Court Opinion

ID: 4091082
Source: CourtListenerOpinion
Date Created: 2016-10-20 05:03:33.325913+00
Date Added: 2024-06-11T14:08:40.281625
License: Public Domain

COURT OF APPEALS
                            SECOND DISTRICT OF TEXAS
                                 FORT WORTH

                                NO. 02-15-00265-CV

AMERICAN REFRIGERATION                                                 APPELLANT
COMPANY, INC.

                                         V.

TRANTER, INC.                                                           APPELLEE

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            FROM THE 30TH DISTRICT COURT OF WICHITA COUNTY
                       TRIAL COURT NO. 180,092-A

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                           MEMORANDUM OPINION1

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      This case arises from a broken heat exchanger manufactured by Appellee

Tranter, Inc. (Tranter) and installed as part of the ice rink refrigeration system in

Dartmouth College’s Thompson Arena in Hanover, New Hampshire. Appellant

American Refrigeration Company, Inc. (ARC), a Massachusetts corporation with

      1
          See Tex. R. App. P. 47.4.
its headquarters and principal place of business in Andover, Massachusetts,

appeals from the trial court’s order denying its special appearance. See Tex.

Civ. Prac. & Rem. Code Ann. § 51.014(a)(7) (West Supp. 2016) (authorizing an

interlocutory appeal from the denial of a special appearance). In one issue, ARC

argues that the trial court erred in denying its special appearance because it

lacked sufficient minimum contacts with the State of Texas that would enable

Texas to assert personal jurisdiction over it. We reverse and render.

                                 I. Background

      In March 2011, Dartmouth and ARC entered into an agreement under

which ARC agreed to install an ice rink refrigeration system in Thompson Arena.

Dartmouth retained Refrigeration Engineering Company (REC), a company

based in Massachusetts, to perform the design work on the project. REC’s plans

specified that the Tranter heat exchanger was to be used.         ARC placed a

purchase order for the heat exchanger with North Atlantic Refrigeration, a

company located in Massachusetts.

      According to ARC, North Atlantic Refrigeration ordered the heat exchanger

from Refrigeration Valves and Systems Corporation (RVS), a Texas corporation

located in Bryan, Texas; Tranter, however, contends that ARC ordered the heat

exchanger from RVS.       RVS requested that Tranter manufacture the heat

exchanger according to certain specifications.      Tranter’s principal place of

business is in Wichita County, Texas, and Tranter designed and manufactured

the heat exchanger there. In June 2011, Tranter shipped the heat exchanger to

                                        2
RVS in Bryan, Texas, and RVS, in turn, shipped the heat exchanger to New

Hampshire.    ARC installed the refrigeration system, which included the heat

exchanger, in Thompson Arena in August 2011.

      In June 2012, the refrigeration system failed.        After an investigation,

Dartmouth concluded that the system failed as a result of defects in the heat

exchanger and shipped the heat exchanger to Tranter for evaluation. Tranter

and ARC concluded that contamination introduced into the heat exchanger

during maintenance at Dartmouth had damaged the heat exchanger. Unsatisfied

by these conclusions, the Trustees of Dartmouth College sent a demand letter to

Tranter, ARC, and RVS in November 2013, claiming damages in excess of

$880,000.

      In December 2013, Tranter brought a declaratory judgment action in

Wichita County, Texas, against ARC, RVS, and the Trustees of Dartmouth

College. Tranter prayed for the following declarations:

             1. That the Agreement signed between [Tranter] and [RVS]
      set out the intentions, rights, obligations, and remedies of the parties
      to the contract.

             2. Pursuant to the TERMS & CONDITIONS OF SALE,
      Tranter shall not be liable to any Defendant for any consequential,
      indirect, special[,] or punitive damages including but not limited to
      lost profits or additional damages.

             3. [Tranter] and [ARC] did not enter into a contract.

            4. [Tranter] and . . . [the] Trustees of Dartmouth College did
      not enter into a contract.

                                         3
            5. At the time the Heat Transfer system was shipped from
      Tranter to [RVS], it was free from defects in material or
      workmanship.

