glencoe-capital-partners-ii-lp-terence-s-malone-louis-j-manetti ( 2008 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-08-009-CV
GLENCOE CAPITAL PARTNERS II, L.P., APPELLANTS
TERENCE S. MALONE, LOUIS J. MANETTI,
RICHARD A. COONROD, DAVID S. EVANS, AND
RONALD D. WRAY
V.
HAROLD GERNSBACHER, REUBEN N. PALM, APPELLEES
MICHAEL N. PALM, SHANNON PALM, JAMES G.
PALM, SUSAN PALM, MARK R. PALM, PAMELA
PALM, THOMAS L. PALM, MAUREEN PALM,
RICHARD F. PALM, KRISTIN PALM, ROBERT N.
ZINTGRAFF, AND ZINTGRAFF INVESTMENTS, LTD.
(BY ZINTGRAFF MANAGEMENT TRUST AND
ROBERT N. ZINTGRAFF, TRUSTEE)
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FROM THE 141ST DISTRICT COURT OF TARRANT COUNTY
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OPINION
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In this interlocutory appeal, Appellants challenge the trial court’s order
overruling their special appearances. We affirm.
I. Background
This case arises from a series of complex transactions involving the
acquisition and financing of several food service equipment supply companies.
Following are the allegations and jurisdictional facts relevant to this appeal.
A. Appellees’ Allegations
Appellees—Gernsbacher, Zintgraff, and the Palms—are former
shareholders in what were independent food service equipment supply
companies. Gernsbacher, a Texas resident, was a shareholder in
Gernsbacher’s, Inc., a Texas corporation based in Fort Worth. Zintgraff, also
a Texas resident, was a shareholder in Top of the Table, Inc., a Texas
corporation based in San Antonio. The Palms, all Minnesota residents, were
shareholders in Palm Brothers, Inc., a corporation based in Minnesota.
In 2000, Strategic Equipment and Supply Corporation (“SESC”), a
Delaware corporation with its corporate offices in Arizona before 2001 and in
Dallas after, acquired Gernsbacher’s, Top of the Table, Palm Brothers, and other
food service equipment supply companies. Appellant Glencoe Partners II, L.P.
(“Glencoe”), whose general partner resides in Illinois, was SESC’s majority
shareholder. An investment group led by Glencoe financed SESC’s acquisition
of the companies, and LaSalle Bank and others provided additional financing.
Gernsbacher, Zintgraff, and the Palms received a collective total of $8.2 million
2
in SESC stock plus notes made by SESC in the original aggregate amount of
$9.5 million (“the Shareholder Notes”).
After the acquisitions, SESC’s nine-member board of directors consisted
of three Glencoe employees, including Appellant Wray (an Illinois resident);
three members of the “Glencoe Executive Network” (a group of senior
executives pooled by Glencoe to serve at Glencoe’s pleasure on the boards of
Glencoe-controlled companies), including Appellants Malone (a Michigan
resident) and Coonrod (a Minnesota resident); and three former shareholders
of the acquired companies, namely, Gernsbacher, Zintgraff, and Mike Palm. 1
Gernsbacher and Zintgraff continued to run their respective “divisions” of SESC
from their offices in Fort Worth and San Antonio.
SESC failed to perform as well as expected. Appellants represented to
Appellees in September 2001 that LaSalle Bank had demanded an immediate
additional equity investment of $6 million as a condition of maintaining its
relationship with SESC. Appellants decided to raise the equity investment
1
… Appellant Evans, an Illinois resident and Glencoe’s CEO, served as an
SESC director from September 2000 through March 2002 and as SESC’s vice
president from January 2000 though 2005. Appellant Manetti (also an Illinois
resident) has been a member of Glencoe Capital’s senior management since the
summer of 2001 and served as an SESC director from November 2001 through
March 2002.
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through the sale of additional notes (“the New Notes”). The events surrounding
the issuance of the New Notes lie at the heart of Appellees’ claims.
