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Affirmed in Part, Reversed in Part, and = Remanded,=20 and Majority and Dissenting Opinions filed July 3, = 2008.

           &= nbsp;           &n= bsp;           &nb= sp;           &nbs= p;            = ;            =      =20

 

In The

 

Fourteenth=20 Court of Appeals

____________

 

NO. 14-07-00270-CV

____________

 

DAN KELLY=20 AND LAURA HOFSTATTER, = Appellants

 

V.

 

GENERAL=20 INTERIOR CONSTRUCTION, INC., = Appellee

 

 

On Appeal from the = 125th District Court

Harris County, = Texas

Trial Court Cause = No.=20 05-46388

 

 

D I S S E=20 N T I N G   O P I N I O N

In this=20 case, corporate officers of an Arizona-based general contractor = appeal the=20 denial of their joint special appearance in a lawsuit filed = against them=20 in their individual capacities by a Texas-based = subcontractor.  The=20 subcontractor seeks to recover damages based on purported=20 breach-of-contract claims, alleged fraudulent statements, and = alleged=20 violations of Chapter 162 of the Texas Property Code.  = In  its=20 live pleading, the subcontractor did not allege (1) a = breach-of-contract=20 claim against the officers, (2) that the corporate officers = committed any=20 act in Texas, or (3) that the corporate officers were doing = business in=20 Texas at any time.  Because the subcontractor failed to = satisfy the=20 fundamental requirement that its pleading contain sufficient = allegations=20 of some basis for the exercise of personal jurisdiction, the = corporate=20 officers satisfied their burden of negating all bases of personal=20 jurisdiction by presenting undisputed evidence that they are not = Texas=20 residents.  Moreover, as to the Chapter 162 claims, because = the=20 evidence conclusively proves that the corporate officers satisfied = their=20 burden of negating all bases of personal jurisdiction, the = evidence is=20 legally insufficient to support the trial court=3Ds implied=20 findings to the contrary.  Accordingly, this court should = sustain the=20 second and third issues, reverse the trial court=3Ds order,=20 and order the trial court to dismiss the subcontractor=3Ds claims=20 against the officers for lack of personal jurisdiction.  = Because it=20 does not, I respectfully dissent.

Factual=20 and Procedural Background

Appellants=20 Dan Kelly and Laura Hofstatter (collectively the AOfficers@) are the=20 sole shareholders and officers of Diva Consulting, Inc. = (ADiva@), an=20 Arizona-based general contractor.  Hofstatter is the = President of=20 Diva, and Kelly is the company=3Ds Vice=20 President.  It is undisputed that both individuals are = Arizona=20 residents.  Diva, acting as the general contractor on a Texas = construction project, contracted with subcontractor General = Interior=20 Construction, Inc. (AGeneral@), a Texas=20 company, for hotel renovations to be performed in Texas.  = Diva=20 disputed the amount allegedly owed and stopped paying General = because Diva=20 claims to have incurred expenses in remedying alleged flaws in=20 General=3Ds=20 work.

After the=20 owner of the property, Meristar Hospitality Corporation = (AMeristar@) sued=20 both Diva and General, General filed a third-party petition = against the=20 Officers, ostensibly asserting three claims:  (1) breach of = contract,=20 (2) violations of Chapter 162 of the Texas Property Code, and (3)=20 fraud.

In a=20 section of its petition entitled ABreach of=20 Contract,@ = General=20 made the following allegations:

!      =20 Diva breached its contract with General, causing General to suffer = damages=20 in an amount in excess of the minimum jurisdictional limit of the = trial=20 court. 

!      =20 Hofstatter is President of = Diva;=20 Kelly is Vice President of Diva.

!        =20 The Officers are the only owners of Diva.

Citing to alleged = violations of=20 Chapter 162 of the Texas Property Code, General made the=20 following = allegations:

!        =20 Payments=20 Meristar made to Diva or the Officers were trust funds to be held = for the=20 benefit of General.

!        =20 Meristar=3Ds payments made to = Diva were=20 in return for work performed in Texas by General.

!        =20 The = Officers=20 were trustees of all payments Meristar made to Diva.

!        =20 General was the=20 beneficiary of trust funds paid to the Officers.

!        =20 The = Officers=20 acted with intent to defraud by providing affidavits to Meristar = stating=20 that all subcontractors were paid or would be paid when that = statement was=20 untrue.

!      =20 Therefore, the Officers are liable to General for violating = section=20 162.005(1)(C) of the Texas Property Code.

Finally,=20 General made the following allegations pertaining to = fraud:

!      =20 The Officers promised that General would be paid under the = contract, but=20 General received only partial payment.

!      =20 The Officers made material misrepresentations with the intention = that=20 General would rely on those misrepresentations.

!      =20 The Officers made such misrepresentations with the knowledge that = the=20 statements were false or with reckless disregard for the = truth.

!      =20 General relied on the misrepresentations and was damaged as a=20 result.

