Koch Graphics, Inc. v. Avantech, Inc.
| Decision Date | 15 January 1991 |
| Docket Number | No. 05-90-00587-CV,05-90-00587-CV |
| Citation | 803 S.W.2d 432 |
| Parties | KOCH GRAPHICS, INC., Appellant, v. AVANTECH, INC., Appellee. |
| Court | Texas Court of Appeals |
James David Brown, Winstead, Sechrest & Minick, Dallas, for appellant.
Mark L. Johansen, Akin, Gump, Strauss, Hauer & Feld, Dallas, for appellee.
Before ENOCH, C.J., and THOMAS and OVARD, JJ.
Koch Graphics, Inc. appeals the overruling of its special appearance, the denials of its motion to quash process and motion for new trial, and the awarding of a default judgment in favor of Avantech, Inc. We reverse the trial court's judgment, render on Koch's special appearance, and order the cause dismissed for lack of personal jurisdiction over Koch.
In September 1988, Avantech contacted Hudson Machinery Company, Inc., a New York corporation, concerning Avantech's prospective purchase of printing equipment then owned by Koch, also a New York corporation. Avantech and Hudson agreed on a selling price of $715,000, and Hudson received a $50,000 deposit. Koch was not involved in the negotiation of the agreement but Avantech viewed the equipment at Koch's place of business in New York City. Koch agreed to sell the equipment to Hudson for $645,000 and received a $50,000 deposit from Hudson. Neither sale was completed. Koch kept Hudson's deposit and later sold the equipment to another party. Avantech demanded the return of its deposit from Hudson and Koch. When none was forthcoming, Avantech sued, claiming breach of contract, conversion, and unjust enrichment. 1 In addition to the $50,000 in actual damages, Avantech requested punitive damages and attorney's fees.
Hudson filed a special appearance, which the trial court sustained. The court granted a partial default judgment against Koch on February 2, 1990. This judgment did not address Avantech's claim for punitive damages and attorney's fees. Koch filed a special appearance without supporting affidavits on March 5, 1990. Koch also filed a motion to quash service, a motion for new trial, and an original answer. All were made subject to its special appearance. Koch filed an amended special appearance which included a supporting affidavit and exhibits on March 14, 1990. On March 27, 1990, Avantech filed an amended petition in which it dropped its claim for punitive damages and attorney's fees, thus making the judgment final. The trial court held a hearing and overruled Koch's special appearance on March 30, 1990. The court denied Koch's motions to quash service and for new trial on April 12, 1990.
Koch's first point of error challenges the overruling of its special appearance. Although the trial court held a hearing and allowed evidence, the trial court refused to reach the merits of the special appearance. The court stated that it did not have the power to entertain a special appearance after the entry of a default judgment. We disagree. At the time the Special Appearance and its amendment were filed, the trial court retained power since the judgment was interlocutory. See Houston Health Clubs, Inc. v. First Court of Appeals, 722 S.W.2d 692, 693-694 (Tex.1987). Furthermore, it has been held that, within the period when the trial court has plenary power over its judgment, the court may address a special appearance. Myers v. Emery, 697 S.W.2d 26, 29 (Tex.App.--Dallas 1985, no writ). The trial court should have decided Koch's special appearance on the merits. Since the evidence which the parties presented at the special appearance hearing is in the record, we will address the merits of Koch's claim. Lone Star Gas Co. v. Railroad Comm'n, 767 S.W.2d 709, 710 (Tex.1989); TEX.R.APP.P. 81(c).
As a starting point, we address the argument that Koch waived its claim by seeking affirmative relief from the trial court. Koch filed a special appearance and then filed motions to have the default judgment set aside and for new trial. The motions were expressly made subject to its special appearance. Rule 120a provides that "any other plea, pleading, or motion may be ... filed subsequent thereto without waiver of such special appearance." TEX.R.CIV.P. 120a(1). The mere filing of the motions did not waive Koch's special appearance. Additionally, Koch's actions taken after the denial of its special appearance did not cause a waiver of its special appearance.
If the objection to jurisdiction is overruled, the objecting party may thereafter appear generally for any purpose. Any such special appearance or such general appearance shall not be deemed a waiver of the objection to jurisdiction when the objecting party or subject matter is not amenable to process issued by the courts of this State.
A Texas court may exercise jurisdiction over a nonresident only if the Texas long-arm statute authorizes it and if the exercise is consistent with federal and state constitutional guarantees of due process. Schlobohm v. Schapiro, 784 S.W.2d 355, 356 (Tex.1990). Avantech's pleadings assert that Koch was a third-party beneficiary to a contract Avantech had negotiated with Hudson and that Koch "had otherwise engaged in business in Texas." We note again that the trial court granted Hudson's special appearance and Avantech has not appealed that ruling. With those facts decided adversely to Avantech, we fail to see how a third-party beneficiary to a contract is amenable to suit in Texas when the prime negotiator of the contract is not, unless of course the third-party is otherwise subject to this state's jurisdiction. Thus, we come to the long-arm statute which allows jurisdiction over nonresidents who "do business" in Texas.
In addition to other acts that may constitute doing business, a nonresident does business in this state if the nonresident:
(1) 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;
(2) commits a tort in whole or in part in this state; or
(3) recruits Texas residents, directly or through an intermediary located in this state, for employment inside or outside this state.
TEX.CIV.PRAC. & REM.CODE ANN. § 17.042 (Vernon 1986).
Further, the Texas Supreme Court has set forth a test to determine whether the exercise of jurisdiction conforms with due process:
(1) The nonresident defendant or foreign corporation must purposefully do some act or consummate some transaction in the forum state;
(2) The cause of action must arise from, or be connected with, such act or transaction; even if the cause of action does not arise from a specific contact, jurisdiction may be exercised if the defendant's contacts with Texas are continuing and systematic; and
(3) The assumption of jurisdiction by the forum...
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