83 S.W.3d 789 (Tex. 2002), 00-1019, BMC Software Belgium, N.V. v. Marchand

Docket Nº00-1019.
Citation83 S.W.3d 789, 45 Tex.Sup.Ct.J. 930
Party NameBMC SOFTWARE BELGIUM, N.V., Petitioner, v. Michel MARCHAND, Respondent.
Case DateJune 27, 2002
CourtSupreme Court of Texas

Page 789

83 S.W.3d 789 (Tex. 2002)

45 Tex.Sup.Ct.J. 930

BMC SOFTWARE BELGIUM, N.V., Petitioner,

v.

Michel MARCHAND, Respondent.

No. 00-1019.

Supreme Court of Texas

June 27, 2002

Argued Sept. 5, 2001.

Rehearing Denied Aug. 29, 2002.

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Merritt B. Chastain, III, Thomas H. Wilson, Houston, Vinson & Elkins, for Petitioner.

Stuart M. Nelkin, Carol Nelkin, Nelkin & Nelkin, Houston, for Respondent.

Justice BAKER delivered the opinion of the Court.

This is an interlocutory appeal from the denial of a foreign corporation's special appearance. A divided court of appeals affirmed the trial court's ruling. 80 S.W.3d 52. We conclude that the foreign corporation's contacts with Texas are insufficient to create either specific or general jurisdiction. We also conclude that the trial court did not abuse its discretion in denying the plaintiff's motion to continue the special appearance hearing. We therefore reverse the court of appeals' judgment and render judgment dismissing the plaintiff's claims against the foreign corporation for want of jurisdiction.

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I. BACKGROUND

Michel Marchand, a Belgian citizen, was employed by Platinum Technologies in Belgium. In March 1996, Marchand began negotiating with Gerd Ordelheide and Adri Kok for employment with BMC Software Belgium, N.V. (BMCB). Ordelheide and Kok were directors of BMCB, a wholly-owned subsidiary of BMC Software, Inc. (BMCS), a Delaware corporation headquartered in Houston.

On March 29, 1996, Marchand and BMCB signed a letter agreement outlining the terms of Marchand's employment with BMCB, including the offer of options to purchase 20,000 shares of BMCS stock. The agreement did not specify when the options would be granted or when Marchand could exercise them. The letter agreement also referenced a "management agreement" that Marchand had apparently presented to BMCB. On June 13, 1996, BMCB and Marchand executed the management agreement between BMCB and a company called Procurement, N.V., of which Marchand was the sole officer and director. The record shows that Marchand asked BMCB to hire Procurement as a management company so that Marchand could work for Procurement as an independent contractor rather than directly for BMCB. Apparently, this arrangement enabled Marchand to reduce his Belgian tax liability. The management agreement was in German, and it stated that Belgian law applies and the court at Brussels had exclusive jurisdiction.

When Marchand actually began working for BMCB is unclear. But it is clear that in July 1997, BMCB discharged Procurement and Marchand. Marchand was never granted any options to purchase BMCS stock. He sued BMCB and BMCS for breach of contract, fraud, negligent misrepresentation, and declaratory relief. Marchand alleged both specific and general jurisdiction over BMCB. BMCB filed a special appearance, which the trial court denied. BMCB appealed the trial court's interlocutory order. See TEX. CIV. PRAC. & REM.CODE § 51.014(a)(7). The court of appeals affirmed, 80 S.W.3d at 55, and BMCB petitioned this Court for review.

II. THIS COURT'S JURISDICTION

Until 1997, a trial court's order denying a special appearance was reviewable only on appeal after trial. Canadian Helicopters Ltd. v. Wittig, 876 S.W.2d 304, 307 (Tex.1994). But the Legislature amended section 51.014 of the Civil Practice and Remedies Code to permit an interlocutory appeal from a trial court's ruling on a special appearance.

Typically, a court of appeals judgment in an interlocutory appeal is conclusive and an appeal to this Court is not allowed. See TEX. GOV'T CODE§ 22.225(b). However, because there is a dissent in the court of appeals, we may exercise jurisdiction in this case. See TEX. GOV'T CODE § 22.225(c).

III. APPLICABLE LAW

A. SPECIAL APPEARANCE--STANDARD OF REVIEW

The plaintiff bears the initial burden of pleading sufficient allegations to bring a nonresident defendant within the provisions of the long-arm statute. See McKanna v. Edgar, 388 S.W.2d 927, 930 (Tex.1965). A defendant challenging a Texas court's personal jurisdiction over it must negate all jurisdictional bases. Kawasaki Steel Corp. v. Middleton, 699 S.W.2d 199, 203 (Tex.1985). This Court has never clearly articulated the standard for reviewing a trial court's order denying a special appearance. The Fourth Court of Appeals has held that, because personal jurisdiction involves both legal and factual questions, appellate courts should review