The=20 Officers filed a joint special appearance contesting the trial=20 court=3Ds ability=20 to exercise personal jurisdiction over them as to = General=3Ds=20 third-party claims.  The trial court denied this special = appearance,=20 and the Officers have appealed.[1]

<= SPAN=20 style=3D"FONT-SIZE: 13pt; LINE-HEIGHT: 150%; FONT-FAMILY: = Shruti">

Jurisdictional=20 Analysis

Personal=20 jurisdiction over a nonresident defendant is constitutional when = two=20 conditions are met:  (1) the defendant has established = minimum=20 contacts with the forum state, and (2) the exercise of personal=20 jurisdiction comports with traditional notions of fair play and=20 substantial justice.[2] =20 For a defendant to have sufficient minimum contacts with the = forum, it is=20 essential that there be some act by which the nonresident = defendant=20 Apurposefully=20 avails@ = itself of=20 the privilege of conducting activities in the forum state, thus = invoking=20 the benefits and protections of its laws.[3] =20 Although not determinative, foreseeability is an important = consideration=20 in deciding whether the nonresident defendant purposefully has = established=20 minimum contacts with Texas.[4] =20 The concept of foreseeability is implicit in the requirement that = there be=20 a substantial connection between the defendant and Texas arising = from the=20 defendant=3Ds conduct=20 purposefully directed toward Texas.[5] =20 A defendant should not be subject to a Texas court=3Ds=20 jurisdiction based upon random, fortuitous, or attenuated = contacts.[6]

<= SPAN=20 style=3D"FONT-SIZE: 13pt; LINE-HEIGHT: 150%; FONT-FAMILY: = Shruti">

For=20 specific jurisdiction to exist as to a particular claim, the claim = must=20 arise from or relate to the defendant=3Ds=20 purposeful contacts with Texas.[7] =20 In conducting a specific‑jurisdiction analysis, the focus is = on the=20 relationship among the defendant, Texas, and the litigation.[8] =20 For a nonresident defendant=3Ds contacts=20 with Texas to support an exercise of specific jurisdiction, there = must be=20 a substantial connection between the defendant=3Ds=20 purposeful contacts with Texas and the operative facts of the=20 litigation.[9]

Under=20 three issues, the Officers challenge the trial court=3Ds implied=20 findings of specific jurisdiction.  Other intermediate courts = of=20 appeals have performed the specific-jurisdiction analysis on a=20 claim-by-claim basis.[10] =20 The United States Supreme Court, the Texas Supreme Court, and this = court=20 have not yet addressed this issue.  By holding that the trial = court=3Ds order=20 should be affirmed in part and reversed in part following a = claim-by-claim=20 specific-jurisdiction analysis, this court necessarily takes a = position on=20 the issue of whether all claims stand or fall together in a=20 specific-jurisdiction analysis.  The majority chooses the = correct=20 approach C = a=20 claim-by-claim analysis C = but=20 nevertheless reaches the wrong result.

           = ;            =             &= nbsp;     =20 Breach-of-Contract Claim =

Though=20 General claims to have asserted a breach-of-contract claim against = the=20 Officers, even liberally construing General=3Ds=20 third-party petition, the pleading does not contain such a = claim. =20 After previously alleging the existence of a contract between = General and=20 Diva, General made the following allegations in a section of=20 General=3Ds petition=20 entitled ABreach of=20 Contract@:

DIVA wholly and = completely=20 failed to perform its obligations under the contract, resulting in = damages=20 to [General]. [General=3Ds] damages were a = natural,=20 probable, and foreseeable consequence of DIVA=3Ds breach.  = DIVA failed=20 to honor the contract by failing to pay [General] for all services = and=20 materials provided.  DIVA=3Ds conduct = constitutes a=20 breach of the contractual obligations and relationship [sic] = between the=20 parties, both written and oral, express and implied. =20 DIVA=3Ds breach has caused = [General]=20 to suffer damages in an amount in excess of the minimum = jurisdictional=20 limits of this Court.

At all relevant = times herein,=20 LAURA HOFSTATTER was President of [Diva] and DAN KELLY was Vice = President=20 of [Diva].  They are the only owners of [Diva].

These=20 allegations are the only part of General=3Ds pleading=20 that arguably could constitute an allegation of breach of contract = against=20 the Officers.  However, General never alleged that the = Officers=20 entered into a contract with General, that General performed under = such a=20 contract, that the Officers breached such a contract, or that = General has=20 suffered any damages resulting from the breach of such a = contract. =20 According to the majority opinion, General alleges in its petition = that=20 the Officers exclusively operated Diva and that the Officers are = liable=20 for breach of contract.  See ante at p.5, n.3.  = However,=20 General=3Ds pleading=20 contains neither of these allegations.  General does allege = that the=20 Officers are liable for violation of section 162.005(1)(C)(2) of = the Texas=20 Property Code and that General is suing the Officers for fraud; = however,=20 General does not state that the Officers are liable for breach of=20 contract.

In the=20 absence of special exceptions, this court must construe=20 General=3Ds=20 third-party petition liberally and must find that the petition = contains=20 any claims that reasonably may be inferred from the specific = language used=20 in the petition, even if the petition fails to state all of the = elements=20 of that claim.[11] =20 This court, however, cannot use the liberal construction of the = petition=20 as a license to read into the petition a claim that it does not = contain.[12]

The=20 elements of a breach-of-contract claim by General against the = Officers=20 would be:  (1) the existence of a valid contract between = General and=20 the Officers,  (2) performance or tendered performance by = General=20 under the contract, (3) breach of the contract by the Officers, = and (4)=20 damages sustained by General as a result of the = Officers=3D = breach.[13] =20 Even liberally construing General=3Ds=20 third-party petition, it cannot reasonably be inferred from the=20 pleading=3Ds language=20 that General has alleged any of these elements.[14] =20 Though the petition does contain allegations under the heading=20 ABreach of=20 Contract,@ = the only=20 claim that reasonably can be inferred from the language of this = section is=20 a breach-of-contract claim by General against Diva.[15] =20 Because General failed to allege a breach-of-contract claim = against the=20 Officers, this court need not conduct a specific-jurisdiction = analysis=20 regarding breach of contract.

