant comports with due process, and if
due process is met, the district court turns to the
extraterritorial jurisdictional rules of the state in which it
sits to determine whether personal jurisdiction is conferred.
Interfirst Bank Clifton v. Fernandez, 844 F.2d 279, 282 (5th Cir.
1988); Schlobohm v. Schapiro, 784 S.W.2d 355, 356 (Tex.1990).
Because the Texas Long Arm Statute is coextensive with the
confines of due process, questions of personal jurisdiction in
Texas are generally analyzed entirely within the framework of the
Constitutional constraints of Due Process. See Texas Long Arm
8
Statute, Tex.Civ.Prac. & Rem.Code Ann. § 17.041 (Vernon 2001) et.
seq.; Gessmann v. Stephens, 51 S.W.3d 329, 335 (Tex.App. 2001);
Fernandez, 844 F.2d at 282.
However, exercising personal jurisdiction over an estate
which is probated in a foreign district presents particular
jurisdictional problems. Usually when a court exercises
jurisdiction over either a foreign or domestic estate the
jurisdiction is in rem - that is, the court has jurisdiction over
the property itself. Here, however, there is no question that
the district court lacked in rem jurisdiction over the Estate.
Instead, the contention here is that Liebreich, as the personal
representative of the Estate, created in personam jurisdiction
over the Estate. There are two ways in which Liebreich might
have brought the Estate into the reach of the district court, and
both avenues have been presented to this Court. First, the
district court found general jurisdiction over the Estate via
Liebreich. Moreover, RTC argues that Liebreich created specific
jurisdiction over the Estate. However, neither general nor
specific jurisdiction existed over the Estate.
A. General Jurisdiction
The district court correctly found that it had general
personal jurisdiction over Liebreich as a resident of Texas.
9
However, the district court impermissibly imputed that general
personal jurisdiction to the Estate. The district court stated
that, "[t]here can be no doubt that as a resident of the State of
Texas, Ms. Liebreich has had sufficient contacts with the state
to confer general jurisdiction over her in this matter, both in
her individual and representative capacities." Thus, the district
court concluded that the general jurisdiction which a Texas court
has over a Texas resident applies equally to a foreign estate
whose representative lives in Texas. However, the district court
is in error on this point.
General jurisdiction exists where a "defendant's contacts
with the forum state are substantial and continuous and
systematic but unrelated to the instant cause of action."
Central Freight Lines, 322 F.3d at 381 (internal quotations
omitted); Helicoptieros Nacionales de Columbia, S.A. v. Hall, 466
U.S. 408 (1984). The residency of a defendant in the forum state
routinely creates such systematic and continuous contact. In the
instant case, however, the defendant in question is not a
resident of Texas. As a creature of the Florida probate regime,
the Estate resides in Florida. Thus, for an estate probated in a
foreign jurisdiction to establish the type of continuous and
systematic contact necessary for general jurisdiction, the
representative of the Estate must have made those contacts in her
representative capacity, on behalf of the Estate. It is not
10
sufficient that the personal representative herself lives in
Texas.
Here, despite the fact that Liebreich conducted some Estate
business from her home in Texas, she did not establish systematic
and continuous contact with Texas on behalf of the Estate such
that general jurisdiction over the Estate was conferred. RTC
argues that on behalf of the Estate Liebreich signed a retainer
letter in Texas, received and distributed property from the
Estate in Texas, and participated in decisions concerning the
Florida litigation while she was in Texas. However, these
sporadic Estate-related activities cannot be described as a part
of a systematic and continuous stream of activities tying the
Estate to Texas. None of the activities individually constitutes
a substantial or meaningful contact with Texas, Texas law, or
Texas residents, and certainly considered in toto they fail to
amount to continuous and systematic contact with Texas such that
general jurisdiction is created. Compare, Central Freight Lines,
322 F.3d 381(finding that general jurisdiction was lacking over
corporate defendant, despite the fact that the defendant,
"routinely arranges and receives interline shipments to and from
Texas and apparently sends sales people to the state on a regular
basis to develop business, negotiate contracts, and service
national accounts...."); see also, Wilson v. Belin, 20 F.3d 644,
649-51 (5th Cir. 1994) (finding no general personal jurisdiction
11
over the defendant, despite the fact that defendant engaged in at
least one professional legal project a year in Texas over the
previous three years). Consequently, the district court erred in
concluding that it had general personal jurisdiction over the
Estate.
B. Specific Jurisdiction
Although the district court relied on general personal
jurisdiction over the Estate, RTC suggests that the district
court also had specific jurisdiction over the Estate. Specific
jurisdiction may be found when a foreign defendant "has
‘purposefully directed’ his activities at residents of the forum,
and the litigation results from alleged injuries that ‘arise out
of or relate to’ those activities." Burger King Corp. v.
Rudzewicz, 471 U.S. 462,472 (1985)(citing Keeton v. Hustler
Magazine, Inc., 465 U.S. 770,774 (1984) and Helicopteros
Nacionales, 466 U.S. at 414)(internal citations omitted)). A
single act may support specific jurisdiction where the act is
directed at residents of the forum, and the cause of action
relates to the act. Burger King Corp., 471 U.S. at 476 n.18
(citing McGee v. International Life Insurance Co., 355 U.S. 220
at 223 (1957)).
In the specific jurisdiction rubric, only those acts which
12
relate to the formation of the contract and the subsequent breach
are relevant. In support of its argument that specific
jurisdiction exists, RTC points to the fact that Liebreich
participated in negotiations concerning the Estate-Flag contract
while in Texas, and the fact that Liebreich signed the
Estate-Flag contract while in Texas. However, neither of these
acts were directed at residents of the forum state, or at the
forum state itself. While it is well established that "with
respect to interstate contractual obligations...parties who reach
out beyond one state and create...obligations with citizens of
another state are subject to regulation and sanctions in the
other State for the consequences of their activities," here,
while contracting in the stead of a Florida resident, Liebreich
reached out from Texas to residents of Florida (Flag) and
California (RTC). Burger King, 471 U.S. at 473. Therefore, the
Estate did not direct its activities at the forum state.
Moreover, the physical location of Liebreich at the time she
signed the agreement and participated in negotiations on behalf
of the Estate is not especially relevant in the analysis.5 The
Supreme Court has rejected a formalistic rendering of minimum
contacts, opting instead to look at the degree that a nonresident
5
Additionally, the presence of Liebreich in Texas lacks the
significance that it might otherwise have, had she been acting on
her own behalf, as she was at the time representing an entity
whose "physical presence" was in Florida.
13
defendant has reached out and availed himself of the foreign
venue. Here, in forming the contract, the Estate availed itself
of the State of Florida and contracted exclusively with non-Texas
residents. The Estate did not reach out to Texas, nor did it
direct its contract-related activities toward Texas. It did not
contract with Texas residents nor did it avail itself of Texas
law in the formation of the contract. Therefore, the fact that
Liebreich signed the contract in Texas does not, alone, support
specific jurisdiction.
In sum, the district court lacked personal jurisdiction over
the Estate. Liebreich's general jurisdiction cannot be imputed to
the Estate, and the Estate did not establish minimum contacts
relating to the breach action with the forum jurisdiction
sufficient to support specific jurisdiction. Therefore, the
district court erred in failing to dismiss the action against the
Estate for want of jurisdiction.
III.
For the foregoing reasons the judgment of the district court
is vacated and the case is remanded for proceedings consistent
with the renderings herein.
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