Dominic Marrocco v. Mark Hill

Affirmed and Memorandum Opinion filed October 20, 2011
In The
Fourteenth Court of Appeals
NO. 14-10-01077-CV
DOMINIC MARROCCO, Appellant
V.
MARK HILL, Appellee
On Appeal from the 164th District Court
Harris County, Texas
Trial Court Cause No. 2010-05438
MEMORANDUM OPINION
This is an accelerated, interlocutory appeal from the trial court’s order denying
appellant Dominic Marrocco’s special appearance. Marrocco contends that the trial court
erred because he has not consented to Texas’ jurisdiction, and, alternatively, that the
enforcement of a forum-selection clause against him would be unreasonable and unjust.
We affirm.
I
Sometime in 2008, Marrocco, a U.K. citizen and Nevada resident, began
negotiating a partnership agreement with appellee Mark Hill. This agreement formalized
Hill’s position with iDesta USA, LLC, a Nevada limited-liability company. The parties
dispute whether Marrocco was negotiating in his individual capacity or as a
representative of iDesta Solutions, LP, a company both parties admit has never existed.1
They also agree that Marrocco signed an agreement explicitly naming only himself and
Hill as parties and frequently mentioning Marrocco by name. For example, the agreement
includes this provision, referring specifically and repeatedly to Marrocco:
II. DEFINITIONS
...
D. ―Good Reason‖ shall mean Mr. Hill’s resignation or termination
due to the occurrence of any of the following without Mr. Hill’s
prior consent:
(1) a willful failure by Mr. Marrocco to substantially perform
the obligations under this Agreement;
(2) a willful act by Mr. Marrocco that constitutes intentional
misconduct and that is materially and demonstrably injurious
to Mr. Hill;
(3) a willful breach by Mr. Marrocco of a material provision
of this Agreement;
(4) a willful violation of a federal or state law or regulation by
Mr. Marrocco applicable to the business of the Company2 that
is materially and demonstrably injurious to Mr. Hill;
(5) commission of any material act of fraud by Mr. Marrocco
with respect to Mr. Hill;
. . . [or]
(12) the failure of Mr. Marrocco to obtain the written
assumption of this Agreement by any successors of the
Company . . . .
1
Marrocco is an officer of a U.K. company named iDesta Solutions, Limited.
2
―Company‖ is defined in the agreement as iDesta USA.
2
The agreement’s ―Governing Law and Venue‖ clause provides that Texas law will
govern the contract and that ―[a]ny litigation related to the terms of this Agreement shall
be filed in Harris County District Court, Houston, Texas.‖ The agreement also contains a
merger clause and a clause providing that ―[o]ral changes to this Agreement shall have no
effect.‖ Before signing, Marrocco and Hill orally discussed certain changes to the
agreement Marrocco desired. Eventually, both parties signed the agreement; the signature
page notably included the first and only appearance of the name ―iDesta Solutions, LP‖:
IN WITNESS WHEREOF, each of the parties has executed this
Agreement, in the case of the Company by its duly authorized officer, as of
the date first set forth above.
IDESTA SOLUTIONS, LP
By: /s/ Dominic Anthony Marrocco
Dominic Anthony Marrocco
...
MARK A. HILL
By: /s/ Mark A. Hill
Mark A. Hill
...
Shortly after the parties signed the agreement in November 2008, Marrocco and
Hill exchanged several emails attaching amended versions of the agreement. There is
some dispute as to whether the parties executed any of these amended agreements, but
they worked together for more than a year before Hill sued Marrocco in Harris County
district court for breach of the partnership agreement, unjust enrichment, and quantum
meruit. Marrocco contested the court’s jurisdiction and filed a special appearance. After a
hearing, the trial court denied Marrocco’s special appearance. This appeal followed.
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II
Whether a trial court has personal jurisdiction over a defendant is a question of
law we review de novo. Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 574
(Tex. 2007), BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002).
When, as in this case, the trial court issues no findings of fact or conclusions of law, all
facts necessary to support the judgment and supported by the evidence are implied. BMC
Software, 83 S.W.3d at 795. But when the appellate record includes the reporter’s and
clerk’s records, parties can challenge the legal and factual efficiency of these implied
factual findings. Id.; Info. Servs. Grp., Inc. v. Rawlinson, 302 S.W.3d 392, 397 (Tex.
