Court Opinion

ID: 2842516
Source: CourtListenerOpinion
Date Created: 2015-09-03 14:46:18.979526+00
Date Added: 2024-06-11T11:32:44.882609
License: Public Domain

Opinion issued June 4, 2009

 
 

In The
Court of Appeals
For The
First District of Texas
____________

NO. 01-08-00377-CV
____________

DAVID M. GONZALEZ, Appellant

V.

AAG LAS VEGAS, L.L.C., ASCENT AUTOMOTIVE GROUP, L.P., and
KW#1 ACQUISITION COMPANY, L.L.C., Appellees

On Appeal from the 189th District Court
Harris County, Texas
Trial Court Cause No. 2006-67618

O P I N I O N

	In this accelerated, interlocutory appeal, appellant, David M. Gonzalez
("Gonzalez"), challenges the trial court's order denying his special appearance. (1)  In
his sole issue on appeal, Gonzales contends that he is not amenable to service in
Texas because he did not have sufficient minimum contacts with Texas to satisfy the
requirements of due process.  We reverse and render.Background
	Gonzalez is a resident of Las Vegas, Nevada.  Appellee AAG-Las Vegas,
L.L.C. ("AAG-Las Vegas") is a Delaware limited liability company with its principle
place of business in Nevada.  Appellee KW#1 Acquisition Company, L.L.C.
("KW#1") is a Delaware limited liability company with its principle place of business
in Ohio.  Appellee Ascent Automotive Group, L.P. ("Ascent") is a Delaware limited
partnership with its principal place of business in Houston, Texas.
 	While employed in Ohio at an automotive dealership, Gonzalez was
approached by David Watts ("Watts"), Chief Operating Officer of Ascent, regarding
a possible management position with Lexus of Akron-Canton, an Ohio Lexus
dealership that Watts was considering purchasing with Kevin Whalen ("Whalen"). 
In June 2004, Gonzalez traveled to Houston to interview for the general manager
position.  At the Houston meeting, Gonzalez interviewed with Watts, Whalen, and
Jerry Pyle ("Pyle").  In addition to evaluating Gonzalez at the meeting, Watts and
Whalen asked Pyle to invest in the Akron dealership as well as a Lexus dealership in
Cleveland.  During the interview, the parties discussed a program to permit managers
to acquire a partial interest in the car dealerships.  Gonzalez claims that, during these
discussions, he was promised the right to earn a ten percent ownership in the two car
dealerships.
	 The following September, KW#1 hired Gonzalez to be the general manager
of the KW#1 Lexus of Akron-Canton dealership.  As general manager of the Canton
dealership, Gonzalez reported to Watts in Texas and received his pay from Texas. 
Gonzalez also regularly telephoned Houston to report on the status of the dealership. 
	In 2005, AAG Las Vegas purchased a Lexus dealership in Las Vegas, Nevada
("Lexus of Las Vegas").  Shortly after that, AAG Las Vegas hired Gonzalez to be the
general manager of Lexus of Las Vegas.  
	After accepting the position, Gonzalez moved from Ohio to Las Vegas and
began working as general manager of Lexus of Las Vegas.  During his time as general
manager, Gonzalez made another trip to Houston to attend a two-day general
manager's meeting.  Appellant's duties at AAG Lexus of Las Vegas were identical
to his duties at KW#1's Lexus of Akron-Canton.  AAG Las Vegas was the corporate
entity responsible for paying Gonzalez as general manager of Lexus of Las Vegas.  
	In Fall 2006, AAG Las Vegas terminated Gonzalez's employment with Lexus
of Las Vegas.  AAG Las Vegas asserts that it terminated Gonzalez because, while
Gonzalez was employed at Lexus of Las Vegas, he (1) improperly usurped business
opportunities by secretly trying to obtain other dealerships, (2) actively recruited
other Lexus of Las Vegas employees to leave Lexus of Las Vegas, (3) improperly
purchased a car from one of his recruits, (4) did not effectively attend to inventory
management, causing reduced profits, and (5) was late and unprepared for meetings
at the Las Vegas dealership. 
	On October 19, 2006, appellees sued Gonzalez in Texas in this case.  Among
other things, they sought to declare the parties' ownership interests in Lexus of Las
Vegas and Lexus of Akron-Canton. On January 26, 2007, Gonzalez sued appellees
in Nevada, also seeking a declaration of the parties' rights to the two dealerships in
addition to various other causes of action.  The two lawsuits are founded on
substantially the same issues and facts.  
	Gonzalez filed a special appearance in this case, challenging the trial court's
in personam jurisdiction over him for the entire proceeding.  Gonzalez contended that
he lacked the requisite minimum contacts with Texas to satisfy the requirements of
due process and that the trial court's exercise of personal jurisdiction over him would
violate the traditional notions of fair play and substantial justice.  Appellees filed a
response.   Following a hearing, the trial court denied Gonzalez's special appearance. 
This interlocutory appeal followed.  

