Nat'l Fire Ins. Co. of Hartford, Valley Forge Ins. Co., v. Ce Design, Ltd.

• Decision Date: 18 April 2014
• Docket Number: No. 05–13–00720–CV.,05–13–00720–CV.
• Citation: 429 S.W.3d 806
• Parties: NATIONAL FIRE INSURANCE COMPANY OF HARTFORD, Valley Forge Insurance Company, and Continental Casualty Company, Appellants v. CE DESIGN, LTD., and Paldo Sign and Display Company, Appellees.
• Court: Texas Court of Appeals

429 S.W.3d 806

NATIONAL FIRE INSURANCE COMPANY OF HARTFORD, Valley Forge Insurance Company, and Continental Casualty Company, Appellants

v.CE DESIGN, LTD., and Paldo Sign and Display Company, Appellees.

No. 05–13–00720–CV.

Court of Appeals of Texas,

Dallas.

April 18, 2014.

Susan Rampacek Wilson, Colliau Carluccio Keener Morrow Peterson & Parsons, Dallas, Andrea Meshonn Evans Brown, Dallas, Heather Simpson, Basking Ridge, NJ, Christopher Carroll, Basking Ridge, NJ, for Appellants.

Michael K. Hurst, Gruber Hurst Johansen Hail Shank, LLP, Dallas, Brian Wanca, Rolling Meadows, IL, A. Shonn Brown, Dallas, John Franklin Guild, Dallas, Jonathan Childers, Dallas, Emilio F. Deayala, Buck Keenan LLP, Houston, Lesley Edward Little, Houston, Caroline Strange, Houston, for Appellees.

Before Justices BRIDGES, FILLMORE, and LEWIS.

OPINION

Opinion by Justice FILLMORE.

Appellants National Fire Insurance Company of Hartford (National Fire), Valley Forge Insurance Company (Valley Forge), and Continental Casualty Company (Continental Casualty) filed a declaratory judgment action in Texas against appelleesCE Design, Ltd. and Paldo Sign and Display Company. Appellees filed special appearances contesting the trial court's jurisdiction. The trial court signed an order granting the special appearances and dismissing appellees from the declaratory judgment action for lack of personal jurisdiction. Appellants then filed this interlocutory appeal. SeeTex. Civ. Prac. & Rem.Code Ann. § 51.014(a)(7) (West Supp.2013). We affirm the trial court's order.

Background

Appellees are representatives of a nationwide class of plaintiffs in a class action lawsuit filed in Illinois federal court (class action), CE Design Ltd. et al. v. King Supply Company, LLC d/b/a Architectural Metals, No. 09 C 2057, United States District Court for the Northern District of Illinois. In that class action, it is alleged that King Supply Company, LLC, d/b/a King Architectural Metals, (King) violated the federal Telephone Consumer Protection Act (TCPA), 47 U.S.C.A. § 227 (West Supp.2013), and committed common law conversion, by sending mass, unsolicited facsimile advertisements to appellees and other recipients without prior express invitation or permission.¹ In addition to damages, an injunction was sought prohibiting King from sending additional unsolicited facsimile advertisements or engaging in further violations of the TCPA.

King tendered its defense and sought indemnity from appellants for the claims asserted in the class action. Appellants are Illinois insurance companies who issued commercial general liability and commercial umbrella policies to King. ² Appellants disclaimed coverage for the asserted claims and refused to defend King in the class action.

Appellees, individually and as representatives of the settlement class, entered into a settlement with King in the amount of $20,000,000. Appellees and the settlement class covenanted that, except for $200,000 of the settlement amount to be paid by King, they would not execute against King or King's assets other than insurance to collect the remainder of the settlement amount. ³

Appellants filed the declaratory judgment action underlying this appeal in a Texas district court, naming King and appellees as defendants, seeking a declaration that appellants have no duty to defend or indemnify King for claims asserted against King in the class action.⁴ Appellees filed special appearances asserting appellants could not meet their burden to establish jurisdiction over appellees under the Texas long-arm statute or that the exercise of jurisdiction would comport with due process.⁵

The trial court granted appellees' special appearances and dismissed them from the declaratory judgment action. Appellants filed this interlocutory appeal.

Personal Jurisdiction

In a single issue, appellants contend the trial court erred in dismissing appellees from the declaratory judgment action based on lack of personal jurisdiction. Appellants do not argue that general jurisdiction exists over appellees. They assert the trial court erred by failing to find specific jurisdiction over appellees.

