George Garcia v. Gregory K. Propst, Individually and Derivatively on Behalf of Riostar Solutions, Inc. ( 2020 )

NUMBER 13-18-00472-CV
COURT OF APPEALS
THIRTEENTH DISTRICT OF TEXAS
CORPUS CHRISTI – EDINBURG
GEORGE GARCIA, ET AL., Appellants,
v.
GREGORY K. PROPST, INDIVIDUALLY
AND DERIVATIVELY ON BEHALF OF
RIOSTAR SOLUTIONS, INC., Appellee.
On appeal from the 275th District Court
of Hidalgo County, Texas.
OPINION
Before Justices Benavides, Longoria, and Perkes
Opinion by Justice Perkes
Appellee Gregory K. Propst (Greg), individually and derivatively on behalf of
RioStar Solutions, Inc., sued, among others, appellants George Garcia, J Brokerage
Corp., Daniel Diaz, Frank Diaz, Tim O’Bannon, S. Katzman Produce, Inc., Katzman Berry
Corp., Top Katz Brokers, LLC, Stephen Katzman, Joseph Palumbo, Mario Andreani,
Patterson Companies, Inc., Sweet Life Logistics, Inc., and Sweet Life Transportation, Inc.,
all nonresidents, for various business-related torts. On interlocutory appeal, appellants
contend by two issues that (1) the trial court erred in denying their special appearances,
and (2) the trial court abused its discretion in sustaining Greg’s objections to portions of
their jurisdictional evidence. We affirm in part and reverse and render in part.
I. BACKGROUND
In 2013, Greg and his nephew Christopher Propst (Chris), formed RioStar
Solutions, Inc. (RioStar), a Texas corporation with its principal place of business in
McAllen, Texas, as the corporation’s sole shareholders, directors, and officers. From its
inception, RioStar entered into an “Independent Contractor/Sales Agent Agreement”
(Sales Agreement) with appellants Patterson Companies, Inc. and Sweet Life Logistics,
Inc (collectively Patterson), affiliated Florida corporations with their principal places of
business in Florida.1
Patterson is a federally licensed freight broker that acts as an intermediary
between shippers, receivers, and carriers.2 Patterson contracts with independent sales
agents, such as RioStar, to operate under Patterson’s name and license in different parts
of the country. The Sales Agreement between Patterson and RioStar generally provided
that RioStar would solicit business on behalf of Patterson in exchange for a commission.
Patterson agreed to provide RioStar with financing for start-up costs, promotional
materials, logistical support, and access to proprietary information such as software,
1 At the time of the Sales Agreement, Patterson Companies, Inc. was known as Patterson Freight
Systems, Inc. and Sweet Life Logistics, Inc. was known as Sam Patterson Truck Brothers, Inc.
2 The primary distinction between the two Patterson entities is that Patterson Companies, Inc.
serves the perishable goods market while Sweet Life Logistics, Inc. focuses on nonperishable goods.
2
shipper and carrier lists, and rates charged. The Sales Agreement allowed either party to
terminate the contract upon written notice and included a Florida forum-selection and
choice-of-law provision. The Sales Agreement included a provision stating that RioStar
would be Patterson’s exclusive agent for “Texas and Mexico through 2015.” A significant
portion of the customers RioStar solicited on behalf of Patterson were based in South
Texas, especially agricultural producers.
RioStar thereafter entered into a Management Services Agreement (Management
Agreement) with Stride Investments, LLC (Stride), a Texas company wholly owned by
Chris. Chris was already operating as an independent sales agent for Patterson prior to
forming RioStar with Greg. Under the Management Agreement, Stride, through Chris’s
expertise, agreed to act as an external consultant to RioStar in exchange for an annual
fee. Stride also agreed that it would not disclose RioStar’s proprietary information or
engage in other management services that would create a conflict of interest.
Over the next three years, the relationship between Greg and Chris deteriorated,
leading to uncertainty about RioStar’s future in the summer of 2016. Chris ultimately
elected to leave RioStar and open a competing brokerage in McAllen, taking several of
RioStar’s employees with him and, according to Greg, RioStar’s proprietary information
and customers. Greg filed this lawsuit in September 2016, bringing claims against Chris
and Stride for breach of fiduciary duty and claims against Chris, Stride, and the former
RioStar employees for violating the Texas Uniform Trade Secrets Act and the “Texas Civil
Theft Act.”