App.—Houston [14th Dist.] 2009, pet. denied).
The plaintiff has the initial burden of pleading sufficient allegations to bring the
nonresident defendant within the provisions of the Texas long-arm statute. BMC
Software, 83 S.W.3d at 793; Rawlinson 302 S.W.3d at 397. A defendant challenging a
Texas court’s personal jurisdiction over it must negate all jurisdictional bases. BMC
Software, 83 S.W.3d at 793; Rawlinson, 302 S.W.3d at 397.
Texas courts may exercise jurisdiction over a nonresident if the Texas long-arm
statute authorizes the exercise of jurisdiction and the exercise of jurisdiction is consistent
with federal and state constitutional guarantees of due process. Moki Mac, 221 S.W.3d at
574; BMC Software, 83 S.W.3d at 795. The Texas long-arm statute authorizes Texas
courts to exercise jurisdiction over a nonresident defendant who ―does business‖ in the
state. Tex. Civ. Prac. & Rem. Code § 17.042. The Texas Supreme Court has interpreted
the broad language of the Texas long-arm statute to extend Texas courts’ personal
jurisdiction ―as far as the federal constitutional requirements of due process will permit.‖
BMC Software, 83 S.W.3d at 795.
Personal jurisdiction over a nonresident defendant is constitutional when two
conditions are met: (1) The defendant has established minimum contacts with the forum
state, and (2) the exercise of jurisdiction comports with traditional notions of fair play
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and substantial justice. Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945); BMC
Software, 83 S.W.3d at 795. Minimum contacts are sufficient for personal jurisdiction
when the nonresident defendant purposely avails himself of the privilege of conducting
activities in the forum state, thus invoking the benefits and protections of its laws. Int’l
Shoe, 326 U.S. at 319; Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777,
784 (Tex. 2005). In determining whether a defendant has purposely availed himself of the
forum, courts should remember that only the defendant’s contacts with the forum matter,
the acts relied on must be purposeful rather than merely fortuitous, and the defendant
must seek some benefit, advantage, or profit by availing himself of the forum. Michiana,
168 S.W.3d at 785.
Texas courts may exercise two types of jurisdiction based on a nonresident’s
contacts with the state. If the defendant has made continuous and systematic contacts
with the forum, general jurisdiction is established regardless of whether the defendant’s
alleged liability arises from those contacts. Moki Mac, 221 S.W.3d at 575; BMC
Software, 83 S.W.3d at 796. In contrast, when specific jurisdiction is alleged, we focus
the minimum-contacts analysis on the relationship among the defendant, the forum, and
the litigation. Moki Mac, 221 S.W.3d at 575–76. Specific jurisdiction is established if the
defendant’s alleged liability arises out of or is related to an activity conducted within the
forum. Id. at 576. For a nonresident defendant’s forum contacts to support an exercise of
specific jurisdiction, there must be a substantial connection between those contacts and
the operative facts of the litigation. Id. at 585. To identify the operative facts of the
litigation, we select those facts that would be the focus of the trial. See id; Rawlinson, 302
S.W.3d at 398. Here, the appellee alleges only specific jurisdiction.
A defendant may also waive his right to contest personal jurisdiction. Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 473 n.14 (1985); Tri-State Bldg. Specialties, Inc. v.
NCI Bldg. Sys., L.P., 184 S.W.3d 242, 248 (Tex. App.—Houston [1st Dist.] 2005, no
pet.). A mandatory forum-selection clause is one of several ways a litigant may expressly
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or impliedly consent to personal jurisdiction. Burger King, 471 U.S. at 473 n.14; Tri-
State, 184 S.W.3d at 248.
Forum-selection clauses are generally enforceable and presumptively valid. In re
Laibe Corp., 307 S.W.3d 314, 316 (Tex. 2010) (per curiam). A trial court abuses its
discretion in refusing to enforce the clause unless the party opposing enforcement clearly
shows (1) enforcement would be unreasonable or unjust, (2) the clause is invalid for
reasons of fraud or overreaching, (3) enforcement would contravene a strong public
policy of the forum where the suit was brought, or (4) the selected forum would be
seriously inconvenient for trial. Id. The burden of proof is heavy for the party challenging
enforcement. Id.
