Ken Hoagland v. Bill Butcher, Kari Butcher, Butcher & Butcher, and OCTV Partners, LLC , 396 S.W.3d 182 ( 2013 )

Reversed and Remanded and Plurality, Concurring, and Dissenting Opinions
filed January 24, 2013.
In The
Fourteenth Court of Appeals
NO. 14-11-01074-CV
KEN HOAGLAND, Appellant
V.
BILL BUTCHER, KARI BUTCHER, BUTCHER & BUTCHER, AND OCTV
PARTNERS, LLC, Appellees
On Appeal from the 80th District Court
Harris County, Texas
Trial Court Cause No. 2010-58144
PLURALITY OPINION
In two issues, appellant Ken Hoagland challenges the trial court’s order
granting appellees’ special appearance and dismissing the underlying case. We
hold Hoagland pleaded jurisdictional facts that appellees committed tortious acts in
Texas and appellees did not present evidence negating every basis for jurisdiction.
We thus reverse the trial court’s order and remand this case for further proceedings
consistent with this opinion.
Background
Hoagland is the chairman of a political effort called the FairTax Campaign.
The purpose of the FairTax Campaign is to persuade the United States Congress to
pass a bill replacing the current federal income and payroll tax structures with a
consumption tax. Appellees Bill and Kari Butcher, both residents of California,
are the general partners of appellee Butcher & Butcher, a general partnership with
its principal place of business in California.
On July 7, 2009, Bill and Kari traveled to Houston, Texas and made a
presentation on behalf of Butcher & Butcher to a non-profit organization called
Americans for Fair Taxation (AFFT) during its board meeting in hopes of being
hired by AFFT to promote the FairTax Campaign. Hoagland was present at the
meeting. AFFT thereafter hired Butcher & Butcher.
Appellee OCTV Partners, LLC, a California limited liability company,
subsequently was formed to produce “political direct response television
commercials” promoting the FairTax Campaign and soliciting funds for AFFT.
Hoagland was one of three initial managers of OCTV, and Bill was one of five
members. Hoagland, in his capacity as a manager of OCTV, along with the other
managers and members of OCTV (including Bill), entered into an Operating
Agreement.1 Pursuant to the Operating Agreement, Hoagland was entitled to
yearly distributions of “Available Cash.”2
1
The record includes an unexecuted copy of the Operating Agreement. However,
Hoagland’s affidavit in support of his response to the special appearance states that the Operating
Agreement was executed, and appellees do not dispute this fact. The record does not show when
the Operating Agreement was executed, although it may have been during November 2009.
2
“Available Cash” was defined as “the amount of cash available for distribution to the
Members and Managers” to be distributed as follows: first, to the members until they had
received distributions totaling twice their capital contributions; second, 60 percent to the
2
On January 6, 2010, OCTV entered into an agreement with AFFT. Pursuant
to the OCTV-AFFT Agreement, OCTV agreed to produce infomercials soliciting
contributions for the FairTax Campaign. The first infomercial would be financed
by OCTV. Contributions would be sent to an escrow account in Houston, Texas.
Escrow funds would be used to compensate OCTV for its services and to finance
the infomercials. Hoagland wrote, helped develop and promote, and appeared in a
30-minute infomercial. Hoagland alleges that, after OCTV produced the
infomercial, Bill convinced Hoagland to take a $3,000 monthly flat fee in lieu of
receiving distributions of Available Cash under the Operating Agreement because
the infomercial campaign might not be successful.
On May 19, 2010, Bill and Kari delivered a report at another AFFT board
meeting in Hoagland’s presence detailing the success of OCTV’s infomercial.3 At
its July 29, 2010 board meeting, AFFT “had a discussion on the possible violations
of the fundraising agreement by Butcher & Butcher.” After the discussion, Bill
and Kari joined the meeting to explain their “financial performance and contract
violation issues.” After Bill and Kari’s presentation, the board determined that Bill
and Kari, on behalf of Butcher & Butcher, breached the OCTV-AFFT Agreement
by “engineer[ing] additional extra compensation.” The board decided to terminate
the OCTV-AFFT Agreement. Hoagland asserts appellees were fired by AFFT for
“inappropriately draining . . . monies, revenues, and other dollars generated by the
infomercial . . . for their own personal gain.”4 He also alleges he was not paid in
members and 40 percent to the managers until the members had received distributions totaling
four times their capital contributions; and thereafter, 60 percent to the managers and 40 percent
to the members.
