Court Opinion

ID: 4046783
Source: CourtListenerOpinion
Date Created: 2016-09-29 00:14:57.90116+00
Date Added: 2024-06-11T14:04:36.801046
License: Public Domain

ACCEPTED
                                                                               02-15-00265-CV
                                                                   SECOND COURT OF APPEALS
                                                                         FORT WORTH, TEXAS
                                                                         10/27/2015 2:23:34 PM
                                                                                DEBRA SPISAK
                                                                                        CLERK

                   ORAL ARGUMENT REQUESTED

                      Case Number 02-15-00265-CV               FILED IN
                                                        2nd COURT OF APPEALS
                                                          FORT WORTH, TEXAS
                   IN THE COURT OF APPEALS              10/27/2015 2:23:34 PM
          FOR THE SECOND JUDICIAL DISTRICT OF           TEXAS
                                                            DEBRA SPISAK
                                                                 Clerk

                           at Fort Worth
__________________________________________________________________

              AMERICAN REFRIGERATION COMPANY, INC.,
                          Appellant,

                                    v.

                         TRANTER, INC.,
                             Appellee.
__________________________________________________________________

From Cause 180,092-A in the 30th Judicial District Court of Wichita County
__________________________________________________________________

                      BRIEF OF APPELLANT
__________________________________________________________________

                                   WALTERS, BALIDO & CRAIN, L.L.P.

                                                          Gregory R. Ave
                                               State Bar Number 01448900
                                               greg.ave@wbclawfirm.com
                                           Meadow Park Tower, Suite 1500
                                          10440 North Central Expressway
                                                       Dallas, Texas 75231
                                         Telephone Number (214) 347-8310
                                          Facsimile Number (214) 347-8311

October 27, 2015                         ATTORNEYS FOR APPELLANT

                                      
                 LIST OF PARTIES AND THEIR COUNSEL

      Pursuant to Texas Rule of Appellate Procedure 38.1(a) and

38.2(a)(1)(A), the following are the parties to the trial court’s interlocutory

judgment being appealed and their counsel:

1.    Appellant                     American Refrigeration Company, Inc.

2.    Counsel for Appellants        Gregory R. Ave (appellate counsel)
                                    Kelly M. Crain (trial counsel)
                                    Walters, Balido & Crain, L.L.P.
                                    Meadow Park Tower, Suite 1500
                                    10440 North Central Expressway
                                    Dallas, Texas 75231;

3.    Appellee                      Tranter, Inc.;

4.    Counsel for Appellee          John R. Lively, Sr.
                                    John R. Lively, Jr.
                                    Lively & Associates, LLP
                                    201 Main Street, Suite 1260
                                    Fort Worth, Texas 76102; and

5.    Trial Judge                   The Honorable Robert P. Brotherton,
                                    Presiding Judge of the 30th District
                                    Judicial District Court of Wichita
                                    County, Texas

                                       i
      For clarity and convenience, Appellant American Refrigeration

Company, Inc. will be referred to as “ARC”; Appellee Tranter, Inc.; will be

referred to as “Tranter”; and the Honorable Robert P. Brotherton Presiding

Judge of the 30th District Court, Wichita County, Texas will be referred to

as “the trial court.”

      The appellate record in this matter consists of a 55 page Clerk’s

Record, which will be referred to by page number (i.e., “C.R. __”) and there

is no Reporter’s Record for this appeal.

                                      ii
                                             TABLE OF CONTENTS

LIST OF PARTIES AND THEIR COUNSEL ...................................................i

TABLE OF CONTENTS ..................................................................................... iii

TABLE OF AUTHORITIES ............................................................................... iv

STATEMENT OF THE CASE ........................................................................... vi

ISSUES PRESENTED FOR REVIEW ............................................................. vii

STATEMENT OF FACTS .................................................................................... 1

SUMMARY OF ARGUMENT ............................................................................. 3

ARGUMENTS AND AUTHORITIES .............................................................. 4

     A.           Applicable Standard of Review ....................................................... 4
     B.           Appellant is not a Texas Resident .................................................... 4
     C.           Appellant Does not have Minimum Contacts with the
                  State of Texas ....................................................................................... 6
     D.           Specific or General Jurisdiction ........................................................ 7
     E.           Jurisdiction over Appellant is not Consistent with
                  Traditional Notions of Fair Play and Substantial Justice ........... 11

