Charles Walker v. Robert Loiseau, Special Deputy Receiver for American Benefit Plans

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

NO. 03-02-00328-CV

Charles Walker, Appellant

v.

Robert Loiseau, Special Deputy Receiver for American Benefit Plans, et al., Appellees

FROM THE DISTRICT COURT OF TRAVIS COUNTY, 345TH JUDICIAL DISTRICT

NO. GN201141, HONORABLE SCOTT H. JENKINS, JUDGE PRESIDING

M E M O R A N D U M O P I N I O N

This is an appeal from the denial of a special appearance and the grant of a temporary

injunction. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014 (a)(7) (West Supp. 2003); Walling v.

Metcalfe , 863 S.W.2d 56, 58 (Tex. 1993) . Appellant Charles Walker, a Mississippi resident and

president of First American Christian Society (1) ("the Fraternal"), conducted various business

transactions with Robert Neal, a Texas resident and president of American Benefit Plans ("American

Benefit"), regarding their respective insurance entities. In March 2002, the Attorney General of

Texas brought suit against American Benefit and other entities owned or controlled by Neal

(collectively the "Neal entities" (2) ) for engaging in the unauthorized business of insurance in Texas. (3)

The Attorney General did not name Walker as a defendant. The trial court established a receivership

to account for and recover American Benefit's various assets. (4) The Receiver then filed suit in Texas

against Walker, Neal, and other defendants, ancillary to the main receivership suit involving the Neal

entities, requesting a temporary injunction to freeze any assets held as a result of the Neal entities'

activities. Walker challenged the Texas court's personal jurisdiction over him with regard to

$500,000 transferred directly into his personal account. The district court denied Walker's special

appearance and granted the temporary injunction.

BACKGROUND

In June 2001, Neal approached Walker with a proposal for the Fraternal to underwrite

an American Benefit health-insurance plan. The two men met in Mississippi, and on July 12 Walker

faxed a letter to Neal in Texas announcing an agreement whereby the Fraternal would serve as

underwriter and would issue a master insurance policy to American Benefit. However, later in July,

Walker faxed a second letter to Neal stating that any agreement between the two insurance entities

was "terminated, effective immediately." (5) Walker terminated the agreement because Neal had made

significant misrepresentations suggesting that the Fraternal insured all of American Benefit's health-care plans. (6)

However, in October or November, Walker contacted Neal to express an interest in

marketing and selling American Benefit health-care plans in Mississippi. Walker signed in

Mississippi, and sent to Neal in Texas, a "General Agent Agreement," provided by Neal, by which

Walker agreed to market American Benefit plans in Mississippi. That contract included a choice-of-law and forum-selection clause providing that any disputes would be settled in Texas courts, under

Texas law. Although Walker testified that he never received a copy signed by Neal, he did make at

least one sale under the agreement, although the transaction does not appear to have been

consummated. During the same period, Walker and Neal negotiated to each buy a 25% share in

Capitol Re, a reinsurance company they intended to use to reinsure the American Benefit health

plans. That transaction also fell through.

Walker then decided to sell his interest in the Fraternal. It is the alleged sale of the

Fraternal to Neal that forms the basis for the Receiver's suit against Walker to recover the $500,000.

Walker faxed Neal indicating that he intended to sell his interest in the Fraternal and that, because

Neal had previously expressed a desire to purchase control of the Fraternal, Walker would delay

selling the company to another prospective buyer. The minutes from the Fraternal's January 10th

meeting indicated that Walker was considering two different buyers and would have to pray on the

decision. Minutes from the January 14th meeting indicate that Walker, acting alone, chose Neal. (7)

In a subsequent fax, Walker indicated that he and Neal had reached an agreement on the sale:

"Congratulations on agreeing to purchase the Walker family investment and contributions into [the

Fraternal] and assuming control of [the Fraternal]." (8)

Although the only documentation of the transaction consists of these fax

transmissions and the two excerpts from the minutes, Neal did in fact pay $500,000. Walker and his

family members resigned their positions on the board of the Fraternal, simultaneously appointing

Neal and his associates to constitute the new board of directors. (9) Neal caused two $250,000 wire

transfers to be sent by Electronic Benefits Group, a Neal entity, from a Texas bank to Walker's

personal account in Tupelo, Mississippi. At the time of this transfer, the Fraternal's value appears

from the record to have been significantly less than $500,000. The transfer was not memorialized,

at Neal's request, in order to avoid making the transaction generally known.