Greg also alleged that a group of Patterson officers and independent contractors,
appellants George Garcia, J Brokerage Corp., Daniel Diaz, Frank Diaz, and Tim
3
O’Bannon (collectively referred to as the “Garcia Group” in the petition), and a group of
Patterson clients and their affiliated companies and principals, appellants S. Katzman
Produce, Inc., Katzman Berry Corp., Top Katz Brokers, LLC, Stephen Katzman, Joseph
Palumbo, and Mario Andreani (collectively referred to as “Katzman” in the petition),
formed a civil conspiracy to lure Chris away from RioStar and Patterson and “join Garcia
Group and Katzman in a new venture offering transportation management services in
direct competition with RioStar.” Greg sued the “Garcia Group” and “Katzman” for aiding
and abetting Chris’s breach of fiduciary duty and the “Garcia Group” for tortious
interference with a contract. However, the petition failed to identify which of the eleven
appellants were the principal actors in the conspiracy, attributing acts generally to the
“Garcia Group” and “Katzman.” Moreover, the petition failed to allege that any act in
furtherance of the conspiracy occurred in Texas or that the conspiracy ever came to
fruition (i.e., that these appellants ever opened a competing brokerage in Texas).
Appellants Patterson Companies, Inc., Sweet Life Logistics, Inc., and Sweet Life
Transportation, Inc. were not originally named in the suit. With Greg and Chris unable to
resolve their dispute, Patterson Companies, Inc. and Sweet Life Logistics, Inc. exercised
their right to terminate the Sales Agreement with RioStar and offered individual contracts
to both Greg and Chris. Greg declined3 but Chris accepted, entering into a “Broker/Sales
Agent Agreement” with Patterson Companies, Inc., Sweet Life Logistics, Inc., and Sweet
3 In an August 15, 2016 email, Greg tried to convince the principal owner of the Patterson entities
that “setting Chris up as a competing Patterson agent in McAllen, TX . . . would be hugely detrimental to
RioStar as well as Patterson.” Greg wanted the Patterson entities to maintain an exclusive relationship with
RioStar. When that did not happen, Greg and RioStar elected to work with another licensed broker.
4
Life Transportation, Inc. 4 (collectively Patterson Companies) on September 27, 2016.
Greg subsequently amended his petition by alleging the Patterson Companies were
providing Chris’s competing brokerage with the same financial, promotional, and logistical
support previously provided to RioStar under the Sales Agreement, and thereby aiding
and abetting Chris, Stride, and the former RioStar employees in breaching their fiduciary
duties to RioStar and tortiously interfering in its contractual relationships with those
parties.5
When the suit was filed, the trial court granted Greg’s request for a temporary
restraining order against the original defendants, enjoining them from “[a]cting as an
agent of or doing business in Texas under Patterson’s brokerage license.” A corporate
representative for Patterson Companies, Inc. filed an affidavit opposing Greg’s request
for a temporary injunction, averring that not doing business in Texas would cost the
company “gross revenues in the amount of $10,000,000.00 or more.” The trial court lifted
the prohibition but required Chris to pay RioStar a monthly royalty on commissions. This
latter order was subsequently reversed.6
Three special appearances were filed, one on behalf of each group of appellants
identified in the petition. They all contended that Greg failed to meet his initial pleading
burden and verified that the appellants were nonresidents. Jurisdictional discovery was
4 Sweet Life Transportation, Inc. is a federally licensed motor carrier, not a federally licensed
transportation broker like Patterson Companies, Inc. and Sweet Life Logistics, Inc.
5 Patterson Companies, Inc. and Sweet Life Logistics, Inc. have sued Greg and RioStar in Florida,
alleging violations of noncompete and confidentiality provisions in the Sales Agreement.
6 The temporary injunction was the subject of another interlocutory appeal in this Court. See Propst
v. Propst, No. 13-18-00291-CV, 2019 WL 5609964 (Tex. App.—Corpus Christi–Edinburg Oct. 31 2019, no
pet. h.).
