Patrick Lynch and Dennis Meier v. Carlile Bancshares, Inc., and Washington Investment Company ( 2014 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 02-14-00014-CV
CARLILE BANCSHARES, INC. AND APPELLANTS
WASHINGTON INVESTMENT
COMPANY
V.
WILLIAM L. ARMSTRONG, III, ROD APPELLEES
BRYANT, SHANE LOEFFLER, AND
JACK VILLINES
AND
NO. 02-14-00018-CV
PATRICK LYNCH AND DENNIS APPELLANTS
MEIER
V.
CARLILE BANCSHARES, INC. AND APPELLEES
WASHINGTON INVESTMENT
COMPANY
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FROM THE 342ND DISTRICT COURT OF TARRANT COUNTY
TRIAL COURT NO. 342-264322-13
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MEMORANDUM OPINION1
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In these interlocutory appeals, we are asked to decide whether forum-
selection clauses contained in corporate merger documents are enforceable
against nonsignatories to the merger documents and, if not, whether the trial
court could exercise personal jurisdiction over the nonsignatories. We conclude,
under the specific facts of this case, that the forum-selection clauses are not
enforceable against the nonsignatories. However, we conclude that two of the
nonsignatories had sufficient minimum contacts with Texas that exercising
jurisdiction over them does not offend traditional notions of fair play and
substantial justice. Accordingly, we affirm the trial court’s special-appearance
orders.
I. BACKGROUND
A. PROPOSED MERGER AND DUE DILIGENCE
Washington Investment Company (WIC) was a Colorado bank-holding
company that owned all of the outstanding shares of Colorado Community Bank
(the Bank). Jerry Bryant (J. Bryant) was the chairman and chief executive officer
of WIC and the Bank. Patrick Lynch was the president of the Bank and was a
member of WIC’s and the Bank’s boards of directors. Dennis Meier was the
1
See Tex. R. App. P. 47.4.
2
executive vice president of the Bank and was a member of the boards of
directors of WIC and the Bank. William L. Armstrong, III, Jack Villines, Rod
Bryant, and Shane Leoffler (collectively, the remaining directors) were the
remaining members of WIC’s and the Bank’s boards of directors.
In 2009, WIC’s net income began to decrease significantly based on the
decline in the values of the bank’s real-estate holdings, which secured its
commercial loans. Believing the Bank’s recovery would be a slow process,
WIC’s board of directors hired St. Charles Capital, LLC (St. Charles)—a
Colorado investment banking firm—to find a buyer for WIC and, thus, the Bank.
On February 21, 2011, Wesley A. Brown, the managing director of St. Charles,
acting at the behest of WIC’s board of directors, contacted Tom C. Nichols who
was Carlile Bancshares, Inc.’s chief executive officer and chairman of its board of
directors. Carlile is a Texas corporation that buys or invests in community banks
located in the southwestern United States. Carlile had not considered buying
WIC or the Bank before Brown called.
Shortly thereafter, Carlile and WIC signed a nondisclosure agreement.
Nichols signed the agreement on behalf of Carlile.2 Carlile and WIC began
preliminary due diligence, with “limited information” being exchanged. During this
due-diligence period, J. Bryant, Lynch, and Meier compiled extensive financial
information about WIC and the Bank, which Carlile requested, and forwarded it to
2
The record does not reflect who signed the nondisclosure agreement on
behalf of WIC.
3
Carlile in Texas. Further, multiple emails and phone calls were exchanged
between Carlile representatives, J. Bryant, Lynch, and Meier. On May 16, 2011,
Carlile issued a nonbinding letter of interest to WIC, which outlined the basic
parameters under which Carlile would acquire all outstanding shares of WIC.
Nichols signed the letter as chairman of the board and chief executive officer of
Carlile, and J. Bryant signed and accepted the letter as president of WIC. In
June or July 2011, Lynch and J. Bryant met with Nichols in Texas to discuss the
possible merger of Carlile and WIC.3 On September 26, 2011, Nichols met with
J. Bryant at Carlile’s office in Tarrant County, Texas, to discuss “the terms of the
definitive agreement and other issues related to Carlile’s acquisition of WIC.”
B. WIC APPROVAL, FORMAL AGREEMENTS, AND DIRECTOR RELEASES
On February 23, 2012, WIC’s board of directors approved (1) a merger
between WIC and Carlile, (2) J. Bryant to act as the representative of the
shareholders of WIC, and (3) J. Bryant to finalize the transaction with Carlile. In
spring 2012, Nichols met with J. Bryant and Lynch at Carlile’s office in Tarrant
County, Texas, “to discuss and negotiate” J. Bryant’s noncompete agreement
and Lynch’s future employment agreement with Carlile.4 On March 6, 2012,
Carlile, WIC, and J. Bryant (as the representative of WIC’s shareholders) signed
an acquisition and reorganization agreement (the agreement), memorializing
3
Nichols believed that this meeting occurred in May 2011.
4
Lynch denied that this meeting occurred in Texas, and J. Bryant could not
recall such a meeting.
4
their intent to merge Carlile and WIC into a new entity—Newco, a subsidiary of
Carlile. The agreement contained a choice-of-law and forum-selection clause:
“GOVERNING LAW. THIS AGREEMENT IS TO BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
TEXAS, WITHOUT REGARD FOR THE PROVISIONS THEREOF REGARDING
CHOICE OF LAW. VENUE FOR ANY CAUSE OF ACTION ARISING FROM
THIS AGREEMENT WILL LIE IN TARRANT COUNTY, TEXAS.” The
agreement also contained an indemnification clause that required Carlile to
“indemnify, defend, and hold harmless each person entitled to indemnification
from WIC or any WIC Subsidiary against all liabilities arising out of actions or
omissions” arising from the agreement. J. Bryant signed the agreement on
behalf of WIC and WIC’s shareholders. The agreement was subject to
shareholder approval.
WIC and Carlile then exchanged more “information relating to
representations and warranties pertaining to WIC and its subsidiaries.” This
information led Carlile and WIC to sign an amended acquisition and
reorganization agreement (amended agreement) on April 20, 2012, which itself
was amended on November 16, 2012 (second amended agreement).5 The
5
Between the time of the amended and the second amended agreements,
Nichols met with Armstrong at Carlile’s offices in Tarrant County, Texas, to
discuss the Bank’s “financial condition and the need for it to be acquired and/or
have a substantial injection of capital.” Armstrong affirmed that he traveled to
Texas for this meeting.
5
amended agreement contained the same choice-of-law and forum-selection
clause that was included in the agreement. The second amended agreement did
not contain the clause but provided that any provision in the amended agreement
that was not specifically amended or deleted by the second amended agreement
remained “in full force and effect.” The second amended agreement did not
mention any alteration or deletion of the clause. The amended agreement
contained several covenants, obligations, representations, and warranties by
WIC to Carlile. Further, the amended agreement required Carlile to indemnify J.