In April, Walker received notice from the Mississippi Department of Insurance that

the Fraternal was in violation of various capitalization requirements under the Mississippi insurance

code and that the election of the new board had been illegal under a Mississippi law requiring that

directors of Mississippi fraternal benefit societies be Mississippi residents. After asking Neal and

the other newly installed board members to resign until they could establish Mississippi residence,

Walker assumed the position of acting president. Walker's brief to this Court indicates that he is

currently acting as president of the Fraternal.

In March, before Walker received the letter from the Mississippi Department of

Insurance and while Neal was still in control of the Fraternal, the Texas Attorney General filed its

original action alleging that Neal had engaged in money laundering by diverting insurance proceeds

and premiums paid by Texas customers to various Neal entities. In that case, a forensic accountant

traced some of those funds to offshore accounts, including some that had passed through the

Fraternal. (10) Those funds allegedly passed from an entity known as the National Association for

Working Americans, through Electronic Benefits Group, both of which were Neal entities, and after

passing through the Fraternal were routed to offshore accounts on Neal's authority. (11)

The Receiver filed this suit against Neal, Walker, and others seeking to recover any

funds wrongfully obtained from the Receivership estate. Initially, the Receiver pleaded the case

under a conversion theory, requesting restitution of the wrongfully-taken funds. While the other

defendants refused to testify, invoking their Fifth Amendment right against self-incrimination,

Walker chose to file a special appearance challenging the Texas courts' jurisdiction over his person.

In his response to the special appearance, the Receiver adjusted his position to argue that Walker had

participated in tortious activities having an effect in Texas.

The Hearing

Both Walker's special appearance and the temporary injunction were heard in the

same proceeding, without any prejudice to Walker's jurisdictional challenge. Walker did not appear.

The Receiver based its argument for jurisdiction on the theory that Walker had participated in a

money-laundering scheme masterminded by Neal and affecting Texas consumers. The Receiver

began by taking the stand to testify about the underlying receivership proceedings and establish his

case that the $500,000 transfer was part of a larger illegal scheme. The Receiver then called Tom

Petrosewicz, a forensic accountant, to testify about the financial records of the Walker/Neal

transactions. Petrosewicz testified that Neal's practice of transferring money between insurance

entities without receiving equivalent value in exchange was consistent with a pattern of money-laundering activity. Petrosewicz confirmed that all of the money transferred, either to Walker or to

the Fraternal, had been taken from Texas insurance consumers. Despite close questioning by

Walker's counsel, Petrosewicz maintained his position that Walker had sold Neal a worthless

"interest" in the Fraternal in exchange for $500,000. The record contains no evidence t hat Walker

had actual knowledge that the $500,000 was the fruit of an illegal scheme operated by Neal. There

is also no evidence that the Fraternal was a link in Neal's alleged money laundering scheme while

Walker was its president or a board member.

The Receiver introduced into evidence the various records of Walker's transactions

with Neal and the Mississippi Department of Insurance's letter declaring that the Fraternal would

be declared insolvent, absent remedial action, because it had included assets that did not belong to

it and had drastically understated its debts and liabilities. (12) The letter also indicated that the

mechanism by which Walker had transferred his interest to Neal, appointing the Neal family to sit

on the board of directors, violated the Fraternal's bylaws and the requirement that all directors be

Mississippi residents. (13) The Receiver argued that, because of this indication that the Fraternal had

not been worth the money Neal paid to Walker and because of the suggestion that the Fraternal was

legally incapable of benefitting Neal's insurance organization, Walker had participated in Neal's

tortious behavior.