III
Marrocco relies on Roe v. Ladymon in asserting that he signed the partnership
agreement in a representative capacity for iDesta Solutions, LP, and not in his personal
capacity. See 318 S.W.3d 502 (Tex. App.—Dallas 2010, no pet.). Ladymon dealt with a
partner who signed an agreement in his representative capacity for a limited-liability
partnership, and the court concluded that, ―by signing the contract as an agent for a
disclosed principal, [the partner] did not become personally bound by the terms of that
contract . . . .‖ Id. at 521. We find that case to be easily distinguished.
In Ladymon, Kimberlea Roe contracted for Metro Townhomes & Homes, L.L.P.,
to renovate her home. Id. at 507. The contract defined Roe as the ―Owner‖ and Metro as
the ―Contractor.‖ Id. Blane Ladymon, a Metro partner, signed the contract on behalf of
Metro and initialed each page in the blank for ―Contractor.‖ Id. at 515. Ladymon was
never identified in the contract as a party, and the signature block clearly showed him to
be a Metro representative:
CONTRACTOR:
METRO TOWNHOMES & HOMES, L.L.P.
6
By: /s/ Blane Ladymon
Printed Name: Blane Ladymon
Its: Partner
Id. at 515, 515 n.13.
The agreement signed by Marrocco was fundamentally different. Marrocco
himself was named as a party and was identified several times in the agreement as having
contractual duties to Hill. And, though IDESTA SOLUTIONS, LP, does appear above
Marrocco’s signature, the name appears to be more an anomaly than an indication that
Marrocco was acting in a representative capacity. This is the first and only appearance of
that name in the contract, and whereas the contract at issue in Ladymon explicitly named
Ladymon as a partner of Metro, there is nothing in the partnership agreement here that
indicates any relationship whatsoever between Marrocco and iDesta Solutions, LP.3
Thus, despite being named himself as a party and explicitly given responsibilities
within the agreement, Marrocco contends a single, unexplained appearance of a
nonexistent company’s name protects him from personal liability. We are unconvinced
and hold that Marrocco signed the agreement in his individual capacity and is thus bound
by its terms, including the forum-selection clause.4
3
Marrocco argues that the statement preceding his signature shows this relationship: ―[E]ach of
the parties has executed this Agreement, in the case of the Company by its duly authorized officer . . . .‖
That statement is irrelevant, however, because the agreement explicitly defines ―Company‖ as iDesta
USA—which is not listed on the signature page at all.
4
Even if we were convinced that Marrocco had been representing iDesta Solutions, LP, in
negotiations with Hill, Marrocco would be unable to escape personal liability. Because there was never a
company named iDesta Solutions, LP, Marrocco would have been an agent of a nonexistent principal. As
such, he would be personally liable for any contract he made on behalf of that company. See Carter v.
Walton, 469 S.W.2d 462, 471 (Tex. Civ. App.—Corpus Christi 1971, writ ref’d n.r.e.) (―As a general
rule, one who contracts as an agent in the name of a nonexistent or fictitious principal, or a principal
without legal status or existence, renders himself personally liable on the contracts so made.‖) (quoting 3
Am. Jur. 2d Agency § 295 (1962)); see also Restatement (Third) of Agency § 6.04 (2006) (―Unless the
third party agrees otherwise, a person who makes a contract with a third party purportedly as an agent on
behalf of a principal becomes a party to the contract if the purported agent knows or has reason to know
that the purported principal does not exist or lacks capacity to be a party to a contract.‖).
7
We now turn to Marrocco’s argument that enforcement of the forum-selection
clause would be unreasonable and unjust. This argument places a heavy burden on
Marrocco, and he has failed to meet it.
Marrocco argues that it is ―inherently unjust‖ to require a U.K. resident to litigate
in Texas when he has no contacts to Texas outside the contract at issue. This argument is
untenable. Personal jurisdiction is a right intended to protect an individual, and an
individual may bargain away that right. Tri-State, 184 S.W.3d at 248. Marrocco
bargained away this right by signing the partnership agreement with Hill and consenting
to the agreement’s forum-selection clause. Thus, enforcing the forum-selection clause
against Marrocco is neither unreasonable nor unjust.
***
For the foregoing reasons, we affirm.
/s/ Jeffrey V. Brown
Justice
Panel consists of Justices Brown, Boyce, and McCally.
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