Todd Enright v. Asclepius Panacea, LLC Asclepius Panacea GP, LLC Daily Pharmacy, LLC Daily Pharmacy GP, LLC And Toth Enterprises II, P .A. D/B/A Victory Medical Center ( 2015 )

ACCEPTED
03-15-00348-CV
6165399
THIRD COURT OF APPEALS
AUSTIN, TEXAS
7/21/2015 5:00:30 PM
JEFFREY D. KYLE
CLERK
No. 03-15-00348-CV
______________________________________
FILED IN
COURT OF APPEALS 3rd COURT OF APPEALS
THIRD JUDICIAL DISTRICT OF TEXAS AUSTIN, TEXAS
AUSTIN, TEXAS 7/21/2015 5:00:30 PM
______________________________________ JEFFREY D. KYLE
Clerk
TODD ENRIGHT,
Appellant,
v.
ASCLEPIUS PANACEA, LLC; ASCLEPIUS PANACEA GP, LLC; DAILY
PHARMACY, LLC; DAILY PHARMACY GP, LLC; AND TOTH
ENTERPRISES II, P.A. D/B/A VICTORY MEDICAL CENTER,
Appellees.
______________________________________
BRIEF OF APPELLANT
TODD ENRIGHT
_________________________________________________
On Appeal from the 98th Judicial District Court
of Travis County, Texas
Trial Court No. D-1-GN-14-004689
Hon. Gisela D. Triana of the 200th Judicial District Court, Presiding
__________________________________________
Thomas S. Leatherbury Jennifer B. Poppe
State Bar No. 12095275 State Bar No. 24007855
Vinson & Elkins LLP Jonah Jackson
2001 Ross Avenue, Suite 3700 State Bar No. 24071450
Dallas, Texas 75201 Vinson & Elkins LLP
Telephone: (214) 220-7700 2801 Via Fortuna, Suite 100
Facsimile: (214) 999-7792 Austin, Texas 78746
tleatherbury@velaw.com Telephone: (512) 542-8400
Facsimile: (512) 542-8612
jpoppe@velaw.com
jjackson@velaw.com
Attorneys for Appellant Todd Enright
ORAL ARGUMENT REQUESTED
IDENTITY OF PARTIES AND COUNSEL
1. Appellant Todd Enright
Thomas S. Leatherbury Jennifer B. Poppe
Vinson & Elkins LLP Jonah Jackson
2001 Ross Avenue, Suite 3700 Vinson & Elkins LLP
Dallas, Texas 75201 2801 Via Fortuna, Suite 100
Telephone: (214) 220-7700 Austin, Texas 78746
Facsimile: (214) 999-7792 Telephone: (512) 542-8400
tleatherbury@velaw.com Facsimile: (512) 542-8612
jpoppe@velaw.com
jjackson@velaw.com
2. Appellees Asclepius Panacea, LLC; Asclepius Panacea GP, LLC; Daily
Pharmacy, LLC; Daily Pharmacy GP, LLC; and Toth Enterprises II,
P.A. d/b/a Victory Medical Center
Eric J. Taube
Paul Matula
Taube Summers Harrison Taylor Meinzer Brown, LLP
100 Congress Avenue, 18th Floor
Austin, Texas 78701
etaube@taubesummers.com
pmatula@taubesummers.com
3. Defendants QVL Pharmacy #181 GP, LLC; QVL Pharmacy #162 GP,
LLC; and QVL Pharmacy Holdings, Inc. (not parties to this appeal)
QVL is not currently represented by counsel.
Former counsel:
Christine Kirchner
Cade W. White
Chamberlain, Hrdlicka, White, Williams & Aughtry
1200 Smith Street, Suite 1400
Houston, Texas 77002
c.kirchner@chamberlainlaw.com
cade.white@chamberlainlaw.com
i
TABLE OF CONTENTS
IDENTITY OF PARTIES AND COUNSEL .............................................................i
TABLE OF CONTENTS.......................................................................................... ii
TABLE OF AUTHORITIES ....................................................................................iv
RECORD REFERENCES ........................................................................................vi
STATEMENT REGARDING ORAL ARGUMENT ............................................ vii
STATEMENT OF THE CASE.............................................................................. viii
ISSUES PRESENTED...............................................................................................x
STATEMENT OF THE FACTS ...............................................................................1
SUMMARY OF THE ARGUMENT ......................................................................10
STANDARD OF REVIEW .....................................................................................11
ARGUMENT ...........................................................................................................12
I. Exercise of personal jurisdiction over Enright does not meet the
requirements of due process. .............................................................................12
A. While representing White Winston in negotiating and providing the
purchase loan to VMC, Enright did not purposely avail himself of
the privileges of conducting business within Texas, so as to invoke
the benefits and protections of Texas law. ..................................................15
B. The exercise of specific jurisdiction over Enright is improper because
his contacts with Texas have no substantial connection to the alleged
torts. .............................................................................................................19
1. The factual basis for VMC’s post-transaction claims is unrelated
to Enright’s contacts with Texas. .........................................................19
2. Because all of VMC’s claims fail as a matter of law, Enright’s
contacts with Texas cannot possibly be “substantially
connected” to any tortious conduct. .....................................................23
C. Exercise of personal jurisdiction over Enright does not comport with
traditional notions of fair play and substantial justice. ...............................26
II. The trial court’s order is not supported by the evidence in the record..............27
A. The evidence is legally and factually insufficient to support the
inference that Enright could have made any alleged
misrepresentation to VMC prior to the transaction.....................................28
ii
B. The evidence is legally and factually insufficient to support the
inference that Enright could have interfered with the TSA. .......................30
CONCLUSION AND PRAYER .............................................................................32
CERTIFICATE OF COMPLIANCE.......................................................................34
CERTIFICATE OF SERVICE ................................................................................35
APPENDIX ..............................................................................................................36
iii
TABLE OF AUTHORITIES
Cases
ACS Investors, Inc. v. McLaughlin,
943 S.W.2d 426 (Tex. 1997)................................................................................14
Ashdon, Inc. v. Gary Brown & Assocs., Inc.,
260 S.W.3d 101 (Tex. App.—Houston [1st Dist.] 2008, no pet.) .......................27
BMC Software Belgium, N.V. v. Marchand,
83 S.W.3d 789 (Tex. 2002)..................................................................................12
Botter v. Am. Dental Ass’n,
124 S.W.3d 856 (Tex. App.—Austin 2003, no pet.) ...........................................12
Briggs v. Seacoast Power, L.L.C.,
No. 03-01-00286-CV, 2001 WL 1346137
(Tex. App.—Austin Oct. 25, 2001, no pet.) ........................................................22
Burger King Corp. v. Rudzewicz,
471 U.S. 462 (1985).............................................................................................15
Butnaru v. Ford Motor Co.,
84 S.W.3d 198 (Tex. 2002)..................................................................................25
Daimler AG v. Bauman,
134 S. Ct. 746 (2014) ...........................................................................................13
Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C.,
815 S.W.2d 223 (Tex. 1991)......................................................................... 13, 26
Helicopteros Nacionales de Colombia S.A. v. Hall,
466 U.S. 408 (1984).............................................................................................12
Int’l Shoe Co. v. Washington,
326 U.S. 310 (1945).............................................................................................13
Kaye/Bassman Int’l Corp. v. Dhanuka,
418 S.W.3d 352 (Tex. App.—Dallas 2013, no pet.)............................................14
Kelly v. Gen. Interior Constr., Inc.,
301 S.W.3d 653 (Tex. 2010)................................................................................11
Merrell Dow Pharm., Inc. v. Havner,
953 S.W.2d 706 (Tex. 1997)................................................................................12
Michiana Easy Livin’ Country, Inc. v. Holten,
168 S.W.3d 777 (Tex. 2005)............................................................. 16, 17, 18, 23
iv
Moki Mac River Expeditions v. Drugg,
221 S.W.3d 569 (Tex. 2007)........................................................................ passim
Moncrief Oil Int’l Inc. v. OAO Gazprom,
414 S.W.3d 142 (Tex. 2013)................................................................................13
Nat’l Indus. Sand Ass’n v. Gibson,
897 S.W.2d 769 (Tex. 1995)................................................................................23
Panda Brandywine Corp. v. Potomac Elec. Power Co.,
253 F.3d 865 (5th Cir. 2001)................................................................................15
PHC-Minden, L.P. v. Kimberly-Clark Corp.,
235 S.W.3d 163 (Tex. 2007)................................................................................12
Revell v. Lidov,
317 F.3d 467 (5th Cir. 2002)................................................................................15
Stull v. LaPlant,
411 S.W.3d 129 (Tex. App.—Dallas 2013, no pet.)............................................14
TeleVentures, Inc. v. Int’l Game Tech.,
12 S.W.3d 900 (Tex. App.—Austin 2000, pet. denied) ................... 16, 21, 22, 24
Wolf v. Summers-Wood, L.P.,
214 S.W.3d 783 (Tex. App.—Dallas 2007, no pet.)............................................13
Statutes
Tex. Civ. Prac. & Rem. Code Ann. § 17.042(2)......................................................23
Rules
Tex. R. App. P. 28.1(c) ..............................................................................................9
Tex. R. Civ. P. 296.....................................................................................................9
v
RECORD REFERENCES
The reporter’s record will be cited as follows:
[Volume]RR[page(s)].
