884 F.2d 200 (5th Cir. 1989), 88-6065, WNS, Inc. v. Farrow

Docket Nº:88-6065.
Citation:884 F.2d 200
Party Name:WNS, INC., Plaintiff-Appellant, v. James Larry FARROW and Mary Dee Farrow, Defendants-Appellees.
Case Date:September 22, 1989
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit
 
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Page 200

884 F.2d 200 (5th Cir. 1989)

WNS, INC., Plaintiff-Appellant,

v.

James Larry FARROW and Mary Dee Farrow, Defendants-Appellees.

No. 88-6065.

United States Court of Appeals, Fifth Circuit

September 22, 1989

Page 201

Lee L. Kaplan, David Hricik, Baker & Botts, Houston, Tex., for plaintiff-appellant.

Daniel J. Kasprazak, Glenda Hobbs Kirsch, John T. Johnston, Calvin, Dylewski, Gibbs, Maddox, Russell & Verner, Houston, Tex., for defendants-appellees.

Appeal from the United States District Court for the Southern District of Texas.

Before CLARK, Chief Judge, JOHNSON and SMITH, Circuit Judges.

JOHNSON, Circuit Judge:

Plaintiff WNS, Inc. (WNS) appeals an order of the district court dismissing its lawsuit against defendants James Larry Farrow and Mary Dee Farrow for lack of personal jurisdiction. Persuaded that sufficient contacts exist between the Farrows and Texas to support the exercise of personal jurisdiction over the Farrows in federal district court in Texas, we reverse and remand.

I. FACTS AND PROCEDURAL HISTORY

The jurisdictional issue presented by the instant appeal evolves out of the attempt by plaintiff WNS to bring suit against the defendant Farrows in federal district court in Texas. WNS filed its action against the Farrows on December 18, 1987, asserting both tort and contract claims arising from transactions and negotiations occurring in Texas and Georgia between WNS and the Farrows regarding the purchase and operation of a "Deck the Walls" franchise. The following is a brief summary of the facts relevant to the instant appeal.

WNS is a Texas corporation located in Houston, Texas, which licenses the Deck the Walls trade name, and franchises a comprehensive system for opening and operating a Deck the Walls store. In maintaining this system, WNS provides franchisees desiring to operate a Deck the Walls store with a complete program for operating such a business. In the instant appeal, the Farrows, who are residents of Georgia, contacted WNS at its Houston office in March 1986 for the purpose of one or both of them applying to become Deck the Walls store franchisees. As part of the process of becoming a Deck the Walls franchisee, an individual applicant is required by WNS to travel to Houston for an extensive formal interview. Accordingly, on or about March 7, 1986, the Farrows travelled to Houston for the purpose of meeting with WNS employees for the above formal interview and allegedly to negotiate and structure a franchise agreement.

At this point, it should be noted that the Farrows dispute the above proposition that they travelled to Houston for the purpose of becoming Deck the Walls franchisees; instead, the Farrows maintain that they travelled to Houston merely for a "social visit" to learn more about the virtues of the company from the WNS staff. WNS asserts, however, that in addition to negotiating and structuring a franchise agreement with WNS during the Houston visit, the Farrows also completed an application for a Georgia franchise of Deck the Walls which both Mr. and Mrs. Farrow signed. Moreover, WNS maintains that, during the Houston visit, the parties negotiated specific terms for the following three contracts: (1) a franchise agreement to buy a franchise for $171,857 to operate a Deck the Walls store in Georgia, (2) a loan/lease agreement to enable the Farrows to operate

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the Deck the Walls store in Georgia before permanent financing was in place, and (3) a sublease agreement for a space in a shopping center in Georgia for the Deck the Walls store.

Thereafter, the Farrows returned to Georgia and subsequently mailed a cashier's check to WNS in partial payment of their financial...

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