American Refrigeration Company, Inc. v. Tranter, Inc. ( 2015 )

ACCEPTED
02-15-00265-CV
SECOND COURT OF APPEALS
FORT WORTH, TEXAS
10/27/2015 2:23:34 PM
DEBRA SPISAK
CLERK
ORAL ARGUMENT REQUESTED
Case Number 02-15-00265-CV FILED IN
2nd COURT OF APPEALS
FORT WORTH, TEXAS
IN THE COURT OF APPEALS 10/27/2015 2:23:34 PM
FOR THE SECOND JUDICIAL DISTRICT OF TEXAS
DEBRA SPISAK
Clerk
at Fort Worth
__________________________________________________________________
AMERICAN REFRIGERATION COMPANY, INC.,
Appellant,
v.
TRANTER, INC.,
Appellee.
__________________________________________________________________
From Cause 180,092-A in the 30th Judicial District Court of Wichita County
__________________________________________________________________
BRIEF OF APPELLANT
__________________________________________________________________
WALTERS, BALIDO & CRAIN, L.L.P.
Gregory R. Ave
State Bar Number 01448900
greg.ave@wbclawfirm.com
Meadow Park Tower, Suite 1500
10440 North Central Expressway
Dallas, Texas 75231
Telephone Number (214) 347-8310
Facsimile Number (214) 347-8311
October 27, 2015 ATTORNEYS FOR APPELLANT
LIST OF PARTIES AND THEIR COUNSEL
Pursuant to Texas Rule of Appellate Procedure 38.1(a) and
38.2(a)(1)(A), the following are the parties to the trial court’s interlocutory
judgment being appealed and their counsel:
1. Appellant American Refrigeration Company, Inc.
2. Counsel for Appellants Gregory R. Ave (appellate counsel)
Kelly M. Crain (trial counsel)
Walters, Balido & Crain, L.L.P.
Meadow Park Tower, Suite 1500
10440 North Central Expressway
Dallas, Texas 75231;
3. Appellee Tranter, Inc.;
4. Counsel for Appellee John R. Lively, Sr.
John R. Lively, Jr.
Lively & Associates, LLP
201 Main Street, Suite 1260
Fort Worth, Texas 76102; and
5. Trial Judge The Honorable Robert P. Brotherton,
Presiding Judge of the 30th District
Judicial District Court of Wichita
County, Texas
i
For clarity and convenience, Appellant American Refrigeration
Company, Inc. will be referred to as “ARC”; Appellee Tranter, Inc.; will be
referred to as “Tranter”; and the Honorable Robert P. Brotherton Presiding
Judge of the 30th District Court, Wichita County, Texas will be referred to
as “the trial court.”
The appellate record in this matter consists of a 55 page Clerk’s
Record, which will be referred to by page number (i.e., “C.R. __”) and there
is no Reporter’s Record for this appeal.
ii
TABLE OF CONTENTS
LIST OF PARTIES AND THEIR COUNSEL ...................................................i
TABLE OF CONTENTS ..................................................................................... iii
TABLE OF AUTHORITIES ............................................................................... iv
STATEMENT OF THE CASE ........................................................................... vi
ISSUES PRESENTED FOR REVIEW ............................................................. vii
STATEMENT OF FACTS .................................................................................... 1
SUMMARY OF ARGUMENT ............................................................................. 3
ARGUMENTS AND AUTHORITIES .............................................................. 4
A. Applicable Standard of Review ....................................................... 4
B. Appellant is not a Texas Resident .................................................... 4
C. Appellant Does not have Minimum Contacts with the
State of Texas ....................................................................................... 6
D. Specific or General Jurisdiction ........................................................ 7
E. Jurisdiction over Appellant is not Consistent with
Traditional Notions of Fair Play and Substantial Justice ........... 11
CONCLUSION AND PRAYER ........................................................................ 12
CERTIFICATE OF SERVICE ............................................................................ 13
CERTIFICATE OF COMPLIANCE .................................................................. 14
