Arcon, Inc. v. Mary Malone, Individually and as Representative of the Estate of David W. Griggs, and Sartain Structures

NO. 12-01-00214-CV

IN THE COURT OF APPEALS

TWELFTH COURT OF APPEALS DISTRICT

TYLER, TEXAS

ARCON, INC.,

§ APPEAL FROM THE 188TH

APPELLANT

V.

§ JUDICIAL DISTRICT COURT OF

MARY MALONE, INDIVIDUALLY AND

AS REPRESENTATIVE OF THE ESTATE

OF DAVID W. GRIGGS, DECEASED

AND SARTAIN STRUCTURES,

APPELLEES

§ GREGG COUNTY, TEXAS OPINION ON MOTION FOR REHEARING

Mary Malone, individually and as representative of the estate of David W. Griggs, Deceased ("Malone) filed a motion for rehearing based on the Texas Supreme Court's opinion in American Type Culture Collection, Inc. v. Coleman, No. 00-0959, 45 Sup. Ct. J. 1008, 2002 WL 1433719 (Tex. July 3, 2002) and its opinion in BMC Software Belgium, N.V. v. Marchand, No. 00-1019, 45 Sup. Ct. J. 930, 2001 WL 1898473 (Tex. June 27, 2002). Malone's motion for rehearing is denied. Our opinion of June 28, 2002 is hereby withdrawn and the following opinion is substituted in its place.

Appellant Arcon, Inc. ("Arcon") brings this interlocutory appeal complaining of the trial court's denial of its special appearance in favor of Appellee Malone. Arcon raises two issues on appeal. We reverse with instructions that the trial court dismiss Malone's claims against Arcon.

Background  

Arcon hired Sartain Structures ("Sartain") to do construction work on an addition to a box factory in Oklahoma. The construction project required construction workers to work on a platform bolting rafters onto columns, which were bolted into a concrete slab. Arcon allegedly installed the bolts that were supposed to secure the column to the concrete slab. Griggs was standing on the platform when the bolts securing one of the columns to the concrete slab allegedly failed. The column and the attached center rafter began to fall. Griggs, apparently under the impression that the platform was collapsing, grabbed the rafter, but ultimately lost his grip and fell thirty feet to his death on the concrete slab below.

Malone filed the instant lawsuit on November 13, 2000. Arcon filed a special appearance and, in due order of pleading, answered. In its special appearance, Arcon alleged (1) that it is an Oklahoma corporation, (2) that it owns no assets in Texas, (3) that it does no advertising in Texas, (4) that it does not maintain an office in Texas, (5) that it has no bank accounts in Texas, (6) that it owns no real property in Texas, (7) that it has committed no tort in Texas, (8) that it has no representatives or agents in Texas, (9) that Griggs was hired in Oklahoma, and (10) that the subject matter of the suit occurred in Oklahoma and did not arise out of business done in Texas. Malone responded to Arcon's special appearance and argued that the trial court had general jurisdiction because Arcon had continuous and systematic contacts with Texas by performing six construction projects during recent years, including at least one job involving Sartain. Malone also contended that the trial court had specific jurisdiction pursuant to Texas Civil Practice and Remedies Code § 17.042(3) because Arcon had recruited Texas residents through an intermediary, Sartain. An evidentiary hearing was conducted and Arcon's special appearance was denied. Arcon requested findings of facts and conclusions of law, but the trial court made no such findings. Arcon brings this interlocutory appeal ⁽¹⁾ complaining of the trial court's denial of its special appearance.

Standard of Review  

A nonresident defendant must negate all bases of personal jurisdiction to prevail in a special appearance. CSR Ltd. v. Link, 925 S.W.2d 591, 596 (Tex. 1996). The question of whether a trial court can assume personal jurisdiction over a nonresident defendant is a question of law that we review de novo. See De Prins v. Van Damme, 953 S.W.2d 7, 13 (Tex. App.-Tyler 1997, writ denied); see also Hotel Partners v. Craig, 993 S.W.2d 116, 120 (Tex. App.-Dallas 1994, writ denied). We review the trial court's resolution of any underlying factual questions for factual sufficiency of the evidence and will affirm the trial court's order on any legal theory that finds support in the evidence. See Guardian Royal Exch. Assurance Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex. 1991). However, when the trial court does not make any findings of fact or conclusions of law, any questions of fact must be presumed and found in support of the judgment. See Zac Smith & Co. v. Otis Elevator Co., 734 S.W.2d 662, 666 (Tex. 1987).

