The opinion
Opinion issued May 9, 2002
In The
Court of Appeals
For The
First District of Texas
NO. 01-01-00689-CV
____________
INTERNATIONAL ELEVATOR COMPANY, Appellant
V.
SAMUEL GARCIA, SR. and MARIA GARCIA, Appellees
On Appeal from the 149th District Court
Brazoria County, Texas
Trial Court Cause No. 10094*RM99
O P I N I O N
This is an accelerated appeal from the trial court's denial of a special
appearance filed by appellant, International Elevator Company (International
Elevator). In two issues, International Elevator contends the trial court erred in
denying its special appearance. In a cross-point, appellees, Samuel Garcia, Sr. and
Maria Garcia (collectively, the Garcias), contend the trial court erred in admitting
unauthenticated bank records from International Elevator. We reverse.
Background
On July 19, 1999, Samuel Garcia was injured while on board an elevator lift
in Freeport, Texas. Garcia suffered multiple injuries including fractures of his legs,
ankles, left knee, patella, and pelvis. He is permanently disabled and cannot walk
without the assistance of a walker.
The elevator was manufactured by Viola Industries-Elevator Division, Inc.
(Viola Industries), a Kansas corporation owned by Bob Viola and Barry Viola, who
are father and son, respectively. On November 22, 1996, Viola Industries sold its
assets to International Elevator. The Asset Purchase Agreement (Agreement),
conveyed all machinery, equipment, vehicles, and accounts receivables, including
accounts receivables of any projects and orders received before December 31, 1996,
from Viola Industries to International Elevator. The Agreement stated that
International Elevator would not assume any of Viola Industries' debts, obligations,
or other liabilities. Viola Industries and International Elevator are Kansas
corporations. Garcia is a Texas resident.
On December 2, 1996, Industrial Hoist Maintenance Systems (Industrial Hoist),
purchased a deflector sheave and shaft from Viola Industries for the elevator on
which Garcia was injured. The Garcias contend the deflector sheave and shaft
proximately caused the elevator crash. The parties stipulated that general jurisdiction
was not at issue, and the Garcias asserted only specific jurisdiction at the special
appearance hearing and continue that contention on appeal.
International Elevator contends it is a non-resident and does not have sufficient
minimum contacts with Texas to invoke specific jurisdiction. International Elevator
contends it did not seek to sell the elevator parts to Industrial Hoist and never sold the
parts to Industrial Hoist. In its special appearance, International Elevator relied on
the deposition testimony of its president, Barry Viola, who stated that International
Elevator is a Kansas corporation, and the elevator parts in question were sold by
Viola Industries, not International Elevator. Bob Viola, president of Viola Industries
confirmed that the elevator parts were sold by Viola Industries, and not International
Elevator. International Elevator also produced a check from Industrial Hoist paid to
Viola Industries in the amount of $148.62, the amount of the elevator parts in
question. International Elevator also produced its bank accounts that did not reveal
a payment from Industrial Hoist for this amount.
Standard of Review
The burden of proof is on the non-resident to negate all possible grounds for
personal jurisdiction. Kawasaki Steel Corp. v. Middleton , 699 S.W.2d 199, 203 (Tex.
1985); Garner v. Furmanite Australia Pty., Ltd. , 966 S.W.2d 798, 802 (Tex.
App.--Houston [1st Dist.] 1998, pet. denied). Existence of personal jurisdiction is
a question of law, but that determination must sometimes be preceded by the
resolution of underlying facts. Preussag Aktiengesellschaft v. Coleman , 16 S.W.3d
110, 113 (Tex. App.--Houston [1st Dist.] 2000, pet. dism'd w.o.j.); James v. Illinois
Cent. R.R. Co. , 965 S.W.2d 594, 596 (Tex. App.--Houston [1st Dist.] 1998, no pet.).
When the trial court does not enter findings of fact or conclusions of law, we resolve
factual disputes in favor of the trial court's order and must determine whether the
challenged findings are so against the weight and preponderance of the evidence so
as to be manifestly erroneous or unjust. American Type Culture Collection Inc. v.
Coleman, 26 S.W.3d 37, 40 (Tex. App.--Houston [1st Dist.] 2000, pet. granted Nov.
15, 2001); Minucci v. Sogevalorsa, 14 S.W.3d 790, 794 (Tex. App.--Houston [1st
Dist.] 2000, no pet.). Because there were no findings of fact and the parties contest
the underlying facts, we review the trial court's decision under a factual sufficiency
standard. Minucci, 14 S.W.3d at 794 .