CONCLUSION AND PRAYER ........................................................................ 12

CERTIFICATE OF SERVICE ............................................................................ 13

CERTIFICATE OF COMPLIANCE .................................................................. 14

APPENDIX ........................................................................................................... 15

                                                           iii
                                   TABLE OF AUTHORITIES

                                                    Cases

BMC Software Belgium, N.V. vs. Marchand, 83 S.W.3d 789 (Tex. 2002)......... 4, 5

Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) ........................................... 6

In re E.I. du Pont de Nemours & Co., 92 S.W.3d 517 (Tex. 2002) ......................... 4

Guardian Royal Exch. Assur. v. English China Clays,
15 S.W.2d 223 (Tex. 1991) .........................................................................5, 6, 7, 11

Helicopteros Nationales de Columbia, S.A. v. Hall, 466 U.S. 408 (1984) ............... 7

International Shoe Company v. Washington, 326 U.S. 310 (1945) ......................... 5

Kawasaki Steel Corp. v. Middleton, 699 S.W.2d 199 (Tex. 1985)........................... 4

M.G.M. Grand Hotel v. Castro,
8 S.W.3d 403 (Tex. App. – Corpus Christi 1999, no pet.) .................................. 5

Minucci v. Sogevalor,
14 S.W.3d 790 (Tex.App.—Houston [14th Dist.] 2000, no pet.) ........................ 4

Moncrief Oil Int’l v. OAO Gazprom, 414 S.W.3d 142 (Tex. 2013) ....................... 4

Retamco Operating, Inc. v. Republic Drilling Co.,
278 S.W.3d 333 (Tex. 2009) ................................................................................... 10

U-Anchor Adver., Inc. v. Burt, 553 S.W.2d 760 (Tex. 1977) ................................. 6

Zinc Nacional, S.A. v. Bouche Trucking, Inc., 308 S.W.3d 395 (Tex. 2010) ......... 4

                                                       iv
                                  Other Authorities

TEXAS CIVIL PRACTICE & REMEDIES CODE §17.041-.045 ........................................ 6

TEXAS CIVIL PRACTICE & REMEDIES CODE §51.014(a)(7) ....................................... 4

                                             v
                       STATEMENT OF THE CASE

      This interlocutory appeal arises from cause number 180,092-A,

originally styled Tranter, Inc. v. American Refrigeration Company, Inc.,

Refrigeration Valves and Systems Corporation and Trustees of Dartmouth, and

pending in the 30th District Court of Wichita County, Texas, the Honorable

Robert P. Brotherton presiding.     (C.R. 5.)   Suit was originally filed on

December 27, 2013. (Id.)     Tranter seeks a declaration that it owes no

obligations to the ARC for the heat transfer system manufactured by

Tranter to be used at Dartmouth College (“Dartmouth”). (C.R. 5-9.)

      In its special appearance ARC denied that the trial court had personal

jurisdiction over it. (C.R. 10-20.) Tranter filed its response to ARC’s special

appearance on July 22, 2015. (C.R. 21-44.) The trial court entered an order

denying ARC’s special appearance on July 30, 2015. (C.R. 46.) ARC filed

its notice of appeal on August 19, 2015. (C.R. 47-49.)

                                      vi
                  ISSUES PRESENTED FOR REVIEW

     The issues on appeal and which are presented for the Court’s review

address or touch upon the following:

           1.   Did the trial court err in denying ARC’s special
                appearance?

                                   vii
                          STATEMENT OF FACTS

A.    JURISDICTIONAL FACTS

      As demonstrated in ARC’s special appearance (C.R. 10-20), ARC’s

contacts with Texas were minimal and were certainly not purposeful. In

this regard, it is undisputed that:

            1.    ARC is a Massachusetts corporation, with its
                  principal place located in Andover,
                  Massachusetts (C.R. 18);

            2.    The project at issue – the Thompson Arena Ice
                  Rink – is located at Dartmouth in Hanover,
                  New Hampshire (C.R. 19);

            3.    Refrigeration Engineering Company (“REC”)
                  performed the design work and specified the
                  Tranter heat exchanger used for the project,
                  not ARC (C.R. 19);

            4.    ARC contacted North Atlantic Refrigeration, a
                  company located in Massachusetts, to obtain
                  the Tranter unit at issue (C.R. 19);

            5.    ARC did not contact or deal with
                  Refrigeration Valves and Systems Corporation
                  (“RVS”) – which is located in Texas in order to
                  acquire the heat transfer unit (C.R. 19 and 33);

            6.    ARC had no direct contact with Tranter until
                  after problems presented themselves with the
                  heat exchanger unit in June of 2012 (C.R. 19).

