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Colmen LLC v. Santander Consumer Usa, Inc.

Court of Appeals of Texas, Fifth District, Dallas

November 3, 2017

COLMEN LLC, D/B/A COLMEN MOTORS, Appellant
v.
SANTANDER CONSUMER USA, INC., Appellee

         On Appeal from the 134th Judicial District Court Dallas County, Texas Trial Court Cause No. DC-16-09980

          Before Justices Bridges, Fillmore, and Stoddart

          MEMORANDUM OPINION

          ROBERT M. FILLMORE JUSTICE

         Colmen LLC, d/b/a/ Colmen Motors (Colmen) appeals the trial court's order denying its special appearance in a lawsuit filed against it by Santander Consumer USA, Inc. (Santander). See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(7) (West Supp. 2016). In three issues, Colmen argues: 1) Santander failed to plead sufficient allegations to establish a factual basis for specific or general personal jurisdiction and Colmen carried its burden to negate all bases of personal jurisdiction by presenting evidence it is not a resident of Texas, which Santander failed to rebut with evidence establishing jurisdiction was proper in Texas; 2) Texas lacks specific jurisdiction over Colmen because Colmen's alleged liability does not arise out of and is unrelated to an activity it conducted in Texas; and 3) Texas lacks general jurisdiction over Colmen because Colmen's contacts with Texas are not so continuous and systematic as to render it essentially at home in Texas. For the reasons that follow, we conclude Colmen has sufficient minimum contacts with Texas to support the exercise of specific jurisdiction, and Santander's claims arise directly out of Colmen's contacts with Santander in Texas. Accordingly, we affirm the trial court's order denying Colmen's special appearance and remand this case to the trial court for further proceedings consistent with this opinion.

         BACKGROUND

         This case involves a dispute between Santander, an Illinois corporation with its principal place of business and headquarters in Dallas County, Texas, and automobile dealership Colmen, a Delaware limited liability company whose principal place of business is in Florida. Santander is in the business of purchasing automobile retail installment sales contracts from dealers like Colmen. On or about April 6, 2016, Colmen and Santander entered into a Non-Recourse Master Dealer Agreement (Agreement) whereby Colmen was entitled, but not obligated, to sell automobile retail installment sales contracts to Santander.

         Under the Agreement, Colmen had the option of submitting a proposal, including terms and conditions, under which it would consider selling and assigning an installment sales contract to Santander. After reviewing Colmen's proposed terms and conditions and the applicable loan documentation, Santander could elect to purchase the installment sales contract. Colmen, however, controlled final approval of the sale, and could refuse the transaction notwithstanding Santander's agreement to purchase the installment sales contract. The Agreement had no specified term, and was to be interpreted in accordance with Texas law. Colmen agreed to indemnify Santander in the event of claims arising out of Colmen's breach of or conduct under the Agreement or the installment sales contracts. Colmen also granted Santander an irrevocable power of attorney to act as Colmen's agent, including the right to sign Colmen's name to documents, checks, money orders or other forms of payment, as well as any other instrument necessary to carry out the Agreement.

         Pursuant to the Agreement, Colmen made solicitations and sold numerous installment sales contracts to Santander. This lawsuit arises out of Colmen's alleged breach of the Agreement as it relates to fifty-two installment sales contracts it sold to Santander with an aggregate value of more than $1.6 million. Specifically, Santander alleges Colmen misrepresented retail customer income, employment, and credit or identifying information relating to installment sales contracts it sold to Santander. Regarding a separate installment sales contract sold by Colmen to Santander, Santander alleges that Colmen breached the Agreement by failing to tender payment for Additional Products and Services (APS) that were canceled after Santander purchased the contract.[1] As a result of Colmen's alleged breaches, Santander exercised its right under the Agreement to demand that Colmen repurchase the installment sales contracts, and pay to Santander the amount collected for canceled APS. Colmen refused to do so. Santander then filed suit against Colmen in Dallas County, Texas for breach of the Agreement. In response, Colmen filed a special appearance challenging the trial court's jurisdiction over it.