The clerk’s record will be cited as follows:
CR[page(s)].
The exhibits at CR400-528, which are attached to Plaintiffs’ Response to
Defendant Todd Enright’s First Amended Special Appearance (CR367-97)
(Response), do not appear in their original order as listed in Plaintiffs’ Index of
Exhibits at CR398-99. For the sake of clarity, please note that the exhibits to the
Response are located in the clerk’s record as follows:
Exhibit 1 – CR435-40 Exhibit 16 – CR455-59
Exhibit 1-A – CR465-66 Exhibit 17 – CR411-12
Exhibit 2 – CR467-96 Exhibit 18 – CR417-18
Exhibit 3 – CR497-514 Exhibit 19 – CR441-44
Exhibit 4 – CR445-54 Exhibit 21 – CR423-25
Exhibit 5 – CR525-26 Exhibit 22 – CR426-29
Exhibit 7 – CR403-05 Exhibit 31 – CR527-28
Exhibit 10 – CR406-10 Exhibit 33 – CR400-02
Exhibit 11 – CR430-34 Exhibit 37 – CR460-62
Exhibit 12 – CR413-16 Exhibit 39 – CR463-64
Exhibit 14 – CR515-21 Exhibit 40 – CR419-22
Exhibit 15 – CR522-24
vi
STATEMENT REGARDING ORAL ARGUMENT
Appellant Todd Enright respectfully requests the opportunity to present oral
argument in this appeal. Appellant believes that oral argument will assist the Court
in better understanding the record and in applying the law to the facts.
vii
TO THE HONORABLE COURT OF APPEALS:
Appellant Todd Enright (Enright) submits this brief in accordance with
Texas Rules of Appellate Procedure 9.4 and 38.1.
STATEMENT OF THE CASE
Enright seeks review of the trial court’s order of May 15, 2015, denying
Enright’s special appearance. Appellees Asclepius Panacea, LLC; Asclepius
Panacea GP, LLC; Daily Pharmacy, LLC; Daily Pharmacy GP, LLC; and Toth
Enterprises II, P.A. d/b/a Victory Medical Center (collectively, VMC) filed this
lawsuit on November 10, 2014, asserting claims against Enright in his individual
capacity in connection with their purchase and operation of two pharmacies from
QVL Pharmacy #181 GP, LLC; QVL Pharmacy #162 GP, LLC; and QVL
Pharmacy Holdings, Inc. (collectively, QVL).1 CR3.
Enright, a New Hampshire resident, is an agent of White Winston Select
Asset Funds, LLC (White Winston), which financed VMC’s purchase of QVL’s
pharmacies. Enright filed his special appearance on December 15, 2014, which he
amended on April 21, 2015, challenging the Court’s exercise of personal
jurisdiction over him. CR39 & 179. The Honorable Gisela D. Triana heard
Enright’s special appearance on April 30, 2015. CR177; 2RR1. On May 15, 2015,
1
VMC also asserted claims against the QVL entities, but QVL is not a party to this
appeal.
viii
Judge Triana issued an order denying the special appearance. CR567. Enright
timely filed a notice of appeal on June 3, 2015. CR592.
ix
ISSUES PRESENTED
1. Did the trial court err in concluding that Enright purposefully availed
himself of the benefits of doing business in Texas?
2. Did the trial court err in concluding that VMC’s claims against Enright are
substantially connected to Enright’s contacts with Texas?
3. Did the trial court err in concluding that the exercise of personal jurisdiction
over Enright comports with the traditional notions of fair play and
substantial justice?
4. Did the trial court err in concluding that the evidence was factually sufficient
to support the exercise of personal jurisdiction?
5. Did the trial court err in concluding that the evidence was legally sufficient
to support the exercise of personal jurisdiction?
6. Did the trial court err in denying Enright’s special appearance?
x
STATEMENT OF THE FACTS
Enright, a New Hampshire resident, is a partner with White Winston, a Utah
company with offices in Boston, Massachusetts. CR227 (¶ 3); CR499-501. White
Winston invests its funds in public and private debt. CR228 (¶ 6). White Winston
is the senior creditor as part of QVL’s debt portfolio. CR228 (¶ 6). Until 2014,
QVL operated several retail pharmacy locations in Texas and Louisiana. CR345
(¶ 3). Enright, on behalf of White Winston, served as QVL’s point of contact
relating to QVL’s debt.
During the fall of 2013, QVL began to refocus its business on pharmacy
services and proprietary software and resolved to divest itself of its retail
pharmacies. CR359-60; CR479. To further this divestiture, QVL’s then-CEO,
Gary Chad Collins, identified and contacted potential buyers for each of QVL’s
pharmacy locations. In early December 2013, Mr. Collins called Dr. William
Franklin, the owner of Victory Medical Center, to determine VMC’s interest in
purchasing QVL’s nearby Austin, Texas pharmacy location. CR345-46 (¶ 4);
CR356-57. Dr. Franklin told Mr. Collins that he was very interested in the Austin
location and, potentially, other locations as well. CR346 (¶ 4); CR359-60; CR436
(¶ 2).
Soon after QVL’s initial discussions with VMC, Mr. Collins and
Dr. Franklin approached White Winston to discuss whether the company would
lend VMC money to finance their acquisition of the two QVL pharmacies.
CR358; CR362; CR437 (¶ 3). Mr. Collins invited Enright to a conference call with
Dr. Franklin on December 12, 2013. CR226; CR346 (¶ 6); CR437 (¶ 3). During
that conference call, Enright told Dr. Franklin that he represented White Winston,
and the two broadly discussed the terms of a possible purchase loan that would
accommodate VMC’s desired equity purchase. CR228 (¶ 6); CR346 (¶ 6).
Enright had only a few additional communications with VMC’s
representatives before the agreements were finalized on December 31, 2013. After
the December 12 call, Enright exchanged emails with VMC’s representatives,
including Dr. Franklin, to obtain the necessary financial documents from VMC.
