Accelerated Wealth, LLC and Accelerated Wealth Group, LLC v. Lead Generation and Marketing LLC ( 2013 )

Fourth Court of Appeals
San Antonio, Texas
MEMORANDUM OPINION
No. 04-12-00647-CV
ACCELERATED WEALTH, LLC and Accelerated Wealth Group, LLC,
Appellants
v.
LEAD GENERATION AND MARKETING, LLC,
Appellee
From the 131st Judicial District Court, Bexar County, Texas
Trial Court No. 2012-CI-09405
Honorable Michael P. Peden, Judge Presiding
Opinion by: Sandee Bryan Marion, Justice
Sitting: Catherine Stone, Chief Justice
Sandee Bryan Marion, Justice
Patricia O. Alvarez, Justice
Delivered and Filed: March 20, 2013
AFFIRMED
This is an accelerated appeal of the trial court’s order denying the special appearances
filed by Accelerated Wealth, LLC and Accelerated Wealth Group, LLC (collectively referred to
herein as “Accelerated Wealth”). Accelerated Wealth asserts the trial court erred in denying the
special appearances because: (1) the trial court could consider only the allegations contained in
Lead Generation and Marketing, LLC’s original petition; (2) the trial court could not consider
evidence of any contacts that occurred after the date the original petition was filed; and (3) the
allegations contained in the original petition and the evidence of the contacts that occurred before
04-12-00647-CV
the date the original petition was filed did not establish general jurisdiction over Accelerated
Wealth. We affirm the trial court’s order.
MINIMUM CONTACTS ANALYSIS AND STANDARD OF REVIEW
“Whether a court has personal jurisdiction over a defendant is determined as a matter of
law, which appellate courts review de novo.” Spir Star AG v. Kimich, 310 S.W.3d 868, 871
(Tex. 2010). “When, as here, a trial court does not issue findings of fact or conclusions of law to
support its special-appearance determination, we presume that all factual disputes were resolved
in favor of the trial court’s ruling.” Id. at 871–72.
The exercise of personal jurisdiction over a nonresident defendant by a Texas court
comports with federal due process limitations when: (1) the defendant has established minimum
contacts with Texas; and (2) the exercise of jurisdiction comports with traditional notions of fair
play and substantial justice. Id. at 872. A defendant’s contacts with Texas can give rise to either
specific or general jurisdiction. Id. “General jurisdiction exists when a defendant’s contacts are
continuous and systematic, even if the cause of action does not arise from activities performed
in” Texas. Id. “Specific jurisdiction is appropriate when (1) the defendant’s contacts with
[Texas] are purposeful, and (2) the cause of action arises from or relates to the defendant’s
contacts.” Id. at 873. In a specific jurisdiction analysis, we focus on the relationship among the
defendant, Texas, and the litigation. Id. at 873.
Three issues are considered “in determining whether a defendant purposefully availed
itself of the privilege of conducting activities in Texas.” Retamco Operating, Inc. v. Republic
Drilling Co., 278 S.W.3d 333, 338 (Tex. 2009). “First, only the defendants contacts with
[Texas] are relevant, not the unilateral activity of another party or a third person.” Id. at 339
(quoting Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 575 (Tex. 2007)). “Second,
the contacts relied upon must be purposeful rather than random, fortuitous, or attenuated.” Id.
-2-
04-12-00647-CV
“Thus, sellers who reach out beyond one state and create continuing relationships and obligations
with citizens of another state are subject to the jurisdiction of the latter in suits based on their
activities.” Id. “Finally, the defendant must seek some benefit, advantage, or profit by availing
itself of the jurisdiction.” Id.
SPECIAL APPEARANCE BURDENS AND PROCEDURE
“[T]he plaintiff and the defendant bear shifting burdens of proof in a challenge to
personal jurisdiction.” Kelly v. General Interior Const., Inc., 301 S.W.3d 653, 658 (Tex. 2010).
“[T]he plaintiff bears the initial burden to plead sufficient allegations to bring the nonresident
defendant within the reach of Texas’s long-arm statute.” Id. “Once the plaintiff has pleaded
sufficient jurisdictional allegations, the defendant filing a special appearance bears the burden to
negate all bases of personal jurisdiction alleged by the plaintiff.” Id. The defendant can
factually negate jurisdiction by presenting evidence “that it has no contacts with Texas,
effectively disproving the plaintiff’s allegations.” Id. at 659. “The plaintiff can then respond
with its own evidence that affirms its allegations.” Id.
SPECIFIC JURISDICTION
Accelerated Wealth asserts that the live pleading at the time of the hearing on the special
appearance was Lead Generation’s original petition, which alleged only general jurisdiction.
Accelerated Wealth contends the trial court should not have considered Lead Generation’s
amended petition which was filed after the hearing on the special appearances and which alleged
additional jurisdictional facts. Accelerated Wealth also contends the trial court should not have
considered evidence of contacts that arose after the date Lead Generation’s original petition was
filed.