Jurisdiction
A court may assert personal jurisdiction over a non-resident defendant only if
the requirements of both the United States Constitution and the Texas long-arm
statute are satisfied. CSR Ltd. v. Link , 925 S.W.2d 591, 594 (Tex. 1996) (orig.
proceeding); Helicopteros Nacionales de Colombia, S.A. v. Hall , 466 U.S. 407, 414 ,
104 S. Ct. 1868, 1872 (1984). The Texas long-arm statute allows a Texas court to
exercise personal jurisdiction over a non-resident defendant who does business in
Texas, and reaches as far as the federal and state constitutional guarantees of due
process allow. Tex. Civ. Prac. & Rem. Code Ann. § 17.042 (Vernon 1997); Garner
v. Furmanite Australia Pty., Ltd., 966 S.W.2d 798, 802 (Tex. App.--Houston [1st
Dist.] 1998, pet. denied). The requirements of the Texas long-arm statute are satisfied
if the exercise of personal jurisdiction comports with federal due process limitations.
CSR Ltd., 925 S.W.2d at 594 .
A state may assert personal jurisdiction over a non-resident defendant only if
the defendant has some minimum, purposeful contacts with the state, and the exercise
of jurisdiction will not offend traditional notions of fair play and substantial justice.
Dawson-Austin v. Austin , 968 S.W.2d 319, 326 (Tex. 1998). A non-resident that has
purposefully availed itself of the privileges and benefits of conducting business in
Texas has sufficient contacts with the forum to confer personal jurisdiction. CSR
Ltd. , 925 S.W.2d at 594 ; Garner , 966 S.W.2d at 803 . A defendant should not,
however, be subject to the jurisdiction of a Texas court based upon random,
fortuitous, or attenuated contacts. CSR Ltd., 925 S.W.2d at 595 . A non-resident
defendant must have purposefully established such minimum contacts with the forum
that it could reasonably anticipate being sued there. Burger King Corp. v. Rudzewicz ,
471 U.S. 462, 475 ; 105 S. Ct. 2174, 2183 (1985).
The parties stipulated at the special appearance hearing that general jurisdiction
was not being asserted. We will therefore only address specific jurisdiction. See
Pessina v. Rosson, No. 03-01-00204-CV, slip op. at 5 (Tex. App.--Austin Nov. 15,
2001, pet. filed Feb. 4, 2002) (addressing only specific jurisdiction when parties
stipulated general jurisdiction not at issue in special appearance hearing).
Specific jurisdiction is established if the defendant's alleged liability arises
from, or is related to, an activity conducted within the forum. Guardian Royal Exch.
Assurance, Ltd. v. English China Clays, P.L.C. , 815 S.W.2d 223, 227 (Tex. 1991).
The exercise of personal jurisdiction is proper when the contacts proximately result
from actions of the non-resident defendant that create a substantial connection with
the forum state. Id. at 226 . If the non-resident defendant has purposefully availed
itself of the privileges and benefits of conducting business in a state, it has sufficient
contacts to confer personal jurisdiction. Burger King , 471 U.S. at 475 , 105 S. Ct. at
2183 .
Evidence of Contacts with Texas
The Garcias contend the trial court had jurisdiction over International Elevator
because International Elevator sold the defective elevator parts that caused the injury
or because International Elevator acted with Viola Industries under a joint enterprise
theory.
Sale of Elevator Parts
The Garcias contend the Agreement between Viola Industries and International
Elevator proves that International Elevator is liable for all sales orders relating to
elevator parts prior to December 31, 1996. The Garcias did not introduce any other
evidence that International Elevator sold the defective elevator parts in question.
International Elevator responds that it did not assume liabilities from Viola Industries,
and International Elevator only had the right to fill any outstanding orders until
December 31, 1996. The Agreement was signed November 22, 1996, and the
defective elevator parts were sold December 2, 1996. Barry and Bob Viola testified
that the Agreement took effect January 1, 1997.
Under Section 6.2 of the Agreement, Viola Industries was responsible for
completing all pending contracts. The clause continues to state that, if Viola
Industries were unable to complete the pending contracts, International Elevator
would complete the jobs. Although the sale of the defective elevator parts occurred
before January 1, 1997, there is no evidence that International Elevator sold the
elevator parts in question.
Barry Viola, president of International Elevator, testified that International
Elevator did not sell the elevator sheave and shaft. Bob Viola, president of Viola
Industries, stated Viola Industries sold the elevator parts. International Elevator also
produced a check from Industrial Hoist to Viola Industries for the amount of the
elevator parts.
Moreover, under Section 6.1 the Agreement, International Elevator did not
assume any of Viola Industries' debts, obligations, or other liabilities. A corporation
acquiring the assets of a selling corporation incurs no liability of the selling
corporation unless the acquiring corporation expressly assumes that liability. Tex.
Bus. Corp. Act Ann. Art. 5.10 (B)(2) (Vernon Supp. 2002). Therefore, International
Elevator cannot be held liable for any of Viola Industries' liabilities under the
Agreement.