In response, Walker's counsel relied on Walker's deposition testimony explaining his

relationship with Neal. Walker argued that, because he could offer a plausible explanation for his

business transactions with Neal, it was impossible for the Texas courts to exercise jurisdiction based

only on the communications regarding the $500,000 in transferred funds. Walker argued that he had

merely sold his interest in the Fraternal to Neal in a bona fide transaction, taking place entirely in

Mississippi, and that any legal irregularities were the result of oversight on his part.

Because Walker did not take the stand, the Receiver introduced and tendered all of

Walker's deposition into evidence. Walker had difficulty explaining the transaction. When asked

to describe the nature of the property he had conveyed to Neal in return for $500,000, Walker

claimed that he had transferred his and his family's "interest" in the Fraternal. However, under

questioning, Walker admitted that he did not actually own an interest in the Fraternal. Rather, the

Fraternal belongs to its members, not to the individuals managing the Fraternal's activities. Walker

freely admitted that he had no direct ownership interest in the Fraternal, but rather held a

"management contract" whereby he was to recover 5% of the Fraternal's profits. However, under

examination, Walker admitted that the Fraternal had never made a profit and that he had never been

paid any money pursuant to his management contract. Walker then suggested that he had transferred

to Neal a "controlling interest" in the Fraternal. However, Walker also admitted that he had

attempted to transfer control over the fraternal to Neal in contravention of the Fraternal's bylaws.

Although under the by-laws only the membership may elect the board of directors, Walker and his

family attempted to transfer a controlling interest in the Fraternal by resigning and appointing a

successor board composed of Neal and his relatives. Walker further admitted that he knew it was

inappropriate for non-Mississippi residents to sit on the board of a Mississippi fraternal organization,

but maintained that he believed that the Neals intended to move to Mississippi and had looked into

buying real estate in the area.

Walker claimed that the value of this management contract and control of the board

of directors was $500,000. This amount, Walker claimed, constituted the amount of money he had

personally invested in the Fraternal while acting as its manager. However, under examination,

Walker admitted that there existed no documentation of any debt owed by the Fraternal to Walker.

Walker claimed that his wife, who served as the Fraternal's bookkeeper, knew of the investments

but had not entered them into the Fraternal's accounting records. Walker admitted that the required

capital disclosure forms, which were filed over his signature with the Mississippi Department of

Insurance, contained no record of the alleged $500,000 investment. Walker also contended that the

Fraternal had value to Neal because it provided an opportunity for Neal's insurance entities to sell

insurance products in other states, because Neal had been having some regulatory problems in

Texas. (14) Walker testified that Neal would be able to market insurance products outside of

Mississippi if Neal provided the Fraternal with sufficient capitalization to meet other states'

regulatory capitalization requirements. Although Walker offered no evidence supporting his

allegation that ownership of the Fraternal would assist Neal in marketing insurance products in

"other states," the letter from the Mississippi Department of Insurance indicates that "[the

Fraternal's] license only gives it the authority to offer certain benefits to Mississippi residents ." (15)

(Emphasis added). Walker could give no other explanation for any value conveyed to Neal in return

for $500,000.

Walker and the Receiver agreed on the basic details of Walker's business relationship

with Neal, but joined issue as to whether Walker had participated in Neal's money-laundering

activities. The Receiver contended that, because Walker's actions were part of a pattern of

fraudulent activity, undertaken in the context of an ongoing business relationship involving Texas

insurance entities, personal jurisdiction was appropriate based on the harm which occurred in Texas.

Walker countered the Receiver's assertion of jurisdiction by attempting to provide an innocent

interpretation of each aspect of the purported sale of the Fraternal. The trial court denied Walker's

special appearance and granted the temporary injunction. Walker now appeals.