CR228 (¶ 7); CR466. In late December, Enright participated in one additional
conference call with representatives of VMC and QVL to discuss coordination of
the transaction and White Winston’s financing. CR228 (¶ 7). Between the second
conference call and the close of the transaction on December 31, 2013, Enright had
no further contacts with VMC, although lawyers from both parties kept White
Winston informed of the transaction’s progress via email, including the exchange
of drafts of the agreements between VMC and QVL. CR228 (¶ 7); CR401;
CR526; CR528.
VMC eventually agreed to purchase two of QVL’s pharmacies, including the
Austin location. In order to accommodate VMC’s desire to assume operation of
2
the two pharmacies without interruption, QVL and VMC structured the transaction
as an equity purchase rather than an asset purchase. CR346. VMC and QVL
negotiated and agreed to terms over the span of only a few weeks, and executed a
Purchase Agreement on December 31, 2013. Although not involved directly in
VMC’s transaction, White Winston did lend VMC $675,000 for the purchase
through a loan agreement and related documents dated December 31, 2013.2
CR229-30 (¶¶ 12-20); CR232-339.
Enright’s contacts with Texas during VMC’s negotiations with QVL were
minimal. He did not participate in due diligence or otherwise discuss the
transaction—other than those aspects of the transaction that related to the financing
provided by White Winston—with Dr. Franklin or any other representative of
VMC. CR228 (¶ 6); CR346-47 (¶¶ 6-7). Enright (along with White Winston’s
attorney) was involved only in the negotiation of VMC’s financing on behalf of
White Winston. Enright never traveled to Texas during the negotiations between
VMC and QVL and had no contact with Dr. Franklin or any of VMC’s
representatives beyond the two telephone calls in December and emails related to
2
The terms and conditions of the loan are set forth in a Loan Agreement, a Secured
Promissory Note, a Securities Pledge Agreement, a Security Agreement, an Escrow
Agreement, a Priority and Release Agreement, and two Guaranties.
3
the financing.3 CR228 (¶¶ 6-7); CR346-47 (¶¶ 6-7). Enright’s sole role was to
represent White Winston in the negotiation and execution of its loan to VMC.
The loan agreement documents were negotiated and drafted by VMC’s and
White Winston’s attorneys and executed on behalf of White Winston by Enright.
Unlike the Purchase Agreement and Transition Services Agreement, discussed
more fully below, which Enright did not negotiate, all of the loan agreements
establish Massachusetts as the mandatory jurisdiction and venue for any dispute.
CR250; CR266; CR284-85; CR297; CR315; CR327; CR336. As part of the loan
agreement, White Winston also released its interest in the assets of the two
pharmacies, which had served as part of the collateral for QVL’s debt held by
White Winston and other creditors it represented. CR228 (¶ 6); CR282-85.
As part of the Purchase Agreement, QVL and VMC also entered into the
Transition Services Agreement (TSA) through which QVL agreed to provide VMC
with certain administrative and support services. CR549-65. Neither White
Winston nor Enright negotiated the Purchase Agreement or the TSA or was a party
to either agreement.
3
Enright and White Winston’s attorney were also periodically informed by QVL’s
attorney of negotiations between QVL and VMC. See CR401; CR526; CR528. As
QVL’s senior creditor, White Winston was required to release its security interest in the
two pharmacies’ assets at the time of sale, and therefore White Winston had an interest in
whether VMC’s compensation to QVL adequately reflected the security interest that
White Winston was releasing. CR282-93.
4
The TSA established an ongoing relationship between QVL and VMC.
Under the TSA, QVL was to continue to collect and process the accounts
receivable for the two pharmacies and, each month, reconcile QVL’s services
against receipts. CR565. VMC were also permitted, although not required, to
purchase prescription drugs for the two pharmacies through QVL’s existing
relationship with AmerisourceBergen Drug Corporation (ABDC). CR565.
Monthly payments were to be based on a reconciliation of the gross receipts
attributable to the two stores, offset by the cost of services provided by QVL
(including VMC’s drug purchases through ABDC) and VMC’s share of certain
pro-rata charges such as software licenses and QVL overhead. CR565. The TSA
services were primarily provided by two QVL employees, Joyce Montgomery and
Sandra Gonzales.4
Enright had limited contacts with Texas, and none in his individual capacity,
after VMC’s purchase of QVL’s pharmacies. On behalf of White Winston,
Enright continued to communicate with QVL and its agents concerning White
Winston’s role as QVL’s senior creditor. Enright also served as QVL’s point of
contact at White Winston concerning the credit facility that QVL used to make
operational payments, including payments to VMC.
4
Ms. Montgomery and Ms. Gonzales later left QVL, but continued to provide the
services to VMC as contractors for QVL.
5
Enright traveled to Texas on business for White Winston 4 times in 2014, to
review QVL’s collateral and performance under agreements with White Winston
and met with Dr. Franklin on two of those trips. CR229 (¶ 10). First, in mid-
January 2014, Enright traveled with Mr. Collins to Austin where Dr. Franklin
provided a tour of VMC’s facilities. CR209 (¶ 4). Second, Enright again met
briefly with Dr. Franklin in Austin in April of 2014, also while in Texas on
business for White Winston, unrelated to VMC. CR209 (¶ 4). Around the time of
their second meeting, Dr. Franklin was negotiating with QVL to amend or
terminate the TSA. CR209 (¶ 4); CR431-32. Dr. Franklin and Enright discussed
whether and how the potential changes to the TSA would affect VMC’s loan
agreement with White Winston. CR209 (¶ 4).
The post-transaction relationship between VMC and QVL was not entirely
smooth. In late January, less than a month after the transaction, VMC found
themselves unable to purchase their desired amount of drug inventory through
QVL’s credit facility with ABDC. CR208-09 (¶ 3). VMC had apparently already
purchased a larger than expected amount of prescription drugs and were unable to
pay the balance owed to ABDC, which in turn affected QVL’s credit with ABDC.
CR208-09 (¶ 3).
VMC’s cash flow problems also affected their ability to make payments on
White Winston’s loan. To resolve the issue, VMC approached White Winston
6
again and requested a loan increase and modification of the repayment terms.
CR208-09 (¶ 3); CR228(¶ 7). White Winston advanced VMC an additional
$182,000 on January 31, 2014, through the execution of a Promissory Note
Modification Agreement. CR228 (¶ 7); CR341-44.5 At the time of the
modification, White Winston, QVL, and VMC also executed a First Amendment to
Priority and Release Agreement that recognized and affirmed VMC’s obligations
to pay QVL for services under the TSA and provided that certain creditors of QVL,
represented by White Winston, would retain an interest in the assets of the two
acquired pharmacies equal to any amounts owed under the TSA. CR213-14.
Some months later, VMC experienced further difficulties with QVL, this
time concerning payments allegedly due by QVL to VMC under the TSA. QVL
was by this time at or above the limit of its credit facility with White Winston and
unable to timely make operating payments, including payments claimed by VMC.
In mid-July, after several months of difficulty, QVL secured enough credit
availability to send VMC a check for $64,752.45, approximately half of what QVL
believed it owed VMC. CR210 (¶ 7); CR456; CR523. QVL drafted a check for
the second half at the same time but held it while waiting for additional credit to
5
As part of that agreement, VMC released White Winston and its “agents, employees,
representatives, directors, officers, members, managers, successors and assigns . . . from
any and all claims, counterclaims, demands, actions and causes of action of any nature
whatsoever, whether at law or in equity . . . from the beginning of the world to the date of
this Agreement.” CR342.