Gonzalez's Special Appearance
	In his sole issue, Gonzalez contends that the trial court erred in denying his
special appearance.  
A.	Standard of Review
	Special appearances are governed by Rule 120a of the Texas Rules of Civil
Procedure, which provides that "a special appearance may be made by any party . .
. for the purpose of objecting to the jurisdiction of the court over the person or
property of the defendant on the ground that such party or property is not amenable
to process by the courts of this State."  Tex. R. Civ. P. 120a.  The existence of
personal jurisdiction is a question of law reviewed de novo by this Court.  BMC
Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002).  However, this
question must sometimes be preceded by resolving underlying factual disputes.  Id. 
When, as here, the trial court does not issue fact findings, we presume that the trial
court resolved all factual disputes in favor of its ruling.  Am. Type Culture Collection,
Inc. v. Coleman, 83 S.W.3d 801, 806 (Tex. 2002).
B.	Personal Jurisdiction
	"Texas courts may assert personal jurisdiction over a nonresident defendant
only if the Texas long-arm statute authorizes jurisdiction and the exercise of
jurisdiction is consistent with federal and state due process standards."  Id.  (citing
Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d
223, 226 (Tex. 1991)); see Texas Civ. Prac. & Rem. Code Ann. §§ 17.041-.045
(Vernon 2008) (Texas long-arm statute).  The long-arm statute allows Texas courts
to exercise jurisdiction over a nonresident defendant that "does business" in the state. 
Tex. Civ. Prac. & Rem. Code Ann. §17.042 (Vernon 2008).  The Texas Supreme
Court has held that "section 17.042's broad language extends Texas courts' personal
jurisdiction as far as the federal constitutional requirements of due process will
permit."  BMC Software, 83 S.W.3d at 795.
	Initially, the plaintiff bears the burden of pleading allegations sufficient to
bring a nonresident defendant within the terms of the Texas long-arm statute.  Am.
Type Culture Collection, 83 S.W.3d at 807.  However, a nonresident defendant who
files a special appearance assumes the burden of negating all bases of personal
jurisdiction that the plaintiff has alleged.  Id.  We review all evidence in the record
to determine if the nonresident defendant negated all possible grounds.  N803RA, Inc.
v. Hammer, 11 S.W.3d 363, 366 (Tex. App.--Houston [1st Dist.] 2000, no pet.)
(citing Kawasaki Steel Corp. v. Middleton, 699 S.W.2d 199, 203 (Tex. 1985)).
	Personal jurisdiction over nonresident defendants is constitutional when two
conditions are met: (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.  Am. Type Culture Collection, 83 S.W.3d at 806
(citing Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158 (1940)). 
A nonresident defendant's minimum contacts must derive from purposeful availment: 
a nonresident defendant must have "purposefully availed" itself of the privileges and
benefits of conducting business in the foreign jurisdiction to establish sufficient
contacts with the forum to confer personal jurisdiction.  Id.  (citing Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 474-76, 105 S. Ct. 2174, 2183-84 (1985)); Xenos
Yuen v. Fisher, 227 S.W.3d 193, 200 (Tex. App.--Houston [1st Dist.] 2007, no pet.). 
An act or acts "by which the defendant purposefully avails itself of the privilege of
conducting activities" in Texas and "thus invok[es] the benefits and protections" of
Texas law, constitutes sufficient contact with Texas to confer personal jurisdiction. 
Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 784 (Tex. 2005)
(quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 1240 (1958)).
	We consider three elements in assessing purposeful availment.  See Michiana
Easy Livin' Country, 168 S.W.3d at 785; First Oil PLC v. ATP Oil & Gas Corp., 264
S.W.3d 767, 782 (Tex App.--Houston [1st Dist.] 2008, no pet.).  First, we consider
only the defendant's own actions, not those of the plaintiff or any other third party. 
Michiana Easy Livin' Country, 168 S.W.3d at 785; First Oil PLC, 264 S.W.3d at 782;
see also U-Anchor Adver., Inc. v. Burt, 553 S.W.2d 760, 763 (Tex. 1977) (quoting
Hanson v. Denckla, 357 U.S. at 253, 78 S. Ct. at 1239-40 (1958)) ("The unilateral
activity of those who claim some relationship with a nonresident defendant cannot
satisfy the requirement of contact with the forum State.  The application of that rule
will vary with the quality and nature of the defendant's activity, but it is essential in
each case that there be some act by which the defendant purposefully avails itself of
the privilege of conducting activities within the forum State, thus invoking the
benefits and protections of its laws.").
	Second, the defendant's activities must be purposeful, not random, isolated, or
fortuitous.  Michiana Easy Livin' Country, 168 S.W.3d at 785; First Oil PLC, 264
S.W.3d at 782.  "It is the quality rather than the quantity of contacts that is
determinative."  First Oil PLC, 264 S.W.3d at 782 (emphasis in original).  Third, the
defendant must seek some benefit, advantage, or profit by virtue of its activities in the
proposed forum state, because this element is based on the notion of implied consent. 
Michiana Easy Livin' Country, 168 S.W.3d at 785; First Oil PLC, 264 S.W.3d at 782.
	Our jurisdictional analysis is further divided into general and specific
jurisdiction.  CSR, Ltd. v. Link, 925 S.W.2d 591, 595 (Tex. 1996).  General
jurisdiction will attach when "a defendant's contacts in a forum are continuous and
systematic permitting the forum to 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."  Id.  To support general jurisdiction, the defendant's forum activities
must have been "substantial," which requires stronger evidence of contacts than for
specific personal jurisdictions.  Preussag Aktiengesellschaft v. Coleman, 16 S.W.3d
110, 114 (Tex. App.--Houston [1st Dist.] 2000, pet. dism'd w.o.j.).
	Specific jurisdiction arises when the defendant's alleged liability arises from
or is related to an activity conducted within the forum.  BMC Software, 83 S.W.3d at
796.  "For a nonresident defendant's forum contacts to support an exercise of specific
jurisdiction, there must be a substantial connection between those contacts and the
operative facts of the litigation."  Moki Mac River Expeditions v. Drugg, 221 S.W.3d
569, 585 (Tex. 2007).  This requirement assesses "the strength of the necessary
connection between the defendant, the forum, and the litigation."  Id at 584.
C.	Discussion 
	In his sole issue, Gonzalez asserts that the trial court erred in denying his
special appearance because Gonzalez is not subject to Texas's specific personal
jurisdiction and because the exercise of personal jurisdiction over him does not
comport with fair play and substantial justice.  Gonzalez contends he does not have
the minimum contacts necessary to subject him to specific personal jurisdiction in
Texas because: (1) he has not purposefully availed himself of the laws and privileges
of doing business in Texas, and (2) his contacts with Texas are not related with