DISCUSSION

Special Appearance

The plaintiff bears the initial burden of pleading sufficient allegations to bring a

nonresident defendant within the provisions of the Texas long-arm statute. See BMC Software

Belgium, N.V. v. Marchand , 83 S.W.3d 789, 793 (Tex. 2002). Once the plaintiff meets that burden,

the burden shifts to the defendant to negate all jurisdictional bases. Id. ; Kawasaki Steel Corp. v.

Middleton , 699 S.W.2d 199, 203 (Tex. 1985). Whether a court has personal jurisdiction over a

defendant is a question of law. BMC Software , 83 S.W.3d at 794 . However, the trial court

frequently must resolve questions of fact before deciding the jurisdictional question. Id. ; see also

Pessina v. Rosson , 77 S.W.3d 293, 296 (Tex. App.--Austin 2001, pet. dism'd w.o.j.) (review of

special appearance on agreed facts: de novo ). If a trial court enters an order denying a special

appearance and issues findings of fact and conclusions of law, the appellant may challenge the fact

findings on legal and factual sufficiency grounds. BMC Software , 83 S.W.3d at 794 . We determine

the appropriateness of the trial court's resolution of a fact dispute by an ordinary sufficiency of the

evidence review based on the entire record of the special appearance proceeding. Daimler-Benz

Aktiengellschaft v. Olson , 21 S.W.3d 707, 715 (Tex. App.--Austin 2000, no pet.).

A Texas court may exercise jurisdiction over a nonresident defendant if the Texas

long-arm statute authorizes the exercise of jurisdiction and the exercise of jurisdiction comports with

due process. Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C. , 815 S.W.2d

223, 226 (Tex. 1991); see Tex. Civ. Prac. & Rem. Code Ann. § 17.042 (West 1997). The broad

language of the long-arm statute permits an expansive reach, limited only by the federal

constitutional requirements of due process. Schlobohm v. Schapiro , 784 S.W.2d 355, 357 (Tex.

1990). Therefore, our task is to determine whether the trial court's exercise of jurisdiction over

Walker violates federal due process standards. Guardian Royal , 815 S.W.2d at 226 . The federal

due process clause protects a person's liberty interest in not being subject to binding judgments of

a forum with which that person is not sufficiently connected. See Burger King Corp. v. Rudzewicz ,

471 U.S. 462, 471-72 (1985). A state may assert personal jurisdiction over a nonresident defendant

only if the defendant has (1) maintained minimum contacts with the forum state and (2) the exercise

of jurisdiction comports with traditional notions of fair play and substantial justice. BMC Software ,

83 S.W.3d at 792 . A nonresident defendant that has "purposefully availed" itself of the privileges

and benefits of conducting business in the foreign jurisdiction has sufficient contacts to confer

personal jurisdiction. Id. at 795 (citing Burger King , 471 U.S. at 474-76 ). Harmful activities that

will foreseeably cause harm in the foreign state are generally sufficient to invoke personal

jurisdiction. See World-Wide Volkswagen Corp. v. Woodson , 444 U.S. 286, 296-97 (manufacturer

and importer subject to Oklahoma jurisdiction in automobile products-liability suit, but not New

York based importer and dealer). Furthermore, intentional tortious activity confers general

jurisdiction at the situs of the harm caused. Calder v. Jones , 465 U.S. 783, 789-90 (1984) (libel

jurisdiction appropriate in any state where libelous statements published).

Minimum Contacts

Walker argues that specific personal jurisdiction is inappropriate in this case because

his legitimate business contacts with the State of Texas regarding the transferred money were

insufficient to constitute minimum contacts. (16) His argument, however, is based on case law

involving business transactions rather than patterns of tortious activity. See, e.g. , 3-D Elec. Co. v.

