Wellness Wireless, Inc v. Nicholas Vita and Rosemary Mazanet

Opinion issued March 12, 2013
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-12-00500-CV
———————————
WELLNESS WIRELESS, INC, Appellant
V.
NICHOLAS VITA AND ROSEMARY MAZANET, Appellees
On Appeal from the 127th District Court
Harris County, Texas
Trial Court Case No. 2011-54116
MEMORANDUM OPINION
Wellness Wireless, Inc. filed this interlocutory appeal from the trial court’s
order granting the special appearances of nonresident defendants Nicholas Vita and
Rosemary Mazanet. Wellness contends that the trial court erred in certain fact
findings and conclusions of law and that the trial court had personal jurisdiction
over Vita and Mazanet. We affirm the trial court’s order sustaining Vita’s and
Mazanet’s special appearances and dismissing Wellness’s claims against them.
Background
Kimon Angelides founded Wellness as a Delaware corporation and
registered it in Texas as a foreign for-profit corporation. Angelides initially served
as the company’s chief executive officer and director. Wellness’s sole place of
business was in a Houston office that Angelides had leased for the company.
Wellness provided mobile health services to those with chronic diseases such as
diabetes. The company was a “spin-off” subsidiary partially owned by Diabetes
America, Inc., another Delaware corporation founded by Angelides that had patient
health centers in Texas and Arizona. The two companies shared some common
board members.
Vita, a resident of New York, and Mazanet, a resident of Connecticut, were
principals in various affiliated entities collectively known as Argenis. Argenis
owned stock in and made loans to Diabetes America. Argenis also owned shares in
Wellness. At various times, Vita was a director of both Diabetes America and
Wellness. Mazanet was periodically a director and officer of Diabetes America, but
was never a director or officer of Wellness.
2
In or about April 2008, Diabetes America decided to settle civil claims
against Healthpia, Inc. and Stephen Kim that were then pending in federal district
court. Angelides, acting as Wellness’s director, offered to assume Diabetes
America’s litigation expenses in that case in return for an assignment of all rights
to any recovery from the lawsuit. Wellness and Diabetes America executed an
assignment agreement to that effect in May.
On the same day that the assignment agreement was executed, Diabetes
America entered into a settlement agreement with InfoPia America LLC, a Florida
company affiliated with Healthpia, to resolve the civil claims. Under that
agreement, InfoPia agreed to pay Diabetes America a total of $800,000 according
to a payment schedule.
In October 2008, Angelides resigned as director and CEO of Wellness, at
which point Wellness ceased operations. Vita formally resigned as a director the
following month. Wellness’s status as a registered foreign for-profit corporation in
Texas was forfeited in May 2009, and its status as a Delaware corporation was
forfeited the following October.
Pursuant to the settlement agreement with Diabetes America, Infopia made
an initial payment of $300,000 which was in turn paid to Diabetes America’s law
firm. Infopia failed to make any further payments as required under the settlement
3
agreement. Diabetes America obtained a default judgment against Healthpia and
Stephen Kim in December 2008.
In early 2010, a telephonic meeting took place among three Diabetes
America board directors: Vita, Mazanet, and Bonita Groesser. The purpose of the
meeting was to discuss and approve a new settlement agreement with Infopia.
Mazanet and Vita participated in the meeting from outside Texas. The record does
not reflect from where Groesser, a Texas resident, participated in the meeting. In
February 2010, Vita signed in New York on behalf of Diabetes America a
“Settlement Agreement and Mutual Release” with Infopia whereby the parties
released claims against one another for payment by Infopia of $300,000. The 2010
Settlement Agreement and Mutual Release does not refer to any assignment right
held by Wellness.
After having resigned from his positions at Diabetes America and Wellness
in 2008, Angelides pursued other business activities. Starting in 2011, Angelides
obtained consents from various Wellness shareholders (except Argenis) to be
appointed as acting director to collect outstanding debts and wind up the company.
At the time, Wellness’s corporate status remained forfeited. Angelides engaged
counsel for Wellness to demand from Infopia the payments due under the 2008
settlement agreement. Infopia refused on the ground that the debt was satisfied and
4
referred to the 2010 Settlement Agreement and Mutual Release that it had executed
with Diabetes America.
Wellness sued Vita and Mazanet (as well as Groesser) for “converting” the
recovery that had been assigned to it. It asserted claims for fraud, gross negligence,
misappropriation of confidential information, usurpation of corporate opportunity,
breach of fiduciary duty, and civil conspiracy. Wellness further claimed that Vita’s
and Mazanet’s actions benefitted not only Argenis, but also Vita and Mazanet
individually because they were Argenis’s principals. As stated by Wellness in its
proposed findings of fact and conclusions of law, all of Wellness’s claims “relate
to” the approval and signing of the 2010 Settlement Agreement and Mutual
Release. After Wellness filed suit, the Texas Secretary of State issued Wellness a
certificate of conversion certifying its status as a Texas corporation, and Wellness
was later reinstated as a Delaware corporation.
Vita and Mazanet filed a special appearance with supporting affidavits to
challenge the district court’s exercise of personal jurisdiction over them,
contending that they were residents of New York and Connecticut, respectively.
The district court conducted a hearing on the special appearance on Friday,
February 10, 2012. None of the parties called any witnesses at the hearing. During
the hearing, the trial court suggested that Wellness’s counsel “tighten up” the
5
petition and gave Wellness “two weeks from today to fix” the pleading. It also
requested additional briefing on issues relating to the special appearances.