Bryant, Meier, Lynch, and the remaining directors from “all liabilities arising out of
actions or omissions” relating to the merger. The second amended agreement
did not modify the indemnity provision or the covenants, obligations,
representations, and warranties. Indeed, all remained in effect after the merger
closed. Nichols on behalf of Carlile, and J. Bryant on behalf of WIC and its
shareholders, signed the amended and second amended agreements.
The amended agreement required each member of WIC’s board of
directors to sign a release that released “WIC and the WIC Subsidiaries from any
and all claims of such directors.” It also provided for every officer and director to
receive “a tail coverage policy” for one year after the merger was closed.6 The
second amended agreement did not modify the release requirement or the
6
A tail policy provides ongoing insurance coverage for a company’s officers
and directors for claims made during the tail period that are based on acts or
omissions of the officers or directors before closing. E.g., Duncan, SEC Lit.
Release No. 22274, 103 SEC Docket 614, 2012 WL 8703002 (Mar. 5, 2012).
6
provision of tail coverage. Each release contained a choice-of-law and forum-
selection clause: “THIS AGREEMENT IS TO BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF
TEXAS. VENUE FOR ANY CAUSE OF ACTION ARISING FROM THIS
AGREEMENT WILL LIE IN TARRANT COUNTY, TEXAS.” Lynch, Meier, J.
Bryant, and the remaining directors each signed a release.
C. VOTING AGREEMENTS AND MERGER AGREEMENT
Because the merger was subject to shareholder approval, Lynch, Meier, J.
Bryant, and the remaining directors signed a voting agreement shortly after the
amended agreement was signed and voted their shares in favor of the merger.7
The voting agreement contained a choice-of-law and forum-selection provision:
“THIS AGREEMENT IS TO BE CONSTRUED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF COLORADO. VENUE FOR
ANY CAUSE OF ACTION ARISING FROM THIS AGREEMENT WILL LIE IN
YUMA COUNTY, COLORADO.” J. Bryant, Meier, Lynch, and the remaining
directors also signed support agreements as directors of WIC, in which they
agreed “to refrain from harming the goodwill of WIC . . . or Carlile, and their
respective customer and client relationships.” As did the voting agreement, the
7
J. Bryant signed on behalf of WIC, as “Substitute Proxy Holder,” and as
an individual shareholder. All other signatories signed as individual
shareholders.
7
support agreement fixed Colorado as the governing law and the appropriate
venue for “any cause of action arising from this agreement.”
On December 27, 2012, the agreement and plan of merger (merger
agreement) was finalized, which required Carlile—through Newco—to buy WIC’s
outstanding shares, Newco to merge into WIC, and WIC to become a subsidiary
of Carlile. The merger agreement contained a choice-of-law and forum-selection
clause: “Governing Law. THIS MERGER AGREEMENT IS TO BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF TEXAS. VENUE FOR ANY CAUSE OF ACTION ARISING
FROM THIS MERGER AGREEMENT WILL LIE IN TARRANT COUNTY,
TEXAS.” The merger agreement was signed by Nichols on behalf of Carlile and
J. Bryant on behalf of WIC. The next day, J. Bryant, as authorized by WIC,
signed and delivered to Carlile an “Officer’s Certificate,” certifying the accuracy of
WIC’s representations and warranties regarding the merger and the full
performance of WIC’s obligations, as set forth in the agreement, the amended
agreement, and the second amended agreement. Nichols asserted that “[i]f not
for the execution and delivery of the Officer’s Certificate to Carlile in Texas,
Carlile would not have purchased the outstanding WIC shares.” Shortly after the
merger was final, Lynch signed the previously-negotiated employment
agreement with Carlile to serve as president of the Bank, which was then a
subsidiary of Carlile. Lynch’s employment agreement contained a choice-of-law
8
clause, mandating Colorado law as the law governing the employment
agreement.
D. PROCEDURAL FACTS
After the merger closed, Carlile believed that key pieces of information had
been concealed during the due-diligence process, causing Carlile to overpay for
the WIC stock. Carlile and WIC filed suit against J. Bryant, Lynch, Meier, and the
remaining directors for common-law fraud, securities fraud, fraud in a stock
transaction, negligent misrepresentation, and unjust enrichment. Along with
money damages, Carlile and WIC pleaded for rescission and imposition of a
constructive trust. In their petition, they contended two separate bases for the
exercise of personal jurisdiction over Lynch, Meier, and the remaining directors:
(1) Lynch, Meier, and the remaining directors consented to jurisdiction in Texas
by virtue of the forum-selection clauses and (2) Lynch’s, Meier’s, and the
remaining directors’ minimum contacts with Texas conferred specific jurisdiction
without offending the traditional notions of fair play or substantial justice. Shortly
after Carlile and WIC filed suit, the remaining directors demanded that Carlile
indemnify them against Carlile’s claims based on the indemnification clause
contained in the agreement.
J. Bryant, Meier, Lynch, and the remaining directors answered subject to
their special appearances, in which they asserted that the trial court did not have
personal jurisdiction over them based on a lack of minimum contacts with Texas.
See Tex. R. Civ. P. 120a(1). The remaining directors submitted affidavits in
9
support of their special appearances in which they stated they did not live or
conduct business in Texas; did not own or lease property or maintain bank
accounts in Texas; did not sign contracts in Texas; did not sign the agreement,
amended agreement, the second amended agreement, or the merger
agreement; and did not pay taxes in Texas. Meier also submitted an affidavit in
which he averred that he is not a resident of Texas; has never conducted any
business in Texas; has no ongoing contact or relationship with any person or
business in Texas; has no regular or systematic contact with any person or
business in Texas; and has not traveled to Texas in the last ten years. Lynch
made similar averments in his affidavit but admitted he “traveled to . . . Texas
twice in the last ten . . . years. Once in 2005 to attend a sporting event and
between late 2010 to mid-2011 to attend a gathering at the offices of Tom
Nichols and Don Cosby,” the president of Carlile.
In response to the special appearances, Nichols submitted an affidavit
stating that Lynch traveled to Texas in May 2011 to discuss with Nichols and
Cosby the Bank’s business, the Bank’s financial condition, Carlile’s preliminary
due-diligence findings, and the specifics of the proposed merger. During the
drafting of the merger agreement, several conference calls occurred with Lynch
and Meier calling Carlile in Texas. Several other calls regarding the acquisition
were initiated by J. Bryant to Carlile in Texas, with Lynch and Meier participating.
Further, Nichols averred that Lynch traveled to Texas to finalize his employment
agreement with Carlile before the merger closed. Nichols also detailed specific
10
information that was not disclosed (either due to the concealment of information
or the production of false information) during the due-diligence period.