5
conducted, and each party filed evidence to support their position. Greg’s evidence
consisted of deposition transcripts, recorded phone conversations, emails, and various
business records, while appellants relied primarily on affidavits. Greg objected to
numerous portions of these affidavits on various grounds, all of which were sustained by
the trial court. During the hearing, Greg abandoned his allegation of general jurisdiction,
relying solely on specific jurisdiction.7 The trial court denied the special appearances as
to each appellant and this interlocutory appeal ensued. See TEX. CIV. PRAC. & REM. CODE
ANN. § 51.014(a)(7).
II. STANDARD OF REVIEW & APPLICABLE LAW
A. Standard of Review
Whether a trial court may exercise personal jurisdiction over a nonresident
defendant is a question of law we review de novo. Searcy v. Parex Res., Inc., 496 S.W.3d
58, 66 (Tex. 2016) (citing Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801,
805–06 (Tex. 2002)). “When, as here, the trial court did not issue findings of fact and
conclusions of law, all relevant facts that are necessary to support the judgment and
supported by evidence are implied.” Old Republic Nat’l Title Ins. Co. v. Bell, 549 S.W.3d
550, 558 (Tex. 2018) (citing BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789,
795 (Tex. 2002)).
B. Personal Jurisdiction
Under Texas’s long-arm statute, Texas courts may exercise personal jurisdiction
over a nonresident defendant that “does business” in Texas. See TEX. CIV. PRAC. & REM.
7 Greg’s petition generally alleges that “[e]ach nonresident Defendant has minimum contacts with
the State of Texas necessary to establish specific and general jurisdiction.”
6
CODE ANN. §§ 17.041, .042; PHC-Minden, L.P., v. Kimberly-Clark Corp., 235 S.W.3d 163,
166 (Tex. 2007). Because the exercise of personal jurisdiction over a nonresident
implicates due process concerns, the Texas long-arm statute reaches only “as far as the
federal constitutional requirements of due process will permit.” PHC-Minden, 235 S.W.3d
at 166 (quoting U-Anchor Adver., Inc. v. Burt, 553 S.W.2d 760, 762 (Tex. 1977)); see
Goodyear Dunlop Tires Operations, S.A., v. Brown, 564 U.S. 915, 918 (2011) (“A state
court’s assertion of jurisdiction exposes defendants to the State’s coercive power, and is
therefore subject to review for compatibility with the Fourteenth Amendment’s Due
Process Clause.” (citing Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945))).
The exercise of personal jurisdiction satisfies due process if (1) the nonresident
defendant established minimum contacts with the forum state and (2) the exercise of
jurisdiction comports with traditional notions of fair play and substantial justice. Id. (citing
Int’l Shoe, 326 U.S. at 316). When a nonresident defendant purposefully avails itself of
the privileges and benefits of conducting business in a foreign jurisdiction, its contacts are
sufficient to confer the forum with personal jurisdiction. Moncrief Oil Int’l, Inc. v. OAO
Gazprom, 414 S.W.3d 142, 150 (Tex. 2013) (citing Republic Drilling, 278 S.W.3d at 338)).
Only the defendant’s purposeful contacts are relevant to the inquiry; unilateral activity of
another party or third person, as well as random, isolated, or fortuitous contacts by the
defendant, are insufficient to prove that the defendant purposefully availed itself.
Cornerstone Healthcare Grp. Holding, Inc. v. Nautic Mgmt. VI, LP, 493 S.W.3d 65, 70
(Tex. 2016) (citing Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 785
(Tex. 2005)).
7
Once minimum contacts have been established, the exercise of jurisdiction will
typically comport with traditional notions of fair play and substantial justice. Spir Star AG
v. Kimich, 310 S.W.3d 868, 878 (Tex. 2010) (citing Guardian Royal Exch. Assurance, Ltd.
v. English China Clays, PLC, 815 S.W.2d 223, 231 (Tex. 1991)). The defendant must
present “a compelling case that the presence of some consideration would render
jurisdiction unreasonable.” Id. at 879 (quoting Guardian Royal, 815 S.W.2d at 231).