On Monday, February 12, the trial court coordinator informed the parties by
email that the judge “will not require the briefing he asked for” because he “is
going to grant the Special Appearance.” Later that day, Wellness filed a new
pleading (the “Fifth Supplemental Petition”) and a supplemental brief discussing
“new reasons, not raised previously, on why” the special appearances should be
denied. The next day, it also filed “supplemental comments” along with
Angelides’s supporting affidavit. Wellness did not request leave to file the
supplemental petition, brief, “comments,” or evidence.
Over two months later, the court signed an order holding that it lacked
personal jurisdiction over Vita and Mazanet. The same order reflected the court’s
findings of facts and conclusions of law on the special appearance ruling. Wellness
requested amended findings and conclusions, effectively asking the court to
reverse its decision. The district court denied the motion. Wellness timely filed this
interlocutory appeal.
Personal Jurisdiction
Wellness argues that it pleaded sufficient jurisdictional facts to bring Vita
and Mazanet within the Texas long-arm statute and that it proved sufficient
minimum contacts to establish the Texas courts’ personal jurisdiction over them.
6
Vita and Mazanet disagree and contend that Wellness has not demonstrated any
acts by them directed at the State of Texas that are sufficient to establish Vita’s and
Mazanet’s purposeful availment “of the privilege of conducting activities within
the forum State, thus invoking the benefits and protections of its laws.” Hanson v.
Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 1240 (1958).
A. Standard of Review
“Whether a court has personal jurisdiction over a nonresident defendant is a
question of law, which we review de novo.” Zinc Nacional, S.A. v. Bouche
Trucking, Inc., 308 S.W.3d 395, 397 (Tex. 2010) (citing BMC Software Belg., N.V.
v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002)). “Existence of personal jurisdiction
is a question of law, but that determination must sometimes be preceded by the
resolution of underlying facts.” Int’l Elevator Co. v. Garcia, 76 S.W.3d 778, 781
(Tex. App.—Houston [1st Dist.] 2002, no pet.). When, as here, the trial court
makes findings of fact and conclusions of law in support of its ruling, the appellant
may challenge the legal and factual sufficiency of the evidence to support those
findings. BMC Software, 83 S.W.3d at 794. 1 A factual finding will be reversed for
1
We note that in Moncrief Oil International, Inc. v. OAO Gazprom, 332
S.W.3d 1 (Tex. App.—Fort Worth 2010, pet. granted), the Fort Worth Court
of Appeals considered a special appearance that was, like the special
appearances in this case, “nonevidentiary in the sense that no witnesses
testified and no evidence was introduced at the hearing.” 332 S.W.3d at 7.
The court considered itself to be “in the same position as the trial court” and
thus “implying all facts supported by the evidence in favor of the trial
7
legal insufficiency only if there is no evidence to support the finding. Shell
Compania Argentina de Petroleo, S.A. v. Reef Exploration, Inc., 84 S.W.3d 830,
836 (Tex. App.—Houston [1st Dist.] 2002, pet. denied). A factual finding will be
reversed for factual insufficiency only if it is so against the great weight and
preponderance of the evidence as to be manifestly erroneous or unjust. Id.
“If findings of fact are not challenged, they are binding on the parties and on
this Court.” In re K.R.P., 80 S.W.3d 669, 673 (Tex. App.—Houston [1st Dist.]
2002, pet. denied); see also Botter v. Am. Dental Ass’n, 124 S.W.3d 856, 860 n.1
(Tex. App.—Austin 2003, no pet.) (“When a court issues findings of fact we are to
assume that they are valid unless they are challenged by the appellant[.]”).
We do not review the trial court’s conclusions of law for factual
insufficiency; we instead review the trial court’s legal conclusions drawn from the
court’s ruling seem[ed] inappropriate.” Id. (citing Villagomez v. Rockwood
Specialties, Inc., 210 S.W.3d 720, 726–27 (Tex. App.—Corpus Christi 2006,
pet. denied)). The issue is “why the trial court’s findings should be given any
special deference in circumstances such as these.” Villagomez, 210 S.W.3d
at 727. The Texas Supreme Court has granted a petition of review in
Moncrief, but as of the date of this opinion, the Supreme Court has not yet
issued a decision in the case. Therefore, we continue to apply the standard
thus far endorsed by the Supreme Court: “the proper standard of review
require[s] the appellate court to imply all fact findings supported by the
evidence in favor of the trial court’s ruling.” Moncrief, 332 S.W.3d at 8 n.6
(citing Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 657 (Tex.
2010), and BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 795
(Tex. 2002)). Nonetheless, even if we were to apply a de novo standard to
the trial court’s findings, we would rule the same way because the record in
this case presents no jurisdictional fact disputes that we would need to
resolve.
8
facts de novo to determine their correctness. BMC Software, 83 S.W.3d at 793–94.
If a conclusion of law is erroneous, but the trial court rendered the proper
judgment, the erroneous conclusion of law does not require reversal. Id.
In its first issue, Wellness contends that the trial court erred in seven of its
eleven factual findings because they are “against the weight of the evidence.” We
construe this issue as a factual sufficiency challenge to the identified factual
findings. In its second issue, Wellness contends that the trial court erred in six of
its fifteen conclusions of law because they reflect “an incorrect understanding and
application of the law.” Being challenges to conclusions of law, we review them de
novo to determine their correctness. See id.