7
become available. CR210 (¶ 7); CR422. On July 22, 2014, Dr. Franklin sent
Enright an email accusing White Winston of interfering with QVL’s check and
threatening to sue both White Winston and Enright. CR461-62. Enright
responded that White Winston had not taken any action relating to QVL’s check,
reminded Dr. Franklin that White Winston, as QVL’s senior creditor, merely
provided QVL with a credit facility subject to draw request procedures and
collateral agreements, and advised Dr. Franklin to contact QVL concerning the
disputed payment. CR461.
Shortly thereafter, on or about August 7, 2014, White Winston, in an effort
to protect its interests and avoid litigation, offered to advance QVL funds beyond
its credit limit, for the purpose of making the final payment to VMC. As a
condition for this extension of further credit to QVL for VMC’s benefit, White
Winston asked Dr. Franklin and VMC to release the threatened claims against
White Winston and its agents. CR427; CR464. VMC declined the offer.
On or about August 27, 2014, one of QVL’s contractors, Sandra Gonzales,
under the mistaken impression that White Winston had approved the additional
credit that was predicated on VMC’s release, sent the second check to VMC.
CR424; CR427. However, because QVL still did not actually have any credit
available, the issuing bank, Boston Private Bank & Trust Co., automatically
rejected the check when presented by VMC’s bank. CR420-22; CR424. When
8
Boston Private Bank notified White Winston that an attempt had been made to
draw on the checking account tied to QVL’s credit facility, Enright confirmed that
White Winston had not authorized any additional credit. CR427; CR424.
On November 10, 2014, VMC filed suit for claims relating to the purchase
and QVL’s performance under the TSA. CR3-36. VMC did not name White
Winston as a defendant, but did sue Enright in his individual capacity. VMC’s
claims against Enright are for fraudulent misrepresentations in December 2013 and
for tortious interference with the TSA during 2014.6 CR542-44. Enright filed a
special appearance on December 15, 2014, challenging the Court’s exercise of
personal jurisdiction. CR39-56. VMC sought extensive discovery over the
following months, and Enright filed his First Amended Special Appearance on
April 21, 2015. CR179-207. VMC filed their Response to the special appearance
and an amended petition on April 23, 2015. CR367-99; CR529-47. After a
hearing on the special appearance on April 30, 2015, the trial court denied the
special appearance on May 15, 2015. CR567. Enright timely filed a notice of
appeal June 3, 2015, perfecting his interlocutory appeal from the denial.
CR592-94. Enright requested that the trial court file findings of fact and
conclusions of law pursuant to Texas Rule of Civil Procedure 296 and Texas Rule
of Appellate Procedure 28.1(c), but the court declined. CR598-600.
6
VMC also asserted claims for conversion and money had and received. According to
VMC, the “same evidence” supports these claims. CR385-86.
9
SUMMARY OF THE ARGUMENT
The trial court’s denial of Enright’s special appearance rests on two
fundamental errors, either of which provides a ground for this Court to reverse.
First, the court erroneously concluded that each of the three due process
requirements was satisfied when, in truth, none is—Enright does not have the
necessary minimum contacts with Texas, his contacts are not substantially related
to VMC’s claims, and the exercise of personal jurisdiction would not comport with
the traditional notions of fair play and substantial justice. Second, and
independently, the trial court erred in its implicit conclusion that there was
sufficient evidence of facts necessary to support jurisdiction.
Texas may not, consistent with the requirements of due process, exercise
personal jurisdiction over a New Hampshire resident employed in Boston,
Massachusetts by a Utah company, who has no contacts with Texas as an
individual. Enright’s only contacts with Texas have been as White Winston’s
agent, most of which have no connection to VMC, let alone to the substance of
VMC’s claims. All of Enright’s contacts with Texas relating to VMC sprang from
the unilateral activity of Mr. Collins and Dr. Franklin, who first reached out to
White Winston seeking financing for VMC’s purchase of two QVL pharmacies.
These attenuated contacts resulting from the unilateral actions of other parties are
insufficient to support the exercise of personal jurisdiction. Furthermore, VMC’s
10
claims are not substantially related to Enright’s contacts, as required by due
process.
VMC’s suit is also an improper attempt to avoid mandatory jurisdiction in
Massachusetts by suing White Winston’s agent as an individual. Permitting it to
proceed would violate the traditional notions of fair play and substantial justice.
Finally, even if VMC’s jurisdiction allegations could theoretically pass
constitutional muster, the exercise of jurisdiction is improper for the separate
reason that there is insufficient evidence of necessary facts. Because of these
errors, this Court should reverse the trial court’s order denying Enright’s special
appearance and dismiss Appellees’ claims against Enright for lack of personal
jurisdiction.
STANDARD OF REVIEW
Whether a court has personal jurisdiction over a nonresident defendant is a
question of law that is reviewed de novo. Moki Mac River Expeditions v. Drugg,
221 S.W.3d 569, 574 (Tex. 2007). VMC had the initial burden of pleading
sufficient allegations to invoke jurisdiction against Enright under the Texas long-
arm statute. See id. “If the plaintiff fails to plead facts bringing the defendant
within reach of the long-arm statute (i.e., for a tort claim, that the defendant
committed tortious acts in Texas), the defendant need only prove that it does not
11
live in Texas to negate jurisdiction.” Kelly v. Gen. Interior Constr., Inc., 301
S.W.3d 653, 658-59 (Tex. 2010) (emphasis added).
Because the trial court declined to issue findings of fact in this case, “all
facts necessary to support the judgment and supported by the evidence are
implied.” BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex.
2002). However, implied findings are not conclusive, and “may be challenged for
legal and factual sufficiency” when the clerk’s and reporter’s records are before the
court of appeals. Id. Evidence is factually insufficient if the necessary findings are
“contrary to the great weight and preponderance of the evidence.” Botter v. Am.
Dental Ass’n, 124 S.W.3d 856, 861 (Tex. App.—Austin 2003, no pet.). There is
legally insufficient evidence of a vital fact when, inter alia, there is a complete
absence of evidence, the evidence offered to prove a vital fact is no more than a
mere scintilla, or the evidence conclusively establishes the opposite of the vital
fact. Merrell Dow Pharm., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex. 1997)
ARGUMENT
I. Exercise of personal jurisdiction over Enright does not meet the
requirements of due process.
VMC’s attempt to bring claims against Enright in Texas does not comport
with the three constitutional due process requirements for specific jurisdiction.7
7
A nonresident’s sufficient minimum contacts can give rise to either “general”
jurisdiction or “specific” jurisdiction. Helicopteros Nacionales de Colombia S.A. v. Hall,
12
Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d
223, 227-28 (Tex. 1991). “For a Texas forum to properly exercise specific
jurisdiction . . . (1) [the defendant] must have made minimum contacts with Texas
by purposefully availing itself of the privilege of conducting activities here, and (2)
[the defendant]’s liability must have arisen from or related to those contacts.”
Moki Mac, 221 S.W.3d at 576. Third, even if the minimum contacts and
substantial relation requirements are satisfied, the exercise of personal jurisdiction
must also comport with “traditional notions of fair play and substantial justice.”
Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945) (citation omitted); Moki
Mac, 221 S.W.3d at 575.
None of VMC’s claims—which, for the purposes of jurisdictional analysis
can be grouped into pre-transaction claims (fraud and securities fraud) and post-
transaction claims (tortious interference, conversion, and money had and
466 U.S. 408, 413-14 (1984); PHC-Minden, L.P. v. Kimberly-Clark Corp., 235 S.W.3d
163, 166 & n.3 (Tex. 2007). VMC did not argue that Texas has general jurisdiction over
Enright. Even if they had, Enright has not “conducted substantial activities within the
forum” that were “continuous and systematic” to support general jurisdiction. BMC
Software, 83 S.W.3d at 797. Moreover, it is not established that an individual can ever be
subject to general jurisdiction in any state other than his domicile. See Daimler AG v.
