Nationwide Capital Funding, Inc. v. the H. Epps Co., Inc.

                             NUMBER 13-04-308-CV

                         COURT OF APPEALS

               THIRTEENTH DISTRICT OF TEXAS

                  CORPUS CHRISTI - EDINBURG

___________________________________________________________________

NATIONWIDE CAPITAL FUNDING, INC.,                       Appellant,

                                           v.

THE H. EPPS CO., INC.,                                             Appellee.

___________________________________________________________________

                   On appeal from the 28th District Court

                           of Nueces County, Texas.

___________________________________________________  _______________

                     MEMORANDUM OPINION^[1]

       Before Chief Justice Valdez and Justices Hinojosa and Rodriguez

                      Memorandum Opinion by Justice Rodriguez

Appellant, Nationwide Capital Funding, Inc. (Nationwide), appeals the trial court's ruling granting the special appearance of appellee, The H. Epps Co., Inc. (Epps).  By six points of error, Nationwide contends the trial court erred (1) in failing to file findings of fact and conclusions of law and (2) in granting the special appearance because (a) the preponderance of the evidence established that Epps had sufficient minimum contacts with Texas and that the exercise of jurisdiction over Epps would not have offended traditional notions of fair play and substantial justice, and (b) the exercise of jurisdiction over Epps was consistent with federal and state due process standards and guidelines and section 17.042 of the Texas Civil Practices and Remedies Code.^[2]  We affirm.

I.  Standard of Review

In a special appearance, the plaintiff bears the initial burden of pleading sufficient allegations to bring the nonresident defendant within the provisions of the long‑arm statute.  BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 793 (Tex. 2002).  A defendant challenging a Texas court's personal jurisdiction over it must negate all jurisdictional bases.  Id. "Whether a court has personal jurisdiction over a defendant is a question of law."  Am. Type Culture Collection v. Coleman, 83 S.W.3d 801, 805‑06 (Tex. 2002) (citing BMC Software, 83 S.W.3d at 794).

But in resolving this question of law, a trial court must frequently resolve questions of fact. On appeal, the trial court's determination to grant or deny a special appearance is subject to de novo review, but appellate courts may be called upon to review the trial court's resolution of a factual dispute.

Id. at 806 (citing BMC Software, 83 S.W.3d at 794-95).  "When the trial court does not issue findings of fact and conclusions of law with its special appearance ruling, all facts necessary to support the judgment and supported by the evidence are implied."  BMC Software, 83 S.W.3d at 795.  These implied findings are not conclusive and may be challenged for legal and factual sufficiency when the appellate record includes the reporter's and clerk's records, as in this case.  Id.  "For legal sufficiency points, if there is more than a scintilla of evidence to support the finding, the no evidence challenge fails."  Id.  Factual sufficiency is reviewed by considering all of the evidence that was before the trial court.  See Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex. 1996) (per curiam); see also Valsangiacomo v. Americana Juice Import, Inc., 35 S.W.3d 201, 205 (Tex. App.BCorpus Christi 2000, pet. dism'd w.o.j.).  The findings of the trial court must be upheld under this review unless they are so against the great weight and preponderance of the evidence as to be clearly wrong and manifestly unjust.  Ortiz, 917 S.W.2d at 772.

Appellate courts review the trial court's conclusions of law de novo.  BMC Software, 83 S.W.3d at 794.  An appellant may not challenge a trial court's conclusions of law for factual insufficiency; however, the reviewing court may review the trial court's legal conclusions drawn from the facts to determine their correctness.  Id.  We examine the entire record, not just the evidence in support of the trial court's legal conclusion.  Valsangiacomo, 35 S.W.3d at 205.

II.  Findings of Fact and Conclusions of Law

In its first point of error, Nationwide argues that, upon request, the trial court erred in failing to file findings of fact and conclusions of law in violation of rules 296 and 297 of the Texas Rules of Civil Procedure, and that the error was harmful.  See Tex. R. Civ. P. 296, 297.  Rule 296 provides that, "[i]n any case tried in the district or county court without a jury, any party may request the court to state in writing its findings of fact and conclusions of law."  Id. at rule 296.  Rule 297 states, "[t]he court shall file its findings of fact and conclusions of law within twenty days after a timely request is filed."  Id. at rule 297.  A case is "tried" when there is a hearing before the court on conflicting evidence.  See Besing v. Moffitt, 882 S.W.2d 79, 81-82 (Tex. App.BAmarillo 1994, no writ); Timmons v. Luce, 840 S.W.2d 582, 586 (Tex. App.BTyler 1992, no writ).  In the present case, there was an evidentiary hearing where the trial court heard evidence on the issue of personal jurisdiction.  Thus, rules 296 and 297 apply.

