Wash. DC Party Shuttle, LLC v. Iguide Tours, LLC

• Decision Date: 27 June 2013
• Docket Number: No. 14–12–00303–CV.,14–12–00303–CV.
• Citation: 406 S.W.3d 723
• Parties: WASHINGTON DC PARTY SHUTTLE, LLC, Party Shuttle Tours, LLC and Creativerse Internet Systems, LLC, Appellants v. IGUIDE TOURS, LLC, Tyree Cook, and Abise Eshetu, Appellees.
• Court: Texas Court of Appeals

406 S.W.3d 723

WASHINGTON DC PARTY SHUTTLE, LLC, Party Shuttle Tours, LLC and Creativerse Internet Systems, LLC, Appellants
v.
IGUIDE TOURS, LLC, Tyree Cook, and Abise Eshetu, Appellees.

No. 14–12–00303–CV.

Court of Appeals of Texas,
Houston (14th Dist.).

June 27, 2013.

[406 S.W.3d 725]

C. Thomas Schmidt, Houston, for Appellants.

Graham Eugene Sutliff, Houston, for Appellees.

EN BANC OPINION
TRACY CHRISTOPHER, Justice.

In this suit arising from the alleged breach of confidentiality agreements and theft of trade secrets, three related companies

[406 S.W.3d 726]

sued two nonresident former employees and the foreign company that the former employees established. In this interlocutory appeal, the plaintiffs challenge the content and form of the trial court's order granting the new company's special appearance and a separate ruling partially denying their request for a temporary injunction.

On our own motion, we have decided this case en banc in order to answer an error-preservation question on which courts have reached conflicting results: to preserve a complaint for appeal that an affidavit fails to reveal the basis of the affiant's personal knowledge of the stated facts, is it necessary to object and obtain a ruling? We conclude that it is.

We hold that the trial court did not err in determining that it lacked personal jurisdiction over the new corporation, and that the plaintiffs failed to preserve their complaint about the form of the order granting the special appearance. We therefore affirm the trial court's special-appearance ruling. We further hold that the trial court did not abuse its discretion in partially denying the plaintiffs' request for a temporary injunction, and we affirm that ruling as well.

I. Factual and Procedural Background

Appellants Washington DC Party Shuttle, LLC (“DC Party Shuttle”), Party Shuttle Tours, LLC and Creativerse Internet Systems, LLC (“Creativerse,” collectively “the Shuttle Parties”) filed suit against appellees IGuide Tours, LLC (“IGuide”), Tyree Cook, and Abise Eshetu (collectively “the IGuide Parties”), asserting claims for breach of contract, breach of fiduciary duty, and misappropriation of trade secrets. The Shuttle Parties also sought a temporary restraining order and temporary and permanent injunctions. According to the pleadings, DC Party Shuttle is a District of Columbia limited liability company with a principal place of business in the District of Columbia; Party Shuttle Tours, LLC is a Delaware limited liability company with a principal place of business in Houston, Texas; Creativerse is a Texas limited liability company with a principal place of business in Houston, Texas. As described by the Shuttle Parties in their live pleadings, these entities operate through a “network of companies that do business as OnBoard Tours.” The record reflects that DC Party Shuttle and Party Shuttle Tours are primarily engaged in the business of providing sightseeing tours, and that Creativerse owns and markets the websites for all of the OnBoard Tours companies.

The Shuttle Parties allege that Cook and Eshetu are residents of Virginia and former employees of DC Party Shuttle and Creativerse. According to the Shuttle Parties, Cook and Eshetu each signed a non-compete agreement with both DC Party Shuttle and Creativerse. Under the terms of these agreements, each was prohibited primarily from (a) engaging in a competing tour business or internet marketing business for three years following separation from the Shuttle Parties' employment, (b) misusing confidential information, or (c) soliciting and hiring other employees of the Shuttle Parties. The Shuttle Parties allege that on December 1, 2011, Cook and Eshetu created IGuide, a competing sightseeing tour company, while they were still employed by two of the Shuttle Parties.

Cook and Eshetu left their respective employment with the Shuttle Parties on February 15, 2012. Two weeks later, IGuide began operating sightseeing tours employing other former employees of the Shuttle Parties. The Shuttle Parties filed suit the next day and obtained a temporary restraining order.