                                      1 
      Moreover, ARC has no current business operations in Texas and has

performed no projects in Texas since its formation in 1996.    (C.R. 19.)

Finally, ARC has had no general or systematic contacts with any person or

organization during its existence. (Id.)

                                      2
                   SUMMARY OF THE ARGUMENT

     It is undisputed that ARC is a Massachusetts corporation that has

never operated in Texas. Indeed, ARC’s only contacts with Texas occurred

after the heat exchanger unit manufactured by Tranter failed following its

installation at Dartmouth in Hanover, New Hampshire. Such contacts do

not subject ARC to personal jurisdiction in Texas and its special appearance

should have been sustained by the trial court.

                                     3
                   ARGUMENTS AND AUTHORITIES

A.   Applicable Standard of Review

      The issue presented by this appeal is whether the ARC – a

nonresident defendant – negated all alleged grounds enabling the trial

court to exercise personal jurisdiction over it.     Kawasaki Steel Corp. v.

Middleton, 699 S.W.2d 199, 203 (Tex. 1985); Minucci v. Sogevalor, 14 S.W.3d
790, 794 (Tex. App.–Houston [14th Dist.] 2000, no pet.). Whether the court

can exercise personal jurisdiction over a nonresident defendant is a

question of law that is reviewed de novo. Moncrief Oil Int’l v. OAO Gazprom,

414 S.W.3d 142, 150 (Tex. 2013); Zinc Nacional, S.A. v. Bouche Trucking, Inc.,

308 S.W.3d 395 (Tex. 2010).      An order granting or denying a special

appearance may be appealed immediately. Tex. Civ. Prac. & Rem. Code §

51.014(a)(7); In re E.I. du Pont de Nemours & Co., 92 S.W.3d 517, 521 (Tex.

2002).

B.    Appellant is not a Texas Resident

      Again, a defendant must negate all grounds permitting the exercise

of personal jurisdiction when challenging same. BMC Software v. Marchand,

83 S.W.3d 789, 793 (Tex. 2002). Therefore, a defendant must demonstrate

that it is a not a Texas resident and that it did not have minimum contacts

                                      4
with Texas. Id. at 795; Guardian Royal Exch. Assur. v. English China Clays,

815 S.W.2d 223, 226 (Tex. 1991). Once a defendant produces evidence

negating the basis of personal jurisdiction, the burden shifts to the plaintiff

to show that the trial court has jurisdiction over the defendant. M.G.M.

Grand Hotel v. Castro, 8 S.W.3d 403, 408 (Tex. App.–Corpus Christi 1999, no

pet.).

         It is undisputed that ARC is not a Texas resident. Rather, ARC was

incorporated in Massachusetts and maintains its principal place of business

there. (C.R. 18-19.) Additionally, ARC has no office in Texas. (C.R. 18-19.)

Therefore, because ARC is not a Texas resident, the due process clause of

the Fourteenth Amendment to the United States Constitution governs the

power of a Texas court to exercise jurisdiction over it.      International Shoe

Company v. Washington, 326 U.S. 310 (1945). This fundamental threshold

requires that a court can only exercise jurisdiction over a nonresident

defendant 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. Id at 316.

                                        5
C.    Appellant Does not have Minimum Contacts with the State of Texas

      The Texas long-arm statute governs a court’s authority to exercise

jurisdiction over a nonresident defendant. Tex. Civ. Prac. & Rem. § 17.041-

045. According to the Texas Supreme Court, the statute’s language extends

the jurisdiction of Texas courts as far as the federal constitutional

requirements of due process permit. U-Anchor Adver., Inc. v. Burt, 553
S.W.2d 760, 762 (Tex. 1977). Therefore, decisions by both the United States

Supreme Court and Texas Supreme Court serve as precedent in

determining if a nonresident defendant should be subject to the jurisdiction

of a Texas court. BMC Software, supra, 83 S.W.3d at 795.

      Under the minimum contacts analysis, a court must determine

whether the nonresident defendant has “purposefully availed” itself of

conducting activities within Texas. Guardian Royal, supra, 815 S.W.2d at 226.

Additionally, foreseeability is a central consideration in deciding whether a

nonresident defendant has purposely established minimum contacts with a

state. Id. at 227.   Finally, a defendant should not be subject to the

jurisdiction of a foreign state’s courts based on “random” or “fortuitous”

contacts. Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985).

