Cynthia Hargrave Viator, Personal Representative of the Estate of Harvey Hargrave, John Lawrence Hargrave, Individually Patrick Joseph Hargrave And Cynthia Hargrave Viator v. HTC Holding A.S. (Slovakia) Zetor, A.S. FRAGOKOV-export Manufacturing Cooperative

• Court: Court of Appeals of Texas
• Decided: November 28, 2012
• Docket: 04-12-00447-CV
• Status: Published

Opinion

Fourth Court of Appeals San Antonio, Texas MEMORANDUM OPINION No. 04-12-00447-CV

Cynthia Hargrave VIATOR, Personal Representative of the Estate of Harvey Hargrave, Deceased; John Lawrence Hargrave, Individually; Patrick Joseph Hargrave; and Cynthia Hargrave Viator, Individually, Appellants

v.

HTC HOLDING a.s., Fragokov - Export, Manufacturing Cooperative, and Zetor a.s., Appellees

From the 38th Judicial District Court, Uvalde County, Texas Trial Court No. 2011-02-27947-CV Honorable Camile G. Dubose, Judge Presiding

Opinion by: Phylis J. Speedlin, Justice

Sitting: Phylis J. Speedlin, Justice Rebecca Simmons, Justice Marialyn Barnard, Justice

Delivered and Filed: November 28, 2012

AFFIRMED

Cynthia Hargrave Viator, Personal Representative of the Estate of Harvey Hargrave,

Deceased; John Lawrence Hargrave, Individually; Patrick Joseph Hargrave; and Cynthia

Hargrave Viator, Individually (collectively, “Viator”) appeal the trial court’s granting of the

special appearances filed by Fragokov and Zetor a.s. Because we conclude that the entities are

not subject to personal jurisdiction in Texas, we affirm the judgment of the trial court. 04-12-00447-CV

BACKGROUND

On February 2, 2009, Harvey Hargrave suffered fatal injuries when the brakes and/or

clutch on the tractor he was using to push an old fence into a fire pit allegedly failed, causing him

to fall into the fire pit. Hargrave was severely burned, and died 39 days later as a result of the

accident. Hargrave purchased the 1998 John Deere 2400 tractor at an auction in Mississippi and

transported the tractor to his ranch in Uvalde County. Viator alleged that the John Deere tractor

was manufactured by Zetor a.s., a Czech company, and equipped with hydraulic components

manufactured by Fragokov, a Slovakian company. Viator sued Alton LeBlanc & Sons, LLC,

Deere & Company, Zetor North America, Inc., HTC Holding a.s., Zetor a.s., and Fragokov

asserting causes of action for products liability, negligence, wrongful death, and breach of the

implied warranty of fitness. HTC Holding a.s., Zetor a.s. (“Zetor”), and Fragokov - Export,

Manufacturing Cooperative (“Fragokov”) each filed a special appearance challenging personal

jurisdiction, arguing, in part, that they lack minimum contacts with Texas and that the trial

court’s assertion of jurisdiction offended traditional notions of fair play and substantial justice.

Following a hearing, the trial court sustained the special appearances filed by HTC Holding a.s.,

Zetor, and Fragokov. Viator timely appealed. Viator subsequently filed a motion to dismiss the

appeal as to HTC Holding a.s. That motion is granted. See TEX. R. APP. P. 42.1(a)(2).

DISCUSSION

On appeal, Viator argues that the trial court erred in granting the special appearances in

favor of Fragokov and Zetor because they are both subject to personal jurisdiction in Texas.

Burden of Proof and Standard of Review

The plaintiff bears the initial burden of pleading allegations sufficient to bring a

nonresident defendant within the provisions of the long-arm statute. Kelly v. Gen. Interior

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Constr., Inc., 301 S.W.3d 653, 658 (Tex. 2010); Am. Type Culture Collection, Inc. v. Coleman,

83 S.W.3d 801, 807 (Tex. 2002). Once the plaintiff has pleaded sufficient jurisdictional

allegations, the nonresident defendant filing a special appearance then assumes the burden to

negate all bases of personal jurisdiction alleged by the plaintiff. Kelly, 301 S.W.3d at 658;

Coleman, 83 S.W.3d at 807. If the defendant produces evidence negating jurisdiction, the

burden returns to the plaintiff to show as a matter of law that the court has jurisdiction over the

defendant. Oryx Capital Int’l, Inc. v. Sage Apartments, L.L.C., 167 S.W.3d 432, 441 (Tex.