B. Jurisdictional pleading requirements and the burden of proof
A plaintiff bears the initial burden of pleading allegations sufficient to bring
a nonresident defendant within the terms of the Texas long-arm statute. TEX. CIV.
PRAC. & REM. CODE ANN. § 17.042 (West 2008); Kelly v. Gen. Interior Constr.,
Inc., 301 S.W.3d 653, 658 (Tex. 2010); Moki Mac River Expeditions v. Drugg, 221
S.W.3d 569, 574 (Tex. 2007). The plaintiff’s original pleadings as well as its
response to the defendant’s special appearance can be considered in determining
whether the plaintiff satisfied its burden. Touradji v. Beach Capital P’ship, L.P.,
316 S.W.3d 15, 23 (Tex. App.—Houston [1st Dist.] 2010, no pet.). “Because the
plaintiff defines the scope and nature of the lawsuit, the defendant’s corresponding
9
burden to negate jurisdiction is tied to the allegations in the plaintiff’s pleading.”
Kelly, 301 S.W.3d at 658.
If the plaintiff pleads sufficient jurisdictional allegations, the nonresident
defendant has the burden of negating all bases of jurisdiction in those allegations.
Id.; Moki Mac, 221 S.W.3d at 574. “Once the defendant has produced credible
evidence negating all bases of jurisdiction, the plaintiff bears the ultimate burden to
establish that the Texas court has personal jurisdiction over the defendant as a
matter of law.” MGM Grand Hotel, Inc. v. Castro, 8 S.W.3d 403, 408 (Tex.
App.—Corpus Christi 1999, no pet.).
If the plaintiff does not plead sufficient jurisdictional facts, the defendant
can meet its burden to negate jurisdiction by proving it is not a Texas resident.
Kelly, 301 S.W.3d at 658–59. If the plaintiff does plead sufficient jurisdictional
facts, “[t]he defendant can negate jurisdiction on either a factual or legal basis.” Id.
at 659. Among the ways to negate jurisdiction, “the defendant can show that even
if the plaintiff’s alleged facts are true, the evidence is legally insufficient to
establish jurisdiction; the defendant’s contacts with Texas fall short of purposeful
availment; [or,] for specific jurisdiction, that the claims do not arise from the
contacts[.]” Id.
10
C. Pleadings and evidence before the district court
On appeal, Wellness relies on its allegations in a petition and brief that were
filed after the February 10 hearing as well as statements in a post-hearing affidavit.
Vita and Mazanet contend that these filings were untimely and therefore we should
not consider them in our analysis. Before engaging in the personal jurisdiction
analysis, we examine what filings were properly before the court when it issued its
ruling on the special appearance.
At the time of the February 10 hearing on the special appearance, Wellness’s
live pleadings were its “Amended Third Supplemental Petition” and its “Fourth
Supplemental Petition” filed on January 19, 2012.2 After the hearing, Wellness
filed its Fifth Supplemental Petition as well an additional brief, “comments,”
pleadings, and evidence addressing the special appearance.
1. Amended pleading
Absent leave of court to file otherwise late pleadings and evidence, we
cannot consider them in reviewing the trial court’s order. Under Rule 120a, a court
“shall determine the special appearance on the basis of the pleadings.” TEX R. CIV.
P. 120a(3). This rule has been interpreted to require the pleadings to be on file at
2
It appears that Wellness mistakenly identified the third, fourth, and fifth
petitions as “supplemental” petitions. But it is clear that they are not
supplemental petitions; rather, they are amended petitions that restate prior
allegations regarding service, the facts, and the causes of action while adding
new allegations.
11
the time of the hearing. See Frank A. Smith Sales, Inc. v. Atl. Aero, Inc., 31 S.W.3d
742, 747 (Tex. App.—Corpus Christi 2000, no pet.) (“The meaning of the term
‘pleadings’ must be limited at least so as to exclude matters not filed prior to the
special appearance hearing.”); Botter, 124 S.W.3d at 860 n.1 (adopting same rule
and refusing to consider amended petition filed after hearing); see also Hussong v.
Schwan’s Sales Enters., Inc., 896 S.W.2d 320, 323 (Tex. App.—Houston [1st
Dist.] 1995, no pet.) (noting that in summary-judgment context, “a trial court can
only consider pleadings and proof on file at the time of the hearing, or filed after
the hearing and before judgment with the permission of the court.”); Leinen v.
Buffington’s Bayou City Serv. Co., 824 S.W.2d 682, 685 (Tex. App.—Houston
[14th Dist.] 1992, no writ) (same). This limitation is particularly important in a
special appearance proceeding because “the pleadings are essential to frame the
jurisdictional dispute” and because “the plaintiff and the defendant bear shifting
burdens of proof.” Kelly, 301 S.W.3d at 658 & n.4.
Wellness contends that the trial court granted leave to file an amended
pleading during the February 10 hearing. The court stated that it would give
Wellness “two weeks from today to fix [the] pleading.” However, a court
employee communicated three days later by email that the judge intended to grant
the special appearance before Wellness filed its amended pleading. Vita and
Mazanet initially informed the court by letter that they did not intend to respond to
12
the new allegations; however, they subsequently filed a general denial “out of an
abundance of caution subject to Defendants’ previously filed Special Appearance.”
