IMV Technologies and IMV International Corporation D/B/A IMV Technologies USA v. Inguran, LLC D/B/A Sexing Technologies

• Court: Court of Appeals of Texas
• Decided: November 14, 2013
• Docket: 10-13-00150-CV
• Status: Published

Opinion

IN THE TENTH COURT OF APPEALS

No. 10-13-00150-CV

IMV TECHNOLOGIES AND IMV INTERNATIONAL CORPORATION D/B/A IMV TECHNOLOGIES USA, Appellants v.

INGURAN, LLC D/B/A SEXING TECHNOLOGIES, Appellee

From the 85th District Court Brazos County, Texas Trial Court No. 12-001420-CV-85

MEMORANDUM OPINION

This is a dispute between a Texas company and companies in Minnesota and

France about where a lawsuit will be tried. Inguran, LLC d/b/a Sexing Technologies, a

company which has its principal place of business in Navasota, Texas, possesses

technology which allows it to sort semen by sex for use in artificial insemination for the

breeding of cattle. Inguran uses this technology in its various facilities around the country and in Canada. IMV Technologies (IMV) is a French manufacturer of straw

filling machines which have been used by Inguran in its semen sorting business. IMV

International Corporation d/b/a IMV Technologies USA (IMV USA) is a Minnesota

company which purchases these machines from manufacturers like IMV for resale in

the United States.

In January of 2011, Inguran purchased six new models of a straw filling machine,

the MX5, from IMV USA for use in Inguran’s facilities. One MX5 was delivered to

Navasota. The remaining five machines were delivered to Inguran’s facilities in other

states. Six more machines were ordered but not delivered because in the meantime,

Inguran had received reports from its facilities that the straws were not being filled or

sealed properly. The machine in Navasota was also not filling and sealing the straws

properly. Inguran’s customers also started complaining and demanding refunds.

Inguran sued IMV USA and IMV in Brazos County, Texas. Both IMV USA and

IMV filed special appearances. After a hearing on IMV USA’s special appearance, the

trial court, in one order, denied both IMV USA’s and IMV’s special appearance.

Because the trial court did not err in denying IMV USA’s special appearance but erred

in denying IMV’s special appearance, we affirm in part and reverse and remand in part

the trial court’s order.

PERSONAL JURISDICTION

In five issues, IMV USA asserts that the trial court erred in denying its special

IMV Technologies v. Inguran, LLC Page 2 appearance. In one issue, IMV makes the same assertion.

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,

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 addition to other acts that may constitute doing business, a nonresident does business in this state if the nonresident: IMV Technologies v. Inguran, LLC Page 3 (1) contracts by mail or otherwise with a Texas resident and either party is to perform the contract in whole or in part in this state;

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

(3) recruits Texas residents, directly or through an intermediary located in this state, for employment inside or outside this state.

TEX. CIV. PRAC. & REM. CODE ANN. § 17.042 (Vernon 2008). 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 IMV USA’s and

IMV’s acts would bring them 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

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.

IMV Technologies v. Inguran, LLC Page 4 A. Minimum Contacts

A defendant establishes minimum contacts with a state when it "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. Inguran argued only specific jurisdiction

in its petition and here in response to IMV USA’s and IMV’s appeal. A court has

specific jurisdiction over a defendant if its alleged liability arises from or is related to an

activity conducted within the forum. Spir Star AG v. Kimich, 310 S.W.3d 868, 873 (Tex.

2010), CSR Ltd. v. Link, 925 S.W.2d 591, 595 (Tex. 1996). Unlike general jurisdiction

which requires a "more demanding minimum contacts analysis," CSR Ltd., 925 S.W.2d

at 595, specific jurisdiction "’may be asserted when the defendant's forum contacts are

isolated or sporadic, but the plaintiff's cause of action arises out of those contacts with

the state.’" Spir Star AG, 310 S.W.3d at 873 (quoting 4 CHARLES ALAN WRIGHT &

IMV Technologies v. Inguran, LLC Page 5 ARTHUR R. MILLER, FEDERAL PRACTICE & PROCEDURE § 1067.5 (3d ed. 2002)).

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).

1. IMV USA

Inguran alleged in its petition breach of contract and various torts as causes of

action against IMV USA. Inguran alleged that IMV USA forwarded an offer to sell six

MX5 machines to Inguran at its office in San Antonio. Inguran accepted the offer by

forwarding a purchase order for the six MX5 machines to be shipped to Navasota. One

MX5 was delivered to Navasota where Travis Most, an employee of IMV USA, installed

and tested it. Three months later, Travis again traveled to Navasota to repair the MX5

installed there. Inguran alleged in its petition that IMV USA breached the contract

because the MX5 in Navasota was failing to fill and seal the straws adequately.

Specifically, it alleged, the third needle was failing to fill the straws completely.