Although the Agreement appears to give International Elevator the right to
assume sales orders placed before December 31, 1996, all the evidence presented at
the special appearance hearing indicated that Viola Industries sold the elevator parts
in question. Bob Viola stated that Viola Industries sold the parts in question.
Industrial Hoist paid Viola Industries $148.62 for the parts in question. International
Elevator denies it sold the parts, and the only evidence of the transaction indicates
Viola Industries sold the parts in question.
We hold that the great weight and preponderance of the evidence shows that
International Elevator did not sell the elevator parts, thereby negating the sale as a
basis for an assertion of specific jurisdiction.
Joint Enterprise Theory
In the alternative, the Garcias contend that, if Viola Industries sold the elevator
parts in question, Viola Industries and International Elevator were engaged in a joint
enterprise, and that International Elevator is subject to the jurisdiction of Texas on
that basis.
Joint enterprise liability renders each party an agent of the other, and, thus,
holds each responsible for the negligent act of the other. Texas Dept. of Transp. v.
Able, 35 S.W.3d 608, 613 (Tex. 2000) (citing Shoemaker v. Estate of Whistler, 513
S.W.2d 10, 14 (Tex. 1974)). The elements of a joint enterprise are: (1) an agreement,
express or implied, among the members of the group; (2) a common purpose to be
carried out by the group; (3) a community of pecuniary interest in that purpose,
among the members; and (4) an equal right to a voice in the direction of the
enterprise, which gives an equal right of control. Id. at 613 (citing to Restatement
(Second) of Torts § 491 cmt. c (1965); Blount v. Bordens Inc., 910 S.W.2d 931,
933 (Tex. 1995); Triplex Communications, Inc. v. Riley, 900 S.W.2d 716, 718 (Tex.
1995)).
Neither party has cited a case, nor can we identify any authority, that addresses
personal jurisdiction based on a joint enterprise theory. International Elevator
contends Texas has specifically rejected the argument that a non-resident's contacts
may be imputed to another non-resident to support personal jurisdiction. See
National Indus. Sand Ass'n v. Gibson, 897 S.W.2d 769, 773 (Tex. 1995). We agree.
The record here shows no evidence of any factors of a joint enterprise.
International Elevator and Viola Industries did not have an agreement, express or
implied, that demonstrated a common purpose, a pecuniary interest, or an equal right
to vote in the enterprise. See Able, 35 S.W.3d at 613 . To the contrary, Viola
Industries sold all of its assets to International Elevator and ceased to do business.
Moreover, even if the factors of a joint enterprise had been shown, one corporation's
actions cannot be imputed to another corporation's actions for the purposes of
asserting personal jurisdiction. Gibson, 897 S.W.2d at 773 .
We conclude that International Elevator has negated the joint enterprise theory
as a basis for asserting specific jurisdiction. Under a factual sufficiency review, we
hold that the trial court's finding was so against the weight and preponderance of the
evidence that it was manifestly erroneous and unjust.
The Garcias' Cross-Point
In their cross-point, the Garcias contend the trial court erred in admitting bank
records of International Elevator's accounts at Home National Bank in Arkansas City,
Kansas. The bank records were 20 pages of deposit slips made in January and
February of 1999. The Garcias contend the bank records were not properly
authenticated and contain inadmissible hearsay. In addition, the Garcias contend they
were not given the opportunity to inspect those records. The Garcias do not contest
the admissibility of the check from Industrial Hoist to Viola Industries.
We need not address this issue because it is not necessary to rely on these bank
records from Home National Bank to negate all grounds for asserting personal
jurisdiction. First, the Agreement and Texas law clearly state that a corporation
acquiring assets cannot be held liable for a selling corporation's liabilities unless the
acquiring corporation specifically assumes those liabilities. The testimonies of the
presidents of Viola Industries and International Elevator indicate that Viola Industries
sold the elevator parts in question. Moreover, the check from Industrial Hoist to
Viola Industries supports the conclusion that Viola Industries sold the parts in
question and received payment for the parts. We hold that all of the evidence
indicates Viola Industries sold the parts in question, and any error in admitting the
bank records was harmless.
Accordingly, we overrule the Garcias' cross-point.
Conclusion
Based on the great weight and preponderance of the evidence, the trial court's
denial of International Elevator's special appearance was erroneous as a matter of
law. We reverse the judgment of the trial court, and render judgment dismissing,
without prejudice, appellant, International Elevator Company, from this cause.
Tim Taft
Justice
Panel consists of Justices Taft, Radack, and Price. (1)
Publish. Tex. R. App. P. 47.
1.
The Honorable Frank C. Price, former Justice, Court of Appeals, First District
of Texas at Houston, participating by assignment.