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Rex Performance Products, LLC v. Bettegowda

Court of Appeals of Texas, Second District, Fort Worth

August 22, 2019

Rex Performance Products, LLC, Appellant
v.
Manu Bettegowda and Pregis Performance Products, LLC, Appellees

          On Appeal from the 141st District Court Tarrant County, Texas Trial Court No. 141-298129-18

          Before Gabriel and Kerr, JJ., and Gonzalez, J. [1]

          MEMORANDUM OPINION

          Ruben Gonzalez Ruben Gonzalez Visiting Judge

         I. Introduction

         In two issues in this accelerated interlocutory appeal, [2] Appellant Rex Performance Products, LLC, a Michigan limited liability company, appeals the trial court's order granting the special appearance filed by Appellees Pregis Performance Products, LLC, a Delaware limited liability company, and Manu Bettegowda, a Connecticut resident and Pregis's agent, asking us to find that Bettegowda's email communications with a Texas resident provided sufficient minimum contacts to establish personal jurisdiction. We affirm.

         II. Background

         Rex sued James Donald Tate, Olympus Partners, LP, [3] and Appellees, alleging that Tate, a Texas resident and Rex's president, CEO, and minority share owner, had secretly negotiated a side deal for himself when he negotiated the February 23, 2018 sale of Rex's assets to Pregis. The "side deal," which Rex claimed was discovered by reviewing Tate's emails before the sale closed, involved a $1.5 million "Super Bonus" payable to Tate in exchange for driving the sale price down by $3 million. Rex sought to enjoin the $1.5 million payment and brought a claim for breach of fiduciary duty against Tate and a claim for conspiracy against all of the defendants. Rex also alleged that Tate's co-defendants were joint tortfeasors for knowingly inducing and participating in Tate's breach of fiduciary duty and alleged personal jurisdiction under the Texas long-arm statute on the basis of business torts committed in whole or in part in Texas and under its joint tortfeasor theory. See Tex. Civ. Prac. & Rem. Code Ann. § 17.042(2).

         Appellees filed a special appearance, arguing that there was no nexus between them, Rex's allegations, and the forum; that Rex could not establish either specific or general jurisdiction over them;[4] and that Rex's Texas lawsuit was "pure gamesmanship" because Rex had also filed a lawsuit against Tate in Michigan on the same day that it filed the instant lawsuit. They contended that none of Rex's alleged injuries occurred in Texas, that the sale did not occur in Texas, and that the asset-purchase agreement at issue contained a Delaware forum selection clause.

         The only witness to testify during the April 27, 2018 special appearance hearing was Rex Hansen, who had been Rex's administrative manager and who testified that Tate had been authorized to negotiate the sale of assets to Pregis and had negotiated with Bettegowda. Tate lived in Keller, Texas, managed Rex's sales around the country, and traveled to Michigan once a month in 2017 and 2018 but primarily worked in Texas.

         Hansen identified in Plaintiff's Exhibits 9 and 10 photographs he had taken of a building that he said was "the Pregis location in Corsicana[, ] Texas." The trial court admitted the photographs into evidence over Appellees' objections. Hansen testified that he was familiar with Pregis's logo and that the logo on the building was the same logo of the company that had purchased Rex's assets. The trial court also admitted into evidence Plaintiff's Exhibit 12, a print-out from a Pregis website that announced, "Pregis Acquires Rex Performance Products." During cross-examination, Hansen said that he took the photographs in Plaintiff's Exhibits 9 and 10 a week before the hearing but had not been inside that Pregis location and did not know if it was operational or an empty building. He also admitted that he did not know which legal entity owned or operated the building and did not dispute that the Pregis entity sued in the instant lawsuit was formed in February 2018.

         With regard to Plaintiff's Exhibit 11, Rex's counsel asked Hansen if he was familiar with how Rex's email was managed, and Hansen explained that Rex had a server in Michigan that ran Microsoft Exchange and that "everybody use[d] their phone and/or Outlook to get and receive emails." Hansen said that he was familiar with the January and February 2018 email exchanges between Bettegowda and Tate that were contained in Plaintiff's Exhibit 11. The following recitation ensued:

Q. Are these emails business records for Rex Performance Products?
A. They are.
Q. And were these records made and kept in the course of a regular conducted business activity?
A. They are.
Q. Are these records routinely made and kept in the course of ...

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