OLD REPUBLIC NATIONAL TITLE INSURANCE COMPANY AS SUBROGEE OF CHITRA CHANDRASEKARAN APPELLANT v. ROBIN GOLDSMITH APPELLEE (2016)

DISSENTING MEMORANDUM OPINION 1

The majority opinion concludes that appellee Robin W. Goldsmith's actions of knowing participation in an alleged fraudulent scheme, which included at least eighty-one money transfers to Lisa Bell (a Texas resident) over a four-year period, the recordation of liens on property located in Texas to protect those assets, and the receipt of funds from a fraudulent sale of Texas real property, all in an effort to hinder collection of a federal lien or garnishment, were not sufficient to justify a Texas court's exercise of personal jurisdiction over Goldsmith. Because I believe this holding is not in harmony with well-settled law on specific jurisdiction and minimum contacts, I respectfully dissent.

Goldsmith characterizes the underlying facts of this case in the terms of a fairy tale, complete with “once upon a time,” a fairy princess, a frog disguised as a prince, and a rescuing fairy godmother. Goldsmith omits, however, the allegations that the fairy godmother and the fairy princess attempted to hide the kingdom's riches from others who were not characters in their tale.

Goldsmith and Bell were admittedly close and had been friends since “the late ‘70s.” Bell married Bruce Benson in 2002, and they bought a home together in Arlington, Texas. The marriage fell apart after Benson was criminally charged in 2009 for aiding and abetting the making of a false, fictitious, or fraudulent claim to the federal government. See 18 U.S.C.A. §§ 2, 287 (West 2015). Along with his 24-month sentence, the federal court ordered Benson to pay $782,297.14 in restitution. To satisfy the judgment, the government filed a restitution lien and sought to garnish Benson's nonexempt property, which would include his community property with Bell. Goldsmith admitted she knew about the lien.

When Benson's legal troubles began, Bell became “worried” and started “trying to plan, brainstorming” with Goldsmith about “what do [Goldsmith and Bell] do next.” In 2009 shortly before Benson was federally sentenced, Goldsmith, who resides in Louisiana, began to transfer sums of money to Bell in Texas. On September 10, 2011, liens on Bell's two cars were recorded in favor of Goldsmith. Bell and Benson divorced in 2011, and Goldsmith designated one $10,000 transfer to Bell in 2010 as being for Bell's “legal” expenses. After the divorce, Goldsmith continued to regularly transfer money to Bell. Between 2009 and 2012, Goldsmith transferred almost $150,000 to Bell in Texas.

On August 22, 2012, Bell sold the Arlington home to Chitra Chandrasekaran for $215,000. The government's lien was not noted in the warranty deed, and Bell did not disclose that the house had been bought during her prior marriage. Appellant Old Republic Title Insurance Company issued the title policy for the sale. Bell cashed the check she received in the amount of $202,574.88—the net proceeds amount from the sale—and immediately had the funds converted into a cashier's check made out to Goldsmith. Goldsmith received the check in Louisiana and deposited the funds in her Louisiana bank. The check amount was $56,772.72 more than Goldsmith had transferred to Bell over the previous four years. Goldsmith began disbursing the surplus amount and more back to Bell in Texas in the form of several additional money transfers. A year later, the government contacted Chandrasekaran and informed her of the lien that had attached to the home she purchased from Bell. Old Republic, as the title insurer, remitted the amount of the sale proceeds to the government.

Old Republic, a Minnesota corporation registered to do business in Texas, filed suit against Bell and Goldsmith. Old Republic's claim against Goldsmith arose under the Uniform Fraudulent Transfer Act, which creates tort liability not only against “the person for whose benefit the transfer was made” but also against “the first transferee of the asset” or any “subsequent transferee.” Tex. Bus. & Com. Code Ann. § 24.009(b) (West 2015); see id. § 24.005 (West 2015) (creating liability for and defining fraudulent transfers as to present or future creditors). Old Republic alleged that Goldsmith participated in a four-year, fraudulent scheme involving the multiple transfers of money between Goldsmith in Louisiana and Bell in Texas in an attempt “to avoid satisfaction of the Federal Lien” and “to prevent [Old Republic] from obtaining collection of [its subrogated] claim for reimbursement for payment of the Federal Lien.” Goldsmith allegedly knew that at the time of these money transfers, the federal government “had filed criminal charges against Bell's husband,” which led to the federal lien on Bell's community property in the amount of $782,297.14 in 2009. Old Republic alleged that Goldsmith knew of the lien, “brainstorm[ed]” with Bell about “what [to] do next” regarding Bell's “worr[y] about the federal government trying to collect” on the lien, and knew Bell's repayments to her after the sale of the real estate were more than she was owed for the prior money transfers and were attempts to “hinder and defraud” those seeking satisfaction of the lien. Significantly, Old Republic alleged that when Goldsmith received the sale proceeds from Bell, Goldsmith knew that Bell “was in serious financial difficulty ․ in that all or a substantial portion of her other assets had previously been garnished by the United States.” Bell's transfer of the proceeds from the sale to Chandrasekaran allegedly “was made to Goldsmith for nothing of reasonably equivalent value,” and Goldsmith allegedly resumed sending money to Bell after receiving the sale proceeds. Additionally, the jurisdictional evidence submitted to the trial court showed that Goldsmith was aware that there were liens on Bell's cars in favor of Goldsmith, which Goldsmith stated were filed to “take care of [Bell's] children” and were “legitimate asset[s] that [Goldsmith] could hold” for their benefit.