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the trial court's decision for an abuse of discretion. See, e.g., Klenk v. Bustamante, 993 S.W.2d 677, 681 (Tex.App.-San Antonio 1998, no pet.). However, other courts of appeals review the trial court's factual findings for legal and factual sufficiency and review the trial court's legal conclusions de novo. See, e.g., E.L.M. LeBlanc v. Kyle, 28 S.W.3d 99, 101 (Tex.App.-Texarkana 2000, pet. denied); In re Estate of Judd, 8 S.W.3d 436, 440-41 (Tex.App.-El Paso 1999, no pet.); C-Loc Retention Sys., Inc. v. Hendrix, 993 S.W.2d 473, 476 (Tex.App.-Houston [14th Dist.] 1999, no pet.); Cadle v. Graubart, 990 S.W.2d 469, 471 (Tex.App.Beaumont 1999, no pet.); Ball v. Bigham, 990 S.W.2d 343, 347 (Tex.App.Amarillo 1999, no pet.); Garner v. Furmanite Australia Pty, Ltd., 966 S.W.2d 798, 802 (Tex.App.-Houston [1st Dist.] 1998, pet. denied); Al-Turki v. Taher, 958 S.W.2d 258, 260-61 (Tex.App.-Eastland 1997, pet. denied).

We agree with the latter view and disapprove of those cases applying an abuse of discretion standard only. 1 Whether a court has personal jurisdiction over a defendant is a question of law. See Hotel Partners v. Craig, 993 S.W.2d 116, 120 (Tex.App.-Dallas 1994, writ denied) (stating that this Court's decision in Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex.1991), suggests that personal jurisdiction is a legal question). However, the trial court frequently must resolve questions of fact before deciding the jurisdiction question. See E.L.M. LeBlanc, 28 S.W.3d at 101; C-Loc Retention Sys., 993 S.W.2d at 476. If a trial court enters an order denying a special appearance, and the trial court issues findings of fact and conclusions of law, the appellant may challenge the fact findings on legal and factual sufficiency grounds. See Hotel Partners v. KPMG Peat Marwick, 847 S.W.2d 630, 632 (Tex.App.-Dallas 1993, writ denied). Our courts of appeals may review the fact findings for both legal and factual sufficiency. Ortiz v. Jones, 917 S.W.2d 770, 772 (Tex.1996). This Court's review of the trial court's fact findings is limited to legal sufficiency. Ortiz, 917 S.W.2d at 772.

Appellate courts review a trial court's conclusions of law as a legal question. Hitzelberger v. Samedan Oil Corp., 948 S.W.2d 497, 503 (Tex.App.-Waco 1997, pet. denied). The 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. Templeton v. Dreiss, 961 S.W.2d 645, 656 n. 8 (Tex.App.-San Antonio 1998, pet. denied); Dallas County v. Sweitzer, 881 S.W.2d 757, 763 (Tex.App.-Dallas 1994, writ denied). If the reviewing court determines a conclusion of law is erroneous, but the trial court rendered the proper judgment, the erroneous conclusion of law does not require reversal. Scholz v. Heath, 642 S.W.2d 554, 559 (Tex.App.-Waco 1982, no writ).

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When a 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. See Worford v. Stamper, 801 S.W.2d 108, 109 (Tex.1990); Zac Smith & Co. v. Otis Elevator Co., 734 S.W.2d 662, 666 (Tex.1987); In re W.E.R., 669 S.W.2d 716, 717 (Tex.1984). When the appellate record includes the reporter's and clerk's records, these implied findings are not conclusive and may be challenged for legal and factual sufficiency in the appropriate appellate court. Roberson v. Robinson, 768 S.W.2d 280, 281 (Tex.1989); Zac Smith & Co., 734 S.W.2d at 666. For legal sufficiency points, if there is more than a scintilla of evidence to support the finding, the no evidence challenge fails. Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex.1992).

B. IN PERSONAM JURISDICTION

The Texas long-arm statute governs Texas courts' exercise of jurisdiction over nonresident defendants. See TEX. CIV. PRAC. & REM.CODE§§ 17.041-.045. That statute permits Texas courts to exercise jurisdiction over nonresident defendants that "does business" in Texas, and the statute lists some activities that constitute "doing business." TEX. CIV. PRAC. & REM.CODE § 17.042. The list of activities, however, is not exclusive. We have held that section 17.042's broad language extends Texas courts' personal jurisdiction "as far as the federal constitutional requirements of due process will permit." U-Anchor Adver., Inc. v. Burt, 553 S.W.2d 760, 762 (Tex.1977). Thus, we rely on precedent from the United States Supreme Court and other federal courts, as well as our own State's decisions, in determining whether a nonresident defendant has met its burden to negate all bases of jurisdiction. See Guardian Royal, 815 S.W.2d at 226; U-Anchor Adver., 553 S.W.2d at 762.

Personal jurisdiction over nonresident defendants 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 and substantial justice. International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). 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...

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