-3-
04-12-00647-CV
A. Response and Specific Jurisdiction Allegations
Although Accelerated Wealth takes issue with the trial court’s consideration of additional
jurisdictional allegations contained in Lead Generation’s amended petition, Accelerated Wealth
fails to address that these additional jurisdictional allegations also are contained in Lead
Generation’s response to Accelerated Wealth’s special appearance. The trial court may properly
consider additional allegations contained in a response to a special appearance. 1 See, e.g.,
Alliance Royalties, LLC v. Boothe, 329 S.W.3d 117, 120–21 (Tex. App.—Dallas 2010, no pet.);
Ennis v. Loiseau, 164 S.W.3d 698, 705 (Tex. App.—Austin 2005, no pet),
With regard to specific jurisdiction, Lead Generation alleged in its response that its
claims against Accelerated Wealth included tortious interference with contracts,
misappropriation of trade secrets, and civil conspiracy. Lead Generation further alleged that: (1)
it is engaged in the business of licensing confidential and proprietary business leads related to the
real estate investment seminar business; and (2) its causes of action against Accelerated Wealth
stem from the unauthorized acquisition and use of Lead Generation’s proprietary business
information for Accelerated Wealth’s own benefit in connection with the real estate investment
seminar business. Finally, Lead Generation alleged that Accelerated Wealth’s wrongful acts
giving rise to the causes of action include wrongful acts committed in the State of Texas. We
construe these allegations as an assertion that the trial court had specific jurisdiction over
Accelerated Wealth since Lead Generation alleges that Accelerated Wealth’s liability arises out
of wrongful acts committed in the State of Texas. See Spir Star AG, 310 S.W.3d at 873.
1
We note that because the amended petition contained the same allegations asserted in the response, which the trial
court could properly consider, leave of court to file the amended petition likely can be presumed since Accelerated
Wealth could not have demonstrated any surprise or prejudice in view of the allegations in the response. See
Nichols v. Bridges, 163 S.W.3d 776, 782–83 (Tex. App.—Texarkana 2005, no pet.). Because our analysis focuses
on the allegations contained in the original petition and response, we need not rely on the trial court’s consideration
of the amended petition; therefore, we need not definitely resolve whether the trial court could have considered the
amended petition. See TEX. R. APP. P. 47.1 (opinion need address only those issues necessary to final disposition of
the appeal).
-4-
04-12-00647-CV
Because the trial court could properly consider the allegations contained in Lead Generation’s
response, see Alliance Royalties, LLC, 329 S.W.3d at 120; Ennis, 164 S.W.3d at 705, we reject
Accelerated Wealth’s contention that only general jurisdiction was alleged.
Putting Lead Generation’s specific jurisdiction allegations in the factual context alleged
in Lead Generation’s original petition and response, Lead Generation licensed its leads to an
affiliate, Performance Advantage Group, Inc. (“PAG”), which used the leads to explore business
opportunities in the real estate industry. PAG employed Tobey Waggoner, Dallas Tall, and
several additional individual defendants, who also were sued by Lead Generation, in sales
positions, and each employee signed an employment agreement containing a confidentiality
provision recognizing the confidentiality of the leads licensed to PAG by Lead Generation.
While still employed by PAG, Waggoner and Tall formed Accelerated Wealth which was
formed to conduct business in competition with PAG. While employed in Texas by PAG,
Waggoner and Tall’s duties as employees of PAG overlapped their formation of and actions
taken on behalf of Accelerated Wealth, and Waggoner and Tall had significant contacts with the
State of Texas during this time. Waggoner and Tall then recruited other PAG employees located
in Texas, including the additional named individual defendants, to become employees of
Accelerated Wealth, thereby interfering with the employment agreements between PAG and
these individuals. Finally, Accelerated Wealth, Waggoner, Tall, and the other named individual
defendants, who were former employees of PAG, used Lead Generation’s leads which were
licensed to PAG to benefit Accelerated Wealth’s business.
Because we hold that the original petition and response contained sufficient allegations of
specific jurisdiction, the burden shifted to Accelerated Wealth to negate jurisdiction based on the
above-detailed allegations. Kelly, 301 S.W.3d at 658. In order to do so, Accelerated Wealth was
required to present evidence to effectively disprove the allegations. Id. at 659. Accelerated
-5-
04-12-00647-CV
Wealth, however, only presented evidence addressing general jurisdiction, not the foregoing
allegations pertaining to specific jurisdiction. Therefore, Accelerated Wealth failed to satisfy its
burden, and the trial court did not err in denying the special appearance. See id.
