Nichols v. Bridges

• Decision Date: 27 April 2005
• Docket Number: No. 06-05-00020-CV.,06-05-00020-CV.
• Parties: Don NICHOLS, Individually, and d/b/a Nichols Marine of McAlester, Oklahoma, Appellant v. James BRIDGES, Appellee.
• Court: Texas Supreme Court

163 S.W.3d 776

Don NICHOLS, Individually, and d/b/a Nichols Marine of McAlester, Oklahoma, Appellant v. James BRIDGES, Appellee.

No. 06-05-00020-CV.

Court of Appeals of Texas, Texarkana.

Submitted March 15, 2005.

Decided April 27, 2005.

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COPYRIGHT MATERIAL OMITTED

Stephen R. Patterson, Merriman, Patterson, Connolly & Hughes, LLP, Longview, for appellant.

Bradley T. Steele, Longview, for appellee.

Before MORRISS, C.J., ROSS and CARTER, JJ.

OPINION

Opinion by Justice CARTER.

Don Nichols, individually, and d/b/a Nichols Marine of McAlester, Oklahoma (hereinafter referred to as Don), appeals an order denying a special appearance claim challenging the personal jurisdiction in Texas. We find that there is no evidence to support the finding and reverse the judgment of the trial court.

Facts and Procedural History

Don Nichols, a resident of Oklahoma, established a boat dealership in McAlester, Oklahoma, in 1972. Don's son, Gary Nichols, established Nichols Marine of Texas, L.L.C., and Marine Holdings Corporation. Don has never had any ownership interest in Nichols Marine of Texas, L.L.C., or Marine Holdings Corporation. It is alleged that Nichols Marine of Texas, L.L.C., entered into an employment agreement with James Bridges and that Bridges was wrongfully terminated by Nichols Marine of Texas, L.L.C. Bridges further alleged that he and Gary Nichols entered into a business plan agreement whereby Gary Nichols would arrange for the necessary funding for all company acquisitions and operations. Nichols Marine of Texas, L.L.C., was dissolved, and Gary Nichols then incorporated Nichols Marine of Longview, L.L.C. Bridges sued Gary Nichols, Nichols Marine of Longview, L.L.C., Marine Holdings Corporation, Don Nichols, individually, and d/b/a Nichols Marine of McAlester, Oklahoma. Don filed a special appearance alleging the trial court did not have jurisdiction over him. After a hearing, the trial court denied the motion, which denial is being appealed.

Gary's corporation was structured to allow a transfer of boats from Oklahoma to Texas regardless of which company was obligated for the floor plan financing. Don was allowed to participate with Gary's corporation as a buying group through Marine Holdings Corporation, which allowed Don to obtain discounts or rebates from the manufacturers. Don was aware that the group purchasing and the floor plan financing allowed the Longview store to acquire inventory. Don's company received rebates from boat manufacturers during the time that Gary and Bridges were involved in the Longview store. The rebates were to be received by Marine Holdings Corporation and then disbursed to the respective stores, including the Longview store.

Don challenges the legal and factual sufficiency of the implied findings of fact to support the judgment.

Standard of Review

The Texas Supreme Court has spoken extensively on the jurisdiction of Texas courts over a nonresident defendant. See Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 805-07 (Tex.2002). Texas courts may assert personal jurisdiction over a nonresident only if the Texas long-arm statute authorizes jurisdiction and the exercise of jurisdiction is consistent with federal and state due process standards. Guardian Royal Exch. Assur., Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex.1991). The Texas long-arm statute reaches "as far as the federal constitutional requirements of due process will allow." Id. Thus, the Texas long-arm statute requirements are satisfied if exercising jurisdiction comports with federal due process limitations. Id. The Texas statute specifies that the following actions by a nonresident may constitute "doing business" in Texas: (1) contracting 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) committing a tort in whole or in part in this state, or (3) recruiting Texas residents, directly or through an intermediary located in this state for employment inside or outside this state. See TEX. CIV. PRAC. & REM.CODE ANN. § 17.042 (Vernon 1997).

Under the Due Process Clause of the Fourteenth Amendment, jurisdiction is proper if a nonresident defendant established "minimum contacts" with Texas and maintenance of the suit does not offend "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). The purpose of the minimum-contacts analysis is to protect the defendant from being haled into court when its relationship with Texas is too attenuated to support jurisdiction. Schlobohm v. Schapiro, 784 S.W.2d 355, 357 (Tex.1990). Accordingly, we focus on the defendant's activities and expectations in deciding whether it is proper to call it before a Texas court. Id.