         At the January 17, 2017 special appearance hearing before the trial court, Colmen supported its special appearance with several incomplete and unsigned Santander forms purporting to be representative of the Agreement. Counsel for Colmen offered the incomplete forms, including an Addendum A, as "an exemplar so that the Court can actually read the terms in the contract that was filed by the Plaintiff because what was filed by the Plaintiff is not particularly legible." Over Santander's objection to the unverified copies, the trial court admitted Colmen's offered "exemplar" solely for the purpose of paragraph twenty-six of the Agreement, which included the Texas choice of law provision.

         At the special appearance hearing, Santander presented the Affidavit of Benny Cherry, the Vice President-Dealer Operations for Santander (the Cherry Affidavit). The Cherry Affidavit described the formation of the Agreement, the parties' relationship under the Agreement, the procedures for executing the Agreement, and Colmen's solicitations and sales to Santander of the fifty-two installment sales contracts at issue in this case. Attached as Exhibit A to the Cherry Affidavit was a sworn true and correct copy of the fully executed Agreement, including Addendum A. A Supplemental Affidavit of Benny Cherry, filed with the trial court after the special appearance hearing, states in pertinent part that Santander's corporate headquarters is in Dallas, Texas. The trial court denied Colmen's special appearance. This interlocutory appeal followed.

         PERSONAL JURISDICTION

         Standard of Review

         Whether a trial court has personal jurisdiction over a nonresident defendant is a question of law. Thus, we review a trial court's determination of a special appearance de novo. Moncrief Oil Int'l, Inc. v. OAO Gazprom, 414 S.W.3d 142, 150 (Tex. 2013) (citing Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex. 2007)). "When, as here, the trial court does not issue findings of fact and conclusions of law, we imply all relevant facts necessary to support the judgment that are supported by evidence." Id. (citing Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 337 (Tex. 2009)).

         Applicable Law

         Texas courts may exercise personal jurisdiction over a nonresident defendant "when the state's long-arm statute authorizes such jurisdiction and its exercise comports with due process."Cornerstone Healthcare Grp. Holding, Inc. v. Nautic Mgmt. VI, L.P., 493 S.W.3d 65, 70 (Tex. 2016). The Texas long-arm statute allows jurisdiction over a nonresident that does business in Texas. Tex. Civ. Prac. & Rem. Code Ann. § 17.042 (West 2015). Among other acts, the Texas long-arm statute provides that contracting with a Texas resident, where either party is to perform the contract in whole or in part in Texas, constitutes doing business in this state. Id. § 17.042(1); Moki Mac River Expeditions, 221 S.W.3d at 574. "The broad 'doing business' language in Texas's long-arm statute allows the trial court's jurisdiction to 'reach as far as the federal constitutional requirements of due process will allow.'" Kelly v. Gen. Interior Const., Inc., 301 S.W.3d 653, 657 (Tex. 2010) (quoting Moki Mac River Expeditions, 221 S.W.3d at 575). "A state's exercise of jurisdiction comports with federal due process if the nonresident defendant has 'minimum contacts' with the state and the exercise of jurisdiction 'does not offend "traditional notions of fair play and substantial justice".'" Cornerstone Healthcare Grp. Holding, Inc., 493 S.W.3d at 70 (quoting Walden v. Fiore, 134 S.Ct. 1115, 1121 (2014)).

         The "touchstone" of a minimum-contacts analysis is purposeful availment. Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 784 (Tex. 2005). "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." Kelly, 301 S.W.3d. at 657-58 (quoting Retamco Operating, Inc., 278 S.W.3d at 338-39). To constitute "purposeful availment, " a defendant's contacts must be "purposefully directed, " and must result from the defendant's own "efforts to avail itself of the forum." TV Azteca v. Ruiz, 490 S.W.3d 29, 38 (Tex. 2016), cert. denied, 137 S.Ct. 2290 (2017) (quoting Moki Mac River Expeditions, 221 S.W.3d at 576; Guardian Royal Exch. Assurance, Ltd, v. English China Clays, P.L.C., 815 S.W.2d 223, 228 (Tex. 1991)).