Barnett Constr. Co. , 706 S.W.2d 135, 137 (Tex. App.--Dallas 1986, writ ref'd) (Tennessee general

contractor not subject to jurisdiction based on casual contact with sub-contractor doing business in

Texas). The long-arm statute allows personal jurisdiction for any tort "committed in whole or in part

in Texas." Tex. Civ. Prac. & Rem. Code Ann. § 17.042 (2). In Texas, personal jurisdiction may be

appropriate in cases where a defendant takes part in any aspect of a tortious scheme that impacts

Texas citizens, regardless of a defendant's other links to our State. See Siskind v. Villa Found. for

Educ., Inc. , 642 S.W.2d 434, 437 , 438 n.5 (Tex. 1982); see also Memorial Hosp. Sys. v. Fisher Ins. ,

835 S.W.2d 645, 650-51 (Tex. App.--Houston [14th Dist.] 1992, no writ) (commission of tort

causing foreseeable economic injury in Texas sufficient to confer personal jurisdiction); General

Elec. v. Brown & Ross Int'l. , 804 S.W.2d 527, 532 (Tex. App.--Houston [1st Dist.] 1990, writ

denied) (fraud conspirator subject to specific personal jurisdiction in Texas because, in participating

in fraud scheme, could have anticipated subsequent litigation). At the special appearance hearing,

the Receiver argued that personal jurisdiction was appropriate because Walker had participated in

Neal's scheme, much of which unfolded in Texas. See Tex. Civ. Prac. & Rem. Code Ann.

§ 17.042 (2). Because participation in tortious activity is sufficient to confer specific personal

jurisdiction under both the long-arm statute and the federal due process clause, we will affirm the

trial court's ruling if the evidence presented at the hearing is legally and factually sufficient to

support the trial court's determination. See Olson , 21 S.W.3d at 715 .

When, as in this case, a trial court does not issue findings of fact and conclusions of

law with its special appearance ruling, all facts necessary to support the judgment and supported by

the evidence in the record are implied in favor of the denial. BMC Software , 83 S.W.3d at 795 .

Because the appellate record includes the reporter's and clerk's records, these implied findings are

not conclusive and may be challenged for legal and factual sufficiency. Id. In the case at bar,

however, the trial court's findings of fact pursuant to the temporary injunction, which were based

on the same record as the special appearance, are instructive in assessing the trial court's ruling on

the special appearance. The Receiver bore a higher burden in the temporary injunction proceeding;

an element of the pleadings for obtaining a temporary injunction is the requirement that the movant

demonstrate a right to probable recovery. Transport Co. of Tex. v. Robertson Transps., Inc. , 261

S.W.2d 549, 552 (Tex. 1953); Amalgamated Acme Affiliates, Inc. v. Morton , 33 S.W.3d 387, 392

(Tex. App.--Austin 2000, no pet.). The trial court's finding indicates that the court considered there

to be sufficient evidence for the proposition that the Receiver would recover funds from Walker and

the other defendants because Walker and the others were participants in Neal's overall scheme. In

order to issue the temporary injunction, the trial court evaluated the credibility of Walker's testimony

before ruling against him. We believe that this finding bolsters the trial court's denial of Walker's

special appearance.

We review the special appearance record under the same standard applied to the

review of jury findings or a trial court's findings of fact. See BMC Software , 82 S.W.3d at 795

(citing Roberson v. Robinson , 768 S.W.2d 280, 281 (Tex. 1989)). Walker bore the burden of

disproving all bases for jurisdiction. In its role as fact-finder, the trial court is the sole arbiter of the

witnesses' credibility and the weight to be given their testimony. See Bellefonte Underwriters Ins.

Co. v. Brown , 704 S.W.2d 742, 744-45 (Tex. 1986). It is not within the province of this Court to

interfere with the trial court's resolution of conflicts in the evidence or to pass on the weight or

credibility of the witnesses' testimony. See Benoit v. Wilson , 239 S.W.2d 792, 796 (Tex. 1951);

K-Mart Corp. v. Pearson , 818 S.W.2d 410, 413 (Tex. App.--Houston [1st Dist.] 1991, no writ).