The=20 majority concludes that General did allege a breach-of-contract = claim=20 against the Officers.  The majority, however, concludes that = the=20 Officers are not subject to personal jurisdiction as to this = purported=20 claim because the Officers were acting in their capacities as = agents of=20 Diva and because they are not parties to General=3Ds=20 subcontract with Diva.  In reaching its conclusion, the = majority=20 relies on Wolf v. Summer-Wood, L.P., in which the Fifth = Court of=20 Appeals held that the trial court lacked personal jurisdiction = over=20 corporate officers as to the contract claim solely because the = Wolf=20 court determined that the officers were not parties to the = contract in=20 question.[16] =20 Though the Wolf case supports the majority=3Ds=20 analysis, this analysis conflicts with prior precedents from this = court=20 and the Texas Supreme Court.

In=20 conducting a personal-jurisdiction analysis, this court should = review only=20 the claims and the evidence regarding the Texas contacts of the = parties=20 who are objecting to personal jurisdiction; this court should = refrain from=20 conducting a merits-based analysis.  Indeed, at this = juncture, the=20 merits of the claims are not at issue.[17] =20 The court=3Ds task in=20 reviewing a special appearance is simply to identify the claims in = question and assess the Texas contacts of the Officers in light of = those=20 claims.

For=20 example, in Cerbone, the specially appearing defendant = asserted=20 that the promissory note he signed in Illinois was executed only = as agent=20 of the corporation for which he served as president and chief = executive=20 officer.[18] =20 The plaintiff alleged that the corporate officer had executed the = note in=20 his individual capacity.[19] =20 This court declined an invitation to consider the merits and to = determine=20 whether the corporate officer was a party to the contract in his=20 individual capacity.[20] =20 Instead, this court concluded that, presuming the corporate = officer was a=20 party to the contract in his individual capacity, the = jurisdictional=20 evidence conclusively proved that the claims against the corporate = officer=20 did not arise from or relate to the officer=3Ds=20 purposeful contacts with Texas.[21] =20 The majority asserts that its analysis does not address the merits = of=20 General=3Ds=20 purported breach-of-contract claim; however, if, as the majority = holds,=20 there is no valid contract between the Officers and General, then = any=20 contract claim by General against the Officers clearly lacks = merit.[22] =20 Therefore, contrary to precedent, the majority does address the = merits.[23]

The=20 majority=3Ds analysis=20 of the purported breach-of-contract claim is unnecessary because = General=20 has not pleaded a contract claim against the Officers.  In = addressing=20 this claim, the majority creates a conflict with Cerbone = and other=20 precedents that require this court to review the trial = court=3Ds=20 personal-jurisdiction rulings without addressing the merits of the = claims=20 in question.  The better course would be to eliminate this=20 unnecessary analysis and instead dispose of the issue based on=20 General=3Ds failure=20 to assert a contract claim against the Officers.

Chapter=20 162 Claims and Fraud Claims

General=3Ds petition=20 does not contain sufficient allegations to invoke the exercise of = personal=20 jurisdiction over the Officers.

The record=20 reflects that the Officers were served with process under Texas = Rule of=20 Civil Procedure 108.  Whether a nonresident defendant is = served with=20 process under this rule or under the Texas long-arm statute, the = plaintiff=20 must allege in its petition some basis for personal jurisdiction, = such as=20 the defendant=3Ds=20 conducting of business in Texas or the defendant=3Ds=20 commission of an act or acts in Texas.[24] =20 If the plaintiff does not make such jurisdictional allegations in = the=20 petition, then the defendant can satisfy his burden of negating = all bases=20 of personal jurisdiction by presenting evidence that the defendant = is not=20 a resident of Texas.[25]

In its=20 third-party petition, General alleges that the Officers acted with = intent=20 to defraud by providing false affidavits to Meristar and that the = Officers=20 violated section 162.005(1)(C) of the Texas Property Code.  = General=20 also asserts that the Officers fraudulently represented that = General would=20 be paid in full under its contract with Diva.  Notably, = General does=20 not allege that any of these acts occurred in Texas.  = Moreover, in=20 its third-party petition, General does not allege that the = Officers=20 committed any act whatsoever in Texas or that they conducted any = business=20 whatsoever in Texas.  Therefore, General=3Ds=20 third-party petition lacks sufficient allegations to invoke the = trial=20 court=3Ds personal=20 jurisdiction over the Officers, and the Officers, thus, could = satisfy=20 their burden of negating all bases of personal jurisdiction merely = by=20 presenting evidence that they are not residents of Texas.[26] =20

In their=20 joint special appearance, the Officers proved that they are = residents of=20 Arizona and not residents of Texas.  General has not disputed = this=20 evidence.  The Officers, thus, satisfied their burden of = negating all=20 bases of personal jurisdiction, and the trial court erred as a = matter of=20 law by denying their joint special appearance.[27]

In any=20 event, the evidence conclusively negates jurisdiction as=20 to = the=20 Chapter 162 claims.