APPENDIX ........................................................................................................... 15
iii
TABLE OF AUTHORITIES
Cases
BMC Software Belgium, N.V. vs. Marchand, 83 S.W.3d 789 (Tex. 2002)......... 4, 5
Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) ........................................... 6
In re E.I. du Pont de Nemours & Co., 92 S.W.3d 517 (Tex. 2002) ......................... 4
Guardian Royal Exch. Assur. v. English China Clays,
15 S.W.2d 223 (Tex. 1991) .........................................................................5, 6, 7, 11
Helicopteros Nationales de Columbia, S.A. v. Hall, 466 U.S. 408 (1984) ............... 7
International Shoe Company v. Washington, 326 U.S. 310 (1945) ......................... 5
Kawasaki Steel Corp. v. Middleton, 699 S.W.2d 199 (Tex. 1985)........................... 4
M.G.M. Grand Hotel v. Castro,
8 S.W.3d 403 (Tex. App. – Corpus Christi 1999, no pet.) .................................. 5
Minucci v. Sogevalor,
14 S.W.3d 790 (Tex.App.—Houston [14th Dist.] 2000, no pet.) ........................ 4
Moncrief Oil Int’l v. OAO Gazprom, 414 S.W.3d 142 (Tex. 2013) ....................... 4
Retamco Operating, Inc. v. Republic Drilling Co.,
278 S.W.3d 333 (Tex. 2009) ................................................................................... 10
U-Anchor Adver., Inc. v. Burt, 553 S.W.2d 760 (Tex. 1977) ................................. 6
Zinc Nacional, S.A. v. Bouche Trucking, Inc., 308 S.W.3d 395 (Tex. 2010) ......... 4
iv
Other Authorities
TEXAS CIVIL PRACTICE & REMEDIES CODE §17.041-.045 ........................................ 6
TEXAS CIVIL PRACTICE & REMEDIES CODE §51.014(a)(7) ....................................... 4
v
STATEMENT OF THE CASE
This interlocutory appeal arises from cause number 180,092-A,
originally styled Tranter, Inc. v. American Refrigeration Company, Inc.,
Refrigeration Valves and Systems Corporation and Trustees of Dartmouth, and
pending in the 30th District Court of Wichita County, Texas, the Honorable
Robert P. Brotherton presiding. (C.R. 5.) Suit was originally filed on
December 27, 2013. (Id.) Tranter seeks a declaration that it owes no
obligations to the ARC for the heat transfer system manufactured by
Tranter to be used at Dartmouth College (“Dartmouth”). (C.R. 5-9.)
In its special appearance ARC denied that the trial court had personal
jurisdiction over it. (C.R. 10-20.) Tranter filed its response to ARC’s special
appearance on July 22, 2015. (C.R. 21-44.) The trial court entered an order
denying ARC’s special appearance on July 30, 2015. (C.R. 46.) ARC filed
its notice of appeal on August 19, 2015. (C.R. 47-49.)
vi
ISSUES PRESENTED FOR REVIEW
The issues on appeal and which are presented for the Court’s review
address or touch upon the following:
1. Did the trial court err in denying ARC’s special
appearance?
vii
STATEMENT OF FACTS
A. JURISDICTIONAL FACTS
As demonstrated in ARC’s special appearance (C.R. 10-20), ARC’s
contacts with Texas were minimal and were certainly not purposeful. In
this regard, it is undisputed that:
1. ARC is a Massachusetts corporation, with its
principal place located in Andover,
Massachusetts (C.R. 18);
2. The project at issue – the Thompson Arena Ice
Rink – is located at Dartmouth in Hanover,
New Hampshire (C.R. 19);
3. Refrigeration Engineering Company (“REC”)
performed the design work and specified the
Tranter heat exchanger used for the project,
not ARC (C.R. 19);
4. ARC contacted North Atlantic Refrigeration, a
company located in Massachusetts, to obtain
the Tranter unit at issue (C.R. 19);
5. ARC did not contact or deal with
Refrigeration Valves and Systems Corporation
(“RVS”) – which is located in Texas in order to
acquire the heat transfer unit (C.R. 19 and 33);
6. ARC had no direct contact with Tranter until
after problems presented themselves with the
heat exchanger unit in June of 2012 (C.R. 19).
1
Moreover, ARC has no current business operations in Texas and has
performed no projects in Texas since its formation in 1996. (C.R. 19.)
Finally, ARC has had no general or systematic contacts with any person or
organization during its existence. (Id.)