Glencoe enlisted a Chicago investment banking firm, Lincoln Partners, to
prepare a “fairness opinion” concerning the fairness of the New Notes
transaction to SESC’s shareholders. Appellees allege that Lincoln had extensive
ties to Glencoe and was not independent and impartial, despite Lincoln’s
assertions to the contrary. Lincoln furnished three fairness opinions to SESC
shareholders in November and December 2001.
Appellees contend that Appellants orally misrepresented the nature and
effect of the New Notes in multiple SESC board meetings, in which
Gernsbacher and Zintgraff participated by telephone from Texas, and that
Appellants and Lincoln misrepresented the terms of the New Notes in writings,
including the fairness opinions, that Appellants and Lincoln mailed to
Gernsbacher and Zintgraff in Texas. Appellees allege that, among other things,
Appellants represented that the New Notes would be paid if SESC sold all of its
assets. They further allege that Appellants later secretly changed the terms of
the New Notes to make them payable in the event of a sale only if 80% or
more of the holders of the New Notes approved payment. Gernsbacher and
Zintgraff eventually purchased a total of $275,000 worth of the New Notes
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when the notes were issued in March 2002. Glencoe purchased or controlled
80% of the New Notes.
SESC sold all of its operating assets to SESC Acquisition, Inc. in 2005.
SESC paid nothing to Gernsbacher, Zintgraff, and the Palms on the Shareholder
Notes, and it paid nothing to Gernsbacher and Zintgraff on the New Notes.
Appellees sued Appellants and others in Tarrant County, Texas, alleging
causes of action for breach of fiduciary duties, fraud, and violation of the
fraudulent transfers act. The gist of their allegations is that Appellants colluded
to render worthless the SESC stock and notes held by Appellees. Appellees
seek actual damages, exemplary damages, and recession of the New Notes.
B. Special Appearances
Appellants filed special appearances, see Tex. R. Civ. P. 120a, and each
individual Appellant filed a supporting affidavit. In his affidavit, Coonrod stated
that he had participated in several SESC board meetings between August 2001
and February 2002; Gernsbacher and Zintgraff participated by telephone in
several of the board meetings; Coonrod did not know the locations from which
either Gernsbacher or Zintgraff participated in the telephonic meetings; he never
telephoned Gernsbacher or Zintgraff for any SESC board meeting; he did not
draft documents related to the New Notes; and he did not mail any documents
related to the New Notes to Gernsbacher or Zintgraff. Malone’s, Manetti’s,
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Wray’s, and Evans’s affidavits recite the same essential averments as
Coonrod’s, except Malone’s explains that he served as chairman of SESC’s
board from January 2000 until early 2005 and stated that while he did draft a
letter concerning the New Notes that was sent to all SESC shareholders in
January 2002, he did not draft or prepare other materials related to the New
Notes.
Appellants also submitted the affidavit of Beth A. Satterfield, Glencoe
Capital’s CFO and COO and SESC’s former assistant secretary. She stated that
prior to each SESC board meeting, a toll-free telephone number was circulated
to the potential participants, including Gernsbacher and Zintgraff, so that they
could call into the meeting.
Gernsbacher testified at the hearing on the special appearances. He said
that after SESC acquired Gernsbacher’s, Inc., he continued to work at
Gernsbacher’s as a division of SESC and served as an SESC director. He
testified that he participated in SESC board meetings telephonically. When
asked whether he was in Texas during the meetings, he testified that he
“presume[d] [he] was in Texas . . . that’s where [he] normally [was].” He
further testified that “normally [the directors] had a few minutes where [they
would] talk before the meetings, and [they] would discuss where people were
and what they were doing.” Gernsbacher said that Appellants made
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misrepresentations during these meetings concerning the state of SESC and the
New Notes transaction.