            6. No warranty existed, either express or implied from Tranter
      to Dartmouth on the subject exchanger.

            7. When the exchanger was shipped from Tranter to RVS in
      Bryan, it was free from defects.

            8. When the exchanger and system were installed, there were
      no defects and it operated as intended.

            9. The exchanger operated for approximately one year
      without any of the issues occurring as alleged by Dartmouth.

            10. The damage to the exchanger was caused by foreign
      material being introduced to the system when renovations were
      being done to the arena, approximately one year after the system
      was installed.

            11.    [Tranter] is entitled to reasonable and necessary
      attorney’s fees pursuant to Chapter 37 of the Texas Civil Practice
      and Remedies Code.

      ARC filed a special appearance, alleging that it was not a Texas resident,

that it did not have minimum contacts with Texas giving rise to either specific or

general jurisdiction, and that the exercise of jurisdiction over ARC would not

comport with traditional notions of fair play and substantial justice. ARC attached

to its special appearance an affidavit from its president, Michael Sirois. Sirois

averred that ARC is incorporated in Massachusetts; that ARC’s company

headquarters and principal place of business is in Andover, Massachusetts; that

ARC has no business operations, personnel, or registered agent in Texas; and

that ARC has not performed any projects in Texas since the formation of the

company in 1996.      He further averred that REC—not ARC—performed the

                                        4
design work on the Thompson Arena project, that REC’s design plans and

specifications called for the Tranter heat exchanger, that REC selected the

Tranter heat exchanger, that ARC contacted North Atlantic Refrigeration in order

to obtain the heat exchanger, that ARC placed the purchase order for the heat

exchanger with North Atlantic Refrigeration, that ARC did not directly contact

RVS or Tranter to obtain the heat exchanger, that ARC did not negotiate any

contracts or sign any contracts with any company or person in Texas regarding

this project, and that ARC had no contact with Tranter until after problems with

the heat exchanger arose in June 2012.

      Tranter filed a response to ARC’s special appearance, contending that the

trial court had both general and specific jurisdiction over ARC and that the trial

court’s assumption of jurisdiction over ARC did not deprive ARC of due process.

Tranter attached to its response (1) an affidavit from RVS’s president, Virgil

Jordan, (2) an “Agreement & Order Acknowledgement” for the heat exchanger

listing RVS as the seller, ARC as the customer, and North Atlantic Refrigeration

as the “representative,” (3) a list of sixty-three orders that ARC had placed with

RVS from 2004 through 2015 and for which ARC paid a total of $890,000, and

(4) the demand letter from the Trustees of Dartmouth College. Jordan stated in

his affidavit that ARC approached and contacted RVS in Texas to purchase the

heat exchanger, that ARC placed the order with RVS for the heat exchanger, and

that ARC paid RVS approximately $68,142 for the heat exchanger. He further

stated that “[a]ccording to the Agreement & Order Acknowledgment, the package

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was F.O.B., Texas[,] otherwise known as free on board. As such, ownership of

the heat exchanger was transferred from RVS to its customer [ARC] here in

Bryan, Texas.” Jordan also stated that ARC has been doing business in Texas

with RVS regularly since 2004 and that ARC placed sixty-three orders with RVS

in Texas from 2004 through 2015 for which ARC paid a total of $890,000.

Jordan claimed that in each of the transactions, ownership of the product was

transferred to ARC in Texas and that “[e]ach sale was pursuant to a written

contract that was entered into in the State of Texas and each contract was

performed within the State of Texas.”

      After a hearing, the trial court signed an order stating that the trial court

had jurisdiction over ARC and denied ARC’s special appearance. The trial court

did not make any findings of fact or conclusions of law. ARC has appealed.

                II. Burden of Pleading and Standard of Review

      The plaintiff bears the initial burden of pleading sufficient allegations to

bring a nonresident defendant within the provisions of the Texas long-arm

statute. Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex. 2007);

TravelJungle v. Am. Airlines, Inc., 212 S.W.3d 841, 845 (Tex. App.—Fort Worth

2006, no pet.). To determine whether the plaintiff satisfied its pleading burden

and to determine the basis for jurisdiction alleged by the plaintiff, a court

considers the allegations in the plaintiff’s petition as well as those in its response

to the defendant’s special appearance. Wikert v. Year One, Inc., 320 S.W.3d
522, 524 (Tex. App.—Dallas 2010, no pet.) (citing Tex. R. Civ. P. 120a(3);

                                          6
Flanagan v. Royal Body Care, Inc., 232 S.W.3d 369, 374 (Tex. App.—Dallas

2007, pet. denied)). Upon filing a special appearance, the nonresident defendant

assumes the burden of negating all bases of personal jurisdiction alleged by the

plaintiff. Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 807 (Tex.