App.—San Antonio 2005, no pet.); Gutierrez v. Cayman Islands Firm of Deloitte & Touche, 100

S.W.3d 261, 273 (Tex. App.—San Antonio 2002, pet. dism’d). “Because the plaintiff defines

the scope and nature of the lawsuit, the defendant’s corresponding burden to negate jurisdiction

is tied to the allegations in the plaintiff’s pleading.” Kelly, 301 S.W.3d at 658.

Whether a court has personal jurisdiction over a nonresident defendant is a question of

law, which we review de novo. Zinc Nacional, S.A. v. Bouche Trucking, Inc., 308 S.W.3d 395,

397 (Tex. 2010); BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002).

When, as here, a trial court does not issue findings of fact or conclusions of law to support its

special-appearance determination, we presume that all factual disputes were resolved in favor of

the trial court’s ruling. Spir Star AG v. Kimich, 310 S.W.3d 868, 871-72 (Tex. 2010); Marchand,

83 S.W.3d at 794; Griffith v. Griffith, 341 S.W.3d 43, 49 (Tex. App.—San Antonio 2011, no

pet.).

Applicable Law — Personal Jurisdiction

The Texas long-arm statute’s broad “doing business” language authorizes personal

jurisdiction over a nonresident defendant “as far as the federal constitutional requirements of due

process will allow.” Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815

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S.W.2d 223, 226 (Tex. 1991); TEX. CIV. PRAC. & REM. CODE ANN. § 17.042 (West 2008). To

establish personal jurisdiction, the defendant must have established minimum contacts with the

forum state, and the assertion of jurisdiction must comport with “traditional notions of fair play

and substantial justice.” Marchand, 83 S.W.3d at 795 (citing Int’l Shoe Co. v. Washington, 326

U.S. 310, 316 (1945)). The minimum-contacts analysis requires “some act by which the

defendant purposefully avails itself of the privilege of conducting activities within the forum

State, thus invoking the benefits and protections of its laws.” Michiana Easy Livin’ Country,

Inc. v. Holten, 168 S.W.3d 777, 784 (Tex. 2005) (quoting Hanson v. Denckla, 357 U.S. 235, 253

(1958)).

“Personal jurisdiction exists if the nonresident defendant’s minimum contacts give rise to

either specific jurisdiction or general jurisdiction.” Marchand, 83 S.W.3d at 795. When specific

jurisdiction is asserted, the minimum contacts analysis focuses “on the ‘relationship among the

defendant, the forum, and the litigation.’” Moki Mac River Expeditions v. Drugg, 221 S.W.3d

569, 575-76 (Tex. 2007) (quoting Guardian Royal, 815 S.W.2d at 228).

Both the Texas Supreme Court and the United States Supreme Court have held that the

mere fact that goods have traveled into a state, without more, does not establish the minimum

contacts necessary to subject a manufacturer to personal jurisdiction within that state. See, e.g.,

Asahi Metal Indus. Co. v. Super. Ct., 480 U.S. 102, 112 (1987); World-Wide Volkswagen Corp.

v. Woodson, 444 U.S. 286, 296 (1980); Michiana, 168 S.W.3d at 788. The mere fact that a seller

knows its goods will end up in the forum state does not support jurisdiction when the seller made

no attempt to market its goods there. Michiana, 168 S.W.3d at 787. “The exercise of

jurisdiction over a merchant requires that the merchant actually direct sales to the forum state,

not through it.” Zinc Nacional, 308 S.W.3d at 397-98 (citing Asahi, 480 U.S. at 112 (“The

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placement of a product into the stream of commerce, without more, is not an act of the defendant

purposefully directed toward the forum State. Additional conduct of the defendant may indicate

an intent or purpose to serve the market in the forum State. . . .”)).