3
The report is not in our record, but it is discussed in Hoagland’s affidavit in support of
his response to appellees’ special appearance.
4
According to Hoagland, the dispute between AFFT and appellees is being resolved
through arbitration.
3
accordance with the Operating Agreement or paid consulting fees that appellees
owed him.
Hoagland sued appellees on September 13, 2010, asserting claims for breach
of contract, quantum meruit, fraudulent inducement, and fraud, and seeking
injunctive relief to prevent appellees “from wrongfully appropriating and using
[Hoagland’s] likeness, name, and proprietary data in connection with a series of
infomercials and other social messaging medium [sic] such as You Tube [sic] and
Twitter in connection with . . . the ‘FairTax Campaign.’” Hoagland alleged the
following jurisdictional facts:
Each of the Defendants made written and oral misrepresentations of
material fact to the Plaintiff (while Plaintiff was physically located in
Harris County, Texas) via email and telephone conversations and in-
person meetings during calendar years 2009 and 2010, with the
intention that Plaintiff would rely upon such misrepresentations and
take action or refrain from taking certain actions within Harris
County, Texas. Furthermore, Defendants Bill Butcher and Kari
Butcher made trips to Houston, Texas, as part of their effort to
mislead Plaintiff, and attended meetings with Plaintiff during which
fraudulent misrepresentations were made by each of the Defendants to
the Plaintiff. Moreover, Defendants have sent money to Plaintiff in
accordance with an enforceable oral agreement during calendar years
2009 and 2010 for services performed by Plaintiff, but eventually
Defendants breached their oral agreement with Plaintiff by wrongfully
refusing to continue paying money to Plaintiff for services rendered in
the past and to be rendered in the future. Recently, in 2010,
Defendants wrongfully appropriated the name, likeness and
proprietary data belonging to the Plaintiff and refuse to stop the
unauthorized use of same. The wrongful appropriation includes the
public display and use of data within the State of Texas on You Tube
[sic] and other public social messaging sites such as Twitter.
The trial court granted a temporary restraining order restraining appellees from
“using or displaying or referencing Plaintiff’s name, image, likeness, voice, photos,
videos, scripts, data, or any other type of image or likeness of property of Plaintiff,
4
on You Tube [sic], Twitter, or any other form of social networking medium.”
Appellees filed a special appearance alleging that OCTV had no contacts
with Texas and Bill’s, Kari’s, and Butcher & Butcher’s contacts with Texas were
not related to the business transactions at issue in the lawsuit. The trial court
granted the special appearance and dismissed the underlying case for want of
jurisdiction. The trial court did not issue findings of fact or conclusions of law.
Hoagland filed a motion for new trial, which the trial court denied.
Discussion
Hoagland challenges the trial court’s grant of the special appearance,
dismissal of the underlying case, and denial of Hoagland’s motion for new trial.
Whether a court has personal jurisdiction over a nonresident defendant is a
question of law.5 Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801,
805–06 (Tex. 2002); Meader v. IRA Res., Inc., 178 S.W.3d 338, 342 (Tex. App.—
Houston [14th Dist.] 2005, no pet.). The trial court’s decision to grant or deny a
special appearance is subject to de novo review on appeal, but if a factual dispute
exists, an appellate court is called upon to review the trial court’s resolution of the
factual dispute as well. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d
789, 794 (Tex. 2002); Coleman, 83 S.W.3d at 806; Meader, 178 S.W.3d at 342–
43. If the trial court does not issue findings of fact, as in this case, a reviewing
court should presume the trial court resolved all factual disputes in favor of its
judgment. Coleman, 83 S.W.3d at 806; Meader, 178 S.W.3d at 343. Personal
jurisdiction over nonresident defendants satisfies the constitutional requirements of
due process when the defendant has purposefully established minimum contacts
5
We do not adjudicate the merits of the parties’ claims when conducting an analysis of
personal jurisdiction. Bougie v. Technical Risks, Inc., No. 14-03-01222-CV, 2004 WL 2902508,
at *5 (Tex. App.—Houston [14th Dist.] Dec. 16, 2004, no pet.) (mem. op.). Rather, we review
the claims and the evidence regarding only the jurisdictional facts. Id.
