Nationwide Distribution Services, Inc. v. Robert Jones and Poly Trucking, Inc. ( 2015 )

ACCEPTED
01-15-00232-CV
FIRST COURT OF APPEALS
HOUSTON, TEXAS
5/8/2015 5:18:58 PM
CHRISTOPHER PRINE
CLERK
NO. 01-15-00232-CV
ACCELERATED APPEAL
FILED IN
1st COURT OF APPEALS
HOUSTON, TEXAS
5/8/2015 5:18:58 PM
IN THE CHRISTOPHER A. PRINE
COURT OF APPEALS Clerk
FOR THE
FIRST DISTRICT OF TEXAS
Nationwide Distribution Services, Inc.,
Appellant
vs.
Robert Jones and Poly Trucking, Inc.,
Appellees
BRIEF OF APPELLANT
Jack McKinley
State Bar No. 13716300
Robert L. Ramey
State Bar No. 16498200
RAMEY, CHANDLER, QUINN & ZITO, P.C.
750 Bering, Suite 600
Houston, Texas 77057
Telephone: (713) 266-0074
Facsimile: (713) 266-1064
jmm@ramey-chandler.com
COUNSEL FOR APPELLANT
STATEMENT REGARDING ORAL ARGUMENT
Appellant, Nationwide Distribution Services, Inc., does not believe that oral
argument is necessary in order to fully present its position to the Court, but would be
pleased to participate if the Court finds a use for it.
RECORD REFERENCES
All references to the clerk’s record are as follows: (CR [vol.][pg.]), with (CR
[vol.] at [page:line] to [page:line] indicating a citation to the internal pagination of a
deposition)
All references to the reporter’s record are as follows: (RR [vol.] [pg.]).
ii
IDENTITY OF PARTIES AND COUNSEL
APPELLANT: Nationwide Distribution Services, Inc.
COUNSEL FOR APPELLANTS: Jack McKinley
State Bar No. 13716300
Ramey, Chandler, Quinn & Zito, P.C.
750 Bering, Suite 600
Houston, Texas 77057
Telephone: (713) 266-0074
Facsimile: (713) 266-1064
jmm@ramey-chandler.com
APPELLEE: Robert Jones
COUNSEL FOR APPELLEE Jason A. Itkin
ROBERT JONES: State Bar No. 24032461
Cory D. Itkin
State Bar No. 24050808
Noah M. Wexler
State Bar No. 24060816
Arnold & Itkin, LLP
6009 Memorial Drive
Houston, Texas 77007
Telephone: (713) 222-3800
Facsimile: (713) 222-3850
e-service@arnolditkin.com
APPELLEE: Poly Trucking, Inc.
COUNSEL FOR APPELLEE Ruark D. Mershon
POLY TRUCKING, INC.: State Bar No. 24037100
2000 W. Marshall Drive
Grand Prairie, Texas 75051
Telephone: (972) 337-7692
Facsimile: (972) 337-8139
ruarkm@poly-america.com
iii
TABLE OF CONTENTS
Page(s)
Statement Regarding Oral Argument........................................................................ ii
Record References. ................................................................................................... ii
Identity of Parties and Counsel. ............................................................................... iii
Table of Contents..................................................................................................... iv
Index of Authorities. ............................................................................................... vii
Statement of The Case. ............................................................................................. 1
Statement of Jurisdiction........................................................................................... 1
Issues Presented. ....................................................................................................... 1
Statement of The Facts.............................................................................................. 1
Summary of the Argument........................................................................................ 6
Test for Personal Jurisdiction; Standard of Review.................................................. 9
ARGUMENT.......................................................................................................... 12
I. There is no general jurisdiction over NDS because it has no
continuous and systematic contacts with Texas. ................................ 12
A. NDS’ Georgia contract to manage a Georgia warehouse for
a Texas company with national operations is not a
“contact” with Texas................................................................ 14
B. That Kimberly Clark has its headquarters and accounting
department in Texas, and so NDS sent bills to Texas, is no
basis for personal jurisdiction. ................................................. 18
iv
II. There is no specific jurisdiction over NDS because its “contacts”
with Texas are far below the constitutional minimum. ...................... 22
A. Jones did not even allege that NDS committed a tort or took
any action in Texas, as required for specific jurisdiction......... 23
(1) Jones alleged and the evidence shows that NDS
loaded the cargo in Georgia, pursuant to its duties
there as a warehouseman. .............................................. 23
(2) The Kimberly Clark-NDS contract for
warehouseman services in Georgia states that it is
governed by Wisconsin law........................................... 24
(3) Absent alleged contacts by NDS with Texas, NDS’
Special Appearance had to be sustained because it is
a foreign citizen. ............................................................ 25
B. Effects within the forum from the act of a party operating
entirely outside the forum do not support specific
jurisdiction . ............................................................................. 26
III. NDS did not waive its Special Appearance by participating in
merits-related discovery and filing or joining non-dispositive
motions. .............................................................................................. 27
A. Participating even in merits discovery does not deliberately
relinquish a challenge to personal jurisdiction......................... 28
B. Merits-related motions for discovery and continuance may
be important to defending a lawsuit if a special appearance
is denied. .................................................................................. 37
Conclusion and Prayer. ........................................................................................... 42
Certificate of Compliance. ...................................................................................... 43
v
Certificate of Service. ............................................................................................. 44
Appellants’ Appendix. ............................................................................................ 45
vi
INDEX OF AUTHORITIES
Cases Page(s)
American Type Culture Collection, Inc. v. Coleman,
83 S.W.3d 801 (Tex. 2002)............................................................................ 28, 40
Anderson v. Bechtle,
2001 WL 930205, p. 2 (Tex. App.—Houston [1st Dist.] 2001) (unpublished)
........................................................................................................................... 32, 41
BMC Software Belguim, N.V. v. Marchand,
83 S.W.3d 789 (Tex. 2002).................................................................................. 11
Burger King,
471 U.S. 462, 105 S. Ct. 2187. ............................................................................. 24
Burger King Corp. v. Rudzewicz,
471 U.S. 462, 105 S. Ct. 2174 (1985)............................................................. 10, 18
Dawson-Austin v. Austin,
968 S.W.2d 319 (Tex. 1998).................................................................... 32, 33, 34
Exito Electronics Co., Ltd. v. Trejo,
142 S.W.3d 302 (Tex. 2004)........................................................ 33, 34, 35, 36, 41
First Oil, PLC v. ATP Oil & Gas Corp.,
264 S.W.3d 767 (Tex. App. —Houston [1st Dist.] 2008). ................................... 34
Forest River, Inc. v. Quality Frames, Inc.,
2005 WL 615424 (Tex. App.—Houston [1st Dist.] 2005)
(memorandum opinion)............................................................................ 34, 36, 41
Freudensprung v. Offshore Technical Services, Inc.,
379 F.3d 327 (5th Cir. 2004)................................................................................. 19
Gutierrez v. Cayman Islands firm of Deloitte & Touche,
100 S.W.3d 261 (Tex.App.—San Antonio 2002)................................................ 37
vii
Helicopteros Nacionales De Colombia v. Hall,
466 U.S. 408, 104 S. Ct. 1868 (1984)....................................................... 10, 11, 26
Helicopteros Nacionales,
466 U.S. 417, 104 S. Ct. 1873. ....................................................................... 19, 26
Horizon Shipbuilding, Inc. v. Blyn II, Holding, LLC,
324 S.W.3d 840, 846 (Tex.App.—Houston [14th Dist.] 2010). .......................... 40
Horowitz v. Berger,
377 S.W.3d 115 (Tex. App.—Houston [14th Dist.] 2012). .................................. 36
In Re Stern,
321 S.W.3d 828 (Tex. App.—Houston [1st Dist.] 2010). ........................ 34, 35, 36
In re: Alford Chevrolet-Geo,
997 S.W.2d 173 (Tex. 1999)................................................................................ 38
In re Doe,
443 S.W.3d 603 (Tex. 2014)................................................................................ 14
In re City of Georgetown,
53 S.W.3d 328 (Tex. 2001).................................................................................. 31
Jernigan v. Langley,
111 S.W.3d 153 (Tex. 2003)................................................................................ 28
Kelly v. General Interior Construction, Inc.,
301 S.W.3d 653 (Tex. 2010).......................................................................... 25, 26
Lisitsa v. Flit,
419 S.W.3d 672 (Tex. App.—Houston [14th Dist.] 2013). .................................. 37
Luther Transfer & Storage v. Walton, Inc.,
296 S.W.2d 750 (Tex. 1956)................................................................................ 16
Luv N' care, Ltd. v. Insta-Mix, Inc.,
438 F.3d 465 (5th Cir.2006). ............................................................................... 17
viii
Metropolitan Wholesale Supply, Inc. v. M/V Royal Rainbow,
