Texas Law Firm Loses Bid to Sue Ohio Firm Over Fees in Texas

A Texas law firm failed on Thursday to convince the Fifth Circuit that an Ohio firm or two of its lawyers had enough of a connection with Texas for them to be sued there for fraud or contract breach related to a fee-sharing agreement.

Danziger & De Llano LLP, based in Texas, said it referred a qui tam matter to Ohio-based Morgan Verkamp LLC after agreeing to split the attorneys’ fees equally. Danziger said Morgan Verkamp received more than $5 million in fees, and owed it $2.1 million in accordance with their agreement. Danziger also named as defendants Frederick M. Morgan Jr. and Jennifer Verkamp.

The U.S. District Court for the Southern District of Texas dismissed the cause for lack of personal jurisdiction.

The U.S. Court of Appeals for the Fifth Circuit affirmed, saying Texas courts didn’t have personal jurisdiction over Danziger’s intentional tort claims because the defendants didn’t direct their activities to Texas.

The panel rejected Danziger’s jurisdiction arguments, noting that little of the alleged tortious actions took place in Texas. The appeals court said Morgan Verkamp is not alleged to have “actively engaged” in a single communication directed into Texas, and the only act related to the state “was a reply to an unsolicited email, which is not a sufficient contact for jurisdiction under our precedents.”

“Because none of Morgan Verkamp’s allegedly tortious conduct either occurred in Texas or was otherwise meaningfully connected to the state, the district court correctly dismissed Danziger’s intentional tort claims for lack of personal jurisdiction,” Judge Stephen A. Higginson wrote in the opinion.

Danziger’s claim for breach of contract was also dismissed, because Danziger “was the only connection between the alleged contract and Texas.”

“Morgan Verkamp did not perform in Texas and was not required to perform in Texas,” Higginson wrote. “Moreover, this alleged contract to split the fees arising from a non-Texas law firm’s legal representation of a non-Texas client in a non-Texas case was centered outside of Texas.”

Judges W. Eugene Davis and Kurt D. Engelhardt joined in the decision.

Danziger is represented by Susman Godfrey LLP. Morgan Verkamp is represented by Law Office of Sarah Frazier PLLC, Goldstein & Russell PC, and Montgomery Jonson LLP.

The case is Danziger v. Morgan, 5th Cir., No. 21-20186, 1/27/22.