Bauman, 134 S. Ct. 746, 760 (2014). Finally, because the fiduciary shield doctrine
renders any contacts with Texas by Enright in his capacity as an agent for his employer
irrelevant for general jurisdiction, Wolf v. Summers-Wood, L.P., 214 S.W.3d 783, 790
(Tex. App.—Dallas 2007, no pet.), none of Enright’s contacts with Texas could satisfy
general jurisdiction.
13
received)8—satisfy due process. First, VMC’s pre-transaction claims fail to satisfy
the minimum contacts requirement. Second, none of VMC’s claims (pre- or post-
transaction) arise from or relate to the contacts that Enright does have with Texas.
And third, the exercise of personal jurisdiction over Enright for any of VMC’s
claims would offend the traditional notions of fair play and substantial justice. 9
8
For specific jurisdiction, jurisdictional contacts should be analyzed on a per-claim basis,
unless the claims relate to the same underlying contacts. Moncrief Oil Int’l Inc. v. OAO
Gazprom, 414 S.W.3d 142, 150 (Tex. 2013). Because VMC’s claims for fraud and
securities fraud allegedly arise from the same contacts before the transaction, it is proper
to analyze them together. Similarly, because VMC’s other claims relate to Enright’s
alleged control over QVL’s credit facility after the transaction, the jurisdictional analysis
for each post-transaction claim is the same.
9
As an initial matter, none of Mr. Enright’s contacts with Texas were made in his
capacity as an individual, and therefore they should not be attributed to him for
jurisdictional purposes. Where an individual’s contacts with Texas are attributable to his
employer, the fiduciary shield doctrine precludes those contacts from supporting a claim
of specific jurisdiction against the individual as well as general jurisdiction. Stull v.
LaPlant, 411 S.W.3d 129, 138 (Tex. App.—Dallas 2013, no pet.). VMC have argued
that because their claims against Enright are in his individual capacity, the fiduciary
shield doctrine does not apply. However, this misstates the law in Texas. While some
courts have stated in dicta that the fiduciary shield does not apply to specific jurisdiction,
the Texas Supreme Court has never so held. Furthermore, several courts have recognized
that official corporate acts should not be attributed to the individual for jurisdictional
purposes unless the individual had an independent reason to perform those acts. See
Kaye/Bassman Int’l Corp. v. Dhanuka, 418 S.W.3d 352, 359 (Tex. App.—Dallas 2013,
no pet.) (“Absent pleading and proof that an officer’s conduct was solely for the officer’s
benefit and contrary to the interest of the business entity, an officer’s ‘acts on the
corporation’s behalf are deemed corporate acts.’”) (quoting ACS Investors, Inc. v.
McLaughlin, 943 S.W.2d 426, 432 (Tex. 1997)). In this case, there is no evidence that
Enright had any contact with Texas for any purpose other than in the sole interest of
White Winston. Enright has no personal interest in any of the entities involved in the
transaction, including White Winston, or in the transaction or any of the agreements.
Therefore, he does not have the minimum contacts necessary to justify the assertion of
personal jurisdiction.
14
A. While representing White Winston in negotiating and providing
the purchase loan to VMC, Enright did not purposely avail
himself of the privileges of conducting business within Texas, so as
to invoke the benefits and protections of Texas law.
Enright’s contacts with Texas prior to VMC’s purchase of QVL’s
pharmacies do not constitute the “purposeful availment” required for minimum
contacts. There are three key elements to purposeful availment. First, only the
defendant’s contacts with the forum are relevant to purposeful availment. Moki
Mac, 221 S.W.3d at 575. Second, Enright’s contacts must be “purposeful rather
than random, fortuitous, or attenuated” Id. Third, he “must seek some benefit,
advantage or profit by availing [him]self of the jurisdiction.” Id. (quotation marks
and citation omitted). Enright’s pre-transaction Texas contacts meet none of these
requirements.
First, the contacts relied on by the trial court are not Enright’s. It is not
sufficient that VMC or QVL were located in Texas or that VMC’s alleged injury
was felt in Texas. See Revell v. Lidov, 317 F.3d 467, 473 (5th Cir. 2002) (“[T]he
plaintiff’s residence in the forum, and suffering of harm there, will not alone
support jurisdiction.”); see also Panda Brandywine Corp. v. Potomac Elec. Power
Co., 253 F.3d 865, 870 (5th Cir. 2001). “[O]nly the defendant’s contacts” are
relevant to personal jurisdiction, Moki Mac, 221 S.W.3d at 575. Here, it is
undisputed that Enright did not reach out to Texas. Instead, Enright’s contacts
15
were the result of the “unilateral activity of another party or a third person.”
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985).
The record shows, and VMC do not dispute, that Enright, on behalf of White
Winston, came into contact with VMC only because Dr. Franklin expressed an
interest in discussing financing possibilities with White Winston after Mr. Collins
contacted him on behalf of QVL. Without Dr. Franklin’s interest and Mr. Collin’s
invitation, Enright would never have had the two calls with Dr. Franklin or
executed the loan agreements between VMC and White Winston. See
TeleVentures, Inc. v. Int’l Game Tech., 12 S.W.3d 900, 912 (Tex. App.—Austin
2000, pet. denied) (holding contacts “instigated” by the plaintiff did not constitute
purposeful availment by the defendant); see also Michiana Easy Livin’ Country,
Inc. v. Holten, 168 S.W.3d 777, 793-94 (Tex. 2005) (holding that the defendant,
based in Michigan, did not purposefully avail itself of the benefits of doing
business in Texas by selling an RV to a Texas resident who had initiated the
transaction).
Even assuming that these contacts could be considered Enright’s rather than
VMC’s, they still fail to meet the second requirement for purposeful availment–
that his contacts were purposeful. Enright did not “reach out beyond” his home
state of New Hampshire to “create continuing relationships and obligations” in
16
Texas. Michiana, 168 S.W.3d at 785. To the contrary, Enright received and
responded to VMC’s inquiry concerning financing.
This case is similar to Michiana, in which the Texas Supreme Court held
that Texas could not exercise personal jurisdiction over an Indiana-based merchant
who sold and shipped a recreational vehicle to the plaintiff in Texas. Id. at 781. In
that case, the sale was instigated by the plaintiff, who first called the defendant. Id.
The defendant’s only contacts with Texas came as a result of that call, and
therefore did not constitute purposeful availment. Id. at 794. Just like the
defendant in Michiana, Enright did not purposefully reach out to Texas by
answering QVL’s and VMC’s request to discuss financing.
In fact, Enright’s pre-transaction contacts with Texas are even more
attenuated than the contacts in Michiana because, unlike the defendant in
Michiana, Enright, as an individual, was not a party to the resulting transaction.
The plaintiff in Michiana sued the company from whom he purchased an RV,
whereas here, VMC have sued one of White Winston’s agents as an individual.
Enright’s two telephone calls and handful of emails with VMC in December 2013
depended first on Mr. Collins’ and Dr. Franklin’s decision to reach out to White
Winston and second on the fact that Enright is White Winston’s agent. Enright’s
connection in his individual capacity to these contacts is far too attenuated to be
considered purposeful.
