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Turman v. POS Partners, LLC

Court of Appeals of Texas, Fourteenth District

January 4, 2018


         On Appeal from the 189th District Court Harris County, Texas Trial Court Cause No. 2016-28003

          Panel consists of Justices Christopher, Brown, and Wise.



         In this case asserting contract and breach-of-fiduciary-duty claims, defendant Richard Turman appeals from the trial court's ruling denying his special appearance. Turman's Texas contacts are insufficient to support general jurisdiction; however, the record supports the trial court's implied finding that there is a substantial connection between Turman's Texas contacts and the operative facts of the breach-of-fiduciary-duty claim alleged by plaintiff POSP Partners, LLC ("POSP"). We therefore conclude that the trial court did not err in exercising specific jurisdiction over that claim. We conclude, however, that there is no such substantial connection between Turman's Texas contacts and POSP's request for a declaration that it is not liable to Turman under the terms of a compensation agreement executed by Turman and a POSP employee. We accordingly affirm the trial court's ruling in part, reverse it in part, and remand the case to the trial court with instructions to sever and dismiss POSP's contract claim for lack of personal jurisdiction.

         I. Background

         POSP is a Texas company that does business in several states. The company markets and sells point-of-sale hardware, software, and services, including credit card processing services.

         Oklahoma resident Turman worked for a similar company, CRS Inc., in Oklahoma. After POSP purchased CRS Inc. or its assets in the summer of 2013, POSP began doing business in Oklahoma under the name CRS Oklahoma or CRS Oklahoma, LLC. Turman became a regional account manager for POSP and was paid as a commissioned sales agent. While working for POSP, Turman also formed his own company, Specialized POS Systems, LLC. Turman purchased the equipment that Specialized POS sells from Nelson Distributing in Texas, which POSP alleges is the same vendor that supplies POSP's equipment.

         Turman received sales leads from POSP, and on four occasions, these included POSP customers in Texas. Turman sold POSP equipment to Speedy Mart in Wheeler, Texas and Pasqual, Inc. in Wichita Falls, Texas. According to Turman, he contacted these companies at POSP's direction, and the two companies placed their orders for equipment upgrades by telephone. Regarding the third instance, POSP states in a footnote in its live pleading that Turman has filed an affidavit in which he admits receiving a lead from POSP that Robbin's True Value Hardware in Canadian, Texas, needed a broken cash register replaced. POSP further states that Turman admits he sold and installed the cash register in Texas through his own company rather than through POSP. In the fourth instance, POSP alleges that it informed Turman that Ginger's Point Corporation d/b/a Blue Bayou wanted to buy a cash register and that Turman instead sold the equipment through his own company and kept the sales proceeds. The customer's sales order and canceled checks, which POSP attached to its pleading, identify only an Oklahoma address; however, as with Robbin's True Value Hardware, POSP states in a footnote that "Turman has filed an affidavit admitting . . . that he personally sold and installed (in Texas) the point-of-sale equipment that Blue Bayou was seeking to purchase from POSP . . . ."[1]

         After discovering that Turman had used his own company to sell equipment to POSP's customers, POSP informed Turman in April 2016 that he was terminated. In response, Turman emailed POSP that it had breached its contract with him by failing to pay all of the commissions POSP owed him. He produced a document dated September 16, 2013 with POSP's logo above the heading, "RE: Sales Compensation Schedule, Richard Turman, Regional Account Manager."[2] The compensation agreement is executed by Turman and signed on POSP's behalf by Dan Martin. Among other things, the compensation schedule calls for Turman to be paid a 15% commission on sales and to receive an automobile allowance of $350/month. According to Turman, the agreement was negotiated and executed in Oklahoma. POSP alleges alternatively that the document is a forgery and that Martin lacked authority to sign such an agreement on POSP's behalf.

         POSP sued Turman in Texas for breach of fiduciary duty, alleging that Turman made sales on behalf of other companies to POSP's existing or potential customers. POSP also sued for construction of the compensation contract, asking the trial court for a declaration that the 2013 compensation agreement between POSP and Turman is invalid or unenforceable. POSP argued in the alternative that Turman ratified a change in the compensation agreement because throughout the three years of his employment, Turman accepted POSP's payment of only a 12% commission with no automobile allowance.

         Turman filed an original and two amended special appearances contesting the court's exercise of personal jurisdiction over him. The record does not show that POSP responded, and we have no record of the oral hearing on the special appearance, which we presume was non-evidentiary.[3]

         The trial court denied Turman's special appearance, and in a single issue, Turman challenges the trial court's ruling.

         II. Standard of Review

         In the trial court, the plaintiff bears the initial burden to allege facts bringing the defendant within reach of the Texas long-arm statute. See Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 658 (Tex. 2010). If the plaintiff does not do so, then the defendant can defeat jurisdiction merely by proving that it does not reside in Texas. See id. at 659. If the plaintiff does allege sufficient jurisdictional facts, then the burden shifts to the defendant to negate the bases of personal jurisdiction alleged. See id. at 658. If the defendant does so, then the burden shifts back to the plaintiff to affirm its allegations with legal authority or evidence showing jurisdiction. See id. at 659.

         Because the existence of personal jurisdiction is a question of law, we review the trial court's ruling de novo. See Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 805-06 (Tex. 2002). In determining whether personal jurisdiction exists, however, the trial court may have to resolve factual disputes. See id. at 806 (citing BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002)). Where, as here, the trial court issues no factual findings, we presume that the trial court resolved all factual disputes in favor of the judgment. See id. (citing BMC Software, 83 S.W.3d at 795). If the record includes the clerk's and reporter's records, a litigant may challenge the trial court's implied findings for legal and factual sufficiency. See BMC Software, 83 S.W.3d at 795. But, because the factfinder is the sole judge of the witnesses' credibility and the weight to be given to their testimony, we will not substitute our judgment for that of the trial court, even if we might reach a different result in similar circumstances. See Thu Thuy Huynh v. Thuy Duong Nguyen, 180 S.W.3d 608, 615 (Tex. App.-Houston [14th Dist.] 2005, no pet.).

         III. Governing Law

         Our state long-arm statute "extends Texas courts' personal jurisdiction 'as far as the federal constitutional requirements of due process will permit.'" M & F Worldwide Corp. v. Pepsi-Cola Metro. Bottling Co., 512 S.W.3d 878, 885 (Tex. 2017) (quoting BMC Software, 83 S.W.3d at 795). Federal due-process requirements are satisfied if (a) the nonresident defendant has "minimum contacts" with the forum state, and (b) the court's exercise of jurisdiction "does not offend 'traditional notions of fair play and substantial justice.'" Id. (quoting Walden v. Fiore, __ U.S. __, 134 S.Ct. 1115, 1121, 188 L.Ed.2d 12 (2014)).

         The principle underlying minimum-contacts analysis is that "[t]he 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." M & F Worldwide, 512 S.W.3d at 886 (quoting Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 338 (Tex. 2009)). A defendant has established minimum contacts with the forum state if it has "purposefully avail[ed] itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws." Id. (quoting Moncrief Oil Int'l, Inc. v. OAO Gazprom, 414 S.W.3d 142, 150 (Tex. 2013)).

         When determining whether the defendant has purposefully availed itself of the privilege of conducting activities in Texas, three rules are paramount. First, only the defendant's contacts are relevant, not the unilateral activity of someone else. See id. (citing Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 785 (Tex. 2005)). Second, the defendant's acts must be purposeful and not random or fortuitous. See id. And third, the defendant "must seek some benefit, advantage, or profit by ...

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