The Court of Appeals of Texas recently held that a title company could pursue an action over two brothers who received proceeds from the sale of their deceased father’s property in Texas, and that the brothers’ actions were sufficient to confer jurisdiction.  See Capital Title of Tex., LLC v. Shank, 2022 Tex. App. LEXIS 1138 (Tex. App. Feb. 17, 2022).  In the case, a couple purchased a second home in Texas.  The husband passed away and, although his will provided that his interest in the property should go to his wife, she never probated the will.  In 2019, the wife entered into a contract to sell the property.  Under Texas intestacy law, the husband’s undivided 50% interest in the property passed to his four children from a prior marriage in equal shares (i.e., 12.5% each).  Thus, the title company contacted the children about the sale.  All four agreed to sign deeds, but two agreed that their sales proceeds could go to the wife and two, Mark and Douglas, asked to receive their 12.5% of the proceeds themselves.  However, for reasons that are in dispute, only 50% of the proceeds went to the wife and 25% went to each of Mark and Douglas, who refused to return the excess monies.  The wife and the two children who did not want the sales proceeds then brought an action against the title company, and the title company brought a third-party complaint against Mark and Douglas for unjust enrichment.  Mark and Douglas filed a combined special appearance arguing that the Texas court did not have jurisdiction over them.  The trial court agreed and granted the special appearance.

On appeal, the Court reversed.  The Court confirmed that “[t]he exercise of personal jurisdiction satisfies due process if (1) the nonresident defendant established minimum contacts with the forum state and (2) the exercise of jurisdiction comports with traditional notions of fair play and substantial justice.”  The Court then agreed with Mark and Douglas that the fact that their father purchased the property, that their stepmother declined to probate the will, and that their stepmother decided to sell the property did not confer jurisdiction over them.  However, the transaction did not end there.  “[I]f the brothers wanted to avoid jurisdiction in Texas with respect to this transaction, then they could have simply refused to sign the deed. And if they wanted to sever all ties to Texas with respect to the property, then they could have executed a quitclaim deed in favor of Carolyn or their brothers. . . . Instead, they elected to sign the general warranty deed and convey their interests to the buyers in exchange for a portion of the sales proceeds. In doing so, they established an ongoing relationship between themselves, the buyers, and Texas.”  Further, because Douglas resides in a neighboring state and Mark acknowledged that he sometimes traveled to Texas to visit his father, the Court found it would not be particularly burdensome for them to defend a suit in Texas.  Accordingly, the Court reversed the trial court.

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com, Desiree McDonald at dmcdonald@riker.com, or Kevin Hakansson at khakansson@riker.com.