Analysis

On appeal, Viator contends that Fragokov and Zetor failed to negate all the bases of

personal jurisdiction alleged by the plaintiffs. Specifically, Viator argues that both defendants

failed to address whether they are aware that “thousands of [their] products were ultimately

being sold in the forum state.” Viator further argues that the trial court should not have

dismissed Fragokov and Zetor prior to document production in accordance with Rule 120a(3).

See TEX. R. CIV. P. 120a(3).

First, we address whether the trial court prematurely granted the special appearances.

The trial court determines a special appearance on the basis of the pleadings, any stipulations

made by and between the parties, such affidavits and attachments as may be filed by the parties,

the results of discovery processes, and any oral testimony. Id.; Gutierrez, 100 S.W.3d at 273.

The scope of discovery is generally within the trial court’s discretion. In re Colonial Pipeline

Co., 968 S.W.2d 938, 941 (Tex. 1998) (orig. proceeding); In re BP Prods. N. Am. Inc., 263

S.W.3d 106, 111 (Tex. App.—Houston [1st Dist.] 2006, orig. proceeding). We thus review an

issue of “adequate time for discovery” under an abuse of discretion standard. Specialty

Retailers, Inc. v. Fuqua, 29 S.W.3d 140, 145 (Tex. App.—Houston [14th Dist.] 2000, pet.

denied). An abuse of discretion occurs when the trial court acts without reference to any guiding

rules or principles. VingCard A.S. v. Merrimac Hospitality Sys., Inc., 59 S.W.3d 847, 855 (Tex.

App.—Fort Worth 2001, pet. denied) (citing Downer v. Aquamarine Operators, Inc., 701

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S.W.2d 238, 241-42 (Tex. 1985)). In reviewing the trial court’s decision, we must determine

whether the trial court’s action was arbitrary or unreasonable. Downer, 701 S.W.2d at 242.

In this case, Viator filed suit on February 1, 2011. Fragokov filed its special appearance

on May 3, 2011 and Zetor filed its special appearance on November 4, 2011. Thereafter, the trial

court entered a docket control order providing specific dates by which the discovery relating to

the special appearance issues was to be completed, setting that deadline for February 1, 2012.

Viator first served requests for production on September 19, 2011. The trial court subsequently

limited Viator’s requests for production to 150 in number and allowed the defendants additional

time to respond due to the necessity of translating the requests and responses. During that time,

Viator did not seek depositions from any Zetor or Fragokov employee or representative.

The hearing on the special appearances was held on June 1, 2012. Immediately prior to

the hearing, counsel for Viator filed responses to the special appearances as well as his own

affidavit stating that Zetor and Fragokov have produced no documents in response to plaintiffs’

requests for production, and that the responsive documents bear on the jurisdictional issues.

During the hearing, Zetor objected to the untimely and conclusory affidavit filed by Viator’s

counsel. Zetor also argued that the reason it had not filed any documents related to jurisdiction

in Texas was because Zetor did not possess such documents, and therefore counsel represented

to the court that Zetor would not be supplementing the responses in the coming weeks. Zetor’s

Responses and Objections to Plaintiffs’ Second (sic) Amended Requests for Production were

admitted into evidence. The trial court stated that it would not rule on the special appearances

until June 22, 2012 to give the parties time to file additional briefing. All parties filed post-

hearing briefing. 1

1 The post-hearing letter brief filed by Viator is not part of the appellate record because it was not filed with the trial court clerk.

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In Barron v. Vanier, the Fort Worth Court of Appeals held that the trial court abused its

discretion in denying the plaintiff’s motion for continuance of a special appearance hearing to

permit him to conduct further discovery on the issue of personal jurisdiction where the special

appearance hearing was held two months after the filing of the special appearances, and the

plaintiff sought information which, if existing and discovered, could support his allegations of

personal jurisdiction over the defendants. Barron v. Vanier, 190 S.W.3d 841, 847-51 (Tex.

