Brad Bower v. American Lumber, Inc.

Opinion

IN THE TENTH COURT OF APPEALS

No. 10-14-00322-CV

BRAD BOWER, Appellant v.

AMERICAN LUMBER, INC., Appellee

From the 85th District Court Brazos County, Texas Trial Court No. 13-002584-CV-85

MEMORANDUM OPINION

Brad Bower, a resident of Idaho, appeals the trial court’s denial of Bower’s special

appearance. Because the trial court erred, we reverse the trial court’s order and remand

this case to the trial court for further proceedings.

BACKGROUND

Eddie Winn and Andrew Keys worked for American Lumber, Inc. They both

signed non-competition agreements. At some point in time, Winn became unhappy with

his employment and contacted another lumber company, Eagle Forest Products, LLC, in Idaho. Winn and Keys eventually accepted employment with Eagle Forest and began

selling lumber in Texas in competition with American Lumber. American Lumber sued

Winn, Keys, Eagle Forest, and Bower. Bower is the managing member of Eagle Forest.

Bower was not sued in his official capacity but rather was sued in his individual capacity.

In three issues on appeal, Bower contends the trial court erred in denying Bower’s

special appearance in which Bower objected to the trial court’s jurisdiction over him.

PERSONAL JURISDICTION

Pursuant to Rule 120a of the Texas Rules of Civil Procedure, a special appearance

may be made by any party for the purpose of objecting to the jurisdiction of the court

over the person or property of the defendant on the ground that such person or property

is not amenable to process issued by the courts of this State. TEX. R. CIV. P. 120a(1).

Personal jurisdiction is a question of law which we review de novo. Kelly v. General

Interior Constr., Inc., 301 S.W.3d 653, 657 (Tex. 2010); BMC Software Belgium, N.V. v.

Marchand, 83 S.W.3d 789, 794 (Tex. 2002). Texas courts have personal jurisdiction over a

nonresident defendant when (1) the Texas long-arm statute provides for it, and (2) the

exercise of jurisdiction is consistent with federal and state due process guarantees. Spir

Star AG v. Kimich, 310 S.W.3d 868, 872 (Tex. 2010); Moki Mac River Expeditions v. Drugg,

221 S.W.3d 569, 574 (Tex. 2007).

Under the Texas long-arm statute, the plaintiff has the initial burden to plead

sufficient allegations to confer jurisdiction. Kelly, 301 S.W.3d at 658; Retamco Operating,

Bower v. American Lumber, Inc. Page 2 Inc. v. Republic Drilling Co., 278 S.W.3d 333, 337 (Tex. 2009); American Type Culture

Collection, Inc. v. Coleman, 83 S.W.3d 801, 807 (Tex. 2002). The defendant seeking to avoid

being sued in Texas then has the burden to negate all potential bases for jurisdiction pled

by the plaintiff. See id. When, as here, the trial court does not make findings of fact and

conclusions of law in support of its ruling, "all facts necessary to support the judgment

and supported by the evidence are implied." Retamco, 278 S.W.3d at 337 (quoting BMC

Software, 83 S.W.3d at 795 (citations omitted)).

STEP ONE—THE LONG ARM STATUTE

The Texas 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:

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(2) commits a tort in whole or in part in this state; . . . .

TEX. CIV. PRAC. & REM. CODE ANN. § 17.042 (West xxxx). The statute's broad doing-

business language "allows the statute to reach as far as the federal constitutional

requirements of due process will allow." Retamco, 278 S.W.3d at 337 (quoting Moki Mac,

221 S.W.3d at 575 (citations omitted)); accord Michiana Easy Livin' Country, Inc. v. Holten,

168 S.W.3d 777, 788 (Tex. 2005). Therefore, we only analyze whether Bower’s acts would

bring him within Texas' jurisdiction consistent with constitutional due process

requirements. See Moki Mac, 221 S.W.3d at 575 (citations omitted).

STEP TWO—CONSTITUTIONAL DUE PROCESS GUARANTEES Bower v. American Lumber, Inc. Page 3 Under a constitutional due-process analysis, personal jurisdiction is achieved

when (1) the non-resident defendant has established minimum contacts with the forum

state, and (2) the assertion of jurisdiction complies with "traditional notions of fair play

and substantial justice." Moki Mac, 221 S.W.3d at 575 (quoting Int'l Shoe Co. v. Washington,

326 U.S. 310, 316, 66 S. Ct. 154, 90 L. Ed. 95 (1945)). We focus on the defendant's activities

and expectations when deciding whether it is proper to call the defendant before a Texas

court. Int'l Shoe Co., 326 U.S. at 316.

Minimum Contacts

A defendant establishes minimum contacts with a state when the defendant

"purposefully avails itself of the privilege of conducting activities within the forum state,

thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235,

253, 78 S. Ct. 1228, 2 L. Ed. 2d 1283 (1958) (citing Int'l Shoe Co., 326 U.S. at 319). "The

defendant's activities, whether they consist of direct acts within Texas or conduct outside

Texas, must justify a conclusion that the defendant could reasonably anticipate being

called into a Texas court." Am. Type Culture Collection, 83 S.W.3d at 806 (citing World-Wide

Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S. Ct. 559, 62 L. Ed. 2d 490 (1980)).

A nonresident's contacts can give rise to either specific or general jurisdiction. Am.

Type Culture Collection, 83 S.W.3d at 806. Here, only specific jurisdiction over Bower is at

issue. A court has specific jurisdiction over a defendant if the defendant’s alleged liability

arises from or is related to an activity conducted within the forum. Spir Star AG v. Kimich,

Bower v. American Lumber, Inc. Page 4 310 S.W.3d 868, 873 (Tex. 2010); CSR Ltd. v. Link, 925 S.W.2d 591, 595 (Tex. 1996). In such

cases, "we focus on the 'relationship among the defendant, the forum[,] and the

litigation.'" Spir Star AG, 310 S.W.3d at 873 (quoting Moki Mac, 221 S.W.3d at 575-76).