Carlile and WIC also attached excerpts from Lynch’s and Meier’s
depositions to their special-appearance response. Meier admitted to sending
multiple emails to Cosby, Nichols, and other Carlile employees in Texas that
relayed information relevant to the due-diligence process. Meier personally
prepared some of the compiled documents that he forwarded to Cosby and
Nichols in Texas by email. Lynch also participated in compiling the due-diligence
information that he knew was forwarded to Carlile in Texas. Both Meier and
Lynch stated that they compiled and provided the information either at J. Bryant’s
request or with his approval. Nichols stated that Carlile relied on much of this
information in making its decision about the advisability of a merger. Lynch again
admitted to meeting with Carlile representatives in 2011 at Carlile’s offices in
Texas to discuss “different regions of our company where maybe improvements
could [be] made and those kinds of things.” Lynch also talked with Cosby by
phone and email, while Cosby was located in Texas, presumably about Lynch’s
future employment agreement with Carlile. Both Lynch and Meier were aware
that Carlile was located in Texas.
The trial court overruled J. Bryant’s, Lynch’s, and Meier’s objections to the
exercise of personal jurisdiction but sustained the remaining directors’ objections.
See Tex. R. Civ. P. 120a(4). The trial court did not make findings of fact or
conclusions of law and none were requested. See Tex. R. Civ. P. 296. Meier,
11
Lynch, Carlile, and WIC appeal the trial court’s interlocutory rulings. 8 See Tex.
Civ. Prac. & Rem. Code Ann. § 51.014(a)(7) (West Supp. 2014); Tex. R. App. P.
28.1(a). Lynch and Meier assert in three issues that the trial court erred in
overruling their special appearance because the Texas long-arm statute was not
satisfied, they did not have minimum contacts with Texas, and the exercise of
jurisdiction over them would offend notions of fair play and substantial justice.
Carlile and WIC assert in a sole issue that the trial court erred in sustaining the
remaining directors’ special appearance because the forum-selection clauses
contained in the agreement, the amended agreement, the releases, and the
merger agreement operated as the remaining directors’ consent to the trial
court’s jurisdiction. In their reply brief, Lynch and Meier assert that they, like the
remaining directors, are not subject to the forum-selection clauses, which further
supports their special appearance.
II. FORUM-SELECTION CLAUSES
We first address whether the contractual clauses setting venue and the
applicable law for any disputes apply to Carlile and WIC’s claims against Lynch,
Meier, and the remaining directors such that Lynch, Meier, and the remaining
directors consented to jurisdiction in Texas. We do so because the presence of
a valid and enforceable forum-selection clause circumvents the need to conduct
a due-process and minimum-contacts analysis because such a clause acts as
8
J. Bryant did not appeal the denial of his special appearance.
12
consent to jurisdiction in the contracted-for forum. Carnival Cruise Lines, Inc. v.
Shute, 499 U.S. 585, 589–90, 111 S. Ct. 1522, 1525 (1991); Baker Hughes Inc.
v. Brooks, 405 S.W.3d 246, 249 (Tex. App.—Houston [14th Dist.] 2013, pet.
denied); RSR Corp. v. Siegmund, 309 S.W.3d 686, 704 (Tex. App.—Dallas 2010,
no pet.); see also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 n.14, 105
S. Ct. 2174, 2182 n.14 (1985) (recognizing personal jurisdiction is a waivable
right and party may give express or implied consent to jurisdiction under “variety
of legal arrangements”). In short, if a party contractually consents to jurisdiction
in a particular forum, the trial court’s exercise of jurisdiction over that party will
not offend due process even in the absence of minimum contacts with Texas.
Dos Santos v. Bell Helicopter Textron, Inc., 651 F. Supp. 2d 550, 554 (N.D. Tex.
2009); Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 792 (Tex.
2005); RSR Corp., 309 S.W.3d at 704; Tri-State Bldg. Specialties, Inc. v. NCI
Bldg. Sys., L.P., 184 S.W.3d 242, 248 (Tex. App.—Houston [1st Dist.] 2005, no
pet.).
A. STANDARD OF REVIEW
Because the trial court did not issue findings of fact and conclusions of law,
we infer that the trial court made all fact findings that have support in the record
and that are necessary to uphold the ruling.9 CNOOC Se. Asia Ltd. v. Paladin
9
At various points in their briefs, the parties rely on statements the trial
court made at a hearing on the special appearances to support their respective
arguments regarding what the trial court found or concluded. Such statements
are not the equivalent of findings of fact and conclusions of law, and we will not
13
Res. (SUNDA) Ltd., 222 S.W.3d 889, 894 (Tex. App.—Dallas 2007, pets. denied)
(op. on reh’g); see also Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569,
574 (Tex. 2007); BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789,
794–95 (Tex. 2002). We review the trial court’s decision whether to enforce
forum-selection clauses for an abuse of discretion. Brown v. Mesa Distribs., Inc.,
414 S.W.3d 279, 284 (Tex. App.—Houston [1st Dist.] 2013, no pet.). “Under an
abuse of discretion standard, we defer to the trial court’s factual determinations if
they are supported by the evidence, but we review the trial court’s legal
determinations de novo.” In re Labatt Food Serv., L.P., 279 S.W.3d 640, 643
(Tex. 2009) (orig. proceeding). Therefore, to the extent our review involves
contractual interpretation of a forum-selection clause, we employ a de novo
standard of review. Phoenix Network Techs. v. Neon Sys., 177 S.W.3d 605, 610
(Tex. App.—Houston [1st Dist.] 2005, no pet.).
When we are asked to enforce a forum-selection provision, we first
determine whether the contract in fact contains such a clause by using ordinary
principles of contract interpretation. RSR Corp., 309 S.W.3d at 700. If such a
clause is found, we then determine whether there is any reason to deem it
unenforceable, recognizing that the presumption is that the clause is indeed
enforceable. In re Int’l Profit Assocs., 274 S.W.3d 672, 675 (Tex. 2009) (orig.
proceeding); RSR Corp., 309 S.W.3d at 700. Assuming the clause is
construe them to be so in our review. See Amend v. Watson, 333 S.W.3d 625,
628 n.2 (Tex. App.—Dallas 2009, no pet.).
14
enforceable, we finally decide whether the clause applies to the particular claims
or issues being litigated. In re Lisa Laser, Inc., 310 S.W.3d 880, 884–86 (Tex.
2010) (orig. proceeding).
B. FORUM OR VENUE
It is uncontroverted that some of the written agreements entered into at
various times during the parties’ negotiations contained clauses that contractually
set venue for any litigation arising out of the agreements in the courts of Tarrant
County, Texas. Carlile, WIC, and the remaining directors refer to the operative
clauses as forum-selection clauses, but Lynch and Meier assert the clauses are
venue-selection clauses that do not confer jurisdiction as forum-selection clauses
do.
A forum-selection clause is a contractual provision that selects the
adjudicative body in which jurisdiction is properly invoked, while a venue-
selection clause selects the geographic place of trial. In re Great Lakes Dredge
& Dock Co., 251 S.W.3d 68, 73–74 (Tex. App.—Corpus Christi 2008, orig.
proceeding). In some instances, the difference between the two clauses is key.