                                      6
      A defendant’s minimum contacts can either give rise to specific or

general jurisdiction. Helicopteros Nationales de Columbia, S.A. v. Hall, 466
U.S. 408, 413-14 (1984); Guardian Royal, supra, 815 S.W.2d at 226. Specific

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

related to an activity that the nonresident conducts in the forum state.

However, general jurisdiction imposes a more demanding analysis than

specific jurisdiction, as general jurisdiction may only be exercised when a

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

forum state has jurisdiction over the defendant even if the suit is not

related to the defendant’s contacts in the forum state. Id at 228.

D.    Specific or General Jurisdiction

      Tranter readily admits ARC is a foreign corporation located in

Andover, Massachusetts. (C.R. 5.) Tranter has not alleged the trial court

has specific jurisdiction or general jurisdiction over ARC.           (C.R. 6.)

However, the evidence proves ARC is subject to neither. Tranter alleges

only that “the parties have contracted in writing to perform an obligation

in Wichita County.” (C.R. 6.)

      Again, ARC was incorporated in Massachusetts and has its

headquarters and principal place of business there.                  (C.R. 18.)

                                         7
Furthermore, ARC has no business operations or personnel in Texas. (C.R.

18-19.) Indeed, ARC has no registered agent in Texas (C.R. 18).

     As it relates to the matter sub judice, ARC was retained by Dartmouth

to complete a project at its ice rink in Hanover, New Hampshire. (C.R. 19.)

On the other hand, Dartmouth retained REC – based in Massachusetts -- to

design the project. (Id.) REC performed the design work and specified the

Tranter heat exchanger at issue. (Id.) Significantly, ARC did not select

Tranter unit; instead, it was called for in REC’s design plans and

specifications. (Id.) ARC then contacted North Atlantic Refrigeration, a

company located in Massachusetts, in order to obtain the Tranter unit

called for by REC’s specifications for the Dartmouth project. (Id.) ARC did

not contact Tranter in order to procure the unit. (Id.) Likewise, ARC did

not contact Refrigeration Valves and Systems Corporation ("RVS") – the

company that did contract with Tranter – to order the unit (Id.)

     Simply put, ARC had no direct contacts with Tranter prior to the time

problems arose with the unit in June of 2012. (Id.) Moreover, ARC did not

negotiate any contracts or sign any contracts with any company or person

in Texas with regard to the Dartmouth project. (Id.) In the broader context,

ARC has no current business operations in Texas. (Id.) Further, ARC has

                                      8
not performed any projects in Texas since the formation of the company in

1996. (Id.)

      ARC simply placed the purchase order for the Tranter unit with its

fellow Massachusetts resident, North Atlantic. (Id.) ARC has no general or

systematic contacts with the State of Texas, and has had no such contacts

since the company’s formation in 1996. (Id.) Critically, ARC did not enter

into any contract to be performed in Wichita County, Texas. (Id.)

      Tranter presented evidence in its response to ARC’s special

appearance which it claims demonstrates ARC entered into a contract with

RVS, a Texas company. (C.R. 25.) However, a review of this “evidence”

only demonstrates that it is consistent with ARC’s position and it provides

no evidence ARC entered into any contract with RVS. (C.R. 33.) Rather,

this document – designated an “Agreement & Order Acknowledgment” –

lists RVS as the seller (Id.) Although it lists ARC as the “customer,” it also

lists North Atlantic and Al Melanson as the “representative.” (Id.)

      This is completely consistent with the Affidavit of Michael Sirois,

President of ARC, in which he states ARC contacted North Atlantic in

Massachusetts to obtain the Tranter unit. (C.R. 18-19.) The “Agreement &

Order Acknowledgment” cited by Tranter provides no evidence that ARC

                                      9
entered into any agreement with RVS – there is no signature line for ARC

or any other party – indeed, the document bears no signature at all. (C.R.

33). Therefore, there is nothing in the record demonstrating ARC contacted

RVS rather than North Atlantic (whose representative was listed on the

document). (Id.) The Tranter unit was apparently shipped to Louis P.

Cote, Inc. in Goffston, New Hampshire. (Id.) There is nothing on the

document which demonstrates or proves RVS had any direct dealing with

ARC, and Tranter has not challenged Sirois’ assertion that the Tranter unit

was obtained through North Atlantic in Massachusetts. (C.R. 21-44.)

