author: LAURA C. HIGLEY, Justice.

text:
    GULF COAST WASTE DISPOSAL AUTHORITY, Appellant, v. FOUR SEASONS EQUIPMENT, INC., Appellee.
    No. 01-09-01001-CV.
    Court of Appeals of Texas, Houston (1st Dist.).
    June 24, 2010.

      John J. Hightower, Patricia L. Hayden, Scott Bounds, Olson & Olson, L.L.P., Houston, TX, for Appellant.
    K. Scott Brazil, Brazil & Dunn, Houston, TX, for Appellee.
    Panel consists of Justices KEYES, HANKS, and HIGLEY.
   OPINION

LAURA C. HIGLEY, Justice.

In this interlocutory appeal, Gulf Coast Waste Disposal Authority (“Gulf Coast”), a political subdivision of the State, appeals the trial court’s denial of its plea to the jurisdiction, asserting that it has immunity from suit. The underlying dispute arises from a commercial transaction in which Gulf Coast acquired a crane from Four Seasons Equipment, Inc. (“Four Seasons”) through an Internet auction. We determine whether, as alleged by Four Seasons, Gulf Coast’s governmental immunity was waived because the acquisition of the crane constituted an uncompensated “taking” of Four Seasons’s property as prohibited by article I, section 17 of the Texas Constitution.

We conclude that the acquisition of the crane was not an unconstitutional taking; thus, Gulf Coast’s sovereign immunity has not been waived. The trial court erred when it denied Gulf Coast’s jurisdictional plea. We further conclude that the trial court lacks subject matter jurisdiction over Four Seasons’s breach of contract claim because Four Seasons’s requested damages exceed the maximum jurisdictional limit of the trial court.

We reverse and render judgment dismissing Four Seasons’s claims against Gulf Coast for lack of jurisdiction.

Background

Created by the Texas Legislature, Gulf Coast is a political subdivision of the State of Texas. It is a conservation and reclamation district, which manages the water resources of Chambers, Galveston, and Harris counties by providing waste disposal systems and regulation of waste disposal.

In 2007, Gulf Coast sought to purchase a crane for its Washburn Tunnel Treatment Facility. Gulf Coast contacted Four Seasons and requested budgetary pricing on a 30-ton capacity hydraulic rough terrain crane. Gulf Coast requested and received Four Seasons’s assistance in formulating the bid specifications for the desired crane.

Gulf Coast informed Four Seasons that the purchase of the crane would occur through the “reverse auction process.” A reverse auction is a real-time bidding process usually lasting less than one hour and taking place at a previously scheduled time and Internet location. Suppliers anonymously submit bids to provide the designated goods or services. During the auction, the bids go down rather than up. Bidders are able to view the current bid and may make multiple, increasingly lower bids until the set time expires. The goal is to be the lowest bidder at the end of the auction.

Texas Procurement Center (“Texas Procurement”), an auction facilitator, had the required software to conduct an on-line reverse auction. Gulf Coast did not have the software to conduct a reverse auction and had previously used the services of Texas Procurement when purchasing equipment through the reverse auction process.

To purchase the crane in 2007, Gulf Coast again used Texas Procurement’s services to conduct the reverse auction. Texas Procurement conducted the reverse auction on July 80, 2007. Four Seasons participated in the on-line bidding process for the crane.

Before it was permitted to participate in the on-line bidding, Four Seasons was required to agree to the terms and conditions set out in the Supplier Reverse Auction User Agreement. The agreement expressly stated that, by accessing Texas Procurement’s bidding system, the supplier was agreeing to the terms and conditions of the Supplier Reverse Auction User Agreement. The agreement explained that Gulf Coast could choose to pay Texas Procurement, which would, in turn, pay the successful bidder.

Four Seasons’s bid of $280,000 was the successful bid for the crane.

After confirming that Four Seasons’s crane met the bid specifications, Gulf Coast submitted a purchase order to Texas Procurement for the crane. The purchase order indicated a total cost of $294,000. This included Four Seasons’s $280,000 bid price for the crane and a $14,000 commission to be paid to Texas Procurement. Texas Procurement in turn sent a purchase order to Four Seasons. The purchase order indicated that the bid price for the crane was $280,000 and that the crane should be delivered to Gulf Coast’s Wash-burn Tunnel Treatment Facility.

On December 3, 2007, Texas Procurement sent an invoice to Gulf Coast for $294,000. Four Seasons delivered the crane to Gulf Coast on March 25, 2008. On March 26, 2008, Gulf Coast paid Texas Procurement in full for the crane. Gulf Coast also paid Texas Procurement’s commission. That same day, Four Seasons invoiced Texas Procurement for $279,999.99. This represented the $280,000 purchase price less $.01 for a crane that Gulf Coast traded-in to Four Seasons. Despite being paid in full by Gulf Coast, Texas Procurement never paid Four Seasons for the crane.

On May 9, 2009, Four Seasons sued Gulf Coast for inverse condemnation, alleging a physical and a regulatory taking in violation of article I, section 17 of the Texas Constitution. In claiming a physical taking, Four Seasons’s original petition alleges, “Gulf Coast physically appropriated the Crane from Four Seasons through the reverse auction process.” Four Seasons also asserts that Gulf Coast “committed” a regulatory taking when it “imposed” the use of the reverse auction process to acquire the crane.

Gulf Coast answered and filed a plea to jurisdiction. In its jurisdictional plea Gulf Coast averred,

Four Seasons has not pled a cause of action for which Gulf Coast’s governmental immunity has been waived, and the uncontroverted evidence establishes that Four Seasons cannot plead a cause of action against Gulf Coast for which governmental immunity has been waived. Thus, the court lacks jurisdiction to enter any order other than an order of dismissal, and Gulf Coast seeks such an order of dismissal.

Addressing Four Seasons’s physical takings claim, Gulf Coast asserted, “Four Seasons argues that Gulf Coast intended to use [Texas Procurement] to conduct a reverse auction, which is [the] necessary intent for a taking. However, an intent to use [Texas Procurement] to conduct a reverse auction is not an intent to take Four Seasons’ property without making payment therefore.” Gulf Coast further asserted, “When money or property is withheld in a contractual dispute, requisite intent under constitutional-takings jurisprudence is lacking.”

With regard to Four Seasons’s regulatory takings claim, Gulf Coast argued, “Four Seasons neglects to mention that it was under no regulatory requirement to participate in the reverse auction. It knew the terms of the transaction via the ‘Supplier Reverse Auction User Agreement’ before it ever submitted a bid.”

Before the trial court ruled on the jurisdictional plea, Four Seasons supplemented its petition to include a breach of contract claim. Four Seasons claimed that it had entered into a contract with Gulf Coast and that Gulf Coast had breached the contract when it failed to pay for the crane. Four Seasons further alleged that Texas Procurement had acted as the agent of Gulf Coast during the transaction. Four Seasons also asserted that Gulf Coast had waived its immunity by its conduct. Lastly, Four Seasons alleged that it could recover as a third-party beneficiary of the contract between Gulf Coast and Texas Procurement.

Gulf Coast did not supplement its plea to the jurisdiction to address the additional allegations found in Four Seasons’s supplemental petition. The trial court denied Gulf Coast’s jurisdictional plea. Gulf Coast then filed this interlocutory appeal to challenge the trial court’s ruling. We now determine whether the trial court properly denied Gulf Coast’s plea to the jurisdiction.

Plea to the Jurisdiction

A. Scope and Standard of Review

A plea to the jurisdiction based on governmental immunity challenges the trial court’s subject matter jurisdiction. Tex.Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 225-26 (Tex.2004). Because subject matter jurisdiction is a question of law, we review de novo a trial court’s ruling on a plea to the jurisdiction. State v. Holland, 221 S.W.3d 639, 642 (Tex.2007).

The plaintiff bears the burden of alleging facts that affirmatively demonstrate that the trial court has subject matter jurisdiction over a case. Tex. Ass’n of Bus. v. Tex. Air Control Bd., 852 S.W.2d 440, 446 (Tex.1993). When a plea to the jurisdiction challenges the sufficiency of plaintiffs pleadings to confer jurisdiction, we determine whether the pleader has alleged facts that affirmatively demonstrate the court’s jurisdiction to hear the cause. See Miranda, 133 S.W.3d at 226. We construe the pleadings liberally in favor of the plaintiff and look to the pleader’s intent. Id. If the pleadings affirmatively negate the existence of jurisdiction, then a plea to the jurisdiction may be granted without allowing the plaintiff an opportunity to amend its petition. Id. at 227.