The court never signed an order either granting leave to amend the pleading or
striking the amended pleading.
After the court ruled on the special appearance and entered its findings,
Wellness requested an “amended judgment” and “modified” fact findings and
conclusions of law based on the new pleading and on other contentions it had
made. Its proposed fact findings and legal conclusions would have resulted in the
trial court overruling the special appearance. Vita and Mazanet filed objections to
the motion on multiple grounds, including that the motion was untimely and that
the newly alleged jurisdictional facts in the Fifth Supplemental Petition still failed
to establish personal jurisdiction.
Under these circumstances, we will presume that the trial court granted
Wellness leave to amend its pleading at the February 10 hearing and did not revoke
that ruling. Texas Rule of Civil Procedure 63 provides that, in general, “[p]arties
may amend their pleadings . . . as they may desire by filing such pleas with the
clerk at such time as not to operate as a surprise to the opposite party[.]” TEX. R.
CIV. P. 63. This rule is given a “liberal interpretation.” Goswami v. Metro. Sav. and
Loan Ass’n, 751 S.W.2d 487, 490 (Tex. 1988). “Texas courts have held that in the
absence of a sufficient showing of surprise by the opposing party, the failure to
13
obtain leave of court when filing a late pleading may be cured by the trial court’s
action in considering the amended pleading.” Id.
The reporter’s record reflects that the trial court suggested at the February 10
hearing that Wellness “tighten up” its petition and expressly allowed Wellness two
weeks to do so. Although a court employee emailed information several days later
indicating that the court no longer required briefing and would grant the special
appearances, this email is clearly not an order of the court. The trial court delayed
over two months after Wellness filed its Fifth Supplemental Petition before
formally ruling on the special appearances. Moreover, Vita and Mazanet have not
argued that they were surprised or prejudiced by the Fifth Supplemental Petition.
Under these circumstances, we presume that the trial court expressly granted leave
to file the amended pleading on February 10 and did not revoke that ruling. Cf.
Patterson v. First Nat’l Bank of Lake Jackson, 921 S.W.2d 240, 244 (Tex. App.—
Houston [14th Dist.] 1996, no writ) (corrected op.) (concluding that “the trial court
implicitly granted appellant leave to file the amended pleading” by expressly
allowing appellant to file countermotion for summary judgment that necessarily
required amended pleading).
2. Affidavit
The parties also dispute whether we may consider Angelides’s affidavit. A
trial court may consider affidavits but only if they are “served at least seven days
14
before the hearing.” TEX. R. CIV. P. 120a(3). Vita and Mazanet contend that
Angelides’s affidavit was filed only in connection with a summary-judgment
motion filed by a different defendant and therefore it may not be considered with
respect to the special appearances. Cf. Cnty. of Cameron v. Brown, 80 S.W.3d 549,
555 (Tex. 2002) (“[A] court . . . must consider only plaintiffs’ pleadings and the
evidence pertinent to the jurisdictional inquiry.”).
It is unnecessary for us to determine whether we should consider
Angelides’s affidavit as constituting part of the jurisdictional evidence before the
trial court when it ruled on the special appearances. See TEX. R. APP. P. 47.1.
Assuming, without deciding, that Wellness properly presented Angelides’s
affidavit as evidence against the special appearances, we conclude for the reasons
below that Wellness did not meet its burden to establish personal jurisdiction over
Vita and Mazanet.
D. Substantive law
A Texas court may assert personal jurisdiction over a nonresident defendant
if it satisfies (1) the requirements of the Texas long-arm statute and (2) federal
constitutional due-process guarantees. Moki Mac, 221 S.W.3d at 574. “Because the
Texas long-arm statute reaches ‘as far as the federal constitutional requirements of
due process will allow,’ the statute is satisfied if the exercise of personal
jurisdiction comports with federal due process.” PreussagAktiengesellschaft v.
15
Coleman, 16 S.W.3d 110, 113 (Tex. App.—Houston [1st Dist.] 2000, pet. dism’d
w.o.j.) (quoting CSR, Ltd. v. Link, 925 S.W.2d 591, 594 (Tex. 1996)). We thus
examine only whether a Texas court’s exercise of jurisdiction over Vita and
Mazanet would comport with the requirements of federal due process. See CSR,
925 S.W.2d at 594.
Personal jurisdiction is proper when the nonresident defendant has
purposefully established minimum contacts with the forum state such that it could
reasonably anticipate being sued there and the exercise of jurisdiction comports
with “traditional notions of fair play and substantial justice.” Moki Mac, 221
S.W.3d at 575 (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct.
154, 158 (1945)). Minimum contacts are sufficient for personal jurisdiction when
the nonresident defendant has purposefully availed itself of the privileges of
conducting activities within the forum state, thus invoking the benefits and
protections of its laws. Id. (citing Hanson, 357 U.S. at 253, 78 S. Ct. at 1240).
There are two types of personal jurisdiction: general and specific. Wellness
contends that Vita’s and Mazanet’s contacts with Texas are sufficient to establish
both general and specific personal jurisdiction over each of them. We review each
type of personal jurisdiction in turn. But first, we examine the factual sufficiency
challenges.