2
SUMMARY OF THE ARGUMENT
It is undisputed that ARC is a Massachusetts corporation that has
never operated in Texas. Indeed, ARC’s only contacts with Texas occurred
after the heat exchanger unit manufactured by Tranter failed following its
installation at Dartmouth in Hanover, New Hampshire. Such contacts do
not subject ARC to personal jurisdiction in Texas and its special appearance
should have been sustained by the trial court.
3
ARGUMENTS AND AUTHORITIES
A. Applicable Standard of Review
The issue presented by this appeal is whether the ARC – a
nonresident defendant – negated all alleged grounds enabling the trial
court to exercise personal jurisdiction over it. Kawasaki Steel Corp. v.
Middleton, 699 S.W.2d 199, 203 (Tex. 1985); Minucci v. Sogevalor, 14 S.W.3d
790, 794 (Tex. App.–Houston [14th Dist.] 2000, no pet.). Whether the court
can exercise personal jurisdiction over a nonresident defendant is a
question of law that is reviewed de novo. Moncrief Oil Int’l v. OAO Gazprom,
414 S.W.3d 142, 150 (Tex. 2013); Zinc Nacional, S.A. v. Bouche Trucking, Inc.,
308 S.W.3d 395 (Tex. 2010). An order granting or denying a special
appearance may be appealed immediately. Tex. Civ. Prac. & Rem. Code §
51.014(a)(7); In re E.I. du Pont de Nemours & Co., 92 S.W.3d 517, 521 (Tex.
2002).
B. Appellant is not a Texas Resident
Again, a defendant must negate all grounds permitting the exercise
of personal jurisdiction when challenging same. BMC Software v. Marchand,
83 S.W.3d 789, 793 (Tex. 2002). Therefore, a defendant must demonstrate
that it is a not a Texas resident and that it did not have minimum contacts
4
with Texas. Id. at 795; Guardian Royal Exch. Assur. v. English China Clays,
815 S.W.2d 223, 226 (Tex. 1991). Once a defendant produces evidence
negating the basis of personal jurisdiction, the burden shifts to the plaintiff
to show that the trial court has jurisdiction over the defendant. M.G.M.
Grand Hotel v. Castro, 8 S.W.3d 403, 408 (Tex. App.–Corpus Christi 1999, no
pet.).
It is undisputed that ARC is not a Texas resident. Rather, ARC was
incorporated in Massachusetts and maintains its principal place of business
there. (C.R. 18-19.) Additionally, ARC has no office in Texas. (C.R. 18-19.)
Therefore, because ARC is not a Texas resident, the due process clause of
the Fourteenth Amendment to the United States Constitution governs the
power of a Texas court to exercise jurisdiction over it. International Shoe
Company v. Washington, 326 U.S. 310 (1945). This fundamental threshold
requires that a court can only exercise jurisdiction over a nonresident
defendant when (1) the defendant has established minimum contacts with
the forum state, and (2) the exercise of jurisdiction comports with
traditional notions of fair play and substantial justice. Id at 316.
5
C. Appellant Does not have Minimum Contacts with the State of Texas
The Texas long-arm statute governs a court’s authority to exercise
jurisdiction over a nonresident defendant. Tex. Civ. Prac. & Rem. § 17.041-
045. According to the Texas Supreme Court, the statute’s language extends
the jurisdiction of Texas courts as far as the federal constitutional
requirements of due process permit. U-Anchor Adver., Inc. v. Burt, 553
S.W.2d 760, 762 (Tex. 1977). Therefore, decisions by both the United States
Supreme Court and Texas Supreme Court serve as precedent in
determining if a nonresident defendant should be subject to the jurisdiction
of a Texas court. BMC Software, supra, 83 S.W.3d at 795.
Under the minimum contacts analysis, a court must determine
whether the nonresident defendant has “purposefully availed” itself of
conducting activities within Texas. Guardian Royal, supra, 815 S.W.2d at 226.
Additionally, foreseeability is a central consideration in deciding whether a
nonresident defendant has purposely established minimum contacts with a
state. Id. at 227. Finally, a defendant should not be subject to the
jurisdiction of a foreign state’s courts based on “random” or “fortuitous”
contacts. Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985).