Zintgraff testified via affidavit. He averred that all individual Appellants
were fully aware that both Top of the Table and Gernsbacher’s, Inc. were
located in Texas and had their principal offices in Texas and that both
Gernsbacher and Zintgraff were Texas residents. Zintgraff described in detail
a series of board meetings between October 2001 and February 2002, in which
he participated by telephone from his San Antonio office. He stated that during
the meetings, each of the individual Appellants misrepresented SESC’s financial
condition and the supposedly urgent need for new capital at the insistence of
La Salle. Zintgraff averred that the individual Appellants either made
misrepresentations, failed to correct misrepresentations, or directed his
attention to written misrepresentations concerning the New Notes during phone
conferences in which he participated from Texas.
On December 21, 2007, the trial court denied all of Appellants’ special
appearances. This appeal followed.
II. Discussion
Appellants argue that the trial court erred by denying their special
appearances (1) because there is legally and factually insufficient evidence that
they purposefully availed themselves of the privilege of conducting activities in
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Texas and Appellees’ claims do not arise out of any contacts Appellants may
have made with Texas, and (2) because the exercise of personal jurisdiction
does not comport with the due process requirements of fair play and substantial
justice. 2
A. Burden of Pleading and Standard of Review
The plaintiff bears the initial burden of pleading sufficient allegations to
bring a nonresident defendant within the provisions of the Texas long-arm
statute. Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex.
2007); BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 793 (Tex.
2002); TravelJungle v. Am. Airlines, Inc., 212 S.W.3d 841, 845 (Tex.
App.—Fort Worth 2006, no pet.); Michel v. Rocket Eng’g Corp., 45 S.W.3d
658, 668 (Tex. App.—Fort Worth 2001, no pet.). Upon filing a special
appearance, the nonresident defendant assumes the burden of negating all
bases of personal jurisdiction alleged by the plaintiff. Am. Type Culture
Collection, Inc. v. Coleman, 83 S.W.3d 801, 807 (Tex. 2002), cert. denied,
537 U.S. 1191 (2003). In other words, the defendant must disprove the
2
… In their first issue, Appellants ague that the trial court lacks general
jurisdiction over them. Appellees did not allege general jurisdiction in the trial
court and have not briefed it on appeal. Therefore, and because we ultimately
determine that the trial court had specific jurisdiction over Appellants, we need
not address general jurisdiction or Appellants’ first issue. See Tex. R. App. P.
47.1.
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existence of minimum contacts sufficient to establish personal jurisdiction over
it—general, specific, or both—as alleged by the plaintiff. See id. Absent
allegations of any specific, purposeful act through which the defendant can be
said to have sought a benefit by availing itself of the jurisdiction, evidence that
a defendant is a nonresident is sufficient to meet its burden. Michiana Easy
Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 785 (Tex. 2005); see also
Hotel Partners v. KPMG Peat Marwick, 847 S.W.2d 630, 633 (Tex.
App.—Dallas 1993, writ denied).
Whether a trial court has personal jurisdiction over a defendant is a
question of law. Marchand, 83 S.W.3d at 793; TravelJungle, 212 S.W.3d at
845. However, the trial court must frequently resolve fact questions before
deciding the jurisdictional question. Marchand, 83 S.W.3d at 794. When the
trial court does not enter express findings of fact and conclusions of law
regarding its ruling on a special appearance, the reviewing court infers all fact
findings necessary to support the judgment that are supported by the evidence.
Id. at 794–95. When the appellate record includes the reporter’s and clerk’s
records, these implied findings are not conclusive and may be challenged for
legal and factual sufficiency in the appropriate appellate court. See id. at 795;
TravelJungle, 212 S.W.3d at 845; Michel, 45 S.W.3d at 668. If the reviewing
court determines that the trial court’s findings are supported by sufficient
9
evidence, or if the material facts are undisputed, the reviewing court decides
as a matter of law whether those facts negate all bases for personal
jurisdiction. Marchand, 83 S.W.3d at 794–95.
