H. Heller & Co. v. Louisiana-Pacific Corp.

• Decision Date: 07 December 2006
• Docket Number: No. 14-06-00481-CV.,14-06-00481-CV.
• Parties: H. HELLER & CO., INC. and Gulf Performance Polymers, Inc., Appellants, v. LOUISIANA-PACIFIC CORP., Appellee.
• Court: Texas Court of Appeals

209 S.W.3d 844

H. HELLER & CO., INC. and Gulf Performance Polymers, Inc., Appellants, v. LOUISIANA-PACIFIC CORP., Appellee.

No. 14-06-00481-CV.

Court of Appeals of Texas, Houston (14th Dist.).

December 7, 2006.

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Rachel Michelle Stanford, Gregory M. Cokinos, Robert A. Plessala, Houston, for appellants.

George R. Murphy, Sabrina L. DiMichele, Houston, J. Greg Dow, Humble, for appellee.

Panel consists of Chief Justice HEDGES and Justices YATES and SEYMORE.

MAJORITY OPINION

ADELE HEDGES, Chief Justice.

Appellants, H. Heller & Co., Inc. and Gulf Performance Polymers, Inc., appeal from the denial of their plea to the jurisdiction. In the court below, Louisiana-Pacific filed for enforcement of an Alabama judgment against appellants. On appeal, appellants contend that the trial court erred in denying their plea to the jurisdiction because the Alabama court issuing the original judgment did not have personal jurisdiction over them. We affirm.

Background

Appellants manufacture high-density polyethylene, or HDPE, a thermoplastic made from petroleum. In 2000, LP purchased three shipments of HDPE from appellants for use in the manufacture of an engineered-wood decking material. Each shipment was comprised of two rail-car loads sent from appellants' facility in Channelview, Texas, to LP's facility in Selma, Alabama.

In its Alabama lawsuit, LP alleged that the third shipment of HDPE from appellants failed to meet contract specifications. LP further alleged that the sub-standard quality of appellant's product resulted in a sub-standard batch of decking material, which had to be scrapped. According to LP, appellants subsequently declined to refund LP's payment or replace the deficient product. LP pleaded causes of action for breach of contract, breach of warranty, fraud/misrepresentation, conversion, and unjust enrichment. Appellants failed to answer in the Alabama lawsuit. Consequently, on May 11, 2004, the Alabama trial court entered a default judgment awarding LP $199,494 in damages and interest.

In the court below, appellants acknowledged making the sales to LP but contended that LP initiated the contact that resulted in the sales and that neither of the appellants solicited business in Alabama or sent personnel to Alabama related to the sales. They further alleged that they did not maintain offices in Alabama, did not have an agent for service of process in Alabama, did not have salespeople in Alabama or make routine sales there, did not advertise in Alabama, and did not have bank accounts or own property in the state. Appellants asserted that LP representatives traveled to Texas to inspect the product and traveled to New York to discuss the sale, but at no time did any representative of appellants travel to Alabama in conjunction with the sale. They further contended that pursuant to the terms of the shipment contract, ownership and risk of loss of the HDPE transferred to LP when the product was loaded on railcars in Channelview, Texas.

In an affidavit attached to LP's response, Greg Stogner, an LP manager, stated that appellants' initial contact with the company was through a former LP employee who worked at its Selma, Alabama facility. Prior to sending the allegedly defective shipment, appellants had sold and shipped at least four other railcars of HDPE to LP in Selma. The purchase order for each shipment stated that the product would be shipped to Selma, Alabama. Appellants selected and paid for the rail carrier to deliver the product to Selma. Furthermore, in negotiating the sale, LP required that the HDPE have a certain nominal melt index, and appellants certified that their product met this specification.

LP's original enforcement action, filed in the court below on July 19, 2005, appears to have been based on common law principles of foreign judgment enforcement. However, on December 6, 2005, LP subsequently amended their pleadings pursuant to the Uniform Enforcement of Foreign Judgments Act (UEFJA). TEX. CIV. PRAC. & REM.CODE ANN. §§ 35.001.-008 (Vernon 1997 & Supp.2006). Under the UEFJA, the very filing of a foreign judgment in a Texas court constitutes both an original petition and a final judgment, automatically creating a final Texas judgment. Moncrief v. Harvey, 805 S.W.2d 20, 22 (Tex. App.-Dallas 1991, no writ). A challenge to the enforcement of a foreign judgment operates as a motion for new trial. Mindis Metals, Inc. v. Oilfield Motor & Control, Inc., 132 S.W.3d 477, 485 (Tex.App.-Houston [14th Dist.] 2004, pet. denied). As mentioned, appellants challenged enforcement of the Alabama action by filing a plea to the jurisdiction, which the trial court denied.

