Court Opinion

ID: 22255
Source: CourtListenerOpinion
Date Created: 2010-04-25 07:53:42+00
Date Added: 2024-06-11T15:03:54.765246
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS

                       FOR THE FIFTH CIRCUIT

                       _____________________

                            No. 00-20244
                          Summary Calendar
                       _____________________

          AQUA-DYNE INC, a Texas Corporation

                                         Plaintiff-Appellant

          v.

          LES ENTERPRISES CLAUDE CHAGNON INC, a Canadian
          Corporation

                                         Defendant-Appellee

_________________________________________________________________

           Appeal from the United States District Court
                for the Southern District of Texas
                      Docket No. H-99-CV-2627
_________________________________________________________________

                         November 3, 2000

Before KING, Chief Judge, and SMITH and PARKER, Circuit Judges.

PER CURIAM:*

     Plaintiff-Appellant, Texas-based Aqua-Dyne Inc., appeals the

district court’s final judgment dismissing Aqua-Dyne’s

declaratory judgment action.   The district court found it lacked

personal jurisdiction over Defendant-Appellee, Canadian-based Les

Enterprises Claude Chagnon, Inc.   For the following reasons, we

     *
      Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
affirm.

                                  I.

     Aqua-Dyne, Inc. is a Texas corporation that manufactures

high-pressure water jetting systems, pumps, and related

equipment.   Les Enterprises Claude Chagnon, Inc. (“Chagnon”) is a

Canadian corporation that purchased a “dual water jet blaster

unit pump” and related equipment from Liquid-Laser Jetting

Systems, Inc. (“Liquid-Laser”).    At the time of the purchase

Liquid-Laser was the Canadian distributor for Aqua-Dyne products.

Liquid-Laser and Chagnon signed the contract for $558,000

Canadian on April 22, 1999.

     The equipment at issue was shipped F.O.B. from Houston,

Texas to Liquid-Laser in Canada and then sent to Chagnon, also in

Canada.   Payment was remitted from Chagnon through Liquid-Laser

to Aqua-Dyne in Houston.   Chagnon’s only direct contact was with

Liquid-Laser, as distributor for Aqua-Dyne.    Aqua-Dyne did,

however, create the quotation and contract for sale in Texas and

also transferred title to the equipment to Chagnon in Texas.

     A disagreement arose regarding the age and condition of the

equipment.   Chagnon expressed dissatisfaction with its purchase

and sought a refund from Liquid-Laser.    On June 10, 1999, Chagnon

and Liquid-Laser reached a settlement agreement whereby Liquid-

Laser agreed to repurchase the disputed equipment.    The agreed-

upon amount ($450,000 Canadian) was to be paid by June 15, 1999.

                                  2
No payment issued despite the further written requests by

Chagnon.    On August 2, 1999, with the settlement agreement still

unconsumated, Chagnon wrote Aqua-Dyne demanding reimbursement for

damages from the faulty equipment and stating that it would

pursue legal remedies against the Texas company in Canada.    As a

result of this threat, on August 18, 1999, Aqua-Dyne filed a

declaratory judgment suit in the United States District Court for

the Southern District of Texas.    Aqua-Dyne sought a declaration

that it was not liable for the cost of the disputed equipment and

that the Canadian settlement agreement was valid.    On September

15, Chagnon filed suit against Aqua-Dyne and Liquid-Laser in the

Superior Court of the Province of Quebec, District of Saint-

Hyacinthe.

     On October 4, 1999, Chagnon filed a motion to dismiss the

Texas action for lack of personal jurisdiction and under the

doctrine of forum non conveniens, or in the alternative, to

dismiss or stay pending the outcome of the Canadian suit.     See

Fed. R. Civ. P. 12(b)(2).    Aqua-Dyne filed an opposition motion

on October 22, 1999.    On November 5, 1999, Chagnon filed a reply

brief with affidavits from Pierre Lebel and Richard Cignac

attached.    The district court denied Chagnon’s motions on

November 8, 1999.

     On November 10, 1999, Chagnon filed a Motion for

                                  3
Reconsideration and refiled its reply brief and affidavits.1       In

the days that followed, numerous responses and replies were filed

by the parties.