Id.; Jeremy Jones, Comment, Forum and Venue Selection Clauses in Seamen’s
Employment Contracts: Can Contractual Stipulations be Used to Defeat a
Seaman’s Choice of Forum or Venue in a Jones Act Claim?, 85 Tul. L. Rev. 519,
523–24 (2010). However, Texas and federal courts have referred to contractual-
venue provisions that are similar to the provisions at issue in this case as forum-
selection clauses, which equate to a consent to personal jurisdiction. Carnival
15
Cruise Lines, 499 U.S. at 587–88, 595, 111 S. Ct. at 1524, 1528; Alliance Health
Group, LLC v. Bridging Health Options, LLC, 553 F.3d 397, 399 (5th Cir. 2008);
Michiana, 168 S.W.3d at 792; Lindsey v. RGK Consultants, LLC, No. 14-09-
00855-CV, 2010 WL 1189440, at *1–2 (Tex. App.—Houston [14th Dist.] Mar. 30,
2010, no pet.) (mem. op.); cf. In re Fisher, No. 12-0163, 2014 WL 801160, at *1,
8–9 (Tex. May 2, 2014) (orig. proceeding) (corrected op. on reh’g) (referring to
contractual clause, which mandated that any legal action arising out of the
agreement would be brought only in a Texas court, as venue-selection clause but
recognizing that clause was a consent to personal jurisdiction and venue).
Contrary to Lynch, Meier, and the remaining directors’ argument, there is
no requirement that a contractual venue clause specifically contain the words
“forum,” “jurisdiction,” or “consent” to be considered a consent to jurisdiction.
See Kevlin Servs., Inc. v. Lexington State Bank, 46 F.3d 13, 14–15 (5th Cir.
1995); Lindsey, 2010 WL 1189440, at *2–3. Indeed, a forum-selection clause is,
by definition, a clause specifying a particular venue, i.e., place, for suit. Mendoza
v. Microsoft, Inc., No. 5:13-CV-378-DAE, 2014 WL 842929, at *9 (W.D. Tex. Mar.
5, 2014). Thus, we conclude that, to the extent there is a case-affecting
difference between forum-selection and venue-selection clauses under the facts
of this case, the operative clauses are forum-selection clauses. E.g., Lindsey,
2010 WL 1189440, at *2. Because the clauses at issue are forum-selection
clauses, they are presumptively valid. Laibe, 307 S.W.3d at 316.
16
C. ENFORCEMENT AGAINST NONSIGNATORIES
Lynch, Meier, and the remaining directors assert that the presumptively-
valid forum-selection clauses are not enforceable against them so as to confer
personal jurisdiction because they were not signatories to the agreement, the
amended agreement, the second amended agreement, or the merger
agreement. Indeed, a forum-selection clause in an agreement can be enforced
as to a nonsignatory only if the nonsignatory is bound by that agreement under
recognized contract or agency principles. Hellenic Inv. Fund, Inc. v. Det Norske
Veritas, 464 F.3d 514, 517 (5th Cir. 2006); In re Kellogg Brown & Root, Inc., 166
S.W.3d 732, 739 (Tex. 2005) (orig. proceeding).
Carlile and WIC bore the burden to identify and prove a theory under which
the nonsignatories could be bound by the forum-selection clauses. See CNOOC,
222 S.W.3d at 894–95. Carlile and WIC do not argue that Lynch, Meier, or the
remaining directors personally signed any of these three documents; instead,
they assert that Lynch, Meier, and the remaining directors are bound by the
forum-selection clauses under the doctrine of direct-benefits estoppel and as
transaction participants. See Quality Custom Rail & Metal, LLC v. Travelers Cas.
& Sur. Co. of Am., No. 3:13-CV-3587-D, 2014 WL 840046, at *3 (N.D. Tex. Mar.
4, 2014); Tex. Source Group, Inc. v. CCH, Inc., 967 F. Supp. 234, 237 (S.D. Tex.
1997); Kellogg, 166 S.W.3d at 739; Deep Water Slender Wells, Ltd. v. Shell Int’l
Exploration & Prod., 234 S.W.3d 679, 693 & n.8 (Tex. App.—Houston [14th Dist.]
2007, pet. denied).
17
1. Direct-Benefits Estoppel
Direct-benefits estoppel, which was initially developed in the context of
arbitration clauses,10 applies when a nonsignatory “knowingly exploits the
agreement containing the arbitration clause.” Bridas S.A.P.I.C. v. Gov’t of
Turkm., 345 F.3d 347, 361–62 (5th Cir. 2003) (quoting E.I. DuPont de Nemours
& Co. v. Rhone Poulenc Fiber & Resin Intermediates, S.A.S., 269 F.3d 187, 199
(3d Cir. 2001)). The doctrine is invoked if “non-signatories who, during the life of
the contract, have embraced the contract despite their non-signatory status but
then, during litigation, attempt to repudiate the arbitration clause in the contract.”
Hellenic, 464 F.3d 517–18; see also Carr v. Main Carr Dev., LLC, 337 S.W.3d
489, 497 (Tex. App.—Dallas 2011, pet. denied).
Direct-benefits estoppel has been applied to enforce forum-selection
clauses against nonsignatories seeking to sue on the contract containing the
forum-selection clause. See, e.g., Hellenic, 464 F.3d at 520. But as the United
States Court of Appeals for the Fifth Circuit has pointed out, direct-benefits
estoppel is “seriously consider[ed]” only when “the nonsignatory had brought suit
against a signatory premised in part upon the agreement.” Bridas, 345 F.3d at
10
We look to cases applying direct-benefits estoppel in the context of
arbitration clauses because arbitration clauses are a type of forum-selection
clause. See St. Clair v. Brooke Franchise Corp., No. 2-06-216-CV, 2007 WL
1095554, at *4 (Tex. App.—Fort Worth Apr. 12, 2007, no pet.) (mem. op.). See
generally Vimar Seguros y Reaseguros, S.A. v. M/V Sky Reefer, 515 U.S. 528,
534, 115 S. Ct. 2322, 2326 (1995) (recognizing arbitration provisions are a
subset of forum-selection clauses).
18
362. See generally MaxEn Capital, LLC v. Sutherland, No. H-08-3590, 2009 WL
936895, at *5 (S.D. Tex. Apr. 3, 2009) (collecting cases enforcing forum-selection
and arbitration clauses against nonsignatories based on estoppel). In other
words, the party position of the nonsignatory in the lawsuit—plaintiff or
defendant—is an important distinction in deciding whether estoppel can bind a
nonsignatory to a contract’s terms. See Bridas, 345 F.3d at 361 (“[T]he
[nonsignatory defendant] . . . did not sign a contract containing an arbitration
provision and never sued [plaintiff] on the agreement. The distinction is not one
without a difference.”). Here, Lynch, Meier, and the remaining directors did not
sue Carlile or WIC under the agreement, the amended agreement, the second
amended agreement, or the merger agreement. Thus, they did not “exploit” the
agreements containing the Tarrant County forum-selection clauses to the degree
required for direct-benefits estoppel. See id. at 362. Indeed, estoppel is a
defensive theory, not a theory by which a signatory plaintiff may hold a
nonsignatory defendant to the terms of a contract the nonsignatory defendant is
not seeking to enforce. See Perry Homes v. Cull, 258 S.W.3d 580, 593 (Tex.