6
A defendant’s minimum contacts can either give rise to specific or
general jurisdiction. Helicopteros Nationales de Columbia, S.A. v. Hall, 466
U.S. 408, 413-14 (1984); Guardian Royal, supra, 815 S.W.2d at 226. Specific
jurisdiction is exercised if the defendant’s alleged liability arises from or is
related to an activity that the nonresident conducts in the forum state.
However, general jurisdiction imposes a more demanding analysis than
specific jurisdiction, as general jurisdiction may only be exercised when a
nonresident’s contacts in a forum are so continuous and systematic that the
forum state has jurisdiction over the defendant even if the suit is not
related to the defendant’s contacts in the forum state. Id at 228.
D. Specific or General Jurisdiction
Tranter readily admits ARC is a foreign corporation located in
Andover, Massachusetts. (C.R. 5.) Tranter has not alleged the trial court
has specific jurisdiction or general jurisdiction over ARC. (C.R. 6.)
However, the evidence proves ARC is subject to neither. Tranter alleges
only that “the parties have contracted in writing to perform an obligation
in Wichita County.” (C.R. 6.)
Again, ARC was incorporated in Massachusetts and has its
headquarters and principal place of business there. (C.R. 18.)
7
Furthermore, ARC has no business operations or personnel in Texas. (C.R.
18-19.) Indeed, ARC has no registered agent in Texas (C.R. 18).
As it relates to the matter sub judice, ARC was retained by Dartmouth
to complete a project at its ice rink in Hanover, New Hampshire. (C.R. 19.)
On the other hand, Dartmouth retained REC – based in Massachusetts -- to
design the project. (Id.) REC performed the design work and specified the
Tranter heat exchanger at issue. (Id.) Significantly, ARC did not select
Tranter unit; instead, it was called for in REC’s design plans and
specifications. (Id.) ARC then contacted North Atlantic Refrigeration, a
company located in Massachusetts, in order to obtain the Tranter unit
called for by REC’s specifications for the Dartmouth project. (Id.) ARC did
not contact Tranter in order to procure the unit. (Id.) Likewise, ARC did
not contact Refrigeration Valves and Systems Corporation ("RVS") – the
company that did contract with Tranter – to order the unit (Id.)
Simply put, ARC had no direct contacts with Tranter prior to the time
problems arose with the unit in June of 2012. (Id.) Moreover, ARC did not
negotiate any contracts or sign any contracts with any company or person
in Texas with regard to the Dartmouth project. (Id.) In the broader context,
ARC has no current business operations in Texas. (Id.) Further, ARC has
8
not performed any projects in Texas since the formation of the company in
1996. (Id.)
ARC simply placed the purchase order for the Tranter unit with its
fellow Massachusetts resident, North Atlantic. (Id.) ARC has no general or
systematic contacts with the State of Texas, and has had no such contacts
since the company’s formation in 1996. (Id.) Critically, ARC did not enter
into any contract to be performed in Wichita County, Texas. (Id.)
Tranter presented evidence in its response to ARC’s special
appearance which it claims demonstrates ARC entered into a contract with
RVS, a Texas company. (C.R. 25.) However, a review of this “evidence”
only demonstrates that it is consistent with ARC’s position and it provides
no evidence ARC entered into any contract with RVS. (C.R. 33.) Rather,
this document – designated an “Agreement & Order Acknowledgment” –
lists RVS as the seller (Id.) Although it lists ARC as the “customer,” it also
lists North Atlantic and Al Melanson as the “representative.” (Id.)
This is completely consistent with the Affidavit of Michael Sirois,
President of ARC, in which he states ARC contacted North Atlantic in
Massachusetts to obtain the Tranter unit. (C.R. 18-19.) The “Agreement &
Order Acknowledgment” cited by Tranter provides no evidence that ARC
9
entered into any agreement with RVS – there is no signature line for ARC
or any other party – indeed, the document bears no signature at all. (C.R.
33). Therefore, there is nothing in the record demonstrating ARC contacted
RVS rather than North Atlantic (whose representative was listed on the
document). (Id.) The Tranter unit was apparently shipped to Louis P.
Cote, Inc. in Goffston, New Hampshire. (Id.) There is nothing on the
document which demonstrates or proves RVS had any direct dealing with
ARC, and Tranter has not challenged Sirois’ assertion that the Tranter unit
was obtained through North Atlantic in Massachusetts. (C.R. 21-44.)
