Court Opinion

ID: 28501
Source: CourtListenerOpinion
Date Created: 2010-04-25 09:24:30+00
Date Added: 2024-06-11T14:55:17.192084
License: Public Domain

UNITED STATES COURT OF APPEALS
                           For the Fifth Circuit

                                 No. 01-20717

                          FCA INVESTMENTS COMPANY,

                                                         Plaintiff-Appellant,

                                     VERSUS

                          BAYCORP HOLDINGS, LTD.,

                                                          Defendant-Appellee.

               Appeal from the United States District Court
          For the Southern District of Texas (Houston Division)
                     (Civil Action No. H-00-CV-3436)
                               August 29, 2002
Before JOLLY, DUHÉ, and DENNIS, Circuit Judges.

DENNIS, Circuit Judge:*

      Plaintiff-Appellant FCA Investments Company (“FCA”) brought this

lawsuit to state claims of fraud and breach of contract against

Defendant-Appellee Baycorp Holdings, Ltd. (“Baycorp”), its partner in

a joint venture in New Zealand.           This appeal follows the district

court’s dismissal of FCA’s claims for lack of personal jurisdiction.

      *
       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should not be published and is not precedent except under the limited circumstances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.
Because we find that FCA presented sufficient evidence to make out a

prima facie case supporting jurisdiction in Texas and that the

exercise of jurisdiction over Baycorp would not offend traditional

notions of fair play and substantial justice, we REVERSE.

                                       I.

      FCA is an investment company incorporated in Delaware.               Its

principal place of business is in Houston, Texas.                 Baycorp is a

financial services company organized under the laws of New Zealand.

Its principal place of business is in Auckland, New Zealand.

      In 1996, Baycorp’s then-chairman, James Boult, solicited FCA’s

participation in the creation of a “small niche finance company” in

New Zealand. The purpose of the venture was to establish and operate

“Finance House,” an entity that would pioneer the sub-prime lending

market in New Zealand.        Boult initially contacted FCA’s president,

Robert Scharar, about the venture via telephone. Later, he sent him

a letter via telefax outlining the Finance House venture and

Baycorp’s role in its management. The letter proposed that the two

meet in Houston to discuss the plan in person.

      Scharar testified by affidavit that he and Boult met in Houston

on   September   2,   1996.     They    discussed   the   draft    information

memorandum about the venture that was mailed to Scharar beforehand.

The memorandum contemplated that Baycorp would actively manage and

operate Finance House using its management expertise and the latest

information technology tools.          Boult made assurances that Baycorp

would carry out its responsibilities in a manner that benefitted the

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venture and its investors.   In particular, he assured Scharar that

Baycorp would not use the technology developed at Finance House to

compete with the venture at a later date “in any way.” After further

correspondence, FCA made two contributions to the Finance House

venture—an initial investment of $71,000 USD and a subsequent loan of

$60,000 USD. Finance House proved unsuccessful and eventually ceased

to operate.

     After the failure of Finance House, FCA suspected that Baycorp

had improperly designed the venture to develop its expertise for

later use in other business opportunities and that it was, in fact,

using the technology developed at Finance House for its independent

gain.   FCA’s suspicions were fueled by a newspaper article touting

Baycorp’s use of its recently developed management technologies in a

new Australian venture, as well as by similar statements in Baycorp’s

annual corporate reports.

     Unsatisfied with Baycorp’s response to its inquiries, FCA filed

suit in Texas state court. It alleged that Baycorp had fraudulently

obtained its participation in Finance House, stating claims for

fraudulent inducement, fraud, fraud in stock transaction, and breach

of contract. Baycorp removed the case to federal court and moved to

dismiss for lack of personal jurisdiction, asserting it did not have

sufficient minimum contacts with Texas to warrant being haled into

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court there.1 The district court granted Baycorp’s motion without a

hearing. After the court rebuffed its motion to amend the judgment,

FCA timely appealed.

                                      II.

      We review de novo a district court’s dismissal of a case for

lack of personal jurisdiction.        Alpine View Co. Ltd. v. Atlas Copco

A.B., 205 F.3d 208, 214 (5th Cir. 2000).

                                      III.

      A federal court sitting in diversity may exercise personal

jurisdiction over a defendant to the extent permitted by the

applicable state law. Panda Brandywine Corp. v. Potomac Elec. Power

Co., 253 F.3d 865, 867 (5th Cir. 2001).          The Texas long-arm statute

authorizes personal jurisdiction over a nonresident defendant to the

extent allowed by the due process clause of the Fourteenth Amendment.

Id. Accordingly, we need only determine whether the district court’s

exercise of jurisdiction over Baycorp would be consistent with the

due process clause.       Alpine View, 205 F.3d at 214.

      The exercise of jurisdiction over a nonresident defendant

comports with due process if “(1) that defendant has purposefully

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

      1
       Baycorp withdrew its initial motion to dismiss, then filed a second motion
to dismiss, which it subsequently amended. The district court granted the amended
second motion to dismiss.

