Tri-State Building v. Nci Building Sys., 01-05-00083-CV.

• Decision Date: 06 October 2005
• Docket Number: No. 01-05-00083-CV.,01-05-00083-CV.
• Citation: 184 S.W.3d 242
• Parties: TRI-STATE BUILDING SPECIALTIES, INC. d/b/a Western Garage Doors, Susan Hollister, and Jennie Bush, Appellants, v. NCI BUILDING SYSTEMS, L.P. d/b/a Able Door Manufacturing, Appellee.
• Court: Texas Court of Appeals

184 S.W.3d 242

TRI-STATE BUILDING SPECIALTIES, INC. d/b/a Western Garage Doors, Susan Hollister, and Jennie Bush, Appellants, v. NCI BUILDING SYSTEMS, L.P. d/b/a Able Door Manufacturing, Appellee.

No. 01-05-00083-CV.

Court of Appeals of Texas, Houston (1st Dist.).

October 6, 2005.

COPYRIGHT MATERIAL OMITTED

John "Lee" Arellano, Arellano & Associates, Houston, TX, for Appellant.

Curt M. Langley, Jackson Walker L.L.P., Houston, TX, for Appellee.

Panel consists of Justices NUCHIA, JENNINGS, and HIGLEY.

OPINION

LAURA CARTER HIGLEY, Justice.

Presenting a single issue, with two sub-issues, appellants, Tri-State Building Specialties, Inc. d/b/a Western Garage Doors ("Tri-State"), Susan Hollister ("Hollister"), and Jennie Bush ("Bush"), contend that the trial court erred in denying their special appearance,¹ which they filed in a suit brought against them by appellee, NCI Building Systems, L.P. d/b/a Able Door Manufacturing ("NCI").

We affirm in part and reverse and render in part.

Factual and Procedural Background

Tri-State is a California corporation with its principal office located in Oceanside, California. Hollister is the president of Tri-State and Bush is its vice-president. Both Hollister and Bush are residents of California.

Tri-State purchased garage doors from Able Doors, a California company. At some point, Able Doors filed for bankruptcy protection and its assets were purchased by NCI. On March 12, 2004, Tri-State and NCI entered into a contract entitled "Application for Credit," which set forth the terms and conditions by which NCI would make sales to Tri-State. Included in the agreement was a forum selection clause, providing that all claims and disputes arising out of any transactions between NCI and Tri-State would be brought in state court in Harris County, Texas.

On June 29, 2004, NCI filed suit against appellants, presenting claims for "suit on account" and for breach of contract. NCI alleged that appellants had not paid it for goods and services provided to Tri-State by NCI on an open account and pursuant to a contract. NCI claimed an outstanding balance of $90,502.37. NCI's claims were supported by "Exhibit A," which was appended to the petition and expressly incorporated into it by reference. Included in the exhibit were (1) the affidavit of NCI's credit manager, averring that the amount due on the account was $90,502.37, (2) an "Accounts Receivable Aged Invoice Report," itemizing and detailing the transactions between NCI and Tri-State between the dates of December 16, 2003 and April 23, 2004, and (3) a copy of the Application for Credit.

Appellants did not file an answer, and NCI obtained a default judgment against them on October 25, 2004. On November 24, 2004, appellants filed a special appearance, and subject to the special appearance, a motion for new trial, a motion to quash defective service, and an original answer. Appellants filed an amended special appearance on December 16, 2004 and, subject to the special appearance, also amended their answer and the various, previously filed motions.

In the amended special appearance, appellants averred that Tri-State is a California company, with its corporate office in Oceanside, California. Tri-State conceded that, pursuant to the forum selection clause in the Application for Credit, it was subject to the jurisdiction of the trial court for those claims arising from transactions between it and NCI that postdate the signing of the Application for Credit on March 12, 2004. Conversely, Tri-State asserted that the trial court lacked personal jurisdiction over it for claims arising from transactions predating March 12, 2004. Tri-State stated that "$42,762.62 worth of [NCI's] claims fall outside the jurisdiction" of the trial court, i.e., those sums owed for transactions predating March 12, 2004. Tri-State asserted that it had consented to venue in Texas only for claims arising after March 12, 2004.

Hollister and Bush contested the trial court's in personam jurisdiction as to the entire proceeding, asserting that they had no contacts with Texas to support jurisdiction over them. Hollister and Bush also asserted that they are "merely employees" of Tri-State and, as such, could not be held personally liable for Tri-State's debts. The amended special appearance was supported by the affidavits of Hollister and Bush.

