Court of Appeals of Texas, Ninth District, Beaumont
Submitted on January 3, 2019
On
Appeal from the 136th District Court Jefferson County, Texas
Trial Cause No. D-200,644
Before
Kreger, Horton, and Johnson, JJ.
MEMORANDUM OPINION
HOLLIS
HORTON, JUSTICE.
May a
company charge a purchase to an account holder's
corporate account when the individual who makes the purchase
tells the company selling the goods that the goods are not
being acquired for the account holder? And if the company
charges the account holder for the purchase while knowing the
account holder was not making the purchase, does the account
holder's credit agreement apply to the transaction? If
the account holder is also a nonresident of this State, may a
forum selection clause in the account holder's credit
agreement require the account holder to defend a lawsuit the
seller filed against the account holder in the state
designated in the clause?
The
trial court resolved these questions in a Texas company's
favor and denied an Iowa company's special appearance. In
its special appearance, the Iowa company claimed it never
purchased the goods that were the subject of the Texas
company's suit. And in the hearing, the Iowa company
established that neither it nor an agent acting on its behalf
acquired the goods for the Iowa company's account.
Moreover, the Iowa company established the Texas company knew
the individual who acquired the goods was not purchasing them
for the Iowa company's account. Nevertheless, the trial
court held the forum selection clause in a credit agreement
the Iowa company signed allowed the court to exercise
jurisdiction over the Iowa company and to resolve the Texas
company's claim seeking to recover payment for the goods
the Texas company delivered to the individual who signed
contracts renting the goods the individual subsequently used.
We
conclude the forum selection clause does not apply because
the Texas company knew the goods were not purchased on the
Iowa company's account. And since the record contains no
other basis justifying the trial court's ruling, we
reverse the trial court's order denying the special
appearance and dismiss the Iowa company from the suit.
Background
In
September 2017, Quality Event Flooring Systems, LLC (Quality
Flooring) sued Basis Live, LLC (Basis Live), FC Festivals,
LLC (Festivals), Dave DeWaard, and Dave Arndt alleging they
failed to pay the balance they owed Quality Flooring under
two floor-rental contracts, dated April 2017. After Festivals
learned of the suit, it filed a special appearance. In the
special appearance, Festivals asserted that it never rented
the floors for the concerts that were the subject of Quality
Flooring's claims, did no business with Quality Flooring,
and never signed any contracts with Quality Flooring that
required it or Quality Flooring to perform any part of the
contract in Texas.
In
September 2018, the trial court conducted a hearing on
Festivals' special appearance. The evidence from the
hearing shows that Quality Flooring sells and rents portable
floors for concerts and special events. In late March or
early April 2017, DeWaard, an Iowa resident, spoke to Ben
Grennell, an employee of Quality Flooring, about the prospect
of renting portable floors for two concerts, scheduled to
occur in late April 2017 in Florida and Alabama. Over the
next several days, Grennell, working from Quality
Flooring's Texas office, and DeWaard, a resident of Iowa,
exchanged a series of emails about the floors. The emails
discuss the terms under which Quality Flooring would consider
renting the floors.
In the
first of these emails, dated April 3, 2017, Grennell asked
DeWaard to clarify two items the two of them had discussed by
phone, (1) how many square feet of flooring would DeWaard
need for the concerts, and (2) "what company name and
address do you want me to put this contract under?" In
response, DeWaard sent Grennell an email advising him that he
needed "[a]bout 80 thousand total" for "Basis
Live LLC[,] [B]ox 243[,] Forest [C]ity[,] IA[.]"
In
response to DeWaard's email, Grennell informed DeWaard
what Quality Flooring would charge to rent, install, and
remove the two floors. A week later, Grennell sent DeWaard an
email informing him that Quality Flooring's chief
operating officer had informed him that Quality Flooring
would "have to do the contract for the flooring under
[Festivals] because that is what your credit check is under.
