March 3, 2017

March 03, 2017

This week the Texas Supreme Court issued 2 opinions: (1) dealing with the existence of specific jurisdiction sufficient to support denial of a special appearance and (2) addressing the Rule Against Perpetuities in the context of a "top lease."

In the M&F Worldwide Corp., et al. v. Pepsi-Cola Metropolitan Bottling Co. case, the Texas Supreme Court addressed whether a settlement agreement partially negotiated in Texas and substantially performed in Texas is sufficient to support specific jurisdiction over nonresident Defendants.

The trial court and Court of Appeals both found that two meetings in Texas "can be fairly construed as purposeful availment of the privileges of doing business in Texas."

The Texas Supreme Court disagreed and reversed. The Court summarized that specific personal jurisdiction requires purposeful availment of the privilege of conducting activities within the state and a "substantial connection" between those activities and the facts of the case. Focusing on whether the "precise act giving rise to the tort" took place in Texas, the Court concluded that the fraudulent transfer and tortious interference on which the claims were based "hinge on the effect of the parties' execution of the New York settlement agreement and related conduct that occurred outside of Texas." In other words, the actions of the Defendants in negotiating, executing, and carrying out the settlement agreement at issue did not constitute purposeful availment of the privileges of doing business in Texas, and the activities on which the Plaintiff's claims were based do not bear a substantial connection to the acts that occurred in Texas.