B. Evidence of Post-Petition Contacts
Relying on PHC-Minden, L.P. v. Kimberly-Clark Corp., 235 S.W.3d 163 (Tex. 2007),
Accelerated Wealth argues that the trial court could not consider the evidence Lead Generation
presented of post-petition contacts Accelerated Wealth had with Texas. Given that Lead
Generation alleged Accelerated Wealth’s contacts with Texas gave rise to specific jurisdiction,
Accelerated Wealth’s reliance on PHC-Minden, L.P. is misplaced. In that case, the Texas
Supreme Court concluded that the relevant “period for assessing contacts for purposes of general
jurisdiction” “ends at the time suit is filed.” 235 S.W.3d at 169 (emphasis added). The court
explained, “As noted above, general jurisdiction is dispute-blind; accordingly, and in contrast to
specific jurisdiction, the incident made the basis of the suit should not be the focus in assessing
continuous and systematic contacts.” Id. (emphasis added). At least one Texas court appears to
have recognized the distinction between consideration of post-petition contacts in a general
jurisdiction analysis as opposed to a specific jurisdiction analysis, noting, “When general
jurisdiction is at issue only the defendant’s pre-suit contacts are relevant.” Specht v. Dunavant,
362 S.W.3d 752, 755 (Tex. App.—Houston [14th Dist.] 2011, no pet.) (emphasis added).
Limiting a general jurisdiction inquiry to pre-suit contacts is consistent with the analysis
to be performed which takes into consideration whether the nonresident contacts are sufficiently
continuous and systematic before a suit is filed to permit the nonresident defendant to be hailed
into a Texas court to answer the suit. In contrast, specific jurisdiction considers whether a
substantial connection exists between the defendant’s purposeful contacts with Texas and the
operative facts of the litigation. Specht, 362 S.W.3d at 755. The operative facts of the litigation
-6-
04-12-00647-CV
are not isolated to the events occurring pre-petition, especially in the context of the
misappropriation of trade secrets where the wrongful acts of misappropriation can be on-going.
See Educational Testing Serv. v. Katzman, 631 F. Supp. 550, 556 (D. N.J. 1986) (“To permit the
filing of a complaint to limit jurisdiction by immunizing a defendant’s future actions in the
forum state when those actions are a mere continuation of those underlying the complaint would
make no sense.”).
This case provides a good example of the on-going nature of the operative facts of the
litigation. In this case, evidence was presented that Accelerated Wealth allegedly used Lead
Generation’s leads to locate a sufficient audience for at least six real estate investment seminars
and one real estate workshop that Accelerated Wealth conducted in Texas in the two months
after Lead Generation’s original petition was filed. Although these seminars occurred post-
petition, they are operative facts of the litigation which a specific jurisdiction analysis is
permitted to consider. Because we previously concluded that Accelerated Wealth failed to meet
its initial burden to present evidence to disprove the specific jurisdiction allegations, however,
we do not need to consider the evidence of Accelerated Wealth’s post-petition contacts.
Therefore, we need not definitely resolve whether evidence of post-petition contacts can be
considered when specific jurisdiction is at issue. See TEX. R. APP. P. 47.1.
FAIR PLAY AND SUBSTANTIAL JUSTICE
Because Accelerated Wealth failed to meet its burden to disprove that it has sufficient
minimum contacts with Texas to support specific jurisdiction, we must determine whether an
assertion of jurisdiction over Accelerated Wealth comports with traditional notions of fair play
and substantial justice. Retamco Operating, Inc., 278 S.W.3d at 341. Only in rare cases will the
exercise of jurisdiction not comport with fair play and substantial justice when the nonresident
defendant has purposefully established minimum contacts with the forum state. Id.
-7-
04-12-00647-CV
“Nonetheless, we still consider: (1) the burden on the defendant; (2) the interests of the forum
state in adjudicating the dispute; (3) the plaintiff’s interest in obtaining convenient and efficient
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.” Id. “To defeat jurisdiction, [Accelerated Wealth] must present a
compelling case that the presence of some consideration would render jurisdiction
unreasonable—something [Accelerated Wealth] has not done” since it did not even address this
prong of our analysis in its brief. Spir Star AG, 310 S.W.3d at 878–79 (internal citations
omitted).
Lead Generation “has an interest in resolving this controversy in Texas because that is
where the litigation began.” Retamco Operating, Inc., 278 S.W.3d at 341. Requiring
Accelerated Wealth to defend Lead Generation’s claim in Texas “would not pose an undue
burden for the company” as Texas “is familiar territory for [Accelerated Wealth’s] leadership,”
especially given that Waggoner and Tall’s employment with PAG and the formation of
Accelerated Wealth overlapped. Spir Star AG, 310 S.W.3d at 879. “Moreover, Texas has a
significant interest in exercising jurisdiction over controversies arising from injuries a Texas
resident [entity] sustains” when employees previously employed in Texas by the Texas entity use
confidential information or misappropriate trade secrets in connection with the formation of a
competing entity. See id. Accordingly, asserting personal jurisdiction over Accelerated Wealth
comports with traditional notions of fair play and substantial justice.
CONCLUSION
The trial court’s order is affirmed.
Sandee Bryan Marion, Justice
-8-