16
Wellness’s Factual Sufficiency Challenges
In its first issue, Wellness challenges seven fact findings. Wellness has not,
however, identified any pleadings or evidence that controverts six of these
findings; rather, Wellness complains only that they are incomplete. 3 Wellness
asserts that fact finding nine (“Neither Vita nor Mazanet every received any
compensation from Diabetes America.”) is contrary to “uncontradicted evidence”
that Vita received a salary for his services at Diabetes America. However, the
evidence in the record cited by Wellness actually shows that Vita and Mazanet
performed services for Diabetes America for which they were entitled to payment
but had not yet received payment.
Wellness also challenges the trial court’s failure to make eight proposed fact
findings regarding “significant uncontroverted contacts between [Vita and
Mazanet] and Texas.” A trial court is not required to make findings on every
disputed issue. See Mladenka v. Mladenka, 130 S.W.3d 397, 409 (Tex. App.—
Houston [14th Dist.] 2004, no pet.). It is enough that the trial court make findings
on sufficient fact issues to resolve the legal issue presented. See Boudreaux Civic
Ass’n v. Cox, 882 S.W.2d 543, 550 (Tex. App.—Houston [1st Dist.] 1994, no writ)
(stating that, under Rule 298 pertaining to requests for additional or amending
3
Wellness does not assert that fact findings two, three, four, five, six, and
eleven are inaccurate; it only asserts that additional details should have been
included for these findings.
17
findings of fact and conclusions of law, “[a]dditional findings of fact are required
only when they are necessary to determine ultimate or controlling issues”). To the
extent that the trial court may have failed to make particular fact findings relevant
to the legal conclusions, we will accept the uncontroverted pleadings and evidence
presented by Wellness.
We overrule Wellness’s first issue.
Challenge to Legal Conclusions
Wellness challenges eight conclusions of law in which the trial court
determined that it did not have general or specific jurisdiction over Vita and
Mazanet.4
A. General Jurisdiction
General jurisdiction will attach when “a defendant’s contacts in a forum are
continuous and systematic permitting the forum to exercise personal jurisdiction
4
Wellness, in the “issues presented” section of its brief, counts six challenges
to conclusions of law but its brief substantively challenges eight conclusions.
Specifically, the “issue presented” section does not challenge the trial court’s
twenty-fourth conclusion of law (“The fiduciary shield doctrine applies
because Mazanet and Vita’s minimal contacts with Texas were made in their
capacity as corporate officers.”) or twenty-fifth conclusion of law (Vita and
Mazanet’s “contacts with Texas were not continuous or systematic. . . . and
the fiduciary shield doctrine prevents the Court from exercising general
jurisdiction.”). In its brief, however, Wellness asserts that these conclusions
are in error. Therefore, Wellness’s challenges to these issues are properly
presented for our consideration. See TEX. R. APP. P. 38.1(f) (providing that
appellate “brief must state concisely all issues or points presented for
review” and “statement of an issue or point will be treated as covering every
subsidiary question that is fairly included”).
18
over the defendant even if the cause of action did not arise from or relate to
activities conducted within the forum state.” CSR, 925 S.W.2d at 595. The central
question for the general-jurisdiction inquiry is whether the defendants’ contacts are
so “continuous and systematic” that the relationship between the nonresidents and
the state approaches the relationship between the state and its own residents. PHC–
Minden, L.P. v. Kimberly–Clark Corp., 235 S.W.3d 163, 168 (Tex. 2007). General
jurisdiction requires a “more demanding minimum contacts analysis” than a
specific-jurisdiction inquiry, id. (quoting CSR, 925 S.W.2d at 595), with a
“substantially higher” threshold, id. (quoting 4 WRIGHT & MILLER, FEDERAL
PRACTICE & PROCEDURE § 1067.5 (2007)). Usually, “the defendant must be
engaged in longstanding business in the forum state, such as marketing or shipping
products, or performing services or maintaining one or more offices there;
activities that are less extensive than that will not qualify for general in personam
jurisdiction.” Id. (quoting 4 WRIGHT & MILLER, FEDERAL PRACTICE & PROCEDURE
§ 1067.5). General jurisdiction exists when the nonresident is deemed to have
consented to jurisdiction through its continuous contact invoking the benefits and
protections of Texas law. See Am. Type Culture Collection, Inc. v. Coleman, 83
S.W.3d 801, 808 (Tex. 2002). This analysis focuses on the nature and quality of
the contacts, as opposed to the quantity. Id. at 810.
19
A court examines the defendant’s forum-related activities for a reasonable
number of years up to the time of the filing of the lawsuit. PHC–Minden, 235
S.W.3d at 169. A general-jurisdiction inquiry can be tedious, as it “demands . . .
that all contacts be carefully investigated, compiled, sorted, and analyzed for proof
of a pattern of continuing and systematic activity.” Id. at 170 (quoting Schlobohm
v. Schapiro, 784 S.W.2d 355, 359 (Tex. 1990)). In conducting this dispute-blind
inquiry, the location of Wellness’s headquarters and its choice not to sue Diabetes
America are irrelevant. See id. General jurisdiction examines the defendant’s
activities that occur in the forum, not merely those that are related to the forum.
See CSR, 925 S.W.2d at 595 (“General jurisdiction requires a showing that the
defendant conducted substantial activities within the forum, a more demanding
minimum contacts analysis than for specific jurisdiction.”).
Vita and Mazanet are residents of New York and Connecticut, respectively.
