Capital Pacific, L.L.C. and B. Scott Fuller v. Jeffrey D. Boyd ( 2005 )

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  Opinion issued November 3, 2005

In The

  Court of Appeals

For The

First District of Texas

  NO. 01-05-00469-CV

CAPITAL PACIFIC, L.L.C. and B. SCOTT FULLER, Appellants

V.

HUMBLE GARDEN, L.L.C.,; COURTNEY B. ROBERTS; MICHAEL J. AND CHERI L. CHAMP; JERRY AND JULIE STEINER; RICHARD G. AND BARBARA L. LINDSAY; PATRICK J. AND SHEILA A. FOLKINS; JEFFREY D. AND JOANN J. BOYD; ROLF R. AND LEE ANN PETERSON, AS TRUSTEES OF THE PETERSON FAMILY REVOCABLE TRUST OF 1992; HOLLY H. BUSSE; FOOD MART EUREKA, INC.; MARY ANN LUCCHESI; JAMES N. AND LINDA E. LUCCHESI; VP PROPERTIES, L.L.C.; AND DAVID P. JONES, Appellees

On Appeal from the 80th District Court

Harris County, Texas

Trial Court Cause No. 2004-58991

MEMORANDUM OPINION

          Appellants, Capital Pacific, L.L.C. and B. Scott Fuller, appeal from the denial of their special appearance. We affirm.

BACKGROUND

          This case stems from a real estate transaction concerning a piece of commercial property in Texas. Appellees, Humble Garden, L.L.C., Courtney B. Roberts, Michael J. and Cheri L. Champ, Jerry and Julie Steiner, Richard G. and Barbara L. Lindsay, Patrick J. and Sheila A. Folkins, Jeffrey D. and Joann J. Boyd, Rolf R. and Lee Ann Peterson, as trustees of the Peterson family revocable trust of 1992, Holly H. Busse, Food Mart Eureka, Inc., Mary Ann Lucchesi, James N. and Linda E. Lucchesi, VP Properties, L.L.C., and David P. Jones, a group of individual and institutional investors from California, Oregon, and Washington, were plaintiffs in the action below. Capital Pacific, L.L.C. (“Capital”), a real estate brokerage firm with its principal place of business in Oregon, and B. Scott Fuller (“Fuller”), a member of Capital and a resident of Oregon, were named defendants below.

          In 2003, Capital, via Fuller, entered into a contract with the co-defendants (“Texas Sellers”) to serve as broker with the “exclusive right to sell” Garden Ridge, a large retail store located on FM 9450 in Humble, Texas. Appellants marketed the property in a variety of ways, including a two-page advertisement that provided such information as the expected rental income from the property, the length of the lease, and other information relevant to a prospective purchaser. Appellants were further responsible for preparing a due diligence report for any “potential purchasers.” Additionally, Fuller traveled to Texas to meet with one of the Texas Sellers regarding the Garden Ridge store.

          According to an affidavit supplied by appellees, but disputed by appellants, appellants were involved in a conference call with, inter alia, Humble Garden and one of the Texas Sellers regarding the Garden Ridge store and its lease in connection with the property. After this conversation, appellees requested the due diligence report prepared by appellants and then tendered an offer to purchase the Garden Ridge property. From the sale of the property, appellants received a $102,000 commission from Charter Title, a Texas title company.

          Shortly after acquiring the Garden Ridge property, the tenant, from whom the appellees expected over a million dollars a year in rental income, filed for bankruptcy, which resulted in a substantial depreciation of the property’s value. Appellees charged that appellants and the Texas Sellers had material knowledge of the financial distress of the tenant and brought suit claiming common law fraud, statutory fraud in the sale of real estate, negligent misrepresentation, fraudulent inducement, and civil conspiracy to commit fraud.