In some instances, a plea to the jurisdiction may require the court to consider evidence pertaining to jurisdictional facts. See id.; Bland Indep. Sch. Dist. v. Blue, 34 S.W.3d 547, 555 (Tex.2000). A plea should not be granted if a fact issue is presented regarding the court’s jurisdiction. Miranda, 133 S.W.3d at 227-28. But, if the relevant undisputed evidence negates jurisdiction, then the plea to the jurisdiction must be granted. Id. at 228. We must take as true all evidence favorable to the plaintiff and “indulge every reasonable inference and resolve any doubts in [his] favor.” Id.

B. Analysis: Physical Takings Claim

The Texas Constitution provides a limited waiver of a governmental unit’s immunity from suit when property is taken, damaged, or destroyed for public use without adequate compensation. See Tex. Const. art. I, § 17; see also Gen. Servs. Comm’n v. Little-Tex Insulation Co., Inc., 39 S.W.3d 591, 598 (Tex.2001). As a result, immunity does not shield a governmental unit from a constitutional-takings claim. See Holland, 221 S.W.3d at 643. Nonetheless, when a plaintiff fails to assert facts that constitute a taking, dismissal of the claim for want of jurisdiction is appropriate. See Little-Tex Insulation, 39 S.W.3d at 600 (dismissing inverse-condemnation claim for want of jurisdiction because allegations did not state takings claim).

Here, Four Seasons alleges that Gulf Coast’s acquisition of the crane, through the reverse auction process, constitutes a physical and regulatory taking in violation of the Texas Constitution’s takings clause. We first address Gulf Coast’s contention that Four Seasons has not alleged a cognizable physical takings claim.

A physical taking occurs when the government authorizes an unwarranted physical occupation or appropriation of an individual’s property. Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 933 (Tex.1998). To establish a takings claim, the claimant must allege that a governmental unit acted intentionally to take or damage the property for a public purpose. See Little-Tex Insulation, 39 S.W.3d at 598.

In its original and supplemental petitions, Four Seasons acknowledges, “The constitutional taking standard requires intentional conduct.” To satisfy this requirement, Four Seasons alleges certain acts and omissions by Gulf Coast as causing the physical taking of the crane.

Four Seasons first asserts that Gulf Coast’s act of using the reverse auction process to purchase the crane is sufficient to satisfy the requisite element of intent because the intentional use of such process resulted in the taking of Four Seasons’s property without compensation. In addition, Gulf Coast claims,

In the case at bar, there is clear, direct, and positive evidence that Gulf Coast committed intentional acts. Gulf Coast never asked [Texas Procurement] if there was another process by which Gulf Coast could pay Four Seasons directly; never requested that [Texas Procurement] post a performance bond or any type of bond; never consulted with any other entity, agency, city or state, or county utilizing [Texas Procurement’s] services before making the decision to utilize [Texas Procurement]; never did any investigation into the background of [Texas Procurement] or whether or not they were solvent, or dependable; never received Board approval to utilize the services of [Texas Procurement], Before the incident made the basis of this lawsuit, there was a piece of laboratory equipment acquired through [Texas Procurement] services where [Texas Procurement] was slow to pay. Gulf Coast never contacted the City of Houston for a reference regarding [Texas Procurement]. These facts conclusively prove that Gulf Coast knew or should have known that [Texas Procurement] was on the brink of insolvency, and even with this knowledge, it still intended to use [Texas Procurement] as the reverse auctioneer by entering into a contract with [Texas Procurement]. This intentional act by Gulf Coast resulted in a physical taking of Four Season’s Crane.

In sum, Four Seasons alleges that the intentional government actions resulting in an uncompensated physical taking of its property are (1) Gulf Coast’s use of the reverse auction process and (2) Gulf Coast’s retention of Texas Procurement as auctioneer without first conducting appropriate due diligence into Texas Procurement’s financial health.

The Supreme Court of Texas has made clear that the level of intent required to support a takings claim is more than mere negligence. City of Tyler v. Likes, 962 S.W.2d 489, 505 (Tex.1997). When, as here, it is alleged that the governmental unit’s intentional act is not the actual physical taking or damaging of property, but rather the cause of a physical taking, a governmental unit acts intentionally if it knows either that a specific act is causing identifiable harm or that the harm is substantially certain to result. See City of Dallas v. Jennings, 142 S.W.3d 310, 314-15 (Tex.2004). This case implicates the last inquiry: whether the pleaded facts show that Gulf Coast knew that Texas Procurement’s failure to pay Four Seasons for the crane was substantially certain to result (1) from the decision to use the reverse auction process or (2) from the retention of Texas Procurement to facilitate the reverse auction. A governmental entity is substantially certain that its actions will cause harm only when the harm is “necessarily an incident to, or necessarily a consequential result of the [entity’s] action.” Id. at 314. The government’s knowledge must be determined as of the time it acted, not with benefit of hindsight. Id.

Even when viewed in its favor, Four Seasons’s allegations do not affirmatively demonstrate the requisite intent to support a physical takings claim. More particularly, the allegations do not affirmatively demonstrate that Gulf Coast knew with substantial certainty that Texas Procurement would fail to pay Four Seasons for the crane. Texas Procurement’s failure to pay Four Seasons is not necessarily incident to, or a consequential result of Gulf Coast’s lack of due diligence or its knowledge that Texas Procurement had paid a supplier late on one occasion. Similarly, Texas Procurement’s failure to pay Four Seasons is not necessarily incident to, or a consequential result of Gulf Coast’s use of the reverse auction process. At most, Four Seasons’s allegations demonstrate Gulf Coast’s awareness that an increased risk existed that Texas Procurement would not pay Four Seasons.

In addition, undisputed jurisdictional evidence offered by Gulf Coast demonstrates that it lacked the requisite intent to support a physical taking. Gulf Coast offered the affidavit of James Cooksey, its chief financial officer. Cooksey testified that Gulf Coast had used the reverse auction process over the years “on various occasions.” According to Cooksey, Texas Procurement is the only reverse auction facilitator that Gulf Coast has used. Cooksey also testified that it had acquired another crane from Four Seasons in 2002 through the reverse auction process. Texas Procurement had been the auction facilitator in that transaction as well. Four Seasons never indicated to Gulf Coast that it had not been paid in that transaction. Lastly, it is undisputed that Gulf Coast paid Texas Procurement $280,000 for the crane, plus a $14,000 commission. Such evidence further shows that Gulf Coast was not “substantially certain” that Texas Procurement would not pay Four Seasons.

The Texas Supreme Court has made clear that, in takings cases, its objective has been to “avoid what would be an anomalous result if the State, an entity otherwise generally entitled to immunity for negligence, were subject to liability for something less than intentional behavior.” Tarrant Reg’l Water Dist. v. Gragg, 151 S.W.3d 546, 554 (Tex.2004). As a result, the government retains immunity absent intentional conduct. See Jennings, 142 S.W.3d at 314-15. Anything less than intentional conduct will not suffice. See Karnes City v. Kendall, 172 S.W.3d 624, 629 (Tex.App.-San Antonio 2005, pet. denied) (holding that gross negligence does not supply requisite intent to sustain liability of governmental entity for a constitutional takings claim; acting with conscious indifference to a known risk is not equivalent to acting intentionally).

Gulf Coasts use of Texas Procurements services and Gulf Coasts decision to use the reverse auction process — the acts cited by Four Seasons as intentional acts — demonstrate at most acts of negligence. Mere negligence cannot support a takings claim against Gulf Coast. See Likes, 962 S.W.2d at 505. Thus, Four Seasons pleadings, and the record evidence, affirmatively negate jurisdiction with regard to Four Seasons physical takings claim. We hold that the trial court erred when it did not grant Gulf Coasts plea to the jurisdiction regarding the physical takings claim.

C. Analysis: Regulatory Takings Claim

In its pleadings, Four Seasons also asserts a regulatory takings claim. A compensable regulatory taking can occur when a governmental unit imposes restrictions that either deny a property owner all economically viable use of its property or unreasonably interfere with the owner’s right to use and enjoy the property. Mayhew v. Town of Sunnyvale, 964 S.W.2d 922, 933 (Tex.1998); Taub v. City of Deer Park, 882 S.W.2d 824, 826 (Tex.1994).