         When determining whether a nonresident defendant purposefully availed itself of the privilege of conducting activities in Texas, we consider three factors: 1) only the defendant's contacts with the forum are relevant, not the unilateral activity of another party or a third person; 2) the contacts relied upon must be purposeful rather than random, isolated or fortuitous; and 3) the defendant must seek some benefit, advantage or profit by availing itself of the jurisdiction. Cornerstone Healthcare Grp. Holding, Inc., 493 S.W.3d at 70-71. This analysis assesses the quality and nature of the contacts, not the quantity. Moncrief Oil Int'l., Inc., 414 S.W.3d at 151. "[A] defendant will not be haled into a jurisdiction solely based on contacts that are 'random, isolated, or fortuitous, '" Michiana Easy Country Livin', Inc., 168 S.W.3d at 785 (quoting Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774 (1984)), or on the "unilateral activity of another party or a third person." Guardian Royal Exch., 815 S.W.2d at 226 (quoting Burger King Corp., v. Rudzewicz, 471 U.S. 462, 475 (1985)). "At its core, the purposeful availment analysis seeks to determine whether a nonresident's conduct and connection to a forum are such that it could reasonably anticipate being haled into court there." Moncrief Oil Int'l, Inc., 414 S.W.3d at 152.

         In addition to minimum contacts, due process requires that the exercise of personal jurisdiction comply with traditional notions of fair play and substantial justice. Id. at 154 (citing Retamco Operating, Inc., 278 S.W.3d at 338). The following factors are considered in this evaluation: 1) the burden on the defendant in trying the case in the forum state; 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 the dispute; and 5) the shared interest of the several States in furthering fundamental substantive social policies. Retamco Operating, Inc., 278 S.W.3d at 341. "If a nonresident has minimum contacts with the forum, rarely will the exercise of jurisdiction over the nonresident not comport with traditional notions of fair play and substantial justice." Moncrief Oil Int'l Inc., 414 S.W.3d at 154-55.

         A nonresident defendant's contacts with a forum can give rise to either general or specific jurisdiction. Cornerstone Healthcare Grp. Holding, Inc., 493 S.W.3d at 71. Santander's asserted basis for personal jurisdiction over Colmen is specific jurisdiction.[2] When specific jurisdiction is alleged, we focus on the relationship among the defendant, the forum, and the litigation. Moncrief Oil Int'l Inc., 414 S.W.3d at 150. Specific jurisdiction exists only if the alleged liability arises out of or is related to the defendant's activity within the forum. Id. at 150, 156. "[F]or a nonresident defendant's forum contacts to support an exercise of specific jurisdiction, there must be a substantial connection between the defendant's contacts and the operative facts of the litigation." Id. at 156 (quoting Moki Mac River Expeditions, 221 S.W.3d at 585). "The operative facts are those on which the trial will focus to prove the liability of the defendant who is challenging jurisdiction." Mitchell v. Freese & Goss, PLLC, No. 05-15-00868-CV, 2016 WL 3923924, at *3 (Tex. App.-Dallas July 15, 2016, pet. denied) (mem. op.) (quoting Leonard v. Salinas Concrete, LP, 470 S.W.3d 178, 188 (Tex. App.-Dallas 2015, no pet.)). We analyze specific jurisdiction on a claim-by-claim basis, unless we are shown that all claims arise from the same contacts with Texas. TV Azteca, 490 S.W.3d at 37; Moncrief Oil Int'l Inc., 414 S.W.3d at 150-51.

         The plaintiff and the defendant bear shifting burdens of proof in a challenge to personal jurisdiction. Kelly, 301 S.W.3d at 658; see also Tex. R. Civ. P. 120a. The plaintiff bears the initial burden to plead sufficient allegations to bring the nonresident defendant within the reach of Texas's long-arm statute. Kelly, 301 S.W.3d at 658. "Once the plaintiff has pleaded sufficient jurisdictional allegations, the defendant filing a special appearance bears the burden to negate all bases of personal jurisdiction alleged by the plaintiff." Id. The defendant can negate jurisdiction on either a factual or legal basis. Id. at 659. To negate jurisdiction on a factual basis, the defendant must present evidence disproving the plaintiff's jurisdictional allegations. Id. "The plaintiff can then respond with its own evidence that affirms its allegations, and it risks dismissal of its lawsuit if it cannot present the trial court with evidence establishing personal jurisdiction." Id. The defendant negates jurisdiction on a legal basis by showing that "even if the plaintiff's alleged facts are true, the evidence is legally insufficient to establish ...


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