17
Finally, the third requirement of purposeful availment—that Enright sought
some benefit or advantage of doing business in Texas—is not met by his pre-
transaction contacts. See Moki Mac, 221 S.W.3d at 575. It is undisputed that
Enright personally has no interest in QVL, VMC, White Winston, or any
agreement or transaction among them. Enright individually never did any business
in Texas of any kind. The only business conducted by Enright was White
Winston’s loan to VMC, and that transaction was explicitly structured so as to
disclaim any “benefit, advantage or profit” from Texas by establishing
Massachusetts as the forum with exclusive jurisdiction over potential disputes. As
evidenced by the forum selection clauses of those documents, Enright, representing
White Winston, plainly sought no benefit of doing business in Texas. See Moki
Mac, 221 S.W.3d at 575; see also Michiana, 168 S.W.3d at 792 (“[I]nsertion of a
clause designating a foreign forum suggests that no local availment was
intended.”).
None of the three elements of purposeful availment are present with respect
to VMC’s pre-transaction claims. For Texas to exercise specific jurisdiction over
Enright, due process requires that he personally and purposefully availed himself
of the benefits of doing business in Texas, and he did not do so.
18
B. The exercise of specific jurisdiction over Enright is improper
because his contacts with Texas have no substantial connection to
the alleged torts.
The trial court’s order is flawed for the independent reason that none of
VMC’s claims—pre- or post-transaction—are sufficiently related Enright’s
contacts with Texas. In addition to purposeful availment, due process also requires
that “the defendant’s alleged liability ‘aris[es] out of or [is] related to’ an activity
conducted within the forum.” Moki Mac, 221 S.W.3d at 576 (citation omitted).
“The ‘arise from or relate to’ requirement lies at the heart of specific jurisdiction
by defining the required nexus between the nonresident defendant, the litigation,
and the forum.” Id. at 579. Specific jurisdiction is improper unless there is “a
substantial connection between [the defendant’s] contacts and the operative facts
of the litigation.” Id. at 585. In this case, Enright’s contacts with Texas are
unrelated to the alleged conduct underlying VMC’s post-transaction claims and in
any event, all of VMC’s claims fail as a matter of law and therefore cannot arise
from or relate to any contacts with Texas.
1. The factual basis for VMC’s post-transaction claims is
unrelated to Enright’s contacts with Texas.
The facts underlying VMC’s post-transaction claims—that White Winston
prevented QVL from making payments to VMC—are not substantially related to
any contacts with Texas. VMC assert that White Winston failed to advance credit
to QVL to make its payments, causing QVL to breach the TSA. However, White
19
Winston’s administration of QVL’s credit facility entailed no connection with
Texas at all. Thus, the conduct underlying VMC’s claims that Enright tortiously
interfered with QVL’s payments under the TSA or that he converted VMC’s
property did not involve any contacts with Texas. Put another way, Enright’s
actual contacts with Texas on behalf of White Winston—business communications
with QVL and VMC and a handful of trips—are not substantially connected to the
alleged torts.
Even accepting all of VMC’s allegations regarding Enright as true, all of
Enright’s conduct took place, if at all, outside of Texas. White Winston’s
advances of credit to QVL took place entirely outside of the state of Texas, and the
requested credit was made available to QVL through a zero-balance checking
account located in Boston. In August of 2014, a contractor for QVL mistakenly
sent VMC a check although QVL had no credit available, and the Boston-based
bank automatically rejected the check. Even if Enright were personally
responsible for that conduct and even if the conduct were somehow tortious, it still
did not involve any contacts with Texas and therefore fails to satisfy the
“substantial connection” requirement. See Moki Mac, 221 S.W.3d at 585 (holding
that plaintiff’s personal injury claim concerned alleged negligence that took place
in Arizona and the defendant’s contacts with Texas—which consisted of
20
advertising and promoting to Texas residents its Arizona river-rafting trips—were
not sufficiently connected to the claim to support specific jurisdiction).
Texas cannot exercise jurisdiction over Enright for the post-transaction
claims because he had no contacts with Texas in relation to the allegedly tortious
conduct. VMC’s allegations that tortious effects were felt in Texas are wholly
irrelevant to the question of personal jurisdiction. See Moki Mac, 221 S.W.3d
at 575. Whatever the effects in Texas, White Winston’s decisions and actions with
respect to QVL’s line of credit are not related to any contact with Texas by
Enright.
In their pleadings and at the special appearance hearing, VMC repeatedly
emphasize the number and frequency of Enright’s communications with VMC and
QVL. CR380; CR382-84; 2RR41, 2RR50-51. However, Enright’s
communications with parties in Texas do not substantially relate to the substance
of VMC claims, which took place entirely outside of Texas. This Court has
recognized the significant difference between communications that concern or
discuss allegedly tortious conduct and communications that are substantially
connected to the tortious conduct—the former cannot support personal jurisdiction,
only the latter. See TeleVentures, 12 S.W.3d at 910 (concluding that defendant’s
letter to plaintiff in Texas terminating their agreement was not related to the claim
for breach of contract because “[t]he breach, if any, was not created by the
21
termination letter; rather, if there was a breach, it occurred when and where [the
defendant] ceased its performance of the contract”).
These facts are similar to TeleVentures, in which this Court held that there
was no personal jurisdiction over a Nevada-based company for claims for breach
of contract, fraud, and tortious interference brought by a Texas-based manufacturer
of hotel-gambling technology. Id. at 904. The plaintiffs in that case alleged that
the defendant’s letter terminating their contract and the subsequent establishment
of a Texas-based joint venture with another company constituted sufficient
contacts with Texas to confer specific jurisdiction. Id. This Court disagreed, and
held that because the allegedly tortious conduct occurred in Nevada, the plaintiffs’
claims were not substantially related to activity conducted within the forum. Id.
at 910; see also Briggs v. Seacoast Power, L.L.C., No. 03-01-00286-CV, 2001 WL
1346137, at *4 (Tex. App.—Austin Oct. 25, 2001, no pet.) (“neither contracting
with a Texas resident nor communicating with such resident during the
performance of this contract is sufficient to confer jurisdiction.”).
Similarly here, Enright’s communications with VMC and QVL in Texas are
unrelated to the tortious conduct, which involved White Winston’s decision
whether to extend additional credit to QVL in Boston, with a Boston bank. That
conduct, whatever its effects in Texas, is not related, let alone substantially related,
to any contact with Texas by Enright.
22
2. Because all of VMC’s claims fail as a matter of law,
Enright’s contacts with Texas cannot possibly be
“substantially connected” to any tortious conduct.
Personal jurisdiction over all of VMC’s claims—both pre- and post-
transaction—does not satisfy the “substantially connected” requirement for the
independent reason that VMC’s claims fail as a matter of law. Although, under
Texas law, evidence that a defendant’s conduct was tortious is not sufficient to
confer personal jurisdiction, tortious conduct is nevertheless a necessary
requirement for specific jurisdiction based on a tort. Because Enright engaged in
no tortious conduct, his contacts with Texas, no matter how extensive, cannot be
substantially connected to any tortious conduct.
To confer personal jurisdiction based on commission of a tort, the Texas
long-arm statute requires both the commission of a tort and that the commission of
the tort took place in Texas. Tex. Civ. Prac. & Rem. Code Ann. § 17.042(2).
Because specific jurisdiction is predicated on the substantial connection between
the defendant’s contacts with Texas and the alleged tort, it is axiomatic that,
without any tortious conduct, there can be no substantial connection. Thus, a
nonresident can defeat personal jurisdiction by showing either that the tort did not
involve contacts with Texas or that his conduct, wherever committed, was not
tortious. See Michiana, 168 S.W.3d at 790-92 & nn. 76, 82 (disapproving of cases
holding that “specific jurisdiction turns on whether a defendant’s contacts were
23
tortious rather than the contacts themselves” but also recognizing that “a
nonresident may defeat jurisdiction by proving there was no tort”) (emphasis
added). Cf. Nat’l Indus. Sand Ass’n v. Gibson, 897 S.W.2d 769, 774 (Tex. 1995)
(finding no personal jurisdiction with respect to claims stemming from
constitutionally protected conduct for which there could be no liability).