     After this series of motions, responses and replies, but

without an evidentiary hearing, the district court granted

Chagnon’s motion for reconsideration and dismissed the suit for

lack of personal jurisdiction.   The remaining claims of forum non

conveniens and the motion to stay pending the Canadian action

were rendered moot.   The district court’s memorandum and order

and the final judgment dismissing the lawsuit were entered on

February 23, 2000.

     Aqua-Dyne timely appeals.

                                 II.

     We review de novo a district court’s grant of a motion to

dismiss for lack of personal jurisdiction.     See Jobe v. ATR

Marketing., Inc., 87 F.3d 751, 753 (5th Cir. 1996).

     A federal court sitting in diversity may exercise

jurisdiction over a non-resident corporate defendant only if

permitted by the law of the forum state.     See Fed. R. Civ. P.

4(e)(1), 4(h)(1), 4(k)(1); Alpine View Co. v. Atlas Copco AB, 205
F.3d 208, 214 (5th Cir. 2000).   The Texas long-arm statute, see

     1
       The district court struck this motion on November 18,
stating that the document was not an original. The next day
Chagnon refiled the reply.

                                  4
Tex. Civ. Prac. & Rem. Code Ann. § 17.042 (1997), confers

personal jurisdiction over a non-resident defendant to the full

extent allowed by the federal Constitution.   See Wilson v. Belin,

20 F.3d 644, 647 n.1 (5th Cir. 1994).   As such, analysis of the

long-arm statute’s grant of personal jurisdiction and the

constitutional requirement that the exercise of personal

jurisdiction comport with federal due process merges into a

unitary question of minimum contacts with the forum state.     See

Mink v. AAAA Dev. LLC, 190 F.3d 333, 335 (5th Cir. 1999);

Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-73 (1985).

     This due process protection of ensuring minimal contact with

the forum derives from the Fourteenth Amendment, which “permits

the exercise of personal jurisdiction over a non-resident

defendant when (1) that defendant has purposely availed himself

of the benefits and protections of the forum state by

establishing ‘minimum contacts’ with the forum state; and (2) the

exercise of jurisdiction over that defendant does not offend

‘traditional notions of fair play and substantial justice.’”

Latshaw v. Johnson, 167 F.3d 208, 211 (5th Cir. 1999) (quoting

International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).

The core of this minimum contacts protection is that the

defendant’s contact with the forum state must be significant

enough “that he should reasonably anticipate being haled into

court” in that state.   World-Wide Volkswagen Corp. v. Woodson,

444 U.S. 286, 297 (1980).

                                 5
     As the instant suit arises from Chagnon’s contact with the

state of Texas regarding the one-time purchase of industrial

equipment, we are concerned with specific personal jurisdiction.

See Wilson v. Belin, 20 F.3d 644, 647 (5th Cir. 1995) (“The

‘minimum contacts’ prong of the inquiry may be further subdivided

into contacts that give rise to ‘specific’ personal jurisdiction

and those that give rise to ‘general’ personal jurisdiction.”).2

Specific jurisdiction can be found when a non-resident defendant

purposely directs its activities at a forum state and “litigation

results from alleged injuries that ‘arise out of or relate to’

those activities.”   Burger King Corp. v. Rudzewicz, 471 U.S. 462,

472 (1985) (quoting Helicopteros Nacionales de Colombia, S.A. v.

Hall, 466 U.S. 408, 414 (1984)).

     On appeal, Aqua-Dyne maintains that the trial judge erred in

its determination that Aqua-Dyne failed to establish a prima

facie showing of specific personal jurisdiction.   We find no

fault in the standard applied or reasoning of the district court,

and through a careful reading of the affidavits and record, find

no minimum contacts sufficient to “hale” Chagnon into court in

     2
       On appeal, discussion is limited to the question of
specific personal jurisdiction. The record does not reveal that
Chagnon had regular contacts with Texas or sought the regular
services of Texas residents, thus precluding general personal
jurisdiction. See C & H Transportation Co. Inc. v. Jensen and
Reynolds Contraction Co., 719 F.2d 1267, 1270 (5th Cir. 1983).
Aqua-Dyne does not challenge the district court’s holding that
Changon has insufficient minimum contacts for general personal
jurisdiction.

