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Compassware, Inc. v. Behealth Solutions, L.L.C.

United States District Court, W.D. Texas, Austin Division

February 22, 2018

COMPASSWARE, INC., Plaintiff,
v.
BEHEALTH SOLUTIONS, L.L.C., Defendant.

          ORDER

          SAM SPARKS SENIOR UNITED STATES DISTRICT JUDGE.

         BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause, and specifically, Defendant BeHealth Solutions, L.L.C. (Behealth)'s Motion to Dismiss for Lack of Personal Jurisdiction [#5], Plaintiff Compassware, Inc. (Compassware)'s Response [#9] in opposition, and BeHealth's Reply [#10] in support as well as Compassware's Motion to File Surreply [#13] and BeHealth's Response [#17] in opposition. Having reviewed the documents, the relevant law, and the file as a whole, the Court now enters the following opinion and orders.

         Background

         This is a contract dispute between BeHealth and Compassware. BeHealth is a limited liability company organized under the laws of Virginia, with members in Virginia, Indiana, Maryland, and California. Not. Removal [#1]. Compassware is a citizen of Texas and Delaware. Id. The parties' current dispute centers on whether this Court may exercise personal jurisdiction over BeHealth.

         In July 2016 BeHealth hired Chris Dancy, a mobile app developer, to work as an independent contractor on the development of an app for BeHealth. Mot. Dismiss [#5-2] Ex. A-l. Dancy lived and worked in Tennessee. Id. [#5] at 2.

         Subsequently, Dancy suggested BeHealth should hire Compassware, a company owned by Dancy, to provide development services for BeHealth's app. Mot. Dismiss [#5] at 2. BeHealth proved amenable to this suggestion. Id. However, it appears Dancy did not have employees in place to perform the work for BeHealth, for in June 2016, Dancy contacted Chris Dauw, an app developer, and solicited the services of Dauw's development team for work on the BeHealth app. Dauw and his development team are located in Austin, Texas. Resp. Mot. Dismiss [#9-1] Ex. A (Dauw Aff) at 1. Shortly thereafter, in August 2016, Dauw was made CTO of Compassware. Id.

         In September 2016, BeHealth investors, executives, and board members attended a project kick-off meeting with Compassware in Austin, Texas. Id. at 2. Dauw's Texas-based development team began working on BeHealth's app around the same time, although BeHealth and Compassware did not enter into contractual agreements until January 2017. Id. at 2-3.

         The contractual agreements entered into by BeHealth and Compassware were signed by BeHealth in Virginia and by Dancy, in his capacity as CEO of Compassware, in Tennessee. Mot. Dismiss [#5] at 2-3. The agreements also list a Tennessee mailing address for Compassware. id. [#5-3] Ex. A-2 at 2. However, Dauw, the CTO[1] in charge of the development of the app, states the terms of the contract were negotiated by Dauw from Texas and in large part drafted in Texas. Dauw Aff. Dauw further states BeHealth was aware the app would be developed exclusively in Texas, by Dauw's Texas-based development team. Id.

         BeHealth representatives subsequently attended meetings with Compassware in Texas on three separate occasions: January 16, 2017; February 1, 2017; and June 15, 2017. Dauw Aff. There is no indication BeHealth representatives ever met with Compassware anywhere other than Texas. See Mot. Dismiss [#5]; Resp. Mot. Dismiss [#9]; Reply Mot. Dismiss [#10].

         In October 2017, Compassware filed suit against BeHealth in state court for breach of contract. Supp. Filing [#6-1] Pet. at 1-2. BeHealth removed the suit to federal court in November 2017 and now asks the Court to dismiss for lack of subject matter jurisdiction. Not. Removal [#1]; Mot. Dismiss [#5].

         Analysis

         I. Legal Standard

         The Federal Rules of Civil Procedure allow a defendant to assert lack of personal jurisdiction as a defense to suit. FED. R. ClV. P. 12(b)(2).

         To determine whether a federal district court sitting in diversity has personal jurisdiction over a nonresident defendant, the district court considers first whether exercising jurisdiction over the defendant comports with due process. Religious Tech. Ctr. v Liebreich, 339 F.3d 369, 373 (5th Cir. 2003). If the requirements of due process are satisfied, the court then determines whether the exercise of jurisdiction is authorized by the jurisdictional "long-arm" statute of the state in which the court sits. Id. Because the Texas long-arm statute has been interpreted as extending to the ...


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