Wellness does not contend that they own any Texas property or bank account or
that they have a registered agent for service of process here. Instead, Wellness
relies on seven categories of contacts to demonstrate continuous and systematic
contacts:
(1) Actions taken by Diabetes America, a corporation with its principal place
of business and a number of health centers in Texas;
20
(2) Duties Vita and Mazanet performed for Diabetes America in Texas,
including travel to Texas in connection with their work for Diabetes
America;5
(3) Actions taken by Argenis in Texas, including loans to Diabetes America
and filing a UCC financing statement in order to perfect its loans;
(4) Duties Vita and Mazanet performed for Argenis in Texas;
(5) Vita’s approach to Angelides to become a director of Wellness and his
subsequent actions taken as “active” director of Wellness;
(6) A lawsuit filed by Mazanet in a Texas bankruptcy court for
reimbursement of loans, expenses, and compensation from Diabetes
America; and
(7) The formation in 2011 of Diabetes America – Texas, LLC, a Texas
company, where in the formation documents Vita and Mazanet are identified
as initial managers.
Wellness’s first and third categories presume that activities of entities doing
business in Texas can be imputed to an individual defendant when the individual is
a director or officer of the entity (as in the case of Diabetes America) or is a
principal of the entity (as in the case of Argenis). 6 Texas courts have adopted the
fiduciary-shield doctrine to protect “a corporate officer or employee from the trial
5
The amount of travel, according to the trial court’s fact finding number ten,
was rare. Wellness does not contest this fact finding and cites to evidence of
only two trips to Houston by Vita.
6
Wellness does not explain how the third category—Argenis filing a
financing statement in Texas—can be imputed to Vita and Martinez except
to generally state that they controlled Argenis and that they violated their
fiduciary duties to Diabetes America by prioritizing Argenis’s lien against
Diabetes America. But Wellness does not have standing to complain of a
breach of duty to Diabetes America.
21
court’s exercise of general personal jurisdiction when all of the individual’s
contacts with Texas were on behalf of his employer.” Wright v. Sage Eng’g, Inc.,
137 S.W.3d 238, 250 (Tex. App.—Houston [1st Dist.] 2004, pet. denied); see also
Brown v. Gen. Brick Sales Co., Inc., 39 S.W.3d 291, 297–98 (Tex. App.—Fort
Worth 2001, no pet.) (explaining doctrine in similar terms). The rule applies only
to assertions of general jurisdiction, not specific jurisdiction. Shapolsky v. Brewton,
56 S.W.3d 120, 133 n.6 (Tex. App.—Houston [14th Dist.] 2001, pet. denied)
(citing Brown, 39 S.W.3d at 297–98). 7
There is an exception to the fiduciary-shield doctrine: jurisdiction over an
individual associated with a corporation may be based on the corporation’s
activities when the corporation is the alter ego of the individual. BMC Software, 83
S.W.3d at 798; Tabacinic v. Frazier, 372 S.W.3d 658, 669 (Tex. App.—Dallas
7
While corporate agents are individually liable for fraudulent or tortious acts
committed in the course of their service of their corporation, Shapolsky v.
Brewton, 56 S.W.3d 120, 133 (Tex. App.—Houston [14th Dist.] 2001, pet.
denied), that rule does not make them subject to general jurisdiction in the
forum where the acts occurred; an inquiry into whether their tortious acts
create personal jurisdiction is a specific-jurisdiction inquiry. See Tabacinic
v. Frazier, 372 S.W.3d 658, 668–69 (Tex. App.—Dallas 2012, no pet.)
(holding that fiduciary-shield doctrine did not apply to protect defendants
from specific jurisdiction when plaintiff alleged individual defendants
committed tortious acts while working for corporation); Pessina v. Rosson,
77 S.W.3d 293, 300 (Tex. App.—Austin 2001, pet. denied) (holding that
fiduciary-shield doctrine did not prevent court from asserting specific
jurisdiction over defendant because claim concerns tortious conduct by
defendant individually); Shapolsky, 56 S.W.3d at 133–34 (same).
22
2012, no pet.); Davey v. Shaw, 225 S.W.3d 843, 856 (Tex. App.—Dallas 2007, no
pet.). It is the plaintiff’s burden to establish that the individual was an alter ego of
his employer. Tabacinic, 372 S.W.3d at 669; Brown, 39 S.W.3d at 298. But
Wellness does not rely on this exception. Thus, we do not consider the first or third
of these categories of activities, absent evidence that Vita and Mazanet themselves
acted in Texas on behalf of those entities. The relevant legal inquiry is the
activities of Vita and Mazanet in Texas, whether in their individual capacities or
acting on behalf of a third party.
Turning to the second category—activities that Vita and Mazanet performed
in Texas for Diabetes America—Wellness relies on its description of those
activities in the uncontroverted statement in its Fifth Amended Petition: “Mazanet
and Vita spent time in Houston directing company activities for, negotiating
financings and loans for [Diabetes America] and/or attending Board of Directors
meetings, managements meetings and other meetings, both telephonically and in
person over a period of several years, in their roles as directors and executives at
[Diabetes America].” While it is clear that the meetings and activities occurred
before the filing of this lawsuit, Wellness did not describe the amount of time spent
in Houston, the quantity of personal meetings (as opposed to telephonic meetings)
23
held in Texas, the length of the meetings, or the purposes of the meetings.8 In
finding of fact ten, the court found that Vita and Mazanet “participated in most
board meetings telephonically from outside Texas,” a finding that Wellness does
not contest. Vita’s and Mazanet’s isolated business trips to Texas as part of their
duties for Diabetes America 9 are likewise insufficient to create general jurisdiction
over them. Isolated trips to Texas “fall short of the ‘continuous and systematic
contact’ the Supreme Court requires.” PHC–Minden, 235 S.W.3d at 170. Indeed,
even multiple trips to Texas are insufficient to create general jurisdiction when
those trips do not “in any way enhance[]” the nonresident’s contacts with Texas.
