Court Opinion

ID: 2813415
Source: CourtListenerOpinion
Date Created: 2015-07-01 05:28:44.964609+00
Date Added: 2024-06-11T08:34:15.456531
License: Public Domain

REVERSE and RENDER; and Opinion Filed June 30, 2015.

                                          S    In The
                                Court of Appeals
                         Fifth District of Texas at Dallas
                                       No. 05-14-01349-CV

                                 TROY BROWN, Appellant
                                           V.
                               CURTIS PENNINGTON, Appellee

                       On Appeal from the 162nd Judicial District Court
                                    Dallas County, Texas
                            Trial Court Cause No. DC-13-12400

                              MEMORANDUM OPINION
                         Before Justices Fillmore, Stoddart, and Whitehill
                                   Opinion by Justice Fillmore
       John Fields, Kyle Phillips, and Advantage Marking and Labeling, Inc. (Advantage) sued

Curtis Pennington, seeking declaratory relief from the trial court. Pennington, individually and

derivatively on behalf of Advantage, filed counterclaims against Fields and Phillips and third-

party claims against Troy Brown, Michael Collins, and the Collins Law Group. Brown filed a

special appearance asserting the trial court did not have personal jurisdiction over him. The trial

court denied the special appearance.

       Brown brought this interlocutory appeal, challenging the sufficiency of the evidence to

support certain of the trial court’s findings of fact and arguing the trial court erred by denying the

special appearance. We reverse the trial court’s order denying the special appearance and render

judgment dismissing Pennington’s claim against Brown for want of personal jurisdiction.
                                                                Background 1

            Fields, Phillips, and Pennington are equal shareholders of Advantage, a corporation with

business operations in Texas. Each of them served on Advantage’s board of directors, and

Pennington was the company president. According to Pennington, Fields and Phillips, “after

banding together and deciding to oust Pennington from his position as a salaried Advantage

officer, employee, and shareholder,” signed a representation agreement with Collins and his law

firm on May 4, 2012, “for the purpose of planning the method and manner by which they would

squeeze [Pennington] out of the company.” On June 27, 2012, Fields and Phillips called a

special meeting of the board of directors and voted to remove Pennington as Advantage’s

president. “Shortly after” June 27, 2012, Collins sent Pennington an email stating Fields and

Philips wanted to cause Pennington’s “separation” from Advantage by buying his stock.

            Pennington subsequently sued Fields, Phillips, and Advantage. 2 Advantage asserted

counterclaims in that litigation. At some point, Pennington non-suited his claims. Advantage’s

counterclaims were tried to the bench, and the trial court rendered a final judgment disposing of

those claims.

            Advantage had a banking relationship with Bank of America (BOA) and Banc of

America, Leasing & Capital (BOALC), and Pennington had personally guaranteed Advantage’s

obligations to BOA and BOALC. At some point after June 27, 2012, Advantage’s debt was

moved into the “special asset group” at BOA, and Fields began negotiating with BOA and

BOALC about terms under which Advantage’s banking relationship with BOA and BOALC

could be “stabilized.” In late summer 2012, Fields requested that Brown, who is Fields’s

brother-in-law, replace Pennington as a guarantor of Advantage’s obligations to BOA and

    1
        The facts are taken from the parties’ pleadings and evidence relating to the special appearance.
    2
        The appellate record does not indicate when this litigation commenced, but reflects it was ongoing during the late summer and fall of
2012.

                                                                       –2–
BOALC. Brown, who is a resident of North Carolina, agreed to do so. The BOA and BOALC

representatives involved in the negotiations were located in Missouri and Rhode Island.

          Fields also explored an alternative financial arrangement for Advantage with Southwest

Bank, which is located in Texas. Brown sent personal financial statements to Southwest Bank

during Fields’s discussions with the bank. Advantage did not enter into an agreement with

Southwest Bank.

          Brown signed a Guaranty dated October 19, 2012, in North Carolina. The parties to the

Guaranty are Brown, BOA, and BOALC. The address stated on the agreement for BOA is in

Georgia.        Brown was instructed to return the signed Guaranty to the BOA and BOALC

representative in Rhode Island, and the Guaranty states it is governed by the laws of Rhode

Island.

          Brown also signed a Consent and Release Agreement (the Agreement) in North Carolina.

The Agreement states it is “by and among” BOA, BOALC, Advantage, Pennington, and Brown.

However, Advantage was not a signatory to the Agreement, and Pennington never signed the

Agreement. The Agreement noted in its “Whereas” preamble clauses that:

          Pennington had guaranteed Advantage’s obligations to BOA and BOALC;

          Pennington was no longer involved in the management of Advantage in any way
          and drew no salary from Advantage, and his ability to receive any distribution as
          a shareholder was limited by a corporate resolution that limited such distributions
          unless there was a cash reserve equal to two month’s fixed expenses and salaries,
          plus the amount of current maturities of Advantage’s debt; 3

          Phillips and Fields now control the management of Advantage;

          Advantage and Pennington sought BOA’s and BOALC’s consent to the change of
          control and Pennington requested to be released from his obligations under his
          guarantees; and

     3
        As noted, the Guaranty is dated October 19, 2012. The Agreement states it was “made” on October 19, 2012. Although the record
reflects Pennington was not actively involved in the management of Advantage on October 19, 2012, the resolution impacting his salary and
shareholder distributions apparently was not passed until December 5, 2012. The facsimile transmission lines on both the Guaranty and the
Agreement are dated February 13, 2013.

                                                                 –3–
           BOA and BOALC were willing to consent to the change of control and to release
           Pennington from his obligations provided that Brown unconditionally guaranteed
           Advantage’s obligations to BOA and BOALC and Advantage consented to amend
           the terms of a lease with BOALC.

