Crossroads Fin., LLC v.
| Decision Date | 13 December 2016 |
| Docket Number | No. 05-16-00486-CV,05-16-00486-CV |
| Parties | CROSSROADS FINANCIAL, LLC, Appellant v. A.D.I.M. GLOBAL CO. LTD, Appellee |
| Court | Texas Court of Appeals |
On Appeal from the 191st Judicial District Court Dallas County, Texas
Before Justices Francis, Fillmore, and Myers
Opinion by Justice Fillmore
Crossroads Financial, LLC ("Crossroads") appeals the trial court's order denying its special appearance. See TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(7) (West Supp. 2016). For the reasons that follow, we conclude Crossroads's contacts with Texas are insufficient to create either specific or general personal jurisdiction. Accordingly, we reverse the trial court's order as to Crossroads and render judgment dismissing appellee's claims against Crossroads.
Appellee A.D.I.M. Global Co., Ltd. ("ADIM"), a Chinese limited partnership, sued Crossroads and other parties contending it was not paid in full for goods it shipped from China to the United States. ADIM asserted tort and contract claims against Crossroads and its employees James Rothman, Tricia Sherry, and Branka Thorstad. Crossroads is a Florida limited liability company with its principal place of business in Boca Raton, Florida. Rothman, Sherry, and Thorstad are residents of Florida. Crossroads, Rothman, Sherry, and Thorstad filed a special appearance. The trial court granted the special appearance as to the three individuals, but denied it as to Crossroads. This appeal followed.
Texas courts may exercise personal jurisdiction over a nonresident defendant "when the state's long-arm statute authorizes such jurisdiction and its exercise comports with due process." Cornerstone Healthcare Grp. Holding, Inc. v. Nautic Mgmt. VI, L.P., 493 S.W.3d 65, 70 (Tex. 2016), petition for cert. filed, No. 16-522 (U.S. Oct. 17, 2016). The Texas long-arm statute provides in relevant part that "in addition to other acts that may constitute doing business," a nonresident does business in Texas 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, or if the nonresident commits a tort in whole or in part in this state. TEX. CIV. PRAC. & REM. CODE ANN. § 17.042(1), (2) (West 2015). This statute "provides for personal jurisdiction that extends to the limits of the United States Constitution, and so federal due process requirements shape the contours of Texas courts' jurisdictional reach." Searcy v. Parex Res., Inc., 496 S.W.3d 58, 66 (Tex. 2016).
"[W]hether a trial court's exercise of jurisdiction is consistent with due process requirements turns on two requirements: (1) the defendant must have established minimum contacts with the forum state; and (2) the assertion of jurisdiction cannot offend traditional notions of fair play and substantial justice." Id. (citing Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). "[S]ufficient minimum contacts exist when the nonresident defendant 'purposefully avails itself of the privilege of conducting activities within the forum [s]tate, thus invoking the benefits and protections of its laws.'" Id. at 66-67 (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)). In Searcy, the court explained: "[t]he nub of the purposefulavailment analysis is whether a nonresident defendant's conduct in and connection with Texas are such that it could reasonably anticipate being haled into court here." Id. at 67. The defendant must purposefully direct contacts into the forum state. Id. (citing Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 228 (Tex. 1991)).
When determining whether a nonresident purposefully availed itself of the privilege of conducting activities in Texas, we consider three factors: (1) only the defendant's contacts with the forum are relevant, not the unilateral activity of another party or third person; (2) the contacts relied upon must be purposeful rather than random, isolated, or fortuitous; and (3) the defendant must seek some benefit, advantage, or profit by availing itself of the jurisdiction. Cornerstone Healthcare Grp. Holding, Inc., 493 S.W.3d at 70-71. This analysis assesses the quality and nature of the contacts, not the quantity. Moncrief Oil Int'l, Inc. v. OAO Gazprom, 414 S.W.3d 142, 151 (Tex. 2013). A defendant will not be haled into a jurisdiction based solely on contacts that are random, isolated, or fortuitous, or on the unilateral activity of another party or a third person. Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 785 (Tex. 2005); Guardian Royal Exch., 815 S.W.2d at 226.