5
with the forum state and the exercise of jurisdiction is consistent with traditional
notions of fair play and substantial justice. Marchand, 83 S.W.3d at 795; Meader,
178 S.W.3d at 343.
I. Hoagland’s Burden to Plead Sufficient Jurisdictional Facts
Appellees argue that Hoagland did not meet his initial burden of “alleg[ing]
specific facts that rise to the level of general jurisdiction or specific jurisdiction.”
A plaintiff bears the initial burden of alleging facts sufficient to bring a non-
resident defendant within the terms of the Texas long-arm statute (i.e., for a tort
claim, the plaintiff must allege that the defendant committed tortious acts in
Texas). Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 658-59 (Tex. 2010);
Coleman, 83 S.W.3d at 807. The nonresident defendant then assumes the burden
of negating all bases of jurisdiction in the plaintiff’s allegations. Kelly, 301
S.W.3d at 658; Coleman, 83 S.W.3d at 807. “Because the plaintiff defines the
scope and nature of the lawsuit, the defendant’s corresponding burden to negate
jurisdiction is tied to the allegations in the plaintiff’s pleading.”6 Kelly, 301
S.W.3d at 658.
The Texas long-arm statute extends jurisdiction over a nonresident who
“commits a tort in whole or in part in [Texas].” Tex. Civ. Prac. & Rem. Code
§ 17.042(2)7; see also Kelly, 301 S.W.3d at 659. Fraud and fraudulent inducement
6
“If the plaintiff fails to plead facts bringing the defendant within reach of the long-arm
statute . . . , the defendant need only prove that it does not live in Texas to negate jurisdiction.”
Kelly, 301 S.W.3d at 658-59. When the pleading is wholly devoid of jurisdictional facts, the
plaintiff should amend the pleading to include the necessary factual allegations, allowing
jurisdiction to be based on evidence rather than allegations. Id. at 659.
7
The other two prongs of the long-arm statute, applicable to a nonresident who
“contracts . . . with a Texas resident and either party is to perform the contract in whole or in part
in this state” or who “recruits Texas residents . . . for employment inside or outside this state,”
may also apply because Hoagland alleges he is a Texas resident who entered into a contract with
appellees after they induced him in Texas to do so and that appellees “hired him to continue to
act as Chairman [of the FairTax Campaign], write virtually everything related to the
6
require (1) a material misrepresentation by a speaker who knew at the time it was
false or made it recklessly as a positive assertion without any knowledge of the
truth with the intent that the other party rely on the misrepresentation, (2) reliance
by the other party on the misrepresentation, and (3) resulting injury of the other
party. See In re FirstMerit Bank, N.A., 52 S.W.3d 749, 758 (Tex. 2001). Fraud
and fraudulent inducement are separate causes of action that share the same
elements. See id.; see also Haase v. Glazner, 62 S.W.3d 795, 798 (Tex. 2001).
Hoagland alleged in his live petition, in relevant part, that each appellee
“made written and oral misrepresentations of material fact to [Hoagland] . . . in
Harris County, Texas . . . via email and telephone conversations and in-person
meetings . . . with the intention that [Hoagland] would rely upon such
misrepresentations and take action or refrain from taking certain actions within
Harris County, Texas.” (Emphasis added.) Hoagland also alleged that appellees
each (1) “misrepresented their abilities and financial condition such that it was
believed they would bring enormous skill, expertise, and personal and donated
monies to the [FairTax Campaign] effort” and (2) fraudulently induced Hoagland
into signing the Operating Agreement. Hoagland further alleged that Bill
convinced Hoagland to take a $3,000 monthly fee in lieu of the fee to which he
was entitled under the Operating Agreement based on Bill’s representation that
Hoagland would benefit more financially from taking the monthly fee than from
campaign . . . as well as to appear on local and national media outlets and lead rallies and such.”
