Barnhill v. Automated Shrimp Corp.

222 S.W.3d 756, 2007 Tex. App. LEXIS 2485, 2007 WL 926160
CourtCourt of Appeals of Texas
DecidedMarch 28, 2007
Docket10-06-00038-CV
StatusPublished
Cited by21 cases

This text of 222 S.W.3d 756 (Barnhill v. Automated Shrimp Corp.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Barnhill v. Automated Shrimp Corp., 222 S.W.3d 756, 2007 Tex. App. LEXIS 2485, 2007 WL 926160 (Tex. Ct. App. 2007).

Opinions

OPINION

FELIPE REYNA, Justice.

In this accelerated appeal, Stephen Barnhill challenges the denial of his special appearance on grounds that: (1) his communications with Texas are fortuitous; (2) certain actions were taken in his representative capacity and not directed at Texas; (3) his assistance with SEC filings is not connected to Texas; (4) his contractual obligations were not performable in Texas; [761]*761and (5) Texas jurisdiction violates notions of fair play and substantial justice. We affirm.

FACTUAL BACKGROUND

Barnhill was chief executive officer of the Barnhill Group in Georgia. Bill G. Williams was chief executive officer of Direct Wireless Communications, Inc., a subsidiary of Direct Wireless Corporation, in Texas. Williams contacted Barnhill to discuss a merger. Eventually, DWCI acquired the assets of the Barnhill Group, including Barnhill’s medical expertise and his 49% interest in “fractal genomics,” a form of medical technology, and the assets of Fractal Genomics. Barnhill acquired approximately 50% of DWCI stock. Individually, Barnhill received 49% of the $500,000 paid for the Fractal assets and entered an employment agreement with DWCI. DWCI became Health Discovery Corporation of which Barnhill became CEO.

When stock issues arose, HDC sued Williams, Shirley K. Williams, and Automated Shrimp Corporation. The Williamses and ASC sued Barnhill, among others, as a third-party defendant. DWC and shareholders Gerald Easterling, Tim Holloway, Baptist Community Services, and the Guadalupe Family Limited Partnership intervened in the suit against Barnhill. Barnhill filed a special appearance which the court initially granted, but ultimately denied on motion for reconsideration. Barnhill challenges several of the court’s conclusions of law:

A. Barnhill has been doing business in Texas as that term is defined under the provisions of § 17.042 of the Texas Civil Practice & Remedies Code, both with respect to contracts and torts.
B. In entering into a contract performable in Texas and subject to construction under Texas law and in directing representations to Texas residents in Texas, Barnhill has purposefully directed his activities toward Texas.
C. Misrepresentations made by a nonresident of Texas that are alleged to be false and that are made to a Texas resident and received in Texas are sufficient to constitute doing business in Texas.
D. The causes of action alleged by third-party plaintiffs and intervenors arise out of the contracts entered into by Barnhill and the representations made by him.
E. Barnhill’s acts of doing business in Texas constitute sufficient minimum contacts with Texas for the exercise of jurisdiction over him in Texas in that he should have anticipated that, to the extent that his conduct was or is allegedly wrongful, he could be called to answer for it in a Texas court.
F. Barnhill’s communications sent to and received by Bill Williams in Texas were made before Barnhill became an officer and director of HDC and were made in his individual capacity, so that Barnhill may be held personally liable to the extent that the communications were false and may be held to answer therefore in Texas.
G. If the representations made by Barnhill in the communications to Shirley Williams and Holloway in Texas are fraudulent as alleged, Barnhill can be held responsible for them in his individual capacity.
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I. If Barnhill has made or caused or permitted to be made inaccurate or incomplete required reports to the SEC, thereby exposing HDC, a Texas corporation, to fines, penalties, and/or liabilities and damaging the interests of its shareholders, he may be held to answer to HDC’s claims in Texas.
[762]*762J. The exercise of personal jurisdiction over Barnhill on the claim made by third-party plaintiffs and intervenors meet the requirements of federal and state due process.
K. The exercise of such jurisdiction over Barnhill does not offend traditional notions of fair play and substantial justice.

STANDARD OF REVIEW

A plaintiff must plead “sufficient allegations” to bring a nonresident defendant within the long-arm statute. BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 793 (Tex.2002). The defendant must then negate “all jurisdictional bases.” Id. In considering the denial of a special appearance, we determine only the issue of jurisdiction, not liability. See Michiana Easy Livin’ Country Inc. v. Holten, 168 S.W.3d 777, 791-92 (Tex.2005). We review a court’s findings of fact for legal and factual sufficiency and its conclusions of law de novo. See BMC Software, 83 S.W.3d at 794.

APPLICABLE LAW

A Texas court may exercise personal jurisdiction over a nonresident defendant if: (1) the defendant has minimum contacts with Texas; and (2) the exercise of jurisdiction comports with traditional notions of fair play and substantial justice. BMC Software, 83 S.W.3d at 795. Minimum contacts arise if the defendant “purposefully availed” himself of the “privileges and benefits of conducting business in the foreign jurisdiction.” Id.

Three aspects of this requirement are relevant here. First, it is only the defendant’s contacts with the forum that count: purposeful availment “ensures that a defendant will not be haled into a jurisdiction solely as a result of ... the ‘unilateral activity of another party or a third person.’ ” Second, the acts relied on must be “purposeful” rather than fortuitous. Sellers who “reach out beyond one state and create continuing relationships and obligations with citizens of another state” are subject to the jurisdiction of the latter in suits based on their activities. By contrast, a defendant will not be haled into a jurisdiction solely based on contacts that are “random, isolated, or fortuitous.” Third, a defendant must seek some benefit, advantage, or profit by “availing” itself of the jurisdiction.

Michiana, 168 S.W.3d at 785 (internal citations omitted). We do not consider whether conduct is: (1) “surreptitious or fraudulent or the merits of such claims;” or (2) “ ‘directed,’ or aimed at Texas, or the ‘effects’ were in Texas.” Lewis v. Indian Springs Land Corp., 175 S.W.3d 906, 917 (Tex.App.-Dallas 2005, no pet.).

There must be “either minimum contacts sufficient to confer specific jurisdiction or continuous and systematic contacts sufficient to confer general jurisdiction.” I & JC Corp. v. Helen of Troy L.P., 164 S.W.3d 877, 886 (Tex.App.-El Paso 2005, pet. denied). Specific jurisdiction exists where the cause of action “arises from or is related to an activity conducted within the forum.” BMC Software, 83 S.W.3d at 796. The focus is on the “relationship among the defendant, the forum and the litigation.” Guardian Royal Exch. Assur., Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 228 (Tex.1991).

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Barnhill v. Automated Shrimp Corp.
222 S.W.3d 756 (Court of Appeals of Texas, 2007)

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Bluebook (online)
222 S.W.3d 756, 2007 Tex. App. LEXIS 2485, 2007 WL 926160, Counsel Stack Legal Research, https://law.counselstack.com/opinion/barnhill-v-automated-shrimp-corp-texapp-2007.