Max Protech, Inc v. John Herrin

Affirmed and Opinion filed April 5, 2011.

In The

Fourteenth Court of

Appeals

___________________

NO. 14-10-00825-CV

___________________

Max Protetch, Inc. , Appellant

V.

John A. Herrin , Appellee

On

Appeal from the 125th District Court

Harris County,

Texas

Trial Court Cause No. 2009-29153

OPINION

In this accelerated interlocutory appeal, appellant

Max Protetch, Inc. (Protetch) challenges the trial court’s denial of its special

appearance. Concluding the court has personal jurisdiction over Protetch, we

affirm.

Background

Appellee

John A. Herrin is a resident of Houston. Protetch is a New York corporation

authorized to fabricate, promote, price, and sell limited editions of the works

of deceased artist Scott Burton. Max Protetch (Mr. Protetch) is the president

of Protetch. According to Mr. Protetch, Protetch has eight full-time and

part-time employees, all of whom work in New York.

In

2005, after researching Burton’s furniture designs and personally inspecting

pieces in galleries in San Antonio, Dallas, and Protetch’s gallery in New York

City, Herrin contracted to purchase a four-hundred pound stainless-steel Scott

Burton table from Protetch. All negotiations leading to the contract occurred

in New York, and sale of the table occurred there. Herrin assumed

responsibility for shipping the piece from New York to Texas, with the sale

expressly “FOB New York.” [1]

Herrin

made three equal payments, two of which he drafted in Houston and sent to

Protetch in New York. According to Herrin, before he received the table,

Protetch employees regularly communicated with him.

In

May 2007, the table was delivered to Herrin’s residence in Houston. Herrin

observed that the table was damaged and did not conform to the agreed

specifications, particularly with regard to the color of the finish. According

to Herrin, he immediately informed Protetch the table was non-conforming; and,

thereafter, Protetch employees repeatedly contacted him regarding the table.

In

July 2007, Mr. Protetch traveled to Houston to participate in a panel

discussion at the Museum of Fine Arts. While in Houston, Mr. Protetch

inspected the table at Herrin’s home. It is not clear which party initiated

the visit.

According

to Herrin, Mr. Protetch acknowledged in Herrin’s home that the table was

damaged, and Herrin further told Mr. Protetch he would not accept the table

with its current finish. Mr. Protetch told Herrin he would have the table

repaired and it could also be refinished.

The

table was returned to New York, allegedly at Herrin’s expense, but it could not

be repaired or refinished. [2]

Protetch did not return the table to Herrin, but, according to Herrin, Mr.

Protetch indicated the company would construct another table conforming to the

agreed specifications. When Herrin received photographs of the second table,

he concluded the second table also did not meet the specifications. After

communicating with Protetch employees, Herrin believed Protetch would not

construct and deliver a conforming table, and he requested that Protetch refund

his money. According to Herrin, Protetch then ceased communication with him.

Protetch kept both tables and Herrin’s money.

On May 8, 2009, Herrin

sued Protetch, alleging claims for breach of contract and violation of the

Texas Theft Liability Act. [3]

Herrin alleged, “Max Protetch, Inc. is a New York Corporation that does

business in the State of Texas, but does not maintain a regular place of

business or a designated agent for service of process, as required by Texas

law.”

Protetch filed a verified

special appearance “to the entire proceeding” and an answer subject thereto.

Protetch alleged it is a corporation organized under the laws of New York, with

its principal place of business in Manhattan, New York. Protetch argued the

court had neither general nor specific jurisdiction over it. In a subsequently

filed affidavit, Mr. Protetch averred, “All negotiations occurred in New York,

and the sale of the piece, for $65,000.00, occurred in New York. Plaintiff

assumed responsibility for shipping the piece from New York to Texas, and the

sale was expressly ‘FOB New York.’”