Four Seasons contends that Gulf Coast committed a regulatory taking when it “imposed the use of a reverse auction process to acquire the crane.” Its own pleadings, however, belie this assertion. For example, in its original petition, Four Seasons states, “Gulf Coast contacted [Four Seasons] and requested that it take part in an online auction scheduled for July 30, 2007 for the [ ] crane.” (Emphasis added.) In addition, the affidavit of Rod Dundas, Four Seasons’s vice president, indicates that Four Seasons participated in the auction at Gulf Coast’s “request.” There are no allegations or evidence that Four Seasons acted under any legal compulsion when it participated in the reverse auction process. Instead, the pleadings and the jurisdictional evidence affirmatively demonstrate that Four Seasons voluntarily participated in the reverse auction process. In short, Gulf Coast never “imposed” the reverse auction process on Four Seasons.

Four Seasons’s voluntary participation in the bidding process is fatal to its takings claim. Courts have long held that a party cannot voluntarily participate in a government program or process and then later claim that the process effectuated a government taking. See, e.g., Bowles v. Willingham, 321 U.S. 503, 517-18, 64 S.Ct. 641, 648-49, 88 L.Ed. 892 (1944); Meriden Trust & Safe Deposit Co. v. FDIC, 62 F.3d 449, 455 (2d Cir.1995); Burditt v. United States Dep’t of Health & Human Servs., 934 F.2d 1362, 1376 (5th Cir.1991); see Kahn v. Imperial Airport, L.P., 308 S.W.3d 432, 442-43 (Tex.App.-Dallas 2010, no pet.) (concluding that restrictive terms of agreed order did not constitute governmental taking because it was “a joint decision” of the city and claimants; it was not a unilateral act or regulation by the city).

Because Four Seasons voluntarily participated in the reverse auction process, we conclude that the pleadings and record evidence affirmatively negate Four Seasons’s regulatory takings claim and, thus, negate jurisdiction. We hold that the trial court erred when it denied Gulf Coast’s plea to the jurisdiction with regard to the regulatory takings claim.

We sustain Gulf Coast’s issues to the extent they assert that the trial court erred when it denied Gulf Coast’s plea to the jurisdiction.

Damages in Excess of Jurisdictional Limit

As mentioned, Four Seasons asserted its breach of contract claim for the first time in its supplemental petition. Gulf Coast did not amend or supplement its plea to the jurisdiction to address the new allegations raised in the supplemental petition. Nonetheless, Gulf Coast asserts on appeal that the trial court lacks subject matter jurisdiction over Four Seasons’s breach of contract claim because the amount in controversy exceeds the trial court’s $100,000 jurisdictional limit. We agree.

The jurisdictional limit of a Harris County civil court at law is more than $500 but less than $100,000, excluding interest, statutory or punitive damages, penalties, attorney’s fees, and costs. See Tex. Gov’t Code Ann. § 25.0003(c)(1) (Vernon Supp.2009), § 25.1032(a) (Vernon 2004). The amount in controversy is ordinarily determined by looking at the allegations in the plaintiffs original petition. See Peek v. Equip. Serv. Co. of San Antonio, 779 S.W.2d 802, 804 (Tex.1989). In its original petition, Four Seasons expressly claims damages of $280,000. Because this sum exceeds the $100,000 jurisdictional limit of the trial court, we conclude that the trial court lacks subject matter jurisdiction over Four Seasons’s breach of contract claim.

We hold that Four Seasons’s breach of contract claim should be dismissed.

Conclusion

We reverse the trial court’s order denying Gulf Coast’s plea to the jurisdiction and render judgment dismissing Four Seasons’s claims for want of jurisdiction.

      . We have jurisdiction over this interlocutory appeal because it is an appeal from the denial of a plea to the jurisdiction. See Tex. Civ. Prac. & Rem Code Ann § 51.014(a)(8) (Vernon 2008) (permitting appeal from interlocutory order that denies plea to jurisdiction filed by governmental unit). In the same instrument with its plea to the jurisdiction, Gulf Coast filed a motion for summary judgment. The motion for summary judgment challenged the merits of Four Seasons's takings claims and requested the trial court to render a take-nothing judgment against Four Seasons. When it denied Gulf Coast's plea to the jurisdiction, the trial court also denied Gulf Coast's motion for summary judgment. Although it invites us to do so, we do not have jurisdiction to review the denial of the motion for summary judgment in this interlocutory appeal. See Novak v. Stevens, 596 S.W.2d 848, 849 (Tex.1980).

      . In its opening brief, Gulf Coast identifies the following three issues for appeal: (1) the County Civil Court at Law erred by failing to dismiss [Four Seasons's] takings claims against [Gulf Coast] because as a matter of law [Four Seasons] failed to plead facts showing a viable takings claims; (2) the County Civil Court at Law erred by failing to dismiss [Four Seasons’s] takings claims against [Gulf Coast] because as a matter of law the jurisdictional facts establish that [Four Seasons] does not have a viable takings claim; and (3) the County Civil Court at Law erred by exercising subject matter jurisdiction over [Four Seasons's] inverse condemnation/takings claim against [Gulf Coast]. After listing the three issues, Gulf Coast writes, "The issues are argued together as one.” To coincide with Gulf Coast’s briefing, we amalgamate Gulf Coast’s issues and determine unitarily whether the trial court properly denied Gulf Coast's plea to the jurisdiction.

      . We note that this standard has been applied in cases in which it was alleged that real property was damaged as a result of a government action. See, e.g., Tarrant Reg’l Water Dist. v. Gragg, 151 S.W.3d 546, 550 (Tex.2004) (concerning release of water from reservoir causing flooding that damaged land); City of Arlington v. State Farm Lloyds, 145 S.W.3d 165, 166 (Tex.2004) (involving dislodgment of clogged sewer causing sewage backup into residence); City of Dallas v. Jennings, 142 S.W.3d 310, 312 (Tex.2004) (involving sewage back-up that flooded homes). Despite the factual differences, we discern no reason why the test should not apply to Four Seasons's taking claim.

      . We further note that, to support its takings claim, Four Seasons alleges that it contracted with Gulf Coast to sell the crane and that Gulf Coast never paid for the crane. Our supreme court has reasoned that when a governmental unit withholds property in a contractual context, it lacks the necessary intent to commit a taking because it "is acting within a color of right under the contract and not under its eminent domain powers.” Gen. Servs. Comm'n v. Little-Tex Insulation Co., Inc., 39 S.W.3d 591, 598-99 (Tex.2001); see State v. Holland, 221 S.W.3d 639, 643-44 (Tex.2007). For this reason, Four Seasons's contract allegations also fail to demonstrate the intent necessary for a physical takings claim. To the contrary, such allegations negate the requisite intent.

      . In addition, courts have held that when a governmental unit acquires property rights in the same manner as a private citizen, and not pursuant to its sovereign powers, such acquisition is not an unconstitutional taking. See, e.g., MBP Corp. v. Bd. of Trs. of Galveston Wharves, 297 S.W.3d 483, 490-91 (Tex.App.Houston [14th Dist.] 2009, no pet.) ("[B]e-cause a private landowner could have acted as the [governmental unit] did, we conclude [the claimant] has not shown the [unit’s] requisite intent to act under its sovereign powers.”); Dallas County Cmty. Coll. Dist. v. Clear Chamiel Outdoor, Inc., No. 05-07-00701-CV, 2008 WL 3307085, at *3-4 (Tex.App.-Dallas July 31, 2008, pet. denied) (mem.op.) (concluding that taking did not exist as government did not compel transfer of property in case in which party "voluntarily and willingly” sold property to government). The requisite intent to take property using sovereign powers is absent in such cases. See MBP Corp., 297 S.W.3d at 491. Here, the record affirmatively negates jurisdiction because it shows that Gulf Coast was acting “akin to a private citizen” when it acquired the crane; it was not acting pursuant to its sovereign powers. See Holland, 221 S.W.3d at 643 (quoting Gen. Servs. Comm'n v. Little-Tex Insulation Co., Inc., 39 S.W.3d 591, 599 (Tex.2001)); see also MBP Corp., 297 S.W.3d at 491.