2008), cert. denied, 855 U.S. 1103 (2009); see also Grigson v. Creative Artists
Agency, L.L.C., 210 F.3d 524, 526–28 (5th Cir. 2000) (estopping a signatory
plaintiff from relying on defendants’ status as nonsignatories to prevent
defendants from compelling arbitration under contractual provision), cert. denied,
531 U.S. 103 (2000).
19
However, “a nonparty may seek or obtain direct benefits from a contract by
means other than a lawsuit.” In re Weekley Homes, L.P., 180 S.W.3d 127, 132
(Tex. 2005) (orig. proceeding). Indeed, a nonsignatory also can exploit a
contract by knowingly seeking and obtaining direct and substantial benefits from
that contract. Noble Drilling Servs., Inc. v. Certex USA, Inc., 620 F.3d 469, 473
(5th Cir. 2010); Fleetwood Enters., Inc. v. Gaskamp, 280 F.3d 1069, 1074 (5th
Cir. 2002); Weekley Homes, 180 S.W.3d at 131–33. Carlile and WIC assert that
the remaining directors’ invocation of the indemnity provision and their receipt of
the proceeds from the merger were direct and substantial benefits justifying a
conclusion that direct-benefits estoppel applies. Carlile and WIC also argue that
Lynch additionally received “the benefit of employment with Carlile” and that
Lynch and Meier, along with the benefits received by the remaining directors,
received tail insurance.
Lynch’s employment agreement did not include a Tarrant County forum-
selection clause and was a separate agreement from the merger agreements;
thus, Lynch’s employment cannot be considered a benefit derived from the
merger agreements implicating direct-benefits estoppel. The receipt of the
proceeds from the merger also is not a sufficient substantial benefit for the
purposes of direct-benefits estoppel. See St. Clair, 2007 WL 1095554, at *7
(holding wife’s receipt of sale proceeds as part of community estate where she
did not negotiate or participate in sale was not a benefit sufficient to invoke
estoppel). The indemnity provision and the availability of tail insurance, likewise,
20
are insufficient to show a substantial benefit because there is no evidence that
Carlile and WIC actually indemnified Lynch, Meier, or the remaining directors or
that Lynch and Meier claimed coverage under the tail insurance. Carlile and WIC
failed to meet their burden to prove direct-benefits estoppel such that the
nonsignatory defendants could be bound by the forum-selection clauses.
Finally, we note that estoppel is an equitable theory that may or may not
be applied at the trial court’s discretion. See Weekley Homes, 180 S.W.3d at
134–35; VSR Fin. Servs., Inc. v. McLendon, 409 S.W.3d 817, 830 (Tex. App.—
Dallas 2013, no pet.). On the record before us, we cannot conclude that the trial
court clearly abused that discretion in declining to enforce the forum-selection
clauses against nonsignatories Lynch, Meier, and the remaining directors under
direct-benefits estoppel.
2. Transaction Participants
Carlile and WIC next assert that the forum-selection clauses may be
enforced against Lynch, Meier, and the remaining directors because they
participated in and were closely related to the merger:
[The remaining directors] made the decision initially to sell WIC.
They approved the retention of St. Charles to find a buyer. They
directed St. Charles to solicit Carlile in Texas. They approved the
sale of the WIC stock to Carlile. They approved and authorized
Jerry Bryant to execute the agreements containing the choice of
forum clauses. They approved and directed the distribution of a
Proxy Statement to WIC’s shareholders. They recommended that
the WIC shareholders vote in favor of the transaction. . . . They
signed Support Agreements promising to support the merger. . . .
Last, but certainly not least, [they] personally received approximately
$4 million of Carlile’s money in the transaction.
21
Regarding Lynch and Meier, Carlile and WIC raise the same actions quoted
above but add that Lynch and Meier “were actively involved in the pre-closing
activities leading to the transaction, including providing due diligence materials to
Carlile, and participated in telephone calls with Carlile.” Carlile and WIC
recognize that “[n]either the Texas Supreme Court nor this [c]ourt has ruled on
the enforceability of forum-selection clauses by or against non-signatories who
participated in the transaction.” See Deep Water, 234 S.W.3d at 693.
Nonsignatories may be subject to forum-selection clauses if they were
transaction participants. See Brock v. Entre Computer Ctrs., Inc., 740 F. Supp.
428, 430–31 (E.D. Tex. 1990). However, all cases analyzing whether a
nonsignatory is a transaction participant apply the issue solely in the context of a
nonsignatory defendant attempting to enforce a forum-selection clause against a
signatory plaintiff, who did not want the clause enforced. See CNOOC, 222
S.W.3d at 898 (collecting cases); see also Quicksilver Resources, Inc. v. Eagle
Drilling, LLC, 792 F. Supp. 2d 948, 953 & n.5 (S.D. Tex. 2011) (declining to
enforce choice-of-law provision against nonsignatory officers, directors, and
shareholders of signatory corporation by plaintiff signatory and stating defendant
nonsignatories not third-party beneficiaries or closely related). Based on the
record before us and the paucity of legal authority applying the transaction-
participant theory to enforce a forum-selection clause against a nonsignatory in a
suit brought by a signatory, we conclude that Carlile and WIC have failed to carry
22
their burden to identify and prove a theory under which the nonsignatories could
be bound by the forum-selection clauses.
3. Summary
Carlile and WIC could not enforce the forum-selection clauses against
nonsignatories Lynch, Meier, and the remaining directors under either direct-
benefits estoppel or as transaction participants. The trial court did not err by
concluding that the forum-selection clauses could not be enforced against the
remaining directors.11 Therefore, we need not decide whether Carlile and WIC’s
claims fall within the scope of the forum-selection clauses. See Tex. R. App. P.
47.1. We overrule Carlile and WIC’s sole issue.
III. IN PERSONAM JURISDICTION
We now decide whether the trial court correctly exercised jurisdiction over
Lynch and Meier on the basis of minimum contacts. Carlile and WIC do not
argue on appeal that the trial court had in personam jurisdiction over the
remaining directors on the basis of the long-arm statute and due process: “The
only issue here is whether the [remaining directors] consented to jurisdiction
11
Although the trial court would have erred by overruling Lynch’s and
Meier’s special appearances because the forum-selection clauses constituted
their consent to jurisdiction, we may uphold the trial court’s ruling on any legal
basis finding support in the record, i.e., Lynch’s and Meier’s minimum contacts
with the forum state. Therefore, our conclusion regarding the enforceability of
the forum-selection clause against the nonsignatories alone is not fatal to the trial
court’s ruling. See Dukatt v. Dukatt, 355 S.W.3d 231, 237 (Tex. App.—Dallas
2011, pet. denied) (recognizing appellate courts must affirm denial of special
appearance on any legal theory supported by the evidence in the absence of
findings and conclusions).