B. Specific Jurisdiction
The Texas long-arm statute authorizes personal jurisdiction over a
nonresident defendant who “does business” in Texas, which specifically
includes committing a tort in Texas, in whole or in part. Tex. Civ. Prac. & Rem.
Code Ann. § 17.042(1) (Vernon 2008); TravelJungle, 212 S.W.3d at 845. But
the statute’s broad, doing-business language reaches only as far as federal
due-process criteria permit; the defendant must have established minimum
contacts with the forum state, and the assertion of jurisdiction must comport
with “traditional notions of fair play and substantial justice.” IRA Res., Inc. v.
Griego, 221 S.W.3d 592, 596 (Tex. 2007) (citing Marchand, 83 S.W.3d at
795); see also Schlobohm v. Schapiro, 784 S.W.2d 355, 356 (Tex. 1990).
1. Minimum Contacts
When a plaintiff asserts specific jurisdiction, the minimum contacts
analysis focuses on the relationship between the defendant, the forum, and the
litigation. IRA Res., 221 S.W.3d at 596; Moki Mac, 221 S.W.3d at 575–76.
Minimum contacts are sufficient for personal jurisdiction when the nonresident
defendant “purposefully avails” itself of the privilege of conducting activities
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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, 1240 (1958); IRA
Res., 221 S.W.3d at 596; Michiana, 168 S.W.3d at 784. Purposeful availment
is the “touchstone of jurisdictional due process.” IRA Res., 221 S.W.3d at
596; Michiana, 168 S.W.3d at 784.
Purposeful availment has at least three aspects. IRA Res., 221 S.W.3d
at 596; Michiana, 168 S.W.3d at 785. First, only the defendant’s contacts
with the forum are relevant, not the unilateral activity of another party or third
person. IRA Res., 221 S.W.3d at 596; Michiana, 168 S.W.3d at 785. Second,
the contacts relied upon must be purposeful rather than random, isolated, or
fortuitous. IRA Res., 221 S.W.3d at 596; Michiana, 168 S.W.3d at 785.
Third, the defendant must seek some benefit, advantage, or profit by “availing”
itself of the jurisdiction, thus impliedly consenting to its laws. IRA Res., 221
S.W.3d at 596; Michiana, 168 S.W.3d at 785.
In this case, the principal contacts between Appellants and Texas relevant
to specific jurisdiction are the telephonic board meetings, in which Gernsbacher
and Zintgraff participated from Texas and during which Appellants allegedly
made misrepresentations regarding SESC’s financial condition and the terms of
the New Notes. We must, therefore, determine whether the telephonic board
meetings rise to the level of purposeful availment.
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Although the supreme court has disapproved “opinions holding that . . .
specific jurisdiction is necessarily established by allegations or evidence that a
nonresident committed a tort in a telephone call from a Texas number,”
Michiana, 168 S.W .3d at 791–92 (emphasis added), it has not held that
telephone calls are never sufficient to establish minimum contacts. In Michiana,
a Texas resident attempted to sue an Indiana seller of motor homes in a Texas
court, asserting as the basis for specific jurisdiction misrepresentations the
seller allegedly made during a single phone call initiated by the Texas resident.
Id. at 784. The supreme court noted that “changes in technology have made
reliance on phone calls obsolete as proof of purposeful availment.” Id. at 791.
The phone call in Michiana satisfied none of the three key aspects of purposeful
availment: the seller’s contact with Texas resulted not from its own activity but
from the Texas resident’s unilateral activity, namely, the phone call initiated by
the Texas resident; the seller’s contact with Texas was not purposeful but
isolated and fortuitous; and the seller did not “avail” itself of the privilege of
doing business in Texas. See id. at 785. But while the seller’s sole telephonic
contact with Texas fell short of purposeful availment, the supreme court’s use
of the modifier “necessarily” in its disapproval of “opinions holding that . . .
specific jurisdiction is necessarily established by allegations or evidence that a
nonresident committed a tort in a telephone call from a Texas number”
12
suggests that telephonic contact may rise to the level of purposeful availment
in different circumstances. See id. at 791–92.
