IMV Technologies and IMV International Corporation D/B/A IMV Technologies USA v. Inguran, LLC D/B/A Sexing Technologies ( 2013 )

IN THE
TENTH COURT OF APPEALS
No. 10-13-00150-CV
IMV TECHNOLOGIES AND IMV
INTERNATIONAL CORPORATION D/B/A
IMV TECHNOLOGIES USA,
Appellants
v.
INGURAN, LLC D/B/A SEXING
TECHNOLOGIES,
Appellee
From the 85th District Court
Brazos County, Texas
Trial Court No. 12-001420-CV-85
MEMORANDUM OPINION
This is a dispute between a Texas company and companies in Minnesota and
France about where a lawsuit will be tried. Inguran, LLC d/b/a Sexing Technologies, a
company which has its principal place of business in Navasota, Texas, possesses
technology which allows it to sort semen by sex for use in artificial insemination for the
breeding of cattle. Inguran uses this technology in its various facilities around the
country and in Canada. IMV Technologies (IMV) is a French manufacturer of straw
filling machines which have been used by Inguran in its semen sorting business. IMV
International Corporation d/b/a IMV Technologies USA (IMV USA) is a Minnesota
company which purchases these machines from manufacturers like IMV for resale in
the United States.
In January of 2011, Inguran purchased six new models of a straw filling machine,
the MX5, from IMV USA for use in Inguran’s facilities. One MX5 was delivered to
Navasota. The remaining five machines were delivered to Inguran’s facilities in other
states. Six more machines were ordered but not delivered because in the meantime,
Inguran had received reports from its facilities that the straws were not being filled or
sealed properly. The machine in Navasota was also not filling and sealing the straws
properly. Inguran’s customers also started complaining and demanding refunds.
Inguran sued IMV USA and IMV in Brazos County, Texas. Both IMV USA and
IMV filed special appearances. After a hearing on IMV USA’s special appearance, the
trial court, in one order, denied both IMV USA’s and IMV’s special appearance.
Because the trial court did not err in denying IMV USA’s special appearance but erred
in denying IMV’s special appearance, we affirm in part and reverse and remand in part
the trial court’s order.
PERSONAL JURISDICTION
In five issues, IMV USA asserts that the trial court erred in denying its special
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appearance. In one issue, IMV makes the same assertion.
Personal jurisdiction is a question of law which we review de novo. Kelly v.
General Interior Constr., Inc., 301 S.W.3d 653, 657 (Tex. 2010); BMC Software Belgium, N.V.
v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). Texas courts have personal jurisdiction
over a nonresident defendant when (1) the Texas long-arm statute provides for it, and
(2) the exercise of jurisdiction is consistent with federal and state due process
guarantees. Spir Star AG v. Kimich, 310 S.W.3d 868, 872 (Tex. 2010); Moki Mac River
Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex. 2007).
Under the Texas long-arm statute, the plaintiff has the initial burden to plead
sufficient allegations to confer jurisdiction. Kelly, 301 S.W.3d at 658; Retamco Operating,
Inc. v. Republic Drilling Co., 278 S.W.3d 333, 337 (Tex. 2009); American Type Culture
Collection, Inc. v. Coleman, 83 S.W.3d 801, 807 (Tex. 2002). The defendant seeking to
avoid being sued in Texas then has the burden to negate all potential bases for
jurisdiction pled by the plaintiff. See id. When, as here, the trial court does not make
findings of fact and conclusions of law in support of its ruling, "’all facts necessary to
support the judgment and supported by the evidence are implied.’" Retamco, 278
S.W.3d at 337 (quoting BMC Software, 83 S.W.3d at 795 (citations omitted)).
STEP ONE—THE LONG ARM STATUTE
The Texas long-arm statute provides:
In addition to other acts that may constitute doing business, a nonresident
does business in this state if the nonresident:
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(1) contracts by mail or otherwise with a Texas resident and either party is
to perform the contract in whole or in part in this state;
(2) commits a tort in whole or in part in this state; or
(3) recruits Texas residents, directly or through an intermediary located in
this state, for employment inside or outside this state.
TEX. CIV. PRAC. & REM. CODE ANN. § 17.042 (Vernon 2008). The statute's broad doing-
business language "allows the statute to reach as far as the federal constitutional
requirements of due process will allow." Retamco, 278 S.W.3d at 337 (quoting Moki Mac,
221 S.W.3d at 575 (citations omitted)); accord Michiana Easy Livin' Country, Inc. v. Holten,
168 S.W.3d 777, 788 (Tex. 2005). Therefore, we only analyze whether IMV USA’s and
IMV’s acts would bring them within Texas' jurisdiction consistent with constitutional
due process requirements. See Moki Mac, 221 S.W.3d at 575 (citations omitted).