On

August 16, 2010, Herrin filed a second amended petition, adding a claim for

fraud and the following jurisdictional facts: (1) Mr. Protetch met with Herrin

at Herrin’s home in Houston and made representations which resulted in the

table’s return to New York; and (2) Max Protetch’s employees regularly

contacted Herrin in Houston about Herrin’s dissatisfaction with both tables,

but abruptly ceased contact when Herrin demanded a refund. On the same date,

the court held a non-evidentiary hearing, during which Herrin acknowledged he

was not asserting general jurisdiction. The court denied Protetch’s special

appearance, and this interlocutory appeal ensued.

Analysis

In

its sole issue, Protetch argues the trial court erred in denying its special

appearance because Texas does not have specific jurisdiction over Protetch.

Burden

of Proof and Standard of Review

The

plaintiff bears the initial burden of pleading sufficient allegations to bring

a nonresident within the provisions of the long-arm statute. BMC Software

Belg., N.V. v. Marchand , 83 S.W.3d 789, 793 (Tex. 2002). The nonresident

defendant then bears the burden of proof to negate all bases of personal

jurisdiction asserted by the plaintiff. Kelly v. Gen. Interior Constr. Inc. ,

301 S.W.3d 653, 658 (Tex.

2010). [4]

If

the plaintiff does not plead sufficient jurisdictional facts, the defendant

meets its burden to negate jurisdiction by proving it is not a Texas resident.

Id . at 658–59. In determining whether the plaintiff satisfied its

burden, a court may consider the plaintiff’s pleadings as well as its response

to the defendant’s special appearance. See Tex. R. Civ. Pro. 120a(3); Touradji

v. Beach Capital P’ship, L.P., 316 S.W.3d 15, 23 (Tex. App.—Houston [1st

Dist.] 2010, no pet.). In

conducting our review, we accept as true the allegations in the petition. Pulmosan

Safety Equip. Corp. v. Lamb , 273 S.W.3d 829, 835 (Tex. App.—Houston [14th

Dist.] 2008, pet. denied).

The existence of personal jurisdiction is a question of law. BMC

Software , 83 S.W.3d at 794 . On appeal, we consider all of the evidence

before the trial court on the question of jurisdiction. Horizon

Shipbuilding, Inc. v. BLyn II Holding, LLC , 324 S.W.3d 840, 845 (Tex.

App.—Houston [14th Dist.] 2010, no pet.)

When, as in the present case, a trial court does not issue findings of

fact and conclusions of law with its special appearance ruling, we infer “all

facts necessary to support the judgment and supported by the evidence.” BMC

Software , 83 S.W.3d at 795 ; Horizon , 324 S.W.3d at 846 . These

inferred findings are not conclusive, however, and may be challenged for legal

and factual sufficiency when this court has a complete record on appeal. BMC

Software , 83 S.W.3d at 795 ; Cerbone v. Farb , 225 S.W.3d 764, 767

(Tex. App.—Houston [14th Dist.] 2007, no pet.).

Legal

Principles Relevant to Personal Jurisdiction

Texas

courts may assert personal jurisdiction over a nonresident if (1) the Texas

long-arm statute authorizes the exercise of jurisdiction, and (2) the exercise

of jurisdiction is consistent with federal and state constitutional due-process

guarantees. Moki Mac River Expeditions v. Drugg , 221 S.W.3d 569, 574

(Tex. 2007); Horizon , 324 S.W.3d at 847 . The long-arm statute provides

in relevant part:

In addition

to other acts that may constitute doing business, a nonresident does business

in this state if the nonresident:

(1)

contracts by mail or otherwise with a Texas resident and either party is to

perform the contract in whole or in part in this state; [or]

(2)

commits a tort in whole or in part in this state . . . .

Tex. Civ.

Prac. & Rem. Code § 17.042.

The “doing business” language “allows the statute to ‘reach as far as the

federal constitutional requirements of due process will allow.’” Moki Mac ,

221 S.W.3d at 575 (quoting Guardian Royal Exch. Assurance, Ltd. v. English

China Clays, P.L.C. , 815 S.W.2d 223, 226 (Tex. 1991)). Therefore, when a

jurisdictional assertion meets federal due process standards, the Texas

long-arm statute requirements are also satisfied. Id. ; Horizon ,

324 S.W.3d at 847 .

State statutory and federal due-process requirements are satisfied if (a)

the nonresident has minimum contacts with Texas, and (b) exercise of personal

jurisdiction over the nonresident does not offend traditional notions of fair

play and substantial justice. Helicopteros Nacionales de Colombia, S.A. v.