There are two types of personal jurisdiction, specific and general. Id. at 71; see
generally Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 (1984)
(adopting the terms “general” and “specific” to describe the two types of personal
jurisdiction). The exercise of specific jurisdiction is appropriate when the plaintiff’s claim
arises from or relates to the defendant’s contacts with the forum state. Cornerstone
Healthcare, 493 S.W.3d at 71 (citing Spir Star, 310 S.W.3d at 873). In other words, “there
must be a substantial connection between those contacts and the operative facts of the
litigation.” Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 585 (Tex. 2007).
C. Shifting Burdens
The plaintiff bears the initial burden of alleging facts that establish the trial court’s
jurisdiction under the Long-Arm Statute (e.g., for a tort claim, that the defendant
committed tortious acts in Texas). Searcy, 496 S.W.3d at 66 (citing Retamco Operating,
Inc. v. Republic Drilling Co., 278 S.W.3d 333, 337 (Tex. 2009)). The burden then shifts to
the defendant to negate all bases for personal jurisdiction that exist in the plaintiff’s
pleading. Id. (citing Republic Drilling, 278 S.W.3d at 337).
If the plaintiff fails to meet its pleading burden, however, “the defendant need only
prove that it does not live in Texas to negate jurisdiction.” Kelly v. Gen. Interior Constr.,
8
Inc., 301 S.W.3d 653, 659 (Tex. 2010) (citing Siskind v. Villa Found. for Educ., Inc., 642
S.W.2d 434, 438 (Tex. 1982)). The burden then shifts back to the plaintiff to present
rebuttal evidence that establishes personal jurisdiction. See id. at 660 (acknowledging
that, although the plaintiff “failed to plead jurisdictional facts” and the defendants met “their
burden to negate all basis of jurisdiction by proving that they do not live in Texas,” the
plaintiff had the opportunity to “present any responsive evidence establishing the requisite
link with Texas.”); see also TEX. R. CIV. P. 120a(3) (“The court shall determine the special
appearance on the basis of the pleadings, any stipulations made by and between the
parties, such affidavits and attachments as may be filed by the parties, the results of the
discovery processes, and any oral testimony.”). “If the plaintiff’s evidence does not fall
within the scope of the factual allegations in the pleading, then the plaintiff should amend
the pleading for consistency.” Kelly, 301 S.W.3d at 659 n.4.
D. A Conspiracy Alone Does Not Establish Jurisdiction
“The mere existence or allegation of a conspiracy directed at Texas is not sufficient
to confer jurisdiction.” Old Republic Nat’l Title Ins. Co. v. Bell, 549 S.W.3d 550, 560 (Tex.
2018) (citing Nat’l Indus. Sand Ass’n v. Gibson, 897 S.W.2d 769, 773 (Tex. 1995)).
Moreover, a plaintiff cannot impute jurisdictional contacts between co-conspirators; to
satisfy due process, each defendant himself must have minimum contacts with Texas that
are substantially connected to the operative facts of the litigation. Siskind v. Villa Found.
for Educ., Inc., 642 S.W.2d 434, 437 (Tex. 1982) (citing Rush v. Savchuk, 444 U.S. 320
(1980)); see also TV Azteca v. Ruiz, 490 S.W.3d 29, 52 (Tex. 2016) (“When determining
personal jurisdiction, ‘[e]ach defendant’s contacts with the forum State must be assessed
individually.’” (quoting Calder v. Jones, 465 U.S. 783, 790 (1984))).
9
III. ANALYSIS
A. Patterson Companies
Greg satisfied his pleading burden against the Patterson Companies, and provided
evidence—largely uncontroverted—that affirmed his jurisdictional allegations. See Kelly,
301 S.W.3d at 659. Accordingly, the record establishes that the Patterson Companies
had minimum contacts with the forum that were substantially connected to the operative
facts of Greg’s lawsuit. See id.
1. Minimum Contacts
After Patterson Companies, Inc. and Sweet Life Logistics, Inc. terminated the
Sales Agreement with RioStar, they, along with Sweet Life Transportation, Inc., entered
into an agreement with Chris that allowed him to act as their sales agent in Texas.8 That
agreement created a purposeful and substantial connection between the Patterson
Companies and the forum, not only because Chris performed under the agreement in
Texas, but because it allowed the Patterson Companies to repeatedly service and profit
from the Texas market, creating a contact with the forum every time Chris arranged a
load on their behalf. See Michiana, 168 S.W.3d at 787 (explaining that even a single
contract can establish minimum contacts, especially when “it involves many contacts over
a long period of time” (citing CMMC v. Salinas, 929 S.W.2d 435, 440 (Tex. 1996)).
