Court Opinion

ID: 9772843
Source: CourtListenerOpinion
Date Created: 2023-08-29 17:31:18.959768+00
Date Added: 2024-06-11T07:31:48.797069
License: Public Domain

HECHT, Justice,
dissenting.
I doubt whether there is any legal doctrine more ritualistic than personal jurisdiction. This doctrine invariably invokes in*475cantation — from “traditional notions of fair play and substantial justice” to “purposeful availment”. I suspect the explanation is that courts too often yield to the temptation to surrender the difficult struggle to understand the doctrine coherently, and to revert instead to more easily recited but less meaningful liturgy.
The majority have done our necessary obeisance to the personal jurisdiction liturgy of the sundry cases. I agree that the standards for determining the limits of personal jurisdiction are those they expound. Only in applying these standards to this case do the majority and I part company. Beyond the rhetoric of caselaw, the crux of the matter is simply, did Schapiro conduct himself in such a way that he should reasonably have expected to answer for that conduct in the courts of Texas. Because I believe it is rather clear from the evidence that he did, I respectfully dissent.
• Schapiro’s dealings with Texas are described in the testimony of two witnesses, Schapiro himself and Richard Craft.1 Their testimony, summarized below in somewhat more detail than in the majority opinion, reveals, I believe, that Schapiro should well have known that his actions placed him within reach of Texas courts.

Schapiro’s Testimony

Schapiro is a physician with a specialty in diagnostic radiology practicing in Pittsburgh, Pennsylvania, and living in one of its suburbs. In July 1984 Schapiro’s older son, Douglas, called to say that he and his wife had formed a corporation called Hangers, Inc. for the purpose of opening dry cleaning outlet stores in major office buildings. Schapiro thought the idea was a bright one and, at Douglas’ invitation, invested $10,000 in Hangers, receiving stock in the corporation in return. Although Schapiro was not involved in incorporating Hangers, its corporate records were kept by his attorney in Pittsburgh.
Hangers leased space for its outlets, and Schapiro guaranteed some of those leases. After the outlets operated successfully for a few months, Douglas wanted to open a dry cleaning plant to clean the clothes taken in through the outlets. Schapiro agreed to assist Hangers in acquiring equipment worth $180,000, and loaned Hangers $30,-000 of his personal funds for the down payment. In late 1984 or early 1985 Scha-piro came to Dallas to look over the business and to obtain financing from MBank for the rest of the plant. After negotiating an interest rate a half point lower than MBank had initially offered, Schapiro signed a promissory note for $136,702.10 to purchase equipment for the plant. Schapi-ro owned the equipment and leased it to Hangers. (Schapiro also owned at least one car used by Hangers’ employees.)
Hangers leased the premises for the plant from the Schlobohms. Although Schapiro had guaranteed other leases for Hangers, he was not asked to, and did not, guarantee this one. He did not negotiate the lease with the Schlobohms and to his knowledge never talked with them.
The business needed more money, in Schapiro’s words, “[vjirtually weekly, biweekly or at least monthly”, and Schapiro loaned it on request. Late in 1984 Schapiro insisted that all the stock in the corporation be transferred to him, and Douglas and Richard Craft, both shareholders from the inception of the corporation, begrudgingly complied.
In early 1985, Douglas was president of Hangers. Schapiro was the sole shareholder and sole director but held no other office and was not involved in the day to day operations. Douglas did not need his father’s approval to open new outlet stores.
By the summer of 1985 Schapiro’s investment was fairly extensive, and he “had some sense of alarm.” Part of his concern was a lack of information about the business. For many months, Schapiro testified, “[tjhere were endless communications from Pittsburgh to Dallas, all of which [were] basically one way.” To allay his fears, *476Schapiro sent his personal accountant to Dallas to ensure at least that appropriate accounting and reporting mechanisms were in place.
In October 1985, returning home from a workshop in San Antonio, Schapiro stopped in Dallas and visited Douglas about the condition of the business. About three months later, in January 1986 Schapiro visited Dallas again to check the condition of the business. That same month he resigned as a director because he could not get the information he wanted out of Hangers’ management.
In February 1986 Schapiro received information which he realized, in a “flash of anxiety at 2:00 o’clock in the morning”, meant the business had about a $50,000 operating deficit. After conversing with Douglas, who agreed there was an operating deficit but thought it was more like $15,000-25,000, Schapiro was “[ejxplosively” alarmed. Schapiro again sent his personal accountant to Dallas to evaluate the condition of the business. Shortly thereafter Schapiro refused to have anything further to do with the business.

Richard Craft’s Testimony

Craft was Hangers’ vice president and plant manager from August 1984 to July 1986. He initially owned stock in the corporation but later sold his shares to Schapi-ro when Schapiro demanded that he do so.
Craft testified: “From my position I could see a lot of activity between [Schapi-ro] and his various business associates in Hangers aside from the constant stream of money that was coming from Pittsburg [sic].” Craft constantly compiled information to send to Pittsburgh in response to many phone calls he received from Schapi-ro’s secretary and agents in Pittsburgh. According to Craft, “any major transaction,” like a lease or transfer of money, “was approved by [Schapiro] or one of his business associates.” Craft also testified:
Q Do you have an opinion as to [Scha-piro’s] control over the corporate affairs?
A Yes, sir.
Q What is that opinion?
A [Schapiro’s] control was — [Schapi-ro] was the corporation and made the major decisions of that.
Q On what do you base that opinion?
A The amount of activity, day to day, constant transfers of money.
We felt ultimately we were making decisions by committee between Dallas and Pittsburgh, and no serious action could ever be taken without being approved in Pittsburg [sic] first.
On cross-examination, Craft admitted that he had written Schapiro and threatened that if Schapiro did not pay him $50,-000, he would institute civil suits and an IRS investigation against Schapiro, and a criminal prosecution against Douglas. Schapiro never paid Craft more than $2,700. Craft did complain to the IRS about Schapiro but never sued him. Craft testified that he has nothing against Scha-piro personally, but that his feelings have been hurt because of the time he invested in the business and the way he was treated in the end.

Schapiro’s Reasonable Expectation

On this record I cannot imagine how Schapiro could have invested hundreds of thousands of dollars in a Dallas business run by his son, served as the sole director and shareholder of the corporation for most of the period in question, advanced the business money on a weekly or monthly basis for some two years, had “endless communications” with the business, made two trips to Dallas to see the business, sent his accountant to inspect it two other times, negotiated a $136,000 loan from a Dallas bank to buy equipment to lease to the business, guaranteed some of the business’ leases, and kept the corporate records with his personal attorney, and never reasonably have expected that he might be subject to suit in Texas. Even if Craft’s credibility was undermined, Schapiro’s own testimony established that he called the shots in Dallas. Comparing the facts of this case with those cited by the majority and the parties, I see nothing unfair or offensive in requiring Schapiro to answer in a Dallas court the actions he freely took here.
*477The limits of courts’ in personam jurisdiction are not defined with certainty. I fear that our decision in this case contributes to the uncertainty and confusion in this area of the law. It is for this reason that I respectfully decline to join in the result reached by the majority.

. Although two other witnesses — Schapiro’s son Douglas and Terry Allen of MBank — also testified before the trial court, I do not consider their testimony significant in determining the jurisdictional issue.