General=20 alleges that the Officers are individually liable because they = allegedly=20 violated Chapter 162 of the Texas Property Code.[28] =20 General claims that all payments made by Meristar to Diva or the = Officers=20 were trust funds[29]=20 and that under Chapter 162, the Officers were trustees of all such = payments because the Officers allegedly are owners and officers of = a=20 contractor who allegedly received trust funds or who allegedly had = control=20 or direction of trust funds.[30] =20 General alleges that it is a beneficiary of these alleged trust = funds the=20 Officers received or over which they had control or direction.[31] =20 General further alleges that the Officers acted with intent to = defraud and=20 are liable under section 162.005(1)(C) of the Texas Property Code = because=20 they allegedly used, disbursed, or diverted trust funds that were = paid in=20 reliance on an affidavit (furnished by the Officers under section = 53.085)=20 that contains false information relating to the = trustee=3Ds payment=20 of current or past due obligations.[32] =20 Under binding precedent, for purposes of the jurisdictional = analysis, this=20 court is to presume without deciding that these allegations are = true and=20 then examine the evidence regarding the relationship between these = allegations and the Officers=3D = respective purposeful contacts with Texas.[33]

To meet=20 their burden to negate all potential bases of jurisdiction, the = Officers=20 filed a verified joint special appearance proving the=20 following:

!      =20 The Officers are both residents of Arizona.

!      =20 The Officers do not reside in Texas, own property in Texas, have = an office=20 or employees in Texas, or transact business in Texas in their = individual=20 capacities.

!      =20 The Officers are corporate officers and directors of Arizona-based = Diva.

!      =20 Diva is a party to the contract at issue in the underlying = lawsuit, but=20 the Officers are not parties to that contract in their individual=20 capacities and did not guarantee the contract.

!      =20 Meristar is the owner of the property.

!      =20 Meristar is based in Arizona.

!      =20 The contract between Meristar and Diva was entered into in=20 Arizona.

!      =20 Diva Aworked with=20 Meristar=3Ds agent in=20 Arizona.@

!      =20 When Meristar paid monies in connection with work on the property, = funds=20 were transferred from one Arizona bank account to Diva=3Ds Arizona bank=20 account.

!      =20 The funds were held in Diva=3Ds Arizona general = operating=20 account and used to pay expenses and salaries in Arizona.[34] =20

The=20 evidence provided by General in response to the = Officers=3D = special=20 appearance does not conflict with any of these facts.  = Therefore,=20 these facts are undisputed.

 =20         Any alleged knowledge = that the=20 brunt of the alleged damages caused by the alleged torts would be = felt by=20 General in Texas is insufficient to support specific = jurisdiction.[35] =20 The proper approach is to analyze the degree of connectedness = between the=20 Officers=3D = Texas=20 contacts and the operative facts of the Chapter 162 claims to = determine=20 whether the operative facts involve contacts with Texas.[36] =20 To find specific jurisdiction over the non-resident Officers, the = evidence=20 must establish a substantial connection between each = defendant=3Ds=20 purposeful contacts with Texas and the operative facts of the = Chapter 162=20 claims.[37] =20 In conducting the personal-jurisdiction analysis, only the=20 Officers=3D = purposeful contacts with Texas are to be considered C = not the=20 Texas contacts of any other parties.[38] =20 This court may not consider Diva=3Ds contacts=20 with Texas.

Nonetheless,=20 in determining that specific jurisdiction exists as to the Texas = Property=20 Code claim, the majority relies on the following alleged contacts = of Diva:=20

!      =20 Diva=3Ds regular = conducting of=20 business in Texas

!      =20 Diva=3Ds entering into the = contract=20 for the project in question

!      =20 Diva=3Ds entering into = numerous=20 agreements with Texas subcontractors, including=20 General

!      =20 Diva=3Ds sending of two = checks to=20 General to make payment on Diva=3Ds contract with = General =20 Diva=3Ds and/or = General=3Ds performance of = the=20 construction work in Texas

!      =20 Diva=3Ds receipt=20 of invoices from General.

Because=20 there is no pleading or proof of any theory for piercing the = corporate=20 veil, this court should consider only the Officers=3D = purposeful contacts with Texas and not the contacts of Diva or any = other=20 party.[39] =20 The majority concludes that, because Chapter 162 provides for = personal=20 liability for corporate officers under certain circumstances,=20 General=3Ds=20 allegation of liability under Chapter 162 allows this court to = consider=20 all of Diva=3Ds contacts=20 with Texas as if they were the Officers=3D = contacts=20 with Texas in their individual capacity.  The = majority=3Ds analysis=20 conflicts with this court=3Ds opinion=20 in Cerbone, in which the court presumed that the corporate = officer=20 executed the contract in his individual capacity, as alleged by = the=20 plaintiff; however, the Cerbone court did not count all the = contacts of the corporation with Texas as being contacts of the = corporate=20 officer in his individual capacity.[40]=20

The=20 operative facts regarding General=3Ds claims=20 under Chapter 162 are (1) the Officers=3D = submission of affidavits to Meristar, (2) Meristar=3Ds payment=20 of funds to Diva or the Officers in reliance on these affidavits, = (3) the=20 Officers=3D = alleged=20 receipt or exercise of control over payments from Meristar, and = (4) the=20 Officers=3D = alleged=20 use of these funds.  However, the undisputed evidence before = the=20 trial court shows that none of these events occurred in Texas.[41]

=

Under=20 Chapter 162 of the Texas Property Code, corporate officers are = subject=20 to  potential personal liability.  Rather than focus on = the=20 operative facts under which the Officers would be personally = liable under=20 General=3Ds Chapter=20 162 allegations, the majority focuses on contacts that cannot give = rise to=20 liability under Chapter 162 C = evidence=20 that Kelly made three or four trips to the site of the Texas = project=20 (Hofstatter made no such trips), letters and faxes between the = Officers=20 (as representatives of Diva) and representatives of General in = Texas=20 regarding the project, and two checks the Officers sent on behalf = of Diva=20 to General.[42]