          Appellants challenged personal jurisdiction by special appearance, which was denied by the trial court. Appellants then timely filed this interlocutory appeal. Capital, in its sole issue, contends that the evidence is legally and factually insufficient to support the trial court’s implied legal conclusion that specific or general jurisdiction lies. Fuller raises the same issue as applied to him in his individual capacity

STANDARD OF REVIEW

          The existence of personal jurisdiction is a question of law reviewed de novo by this court. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789 (Tex. 2002). However, this question must sometimes be preceded by resolving underlying factual disputes. Id. at 794. 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, 805-06 (Tex. 2002). If the appellate record contains the applicable trial record, these implied findings are not conclusive, and an appellant may challenge them for evidentiary sufficiency. BMC Software, 83 S.W.3d at 795. “For legal sufficiency challenges to personal jurisdiction, as long as there is more than a scintilla of evidence to support the finding, the no-evidence challenge fails.” Id. at 795.

PERSONAL JURISDICTION

          Personal jurisdiction over non-resident defendants is governed by Texas’s long-arm statute. Tex. Civ. Prac. & Rem. Code Ann. §§ 17.041–045 (Vernon Supp. 2004-05).   The long-arm statute allows Texas courts to exercise jurisdiction over a nonresident defendant that “does business” in the state. Id. at § 17.042. While the statute lists certain activities that fall within the definition of doing business, the list is not exhaustive. BMC Software, 83 S.W.3d at 795. 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.” Id. (citation omitted).

          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. Id. (citing Int’l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158 (1945)). 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)).

          “The purpose of the minimum-contacts analysis is to protect the defendant from being haled into court when its relationship with Texas is too attenuated to support jurisdiction.” Schlobohm v. Schapiro, 784 S.W.2d 355, 357 (Tex.1990). Therefore, we examine the defendant’s activities and expectations “in deciding whether it is proper to call it before a Texas court.” Am. Type, 83 S.W.3d at 806 (citation omitted). While not dispositive to our inquiry, foreseeability on the part of the defendant that his “conduct and connection with the forum are such that he should reasonably anticipate being haled into court there” is an important factor in the personal jurisdiction calculus. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S. Ct. 559, 567 (1980).

          Minimum contacts analysis is further divided into general and specific personal jurisdiction. CSR, Ltd. v. Link, 925 S.W.2d 591, 595 (Tex. 1996). Specific jurisdiction lies 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. General jurisdiction will attach when “a defendant’s contacts in a forum are continuous and systematic so that the forum may 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.

A. Specific Personal Jurisdiction over Capital

          Capital’s central contention is that any of its alleged liability results from acts that did not take place in Texas because “any representations by Appellants to Appellees occurred outside of Texas and were directed from Oregon towards California, Oregon, and/or Washington, not Texas.” That is, because any fraud or negligent misrepresentation—and any concomitant reliance upon such—occurred outside Texas, no specific personal jurisdiction lies. In support of this argument Capital relies on (1) BMC Software, 83 S.W.3d at 879; (2) an analysis of each piece of jurisdictional evidence independently from the others; (3) their allegation that the identity of the affiant, who testified to the conference call between, among others, Capital and appellees, is unknown to them; and (4) their contention that the mere presence of property within the forum is not enough for specific jurisdiction to attach.

          1. BMC Software

          BMC Software involved a Belgian citizen who, during negotiations with BMC Software Belgium, a wholly owned subsidiary of a Houston corporation, was promised a significant amount of stock options. BMC Software, 83 S.W.3d at 793. After he was terminated without the promised stock options, the Belgian citizen sued both the Belgian software company and its Houston parent for breach of contract, fraud, negligent misrepresentation, and declaratory relief, alleging that the Houston firm and its Belgian subsidiary conspired—in talks taking place in Houston—to deprive him of the stock options. Id. at 793.

          The Belgian subsidiary filed a special appearance that was eventually upheld by the Texas Supreme Court. Id. at 789. The court noted that the Belgian company negotiated with the plaintiff, a foreigner, in Europe; that the plaintiff accepted his offer to work in Europe and was employed in Belgium; and that the Belgian subsidiary made no representations to the plaintiff in Texas and that “he did not rely to his detriment on the conversation in Texas.” Id. at 797.

