Aqua-Dyne Inc v. Les Ent Claude Chagn ( 2000 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 00-20244
Summary Calendar
_____________________
AQUA-DYNE INC, a Texas Corporation
Plaintiff-Appellant
v.
LES ENTERPRISES CLAUDE CHAGNON INC, a Canadian
Corporation
Defendant-Appellee
_________________________________________________________________
Appeal from the United States District Court
for the Southern District of Texas
Docket No. H-99-CV-2627
_________________________________________________________________
November 3, 2000
Before KING, Chief Judge, and SMITH and PARKER, Circuit Judges.
PER CURIAM:*
Plaintiff-Appellant, Texas-based Aqua-Dyne Inc., appeals the
district court’s final judgment dismissing Aqua-Dyne’s
declaratory judgment action. The district court found it lacked
personal jurisdiction over Defendant-Appellee, Canadian-based Les
Enterprises Claude Chagnon, Inc. For the following reasons, we
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
affirm.
I.
Aqua-Dyne, Inc. is a Texas corporation that manufactures
high-pressure water jetting systems, pumps, and related
equipment. Les Enterprises Claude Chagnon, Inc. (“Chagnon”) is a
Canadian corporation that purchased a “dual water jet blaster
unit pump” and related equipment from Liquid-Laser Jetting
Systems, Inc. (“Liquid-Laser”). At the time of the purchase
Liquid-Laser was the Canadian distributor for Aqua-Dyne products.
Liquid-Laser and Chagnon signed the contract for $558,000
Canadian on April 22, 1999.
The equipment at issue was shipped F.O.B. from Houston,
Texas to Liquid-Laser in Canada and then sent to Chagnon, also in
Canada. Payment was remitted from Chagnon through Liquid-Laser
to Aqua-Dyne in Houston. Chagnon’s only direct contact was with
Liquid-Laser, as distributor for Aqua-Dyne. Aqua-Dyne did,
however, create the quotation and contract for sale in Texas and
also transferred title to the equipment to Chagnon in Texas.
A disagreement arose regarding the age and condition of the
equipment. Chagnon expressed dissatisfaction with its purchase
and sought a refund from Liquid-Laser. On June 10, 1999, Chagnon
and Liquid-Laser reached a settlement agreement whereby Liquid-
Laser agreed to repurchase the disputed equipment. The agreed-
upon amount ($450,000 Canadian) was to be paid by June 15, 1999.
2
No payment issued despite the further written requests by
Chagnon. On August 2, 1999, with the settlement agreement still
unconsumated, Chagnon wrote Aqua-Dyne demanding reimbursement for
damages from the faulty equipment and stating that it would
pursue legal remedies against the Texas company in Canada. As a
result of this threat, on August 18, 1999, Aqua-Dyne filed a
declaratory judgment suit in the United States District Court for
the Southern District of Texas. Aqua-Dyne sought a declaration
that it was not liable for the cost of the disputed equipment and
that the Canadian settlement agreement was valid. On September
15, Chagnon filed suit against Aqua-Dyne and Liquid-Laser in the
Superior Court of the Province of Quebec, District of Saint-
Hyacinthe.
On October 4, 1999, Chagnon filed a motion to dismiss the
Texas action for lack of personal jurisdiction and under the
doctrine of forum non conveniens, or in the alternative, to
dismiss or stay pending the outcome of the Canadian suit. See
Fed. R. Civ. P. 12(b)(2). Aqua-Dyne filed an opposition motion
on October 22, 1999. On November 5, 1999, Chagnon filed a reply
brief with affidavits from Pierre Lebel and Richard Cignac
attached. The district court denied Chagnon’s motions on
November 8, 1999.
On November 10, 1999, Chagnon filed a Motion for
3
Reconsideration and refiled its reply brief and affidavits.1 In
the days that followed, numerous responses and replies were filed
by the parties.