Fields and Phillips, although not listed as parties to the Agreement, signed it as guarantors of

Advantage’s obligations to BOA and BOALC, acknowledging and consenting to the terms of the

Agreement and ratifying and affirming their continuing guaranties of Advantage’s obligations to

BOA and BOALC.

           On October 14, 2013, Fields, Phillips, and Advantage filed this litigation alleging that,

only days after non-suiting his claims in the previous litigation, Pennington sent a “Statutory

Notice” to Advantage demanding that it take action against Fields, Phillips, Collins, and the

Collins Law Firm and threatening that, if Advantage did not take the requested action,

Pennington would do so. Fields, Phillips, and Advantage requested declaratory relief from the

trial court. 4       Pennington answered and, individually and derivatively on behalf of Advantage,

filed counterclaims against Fields and Phillips and third-party claims against Brown, Collins, and

the Collins Law Firm. As relevant to this appeal, Pennington alleged Brown “conspired with

and/or aided and abetted and/or assisted and encouraged Fields and Phillips in committing”

shareholder oppression. Brown filed a special appearance supported by his affidavit in which he

negated contacts with the state of Texas.

           Pennington responded to the special appearance and, relying on Brown’s deposition

testimony and exhibits to Brown’s deposition, asserted the trial court had specific jurisdiction

     4
        Fields, Phillips, and Advantage requested declarations that: (1) Fields and Phillips’s decision to remove Pennington from the office of
president of Advantage did not violate any express agreement or understanding between the shareholders; (2) Pennington is barred by the
doctrine of res judicata from raising any claims related to the decision to remove him from office; (3) in deciding to remove Pennington from the
office of president, Fields and Phillips acted in good faith and reasonably believed they were acting in Advantage’s best interest; (4) when Field
and Phillips removed Pennington from the office of president, Advantage suffered no damages as a result of the alleged decision by BOA to place
Advantage in “special asset service”; (5) Advantage’s indemnification of Fields and Phillips for the claims brought by Pennington was authorized
and appropriate under Advantage’s bylaws and applicable law; and (6) Advantage’s refusal to bring a claim against Collins and his law firm was
a proper and appropriate exercise of business judgment.

                                                                      –4–
over Brown. Pennington also amended his third-party claim against Brown and alleged, as

jurisdictional facts, 5 that:

           •          Prior to 2012, Brown visited Advantage and expressed to Fields, at least,
                      an interest in investing in the company “if it got to another level,” and
                      delivered that information to Fields in Texas;

           •          Fields reached out to Brown sometime in the spring of 2012 and sought
                      Brown’s assistance in causing Pennington’s removal from all aspects of
                      Advantage, including an ownership interest;

           •          Brown informed Fields that he was ready, willing, and able to assist Fields
                      and, by extension Advantage and Phillips, in ensuring Advantage was
                      restructured in a manner that eliminated Pennington and that involved
                      Brown substituting for Pennington in connection with the ownership or
                      operation of Advantage and “in particular, with regard to restructuring and
                      replacing [Advantage’s] bank debt, in the place and stead of Pennington,
                      but only if [Pennington] had been removed from the ownership and/or
                      management, and was no longer receiving any financial benefit or
                      compensation”;

           •          Brown knew of the disagreements between Pennington, on the one hand,
                      and Fields and Phillips, on the other hand;

           •          Starting in August 2012, if not earlier, Brown engaged in a series of
                      communications and transactions with Fields, Phillips, Advantage, and
                      two lending institutions, including one, Southwest Bank, that is located in
                      Texas and with whom he dealt, directly, in Texas;

           •          “At all times relevant,” Brown knew that Fields needed him to assist
                      Fields and Phillips in securing funding for a buyout of Pennington’s stock
                      and he routinely sent communications to Fields and others in Texas to
                      facilitate such a transaction;

           •          Brown directed a request to Fields to send him financial information about
                      Advantage so that he could deliver the information to a “money guy” and
                      Fields delivered the information to Brown;

           •          Brown communicated to Southwest Bank in connection with his effort to
                      assist Fields in restructuring Advantage and its bank debt in a manner that
                      involved ousting Pennington;

     5
        Pennington alleged other jurisdictional facts that do not relate to his claims against Brown, such as the fact Brown was born in Texas. We
recite only the alleged jurisdictional facts that could support specific jurisdiction over Brown.

                                                                      –5–
       •       Pennington’s complete separation from Advantage was part of the
               inducement for Brown’s agreement to guaranty the debt of a corporation
               he had no ownership in and “on information and belief,” Fields and
               Phillips promised some or all of Pennington’s Advantage stock as
               consideration or partial consideration for the guaranty “and/or various
               services or benefits Brown secretly has rendered or provided to Advantage
               and/or Fields and Phillips, and/or that he is to provide in the future”;

       •       “On information and belief,” Brown communicated to Fields that his
               agreement to become a guarantor of the Advantage bank debt was
               conditioned on Pennington having no role in Advantage’s management
               and no ability to receive salary or shareholder distributions; and

       •       Brown signed a Consent and Release Agreement and a Guaranty to assist
               in the restructuring of Advantage’s ownership and bank debt on a basis
               where Pennington was removed from all rights to participate in
               Advantage’s management or ability to receive a salary or shareholder
               distributions and Brown was not only aware of this, but “conditioned his
               willingness to sign the aforementioned instrument.”