12 F.3d 58 (5th Cir. 1992)..................................................................................... 13
Michiana Easy Livin’ Country, Inc. v. Holten,
168 S.W.3d 777 (Tex. 2005).............................................................. 20, 21, 24, 26
Minucci v. Sogevalor, S.A.,
14 S.W.3d 790 (Tex. App.—Houston [1st Dist.] 2000). ...................................... 33
Moki Mac Expeditions v. Drugg,
221 S.W.3d 569 (Tex. 2007) (CR 71)............................................................ 22, 23
Moncrief Boil International, Inc. v. OAO Gazprom,
414 S.W.3d 142 (Tex. 2013).......................................................................... 12, 23
National Industrial Sand v. Gibson,
897 S.W.2d 769 (Tex. 1995)................................................................................ 27
Peninsula Asset Management (Cayman) Ltd. v. Hankook Tire Co., Ltd.,
2006 WL 1030185, p.4 (Tex.App. —Ft. Worth 2006) (unpublished)................ 40
PHC-Minden, L.P. v. Kimberly-Clark Corp.,
235 S.W.3d 163 (Tex. 2007)................................................................................ 11
Polycomp Administrative Services, Inc. v. Jackson,
2010 WL 1611760 (Tex. App.—Houston [1st Dist.] 2010). .......................... 21, 24
Robertson v. Hensel Phelps Construction Co.,
1999 WL 233599, p. 1 (Tex.App.—Houston [1st Dist.] 1999). ........................... 40
Ruston Gas Turbines, Inc. v. Donaldson Co., Inc.,
9 F.3d 415 (5th Cir.1993). ................................................................................... 17
Schlobohm v. Schapiro,
784 S.W.2d 355 (Tex. 1990)................................................................................ 10
Silbaugh v. Ramirez,
126 S.W.3d 88 (Tex.App.—Houston [1st Dist.] 2002). ..................... 33, 34, 36, 41
ix
Southern Pacific Transportation Co. v. Commercial Metals Co.,
456 U.S. 336, 342 102 S. Ct. 1815, 1820 (1982).................................................. 13
Stephen F. Austin State University v. Flynn,
228 S.W.3d 653 (Tex. 2007)................................................................................ 22
Texas Mut. Ins. Co. v. Ruttiger,
381 S.W.3d 430 (Tex. 2012)................................................................................ 31
U-Anchor Advertising, Inc. v. Burt,
553 S.W.2d 760 (Tex. 1977)................................................................................ 20
University of Texas Medical Branch v. Blackmon,
195 S.W.3d 98 (Tex. 2006).................................................................................. 30
Waterman Steamship Corp. v. Ruiz,
355 S.W.3d 387 (Tex. App.—Houston [1st Dist.] 2011). .................................... 10
World Wide Volkswagon Corp. v. Woodson,
444 U.S. 286, 296, 100 S. Ct. 559 (1980)....................................................... 17, 21
Statutes and Rules Page(s)
4 Wright & Miller, FEDERAL PRACTICE & PROCEDURE §1067.5............................. 11
Article 5568, Vernon's Texas Civil Statutes. .......................................................... 16
Tex. Bus. & Comm. Code §7.102(a)(13)................................................................ 16
Tex. Civ. Prac. & Rem. Code (“CPRC”) §17.042. ................................................... 9
Texas Long-Arm Statute..................................................................................... 9, 10
Tex. R. Civ. P. 120a...................... 8, 9, 28, 30, 31, 33, 34, 35, 36, 37, 39, 40, 41, 42
Tex. R. Civ. P. 162.................................................................................................. 30
United States Constitution. ............................................................................... 10, 15
x
TO THE HONORABLE FIRST COURT OF APPEALS:
STATEMENT OF THE CASE
This is an accelerated appeal from a February 23, 2015 order (CR 121) denying
a special appearance by Nationwide Distribution Services, Inc. (CR 9). The lawsuit
seeks damages for personal injury. (CR 18). Appellant timely filed a Notice of Appeal
from the denial of its special appearance (CR 127).
STATEMENT OF JURISDICTION
The court has jurisdiction to hear this appeal from an interlocutory order
pursuant to Texas Civil Practice & Remedies Code §51.014(a)(7) because the order
in question denied a special appearance.
ISSUES PRESENTED
1. There is no general jurisdiction over NDS because it has no continuous and
systematic contacts with Texas.
2. There is no specific jurisdiction over NDS because its “contacts” with Texas
are far below the constitutional minimum
3. NDS did not waive its special appearance by participating in merits-related
discovery and filing or joining non-dispositive motions
STATEMENT OF THE FACTS
Plaintiff Robert Jones filed this lawsuit on October 25, 2013, initially suing
three “Kimberly-Clark” (hereafter: “K-C”) corporate entities. (SCR 3). Jones filed a
First Amended Petition on January 15, 2014 adding Nationwide Distribution Services,
Inc. (“NDS”) and Nationwide Express, Inc. as defendants. (SCR 9). Intervenor Poly
Trucking, Inc. (“Poly”), plaintiff’s employer, filed a Second Amended Petition in
Intervention adding NDS on January 24, 2014. (CR 4).
Jones (“Jones”) alleges, and no one denies, that he is a Michigan resident suing
a Tennessee corporation (NDS) and a Texas corporation (Poly) for an injury he
suffered in Texas. (CR 19). Jones’ February 2012 injury (SCR 11) occurred while he
was delivering cargo as a truck driver for Poly. (SCR 201 at 35/1-25; 202 at 37/13-
24). Jones does not say NDS committed a negligent act in Texas. He alleges NDS
“negligently loaded and/or secured the cargo [in the trailer Jones was pulling] at its
facility in Roswell, Georgia.” (CR 19 ¶7) (emphasis added). NDS’ allegedly negligent
handling of cargo in Georgia is said to have caused injury in Texas because “the load
fell out of a trailer” while Jones was delivering the cargo in Texas. (CR 19 ¶7).
On March 17, 2014—slightly more than a year ago—NDS filed a Special
Appearance in response to the petitions of both Jones and intervenor Poly, stating that
it has no activity in or contacts with Texas (CR 9). NDS attached to its Special
Appearance an affidavit of its president (David Coffey), attesting that NDS is a
Tennessee corporation with its principal place of business in Tennessee and no offices,
property, bank accounts, contracts, agents, employees or sales in Texas. (SCR 24).
Instead, NDS operates as a warehouseman in Roswell, Georgia (for co-defendant K-
C), where it loaded the cargo in question. (SCR 218 at 101/12-102/12).
2
The trial court issued a docket control order on May 13, 2014 (SCR 26), setting
trial for February 2, 2015 with pre-trial deadlines that included expert witness
designation for defendants on November 3, 2014 and a discovery cutoff on January
2, 2015. Jones filed a Second Amended Petition on July 7, 2014, specifying for the
first time the negligence being alleged against NDS. (CR 18, 19 ¶7).
Jones filed a Response to NDS’s Special Appearance on February 20, 2015.
(CR 66). His Response equates NDS’ loading of Texas-bound cargo at a Georgia
warehouse with purposeful availment by NDS of the privilege of conducting business
in Texas (i.e., “minimum contacts” by NDS with Texas, justifying the exercise of
personal jurisdiction consistent with due process). Jones asserted as minimum contacts
that: (1) the load in question, and most loads leaving the Kimberly-Clark warehouse
in Georgia, went to Texas; (2) K-C, a Delaware corporation, has its headquarters in
Texas; and (3) NDS sent invoices to K-C’s “accounts payable” department in Texas.
(CR 72-75). Jones argues that those facts, and the foreseeability “that someone would
be injured in Texas if they improperly loaded cargo bound for Texas,” indicate general
jurisdiction over NDS in Texas. (CR 75).
The evidence relevant to personal jurisdiction is undisputed. NDS loaded Poly’s
trailer with K-C’s cargo at the Roswell, Georgia warehouse, after which Jones
inspected the load, sealed the trailer and left for Texas. (SCR 210-213). Jones
3
delivered the load to the Ravago facility in Waller, Texas (SCR 202 at 37/20-38/23),
where part of the load fell on him after he opened the trailer door. (SCR 214 at 86/10
to 216 at 94/10). There is no allegation or evidence that NDS has or has ever had any
employees or operations in Texas, or that it had anything to do with unloading the
trailer in Texas. Jones made the conclusory allegation that NDS “does a substantial
amount of business in Texas and directs products to Texas” (CR 19 ¶5), but the
affidavit attached to NDS’ Special Appearance (SCR 24) and even Jones’ own
evidence (SCR 74 at 5/22 to 75 at 9/15) established the opposite of that allegation.
Jones deposed David Coffey, president of NDS, on February 16, 2014. (SCR
73). Mr. Coffey testified that NDS had two employees working on-site at the facility
in Roswell, Georgia where it acted as warehouseman for K-C. (SCR 74 at 6/22-7/9).
NDS leases its own facilities in Tennessee and North Carolina, but does not own or
lease the facility where it provides warehouse services to K-C in Roswell, Georgia.
(SCR 74 at 6/6-7/6). NDS provided warehouse services to K-C in Georgia pursuant
to a “Blanket Warehouse Services Agreement” between the two companies. (SCR 56;
75 at 9/11-15). Mr. Coffey testified that warehousing services include unloading and
storage of a client’s goods, while distribution includes preparing goods for pickup and
delivery by other companies. (SCR 77 at 18/11-15).
Among NDS’s job responsibilities at the Georgia warehouse was loading
4
trailers bound for Ravago in Waller, Texas, which it did on 168-170 occasions. (SCR
78 at 21/9-24/16). NDS was given paperwork directing what products to load on
trailers for shipment and where the products were to be shipped. (SCR 75 at 12/15 to
76 at 13/8).
