Texas Supreme Court Opinions - 3/3/17

Posted by Rich PhillipsOn Friday, March 3, 2017, the Supreme Court of Texas issued opinions in two argued cases:No. 15-0083, M&F Worldwide Corp. v. Pepsi-Cola Bottling Co., Inc.—In this appeal of the denial of a special appearance, the Court was asked to decide whether Texas courts could exercise specific personal jurisdiction over corporate defendants that are not Texas residents. The suit arose from a settlement agreement that resolved a New York lawsuit. Plaintiff Pepsi-Cola Bottling Co. (a non-Texas resident) alleges that by signing the settlement agreement, the defendants tortiously interfered with indemnity obligations owed to the plaintiff by different non-resident company. The non-Texas-resident defendants filed special appearances, arguing that they were not subject to personal jurisdiction in Texas. The plaintiff argued that they were subject to jurisdiction because they traveled to Texas twice to negotiate the allegedly tortious settlement agreement and that some of the agreements related to the settlement agreement were performable in Texas. In a unanimous opinion by Justice Lehrmann, the Supreme Court rejected these arguments and found that the non-resident defendants are not subject to specific personal jurisdiction in Texas. The Court concluded that, “[i]n negotiating, executing, and carrying out the settlement agreement, the [non-resident] defendants did not seek to do business in Texas, commit a tort in Texas, or allegedly cause injury to [plaintiff] in Texas. Further, to the extent the [non-resident] defendants purposefully directed activities toward Texas, Pepsi’s causes of action do not arise from those contacts.” Because it found no specific personal jurisdiction, the Court remanded the case to the court of appeals to consider in the first instance whether the non-resident defendants are subject to general jurisdiction in Texas.No. 15-0248, BP America Production Co. v. Laddex Ltd.— [Caution: impending discussion of the rule against perpetuities] This case arises from an assertion that a lease had terminated due to a failure to produce in paying quantities. Respondent Laddex took a top lease covering property already leased to Petitioner BP and then sued BP arguing that BP’s lease had terminated due to lack of production in paying quantities. The trial court rejected BP’s argument that Laddex’s top lease was invalid under the rule against perpetuities and submitted to a jury whether the lease had ceased to produce in paying quantities. The court of appeals agreed that the top lease did not violate the rule against perpetuities but held that the trial court had improperly instructed the jury regarding production in paying quantities and remanded for a new trial. In another unanimous opinion by Justice Lehrmann, the Supreme Court first held that although the top lease was not a model of clarity, it did not violate the rule against perpetuities because it was a present conveyance of the lessor’s possibility of reverter under the BP lease. Thus, the interest vested at the time the top lease was signed and did not implicate issues about whether the interest would vest at an indeterminate time in the future. The Supreme Court then held that the trial court improperly narrowed the jury’s consideration of whether the well had ceased producing in paying quantities by limiting the time period at issue to a fifteen-month period of slowed production. The Court reiterated its holding in Clifton v. Koontz, 325 S.W.2d 684 (Tex. 1959), that Texas law is “clear that  ‘there can be no limit as to time…to be taken into consideration’ in making” the production-in-paying-quantities determination. The Court held that, while the parties are free to argue for different time periods, “the charge may not ask or instruct the jury about a specific period without unduly influencing the jury and violating Clifton.” Thus, the Court affirmed the court of appeals’ judgment remanding the case for a new trial.The Court did not grant any new petitions for review. You can access the complete order list here.