Temperature Systems, Inc. v. Bill Pepper, Inc., 05-92-00054-CV

• Citation: 854 S.W.2d 669
• Decision Date: 19 February 1993
• Docket Number: No. 05-92-00054-CV,05-92-00054-CV
• Parties: TEMPERATURE SYSTEMS, INC., Appellant, v. BILL PEPPER, INC. d/b/a Wm. Pepper & Associates, Appellee.
• Court: Court of Appeals of Texas

Page 669

854 S.W.2d 669

TEMPERATURE SYSTEMS, INC., Appellant, v. BILL PEPPER, INC. d/b/a Wm. Pepper & Associates, Appellee.

No. 05-92-00054-CV.

Court of Appeals of Texas,

Dallas.

Feb. 19, 1993.

Rehearing Denied April 6, 1993.

William L. Shirer, Steven D. Goldston, Dallas, for appellant.

Brian D. Melton, Dallas, for appellee.

Before BAKER, KINKEADE and BURNETT, JJ.

OPINION

BURNETT, Justice.

Temperature Systems, Inc. (TSI) appeals from the trial court's order overruling its special appearance under rule 120a of the Texas Rules of Civil Procedure. In a single point of error, TSI contends that the trial court's overruling of its special appearance violates the Texas jurisdictional test and the Due Process Clause of the Fourteenth Amendment of the United States Constitution. Because we find that the trial court exercised jurisdiction over TSI consistent with the Texas jurisdictional test and the Due Process Clause, we overrule TSI's point of error. We affirm the trial court's judgment.

FACTUAL AND PROCEDURAL HISTORY

TSI is a Wisconsin corporation with its principal place of business in Wisconsin. TSI is a distributor of heating, ventilation, and air conditioning (HVAC) equipment. TSI primarily distributes equipment manufactured by Carrier. TSI purchases the Carrier equipment directly from Carrier's factories all across the United States. Carrier does not have a factory in Texas. TSI sells equipment in Wisconsin, Michigan, and northern Illinois. TSI does not advertise or solicit business in Texas. TSI is not licensed to do business in Texas and does not have any offices, agents, representatives, property, or any other assets in Texas.

Since 1975, TSI has maintained an inter-distributor relationship with other Carrier distributors across the United States, including Texas. Pursuant to this relationship, a Carrier distributor needing a particular piece of equipment not in stock at the Carrier factories can obtain the equipment from other Carrier distributors. TSI transfers equipment to and purchases equipment from Carrier distributors in Texas under this distributor relationship. Between August 1988 and June 1990, TSI purchased $45,000 worth of Carrier equipment from Carrier distributors in Texas. TSI also purchased $450,000 worth of non-Carrier HVAC equipment from other Texas residents between 1987 and 1990.

Bill Pepper, Inc. (Pepper) is a Texas corporation with its principal place of business in Texas. Pepper is an executive search and recruiting firm working primarily in the HVAC industry. Pepper places candidates with HVAC companies in twenty-one states, including Texas and Wisconsin. Pepper derives eighty-five percent of its income from states other than Texas. Pepper performs all of its placement work from its office in Texas.

Pepper and TSI entered into an oral contract whereby Pepper agreed to search for candidates for sales representative positions at TSI and TSI agreed, for any candidate presented by Pepper and hired by TSI, to pay thirty percent of the candidate's first year earnings as Pepper's fee. Pepper sent TSI three candidates. All of the candidates, including Steve Ross, a Wisconsin resident, were rejected by TSI. About five months after rejecting Ross, TSI hired Ross. When Pepper learned that TSI hired Ross, Pepper demanded its thirty percent fee from TSI. TSI refused to pay the fee. Pepper filed suit for breach of contract against TSI in Dallas County, Texas.

In paragraph II of Pepper's original petition, under the subheading "Basis for Jurisdiction in Texas," Pepper alleged:

Defendant, TEMPERATURE SYSTEMS, INC., is a Wisconsin corporation with its principal place of business in Madison, Wisconsin. TSI has not qualified to do business in the State of Texas. TSI is a nonresident of Texas that has engaged in business in Texas within the meaning of Art. 17.042 of the Texas Civil Practice & Remedies Code by entering into an oral contract on September 1, 1988 with Wm. Pepper & Associates as set forth in detail below, which contract was performable in part in the State of Texas by Wm. Pepper & Associates' performance of a search for a sales position at TSI and particularly by the recruiting of Steven Ross from Dallas, Texas, obtaining a complete background of Steven Ross on January 7, 1989, scheduling an interview for Steven Ross with TSI in March, 1989, together with seventeen (17) telephone conferences from August 4, 1988 to February 2, 1989 placed by William M. Pepper in Dallas, Texas to Terry Riker and Steven Ross and several other other [sic] candidates and forwarding numerous items of correspondence from Dallas, Texas to TSI. In addition TSI was obligated under the contract to make payment to Wm. Pepper & Associates in Dallas, Texas.

TSI filed a special appearance. After a hearing, the trial court overruled TSI's special appearance. The case proceeded to trial. The jury found for Pepper. TSI appeals only the order overruling its special appearance.

