The Court of Appeals for the Fifth District of Texas reversed and remanded a trial court's order that confirmed an arbitration award in favor of Viva Railings, LLC, against Jayco Hawaii, Inc. Jayco appealed, arguing that the trial court abused its discretion by not holding a hearing on Jayco's special appearance, which contested personal jurisdiction in Texas. The arbitration arose from a contract between Jayco and Viva for materials related to a construction project in Hawaii, which included a mandatory arbitration clause governed by Texas law. After initiating arbitration, Viva sought to confirm the award, prompting Jayco to file a special appearance. However, the trial court granted Viva's motion to confirm the arbitration award without addressing Jayco's jurisdictional claim, leading to the appeal. The court emphasized the necessity of both subject matter and personal jurisdiction for a binding judgment and highlighted that a special appearance must be strictly complied with to avoid being classified as a general appearance. This decision underscores the importance of addressing jurisdictional challenges prior to final judgments in Texas courts.
Personal jurisdiction is a waivable right, and a party waives its special appearance by (1) seeking the court's judgment on matters other than jurisdiction, (2) acknowledging that an action is properly before the court, or (3) requesting affirmative relief from the court. A special appearance must be filed before any motion to transfer venue or other pleadings, as stipulated by TEX. R. CIV. P. 120a(1), which establishes the "due-order-of-pleading" requirement. Additionally, a special appearance must be addressed before any other motions, including venue transfers, according to the "due-order-of-hearing" requirement found in TEX. R. CIV. P. 120a(2). A trial court's failure to adhere to this order is reviewed for abuse of discretion; for instance, a court erred by prioritizing merits-based discovery over a special appearance hearing.
In the current case, Jayco argues that the trial court abused its discretion by addressing Viva’s motion to confirm an arbitration award before hearing Jayco’s special appearance. This is upheld, as the rules dictate that a special appearance must be resolved prior to any other motions. Viva contends that Jayco waived its special appearance due to contractual consent, citing cases involving forum-selection clauses. However, those cases are distinguished because they did not involve the due-order-of-hearing rule, the core issue at hand. Instead, the situation parallels a previous ruling where a trial court wrongfully mandated merits discovery before resolving a special appearance. Ultimately, the party making the special appearance has the right to have it adjudicated prior to any other pleadings.
The trial court exceeded its authority by granting a dispositive motion against Jayco while Jayco's special appearance was pending. The court also abused its discretion by ruling that Wade’s claims against GM Oil Properties and Moores were not subject to a valid arbitration agreement before addressing the defendants’ special appearances. Viva argued that Jayco waived its special appearance by engaging with Texas courts under the Texas General Arbitration Act (TGAA), which confers jurisdiction on courts to enforce arbitration agreements. However, compliance with the Texas Rules of Civil Procedure is mandatory, and the TGAA does not permit deviation from the due-order-of-hearing rule. The trial court must first rule on a party’s special appearance before addressing any related motions, and failure to do so constitutes reversible error. Furthermore, a trial court must affirmatively establish jurisdiction over the subject matter and parties before issuing a default judgment. Viva contended that Jayco's lack of a reporter's record from the hearing limited appellate review and thus warranted a presumption in favor of the trial court's judgment. However, this presumption applies only when the reporter's record is essential to the appeal. In this case, the appellate issue revolves around the trial court's authority to render a decision out of order, not the correctness of the decision itself.
The trial court's judgment is not affirmed due to Jayco's failure to provide a reporter’s record for appeal. Viva's argument that the trial court correctly denied Jayco’s special appearance is rejected, as doing so is deemed an abuse of discretion. The court emphasizes the necessity of separating the special appearance from other proceedings, specifically addressing that personal jurisdiction must be determined beforehand. The trial court improperly held a hearing on Viva's motion to confirm without first allowing Jayco to present its special appearance, violating procedural rules that require timely notice and evidence submission. Consequently, the appellate court reverses the trial court's judgment and remands the case for further proceedings, ordering that Jayco recover its appeal costs from Viva.