Nationwide filed a timely request for findings of fact and conclusions of law.  See Tex. R. Civ. P. 296.  When the trial court did not file the requested findings or conclusions, Nationwide filed a notice of past due findings of fact and conclusions of law in accordance with rule 297.  See id. at rule 297. However, the trial court did not issue its findings of fact and conclusions of law.  Following this proper request and reminder, the trial court's duty to file findings of fact and conclusions of law was mandatory.  Tenery v. Tenery, 932 S.W.2d 29, 30 (Tex. 1996) (per curiam); Cherne Indus., Inc., v. Magallanes, 763 S.W.2d 768, 771 (Tex. 1989); Humphrey v. Camelot Ret. Cmty., 893 S.W.2d 55, 61 (Tex. App.‑Corpus Christi 1994, no writ).  In such a circumstance, the failure of the trial court to respond is presumed harmful, unless the record before the appellate court affirmatively demonstrates that the party complaining of the failure to file findings of fact has suffered no injury.  Tenery, 932 S.W.2d at 30.  The test for determining harm in such a case is whether the circumstances of the particular case would force an appellant to guess the reason or reasons that the trial court ruled against it.  Humphrey, 893 S.W.2d at 61 (citing Sheldon Pollack Corp. v. Pioneer Concrete Co., 765 S.W.2d 843, 845 (Tex. App.‑Dallas 1989, writ denied)).

In the present case, we conclude that there was no harm because, under the circumstances of this case, Nationwide was not forced to guess the reasons that the trial court granted Epps's special appearance and dismissed the case.  Indeed, on appeal, Nationwide brings as a point of error that the preponderance of the evidence established Epps had minimum contacts with Texas.  Nationwide briefs this Court on that issue, without the benefit of the trial court's findings of fact.  Furthermore, in the present case, the grounds for the trial court's ruling were unambiguous.  As discussed in our analysis of Nationwide's fourth point of error, the appellate record clearly shows that evidence was presented to demonstrate Epps's contacts, if any, with Texas.  We have reviewed the record and conclude that an abatement of this appeal solely for the purpose of compelling the trial court to file findings of fact and conclusions of law would serve no useful purpose.  See Sheldon Pollack, 765 S.W.2d at 845.  Therefore, we may rule on the merits of this case without the need to order the trial court to issue findings of fact and conclusions of law in compliance with rule 297.  See Tex. R. Civ. P. 297.  Accordingly, we conclude that the appellate record affirmatively demonstrates that Nationwide was not harmed by the trial court's failure to file findings of fact and conclusions of law.  Tenery, 932 S.W.2d at 30.  We overrule Nationwide's first point of error.

III.  In Personam Jurisdiction

A.  The Law

In Texas, a party may contest personal jurisdiction by filing a special appearance.  See Tex. R. Civ. P. 120a(1).  A special appearance is determined by reference to the pleadings, any stipulations made by and between the parties, any affidavits and attachments filed by the parties, discovery, and any oral testimony. Id. at rule 120a(3).  A Texas court may assert personal jurisdiction over a nonresident defendant only when (1) the Texas long‑arm statute authorizes jurisdiction and (2) the exercise of jurisdiction is consistent with federal and state due process standards.  Coleman, 83 S.W.3d at 806; see Tex. Civ. Prac. & Rem. Code Ann. ' 17.041-.045 (Vernon 1997 & Supp. 2005).  The long-arm statute authorizes jurisdiction over a nonresident defendant "doing business" in Texas, see Tex. Civ. Prac. & Rem. Code Ann. ' 17.042 (Vernon 1997), and allows a court to exercise personal jurisdiction over a nonresident defendant "as far as the federal constitutional requirements of due process will allow."  Coleman, 83 S.W.3d at 806; BMC Software, 83 S.W.3d at 795.  Thus, in determining whether a nonresident has met its burden to negate all bases of jurisdiction, we rely on precedent from the United States Supreme Court and other federal courts, as well as our own State's decisions.  BMC Software, 83 S.W.3d at 795.

Due process permits a state court to exercise personal jurisdiction over a defendant only if the defendant has some minimum, purposeful contacts with the state, and the exercise of jurisdiction will not offend traditional notions of fair play and substantial justice.  Id.; see Int'l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945).  "It is essential in each case that there be some act by which the defendant 'purposefully avails' itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protection of its laws." Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 784 (Tex. 2005); see Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-76 (1985) (providing that 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).  By invoking the benefit and protections of a forum's laws, a nonresident consents to suit there.  Holten, 168 S.W.3d at 784 (citing World‑Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)).  However, a defendant should not be subject to a foreign court's jurisdiction based upon "random," "fortuitous," or "attenuated" contacts.  Burger King, 471 U.S. at 475; BMC Software, 83 S.W.3d at 795.

