Case Name: Charles H. SCHLOBOHM and Joneen L. Schlobohm, Appellants, v. Rolf L. SCHAPIRO, Appellee
Court: Texas Courts of Appeals
Jurisdiction: Texas
Decision Date: 1988-09-09
Citations: 759 S.W.2d 470
Docket Number: No. 05-87-01265-CV
Parties: Charles H. SCHLOBOHM and Joneen L. Schlobohm, Appellants, v. Rolf L. SCHAPIRO, Appellee.
Judges: Before STEPHENS, HECHT and KINKEADE, JJ.
Reporter: South Western Reporter Second Series
Volume: 759
Pages: 470–477

Head Matter:
Charles H. SCHLOBOHM and Joneen L. Schlobohm, Appellants, v. Rolf L. SCHAPIRO, Appellee.
No. 05-87-01265-CV.
Court of Appeals of Texas, Dallas.
Sept. 9, 1988.
Rehearing Denied Oct. 18, 1988.
James H. Baumgartner, Jr., David Reese, Dallas, for appellants.
Howard V. Tygrett, Dallas, for appellee.
Before STEPHENS, HECHT and KINKEADE, JJ.

Opinion:
STEPHENS, Justice.
Charles Scholobohm and Joneen Schlo-bohm (collectively referred to as Schlo-bohm) appeal from a trial court order dismissing their cause of action against Rolf Schapiro for lack of in personam jurisdiction. Schlobohm brought suit against Rolf Schapiro, Hangers Dry Cleaners & Laundry, Inc., and Douglas Schapiro for amounts due pursuant to a commercial lease. Rolf Schapiro made a special appearance pursuant to Texas Rules of Civil Procedure 120a, claiming that the trial court did not have in personam jurisdiction. The trial court agreed and severed him from the lawsuit. In four points of error, Schlobohm asserts that the court in fact has in personam jurisdiction over Rolf Schapiro and it erred in sustaining his objection to the jurisdiction of the court. Further, Schlobohm contends that the trial court exceeded its authority by ruling on the merits of the case. We disagree and, accordingly, affirm the judgment of the trial court.
Rolf Schapiro is a physician who lives and practices in Pennsylvania. Schapiro's son, Douglas, lives in Dallas. In July 1984, Douglas approached Schapiro with the idea of forming a corporation to establish dry cleaning stores in major office buildings. Hangers Dry Cleaners and Laundry, Inc. was incorporated on July 23,1984. Schapi-ro "loaned" several thousand dollars to the business in exchange for stock in the company. The business initially did well and Douglas informed Schapiro of his desire to expand the business by leasing a building and installing a dry cleaning machine and a laundry machine. Sometime in November 1984, Schapiro made a downpayment on the equipment. On November 12, 1984, Schlo-bohm leased a building to Hangers for a term of sixty months. Hangers occupied the building until some time in August 1986. Schlobohm brought suit for non-payment of rentals for August 1986 and as it accrues until the end of the lease term in 1989.
In points of error one and two, Schlo-bohm asserts that the trial court erred in sustaining Schapiro's objection to the in personam jurisdiction of the court.
Schlobohm first argues that the trial court should have focused its legal analysis on the constitutional limitations of Due Process rather than limiting its inquiry to the Texas Long Arm Statute's "doing business" language. The Long Arm Statute is set out in section 17.042 of the Texas Civil Practice and Remedies Code and states in pertinent part: "In addition to other acts that may constitute doing business, a nonresident does business in this state if the nonresident: (1) contracts by mail or otherwise with a Texas resident and either party is to perform the contract in whole or in part in this state...."
Schapiro never had any personal contact with Schlobohm. The lease contract is signed only by Douglas as president of Hangers. Schapiro's contacts with Texas are set out below:
1. August 15, 1984, as the sole director of Hangers, Schapiro conducted the first meeting of the Director at the corporation's registered office in Dallas.