                                   6
Houston, Texas.

     Under the law of this circuit, “when a court rules on a

motion to dismiss for lack of personal jurisdiction without

holding an evidentiary hearing, it must accept as true the

uncontroverted allegations in the complaint and resolve in favor

of the plaintiff any factual conflicts posed by the affidavits.”

Latshaw v. Johnson, 167 F.3d 208, 211 (5th Cir. 1999); see also

Bullion v. Gillespie, 895 F.2d 213, 217 (5th Cir. 1990) (“On a

motion to dismiss for lack of jurisdiction, uncontroverted

allegations in the plaintiff’s complaint must be taken as true,

and conflicts between the facts contained in the parties’

affidavits must be resolved in the plaintiff’s favor for purposes

of determining whether a prima facie case for personal

jurisdiction exists.”) (quoting D.J. Investments, Inc. v.

Metzeler Motorcycle Tire Agent Gregg, Inc., 754 F.2d 542, 546

(5th Cir. 1985)).

     Mindful of the low threshold required for a district court

finding that the plaintiff has made out a prima facie case for

personal jurisdiction over the defendant, and resolving all

factual conflicts in favor of Aqua-Dyne, we conclude that the

district court correctly held that Aqua-Dyne failed to establish

even a prima facie case.   Three factors laid out in Aqua-Dyne’s

own appellate brief are dispositive of the matter.   First, the

terms and structure of the sales contract between Liquid-Laser

and Chagnon demonstrate Chagnon’s circumscribed role in Texas.

                                 7
Second, the role of Pierre Lebel, even if characterized as a

“representative” of Chagnon, fails to link the Chagnon

corporation to the situs of Texas sufficiently to meet the

constitutional requirement of due process.    Third, the series of

communications alleged between Chagnon and Aqua-Dyne exist as

after-the-fact communications, inadequate to support a showing of

minimum contacts jurisdiction under the law of this and other

circuits.   We address each of these arguments in turn.

                                A.

     Aqua-Dyne argues that notwithstanding the fact that the

contract was signed by two Canadian companies, and that the

payment and equipment traveled directly from a Canadian

distributor to a Canadian purchaser, the site of where the

contract was drafted controls jurisdiction.   We disagree.

     “[T]he unilateral activity of those who claim some

relationship with a nonresident defendant cannot satisfy the

requirement of contact with the forum State.”     Hanson v. Denckla,

357 U.S. 235, 253 (1958); see also Bullion v. Gillespie, 895 F.2d
213, 216 (5th Cir. 1990) (“Jurisdiction is improper if grounded

in the unilateral activity of the plaintiff.”).    The drafting of

the contract was such a unilateral act, neither affecting the

contractual obligations of the parties nor linking the forum

state to the situs where the contract was to be performed.    The

same can be said of the fact that title passed to Chagnon

directly in Texas and that the sales quotation was created in

                                 8
Texas.   None of these actions rises to a prima facie level of

jurisdictional connection consistent with due process because

none of the acts links the Canadian dispute between two

contractually bound Canadian companies to the forum of Texas.

     More fundamental to the due process analysis, a contract

signed between two Canadian companies in Canada demonstrates a

purposeful intent to have Canadian law and courts resolve

resulting legal questions.   Following the dictates of Burger King

Corp. v. Rudzewicz, the question before this court is whether

Chagnon purposely availed itself of the privileges of conducting

business in Texas, and whether it was foreseeable from its

conduct that it could be “haled into court” in Texas.     See 471
U.S. at 474-75 (1985).   Chagnon chose a Canadian distributor for

its purchase.   It signed a contract with that distributor.

Allowing a manufacturer who has drafted the contract to assert

jurisdiction over the purchaser because of that act expansively

broadens the jurisdictional reach of parties not involved in the

contractual relationship.    In the same fashion, the production of

the quotation and the transfer of title do not shift the

jurisdictional analysis.