The circumstances of this case are markedly different from the single,
unsolicited, unilateral phone call in Michiana. Instead of Michiana’s single
phone call, this case involves many telephonic board meetings at regular
intervals over a span of years—even if we limit the scope of relevant contacts
to those in 2001 and 2002 when the parties discussed the New Notes, as
Appellants argue we must. Unlike the seller in Michiana, who did not advertise
or otherwise seek business from Texas residents, Appellants (according to
Appellees’ petition) sought to induce Texas residents—Gernsbacher and
Zintgraff—to subscribe to the New Notes.
One similarity between Michiana and this case—a similarity that
Appellants argue negates specific jurisdiction—is that neither the seller in
Michiana nor the Appellants in this case placed phone calls to Texas. In
Michiana, the Texas resident placed the call to the seller in Indiana. Id. at 781.
In this case, SESC circulated a toll-free phone number to the board members
before the board meetings, and the board members would call that number to
participate in the meeting. Appellants averred in their special-appearance
affidavits that they did not know where Zintgraff and Gernsbacher were during
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the telephonic board meetings, and Gernsbacher conceded that he could have
phoned into the meetings from any state.
But again, the differences between this case and Michiana outweigh the
similarities. Unlike the one-time, unsolicited, fortuitous transaction between the
seller and the Texas resident in Michiana, Appellants had a long-time, ongoing
relationship with Gernsbacher and Zintgraff, whom they knew to be Texas
residents and whom they knew operated the Fort Worth and San Antonio
divisions of SESC. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 470,
105 S. Ct. 2174, 2181 (1985) (noting long-term relationship between Florida
franchisor and Michigan franchisee as significant factor in subjecting franchisee
to Florida jurisdiction). Moreover, to the extent that it makes a difference
whether Appellants knew where Gernsbacher and Zintgraff were during the
board meetings, the record contains evidence showing that they did know that
Gernsbacher and Zintgraff called into the meetings from Texas. Zintgraff
testified that he always participated in the meetings from his San Antonio
office; Gernsbacher testified that he participated from his Fort Worth office
most of the time; and Gernsbacher testified that “normally [the board] had a
few minutes where [they would] talk before the meetings, and [they] would talk
about where people were and what they were doing.”
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Even if Appellants did not know that Gernsbacher and Zintgraff
participated in the meetings from Texas, that ignorance alone is not enough to
negate specific jurisdiction because it was foreseeable that their activity
directed towards Texas residents would subject them to Texas jurisdiction. In
TravelJungle, we held that the foreign defendant, TravelJungle, purposefully
availed itself of the privilege of conducting activity in Texas by accessing the
American Airline’s computer servers in Texas via the Internet even though
TravelJungle claimed that it did not know where American’s servers were
located: “By deliberately directing its activity toward AA.com, TravelJungle
should have been aware of the possibility that it would be haled into any forum
where AA.com’s servers were located.” 212 S.W.3d at 841, 850, 851.
Likewise, by deliberately directing their activity toward Gernsbacher and
Zintgraff—whom they knew to be Texas residents—Appellants should have
been aware of the possibility that they would be subject to Texas jurisdiction,
even if they did not know where Gernsbacher and Zintgraff were at the precise
moments that Appellants allegedly made misrepresentations during the
telephonic board meetings.