          Capital claims that this case is dispositive, pointing to the Texas Supreme Court’s language stating that “the nature of the claims demonstrate that they can only arise from [the Belgian subsidiary’s] contact with [the plaintiff], which all occurred outside Texas.” Id. at 797. This case, however, is not as decisive as Capital’s argument implies. While the BMC Software court was clearly concerned with haling into court a Belgian corporation with no ties to the forum—other than simply being owned by a Texas corporation—this is not analogous to the instant case.

          Capital attempts to reconcile the BMC Software facts with its facts by arguing that (1) it was not a party to the actual sale of the property and (2) any contact it had with Humble Garden occurred in Oregon or California. These arguments, however, selectively view the present factual situation and “focus[es] on only part of the overall situation.” Glattly v. CMS Viron Corporation, No. 01-04-00998-CV, 2005 WL 1111462, at *7 (Tex. App—Houston [1st Dist.] May 5, 2005, no pet.).

          As an initial matter, appellees have alleged that Capital did have contact with the forum, and it is undisputed that (1) Fuller, in his role as an employee of Capital, visited the Garden Ridge property in Texas—the property that is at the heart of this lawsuit; (2) Capital prepared a due diligence report regarding the subject property; and (3) Capital received the $102,000 commission for sale of a Texas property from a Texas title company. It is the quality and nature of the defendant’s contacts, rather than their number, that is important to the minimum contacts analysis. Guardian Royal Exch. Assurance., Ltd. v. English China Group, P.L.C., 815 S.W.2d 223, 230 n.11 (Tex. 1991). Capital’s undisputed actions are all related to an activity—selling the property—within the forum.

          Moreover, the two contracts here—the brokerage contract between appellant and the Texas Sellers and the contract for the sale of property—were interrelated. This is especially so because Capital was closely involved with the Texas Sellers in marketing the property and preparing the due diligence report. See Glattly, No. 01-04-00998-CV, at *6-7 (rejecting appeal from denial of special appearance where appellant was not party to one of a series of contracts because each contract involved in the dispute played material role in bringing overall transaction to fruition). Capital’s alleged tortious conduct “related to activities in Texas and could potentially have a significant effect in that forum.” Id. at *7.

          2. Jurisdictional Evidence

          Appellant’s brief separates each piece of jurisdictional evidence to support specific jurisdiction and then argues that each piece of evidence, standing alone, is not enough for jurisdiction to attach.

          However, the jurisdictional calculus is not performed in an evidentiary vacuum. It is clear that Capital’s liability, if any, is related to an activity conducted within the forum. See BMC Software, 83 S.W.3d at 796. As mentioned above, Capital was the exclusive broker for the Garden Ridge property located in Texas, Fuller visited the Garden Ridge property that forms the basis of this controversy, Capital prepared a due diligence report regarding the subject property, and Capital received the $102,000 commission for sale of the Texas property from a Texas title company. To reiterate, all of this conduct is related to an activity—selling the property—within the forum. See Aviles v. Kunkle, 978 F.2d 201 (5th Cir. 1992) (holding that to exercise specific jurisdiction, defendants’ forum contacts that are asserted as basis for jurisdiction must be related to subject matter of controversy); Cent. Tex. Cattle Co. v. McGuiness, 842 S.W.2d 388 (Tex. App.—San Antonio, 1992, no writ) (holding that Texas courts have specific jurisdiction over nonresident defendant if his activities in Texas are isolated, but cause of action arises from those activities).

          3. The Affidavit

          Capital further claims that it does not know the author of the conference-call affidavit, C. Todd Endres, stating that he is “an unknown individual who is not a party to this action.” However, appellees point out that, in addition to the affidavit, the record also contains a letter concerning the contract for sale of the Garden Ridge property from Endres to one of the Texas Sellers on which Fuller was copied. Moreover, that same letter is stamped “Read & Approved by B. Scott Fuller.” Capital argues alternatively that even if this affidavit is credible, it is insufficient to support specific jurisdiction because the conference call took place in Oregon and California, not Texas. Guardian Royal Exch., 815 S.W.2d at 231.