Brown filed a second affidavit, as well as an affidavit from Fields. Through Brown’s two

affidavits and Fields’s affidavit, Brown denied all the alleged jurisdictional facts that are relevant

in this case. Following a special appearance hearing with no live testimony, the trial court

denied Brown’s special appearance and entered findings of fact and conclusions of law. The trial

court concluded it had jurisdiction over Brown because (1) he contracted with Texas residents

for a specific purpose, (2) the contracts he signed were performable, in whole or in part, in

Texas, and (3) the torts he is accused of committing or participating in all occurred in Texas, via

his conduct directed toward Texas.

                                              Analysis

       In one issue, Brown challenges the legal and factual sufficiency of the evidence to

support a number of the trial court’s findings of fact and contends the trial court erred by denying

the special appearance.

                                                 –6–
                                        Standard of Review

       The trial court’s determination it has personal jurisdiction over a nonresident defendant is

a question of law that we review under a de novo standard. Moki Mac River Expeditions v.

Drugg, 221 S.W.3d 569, 574 (Tex. 2007). When resolving this question of law, the trial court

must frequently resolve questions of fact. Am. Type Culture Collection, Inc. v. Coleman, 83
S.W.3d 801, 805–06 (Tex. 2002). If the trial court issues findings of fact, those findings are

binding upon the appellate court, unless challenged on appeal. Lombardo v. Bhattacharyya, 437
S.W.3d 658, 668 (Tex. App.—Dallas 2014, pet. denied). The appellant may challenge the fact

findings on legal and factual sufficiency grounds. BMC Software Belgium, N.V. v. Marchand, 83
S.W.3d 789, 794 (Tex. 2002). A legal sufficiency challenge to a finding fails if there is more

than a scintilla of evidence to support the finding. Id. at 795. In conducting a factual sufficiency

review, we may set aside the trial court’s finding only if it is so contrary to the overwhelming

weight of the evidence as to be clearly wrong and unjust. Lombardo, 437 S.W.3d at 668.

       In a challenge to personal jurisdiction, a plaintiff and defendant bear shifting burdens of

proof. Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 658 (Tex. 2010). The plaintiff has

the initial burden to plead sufficient allegations to invoke jurisdiction under the Texas long-arm

statute. Id. Once the plaintiff has pleaded sufficient jurisdictional allegations, the defendant

bears the burden of negating all alleged bases of jurisdiction alleged by the plaintiff.         Id.

“Because the plaintiff defines the scope and nature of the lawsuit, the defendant’s corresponding

burden to negate jurisdiction is tied to the allegations in the plaintiff’s pleading.” Id. The

defendant can negate jurisdiction on either a factual or a legal basis. Id. at 659.

       Factually, the defendant can present evidence that it has no contacts with Texas,
       effectively disproving the plaintiff’s allegations. The plaintiff can then respond
       with its own evidence that affirms its allegations, and it risks dismissal of its
       lawsuit if it cannot present the trial court with evidence establishing personal
       jurisdiction. Legally, the defendant can show that even if the plaintiff’s alleged
       facts are true, the evidence is legally insufficient to establish jurisdiction; the
                                                 –7–
       defendant’s contacts with Texas fall short of purposeful availment; for specific
       jurisdiction, that the claims do not arise from the contacts; or that traditional
       notions of fair play and substantial justice are offended by the exercise of
       jurisdiction.

Id.
                                          Findings of Fact

       In his brief, Brown challenges ten of the trial court’s findings of fact. Pennington

responds that Brown is essentially arguing the trial court was required to accept his version of the

evidence. We address each of Brown’s challenges separately.

                                       Finding of Fact No. 5

       Brown first challenges the trial court’s fifth finding of fact:

       On August 14, 2012, Brown sent an email to Fields in Texas asking Fields how
       his discussions had gone with [BOA]. Brown already had come to learn of a
       disagreement between Fields and Phillips, on the one hand, and Pennington, on
       the other hand, in the summer of 2012, when Fields told him that he had a
       financial issue involving Advantage’s loans at [BOA], and requested a co-
       signature from Brown to stabilize its loans, which required stabilization because
       of the disputes between Pennington, Fields and Phillips.

Brown contends the evidence established (1) he learned of Fields and Phillips’s issues with

Pennington in August 2012, not earlier in the summer of 2012; (2) Fields told him that Fields had

a financial issue at BOA and needed him to be a guarantor on a loan; (3) at the time of Fields’s

request, he was not told about, nor agreed to take any action because of, the disputes between

Pennington, Fields, and Phillips; and (4) he knew Advantage had been moved into the special

asset group by BOA and needed a guaranty to stabilize its banking relationship. Brown asserts

there is no evidence that Fields told him that stabilization was necessary because of disputes

between Fields and Phillips, on the one hand, and Pennington, on the other hand.

       In his affidavits, Brown stated Fields contacted him in late summer or early fall of 2012

and requested that he sign a guaranty to assist Fields in keeping his business solvent. He agreed

to assist “solely out of concern for and to assist my sister and her family.” Fields stated in his

                                                 –8–
affidavit that he contacted Brown in the late summer or early fall of 2012 and asked Brown to

sign a guaranty to assist him in keeping his business solvent. We agree with Brown that, to the

extent the trial court’s finding of fact number five implies Brown learned of Advantage’s

financial problems earlier than “late summer” of 2012, there is no evidence to support that

finding.

          In his deposition, Brown testified Fields said he had a problem with the bank and “needed

help with giving stability to his loans until he could get it resolved.” Brown testified Fields told

him that Fields needed a co-signer because Advantage had been moved into the special asset

group by BOA. Brown testified he learned about a disagreement between Pennington, on the

one hand, and Fields and Phillips, on the other hand, when Fields asked him to co-sign a note, 6

but he did not know very much about the dispute. We conclude there is sufficient evidence to

support the trial court’s finding that Brown was aware of the dispute between the shareholders in

late summer of 2012 when Fields asked him to guaranty the note. Further, there is evidence the

instability in Advantage’s banking relationship with BOA was due to the dispute. However, to

the extent the trial court’s finding implies that Brown knew the instability was due to the dispute,

there is no evidence to support that finding.