     This reasoning comports with our precedent and the reasoning

of sister circuits.   In contract matters, we analyze “prior

negotiations and contemplated future consequences, along with the

terms of the contract and the parties’ actual course of

dealing.”   Latshaw v. Johnson, 167 F.3d 208, 211 (5th Cir. 1999)

                                  9
(quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 479

(1985)).   With the exception of the ambiguous role of Mr. Lebel

(discussed below), there were no prior negotiations of Chagnon in

Texas.   Further, the terms of this contract relegate Aqua-Dyne to

the role of manufacturer, rather than a party to the contract,

and the actual course of conduct supports this limited role.

     Even if Aqua-Dyne were named in the contract, this court has

held that “entering into a contract with an out-of-state party,

without more, is not sufficient to establish minimum contacts.”

Id.; see also Hydrokinetics, Inc. v. Alaska Mechanical, Inc., 700
F.2d 1026, 1031 (5th Cir. 1983) (holding that single purchase of

goods known to be manufactured in Texas and payment of goods were

not enough establish personal jurisdiction); Borg-Warner

Acceptance Corp. v. Lovett & Tharpe, Inc., 786 F.2d 1055, 1063

(11th Cir. 1986) (“[A] purchaser in an isolated transaction may

not be subject to personal jurisdiction in a seller’s state

merely because the manufacturer performed its duties under

contract there.”); Scullin Steel Co. v. National Railway

Utilization Corp., 676 F.2d 309, 313 (8th Cir. 1982) (finding that

a contract between a non-resident purchaser and resident seller

could not alone create minimum contacts in resident’s state).

Since Aqua-Dyne was not a direct party to the contract, and

Chagnon did nothing more than contract with another Canadian

company, Aqua-Dyne’s contractual arguments for minimum contacts

are insufficient.

                                10
                                  B.

     Aqua-Dyne rests much of its minimum contact assertions on

the role played by Pierre Lebel, who allegedly acted on behalf of

Chagnon in Texas.   Aqua-Dyne asserts first that Mr. Lebel was an

employee of Chagnon, and second that in 1995 Mr. Lebel visited

Aqua-Dyne in Texas as a representative for Chagnon.    Taking Aqua-

Dyne’s characterization of Mr. Lebel as true for the purposes of

a prima facie case, this court finds the following meager factual

predicate insufficient for jurisdiction.

     Aqua-Dyne’s argument that Mr. Lebel once held the status of

Chagnon employee cannot support a minimum contacts argument

because Mr. Lebel only worked for Chagnon in May/June 1999, and

only worked in Canada.     The April 1999 contract, at issue in this

case, involved negotiations before Mr. Lebel became a Chagnon

employee.   From the record, Mr. Lebel did not have any contact

with Texas in 1999 as an employee or agent of Chagnon.    Thus,

Aqua-Dyne’s repeated characterization of Mr. Lebel as a “Chagnon

employee,” while technically accurate, is not relevant to the

minimum contacts question before this court.    As an “employee,”

Mr. Lebel did nothing that that would create minimum contacts

with Texas for Chagnon.3

     3
       To bolster Mr. Lebel’s connection with Chagnon, Aqua-Dyne
states that in 1999, George Rankin, President of Aqua-Dyne
observed Mr. Lebel at a meeting in Canada attempting to settle
the contractual dispute between Chagnon, his employer, and
Liquid-Laser, another Canadian company. Again, these facts fail
to demonstrate that Mr. Lebel’s employment status for a month in

                                  11
     Aqua-Dyne’s second argument that Mr. Lebel visited Texas in

1995 as a representative of Chagnon presents a closer question.

It is Mr. Lebel’s relationship with Chagnon during this 1995

visit that underpins Aqua-Dyne’s case.    However, in its

affidavits, Aqua-Dyne carefully omits any reference to Mr.

Lebel’s employment or agency relationship with Chagnon at the

time of his visit to Texas in 1995.    In its reply brief, Aqua-

Dyne argues that, under the applicable legal standard, we must

assume that Lebel was a representative of Chagnon, an assumption

that is essentially a legal conclusion.    But we are not compelled

to make any assumption that is not supported by the facts that

are set out in Aqua-Dyne’s affidavits.    Unable to assert with

specificity Mr. Lebel’s status as an employee or agent of Chagnon

at the time of that visit, Aqua-Dyne has no factual predicate for

the legal conclusion that it urges upon us.