=

The=20 majority relies on Herbert v. Greater Gulf Coast Enterprises, = Inc.,=20 a case in which the First Court of Appeals rejected a = writ-of-error=20 challenge to a default judgment awarding a subcontractor recovery = on its=20 Chapter 162 claim against the president of a general contractor.[43] =20 The appellant in Herbert asserted that the = plaintiff=3Ds petition=20 did not contain sufficient allegations regarding personal = jurisdiction.[44] =20 The Herbert court concluded that the = subcontractor=3Ds petition=20 contained a Asufficient=20 allegation of appellant=3Ds=20 purposeful act or transaction in the State of Texas@ = and that=20 A[t]he=20 cause of action, collection of money owed under the construction = contract,=20 clearly arose out of the transaction.@[45]  In=20 the context of a review of General=3Ds claims=20 and the personal-jurisdiction evidence in this case, the = Herbert=20 case is not on point because it involves only the sufficiency of = the=20 allegations in the plaintiff=3Ds=20 petition.[46] =20 However, even equating, as the majority does, the allegations in=20 Herbert with jurisdictional proof, the Herbert court = found=20 that the following was sufficient to allow the trial court to = exercise=20 personal jurisdiction:

!      =20 The nonresident general contractor accepted, benefitted from, and = promised=20 to pay for labor and materials from a Texas subcontractor on a = Texas=20 construction project.

!      =20 Although requested to do so, the nonresident general contractor = refused to=20 pay the subcontractor as it had agreed.

!      =20 Under Chapter 162 of the Texas Property Code, the nonresident = general=20 contractor and its president Paul Herbert were trustees for = construction=20 draws, as to which the plaintiff subcontractor was the = beneficiary; and=20 these defendants diverted and disposed of these draws.[47]

=

Even=20 presuming that our record contained evidence of all of the above = facts,=20 under the current legal standard for special appearances in Texas, = this=20 evidence would not be sufficient to prove a substantial connection = between=20 a nonresident officer=3Ds=20 purposeful contacts with Texas and the operative facts of the = Chapter 162=20 claims.[48] =20 The Herbert court used as its legal standard for personal=20 jurisdiction the three-pronged test enunciated in = O=3DBrien v.=20 Lanpar Co.[49] =20 In 1984, the United States Supreme Court began using the concepts = of=20 specific jurisdiction and general jurisdiction in the legal = standard for=20 analyzing personal jurisdiction.[50] =20 The Texas Supreme Court then tried to incorporate these two = concepts into=20 its personal-jurisdiction analysis without discarding the = three-pronged=20 O=3DBrien=20 test.[51] =20 Finally, in 1991, the Texas Supreme Court discarded the=20 O=3DBrien=20 test in=20 favor of a legal standard focusing on the two prongs from = International=20 Shoe Co. v. Washington, and the definitions of specific = jurisdiction=20 and general jurisdiction from Helicopteros.[52] =20 When Herbert was decided, there were courts of appeals = decisions=20 holding that if a nonresident tortfeasor knows that the brunt of = the=20 injury will be felt by a particular resident in the forum state, = he=20 reasonably must anticipate being haled into court there to answer = for his=20 actions.[53] =20 However, in 2005, the Texas Supreme Court rejected this line of = cases,=20 because, among other things, the analysis used in this line of = cases did=20 not call for courts to focus sufficiently on the actions of the=20 nonresident defendant.[54]

=

The=20 Herbert court relied on the language from the=20 O=3DBrien = test=20 indicating that the connection between the defendant and Texas was = sufficient if the plaintiff=3Ds claim=20 arose out of a transaction by the nonresident defendant in = Texas.[55] =20 However, under the current legal standard, the = plaintiff=3Ds claim=20 must arise from or relate to the defendant=3Ds=20 purposeful contacts with Texas.[56] =20 In addition, the Texas Supreme Court has emphasized the necessity = for a=20 substantial connection between the defendant=3Ds=20 purposeful contacts with Texas and the operative facts of the=20 litigation.[57] =20 Although the Herbert court did not mention the Abrunt of=20 the injury@ = analysis,=20 its conclusion seems implicitly based on this approach because = there was=20 no allegation that Herbert had committed any act in Texas but = there was an=20 allegation that he had misappropriated trust funds for a Texas=20 construction project.[58] =20 Therefore, the Herbert court appears to have concluded that = Herbert=3Ds alleged=20 out-of-state misappropriation of alleged trust funds for a Texas=20 construction project was sufficient because Herbert reasonably = should have=20 anticipated being haled into court, given that he was aware that = the brunt=20 of the injury would be felt by the subcontractor in Texas.[59] =20 The Texas Supreme Court, however, has since rejected this = analysis.[60] =20 Given the significant difference between the legal standard = applied in=20 Herbert and the legal standard that applies to a=20 personal-jurisdiction analysis today, Herbert is not on = point.[61]=20

The=20 majority also cites various cases regarding liability under = Chapter 162.[62] =20 Because the merits of General=3Ds claims=20 are not at issue in determining the trial court=3Ds ability=20 to exercise personal jurisdiction consistent with the federal due = process=20 guarantees, these cases are not on point.[63]