Even when there is conflicting evidence, the fact-finder's verdict on such matters is generally

regarded as conclusive. See Schneider v. Schneider , 5 S.W.3d 925, 930 (Tex. App.--Austin 1999,

no pet.).

The record contains sufficient evidence to suggest that Walker participated in a

scheme of tortious activity affecting Texas consumers. Petrosewicz described the overall modus

operandi of Neal's money-laundering activities: to transfer money between insurance entities

without any equivalent value being conferred or recorded in the accounting records. (17) Petrosewicz

testified that, as in the other instances of money transferring, the money transferred to Walker had

been given for little or no actual benefit. The "interest" in the Fraternal transferred to Neal by

Walker involved an almost insolvent fraternal benefit organization. There were no documents

memorializing the transaction. More importantly, the transfer was facially illegal because it involved

the selection by the former board of directors of a new board of directors and involved the transfer

of seats on a board of directors of a Mississippi fraternal benefits organization to non-Mississippi

residents, in contravention of state law. (18) Furthermore, the $500,000, which Walker characterized

as the value of his investment in the Fraternal, was not be accounted for in the Fraternal's accounting

records, which were kept by Walker's wife.

The purpose of a special appearance is not to determine liability, but whether the

actions alleged by a plaintiff are of a type that suggest a defendant should expect to be subject to

Texas jurisdiction. See Mort Keshin & Co. v. Houston Chronicle Publ'g Co. , 992 S.W.2d 642, 648

(Tex. App.--Houston [14th Dist.] 1999, no pet.). Walker's activities must also be evaluated in the

context of his business relationship with Neal, which makes clear that Walker understood that he was

dealing with money owned by Texas-based insurance entities. At one point, Walker even signed an

agency agreement with a forum-selection clause providing for Texas jurisdiction. These contacts

to some degree rebut Walker's assertion that he was unaware that his business dealings with Neal

could potentially make him amenable to personal jurisdiction in Texas. Taken together, the evidence

introduced by the Receiver was legally sufficient to support a finding that Walker had participated

in Neal's money-laundering activities and was therefore subject to personal jurisdiction in Texas.

See Pessina , 77 S.W.3d at 296 (participation in fraudulent insurance scheme conferred personal

jurisdiction).

To determine the factual sufficiency of the denial of the special appearance, we must

look to the record as a whole. The only direct evidence to contradict the Receiver's version of

Walker's transaction with Neal is Walker's deposition testimony, entered into evidence by the

Receiver. Walker claimed that he was an innocent seller in good faith and that any legal

irregularities involved in the sale were the result of his ignorance of the law. In essence, Walker's

deposition corroborates the details of the Receiver's version of events; Walker simply offers an

innocent explanation for each aspect of the transaction. The trier of fact was, in effect, presented

with two contradictory explanations of Walker's business relationship with Neal. As is apparent

from the denial of the special appearance and the finding that, for purposes of the temporary

injunction, all of the defendants had likely been participants in Neal's illegal schemes, the trial court

found Petrosewicz's explanation of the documentary evidence more credible than Walker's

explanation. (19) We will not disturb the trial court's determination of the credibility of equally relevant

testimony describing two theories of the case. See Gutierrez v. Deloitte & Touche , 100 S.W.3d 261,

273 (Tex. App.--San Antonio 2002, pet. filed) (specific jurisdiction appropriate in fraud case where

defendant presented testimony on, but did not negate, all jurisdictional bases).

A nonresident defendant is subject to personal jurisdiction for activities that could

foreseeably cause injury in the forum state. The evidence is sufficient to support a finding that, in

all probability, Walker participated in a scheme that caused harm to Texas insurance consumers.

Walker's participation in Neal's overall pattern of fraudulent activity satisfies the minimum-contacts

requirement of the required personal jurisdiction analysis.