[406 S.W.3d 727]

A. IGuide's Special Appearance

In their original petition, the Shuttle Parties' jurisdictional allegations against IGuide consist solely of the statements that “this proceeding arises out of the business done in Texas and torts committed in Texas” and that the trial court “has personal jurisdiction over IGuide because it is conducting business in Texas by marketing its services in Texas through a website and because it is conspiring with Defendants Cook and Eshetu to commit torts in Texas.” IGuide challenged the trial court's exercise of personal jurisdiction over it by filing a special appearance supported by an affidavit from Sewunet Habte, a current IGuide employee and former employee of one or more of the Shuttle Parties.¹ The Shuttle Parties responded that the trial court should deny the special appearance for a variety of procedural and substantive reasons. The trial court granted IGuide's special appearance. In its signed order, the trial court stated that “[a]ll of Plaintiffs' causes of action that have been or could have been asserted against [IGuide] are DISMISSED WITH PREJUDICE for lack of jurisdiction and Plaintiffs shall recover nothing from [IGuide] for the causes of action alleged or that could have been alleged.”

B. Injunctive Relief

The Shuttle Parties obtained a temporary restraining order on the day they filed suit and later sought and obtained an extension of that order. The Shuttle Parties also sought a temporary injunction primarily to enjoin the IGuide Parties from using allegedly confidential internet-marketing information and from operating or marketing sightseeing tours in Washington, D.C. and certain other locations.

At the time of the hearing on the Shuttle Parties' request for a temporary injunction, only Cook and Eshetu remained as defendants. The trial court granted the temporary injunction in what the Shuttle Parties characterize as “a very limited form.” As reflected in the trial court's order, the trial court granted injunctive relief to Creativerse regarding the allegedly confidential internet-marketing information, and denied the request for injunctive relief “regarding sightseeing, tour and/or shuttle bus activities in competition with” DC Party Shuttle and Party Shuttle Tours.

II. Issues Presented

In their first issue, the Shuttle Parties contend that the trial court erred in granting IGuide's special appearance. In their second issue, they argue in the alternative that the form of the special-appearance order is erroneous. They assert in their third issue that the trial court erred in rendering a temporary injunction that fails to maintain the status quo.

III. Special Appearance

The Texas Supreme Court has interpreted the broad language of the Texas long-arm statute to extend Texas courts' exercise of personal jurisdiction “ ‘as far as the federal constitutional requirements of due process will permit.’ ” BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex.2002) (quoting U–Anchor Adver., Inc. v. Burt, 553 S.W.2d 760, 762 (Tex.1977)). Those requirements are fulfilled if the defendant has “certain minimum contacts with [the forum state] such that the maintenance of the suit does not offend ‘traditional notions of fair play and

[406 S.W.3d 728]

substantial justice.’ ” Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1945) (quoting Milliken v. Meyer, 311 U.S. 457, 463, 61 S.Ct. 339, 343, 85 L.Ed. 278 (1940)). Minimum contacts are sufficient to support the exercise of personal jurisdiction if they show that the nonresident defendant has “purposefully availed” itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws. See id. at 319, 66 S.Ct. at 160;Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 784 (Tex.2005). The “purposeful availment” inquiry is a three-pronged test. Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 575 (Tex.2007). First, only the defendant's contacts with the forum are relevant. Id. Second, the contacts on which jurisdiction depends must be purposeful, rather than random, fortuitous, or attenuated. Id. Third, “the ‘defendant must seek some benefit, advantage or profit by “availing” itself of the jurisdiction.’ ” Id. (quoting Michiana Easy Livin' Country, 168 S.W.3d at 785);Motor Components, LLC v. Devon Energy Corp., 338 S.W.3d 198, 201–02 (Tex.App.-Houston [14th Dist.] 2011, no pet.).

Personal jurisdiction may be “general” or “specific.” Zinc Nacional, S.A. v. Bouche Trucking, Inc., 308 S.W.3d 395, 397 (Tex.2010). A trial court properly may exercise general jurisdiction over a defendant whose contacts with the forum state have been continuous and systematic. Moki Mac, 221 S.W.3d at 575;BMC Software, 83 S.W.3d at 796. When there is a substantial connection between the defendant's purposeful contacts with Texas and the operative facts of the litigation, a trial court properly may exercise specific jurisdiction over the defendant. Moki Mac, 221 S.W.3d at 585.

A defendant challenging a Texas court's exercise of personal jurisdiction over him must negate all jurisdictional bases alleged. BMC Software, 83 S.W.3d at 793;Nat'l Indus. Sand Ass'n v. Gibson, 897 S.W.2d 769, 772 (Tex.1995) (orig. proceeding). The plaintiff has the initial burden of pleading sufficient facts to bring the nonresident defendant within the provisions of the Texas long-arm statute. BMC Software, 83 S.W.3d at 793;Brocail v. Anderson, 132 S.W.3d 552, 556 (Tex.App.-Houston [14th Dist.] 2004, pet. denied). If the plaintiff fails to do so, then proof of the defendant's nonresidency is sufficient to negate personal jurisdiction. Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 658–59 (Tex.2010). If the plaintiff does allege sufficient jurisdictional facts, then the defendant can defeat jurisdiction...