In reviewing the evidence, we consider and weigh all of the evidence, both the evidence that tends to prove the existence of a vital fact as well as evidence that tends to disprove its existence. See Ames v. Ames, 776 S.W.2d 154, 158-59 (Tex. 1989). If evidence supports the implied findings of fact, we will uphold the trial court's judgment on any legal theories supported by the findings. See Woford v. Stamper, 801 S.W.2d 108, 109 (Tex. 1990). Ultimately, we must affirm, unless we decide, based on all of the evidence in the record and facts presumed resolved in support of the trial court's ruling, that the appellant negated all bases of personal jurisdiction. See Link, 925 S.W.2d at 596; Guardian Royal, 815 S.W.2d at 226; Otis Elevator Co., 734 S.W.2d at 662, but see Riviera Operating Corp. v. Dawson, 29 S.W.3d 905, 908 (Tex. App.-Beaumont 2000, no pet.).

Burden of Proof Absent Jurisdictional Allegations in Plaintiff's Pleadings

In its first issue, Arcon contends that the trial court erred in overruling Arcon's special appearance because, due to Malone's failure to make jurisdictional allegations, Arcon met its burden of proof by establishing that it was a nonresident. Generally, the allegations of the plaintiff's petition must state facts which affirmatively show the jurisdiction of the court in which the action is brought. See Richardson v. First Nat'l Life Ins. Co., 419 S.W.2d 836, 839 (Tex. 1967); Isaacson v. Anderson, 982 S.W.2d 39, 40-41 (Tex. App.-Houston [1st Dist.] 1998, no pet.). When drafting the petition to be served on a nonresident defendant, the plaintiff must allege facts that, if true, would make the nonresident defendant subject to the personal jurisdiction of a Texas court. See Paramount Pipe & Supply Co. v. Muhr, 749 S.W.2d 491, 496 (Tex. 1988); see, e.g., Biotrace Int'l, Inc. v. Wilwerding, 937 S.W.2d 146, 147 (Tex. App.-Houston [1st Dist.] 1997, no writ); Guardian Royal Exch. Assurance, Ltd., 815 S.W.2d at 226. Where a plaintiff's pleadings do not specifically allege any grounds for personal jurisdiction, a defendant meets its burden of proof by putting on evidence that it is a nonresident. See Siskind v. Villa Foundation for Education, Inc., 642 S.W.2d 434, 438 n.5 (Tex. 1982); M.G.M. Grand Hotel, Inc. v. Castro, 8 S.W.3d 403, 408 (Tex. App.-Corpus Christi 1999, no pet); Hotel Partners v. KPMG Peat Marwick, 847 S.W.2d 630, 633-34 (Tex. App.-Dallas 1993, writ denied). ⁽²⁾ Here, our review of the record indicates that Arcon has met its burden in this regard.

However, a plaintiff's failure to plead facts giving rise to personal jurisdiction is not subject to attack by the defendant. See Castro, 8 S.W.3d at 408 n.2. If the defendant sustains its burden, the burden then shifts to the plaintiff to show as a matter of law that the court has jurisdiction over the defendant. See Riviera Operating Corp. v. Dawson, 29 S.W.3d at 908.  

In the instant case, while Arcon is correct in its statement of the law, the mere fact that it met its burden of proof by proving that it is a nonresident does not resolve the issue of whether the trial court erred in overruling its special appearance. Rather, once Arcon proved that it was a nonresident, the burden of proof shifted to Malone to show that the trial court had personal jurisdiction over Arcon as a matter of law. See Dawson, 29 S.W.3d at 908. Therefore, to the extent that Arcon's first issue does not relate to the trial court's order overruling Arcon's special appearance, it is overruled.

Personal Jurisdiction

A court may assert personal jurisdiction over a nonresident defendant only if the requirements of both the Due Process Clause of the Fourteenth Amendment to the United States Constitution and the Texas Long-Arm Statute are satisfied. See U.S. Const. amend. XIV, § 1; Tex. Civ. Prac. & Rem. Code Ann. § 17.041, et. seq. (Vernon 1997); Hall v. Helicopteros Nacionales de Columbia, S.A., 638 S.W.2d 870, 872 (Tex. 1982), rev'd on other grounds, 466 U.S. 408, 413-14, 104 S. Ct. 1868, 1871-72, 80 L. Ed. 2d 404 (1984). The Texas Long-Arm Statute has been interpreted to be co-extensive with the due process limits of the United States Constitution. See Schlobohm v. Schapiro, 784 S.W.2d 355, 357 (Tex. 1990); Hall, 638 S.W.2d at 872. It follows that if the exercise of personal jurisdiction satisfies the Due Process Clause of the United States Constitution, then the Texas Long-Arm Statute is satisfied. See Link, 925 S.W.2d at 594; Guardian Royal, 815 S.W.2d at 226.