     Even if we were to accept Aqua-Dyne’s argument and “assume”

that Mr. Lebel was a representative of Chagnon in 1995, this

fails to prove Chagnon’s connection to Texas in 1999 regarding

its contractual dispute with Liquid-Laser.    Four years have

passed, lending credence to the district court’s conclusion that

such a connection is too attenuated.    Further, a contract not

directly involving Aqua-Dyne has been entered into between two

Canadian corporations.   See Thompson v. Chrysler Motors Corp.,

1999 has any relevance to the argument that Chagnon purposely
availed itself of the forum state of Texas.

                                12
755 F.2d 1162, 1169 (5th Cir. 1985) (“A nonresident may

permissibly structure his primary conduct so as to avoid being

haled into court in a particular state.”) (citing World-Wide

Volkswagen v. Woodsen, 444 U.S. 286, 297 (1980)).   Without any

current purposeful availment of the Texas forum, this single

visit cannot alone support the full weight of minimum contacts

consistent with due process.4

                                C.

     Finally, Aqua-Dyne asserts that the numerous communications

made between Chagnon and Aqua-Dyne establish a prima facie case

of minimum contacts.   This court has held that “an exchange of

communications between a resident and a nonresident in developing

a contract is insufficient of itself to be characterized as

purposeful activity.” Stuart v. Spademan, 772 F.2d 1185, 1193

(5th Cir. 1985); see also Williams v. Wilson, 939 F. Supp. 543,

548 (W.D. Tex. 1995) (“The Fifth Circuit has consistently held

that the exchange of communications between a party in the forum

state and a party in another state in the development of a

contract is insufficient to confer jurisdiction over a non-

     4
       While the number of visits is not dispositive it is
relevant to assessing the weak ties of Lebel/Chagnon to the forum
state. See Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir.
1985) (“While the number of contacts with the forum state is not
determinative, it is indeed one of the relevant factors to be
considered within the totality of circumstances in assessing the
propriety of exercising personal jurisdiction over a
nonresident.”) (citing Standard Fitting Co. v. Sapag, S.A., 625
F.2d 630, 643 (5th Cir. 1980)).

                                13
resident in a breach of contract suit.”) (citations omitted)).

     In the instant case, not only is Aqua-Dyne not a party to

the contract, but the communications took place after the dispute

arose between Chagnon and Liquid-Laser and primarily focused on

settlement.   Since Aqua-Dyne’s claim for forum contact with Texas

involves the purchase of equipment and not the later settlement

negotiations, these communications involving the contract dispute

are irrelevant to establish minimum contacts.     See Burger King

Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (requiring that

litigation and injury result from purposeful activities in forum

state to establish minimum contacts); see also Digi-Tel Holdings,

Inc. v. Proteq Telecom. (PTE), Ltd., 89 F.3d 519, 524 (8th Cir.

1996) (“[C]ourts have hesitated to use unsuccessful settlement

discussions as contacts for jurisdictional purposes.”).

     Except for the role of Mr. Lebel, no purposeful contacts

between Chagnon and Aqua-Dyne are alleged before the equipment

was purchased from Liquid-Laser.     Such indirect international

communications, occurring after the fact, cannot now be used to

justify a constitutionally significant level of minimum contacts.

On a prima facie level and assessing the full totality of

circumstances, we are left with communications that do nothing to

further the argument for minimum contacts.

     As Aqua-Dyne failed to establish a prima facie threshold of

minimum contacts with Texas, we need not address whether the

exercise of personal jurisdiction in this case would offend

                                14
traditional notions of fair play and substantial justice.    See

Ashahi Metal Inc. v. Superior Court, 480 U.S. 102, 113-16 (1987);

Felch v. Transportes Lar-Mex SA DE CV, 92 F.3d 320, 329 n.20 (5th

Cir. 1996).   Further, our conclusion that personal jurisdiction

is lacking makes it unnecessary for us to consider Appellees’

other assignments of error on forum non conveniens and the

requested stay pending resolution of the Canadian lawsuit.

                               III.

     For the above stated reasons, we AFFIRM.

                                15