                                                      Finding of Fact No. 10

          In its tenth finding, the trial court found:

          In mid-September of 2012, Brown engaged in email exchanges with Fields and
          others, which set forth [BOA’s] proposed terms for renewing an Advantage line
          of credit. Those emails proposed, in part, that Brown would replace Pennington
          as a guarantor, money owed to Pennington would be subordinate to [BOA] and
          [BOA’s] approval of an agreement to purchase Pennington’s ownership in the
          business would be required.

     6
       Brown and Fields used the term “co-sign” as well as the term “guaranty.” However, the record reflects only an intention that Brown sign
a guaranty of Advantage’s obligations.

                                                                    –9–
Brown contends the evidence showed only that he was copied on the emails and there is no

evidence he “engaged in” the email exchange. Relying on the common meaning of the term,

Pennington responds that “engaged in” can include “to do or take part in something” and/or “to

give attention to something” and, therefore, the evidence supports the trial court’s finding.

       Exhibit 1 to Brown’s deposition is an email exchange beginning on September 12, 2012.

In the first email, Fields asked Kenni Hisel, a representative of BOA, whether she had “heard

back from management yet.” Hiesel responded to Fields later that day, setting out the terms

BOA was requesting for the renewal of Advantage’s line of credit. Fields responded to Hisel the

next day, with a copy to Brown, questioning certain of the terms requested by BOA. Hiesel

responded to Fields that she had left a message on his cellphone and was waiting for his call. In

the next email, Fields, with a copy to Brown, thanked Hisel and requested a copy of the adjusted

terms. Hiesel, with a copy to Brown, sent the adjusted terms to Fields.

       The evidence supports a finding that Brown was copied on at least some of the

September 2012 emails exchanged between Fields and Hisel. However, there is no evidence that

Brown either initiated any of the emails or was actively involved in the negotiation of terms

under which BOA would renew Advantage’s line of credit. To the extent the trial court’s finding

implied any such conduct by Brown, there is no evidence to support it.

                                      Finding of Fact No. 13

       The trial court found in finding of fact number thirteen that:

       On September 25, 2012, Fields sent an email to [BOA] and Brown, informing
       [BOA’s] Kennie Hisel that Curtis Pennington must be taken off of the to-be-
       modified loan, which Brown was to guarantee, in order to get litigation with
       Pennington resolved.

Brown complains the email was sent to Hisel, but only copied to Brown.

       Exhibit 4 to Brown’s deposition begins with an email from Hisel on September 24, 2012,

attaching loan documents and a cover letter. The recipients of this email are not identified in the
                                               –10–
exhibit. On September 25, 2012, Fields responded to the email, with a copy to Brown, asking

that Hisel call him because it appears Pennington was still listed as a guarantor and, “[i]n order to

get this litigation resolved, he must be taken off as guarantor.” Hisel responded, without copying

Brown, that Fields should read paragraph 4.k of the document. We conclude the evidence

supports the trial court’s finding that the September 25, 2012 email from Fields to Hisel was

sent, albeit as a copy, to Brown.

                                         Finding of Fact No. 14

       In its fourteenth finding of fact, the trial court stated:

       In late 2012, Brown signed a Consent and Release Agreement and a Guaranty
       Agreement with [BOA], Fields, Phillips and Advantage which was later fully
       executed in February of 2013.

Brown asserts there is no evidence that Brown signed a guaranty with BOA, Fields, Phillips, and

Advantage or that Brown executed either agreement in late 2012.

       In the Guaranty, which is signed only by Brown, Brown “unconditionally guarantee[d]

the full and prompt payment” of Advantage’s obligations to BOA and BOALC. We agree with

Brown that there is no evidence that Fields, Phillips, and Advantage were parties to the

Guaranty. As to the date of the documents, the Guaranty states it was signed and delivered on

October 19, 2012 and the Agreement states is was “made this 19 day of October, 2012.”

Although there is evidence the documents may not have been fully implemented until February

2013, there is evidence to support the trial court’s finding the documents were signed by Brown

in late 2012.

                                         Finding of Fact No. 16

       Finding of fact sixteen states:

       Per Fields’[s] request, Brown also delivered his personal financial statements and
       information to Southwest Bank, in Texas, as part of the assistance he was
       providing at the request of Fields, with Advantage Label’s restructuring, in Texas.

                                                 –11–
Brown takes issue with this finding, arguing the evidence established only that he sent his

personal financial statements to Southwest Bank, and there is no evidence he sent any other

information or that Southwest Bank was in Texas.

        Brown admitted he sent his personal financial statements to Southwest Bank. Brown also

testified during his deposition that he knew one of the bankers at Southwest Bank and that the

banker was located in Texas. We conclude there is no evidence Brown sent any information to

Southwest Bank other than his personal financial statements.          However, there is sufficient

evidence to support the trial court’s finding Brown sent his personal financial statements to

Southwest Bank in Texas.

                                      Finding of Fact No. 18

        The trial court found, in finding of fact number eighteen, that:

        Brown did sign a Consent and Release Agreement and a Guaranty Agreement.
        The Consent and Release Agreement signed by [BOA], Brown, Fields, Phillips
        and Advantage contains the following recitals: (a) Pennington executed
        guarantees of Advantage’s obligations to [BOA]; (b) Pennington is no longer
        involved in the management of Advantage in any way and draws no salary from
        Advantage, and his ability to receive any distributions as a shareholder is limited
        by a corporate resolution; (c) Kyle Phillips and John Fields now control the
        management of Advantage; and (d) [BOA] waived Advantage’s defaults caused
        by the removal of Pennington from Advantage having received Brown’s
        unconditional guaranty in the place and stead of Pennington’s.