          We disagree. Capital quotes BMC Software for the proposition that a defendant’s activities must be “conducted within the forum.” However, the full quote reads that such jurisdiction is “established if 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 (emphasis added). As established above, Capital’s activities fall squarely within the BMC Software Court’s jurisdictional admonition.

          4. Presence of Property

          Capital contends that because the conference call, the marketing, and all their other activities connected with the Garden Ridge property were conducted outside the forum, the only possible basis for jurisdiction is the physical location of the property. Moreover, Capital argues, none of the appellees are residents of Texas, so no misrepresentations could have been directed at Texas.

          We note that, as a preliminary matter, the fact that no appellees are Texas residents is not as important as Capital’s argument implies. First, the minimum contacts test asks us to focus on “whether the defendant has established minimum contacts with the forum state.” BMC Software, 83 S.W.3d at 795 (citing to Int’l Shoe, 326 U.S. 310, 316, 66 S. Ct. 154, 158 (1945) (emphasis added). As discussed above, Capital has established just those sorts of contacts. Additionally, Capital gives us no compelling reason why a California or Oregon court should, or could, exercise jurisdiction over a dispute about real estate in Texas.

          Second, Capital’s argument that the only possible basis for jurisdiction is the physical location of the property fails. As support, Capital cites the United States Supreme Court case Shaffer v. Heitner for the proposition that the mere “presence of property alone would not support the State’s jurisdiction.” 433 U.S. 186, 209, 97 S. Ct. 2569, 2582 (1997). However, the Court went on to say that “the presence of property in a State may bear on the existence of jurisdiction by providing contacts among the forum State, the defendant, and the litigation. Id., 433 U.S. at 207, 97 S. Ct. at 2581.

          That is exactly the case here—it is not simply because the Garden Ridge property is physically in Texas that specific jurisdiction lies, but that the location of the property forms the heart of the underlying lawsuit here. In addition to the location of the property, Capital’s acts of traveling to Texas to inspect the property, preparing a due diligence report, and receiving a financial benefit, in the form a substantial commission, from the sale of the Garden Ridge property, “provid[e] contacts among the forum State, the defendant, and the litigation.” See id.

          Both the United States and Texas Supreme Courts have held that “it is ‘the defendant’s conduct and connection with forum’ ” that are critical. Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 789 (Tex. 2005) (citing Burger King Corp., 471 U.S. at 474, 105 S. Ct. at 2183 (1985)). Moreover, it is the quality and nature of the defendant’s contacts, rather than the number, that is important to the minimum contacts analysis. Guardian, 815 S.W.2d at 230 n.11. Since there is “more than a scintilla of evidence” to support the trial court’s findings that Capital’s conduct and activities were both within and directed toward Texas, we hold that specific personal jurisdiction exists over Capital. BMC Software, 83 S.W.3d at 795. Further, because we hold that Texas courts have specific personal jurisdiction over Capital, we need not reach Capital’s alternative challenge to general personal jurisdiction. Accordingly, we overrule Capital’s sole point of error.

B. Specific Personal Jurisdiction Over Fuller

          Fuller argues that specific or general jurisdiction over him is unconstitutional, and any actions taken by him are protected by the “fiduciary shield” doctrine.

          1. Due Process Argument

          Fuller contends that appellees have attempted to “bootstrap” the personal jurisdiction Texas courts might have over Capital and impute it to him. He points us to Siskind v. Villa Foundation for Education, Inc. for the proposition that attempting to satisfy the minimum contacts in this way runs afoul of due process concerns. 642 S.W.2d 434 (Tex. 1982). The Siskind Court refused to find jurisdiction over the non-resident employees of a school that, inter alia, advertised its programs in Texas and mailed informational packets into Texas because

absent some allegation of a specific act in Texas, or one with reasonable foreseeable consequences within state’s borders, a nonresident employee of a foreign corporation cannot be sued in Texas simply because his or her employer solicits business in Texas.