See Tex. Civ. Prac. & Rem. Code § 17.042(1), (3). However, Hoagland was required only to
allege facts bringing one of his claims within the terms of the statute. See Horizon Shipbuilding
v. BLyn II Holding, LLC, 324 S.W.3d 840, 847 (Tex. App.—Houston [14th Dist.] 2010, no pet.)
(holding plaintiff’s allegation that defendants committed torts in Houston, Texas was sufficient
to bring defendants under the long-arm statute for plaintiff’s claims of various forms of fraud and
negligent misrepresentation).
7
taking the fee outlined in the Operating Agreement.8
We conclude Hoagland pleaded jurisdictional facts that appellees committed
tortious acts—fraud and fraudulent inducement—in Texas. See Kelly, 301 S.W.3d
at 659-60 (holding plaintiff was required to allege defendants committed
fraudulent acts in Texas to satisfy his initial burden of pleading jurisdictional
facts); see also Horizon Shipbuilding, Inc. v. BLyn II Holding, LLC, 324 S.W.3d
840, 847 (Tex. App.—Houston [14th Dist.] 2010, no pet.) (holding plaintiff’s
allegation that defendants committed torts in Texas was sufficient to bring
defendants under the long-arm statute). Accordingly, Hoagland pleaded
allegations sufficient to bring appellees within the terms of the Texas long-arm
statute, and the burden shifted to appellees to negate every basis for jurisdiction
alleged by Hoagland. See Horizon Shipbuilding, Inc., 324 S.W.3d at 847.
II. Appellees’ Burden to Negate Every Basis for Jurisdiction
Hoagland argues the trial court erred in granting appellees’ special
appearance because appellees did not negate every ground for personal
jurisdiction. We agree. A nonresident defendant may negate jurisdiction on either
a factual or legal basis. Kelly, 301 S.W.3d at 659. Factually, the defendant may
present evidence that it has insufficient contacts with Texas, effectively disproving
the plaintiff’s allegations. Id. Legally, the defendant may show that even if the
plaintiff’s alleged facts are true, the evidence is legally insufficient to establish
jurisdiction. Id.
8
Hoagland alleged “Bill called [Hoagland] and asked him to take [the] $3,000 per month
flat fee.” Specific jurisdiction is not necessarily established by evidence that a nonresident
defendant made misrepresentations in a single telephone call to a Texas resident. Citrin
Holdings, LLC v. Minnis, 305 S.W.3d 269, 282 (Tex. App.—Houston [14th Dist.] 2009, no pet.)
(citing Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 791–92 (Tex. 2005)). But
fraudulent misrepresentations made over a series of contacts to induce a party to enter a
transaction can support personal jurisdiction. Id.
8
The contacts on which Hoagland relies in relevant part to support his
argument that the trial court could exercise jurisdiction over his claims are three
AFFT board meetings that Bill and Kari Butcher attended in Texas and Bill’s
telephone call urging Hoagland to accept a reduced fee under the Operating
Agreement.9 Hoagland averred that appellees made presentations during the board
meetings regarding, respectively, “their qualifications and past performance,”
“FairTax,” and “their performance under the ‘OCTV Partners, LLC Media Content
Production and Financial Agreement’”; appellees “made written and oral
misrepresentations of material fact” to Hoagland at the meetings; and, during the
phone call, Bill misrepresented to Hoagland how successful the infomercial would
be to induce Hoagland to accept a reduced fee. Appellees’ special appearance was
supported by affidavits executed by Bill, Kari, and the president of OCTV, Marc
Kassoff. Appellees admit Bill and Kari attended the meetings but deny that
Butcher & Butcher or Kari “made any representations to [Hoagland], in Texas,
regarding the business transaction made the basis of the captioned case.”10
(Emphasis added.) Bill did not deny making the phone call to Hoagland or
otherwise address it. Kassoff stated “[a]ny communications with Plaintiff
9
Hoagland also relies on the following contacts: (1) appellees “used . . . Hoagland to
solicit funds for OCTV on a national basis, both outside and inside the State of Texas,” OCTV
appointed Hoagland to serve as its manager “with broad powers to bind OCTV to agreements
made in Houston and elsewhere,” and OCTV entered into an agreement for an escrow account to
be set up in Houston; and (2) appellees made written and oral misrepresentations to Hoagland via
email and telephone conversations while Hoagland was in Houston. Because we hold that
appellees did not present evidence to negate jurisdiction based on torts they allegedly committed
in Texas at the three board meetings and during a phone call, we need not address the
significance of these other contacts. See Horizon Shipbuilding, Inc., 324 S.W.3d at 848 (citing
Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 339 (Tex. 2009) (“[T]he
minimum-contacts analysis is focused on the quality and nature of the defendant’s contacts,
rather than their number.”)); Id. (“Even a single act can support jurisdiction so long as it is
substantial.”).