App.—Fort Worth 2006, no pet.). Here, in contrast, Viator had ample time in which to conduct

discovery. In fact, the trial court delayed its ruling for an additional three weeks after the special

appearance hearing to allow Viator to “direct the Court to any discovery requests that were

responded to or not responded to that you feel are necessary in order to provide further proof

with regard to the special appearances.” In addition, counsel for Zetor represented to the court at

the hearing that it would not be filing any documents relating to contacts with Texas because

Zetor had no contacts with Texas and therefore possessed no such documents. Accordingly,

Viator had sufficient time in which to conduct discovery on the jurisdictional issues, and

additional time was unlikely to yield information supporting Viator’s allegations of personal

jurisdiction over the defendants. See, e.g., Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d

150, 161 (Tex. 2004) (considering the length of time the case has been on file, the materiality

and purpose of the discovery sought, and whether the party seeking the continuance has

exercised due diligence to obtain the discovery sought in determining whether trial court abused

its discretion by denying motion for continuance in summary judgment context). Thus, we

conclude the trial court did not abuse its discretion in granting the special appearance under Rule

120a(3).

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We next address Viator’s argument that the trial court improperly granted the special

appearances because both Fragokov and Zetor failed to negate all the bases of personal

jurisdiction alleged by the plaintiffs.

A. Fragokov

Viator sued Fragokov, an entity headquartered in the Slovak Republic, and asserted that it

is “doing business” in Texas. Viator averred that the Texas courts have jurisdiction over

Fragokov because:

it is an alien entity doing business in Texas and has purposefully availed itself of the privileges and benefits of conducting business in Texas by manufacturing tractors and other equipment for sale in Texas, distributing, marketing and selling John Deere brand tractors and other equipment in Texas.

In its special appearance, Fragokov argued that it is not a resident of the state of Texas and has

had no purposeful contacts with Texas. Fragokov also maintained that it never conducted

business in the United States and that it has no current contracts with any entity to deliver goods

directly to the United States. Fragokov did admit manufacturing parts between 1996 and 1997

which were later used in a tractor assembled at an unknown location at the request of and to the

specifications of Zetor, another foreign entity. In support, Fragokov attached to its special

appearance the affidavit of Vladimir Kivader, a technical manager. Fragokov also attached a

copy of its contract with Zetor and an English translation of the contract. Kivader averred, in

part, that Fragokov:

• does not own any personal or real property in Texas, nor does it maintain bank accounts in Texas, or advertise in Texas; • does not sell the tractor hydraulic brake and clutch cylinders in Texas; all design, manufacturing, and testing of cylinders have occurred only in Czechoslovakia or the Slovak Republic; • does not own or operate any facilities in Texas; • does not pay taxes in the United States or Texas; • does not have agents, employees, sales representatives, or subsidiaries in Texas;

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• does not solicit business in Texas; • does not have a contract with any Texas citizen or resident regarding the hydraulic break in question; and • does not have any control over the sale, distribution, or destination of the brake and clutch cylinders which John Deere installs.

On appeal, Viator asserts that Kivader’s declaration fails to address whether Fragokov is

aware that “thousands of products were ultimately being sold in the forum state,” thus subjecting

itself to stream of commerce jurisdiction. Given the pleadings filed by Viator, Fragokov’s only

burden was to discount the argument that it “did business” in Texas. We believe that Fragokov

met that burden by filing Kivader’s declaration, in which Kivader demonstrated that Fragokov

has had no contacts with the state of Texas. Additionally, even if Fragokov were required to

discount the stream of commerce argument now being made on appeal, a seller’s awareness

“‘that the stream of commerce may or will sweep the product into the forum State does not

convert the mere act of placing the product into the stream into an act purposefully directed

toward the forum State.’” Kimich, 310 S.W.3d at 873 (quoting CSR Ltd v. Link, 925 S.W.2d

591, 595 (Tex. 1996)); Asahi, 480 U.S. at 112. Here, Fragokov lacks the “additional conduct”

indicating an intent or purpose to serve the Texas market required to impose personal

jurisdiction. See Kimich, 310 S.W.3d at 873 (quoting Asahi, 480 U.S. at 112) (examples of

additional conduct include: (1) “designing the product for the market in the forum State,” (2)

