Pizza Inn, Inc. v. Lumar

• Decision Date: 02 August 1974
• Docket Number: No. 4719,4719
• Citation: 513 S.W.2d 251
• Parties: The PIZZA INN, INC., Appellant, v. Leonard V. LUMAR, dba Lenny's Pizza Den & Pizza Den, Appellee.
• Court: Texas Court of Appeals

Page 251

513 S.W.2d 251

The PIZZA INN, INC., Appellant, v.Leonard V. LUMAR, dba Lenny's Pizza Den & Pizza Den, Appellee.

No. 4719.

Court of Civil Appeals of Texas Eastland.

Aug. 2, 1974.

Rehearing Denied Aug. 30, 1974.

Waylon E. McMullen, McMullen & Snyder, Dallas, for appellant.

Linda S. Aland, Watson, Davis, Strouther, Methvin & Blackburn, Dallas, Martin, Hopkins & Lemon, Roanoke, Va., for appellee.

McCLOUD, Chief Justice.

This is an appeal by plaintiff, The Pizza Inn, Inc., from a judgment dismissing its suit for lack of jurisdiction over the person of defendant, Leonard V. Lumar d/b/a Lenny's Pizza Den and Pizza Den.

Plaintiff, a Texas corporation, sued defendant, a resident of Virginia, alleging defendant breached a franchise agreement entered into by the parties.Defendant, who was served pursuant to the Texas 'Long Arm'Statute, Article 2031b, Vernon's Ann.Tex.Civ.St., filed a special appearance under Rule 120a,Texas Rules of Civil Procedure, for the sole purpose of objecting to the jurisdiction of the court over his person.The court sustained defendant's contention and dismissed plaintiff's suit.We reverse and remand.

Under the written franchise agreement entered into by the parties, defendant was granted a franchise to operate one or more Pizza Inns in Roanoke County, Virginia.The agreement provided that defendant would pay plaintiff monthly three percent (3%) of the gross income received by defendant from the operation of all Inns.Plaintiff alleged that defendant failed and refused to make the monthly royalty payments as required and that such action constituted a material breach as defined in Paragraph 13 of the agreement.Paragraph 13.2 provides that in the event of a breach the plaintiff may declare all unpaid sums immediately due and, 'Franchisee agrees to pay the sums at the office of the Company in Texas . . .'Under paragraph 14 of the agreement defendant agrees to pay all 'charges' provided for in the agreement at the 'office of the Pizza Inn, Inc., in Arlington, Texas.'The contract also stated that the 'Franchise Fee . . . of $7,500 of which sum $4,750 has been paid by check,' was payable at the office of the 'Pizza Inn, Inc., in Arlington, Texas.'Plaintiff alleged but failed to prove that defendant had made all monthly royalty payments, until February 1, 1973, in Texas.

The trial court found that in late March or early April of 1970, defendant received to telephone call at his home in Virginia from J. W. Whitehead, an employee of plaintiff, concerning the possibility of defendant entering into a franchise agreement whereby he would open and operate two Pizza Inn units in Roanoke County, Virginia.During this telephone conversation Whitehead requested that defendant send him a check for $2,000 as a down payment to hold the franchise.On April 22, 1970, defendant sent a $2,000 check to Whitehead in Dallas, Texas, and requested that the necessary forms be sent to him.

The court found further that defendant met with two executives of plaintiff in Arlington, Texas, in the spring of 1970, regarding the franchise for Roanoke County.Also, that on May 27, 1970, defendant executed the agreement under consideration in Virginia and mailed it to plaintiff in Arlington, Texas, together with a check for $2,750, which was the remaining sum owed on the Franchise Fee.The court found that on May 27, 1970, the franchise agreement was accepted by L.A. St. Romain, a vice president of plaintiff, in Arlington, Texas.

The franchise agreement provided that it would be binding on the defendant at the time he signed it, but would not be binding upon plaintiff until such contract was accepted by one of plaintiff's officers at plaintiff's home office in Arlington, Texas.

The issue is whether the Texas court has in personam jurisdiction over the nonresident defendant.This determination requires a two-fold inquiry.We must first determine whether the nonresident defendant is amenable to process under the Texas 'Long Arm'Statute, Article 2031b, supra.The second inquiry is whether the exercise of personal jurisdiction over the defendant is consistent with the requirements of due process of law under the United States Constitution.If the defendant is amenable to process under the Texas 'Long Arm'Statute, and if the exercise of personal jurisdiction over the defendant does not offend the requirements of due process, then the courts of Texas have jurisdiction over the defendant.Jetco Electronic Industries, Inc. v. Gardiner, 473 F.2d 1228(5th Cir.1973);Atwood Hatcheries v. Heisdorf & Nelson Farms, 357 F.2d 847(5th Cir.1966).

The Texas 'Long Arm'Statute provides that any nonresident person who engages in business in this state without maintaining a regular place of business in the state or a designated agent upon whom service may be made is deemed to have appointed the Secretary of State of Texas as agent upon whom service of process may be made in any suit arising out of such business done in this state.Article 2031b, Section (3).The statute provides further in Section (4) that such nonresident person:

'shall be deemed doing business in this State by entering into contract by mail or otherwise With a resident of Texas to be performed in whole or in part by either party in this State . . .'(Emphasis added.)

The franchise agreement in the instant case expressly provided for certain payments to be made by defendant to plaintiff in Texas.The court found that at the time defendant mailed the contract to plaintiffhe also mailed a check for $2,750.This sum was part of the 'Franchise Fee' and under the contract was payable to plaintiff in Arlington, Texas.

We conclude that defendant was 'doing business' in the State of Texas as defined in Article 2031b, supra, by entering into a contract by mail with a resident of Texas, which contract was performable, at least in part, in Texas.The trial court had personal jurisdiction over the defendant if the grasp of the statute does not exceed federal constitutional limitations.

The Texas Supreme Court...