10
It is unclear whether this statement challenges that the representations were made at all,
were made in the presence of Hoagland, were misrepresentations, or had a substantial connection
to the operative facts of the litigation.
9
regarding OCTV . . . that did not take place in California were conducted by
telephone.” Kassoff admitted that when Hoagland “entered into contract and
commenced business activity with OCTV . . . , [Kassoff] was not a manager or
officer of OCTV.”11
11
Hoagland responded with his own affidavit and the affidavit of Terry Stockholm,
AFFT’s acting secretary. Hoagland stated that (1) appellees “misrepresented their abilities and
financial condition such that it was believed they would bring enormous skill, expertise, and
personal and donated monies to the effort”; (2) these misrepresentations were made to Hoagland
while he was in Texas; and (3) the misrepresentations induced Hoagland into signing the
Operating Agreement. In support of this statement, Hoagland attached the AFFT board meeting
minutes from the July 7, 2009 board meeting which state that Bill and Kari made a presentation
to the board on behalf of Butcher & Butcher “regarding their qualifications and past
performance.” Hoagland was present at the meeting. Hoagland stated that appellees’
misrepresentations at this meeting also induced AFFT to enter into the OCTV-AFFT agreement.
Hoagland further stated that Bill and Kari made another presentation to AFFT on
May 19, 2010, with Hoagland and Stockholm in attendance. During that presentation, Bill and
Kari provided a report “tout[ing] the achievements of FairTax TV.” Stockholm stated the
presentation was “regarding the work [Bill, Kari, and Butcher & Butcher] had done since being
employed.” Hoagland attached the report as an exhibit. Stockholm prepared the board meeting
minutes, and they were attached as an exhibit.
Hoagland stated Bill and Kari made another presentation on July 29, 2010, “regarding
their financial performance and certain concerns about contract violations” to the AFFT board.
Hoagland did not state that he was present at this meeting; however, Stockholm was. Hoagland
and Stockholm both stated that the board “determined that these [appellees] breached their
agreement with AFFT, and that they had committed fraud and breach of contract by engineering
additional extra compensation for which they were not entitled.” Stockholm prepared the board
meeting minutes, and they were attached as an exhibit.
Appellees thereafter filed a supplemental special appearance and reply complaining that
Hoagland’s and Stockholm’s affidavits (1) failed to show “how [Hoagland and Stockholm]
obtained personal knowledge”; (2) contained legal arguments and conclusions; (3) only raised
fact issues but did not conclusively prove jurisdiction; (4) contained hearsay from inadmissible
documents and from AFFT board meetings; (5) made misleading statements regarding exhibits
to the affidavits; and (6) are conclusory. Appellees also argued that Hoagland “did not allege or
offer any proof that the alleged [f]raud was committed by . . . OCTV,” Hoagland only alleged
misrepresentations by Butcher & Butcher to AFFT, and even if appellees committed fraud, a
single act of fraud would not confer jurisdiction on the Texas court. Because we hold that
appellees did not negate jurisdiction based on appellees’ purportedly committing fraud in Texas,
we do not address the evidence presented by Hoagland or appellees’ objections to that evidence.