      . Four Seasons also asserted that Gulf Coast had waived its governmental immunity by its conduct and that Texas Procurement was Gulf Coast’s agent. These theories appear to have been pled to advance Four Seasons's newly pleaded breach of contract claim.

      . We have previously held that we may address subject matter jurisdiction in an interlocutory appeal, even though the issue was not raised in the trial court. See Harris County Mun. Util. Dist. No. 156 v. United Somerset Corp., 274 S.W.3d 133, 137-38 (Tex.App.Houston [1st Dist.] 2008, no pet.); City of Houston v. Northwood Mun. Util. Dist. No. 1, 73 S.W.3d 304, 313 (Tex.App.-Houston [1st Dist.] 2001, pet. denied); see also Waco Indep. Sch. Dist. v. Gibson, 22 S.W.3d 849, 851 (Tex.2000) (“[B]ecause subject matter jurisdiction is essential to the authority of a court to decide a case, it cannot be waived and may be raised for the first time on appeal.”).

      . Gulf Coast does not dispute that Four Seasons’s inverse condemnation claims were properly filed in Harris county civil court. The Government Code provides, "A county civil court at law has exclusive jurisdiction in Harris County of eminent domain proceedings, both statutory and inverse, regardless of the amount in controversy.” Tex. Gov't Code Ann. § 25.1032(c) (Vernon 2004); see Houston v. Boyle, 148 S.W.3d 171, 177-78 (Tex.App.Houston [1st Dist.] 2004, no pet.) ("Harris County Civil Courts at Law have exclusive jurisdiction over article 1, section 17 claims.”).

      . In its petition, Four Seasons claims, alternatively to its $280,000 damages request, that it be given possession of the crane "and damages for the loss of market value and/or use by Gulf Coast.” When a plaintiff asserts a single claim through alternative theories of recovery, for the purpose of determining jurisdiction, the amount in controversy is determined by looking to the theory that would yield the largest award. French v. Moore, 169 S.W.3d 1, 7 (Tex.App.-Houston [1st Dist.] 2004, no pet.). For this reason, Four Seasons’s alternative theory of recovery does not affect our conclusion that the trial court lacks subject matter jurisdiction.


source: Caselaw Access Project

author: LAURA CARTER HIGLEY, Justice.

license: Public Domain

text:
    Anna I. MASON, Appellant, v. Anthony J. MASON, Appellee.
    No. 01-07-00809-CV.
    Court of Appeals of Texas, Houston (1st Dist.).
    June 24, 2010.

      Linda Ann Hinds, Steven H. Schweitzer, Fullenweider Wilhite, P.C., Robert Ryan Lindsay, The Fullenweider Firm, Houston, TX, for Appellant.
    Sallee S. Smyth, Richmond, TX, Sherri Ann Evans, Short Jenkins Kamin, LLP, Houston, TX, for Appellee.
    Panel consists of Chief Justice RADACK and Justices ALCALA and HIGLEY.
   OPINION

LAURA CARTER HIGLEY, Justice.

In the trial court, appellee, Anthony J. Mason (“Tony”), obtained a “Final Divorce Decree,” which granted a divorce between him and appellant, Anna I. Mason (“Anna”), and divided their marital estate. Anna, a resident of California, who was served by publication, filed a post-decree special appearance only with respect to Tony’s claim for division of the marital estate; she did not specially appear with respect to Tony’s claim for divorce.

Subject to her special appearance, Anna also filed a motion for new trial. The trial court denied Anna’s special appearance and her motion for new trial. In two issues, Anna appeals these rulings.

Because we hold that the trial court lacked the required jurisdiction to make the property division, as asserted in Anna’s special appearance, we reverse the decree insofar as it divides the property of the marital estate, and we render the judgment that the trial court should have rendered.

Factual & Procedural Background

Tony and Anna were married in Virginia on November 27, 1992. The couple lived together in Virginia until 1994. For the next two to three years, the couple did not regularly reside together, with Tony living and working outside of Virginia for at least a part of this time. In 1996 or 1997, Anna filed for divorce in Virginia. The divorce, however, never became final. The couple remained married, but no longer had contact with one another. The couple had no children together.

In January 2004, Tony moved to Texas. Around this time, he requested a copy of the divorce decree from the Commonwealth of Virginia. The commonwealth notified Tony that it had no record of a divorce between him and Anna.

On November 2, 2004, Tony filed for divorce in Harris County district court. In his petition, Tony pled no jurisdictional facts indicating that the trial court had personal jurisdiction over Anna. Tony-stated that Anna could be served at an address in Kings Beach, California. Anthony requested the trial court to grant him a divorce from Anna and to divide the community estate “in a manner that the Court deems just and right, as provided by law.”

After attempting unsuccessfully to serve Anna in California, Anthony obtained the court’s permission to serve her by publication. The citation was published in the Harris County Daily Court Review on February 3, 2005. To represent Anna, the trial court appointed an attorney ad litem, who answered the suit by general denial.

On June 15, 2005, the trial court conducted a hearing on Tony’s divorce petition. Tony and his attorney appeared, and the attorney ad litem appeared for Anna, who did not appear. Tony confirmed that he was unable to locate Anna for service of citation. The attorney ad litem also informed the court that she was unable to locate Anna.

At the conclusion of the hearing, the trial court rendered judgment granting Tony a divorce from Anna and dividing the marital estate. With regard to the property division, the trial court’s decree provides that each party receive the personal property in that party’s possession or titled in that party’s name as his or her “sole and separate property.” The court ordered that each party be responsible for debts, liabilities, and taxes incurred by that party.

Anna became aware of the divorce and property division in early 2007. On June 14, 2007, Anna filed a special appearance in which she alleged that, because it lacked personal jurisdiction over her, the trial court erred by dividing the marital estate. Subject to her special appearance, Anna also filed a motion for new trial in which she alleged, inter alia, that she had no knowledge of the divorce proceeding prior to rendition of the decree and that she had a meritorious defense to the suit.

After conducting a hearing, the trial court denied Anna’s special appearance. Anna filed a formal bill of exception complaining that the trial court had not allowed her to provide jurisdictional evidence, specifically her own testimony, at the special appearance hearing.

Following an evidentiary hearing, the trial court also denied Anna’s motion for new trial. This appeal followed. In two issues, Anna challenges the trial court’s denial of her special appearance and its denial of her motion for new trial.

Special Appearance

In her first issue, Anna contends that the trial court erred by denying her special appearance.

A. Standard of Review

Because it involves a question of law, we review de novo a trial court’s determination of a special appearance. See Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 657 (Tex.2010); Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex.2007).

B. The Parties Agree on Certain Points

To assist in framing the special-appearance issue for discussion, we note that the parties agree on three significant points. First, the parties do not dispute that the trial court had jurisdiction to grant a divorce between Tony and Anna.

It is well-established that a court may grant a divorce to a Texas resident, even though it lacks personal jurisdiction over the non-resident spouse. See Dawson-Austin v. Austin, 968 S.W.2d 319, 324-25 (Tex.1998). Stated differently, a court may have jurisdiction to grant a divorce, which is an adjudication of the parties’ status, but not have jurisdiction to divide their property, which is an adjudication of parties’ rights. Id. at 324 (citing Estin v. Estin, 334 U.S. 541, 549, 68 S.Ct. 1213, 1218, 92 L.Ed. 1561 (1948)). As one court explained, “Where the trial court in a divorce proceeding has no personal jurisdiction over the respondent, the trial court has the jurisdiction to grant the divorce, but not to ... divide property outside the State of Texas. It may also lack jurisdiction to divide property within the state.” Hoffman v. Hoffman, 821 S.W.2d 3, 5 (Tex.App.-Fort Worth 1992, no writ) (internal citations omitted).

In short, a claim for divorce and a claim for division of marital property are separate jurisdictional issues. See id.; see also Tex. Fam.Code Ann. § 6.308(a) (Vernon Supp. 2009) (“A court in which a suit for dissolution of a marriage is filed may exercise its jurisdiction over those portions of the suit for which it has authority.”). Here, Anna does not challenge the portion of the trial court’s decree granting a divorce between her and Tony. Rather, she challenges only that portion of the decree relating to property division.

Second, the parties agree that the trial court lacked personal jurisdiction over Anna. Indeed, it is neither alleged nor shown that Anna ever lived in Texas, transacted any business in Texas, or participated in obtaining any property or assets in Texas. Nor is it alleged nor shown that Anna consented to or participated in Tony’s transference of marital assets to Texas or in his acquisition of assets in Texas.