The fact that Chris operates as an independent contractor instead of a Patterson
employee is immaterial to the jurisdictional analysis. See TV Azteca, 490 S.W.3d at 51
(“[A] defendant who ‘intentionally targets Texas as the marketplace for its products’ is
8 The agreement does not distinguish between the three entities, referring to them collectively as
“Patterson” throughout the agreement.
10
subject to specific jurisdiction, and ‘using a distributor-intermediary for the purpose
provides no haven from the jurisdiction of a Texas court.’” (quoting Spir Star, 310 S.W.3d
at 871)). To be sure, Chris holds himself out as an authorized representative of the
“Patterson Companies.” Every shipment is brokered under the authority of their federal
licenses, bonded by their insurance, and constitutes a service agreement between the
Patterson Companies and their customer.
And, of course, the Patterson Companies derive a significant financial benefit from
providing their services to the Texas market; a corporate representative for Patterson
Companies, Inc. stated that prohibiting the company from doing business in Texas during
the pendency of this case would cost the company “gross revenues in the amount of
$10,000,000.00 or more.” The Patterson Companies also routinely advance fuel costs to
carriers, including those in Texas. The sum of their contacts with Texas since entering
the new agreement with Chris on September 27, 2016, is significant, all with an eye
toward “getting extensive business in or from the forum state.” See Moncrief Oil, 414
S.W.3d at 153 (quoting Michiana, 168 S.W.3d at 789–90).
2. Forum-Selection Clause
Patterson Companies, Inc. and Sweet Life Logistics, Inc. point to the Florida forum-
selection clause in their Sales Agreement with RioStar as proof that they did not intend
to purposely avail themselves of the forum.9 To be clear, neither appellant filed a motion
to dismiss, seeking to enforce the clause. See generally In re Longoria, 470 S.W.3d 616,
625 (Tex. App.—Houston [14th Dist.] 2015, orig. proceeding) (“Forum-selection clauses
9 This section does not apply to Sweet Life Transportation, Inc., who was not a party to the Sales
Agreement.
11
are generally enforceable and presumptively valid.” (citing In re Laibe Corp., 307 S.W.3d
314, 316 (Tex. 2010) (orig. proceeding) (per curiam))); Deep Water Slender Wells, Ltd. v.
Shell Intern. Exploration & Production, Inc., 234 S.W.3d 679, 687 (Tex. App.—Houston
[14th Dist.] 2007, pet. denied) (“A motion to dismiss is the proper procedural mechanism
for enforcing a forum-selection clause that a party to the agreement has violated in filing
suit.” (citing In re AIU Ins. Co., 148 S.W.3d 109, 111–21 (Tex. 2004) (orig. proceeding))).
In fact, Patterson Companies, Inc. and Sweet Life Logistics, Inc. concede in their brief to
this Court that “Greg’s claims do not arise out of the [Sales] Agreement.” See In re
Longoria, 470 S.W.3d at 625 (“The court must first determine whether the claims fall within
the scope of the forum-selection clause.” (citing Deep Water Slender Wells, 234 S.W.3d
at 687–88)).10
Nevertheless, they ask us to consider the forum-selection clause for the limited
purpose of determining purposeful availment, citing Michiana for the proposition that “a
clause designating a foreign forum suggests that no local availment was intended.” See
168 S.W.3d at 792. The Michiana Court explained, however, that “a forum-selection
clause operates as consent to jurisdiction in one forum, not proof that the Constitution
would allow no other.” Id. (citing Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 595
(1991). Thus, while a forum selection clause “cannot be ignored,” it “does not necessarily
indicate [the nonresident] had no minimum contacts anywhere else.” Id.