2002), cert. denied, 537 U.S. 1191 (2003). In other words, the defendant must

disprove the existence of minimum contacts sufficient to establish personal

jurisdiction over it—general, specific, or both—as alleged by the plaintiff. See id.

Absent allegations of any specific, purposeful act through which the defendant

can be said to have sought a benefit by availing itself of the jurisdiction, evidence

that a defendant is a nonresident is sufficient to meet its burden. Michiana Easy

Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 785 (Tex. 2005); Glencoe Capital

Partners II, L.P. v. Gernsbacher, 269 S.W.3d 157, 163 (Tex. App.—Fort Worth

2008, no pet.).

      Whether a trial court has personal jurisdiction over a defendant is a

question of law, which we review de novo.         Moki Mac, 221 S.W.3d at 574;

TravelJungle, 212 S.W.3d at 845.        In determining whether the nonresident

defendant sufficiently negated the pleaded bases for personal jurisdiction, the

trial court frequently must resolve questions of fact. BMC Software Belg., N.V. v.

Marchand, 83 S.W.3d 789, 794 (Tex. 2002). While we review de novo the trial

court’s legal conclusion that personal jurisdiction exists, any findings of fact

supporting the conclusion are reviewed for factual and legal sufficiency. See id.

When, as here, the trial court does not make findings of fact and conclusions of

                                         7
law in support of its ruling, “all facts necessary to support the judgment and

supported by the evidence are implied.” Id. at 795. Although the trial court held

a hearing on ARC’s special appearance and considered the special appearance,

Tranter’s response, the evidence, and the argument of counsel, there is no

reporter’s record.   Therefore, we will presume that the special appearance

hearing was nonevidentiary and that the trial court considered only the evidence

filed with the clerk. See Michiana, 168 S.W.3d at 782; Gordon & Doner, P.A. v.

Joros, 287 S.W.3d 325, 330 (Tex. App.—Fort Worth 2009, no pet.).

                           III. Personal Jurisdiction

A. Applicable Law

      A Texas court may assert personal jurisdiction over a nonresident

defendant only if the requirements of due process under the Fourteenth

Amendment and the Texas long-arm statute are satisfied. U.S. Const. amend.

XIV, § 1; Tex. Civ. Prac. & Rem. Code Ann. §§ 17.041–.045 (West 2015);

Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 413–14,

104 S. Ct. 1868, 1871–72 (1984); Moki Mac, 221 S.W.3d at 574.

      The Texas long-arm statute governs Texas courts’ exercise of jurisdiction

over nonresident defendants. Tex. Civ. Prac. & Rem. Code Ann. §§ 17.041–

.045; BMC Software, 83 S.W.3d at 795; TravelJungle, 212 S.W.3d at 845. That

statute permits Texas courts to exercise jurisdiction over a nonresident defendant

who “does business” in Texas. Tex. Civ. Prac. & Rem. Code Ann. § 17.042;

BMC Software, 83 S.W.3d at 795; TravelJungle, 212 S.W.3d at 845. The statute

                                        8
lists some activities that constitute “doing business” in Texas, including

contracting by mail or otherwise with a Texas resident when either party is to

perform the contract in whole or in part in Texas. Tex. Civ. Prac. & Rem. Code

Ann. § 17.042(1); Moki Mac, 221 S.W.3d at 574. The list of activities set forth in

section 17.042 is not exclusive, however. BMC Software, 83 S.W.3d at 795;

TravelJungle, 212 S.W.3d at 845.

      Because the long-arm statute reaches “as far as the federal constitutional

requirements for due process will allow,” a Texas court may exercise jurisdiction

over a nonresident if doing so “comports with federal due process limitations.”

TV Azteca v. Ruiz, 490 S.W.3d 29, 36 (Tex. 2016) (quoting Spir Star AG v.