In his brief, Tony concedes the lack of in personam jurisdiction, but asserts that “personal jurisdiction over Anna was not necessary to obtain the relief ultimately granted in the [trial court’s judgment].” He contends that the trial court was permitted to divide the marital estate “in absence of personal jurisdiction over Anna.”

Third, the parties correctly agree that the Texas supreme court’s opinion, Dawson-Austin v. Austin, 968 S.W.2d 319 (Tex.1998), guides the resolution of this issue. Thus, we turn to that case, and its underlying principles, to determine whether the trial court had jurisdiction to divide the marital estate in this case.

C. Analysis

To understand its holding, it is helpful to lay out the background of Dawson-Austin. There, Austin (“Husband”) started a business in Minnesota before his marriage to Dawson-Austin (“Wife”). Id. at 320. During the marriage, Husband’s business substantially increased in value. Id. Husband and Wife lived in Minnesota for most of their marriage. Id. They also acquired property in other locations, including a home in California. Id. at 320-21.

After they separated, Husband moved to Texas, and Wife moved to California. Id. at 321. Six months after moving to Texas, Husband filed for divorce in Texas. Id. Wife filed a special appearance objecting to the Texas court’s jurisdiction to divide the marital estate. See id. The record showed that Wife had never lived in Texas and had traveled to Texas only a few times on business. Id. The trial court overruled her special appearance, and the court of appeals affirmed. Id. Wife petitioned the Texas supreme court, which granted review.

Beginning its jurisdictional discussion, the Texas supreme court explained in Daws on-Asas tin, “The United States Constitution permits a state court to take personal jurisdiction over a defendant only if it has some minimum, purposeful contacts with the state, and the exercise of jurisdiction will not offend traditional notions of fair play and substantial justice.” Id. at 326 (citing Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945); CMMC v. Salinas, 929 S.W.2d 435, 437 (Tex.1996)).

The Dawson-Austin court made clear, however, that the lack of personal jurisdiction over Wife did not end the inquiry with regard to whether the trial court could divide marital property located in Texas. See id. at 327. “Even though the district court did not have in personam jurisdiction over [Wife], it is possible under the United States Constitution, and thus under Texas law, for the court to have had jurisdiction to divide the marital estate located in Texas.” Id.

In Dawsorir-Austin, “[t]he property in Texas in which the parties claimed an interest was [Husband’s] Dallas home and Texas bank accounts, which the parties agreed was community property, and the stock certifícate evidencing [Husband’s] shares in [his business].” Id. To determine whether the trial court had jurisdiction to divide this property, the Dawson-Austin court began by recognizing that, historically, “a state court could exercise jurisdiction over property within the state’s borders and determine the rights and interests of non-residents.” Id. (citing Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565 (1877)). The court then explained that the United States Supreme Court abandoned this position in Shaffer v. Heitner, 433 U.S. 186, 97 S.Ct. 2569, 53 L.Ed.2d 683 (1977). Id. The Shaffer court held that jurisdiction over property “must be based on minimum, purposeful contacts and must not offend traditional notions of fair play and substantial justice.” Id. (citing Shaffer, 433 U.S. at 212, 97 S.Ct. at 2584).

In reaching this conclusion, the Shaffer court reasoned as follows:

The fiction that an assertion of jurisdiction over property is anything but an assertion of jurisdiction over the owner of the property supports an ancient form without substantial modern justification. Its continued acceptance would serve only to allow state-court jurisdiction that is fundamentally unfair to the defendant. We therefore conclude that all assertions of state-court jurisdiction must be evaluated according to the standards set forth in International Shoe and its progeny.

Shaffer, 433 U.S. at 212, 97 S.Ct. at 2584.

After its discussion of Shaffer, the Daw-sortr-Austin court offered the following analysis of the facts before it:

[T]he location in Texas of property that either is or is claimed to be part of the marital estate does not supply the minimum contacts required for the court to exercise jurisdiction over [Wife], [Husband] bought his Dallas home, opened his Texas bank accounts, and brought his [business’s] stock certificate to Texas after he separated from [Wife]. We do not believe that one spouse may leave the other, move to another state in which neither has ever lived, buy a home or open a bank account or store a stock certificate there, and by those unilateral actions, and nothing more, compel the other spouse to litigate their divorce in the new domicile consistent with due process. One spouse cannot, solely by actions in which the other spouse is not involved, create the contacts between a state and the other spouse necessary for jurisdiction over a divorce action.

Dawson-Austin, 968 S.W.2d at 827 (citing In the Interest of S.A.V., 837 S.W.2d 80, 83-84 (Tex.1992) (holding that without personal jurisdiction over one parent, a court could still decide custody of a child living in the State, but could not determine support and visitation)). The Dawson-Austin court continued, “Moreover, [Wife’s] claim to a part of the value of the [] stock is completely unrelated to the situs of the certificate; rather, it is based on the parties’ efforts to increase the value of [Husband’s business], most of which occurred in Minnesota.” Id.

The court concluded, “In no sense can it be said that [Wife] ever ‘purposefully availed’ herself of the privilege of owning property in this State.” Id. (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 2183-2184, 85 L.Ed.2d 528 (1985)). Hence, “the district court lacked jurisdiction to adjudicate [Wife’s] claim to part of the value of the [business’s] stock or to divide the marital estate.” Id. at 328. The Dawson-Austin court ultimately held, “The district court had jurisdiction only to grant a divorce and not to determine the parties’ property claims.” Id.

Here, we begin by noting that Tony did not plead any jurisdictional facts with respect to Anna. Any property in Texas that is part of the marital estate in this case cannot, by itself, supply the requisite minimum contacts for the trial court to exercise personal jurisdiction over Anna or quasi in rem jurisdiction to adjudicate the parties’ property interests. See id. at 327; see also Shaffer, 433 U.S. at 212-13, 97 S.Ct. at 2584.

There is no indication in the record that Anna consented to Tony’s transference of property to Texas or participated in the acquisition of property in Texas. And, it appears undisputed that Anna has never resided in Texas, transacted any business in Texas, or had any meaningful contacts with Texas. As in Dawson-Austin, it is not consistent with the principles of due process in this case to permit Tony to force Anna to litigate their divorce in Texas solely by his unilateral actions of moving to Texas and acquiring property here. See Dawson-Austin, 968 S.W.2d at 327. Tony’s conduct cannot create the requisite minimum contacts between Anna, Texas, the property, and the litigation necessary for the trial court to divide the marital estate. See id.; see also Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 1239-1240, 2 L.Ed.2d 1283 (1958) (“The unilateral activity of those who claim some relationship with a nonresident defendant cannot satisfy the requirement of contact with the forum State. The application of that rule will vary with the quality and nature of the defendant’s activity, but it is essential in each case that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.”).

We recognize that, in his responsive brief, Tony presents argument to support the trial court’s denial of Anna’s special appearance. Tony points to language in Shaffer, the United States Supreme Court opinion on which the Dawsovr-Austin court relied. He contends that the following language in Shaffer indicates that a state court may divide the property of a person over whom the court lacks personal jurisdiction when that property is the subject matter of the underlying dispute:

The case for applying to jurisdiction in rem the same test of “fair play and substantial justice” as governs assertions of jurisdiction in personam is simple and straightforward. It is premised on recognition that “(t)he phrase, ‘judicial jurisdiction over a thing,’ is a customary elliptical way of referring to jurisdiction over the interests of persons in a thing.” Restatement (Second) of Conflict of Laws § 56, Introductory Note (1971) (hereafter Restatement). This recognition leads to the conclusion that in order to justify an exercise of jurisdiction in rem, the basis for jurisdiction must be sufficient to justify exercising “jurisdiction over the interests of persons in a thing.” The standard for determining whether an exercise of jurisdiction over the interests of persons is consistent with the Due Process Clause is the minimum-contacts standard elucidated in International Shoe.
This argument, of course, does not ignore the fact that the presence of property in a State may bear on the existence of jurisdiction by providing contacts among the forum State, the defendant, and the litigation. For example, when claims to the property itself are the source of the underlying controversy between the plaintiff and the defendant, it would be unusual for the State where the property is located not to have jurisdiction. In such cases, the defendant’s claim to property located in the State would normally indicate that he expected to benefit from the State’s protection of his interest. The State’s strong interests in assuring the marketability of property within its borders and in providing a procedure for peaceful resolution of disputes about the possession of that property would also support jurisdiction, as would the likelihood that important records and witnesses will be found in the State....