Personal jurisdiction exists if the nonresident defendant's minimum contacts give rise to either general or specific jurisdiction. Helicopteros Nactionales de Columbia, S.A. v. Hall, 466 U.S. 408, 413-14 (1984); Commonwealth Gen. Corp. v. York, 177 S.W.3d 923, 925 (Tex. 2005) (per curiam); BMC Software, 83 S.W.3d at 796.  Specific jurisdiction is established if the defendant's alleged liability arises from or is related to an activity conducted within the forum.  York, 177 S.W.3d at 925.  In contrast, general jurisdiction is present when a defendant's contacts in a forum are continuous and systematic so that the forum may 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. BMC Software, 83 S.W.3d at 796; Guardian Royal Exch. Assur., Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 228 (Tex. 1991) (explaining that general jurisdiction "is a more demanding minimum‑contacts analysis than specific jurisdiction"). Here, although Nationwide uses words such as "continuous" and "systematic," we construe its argument as one complaining that Epps is not subject to general jurisdiction, but that it is subject to specific jurisdiction.

B.  Specific Jurisdiction

By its fourth point of error, Nationwide contends the trial court erred in granting Epps's special appearance because the preponderance of the evidence established that Epps had minimum contacts with Texas.  See Ortiz, 917 S.W.2d at 772 (setting out that the findings of the trial court must be upheld under a factual sufficiency review unless they are so against the great weight and preponderance of the evidence as to be clearly wrong and manifestly unjust).  Nationwide also contends the trial court erred because the exercise of jurisdiction over Epps would not have offended traditional notions of fair play and substantial justice.  By its fifth point of error, Nationwide argues that the trial court erred because the exercise of jurisdiction over Epps is consistent with federal and state due process guidelines and with section 17.042 of the civil practices and remedies code.

As set out above, a minimum‑contacts analysis requires that a defendant "purposefully avail" itself of the privilege of conducting activities within Texas, thus invoking the benefits and protections of our laws.  See Burger King, 471 U.S. at 475; Coleman, 83 S.W.3d at 806. The defendant's activities, whether they consist of direct acts within Texas or conduct outside of Texas, must justify a conclusion that the defendant could reasonably anticipate being called into a Texas court.  Coleman, 83 S.W.3d at 806 (citing World‑Wide Volkswagen, 444 U.S. at 297).  In considering a defendant's contacts with Texas, it is the quality and nature of the contacts, rather than their number, that is important to the minimum‑contacts analysis.  Id.

In this case, the evidence establishes that Epps is incorporated in Missouri where its only office is located.  Epps contracted with a sub-contractor, B&T Communications, to perform work in Arkansas.  On January 11, 2001, B&T Communications entered into a factoring and security agreement with Nationwide, a contract where Nationwide purchased invoices of B&T Communications.  On or about January 24, 2001, Epps acknowledged receipt of a document entitled "Notice of Assignment" and faxed a copy of the signed acknowledgment to Nationwide in Corpus Christi, Nueces County, Texas.  The Notice of Assignment informed Epps "that payments for invoices mailed or received via EDI system should be made payable and remitted directly to Nationwide . . . For Credit To:  B & T COMMUNICATIONS[,] P.O. Box 260775, Corpus Christi, Texas 78426."  (Emphasis in original.)  For approximately one year, Epps wrote approximately twenty-one checks made payable to Nationwide.  Although the envelopes were addressed to Nationwide, there is no evidence that the checks were mailed directly from Epps to Nationwide.  Barbara Thornton, vice-president of Nationwide, testified that she considered the notice of assignment to be a contract between Nationwide and Epps.  She also testified that she had at least one conversation with John Epps, president and chief executive officer of Epps.  The affidavit of John Epps set out that Epps had never entered into any contract with Nationwide and had no communications with it prior to the filing of the underlying action.  John Epps also affied as to the following:

Defendant Epps does not have a license to do business in Texas, own or lease property in Texas, have an office, bank account, officer, employee, agent, or representative in Texas.  Defendant does not pay taxes in Texas, execute or perform contracts in Texas, or solicit work or employees in Texas, or advertise in any medium intended to reach Texas.