As the majority opinion recognizes, our personal-jurisdiction inquiry must be divorced from the underlying merits of Old Republic's claims brought against Goldsmith, and we may ask only whether Old Republic's allegations were sufficient to justify subjecting Goldsmith to jurisdiction in a Texas court. And although we are not to consider solely whether Goldsmith's actions were tortious or where the effect of those actions was felt, we can consider whether Goldsmith's contacts with Texas were substantially connected to the operative facts of the litigation. See Searcy v. Parex Res., Inc., 496 S.W.3d 58, 67–70 (Tex. 2016); Cornerstone Healthcare Grp. Holding, Inc. v. Nautic Mgmt. VI, L.P., 493 S.W.3d 65, 73–74 (Tex. 2016), petition for cert. filed, (U.S. Oct. 18, 2016) (No. 16-522); Glencoe Capital Partners II, L.P. v. Gernsbacher, 269 S.W.3d 157, 166–67 (Tex. App.—Fort Worth 2008, no pet).

The majority opinion concludes that Goldsmith's alleged contacts with Texas are not sufficient to support specific jurisdiction and focuses on the facts that Bell unilaterally recorded the liens on her cars, sold the real property without disclosing the government's lien, and transferred the sale proceeds to Goldsmith and that Goldsmith only talked to Bell on the phone and sent Bell funds in Texas. But Old Republic alleges that Goldsmith received liens on Texas property and funds from a Texas resident, after Goldsmith knew the federal lien existed, for the purposes of defrauding Old Republic, a company registered to do business in Texas. Whether Goldsmith actually performed actions in Texas is not dispositive; we are to look at the substantial connection Goldsmith's actions have with the fraudulent scheme that occurred in Texas. See Camac v. Dontos, 390 S.W.3d 398, 409 (Tex. App.—Dallas 2012, no pet.); Glencoe, 269 S.W.3d at 163; Touradji v. Beach Capital P'ship, L.P., 316 S.W.3d 15, 30–31 (Tex. App.—Houston [1st Dist.] 2010, no pet.).

Old Republic's allegations show that Goldsmith was a “willing participant” in Bell's apparent scheme to by-pass the effects of the federal lien. Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 340 (Tex. 2009). “In Texas, personal jurisdiction may be found where a defendant takes part in any aspect of a tortious scheme that impacts Texas citizens, regardless of a defendant's other links to [Texas].” See San Pedro Impulsora de Inmuebles Especiales, S.A. de C.V. v. Villarreal, 330 S.W.3d 27, 40–41 (Tex. App.—Corpus Christi 2010, no pet.). I would conclude that the contacts alleged by Old Republic and supported by competent evidence, viewed as a whole and not in isolation, arose from or were related to an activity conducted within Texas such that the exercise of specific jurisdiction over Goldsmith would not offend due process. See Retamco, 278 S.W.3d at 340–42; Trigeant Holdings, Ltd. v. Jones, 183 S.W.3d 717, 727–28 (Tex. App.—Houston [1st Dist.] 2005, pet. denied) (op. on reh'g); accord Dontos v. Vendomation NZ Ltd., 582 F. App'x 338, 347–48 (5th Cir. 2014); Mullins v. TestAmerica, Inc., 564 F.3d 386, 400–02 (5th Cir. 2009); Sourcing Mgmt., Inc. v. Simclar, Inc., 118 F. Supp. 3d 899, 910–12 (N.D. Tex. 2015); cf. Dawson-Austin v. Austin, 968 S.W.2d 319, 327 (Tex. 1998) (holding Texas court lacked personal jurisdiction to divide marital estate where husband moved to Texas, unilaterally transported assets into Texas, and bought Texas property after separation and wife was nonresident), cert. denied, 525 U.S. 1067 (1999). I agree with Old Republic that to conclude otherwise would allow nonresidents to “rest easy, knowing they may conspire with Texas residents to fraudulently transfer Texas-based assets without fear of answering for that fraud in Texas courts.”

Because the trial court had personal, specific jurisdiction over Goldsmith based on these alleged contacts, it erred by granting Goldsmith's special appearance. Accordingly, I would reverse the trial court's order. Because the majority opinion does not, I dissent.

FOOTNOTES

1.   See Tex. R. App. P. 47.4.

LEE GABRIEL JUSTICE