Brown argues there is no evidence that Advantage signed the Agreement, Phillips and Fields

signed the Agreement as parties, or the Agreement contained the language in section (d) of the

finding as a recital.

        As to the complained-about parts of the trial court’s finding, Phillips and Fields signed

the Agreement, although as guarantors acknowledging and consenting to the terms of the

agreement and reaffirming their continuing guaranties, not as parties. However, although the

Agreement lists Advantage as the “Obligor,” there is no evidence Advantage signed the

Agreement. Further, although BOA agreed in the Agreement to waive any defaults caused by
                                                –12–
Phillips and Fields assuming control of Advantage, there is no evidence that language was

contained in a recital.

                                       Finding of Fact No. 20

         Brown next objects to finding of fact number twenty in which the trial court stated,

“Brown knew that what he was being asked to execute was in connection with benefitting Fields,

Phillips and Advantage, in Texas.” Brown argues the evidence established only that he executed

the Agreement and Guaranty to assist Fields with a banking issue.

         Brown testified Fields told him that Fields had a banking issue and needed him to sign a

guaranty to help keep Fields’s business solvent. Brown signed the Guaranty to assist his sister

and Fields, but admitted his actions may have also benefitted Advantage and Phillips. We

conclude there is sufficient evidence to support the trial court’s finding.

                                       Finding of Fact No. 27

         Finding of fact number twenty-seven states, “Brown knew that Advantage had the

unstable banking relationship with [BOA] in Texas.” Brown asserts there is no evidence that

BOA was in Texas. We agree with Brown that the evidence established the BOA and BOALC

representatives involved in the negotiations with were not located in Texas.           However,

Advantage was located in Texas and had an unstable banking relationship with BOA. We

conclude there is sufficient evidence to support the trial court’s finding.

                                       Finding of Fact No. 29

         In finding of fact number twenty-nine, the trial court found that “Brown knew Advantage

needed a stable banking relationship in order to continue to successfully run its operations in

Texas.” Brown objects to the finding on the ground there is no evidence he “did” anything in

Texas.    We read the “in Texas” part of the trial court’s finding to relate to Advantage’s

                                                –13–
operations, not to Brown’s conduct. We conclude there is sufficient evidence to support the trial

court’s finding.

                                     Finding of Fact No. 30

       Brown finally objects to finding of fact number thirty:

       Throughout the time period that Brown was directing communications into Texas
       for the purpose of assisting in the restructuring of Advantage and its bank debt,
       Brown transacted business with Texas residents. Brown purposefully availed
       himself of the benefits and privileges of doing and transacting business with a
       Texas corporation and a Texas resident, and he intended, purposefully, to direct
       his contacts to Texas for the purposes stated in his communications to Texas
       residents, and in instruments he executed to assist Advantage, a Texas
       corporation, and Texas resident Fields.

Brown argues there is no evidence to support the trial court’s findings that (1) he was directing

communications into Texas for the purpose of assisting in the restructuring of Advantage and its

bank debt, (2) he transacted business with Texas residents, and (3) he “purposefully availed

himself of the benefits and privileges of doing and transacting business with a Texas corporation

and a Texas resident, and he intended, purposefully, to direct his contacts to Texas for the

purposes stated in his communications to Texas residents, and in instruments he executed to

assist Advantage, a Texas corporation, and Texas resident Fields.” As set out in more detail

below, we conclude there is no evidence to support these findings by the trial court.

                                      Personal Jurisdiction

       A Texas court may exercise personal jurisdiction over a nonresident defendant if the

Texas long-arm statute authorizes the exercise of jurisdiction and the exercise of jurisdiction is

consistent with federal and state due process guarantees. Moki Mac, 221 S.W.3d at 574. As

relevant to Pennington’s allegations against Brown, the long-arm statute allows the exercise of

personal jurisdiction over a nonresident defendant who (1) contracts by mail or otherwise with a

Texas resident and either party is to perform the contract in whole or in part in Texas, or (2)

commits a tort in whole or in part in Texas. TEX. CIV. PRAC. & REM. CODE ANN. § 17.042 (West
                                               –14–
2015); see also Moki Mac, 221 S.W.3d at 574.             The long-arm statute extends personal

jurisdiction “as far as the federal constitutional requirements of due process will allow.” Moki

Mac, 221 S.W.3d at 575 (quoting Guardian Royal Exch. Assurance, Ltd. v. English China Clays,

P.L.C., 815 S.W.2d 223, 226 (Tex. 1991)). Under the constitutional due process analysis,

personal jurisdiction over a nonresident defendant is proper “when the nonresident defendant has

established minimum contacts with the forum state, and the exercise of jurisdiction comports

with ‘traditional notions of fair play and substantial justice.’” Id. (quoting Int’l Shoe Co. v.

Washington, 326 U.S. 310, 316 (1945)).

        A nonresident defendant’s contacts with a forum can give rise to either specific or general

jurisdiction.   BMC Software, 83 S.W.3d at 795.          Pennington’s asserted basis is specific

jurisdiction. Specific jurisdiction exists when the cause of action arises from or is related to

purposeful activities in the state. Moncreif Oil Intern., Inc. v. OAG Gazprom, 414 S.W.3d 142,

150 (Tex. 2013). Because specific jurisdiction is dispute-specific, we focus on the relationship

among the defendant, the forum, and the litigation. Retamco Operating, Inc. v. Republic Drilling

Co., 278 S.W.3d 333, 338 (Tex. 2009). 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, 221 S.W.3d. at 585.