Kimich, 310 S.W.3d 868, 871 (Tex. 2010)). Therefore, in determining whether

such requirements have been met, we rely on precedent from the United States

Supreme Court and other federal courts, as well as our own state’s decisions.

BMC Software, 83 S.W.3d at 795; TravelJungle, 212 S.W.3d at 845–46. Due

process is satisfied when (1) the defendant has established minimum contacts

with the forum state and (2) the exercise of jurisdiction comports with traditional

notions of fair play and substantial justice.     Int’l Shoe Co. v. Washington,

326 U.S. 310, 316, 66 S. Ct. 154, 158 (1945); TV Azteca, 490 S.W.3d at 36;

TravelJungle, 212 S.W.3d at 846.

      1. Minimum Contacts

      “Minimum contacts are sufficient for personal jurisdiction when the

nonresident defendant ‘purposefully avails itself of the privilege of conducting

                                        9
activities within the forum State, thus invoking the benefits and protections of its

laws.’” Moki Mac, 221 S.W.3d at 575 (quoting Hanson v. Denckla, 357 U.S. 235,

253, 78 S. Ct. 1228, 1240 (1958)); Michiana, 168 S.W.3d at 784. A nonresident

defendant who has “purposefully availed” himself of the privileges of conducting

business in a foreign jurisdiction has sufficient minimum contacts with the forum

to confer personal jurisdiction on a court in that forum. Burger King Corp. v.

Rudzewicz, 471 U.S. 462, 474–76, 105 S. Ct. 2174, 2183–84 (1985); Moki Mac,
221 S.W.3d at 575. The “touchstone” of jurisdictional due process is “purposeful

availment.” Michiana, 168 S.W.3d at 784. It is essential in each case that there

be some act by which the defendant purposefully availed itself of the privilege of

conducting activities within the forum state, thus invoking the benefits and

protections of its laws. Id. (citing Hanson, 357 U.S. at 253, 78 S. Ct. at 1240).

      There are at least three aspects to the “purposeful availment” inquiry: first,

only the defendant’s contacts with the forum are relevant, not the unilateral

activity of another party or third person; second, the contacts with the forum must

be purposeful rather than random, isolated, or fortuitous; and third, the

“defendant must seek some benefit, advantage[,] or profit by ‘availing’ itself of the

jurisdiction.” Moki Mac, 221 S.W.3d at 575 (quoting Michiana, 168 S.W.3d at

785). The defendant’s actions must justify a conclusion that it could reasonably

anticipate being called into the courts of the forum state. Retamco Operating,

Inc. v. Republic Drilling Co., 278 S.W.3d 333, 338 (Tex. 2009). “[T]he minimum-

contacts analysis is focused on the quality and nature of the defendant’s

                                         10
contacts, rather than their number.” Id. at 339 (citing Am. Type Culture

Collection, 83 S.W.3d at 806).

      2. Specific and General Jurisdiction

      Personal jurisdiction exists if the nonresident defendant’s minimum

contacts give rise to either specific jurisdiction or general jurisdiction.

Helicopteros Nacionales de Colombia, 466 U.S. at 413–14, 104 S. Ct. at 1872;

TV Azteca, 490 S.W.3d at 37; TravelJungle, 212 S.W.3d at 846.                 Specific

jurisdiction is present if the nonresident defendant’s alleged liability arises from or

is related to an activity conducted within the forum. Moki Mac, 221 S.W.3d at

576; TravelJungle, 212 S.W.3d at 846–47. In other words, “there must be a

substantial connection between those contacts and the operative facts of the

litigation.” Moki Mac, 221 S.W.3d at 585. When a plaintiff asserts that a trial

court has specific jurisdiction over a nonresident defendant, the minimum

contacts analysis focuses on the relationship among the defendant, the forum,

and the litigation.   Id. at 575–76; Guardian Royal Exch. Assurance, Ltd. v.

English China Clays, P.L.C., 815 S.W.2d 223, 228 (Tex. 1991); TravelJungle,
212 S.W.3d at 847.

      A trial court has general jurisdiction over a nonresident defendant when

that defendant’s contacts in a forum are continuous and systematic so that the

forum may exercise personal jurisdiction over the defendant even if the cause of

action did not arise from or relate to activities conducted within the forum state.