Shaffer, 433 U.S. at 207-08, 97 S.Ct. at 2581 (footnotes omitted). Relying on the Shaffer court’s illustration, Tony asserts that, because the property of the marital estate is the “subject matter” of the dispute here, the trial court had the requisite in rem jurisdiction to make the property division.

We disagree with Tony’s reading of Shaffer. Whether the litigation is a dispute over property located in the forum state is but one factor in the analysis. In a footnote to the above-quoted text, the Supreme Court made clear: “We do not suggest that these illustrations include all the factors that may affect the decision, nor that the factors we have mentioned are necessarily decisive.” Id. at 208 n. 28, 97 S.Ct. at 2581-82 n. 28.

In addition, the Supreme Court was careful to state that “the defendant’s claim to property located in the State would normally indicate that he expected to benefit from the State’s protection of his interest.” Id. at 207-08, 97 S.Ct. at 2581 (emphasis added). In a footnote to this statement, the Supreme Court clarified, “In some circumstances the presence of property in the forum State will not support the inference suggested in the text.” Id. at 207-08 n. 25, 97 S.Ct. at 2581 n. 25. Such circumstances were present in Dawson-Austin and are present here. Dawson-Austin and this case both involve a non-resident spouse with no past significant connections with Texas, who neither consented to, nor participated in, the transference or acquisition of the “subject” marital property in Texas. This was the focus of the Dawson-Austin court’s analysis when it determined that the trial court in that case lacked jurisdiction to divide the marital estate. See Dawson-Austin, 968 S.W.2d at 327. And it is our focus here.

We, like the Dawson-Austin court, are also mindful that the Shaffer court instructed that “[t]he standard for determining whether an exercise of jurisdiction over the interests of persons is consistent with the Due Process Clause is the minimum-contacts standard elucidated in International Shoe.” See Shaffer, 433 U.S. at 207, 97 S.Ct. at 2581; see also Dawson-Austin, 968 S.W.2d at 327. The Supreme Court in International Shoe made clear that the constitutional touchstone of a due process inquiry is determining whether the defendant purposefully established minimum contacts in the forum state. See Int’l Shoe, 326 U.S. at 316, 66 S.Ct. at 158; see also Burger King Corp., 471 U.S. at 474, 105 S.Ct. at 2183. As discussed supra, such minimum contacts are lacking in this case. The record before us does not demonstrate that Anna purposefully availed herself of the privilege of owning property in Texas. See Dawson-Austin, 968 S.W.2d at 327. There is no indication that Anna has purposefully availed herself of the benefits and protections of the laws of this state in order to protect her interest in the marital estate. Accordingly, the trial court lacked the requisite jurisdiction to divide the marital property. See id. at 327-28.

We hold that the trial court erred when it denied Anna’s special appearance challenging the trial court’s jurisdiction to divide the marital estate.

We sustain Anna’s first issue.

Conclusion

We reverse the portion of the trial court’s Final Divorce Decree insofar as it divides the property of the marital estate, and we render the decree that the trial court should have rendered. See Tex. R.App. P. 43.3.

      . See Tex.R. Civ. P. 120a ("A special appearance may be made as to an entire proceeding or as to any severable claim involved therein.”).

      . The Dawson-Austin court succinctly summarized Shaffer as follows:

        Shaffer was a shareholder derivative suit against officers and directors of two Delaware corporations. A Delaware court sequestered defendants' stock in the corporations, even though neither defendants nor their stock were physically present in Delaware, basing its jurisdiction to do so on a Delaware statute that deemed Delaware the situs of ownership of all stock in Delaware corporations. The Supreme Court held that neither defendants nor their stock had sufficient contacts with Delaware to justify the state court's exercise of jurisdiction over them.

        Dawson-Austin v. Austin, 968 S.W.2d 319, 327 (Tex. 1998) (citing Shaffer v. Heitner, 433 U.S. 186, 192, 213-17, 97 S.Ct 2569, 2573, 2584-2587, 53 L.Ed.2d 683 (1977)).

      . As observed by federal procedure commentators, Wright and Miller, "At a minimum, ... it seems clear that [Shaffer ] requires both state and federal courts to examine carefully any action based on quasi-in-rem jurisdiction to make certain that the minimum contacts and fair play and substantial justice standards established by the Supreme Court are met.” 4A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1070 at 283-84 (3d ed. 2002).

      . Tony points out this case is factually distinct from Dawson-Austin in several respects. Tony asserts that in Dawson-Austin the husband moved to Texas “for strategic divorce planning," a fact he avers is absent here. He points out that, unlike in Dawson-Austin, he believed that he and Anna had been divorced for the years they had been separated. While Tony's factual recitations may be correct, we do not find them significant to our minimum contacts analysis. Nor is there any indication that the facts Tony points to in Dawson-Austin were significant to that court's analysis. As discussed, the Dawson-Austin court focused on whether Wife had established minimum contacts in Texas and concluded that Husband's unilateral activities could not supply those contacts. See Dawson-Austin, 968 S.W.2d at 327. Tony also points out that the parties in Dawson-Austin had obvious alternative forums to litigate the property dispute. Tony contends that, here, the only other possible forums, such as California, Virginia, or federal court, lack a sufficient nexus to the dispute. He further asserts that forcing him to litigate in these forums is antithetical to the concept of “fair play and substantial justice.” It is, however, not for us to determine whether these alternative forums are jurisdictionally appropriate. Nor are we faced with the argument that there is no other possible forum. See Shaffer, 433 U.S. at 211 n. 37, 97 S.Ct. at 2583 n. 37 ("This case does not raise, and we therefore do not consider, the question whether the presence of a defendant’s property in a State is a sufficient basis for jurisdiction when no other forum is available to the plaintiff.”); see, e.g., Louring v. Kuwait Boulder Shipping Co., 455 F.Supp. 630, 633 (D.Conn.1977) (holding that Connecticut court could exercise quasi in rem jurisdiction because suit could not be brought in any other state). Thus, we are not persuaded by Tony’s arguments distinguishing the facts of this case from those of Dawson-Austin.

      . Tony further points to following observation by the Dawson-Austin court, "Even though the district court did not have in personam jurisdiction over Dawson-Austin, it is possible under the United States Constitution, and thus under Texas law, for the court to have had jurisdiction to divide the marital estate located in Texas.” Dawson-Austin, 968 S.W.2d at 327.

      . We can envision a different result when a non-resident spouse participates in, or acquiesces to, the acquisition of property located in Texas. See, e.g., Goodenbour v. Goodenbour, 64 S.W.3d 69, 79 (Tex.App.-Austin 2001, pet. denied) (distinguishing Dawson-Austin on basis that nonresident spouse had participated in purchase of real property in Texas).

      . Tony points out that the Supreme Court of Georgia in Abernathy v. Abernathy determined that the trial court there had "full in rem” jurisdiction to divide marital property located in Georgia, which was the subject of the litigation, solely on the basis that the nonresident spouse claimed an interest in the subject property. 267 Ga. 815, 818, 482 S.E.2d 265, 268 (1997). We believe that such approach is not consistent with the approach of our own supreme court in Dawson-Austin. See 968 S.W.2d at 327; see also Shamley v. Shamley, 117 N.C.App. 175, 179-82, 455 S.E.2d 435, 437-39 (1994) (holding that wife living in New Jersey did not have sufficient minimum contacts with North Carolina to be subject to jurisdiction of North Carolina court for purposes of husband’s property division claim, when husband had purchased land and constructed a house in North Carolina without wife's participation, and her only voluntary contacts constituted two brief visits).

      .Tony asserts that Anna has the required minimum contacts with Texas because she seeks to invoke the benefits and protections of Texas law by making a claim to the marital property located in Texas. To support this assertion, Tony invites us to review Anna’s motion from new trial and her affidavit supporting the motion. Tony contends that, from statements made by Anna in those filings, we can presume and infer that Anna desires to pursue a claim against the marital property acquired by Tony in Texas. We disagree with Tony’s logic. First, the subjunctive nature of Tony’s argument highlights the present lack of Anna’s minimum contacts with Texas. Second, it was Tony who chose Texas as the forum for this dispute, not Anna. Third, Anna filed her motion for new trial "subject to” her special appearance. Lastly, personal jurisdiction cannot be based on some possible, future conduct of a defendant.