appellee's claims in this litigation.  Appellees respond that jurisdiction is proper
because there is a substantial connection between Gonzalez's contacts with Texas and
the operative facts of this litigation.  Specifically, appellees assert that the declaratory
judgment action concerns the interpretation of the communications that took place at
the Houston meeting regarding ownership of both the Akron and Las Vegas
dealerships. 
	In addition to relying on the Houston meeting to establish jurisdiction,
appellees note several additional facts that they contend establish that Gonzalez had
sufficient minimum contacts with Texas, i.e., that Gonzalez purposely availed himself
of the privilege of conducting activities within the State of Texas.  Specifically,
appellees point to the following:
	1.	Gonzalez sought out employment in Texas, along with related benefits,
such as health insurance and bonuses.  
	2.	Gonzalez was paid from Texas for his employment.
	3.	Gonzalez traveled to Texas to attend a "forecast and training" meeting,
attendance at which was a requirement of Gonzalez's continued employment in
Nevada.  
	4.	Gonzalez regularly reported to executives in Texas.  
	5.	 Gonzalez claims entitlement to "Texas property" because he claims a
ten percent ownership interest in KW#1 and AAG-Las Vegas. (2)
	Appellees' focus on Gonzalez's contacts with Texas, particularly the Houston
meeting at which Gonzalez's compensation package was discussed, is overly broad. 
 Compare Pelican State Physical Therapy, L.P. v. Bratton, No. 01-06-00199-CV,
2007 WL 2833303, at *10 (Tex. App.--Houston [1st Dist.] Sept. 27, 2007) (mem.
op.) (holding trial court did not err in refusing to exercise specific personal
jurisdiction over out-of-state defendant when operative facts in plaintiff's suit
concerned acts that happened while defendant was employed at plaintiff's Louisiana
clinic, rather than in Texas).  
	As applied to this case, the test for specific personal jurisdiction over Gonzalez
requires--in addition to Gonzalez's purposeful direction of activities toward or
purposeful availment of the privileges of doing business in Texas--a substantial
connection between his contacts and the litigation's operative facts.  See Moki Mac
River Expeditions, 221 S.W.3d at 584.  Assuming without deciding that the contacts
to which appellees point show purposeful availment of Texas's benefits, we hold that
there is not a sufficient connection between those contacts and the litigation to
support the exercise of specific personal jurisdiction over Gonzalez.  See Pelican
State Physical Therapy, 2007 WL 2833303, at *7.
	Appellee's First Amended Original Petition alleges causes of action against
Gonzalez for (1) breach of fiduciary duty of loyalty to Lexus of Las Vegas, (2)
usurpation of corporate opportunities, and (3) a declaratory judgment that Gonzalez
is not entitled to an ownership interest in Lexus of Las Vegas and Lexus of Akron-Canton. (3)  The facts that appellees alleged in support of the breach of loyalty and
usurpation claims are that Gonzalez (1) improperly usurped business opportunities
by secretly trying to obtain other dealerships, (2) actively recruited other Lexus of Las
Vegas employees to leave Lexus of Las Vegas, (3) improperly purchased a car from
one of his recruits, (4) did not effectively attend to inventory management, causing
reduced profits, and (5) was late and unprepared for meetings at the Las Vegas
dealership. (4)
	Given these pleadings, the operative facts of appellees' breach of loyalty and
usurpation claims concerns Gonzalez's acts while general manager in Las Vegas. 
These are the facts that are relevant for a specific personal-jurisdiction analysis, and
the allegations and the evidence shows that these acts happened in Nevada.  See id.
(holding that test for the "relatedness" portion of the specific personal-jurisdiction
test is that a substantial connection exist between the litigation's operative facts and
the nonresident defendant's contacts with Texas); see also Gustafson v. Provider
Healthnet Servs., Inc., 118 S.W.3d 479, 483 (Tex. App.--Dallas 2003, no pet.)
(holding that none of nonresident's following contacts was sufficiently connected to
execution of confidentiality agreement that nonresident was alleged to have breached
or to dissemination of confidential information so as to allow exercise of specific
personal jurisdiction over him:  (1) employment relationship itself, (2) two visits to
Texas during employment, (3) payment from Texas bank, (4) submission of requests
for reimbursement to Texas and subsequent cashing of those checks, (5) employee's
communication with employees located in Texas, (6) employee's health benefits'
being administered from Texas offices, (7) provision of employee's health insurance
through Texas company, and (8) Texas location of insurance agents who administered
employee's dental and life insurance).
	Moreover, we cannot conclude that Texas may assert specific personal
jurisdiction over Gonzalez merely because the compensation plan that is one facet of
the underlying litigation was discussed initially at a meeting in Houston.  Appellees
may not selectively rely on one aspect of the litigation--the declaratory judgment--to
the exclusion of all others as the basis for jurisdiction.
	We distinguish Siskind v. Villa Foundation for Education, Inc., 642 S.W.2d
434 (Tex. 1982), on which appellees rely, in which there were sufficient minimum
contacts subjecting the nonresident defendant, an operator of an Arizona school, to
the jurisdiction of the Texas court.  Siskind, a Texas resident, sued the Villa
Foundation for Education for numerous causes of action, including breach of
contract, misrepresentation, and violation of the Texas Deceptive Trade Practices Act. 
Id. at 435-36.  In holding that Villa was amenable to suit in Texas, the court found
significant the existence of a written contract between the parties in which Villa
voluntarily agreed to the omission of a provision limiting litigation to Arizona at the
Texas resident's request. Id. at 435.  Further, the court determined that because Villa
had a practice of advertising, mailing informational packets, applications, invitations
to re-enroll, and enrollment contracts in Texas, Villa affirmatively solicited Texas
business and therefore purposefully availed itself of the benefits of contacts with
Texas.  Id. at 436. 
	Here, the record does not support the conclusion that Gonzalez directed similar
efforts at Texas to obtain employment with appellees.  Gonzalez came to Texas to
interview for the position with Lexus of Akron-Canton at Watts's request while he
was employed by another car dealership in Ohio.  Gonzalez's deposition testimony
demonstrates that he had conversations with both Watts and Whalen about the
possibility of being the general manager of Lexus of Las Vegas, but Gonzalez stated
that the majority of those conversations were in Akron.  Therefore, unlike Villa,
whose contacts with Texas were "substantial," Gonzalez's contacts with Texas were
minimal.  Id. at 437.
	We also distinguish Tempest Broadcasting Corp. v. Imlay, 150 S.W.3d 861

