Wien Air Alaska Inc. v. Brandt, 98-11141

Citation195 F.3d 208
Decision Date05 November 1999
Docket NumberNo. 98-11141,98-11141
Parties(5th Cir. 1999) WIEN AIR ALASKA, INC. Plaintiff-Appellant v. GERALD I. BRANDT, Defendant-Appellee
CourtUnited States Courts of Appeals. United States Court of Appeals (5th Circuit)

Appeal from the United States District Court For the Northern District of Texas

Before REAVLEY, HIGGINBOTHAM, and DENNIS, Circuit Judges.

HIGGINBOTHAM, Circuit Judge:

In this diversity case, we consider whether a foreign defendant's contacts with Texas are sufficient to confer personal jurisdiction under the Due Process Clause. Because we find sufficient minimum contacts exist and the assertion of jurisdiction would not be unfair or unreasonable, we REVERSE the district court's dismissal and REMAND for further proceedings consistent with this opinion.

I.

Wien Air Alaska, Inc. (Wien Air) is an Alaskan corporation based in Texas, whose sole shareholder is Thor Tjontveit. Gerald I. Brandt is a citizen of the Federal Republic of Germany who provided his services as an attorney for Wien Air from approximately August 1989 to April 1991. Brandt originally visited Texas in 1989 to help Tjontveit acquire Wien Air, then conducted most of his business with Wien Air through foreign meetings, correspondence and communications to Texas, and a final set of meetings in Texas in April 1991.

Wien Air was in the business of leasing U.S. aircraft and planned to expand into Eastern Europe. Brandt helped Wien Air develop this plan. On September 29, 1990, Wien Air authorized Brandt to form two German companies to maintain airport facilities in Germany. Late that year, Wien Air learned that Brandt's law partner, Hubertus Kestler, represented another airline company, GAC Trans-Air Carrier Lease GmbH Flugzeugleasing (GAC) and its sole shareholder Stephan Grzimek. Kestler was developing a plan for GAC that competed with Wien Air's plans.

Brandt told Wien Air that he represented only Wien Air's interests and suggested that Wien Air might be able to purchase GAC because of GAC's financial problems, provided Wien Air sold GAC some airplanes first. Tjontveit proposed to buy GAC and Brandt told Tjontveit on January 3, 1991 that GAC would accept Tjontveit's offer if Tjontveit would pay $1.3 million earnest money to Brandt, toward the full price of 5 million deutsche marks (DM). Acceptances of this offer were exchanged during February and March 1991.

At the same time, Brandt arranged for Wien Air to purchase a 25% stake in Flugservice Berlin (FSB), a company owned by the former East German Airlines. On February 25, 1991, in Germany, a document was prepared, signed, and notarized, which supposedly created a new company, Neue Flugservice und Development Berlin GmbH (NFSB), as a holding company for the FSB purchase. Stock in NFSB was never turned over to Wien Air. Only in October of 1993 was it discovered by Ms. Long, an employee of Wien Air, that Brandt owned the FSB stock himself and had acquired the interest March 1, 1991.

Tjontveit met Brandt in Germany on March 11, 1991 to close Wien Air's purchase of GAC and Wien Air's sale of aircraft to GAC, but GAC stock was not delivered and the transaction did not close. Brandt's law partner Kestler, however, allegedly withdrew DM 5 million from Wien Air's bank in Germany that day without Tjontveit's knowledge or permission, using a power of attorney given to Kestler by Wien Air at Brandt's request.

Brandt prepared a new document, confirming the GAC deal, signed by GAC, notarized by Ms. Long, which set a new closing date for the sale: March 26, 1991. Later, Brandt would tell Wien Air that this document was unenforceable under German law because it was not notarized by a German notary. At that time, Brandt told Tjontveit to go to Iceland on March 25, 1991 to close the GAC transaction. Tjontveit went there, but neither Brandt nor GAC appeared. Brandt called and said closing would occur instead in mid-April 1991. On March 28, 1991 and April 2, 1991, Brandt wrote Tjontveit in Texas promising that all transactions would be completed as intended.

On April 6, 1991, Tjontveit terminated Brandt's services for himself and Wien Air, and on April 10, 1991, Tjontveit told Brandt that Wien Air had retained another lawyer as counsel and warned Brandt not to transfer or vote shares of FSB. Tjontveit then asked Brandt to return Wien Air's power of attorney and to take no further actions until instructed. Tjontveit stated, however, that he was not terminating Brandt as an attorney, but wanted to continue the relation once the GAC situation was resolved.

The GAC deal did not close on April 15, 1991. The next day, Brandt called Tjontveit in Texas to again promise that the GAC deal would close. Brandt said he would come to Texas to close all outstanding matters on April 21 and 22, 1991.