The Blanket Warehouse Services Agreement between K-C and NDS make clear
that NDS was merely handling goods on K-C’s behalf:
9.01 Title: K-C shall consign the Products to itself in care of
Warehouseman [i.e., NDS]. Title to such Products shall not pass to
Warehouseman. All Products shall remain the property of K-C, and shall
be stored and identified as K-C’s property.
(SCR 61). NDS, typical of any warehouseman, was to be notified by the goods’ owner
of incoming shipments, and was in turn to notify the owner of their receipt and
provide bills of lading for shipments leaving the warehouse. (SCR 62-63 at §10.04).
The Warehouse Services Agreement directs K-C to give any notice under the
Agreement to NDS at its head office in Loudon, Tennessee, and NDS to give notice
to K-C at its Roswell, Georgia location. (SCR 67 at §14.06). K-C directed that NDS
send invoices to K-C’s “Accounts Payable Department” in Waco, Texas. (SCR 59 at
§6.02). The evidence that NDS acted as a warehouseman in Georgia, but did nothing
in Texas, is uncontradicted.
In the year since its appearance, NDS has obtained and provided discovery,
both jurisdictional and merits-related, and has filed non-dispositive motions relating
5
to its discovery disputes with Jones. Such filings have included a motion to quash
deposition notices for jurisdictional discovery based upon scheduling conflicts, a
motion to compel more complete answers by Jones to NDS’ interrogatories (CR 24),
and a motion to compel production by Jones of driver’s logs and DVIR records. (CR
32). NDS also moved for a continuance of the expert designation deadline (CR 41),
which the court granted by issuing a new docket control order. (SCR 34).
At no time did NDS ever seek dispositive or affirmative relief, such as through
a motion for summary judgment, motion to dismiss, motion to strike pleadings or
otherwise. At no time did NDS state or imply that in pursuing merits-related
discovery, it was abandoning its concurrent challenge to the jurisdiction.
The trial court held a hearing on NDS’s Special Appearance on February 23,
2015, and signed an order denying it that same day. (CR 121). Less than one year
elapsed between NDS’s Special Appearance and the ruling on that Special
Appearance by the trial court.
SUMMARY OF THE ARGUMENT
Robert Jones, as plaintiff, pled and proved facts that conclusively negate both
general and specific jurisdictions over NDS in Texas. Uncontroverted evidence
attached to NDS’s Special Appearance and Jones’ response to it confirms only one,
trivial “contact” by NDS with Texas (if mailing invoices to a Texas accounting
6
department even qualifies as a jurisdictional contact). Jones’ argument for personal
jurisdiction consists almost entirely of what courts long ago rejected: foreseeability
of injury in the forum, from acts outside the forum (an “effects” or “directed injury”
argument). Courts are clear: foreseeable harm in the forum is the plaintiff’s (Jones’)
contact with the forum—not the defendant’s. Foreseeability of harm is thus not a basis
for personal jurisdiction.
Courts from the U.S. Supreme Court to this court have consistently rejected an
“effects”-based standard for personal jurisdiction. The problem is that an effects-based
standard focuses upon liability facts, not jurisdictionally relevant facts. Jones invited
the district court to focus upon his relationship to the Texas forum (he was injured
here), but personal jurisdiction turns upon NDS’ relationship (or lack of one) to the
forum. Whether Jones’ injury in the forum was a foreseeable result of NDS’ alleged
breach of duty is very relevant to liability, but irrelevant to personal jurisdiction. NDS
is not subject to being sued in Texas unless it committed a tortious act in Texas, or
otherwise has Texas contacts out of which Jones’ injury accident arose.
The closest NDS came to a contact with Texas was sending invoices to K-C,
at its accounts payable department in Waco, Texas, for services performed in Georgia
pursuant to those parties’ Georgia contract. The party to be billed knows and
designates the address to which bills should be sent. Even if NDS had entered into a
7
contract with K-C in Texas for its Georgia services, precedent is clear that would not
create personal jurisdiction over NDS in Texas.
The district court had no evidence to justify its implicit finding that NDS
“purposefully availed itself of the privilege of conducting business in Texas.” The
error goes beyond the fact that NDS performed warehouse services in Georgia, not in
Texas. The district court also failed to recognize that NDS did the opposite of seeking
the benefits of Texas law. Its Blanket Warehouse Services Agreement with K-C
specifies that Wisconsin law governs the contract. (SCR 66; ¶14.05).
Absent personal jurisdiction over NDS, Jones must resort to a waiver argument.
He equates NDS’ participation in merits-related discovery and its discovery motions
with a choice to abandon its challenge to personal jurisdiction. Controlling precedent
rejects that argument as well, consistent with the plain meaning of Tex. R. Civ. P.
120a (outlining special appearance practice).
Jones discusses NDS’ discovery motions as though they constitute a request for
affirmative relief (i.e., adjudication on the merits, disposition of claims), but he never
explains why that would be or cites precedent for the proposition. His false equation
of discovery motions with merits adjudications dissolves on sight, as the two are
obviously distinct. Jones also misconceives the meaning of waiver. It is the deliberate
relinquishment of a known right. NDS’s attempts to obtain merits-related discovery
8
from plaintiff, in recognition that its Special Appearance might be denied and it might
have to try the lawsuit (as the trial court has ruled), has nothing to do with and cannot
plausibly be construed as deliberate relinquishment of a personal jurisdiction defense.
No rule or statute requires that a specially appearing defendant conduct only
jurisdictional discovery until the court rules on its special appearance. To the contrary,
R. 120a is explicit and unqualified in saying that “the use of discovery processes”
does not waive a special appearance. This court has held R. 120a means what it says,
and merits-related discovery does not waive a special appearance. Jones’ argument to
the contrary cannot stand against the rule’s plain meaning and controlling precedent.
TEST FOR PERSONAL JURISDICTION; STANDARD OF REVIEW
Jones claims both types of personal jurisdiction over NDS in Texas—general
and specific. Jones does not cite the Texas Long-Arm Statute, Tex. Civ. Prac. & Rem.
Code (“CPRC”) §17.042, which states that personal jurisdiction exists over a
defendant “doing business” in Texas. It gives, as examples, that the non-resident:
1. Contracts by mail or otherwise with a Texas resident and either
party is to perform the contract in whole or in part in this state;
2. Commits a tort in whole or in part in this state; or
3. Recruits Texas residents, directly or through an intermediary located in
this state, for employment inside or outside this state.
Jones does not allege (in his pleadings) or claim (in his Response to NDS’s Special
9
Appearance) that any of those three examples exists here.
The Texas Long-Arm Statute is construed as allowing assertion of personal
jurisdiction to the limits of the United States Constitution, so it is constrained only by
precedent construing the “due process” guarantee of the U.S. Constitution. Schlobohm
v. Schapiro, 784 S.W.2d 355, 356 (Tex. 1990); Waterman Steamship Corp. v. Ruiz,
355 S.W.3d 387, 403 (Tex. App.—Houston [1st Dist.] 2011).
The United States Supreme Court indicates that the “touchstone” of personal
jurisdiction consistent with the U.S. Constitution is a showing that the defendant
purposefully established “minimum contacts” in the forum state—i.e., that defendant
“purposefully avails itself of the privilege of conducting activities within the forum
state, thus invoking the benefits and protections of its laws.” Burger King Corp. v.
Rudzewicz, 471 U.S. 462, 474-75, 105 S. Ct. 2174, 2183 (1985). The second part of
the due process test is whether the assertion of personal jurisdiction over the non-
resident defendant, even with minimum contacts, comports with “fair play and
substantial justice.” Id. at 476, 2184. The second part of the test is not at issue here,
as NDS has no minimum contacts with Texas that could put “fair play” in issue.
General jurisdiction requires more than specific jurisdiction—the defendant’s
contracts with the forum state must be “continuous and systematic,” not just
“minimum.” Helicopteros Nacionales De Colombia v. Hall, 466 U.S. 408, 416, 104
10
S. Ct. 1868, 1873 (1984). The Texas Supreme Court has said that while the U.S.
Supreme Court “has given little guidance on the appropriate injury for general
jurisdiction,” its opinion in Helicopteros “suggests that the requisite level of contacts
is fairly substantial.” PHC-Minden, L.P. v. Kimberly-Clark Corp., 235 S.W.3d 163,
167 (Tex. 2007). Thus, general jurisdiction requires a “more demanding minimum
contacts analysis” than does specific jurisdiction, and has a “substantially higher”
threshold.” Id. at 168.
Leading scholars see general jurisdiction the same way: “The defendant must
be engaged in longstanding business in the forum state, such as marketing or shipping
products, or performing services or maintaining one or more offices there; activities
that are less extensive than that will not qualify for general in personam jurisdiction.”
Id. at 168, quoting 4 Wright & Miller, FEDERAL PRACTICE & PROCEDURE §1067.5.