Legal Underpinnings

In their sole issue on appeal, appellants contend that the trial court erred in denying their plea to the jurisdiction because the Alabama court that issued the original judgment did not have personal jurisdiction over them. Under constitutional principles of federalism and comity, full faith and credit must be given in each state to the public acts, records, and judicial proceedings of every other state. U.S. CONST. art. IV, § 1; 28 U.S.C. § 1738. Accordingly, Texas is required to enforce a valid judgment presented from another state. See Bard v. Charles R. Myers Ins. Agency, Inc., 839 S.W.2d 791, 794 (Tex. 1992). The party seeking to enforce a foreign judgment has the initial burden to present a judgment that appears on its face to be a final, valid, and subsisting judgment. Mindis Metals, 132 S.W.3d at 484. When a judgment creditor files an authenticated copy of a foreign judgment pursuant to the UEFJA, a prima facie case for its enforcement is presented. Mitchim v. Mitchim, 518 S.W.2d 362, 364 (Tex.1975); Mindis Metals, 132 S.W.3d at 484. The burden then shifts to the judgment debtor to prove by clear and convincing evidence that the foreign judgment should not be given full faith and credit. Mindis Metals, 132 S.W.3d at 484. Well-established exceptions to the requirement of full faith and credit include when (1) the judgment sought to be enforced is interlocutory; (2) the judgment is subject to modification; (3) the rendering court lacks personal or subject matter jurisdiction; (4) the judgment was procured by extrinsic fraud; and (5) the period for enforcing the foreign judgment has expired. Id. at 485; see also Brown v. Lanier Worldwide, Inc., 124 S.W.3d 883, 903 (Tex.App.-Houston [14th Dist.] 2004, no pet.). We look to the laws of the state rendering the judgment to assess the judgment's validity. Mindis Metals, 132 S.W.3d at 484.

Similar to the Texas Long-arm Statute, the Alabama Long-arm Statute extends the personal jurisdiction of Alabama courts to the limits of due process under the federal and state constitutions. ALA. R. CIV. P. 4.2(a)(2); Sieber v. Campbell, 810 So.2d 641, 644 (Ala.2001); see also TEX. CIV. PRAC. & REM.CODE ANN. §§ 17.041.045 (Vernon 1997 & Supp.2006); BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex.2002). The exercise of personal jurisdiction over a nonresident defendant 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. Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945). Personal jurisdiction exists if the nonresident defendant's minimum contacts give rise to either general or specific jurisdiction. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 413-414, 104 S.Ct. 1868, 80 L.Ed.2d 404 (1984); BMC Software, 83 S.W.3d at 795-796. General jurisdiction is present when the defendant's contacts with a forum are continuous and systematic so that the forum may exercise personal jurisdiction over the defendant even if the cause of action did not arise from or relate to activities conducted within the forum state. BMC Software, 83 S.W.3d at 796. Specific jurisdiction is established when the nonresident defendant's alleged liability arises from or is related to activity conducted within the forum. Id. The "touchstone" of jurisdictional due process analysis is "purposeful availment." Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 784 (Tex.2005) (citing Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958)). "[I]t 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. at 785 (quoting Hanson, 357 U.S. at 253, 78 S.Ct. 1228). There are three important aspects to be considered in evaluating purposeful availment: (1) only the defendant's contacts with the forum count; a defendant cannot be haled into a jurisdiction solely as a result of the unilateral activity of another party or a third person; (2) the acts relied upon must be purposeful rather than random, isolated, or fortuitous; and (3) a defendant must have sought some benefit, advantage, or profit by availing itself of the jurisdiction. Id. By invoking the benefit and protections of a forum's laws, a nonresident consents to suit there. Id. (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980)). By contrast, a nonresident may purposefully avoid a jurisdiction by structuring its transactions so as neither to profit from the forum's laws nor be subject to its jurisdiction. Id. (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985)).

Even a single act can support jurisdiction if it creates a substantial connection with the forum. Burger King, 471 U.S. at 476 n. 18, 105 S.Ct. 2174. However, some single or occasional acts related to the forum may be insufficient to establish jurisdiction where their nature and quality create only an attenuated affiliation with...