Under the Due Process Clause, a defendant must have certain minimum contacts with the forum "such that the maintenance of the suit does not offend 'traditional notions of fair play and substantial justice.'" See International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S. Ct. 339, 343, 85 L. Ed. 278 (1940)). A nonresident defendant that has purposefully availed itself of the privileges and benefits of conducting business in the foreign jurisdiction has sufficient contacts with the forum to confer personal jurisdiction. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475-76, 105 S. Ct. 2174, 2183-84, 85 L. Ed. 2d 528 (1985). A defendant should not be subject to the jurisdiction of a foreign court based upon "random," "fortuitous," or "attenuated" contacts. Id. The Texas Supreme Court has compiled these Federal Due Process requirements into a three-part test to determine if a trial court has personal jurisdiction over a nonresident defendant: (1) the nonresident defendant or foreign corporation must purposefully do some act or consummate some transaction in the forum state; (2) the cause of action must arise from or be connected with such act or transaction or the defendant's contacts with Texas must be continuing and systematic; and (3) the assumption of jurisdiction by the forum state must not offend traditional notions of fair play and substantial justice, consideration being given to the quality, nature, and extent of the activity in the forum state, the relative convenience of the parties, the benefits and protection of the laws of the forum state afforded the respective parties, and the basic equities of the situation. See Schlobohm, 784 S.W.2d at 358; O'Brien v. Lanpar Co., 399 S.W.2d 340, 342 (Tex. 1966); see also, CMMC v. Salinas, 929 S.W.2d 435, 437 (Tex. 1996); Link, 925 S.W.2d at 596; Tex. Civ. Prac. & Rem. Code Ann. §17.041, et. seq. (Vernon 1997).

General Jurisdiction  

At the oral argument of this cause, Malone conceded that the trial court did not have specific jurisdiction over Arcon. As such, we consider whether Malone raised evidence in response to Arcon's special appearance proving that the trial court had general jurisdiction over Arcon as a matter of law. A trial court can obtain personal jurisdiction over a defendant either by a finding of specific or general jurisdiction. See Link, 925 S.W.2d at 595. General jurisdiction exists when a defendant's purposeful contacts are continuous and systematic, permitting the forum to exercise personal jurisdiction over the defendant even if the cause of action did not arise from or relate to activities conducted within the forum state. Id. (citing Schlobohm, 784 S.W.2d at 357). General jurisdiction requires a showing that the defendant conducted substantial activities within the forum, a more demanding minimum contacts analysis than for specific jurisdiction. See Guardian Royal, 815 S.W.2d at 228. In our analysis, we do not consider the number of the nonresident defendant's contacts with the forum state, but rather the quality and nature of those contacts. See McDermott v. Cronin, 31 S.W.3d 617, 621 (Tex. App.-Houston [1st Dist.] 2000, no pet.).

In the case at hand, Malone attached the deposition transcript of Raymond Carlisle Roberts ("Roberts"), the president of Arcon, as an exhibit to its response to Arcon's special appearance. In his deposition, Roberts testified that (1) Arcon had done six construction projects in Texas; (2) on at least one of the Texas construction projects, a local engineer approved the building manufacturer's plans; and (3) Arcon used local contractors to do plumbing and electrical work on the Texas projects. At the hearing on Arcon's special appearance, Roberts testified that Arcon's construction projects in Texas were limited to Dollar General Stores. ⁽³⁾ He further testified that these six projects took place during 1998 and 2000, with no jobs occurring in 1999. Moreover, Roberts testified that the time spent on these projects varied based on the amount of work performed, ranging from two to eight weeks per project. On cross examination, Roberts testified that inspectors from Texas would come out to approve the projects and that Arcon had generally availed itself of the building laws of the State of Texas. Roberts also testified that co-defendant, Sartain, worked for Arcon on one of the Texas projects.

Malone has cited no analogous authority, and we are aware of none, in which a court held that there was general jurisdiction where a company engaged in a series of construction projects in the forum state during a nonconsecutive two-year period. Arcon draws a comparison between the United States Supreme Court's holdings in Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437, 72 S. Ct. 413, 96 L. Ed. 485 (1952), in which the Court concluded that there was general jurisdiction, and Hall, 466 U.S. 408, 104 S. Ct. 1868, in which the Court found that the exercise of general jurisdiction was improper. Arcon contends that the facts in the instant case are more closely analogous to Hall. We agree.