Specific jurisdiction arises when (1) the defendant purposefully avails itself of conducting

activities in the forum state, and (2) the cause of action arises from or is related to those

contacts or activities. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472, 105 S. Ct. 2174, 85

L. Ed. 2d 528 (1985); National Indus. Sand Ass'n v. Gibson, 897 S.W.2d 769, 774 (Tex. 1995).

Pleadings and Evidence

A plaintiff must also plead and, when challenged by the defendant, present

evidence of the relevant acts (those connected to the plaintiff’s claims) and that those acts

occurred, at least in part, in Texas. See Kelly v. General Interior Constr., Inc., 301 S.W.3d

653, 660-661 & 659 n. 5 (Tex. 2010) (citing Frank A. Smith Sales, Inc. v. Atl. Aero, Inc., 31

S.W.3d 742, 747 (Tex. App.—Corpus Christi 2000, no pet.)).

American Lumber pled in its first Amended Petition that Brad Bower, in his

individual capacity, was a resident of Idaho and a Managing Member of Eagle Forest

Products, LLC who tortuously interfered with the contractual relationship between

American Lumber and Eddie Winn and Andrew Keys; violated the Texas Uniform Trade

Secrets Act; intentionally formed a conspiracy to interfere with existing contractual

relations and prospective contractual relations; and conspired to violate the Texas

Uniform Trade Secrets Act.

Bower v. American Lumber, Inc. Page 5 Bower filed a verified special appearance pursuant to Rule 120a contending that

he was not a Texas resident, owned no property in Texas, had no bank account in Texas,

had no office, employees, or regular place of business in his individual capacity in Texas,

and committed no tort in Texas. Bower later filed a more specific affidavit declaring that,

in his individual capacity, he had not recruited any Texas resident to work for Eagle. He

acknowledged communicating with Winn and Keys about working for Eagle but that

those communications were on behalf of Eagle and did not occur while he was in Texas.

He also acknowledged that of all the communications with Winn and Keys, only one was

within Texas but that it was not business related. He recounted that he was in Texas on

a business trip to meet with an Eagle employee. The employee introduced Bower to Winn

and the two had dinner which was incidental to the trip. The dinner was a “get to know

you” occasion rather than a business meeting. Bower stated he did not make an offer of

employment at any time during the Texas trip. Bower also asserted that he never met

Keys in person in Texas prior to Keys being hired by Eagle; never committed tortious

activity in Texas or outside of Texas intended to harm a Texas resident; and never

received trade secrets of another company from Winn or Keys. Bower stated he knew

Winn and Keys had signed non-competition agreements with American Lumber but that

when Eagle offered employment to Winn and Keys, Bower believed he acted in good

faith because he understood the non-competition agreements to be unenforceable.

American Lumber responded to Bower’s special appearance, attaching excerpts of

Bower v. American Lumber, Inc. Page 6 deposition testimony of Winn and an affidavit of Barry Hendler, the president of Madera

Americana, Inc., d/b/a American Lumber, Inc. Winn testified at his deposition that Bower

knew of Winn’s non-competition agreement but there was no discussion between the two

about it. Winn further testified that he and Bower met in the spring of 2013 at a restaurant

in Humble, Texas. They “got to know one another” at the restaurant. Winn did not know

why Bower was in town. Winn could not recall whether it was Bower or Cary Holaday,

a sales manager, who called Winn on the phone a few months later to offer Winn

employment with Eagle. The only relevant information provided by Hendler’s affidavit

was a statement that Winn testified at his deposition that he met Bower in Humble and a

conclusion that Bower, individually, entered into an agreement to take the trade secrets

of American Lumber and sell products.1

Application

After reviewing the pleadings and evidence submitted, we find American Lumber

failed to plead what wrongful acts Bower took in his individual capacity and that any of

those acts occurred in Texas. The mere existence of a cause of action does not

automatically satisfy jurisdictional due process concerns. Kelly v. General Interior Constr.,

Inc., 301 S.W.3d 653, 660 (Tex. 2010). Thus, because Bower challenged American

Lumber’s pleadings, Bower could, and did, meet his burden to negate all bases of

jurisdiction by proving through his special appearance and affidavit that he was not a

1 Portions of Hendler’s affidavit were objected to and those objections were sustained.

Bower v. American Lumber, Inc. Page 7 Texas resident, owned no property in Texas, had no bank account in Texas, had no office,

employees, or regular place of business in his individual capacity in Texas, and

committed no tort in Texas. See Siskind v. Villa Foundation for Education, Inc., 642 S.W.2d

434, 438 (Tex. 1982).

CONCLUSION

Accordingly, we conclude that Bower did not purposefully avail himself of

conducting activities in Texas. Thus, Bower’s contacts are not sufficient to support

specific jurisdiction over Bower in his individual capacity, and his special appearance

should have been granted.2

Bower’s first two issues are sustained. The trial court’s order denying Bower’s

special appearance is reversed, and this case is remanded to the trial court to render an

order which grants Bower’s special appearance and dismisses American Lumber’s claims

against Bower for lack of personal jurisdiction.

TOM GRAY Chief Justice

Before Chief Justice Gray, Justice Davis, and Justice Scoggins Reversed and remanded Opinion delivered and filed April 16, 2015 [CV06]

2Because we decide this case based on the lack of alleged minimum contacts with Texas, we need not discuss the “traditional notions of fair play and substantial justice” prong of personal jurisdiction.

Bower v. American Lumber, Inc. Page 8