The Business Court [1st Division] has granted the special appearance of a California resident who allegedly made fraudulent misrepresentations while negotiating a real estate investment deal in Texas.
JT Capital LLC v. Blom Capital LLC, 599 W. Princeton LP, Capella Funds LLC, Corinne Cordon, Joseph Sebastien, Richard Neuharth, and Moses Lucero v. Sapan Talati, Strategic Income JTM LP, and JT Capital Fund, LLC (No. 25-BC01B-0019; 2025 Tex. Bus. 41; October 29, 2025) arose from a real estate deal gone sour. JT and Blom discussed forming a joint venture to buy an apartment complex in Princeton, Texas, but prior to the formation, the owner of the complex defaulted on its mortgage. To prevent foreclosure, JT, Blom, and Capella agreed to contribute funds to purchase the loan and the lender postponed foreclosure so that the parties could come up with a deal to acquire the loan. JT agreed to contribute $3.5 million as a loan so that Blom could acquire the property for the proposed joint venture. But Blom later formed another partnership (599) and executed an amended purchase and sale agreement with the complex owner, designating the partnership as the property’s purchaser. Still, JT and Blom signed a joint venture term sheet requiring repayment of JT’s $3.5 million, but the deal fell apart. JT filed suit in Collin County. The parties agreed to remove the case to the business court. Defendants Blom and Capella filed counterclaims and third-party claims against JT Capital and its officer, Talati. Talati filed a special appearance.
In an opinion by Judge Whitehill, the court granted the special appearance. Blom’s and Capella’s submissions alleged that Talati resided in either Texas or California, pursued the idea to form and invest in a Texas-based joint venture, made numerous misrepresentations about the deal, negotiated with Blom and Capella to finalize the deal, and defrauded the project of $500,000 for his own benefit. Talati further knowingly communicated with Texas residents, indirectly owned other properties in Texas, owned a multi-residential property in Austin, oversaw JT Capital’s investment decisions, signed the joint venture term sheet, communicated regularly with Texas residents on the deal, and directed JT Capital to bring the lawsuit. Talati argued that he wasn’t subject to general jurisdiction, was protected by the fiduciary shield doctrine, and wasn’t subject to specific jurisdiction because neither Blom nor Capella alleged that Talati performed acts in Texas on his own behalf and Talati had no physical contact with the state.
First, the court determined that Capella’s pleadings were inadequate to support general jurisdiction. Although Talati owned properties in Texas, he didn’t reside in Texas and hadn’t traveled to Texas since 2020. Since mere ownership of unrelated property is insufficient to establish general jurisdiction over a nonresident and “mere association with Texas entities does not establish jurisdiction,” Capella presented no evidence that Talati purposefully availed himself of the forum. In any event, the fiduciary shield doctrine, which “protects a nonresident corporate officer or employee from the exercise of jurisdiction when all of his contacts with Texas were made on behalf of his employer,” protected Talati from general jurisdiction in the absence of evidence that Talati’s Texas entities were merely his alter ego.
As to specific jurisdiction, the court again observed that JT Capital’s contacts with Texas could not be imputed to its employee or agent, Talati, for purposes of establishing Talati’s forum contacts. Additionally, since JT Capital wasn’t a “single-purpose entity creates solely to acquire the Property” but pre-existed and conducted business around the country before any of the operative facts occurred, Talati’s “involvement in forming and managing JT Capital is not merely ‘one overarching transaction’ that led to the acquisition of Texas real estate and therefore JT Capital’s contacts cannot be imputed to Talati.” Neither did JT Capital’s decision to file a lawsuit in Texas count against Talati, and even if Talati directed JT Capital to initiate suit, that conduct wouldn’t constitute a tort. Next, Talati’s frequent phone calls and emails to Texas residents were “insufficient evidence of purposeful availment because the recipients receiving those communications in Texas [were] generally fortuitous and the result of a third party’s unilateral activity.” And even if Talati made the misrepresentations Defendants alleged with the knowledge that one of the defendant’s employees was in Texas, it wouldn’t be enough to bestow jurisdiction. As the court observed, “the only connection between Texas and the alleged misrepresentations is they generally implicate Texas real property.”
Moreover, neither JT Capital nor Talati ever took possession of the property, so any alleged misrepresentations affecting the property were prospective and attenuated. As to Defendants’ allegation that Talati promised to personally guarantee the loan for the purchase of the property, it didn’t create a “continuing relationship with the state” because he never acquired the property, nor did he “personally enjoyed the ‘benefits and protections’ of Texas law’ any of the ‘certain continuing obligations’ that arise from real property ownership.” Finally, Defendants didn’t establish that Talati was subject to personal jurisdiction based on an alter ego theory. Consequently, the court granted Talati’s special appearance and dismissed him from the case.