VMC’s pre-transaction claims fail as a matter of law for two reasons. First,
VMC’s pre-transaction claims fail as a matter of law because, as set forth below in
Part II, there is no evidence of fraud. VMC have not alleged, let alone produced
any evidence, that Enright made any misrepresentation in the few contacts he had
with VMC prior to the transaction. Without evidence of misrepresentation, there
can be no connection between Enright’s contacts and fraud. See TeleVentures, 12
S.W.3d at 911-12 (holding that there was no personal jurisdiction over defendant
for claims of fraud where the communications at issue contained no actionable
statements). Second, VMC’s pre-transaction claims fail as a matter of law because
VMC released Enright, as an agent of White Winston, from any and all claims
existing on or before January 31, 2014, a fact VMC do not dispute.10 Without a
10
At the special appearance hearing, VMC argued that an affirmative defense cannot be
considered at the jurisdictional phase, but cited no law in support. To the extent the trial
court accepted this argument, it was in error. Even if VMC were correct that the trial
court should not make a factual determination concerning a disputed question of release,
VMC never even argued that the release was invalid or unenforceable, let alone offered
evidence in support of such an argument. The trial court was not free to disregard the
24
viable fraud claim, there can be no “substantial connection” to support personal
jurisdiction.
VMC’s post-transaction claims similarly fail as a matter of law, because
Enright’s conduct could not possibly have caused the damages VMC allege. VMC
claims that Enright’s interference with the TSA caused VMC to breach their Loan
Agreement with White Winston, which resulted in the loss of a $50,000 cutback
credit. CR544 (¶ 39). However, the uncontroverted evidence—i.e., the plain text
of the Loan Agreement and the uncontroverted timing of VMC’s final payment—
shows that VMC were not due the credit because they had not paid off the loan
within the timeframe required. CR237 (§ 1.3); CR209 (¶ 5). Thus, even if
Enright’s alleged interference with QVL’s payment occurred—and even if it
somehow related to a contact with Texas—the interference is still unrelated to
VMC’s claims because it cannot have been the cause of VMC’s damages. See
Butnaru v. Ford Motor Co., 84 S.W.3d 198, 207 (Tex. 2002) (stating that a claim
for tortious interference with an existing contract requires that the plaintiff suffered
actual damage or loss that was proximately caused by the alleged interference).
In short, because all of VMC’s pre- and post- transaction claims fail as a
matter of law, it is impossible for Enright’s contacts with Texas to be
uncontroverted evidence that VMC had waived their fraud claim months before filing
suit, leaving them without a claim on which to base specific jurisdiction over Enright.
25
“substantially connected” to any tortious conduct, as required by due process for
the exercise of specific jurisdiction. The trial court erred in concluding otherwise.
C. Exercise of personal jurisdiction over Enright does not comport
with traditional notions of fair play and substantial justice.
Even if the purposeful availment and substantial connection tests were met,
the trial court also erred in concluding that the exercise of personal jurisdiction for
any of VMC’s claims satisfies the traditional notions of fair play and substantial
justice, an independent requirement for due process. Guardian Royal Exch., 815
S.W.2d 223 at 231. Those concerns are strongly implicated in the case where, as
here, VMC are attempting to avoid mandatory jurisdiction in another state.11
Fair play and substantial justice are not served by permitting VMC to sue
White Winston’s agent in his individual capacity in Texas. Enright, on behalf of
White Winston, negotiated and executed the Loan Agreement and related
documents with VMC, all of which are subject to Massachusetts law and exclusive
11
In general, courts should consider the following factors in deciding whether the
exercise of jurisdiction comports with traditional notions of fair play and substantial
justice:
(1) the burden on the defendant; (2) the interests of the forum state in
adjudicating the dispute (including the state’s special regulatory
interest in areas such as insurance); (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.
Guardian Royal Exch., 815 S.W.2d at 231.
26
jurisdiction in the state of Massachusetts. White Winston’s contracts with VMC
are explicitly and purposefully structured to establish Massachusetts as the seat of
the parties’ relationship, and the same is true for White Winston’s relationship with
QVL.
Instead of suing White Winston in Massachusetts, VMC have transformed
contract claims into tort claims and asked a Texas court to force Enright—who has
no personal connection to Texas at all—to bear the burden and cost of cross-
country litigation so that VMC can avoid the half-dozen documents it signed
agreeing to submit to the jurisdiction of Massachusetts. Such an attempt to avoid
mandatory jurisdiction in another state offends the notions of fair play and
substantial justice. See Ashdon, Inc. v. Gary Brown & Assocs., Inc., 260 S.W.3d
101, 118 (Tex. App.—Houston [1st Dist.] 2008, no pet.) (holding that personal
jurisdiction over a Florida-based sales representative would offend traditional
notions of fair play and substantial justice where the representative conducted all
of his business in Florida, the alleged conversion of property took place in Florida,
and a related breach-of-contract claim was subject to litigation in Florida).
II. The trial court’s order is not supported by the evidence in the record
In addition to misapplication of the law, the trial court’s order is incorrect
because it implicitly rests on findings of fact unsupported by the evidence.
Although, as set forth in Part I, denial of Enright’s special appearance was error
27
even assuming that Enright had the contacts with Texas alleged, the court also
erred in concluding that there was sufficient evidence of those contacts. Because
the evidence is both legally and factually insufficient to support the necessary
factual findings underlying the denial, this Court should reverse the trial court’s
order and grant Enright’s special appearance.
A. The evidence is legally and factually insufficient to support the
inference that Enright could have made any alleged
misrepresentation to VMC prior to the transaction.
With respect to VMC’s pre-transaction fraud claims, the record contains no
evidence that Enright made any misrepresentations to VMC in December of 2013.
It is undisputed that VMC’s contacts with Enright before the close of the
transaction were limited to two telephone calls and one email exchange between
December 12 and December 31, 2013.12 There is no documentary evidence that
Enright made any fraudulent misrepresentation related to any of those contacts,
and Enright and Mr. Collins both testified that Mr. Collins negotiated the terms of
sale with Dr. Franklin.
Dr. Franklin’s affidavit is not, alone, sufficient to constitute evidence of a
misrepresentation. Dr. Franklin claims that he had substantive discussions with
Enright concerning the terms of the transaction, but even if this were true, his
12
Dr. Franklin testified that he had the December 12, 2013 call with Enright and
Mr. Collins and “at least one other phone call.” CR437-38 (¶¶ 3, 5). Dr. Franklin never
substantiates his implication that there were additional phone calls with any evidence.
28
vague descriptions of the content of those calls contain no description of any
misrepresentation. Dr. Franklin claims that Enright discussed the terms of sale
such as the price and the makeup of QVL’s assets, but he does not identify a single
statement by Enright that he claims was a misrepresentation.13 In fact, VMC’s
Petition contains no allegation of any contact with Texas in which Enright made
any specific misrepresentation.
Outside of Dr. Franklin’s affidavit, there is only one email in the record
between Dr. Franklin and Enright from December 13, 2013, which also does not
contain evidence of a misrepresentation. CR466. It is a request by Enright for
Dr. Franklin to provide financial information necessary to secure the purchase
loan. It contains none of the substantive discussion Dr. Franklin alleges and
contains no statement that the trial court could have inferred was a material
misrepresentation. CR466. Thus, there is no evidence to support a necessary fact,
and therefore the trial court erred in impliedly finding that fact without legally
sufficient evidence.