Hall , 466 U.S. 408, 414 , 104 S. Ct.

1868, 1872 (1984) (citing Int’l Shoe Co. v. Washington , 326 U.S. 310,

316 , 66 S. Ct. 154, 158 (1945)). Minimum contacts suffice for personal

jurisdiction when the non-resident purposefully avails itself of the privilege

of conducting activities within the forum state and thus invokes the benefits

and protections of its laws. Moki Mac , 221 S.W.3d at 575 ; Horizon ,

324 S.W.3d at 847 .

The “purposeful availment” inquiry has three parts. Moki Mac , 221

S.W.3d at 575 ; Horizon , 324 S.W.3d at 847 . First, only the defendant’s

contacts with the forum are relevant. Moki Mac , 221 S.W.3d at 575 ; Horizon ,

324 S.W.3d at 847–48. Second, the contacts on which jurisdiction depends must

be purposeful, rather than random, fortuitous, or attenuated. Moki Mac ,

221 S.W.3d at 575 ; Horizon , 324 S.W.3d at 848 . Third, “the ‘defendant

must seek some benefit, advantage or profit by “availing” itself of the

jurisdiction.’” Moki Mac , 221 S.W.3d at 575 (quoting Michiana Easy

Livin’ Country, Inc. v. Holten , 168 S.W.3d 777, 785 (Tex. 2005)).

When, as in this case, the plaintiff alleges only specific jurisdiction,

we focus on the relationship among the defendant, the forum, and the

litigation. Id . at 575–76. “Specific jurisdiction is established if

the defendant’s alleged liability ‘aris[es] out of or [is] related to’ an

activity conducted within the forum.” Id . at 576 (quoting Helicopteros ,

466 U.S. at 414, n.8 , 104 S. Ct. at 1872 n.8). The relevant test for

relatedness is whether a substantial connection exits between the defendant’s

forum contacts and the operative facts of the litigation. Id. at 585; Horizon ,

324 S.W.3d at 849 .

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. Horizon , 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. Id. 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. Id.

Application to Jurisdictional Facts

The Long-arm Statute

As set forth above, Herrin, a

Texas resident, alleged in part that (1) he and Protetch entered into a

contract which involved delivery of a table in Texas and (2) Protetch’s

president made misrepresentations to him while in Texas. Thus, Herrin alleged

Protetch did business in the state so as to bring it under Texas Civil Practice

and Remedies Code section 17.042. [5]

See Tex. Civ. Prac. & Rem. Code § 17.042. We therefore consider

whether exercise of jurisdiction over Protetch is consistent with due process

guarantees.

Due Process — Minimum Contacts

To determine whether the pleadings

and jurisdictional facts establish the minimum contacts component of federal

due process, we consider whether those facts show (1) Protetch purposefully

availed itself of the privilege of operating in Texas and (2) Protetch ’s alleged liability arises out of, or is related to,

an activity it conducted within Texas. See Moki Mac , 221 S.W.3d at

575–76.

Purposeful

Availment

It

is essential there be some act by which the defendant purposefully availed

itself of the privilege of conducting activities within the forum state such

that the defendant can reasonably foresee being haled into court there. See

Burger King Corp. v. Rudzewicz , 471 U.S. 462, 474 , 105 S. Ct. 2174, 2183

(1985); Michiana , 168 S.W.3d at 784 . As set forth above, three factors

are relevant to the purposeful availment inquiry.

Protetch’s

contacts. First, only Protetch’s Texas contacts, not those of Herrin or a

third party, are relevant to the analysis. Moki Mac , 221 S.W.3d at 575 ;

Horizon , 324 S.W.3d at 847–48. In his pleadings and response to

Protetch’s special appearance, Herrin alleged the following Texas contacts by

Protetch:

·

before delivery of the table,

Protetch’s employees regularly communicated with Herrin in Houston;

·

Protetch delivered the table to

Herrin in Harris County;

·

Protetch’s employees regularly

contacted Herrin in Houston regarding Herrin’s dissatisfaction with the

original table; [6]

·

Mr. Protetch, on behalf of

Protetch, met with Herrin at Herrin’s home in Houston, during which visit, Mr.