                                       4
traditional notions of fair play and substantial justice.”     Id. at

215. Minimum contacts can be established through contacts sufficient

to give rise to either general jurisdiction or specific jurisdiction.

Id.

       FCA contends that Baycorp’s contacts with Texas were sufficient

to    support   specific   jurisdiction.   Specific   jurisdiction   is

appropriate when the nonresident defendant “has purposefully directed

its activities at the forum state and the litigation results from

alleged injuries that arise out of or relate to those activities.”

Id. (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105

S. Ct. 2174, 85 L. Ed. 2d 528 (1985) (internal quotation marks

omitted)). Here we focus on the relationship between the defendant,

the forum, and the litigation. See Burger King, 471 U.S. at 474, 105

S. Ct. at 2183.      A single act by a defendant can be enough to

establish personal jurisdiction if that act gives rise to the claim

asserted. Lewis v. Fresne, 252 F.3d 352, 358-59 (5th Cir. 2001). In

cases alleging the intentional tort of fraud, the defendant’s

participation in a single telephone call is enough to establish

personal jurisdiction if the content of the call gave rise to the

fraud claim.    Id. at 359; see also Wein Air Alaska, Inc. v. Brandt,

195 F.3d 208, 213 (5th Cir. 1999) (“When the actual content of

communications with a forum gives rise to intentional tort causes of

action, this alone constitutes purposeful availment.”).

       “Procedurally, the party invoking the jurisdiction of a federal

                                    5
court bears the burden of establishing minimum contacts justifying

the court’s jurisdiction over a nonresident defendant.”          Guidry v.

United States Tobacco Co., 188 F.3d 619,625 (5th Cir. 1999).           When,

as happened here, a district court rules on a motion to dismiss for

lack of personal jurisdiction without holding an evidentiary hearing,

however, “the party seeking to assert jurisdiction must present

sufficient facts as to make out only a prima facie case supporting

jurisdiction.”   Alpine View, 205 F.3d at 215.          “We must accept as

true that party’s uncontroverted allegations, and resolve in its

favor all conflicts between the facts contained in the parties’

affidavits and other documentation.”        Id.

     The uncontested facts show that Boult contacted Scharar in

Houston via telephone and telefax.        Baycorp sent Scharar a lengthy

information memorandum outlining the proposed Finance House venture.

Boult also met with Scharar in Houston to discuss the project.           The

unmistakable   purpose   of   these   contacts    was   to   solicit   FCA’s

investment in Finance House.

     Supported by Scharar’s affidavit, FCA claims that Boult assured

Scharar during the Houston meeting that Baycorp would not use

technology developed at Finance House to compete with the venture at

a later date “in any way.”       Supported by the documents sent to

Scharar in Houston, FCA also claims that Baycorp made certain

representations about the state of its technological expertise and

its ability to manage Finance House.         FCA contends the newspaper

                                      6
article about Baycorp’s new venture in Australia shows these

assurances and representations were false.    FCA thus alleges that

Baycorp used false assurances and misrepresentations made in, or sent

to, Texas to induce its investment in Finance House to its detriment.

See Ernst & Young, L.L.P. v. Pacific Mut. Life Ins. Co., 51 S.W.3d

573, 577 (Tex. 2001) (stating the elements of fraud).      Accepting

Scharar’s affidavit as true and reading FCA’s supporting documents in

its favor, we find FCA has made a prima facie showing that Baycorp

had sufficient minimum contacts with Texas to cause FCA to suffer a

tortious injury in Texas and thus to support the exercise of personal

jurisdiction over it in Texas.

     Once it has been determined that the defendant purposely

establish minimum contacts within the forum state, the defendant must

make a “compelling case” that the assertion of jurisdiction would be

unfair. Wein Air, 195 F.3d at 215 (citing Burger King, 471 U.S. at

477, 105 S. Ct. 2174).     In considering the fairness issue, we

normally examine “(1) the defendant’s burden; (2) the forum state’s

interests; (3) the plaintiff’s interest in convenient and effective

relief; (4) the judicial system’s interest in efficient resolution of

controversies; and (5) the shared interest of the several states in

furthering fundamental substantive social policies.”     Guidry, 188

F.3d at 630.   “If a cause of action for fraud committed against a

resident of the forum is directly related to the tortious activities

that give rise to personal jurisdiction, an exercise of jurisdiction

                                 7
likely comports with the due process clause, given the obvious

interests of the plaintiff and the forum state.” Wein Air, 195 F.3d

at 215.

     Baycorp has made no showing that jurisdiction would be unfair.

Rather, it merely reiterates the district court’s conclusion that

Texas has no interest in FCA’s dispute with Baycorp.   We disagree.

Given the nature of FCA’s allegations and the fact that FCA is a

Texas resident, we find that the interests of FCA and Texas make the

exercise of jurisdiction in Texas fair.

                                IV.

     Because FCA has made a prima facie showing that Baycorp had

minimum contacts with Texas and because FCA’s fraud claims arise out

of those contacts, we conclude the exercise of jurisdiction over

Baycorp is proper in the Southern District of Texas. Accordingly, we

REVERSE and REMAND for further proceedings consistent with this

opinion.

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