STEP TWO—CONSTITUTIONAL DUE PROCESS GUARANTEES
Under a constitutional due-process analysis, personal jurisdiction is achieved
when (1) the non-resident defendant has established minimum contacts with the forum
state, and (2) the assertion of jurisdiction complies with "’traditional notions of fair play
and substantial justice.’" Moki Mac, 221 S.W.3d at 575 (quoting Int'l Shoe Co. v.
Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 90 L. Ed. 95 (1945)). We focus on the
defendant's activities and expectations when deciding whether it is proper to call the
defendant before a Texas court. Int'l Shoe Co., 326 U.S. at 316.
IMV Technologies v. Inguran, LLC Page 4
A. Minimum Contacts
A defendant establishes minimum contacts with a state when it "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,
78 S. Ct. 1228, 2 L. Ed. 2d 1283 (1958) (citing Int'l Shoe Co., 326 U.S. at 319). "The
defendant's activities, whether they consist of direct acts within Texas or conduct
outside Texas, must justify a conclusion that the defendant could reasonably anticipate
being called into a Texas court." Am. Type Culture Collection, 83 S.W.3d at 806 (citing
World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S. Ct. 559, 62 L. Ed. 2d
490 (1980)).
A nonresident's contacts can give rise to either specific or general jurisdiction.
Am. Type Culture Collection, 83 S.W.3d at 806. Inguran argued only specific jurisdiction
in its petition and here in response to IMV USA’s and IMV’s appeal. A court has
specific jurisdiction over a defendant if its alleged liability arises from or is related to an
activity conducted within the forum. Spir Star AG v. Kimich, 310 S.W.3d 868, 873 (Tex.
2010), CSR Ltd. v. Link, 925 S.W.2d 591, 595 (Tex. 1996). Unlike general jurisdiction
which requires a "more demanding minimum contacts analysis," CSR Ltd., 925 S.W.2d
at 595, specific jurisdiction "’may be asserted when the defendant's forum contacts are
isolated or sporadic, but the plaintiff's cause of action arises out of those contacts with
the state.’" Spir Star AG, 310 S.W.3d at 873 (quoting 4 CHARLES ALAN WRIGHT &
IMV Technologies v. Inguran, LLC Page 5
ARTHUR R. MILLER, FEDERAL PRACTICE & PROCEDURE § 1067.5 (3d ed. 2002)).
In such cases, "we focus on the 'relationship among the defendant, the forum[,] and the
litigation.'" Spir Star AG, 310 S.W.3d at 873 (quoting Moki Mac, 221 S.W.3d at 575-76).
Specific jurisdiction arises when (1) the defendant purposefully avails itself of
conducting activities in the forum state, and (2) the cause of action arises from or is
related to those contacts or activities. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472,
105 S. Ct. 2174, 85 L. Ed. 2d 528 (1985); National Indus. Sand Ass'n v. Gibson, 897 S.W.2d
769, 774 (Tex. 1995).
1. IMV USA
Inguran alleged in its petition breach of contract and various torts as causes of
action against IMV USA. Inguran alleged that IMV USA forwarded an offer to sell six
MX5 machines to Inguran at its office in San Antonio. Inguran accepted the offer by
forwarding a purchase order for the six MX5 machines to be shipped to Navasota. One
MX5 was delivered to Navasota where Travis Most, an employee of IMV USA, installed
and tested it. Three months later, Travis again traveled to Navasota to repair the MX5
installed there. Inguran alleged in its petition that IMV USA breached the contract
because the MX5 in Navasota was failing to fill and seal the straws adequately.
Specifically, it alleged, the third needle was failing to fill the straws completely.
Contacts Prior to the MX5 Purchase
As to minimum contacts, Inguran attached to its response to IMV USA’s special
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appearance, and, without objection, introduced into evidence at the hearing on IMV
USA’s special appearance testimony and documentation that IMV USA has had an
ongoing relationship with Inguran since 2005 and had approximately 250 other
customers in Texas. Since 2005, Inguran has sent purchase orders to IMV USA and IMV
USA sends Inguran the product ordered and an invoice. Inguran’s purchases are billed
to Texas and payment comes from Texas. IMV USA communicates with Inguran by
telephone approximately once a week and corresponds by email more than once a
week. In 2005 and 2006, Texas represented 11.9% and 11.79%, respectively, of IMV
USA’s revenue. In 2011 and 2012, Inguran was in the top five of purchasers of straws
from IMV USA. Further, of the 11 MX5s sold by IMV USA, nine were sold to Inguran.