Although the Michiana Court ultimately determined that the defendant did not
purposefully avail itself of the forum, the Court did not rely exclusively on the forum-
10 We do not offer any opinion regarding the enforceability of the forum-selection clause.
12
selection clause to reach that conclusion. Id. at 784–94. Instead, finding “[n]either [wa]s
sufficient,” the Court rejected the two contacts relied on by the court of appeals in affirming
the denial of the special appearance. Id. at 788. The forum-selection clause was only
“additional proof” that the defendant did not purposefully avail itself of the forum. Id. at
792.
Unlike Michiana, we have already determined that Patterson Companies, Inc. and
Sweet Life Logistics, Inc. had significant contacts with Texas. Perhaps more importantly,
those contacts occurred after the Sales Agreement was terminated. Because Patterson
Companies, Inc. and Sweet Life Logistics, Inc. concede that Greg’s claims are beyond
the scope of the forum-selection clause, we need not decide whether the quality of those
contacts would overcome any contrary “suggest[ion]” raised by the clause. See id.
3. Substantially Connected
Finally, we find that Greg’s claims that the Patterson Companies tortiously
interfered with RioStar’s contractual relationships and aided and abetted Chris in
breaching his fiduciary duty to RioStar are substantially connected to the operative facts
of the litigation, which center on Chris’s conduct once he left RioStar and separately
began representing the Patterson Companies. See Moki Mac, 221 S.W.3d at 585. One
of the key disputes in the litigation is whether the proprietary information Chris allegedly
misappropriated from RioStar, “including customer names and contact information,
account information, rates, forms, [and] marketing materials,” actually belongs to the
Patterson Companies. See id.
We overrule the Patterson Companies’ first issue.
13
B. The Conspiracy Between “Garcia Group” and “Katzman”
As noted, Greg alleges a conspiracy between eleven of the appellants but fails to
identify the principal actors in the conspiracy or allege that any act in furtherance of the
conspiracy occurred in Texas. See Kelly, 301 S.W.3d at 660 (“[A]lthough GIC has alleged
two claims of wrongdoing, it has not alleged that any acts giving rise to these two claims
occurred in Texas.”). Instead, Greg’s allegation that the conspiracy had a “plan to
dominate the Texas market” is nothing more than an “allegation of a conspiracy directed
at Texas” that is insufficient to confer jurisdiction. See Old Republic, 549 S.W.3d at 560
(citing Gibson, 897 S.W.2d at 773).
Accordingly, these appellants satisfied their burden to negate jurisdiction by
proving that they were not Texas residents. See Kelly, 301 S.W.3d at 659. But that does
not end our inquiry; the burden then shifted back to Greg to “present any responsive
evidence establishing the requisite link with Texas” that was “within the scope of the
factual allegations in the pleading.” See id. at 659 n.4, 660.
1. George Garcia and Daniel Diaz
Greg produced evidence that George Garcia and Daniel Diaz solicited Chris to
leave RioStar and join them as a partner in a new brokerage that would compete with the
Patterson Companies and RioStar in Texas. This evidence primarily consisted of a series
of phone conversations between Greg and Chris in early September 2016 that were
secretly recorded by Greg, including the following exchange:
CHRIS: All of this stuff has gone wrong because George and Danny
promised me that they were opening a new company.
GREG: Like a new brokers company or what?
14
CHRIS: Yes.
....
CHRIS: But they promised that I was gonna be a partner in a new
company. And so I screwed up, thinking, “Okay. Well, I guess
I can go do something with you guys.” And that’s where I’ve
been. And I messed up. In mean, they—like you told me,
they—don’t have my back. I don’t even believe that they—I,
honestly, right now, think that they’ve done all this to destroy
the office to be able to go do their office—is what I think.
GREG: To do their office—what—Patterson down here? Or what do
you think?
CHRIS: No. No. No. No. To do their new office. They wanted us to
dissolve, so they can take the business from Texas—is what
I think.
Although they disputed Chris’s characterization of their conversations, 11 both
George and Daniel acknowledged that they spoke with Chris by telephone in the summer
of 2016. Whether a tort occurred as a result of these conversations is not our concern.
See Michiana, 168 S.W.3d at 790–92 (rejecting the idea that personal jurisdiction should
turn on viability of the claim). Instead, “[w]hen communications between a nonresident
and a resident are alleged as the basis for jurisdiction, we look to the quality and nature
of the communications to establish purposeful availment.” Old Republic, 549 S.W.3d at
560 (citing Searcy, 496 S.W.3d at 74).