After this series of motions, responses and replies, but
without an evidentiary hearing, the district court granted
Chagnon’s motion for reconsideration and dismissed the suit for
lack of personal jurisdiction. The remaining claims of forum non
conveniens and the motion to stay pending the Canadian action
were rendered moot. The district court’s memorandum and order
and the final judgment dismissing the lawsuit were entered on
February 23, 2000.
Aqua-Dyne timely appeals.
II.
We review de novo a district court’s grant of a motion to
dismiss for lack of personal jurisdiction. See Jobe v. ATR
Marketing., Inc., 87 F.3d 751, 753 (5th Cir. 1996).
A federal court sitting in diversity may exercise
jurisdiction over a non-resident corporate defendant only if
permitted by the law of the forum state. See Fed. R. Civ. P.
4(e)(1), 4(h)(1), 4(k)(1); Alpine View Co. v. Atlas Copco AB, 205
F.3d 208, 214 (5th Cir. 2000). The Texas long-arm statute, see
1
The district court struck this motion on November 18,
stating that the document was not an original. The next day
Chagnon refiled the reply.
4
Tex. Civ. Prac. & Rem. Code Ann. § 17.042 (1997), confers
personal jurisdiction over a non-resident defendant to the full
extent allowed by the federal Constitution. See Wilson v. Belin,
20 F.3d 644, 647 n.1 (5th Cir. 1994). As such, analysis of the
long-arm statute’s grant of personal jurisdiction and the
constitutional requirement that the exercise of personal
jurisdiction comport with federal due process merges into a
unitary question of minimum contacts with the forum state. See
Mink v. AAAA Dev. LLC, 190 F.3d 333, 335 (5th Cir. 1999);
Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-73 (1985).
This due process protection of ensuring minimal contact with
the forum derives from the Fourteenth Amendment, which “permits
the exercise of personal jurisdiction over a non-resident
defendant when (1) that defendant has purposely availed himself
of the benefits and protections of the forum state by
establishing ‘minimum contacts’ with the forum state; and (2) the
exercise of jurisdiction over that defendant does not offend
‘traditional notions of fair play and substantial justice.’”
Latshaw v. Johnson, 167 F.3d 208, 211 (5th Cir. 1999) (quoting
International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).
The core of this minimum contacts protection is that the
defendant’s contact with the forum state must be significant
enough “that he should reasonably anticipate being haled into
court” in that state. World-Wide Volkswagen Corp. v. Woodson,
444 U.S. 286, 297 (1980).
5
As the instant suit arises from Chagnon’s contact with the
state of Texas regarding the one-time purchase of industrial
equipment, we are concerned with specific personal jurisdiction.
See Wilson v. Belin, 20 F.3d 644, 647 (5th Cir. 1995) (“The
‘minimum contacts’ prong of the inquiry may be further subdivided
into contacts that give rise to ‘specific’ personal jurisdiction
and those that give rise to ‘general’ personal jurisdiction.”).2
Specific jurisdiction can be found when a non-resident defendant
purposely directs its activities at a forum state and “litigation
results from alleged injuries that ‘arise out of or relate to’
those activities.” Burger King Corp. v. Rudzewicz, 471 U.S. 462,
472 (1985) (quoting Helicopteros Nacionales de Colombia, S.A. v.
Hall, 466 U.S. 408, 414 (1984)).
On appeal, Aqua-Dyne maintains that the trial judge erred in
its determination that Aqua-Dyne failed to establish a prima
facie showing of specific personal jurisdiction. We find no
fault in the standard applied or reasoning of the district court,
and through a careful reading of the affidavits and record, find
no minimum contacts sufficient to “hale” Chagnon into court in
2
On appeal, discussion is limited to the question of
specific personal jurisdiction. The record does not reveal that
Chagnon had regular contacts with Texas or sought the regular
services of Texas residents, thus precluding general personal
jurisdiction. See C & H Transportation Co. Inc. v. Jensen and
Reynolds Contraction Co., 719 F.2d 1267, 1270 (5th Cir. 1983).
Aqua-Dyne does not challenge the district court’s holding that
Changon has insufficient minimum contacts for general personal
jurisdiction.
6
Houston, Texas.