In 2011, IMV USA billed Inguran for $1.1 million in products sold.
Purchase of the MX5
Inguran also attached and introduced the affidavit of its Chief Operating-Chief
Executive Officer, Juan Moreno. Moreno stated that IMV USA called him sometime in
2010 to tell him that IMV was now manufacturing, and IMV USA was now selling, the
MX5. IMV USA then offered to have Inguran test one of the machines. The MX5 was
sent to Navasota, and after an initial trial period, Inguran agreed to acquire a series of
machines from IMV USA. Prior to the contact by IMV USA, Moreno did not know IMV
USA and IMV were manufacturing and selling the MX5.
IMV USA did not negate either in its special appearance or at the hearing on its
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special appearance any of the jurisdictional bases alleged by Inguran in its petition.
In light of the pleadings on file and evidence introduced at the special
appearance hearing, we conclude that IMV USA purposefully availed itself of
conducting activities in Texas, and the breach of contract claim arises from or is related
to those contacts or activities. Thus, IMV USA’s contacts are sufficient to support
specific jurisdiction.
2. IMV
IMV is a French company which was alleged to have manufactured the MX5 at
the center of this litigation. Inguran did not allege a breach of contract against IMV but
only alleged various torts by IMV. Those torts are: breach of express warranty for
goods, breach of implied warranty of fitness, breach of implied warranty of
merchantability, strict liability, and negligent misrepresentation.
Two of these causes of action, breach of express warranty for goods and
negligent misrepresentation, were based on alleged representations made by IMV that
the MX5: 1) would adequately fill and seal straws; 2) was more cost-efficient; 3) would
result in less raw material being lost during the filling and sealing process; 4) was able
to produce/fill more straws and thus produce more income than conventional filling
equipment; 5) would be maintenance-free; 6) would be a more automated process; and
7) would require little or no attention by an operator. Inguran alleged that these
misrepresentations occurred in 2010 when IMV USA and IMV “reached out” to Inguran
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personnel in Navasota, Texas. Inguran also alleged in its breach of implied warranty of
fitness claim that IMV knew for what purposes Inguran was using the MX5 and that
IMV knew or had reason to know that Inguran was relying on IMV’s skill or judgment.
IMV responded with its special appearance and attached an affidavit of its Chief
Financial Officer, Frederic Keller. Keller stated that IMV does not market or distribute
products to the United States. IMV manufactures MX5 machines in France for
distribution worldwide. Machines for sale in the United States are shipped from France
to the distributor in the State of Minnesota. The distributor for the United States is IMV
USA and IMV does not in any way control or direct the activity of IMV USA with
respect to the sale of products in the United States. IMV was not involved in any
subsequent distribution of machines to Texas and does not design its products for use
in Texas. It does not advertise or market its products in Texas and it makes no direct
sale of products to Texas. IMV has not entered into any contracts with Inguran and was
not a party to the contract for the sale of the MX5 at issue. IMV also averred that it does
not do business in Texas, does not maintain an office in Texas, and has no agents in
Texas. IMV also attached deposition testimony of the corporate representative of IMV
USA who stated that prior to August of 2011, which is during the time Inguran
purchased the MX5 from IMV USA, IMV USA bought the MX5 machines from another
manufacturer, Cryovet.
Inguran did not respond to IMV’s special appearance and no hearing was held
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on IMVs special appearance. Even if we were to consider the evidence presented in
Inguran’s response to IMV USA’s special appearance and at the hearing on IMV USA’s
special appearance, which we do not, Inguran’s evidence belies jurisdiction. The
affidavit of Inguran’s Chief Operating-Chief Executive Officer states only that IMV USA
contacted him about the MX5. He does not say anything about IMV contacting him or
any representations regarding the quality and ability of the machine. Further, Inguran
attaches the same portion of the deposition testimony of the corporate representative of
IMV USA who stated that prior to August of 2011, the MX5 machines were purchased
from a different manufacturer than IMV.