(Tex. App.--Houston [14th Dist.] 2004, no pet.) and Silbaugh v. Ramirez, 126
S.W.3d 88 (Tex. App.--Houston [1st Dist.] 2002, no pet.), similarly relied on by
appellees.  In Tempest Broadcasting Corp., Tempest Broadcasting Corporation, a
Texas resident, sued Christopher Imlay, a Maryland attorney, and his law firm, for
breach of contract and several intentional torts.  Tempest Broadcasting Corp., 150
S.W.3d at 866.  At the center of the dispute was an AM radio station located in
Robstown, Texas and a Federal Communication Commission (FCC) broadcasting
license.  Id. at 865.  
	In holding jurisdiction proper in Texas, the court found that Imlay and the law
firm conducted business in Texas and committed the intentional torts in Texas.   Id.
at 875-76. Specifically, the court found that Imlay made direct representations in
Texas to Tempest upon which it relied to its detriment and which formed the basis for
Tempest's claims against Imlay and the law firm.  Id. at 876.  These representations
were provided in writing and by telephone to Tempest in Texas.  Id. 
	In contrast, with regard to the instant case, the vast majority of this litigation's
operative facts took place in Nevada.  Specifically, the facts that appellees allege in
support of the breach of loyalty and usurpation claims all took place in Las Vegas. 
Unlike Tempest, who made numerous representations in Texas that formed the basis
of the underlying litigation, Gonzalez's contacts with Texas were minimal.  Id. at
875-76.  Moreover, Tempest involved the sale of  a radio station that was located and
broadcasting within the geographical borders of Texas.  Id. at 865.
	Finally, in Silbaugh, the plaintiff brought suit in Texas against the defendant
asserting several tort and breach of contract claims related to the investment by
Ramirez in a leasing program and loss of his funds from Silbaugh's IOLTA account. 
 Silbaugh, 126 S.W.3d at 91.  In upholding the trial court's denial of Silbaugh's
special appearance, the appellate court held that because Silbaugh had solicited
business with Ramirez while he was in Texas through multiple conference calls and
faxes; entered into a written contract with Ramirez, which he signed in Texas;
accepted Ramirez's payment from Texas; and engaged in correspondence regarding
entering into and carrying out the contract in Texas; Silbaugh knew or reasonably
should have expected that Ramirez would perform his part of the contract from Texas. 
 Id. at 96.  Therefore, the court found that Silbaugh had sufficient contacts with Texas
to establish specific personal jurisdiction.  Id.
	There is no such written contract in the instant case.  And, again, for the
reasons discussed, Gonzalez's contacts with Texas are not such that the operative
facts of the underlying litigation justify specific personal jurisdiction in Texas.  For
these reasons, we hold that the trial court erred in denying Gonzalez's special
appearance.  We sustain appellant's issue.  
Conclusion