Perkins involved a suit in Ohio against a Philippine Islands corporation on a cause of action unrelated to the corporation's activities in Ohio. See Perkins, 342 U.S. at 447, 72 S. Ct. at 419. The corporation did business in the Philippines until the Japanese occupied the islands during World War II. Id. At that time, the president of the corporation returned to his home in Ohio and carried on "continuous and systematic supervision of the necessarily limited wartime activities of the company." Id., 342 U.S. at 448, 72 S. Ct. at 419. Among other things, the corporation's records and bank accounts were kept and located in Ohio, the directors' meetings were held in Ohio, and all key business decisions were made in Ohio. Id. The Supreme Court held that the Ohio court's taking jurisdiction over the defendant satisfied federal due process standards. Id., 342 U.S. at 448, 72 S. Ct. at 420. Hall involved the issue of whether a foreign corporation could be sued in a Texas court on claims arising out of a helicopter crash in Peru. See Hall, 466 U.S. at 409-10, 104 S. Ct. at 1869-70. The parties in Hall made no argument that the claim had any relationship to the defendant's contact with the State of Texas. Id., 466 U.S. at 415 n.10, 104 S. Ct. at 1872 n.10. The Court examined the defendant's contacts with Texas in order to determine whether they constituted "the kind of continuous and systematic general business contacts the court found to exist in Perkins," and concluding that they did not, noted:

It is undisputed that Helicol does not have a place of business in Texas and never has been licensed to do business in the State. Basically, Helicol's contacts with Texas consisted of sending its chief executive officer to Houston for a contract negotiation session; accepting into its New York bank account checks drawn on a Houston bank; purchasing helicopters, equipment, and training services from Bell Helicopter for substantial sums; and sending personnel to Bell's facilities in Fort Worth for training.

Hall, 466 U.S. at 416, 104 S. Ct. 1873.

In the present case, Arcon proved that it is an Oklahoma corporation, that it owns no assets in Texas, that it does no advertising in Texas, that it does not maintain any office in Texas, that it has no bank accounts in Texas, that it owns no real property in Texas, that it has committed no tort in Texas, that it has no representatives or agents in Texas, and that the subject matter of the suit occurred in Oklahoma and did not arise out of business done in Texas. The only evidence involving Texas contacts is that Arcon engaged in six construction projects of varying lengths during the years 1998 and 2000, that Arcon engaged the services of Texas subcontractors related to the electrical and plumbing portions of the six Texas projects, that on at least one of the Texas construction projects, a local engineer approved the building manufacturer's plans, that a Texas inspector approved the projects, and that Arcon had generally availed itself of the laws of the State of Texas related to its construction projects.

On the other hand, the evidence also reflects that Arcon engaged in no activities during 1999. The evidence does not indicate that Arcon's contacts were systematic and continuous. It is undisputed that Arcon had no contact at all with Texas during 1999. Moreover, based on the limited amount of detail in the record, it appears that the type of work involved in each Texas project and the time required to complete the same varied from one project to the next. The record reflects that on at least one job, Arcon merely painted a pre-existing structure, as opposed to the dirt and concrete work it performed on other projects in Texas during the time period in question.

We stress that, in our analysis, we do not consider the number of the nonresident defendant's contacts with the forum state, but rather the quality and nature of those contacts. See McDermott, 31 S.W.3d at 621. Considering the quality and nature of the contacts at issue, we conclude that the instant case is more analogous to Helicopteros than to Perkins; see also American Type Culture Collection, Inc. v. Coleman, No. 00-0959, 45 S. Ct. J. 1008, 2002 WL 1433719, at *6 (Tex. July 3, 2002). Thus, we conclude that Malone failed to satisfy her burden by proving as a matter of law that the trial court had jurisdiction over Arcon. Arcon's second issue is sustained.

Accordingly, the trial court's order overruling Arcon's special appearance is reversed with instructions that the trial court dismiss Malone's claims against Arcon for lack of personal jurisdiction.  

JIM WORTHEN

Justice

Opinion delivered October 23, 2002.

Panel consisted of Worthen, J., and Griffith, J.  

Gohmert, Jr., C.J., not participating  

(DO NOT PUBLISH)

1.

See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(7) (Vernon Supp. 2002).

2.

Malone attempts to distinguish Siskind because the plaintiff in that case did not file a response to the defendant's special appearance. We interpret Arcon's argument to be that, absent allegations of personal jurisdiction in Malone's petition, Arcon satisfied its burden by presenting evidence that it was a nonresident, and therefore, the trial court should have granted its special appearance. We do not agree with Arcon that its evidence of nonresidency is dispositive of the jurisdictional issue. We rely on Siskind in conjunction with the rule in Castro and Dawson as those cases relate to the shifting the burden of proof in such circumstances. Malone has made no argument relating to the shift in the burden of proof.

3.

Additionally, Roberts testified that in one of the Dollar General Stores, there was also located the American Counsel of the Blind.