As to the breach of implied warranty of merchantability and strict liability causes
of action, Inguran alleged that the MX5 was not merchantable at the time it left IMV’s
possession and was defective at the time it left IMV’s possession. Inguran failed to
plead that any of these acts occurred in Texas. The mere existence of a cause of action
does not automatically satisfy jurisdictional due process concerns. Kelly v. General
Interior Constr., Inc., 301 S.W.3d 653, 660 (Tex. 2010). Because of Inguran’s pleading
failure, IMV could, and did, meet its burden to negate all bases of jurisdiction by
proving through the affidavit of its Chief Financial Officer that it is incorporated in
France, its principal place of business is in France, and it does not do business of any
kind in Texas. See Siskind v. Villa Foundation for Education, Inc., 642 S.W.2d 434, 438 (Tex.
1982). Again, Inguran did not challenge IMV’s proof, nor did it present any responsive
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evidence establishing the requisite link with Texas.
In light of Inguran’s pleadings and the evidence attached to IMV’s special
appearance, we conclude that IMV did not purposefully avail itself of conducting
activities in Texas. Thus, IMV’s contacts are not sufficient to support specific
jurisdiction, and IMV’s special appearance should have been granted.
IMV’s issue is sustained.
B. Traditional Notions of Fair Play and Substantial Justice
Having determined that at least IMV USA has minimum contacts with Texas
sufficient to support specific jurisdiction, we must now determine whether an assertion
of jurisdiction over IMV USA comports with "traditional notions of fair play and
substantial justice." Guardian Royal Exchange Assur., Ltd. v. English China Clays, P.L.C.,
815 S.W.2d 223, 228 (Tex. 1991). "Only in rare cases, however, will the exercise of
jurisdiction not comport with fair play and substantial justice when the nonresident
defendant has purposefully established minimum contacts with the forum state." Id. at
231 (citing Burger King, 471 U.S. at 477). Nonetheless, we still consider: (1) the burden
on the defendant; (2) the interests of the forum state in adjudicating the dispute; (3) the
plaintiff's interest in obtaining convenient and effective relief; (4) the interstate judicial
system's interest in obtaining the most efficient resolution of controversies; and (5) the
shared interest of the several states in furthering fundamental substantive social
policies. Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 341 (Tex. 2009);
IMV Technologies v. Inguran, LLC Page 11
Guardian Royal, 815 S.W.2d at 228, 231. To defeat jurisdiction, IMV USA must present a
compelling case that the presence of some consideration would render jurisdiction
unreasonable. Spir Star AG v. Kimich, 310 S.W.3d 868, 878-879 (Tex. 2010).
IMV USA contends that it will be unduly burdened to try the case in Texas
because it is a small company and all of it employees who may have knowledge of the
relevant facts reside in Minnesota. However, IMV USA had no previous problem
sending employees to Texas to set up the MX5, train Inguran’s employees, run tests on
the MX5, and repair the MX5; all in Texas. We do not perceive an undue burden, then,
in trying a lawsuit in Texas. IMV USA also claims that Texas has little interest in
adjudicating the dispute between IMV USA and Inguran. However, Texas has an
interest in adjudicating disputes involving Texas residents, and Texas is a convenient
forum to adjudicate this dispute. See Lewis v. Indian Springs Land Corp., 175 S.W.3d 906,
919 (Tex. App.—Dallas 2005, no pet.). Further, IMV USA contends that because the
MX5 was manufactured in France, the forum with the greatest interest in resolution of
the dispute is France. The fact that the MX5 may have been manufactured in France
cannot, by itself, defeat jurisdiction. See Spir Star, 310 S.W.3d at 879. Further, Texas has
an interest in exercising jurisdiction over controversies arising from injuries a Texas
resident sustains from products that are purposefully brought into the state and
purchased by Texas companies. Id.
Weighing the various factors, we find that the exercise of specific jurisdiction
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over IMV USA by a Texas court does not offend traditional notions of fair play and
substantial justice.
IMV USA’s issues are overruled.
CONCLUSION
Because we have overruled IMV USA’s issues on appeal, the portion of the trial
court’s order which denies IMV USA’s special appearance is affirmed. Because we have
sustained IMV’s issue on appeal, the portion of the trial court’s order which denies
IMV’s special appearance is reversed and remanded to the trial court to render an order
which grants IMV’s special appearance.
TOM GRAY
Chief Justice
Before Chief Justice Gray,
Justice Davis, and
Justice Scoggins
Affirmed in part and reversed and remanded in part
Opinion delivered and filed November 14, 2013
[CV06]
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