Traditional Notions of Fair Play and Substantial Justice

Even though minimum contacts are established, personal jurisdiction may still be

inappropriate if it violates traditional notions of fair play and substantial justice. Asahi Metal Indus.

Co. v. Superior Ct. of Cal ., 480 U.S.102, 114 (1987); CSR Ltd. v. Link, 925 S.W.2d 591, 594 (Tex.

1996). The courts look to five factors in making this determination: (1) the burden on the defendant;

(2) the interests of the forum state in adjudicating the dispute; (3) the plaintiff's interest in obtaining

convenient and effective relief; (4) the interstate judicial system's interest in obtaining the most

efficient resolution of controversies; and (5) the shared interest of the several states in furthering

fundamental substantive social policies. Guardian Royal , 815 S.W.2d at 232 .

Walker has at no time proffered evidence of his inability to litigate fully and fairly

in Texas. In fact, the record indicates that Walker agreed to be, and was, deposed in Austin, Texas.

Although there may be an argument that Walker would be inconvenienced by litigating this claim

in Texas based solely on geographic proximity, such concerns are greatly mitigated in this case by

the nature of the underlying suit and the need of the Receiver to maintain an efficient trial in order

to preserve the Receivership's assets. We are reluctant to hold that personal jurisdiction is

inappropriate simply because a defendant has been shown to be a resident of another state. Many

of the primary witnesses in this case, including the defendants in the underlying Receivership action,

are Texas residents. Furthermore, we believe that jurisdiction is appropriate in light of Texas's

overwhelming regulatory concern and the interest in efficient interstate enforcement of justice.

Given the scope of the fraud allegedly perpetrated by the Neal entities, it would be wasteful of

judicial resources to conduct parallel litigation of this ancillary issue to the underlying Receivership

action in Mississippi. We overrule Walker's first issue.

Temporary Injunction

Walker's only issue regarding the temporary injunction is his argument that the court

lacked personal jurisdiction. Because we find that the trial court properly denied Walker's special

appearance, we overrule his second issue.

CONCLUSION

Because the evidence supports the implied finding that Walker participated in tortious

conduct having effects in Texas, we affirm the trial court's denial of Walker's special appearance

and the temporary injunction as entered.

Mack Kidd, Justice

Before Justices Kidd, B. A. Smith and Yeakel

Affirmed

Filed: July 24, 2003

1. First American Christian Society is referred to both as a "fraternal benefit society" and a

"burial association" in the record. Under Mississippi law, a fraternal benefit society may provide

a limited number of contractual benefits to its members, including: death, endowment, annuity,

disability, and hospital benefits. See Miss. Code Ann. §§ 83-29-1 , 83-29-9, 83-30-31 (2003). We

will refer to First American Christian Society as "the Fraternal."

2. The entities for which Loiseau was appointed Special Deputy Receiver include: American

Benefit Plans; United Employers Voluntary Employee Beneficiary Association; United Employers

Voluntary Employee Beneficiary Association I; National Association for Working Americans;

National Association of Working Americans; Robert David Neal, individually and d/b/a American

Benefit Plans; United Employers Voluntary Employee Beneficiary Association; United Employers

Voluntary Employee Beneficiary Association I; National Association of Working Americans, and

National Association for Working Americans; and Robert Neal Pointer, individually and d/b/a

Electronic Benefits Group, Inc., and d/b/a American Benefit Plans d/b/a Electronic Benefits Group,

Inc.; Jose Michael Mangawang, individually and d/b/a National Association of/for Working

Americans, and d/b/a Enhanced Health Management and American Benefit Plans; John Baptist

Ramirez a/k/a Johnny Rhondo, individually, and The Four Corners Company, LLC, a/k/a Four

Corners Co., LLC, a/k/a Four Corners Corp., a/k/a The 4 Corners Company, LLC.; American

Association of Agriculture, Forestry and Fishing Workers; American Association of Transportation,

Communication, Electrical, Gas and Sanitary Workers; American Association of Wholesale Trade

Workers; American Association of Manufacturer Workers; American Association of Service

Workers; American Association of Construction Workers; and the American Association of

Professional Workers.