Under the law of this circuit, “when a court rules on a
motion to dismiss for lack of personal jurisdiction without
holding an evidentiary hearing, it must accept as true the
uncontroverted allegations in the complaint and resolve in favor
of the plaintiff any factual conflicts posed by the affidavits.”
Latshaw v. Johnson, 167 F.3d 208, 211 (5th Cir. 1999); see also
Bullion v. Gillespie, 895 F.2d 213, 217 (5th Cir. 1990) (“On a
motion to dismiss for lack of jurisdiction, uncontroverted
allegations in the plaintiff’s complaint must be taken as true,
and conflicts between the facts contained in the parties’
affidavits must be resolved in the plaintiff’s favor for purposes
of determining whether a prima facie case for personal
jurisdiction exists.”) (quoting D.J. Investments, Inc. v.
Metzeler Motorcycle Tire Agent Gregg, Inc., 754 F.2d 542, 546
(5th Cir. 1985)).
Mindful of the low threshold required for a district court
finding that the plaintiff has made out a prima facie case for
personal jurisdiction over the defendant, and resolving all
factual conflicts in favor of Aqua-Dyne, we conclude that the
district court correctly held that Aqua-Dyne failed to establish
even a prima facie case. Three factors laid out in Aqua-Dyne’s
own appellate brief are dispositive of the matter. First, the
terms and structure of the sales contract between Liquid-Laser
and Chagnon demonstrate Chagnon’s circumscribed role in Texas.
7
Second, the role of Pierre Lebel, even if characterized as a
“representative” of Chagnon, fails to link the Chagnon
corporation to the situs of Texas sufficiently to meet the
constitutional requirement of due process. Third, the series of
communications alleged between Chagnon and Aqua-Dyne exist as
after-the-fact communications, inadequate to support a showing of
minimum contacts jurisdiction under the law of this and other
circuits. We address each of these arguments in turn.
A.
Aqua-Dyne argues that notwithstanding the fact that the
contract was signed by two Canadian companies, and that the
payment and equipment traveled directly from a Canadian
distributor to a Canadian purchaser, the site of where the
contract was drafted controls jurisdiction. We disagree.
“[T]he unilateral activity of those who claim some
relationship with a nonresident defendant cannot satisfy the
requirement of contact with the forum State.” Hanson v. Denckla,
357 U.S. 235, 253 (1958); see also Bullion v. Gillespie, 895 F.2d
213, 216 (5th Cir. 1990) (“Jurisdiction is improper if grounded
in the unilateral activity of the plaintiff.”). The drafting of
the contract was such a unilateral act, neither affecting the
contractual obligations of the parties nor linking the forum
state to the situs where the contract was to be performed. The
same can be said of the fact that title passed to Chagnon
directly in Texas and that the sales quotation was created in
8
Texas. None of these actions rises to a prima facie level of
jurisdictional connection consistent with due process because
none of the acts links the Canadian dispute between two
contractually bound Canadian companies to the forum of Texas.
More fundamental to the due process analysis, a contract
signed between two Canadian companies in Canada demonstrates a
purposeful intent to have Canadian law and courts resolve
resulting legal questions. Following the dictates of Burger King
Corp. v. Rudzewicz, the question before this court is whether
Chagnon purposely availed itself of the privileges of conducting
business in Texas, and whether it was foreseeable from its
conduct that it could be “haled into court” in Texas. See 471
U.S. at 474-75 (1985). Chagnon chose a Canadian distributor for
its purchase. It signed a contract with that distributor.
Allowing a manufacturer who has drafted the contract to assert
jurisdiction over the purchaser because of that act expansively
broadens the jurisdictional reach of parties not involved in the
contractual relationship. In the same fashion, the production of
the quotation and the transfer of title do not shift the
jurisdictional analysis.