See Kelly, 301 S.W.3d at 659 (noting once defendant presents evidence that it has no contacts
with Texas, then plaintiff can respond with its own evidence to affirm its allegations).
10
Affidavits offered in a special appearance “shall be made on personal
knowledge [and] shall set forth specific facts as would be admissible in evidence.”
Tex. R. Civ. P. 120a(3); see also Ennis v. Loiseau, 164 S.W.3d 698, 703 (Tex.
App.—Austin 2005, no pet.). Special appearance affidavits must also be “direct,
unmistakable, and unequivocal as to the facts sworn to.” Ennis, 164 S.W.3d at
703; see also Wright v. Sage Eng’g, Inc., 137 S.W.3d 238, 250 n.8 (Tex. App.—
Houston [1st Dist.] 2004, pet. denied). A conclusory statement does not provide
the underlying facts to support the conclusion. Pipkin v. Kroger Tex., L.P., 383
S.W.3d 655, 670 (Tex. App.—Houston [14th Dist.] 2012, pet. filed). Conclusory
affidavits are not sufficient to raise fact issues because they are not credible or
susceptible to being readily controverted. Id. (citing Ryland Group v. Hood, 924
S.W.2d 120, 122 (Tex. 1996) (per curiam)). Affidavit testimony that is conclusory
is substantively defective and amounts to no evidence.12 Coastal Transp. Co. v.
Crown Cent. Petroleum Corp., 136 S.W.3d 227, 232 (Tex. 2004).
Here, appellees Kari, Bill, and Butcher & Butcher did not dispute that they
attended the three board meetings or that they made the statements alleged by
Hoagland. Appellees did not include any details regarding what statements were
made during the presentations, whether the statements were made only as part of
the presentations to a group, or whether appellees had any conversations with
Hoagland, and, if so, the content of those conversations. Appellees merely stated
they did not make misrepresentations to Hoagland in Texas regarding the business
transaction made the basis of the captioned case. We conclude these statements
are unsupported factual and legal conclusions. See Ennis, 164 S.W.3d at 703-04
(affirming trial court’s exclusion of nonresident’s statements that he did not have a
12
Objections relating to substantive defects in affidavits are not waived by the failure to
obtain a ruling from the trial court. McMahan v. Greenwood, 108 S.W.3d 467, 498 (Tex. App.—
Houston [14th Dist.] 2003, pet. denied).
11
substantial connection with Texas, plaintiffs’ claims did not result from and were
not related to any of affiant’s activities in Texas, affiant did not have any
continuing or systematic contacts with Texas, and affiant did not commit any tort
in Texas); see also Wright, 137 S.W.3d at 250 n.8 (holding nonresident’s statement
that he had committed no torts in Texas was properly excluded as conclusory).
Kassoff’s affidavit is similarly conclusory. Kassoff stated he was not a
manager or officer of OCTV when Hoagland “entered into [the] contract and
commenced business activity with OCTV.” Kassoff did not provide the
underlying facts to support his conclusions that OCTV “ha[d] never had any
contacts with Texas” and OCTV’s communications with Hoagland all took place
in California or on the telephone. See Ennis, 164 S.W.3d at 703-04; see also
Wright, 137 S.W.3d at 250 n.8. We conclude appellees did not negate jurisdiction
on a factual basis because they failed to present evidence that they had insufficient
contacts with Texas. See Kelly, 301 S.W.3d at 659.
We next analyze whether appellees negated jurisdiction on a legal basis by
showing even if Hoagland’s alleged facts were true, the evidence is legally
insufficient to support jurisdiction. See id. We thus address whether Hoagland’s
allegations, if true, established that appellees had sufficient minimum contacts with
Texas to support the exercise of personal jurisdiction.