Id. (quoting Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 418,
104 S. Ct. 1868, 1874 (1984)).
Turning to the fourth category—activities performed on Argenis’s behalf—
Wellness contends that Vita and Mazanet in their capacity as principals of Argenis
“were involved in negotiating and consummating the purchase of Diabetes
8
In a separate paragraph in the Fifth Amended Petition, Wellness further
asserted that Vita and Mazanet negotiated Argenis’s purchase of Diabetes
America’s stock but did not allege the location of those meetings. It further
asserted that Vita “had discussions . . . through email regarding” Wellness.
Wellness’s petition did not, however, identify the person with whom Vita
communicated by email or the location of either the author or recipient at the
time of the emails.
9
The Court found that “[w]hile serving as directors of Diabetes America, Vita
and Mazanet rarely traveled to Texas.” Wellness does not challenge this
finding, either.
24
America’s stock for Argenis funds.” 10 Wellness did not plead or present evidence
that these activities occurred in Texas or evidence concerning the extent of the
activities.
The fifth category—Vita’s approach to Angelides to become a Wellness
director and activities as an “active” director—is insufficient to confer jurisdiction
over Vita.11 Angelides’s affidavit states that Vita approached him in the summer of
2007, after Vita was serving as a board member for Diabetes America. Angelides,
however, did not connect Vita’s activities with Texas; he did not identify the
location of this initial conversation or state whether the conversation was in-person
or telephonic. Angelides’s affidavit also indicated that Vita “was active as a
director in not only [Wellness’s] business but also in trying to solicit additional
investors and investment funds into” it. Regarding Vita’s activities as a Wellness
director and soliciting investors, Angelides again did not connect this with Texas,
nor did he offer any details about the extent of the work. In the end, these activities
all simply show that Vita worked with and on behalf of Wellness, a Texas-based
10
The contention appears in both the Fourth and Fifth Amended Petitions.
11
When, as here, there are multiple defendants, we must test each defendant’s
actions and contacts with the forum separately. Gen. Elec. Co. v. Brown &
Ross Int’l Distribs., Inc., 804 S.W.2d 527, 532 (Tex.App.—Houston [1st
Dist.] 1990, writ denied).
25
corporation; otherwise, in the record before this Court, Vita’s activities are not
connected to Texas.
The sixth category—Mazanet’s bankruptcy claim in Texas—is insufficient
to confer jurisdiction over Vita; a single bankruptcy claim does not constitute
continuous and systematic activities by Mazanet. See PHC-Minden, 235 S.W.3d at
168 (noting that to support general jurisdiction, usually “the defendant must be
engaged in longstanding business in the forum state” (quoting 4 WRIGHT &
MILLER, FEDERAL PRACTICE & PROCEDURE § 1067.5)); CMMC v. Salinas, 929
S.W.2d 435, 439 (Tex. 1996) (observing that single or occasional acts do not
support personal jurisdiction when they create only attenuated affiliation with
forum).
In its seventh category, Wellness also relies on Vita’s and Mazanet’s
positions as managers of a Diabetes America – Texas, LLC, a Texas company.
That entity came into existence in January 2011, approximately eight months
before this suit was filed. But Wellness has not alleged or shown any action taken
in Texas by Vita or Mazanet in their management roles with that entity.
When we consider the totality of the facts that Wellness relies upon, we
conclude that Vita’s and Mazanet’s contacts with Texas are not continuous and
systematic and are not sufficient to exercise general jurisdiction over them.
26
B. Specific Jurisdiction
Specific jurisdiction is based on the incident that is the basis for the suit and
the defendant’s contacts with the state in connection with that incident. Moki Mak,
221 S.W.3d at 575–76. Thus, the specific-jurisdiction inquiry focuses on the
relationship among the defendant, the forum, and the litigation. Id. (citing
Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d
223, 228 (Tex. 1991)); see also Michiana Easy Livin’ Country, Inc. v. Holten, 168
S.W.3d 777, 789–90 (Tex. 2005) (rejecting focus on whether injury suffered by
plaintiff occurred in Texas, and stating that focus is on defendant’s conduct).
Specific jurisdiction requires satisfaction of “two co-equal components”:
(1) the nonresident purposely directed its activities toward the forum state or
purposely availed itself of the privileges of conducting activities there and (2) the
cause of action arises out of or is related to those contacts with the forum state.
Moki Mac, 221 S.W.3d at 576, 579. “For half a century the touchstone of
jurisdictional due process has been ‘purposeful availment.’” Michiana, 168 S.W.3d
at 784. Since Hanson v. Denckla, “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 protections of its
laws.” Id. (quoting Hanson, 357 U.S. at 253, 78 S. Ct. at 1240 (emphasis supplied
by quotation)).