This reasoning comports with our precedent and the reasoning
of sister circuits. In contract matters, we analyze “prior
negotiations and contemplated future consequences, along with the
terms of the contract and the parties’ actual course of
dealing.” Latshaw v. Johnson, 167 F.3d 208, 211 (5th Cir. 1999)
9
(quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 479
(1985)). With the exception of the ambiguous role of Mr. Lebel
(discussed below), there were no prior negotiations of Chagnon in
Texas. Further, the terms of this contract relegate Aqua-Dyne to
the role of manufacturer, rather than a party to the contract,
and the actual course of conduct supports this limited role.
Even if Aqua-Dyne were named in the contract, this court has
held that “entering into a contract with an out-of-state party,
without more, is not sufficient to establish minimum contacts.”
Id.; see also Hydrokinetics, Inc. v. Alaska Mechanical, Inc., 700
F.2d 1026, 1031 (5th Cir. 1983) (holding that single purchase of
goods known to be manufactured in Texas and payment of goods were
not enough establish personal jurisdiction); Borg-Warner
Acceptance Corp. v. Lovett & Tharpe, Inc., 786 F.2d 1055, 1063
(11th Cir. 1986) (“[A] purchaser in an isolated transaction may
not be subject to personal jurisdiction in a seller’s state
merely because the manufacturer performed its duties under
contract there.”); Scullin Steel Co. v. National Railway
Utilization Corp., 676 F.2d 309, 313 (8th Cir. 1982) (finding that
a contract between a non-resident purchaser and resident seller
could not alone create minimum contacts in resident’s state).
Since Aqua-Dyne was not a direct party to the contract, and
Chagnon did nothing more than contract with another Canadian
company, Aqua-Dyne’s contractual arguments for minimum contacts
are insufficient.
10
B.
Aqua-Dyne rests much of its minimum contact assertions on
the role played by Pierre Lebel, who allegedly acted on behalf of
Chagnon in Texas. Aqua-Dyne asserts first that Mr. Lebel was an
employee of Chagnon, and second that in 1995 Mr. Lebel visited
Aqua-Dyne in Texas as a representative for Chagnon. Taking Aqua-
Dyne’s characterization of Mr. Lebel as true for the purposes of
a prima facie case, this court finds the following meager factual
predicate insufficient for jurisdiction.
Aqua-Dyne’s argument that Mr. Lebel once held the status of
Chagnon employee cannot support a minimum contacts argument
because Mr. Lebel only worked for Chagnon in May/June 1999, and
only worked in Canada. The April 1999 contract, at issue in this
case, involved negotiations before Mr. Lebel became a Chagnon
employee. From the record, Mr. Lebel did not have any contact
with Texas in 1999 as an employee or agent of Chagnon. Thus,
Aqua-Dyne’s repeated characterization of Mr. Lebel as a “Chagnon
employee,” while technically accurate, is not relevant to the
minimum contacts question before this court. As an “employee,”
Mr. Lebel did nothing that that would create minimum contacts
with Texas for Chagnon.3
3
To bolster Mr. Lebel’s connection with Chagnon, Aqua-Dyne
states that in 1999, George Rankin, President of Aqua-Dyne
observed Mr. Lebel at a meeting in Canada attempting to settle
the contractual dispute between Chagnon, his employer, and
Liquid-Laser, another Canadian company. Again, these facts fail
to demonstrate that Mr. Lebel’s employment status for a month in
11
Aqua-Dyne’s second argument that Mr. Lebel visited Texas in
1995 as a representative of Chagnon presents a closer question.
It is Mr. Lebel’s relationship with Chagnon during this 1995
visit that underpins Aqua-Dyne’s case. However, in its
affidavits, Aqua-Dyne carefully omits any reference to Mr.
Lebel’s employment or agency relationship with Chagnon at the
time of his visit to Texas in 1995. In its reply brief, Aqua-
Dyne argues that, under the applicable legal standard, we must
assume that Lebel was a representative of Chagnon, an assumption
that is essentially a legal conclusion. But we are not compelled
to make any assumption that is not supported by the facts that
are set out in Aqua-Dyne’s affidavits. Unable to assert with
specificity Mr. Lebel’s status as an employee or agent of Chagnon
at the time of that visit, Aqua-Dyne has no factual predicate for
the legal conclusion that it urges upon us.