=

The=20 undisputed evidence shows that there is no substantial connection = between=20 the Officers=3D = purposeful contacts with Texas and the operative facts of the = Chapter 162=20 claims.[64] =20 Based upon the undisputed facts, the evidence is legally = insufficient to=20 support the trial court=3Ds implied=20 finding that the Officers established sufficient minimum contacts = with=20 Texas to support the trial court=3Ds exercise=20 of personal jurisdiction over the Officers as to the Chapter 162 = claims.[65]

Conclusion

General=20 did not allege a breach-of-contract claim against the Officers, = nor did=20 General carry its burden of alleging in its petition some basis = for=20 personal jurisdiction over them.  The Officers satisfied = their burden=20 of negating all bases of personal jurisdiction by proving that = they are=20 residents of Arizona and not residents of Texas.  Therefore, = the=20 trial court erred as a matter of law by denying the = Officers=3D = joint=20 special appearance, and this court should reverse the trial=20 court=3Ds order=20 and remand to the trial court with instructions to dismiss=20 General=3Ds claims=20 for lack of personal jurisdiction.

 

 

/s/     =20 Kem Thompson Frost      

Justice

 

Judgment=20 rendered and Majority and Dissenting Opinions filed July 3,=20 2008.

Panel=20 consists of Chief Justice Hedges and Justices Anderson and Frost = (Hedges,=20 C.J., majority).


[1]  Whether a trial court may = exercise personal=20 jurisdiction over the nonresident officers is a question of law = for de=20 novo review.  See BMC Software Belgium, N.V. v. = Marchand,=20 83 S.W.3d 789, 794 (Tex. 2002).  The trial court did not = issue=20 any findings of fact or conclusions of law.  Therefore, all = facts=20 necessary to support the trial court=3Ds ruling that are supported by the = evidence are=20 implied in favor of the trial court=3Ds decision.  Id. at = 795.  Parties=20 may challenge on appeal the legal and factual sufficiency of these = implied=20 factual findings.  Id.  In conducting a = no‑evidence=20 analysis, this court is to review the evidence in the light most = favorable=20 to the challenged finding and indulge every reasonable inference = that=20 would support it.  See City of Keller v. Wilson, 168 = S.W.3d=20 802, 822 (Tex. 2005).  This court must credit favorable = evidence if a=20 reasonable factfinder could and disregard contrary evidence unless = a=20 reasonable factfinder could not.  See id. at = 827. =20 This court must determine whether the evidence at trial would = enable=20 reasonable and fair‑minded people to find the facts at = issue.  See=20 id.  The factfinder is the sole judge of the credibility = of the=20 witnesses and the weight of their testimony.  See id. = at=20 819.

[2]  See BMC Software, 83 = S.W.3d at=20 795. =20

[3]  Michiana Easy = Livin=3D Country, Inc. v. Holten, 168 S.W.3d 777, 784 (Tex. = 2005).=20

[4]  BMC Software, 83 S.W.3d at = 795.

[5]  See Guardian Royal Exch. = Assur., Ltd. v.=20 English China Clays, P.L.C., 815 S.W.2d 223, 227 (Tex. = 1991). =20

[6]  BMC Software, 83 S.W.3d at = 795.

[7]  Am. Type Culture Collection = Inc. v.=20 Coleman, 83 S.W.3d 801, 806B07 (Tex. 2002).

[8]  See Guardian=20 Royal, 815=20 S.W.2d at 228.=20

[9]  See Moki Mac River Expeditions = v.=20 Drugg, 221 S.W.3d 569, 585 (Tex. 2007).

[10]  See Seiferth v. Helicopteros = Atuneros,=20 Inc., 472 F.3d 266, 274B75 (5th Cir. 2006) (analyzing specific=20 jurisdiction on a claim-by-claim basis because the Due Process = Clause=20 precludes a court from exercising specific jurisdiction as to a = claim that=20 does not arise from or relate to the defendant=3Ds forum contacts based on the = court=3Ds legitimate exercise of specific = jurisdiction=20 over a defendant as to another claim); Barnhill v. Automated = Shrimp=20 Corp., 222 S.W.3d 756, 767 (Tex. App.CWaco 2007, no pet.).

[11]  See San Saba Energy, L.P. v.=20 Crawford, 171 S.W.3d 323, 336B37 (Tex. App.CHouston [14th Dist.] 2005, no pet.).=20

[12]  See id.

[13]  See Aguiar v.=20 Segal, 167=20 S.W.3d 443, 450 (Tex. App.CHouston [14th = Dist.] 2005,=20 pet. denied).

[14]  See San Saba Energy, L.P., = 171=20 S.W.3d at 336B37.

[15]  See id.

[16]  214 S.W.3d 783, 792 (Tex. = App.CDallas 2007, no pet.).  =

[17]  See, e.g., Michiana = Easy=20 Livin=3D Country, Inc., 168 S.W.3d at 791; = Weldon-Francke v.=20 Fisher, 237=20 S.W.3d 789, 792 (Tex. App.CHouston [14th = Dist.] 2007, no=20 pet.).

[18]  See Cerbone, 225 S.W.3d = at=20 766B68 & n.1.=20

[19]  See id.

[20]  See id. at 769B70. 

[21]  See id. at 768B71.

[22]  See = Aguiar, 167 S.W.3d at=20 450.

