Houston [1st} Court of Appeals
John P. Guillory and Preis PLC v. Hallmark Specialty Insurance Company, Lessley Services, LLC, ACE American Insurance Company, and Certain Underwriters at Lloyd’s London Subscribing to Policy No. SCT 1011119 (No. 01-22-00081-CV; issued August 31, 2023) arose from an oil spill on property in Cameron Parish, Louisiana. Lessley, a Texas-based petroleum trucking company that transports crude oil and other products, leased a tanker trailer from another transport company, SLLD, to transfer crude oil from a storage tank in Cameron Parish. The SLLD employee operating the trailer fell asleep while loading the oil from the tank to the trailer, spilling nearly 200 barrels of oil onto the ground. Lessley filed a claim with ACE, its primary commercial auto insurer. Lessley also had two excess policies, one issued by Lloyd’s and the other by Hallmark.
Shortly after the spill, the property owner sued Lessley in Cameron Parish for property damage. After initially refusing coverage, ACE reversed course and retained the Lafayette-based law firm Preis PLC and one its lawyers, Guillory, to represent the policyholder Lessley in the Louisiana case. The property owner then added to the lawsuit the driver, SLLD, and ACE. ACE retained Preis PLC and Guillory to represent it in the Louisiana case as well. Guillory, who had both Louisiana and Texas law licenses, subsequently met Lessley in the firm’s satellite office in Houston to prepare for a deposition in the Louisiana case, which took place the next day in Lake Charles. A few months later, Preis PLC and Guillory entered into a Consent Judgment with the property owner and SLLD stating that SLLD had relinquished control of its employee to Lessley when the spill occurred and was thus not vicariously liable for any damages he caused. It further stated that as the employee’s special employer, Lessley had vicarious liability. The firm and Guillory subsequently entered into a Joint Stipulation with the property owner admitting the employee’s negligence and that ACE had originally denied the claim. The case then went to a jury trial, in which the jury rendered a $4.7 million verdict against Lessley, ACE, and the employee, jointly and severally.
No doubt stunned by the verdict, second-layer excess carrier Hallmark sued Lessley, ACE, and Lloyd’s in Harris County district court, seeking a declaratory judgment that it didn’t owe anything to anybody. It also asserted an equitable subrogation claim against ACE to the extent of ACE’s liability for the initial denial of the claim. Hallmark then amended its petition to assert a legal malpractice claim against Guillory and Preis PLC. Hallmark argued that the Louisiana lawyer and firm were nonetheless subject to specific jurisdiction in Texas by virtue of the Houston meeting with Lessley at the firm’s satellite office and the fact that Guillory had a Texas law license and had given legal advice to Lessley at the meeting. Lessley, ACE, and Lloyd’s cross-claimed against Preis PLC and Guillory for malpractice, alleging the same jurisdictional facts. The basis for their claims was that the firm and Guillory failed to notify them of a potential conflict of interest in representing both the insuer and insured, entered into the Consent Judgment and Joint Stipulation without notice and advice, failed to file necessary motions to limit the insured’s liability, prepared an inadequate defense, and failed to seek an apportionment of liability or to appeal the Louisiana case. Guillory and Preis PLC filed special appearances, which the trial court denied.
The court of appeals reversed and dismissed all claims against Preis PLC and Guillory. The parties did not dispute the jurisdictional facts, which centered almost exclusively on the single meeting in Houston between Guillory and Lessley regarding the Louisiana case. Lessley complained that during that meeting Guillory dismissed their insistence that the driver of the trailer was employed by SLLD, not them, and they should bear responsibility for the spill. They claimed further that Guillory did not discuss the implications of his joint representation at the meeting. The parties agreed that neither Preis PLC nor Guillory had solicited their business, that they had never represented Lessley in the past, that Guillory provided no legal services in or from Texas except for the single Houston meeting, that Guillory’s legal work pertained only to the Louisiana lawsuit, and that Guillory gave no advice based on Texas law.
Based on this evidence, the court concluded that Lessley and Hallmark failed to allege facts establishing sufficient minimum contacts between Guillory, the forum state (Texas), and the malpractice claims. To establish a defendant’s minimum contacts with Texas, a claimant must show that the defendant “purposefully availed” itself of the laws of the forum state. This showing requires satisfying a three-pronged test: (1) the nature and extent of the nonresident defendant’s contacts with Texas; (2) whether those contacts were “purposeful as opposed to ‘random, fortuitous, or attenuated”; and (3) whether the nonresident “sought ‘some benefit, advantage[,], or profit by availing itself of [Texas’] jurisdiction,’ thus, consenting to suit in Texas” (citations omitted).
Here, the fact of Lessley’s residence in the state was irrelevant, since the test refers only to the nonresident defendant’s contacts with the state. The same went for Preis PLC’s satellite office in Houston, since no one disputed that Guillory only practices out of Lafayette and was not practicing Texas law when he met with Lessley in Houston. The question then became whether the only relevant jurisdictional facts—that Guillory was licensed to practice in Texas and met with Lessley in Houston—bore a substantial relationship to the legal malpractice claims. The court answered no to that question, holding that the great majority of the acts or omissions alleged Lessley and Hallmark alleged took place in Louisiana, where Guillory practiced and conducted the Louisiana case. And even the acts or omissions alleged to have occurred in Houston (the conflict of interest and inadequate preparation allegations) were not limited to the Houston meeting alone, but extended to the entire Louisiana case. In short, the court concluded that because “operative facts” of the malpractice claims lay predominantly elsewhere than in Texas, no “substantial connection” necessary to find purposeful availment existed between Guillory’s contacts with Texas and those claims. The court found that ACE’s and Lloyd’s’ claims, based on the same jurisdictional facts, likewise failed the test.
Whatever one thinks about the allegations or the quality of lawyering in the case, this decision was undoubtedly correct. Of continuing interest to us (and we hope to you as well) are the tireless and often creative efforts of Texas plaintiffs to cast the personal jurisdiction net as broadly as they can get away with. The frequency with which Texas appellate courts have to conduct a minimum contacts analysis indicates just how important their gatekeeper role really is. It’s one thing to have a well-established and familiar jurisprudence of personal jurisdiction, but it’s quite another to apply it consistently and uniformly to keep cases out of Texas that don’t belong here. We applaud the courts of appeals for correcting their trial courts when they overreach in this way.