      . Anna’s second issue challenges the trial court’s denial of her motion for new trial. We note that the prayer of Anna’s brief requests this Court to reach her second issue “in the alternative” to her first issue. Because we have sustained Anna's first issue, we need not reach her second issue.

      . We reverse the portions of the decree pertaining to the trial court’s division of the marital estate. As discussed, Anna and Tony do not challenge the portion of the trial court’s decree ordering that they are divorced. We, therefore, neither affirm nor reverse that portion of the decree but render the decree that the trial court should have rendered, which includes a decretal provision ordering that Anna and Tony are divorced. See Tex.R.App. P. 43.3.


author: JIM R. WRIGHT, Chief Justice.

text:
    Jose Luis GARRIGA et al., Appellants, v. ACE AMERICAN INSURANCE COMPANY, Appellee.
    No. 11-08-00300-CV.
    Court of Appeals of Texas, Eastland.
    July 1, 2010.

      Jose Luis Garriga, The Garriga Law Firm, P.C., Odessa, pro se.
    Michael C. Tighe, McKinney <& Tighe, L.L.P., Midland, for appellants.
    Joy M. Brennan, Scot A. Schwartzberg, Robin D. Lowenkron, Shawn R. Redman, Houston, for appellee.
    Panel consists of: WRIGHT, C.J, McCALL, J., and STRANGE, J.

      . Ace also included an allegation of negligence against State Farm and Hickman.

   OPINION

JIM R. WRIGHT, Chief Justice.

This court’s former opinion and judgment dated April 15, 2010, are withdrawn, and this court’s opinion and judgment dated July 1, 2010, are substituted therefor. Appellants’ motion for rehearing is this same day denied.

Ace American Insurance Company filed suit against Jose Luis Garriga, Ramon Barragan, State Farm Mutual Automobile Insurance Company, and Troy Scott Hickman for wrongful settlement. The trial court granted Ace’s motion for summary judgment and entered a modified judgment awarding Ace $44,287.90, less a medical payment of $6,364.81, for a total of $37,923.09. The judgment states that the parties are jointly and severally liable for the award. On December 30, 2009, this court issued an order abating the appeal in order for the trial court to address Ace’s negligence claim against State Farm and Hickman. The trial court issued an order on March 26, 2010, that severed the negligence claim from the claims for wrongful settlement. Garriga, Barragan, State Farm, and Hickman appeal from the trial court’s judgment granting Ace’s motion for summary judgment. We reverse.

On October 30, 2003, Barragan and Hickman were involved in an automobile accident that injured Barragan. State Farm provided insurance coverage for Hickman. The accident occurred within the scope of Barragan’s employment for Baker Atlas. Ace was the workers’ compensation carrier for Baker Atlas, and Ace initially denied Barragan’s workers’ compensation claim. Barragan retained Garri-ga to pursue a third-party claim against Hickman; however, Garriga did not represent Barragan on the workers’ compensation claim.

Garriga began to negotiate a settlement with State Farm on Barragan’s behalf. On August 12, 2004, Barragan signed a release of his third-party claim against Hickman, and he received $12,600 as compensation. From the settlement, Garriga paid $6,364.81 in medical expenses and a health insurance subrogation claim. Gar-riga received $2,706.83 from the settlement in attorney’s fees.

After administrative hearings, Ace accepted Barragan’s workers’ compensation claim and paid benefits to Barragan beginning on August 6, 2004. Ace sent a letter to Garriga on November 16, 2004, reminding Garriga of Ace’s notice of subrogation from May 7, 2004. The letter also stated that Ace learned of the settlement with State Farm and Hickman and that Ace “will assert a future credit against all medical and indemnity benefits pursuant to Texas Labor Code § 417.002(b).” Ace continued to pay benefits to Barragan while the parties exchanged correspondence regarding the settlement.

Ace filed suit October 31, 2005, against Garriga, Barragan, State Farm, and Hickman to recover the entire amount of the workers’ compensation lien. The trial court granted Ace’s motion for summary judgment and ordered that the parties were jointly and severally liable to Ace for the full amount of its workers’ compensation lien, less credit for medical expenses.

When, as here, a party files a traditional motion for summary judgement, the standard of review is well settled. Questions of law are reviewed de novo. St. Paul Ins. Co. v. Tex. Dep’t of Transp., 999 S.W.2d 881, 884 (Tex.App.-Austin 1999, pet. denied). To determine if a fact question exists, we must consider whether reasonable and fair-minded jurors could differ in their conclusions in light of all the evidence presented. Goodyear Tire & Rubber Co. v. Mayes, 236 S.W.3d 754, 755 (Tex.2007). We must consider all the evidence in the light most favorable to the nonmovant indulging all reasonable inferences in favor of the nonmovant to determine whether the movant proved that there were no genuine issues of material fact and that it was entitled to judgment as a matter of law. Nixon v. Mr. Prop. Mgmt. Co., 690 S.W.2d 546, 548-49 (Tex.1985).

Garriga and Barragan raise three issues on appeal in their brief, and State Farm and Hickman assert four issues on appeal in their brief. They each bring an issue on appeal that the trial court erred in awarding Ace damages in excess of the $12,600 settlement proceeds from State Farm.

The applicable workers’ compensation statutes on subrogation rights are set out in Tex. Lab.Code Ann. §§ 417.001-.002 (Vernon 2006). Section 417.001 states:

(a) An employee or legal beneficiary may seek damages from a third party who is or becomes liable to pay damages for an injury or death that is compensa-ble under this subtitle and may also pursue a claim for workers’ compensation benefits under this subtitle.
(b) If a benefit is claimed by an injured employee or a legal beneficiary of the employee, the insurance carrier is subrogated to the rights of the injured employee and may enforce the liability of the third party in the name of the injured employee or the legal beneficiary. The insurance carrier’s subrogation interest is limited to the amount of the total benefits paid or assumed by the carrier to the employee or the legal beneficiary, less the amount by which the court reduces the judgment based on the percentage of responsibility determined by the trier of fact under Section 33.008, Civil Practice and Remedies Code, attributable to the employer. If the recovery is for an amount greater than the amount of the insurance carrier’s subrogation interest, the insurance carrier shall:
(1) reimburse itself and pay the costs from the amount recovered; and
(2) pay the remainder of the amount recovered to the injured employee or the legal beneficiary.

Section 417.002 further provides:

(a) The net amount recovered by a claimant in a third-party action shall be used to reimburse the insurance carrier for benefits, including medical benefits, that have been paid for the compensable injury.
(b) Any amount recovered that exceeds the amount of the reimbursement required under Subsection (a) shall be treated as an advance against future benefits, including medical benefits, that the claimant is entitled to receive under this subtitle.
(c) If the advance under Subsection (b) is adequate to cover all future benefits, the insurance carrier is not required to resume the payment of benefits. If the advance is insufficient, the insurance carrier shall resume the payment of benefits when the advance is exhausted.

Under the Workers’ Compensation Act’s subrogation provision, “the first money paid [to] or recovered by the employee, or his representatives, belongs to the compensation carrier paying the compensation, and until it is paid in full, the employee, or his representatives, have no right to any funds.” Argonaut Ins. Co. v. Baker, 87 S.W.3d 526, 530 (Tex.2002); Fort Worth Lloyds v. Haygood, 151 Tex. 149, 246 S.W.2d 865, 869 (1952); see Tex. Mut. Ins. Co. v. Ledbetter, 251 S.W.3d 31, 35 (Tex.2008). Where an injured worker and a third-party tortfeasor settle without regard to a carrier’s recoupment rights, the worker and the third-party are jointly and severally liable to the carrier for the wrongfully appropriated funds. Capitol Aggregates, Inc. v. Great Am. Ins. Co., 408 S.W.2d 922, 923-24 (Tex.1966); Fort Worth Lloyds, 246 S.W.2d at 870-71; Traders & Gen. Ins. Co. v. W. Tex. Utils. Co., 140 Tex. 57, 165 S.W.2d 713, 716 (1942). If the injured employee’s attorney accepts settlement funds in contravention of the carrier’s rights, the attorney is also liable to the carrier. Estrada v. Wausau Ins. Co., 985 S.W.2d 480, 483-84 (Tex.App.-San Antonio 1998, pet. denied).

