Camac v. Dontos

• Citation: 390 S.W.3d 398
• Decision Date: 12 June 2012
• Docket Number: No. 05–11–00765–CV.,05–11–00765–CV.
• Court: Texas Court of Appeals
• Parties: Brad CAMAC, Appellant v. Jordan DONTOS, Jennifer Dontos, & Crave, LLC, Appellees.

390 S.W.3d 398

Brad CAMAC, Appellant

v.Jordan DONTOS, Jennifer Dontos, & Crave, LLC, Appellees.

No. 05–11–00765–CV.

Court of Appeals of Texas,

Dallas.

April 17, 2012.

Rehearing Overruled June 12, 2012.

Sean Higgins, Wilson, Elser, Moskowitz, Edelman & Dicker LLP, Houston, TX, John R. Henderson, Bank of America Plaza, Dallas, TX, for Appellant.

Gary E. Smith, Gary E. Smith, P.C., Dallas, TX, for Appellee.

Before Justices O'NEILL, FRANCIS, and MURPHY.

OPINION

Opinion By Justice MURPHY.

Brad Camac appeals the trial court's order denying his special appearance in a franchise dispute filed against him and others by Jordan and Jennifer Dontos and Crave, LLC (collectively, the Dontoses). ¹ We affirm the trial court's order.

BACKGROUND

The underlying dispute involves a franchise agreement the Dontoses entered into with 24Seven Vending (USA) Limited, a New Zealand company, for vending machine routes located in Texas. Camac, a California resident, was the Vice President of Franchise Sales for 24Seven and handled the sale of the vending machine franchise in Texas to the Dontoses.

According to the Dontoses, they were promised two established vending machine routes within Farmers Branch and Carrollton, Texas, each of which was said to generate minimum average weekly gross sales of $6,730. The Dontoses borrowed $333,000 from a bank recommended by 24Seven, paid that amount plus a $175,000 deposit to 24Seven, quit their jobs, and moved from Seattle, Washington to Carrollton to manage their franchise. Ultimately, 24Seven did not tender the described routes, and instead, the Dontoses were asked to accept below-average sales routes that required greater driving distances between accounts. The Dontoses also later learned 24Seven was running into financial difficulty in the time just before they became franchisees and that 24Seven was to be sold to another company called Bacon Whitney Corporation. The Dontoses claim this information, as well as the availability of the promised routes, was either misrepresented or concealed from them.

Camac is one of ten defendants ² the Dontoses sued alleging violations of the Federal Trade Commission franchise rule, 16 C.F.R. §§ 436.2, 436.9 (2004), the Texas Business Opportunity Act, Tex. Bus. & Com.Code Ann. § 51.301 (West 2009), the Deceptive Trade Practices–Consumer Protection Act, Tex. Bus. & Com.Code Ann. §§ 17.41–.926 (West 2011), and the Washington Franchise Investment Protection Act, Wash. Rev.Code Ann.. § 19.100.170 (West 2008). The Dontoses also alleged causes of action for fraud, breach of the franchise agreement, and interference with contractual and business relationships. As to Camac, the Dontoses specifically alleged he was the “principal spokesman and actor” in the fraud perpetrated on them by the defendants.

Camac specially appeared and objected to the court's exercise of personal jurisdiction over him. Camac argued his only contacts with Texas arose out of his employment with 24Seven. Camac verified his special appearance in which he attested he never conducted business in Texas in his individual capacity, but rather, “any contacts [he] may have had with the State of Texas were on behalf of [his] former employer, 24Seven (USA) Limited.” The Dontoses responded with an affidavit of Jordan Dontos, which they incorporated into their sixth amended petition. The trial court denied the special appearance, finding it had specific jurisdiction over Camac.³ Camac appealed that ruling. SeeTex. Civ. Prac. & Rem.Code Ann. § 51.014(a)(7) (West 2008) (interlocutory appeal).

DISCUSSION

Camac raises several arguments in his single issue challenging the trial court's denial of his special appearance. Those include assertions the Dontoses' jurisdictional facts pleaded and contained in Jordan Dontos's affidavit are insufficient, that Camac did not purposefully avail himself of jurisdiction in Texas because his contacts were at the direction of his employer, there is no connection between the facts alleged and the operative facts of the case, and he negated the jurisdictional allegations. We conclude the trial court properly found it had specific jurisdiction over Camac and limit our analysis accordingly.