In addition to minimum contacts, due process requires the exercise of personal jurisdiction to comply with traditional notions of fair play and substantial justice. Moncrief Oil Int'l, Inc., 414 S.W.3d at 154 (citing Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 338 (Tex. 2009)). "If a nonresident has minimum contacts with the forum, rarely will the exercise of jurisdiction over the nonresident not comport with traditional notions of fair play and substantial justice." Id. at 154-55. This evaluation is undertaken in light of the following factors, when appropriate:
(1) the burden on the defendant; (2) the interests of the forum state in adjudicating the dispute; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the interstate or international judicial system's interest in obtaining the mostefficient resolution of controversies; and (5) the shared interest of the several nations or states in furthering fundamental substantive social policies.
Spir Star AG v. Kimich, 310 S.W.3d 868, 878 (Tex. 2010).
The plaintiff bears the initial burden of pleading allegations that suffice to permit a court's exercise of personal jurisdiction over the nonresident defendant. Searcy, 496 S.W.3d at 66. Once the plaintiff has met this burden, the defendant then assumes the burden of negating all potential bases for personal jurisdiction that exist in the plaintiff's pleadings. Id. The defendant can negate jurisdiction on either a factual or legal basis. Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 659 (Tex. 2010). A defendant negates jurisdiction on a factual basis by presenting evidence to disprove the plaintiff's jurisdictional allegations. Id. "The plaintiff can then respond with its own evidence that affirms its allegations, and it risks dismissal of its lawsuit if it cannot present the trial court with evidence establishing personal jurisdiction." Id. (footnotes omitted). A defendant negates jurisdiction on a legal basis by showing 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; for specific jurisdiction, that the claims do not arise from the contacts; or that traditional notions of fair play and substantial justice are offended by the exercise of jurisdiction." Id.
A defendant's contacts with a forum may give rise to either general or specific jurisdiction. KC Smash 01, LLC v. Gerdes, Hendrichson, Ltd., L.L.P., 384 S.W.3d 389, 392 (Tex. App.—Dallas 2012, no pet.). ADIM asserts Crossroads's contacts with Texas support the exercise of both specific and general jurisdiction.
Specific jurisdiction is based on "whether the defendant's activities in the forum state themselves 'give rise to the liabilities sued on.'" Searcy, 496 S.W.3d at 67 (quoting Int'l Shoe, 326 U.S. at 317). Specific jurisdiction exists when the plaintiff's claims "arise out of" or are"related to" the defendant's contacts with the forum. Id. (citing Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414 nn. 8, 9 (1984)). The defendant's relationship with the forum state, not the plaintiff's relationship, is the proper focus of the specific jurisdiction analysis. Id. Courts must consider the relationship between the defendant, the forum state, and the litigation. Id.
"'[F]or a nonresident defendant's forum contacts to support an exercise of specific jurisdiction, there must be a substantial connection between those contacts and the operative facts of the litigation.'" Moncrief Oil Int'l, Inc., 414 S.W.3d at 156 (quoting Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 585 (Tex. 2007)). "'[B]ut-for causation alone is insufficient.'" Leonard v. Salinas Concrete, LP, 470 S.W.3d 178, 188 (Tex. App.—Dallas 2015, no pet.) (quoting Moncrief Oil Int'l, Inc., 414 S.W.3d at 157). "'The operative facts are those on which the trial will focus to prove the liability of the defendant who is challenging jurisdiction.'" Id. (). We analyze specific jurisdiction on a claim-by-claim basis, unless we are shown that all claims arise from the same contacts with Texas. Moncrief Oil Int'l, Inc., 414 S.W.3d at 150.
When a defendant's continuous operations within a state are "'so substantial and of such a nature as to justify a suit against it on causes of action arising from dealings entirely distinct from those activities,'" a court may exercise general jurisdiction over the defendant. Searcy, 496 S.W.3d at 71 (quoting International Shoe Co., 326 U.S. at 318). "[M]ore recent Supreme Court cases have clarified that the general jurisdiction analysis entails a high bar." Id. at 72. "[A] court has general jurisdiction over a defendant only if its 'affiliations with the [s]tate are so continuous and systematic as to render it essentially at home in the forum [s]tate.'" Id. (quotingDaimler AG v. Bauman, 134 S.Ct. 746, 761 (2014), emphasis added in Searcy). "Continuous and systematic contacts that fail to rise to this relatively high level are insufficient to confer general jurisdiction over a nonresident defendant." Id. (citing Daimler...
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