Protetch misrepresented that the table could be repaired and refinished;

·

after the table was returned to

New York and it was clear the table could not be refinished, Mr. Protetch

represented to Herrin he would make a second, conforming, table;

·

Protetch sent photographs of the

second table to Herrin in Houston; and

·

Protetch’s employees contacted

Herrin in Houston regarding the second table.

Merely contracting with a resident of the forum

state or engaging in communications during performance of the contract generally

is insufficient to subject a nonresident to the forum’s jurisdiction. See Olympia

Capital Assocs., L.P. v. Jackson , 247 S.W.3d 399, 417 (Tex. App.—Dallas

2008, no pet.); Credit Commercial de France, S.A. v. Morales , 195 S.W.3d

209 , 220–21 (Tex. App.—San Antonio 2006, pet. denied). In the present case,

however, Herrin not only alleged a contract to be performed in part in Texas,

but also regular communication between Protetch personnel and Herrin, including

a face-to-face meeting in Houston during which Mr. Protetch allegedly made

misrepresentations inherently related to the contract and which could support a

separate cause of action in tort.

Purposeful contacts. The second

part of the purposeful-availment analysis requires that the contacts on which

jurisdiction depends must be purposeful, rather than random, fortuitous, or

attenuated. Moki Mac , 221 S.W.3d at 575 ; Horizon , 324 S.W.3d at

848 . As discussed above, Herrin alleges regular communication with Protetch

employees. Thus, the present case differs from Michiana , in which the

alleged tort occurred in a single telephone conversation initiated by a Texas

resident. See Michiana , 168 S.W.3d at 791–92.

Herrin also relies on Mr. Protetch’s visit

to Houston and the alleged misrepresentations Herrin made during that visit. In

his affidavit, Herrin averred, “Mr. Max Protetch . . . informed me that he

would be traveling to Houston in July 2007 and that he wanted to inspect the

table prior to taking any further action.” In contrast, Mr. Protetch averred

that, by the time of his 2007 visit, Herrin, “had already received the Scott

Burton table. He asked me to come to his location to view the Scott Burton

piece because he had complaints with that table. Because I was in Houston for

the speaking engagement, I agreed to his request.” Thus, the parties dispute

who initiated the contact in Houston. Assuming (as would support the judgment)

that Mr. Protetch initiated the Houston contact, we hold that this meeting and

the representations allegedly made there were purposeful contacts. See

Horizon , 324 S.W.3d at 848–49 (concluding two meetings in Houston were

purposeful when Texas resident did not compel foreign residents to attend and

representations foreign residents made in Houston could have concerned critical

aspects of contract previously executed); see also Alliance

Royalties, LLC v. Boothe , 329 S.W.3d 117, 126 (Tex. App.—Dallas 2010, no

pet.) (stating trial court could have concluded appellant had purposeful

contacts with Texas when transactions involved Texas real property, contracts

with Texas entities, travel to Texas, representations made in Texas, and

attempts at dispute resolution in Texas); GJP, Inc. v. Ghosh , 251 S.W.3d

854, 879 (Tex. App.—Austin 2008, no pet.) (observing that, although South

Dakota defendant’s previously-planned trip to Texas may have fortuitously

created a good opportunity to perform the subject sale of car in Texas,

defendant nevertheless acted purposefully in opting to do so).

Although the telephone communications alone may not

amount to sufficient minimum contacts, see Michiana , 168 S.W.3d at 791

(“[C]hanges in technology have made reliance on phone calls obsolete as proof

of purposeful availment.”), the face-to-face meeting in Houston tips the

scales. At that meeting, a purposeful contact on Texas soil, Mr. Protetch made

representations that form a substantial portion of the core of the litigation.