     Although the Affidavit of Virgil Jordan, President of RVS, claims

ARC has ordered products from RVS beginning in 2004, every single one of

the transactions on Exhibit A-2 of Mr. Jordan’s Affidavit also lists North

Atlantic or another “company representative” on the transaction, making it

consistent with ARC’s assertion it has not done any business in Texas.

(C.R. 35.)   As Tranter itself notes, a court should consider only the

defendant’s contacts with the forum as relevant, not the unilateral activity

of another party or a third person. (C.R. 24); citing Retamco Operating, Inc.

v. Republic Drilling Co., 278 S.W.3d 333, 338-39 (Tex. 2009). Because the

evidence presented by Tranter is completely consistent with ARC’s

                                     10
evidence that it did no direct business in the State of Texas, no personal

jurisdiction exists in this case over ARC and the denial of its special

appearance was error.

E.    Jurisdiction over ARC is not Consistent with Traditional Notions of
      Fair Play and Substantial Justice

      Even if it were determined ARC has minimum contacts with Texas –

which it does not – the trial court should have declined to exercise

jurisdiction because to do so does not comport with traditional notions of

fair play and substantial justice, and would be inconsistent with the

constitutional requirements of due process. In making this analysis, the

reviewing court is to consider (1) the burden on the defendant, (2) the

interest of Texas in adjudicating the dispute, (3) the plaintiff’s interest in

obtaining convenient and effective relief, (4) the interstate judicial system’s

interest in obtaining the most efficient resolution of controversies, and (5)

the shared interest of the states in furthering fundamental and substantive

social policies. Guardian Royal, supra, 815 S.W.2d at 232.

      As ARC is a company doing business in Massachusetts with no

business operations in Texas and no ties to Texas concerning the

Dartmouth project, it would be a burden on ARC to have to defend this

                                      11
suit in Texas as well as an existing lawsuit on the same underlying claims

brought by Dartmouth in New Hampshire. Moreover, Texas has little

interest in adjudicating a dispute involving an ice rink located in New

Hampshire. Instead, it is in the best interest of the judicial system and the

shared interest of the states if this dispute is resolved in the state where the

events surrounding the suit occurred, and where the primary witnesses to

the underlying claim reside.

                          CONCLUSION AND PRAYER

      For the foregoing reasons, ARC asks the Court to reverse the trial

court’s order denying its special appearance, award ARC its costs on

appeal, and such further and other relief to which it is justly entitled.

                                     Respectfully submitted,

                                     WALTERS, BALIDO & CRAIN, L.L.P.

                                     By:____/s/ Gregory R. Ave______
                                          Gregory R. Ave
                                          greg.ave@wbclawfirm.com
                                          Texas State Bar No. 01448900
                                          Meadow Park Tower, Suite 1500
                                          10440 North Central Expressway
                                          Dallas, Texas 75231
                                          (2l4) 347-8311 (facsimile)
                                          (2l4) 347-8310 (direct dial)

                                            ATTORNEYS FOR APPELLANT

                                       12
                       CERTIFICATE OF SERVICE

      This is to certify that a true and correct copy of the Brief of Appellant
was served upon the following counsel of record for all parties on October
27, 2015, in accordance with the Texas Rules of Appellate Procedure:

John R. Lively, Jr., Esquire               Via E-serve
Lively & Associates, LLP
201 Main Street, Suite 1260
Fort Worth, Texas 76102

ATTORNEYS FOR APPELLEE
TRANTER, INC.

                                           /s/Gregory R. Ave
                                           Gregory R. Ave

                                      13
                   CERTIFICATE OF COMPLIANCE

      Pursuant to Texas Rule of Appellate Procedure 9.4(i)(3), the
undersigned certifies that this brief complies with the type-volume
limitations of Texas Rule of Appellate Procedure 9.4(i)(2)(B).

     Exclusive of the exempt portions identified by Texas Rule of
Appellate Procedure 9.4(i)(1), this brief contains 2,014 words, including
footnotes, headings, and quotations. In providing this word-count, the
undersigned is relying on the word count generated by the computer
program used to prepare the petition.

     This petition has been prepared in proportionally spaced type, 14-
point text, 12-point footnotes, and in Book Antiqua font, using the
computer program known as Microsoft Word (version 2010).

Acknowledged: October 27, 2015.

                                  /s/Gregory R. Ave
                                  Gregory R. Ave

                                   14
                                              APPENDIX

                                                                                                TAB

07/30/15 Order Denying American Refrigeration Company,
Inc.’s Special Appearance .......................................................................... A

                                                     15
TAB A
46