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


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  •                                                                                    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,
    8
    15 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