Considering all of the evidence that was before the trial court, we cannot conclude that the court's implied findings that the acts relied upon were not purposeful but fortuitous, see Holten, 168 S.W.3d at 784, and that the acts were insufficient to constitute purposeful availment of the benefits and protections of Texas law, were so against the great weight and preponderance of the evidence as to be clearly wrong and unjust. See Ortiz, 917 S.W.2d at 772. Epps's merely faxing an acknowledgment of the notice of assignment to Texas or mailing payments to Texas is insufficient to subject the nonresident to the forum's jurisdiction.  See Freudensprung v. Offshore Tech. Serv., Inc., 379 F.3d 327, 344 (5th Cir. 2004) ("This court has repeatedly held that the combination of mailing payments to the forum state, engaging in communications related to the execution and performance of the contract, and the existence of a contract between the nonresident defendant and a resident of the forum are insufficient to establish the exercise of specific personal jurisdiction over the nonresident defendant."); Holt Oil & Gas Corp. v. Harvey, 801 F.2d 773, 778 (5th Cir. 1986) (holding that defendant was not subject to specific jurisdiction where nonresident defendant entered into a contract with a Texas resident, sent an agreement and checks to Texas, and engaged in extensive telephonic and written communications with the plaintiff in Texas); Stuart v. Spademan, 772 F.2d 1185, 1192‑94 (5th Cir. 1985) (finding no specific jurisdiction where nonresident defendant contracted with Texas residents, directed letters and phone calls to Texas, shipped prototypes and products to Texas, negotiated a contract with plaintiffs that was to be governed by Texas law, and marketed his product in Texas).

Additionally, minimum contacts may not be satisfied by merely engaging in communications with a Texas corporation during the performance of a contract.^[3]  Televentures, Inc. v. Int'l Game Tech., 12 S.W.3d 900, 910 (Tex. App.BAustin 2000, pet. denied); see Freudensprung, 379 F.3d at 344; Holt, 801 F.2d at 778; Stuart, 772 F.2d at 1192‑94.  Here, the exchange of communications, via fax, mail, or a conversation, between Nationwide and Epps in the course of carrying out a contractual obligation, if any, in itself, is insufficient to constitute purposeful availment of the benefits and protections of Texas law.  See Televentures, 12 S.W.3d at 910.

Looking at the quality of the contacts between Epps and Texas, it is clear that  Epps did not purposefully avail itself of the privilege of conducting activities in Texas. Nor did it invoke the benefits and protections of Texas laws.  We, therefore, conclude that Epps is not subject to personal jurisdiction in Texas, and the trial court did not err in granting Epps's special appearance on that basis.

Because of the disposition of the fourth point of error on this basis, we need not address further Nationwide's assertions that the exercise of in personam jurisdiction comports with fair play and substantial justice and the exercise of jurisdiction is consistent with federal and state due process standards.  See Tex. R. App. P. 47.1.  Nationwide's fourth and fifth points of error are overruled. Additionally, Nationwide's third issue, wherein it complains that the trial court erred in granting Epps's special appearance, is overruled.

IV.  Conclusion

Accordingly, we affirm the judgment of the trial court.                                                                                    

NELDA V. RODRIGUEZ

Justice

Memorandum Opinion delivered and

filed this 20th day of April, 2006.

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^[1]As this is a memorandum opinion and all issues of law presented by this case are well settled and the parties are familiar with the facts, we will not recite the law and the facts in this memorandum opinion except as necessary to advise the parties of the Court=s decision and the basic reasons for it.  See Tex. R. App. P. 47.1, 47.4.

^[2]Nationwide also contends by its sixth point of error that the trial court erred in dismissing its claims with prejudice.  However, in accordance with rule 38.1(h) of the Texas Rules of Appellate Procedure, we will only consider contentions that are supported by clear and concise arguments with appropriate citations to authorities and the record. Tex. R. App. P. 38.1(h); Rhoades v. State, 934 S.W.2d 113, 119 (Tex. Crim. App. 1996) (en banc).  Nationwide has not presented argument and has not cited authority on this issue, therefore, it has waived error.  See Tufele v. State, 130 S.W.3d 267, 271 (Tex. App.BHouston [14th Dist.] 2002, pet. ref'd).  We overrule Nationwide's sixth point of error.

^[3]Nationwide contends that sub-section one of section 17.042 of the civil practice and remedies code brings Epps within the jurisdiction of Texas.  See Tex. Civ. Prac. & Rem. Code Ann. ' 17.042(1) (Vernon 1997). That section provides, in relevant part, "[i]n addition to other acts that may constitute doing business, a nonresident does business in this state if the nonresident . . . contracts by mail or otherwise with a Texas resident and either party is to perform the contract in whole or in part in this state."  Id.  Nationwide argues that the evidence in this case was undisputed that Epps entered into a contract with Nationwide by fax.  However, in his affidavit, John Epps stated that Epps had never entered into any contract with Nationwide.  We need not reach this issue, however, because, as set out above, "mailing payments to the forum state, engaging in communications related to the execution and performance of the contract, and the existence of a contract between the nonresident defendant and a resident of the forum are insufficient to establish the exercise of specific personal jurisdiction over the nonresident defendant."  Freudensprung v. Offshore Tech. Serv., Inc., 379 F.3d 327, 344 (5th Cir. 2004). Therefore, even assuming without determining the existence of a contract, the result would be the same.