Contacts Prior to the MX5 Purchase

As to minimum contacts, Inguran attached to its response to IMV USA’s special

IMV Technologies v. Inguran, LLC Page 6 appearance, and, without objection, introduced into evidence at the hearing on IMV

USA’s special appearance testimony and documentation that IMV USA has had an

ongoing relationship with Inguran since 2005 and had approximately 250 other

customers in Texas. Since 2005, Inguran has sent purchase orders to IMV USA and IMV

USA sends Inguran the product ordered and an invoice. Inguran’s purchases are billed

to Texas and payment comes from Texas. IMV USA communicates with Inguran by

telephone approximately once a week and corresponds by email more than once a

week. In 2005 and 2006, Texas represented 11.9% and 11.79%, respectively, of IMV

USA’s revenue. In 2011 and 2012, Inguran was in the top five of purchasers of straws

from IMV USA. Further, of the 11 MX5s sold by IMV USA, nine were sold to Inguran.

In 2011, IMV USA billed Inguran for $1.1 million in products sold.

Purchase of the MX5

Inguran also attached and introduced the affidavit of its Chief Operating-Chief

Executive Officer, Juan Moreno. Moreno stated that IMV USA called him sometime in

2010 to tell him that IMV was now manufacturing, and IMV USA was now selling, the

MX5. IMV USA then offered to have Inguran test one of the machines. The MX5 was

sent to Navasota, and after an initial trial period, Inguran agreed to acquire a series of

machines from IMV USA. Prior to the contact by IMV USA, Moreno did not know IMV

USA and IMV were manufacturing and selling the MX5.

IMV USA did not negate either in its special appearance or at the hearing on its

IMV Technologies v. Inguran, LLC Page 7 special appearance any of the jurisdictional bases alleged by Inguran in its petition.

In light of the pleadings on file and evidence introduced at the special

appearance hearing, we conclude that IMV USA purposefully availed itself of

conducting activities in Texas, and the breach of contract claim arises from or is related

to those contacts or activities. Thus, IMV USA’s contacts are sufficient to support

specific jurisdiction.

2. IMV

IMV is a French company which was alleged to have manufactured the MX5 at

the center of this litigation. Inguran did not allege a breach of contract against IMV but

only alleged various torts by IMV. Those torts are: breach of express warranty for

goods, breach of implied warranty of fitness, breach of implied warranty of

merchantability, strict liability, and negligent misrepresentation.

Two of these causes of action, breach of express warranty for goods and

negligent misrepresentation, were based on alleged representations made by IMV that

the MX5: 1) would adequately fill and seal straws; 2) was more cost-efficient; 3) would

result in less raw material being lost during the filling and sealing process; 4) was able

to produce/fill more straws and thus produce more income than conventional filling

equipment; 5) would be maintenance-free; 6) would be a more automated process; and

7) would require little or no attention by an operator. Inguran alleged that these

misrepresentations occurred in 2010 when IMV USA and IMV “reached out” to Inguran

IMV Technologies v. Inguran, LLC Page 8 personnel in Navasota, Texas. Inguran also alleged in its breach of implied warranty of

fitness claim that IMV knew for what purposes Inguran was using the MX5 and that

IMV knew or had reason to know that Inguran was relying on IMV’s skill or judgment.

IMV responded with its special appearance and attached an affidavit of its Chief

Financial Officer, Frederic Keller. Keller stated that IMV does not market or distribute

products to the United States. IMV manufactures MX5 machines in France for

distribution worldwide. Machines for sale in the United States are shipped from France

to the distributor in the State of Minnesota. The distributor for the United States is IMV

USA and IMV does not in any way control or direct the activity of IMV USA with

respect to the sale of products in the United States. IMV was not involved in any

subsequent distribution of machines to Texas and does not design its products for use

in Texas. It does not advertise or market its products in Texas and it makes no direct

sale of products to Texas. IMV has not entered into any contracts with Inguran and was

not a party to the contract for the sale of the MX5 at issue. IMV also averred that it does

not do business in Texas, does not maintain an office in Texas, and has no agents in

Texas. IMV also attached deposition testimony of the corporate representative of IMV

USA who stated that prior to August of 2011, which is during the time Inguran

purchased the MX5 from IMV USA, IMV USA bought the MX5 machines from another

manufacturer, Cryovet.

Inguran did not respond to IMV’s special appearance and no hearing was held

IMV Technologies v. Inguran, LLC Page 9 on IMVs special appearance. Even if we were to consider the evidence presented in

Inguran’s response to IMV USA’s special appearance and at the hearing on IMV USA’s

special appearance, which we do not, Inguran’s evidence belies jurisdiction. The

affidavit of Inguran’s Chief Operating-Chief Executive Officer states only that IMV USA

contacted him about the MX5. He does not say anything about IMV contacting him or

any representations regarding the quality and ability of the machine. Further, Inguran

attaches the same portion of the deposition testimony of the corporate representative of

IMV USA who stated that prior to August of 2011, the MX5 machines were purchased

from a different manufacturer than IMV.