STANDARD OF REVIEW

The trial court made no findings of fact and conclusions of law in connection with its ruling on the special appearance. The parties did not request findings or conclusions pursuant to Rule 296 of the Texas Rules of Civil Procedure. See TEX.R.CIV.P. 296. Under these circumstances, the trial court's judgment implies all necessary fact findings in support of the judgment. Zac Smith & Co. v. Otis Elevator Co., 734 S.W.2d 662, 666 (Tex.1987); Burnett v. Motyka, 610 S.W.2d 735, 736 (Tex.1980). We must affirm the trial court's judgment if it can be upheld on any legal theory that finds support in the evidence. Lassiter v. Bliss, 559 S.W.2d 353, 358 (Tex.1978), overruled on other grounds, Cherne Indus., Inc. v. Magallanes, 763 S.W.2d 768, 770 (Tex.1989).

BURDEN OF PROOF

TSI had the burden at its special appearance hearing to negate all bases of personal jurisdiction. TEX.R.CIV.P. 120a; Kawasaki Steel Corp. v. Middleton, 699 S.W.2d 199, 203 (Tex.1985); Siskind v. Villa Found. for Educ., Inc., 642 S.W.2d 434, 438 (Tex.1982); Thode, In Personam Jurisdiction; Article 2031b, The Texas "Long Arm" Jurisdiction Statute; And the Special Appearance to Challenge Jurisdiction in Texas and Elsewhere, 42 TEX.L.REV. 279, 322 (1964). A defendant must negate all bases of jurisdiction even if there are no jurisdictional allegations in a plaintiff's petition. Siskind, 642 S.W.2d at 438; Steve Tyrell Prod., Inc. v. Ray, 674 S.W.2d 430, 436 (Tex.App.--Austin 1984, no writ). In such a case, proof that a defendant is a nonresident is sufficient to meet this burden. Id. However, proof of nonresidency is not enough when a plaintiff alleges jurisdictional facts. Id. Then, a defendant must also negate the jurisdictional facts alleged. Id.

BASES FOR JURISDICTION

There are two types of jurisdiction: specific and general. Schlobohm v. Schapiro, 784 S.W.2d 355, 358 (Tex.1990). Specific jurisdiction arises when a defendant commits some act in Texas which gives rise to the cause of action asserted against him. Id. General jurisdiction arises when a defendant's contacts with Texas are continuing and systematic. In general jurisdiction cases, the court can exercise jurisdiction over a defendant even if the cause of action asserted does not arise from the defendant's acts in Texas. Id. In its petition, Pepper alleged specific jurisdiction based upon the oral contract with TSI performable in Texas. See TEX. CIV.PRAC. & REM.CODE ANN. § 17.042(1) (Vernon 1989). Pepper admitted at the special appearance hearing that "[i]t is true that this is a contract case."

On appeal, Pepper argues two additional bases for jurisdiction. Pepper alleges specific jurisdiction based upon TSI's commission of a tort in Texas under section 17.042(2) of the long arm statute. See TEX.CIV.PRAC. & REM.CODE ANN. § 17.042(2) (Vernon 1989). We find no allegations in Pepper's petition that TSI committed a tort in Texas. Pepper's petition alleges a tort against TSI under article 5221a-7 of the Texas Revised Civil Statutes; however, it does not allege that this tort was committed in Texas. See Steve Tyrell Prod., 674 S.W.2d at 433-34. At the special appearance hearing, there was no evidence of any specific facts which showed that TSI committed some purposeful act in Texas giving rise to a separate tort claim against TSI. Counsel for Pepper admitted that Pepper's claims against TSI were contract claims, and the evidence at the special hearing showed that Pepper's claims against TSI were based upon various acts of TSI which allegedly breached the oral contract. Since Pepper did not allege specific facts and did not introduce evidence to support a claim for jurisdiction based upon the commission of a tort in Texas, TSI negated this basis for jurisdiction by simply showing it was a nonresident. See Siskind, 642 S.W.2d at 438; Steve Tyrell Prod., Inc., 674 S.W.2d at 436.

Pepper also alleges general jurisdiction on appeal based upon TSI's continuing and systematic contacts with Texas. Pepper contends that TSI's purchases from Texas residents and its relationship with Carrier distributors in Texas constitute continuing and systematic contacts with Texas. There are no pleadings to support Pepper's general jurisdiction claim. Pepper, however, introduced evidence of these specific facts giving rise to the claim of general jurisdiction at the hearing on the special appearance. TSI did not object to this evidence at the special appearance hearing. Accordingly, general jurisdiction was tried by consent, and TSI has the burden of negating the specific facts which form the basis of Pepper's general jurisdiction claim. TEX.R.CIV.P. 167; 3-D Elec. Co. v. Barnett Constr. Co., 706 S.W.2d 135, 138 n. 2 (Tex.App.--Dallas 1986, writ ref'd n.r.e.); see also Siskind, 642 S.W.2d at 438; Steve Tyrell Prod., Inc., 674 S.W.2d at 436. ¹

It is undisputed that TSI is a nonresident; therefore, all bases for jurisdiction not specifically pleaded or otherwise raised by the evidence have been negated. The only bases...