Moreover, the meeting amounted to more than just allegedly committing a tort in

Texas. See id. at 788–91 (discussing committing a tort in Texas

as basis for personal jurisdiction). Mr. Protetch voluntarily came to Texas,

and while he was here he purposefully conducted business with a Texas resident.

Because of Mr. Protetch’s actions, we believe Protetch crossed a bright line

and purposefully availed itself of the privilege of conducting business in

Texas.

Benefit, advantage, or profit. In

analyzing purposeful availment, we last consider whether Protetch sought a benefit,

advantage, or profit by availing itself of Texas. See Moki Mac ,

221 S.W.3d at 575 ; Michiana , 168 S.W.3d at 785 & n.32. The trial

court could have found that Protetch sought to benefit in two regards. First, by

virtue of the contract, it would, and allegedly did, receive payments totaling

$65,000 from Herrin. Second, by virtue of the purported misrepresentations in

Houston and the subsequent refusal to return Herrin’s payment, Protetch now has

both the table and Herrin’s payment.

For the preceding reasons, we conclude the

pleadings and evidence support the conclusion that Protetch purposefully

availed itself of the privilege of conducting activities in Texas.

Substantial Connection to the Operative

Facts of the Litigation

We further conclude there was evidence

Herrin’s claims arose out of, or were related to, Protetch’s business contacts with

Texas, i.e., that there was a substantial connection between Protetch’s business

contacts with Texas and the operative facts of the litigation. See Moki Mac ,

221 S.W.3d at 576, 585 ; see also Michiana , 168 S.W.3d at 791 (“Business

contacts are generally a matter of physical fact, while tort liability

(especially in misrepresentation cases) turns on what the parties thought,

said, or intended. Far better that judges should limit their jurisdictional

decisions to the former rather than involving themselves in trying the latter.”).

Herrin’s breach-of-contract claim arises out of delivery of a non-conforming

table in Houston and out of pre- and post-delivery communications from Protetch

to Herrin. Herrin’s theft and fraud claims arise out of Mr. Protetch’s alleged

misrepresentations in Houston, which purportedly induced Herrin to return the

table to New York at his own expense. Thus, Protetch’s communications in and

to Texas will form the core of the litigation. See Glencoe Capital Partners

II, L.P. v. Gernsbacher , 269 S.W.3d 157, 167 (Tex. App.—Fort Worth 2008, no

pet.) (“Unlike the misrepresentations in Moki Mac , which were tangential

to the plaintiffs’ core negligence claim, Appellants’ misrepresentations in

this case are the core of Appellees’ claims.”).

In sum, we conclude the pleadings and

evidence support the conclusion that Protetch established minimum contacts with

Texas.

Due Process — Fair Play and

Substantial Justice

In a special appearance, a defendant must present “‘a

compelling case that the presence of some consideration would render

jurisdiction unreasonable.’” Guardian Royal Exch., 815 S.W.2d at 231

(quoting Burger King , 471 U.S. at 477 , 105 S. Ct. at 2185 ). Protetch

argues, “It would be inefficient and burdensome to conduct discovery and a

trial in Texas when all the witnesses and evidence are far outside the state. .

. . In contrast, Texas has no particular interest in the dispute between

[Herrin] and Protetch, as none of [Protetch’s] alleged conduct took place in

Texas, and as Texas law would not apply to an action between [Herrin] and

Protetch.”

According to Herrin, he communicated with only three

Protetch employees, including Mr. Protetch. Herrin also alleged his wife was

actively involved in purchase of the table. Thus, contrary to Protetch’s

assertion, the potential witnesses appear more or less evenly divided between

Texas and New York. [7] Neither party suggests what physical evidence might

be necessary for trial. Although the tables are obviously germane to the

issues, it is not clear that their physical presence is required.

Also contrary to Protetch’s assertion, alleged conduct

took place in Texas. Additionally, Protetch provides no support for its

assertion that Texas law would not apply to an action between itself and Herrin

nor why application of New York law might be an obstacle for a Texas court.

Finally, Texas has a manifest interest in providing its residents with a

convenient forum for redressing injuries that out-of-state actors inflict. Glencoe ,

269 S.W.3d at 168 (citing Burger King , 471 U.S. at 479–82, 105 S. Ct. at

2185–87).

