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Jutalia Recycling, Inc. v. CNA Metals Limited

Court of Appeals of Texas, Fourteenth District

November 9, 2017

JUTALIA RECYCLING, INC. AND GUY CARDINALE, Appellants
v.
CNA METALS LIMITED, Appellee

         On Appeal from the 333rd District Court Harris County, Texas Trial Court Cause No. 2016-59079

          Panel consists of Justices Boyce, Jamison, and Brown.

          OPINION

          Martha Hill Jamison, Justice.

         In two issues in this interlocutory appeal involving breach of contract and fraud claims, appellants Jutalia Recycling, Inc. and Guy Cardinale challenge the trial court's denial of their special appearance, contending that they did not consent to jurisdiction in Texas and they lack sufficient minimum contacts such that they would reasonably anticipate being haled into a Texas court.[1] Concluding that the trial court lacks jurisdiction, we reverse the order denying appellants' special appearance and render judgment dismissing appellee CNA Metals Limited's claims against appellants.

         Background

         CNA is a company that imports and exports scrap metal, among other things. A trader for CNA, David Levin, was contacted by Robin Chen, a representative of a company called Foshan Trading, Inc., about the sale of scrap materials. CNA sent Foshan Trading a "Purchase Contract" for a shipment of scrap materials. The Purchase Contract includes the following language in capital letters, "Please note this agreement includes terms & conditions on a separate page attached. All disputes are subject to Fort Bend County State of Texas Jurisdiction." The "terms and conditions" state that the seller "acknowledges, consents, and irrevocably submits to Texas jurisdiction for any Controversy" and "[t]he parties agree that all Controversies shall be brought only in the State courts of Fort Bend County, Texas . . . ."

         An "Agreement of Sale" was then sent to CNA from "Fushun Trading/Jutalia Recycling Inc." on the same day. Levin signed the Agreement of Sale with the notation under his signature "Accepted By Buyer." There is another signature that is illegible with the notation under it "Accepted By Seller." The agreement includes the following language:

In case of dispute, the parties herein irrevocable [sic] consent to the jurisdiction of the state and federal courts having jurisdiction over Richmond County, New York, USA. Venue shall be Richmond County, New York, USA. Unless specified otherwise, terms as per United Commercial Code between Buyer and Seller as merchants exclusively. . . . The Sales Order, together with these terms and conditions, constitutes the entire and exclusive agreement between the Buyer and Seller identified in the Sales Order. Seller's acceptance of the Sales Order is conditioned upon Buyer's agreement that any terms different from or in addition to acknowledgement, release, acceptance or other written correspondence, irrespective of the timing, shall not form a part of the Sales Order even if Seller purports to condition its acceptance of the Sales Order on Buyer's agreement to such different or additional terms.

         Approximately a month after its first order, CNA sent two more Purchase Contracts to "Foshan Trading/Jultalia [sic] Recycling, " which include the same language quoted above as in the initial Purchase Contract. Another Agreement of Sale from Jutalia was sent to CNA, and another document entitled "Sales Order" was also sent from Jutalia to CNA. This Agreement of Sale and the Sales Order both include the same language quoted above as in the initial Agreement of Sale and were both signed by Levin as Buyer and a representative of Jutalia as Seller.[2]

         In the meantime, the first order of scrap materials was shipped from New York to China. Team Enterprise, a transportation company, supervised the loading process. When the shipment arrived, CNA had it inspected and alleges that it contained worthless materials. CNA filed this lawsuit in Harris County, Texas, bringing a claim against Jutalia and Foshan for breach of contract and claims against Jutalia, Foshan, Cardinale, and Team Enterprise for fraud and conspiracy to commit fraud.[3] Jutalia and Cardinale filed the special appearance forming the basis of this appeal.

         In their special appearance, Jutalia and Cardinale asserted that the trial court lacks jurisdiction because they are not amenable to process in Texas, they do not have contacts with Texas sufficient to warrant the exercise of specific or general jurisdiction, and the trial court's asserting jurisdiction would offend traditional notions of fair play and substantial justice. The trial court denied the special appearance after a hearing, and appellants filed this interlocutory appeal.

         Discussion

         On appeal, appellants contend that the trial court erred in denying their special appearance because they did not consent to jurisdiction in Texas and lack sufficient minimum contacts with Texas giving rise to jurisdiction over appellants.

         Whether a court has personal jurisdiction over a defendant is a question of law we review de novo. Moncrief Oil Int'l Inc. v. OAO Gazprom, 414 S.W.3d 142, 150 (Tex. 2013). When, as here, the trial court does not issue findings of fact or conclusions of law, we imply all facts necessary to support the trial court's ruling that are supported by the evidence. Id.

         Personal jurisdiction over nonresident defendants satisfies the constitutional requirements of due process when the defendant has purposefully established minimum contacts with the forum state and the exercise of jurisdiction is consistent with traditional notions of fair play and substantial justice. Id.; Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 337 (Tex. 2009). A defendant establishes minimum contacts with a forum if the defendant has purposely availed itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws. Moncrief, 414 S.W.3d at 150; Retamco, 278 S.W.3d at 338. A defendant's minimum contacts may give rise to either specific jurisdiction or general jurisdiction. Moncrief, 414 S.W.3d at 150; Retamco, 278 S.W.3d at 338. Here, CNA's asserted basis for jurisdiction is specific jurisdiction.

         When specific jurisdiction is asserted, our analysis focuses on the relationship among the defendant, Texas, and the litigation to determine whether the plaintiff's claim arises from Texas contacts. Moncrief, 414 S.W.3d at 150. We analyze minimum contacts for specific jurisdiction on a claim-by-claim basis, unless all claims arise from the same forum contacts. Id. at 150-51. Here, CNA's claims for breach of contract, fraud, and conspiracy to commit fraud are all based on the same purported contacts with Texas.

         I. Consent to Jurisdiction Not Binding on Appellants

         Below, CNA argued that Jutalia consented to Texas jurisdiction in the Purchase Contracts.[4] In their first issue, appellants argue that Jutalia did not consent to Texas jurisdiction because under the Sales Orders, Jutalia's acceptance of CNA's offer to purchase scrap materials was expressly conditioned on the parties' consent to New York jurisdiction for disputes. CNA argues that Jutalia consented to personal jurisdiction in Texas by "accept[ing]" CNA's ...


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