Standard of Review

Because the question of whether a trial court has personal jurisdiction over a nonresident defendant is one of law, we review de novo the trial court's determination of a special appearance. Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex.2007); BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex.2002). When, as here, the trial court does not file findings of fact and conclusions of law in support of its special appearance ruling, we infer all facts necessary to support the judgment and supported by the evidence. Moki Mac, 221 S.W.3d at 574 (citing BMC Software, 83 S.W.3d at 795). However, when, as here, the appellate record includes the reporter's and clerk's records, the trial court's implied findings are not conclusive and may be challenged for legal and factual sufficiency on appeal. BMC Software, 83 S.W.3d at 795.

Burden of Proof

In a challenge to personal jurisdiction, a plaintiff and defendant bear shifting burdens of proof. Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 658 (Tex.2010). The plaintiff bears the initial burden to plead sufficient allegations to bring a nonresident defendant within the reach of the Texas long-arm statute. Id.;BMC Software, 83 S.W.3d at 793. The plaintiff's pleadings and its response to the special appearance may be considered in determining whether the plaintiff satisfied its burden. Camac v. Dontos, 390 S.W.3d 398, 405 (Tex.App.-Dallas 2012, no pet.); Flanagan v. Royal Body Care, Inc., 232 S.W.3d 369, 374 (Tex.App.-Dallas 2007, pet. denied). ⁶ Once the plaintiff has pleaded sufficient jurisdictional allegations, the defendant bears the burden of negating all bases of jurisdiction alleged by the plaintiff. BMC Software, 83 S.W.3d at 793;Capital Tech. Info. Servs., Inc. v. Arias & Arias Consultores, 270 S.W.3d 741, 748 (Tex.App.-Dallas 2008, pet. denied) (en banc). “Because the plaintiff defines the scope and nature of the lawsuit, the defendant's corresponding burden to negate jurisdiction is tied to the allegations in the plaintiff's pleading.” Kelly, 301 S.W.3d at 658. The defendant can discharge its burden to negate those allegations on either a factual or legal basis:

Factually, the defendant can present evidence that it has no contacts with Texas, effectively disproving the plaintiff's allegations. 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. Legally, the defendant can show that even if 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. at 659;see 2007 E. Meadows, L.P. v. RCM Phoenix Partners, L.L.C., 310 S.W.3d 199, 204 (Tex.App.-Dallas 2010, pet. denied).

General and Specific Jurisdiction

The Texas long-arm statute permits Texas courts to exercise jurisdiction over nonresident defendants. SeeTex. Civ. Prac. & Rem.Code Ann. §§ 17.041–.045 (West 2008). Texas courts may assert personal jurisdiction over a nonresident if (1) the Texas long-arm statute authorizes the exercise of jurisdiction, and (2) the exercise of jurisdiction comports with federal and state constitutional due process guarantees. Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 337 (Tex.2009). The long-arm statute's broad language allows Texas courts to “reach as far as the federal constitutional requirements of due process will allow.” Moki Mac, 221 S.W.3d at 575 (quoting Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex.1991)). Under constitutional due process analysis, personal jurisdiction is achieved “when the nonresident defendant has established minimum contacts with the forum state, and the exercise of jurisdiction comports with ‘traditional notions of fair play and substantial justice.’ ” Id. at 575 (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)). The purpose of minimum contacts analysis is to protect a nonresident defendant from being haled into court when its relationship with the forum state is too attenuated to support jurisdiction. Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 806 (Tex.2002). “Significantcontacts suggest that the defendant has taken advantage of forum-related benefits, while minor ones imply that the forum itself was beside the point.” Spir Star AG v. Kimich, 310 S.W.3d 868, 872 (Tex.2010). Only if minimum contacts are established does the court consider the second prong of the constitutional due process analysis—whether maintenance of the action offends traditional notions of fair play and substantial justice. Foley v. Trinity Indus. Leasing Co., 314 S.W.3d 593, 602 (Tex.App.-Dallas 2010, no pet.); see also Clark v. Noyes, 871 S.W.2d 508, 520 (Tex.App.-Dallas 1994, no writ).

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. General jurisdiction will attach if the defendant's contacts with the forum are continuous and systematic, regardless of whether the alleged liability arises from those contacts. Id. at 796. General jurisdiction is “dispute-blind,” as it permits the court to “exercise jurisdiction over a nonresident defendant based on any claim, including claims unrelated to the defendant's contacts with the state.” PHC–Minden, L.P. v. Kimberly–Clark Corp., 235 S.W.3d 163, 168 (Tex.2007); see also Walden v. Fiore, ––– U.S. ––––, 134 S.Ct. 1115, 1121 n. 6, 188 L.Ed.2d 12 (2014) (“ ‘[G...