The phrase “directing their activity” leads us to a key part of Appellants’
argument. Appellants argue that the basis for jurisdiction asserted by Appellees
is that Appellants “directed a tort” at the two Texas plaintiffs—a theory of
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specific jurisdiction that the supreme court rejected in Michiana. In Michiana,
the supreme court noted that directed-a-tort jurisdiction—that is, jurisdiction
based on where the effect of a defendant’s tort is felt—causes several
problems. 168 S.W .3d at 790. First, it shifts the court’s focus from the
relationship among the defendant, the forum, and the litigation to the
relationship among the plaintiff, the forum, and the litigation. Id. Second, it
confuses the roles of judge and jury by equating the jurisdictional inquiry with
the underlying merits; in other words, it shifts the analysis from contacts to
culpability. Id. at 790–91. Third, directed-a-tort jurisdiction shifts the focus
from the defendant’s contacts to the type of claim asserted by the plaintiff; for
example, a defendant might be subject to jurisdiction by directing a tort at the
forum but not be subject to jurisdiction for a contract claim arising from the
same facts. Id. at 791. And finally—as we have already noted—the supreme
court observed that changes in technology have made reliance on phone calls
obsolete as proof of purposeful availment (though, as we have also noted, it did
not hold that phone calls can never be proof of purposeful availment). Id.
Ultimately, the court rejected the notion that “specific jurisdiction turns on
whether a defendant’s contacts were tortious rather than the contacts
themselves.” Id. at 792. (emphasis added).
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In this case, we have focused our jurisdictional analysis on Appellants’
contacts with Texas, not whether those contacts were tortious. Thus, while
Appellants’ observation that the supreme court has rejected directed-a-tort
jurisdiction is true, it does not unhinge our analysis.
In sum, we conclude that Appellants’ participation in the telephonic board
meetings satisfies the three key aspects of purposeful availment. See IRA Res.,
221 S.W.3d at 596; Michiana, 168 S.W.3d at 785. Appellants’ participation
in the board meetings was not the unilateral activity of another party or a third
person; the meetings were purposeful rather than random, isolated, or
fortuitous; and Appellants sought some benefit or advantage by availing
themselves of Texas jurisdiction, namely, Gernsbacher’s and Zintgraff’s
subscription to the New Notes. We therefore hold that the evidence is legally
and factually sufficient to support the trial court’s conclusion that Appellants
availed themselves of the privilege of doing business in Texas.
2. Substantial Connection
But purposeful availment alone will not support an exercise of specific
jurisdiction. Moki Mac, 221 S.W.3d at 579. For specific-jurisdiction purposes,
purposeful availment has no jurisdictional relevance unless the defendant's
liability arises from or relates to the forum contacts. Id. There must be a
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substantial connection between the defendant’s forum contacts and the
operative facts of the litigation. Id. at 584.
In Moki Mac, the supreme court looked to the factual issues that it
anticipated would be the primary focus at trial to determine whether the
plaintiffs’ misrepresentation claims arose from or related to Moki Mac’s
purposeful solicitation of Texas customers. Id. The “operative facts” of the
plaintiff’s suit in Moki Mac concerned a tour guide’s conduct on a hiking
expedition in Arizona and whether the guide exercised reasonable care in
supervising the plaintiff’s son, who died during the hike. Id. at 585. The court
reasoned that it was the events on the trail and the guide’s supervision of the
hike that would be the focus of the trial and would serve as the overwhelming
majority of the evidence presented at trial, not the representations by Moki Mac
in its literature to the plaintiffs. Id. Only after thoroughly considering the
manner in which the hike was conducted would the jury then assess the
plaintiff’s misrepresentation claim. Id. The court concluded that “[w]hatever
connection there may be between Moki Mac’s promotional materials sent to
Texas and the operative facts that led to [the son’s] death, we do not believe
it is sufficiently direct to meet due-process concerns.” Id.
Here, in contrast to Moki Mac, Appellants’ contacts with Texas that show
purposeful availment—the telephonic board meetings—are also the operative
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facts of the litigation. The primary focus at trial will be on the alleged
misrepresentations Appellants made during the board meetings. Unlike the
misrepresentations in Moki Mac, which were tangential to the plaintiffs’ core
negligence claim, Appellants’ misrepresentations in this case are the core of
Appellees’ claims. Appellants’ liability, if any, arises directly from and relates
to their contacts with Texas. We therefore hold that there is a substantial
connection between Appellants’ forum contacts and the operative facts of the
litigation. See id. at 584.