11 Daniel stated in an affidavit that Chris called him, they spoke only about Chris’s frustrations with
Greg, and that Daniel encouraged Chris to work things out with Greg. During his deposition, George also
said that he counseled Chris to work things out with Greg but did acknowledge that he told Chris that he
may leave Patterson in the future and that Chris could join him. But George insisted that he never negotiated
with Chris or offered him a partnership in a new venture because he did not have any specific plans to leave
Patterson at that time: “There was [sic] conversations, broad conversations, if down the road Patterson
takes this direction, that’s not the direction that I want to go. I may look for a different revenue, and you’re
more than welcome to come if you choose.”
15
The evidence produced by Greg supports an implied finding by the trial court that
George and Daniel “sought a benefit, advantage, or profit from these calls” by seeking to
take the book of business that Chris had established in South Texas on behalf of
Patterson and RioStar and make it their own. See id. at 558, 561. Their contacts were
purposeful because they were “aimed at getting extensive business in or from the forum
state.” See Moncrief Oil, 414 S.W.3d at 153 (quoting Michiana, 168 S.W.3d at 789–90).
Further, there is more than a substantial connection between these contacts and
the operative facts of Greg’s claims against George and Daniel—they are one and the
same. By inducing Chris to leave RioStar through alleged “aggressive recruiting efforts,”
George and Daniel may have tortiously interfered with the contractual relationships
between RioStar, Chris, Stride, and the former RioStar employees, and may have aided
and abetted Chris in breaching his fiduciary duties to RioStar. See Moki Mac, 221 S.W.3d
at 585. Accordingly, we overrule George and Daniel’s’ first issue.
However, their contacts cannot be imputed to the nine other alleged conspirators.
See Siskind, 642 S.W.2d at 437 (citing Rush, 444 U.S. 320). Instead, “[e]ach defendant’s
contacts with the forum State must be assessed individually.” TV Azteca, 490 S.W.3d at
52 (quoting Calder, 465 U.S. at 790). Greg failed to establish that any of the other
conspirators had minimum contacts with Texas that were substantially connected to the
operative facts of the litigation. See Moki Mac, 221 S.W.3d at 585.
2. J Brokerage Corp.
J Brokerage Corp. is a Florida corporation with its principal place of business in
Florida. George Garcia is its sole shareholder and it operates in the same fashion that
RioStar operated under the Sales Agreement, soliciting business on behalf of Patterson
16
as an independent contractor/sales agent because it is not a federally licensed
transportation broker in its own right.
Greg suggests in his brief that George was acting on behalf of J Brokerage Corp.
when he solicited Chris to leave RioStar and Patterson, but there is no evidence in the
record to support that assertion. Nor did Greg allege or prove that George’s contacts
should be imputed to J Brokerage Corp. based on an alter ego theory. See generally
Watamar Holding S.A. v. SFM Holdings, S.A., 583 S.W.3d 318, 332 (Tex. App.—Houston
[14th Dist.] 2019, no pet.) (discussing the standard for jurisdictional veil-piercing between
an individual and a corporation). We sustain J Brokerage Corp.’s first issue.
3. Frank Diaz and Tim O’Bannon
The record evidence supports an implied finding that Frank Diaz and Tim
O’Bannon were part of the group that may have planned to form a new business, but
nothing more. There is no evidence that either individual solicited Chris to leave RioStar
and Patterson or had any other minimum contacts with Texas that were substantially
connected to Greg’s claims. See Moki Mac, 221 S.W.3d at 585. We sustain Frank Diaz
and Tim O’Bannon’s first issue.
4. S. Katzman Produce, Inc., Katzman Berry Corp., Top Katz Brokers,
LLC, Stephen Katzman, Joseph Palumbo, and Mario Andreani.