Even if we were to accept Aqua-Dyne’s argument and “assume”
that Mr. Lebel was a representative of Chagnon in 1995, this
fails to prove Chagnon’s connection to Texas in 1999 regarding
its contractual dispute with Liquid-Laser. Four years have
passed, lending credence to the district court’s conclusion that
such a connection is too attenuated. Further, a contract not
directly involving Aqua-Dyne has been entered into between two
Canadian corporations. See Thompson v. Chrysler Motors Corp.,
1999 has any relevance to the argument that Chagnon purposely
availed itself of the forum state of Texas.
12
755 F.2d 1162, 1169 (5th Cir. 1985) (“A nonresident may
permissibly structure his primary conduct so as to avoid being
haled into court in a particular state.”) (citing World-Wide
Volkswagen v. Woodsen, 444 U.S. 286, 297 (1980)). Without any
current purposeful availment of the Texas forum, this single
visit cannot alone support the full weight of minimum contacts
consistent with due process.4
C.
Finally, Aqua-Dyne asserts that the numerous communications
made between Chagnon and Aqua-Dyne establish a prima facie case
of minimum contacts. This court has held that “an exchange of
communications between a resident and a nonresident in developing
a contract is insufficient of itself to be characterized as
purposeful activity.” Stuart v. Spademan, 772 F.2d 1185, 1193
(5th Cir. 1985); see also Williams v. Wilson, 939 F. Supp. 543,
548 (W.D. Tex. 1995) (“The Fifth Circuit has consistently held
that the exchange of communications between a party in the forum
state and a party in another state in the development of a
contract is insufficient to confer jurisdiction over a non-
4
While the number of visits is not dispositive it is
relevant to assessing the weak ties of Lebel/Chagnon to the forum
state. See Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir.
1985) (“While the number of contacts with the forum state is not
determinative, it is indeed one of the relevant factors to be
considered within the totality of circumstances in assessing the
propriety of exercising personal jurisdiction over a
nonresident.”) (citing Standard Fitting Co. v. Sapag, S.A., 625
F.2d 630, 643 (5th Cir. 1980)).
13
resident in a breach of contract suit.”) (citations omitted)).
In the instant case, not only is Aqua-Dyne not a party to
the contract, but the communications took place after the dispute
arose between Chagnon and Liquid-Laser and primarily focused on
settlement. Since Aqua-Dyne’s claim for forum contact with Texas
involves the purchase of equipment and not the later settlement
negotiations, these communications involving the contract dispute
are irrelevant to establish minimum contacts. See Burger King
Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (requiring that
litigation and injury result from purposeful activities in forum
state to establish minimum contacts); see also Digi-Tel Holdings,
Inc. v. Proteq Telecom. (PTE), Ltd., 89 F.3d 519, 524 (8th Cir.
1996) (“[C]ourts have hesitated to use unsuccessful settlement
discussions as contacts for jurisdictional purposes.”).
Except for the role of Mr. Lebel, no purposeful contacts
between Chagnon and Aqua-Dyne are alleged before the equipment
was purchased from Liquid-Laser. Such indirect international
communications, occurring after the fact, cannot now be used to
justify a constitutionally significant level of minimum contacts.
On a prima facie level and assessing the full totality of
circumstances, we are left with communications that do nothing to
further the argument for minimum contacts.
As Aqua-Dyne failed to establish a prima facie threshold of
minimum contacts with Texas, we need not address whether the
exercise of personal jurisdiction in this case would offend
14
traditional notions of fair play and substantial justice. See
Ashahi Metal Inc. v. Superior Court, 480 U.S. 102, 113-16 (1987);
Felch v. Transportes Lar-Mex SA DE CV, 92 F.3d 320, 329 n.20 (5th
Cir. 1996). Further, our conclusion that personal jurisdiction
is lacking makes it unnecessary for us to consider Appellees’
other assignments of error on forum non conveniens and the
requested stay pending resolution of the Canadian lawsuit.
III.
For the above stated reasons, we AFFIRM.
15