Siskind, 642 S.W.2d at 438 (quoting Rush v. Savchuk, 444 U.S. 320, 331-32, 100 S. Ct. 571, 579 (1980) (but noting that specific personal jurisdiction attached as to school).

          However, in appellee’s response to Fuller’s special appearance, it is clear that Fuller performed acts of his own volition in Texas. See Stein v. Deason, 165 S.W.3d 406, 413 (Tex. App.—Dallas 2005, no pet. h.) (holding that courts must also consider jurisdictional facts alleged in response to special appearance in addition to live petition). It is uncontroverted that Fuller personally traveled to Texas to assess the property that is at the heart of this controversy. Again, it is the quality and nature of the defendant’s contacts, rather than their number, that is important to the minimum contacts analysis. Guardian, 815 S.W.2d at 230 n.11. Therefore, Siskind’s reasoning is not applicable to the instant facts, and no unconstitutional bootstrapping occurred.

          2. Fiduciary Shield Doctrine

          Fuller also argues that the fiduciary shield doctrine protects him from personal jurisdiction. This doctrine holds that an employee of a company is protected from personal jurisdiction when the employee’s actions have been on behalf of his employer. Garner v. Furmanite Australia Pty., Ltd., 966 S.W.2d 798, 803 (Tex. App.—Houston [1st Dist.] 1998, pet. denied). However, Texas courts applying the “fiduciary shield doctrine have expressly limited its application to attempts to exercise general jurisdiction over a nonresident defendant.” See, e.g., Wright v. Sage Eng’g, Inc., 137 S.W.3d 238, 250 (Tex. App.—Houston [1st Dist.] 2004 pet. denied); SITQ E.U., Inc. v. Reata Rests., Inc., 111 S.W.3d 638 (Tex. App.—Fort Worth 2003, pet. denied). The fiduciary shield doctrine does not protect a corporate officer from specific personal jurisdiction as to intentional torts or fraudulent acts for which he may be individually liable. Wright, 137 S.W.3d at 250; see also Gen. Elec. Co. v. Brown & Ross Int’l Distribs., Inc., 804 S.W.2d 527, 532-33 (Tex. App.—Houston [1st Dist.] 1990, writ denied) (holding that corporate officers who had, inter alia, made misrepresentations to customers were subject to personal jurisdiction in Texas). It is well settled that a corporate agent can be held individually liable for fraudulent statements or knowing misrepresentations even when the agent makes them in the capacity of a corporate representative. Wright, 137 S.W.3d at 250.

          It “is ‘the defendant’s conduct and connection with the forum’ that are critical.” Michiana Easy Livin’ Country, 168 S.W.3d at 389 (citing Burger King, 471 U.S. at 474, 105 S. Ct. at 2176 (1985)). To determine such, we need only ascertain whether there is “more than a scintilla” of evidence to support the trial court’s finding that Fuller performed individual acts that allow for specific jurisdiction. BMC Software, 83 S.W.3d at 795, 796. Appellees’ evidence satisfies this burden. Again, it is uncontroverted that Fuller personally traveled to Texas to assess the property and that he prepared relevant tax and business information regarding the Garden Ridge property that is at the heart of this litigation. We hold that, as to Fuller, specific personal jurisdiction lies. Further, because we hold that Texas courts have specific personal jurisdiction over Fuller, we need not reach Fuller’s alternative challenge to general personal jurisdiction. Wright, 137 S.W.3d at 251, n.11.

          We overrule Fuller’s sole issue.

  CONCLUSION

          The decision of the trial court is affirmed in all respects.

                                                                        Sam Nuchia

                                                                        Justice

Panel consists of Justices Nuchia, Jennings, and Higley.