Purposeful Availment. To make this determination, we first analyze
whether the nonresident defendants “purposefully availed” themselves of the
privilege of conducting business in Texas. Burger King Corp. v. Rudzewicz, 471
U.S. 462, 475 (1985); Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d
777, 784 (Tex. 2005). Purposeful availment is the “touchstone of jurisdictional
due process.” Holten, 168 S.W.3d at 784. Three key principles govern our
analysis of purposeful availment. Id. at 785. First, the court considers the
12
defendant’s own actions; it does not consider the unilateral activity of another
party. Id. Second, the court considers whether the defendant’s actions were
purposeful rather than “random, isolated, or fortuitous.” Id. Third, the defendant
must seek “some benefit, advantage, or profit by ‘availing’ itself” of the privilege
of doing business in Texas. Id. The defendant’s contacts must be considered as a
whole and not in isolation; we focus on the nature and quality of the contacts.
Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d
223, 230 n.11 (Tex. 1991); Citrin Holdings, LLC v. Minnis, 305 S.W.3d 269, 279
(Tex. App.—Houston [14th Dist.] 2009, no pet.). When there are multiple
defendants, the contacts of each defendant must be analyzed individually. See
Calder v. Jones, 465 U.S. 783, 790 (1984); Minnis, 305 S.W.3d at 279.
It is significant that appellees do not deny they conducted the presentations
in Texas. See Horizon Shipbuilding, Inc., 324 S.W.3d at 849. These were
appellees’ own actions. Attending the board meetings was purposeful and not
random or fortuitous because appellees intended to obtain business and keep an
ongoing business relationship with AFFT. Bill and Kari affirmed that they both
“traveled to Texas on business related to [AFFT].” They both also affirmed that
they “made several trips to Texas” on behalf of Butcher & Butcher “[o]ver the
period of approximately one year.” Also, as Hoagland alleged, OCTV was formed
to “provid[e] political advocacy and fundraising services” to promote the FairTax
Campaign, which OCTV does not deny.13 Thus, appellees sought to profit from
the presentations. See id. We conclude appellees purposely availed themselves of
the privilege of conducting business in Texas. See id. at 848-49.
13
OCTV argued it did not purposely avail itself of the privilege of doing business in
Texas because the Operating Agreement contained a choice-of-law clause selecting California
law. A choice- of-law clause is merely one factor to consider in determining whether a forum
state has personal jurisdiction over a nonresident defendant, but it is not dispositive. See Minnis,
305 S.W.3d at 282.
13
Substantial Connection to the Causes of Action. Minimum contacts may
give rise to two types of personal jurisdiction: specific jurisdiction and general
jurisdiction.14 Minnis, 305 S.W.3d at 279. When specific jurisdiction is asserted,
as here, the court focuses on the relationship between the defendant, the forum, and
the litigation. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408,
414 (1984); Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 575–76 (Tex.
2007). The cause of action must “arise out of or relate to” the nonresident
defendant’s contacts with the forum. Guardian Royal, 815 S.W.2d at 228.
Specific jurisdiction over a nonresident defendant is established if the defendant’s
activities were purposefully directed to the forum state and there is a substantial
connection between the defendant’s forum contacts and the operative facts of the
litigation. Moki Mac, 221 S.W.3d at 585.
Appellees argue attending the board meetings did not “relate to” Hoagland’s
claims and telephone calls cannot support personal jurisdiction in Texas.
Hoagland alleged fraud, fraudulent inducement, quantum meruit, and breach of
contract claims. Hoagland’s fraud and fraudulent inducement claims rest on what
appellees communicated or failed to communicate at the board meetings in
Houston and during Bill’s phone call to Hoagland. See Horizon Shipbuilding, Inc.,
324 S.W.3d at 850; see also In re FirstMerit Bank, 52 S.W.3d at 758 (listing
elements of fraud); Haase, 62 S.W.3d at 798 (noting fraud and fraudulent
inducement share same elements). These claims require that Hoagland relied on
what was or was not communicated and that Hoagland suffered injury as a result.
See Horizon Shipbuilding, Inc., 324 S.W.3d at 850. Thus, the operative facts for
14
A single basis for personal jurisdiction is sufficient to confer jurisdiction over a
defendant. Minnis, 305 S.W.3d at 279. The court need not address general jurisdiction if it finds
that a defendant is subject to specific jurisdiction. Id. If the court finds specific jurisdiction over
a defendant based on one cause of action, the court need not address jurisdiction as to any other
causes of action. Id.