As discussed above, Protetch purposefully

established minimum contacts with Texas. We conclude the exercise of personal

jurisdiction over Protetch would not offend traditional notions of fair play

and substantial justice. See id.

Conclusion

For the preceding reasons, we overrule

Protetch’s sole issue. We therefore affirm the trial court’s order denying

Protetch’s special appearance.

/s/ Martha

Hill Jamison

Justice

Panel

consists of Justices Brown, Boyce, and Jamison.

[1] Mr. Protetch sets forth

this fact in his affidavit. The contract is not part of the appellate record.

Shipment of the table “FOB New York” implies title to the table passed from

Protetch to Herrin in New York. See Am. Type Culture Collection, Inc. v.

Coleman , 83 S.W.3d 801, 807 (Tex. 2002).

[2] At the special appearance

hearing, Herrin’s attorney stated it was Herrin who paid to have the table

returned to New York.

[3] See Tex. Civ.

Prac. & Rem. Code §§ 134.001–.005. Herrin initially also sued the New York

Museum of Modern Art, but deleted the museum from his second amended petition.

[4] Protetch argues Herrin

has the burden of proof to establish the district court has jurisdiction over

it. In support it cites Mesa Agriproducts, Inc. v. Olabi International,

S.A. , a Federal Rule of Civil Procedure 12(b)(2) action in which the court

stated, “The burden rests on the plaintiff to establish that the court has

personal jurisdiction over a nonresident defendant who moves for dismissal.”

No. H-07-1336, 2007 WL 2777773 , at *2 (S.D. Tex. Sept. 21, 2007). We are not

bound by the Mesa court’s statement regarding the burden of proof, and

to the extent it is inconsistent with Kelly , we decline to follow it.

Moveover, the Mesa court continued, “Where, as here, the district court

does not hold an evidentiary hearing on the issue, the plaintiff meets this

burden by presenting a prima facie case that personal jurisdiction is

proper.” Id.

[5] Protetch contends Herrin

is attempting to convert a contract claim into a tort claim in order to

“bootstrap” personal jurisdiction in Texas. Protetch urges that the contract

is the sole source of the duty allegedly breached. In support, Protetch relies

on Southwestern Bell Telephone Co. v. DeLanney , 809 S.W.2d 493 (Tex.

1991).

In DeLanney , the plaintiff alleged only claims

in negligence based on Bell’s failure to publish DeLanney’s real estate

advertisement in the Yellow Pages as promised. Id. at 493 . The supreme

court, however, concluded Bell’s duty to publish the advertisement arose solely

from contract, not from tort, and reversed judgment for DeLanney. Id.

at 494–95.

Here, Herrin alleged torts separate from Protetch’s

alleged failure to fulfill the terms of the contract. Herrin’s fraud and theft

claims arise out of alleged misrepresentations that purportedly induced Herrin

to return the table to New York. We decline to adopt Protetch’s argument. See

Charles R. Weber Co., Inc. v. Back-Haul Bulk Carriers, Inc., No.

14-02-00240-CV, 2002 WL 31769418 , at *2 (Tex. App.—Houston [14th Dist.] Dec.

12, 2002, no pet.) (not designated for publication) (rejecting appellant’s

argument that jurisdiction over it could not be based on alleged tort claims

because they all arose out of contract when alleged conduct—falsely

representing it had prepared a document which was the subject of the

contract—gave rise to potential liability independent of whether a contract

existed between the parties).

[6] There is nothing in the

record to indicate which party initiated the pre- and post-delivery

communications. We will, however, infer that Protetch initiated at least some

of these communications. See BMC Software Belg., N.V. v. Marchand ,

83 S.W.3d 789, 795 (Tex. 2002) (“When a trial court does not issue findings of

fact and conclusions of law with its special appearance ruling, all facts

necessary to support the judgment and supported by the evidence are implied.”).

[7] At the hearing, Protetch

also referred to another potential witness, the manufacturer, in New York.

Herrin points to his having observed Scott Burton’s work at museums in Dallas

and San Antonio, possible locations of additional witnesses.