“advertising in the forum State,” (3) “establishing channels for providing regular advice to

customers in the forum State,” and (4) “marketing the product through a distributor who has

agreed to serve as the sales agent in the forum State”). The record before us does not reveal the

existence of conduct by Fragokov purposefully directed to Texas. There is no evidence that

Fragokov sought a benefit, profit, or advantage by availing itself of the Texas market, or that

Fragokov had sufficient minimum contacts with Texas to make it amenable to jurisdiction in

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Texas. See J. McIntyre Machinery, Ltd. v. Nicastro, 131 S.Ct. 2780, 2791 (2011) (defendant

manufacturer cannot be subject to personal jurisdiction under stream of commerce theory where

it did not engage in activities in forum state that reveal intent to invoke or benefit from protection

of forum state’s laws). Accordingly, we conclude the trial court did not err in granting the

special appearance filed by Fragokov.

B. Zetor

Zetor is a foreign corporation formed under the laws of the Czech Republic with its

principal place of business located in the Czech Republic. Viator asserted that Zetor

manufactured the John Deere tractor at issue, and argued that it was amenable to jurisdiction in

Texas:

This Court has jurisdiction over Defendant ZETOR (CZECH REPUBLIC) because it is an alien entity doing business in Texas and has purposefully availed itself of the privileges and benefits of conducting business in Texas by manufacturing tractors and other equipment for sale in Texas, distributing, marketing and selling John Deere brand tractors and other equipment in Texas.

In response, Zetor filed a special appearance in which it stated that it has never been a

resident of Texas; is not and has never been authorized to do business in Texas; is a corporation

incorporated under the laws of the Czech Republic; has its principal place of business in the

Czech Republic; has no offices or place of business in Texas; does not have and has never had a

registered agent for service of process in Texas; and has had no contacts with Texas. Zetor also

filed the declaration of Ivona Vavrova, Chairperson on the Supervisory Board of Zetor. Vavrova

stated, in part, that Zetor:

• does not own any personal property or real estate in Texas; • does not maintain bank accounts in Texas or perform advertising in Texas; • did not sell the tractor in question in Texas or to Texas; • does not own or operate any facilities in Texas and does not have any employees, agents, sales representatives or subsidiaries working within Texas;

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• does not pay taxes in Texas; • does not sell and has not sold products directly into the State of Texas; does not solicit business within Texas; has no contracts with any Texas citizen or resident regarding the design, manufacture, or sale of tractors; • has no control over the sale, distribution, or destination of tractors in which Deere & Company installs brakes and/or clutch systems; • does not manufacture any product in the United States, including Texas; and • does not market the subject tractor or any other product in Texas.

On appeal, Viator argues that Vavrova’s declaration “quite conspicuously sidesteps the

question whether Zetor, a.s. is aware that ‘thousands of its products were ultimately being sold in

the forum state.’” Again, based on Viator’s pleadings, Zetor was required to disprove that it

purposefully availed itself of the Texas forum by: (1) manufacturing tractors and other

equipment for sale in Texas; and (2) distributing, marketing, and selling John Deere brand

tractors and other equipment in Texas. We disagree that Zetor failed to meet its burden. On this

record, there is no evidence that Zetor either manufactured tractors for sale in Texas or

distributed, marketed, or sold John Deere tractors in Texas. Vavrova’s declaration demonstrates

that Zetor has no contacts with Texas. Further, we cannot conclude that Zetor subjected itself to

stream of commerce jurisdiction, as there is no evidence that Zetor purposefully availed itself of

the Texas market. See J. McIntyre, 131 S.Ct. at 2791. On the record before us, there is simply

no evidence that Zetor attempted to market its goods in Texas. See Michiana, 168 S.W.3d at

787. Accordingly, we hold that the trial court did not err in granting the special appearance in

favor of Zetor.

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CONCLUSION

Based on the foregoing, we overrule Viator’s issue on appeal, and affirm the judgment of

the trial court granting the special appearances filed by Fragokov and Zetor. Viator’s motion to

dismiss as to HTC Holding a.s. only is granted.

Phylis J. Speedlin, Justice

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