        Purposeful availment is the touchstone of the jurisdictional due process analysis.

Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 784 (Tex. 2005). Minimum

contacts are sufficient for personal jurisdiction when the nonresident defendant “purposefully

avails itself of the privilege of conducting activities within the forum state, thus invoking the

benefits and protections of its laws.” Hanson v. Denckla, 357 U.S. 235, 253 (1958); see also

Michiana, 168 S.W.3d at 784. There are three parts to a “purposeful availment” inquiry. Moki

Mac, 221 S.W.3d at 575. First, only the defendant’s contacts with the forum are relevant, not the

                                               –15–
unilateral activity of another party or a third person. Id. Second, the contacts relied upon must

be purposeful rather than random, fortuitous, or attenuated. Id. And finally, the “defendant must

seek some benefit, advantage or profit by ‘availing’ itself of the jurisdiction.” Id. (quoting

Michiana, 168 S.W.3d at 785).

        The purpose of the minimum contacts analysis is to protect a nonresident defendant from

being haled into court when its relationship with the forum state is too attenuated to support

jurisdiction. Coleman, 83 S.W.3d at 806. “Significant contacts suggest that the defendant has

taken advantage of forum-related benefits, while minor ones imply that the forum itself was

beside the point.” Spir Star AG v Kimich, 310 S.W.3d 868, 872 (Tex. 2010).       What is important

is the quality and nature of the defendant’s contacts with the forum state rather than their

number. Retamco, 278 S.W.3d at 339.

       Pennington alleged that Brown conspired with and/or aided and abetted, and/or assisted

and encouraged Fields and Phillips in committing shareholder oppression. The alleged operative

facts of Pennington’s claim are that Brown, wanting to invest in Advantage, assisted Fields and

Phillips in removing Pennington as president and director of Advantage, preventing him from

receiving a salary from Advantage, and restricting his right to receive shareholder distributions.

Pennington, by asserting Brown committed a tort in Texas, met his initial burden of alleging

jurisdiction under the Texas long-arm statute. See TEX. CIV. PRAC. & REM. CODE ANN. § 17.042;

Moki Mac, 221 S.W.3d at 574. A state has an interest in exercising judicial jurisdiction over

persons who commit torts within its territory. Moncrief, 414 S.W.3d at 152. However, Texas’s

interest in protecting its citizens against torts is insufficient to automatically exercise personal

jurisdiction based on an allegation that a nonresident directed a tort from outside the forum

against a resident. Id. (citing Michiana, 168 S.W.3d at 790–91). Rather, the nonresident

defendant’s contacts must satisfy the purposeful availment inquiry. Id.

                                               –16–
       We turn, therefore, to whether Brown successfully negated each of Pennington’s pleaded

jurisdictional facts. To the extent possible, we have grouped the pleaded jurisdictional facts into

categories.

                                     Pre-June 27, 2012 Acts

       Pennington first pleaded Brown visited Advantage’s office, expressed to Fields an

interest in investing in Advantage if it “got to another level,” and delivered this information to

Fields in Texas. Brown stated in his affidavit that he visited Advantage’s office one time,

“several years ago” for social reasons. He testified during his deposition that Advantage had a

new facility, Fields was proud of the facility, and he went to see it. Both Brown and Fields

confirmed in their affidavits that Brown made the comment about investing in Advantage if it

got to another level. According to Brown, both men were in North Carolina when the statement

was made. According to Fields, the men never discussed the issue again.

       The trial court noted in its findings of fact that Brown admitted (1) he visited

Advantage’s office one time for social reasons, and (2) made a “passing comment” to Fields that

he might be interested in investing in Advantage if it got to another level. However, there is no

finding by the trial court, and no evidence in the record, that either Brown’s visit to the

Advantage facility or a comment made “several years ago” in North Carolina was connected to

the operative facts of Pennington’s claim against Brown. Therefore, neither of these acts by

Brown support the exercise of specific jurisdiction by the trial court. See Moki Mac, 221 S.W.3d

at 576 (Specific jurisdiction exists “if the defendant’s alleged liability ‘aris[es] out of or [is]

related to’ an activity conducted within the forum.” (quoting Helicopteros Nacionales de

Columbia v. Hall, 466 U.S. 408, 414 n.8 (1984)); Capital Tech. Info. Servs., Inc. v. Arias &

Arias Consultores, 270 S.W.3d 741, 749 (Tex. App.—Dallas 2008, pet. denied) (en banc).

                                              –17–
       Pennington also alleged that:

       Fields reached out to Brown sometime in the spring of 2012 and sought Brown’s
       assistance in causing the termination of [sic] Curtis Pennington’s permanent
       removal from all aspects of Advantage, including his ownership interest. Brown
       informed Fields, in Texas, that he was ready, willing and able to assist Fields, and
       by extension Advantage and Phillips, in ensuring that the Company was
       restructured in a manner that eliminated Pennington, and that involved Brown
       substituting for Pennington in connection with the ownership or operation of the
       Company, and in particular, with regard to restructuring and replacing the
       Company’s bank debt, in the place and stead of Pennington, but only if he had
       been removed from the ownership and/or management, and was no longer
       receiving any financial benefit or compensation.

In his affidavit, Brown specifically denied these allegations. The trial court made no finding of

fact that (1) Fields communicated with Brown in the spring of 2012 about removing Pennington

from his role at Advantage, (2) Brown communicated to Fields his willingness to be involved in

removing Pennington from his role at Advantage, or (3) Brown communicated to Fields that he

would be involved in replacing Pennington on Advantage’s bank debt only if Pennington had

been removed from ownership and/or management and was no longer receiving any financial

benefit or compensation. Further, there is no evidence of such communications in the record.