This court’s standard of review of the district court’s denial of NDS’s Special
Appearance is de novo because no facts are in issue, and whether the facts meet the
jurisdictional threshold is a matter of law for the court. BMC Software Belguim, N.V.
v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). Facts necessary to support the district
court’s decision, and consistent with the evidence, are implied. However, because the
clerk’s record and reporter’s record are before the court, those implied findings are not
conclusive and may be challenged in this court for factual and legal sufficiency. Id.
11
at 795. There are no fact issues in this appeal, so no factual insufficiency challenge,
but this court “may review the trial court’s legal conclusions drawing from the facts
to determine their correctness.” Id. at 794.
ARGUMENT
I. There is no general jurisdiction over NDS because it has no continuous and
systematic contacts with Texas
NDS notes the absence in the record of factual allegations or evidence of
“continuous and systematic contacts” of NDS with Texas. Jones’ Response asserts
they are “certainly” present (CR 74), but Jones discusses his own and K-C’s contacts
with Texas as if they constitute contacts of NDS. Jones’ Response to Special
Appearance argues for personal jurisdiction over NDS because K-C (1) has its
headquarters here; (2) required NDS to mail invoices to K-C’s “Accounts Payable”
office in Waco; and (3) regularly sends cargoes of scrap metal from the Georgia
warehouse managed by NDS to Texas. (CR 75).
It is a fundamental rule of personal jurisdiction that “only the defendant’s
contacts with the forum are relevant, and not the unilateral activity of another party
or a third person.” Moncrief Boil International, Inc. v. OAO Gazprom, 414 S.W.3d
142, 151 (Tex. 2013). So K-C’s headquarters location in Texas and Jones’ injury
location in Texas, however significant for those parties, are not contacts of NDS with
Texas. Likewise, K-C’s decision to ship its goods to Texas from the Georgia
12
warehouse where NDS stored them, and Jones’ choice to make the haul for Poly
(motor carrier for K-C), are acts of other parties.
Such Texas contacts by other parties are not evidence that NDS purposefully
availed itself of the privilege of conducting business in Texas. For example, NDS
“filled out a bill of lading” when K-C directed that a load of its goods be shipped to
Ravago, a Texas purchaser. (CR 78 at 22/1-12). NDS, a warehouseman, can at most
have acted as K-C’s agent in filling out shipment paperwork because only K-C owned
and had the right to release the goods for shipment to a purchaser. There is no
evidence of any bill of lading saying NDS is shipping goods into Texas. There could
not be, as a bill of lading is a contract and chain of title document between the goods’
owner (the shipper/consignor, K-C) and the motor carrier the owner hires (Poly) to
carry the cargo to the consignee/purchaser (Ravago).
A bill of lading is not made with or by a warehouseman. Precedent is clear:
“The bill of lading is the basic transportation contract between the shipper-consignor
and the carrier; its terms and conditions bind the shipper and all connecting carriers.”
Southern Pacific Transportation Co. v. Commercial Metals Co., 456 U.S. 336, 342
102 S. Ct. 1815, 1820 (1982) (emphasis added); Metropolitan Wholesale Supply, Inc.
v. M/V Royal Rainbow, 12 F.3d 58 (5th Cir. 1992) (bill of lading is “the contract of
carriage between the shipper and the carrier”).
13
There is no claim or evidence that NDS owned the goods K-C was selling and
shipping to Ravago in Waller, Texas from the Georgia warehouse managed by NDS.
That is consistent with NDS’ role as warehouseman, not a consignor/shipper of K-C’s
goods. It is undisputed that when NDS released and loaded K-C’s goods for delivery
by Poly to Ravago in Texas, it acted as directed by owner/consignor K-C. There is no
allegation or evidence that NDS had any right to do (or did do) anything beyond what
K-C directed with the goods K-C entrusted to its care. There is no claim or evidence
that NDS profited from K-C selling goods in Texas or Poly transporting cargo there.
A. NDS’ Georgia contract to manage a Georgia warehouse for a Texas
company with national operations is not a “contact” with Texas
First, it does not matter how deeply K-C is connected to Texas. Like any
multinational corporation doing business worldwide, it has a physical presence in, and
enters into contracts and performs operations in, jurisdictions outside Texas. Here, as
will often be the case, the local (foreign) business with which K-C made a contract has
no contacts with Texas, and performed operations for the Texas company in the
foreign jurisdiction rather than in Texas. If a Texas entity’s Texas contacts are
imputed to every foreign entity with which it contracts for services that are performed
in a foreign jurisdiction, constitutional limits will be an illusion. Having shrunk its
welcome mat as “the world’s forum of final resort,” In re Doe, 443 S.W.3d 603, 611
(Tex. 2014), Texas surely does not intend to violate U.S. constitutional limitations on
14
the even more important issue of personal jurisdiction.
Even if such jurisdictional gusto were compatible with due process under the
U.S. Constitution (which it plainly is not), it would add volume to Texas courts at the
expense of taxpayers, mostly for the benefit of lawyers. Jones has a legitimate
jurisdictional basis to sue Poly and K-C in Texas for his Texas injury because they do
business in Texas. If he wanted to sue NDS in the same lawsuit, he needed to file it
in Georgia (or Tennessee), where he presumably could find counsel as readily as he
found Texas counsel. The benefits of suing in Texas, however large and personal,
should not be confused with a basis for jurisdiction in Texas.
Instead, the focus of personal jurisdiction is upon the foreign entity’s (NDS’)
contacts with Texas. The Statement of Facts shows NDS has no office, employees,
money, presence of any kind or contacts in Texas. Jones does not allege or prove facts
suggesting it does. Instead, Jones argues for what amounts to jurisdiction-by-
association. That novel doctrine has even less merit and support in precedent than
does guilt-by-association. No federal or Texas court has recognized one contracting
party’s Texas contacts as a basis for personal jurisdiction over its counter–party.
Second, NDS cargo loading in Georgia does not become an NDS contact with
Texas just because K-C directs that its goods (the cargo) be shipped to Texas. NDS
fulfilled its responsibilities as a Georgia warehouseman by loading the cargo stored
15
in the Georgia warehouse and generating the paperwork required for its shipment and
delivery. Traditionally, per Article 5568, Vernon's Texas Civil Statutes:
Any person, firm, company or corporation who shall receive, * * *, or
any kind of * * * merchandise, or any personal property in store for hire,
shall be deemed and taken to be public warehousemen.
Luther Transfer & Storage v. Walton, Inc., 296 S.W.2d 750, 752 (Tex. 1956).
Texas’ current version of the Uniform Commercial Code simply uses the term
“warehouse” to refer to “a person engaged in the business of storing goods for hire”
(i.e., a commercial bailee). Tex. Bus. & Comm. Code §7.102(a)(13). Such storage of
K-C’s goods for hire occurred only in Georgia. NDS releasing the bailor’s goods to
K-C’s chosen motor carrier (Poly), for delivery to K-C’s chosen destination, links K-C
and Poly—not NDS—to Texas.
Jones’ real point, at the bottom of the paragraph in which he argues for general
jurisdiction, is that NDS knew K-C’s loads “were bound for Texas” and it was
foreseeable to NDS “that someone would be injured in Texas if they improperly
loaded cargo bound for Texas.” (Response, p. 10). Leave aside for a moment that U.S.
and Texas courts reject foreseeability of injury in the forum as a basis for personal
jurisdiction over a defendant that lacks minimum contacts in the forum (discussed in
part II.B. below). Even if foreseeability of harm in Texas from Georgia warehouse
operations were in itself a contact, it would be far short of the “continuous and
16
systematic” contacts with Texas required for general jurisdiction.
Jones seems to equate product distribution (which routinely supports personal
jurisdiction in multiple forums) with provision of services (which supports jurisdiction
only in the place of performance). Minimum contacts may exist for products liability
defendants with states where they knows or can foresee their products will be
distributed. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 298
(1980); Ruston Gas Turbines, Inc. v. Donaldson Co., Inc., 9 F.3d 415, 419 (5th
Cir.1993). Personal jurisdiction is justified when a product manufacturer or distributor
seeks the financial benefits of selling its products in other states. Luv N' care, Ltd. v.
Insta-Mix, Inc., 438 F.3d 465, 470 (5th Cir.2006).
No such jurisdictional rationale can apply to services (work). By its nature,
work is performed in a given location. Work is not a tangible object that can be
distributed to another state. Once NDS loaded the cargo in Georgia in its role as K-C’s
warehouseman, everything else that happened with the cargo was done by Poly as
motor carrier and K-C as owner. Here, unlike multi-state product distribution, there
is no claim or evidence that NDS derived any benefit from Poly’s transport of goods
to Texas or K-C’s use or sale of its goods in Texas. NDS sought and obtained benefit
in Georgia from work it did in Georgia.
17
B. That Kimberly Clark has its headquarters and accounting
department in Texas, and so NDS sent bills to Texas, is no basis for
personal jurisdiction
Because foreseeability of injury in Texas from cargo loading in Georgia is not
a Texas jurisdictional contact for the Georgia warehouse (see part II.B.), Jones must
find significance in K-C’s Texas location and instruction to send invoices to it at its
“Accounts Receivable” department in Waco. Precedent rejects each of those as a basis
for personal jurisdiction, as neither is a “contact” indicating a defendant purposefully
availed itself of the privilege of conducting activities in the forum.
