Exchequer Financial Group, Inc. v. Stratum Development, Inc.

239 S.W.3d 899, 2007 Tex. App. LEXIS 9262, 2007 WL 4201031
CourtCourt of Appeals of Texas
DecidedNovember 29, 2007
Docket05-06-01622-CV
StatusPublished
Cited by12 cases

This text of 239 S.W.3d 899 (Exchequer Financial Group, Inc. v. Stratum Development, Inc.) 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
Exchequer Financial Group, Inc. v. Stratum Development, Inc., 239 S.W.3d 899, 2007 Tex. App. LEXIS 9262, 2007 WL 4201031 (Tex. Ct. App. 2007).

Opinion

OPINION

Opinion by

Justice FRANCIS.

Exchequer Financial Group, Inc. appeals the trial court’s order granting Stratum Development, Inc.’s special appearance and dismissing appellant’s claims against appellee. In four issues, appellant contends the trial court erred in issuing the order because appellee waived its “defective” special appearance, appellee had sufficient minimum contacts to support general and specific jurisdiction, and the trial court should have granted a continuance. We affirm.

Whether a court has personal jurisdiction over a nonresident defendant is a question of law. Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 805-06 (Tex.2002). In reviewing a trial court’s ruling on a special appearance, we examine all the evidence in the record to determine if the nonresident defendant negated all possible grounds for personal jurisdiction. Reiff v. Roy, 115 S.W.3d 700, 705 (Tex.App.-Dallas 2003, pet. denied). When, as in this case, the trial court does not file findings of fact and conclusions of law, all facts necessary to support the order and supported by the evidence are implied. Id. We reverse the trial court’s ruling only when the court’s implied findings and resulting order are so against the overwhelming weight and preponderance of the evidence as to be manifestly wrong. Id.

Texas courts may exercise personal jurisdiction over a nonresident defendant only if (1) the defendant has established minimum contacts with Texas and (2) exercising jurisdiction comports with traditional notions of fair play and substantial justice. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex.2002). In evaluating the extent of the defendant’s contacts with Texas, the touchstone of our jurisdictional analysis is “purposeful availment.” Michiana Easy Liv-in’ Country, Inc. v. Holten, 168 S.W.3d 777, 784 (Tex.2005). In determining whether the defendant has purposefully availed itself of the privilege of conducting activities within Texas, we look only to the defendant’s contacts and not unilateral contacts of third parties. See id. at 784-85. We examine only purposeful contacts of the defendant itself that are not random, isolated, or fortuitous. Id. at 785. We search for evidence showing the defendant availed itself of the forum by seeking some benefit, advantage, or profit. Id.

The evidence before the trial court, developed through affidavits, documents, and testimony, shows that appellant is a Delaware corporation with its principal place of business in Dallas, Texas. Appellee is an Illinois corporation with its principal place of business in Naperville, Illinois. Appellant alleged appellee and others, while contracted to provide it with technical services, misappropriated its concept for a network of computerized kiosks, to be known as “The Rabbit System,” where customers could order nostalgic food items. On June 1, 2004, appellant sued the defendants in Dallas County, Texas under a variety of contract and tort claims.

On July 8, 2004, appellee filed a special appearance and original answer. In denying that the trial court had general or specific jurisdiction over it, appellee de- *903 dared it does not reside, maintain a place of business, or engage in business in a continuous and systematic manner in Texas. Appellee stated it does not maintain a registered agent in the State, has not committed any tort in Texas, and denied entering into any oral or written agreements with appellant in Texas. Appellee contended that the trial court’s assertion of jurisdiction over it would offend traditional notions of fair play and substantial justice and would deprive it of federal due process.

Appellant filed a response to the special appearance and attached affidavits from Tom Souran and counsel. Souran, appellant’s president, averred he negotiated from Dallas, Texas contracts — by fax, telephone, and email — with appellee and defendant Insight 360 Degrees, Inc. Souran asserted the contracts were “performable” in Dallas County because they contemplated appellant would pay from Dallas and transmit system inputs, trade secrets, and proprietary information from Dallas. Souran further asserted that the end product of the agreements was put into the stream of commerce with the reasonable expectation it would enter Texas.

Attached to counsel’s affidavit was the deposition of Tracy Rowley, Insight’s former president, who had negotiated the contracts with appellant. Rowley testified that he did not know if Insight had done business in Texas because he could never tell where Souran was located while they were in contact. Rowley described Souran as “hopping around from state to state.”

On October 13, 2006, the trial court held a hearing on appellee’s special appearance. During the hearing, Souran testified that appellant signed a “Stratum Internet Service Agreement” with appellee, designating it as the sole distributor of appellee’s software in the United States, and an “Insight 360 Licensing Agreement” with ap-pellee licensing it to use the StratumWeb CMS website and kiosk software appellee had developed.

Souran admitted that appellant never made any payments under the agreements because there were no sales. Souran further admitted that he signed the internet service agreement on behalf of “The Rabbit System,” rather than appellant. Sour-an admitted that telephone calls and facsimiles from appellee to him were placed to a number with a “608” area code covering Madison, Wisconsin, and then transferred, by remote call forwarding, to his local, Dallas-area number. Appellant’s telephone records, attached to Souran’s affidavit, reflect one telephone call placed from appellant to appellee’s president in Illinois, but Souran testified the records were not complete and he was sure there were other calls.

Souran pointed to a section of the licensing agreement designating Insight as ap-pellee’s “Partner.” Souran admitted that he has no knowledge of any common ownership or profit sharing between appellee and Insight. Souran testified that although appellee and Insight had separate offices at the time the agreements were signed, he believed Insight had moved af-terwards into appellee’s office.

Souran admitted that he was assuming that appellee and Insight placed a product into the stream of commerce with the reasonable expectation that it would enter Texas, and that he was not aware of any actual product entering Texas. Souran was aware that Dallas-based Famous American Foods (FAF) had announced on its website that it had “rolled out kiosk solutions” using Insight’s software, but Souran admitted appellee was not mentioned in FAF’s announcement. Souran explained, however, that “[t]here’s never been a reference to [appellee] other than if you’re a developer and wanting to run *904 kiosks, that’s where they come into play for the fulfillment process and the back end .... they would never be in the front end out to the public.”

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Bluebook (online)
239 S.W.3d 899, 2007 Tex. App. LEXIS 9262, 2007 WL 4201031, Counsel Stack Legal Research, https://law.counselstack.com/opinion/exchequer-financial-group-inc-v-stratum-development-inc-texapp-2007.