2. Schapiro remained the sole director until his resignation "at the end of the year 1985."
3. In November 1984, Schapiro "loaned" Hangers the money for the downpayment on the equipment to be installed in the leased premises.
4. In December 1984 or January 1985, Schapiro became the sole stockholder in Hangers.
5. In January 18, 1985, Schapiro came to Dallas and obtained a $136,702.10 loan in his individual capacity with MBank to purchase the equipment. The security agreement states that the collateral on the loan is all equipment leased by Scha-piro to Hangers which is kept at the leased premises.
6. Schapiro continually deposited money in the Hangers account for payroll and expenses. These "loans" are allegedly evidenced by promissory notes which could not be located. These notes allegedly total $24,000.00 and $450,000.00.
7. In January 1986, Schapiro came to Dallas with his wife to visit his children and "hoping we could get some information [about Hangers]."
8. On March 28, 1986, while in Pennsylvania, Schapiro entered into a security agreement with MBank to secure the debts of Hangers. Schapiro assigned $10,000.00 from his personal account with MBank to cover Hangers' insufficient funds checks.
The only other contact Schapiro had with Texas was when he took his medical specialty board examination in Dallas approximately twenty-five years ago and when he attended a workshop in San Antonio on behalf of his Pennsylvania hospital.
The Due Process Clause of the Fourteenth Amendment operates to limit the power of a State to assert in personam jurisdiction over a non-resident defendant. Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 413-14, 104 S.Ct. 1868, 1871-72, 80 L.Ed.2d 404 (1984). In determining the constitutional reach of the state's jurisdiction over persons with only a single or few contacts with Texas, a three-pronged test has been developed:
(1) the nonresident defendant or foreign corporation must purposefully do some act or consummate some transaction in the forum state;
(2) the cause of action must arise from, or be connected with, such act or transaction; and
(3) the assumption of jurisdiction by the forum state must not offend traditional notions of fair play and substantial justice, consideration being given to the quality, nature, and extent of the activity in the forum state, the relative convenience of the parties, the benefits and protection of the laws of the forum state afforded the respective parties, and the basic equities of the situation.
Zac Smith & Co. v. Otis Elevator Co., 734 S.W.2d 662, 663 (Tex.1987). As Schapiro is not a party to the contract upon which Schlobohm brings suit, the court must determine whether his contacts with Texas constitute the kind of continuous and systematic general business contacts which would justify the imposition of in personam jurisdiction. See Zac Smith, 734 S.W.2d at 633; 3-D Electric Co. v. Barnett Construction Co., 706 S.W.2d 135, 141 (Tex. App.—Dallas 1986, writ ref'd n.r.e.).
Due process requirements are satisfied when a defendant has "certain minimum contacts with [the forum] such that the maintenance of the suit does not offend 'the traditional notions of fair play and substantial justice.' " Helicopteros, 466 U.S. at 414, 104 S.Ct. at 1872, quoting International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945). Schlobohm argues that Schapiro's "purposeful commercial contacts with Texas" justify the exercise of personal jurisdiction; that the cause of action arose out of and is related to such "purposeful commercial contacts with Texas"; and that the exercise of in personam jurisdiction in this case would not offend traditional notions of fair play and substantial justice. We disagree.
The touchstone of the minimum contacts test is whether the nonresident defendant has "purposefully availed" himself of the privilege of conducting activities within the forum state, thus invoking the benefits and protection of the forum's laws. Texas Commerce Bank National Ass'n v. Interpol '80 Limited Partnership, 703 S.W.2d 765, 772 (Tex.App.—Corpus Christi 1985, no writ). We hold that Scha-piro's trips to Dallas relating to Hangers in August 1984 to conduct the Director's meeting and in January 1986 to visit his children and to find out the status of Hangers, cannot be described or regarded as contact of a "continuous and systematic" nature. See Helicópteros, 466 U.S. at 416-17, 104 S.Ct. at 1873. Further, although Schapiro came to Dallas and obtained a loan in January 1985, the loan agreement is not connected with Schlobohm's cause of action for amounts due upon Hangers' lease. Therefore, this single contact with Texas does not support the imposition of jurisdiction over Schapiro. See Zac Smith & Co., 734 S.W.2d at 663. We overrule Schlobohm's points of error one and two.