In the alternative, the great weight and preponderance of the evidence is
against the trial court’s implied finding of fact. Dr. Franklin’s conclusory
testimony is contradicted by the testimony of Enright and of Mr. Collins. Beyond
the conference call initiated by Mr. Collins on Dr. Franklin’s behalf, the record
13
Nor does Dr. Franklin ever explain how he came to rely on any of Enright’s alleged
statements.
29
contains no evidence of any communications between Enright and Dr. Franklin
regarding the terms or conditions of the transaction, let alone evidence of any
misrepresentation. VMC were unable to produce a single email, calendar
invitation, telephone record, or any other document that refers even obliquely to
the discussions that Dr. Franklin claims occurred. To find that Dr. Franklin was
credible and Enright could have made alleged misrepresentations, the trial court
would have had to believe that Dr. Franklin negotiated the purchase of two
pharmacy locations for $675,000 in the space of two telephone calls with Enright
lasting only a few hours. That finding is simply not supported by the weight of the
evidence.
B. The evidence is legally and factually insufficient to support the
inference that Enright could have interfered with the TSA.
There is also insufficient evidence to support the court’s implied finding that
Enright could have been responsible for the alleged interference with the TSA.
Even assuming that White Winston’s decisions concerning QVL’s credit facility,
all of which took place outside of Texas, could satisfy the due process
requirements for specific jurisdiction, there is legally and factually insufficient
evidence that Enright personally engaged in the alleged conduct. Although VMC
claim that Enright personally stopped QVL’s payment, the uncontroverted
evidence is that QVL did not have any credit available when the check was
30
presented and that the stop payment was an automatic action taken by Boston
Private Bank rather than by Enright.
Moreover, Enright had no power as an individual to extend or withhold
credit from QVL. QVL’s ability to pay any debt through its line of credit,
including payments to VMC, depended on at least two factors: (1) the availability
of credit and (2) the approval of White Winston to advance that credit. Enright did
not have control over either factor. CR210 (¶ 6). The availability of credit
depended on QVL’s cash flow, and the decision to advance credit required the
approval of two people at White Winston. Therefore, even if White Winston
somehow tortiously prevented QVL from paying VMC, and even if that conduct
were somehow substantially connected to some contact with Texas, there is no
evidence that Enright was personally responsible for that conduct and, in fact, the
uncontroverted evidence conclusively demonstrates that he was not personally
responsible.
On behalf of White Winston, Enright communicated with QVL concerning
the availability of credit and received QVL’s requests for advances, but there is no
evidence that Enright engaged in any of the allegedly tortious conduct (i.e., that
Enright personally prevented QVL from making any payment), and therefore the
evidence is legally insufficient. In the alternative, even if VMC’s conclusory
assertions that Enright interfered could be considered “more than a mere scintilla”
31
of evidence, the great weight of the actual evidence is contrary to the trail court’s
implied finding, and therefore the evidence is factually insufficient.
Thus, the evidence before the trial court in deciding Enright’s special
appearance is factually and legally insufficient to support any inference by the trial
court that Enright could have made a material misrepresentation or could have
been responsible for Appellees’ alleged harm. Without these implied findings of
fact that Enright personally took some action in Texas relating to VMC’s claims,
the trial court’s denial of Enright’s special appearance is not justified.
CONCLUSION AND PRAYER
Enright respectfully prays that, after full briefing and final hearing, this
Court:
1. Reverse the district court and grant Enright’s special appearance;
2. Dismiss VMC’s claims against Enright for lack of personal jurisdiction;
3. Award Enright the costs of this action; and
4. Grant such other and additional relief to which Enright has shown
himself to be justly entitled, whether at law or in equity.
32
Respectfully submitted,
VINSON & ELKINS LLP
/s/ Jennifer B. Poppe
Thomas S. Leatherbury
State Bar No. 12095275
2001 Ross Avenue, Suite 3700
Dallas, Texas 75201
Telephone: (214) 220-7700
Facsimile: (214) 999-7792
tleatherbury@velaw.com
Jennifer B. Poppe
State Bar No. 24007855
Jonah Jackson
State Bar No. 24071450
2801 Via Fortuna, Suite 100
Austin, Texas 78746
Telephone: (512) 542-8400
Facsimile: (512) 542-8612
jpoppe@velaw.com
jjackson@velaw.com
Attorneys for Appellant Todd Enright
33
CERTIFICATE OF COMPLIANCE
Pursuant to Texas Rule of Appellate Procedure 9.4(i)(3), I hereby certify that
this brief contains 7,690 words, excluding the words not included in the word
count pursuant to Texas Rule of Appellate Procedure 9.4(i)(1). This is a computer
generated document created in Microsoft Word, using 14-point typeface for all
text, except footnotes which are in 13-point typeface. In making this certificate of
compliance, I am relying on the word count provided by the software used to
prepare the document.
/s/ Jennifer B. Poppe
Jennifer B. Poppe
34
CERTIFICATE OF SERVICE
The undersigned certifies that on the 21st day of July 2015, a true and correct
copy of this brief was served on the following attorneys in accordance with the
requirements of the Texas Rules of Appellate Procedure via electronic filing or
email.
Eric J. Taube
Paul Matula
Taube Summers Harrison Taylor Meinzer Brown, LLP
100 Congress Avenue, 18th Floor
Austin, Texas 78701
etaube@taubesummers.com
pmatula@taubesummers.com
/s/ Jennifer B. Poppe
Jennifer B. Poppe
US 3623643
35
APPENDIX
Appendix-1 Order Denying Defendant Todd Enright’s First CR567-68
Amended Special Appearance (May 15, 2015)
36
Appendix-1
DC BK15135 PG701
CAUSE NO. D-1-GN-14-004689
ASCLEPIUS PANACEA, LLC, ASCLEPIUS § IN THE DISTRICT COURT
PANACEA GP, LLC, DAILY PHARMACY, §
LLC, DAILY PHARMACY GP, LLC, AND §
TOTH ENTERPRISES II, P.A. D/B/A §
VICTORY MEDICAL CENTER § OF TRAVIS COUNTY, TEXAS
§
Plaintiffs, §
§
vs. §
§
QVL PHARMACY #181 GP, LLC, QVL § 98TH JUDICIAL DISTRICT
PHARMACY# 162 GP, LLC, QVL §
PHARMACY HOLDINGS, INC., and TODD §
ENRIGHT, INDIVIDUALLY §
§
Defendants §
ORDER DENYING DEFENDANT TODD ENRIGHT'S
FIRST AMENDED SPECIAL APPEARANCE
On this day came to be considered Defendant Todd Enright's First Amended Special
Appearance. Having considered the special appearance, the response filed by the Plaintiffs, the
arguments of counsel presented at the hearing on April 30, 2015 and the evidence admitted, and
the pleadings, the Court is of the opinion that the special appearance should be denied. It is
therefore
ORDERED that Defendant Todd Enright's First Amended Special Appearance is
DENIED.
SIGNED on this 1~-ft\day of ~ , 2015.
!iJ~ p. ~
JUDGE PRESIDING
567
DC BK15135 PG702
AGREED AS TO FORM:
~.c~ ~ d
Paul Matula
Taube Summers Harrison Taylor Meinzer Brown LLP
100 Congress Ave., Suite 1800
Austin, Texas 78701
Telephone: 512/472-5997
Telecopier: 512/472-5248
pmatula({l:.taubesummers.com
Je nifer B. Popp
Jonah Jackson
Vinson & Elkins, LLP
2801 Via Fortuna, Suite 100
Austin, Texas 78746-7588
Telephone: 512/542-8464
Telecopier: 512/236-3470
jpoppet(i;,vela'\ .com
j jackson@vela>\'.com
COUNSEL FOR DEFENDANT TODD ENRIGHT
568