The minimum-contacts analysis requires that a defendant "purposefully avail" itself of the privilege of conducting activities within Texas, thus invoking the benefits and protections of our laws. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985). The defendant's activities, whether they consist of direct acts within Texas or conduct outside Texas, must justify a conclusion that the defendant could reasonably anticipate being called into a Texas court. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980). A defendant is not subject to jurisdiction here if its Texas contacts are random, fortuitous, or attenuated. See Guardian Royal Exch. Assur., Ltd., 815 S.W.2d at 226. Nor can a defendant be haled into a Texas court for the unilateral acts of a third party. Id. It is the quality and nature of the defendant's contacts, rather than their number, that is important to the minimum-contacts analysis. Id. at 230 n. 11.

A defendant's contacts with a forum can give rise to either specific or general jurisdiction. For a court to exercise specific jurisdiction over a nonresident defendant, two requirements must be met: (1) the defendant's contacts with the forum must be purposeful, and (2) the cause of action must arise from or relate to those contacts. Id. at 227. General jurisdiction, on the other hand, allows a forum to exercise jurisdiction over a defendant even if the cause of action did not arise from or relate to a defendant's contacts with the forum. Id. at 228. General jurisdiction is present when a defendant's contacts with a forum are "continuous and systematic," a more demanding minimum-contacts analysis than specific jurisdiction. Id.

The plaintiff bears the initial burden of pleading allegations sufficient to bring a nonresident defendant within the provisions of the long-arm statute. McKanna v. Edgar, 388 S.W.2d 927, 930 (Tex.1965). But upon filing a special appearance, the nonresident defendant assumes the burden to negate all the bases of personal jurisdiction alleged by the plaintiff. Kawasaki Steel Corp. v. Middleton, 699 S.W.2d 199, 203 (Tex.1985).

Whether a court has personal jurisdiction over a defendant is a question of law. Coleman, 83 S.W.3d at 805-06 (citing BMC Software v. Marchand, 83 S.W.3d 789 (Tex.2002)).

But in resolving a question of law, a trial court must frequently resolve questions of fact. Coleman, 83 S.W.3d at 805-06 (citing Marchand, 83 S.W.3d at 794). On appeal, the trial court's determination to grant or deny a special appearance is subject to a de novo review, but appellate courts may be called on to review the trial court's resolution of a factual dispute. Id. When the trial court does not issue findings of fact, reviewing courts should presume the trial court resolved all factual disputes in favor of its judgment. Coleman, 83 S.W.3d at 805-06 (citing Marchand, 83 S.W.3d at 795).

Here, the trial court denied the special appearance motion, but did not issue findings of fact. Therefore, we presume the trial court resolved all factual disputes in favor of its judgment. If there is more than a scintilla of evidence to support the implied findings, the no-evidence or legal sufficiency challenge fails. Holt Atherton Indus., Inc. v. Heine, 835 S.W.2d 80, 84 (Tex.1992). An appellate court may reverse a decision of the trial court for factual sufficiency if, after reviewing all of the evidence, the disputed factual determination is so against the great weight and preponderance of the evidence as to be manifestly erroneous or unjust. Cartlidge v. Hernandez, 9 S.W.3d 341, 346 (Tex. App.-Houston [14th Dist.] 1999, no pet.).

Consideration of the Second Amended Original Petition

The trial court conducted a hearing on this special appearance plea November 1, 2004. At that time, the live pleading of Bridges was the first amended original petition. After the hearing was concluded, the judge announced that he would take the matter under advisement after having an opportunity to "review everything else." On November 3, 2004, Bridges filed his second amended original petition, which expanded some of the allegations previously made. There is no evidence that the pleading was filed with the express permission of the trial court.

Rule 63 of the Texas Rules of Civil Procedure provides:

Parties may amend their pleadings,... provided, that any pleadings, responses or pleas offered for filing within seven days of the date of trial or thereafter,... shall be filed only after leave of the judge is obtained, which leave shall be granted by the judge unless there is a showing that such filing will operate as a surprise to the opposite party.

TEX.R. CIV. P. 63 (emphasis added). Accordingly, pleading amendments sought within seven days of the time of trial are to be granted unless there has been a showing of surprise to the opposite party. Rogers v. Gonzales, 654 S.W.2d 509, 515 (Tex. App.-Corpus Christi 1983, writ ref'd n.r.e.).

A liberal interpretation has been given to Rule 63. Texas courts have held that, in the absence of a sufficient showing of surprise by...