Moki Mac, 221 S.W.3d at 575; TravelJungle, 212 S.W.3d at 846.                 General

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jurisdiction requires a more demanding minimum-contacts analysis than specific

jurisdiction. See Am. Type Culture Collection, 83 S.W.3d at 807 (citing Guardian

Royal Exch., 815 S.W.2d at 228).

B. Specific Jurisdiction Analysis

      ARC contends that the evidence proves that it is not subject to specific

jurisdiction. Tranter alleged in its response to ARC’s special appearance and

argues on appeal that ARC approached RVS in Texas and placed the order for

the heat exchanger, thereby entering into a contract with RVS for the

manufacture, purchase, and delivery of the heat exchanger in Texas. These

allegations are supported by Jordan’s affidavit. Tranter argues that because the

contract between RVS and ARC was performed in Texas, ARC purposefully

availed itself of the privilege of doing business in Texas and there is a substantial

connection between ARC’s Texas contacts (ordering the heat exchanger) and

the operative facts of Tranter’s suit—(1) whether the heat exchanger was

damaged when it was manufactured in Texas and (2) whether Tranter made

warranties regarding the heat exchanger pursuant to the order.

      Through Sirois’s affidavit testimony, ARC established that it is not a Texas

resident, has no business operations or personnel in Texas, has no registered

agent in Texas, has not performed any projects in Texas since ARC’s formation,

and did not have any contacts with Tranter prior to the heat exchanger’s failure in

June 2012.     ARC also points out that REC specified that the Tranter heat

exchanger was to be used, that ARC did not contact Tranter or RVS to procure

                                         12
the heat exchanger, that ARC contacted North Atlantic Refrigeration to obtain the

heat exchanger, and that ARC did not negotiate or sign any contracts regarding

the project with any Texas company or resident.             These allegations are

supported by Sirois’s affidavit, but because the trial court did not make findings of

fact and conclusions of law in support of its ruling, “all facts necessary to support

the judgment and supported by the evidence are implied.”            BMC Software,
83 S.W.3d at 795.      Here, Tranter’s evidence of the “Agreement & Order

Acknowledgement” listing ARC as the customer and RVS as the seller supports

the conclusion that ARC entered into a contract with RVS in Texas for the

purchase of the heat exchanger.

      The contract between ARC and RVS satisfies the requirement of the

Texas long-arm statute that ARC was “doing business” in Texas by entering into

a contract with RVS, a Texas resident, to be performed in whole or in part in

Texas. See Tex. Civ. Prac. & Rem. Code Ann. § 17.042(1). But the Texas long-

arm statute reaches only “as far as the federal constitutional requirements of due

process will allow.”   Moki Mac, 221 S.W.3d at 575 (quoting Guardian Royal

Exch., 815 S.W.2d at 226). The exercise of jurisdiction by a Texas court over

ARC must still meet the minimum contacts requirement of federal due process.

See, e.g., id. at 575–88 (holding negligence and misrepresentation claims based

on sending brochures and release forms to Texas residents that satisfied doing-

business requirement of statute were nevertheless insufficient to establish

jurisdiction absent minimum contacts).

                                         13
      Merely contracting with a Texas resident is insufficient to establish the

minimum contacts necessary to support the exercise of specific jurisdiction over

the nonresident defendant. See Burger King, 471 U.S. at 478, 105 S. Ct. at

2185 (stating that an individual’s contract with an out-of-state party cannot by

itself establish sufficient minimum contacts in the other party’s home forum);

TeleVentures, Inc. v. Int’l Game Tech., 12 S.W.3d 900, 908–09 (Tex. App.—

Austin 2000, pet. denied) (stating that merely contracting with a Texas

corporation does not satisfy the minimum-contacts requirement); Magnolia Gas

Co. v. Knight Equip. & Mfg. Corp., 994 S.W.2d 684, 691–92 (Tex. App.—San

Antonio 1998, no pet.) (stating that neither contracting with a Texas corporation

nor the partial performance of a contract in Texas is sufficient to establish

personal jurisdiction), disapproved of on other grounds by BMC Software,
83 S.W.3d at 794 & n.1. There is nothing in the record to suggest that ARC

sought some benefit, advantage, or profit by availing itself of Texas’s jurisdiction.