Stephen Katzman owns S. Katzman Produce, Inc. and Katzman Berry Corp. and
shares an ownership interest in Top Katz Brokers, LLC with Joseph Palumbo and Mario
Andreani (collectively Katzman Group). All three Katzman Group entities are involved in
the produce industry. As Stephen Katzman acknowledges in his affidavit, these entities
“purchase[] produce from suppliers all over the country, inncluding Texas, and use[] the
17
Patterson Companies to broker the transportation of said produce.” Assuming, without
deciding, that each entity and individual in the Katzman Group purposefully availed itself
of the forum by agreeing to provide “support and financial backing” to a prospective
business,12 we conclude there is not a substantial connection between these contacts
and the operative facts of the litigation. See id.
While Greg’s claims against George and Daniel for aiding and abetting are
derivative, his theory of joint and several liability against the Katzman Group based on a
civil conspiracy is another step removed from the operative facts of the litigation. Greg’s
primary claim is that Chris breached his fiduciary duty to RioStar when he left and opened
a competing brokerage, taking with him customers, employees, and proprietary
information. Thus, the operative facts of Greg’s suit principally concern Chris’s conduct.
See id. at 585. Then the evidence would turn to whether George and Daniel aided and
abetted Chris by “inducing” him “to cut ties with RioStar and act against its interest.” See
id. Only after answering these two questions would a jury then assess whether the
Katzman Group are jointly and severally liable for George and Daniel’s actions by forming
a civil conspiracy with them to lure Chris away. See id. In other words, the Katzman
Group’s forum contacts would not be “the focus of the trial” or “consume most if not all of
the litigation’s attention.” See id.; TV Azteca, 490 S.W.3d at 53.
At best, there is a “but-for” relatedness between their forum contacts and Greg’s
suit. But for the Katzman Group’s “support and financial backing,” George and Daniel
would not have been in a position to solicit Chris to leave RioStar and join them. And but
12 There is no evidence in the record that this “new venture” became a going concern.
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for their solicitation, Chris may have reconciled with Greg instead of leaving and allegedly
breaching his fiduciary duties to RioStar. Our Supreme Court rejected the “but-for” test
because it was “too broad and judicially unmoored to satisfy due-process concerns.”
Moki Mac, 221 S.W.3d at 580–81. Because the Katzman Group’s contacts are not
sufficiently related to the operative facts of Greg’s suit, we sustain their first issue. See id.
at 585.
C. Evidentiary Issues
By their second issue, Daniel Diaz and the Patterson Companies contend that the
trial court abused its discretion in sustaining Greg’s objections to various parts of the
affidavits they filed to support their respective special appearances.13 These affidavits
generally deny the allegations in Greg’s petition or the existence of any other minimum
contacts with the forum that are substantially related to Greg’s claims. Even if we assume
that each objection was sustained in error, the inclusion of this evidence would not change
our disposition. As we discussed, Greg produced evidence that (1) affirmed his
jurisdictional allegations against these appellants and (2) was sufficient to support the
order denying their special appearances; therefore, any conflicting inferences that could
be drawn from these affidavits would not entitle these appellants to a reversal. See Kelly,
301 S.W.3d at 659 (explaining that even if “the defendant can present evidence that it
has no contacts with Texas, effectively disproving the plaintiff’s allegations[,] [t]he plaintiff
can then respond with its own evidence that affirms its allegations”); Old Republic, 549
S.W.3d at 558 (citing BMC Software, 83 S.W.3d at 795). Accordingly, without reaching
13George did not file an affidavit; instead, the entire transcript of his deposition was admitted into
evidence without objection.
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the merits, we overrule their second issue for failure to demonstrate a reversible error.
See TEX. R. APP. P. 44.1(a); Ford Motor Co. v. Castillo, 279 S.W.3d 656, 667 (Tex.2009).
IV. CONCLUSION
We affirm the trial court’s order denying the special appearances of George Garcia,
Daniel Diaz, Patterson Companies, Inc., Sweet Life Logistics, Inc., and Sweet Life
Transportation, Inc. We reverse the trial court’s order denying the special appearances
of J Brokerage Corp., Frank Diaz, Tim O’Bannon, S. Katzman Produce, Inc., Katzman
Berry Corp., Top Katz Brokers, LLC, Stephen Katzman, Joseph Palumbo, and Mario
Andreani and render judgment dismissing the claims against these appellants.
GREGORY T. PERKES
Justice
Delivered and filed the
30th day of January, 2020.
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