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Spurgeon v. Empire Petroleum Partners, LLC

Court of Appeals of Texas, Fifth District, Dallas

June 19, 2019


          On Appeal from the 193rd Judicial District Court Dallas County, Texas Trial Court Cause No. DC-17-07687

          Before Justices Myers, Osborne, and Nowell



         Appellant Robert Bruce Spurgeon, Sr. appeals the trial court's order denying his special appearance. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(7) (appeal from interlocutory order denying special appearance). Spurgeon argues the trial court erred by denying his special appearance because the fiduciary shield doctrine prevents attribution of his contacts with Texas that resulted solely from transacting his company's business in Texas, and appellee Empire Petroleum Partners, LLC (Empire) failed to establish an exception to the doctrine. We affirm the trial court's order.

         Factual Background

         Empire owns and operates convenience stores. Empire employed Robert Spurgeon, II (Rob)[1] as its Director of Food Service Programs and Merchandise. In that capacity, Rob was responsible for purchasing printed materials such as signs, banners, name tags, and coupon books, as well as disposable goods such as beverage containers. Rob sourced many of these materials from Innovations in Print, Inc. (Innovations), [2] a Florida corporation.

         Innovations is wholly owned and operated by Spurgeon and his wife. Spurgeon, a resident of Florida, is Rob's father. Spurgeon made six business trips to Texas between January 2016 and February 2017 on behalf of Innovations as part of its work with Empire. During these trips, Spurgeon and Rob discussed marketing materials Empire needed, and Spurgeon visited some of Empire's stores. On behalf of Innovations, Spurgeon rented warehouse space in The Colony and Fort Worth to store items his company sold to Empire; Spurgeon personally guaranteed the leases. During 2016 and 2017, Empire was Innovations's only customer outside of South Florida.

         Haley Hess was an administrative assistant for Empire, and she worked with Rob almost daily. Hess knew Rob purchased materials from Innovations and she spoke to "Bruce with Innovations in Print" on the phone. However, "Bruce" never used his last name and Rob did not tell Hess that his father owned and operated Innovations. After Empire terminated Rob, Hess continued having frequent contact with "Bruce." She learned "Bruce" was Rob's father in April 2017. Likewise, Jeffrey Goodwin, Empire's Chief Operating Officer and Rob's former boss, did not know Rob purchased materials from his father's company until after Empire terminated Rob's employment. Had Goodwin known Rob's father owned Innovations, he would have terminated Rob's employment immediately.

         Empire alleges that after terminating Rob's employment in November 2016, Empire discovered Rob's father owns and operates Innovations and Rob purchased printed materials and disposable goods from Innovations at inflated prices. Empire sued Spurgeon for fraud and conspiracy. It alleges that by purchasing goods from his father's company at inflated prices, Rob committed common-law actual or constructive fraud and Spurgeon knowingly participated in and reaped the benefits of that fraud. Additionally, Empire alleges Rob owed a fiduciary duty to Empire, his employer; Spurgeon knew Rob owed that duty; the men engaged in a conspiracy to breach Rob's fiduciary duty to Empire; and they "committed unlawful, overt acts in furtherance of the conspiracy" by concealing their relationship and pricing the goods sold to Empire above the prices at which goods of a like grade and quality could have been obtained through competitive purchasing.

         The first amended petition asserts Spurgeon did business in Texas as that term is defined in section 17.042 of the civil practice and remedies code.[3] Spurgeon filed a special appearance, which the trial court denied. This interlocutory appeal followed.

         Law & Analysis

         Texas courts have personal jurisdiction over a defendant when two criteria are satisfied: (1) the Texas long arm statute grants jurisdiction; and (2) the exercise of jurisdiction comports with federal and state constitutional guarantees of due process. Searcy v. Parex Res., Inc., 496 S.W.3d 58, 66 (Tex. 2016). The Texas long arm statute lists activities that constitute doing business in Texas, including committing a tort in whole or in part in the state. See Tex. Civ. Prac. & Rem. Code Ann. § 17.042(2).

         A defendant's contacts with a forum may give rise to either general or specific jurisdiction. KC Smash 01, LLC v. Gerdes, Hendrichson, Ltd., L.L.P., 384 S.W.3d 389, 392 (Tex. App.-Dallas 2012, no pet.); Nevada Nat'l Advert., Inc. v. Silverleaf Resorts, Inc., No. 05-16-00694-CV, 2017 WL 655949, at *2 (Tex. App.-Dallas Feb. 17, 2017, no pet.) (mem. op.). Empire does not argue general jurisdiction is available in this case; Empire only argues Spurgeon's contacts with Texas give rise to specific jurisdiction. Specific jurisdiction exists when the plaintiff's claims "arise out of" or are "related to" the defendant's contacts with the forum. Nevada Nat'l Advert., Inc., 2017 WL 655949, at *2.

         The plaintiff bears the initial burden of pleading allegations to permit a court's exercise of personal jurisdiction over the nonresident defendant. Id. (citing Searcy, 496 S.W.3d at 66). Alleging the defendant committed torts in Texas satisfies the plaintiff's initial burden. See Lombardo v. Bhattacharyya, 437 S.W.3d 658, 679 (Tex. App.-Dallas 2014, pet. denied) (citing Tex. Civ. Prac. & Rem. Code Ann. § 17.042). Once the plaintiff meets this burden, the defendant assumes the burden of negating all potential bases for personal jurisdiction that exist in the plaintiff's pleadings. Searcy, 496 S.W.3d at 66. The defendant can negate jurisdiction on either a factual or legal basis. See, e.g., Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 659 (Tex. 2010); Nevada Nat'l Advert., Inc., 2017 WL 655949, at *2. A defendant negates jurisdiction on a factual basis by presenting evidence to disprove the plaintiff's jurisdictional allegations. See Kelly, 301 S.W.3d at 659. A 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 ...

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