	Because Gonzalez did not "purposefully avail [himself] of the privilege of
conducting activities within the forum State, thus invoking the benefits and
protections of its laws," Moki Mac, 221 S.W.3d at 575 (quoting Int'l Shoe Co., 326
U.S. at 319, 66 S. Ct. at 160), Gonzalez lacks sufficient minimum contacts to support
an assertion of specific jurisdiction in Texas.  Accordingly, we reverse the order of
the trial court denying Gonzalez's special appearance and render judgment sustaining
the special appearance.

						Davie L. Wilson
						Justice

Panel consists of Chief Justice Radack and Justices Alcala and Wilson. (5)

1. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(7) (Vernon 2008) (providing
that parties may challenge trial court's orders regarding special appearances by
interlocutory appeal).
2. Appellees claim that KW#1 and AAG-Las Vegas are "Texas property" because these
companies are wholly owned subsidiaries of Ascent, whose principal place of
business is Houston, Texas.  Moreover, appellees allege, without reference to the
record, that the subsidiaries are administered and supervised from Texas.  However,
the record reflects that KW#1 is a Delaware limited liability company with its
principle place of business in Ohio and that AAG-Las Vegas is also a Delaware
limited liability company with its principle place of business in Ohio. 
3. For his part, Gonzalez claims he is no longer seeking an ownership interest in Lexus
of Akron-Canton. 
4. Appellees represent that at the hearings on Gonzalez's special appearance, which
were not transcribed, appellees agreed to nonsuit their claims of usurpation of
corporate opportunity and breach of duty of loyalty without prejudice, leaving only
the declaratory action remaining.  However, Gonzalez disputes that a nonsuit has been
filed.  
5. The Honorable Davie L. Wilson, retired Justice, First Court of Appeals, sitting by
assignment.