We conclude Brown successfully negated these alleged jurisdictional facts.

                         Communications Relating to Advantage’s Debt

       Pennington next alleged that Brown’s conduct during the negotiations with BOA,

BOALC, and Southwest Bank over Advantage’s debt supports the trial court’s exercise of

specific jurisdiction over Brown.      Pennington specifically alleged that Brown knew of the

disagreements between Pennington, on the one hand, and Fields and Phillips, on the other hand;

starting in August 2012, if not earlier, Brown engaged in a series of communications and

transactions with Fields, Phillips, Advantage, and two lending institutions, including one,

Southwest Bank, that is located in Texas and with whom he dealt, directly, in Texas; “at all times

relevant,” Brown knew Fields needed him to assist Fields and Phillips in securing funding for a

                                              –18–
buyout of Pennington’s stock and he routinely sent communications to Fields and others in Texas

to facilitate such a transaction; Brown directed a request to Fields to send him financial

information about Advantage so that he could deliver the information to a “money guy” and

Fields delivered the information to Brown; and Brown communicated to Southwest Bank in

connection with his effort to assist Fields in restructuring Advantage and its bank debt in a

manner that involved ousting Pennington.

       We turn first to Pennington’s allegation that Brown knew of the disagreements between

Pennington, on the one hand, and Fields and Phillips, on the other hand. In our discussion of the

trial court’s finding of fact number five, we concluded the evidence supports a finding that

Brown was aware of the dispute between the shareholders in the late summer when Fields asked

him to co-sign the note with BOA and BOALC. Brown, however, learned of the dispute from

Fields. A communication from a Texas resident to a nonresident defendant is insufficient to

support jurisdiction over the nonresident defendant.     Moncreif, 414 S.W.3d at 152 (“[T]he

unilateral activity of another person cannot create jurisdiction.”); Michiana, 168 S.W.3d at 786–

87 (telephone call from Texas resident to nonresident defendant that led to sale of product

insufficient to constitute purposeful availment by nonresident defendant).

       We next turn to Pennington’s allegation that Brown engaged in a series of

communications and transactions with Fields, Phillips, Advantage, BOA, BOALC and

Southwest Bank. In the summer and fall of 2012, there were a number of emails pertaining to

Fields’s attempts to stabilize Advantage’s banking relationship. We first disregard any emails

sent or copied to Brown because these communications will not support jurisdiction over Brown

in Texas.   See Moncrief, 414 S.W.3d at 152; Michiana, 168 S.W.3d at 786–87.              As to

communications initiated by Brown, on August 14, 2012, Brown sent Fields an email asking

about the status of the negotiations with BOA. At some point, Brown sent his personal financial

                                              –19–
statements to Southwest Bank. On August 31, 2012, Brown sent an email to Fields, in response

to an email from Fields titled “Buyout” that included financial information relating to

Advantage, asking if he could forward the information to a “money guy.” 7 On September 4,

2012, Fields asked if Brown had forwarded the information, and Brown responded that he had

done so. Brown did not direct any emails to BOA or BOALC in Texas.

          Brown did not physically enter Texas in August and September of 2012. Further, he did

not communicate with either BOA or BOALC in Texas. Rather, his communications were

through emails with Fields regarding the status of negotiations relating to Advantage’s financial

issues. These communications do not constitute a contact demonstrating purposeful availment.

See Olympia Capital Assocs., L.P. v. Jackson, 247 S.W.3d 399, 416–17 (Tex. App.—Dallas

2008, no pet.) (communications through telephone and email regrading negotiation and

performance of contract between Texas plaintiffs and nonresident defendant were not contacts of

nonresident defendant with Texas); KC Smash 01, LLC v Gerdes, Hendrichson, Ltd., L.L.P., 384
S.W.3d 389, 393 (Tex. App.—Dallas 2012, no pet.) (rejecting telephone calls and emails as

evidence of purposeful availment). To the extent Brown’s communications with Fields by email

relate to the operative facts of Pennington’s claim, they are insufficient to support the trial

court’s exercise of jurisdiction over Brown.

                                    Guaranty and Consent and Release Agreement

          Pennington’s remaining jurisdictional allegations are based on Brown’s signing the

Guaranty and the Agreement, and his reasons for signing the documents.                                                     Pennington

specifically alleged that (1) Pennington’s complete separation from Advantage was part of the

inducement for Brown’s agreement to guaranty the debt of a corporation in which he had no

     7
       Pennington alleged that Brown directed Advantage’s financial information be sent to him. Brown denied this allegation and there is no
evidence in the record that Brown requested the information from Fields or Advantage.

                                                                  –20–
ownership; (2) “on information and belief,” Fields and Phillips promised Brown some or all of

Pennington’s stock as consideration for the Guaranty or other services Brown had, or would,

provide to Advantage; (3) “on information and belief,” Brown communicated to Fields that his

agreement to become a guarantor of the Advantage bank debt was conditioned on Pennington

having no role in Advantage’s management and no ability to receive salary or shareholder

distributions; and (4) Brown signed the Agreement and the Guaranty to assist in the restructuring

of Advantage’s ownership and bank debt on a basis where Pennington was removed from all

rights to participate in Advantage’s management or ability to receive a salary or shareholder

distributions and was not only aware of this, but “conditioned his willingness to sign the

aforementioned instrument.” Brown denied all these jurisdictional allegations.