Although the Affidavit of Virgil Jordan, President of RVS, claims
ARC has ordered products from RVS beginning in 2004, every single one of
the transactions on Exhibit A-2 of Mr. Jordan’s Affidavit also lists North
Atlantic or another “company representative” on the transaction, making it
consistent with ARC’s assertion it has not done any business in Texas.
(C.R. 35.) As Tranter itself notes, a court should consider only the
defendant’s contacts with the forum as relevant, not the unilateral activity
of another party or a third person. (C.R. 24); citing Retamco Operating, Inc.
v. Republic Drilling Co., 278 S.W.3d 333, 338-39 (Tex. 2009). Because the
evidence presented by Tranter is completely consistent with ARC’s
10
evidence that it did no direct business in the State of Texas, no personal
jurisdiction exists in this case over ARC and the denial of its special
appearance was error.
E. Jurisdiction over ARC is not Consistent with Traditional Notions of
Fair Play and Substantial Justice
Even if it were determined ARC has minimum contacts with Texas –
which it does not – the trial court should have declined to exercise
jurisdiction because to do so does not comport with traditional notions of
fair play and substantial justice, and would be inconsistent with the
constitutional requirements of due process. In making this analysis, the
reviewing court is to consider (1) the burden on the defendant, (2) the
interest of Texas 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 states in furthering fundamental and substantive
social policies. Guardian Royal, supra, 815 S.W.2d at 232.
As ARC is a company doing business in Massachusetts with no
business operations in Texas and no ties to Texas concerning the
Dartmouth project, it would be a burden on ARC to have to defend this
11
suit in Texas as well as an existing lawsuit on the same underlying claims
brought by Dartmouth in New Hampshire. Moreover, Texas has little
interest in adjudicating a dispute involving an ice rink located in New
Hampshire. Instead, it is in the best interest of the judicial system and the
shared interest of the states if this dispute is resolved in the state where the
events surrounding the suit occurred, and where the primary witnesses to
the underlying claim reside.
CONCLUSION AND PRAYER
For the foregoing reasons, ARC asks the Court to reverse the trial
court’s order denying its special appearance, award ARC its costs on
appeal, and such further and other relief to which it is justly entitled.
Respectfully submitted,
WALTERS, BALIDO & CRAIN, L.L.P.
By:____/s/ Gregory R. Ave______
Gregory R. Ave
greg.ave@wbclawfirm.com
Texas State Bar No. 01448900
Meadow Park Tower, Suite 1500
10440 North Central Expressway
Dallas, Texas 75231
(2l4) 347-8311 (facsimile)
(2l4) 347-8310 (direct dial)
ATTORNEYS FOR APPELLANT
12
CERTIFICATE OF SERVICE
This is to certify that a true and correct copy of the Brief of Appellant
was served upon the following counsel of record for all parties on October
27, 2015, in accordance with the Texas Rules of Appellate Procedure:
John R. Lively, Jr., Esquire Via E-serve
Lively & Associates, LLP
201 Main Street, Suite 1260
Fort Worth, Texas 76102
ATTORNEYS FOR APPELLEE
TRANTER, INC.
/s/Gregory R. Ave
Gregory R. Ave
13
CERTIFICATE OF COMPLIANCE
Pursuant to Texas Rule of Appellate Procedure 9.4(i)(3), the
undersigned certifies that this brief complies with the type-volume
limitations of Texas Rule of Appellate Procedure 9.4(i)(2)(B).
Exclusive of the exempt portions identified by Texas Rule of
Appellate Procedure 9.4(i)(1), this brief contains 2,014 words, including
footnotes, headings, and quotations. In providing this word-count, the
undersigned is relying on the word count generated by the computer
program used to prepare the petition.
This petition has been prepared in proportionally spaced type, 14-
point text, 12-point footnotes, and in Book Antiqua font, using the
computer program known as Microsoft Word (version 2010).
Acknowledged: October 27, 2015.
/s/Gregory R. Ave
Gregory R. Ave
14
APPENDIX
TAB
07/30/15 Order Denying American Refrigeration Company,
Inc.’s Special Appearance .......................................................................... A
15
TAB A
46