[February 28, 2025]
In 2023, a client, hotel franchisor, received a presuit demand for $300 million after a minor was allegedly abducted from a venue in Texas and forced into prostitution at a franchisee hotel in Oklahoma. The demand, however, threatened suit in Texas based on Texas’s Trafficking of Persons Statute, Chapter 98 of the Texas Civil Practice & Remedies Code. The Code imposes civil liability for persons, entities, and shareholders/members/partners “who intentionally or knowingly benefit from participating in a venture that traffics another person.” Thus, suits have started to be brought against hotel owners based on allegations that they “must know” people are being trafficked at their hotels and are benefiting from it because they collect money for the rooms they rent.
The claims against the client were meritless, but being licensed in both Texas and Oklahoma, I dug deep into legal basics to challenge jurisdiction if suit were to be brought in Texas. Oklahoma had no such Trafficking Statute at the time.
In civil law, we are all familiar with two types of jurisdiction a court must have, without which a court must dismiss a case for lack of jurisdiction. In criminal law, however, territorial jurisdiction is also a requirement i.e. the crime has to have occurred in Texas for a district attorney to bring charges against the defendant.
In walks the Houston Court of Appeals (1st District) in Sabatino v. Goldstein, 649 S.W.3d 841 (Tex. App. 2022), wherein the Court held that “territorial jurisdiction… is a distinct jurisdictional requirement in all suits.” Id. at 847. Because in that case, the alleged tort took place in Massachusetts, the Court of Appeals held that the trial court lacked jurisdiction over Plaintiff’s claims brought in a civil lawsuit and dismissed the proceeding.
I sent this case to claimant’s counsel arguing that Texas Trafficking Statute could not be applied to tort claims arising in Oklahoma and suit, if brought, would have to be brought in Oklahoma. Shortly after, we settled for favorable terms for the client in early 2024.
Later in 2024, I received a call from a carrier asking me to represent their insured in a double fatality motor vehicle accident that occurred in Oklahoma, where suit was brought in Texas. The motor carrier was a Texas entity and the driver was a Texas resident, thus, the Court had subject matter jurisdiction and personal jurisdiction over the defendants. The issue of nuclear verdicts is well known to carriers in Texas and so, I hoped to file a special appearance challenging territorial jurisdiction. But that “feeling” lawyers sometimes get had me check to see if the Sabatino opinion was still good law, despite only being two years old.
As it turns out, on May 24, 2024, the Texas Supreme Court, while affirming the holding of the Court of Appeals in Sabatino, was not persuaded that territorial jurisdiction should be applied to civil proceedings. “Stated another way, as in any civil case, a court presiding over a [anti-stalking proceeding] must have subject matter jurisdiction over the controversy and personal jurisdiction over the parties… The court of appeals erred in imposing a third, nonwaivable territorial limitation on the court’s jurisdiction that applies only in criminal cases.” Goldstein v. Sabatino, 690 S.W.3d 287, 292 (Tex. 2024).
Thus, there was no longer grounds to seek dismissal in Texas based on territorial jurisdiction.
The take away here is two fold. First, the foregoing emphasizes the importance of making sure counsel stays up to date on the law. What may have been true a few months prior, may no longer be true. This is why you should also vet case law cited by opposing counsel. Second, some novel defensive strategies have short fuses and it is important to act when opportunity arises. Had we delayed settlement negotiations or stonewalled until suit was brought, the ship on civil territorial may have sailed and the client would have been stuck defending an expensive lawsuit in Texas involving considerably egregious allegations.
###
Christopher Chapaneri a distinguished Lydecker attorney with extensive expertise in civil litigation, construction defect, premises liability, amusement park litigation, commercial motor vehicle/trucking, employment law, and environmental litigation—including mold exposure and vegetation management/overspray matters. Chapaneri also has a robust appellate practice, having successfully handled cases before the Texas Supreme Court and the Fifth Circuit Court of Appeals.
In addition, Chapaneri brings substantial experience in handling high exposure and high-risk cases, further strengthening Lydecker’s ability to serve clients across multiple industries in Texas and beyond. Chapaneri also provides services in the State of Oklahoma.