A strong sign Jones (and thus the trial court) is wrong on this point is that he
disagrees with the U.S. Supreme Court. The high court rejects the idea that contracting
with and payment to a forum state resident constitutes minimum contacts that satisfy
personal jurisdiction: “If the question is whether an individual’s contract with an out-
of-state party alone can automatically establish sufficient minimum contacts in the
other party’s home forum, we believe the answer clearly is that it cannot.” Burger
King v. Rudzewiscz, 471 U.S. 462, 478, 105 S. Ct. 2174, 2185 (1985).
The Fifth Circuit, consistent with Burger King\, likewise rejects Jones’ equation
of contracts and billing with personal jurisdiction. That court has “repeatedly held that
the combination of mailing payments to the forum state, engaging in communications
related to the execution and performance of the contract, and the existence of a
18
contract between the non-resident defendant and a resident of the forum are
insufficient to establish the minimum contacts necessary to support the exercise of
specific personal jurisdiction over the non-resident defendant.” Freudensprung v.
Offshore Technical Services, Inc., 379 F.3d 327, 344 (5th Cir. 2004).
That K-C is a Delaware corporation with its headquarters in Texas is therefore
no support for asserting personal jurisdiction in Texas over a Tennessee corporation
performing services (loading and unloading; storage) for K-C at a Georgia warehouse.
That the foreign entity (NDS) sent bills for its Georgia services to a Texas address
designated by the Texas contracting party is even farther from turning the Georgia
services into a Texas “contact” for jurisdictional analysis. The Texas billing address
designated by K-C is not a “contact” for personal jurisdiction analysis, or is so
attenuated as to be meaningless.
K-C, not NDS, determines where bills or payments to it should go. Such
unilateral activity by a Texas resident, as the U.S. Supreme Court said in analogous
circumstances, is “not an appropriate consideration when determining whether a
defendant has sufficient contacts with a forum state to justify an assertion of
jurisdiction.” Helicopteros Nacionales, 466 U.S. 417, 104 S. Ct. 1873. The court there
was discussing the Colombian defendant’s acceptance of checks drawn on a Texas
bank, but invoices going to Texas are no closer to being “contacts.”
19
The Texas Supreme Court also disagrees with Jones that payments to Texas
support personal jurisdiction. U-Anchor Advertising, Inc. v. Burt, 553 S.W.2d 760,
763 (Tex. 1977) explained that a contract requiring an out-of-state defendant to pay
a Texas business at its office in Amarillo was a minimal and fortuitous contact, not an
indication that the defendant purposefully conducted activities within Texas. As the
court explained, the parties entered into an Oklahoma contract to be performed in
Oklahoma. The Oklahoma defendant did nothing to support an inference that it sought
the privilege of doing business in Texas, considering that his only Texas “contact”
was sending checks to the address of the Texas contracting party. The court held that
due process did not allow personal jurisdiction on those very analogous facts.
The Texas Supreme Court has rejected a much stronger case for personal
jurisdiction than Jones presents. Michiana Easy Livin’ Country, Inc. v. Holten, 168
S.W.3d 777 (Tex. 2005) considered a lawsuit based upon an actual contact with
Texas—a product sale to a Texas resident. He looked up a recreational vehicle seller
(retail) seller in Indiana that did not do business in Texas. The only Texas contacts for
the Indiana entity were a phone call with the Texas purchaser, and arrangements for
shipping the RV to Texas. The court held that alleged misrepresentations in the phone
call and shipping of the vehicle did not create personal jurisdiction over the seller:
Delivery in Texas was at Holten’s sole request and sole expense. If a
seller of chattels is subject to suit wherever a customer requests delivery,
20
then the chattel has become its agent for service of process—a
conclusion the United States Supreme Court has expressly rejected.
[citing World Wide Volkswagon Corp. v. Woodson, 444 U.S. 286, 296,
100 S. Ct. 559 (1980)].
Michiana, 168 S.W.3d 788.
The product sale in Michiana resulted from the Texas resident purposefully
availing himself of the inventory and pricing offered by the retailer in Indiana—not
the Indiana business reaching out to Texas as a potential market. Id. at 784, 786. Here
Jones has even less to work with in trying to justify personal jurisdiction. NDS did not
sell a product or deliver anyone’s goods (much less its own) to the forum. K-C already
owned the goods, and Poly (K-C’s contracted motor carrier) delivered them. Nor did
NDS provide services in the forum. All NDS did was (a) load a forum resident’s
goods (b) onto Poly’s tractor-trailer (c) in Georgia (d) pursuant to a contract to
perform services in Georgia. That connects NDS to Georgia, not Texas.
This court has followed the U.S. Supreme Court and Texas Supreme Court in
holding that financial or administrative paperwork passing to or from Texas is not a
contact supporting personal jurisdiction. Polycomp Administrative Services, Inc. v.
Jackson, 2010 WL 1611760 (Tex. App.—Houston [1st Dist.] 2010) (memorandum
opinion) explained that account statements sent to Texas were “a mere incident of
Polycomp’s custodial role,” and that Polycomp performed its services in California.
The district court did not have the power to controvert all that controlling
21
precedent, as required to deny NDS’ Special Appearance. The facts are not disputed,
so whether they support personal jurisdiction is a matter of law, reviewed de novo.
II. There is no specific jurisdiction over NDS because its “contacts” with
Texas are far below the constitutional minimum
Jones correctly cites controlling precedent that specific jurisdiction exists if the
defendant’s “alleged liability arises out of or is related to an activity conducted within
the forum.” Moki Mac Expeditions v. Drugg, 221 S.W.3d 569, 576 (Tex. 2007) (CR
71). However, Jones does not even allege—much less prove—facts indicating that
NDS conducted any activity in Texas and that his injury arises out of that Texas
activity.1 Jones’ identification of NDS in the “Parties” section of the Second Amended
Petition includes the conclusory assertion that NDS “does a substantial amount of
business in Texas and directs products to Texas.” (CR 19). The pleading never alleges
any specific factual basis for that conclusory statement, and is nowhere near saying
that NDS committed a tort in Texas.
Conclusory statements in pleadings have been given no effect in analogous
circumstances. Stephen F. Austin State University v. Flynn, 228 S.W.3d 653, 659
(Tex. 2007) (conclusory allegations of gross negligence not sufficient to plead within
1
It appears Jones was (as he still does) simply characterizing, as NDS’ Texas “business,” the loading of
and provision of bills of lading for the K-C cargo that Poly transported from the Geogia warehouse to
Texas. In any event, NDS thoroughly controverted that allegation with the Affidavit of its president (SCR
23-24), proving that NDS did no business in and had no contacts with Texas.
22
Recreational Use statute).
A. Jones did not even allege that NDS committed a tort or took any
action in Texas, as required for specific jurisdiction
The Texas Supreme Court holds that “specific jurisdiction exists when the
cause of action arises from or is related to purposeful activities in the state.” Moncrief
Oil International, Inc. v. OAO Gazprom, 414 S.W.3d 142, 150 (Tex. 2013). In
considering whether a foreign defendant purposefully availed itself of the privilege
of conducting business in Texas, “only the defendant’s contacts with the forum are
relevant, not the unilateral activity of another party or a third person.” Id. at 151. The
context “must be purposeful rather than random, fortuitous or attenuated,” and “the
defendant must seek some benefit, advantage or profit by availing itself of the
jurisdiction.” Id. at 151.
Minimum contacts are not enough for specific jurisdiction. The Texas Supreme
Court explains that “for a non-resident defendant’s forum contacts to support an
exercise of specific jurisdiction, there must be a substantial connection between those
contacts and the operative facts of the litigation.” Moki Mac, 221 S.W.3d 585. That
required causation would be missing here, even if the contacts existed.
(1) Jones alleged and the evidence shows that NDS loaded the
cargo in Georgia, pursuant to its duties there as a
warehouseman
When K-C and NDS negotiated their Blanket Warehouse Services Agreement,
23
they had Georgia on their minds. Notices to K-C under the Agreement were to be sent
to it at its address in Roswell, Georgia. (SCR 67 at §14.06). It is undisputed that NDS
handled goods in the warehouse in Roswell, Georgia on behalf of K-C. The deposition
of NDS’ president establishes that NDS performed its warehouseman services through
two on-site employees. (SCR 74 at 6/22-7/9). Jones alleged, and it is undisputed, that
NDS “loaded and/or secured the cargo” in question at the Roswell, Georgia
warehouse. (CR 19).
Jones and the trial court mistakenly based personal jurisdiction over NDS upon
a Texas effect of NDS’ alleged negligent act in Geogia. For specific jurisdiction, only
alleged negligence by NDS in Texas would have been relevant.
(2) The Kimberly Clark-NDS contract for warehouseman services
in Georgia states that it is governed by Wisconsin law
To the extent that K-C and NDS did not have Georgia on their minds, they were
thinking about Wisconsin. Section 14.5 of the Blanket Warehouse Services
Agreement states: “Governing Law: This Agreement shall be construed and
performed according to the laws of the state of Wisconsin.” (SCR 66 at §14.05). Even
a choice of law provision directing application of the law of the forum does not in
itself establish personal jurisdiction. Burger King, 471 U.S. 462, 105 S. Ct. 2187. This
court in Polycomp, 2010 WL 1611760 at p. 6, and the Texas Supreme Court in
Michiana, 168 S.W.3d at 792, have treated choice of the law of a foreign jurisdiction
24
as some indication that the foreign defendant did not intend to subject itself to Texas
jurisdiction or purposefully invoke the benefits and protections of Texas law.