NCI filed a response to the amended special appearance, contending that Tri-State had "substantial and numerous contacts with Texas." NCI cited to the Application for Credit, appended to its original petition. NCI also asserted that Tri-State had sufficient minimum contacts with Texas before the signing of the March 12, 2004 Application for Credit. In this regard, NCI referenced Tri-State's own allegations in its amended motion for new trial and Exhibit A, attached to NCI's original petition. NCI alleged that the amended motion for new trial and Exhibit A evidenced that Tri-State engaged in communications and transactions in Texas before March 12, 2004.

NCI also asserted that Hollister and Bush were, as individuals, subject to the jurisdiction of Texas courts because "Tri-State is not a viable corporation and its corporate privileges have been suspended by the California Secretary of State. It is well-established that officers and directors are personally and individually liable for debts of the `corporation' when that corporation's corporate privileges are suspended or revoked." In support of this assertion, NCI cited both the Texas and California tax codes. Attached to its response, NCI offered a certificate from the California Secretary of State, indicating that Tri-State's corporate powers had been suspended.

At the special appearance hearing, appellants argued that NCI had pled no jurisdictional facts in its original petition, the live pleading at the time. Appellants argued that, because no jurisdictional facts had been pled by NCI, the only burden that they were required to meet was to show that they were not residents of Texas. Appellants contended that they had met this burden. NCI responded, inter alia, that Tri-State's special appearance should be denied based on the forum selection clause in the Application for Credit. NCI reiterated that Hollister and Bush were liable as officers because Tri-State's corporate privileges were suspended.

Following the hearing, the trial court signed an order denying appellants' special appearances.² This appeal ensued. Appellants bring one issue, with two sub-issues, contending that the trial court erred in denying their special appearances.

STANDARD AND SCOPE OF REVIEW

"[P]ersonal jurisdiction concerns the court's power to bind a particular person or party." CSR Ltd. v. Link, 925 S.W.2d 591, 594 (Tex.1996) (orig.proceeding). A special appearance is used to challenge the trial court's jurisdiction over the person based on the claim that such person is not amenable to process in this State. See TEX.R. CIV. P. 120a.

Whether a court has personal jurisdiction over a defendant is a question of law. American Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 805-06 (Tex.2002); BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). But in resolving this question of law, a trial court must frequently resolve questions of fact. Coleman, 83 S.W.3d at 806; BMC, 83 S.W.3d at 794. On appeal, the trial court's determination to grant or deny a special appearance is subject to de novo review; however, appellate courts may be called upon to review the trial court's resolution of a factual dispute. Coleman, 83 S.W.3d at 806; BMC, 83 S.W.3d at 794. If the trial court does not issue findings of fact, reviewing courts should presume that the trial court resolved all factual disputes in favor of its judgment. Coleman, 83 S.W.3d at 806; BMC, 83 S.W.3d at 795. But these implied findings are not conclusive and may be challenged on appeal for legal and factual sufficiency, if the appellate record includes the reporter's and clerk's records. BMC, 83 S.W.3d at 795.

IN PERSONAM JURISDICTION OVER TRI-STATE

In the first sub-issue, Tri-State contends that its special appearance should have been granted because (1) NCI's original petition alleged no jurisdictional facts and (2) Tri-State proved it is a nonresident. We disagree.

The plaintiff bears the initial burden of pleading sufficient allegations to bring a nonresident defendant within the provisions of the Texas long-arm statute. Id. at 793. A nonresident defendant challenging personal jurisdiction through a special appearance carries the burden of negating all bases of personal jurisdiction. Id.

Here, NCI expressly incorporated Exhibit A, which included the Application for Credit, into its original petition.³ In support of its amended special appearance, Tri-State offered uncontested evidence that it was not a Texas resident. Tri-State also relied on the Application for Credit to support its contention that, though the trial court had jurisdiction over it for post March 12, 2004 claims, Tri-State was not amenable to process issued by a Texas court for pre-March 12th claims. In its response, NCI cited the Application for Credit as supporting jurisdiction. At the special appearance hearing, NCI argued that, based on the forum selection clause, Tri-State had consented to jurisdiction in Texas.

Rule 120a(3) provides that "[t]he court shall determine the special appearance on the basis of the pleadings, any stipulations made by and between the parties, such affidavits and attachments as may be filed by the parties, the results of discovery processes, and any oral testimony." TEX.R. Civ. P. 120a(3). Here, both sides relied on, and cited to, the Application for Credit, an attachment to the original petition incorporated into that pleading by reference. Under rule 120a, it was appropriate for the trial court to consider the Application for Credit and its forum-selection clause in determining whether it should grant Tri-State's...