23
pursuant to the forum-selection clause. Under that analysis, the [remaining
directors’] contacts with Texas, or lack thereof, are irrelevant.” Therefore, we
address the presence of in personam jurisdiction only regarding Lynch and
Meier. As stated above, Lynch and Meier assert that the trial court lacked in
personam jurisdiction over them because the long-arm statute does not apply
and because minimum contacts with Texas are absent.
A. STANDARDS AND SCOPE OF REVIEW
1. Appellate Prism
The standards of review and the burdens of proof applicable to our review
of a trial court’s ruling on a special appearance are well established. We
determine whether a trial court has personal jurisdiction over a defendant under a
de novo standard. BMC Software, 83 S.W.3d at 794; Fish v. Tandy Corp., 948
S.W.2d 886, 891–92 (Tex. App.—Fort Worth 1997, writ denied). A plaintiff has
the initial burden to plead sufficient allegations to bring a nonresident within the
provisions of the Texas long-arm statute. Kelly v. Gen. Interior Constr., Inc., 301
S.W.3d 653, 658 (Tex. 2010); Retamco Operating, Inc. v. Republic Drilling Co.,
278 S.W.3d 333, 337 (Tex. 2009). Once a plaintiff sufficiently pleads such
jurisdictional allegations, the burden shifts to the defendant to negate the bases
of personal jurisdiction asserted by the plaintiff. Kelly, 301 S.W.3d at 658; Moki
Mac, 221 S.W.3d at 574.
In determining whether the nonresident defendant sufficiently negated the
pleaded bases for personal jurisdiction, the trial court frequently must resolve
24
questions of fact. BMC Software, 83 S.W.3d at 794. While we review de novo
the trial court’s legal conclusion that personal jurisdiction does not exist, any
supporting findings of fact are reviewed for factual and legal sufficiency. Id. If
the trial court’s findings are supported by sufficient evidence, we must decide as
a matter of law whether those facts negate all bases for personal jurisdiction. Id.
In reviewing the factual sufficiency of the evidence to support a fact finding,12 we
may only “unfind” an implied factual finding if we determine that the credible
evidence supporting the finding is too weak or that the finding is against the great
weight and preponderance of the credible evidence contrary to the finding.13 Tex.
Nat’l Bank v. Karnes, 717 S.W.2d 901, 903 (Tex. 1986); Garza v. Alviar, 395
S.W.2d 821, 823 (Tex. 1965).
2. Long-Arm Statute and Due Process
Of course, a special appearance challenges the trial court’s personal
jurisdiction over a defendant. Texas courts may not exercise personal
jurisdiction over a nonresident defendant unless federal due process
requirements and the Texas long-arm statute are satisfied. Tex. Civ. Prac. &
Rem. Code Ann. §§ 17.041–.042 (West 2008); Helicopteros Nacionales de
12
Lynch and Meier do not challenge the legal sufficiency of the trial court’s
implied findings.
13
This standard applies because Lynch and Meier had the burden to
disprove Carlile and WIC’s pleaded jurisdictional facts. See Gooch v. Am. Sling
Co., 902 S.W.2d 181, 184 (Tex. App.—Fort Worth 1995, no writ); W. Wendell
Hall, Hall’s Standards of Review in Texas, 42 St. Mary’s L.J. 3, 41–42 (2010).
25
Colom., S.A. v. Hall, 466 U.S. 408, 412–13 & n.7, 104 S. Ct. 1868, 1871 & n.7
(1984). The Texas long-arm statute and the requirements of due process are
coextensive; thus, the long-arm statute is satisfied if the exercise of personal
jurisdiction comports with federal due process. See Guardian Royal Exch.
Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex.
1991). As such, we rely on federal and Texas jurisprudence in resolving
questions regarding personal jurisdiction. BMC Software, 83 S.W.3d at 795.
Federal due process is satisfied if (1) the nonresident defendant has “minimum
contacts” with Texas and (2) the exercise of personal jurisdiction over the
nonresident defendant does not offend “traditional notions of fair play and
substantial justice.” Int’l Shoe Co. v. State of Wash., Office of Unemp’t Comp. &
Placement, 326 U.S. 310, 316, 66 S. Ct. 154, 158 (1945).
B. APPLICATION
1. Sufficient Pleading Invoking Long-Arm Statute
We first determine whether Carlile and WIC met their initial burden to plead
sufficient allegations to bring Lynch and Meier within the provisions of the Texas
long-arm statute, without reaching the merits of those allegations.14 See
14
Lynch and Meier argue that Carlile and WIC’s failure to specifically allege
jurisdictional facts in their original and first amended petitions indicates they did
not meet this initial burden. But Carlile and WIC’s live pleading filed before the
special-appearance hearing included jurisdictional allegations and is the pleading
we rely on. See Tex. R. Civ. P. 65 (providing amended pleading replaces and
supersedes previous pleading); cf. Frank A. Smith Sales, Inc. v. Atl. Aero, Inc.,
31 S.W.3d 742, 747 (Tex. App.—Corpus Christi 2000, no pet.) (“The meaning of
26
Hoffman v. Dandurand, 143 S.W.3d 555, 559 (Tex. App.—Dallas 2004, no pet.).
Under the long-arm statute, personal jurisdiction attaches to a nonresident
defendant who “commits a tort in whole or in part in [Texas]” or “contracts by mail
or otherwise with a Texas resident and either party is to perform the contract in
whole or in part in [Texas].” Tex. Civ. Prac. & Rem. Code Ann. § 17.042(1)–(2)
(West 2008).
Here, Carlile and WIC pleaded that Lynch and Meier were Colorado
residents but that they committed “torts in whole or in part in Texas,” i.e., fraud
and negligent misrepresentation. They further asserted that Lynch and Meier
“contracted by mail or otherwise with a Texas resident and either party is to
perform the contracts in whole or in part in [Texas].” In support of these claims,
Carlile and WIC alleged that Lynch and Meier concealed and failed to disclose
information in Texas during the merger negotiations. These allegations met
Carlile and WIC’s initial pleading burden by alleging acts or omissions in Texas
by Lynch and Meier, personally or through an agent, and torts arising from such
conduct. See, e.g., Moncrief Oil Int’l Inc. v. OAO Gazprom, 414 S.W.3d 142, 149
(Tex. 2013); Baldwin v. Household Int’l, Inc., 36 S.W.3d 273, 277 (Tex. App.—
Houston [14th Dist.] 2001, no pet.).
Lynch and Meier argue at length that Carlile and WIC failed to meet their
burden to plead a jurisdictional basis under the long-arm statute. In these
the term ‘pleadings’ must be limited at least so as to exclude matter not filed prior
to the special appearance hearing.”).