(3) Absent alleged contacts by NDS with Texas, NDS’ Special
Appearance had to be sustained because it is a foreign citizen
Texas law is clear about the effects of failing to allege or prove facts that
support personal jurisdiction—a special appearance must be sustained.
v. General Interior Construction, Inc., 301 S.W.3d 653, 659 (Tex. 2010) explains:
The defendant can negate jurisdiction on either a factual or legal basis.
. . Legally, the defendant can show that even if the plaintiff’s alleged
facts are true, the evidence is legally insufficient to establish jurisdiction;
the defendant’s contacts with Texas fall short of purposeful availment;
for specific jurisdiction, that the claims do not arise from the contacts.
That is exactly the situation here, where Jones clearly pled tortious conduct by NDS
in Georgia and no specific actions by NDS in Texas, unless sending invoices to the
Kimberly Clark accounting department in Waco is though to be a “contact.”
The Texas Supreme Court explained in Kelly that “GIC failed to plead facts
within the reach of the Long Arm Statute because it did not allege the Officers
committed any tortious acts in Texas.” Id. at 659. The same is true here, where Jones
pled a tortious act in Georgia; only its effects were in Texas. That result, as in Kelly,
is that NDS as the non-resident defendant “could, and did, meet [its] burden to negate
all bases of jurisdiction by proving that [it does] not live in Texas.” Id. at 660. A
plaintiff such as Jones can still present evidence controverting a Special Appearance.
25
Jones tried, but his evidence instead supports NDS’ challenge to personal jurisdiction.
What was true in Kelly is true here: the plaintiff’s rebuttal evidence was “as
silent as its pleadings regarding the Officers’ Texas contacts related to its claims,”
such that “the Officers’ special appearance should have been granted.” Id. at 660.
Here, too, Jones does not attempt and could never succeed in showing that NDS’
purported Texas “contacts” (a contract with a Texas corporation in another state to
perform services in that state, and bills sent to a Texas address) are substantially
related to the operative facts in this lawsuit (alleged loading error in Georgia that
made the cargo dangerous to unload in Texas). Jones presumes that harm in Texas
from loading in Georgia is a jurisdictional contact for the Georgia services provider
with Texas. As shown below, he never explains or cites precedent for that conclusion.
He cannot, as courts universally reject such an “effects” or “directed tort” test.
B. Effects within the forum from the act of a party operating entirely
outside the forum do not support specific jurisdiction
Jones hangs his argument for personal jurisdiction on a peg that cannot support
it, for reasons the Texas Supreme Court explained in Michiana. Jones argues the
“effects” test, which has also been described as declaring jurisdiction where the
defendant “directed a tort.” Michiana, 168 S.W.3d 790. Citing the U.S. Supreme
Court decision in Helicopteros Nacionales, the Texas Supreme Court explains that
effects or “directed a tort” argument impermissibly “shifts” a court’s focus from the
26
‘relationship among the defendant, the forum and the litigation’ to the relationship
among the “plaintiff, the forum . . . and the litigation.” Id. at 790. See also National
Industrial Sand v. Gibson, 897 S.W.2d 769, 795 (Tex. 1995)
Such an argument for personal jurisdiction is mistaken because “minimum-
contacts analysis focuses solely on the actions and reasonable expectations of the
defendant,” while an argument for “directed-a-tort jurisdiction confuses the roles of
judge and jury by equating the jurisdictional inquiry with the underlying merits.” Id.
at 790. Jones’ Response to the Special Appearance is a bold (and so far successful)
effort to conflate the foreseeability of harm in Texas (relevant to his tort claim) with
minimum contacts by NDS with Texas (essential to his jurisdictional claim).
Jones is correct that improper loading in one state can foreseeably cause harm
in another state where the cargo is unloaded (whether that is true here is a non-issue,
beyond the record). However, Jones is wrong that foreseeability of injury in Texas
from cargo loading in Georgia means that the foreign defendant loading cargo in
Georgia has purposefully availed itself of the privilege of conducting business in (has
minimum contacts with) Texas. Far from establishing personal jurisdiction over NDS
in Texas, Jones’ allegations and proof of NDS’ Georgia-only operations negates it.
III. NDS did not waive its Special Appearance by participating in merits-relatd
discovery and filing or joining non-dispositive motions
Apparently realizing the deficiencies in his personal jurisdiction claim, Jones
27
began his Response to the Special Appearance by asking the trial court to find waiver
of the Special Appearance in routine discovery requests and motions. Absent findings
of fact and conclusions of law, the trial court is presumed to have done so. American
Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 806 (Tex. 2002). The trial
court erred because the discovery actions of NDS as a matter of law do not constitute
waiver of its Special Appearance. Texas Rule of Civil Procedure 120a states:
The issuance of process for witnesses, the taking of depositions, the
serving of requests for admissions, and the use of discovery processes,
shall not constitute a waiver of such special appearance. . . . Any motion
to challenge the jurisdiction provided for herein shall be heard and
determined before a motion to transfer venue or any other plea or
pleading may be heard.
NDS’ only “plea” was its Special Appearance. It did not submit any part of its
pleading (answer) to be “heard and determined” before a Special Appearance ruling.
A. Participating even in merits discovery does not deliberately
relinquish a challenge to personal jurisdiction
Nothing in the discovery efforts and proceedings in this lawsuit indicates or
supports an inference that NDS waived its challenge to personal jurisdiction. Waiver
is “an intentional relinquishment of a known right or intentional conduct inconsistent
with claiming that right.” Jernigan v. Langley, 111 S.W.3d 153, 156 (Tex. 2003).
There is no evidence that NDS intentionally relinquished its challenge to personal
jurisdiction over it in Texas. The only argument left to Jones is that NDS’ pursuit of
28
merits-related discovery is inconsistent with a challenge to the jurisdiction, and must
be construed as waiver.
Jones comes nowhere near showing that merits-related discovery proceedings
are “inconsistent with” simultaneously asserting a special appearance—i.e., that no
defendant would rationally or ordinarily do both at the same time. The Texas Supreme
Court makes clear that “for implied waiver to be found through a party’s actions,
intent must be clearly demonstrated by the surrounding facts and circumstances.” Id.
at 156. Defendants routinely engage in merits discovery while asserting special
appearances, for reasons explained in part III.B. below. Merits discovery is a
contingency—preparation of defenses in recognition that the trial court may declare
personal jurisdiction. “There can be no waiver of a right if the person sought to be
charged with waiver says or does nothing inconsistent with intent to rely upon such
a right.” Id. at 156. NDS never abandoned its Special Appearance; it just did not count
upon the trial court granting it. Events have vindicated its caution.
Jones asserts, as evidence of waiver of the Special Appearance, four motions
filed or joined by NDS regarding discovery:
1. A motion to quash notices of the depositions of witnesses Wayne
Carroll and Steve Wade based upon a scheduling conflict;
2. A motion to compel more complete answers by Jones to
Interrogatories;
29
3. A motion to compel production of driver’s logs and DVIR records
by Jones; and
4. A motion for continuance of the expert designation deadline.
(Response to Special Appearance, pp. 4-6).
There is no dispute that the last three motions involved merits-related issues.
Jones, however, fixates upon “affirmative relief” or the “merits” of the lawsuit to the
point of missing the obvious distinction between merits-related discovery and relief
on the merits. NDS’ discovery motions sought information, whereas “[a] claim for
affirmative relief must allege a cause of action, independent of the plaintiff's claim,
on which the claimant could recover compensation or relief.” University of Texas
Medical Branch v. Blackmon, 195 S.W.3d 98 (Tex. 2006) (construing Tex. R. Civ. P.
162). Plain meaning, precedent and common experience in defending lawsuits show
that merits-related discovery motions are nothing like requests for affirmative relief,
and as such cannot be considered a waiver of a personal jurisdiction defense.
First, Rule 120a (quoted above) explicitly declares that depositions and “the use
of discovery processes” is not a waiver of a special appearance. The rule does not
limit that statement to jurisdictional discovery. Instead, Rule 120a declares only two
timing requirements for a special appearance: (1) it must be filed prior to any other
pleading or motion; and (2) it must be “heard and determined before . . . any other
plea or pleading may be heard.”
30
It is undisputed or clearly established that NDS complied with both the due
order of filing and the due order of hearing requirements. It did not present any “plea
or pleading” for ruling prior to its Special Appearance. A motion to compel discovery
or for continuance of discovery deadlines is universally understood to be distinct from
a “plea or pleading.” The former seek action by the court, typically (and in this case)
regarding procedural disputes, while the latter seek affirmative relief or other
adjudication on the merits.