In point of error three, Schlobohm argues that after a plaintiff has set forth any basis to sustain jurisdiction over a non resident defendant, the burden to show that he is not amenable to the court's jurisdiction is upon the defendant.
Schlobohm asserted in their petition that Schapiro's commercial transactions were sufficient to satisfy the minimum contacts requirements necessary to justify in per-sonam jurisdiction. At the special appearance hearing, Schlobohm did not meet the burden of showing that Schapiro purposefully availed himself of the benefits and protection of Texas laws; therefore, the burden of proof did not shift to Schapiro under Rule 120a. See Minexa Arizona, Inc. v. Staubach, 667 S.W.2d 563, 564-65 (Tex.App.—Dallas 1984, no writ); see also Zac Smith & Co., 734 S.W.2d at 664. We overrule Schlobohm's third point of error.
In point of error four, Schlobohm argues that the trial court exceeded its authority under Texas Rules of Civil Procedure 120a by ruling on the merits of the case and in holding that a finding of alter ego was a prerequisite to establishing Schapiro's amenability to suit within Texas. No request for findings of fact or conclusions of law was filed by either party.
The determinations Schlobohm complains of are contained within a letter written by the trial court to the parties stating its holding that Schapiro's objection to the jurisdiction should be sustained. The court states that no alter ego relationship exists between Schapiro and Hangers and then distinguishes the facts of record in the present case from those of Castleberry v. Branscum, 721 S.W.2d 270 (Tex.1986). Findings of Fact and Conclusions of Law need not be in any particular form other than they must be in writing. Villa Nova Resort, Inc. v. State, 711 S.W.2d 120, 124 (Tex.App.—Corpus Christi 1986, no writ). If the court makes Findings of Fact and Conclusions of Law, the fact that they are contained within a letter does not affect their validity, as long as they are filed with the clerk and become a part of the record. Id. The trial court's letter is attached to Schlobohm's Supplemental Motion for Reconsideration and is part of the record before this Court.
Texas Rules of Civil Procedure 120a(2) specifically states: "No determination of any issue of fact in connection with the objection to jurisdiction is a determination of the merits of the case or any aspect thereof." Therefore, even though the trial court's letter may contain Findings of Fact and Conclusions of Law, Schlobohm is not harmed because they are not binding upon the merits of the suit.
Further, the trial court properly determined the alter ego issue. Schlobohm specifically alleged in their First Amended Original Petition that Schapiro and his son are liable for Hangers' debt because: (1) the corporate entity is a sham and is nothing more than the alter ego of Schapiro and his son and (2) the corporate form has been used to achieve a fraudulent and "unequi-table" result. Schlobohm urges the trial court to disregard the corporate fiction and to hold Schapiro and his son personally liable for the actions and debts of the corporate entity. Due to the fact that these allegations were made and evidence concerning alter ego was presented at the special appearance hearing, the alter ego question is at issue in determining whether in personam jurisdiction should be imposed upon Schapiro. See, e.g., 3-D. Electric Co., 706 S.W.2d at 138 n. 2. The finding that the company is Schapiro's alter ego may justify a finding that the individual "engages in business" in the jurisdiction through local activities of the corporation. Cf. 3-D Electric, 706 S.W.2d at 139 (holding that a close relationship between a parent corporation and a subsidiary may justify finding that the parent "engages in business" in the jurisdiction through the local activities of its subsidiary). Therefore, we hold that the trial court properly addressed the alter ego issue in its analysis to determine if in personam jurisdiction is justified. We overrule Schlobohm's fourth point of error and affirm the trial court's judgment.
HECHT, J., dissents with opinion.