27
arguments, they delve into the merits of Carlile and WIC’s claims by asserting
that the alleged acts were not purposefully committed within Texas; any
concealment was by omission and occurred in Colorado; no fiduciary relationship
between Lynch, Meier, and Carlile was pleaded or proven; no substantially false
impression by any concealment was pleaded or proven; Carlile and WIC failed to
plead or prove that J. Bryant was acting within the scope of his authority; and
Lynch and Meier could not foresee being hailed to court in Texas. These
arguments go to the merits of Carlile and WIC’s allegations and are not
appropriate considerations in determining whether Carlile and WIC met their
initial pleading burden under the long-arm statute. See, e.g., Guardian Royal,
815 S.W.2d at 227 (holding “[f]oreseeability is . . . important consideration in
deciding whether the nonresident defendant has purposely established ‘minimum
contacts’” but not considering foreseeability in context of initial pleading burden);
Leesboro Corp. v. Hendrickson, 322 S.W.3d 922, 929 (Tex. App.—Austin 2010,
no pet.) (considering whether corporate representative’s acts could be imputed to
corporation in determining minimum contacts, not initial pleading burden).
2. Due Process
Because Carlile and WIC sufficiently pleaded allegations to bring Lynch
and Meier within the provisions of the Texas long-arm statute, the burden then
shifted to Lynch and Meier to negate all pleaded jurisdictional bases and,
thereby, establish a violation of their rights to due process. Retamco, 278
S.W.3d at 337; see Schlobohm v. Schapiro, 784 S.W.2d 355, 356 (Tex. 1990)
28
(recognizing jurisdiction over nonresident supportable if long-arm statute
authorizes such jurisdiction and it is consistent with due-process guarantees).
Lynch and Meier assert that exercising specific jurisdiction over them would
violate due process because (1) the evidence is factually insufficient to establish
their minimum contacts with Texas and (2) any exercise of jurisdiction would
offend traditional notions of fair play and substantial justice.
a. Minimum contacts
(1) purposeful availment
When, as here, a plaintiff asserts specific jurisdiction, the minimum-
contacts analysis focuses on the relationship between the defendant, the forum,
and the litigation.15 IRA Res., Inc. v. Griego, 221 S.W.3d 592, 596 (Tex. 2007).
Minimum contacts are sufficient when a nonresident defendant “purposefully
avails itself of the privilege of conducting activities within the forum State, thus
invoking the benefits and protections of its laws.” Hanson v. Denckla, 357 U.S.
235, 253, 78 S. Ct. 1228, 1240 (1958). In determining purposeful availment, we
consider (1) the defendant’s own actions but not the unilateral activity of another
party, (2) whether the defendant’s actions were purposeful rather than “random,
isolated, or fortuitous,” and (3) whether the defendant sought “some benefit,
advantage, or profit by availing itself of the privilege of doing business in Texas.”
Michiana, 168 S.W.3d at 785. The nonresident defendant’s contacts are
15
Carlile and WIC concede that the trial court did not have general
jurisdiction over Lynch or Meier.
29
considered as a whole and not in isolation, focusing on the quality and not the
quantity of the contacts. Retamco, 278 S.W.3d at 339; Guardian Royal, 815
S.W.2d at 230 n.11. We look to the relationship between the defendant, the
forum, and the litigation. Moki Mac, 221 S.W.3d at 576.
Here both Meier and Lynch agreed as officers and directors of the Bank
and WIC to seek out Carlile in Texas regarding a potential acquisition of WIC and
the Bank. Meier and Lynch were directly involved in compiling information for the
ensuing due diligence, which they knew would be produced to Carlile in Texas as
part of the merger negotiations. Both Meier and Lynch directed emails to Carlile
employees in Texas that provided further due-diligence information. Lynch
traveled to Texas to meet with Carlile employees about the possible merger and
had phone conversations with Cosby.16
These contacts were not random and fortuitous but were specifically
directed to Carlile in Texas for the purposes of due diligence and the ensuing
merger. See generally Michiana, 168 S.W.3d at 785 (holding “[s]ellers who
‘reach out beyond one state and create continuing relationships and obligations
with citizens of another state’” are purposeful rather than fortuitous contacts
(quoting Travelers Health Ass’n v. Commonwealth of Va. ex rel. State Corp.
16
For the reasons we stated in Glencoe, we are not concluding that phone
calls, standing in isolation, are sufficient to establish purposeful availment.
Glencoe Capital Partners II, L.P. v. Gernsbacher, 269 S.W.3d 157, 165–67 (Tex.
App.—Fort Worth 2008, no pet.). However, phone calls combined with other
contacts satisfying the three inquiries of purposeful availment can support the
exercise of specific jurisdiction. See also Moncrief Oil, 414 S.W.3d at 151–53.
30
Comm’n, 339 U.S. 643, 647, 70 S. Ct. 927, 929 (1950))). The merger
discussions and exchange of information were not unilateral and showed that
Lynch and Meier were availing themselves of the privilege of conducting
business—a possible corporate merger—with a Texas corporation. The due-
diligence process lasted over a year, resulting in amended agreements and a
final merger agreement. Lynch and Meier were involved in this process and
sought some benefit or advantage by availing themselves of Texas jurisdiction—
a merger with Carlile. Further, Meier and Lynch directed the produced
information to Carlile in Texas. See Wien Air Alaska v. Brandt, 195 F.3d 208,
213–15 (5th Cir. 1999) (holding German attorney’s alleged misrepresentations
and omissions directed to Texas, while limited, were sufficient contacts to confer
personal jurisdiction over him in a Texas court). Further, Lynch and Meier were
experienced businessmen and knew the information they provided would be
relied on by Carlile in making the ultimate decision on merging with WIC—a
decision that was made in Texas. Lynch and Meier could reasonably foresee
being haled into a Texas court based on their purposeful actions directed to
Texas. See Moki Mac, 221 S.W.3d at 576–79 (finding purposeful availment by
nonresident company that made alleged material misrepresentations to resident
plaintiffs in Texas, which were relied on by resident plaintiffs to their detriment);
Siskind v. Villa Found. for Educ., Inc., 642 S.W.2d 434, 436 (Tex. 1982) (“Villa’s
solicitation of Texas business, consisting of representations made in Texas, is a
purposeful act committed in Texas.”).
31
Lynch and Meier assert, however, that any actions they took were at the
direction of J. Bryant and that they had no input into what information to produce.
But considering the evidence before the trial court, we cannot conclude that the
evidence supporting the trial court’s implied findings regarding purposeful
availment was too weak or that the findings were against the great weight and
preponderance of the credible evidence contrary to the implied finding. Indeed,
Nichols’s affidavit contradicts Meier’s and Lynch’s averments that they were
passive conduits of information at the mercy of J. Bryant. We conclude that the
trial court’s conclusion that Lynch and Meier purposefully availed themselves of
the privilege of conducting business in Texas was supported by factually
sufficient evidence. See, e.g., Parex Res., Inc. v. ERG Res., LLC, 427 S.W.3d
407, 436–40 (Tex. App.—Houston [14th Dist.] 2014, pets. filed); Leesboro, 322
S.W.3d at 929–32; Glencoe, 269 S.W.3d at 165–67.