The Texas Supreme Court, drafter of the Texas Rules of Civil Procedure, knew
the difference between a motion and a “plea or pleading,” as shown by its several and
distinct references to such filings in Rule 120a. By its own standards for statutory
construction, the supreme court must be assumed to have intended to limit the due
order of hearing requirement to any “plea or pleading” other than the special
appearance, not including motions. The Texas Supreme Court “presumes the
Legislature deliberately and purposefully selects words and phrases it enacts, as well
as deliberately and purposefully omits words and phrases it does not enact.” Texas
Mut. Ins. Co. v. Ruttiger, 381 S.W.3d 430, 452 (Tex. 2012). That is no less true of
rules promulgated by the court under authority from the Legislature, which have the
status of law. In re City of Georgetown, 53 S.W.3d 328, 336 (Tex. 2001).
Consistent with R. 120a, the supreme court has never said that merits-related
31
discovery or motions regarding it waive a special appearance. The supreme court first
addressed the issue of waiver-by-motion in Dawson-Austin v. Austin, 968 S.W.2d 319
(Tex. 1998), in which a specially appearing defendant also filed a motion to quash
service of citation and a plea in abatement. She also later filed a motion for
continuance of a hearing set by her opponent on her filings other than the special
appearance. The supreme court rejected the then-held view of some appellate courts
that a filing not expressly made “subject to” a special appearance was a waiver of the
special appearance.
Dawson-Austin is cited today regarding waiver because the court added, in
dicta, that the specially appearing defendant was “entitled to ask for more time for
discovery on her motion to quash, provided she did not attempt to take that discovery
before the special appearance was decided.” Id. at 323. That is dictum rather than a
holding because only jurisdictional discovery was at issue. The court had no need to
address, and did not address, whether seeking non-jurisdictional discovery prior to a
ruling on the special appearance is a waiver of the special appearance.
Three years later, this court rejected an argument that a motion to quash “certain
[unspecified] discovery” waived defendants’ special appearances. Anderson v.
Bechtle, 2001 WL 930205, p. 2 (Tex. App.—Houston [1st Dist.] 2001) (unpublished).
This court noted: “All requests for affirmative relief do not waive a special
32
appearance,” and “Waiver occurs only if the relief requested is inconsistent with the
defendant’s assertion that the district court lacked jurisdiction.” Id. at p. 2.
This court was still more explicit on the issue two years later, in Silbaugh v.
Ramirez, 126 S.W.3d 88 (Tex.App.—Houston [1st Dist.] 2002). There the court held
that merits-related discovery and motions regarding it did not waive a defendant’s
special appearance. The court noted that “the Texas Supreme Court, in dicta,
interpreted Rule 120a as limiting discovery to facts relevant to the special appearance”
(i.e., in Dawson-Austin). Id. at 93. However, this court said it had “previously declined
to follow the dicta in Dawson-Austin, and instead followed the plain language of the
statute,” Id. at 93, referring to Minucci v. Sogevalor, S.A., 14 S.W.3d 790, 801 (Tex.
App.—Houston [1st Dist.] 2000). The court held in Silbaugh that the defendant’s
motions regarding discovery “were part of the discovery process and did not waive
her special appearance.” 126 S.W.3d 93. The court’s conclusion flowed from its
recognition that Rule 120a “does not limit discovery to only those issues that are
related to the special appearance.” Id. at 93.
The supreme court again considered the waiver issue in Exito Electronics Co.,
Ltd. v. Trejo, 142 S.W.3d 302, 304 (Tex. 2004). There the court of appeals had ruled
that a defendant waived its special appearance by (among other things) “participating
in the trial court’s resolution of discovery matters before the trial court ruled on the
33
special appearance.” Trejo offers no guidance here because the motions pertained only
to jurisdictional discovery, and the court did not consider the effect of merits-related
discovery. The court made that clear: “We therefore express no opinion on the effect
of parties’ participation in discovery that is unrelated to the special appearance before
its resolution.” Id. at 307, n.24. Thus, it is this court’s opinions that control the issue.
This court again addressed merits-related discovery and motions regarding it
in Forest River, Inc. v. Quality Frames, Inc., 2005 WL 615424 (Tex. App.—Houston
[1st Dist.] 2005) (memorandum opinion). The court held that pursuit of a motion to
quash an expert deposition does not waive a special appearance. The opinion explains
that Trejo is not to the contrary because the supreme court expressly declined to
address whether merits discovery has an effect upon a yet-to-be presented special
appearance. This courts followed its holding in Silbaugh, concluding that the plain
meaning of Rule 120a does not limit discovery to jurisdictional issues.
First Oil, PLC v. ATP Oil & Gas Corp., 264 S.W.3d 767 (Tex. App. —Houston
[1st Dist.] 2008) rejected a waiver argument based upon pursuit of motions regarding
jurisdictional discovery. It, like Dawson-Austin, does not address the issue here.
Most recent of the relevant opinions is In Re Stern, 321 S.W.3d 828 (Tex.
App.—Houston [1st Dist.] 2010). The opinion resolved a distinct issue: whether a
plaintiff has a right to take non-jurisdictional discovery against a specially appearing
34
defendant. It does not. The court held in Stern that the trial court abused its discretion
in ordering that the specially appearing defendant must produce his computer hard
drive for forensic examination in a defamation lawsuit, prior to a hearing on his
special appearance. The appeal did not present a waiver issue, yet the court had to
apply precedent that mentions waiver. In doing so it appropriately distinguished a
right to discovery on a special appearance from the waiver of one.
Stern concluded that Rule 120a(3) authorizes discovery prior to a special
appearance only regarding facts essential to justify opposition to the special
appearance, and does not authorize postponing the special appearance hearing in order
to allow discovery “that is unnecessary or irrelevant to the establishment of
jurisdictional facts.” Id. at 839-40. Stern is significant for its discussion of the supreme
court’s opinion in Trejo, and especially for distinguishing the issues of (1) whether
there is a right to take merits-related discovery from a specially appearing defendant
prior to a hearing on jurisdiction; and (2) whether a specially appearing defendant
waives its jurisdictional challenge if it takes merits-related discovery before a hearing.
Stern correctly refers to Trejo as having “pointedly expressed ‘no opinion on
the effect of parties’ participation in discovery that is unrelated to the special
appearance before its resolution.’” 321 S.W.2d 839. This court did not treat its ruling
in Stern against hard drive discovery as a rejection of or inconsistent with its ruling
35
against waiver in Forest River and Silbaugh. Instead, the court said rulings that pursuit
of merits-related discovery is not waiver of a special appearance “are limited to those
situations in which the issue is whether a defendant waives a special appearance by
participating in discovery,” and do not apply to the issue (as in Stern) whether a
discovery ruling is an abuse of discretion in light of a special appearance. Id. at 840.
The result of all this precedent is simple. This court has never held that merits-related
discovery waives a special appearance—only that it does not.
That is not a lonely position. The other Houston appellate court agrees that
merits-related discovery and motions regarding it do not waive a special appearance.
Horowitz v. Berger, 377 S.W.3d 115, 124 (Tex. App.—Houston [14th Dist.] 2012). As
Horowitz explains, “Interrogatories and requests for admission are not pleas, pleadings
or motions.” Id. at 124. The supreme court explained in Trejo that “pleadings”
consists of petitions and answers, while a “motion” is an “application requesting a
court to make a specified rule or order.” 142 S.W.3d 305, n.11. The court’s distinction
between a motion and a pleading is consistent with it having drafted Rule 120a to
require that a special appearance “be heard and determined” before “any other plea or
pleading may be heard,” but without not before any motion may be heard.
The Fourteenth Court explains the state of precedent as follows:
The two Houston-based courts of appeals have held that a defendant’s
participation in merits discovery without having any motions regarding
36
that discovery heard before the special appearance does not constitute a
general appearance waiving that defendant’s special appearance.”
Lisitsa v. Flit, 419 S.W.3d 672, 678 (Tex. App.—Houston [14th Dist.] 2013).
Presenting discovery motions likewise is not waiver. To be waiver, a discovery
motion would have to violate the “due order of hearing” requirement. It cannot,
because R. 120a’s due order of hearing pertains only to “a motion to transfer venue
or any other plea or pleading.” See also Gutierrez v. Cayman Islands firm of Deloitte
& Touche, 100 S.W.3d 261, 267 (Tex.App.—San Antonio 2002) (petition for writ of
mandamus, to overturn an order compelling non-jurisdictional discovery, did not
waive petitioner’s special appearance because the petition was not a “pleading,” and
“Rule 120a specifies that the use of discovery processes does not constitute waiver”).
Lawyers expect and find careful draftsmanship of rules by the Texas Supreme
Court, especially after scrutiny by the Bar and thorough review by committees. It is
inconceivable that the supreme court meant to include discovery motions in Rule
120a’s due order of hearing requirement, yet somehow forgot to say so, or equated a
motion with a “plea or pleading” when its own precedent clearly distinguishes them.
B. Merits-related motions for discovery and continuance may be
important to defending a lawsuit if a special appearance is denied
Jones and the district court are wrong about waiver for reasons going beyond
plain meaning and precedent. Defense counsel do not have the luxury of ignoring
37
practical considerations, such as making sure they can defend a lawsuit on the merits
if a special appearance is denied and pre-trial discovery deadlines are not thereafter
reset. The hard-won wisdom of experience teaches trial lawyers that it is very risky
to limit their discovery to jurisdictional facts in support of a special appearance. The
risk begins with the prevalence of docket control deadlines for discovery and early
trial settings. It then grows with the typical delay in obtaining, providing and making
admissible the jurisdictional discovery needed before all parties will agree to or the
court will order a hearing on a special appearance. It continues with the uncertainty
of the district court’s ruling on a special appearance. Merits-related discovery is a
contingency against limited preparation time following denial of a special appearance.