14
these claims are events that occurred in Houston and the content of the phone
conversation between Bill and Hoagland. See id.; see Minnis, 305 S.W.3d at 282
(acknowledging a single telephone call, in conjunction with fraudulent
misrepresentations made over a series of contacts, can support personal
jurisdiction). Here, the alleged misrepresentations are the core of Hoagland’s fraud
claims and arguably of his breach of contract and quantum meruit claims because
he alleges he entered into the contracts at issue in reliance on the alleged
misrepresentations.15 See Horizon Shipbuilding, Inc., 324 S.W.3d at 850.
We conclude appellees did not negate jurisdiction on a legal basis because
they failed to show that Hoagland’s allegations, if true, would not support
jurisdiction. See Kelly, 301 S.W.3d at 659. Thus, appellees’ contacts with Texas,
as alleged by Hoagland, were sufficient to confer specific jurisdiction on the Texas
court.16
III. Traditional Notions of Fair Play and Substantial Justice
If the nonresident defendant has minimum contacts with the forum state, we
must then determine whether exercise of personal jurisdiction over the nonresident
offends traditional notions of fair play and substantial justice. Burger King, 471
U.S. at 476; Horizon Shipbuilding, Inc., 324 S.W.3d at 851. In making this
determination, we 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 effective relief, (4) the interstate judicial system’s interest in
obtaining the most efficient resolution of controversies, and (5) the shared interests
of the several states in furthering fundamental substantive social policies. Nogle &
15
Hoagland’s claims all arise from the same facts, so we do not need to analyze his other
claims for jurisdictional purposes.
16
We do not address general jurisdiction. See Minnis, 305 S.W.3d at 279.
15
Black Aviation, Inc. v. Faveretto, 290 S.W.3d 277, 285 (Tex. App.—Houston [14th
Dist.] 2009, no pet.). When the nonresident defendant has purposefully established
minimum contacts with the forum state, only in rare instances will the exercise of
jurisdiction not comport with fair play and substantial justice. Angelou v. African
Overseas Union, 33 S.W.3d 269, 281 (Tex. App.—Houston [14th Dist.] 2000, no
pet.) (citing Guardian Royal, 815 S.W.2d at 231).
In a special appearance, a defendant bears the burden of presenting “a
compelling case that the presence of some consideration would render jurisdiction
unreasonable.” Horizon Shipbuilding, Inc., 324 S.W.3d at 851 (citing Guardian
Royal, 815 S.W.2d at 231). Despite this burden, appellees did not analyze this
issue in their special appearance motion. They merely listed the factors a court
must consider, but did not argue that exercise of jurisdiction would offend
traditional notions of fair play and substantial justice. As discussed above, we
have concluded appellees purposely availed themselves of the Texas forum and
there is a substantial connection between appellees’ contacts with Texas and
Hoagland’s claims. Moreover, the state of Texas has an obvious interest in
providing a forum for resolving disputes involving its citizens, particularly disputes
in which the defendant allegedly committed a tort in whole or in part in Texas. See
id.; see also D.H. Blair Inv. Banking Corp. v. Reardon, 97 S.W.3d 269, 278 (Tex.
App.—Houston [14th Dist.] 2002, pet. dism’d w.o.j.). We hold appellees did not
show the trial court’s exercise of personal jurisdiction over the nonresident would
offend traditional notions of fair play and substantial justice.
Conclusion
Having concluded appellant pleaded jurisdictional facts that appellees
committed tortious acts in Texas and appellees did not negate every basis for
jurisdiction, we conclude the trial court erred in granting appellees’ special
16
appearance and dismissing the case. We reverse the trial court’s order and remand
for proceedings consistent with this opinion.
/s/ Martha Hill Jamison
Justice
Panel consists of Justices Frost, Christopher, and Jamison (Frost, J., concurring)
(Christopher, J., dissenting).
17