As to the breach of implied warranty of merchantability and strict liability causes

of action, Inguran alleged that the MX5 was not merchantable at the time it left IMV’s

possession and was defective at the time it left IMV’s possession. Inguran failed to

plead that any of these 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). Because of Inguran’s pleading

failure, IMV could, and did, meet its burden to negate all bases of jurisdiction by

proving through the affidavit of its Chief Financial Officer that it is incorporated in

France, its principal place of business is in France, and it does not do business of any

kind in Texas. See Siskind v. Villa Foundation for Education, Inc., 642 S.W.2d 434, 438 (Tex.

1982). Again, Inguran did not challenge IMV’s proof, nor did it present any responsive

IMV Technologies v. Inguran, LLC Page 10 evidence establishing the requisite link with Texas.

In light of Inguran’s pleadings and the evidence attached to IMV’s special

appearance, we conclude that IMV did not purposefully avail itself of conducting

activities in Texas. Thus, IMV’s contacts are not sufficient to support specific

jurisdiction, and IMV’s special appearance should have been granted.

IMV’s issue is sustained.

B. Traditional Notions of Fair Play and Substantial Justice

Having determined that at least IMV USA has minimum contacts with Texas

sufficient to support specific jurisdiction, we must now determine whether an assertion

of jurisdiction over IMV USA comports with "traditional notions of fair play and

substantial justice." Guardian Royal Exchange Assur., Ltd. v. English China Clays, P.L.C.,

815 S.W.2d 223, 228 (Tex. 1991). "Only in rare cases, however, will the exercise of

jurisdiction not comport with fair play and substantial justice when the nonresident

defendant has purposefully established minimum contacts with the forum state." Id. at

231 (citing Burger King, 471 U.S. at 477). Nonetheless, we still consider: (1) the burden

on the defendant; (2) the interests of the forum state in adjudicating the dispute; (3) the

plaintiff's interest in obtaining convenient and effective relief; (4) the interstate judicial

system's interest in obtaining the most efficient resolution of controversies; and (5) the

shared interest of the several states in furthering fundamental substantive social

policies. Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 341 (Tex. 2009);

IMV Technologies v. Inguran, LLC Page 11 Guardian Royal, 815 S.W.2d at 228, 231. To defeat jurisdiction, IMV USA must present a

compelling case that the presence of some consideration would render jurisdiction

unreasonable. Spir Star AG v. Kimich, 310 S.W.3d 868, 878-879 (Tex. 2010).

IMV USA contends that it will be unduly burdened to try the case in Texas

because it is a small company and all of it employees who may have knowledge of the

relevant facts reside in Minnesota. However, IMV USA had no previous problem

sending employees to Texas to set up the MX5, train Inguran’s employees, run tests on

the MX5, and repair the MX5; all in Texas. We do not perceive an undue burden, then,

in trying a lawsuit in Texas. IMV USA also claims that Texas has little interest in

adjudicating the dispute between IMV USA and Inguran. However, Texas has an

interest in adjudicating disputes involving Texas residents, and Texas is a convenient

forum to adjudicate this dispute. See Lewis v. Indian Springs Land Corp., 175 S.W.3d 906,

919 (Tex. App.—Dallas 2005, no pet.). Further, IMV USA contends that because the

MX5 was manufactured in France, the forum with the greatest interest in resolution of

the dispute is France. The fact that the MX5 may have been manufactured in France

cannot, by itself, defeat jurisdiction. See Spir Star, 310 S.W.3d at 879. Further, Texas has

an interest in exercising jurisdiction over controversies arising from injuries a Texas

resident sustains from products that are purposefully brought into the state and

purchased by Texas companies. Id.

Weighing the various factors, we find that the exercise of specific jurisdiction

IMV Technologies v. Inguran, LLC Page 12 over IMV USA by a Texas court does not offend traditional notions of fair play and

substantial justice.

IMV USA’s issues are overruled.

CONCLUSION

Because we have overruled IMV USA’s issues on appeal, the portion of the trial

court’s order which denies IMV USA’s special appearance is affirmed. Because we have

sustained IMV’s issue on appeal, the portion of the trial court’s order which denies

IMV’s special appearance is reversed and remanded to the trial court to render an order

which grants IMV’s special appearance.

TOM GRAY Chief Justice

Before Chief Justice Gray, Justice Davis, and Justice Scoggins Affirmed in part and reversed and remanded in part Opinion delivered and filed November 14, 2013 [CV06]

IMV Technologies v. Inguran, LLC Page 13