Due Process

Personal jurisdiction concerns a court's power to bind a particular person or party. CSR Ltd. v. Link, 925 S.W.2d 591, 594 (Tex.1996) (orig. proceeding). That power is grounded in constitutional guarantees of due process. Texas courts may exercise personal jurisdiction over a nonresident defendant if the Texas long-arm statute permits the exercise of jurisdiction and the assertion of jurisdiction is consistent with federal and state constitutional due process guarantees. Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 657 (Tex.2010). The requirements of the Texas long-arm statute are considered satisfied if the exercise of personal jurisdiction is consistent with federal due process limitations. Id.

The due process clause of the federal constitution permits a court to exercise personal jurisdiction over a nonresident defendant only when the defendant has “established minimum contacts with the forum state, and the exercise of jurisdiction comports with ‘traditional notions of fair play and substantial justice.’ ” Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 575 (Tex.2007) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)). Minimum contacts are established when the nonresident defendant “purposefully avails itself 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, 2 L.Ed.2d 1283 (1958); Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 784 (Tex.2005). The defendant's conduct and connection with the state must be such that it could reasonably anticipate being sued in the forum state. See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474–75, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985); Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 806 (Tex.2002).

Standards & Burdens

The question of whether a trial court has personal jurisdiction over a nonresident defendant is one of law that we review de novo. Kelly, 301 S.W.3d at 657. When, as here, the trial court does not issue findings of fact or conclusions of law in support of its special appearance ruling, all facts necessary to support the judgment and supported by the evidence are implied. Moki Mac, 221 S.W.3d at 574;BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex.2002).

A defendant claiming it is not amenable to process in Texas must file a verified special appearance challenging the trial court's exercise of jurisdiction. SeeTex.R. Civ. P. 120a; Petrie v. Widby, 194 S.W.3d 168, 174 (Tex.App.-Dallas 2006, no pet.). The plaintiff bears the initial burden of pleading jurisdictional facts sufficient to bring a nonresident defendant within the provisions of the Texas long-arm statute. Kelly, 301 S.W.3d at 658. The plaintiff's pleadings and its response to the special appearance may be considered in determining whether the plaintiff satisfied its burden. Flanagan v. Royal Body Care, Inc., 232 S.W.3d 369, 374 (Tex.App.-Dallas 2007, pet. denied). The nonresident defendant then carries the burden of negating all bases of personal jurisdiction alleged by the plaintiff. Kelly, 301 S.W.3d at 658.

The defendant can negate jurisdiction on either a factual or legal basis. Id. at 659. A factual attack requires the defendant to present evidence that it has no contacts with Texas, effectively disproving the plaintiff's allegations. Id. The plaintiff then responds with its own evidence that affirms its allegations. Id. In a legal attack on specific jurisdiction, the defendant takes the defendant's factual allegations as true. Under this challenge, the defendant may prevail by showing (1) those assumed facts are insufficient to establish jurisdiction, (2) the defendant's Texas contacts fall short of purposeful availment, (3) the claims do not arise from the contacts, or (4) traditional notions of fair play and substantial justice are offended by the exercise of jurisdiction. Id.

Specific Jurisdiction

A defendant's contacts with a forum can give rise to either specific or general jurisdiction. BMC Software, 83 S.W.3d at 795–96. Specific jurisdiction is established if the defendant's alleged liability arises from or is related to the defendant's contacts with the state. Spir Star AG v. Kimich, 310 S.W.3d 868, 873 (Tex.2010). When specific jurisdiction is alleged, the minimum-contacts analysis focuses on the relationship among the defendant, the litigation, and the forum. Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 338 (Tex.2009); Moki Mac, 221 S.W.3d at 575–76. This analysis requires the court to review whether (1) the defendant purposefully availed itself of the privilege of conducting activities in the forum state and (2) whether the operative facts of the litigation bear a substantial connection to the defendant's contacts with the state. Moki Mac, 221 S.W.3d at 578–79. If both these requirements are met, we then must determine if the exercise of specific jurisdiction over the nonresident defendant comports with traditional notions of fair play and substantial justice. Asahi Metal Indus. Co., Ltd. v. Superior Court of Cal., Solano Cnty., 480 U.S. 102, 113, 107 S.Ct. 1026, 94 L.Ed.2d 92 (1987).

Analysis

Camac argues the trial court erred in denying his special appearance as to specific personal jurisdiction because (1) he did not purposefully avail himself of jurisdiction in Texas because his contacts were at the direction of his employer, (2) the Dontoses did not meet their pleading burden of alleging facts showing Camac committed a tort in Texas, and the facts alleged have no connection to the operative facts of the case, and (3) he negated the Dontoses' jurisdictional allegations, and Jordan Dontos's opposing...