Defense lawyers function in a litigation environment in which pretrial discovery
deadlines are rarely if ever bifurcated based upon a defendant having filed a special
appearance. See, e.g., In re: Alford Chevrolet-Geo, 997 S.W.2d 173 (Tex. 1999)
(bifurcated discovery rejected even for class action certification, noting intertwining
of that issue with merits). Here the district court did not issue an initial set of
deadlines for jurisdictional discovery, to be followed (after special appearance rulings)
by a second set of deadlines for merits-related discovery.
A defense lawyer does not have the luxury of assuming, on behalf of a client
whose fate depends upon him, that it is permissible or desirable to ignore pretrial
38
discovery deadlines that apply to his client without limitation to jurisdictional
discovery. If he does, his client will be at the mercy of the court in obtaining merits
discovery via a new docket control order. He cannot just assume the trial court will
extend discovery deadlines if little or no time remains for discovery after a special
appearance is adjudicated. Some relief from deadlines might be expected if a specially
appearing defendant foregoes merits discovery pending a ruling on jurisdiction, but
like any discretionary ruling it is not assured. Even if the court allows more time, a
defendant that has foregone merits discovery and whose special appearance is denied
will be less prepared than other parties who have conducted merits discovery. Lawyers
also know that witnesses may move, disappear, change jobs (loyalties) and even die
in the months or even years that may pass before a special appearance is ruled upon.
Competent and experienced defense counsel therefore hope for the best and
prepare for the worst by routinely taking merits-related discovery within the court-
ordered discovery deadlines, while pursuing in parallel their clients’ special
appearances. Counsel reading R.120a see that it explicitly allows discovery without
restricting it to jurisdictional facts, and sets a due order of hearing requirement only
for motions to transfer venue and a “plea or pleading.” If trial counsel look, they will
find precedent from both Houston appellate courts stating that engaging in merits-
related discovery (including motions) prior to a ruling on a special appearance is not
39
a waiver of that special appearance. The practical considerations often leave trial
counsel with a strong motive to engage in merits discovery if no one is objecting to
it, and cost is the only downside of participating in it.
Merits discovery, in the face of such litigation imperatives and uncertainties,
is thus prudence rather than waiver. There is nothing about merits discovery, or
motions pertaining to it, that constitutes or signals abandonment of a challenge to
personal jurisdiction. There are two red-lines that cannot be crossed without waiver:
(1) due order of filing; and (2) due order of hearing. NDS did not cross either one.
Jones attempted to add delay as a waiver argument, but he has no basis to do
so. Less than a year passed between NDS’ special appearance (March 17, 2014) and
the hearing on it (February 23, 2015). R. 120a does not include a deadline or delay
provision, and special appearances are often decided more than one year after the
defendant’s appearance. See American Type Culture Collection, Inc. v. Coleman, 83
S.W.3d 801 (Tex. 2002) (3 year delay). This court and others have rejected delay-
based waiver claims as a matter of law, absent any hearing deadline in R. 120a.
Peninsula Asset Management (Cayman) Ltd. v. Hankook Tire Co., Ltd., 2006 WL
1030185, p.4 (Tex.App. —Ft. Worth 2006) (unpublished) (18 months); Robertson v.
Hensel Phelps Construction Co., 1999 WL 233599, p. 1 (Tex.App.—Houston [1st
Dist.] 1999) (one year); Horizon Shipbuilding, Inc. v. Blyn II, Holding, LLC, 324
40
S.W.3d 840, 846 (Tex.App.—Houston [14th Dist.] 2010) (one year).
Because Texas courts lack a constitutional basis for personal jurisdiction over
NDS, the district court’s ruling cannot stand unless merits-related discovery is treated
as waiver. Doing so would require re-writing various controlling texts, as follows:
1. Add words to Rule 120a(1): “the use of discovery processes shall
not constitute a waiver of such special appearance [if limited to
jurisdictional facts];”
2. Add words to Rule 120a(2): “Any motion to challenge the
jurisdiction shall be heard and determined before a motion to
transfer venue or any other plea or pleading [or motion] may be
heard;”
3. Re-write the supreme court’s opinion in Trejo so that it implies
rather than disavows a ruling about the effect of non-jurisdictional
discovery prior to a hearing on a special appearance; and
4. Re-write the no-waiver opinions of this court (Anderson, Forest
River and Silbaugh) in order to treat merits discovery and related
motions as waiving a special appearance.
Some of those re-writes are beyond the court’s power. There is no reason for re-writes
within this court’s power (en banc reconsideration of panel precedent) when its
opinions on jurisdiction and waiver are correct. It is the district court that is wrong.
This lawsuit is, to date, a story of un-neighborly overreach by Texas. Jones
insists upon having a Texas lawsuit against a Tennessee company that does business
in Tennessee and Georgia, even though it has zero connection to Texas beyond
contracting with a Texas company in Georgia and then mailing invoices to a Texas
41
accounting office designated by that company. After specially appearing, the foreign
defendant received a May 13, 2014 court order allowing less than 6 months before
expert designations were due, less than 7 months before a discovery cutoff, and less
than 8 months to trial. It engaged in discovery in preparation to defend itself at trial
if its special appearance were denied, only to be told that (contrary to the plain text of
R. 120a) using the discovery process waived its challenge to personal jurisdiction.
This is a Twilight Zone experience for a hapless foreigner whom Jones had no basis
to sue in Texas. The district court’s denial of the special appearance violates due
process, as seen in controlling precedent, and begs for correction.
CONCLUSION AND PRAYER
Nationwide Distribution Services, Inc. therefore prays that
a. the Order denying its Special Appearance be reversed;
b. this court render judgment sustaining its Special Appearance because the
undisputed facts establish lack of personal jurisdiction over and lack of
waiver by appellant, as a matter of law, and
c. for such further relief to which appellant may be entitled.
Respectfully submitted,
RAMEY, CHANDLER, QUINN & ZITO, P.C.
By: /s/ Jack McKinley
Jack McKinley
42
State Bar No. 13716300
Robert L. Ramey
State Bar No. 16498200
750 Bering, Suite 600
Houston, Texas 77057
Telephone: (713) 266-0074
Facsimile: (713) 266-1064
jmm@ramey-chandler.com
COUNSEL FOR APPELLANTS
CERTIFICATE OF COMPLIANCE
The undersigned certifies that in compliance with Tex. R. App. P. 9.4(e), this
Brief has been prepared using conventional typeface no smaller than 14-point for text
and 12-point for footnotes, and contains 10085 words (excluding any parts exempted
by Tex. R. App. P. 9.4(i)(1)).
/s/ Jack McKinley
JACK McKINLEY
43
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of Brief of Appellant has been
served upon all counsel of record, in accordance with the rules, as follows:
Jason A. Itkin Via e-service
Cory D. Itkin
Noah M. Wexler
Arnold & Itkin, LLP
6009 Memorial Drive
Houston, Texas 77007
Counsel for Appellee,
Robert Jones
Ruark D. Mershon Via e-service
2000 W. Marshall Drive
Grand Prairie, Texas 75051
Counsel for Appellee,
Poly Trucking, Inc.
on this 8th day of May , 2015.
/s/ Jack McKinley
JACK McKINLEY
44
NO. 01-15-00232-CV
IN THE
COURT OF APPEALS
FOR THE
FIRST DISTRICT OF TEXAS
NATIONWIDE DISTRIBUTION SERVICES, INC.,
Appellant
vs.
ROBERT JONES and POLY TRUCKING, INC.,
Appellees
APPELLANTS’ APPENDIX
Order Overruling Defendant’s Special Appearance
(Signed February 23, 2015).. .......................................................................... TAB 1
45
2/20/2015 9 55 35 AM
-
Chris Daniel District Clerk
Harris County
Envelope No 4224121
By RODRIGUEZ, JIMMY E
Filed 2/20/2015 9 55 35 AM
CAUSE NO 2013-64642
Robert Jones § IN THE DISTRICT COURT OF
§
Plaintiff, §
§ HARRIS COUNTY, TEXAS
ft
V § Sf/)/>)/
§
Kimberly-Clark Corporation, §
Kimberly-Clark Services, Inc , §
Kimberly-Clark World-Wide, Inc , §
Nationwide Distribution Services, Inc , §
and Nationwide Express Inc §
Defendants § 133rd JUDICIAL DISTRICT
ORDER OVERRULING DEFENDANTS SPECIAL APPEARANCE
The Court has considered Defendant Nationwide Distributions Services, Inc ’s
Special Appearance, all responsive briefing, the Court’s file in this matter, and/or the
arguments of counsel and finds that the special appearance lacks merit and should be
overruled
It is therefore ORDEREDÿ.that Defendant Nationwide Distributions Services, Inc ’s
A/Y
Special Appearance is in all things DENIED/OVERRULED
SIGNED this day of 2015
PrÿsÿTng Jullge ?-»ÿ
121