[23]  See PHC-Minden, L.P. v. = Kimberly-Clark Corp., 235 S.W.3d 163, = 174 (Tex.=20 2007) (citing with approval cases holding that courts should not = determine=20 merits of claims in determining whether personal jurisdiction may = be=20 exercised over the claims); Michiana Easy = Livin=3D Country,=20 Inc.,=20 168 S.W.3d at 791 (stressing that courts must not equate = liability=20 with personal jurisdiction because it would be improper if a=20 party=3Ds liability = established=20 personal jurisdiction and a party=3Ds nonliability = negated=20 personal jurisdiction); Weldon-Francke, 237 S.W.3d at 792 = (stating=20 that Athe merits of the=20 [plaintiffs=3D] claims are not at = issue in=20 determining whether the trial court erred in concluding that it = could=20 exercise personal jurisdiction over [the defendants]@); Cerbone v. = Farb,=20 225 S.W.3d 764, 769B77 (Tex. = App.BHouston [14th = Dist.] 2007, no=20 pet.) (presuming, for purpose of personal-jurisdiction analysis, = that=20 nonresident corporate officer signed promissory note in individual = capacity, as alleged by plaintiff, rather than addressing whether, = as=20 alleged by officer, he signed note solely on behalf of the=20 corporation). 

[24]  See Tex. Civ. Prac. & Rem. = Code=20 Ann. '' 17.041B.045 (Vernon Supp. 2005); Tex. R. Civ. P. 108; = Moki Mac=20 River Expeditions, 221 S.W.3d at 574 (stating that plaintiff = who=20 serves nonresident defendant under the Texas long-arm statute = bears the=20 initial burden of pleading in its petition sufficient allegations = to=20 invoke personal jurisdiction); Paramount Pipe & Supply Co., = Inc. v.=20 Muhr, 749=20 S.W.2d 491, 495B96 (Tex. 1988) = (holding that,=20 even if plaintiff serves a nonresident defendant under Rule 108, = rather=20 than the Texas long-arm statute, the plaintiff still bears the initial burden of pleading in = its=20 petition sufficient allegations to invoke personal jurisdiction, = such as=20 the defendant=3Ds conducting business in Texas and = committing=20 purposeful acts in Texas); Boston = Medical Group,=20 Inc. v. Ellis, No. 14-06-00801-CV, 2007 WL 2447360, at *3 = (Tex.=20 App.CHouston [14th = Dist.] Aug. 30,=20 2007, no pet.) (noting that there is a minimal requirement that = pleadings=20 support personal jurisdiction over nonresident defendants by = alleging that=20 they did business in Texas or committed acts in Texas) (mem.=20 op.).

[25]  See Perna v. Hogan, 162 = S.W.3d 648,=20 653 (Tex. App.CHouston [14th Dist.] 2005, no = pet.). =20

[26]  See id.  =

[27]  See id. (holding that = trial court=20 erred in denying special appearances because = plaintiffs=3D petition did not contain sufficient = allegations=20 invoking personal jurisdiction over the = nonresidents and=20 because the nonresidents presented undisputed evidence that they = are not=20 residents of Texas).

[28]  See Tex. Prop. Code Ann. = '' 162.001B.033 (Vernon 2007).  =

[29]  See id. ' 162.002.

[30]  See id.

[31]  See id. ' 162.003. 

[32]  See id. ' 162.005(1).

[33]  See Michiana Easy=20 Livin=3D Country, Inc., 168 S.W.3d at 791; = Weldon-Francke, 237=20 S.W.3d at 792.

[34]  The Officers also attached = documents to=20 their joint special appearance that purportedly show (1) the funds = from=20 Meristar were used to pay for business-related expenses for the = Texas=20 hotel renovation and (2) Diva=3Ds calculations of the expenses incurred = in=20 remedying flaws in General=3Ds work as evidence that General owes = Diva money=20 instead of Diva owing General.  Although these documents = might relate=20 to affirmative defenses under section 162.031(b), this court is to = presume=20 that General=3Ds claims have merit for the purposes of = our=20 jurisdictional analysis.  See Tex. Prop. Code Ann. = ' 162.031(b) (Vernon 2007); Michiana = Easy=20 Livin=3D Country, Inc., 168 S.W.3d at 791; = Weldon-Francke, 237=20 S.W.3d at 792.  These documents do = not=20 provide any evidence regarding the Officers=3D purposeful = contacts with=20 Texas or lack thereof.

[35]  See Tex. Prop. Code = Ann.=20 '' 162.002, 162.031(a); Michiana Easy=20 Livin=3D Country, Inc., 168 S.W.3d at 788B92 (overruling court of appeals cases = applying the=20 Abrunt of the injury@ specific-jurisdiction analysis); = Markette v.=20 X-Ray X-Press Corp., 240 S.W.3d 464, 469 n.4 (Tex. = App.CHouston [14th Dist.] 2007, no pet.) = (holding that=20 Supreme Court of Texas has overruled court of appeals cases = applying the=20 Abrunt of the injury@ specific-jurisdiction analysis). =20

[36]  See Moki Mac River=20 Expeditions, 221 S.W.3d at 584B85. 

[37]  See id. at = 585.

[38]  See id. at 575 = (stating that,=20 in analyzing personal jurisdiction, the only contacts that are = relevant=20 are the purposeful contacts with Texas of the parties challenging = the=20 trial court=3Ds personal jurisdiction and that the = contacts of=20 all other parties are not relevant).

[39]   See Commonwealth Gen. = Corp. v.=20 York, 177 S.W.3d 923, 925 (Tex. 2005) (holding, in=20 personal-jurisdiction analysis, that contacts of corporation could = not be=20 considered as contacts of sole shareholder unless there was = evidence that=20 would support a finding that shareholder and corporation were = alter egos,=20 in which case the corporation would be viewed as the same legal = person as=20 the shareholder); Michiana Easy Livin=3D Country, Inc., 168 S.W.3d at 785 (stressing that=20 personal-jurisdiction analysis considers only the purposeful Texas = contacts of the defendant challenging personal jurisdiction).=20

[40]  See Cerbone, 225 = S.W.3d at=20 768B71.