(2) substantial connection
Purposeful availment alone does not support the exercise of specific
jurisdiction unless the defendant’s potential liability arises from or relates to the
forum contacts. Guardian Royal, 815 S.W.2d at 228; Glencoe, 269 S.W.3d at
167. In short, there must be a substantial connection between the defendant’s
contacts with the forum and the operative facts of the litigation. Moki Mac, 221
S.W.3d at 584.
Here, Meier and Lynch communicated with and provided information to
Carlile in Texas multiple times, which Carlile relied on in deciding to merge with
32
WIC. Lynch even traveled to Texas to discuss the possible merger and reviewed
the financial status of the Bank at that time. Carlile alleges that this information
was incorrect and resulted in losses to Carlile in Texas, leading to their claims for
fraud and misrepresentation. Thus, the contacts showing purposeful availment
are the operative facts of the litigation. Lynch’s and Meier’s liability, if any, will
arise from the type and scope of the information they produced to Carlile in
Texas. The trial court’s conclusion that there was a substantial connection
between Lynch’s and Meier’s qualitative contacts and the facts of the litigation
was supported by factually sufficient evidence. See Glencoe, 269 S.W.3d at
167.
3. Fair Play and Substantial Justice
If minimum contacts are present, whether general or specific, the
nonresident defendant then bears the burden to establish that the exercise of
personal jurisdiction would offend traditional notions of fair play and substantial
justice. Prof’l Ass’n of Golf Officials v. Phillips Campbell & Phillips, L.L.P., No.
02-12-00426-CV, 2013 WL 6869862, at *5 (Tex. App.—Fort Worth Dec. 27,
2013, pet. denied) (mem. op.) (citing Knight Corp. v. Knight, 367 S.W.3d 715,
726 (Tex. App.—Houston [14th Dist.] 2012, orig. proceeding)). When the
nonresident defendant has purposefully established minimum contacts with the
forum state, it will be rare that the exercise of jurisdiction over the nonresident
defendant would not comport with fair play and substantial justice. Guardian
Royal, 815 S.W.2d at 231.
33
Lynch and Meier assert that Carlile and WIC failed to show that fair play
and substantial justice require Texas jurisdiction. But the burden was on Lynch
and Meier, not Carlile and WIC, to “present ‘a compelling case that the presence
of some consideration would render jurisdiction unreasonable.’” Id. (quoting
Burger King, 471 U.S. at 477, 105 S. Ct. at 2185). The relevant considerations
we are to review in determining whether the exercise of jurisdiction comports with
fair play and substantial justice are (1) the burden on the defendants, (2) the
interest of the forum state in adjudicating the dispute, (3) the plaintiff’s interest in
obtaining convenient and effective relief, (4) the interstate judicial system’s
interest in obtaining the most efficient resolution of controversies, and (5) the
shared interest of the several states in furthering fundamental substantive social
policies. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292, 100 S.
Ct. 559, 564 (1980); Guardian Royal, 815 S.W.2d at 228. Lynch and Meier focus
on the first two considerations.
Lynch’s and Meier’s affidavits offered in support of their special
appearance state no evidence relative to these considerations other than their
assertions that they reside in Colorado. In their brief on appeal, they refer to the
“expense of hotel and ground travel . . . compared to that of the Carlile
representative” and “the cost of discovery since most of the witnesses are
located in Colorado.” However, there is no record evidence of the
burdensomeness of litigating in Texas and, indeed, “[d]istance from the forum is
generally not sufficient to defeat jurisdiction because the availability of ‘modern
34
transportation and communication have made it less burdensome for a party
sued to defend himself in a State where he engages in economic activity.’”
Glencoe, 269 S.W.3d at 168 (quoting McGee v. Int’l Life Ins. Co., 355 U.S. 220,
223, 78 S. Ct. 199, 201 (1957)).
Additionally, Lynch’s and Meier’s alleged misrepresentations were
purposefully directed into Texas, where it was foreseeable that a Texas resident
would rely on them. See Charles R. Weber Co. v. Back-Haul Bulk Carriers, Inc.,
No. 14-02-00240-CV, 2002 WL 31769418, at *5 (Tex. App.—Houston [14th Dist.]
Dec. 12, 2002, no pet.) (not designated for publication). Texas generally has a
manifest interest in providing its residents with a convenient forum for redressing
injuries inflicted by nonresidents. See Burger King, 471 U.S. at 473, 105 S. Ct. at
2182–83. Lynch and Meier have not demonstrated that the interests of Colorado
or the shared interests of all the states outweigh Texas’s substantial interest in
providing relief to its residents. Lynch and Meier have not identified any
considerations that would render jurisdiction in Texas unreasonable or that
provide them with a vested right not to be sued in Texas. Accordingly, we
conclude that Lynch and Meier failed to meet their burden to establish a
compelling case that the trial court’s exercise of personal jurisdiction over Lynch
and Meier would offend traditional notions of fair play and substantial justice.
See, e.g., Tempest Broad. Corp. v. Imlay, 150 S.W.3d at 861, 876–77 (Tex.
App.—Houston [14th Dist.] 2004, no pet.); Rowland & Rowland, P.C. v. Tex.
Emp’rs Indem. Co., 973 S.W.2d 432, 436 (Tex. App.—Austin 1998, no pet.).
35
4. Summary
Carlile and WIC pleaded sufficient allegations bringing Lynch and Meier
within the provisions of the Texas long-arm statute. Lynch and Meier then failed
to establish the violation of their rights to due process because the record
supported the trial court’s conclusion that Lynch and Meier had minimum
contacts with Texas sufficient to establish specific jurisdiction. Lynch and Meier
also failed to present a compelling case that that the trial court’s exercise of
personal jurisdiction over Lynch and Meier would offend traditional notions of fair
play and substantial justice. Therefore, we overrule Lynch and Meier’s three
points.
IV. CONCLUSION
Because Carlile and WIC could not enforce the forum-selection clauses
against nonsignatories Lynch, Meier, and the remaining directors under either
direct-benefits estoppel or as transaction participants, the trial court did not err by
concluding that the forum-selection clauses were unenforceable. Thus, the trial
court correctly sustained the remaining directors’ special appearance. Although
the forum-selection clauses were unenforceable against Lynch and Meier, the
trial court correctly overruled their special appearances because the record
supported the trial court’s conclusion that in personam jurisdiction over Lynch
and Meier was present and did not offend due process or the traditional notions
of fair play and substantial justice. We affirm the trial court’s interlocutory orders.
See Tex. R. App. P. 43.2(a).
36
/s/ Lee Gabriel
LEE GABRIEL
JUSTICE
PANEL: WALKER, MEIER, and GABRIEL, JJ.
DELIVERED: August 7, 2014
37