ARC purchased the heat exchanger from RVS, a Texas resident that shipped the

heat exchanger F.O.B. Texas to New Hampshire. RVS’s act of shipping the

goods F.O.B. Texas does not, by itself, give a Texas court jurisdiction over ARC.

See Sun–X Int’l Co. v. Witt, 413 S.W.2d 761, 768 (Tex. Civ. App.—Texarkana

1967, writ ref’d n.r.e.) (finding no personal jurisdiction where seller shipped goods

F.O.B. Houston).    Merely purchasing goods from, and sending payments to,

Texas does not constitute sufficient minimum contacts for the exercise of specific

jurisdiction. See, e.g., U-Anchor Advert., Inc. v. Burt, 553 S.W.2d 760, 763 (Tex.

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1977) (concluding that defendant who prepared and mailed checks to forum state

did not have sufficient minimum contacts with the forum), cert. denied, 434 U.S.
1063 (1978); Magnolia Gas Co., 994 S.W.2d at 691 (“Furthermore, payments

sent to the forum state are not determinative.”); see also Stuart v. Spademan,

772 F.2d 1185, 1194 (5th Cir. 1985) (“Spademan’s mailing of payments to the

plaintiffs in Texas can hardly be termed significant in terms of determining

purposeful availment of the benefits of the forum state’s laws.”).

      We hold that there is insufficient evidence of the minimum contacts

necessary to conclude that ARC purposefully availed itself of the privilege of

conducting activities within Texas.    Thus, ARC’s contacts with Texas do not

support specific jurisdiction over ARC in Texas.

C. General Jurisdiction Analysis

      ARC also contends that the evidence proves that it is not subject to

general jurisdiction. Tranter alleged that ARC regularly does business in Texas

because it “systematically developed an ongoing business relationship with RVS,

a Texas company whose principal place of business is in Bryan, Texas, by

regularly and continuously entering into contracts with RVS for the purpose of

purchasing goods and services in Texas.” Tranter points to the sixty-three orders

that ARC had placed with RVS from 2004 through 2015 and for which ARC paid

RVS more than $890,000 as evidence of ARC’s ongoing business relationship

with RVS.

                                         15
        ARC points out that each of these orders lists North Atlantic Refrigeration

or other companies as “company representatives” of ARC.           But even if we

assume that ARC made each of these purchases itself, “purchases from Texas

vendors will not alone support the exercise of general jurisdiction.” Am. Type

Culture Collection, 83 S.W.3d at 808. In Helicopteros, the Supreme Court held

that “mere purchases, even if occurring at regular intervals, are not enough to

warrant a State’s assertion of in personam jurisdiction over a nonresident

corporation in a cause of action not related to those purchase transactions.”
466 U.S. at 418, 104 S. Ct. at 1874. Thus, ARC’s purchases from RVS do not

support general jurisdiction over ARC in Texas. See id.; PHC-Minden, L.P. v.

Kimberly-Clark Corp., 235 S.W.3d 163, 171 (Tex. 2007); Am. Type Culture

Collection, 83 S.W.3d at 808.

        Accordingly, we sustain ARC’s sole issue.2

                                  IV. Conclusion

        Having sustained ARC’s sole issue, we reverse the trial court’s order

denying ARC’s special appearance and render judgment dismissing Tranter’s

claims against ARC for lack of personal jurisdiction. See Tex. R. App. P. 43.2(c),

43.3.

        2
        We need not address the question of whether the assertion of personal
jurisdiction over ARC would offend traditional notions of fair play and substantial
justice. See Tex. R. App. P. 47.1; Furtek & Assocs., L.L.C. v. Maxus Healthcare
Partners, LLC, No. 02-15-00309-CV, 2016 WL 1600850, at *8 (Tex. App.—Fort
Worth May 26, 2016, no pet.) (mem. op.).

                                         16
                                       /s/ Anne Gardner
                                       ANNE GARDNER
                                       JUSTICE

PANEL: DAUPHINOT, GARDNER, and MEIER, JJ.

DELIVERED: October 13, 2016

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