Having concluded that Appellants purposefully availed themselves of the
forum and that there is a substantial connection between their forum contacts
and the operative facts of the litigation, we hold that the evidence was legally
and factually sufficient to support the trial court’s conclusion that Appellants
have minimum contacts with Texas sufficient to allow the exercise of specific
jurisdiction over them.
C. Fair Play and Substantial Justice
We now turn to whether the exercise of personal jurisdiction over
Appellants comports with traditional notions of fair play and substantial justice.
See Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815
S.W.2d 223, 226 (Tex. 1991). In making this determination, we consider the
following factors: (1) the burden on the defendants; (2) the interests of the
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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. See id. at 228; see also Asahi Metal Indus. Co. v. Superior Court of
Ca., 480 U.S. 102, 113–16, 107 S. Ct. 1026, 1033–34 (1987); Burger King,
471 U.S. at 477, 105 S. Ct. at 2184. Only in rare cases will the exercise of
jurisdiction not comport with fair play and substantial justice when the
nonresident defendant has purposefully established minimum contacts in the
forum state. Guardian Royal, 815 S.W.2d at 231; see also Schlobohm, 784
S.W.2d at 358.
Appellants contend that the burden of litigating in Texas is “simply too
great to justify jurisdiction” because the individual Appellants live in Minnesota,
Illinois, or Michigan and because Appellant Glencoe is a Delaware corporation
with its headquarters in Illinois. Distance from the forum is generally not
sufficient to defeat jurisdiction because the availability of “modern
transportation and communication have made it less burdensome for a party
sued to defend himself in a State where he engages in economic activity.”
McGee v. Int’l Life Ins. Co., 355 U.S. 220, 223, 78 S. Ct. 199, 201 (1957).
Further, Texas has a manifest interest in providing its residents with a
20
convenient forum for redressing injuries inflicted by out-of-state actors. See
Burger King, 471 U.S. at 479–82, 105 S. Ct. at 2185–87. Moreover,
Appellees have chosen to file suit in Texas, and Gernsbacher and Zintgraff have
an interest in obtaining convenient and effective relief in Texas, where they
reside and where they once owned businesses that were acquired by SESC.
Finally, because Appellants hail from several different states, there will be some
degree of inconvenience on at least some of them regardless of where litigation
proceeds.
Ultimately, Appellants have not identified any considerations that would
render jurisdiction in Texas unreasonable or that provide them with a vested
right not to be sued in Texas. See Burger King, 471 U.S. at 477, 105 S. Ct.
at 2184–85. We therefore hold that the trial court’s exercise of personal
jurisdiction over Appellants would not offend traditional notions of fair play and
substantial justice. See Tempest Broad. Corp. v. Imlay, 150 S.W.3d 861, 876
(Tex. App.—Houston [14th Dist.] 2004, no pet.); Cartlidge v. Hernandez, 9
S.W.3d 341, 350 (Tex. App.—Houston [14th Dist.] 1999, no pet.); Rowland
& Rowland, P.C. v. Tex. Employers Indem. Co., 973 S.W.2d 432, 436 (Tex.
App.—Austin 1998, no pet.).
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III. Conclusion
Because Appellants established minimum contacts with Texas sufficient
to subject them to specific jurisdiction in a Texas court and because the
exercise of such jurisdiction would not offend traditional notions of fair play and
substantial justice, we overrule their second and third issues and, not having
reached their first issue, we affirm the trial court’s denial of their special
appearances.
ANNE GARDNER
JUSTICE
PANEL: GARDNER, WALKER, and MCCOY, JJ.
DELIVERED: October 9, 2008
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