3. The Receiver prevailed in the underlying lawsuit. See Pointer v. State , No. 03-02-00548-CV, 2003 Tex. App. LEXIS4611 (Austin May 30, 2003, no pet. h.) (memorandum opinion).

Although Neal was represented by counsel and filed a notice of appeal, he took no further action and

was dismissed as an appellant. See Pointer v. State , No. 03-02-00548-CV (Tex. App.--Austin

March 5, 2003) (order).

4. The Texas Department of Insurance was named Temporary Receiver for the defendants,

and Robert Loiseau was designated Special Deputy Receiver. We will refer to them collectively as

"the Receiver."

5. Much of Walker's correspondence is written in block capital letters. To make them more

readable, any citation will be made using sentence-style capitalization.

6. In his deposition, Walker described his discovery of Neal's misrepresentations: "[S]omeone

called me and said that, and I said it's not true. I said, we have been talking, but I said, nothing had

been signed." Walker then described his reaction: "I sent a letter, told [Neal] we was stopping all

negotiations. Because this [] guy that called me."

7. Other correspondence in the record suggests that there were other potential buyers, but that

record is underdeveloped and sketchy.

8. The cover sheet to Walker's fax directed Neal to sign the letter and fax it back to Walker;

there is no evidence in the record that Neal did so.

9. Minutes for the Fraternal's January 14 board meeting recorded the vote to appoint Neal

and others to the board. At this time, Walker and the current members resigned; however, each

would continue with their duties until Neal took control and responsibility.

10. The record indicates that the offshore financial institutions that received the money alleged

to have been transferred through the Fraternal have agreed to return it to the Receiver.

11. According to Walker's deposition, he also had signature authority over the accounts in

question at the time of the offshore transfers.

12. In its letter, the Mississippi Department of Insurance indicated that the Fraternal had

misrepresented the value of its assets and the extent of its debts on its required capitalization filings.

13. Walker testified in his deposition that he believed that Neal and some of his family

members intended to relocate to Mississippi.

14. Walker admits that he ultimately learned that Neal had been indicted for his activities in

Texas, but claims that he only learned of the charges after his dealings with Neal had been

concluded.

15. We make no conclusion as to the ultimate legality of Walker's actions under Mississippi

law. The representations of the Mississippi Department of Insurance merely serve to rebut Walker's

position that he participated in a good faith transaction.

16. The minimum contacts analysis has been refined into two categories--general and specific.

Specific jurisdiction exists when the cause of action arises out of or relates to the nonresident's

actions that give rise to the court's jurisdiction. Guardian Royal Exch. Assurance, Ltd. v. English

China Clays, P.L.C. , 815 S.W.2d 223, 230 (Tex. 1991). General jurisdiction exists when the

defendant's contacts with the forum state are sufficiently continuous and systematic that there exists

personal jurisdiction for any suit against the defendant to be brought in that state. Id. Because

general jurisdiction has wider scope, the standard is more demanding, requiring a showing of

substantial activities within the forum state. Schlobohm v. Schapiro , 784 S.W.2d 355, 357 (Tex.

1990). The Receiver has not argued that Walker is subject to general jurisdiction.

17. Under Texas law, knowingly acquiring an interest in the proceeds of criminal activity may

constitute money laundering. See Tex. Pen. Code Ann. § 34.02 (a)(1) (West 2003).

18. Walker in his deposition admitted that according to the Fraternal's by-laws the board of

directors could only be elected by a vote of the membership; nevertheless, Walker and his family

members attempted to appoint the new board without consulting the Fraternal's members.

19. By not testifying, Walker may have disadvantaged himself in the credibility contest.