Meetings in Texas on April 21 and 22 occurred with both Brandt and Tjontveit present. At these meetings, Brandt stated the following: (1) Brandt would complete the German registration process for the two Wien Air subsidiaries; (2) FSB stock belonged to Wien Air, but Brandt held it in trust for Wien Air; (3) Brandt would return all of Wien Air's documents and all valuable personal property of Tjontveit; (4) Brandt would go back to Germany and determine the status of FSB and report back to Wien Air; and (5) Brandt was still acting as Wien Air's attorney.

Brandt did not disclose that he had appropriated the interest in FSB to himself or explain what had happened to the DM 5 million Kestler had taken. Brandt then demanded DM 1.3 million for past services. Wien Air agreed to pay this based on the above promises and representations, signing a document in German allowing Brandt to withdraw the money from a Wien Air account in Germany.

Finally, on May 9, 1991, in New York, Brandt announced the GAC deal would not close and GAC stock would not be delivered. He explained that the document evidencing that deal was not binding because it had not been notarized by a German notary. Brandt said he did not represent Wien Air or Tjontveit, but only represented GAC.

Wien Air brought suit in Texas state court alleging fraud, fraudulent inducement, and breach of contract and fiduciary duties. The case was removed to federal court. Brandt sought dismissal asserting lack of personal jurisdiction and forum non conveniens. The district court did not hold an evidentiary hearing but based its decisions on the affidavits and pleadings of the parties. The court granted dismissal, holding that Wien Air was unable to make a prima facie showing that the defendant had the necessary minimum contacts with Texas to support specific jurisdiction. We REVERSE the dismissal because we find that the defendant's contacts with Texas suffice to show the requisite minimum contacts and that the assertion would not be unfair or unreasonable. The issue of forum non conveniens was not raised on appeal and we do not consider it.

II.

Wien Air seeks to establish jurisdiction over Brandt under the Texas long arm statute, which Texas construes to extend to the limits of due process. See Schlobohm v. Schapiro, 784 SW.2d 355, 357 (Tex. 1990); Wilson v. Belin, 20 F.3d 644, 647 (5th Cir. 1994). Obtaining personal jurisdiction over a non-resident of a state is constitutionally permissible if the nonresident "purposefully availed himself of the benefits and protections" of Texas by establishing "minimum contacts" with Texas such that the defendant could "reasonably anticipate[] being haled into court in the forum state" and the exercise of jurisdiction does not offend "traditional notions of fair play and substantial justice." Holt Oil & Gas Corp. v. Harvey, 801 F.2d 773, 777 (5th Cir. 1987); Wilson, 20 F.3d at 647.

At issue is whether Brandt's contacts with Texas are sufficient to support an assertion of personal jurisdiction. Because the district court did not hold an evidentiary hearing on the issue of jurisdiction, Wien Air need only establish a prima facie case. See Wilson, 20 F.3d at 648. Where the facts are not in dispute, the review of the district court's determination of personal jurisdiction is de novo. Id. at 647-48. Where facts are disputed, the plaintiff presenting a prima facie case is entitled to have the conflicts resolved in his favor. See Bullion v. Gillespie, 895 F.2d 213, 216-17 (5th Cir. 1990); Felch v. Transportes Lar-Mex SA De CV, 92 F.3d 320, 327 (5th Cir. 1996). The district court concluded that while Brandt "had contact with Wien Air in Texas on several occasions, those contacts related to and developed out of an ongoing relationship between the parties established in Germany and do not establish that Brandt purposefully availed himself of the benefits and protections of Texas law." Even if the parties formed their relationship in Germany, however, a single act by Brandt directed toward Texas that gives rise to a cause of action by Wien Air can support a finding of minimum contacts. See Calder v. Jones, 465 U.S. 783 (1984); Ruston Gas Turbines, Inc. v. Donaldson Co., 9 F.3d 415, 419 (5th Cir. 1993).

In Calder minimum contacts were found when a journalist wrote a defamatory article in Florida which he knew would affect the plaintiff's reputation in California. The Court specifically found that the defendant had "expressly aimed" the tort at California. Id. at 789. The defendants in Calder analogized themselves to a welder who works on a boiler in Florida which later explodes in California. The defendants argued that jurisdiction over the welder would not be proper (even if allowable over the manufacturer) because the welder did not control where the manufacturer sold the boiler and the welder "derive[d] no direct benefit" from such distant sales. Id. The Court rejected this analogy based on the fact that the defendants were charged with intentional, tortious conduct directed toward the forum state. In those circumstances, the defendants must "'reasonably anticipate being haled into court there' to answer for the truth of the statements...

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