Sorry for all the paper work." Grennell's reference
to a credit check relates to a March 2017 credit application
that Festivals signed with Quality Mat Company of North
Dakota, LLC (Quality North Dakota). The March 2017 credit
agreement arose from discussions DeWaard had with Quality
Flooring about Festivals' desire to rent floors for a
concert in Iowa. In March 2017, Arndt, Festivals'
manager, signed a credit application with Quality North
Dakota contemplating that Festivals might need some wooden
mats for a festival that it conducts in Iowa. On the credit
application he signed for Festivals, Arndt listed DeWaard as
one of the individuals who could order goods for Festivals on
Festivals' account.
On
April 11, 2017, Grennell sent DeWaard an email advising
DeWaard to "fill out the first page of the credit
application regarding the Basis Live information [because]
[o]ur CFO needs that for the credit application." The
day after that, DeWaard sent Grennell an email advising
Grennell to send Basis Live's credit application to him
and to an individual named Melissa so they could "turn
it around asap[.]"
During
the second week of April 2017, Grennell emailed DeWaard and
advised he had just gotten out of a meeting with Quality
Flooring's officers. Grennell's email states that
Quality Flooring would provide the portable floors for the
two concerts in Florida and Alabama after DeWaard sent
Quality Flooring a $25,000 deposit and agreed to pay any
remaining balance owed to Quality Flooring following the
events. In the same email, Grennell told Dewaard the
contracts for the two concerts "are not under the credit
application you sent in for the wood mats[,]" which
referred back to DeWaard's discussion with Grennell about
the prospect that Festivals might rent wood mats for the
festival in Iowa.
Later
that day, DeWaard signed two contracts to rent the floors for
the Florida and Alabama concerts. DeWaard signed his name to
the rental contracts to pay for the floors. On the line
showing who the contracts were addressed to, Quality Flooring
wrote: "Basis Live LLC/FC Festivals LLC[.]" After
Quality Flooring forwarded the contracts to DeWaard, he
signed them but did not strike Festivals' name from the
address. And DeWaard did not represent whether he signed the
contracts individually, for Basis Live, for Festivals, or for
everyone whose name Quality Flooring put on the line showing
the entities to whom Quality Flooring addressed the
agreements.
Excerpts
from a deposition the parties obtained during discovery from
DeWaard were also before the trial court before the court
ruled on Festivals' special appearance. In his
deposition, DeWaard testified he called Grennell after
receiving the contracts and told him he could not sign the
contracts "because FC Festivals has zero to do with [the
two deals]." DeWaard also testified he spoke to two
other individuals in Quality Flooring's chain of command
about the fact that Festivals was not the entity renting the
floors. DeWaard explained he sent Quality Flooring his
personal check for $25,000 based on Quality Flooring's
request for a down payment toward the cost of renting the
floors. Quality Flooring does not dispute that it credited
DeWaard's down payment against the damages it sought to
recover in its suit. DeWaard also testified he never told
anyone at Quality Flooring that Basis Live and Festivals were
the same companies.
Quality
Flooring asked the trial court to consider three additional
documents to decide whether DeWaard was acting as
Festivals' actual or apparent agent when he rented the
floors. The first consists of excerpts showing the discussion
the court had with the parties during a scheduling hearing.
The excerpts from the scheduling hearing reflect that Quality
Flooring's attorney represented to the trial court that
Quality Flooring could make Grennell available for a
deposition because he still works for Quality Flooring but
works from its Florida office. The evidence before the trial
court, however, contains no evidence from Grennell (other
than his emails) addressing whether DeWaard told him that
Festivals was not involved in the contracts DeWaard signed to
rent the floors.
The
second document is a copy of a March 2017 credit application
signed by Arndt on Festivals' behalf. The credit
application reflects that Festivals asked Quality North
Dakota to set up an account authorizing Festivals to charge
up to $50,000 on its account.[1] Arndt listed DeWaard as an individual who
Festivals authorized to charge goods purchased or rented by
Festivals to Festivals' account.
The
last of the documents is an affidavit signed by Joe E.
Penland, Sr., the president of Quality Mat Company. In his
affidavit, Penland explains that Quality Mat Company is the
parent company of Quality North Dakota. Penland also states
Quality Flooring used Quality North Dakota's credit
agreement form by mistake because the entities that are
parties to transactions "know the other parties with
whom they are doing business[.]" Penland's affidavit
then states that Quality North Dakota has no interest in the
March 2017 credit application signed by Festivals, but ...