       As to the second allegation, the trial court found Brown was not promised any or all of

Pennington’s stock as consideration or partial consideration for signing the Guaranty. The trial

court made no findings pertaining to the first, third, and fifth allegations, and there is no evidence

in the record that Pennington’s complete separation from Advantage was part of the inducement

for Brown to guaranty the debt or that Brown communicated to Fields that (1) his agreement to

become a guarantor of Advantage’s bank debt was conditioned on Pennington having no role in

Advantage’s management and no ability to receive a salary or shareholder distributions, or (2) he

conditioned his willingness to sign the Guaranty and the Agreement on Pennington having no

role in Advantage’s management and no ability to receive a salary or shareholder distributions.

Rather, the evidence established that Fields asked Brown to be a guarantor of Advantage’s bank

debt, and Brown agreed to do without any conditions.

       We finally turn to Pennington’s fourth allegation that Brown executed the Guaranty and

the Agreement to aid in the restructuring of Advantage’s ownership and bank debt on a basis

where Pennington was removed from all right to participate in Advantage’s management or

                                                –21–
ability to receive a salary or shareholder distributions. The evidence established that, in late

summer 2012, Fields contacted Brown, told him Advantage had been moved into the special

asset group by BOA, and requested he guaranty a note to stabilize Advantage’s banking

relationship. Brown agreed to do so to help his sister and his brother-in-law and ultimately

signed both the Guaranty and the Agreement. In a “whereas” preamble clause, the Agreement

acknowledged Pennington was no longer in control of Advantage and that a corporate resolution

prevented Pennington from receiving a salary from Advantage and restricted his right to receive

shareholder distributions from Advantage.

          No Texas resident was a party to the Guaranty. Rather, Brown, a resident of North

Carolina, BOA, with an address in Georgia and a representative in Rhode Island, and BOALC,

with an address and a representative in Rhode Island, were parties to the agreement. The

Guaranty is governed by the laws of Rhode Island, and Brown signed the Guaranty in North

Carolina. The Agreement states it was made “by and among” BOA, BOALC, Advantage,

Pennington, and Brown. However, Advantage was not a signatory on the Agreement, and

Pennington did not sign the Agreement.                                Although Phillips and Fields signed the

Agreement, they did so only as guarantors of Advantage’s obligations to BOA and BOALC and

to confirm they acknowledged and consented to the terms of the Agreement and to ratify and

affirm their continuing guaranty of Advantage’s obligations to BOA and BOALC. Neither the

Guaranty nor the Agreement was a contract between Brown and any Texas resident. 8

          The trial court made no findings, and there is no evidence, that Brown was involved in

negotiating the terms under which BOA and BOALC would continue to extend credit to

Advantage, was involved in the drafting of the Guaranty or the Agreement, or was involved in

     8
      The fact the Agreement discussed Pennington’s removal from the management and payroll of Advantage does not impact our analysis.
The Agreement did not cause Pennington’s removal and merely acknowledged that a “Change in Control Event” had occurred at Advantage.

                                                               –22–
the decisions by the Advantage board of directors to remove Pennington as an officer and

director and to pass the resolution that prevented Pennington from receiving a salary from

Advantage and restricted his right to receive shareholder distributions from Advantage. Further,

the trial court made no findings, and there is no evidence, that Brown benefitted by BOA and

BOALC continuing to loan money to Advantage or by the Advantage board of directors

removing Pennington as an officer and director or passing the resolution. See Michiana, 168
S.W.3d at 785; KC Smash, 384 S.W.3d at 394 (noting there was no evidence nonresident

defendant sought benefit, advantage, or profit by “availing” itself of the forum). We cannot

conclude that Brown’s signing of the Guaranty and the Agreement was a sufficient contact

directed toward Texas to subject him to the jurisdiction of the Texas court.

                                                               Conclusion

           Pennington framed his jurisdictional allegations against Brown in terms of the “totality of

the circumstances” relating to issues occurring in Texas between Advantage’s shareholders and

the need for Advantage to establish a new lending relationship. “However, if the acts themselves

fail to establish minimum contacts and purposeful availment, the defendant’s knowledge of the

relationship to Texas will not make the defendant amenable to the jurisdiction.” KC Smash, 384
S.W.3d at 394. We conclude Brown lacked sufficient minimum contacts to support the trial

court’s exercise of specific jurisdiction over him as to Pennington’s claim. 9 Therefore, the trial

court erred by denying Brown’s special appearance.

     9
        Because Brown lacks minimum contacts with Texas to support personal jurisdiction, we need not consider the second prong of the
constitutional due process analysis—whether maintenance of the action offends traditional notions of fair play and substantial justice. Foley v.
Trinity Indus. Leasing Co., 314 S.W.3d 593, 602 (Tex. App.—Dallas 2010, no pet.).

                                                                    –23–
We resolve Brown’s issue in his favor and render judgment dismissing Pennington’s claim

against Brown for want of jurisdiction.

                                             /Robert M. Fillmore/
                                             ROBERT M. FILLMORE
                                             JUSTICE

141349F.P05

                                          –24–
                                       S
                               Court of Appeals
                        Fifth District of Texas at Dallas
                                      JUDGMENT

TROY BROWN, Appellant                                  On Appeal from the 162nd Judicial District
                                                       Court, Dallas County, Texas,
No. 05-14-01349-CV         V.                          Trial Court Cause No. DC-13-12400.
                                                       Opinion delivered by Justice Fillmore,
CURTIS PENNINGTON, Appellee                            Justices Stoddart and Whitehill participating.

       In accordance with this Court’s opinion of this date, we REVERSE the trial court’s order
denying appellant Troy Brown’s special appearance and RENDER judgment dismissing
appellee Curtis Pennington’s claims against appellant Troy Brown for want of jurisdiction.

        It is ORDERED that appellant Troy Brown recover his costs of this appeal from appellee
Curtis Pennington.

Judgment entered this 30th day of June, 2015.

                                                –25–