[41]  Indeed, the evidence submitted by = General=20 indicates that the affidavits were sent to Meristar in Virginia = and that=20 Meristar sent checks drawn on a Virginia bank account to Diva in = Arizona.=20

[42]  See York, 177 S.W.3d at = 925 (holding=20 court of appeals erred in finding specific jurisdiction because, = even=20 though shareholder had contacts with Texas, the claims against = shareholder=20 did not have a sufficient connection with these = contacts).  =20

[43]  See 915 S.W.2d 866, = 870B71 (Tex. App.BHouston [1st Dist.] 1995, writ=20 denied).=20

[44]  See id.

[45]  Id.

[46]  See id.

[47]  See id. at 869B71.

[48]  Compare id. at = 870B71, with Moki Mac River = Expeditions, 221=20 S.W.3d at 584B85.

[49]  See Herbert, 915 = S.W.2d at=20 870 (applying the O=3DBrien=20 test and citing Siskind v. Villa Foundation for Educ., 642 = S.W.2d=20 434, 436 (Tex. 1982)); O=3DBrien v. Lanpar Co., 399 S.W.2d 340, 342 (Tex. 1966).  =

[50]  See Helicopteros = Nacionales=20 de Colombia, S.A. v. Hall, 466 U.S. 408, 414B15, 104 S. Ct. = 1868, 1872, 80=20 L. Ed. 2d 404 (1984). 

[51]  See Schlobohm v. Schapiro, = 784=20 S.W.2d 355, 358 (Tex. 1990); Zac Smith & Co. v. Otis = Elevator=20 Co., 734 S.W.2d 662, 663B64 (Tex. 1987). 

[52]  See Guardian Royal = Exch. Assur.,=20 Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, = 226B28 (Tex. 1991); see also Helicopteros = Nacionales de Colombia, S.A., 466 U.S. at 414B15, 104 S. Ct. at 1872; International = Shoe Co.=20 v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L. = Ed. 95=20 (1945).

[53]  See, e.g., = Mem=3Dl Hosp. Sys. v. Fisher Ins. Agency,=20 Inc., 835 S.W.2d 645, = 650 (Tex.=20 App.CHouston [14th Dist.] 1992, no=20 writ).

[54]  See Michiana Easy=20 Livin=3D Country, Inc., 168 S.W.3d at 788B92 (overruling court of appeals cases = applying the=20 Abrunt of the injury@ specific-jurisdiction analysis); =20 Cerbone, 225 S.W.3d at 772 (concluding that, under=20 Michiana, personal jurisdiction cannot be based on = allegations that=20 out-of-state tortfeasors knew that the torts they were committing = outside=20 of Texas would cause damages in Texas).

[55]  See Herbert, 915 S.W.2d at = 870B71.

[56]  Am. Type Culture Collection = Inc., 83=20 S.W.3d at 806B07.

[57]  See Moki Mac River = Expeditions, 221=20 S.W.3d at 585.

[58]  See Herbert, 915 S.W.2d at = 870B71. 

[59]  See id.

[60]  See Michiana Easy=20 Livin=3D Country, Inc., 168 S.W.3d at 788B92.

[61]  Compare Herbert, 915 = S.W.2d at=20 870B71, with Moki Mac River=20 Expeditions, 221 S.W.3d = at=20 575B85.

[62]  See C&G, Inc. v. C.N. = Jones, 165=20 S.W.3d 450, 453B54 (Tex. App.CDallas 2005, pet. denied); Perry = & Perry=20 Builders v. Galvan, No. 03-02-00091-CV, 2003 WL 21705248, at = *4 (Tex.=20 App.CAustin July 24, 2003, pet. denied) (mem. = op.);=20 Lively v. Carpet Servs., Inc., 904 S.W.2d 868, 873 (Tex.=20 App.CHouston [1st Dist.] 1995, writ = denied). =20

[63]  See PHC-Minden,=20 L.P., 235=20 S.W.3d at 174; Michiana Easy Livin=3D Country, Inc.,=20 168 S.W.3d=20 at 791; Cerbone, 225 S.W.3d at 770 (concluding that=20 liability cases are not on point in reviewing trial = court=3Ds = personal-jurisdiction=20 ruling).  The majority = also=20 emphasizes that, by enacting Chapter 162, the Texas Legislature = expressed=20 a policy of protecting subcontractors, materialmen, and other = Chapter 162=20 beneficiaries; however, the Texas Supreme Court has pointed out = that=20 statutory policies and liability choices do not override the = requirement=20 of the United States Constitution that a nonresident defendant = have=20 sufficient minimum contacts with the forum state to justify the = exercise=20 of personal jurisdiction.  See PHC-Minden, L.P., 235 = S.W.3d at=20 174.

[64]  See Moki Mac River = Expeditions, 221=20 S.W.3d at 585B88 (concluding that there was no = specific=20 jurisdiction based on the lack of a substantial connection between = the=20 defendant=3Ds purposeful contacts with Texas and the = operative=20 facts of the litigation). 

[65]  Because this court should reverse = based on=20 the first prong of the jurisdictional test, there is no need to = determine=20 whether the exercise of personal jurisdiction comports with = traditional=20 notions of fair play and substantial justice. =20

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