27
To conclude that a nonresident company purposefully availed itself of a
forum, a court must do three things: (1) examine only the defendant’s contacts with
the forum, not those of the plaintiff or any third person; (2) decide that the
defendant’s acts with the forum were purposeful rather than random, isolated, or
fortuitous; and (3) determine that the defendant was seeking some benefit,
advantage or profit by availing itself of the jurisdiction. Michiana, 168 S.W.3d at
785.
Wellness’s claim arises out of the Diabetes America board of directors’
unanimous approval of the 2010 InfoPia settlement at a telephonic board meeting.
Both Vita and Mazanet participated in that meeting by telephone from outside
Texas. There is no evidence in the record about the location of the third board
member, Groesser, at the time of the board meeting, although it is undisputed that
she is a Texas resident. Vita, while in New York, signed the settlement agreement
on behalf of Diabetes America. The settlement agreement is governed by Florida
law and requires Diabetes America to litigate any dispute it has in Brevard County,
Florida and InfoPia to litigate any dispute it has in Harris County, Texas. At the
time the settlement was approved, Wellness had already ceased operations, its
Delaware corporate status was forfeited, and its status as a foreign for-profit
corporation in Texas was also forfeited.
28
The thrust of Wellness’s argument for specific jurisdiction is that “the non-
resident Defendants knew, or had good reason to know, that their conduct in
agreeing and entering the 2010 Settlement Agreement and Mutual Release would
have effects in Texas (i.e., depriving Plaintiff of its assigned rights to payments
from Infopia)[.]” However, the Texas Supreme Court “has expressly rejected
jurisdiction ‘based solely upon the effects or consequences of an alleged
conspiracy’ in the forum state.” Michiana, 168 S.W.3d at 789 (quoting Nat’l Indus.
Sand Ass’n v. Gibson, 897 S.W.2d 769, 773 (Tex. 1995)). “Although foreseeability
is a factor to consider in a minimum contacts analysis, foreseeability alone will not
support personal jurisdiction.” CSR, 925 S.W.2d at 595.12 “The defendant must
take an action ‘purposefully directed toward the forum state’ to be subject to the
jurisdiction of its courts.” Id. (quoting Asahi Metal Indus. Co., Ltd. v. Superior
Court of Cal., 480 U.S. 102, 112, 107 S. Ct. 1026, 1032 (1987) (emphasis supplied
by quotation)).
Wellness’s proposed jurisdictional analysis would impermissibly shift our
focus from the relationship among the defendants, the forum, and the litigation, to
12
Even if foreseeability alone could support personal jurisdiction, the record
here suggests that Vita and Mazanet did not foresee any injury to Wellness
as a consequence of approving the 2010 Settlement Agreement and Mutual
Release. By Wellness’s own pleadings and evidence, Wellness ceased
operations in October or November of 2008. Its Delaware corporate status
was forfeited in October of 2009. Wellness does not explain how Vita and
Mazanet could have foreseen that the settlement agreement, executed in
February 2010, would injure a non-operating, non-existent entity.
29
the relationship among the plaintiff, the forum, and the litigation. See Michiana,
168 S.W.3d at 790. Instead, the specific-jurisdiction analysis “always centers on
the defendant’s actions and choices to enter the forum state and conduct business.”
Kelly, 301 S.W.3d at 660 (emphasis in original). Wellness must therefore plead
and present evidence that Vita’s and Mazanet’s relevant acts occurred, at least in
part, in Texas. Id. at 660–61.
The record reveals that Vita and Mazanet had virtually no Texas contacts
related to or connected with the 2010 Settlement Agreement and Mutual Release.
During the telephonic board meeting to approve the agreement, Vita and Mazanet
were not in Texas. Wellness argues that because Groesser, another Diabetes
America board member, was a Texas resident, there is an inference that she
participated in that phone call while in Texas, and therefore Vita and Mazanet had
contact with Texas when the settlement agreement was approved. However, even if
such an inference about Groesser’s whereabouts were made, that contact with
Texas was merely fortuitous and does not show that Vita and Mazanet
“purposefully availed” themselves of the privilege of conducting activities in
Texas, thereby invoking the benefits and protections of her laws. See Hanson, 357
U.S. at 253, 78 S. Ct. at 1240; see also Michiana, 168 S.W.3d at 791 (“[C]hanges
in technology have made reliance on phone calls obsolete as proof of purposeful
30
availment.”). Moreover, as the trial court found and Wellness does not contest,
Vita signed the 2010 Settlement Agreement and Mutual Release in New York.
Because foreseeability of an injury alone does not support exercise of
personal jurisdiction over a nonresident defendant, and the record reveals that
virtually all of the activities by Vita and Mazanet related to or connected with the
2010 Settlement Agreement and Mutual Release occurred outside Texas, we
conclude that Wellness has failed to plead and prove contacts with Texas that are
substantially connected to the operative facts of the litigation. Accordingly,
Wellness did not establish specific jurisdiction over Vita and Mazanet.
Conclusion
Wellness failed to establish either general or specific personal jurisdiction
over Vita and Mazanet. We therefore affirm the trial court’s order granting Vita’s
and Mazanet’s special appearances. All outstanding motions are overruled as moot.
Harvey Brown
Justice
Panel consists of Chief Justice Radack and Justices Higley and Brown.
31