It is clear that, when the settlement is greater than the amount of benefits paid by the carrier, the remainder of the settlement goes to the claimant or his representative. Section 417.001(b); Tex. Mut. Ins., 251 S.W.3d at 35-36. We must determine whether the carrier is entitled to recover the full amount of benefits paid when the settlement is less than the amount of benefits paid by the carrier.

Garriga relies on New York Underwriters Insurance Co. v. State Farm Mutual Automobile Insurance Co., 856 S.W.2d 194 (Tex.App.-Dallas 1993, no writ), to support its argument that Ace was only entitled to recover the amount of the settlement. In New York Underwriters, two employees were injured in the scope of their employment by a third party who was insured by State Farm. The employees both received benefits from the workers’ compensation carrier, Hartford, and they both received a settlement from State Farm. State Farm made a settlement offer to Hartford, but Hartford rejected the offer. Hartford sued State Farm and the injured employees. State Farm acknowledged its liability up to the settlement amount paid to the injured employees. The court held that, “[i]f the carrier does not pursue its subro-gated claim against the third party tortfea-sor and does not collect damages from the third party tortfeasor, then the carrier may recover only the amount of any settlement between the worker and the third party tortfeasor.” New York Underwriters, 856 S.W.2d at 200.

In New York Underwriters, the court distinguished Capitol Aggregates and stated that, “if the carrier pursues the injured worker’s claim against the third party tort-feasor and recovers a judgment, the carrier may also recover the damages found by the fact finder or the amount of the settlement paid by the third party tortfeasor to the injured worker but not both.” New York Underwriters, 856 S.W.2d at 200; see also Capitol Aggregates, 408 S.W.2d at 924.

In Estrada, the court stated that the holding in New York Underwriters advances policies that are contrary to the legislative purpose in adopting a statutory subrogation right in favor of the carrier. Estrada, 985 S.W.2d at 484. The court further stated that the holding impedes the retention of an attorney by an employee to pursue a third-party claim because it compels the carrier to file a claim in every instance against the third party to preserve its subrogation rights. Id. The court in Estrada followed the holding in Capitol Aggregates, which found that “the party entitled to the money is attempting to recover from one who wrongfully received the same, and the latter will not be subjected to double liability.” Id. (quoting Capitol Aggregates, 408 S.W.2d at 924). The court in Capitol Aggregates noted that the subrogation provision was adopted to prevent the overcompensation to the employee and to reduce the burden of insurance to the employer and to the public. Capitol Aggregates, 408 S.W.2d at 924. These purposes will not be accomplished if the employee is allowed to retain the proceeds of the settlement in addition to his compensation benefits while the carrier is only partially reimbursed. Id.

In Estrada, the injured employee hired Estrada to represent him in a claim against the third-party tortfeasor for personal injuries. The third-party tortfeasor was represented by Allstate, and Wausau was the workers’ compensation carrier. The injured employee and Estrada settled the claims against the third-party tortfea-sor for $20,000, and Allstate issued a check for the settlement. Wausau discovered the settlement had been made in contravention of its subrogation rights. Allstate then paid Wausau $20,000, and Wausau released Allstate. The court in Estrada noted that, had Wausau been required to sue Allstate, Estrada, and the injured employee, it would only be entitled to recover $20,000 against the three defendants jointly and severally. Estrada, 985 S.W.2d at 485. The “first money” paid to the injured employee belonged to Wausau. Therefore, Wausau was entitled to recover that money and retain the settlement it received from Allstate. Had Allstate not paid the settlement to Wausau requiring Wausau to include Allstate in its suit, Wausau would have been limited to the $20,000 wrongful settlement.

As applied to Garriga and Barragan, we agree with Estrada and Capitol Aggregates that a party should not benefit from wrongfully receiving a settlement in contravention of the carrier’s subrogation rights. However, we also agree with the statement in Estrada concerning the limitation of the recovery to the settlement amount. The carrier is entitled to the first money paid to the employee or his representatives until the carrier is paid in full. Tex. Mut. Ins., 251 S.W.3d at 35. The employee and the third-party tortfeasor are jointly and severally liable for the wrongfully appropriated funds. Capitol Aggregates, 408 S.W.2d at 924. Our review of case law does not support the trial court’s finding that Ace is entitled to recover from Garriga and Barragan the entire amount of the compensation benefits it paid.

In Home Indemnity Co. v. Pate, 866 S.W.2d 277, 281 (Tex. App.-Houston [1st Dist.] 1993, writ withdrawn), the court stated that, “[i]f a third-party tortfeasor and its insurer wrongfully pay out to the employee money that belongs to the compensation carrier, the third-party tortfea-sor and its insurance company are liable for the total amount paid by the carrier.” The facts in Pate are distinguishable from the facts before us, and the Pate court was not called upon to answer whether the carrier was entitled to recover the full amount of benefits paid when the settlement was less than the amount of benefits paid by the carrier. The cases cited in Pate do not support the proposition that a carrier is entitled to full payment of benefits regardless of the amount of settlement.

As applied to State Farm and Hickman, Ace pursued its claim against the third-party tortfeasor and was not limited to the amount of the settlement. New York Underwriters, 856 S.W.2d at 200. Ace is entitled to recover the damages found by the factfinder or the amount of the settlement paid by the third-party tortfeasor to the injured worker, but not both. New York Underwriters, 856 S.W.2d at 200; see also Capitol Aggregates, 408 S.W.2d at 924. The trial court severed Ace’s negligence claim. Therefore, on the record before this court, Ace is entitled to recover from State Farm and Hickman the amount of the settlement.

We find that Ace was entitled to recover $12,600. The trial court erred in ordering the parties to pay the full amount of benefits paid. In its final judgment, the trial court awarded an offset of $6,364.81 for medical expenses paid out of the $12,600 settlement. Ace did not challenge the medical offset in its motion for new trial or on appeal. The trial court was correct in awarding the offset of $6,364.81 for medical expenses, and we find that the parties are entitled to offset Ace’s $12,600 recovery by that amount. We sustain Gar-riga and Barragan’s first issue and State Farm and Hickman’s third issue.

Because of our disposition of this issue, we need not address Garriga and Barra-gan’s second issue on appeal or Hickman and State Farm’s fourth issue on appeal. Tex.R.App. P. 47.1.

In their third issue on appeal, Gar-riga and Barragan argue that the trial court erred in refusing to award them an offset for Garriga’s attorney’s fees and costs. Tex. Lab.Code Ann. § 417.003(a) (Vernon 2006) states:

(a) An insurance carrier whose interest is not actively represented by an attorney in a third-party action shall pay a fee to an attorney representing the claimant in the amount agreed on between the attorney and the insurance carrier. In the absence of an agreement, the court shall award to the attorney payable out of the insurance carrier’s recovery:
(1) a reasonable fee for recovery of the insurance carrier’s interest that may not exceed one-third of the insurance carrier’s recovery; and
(2) a proportionate share of expenses.

Ace is pursuing its claim against State Farm and Hickman, and the trial court did not err in refusing to award attorney’s fees to Garriga. We overrule Garriga and Bar-ragan’s third issue on appeal.

In their first issue, State Farm and Hickman contend that there is no proof of negligence. State Farm and Hickman argue that “there is no legal basis to support the trial court’s judgment that State Farm and/or Hickman are jointly and severally liable to ACE.” The trial court severed the negligence claims from this cause. Therefore, we need not address this issue. Tex. R.App. P. 47.1. State Farm and Hickman’s first issue is, therefore, overruled at this time.

In their second issue, State Farm and Hickman argue that there are no pleadings of wrongful settlement or conversion. Ace’s pleadings state that the parties wrongfully settled in violation of Section 417.001 of the Texas Labor Code. When no special exceptions are filed, courts construe pleadings liberally in favor of the pleader. Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 887, 897 (Tex.2000). The pleadings are sufficient to give fair notice of the claim. Tex.R. Crv. P. 47(a). State Farm and Hickman’s second issue on appeal is overruled.

We reverse the judgment of the trial court and render judgment that Ace recover $12,600, less an offset of $6,364.81, on its claims for wrongful settlement.

      . The original judgment included a deduction from the total award for Garriga’s attorney’s fees.