DAVID FRANKE, BRUCE NICKEL, MIKE SCHANKENBURG, KENT SCHANKENBURG, AND RICK ZIMMER, Appellants
JOHAN BOLLEN, Appellee
Appeal from the 127th District Court Harris County, Texas
Trial Court Case No. 2017-83163.
consists of Justices Kelly, Hightower, and Countiss.
Richard Hightower Justice.
David Franke, Bruce Nickel, Mike Schankenburg, Kent
Schankenburg, and Rick Zimmer (collectively, the Investors)
challenge the trial court's grant of the special
appearance of appellee Johan Bollen. The Investors assert
that Bollen had contacts with Texas in connection with the
sale of securities to Texas residents and that his status as
a control person of an entity that engaged in securities
fraud in Texas supports the exercise of personal jurisdiction
over him. Because we conclude that the Investors failed to
allege or provide any evidence of Bollen's purported
contacts with Texas that gave rise to this litigation, we
affirm the trial court's grant of Bollen's plea to
is the founder and majority shareholder in Guidewave
Consulting, LLC. The Investors sued Bollen individually,
Guidewave, and another Guidewave officer, Rocky Emery,
alleging fraudulent inducement and securities fraud in
connection with the Investors' decision to invest $495,
000 in predictive technology.
their original petition, the Investors alleged that Guidewave
is a privately owned company based in Indiana, founded by
Bollen in 2011 "to monetize predictive technology he
developed while working at Indiana University."
According to the Investors' petition,
"Guidewave's technology allegedly allows it to
analyze data from social media to determine a global
'mood' that can predict trends or outcomes including,
but not limited, to financial markets, political elections,
and major world events."
Investors alleged causes of action for fraudulent inducement
and securities fraud against Guidewave, Bollen, and Emery,
stating that the Guidewave parties:
jointly and severally represented, among other things, that:
(1) Guidewave's social media analytics could make
reliable and consistent predictions regarding movements in
the financial markets, political elections, and major world
events; and that (2) KPMG was going to be a 50% investor in
Guidewave, which would make Guidewave a billion dollar
company; and (3) that the [Investors] would earn a
substantial return on their investment."
Investors asserted that the Guidewave parties knowingly or
recklessly made these material and false representations and
that the Investors relied on the misrepresentations "in
their decision to invest approximately $495, 000.00, and
suffered financial harm as a proximate cause of the false
Investors further alleged that Bollen and Emergy "were
the majority members and beneficial owners of Guidewave"
and "[c]aused Guidewave to be used for the purpose of
perpetrating and did perpetrate an actual fraud on [the
Investors] for the direct personal benefit of themselves and
are personally liable under the common law" and Business
Organizations Code sections 101.002 and 21.223(b). And they
alleged that because the Guidewave parties' "conduct
relates to the sale of a security, their fraudulent conduct
constitutes securities fraud."
Investors did not specifically identify any statements by
Bollen, made either directly or indirectly, that they relied
upon. Nor did the they identify the nature of their
investment with Guidewave. It appears from the record that
the Investors actually invested money in a third
company-Predictor Technology Corp.-but that company is not a
party to this lawsuit, and the Investors do not explain the
relationship, if any, between Predictor and Guidewave or
Bollen. The Investors alleged only that Guidewave at some
point approved Emery's transfer of a portion of his own
interest in Guidewave to them, without explaining when or how
they paid for such a transfer. Rather, the Investors alleged
the following facts in support of their fraud claims:
• Emery "was not only an investor and company
officer in Guidewave, but was authorized by Guidewave and
[Bollen] to solicit other investors for the purpose of
raising capital to fund Guidewave's operations."
• The Investors were contacted by Emery on
Guidewave's behalf in February 2014 because Emery wanted
them to invest in Guidewave.
• Emery "made representations with a particular
emphasis on Guidewave's purported ability to predict
movements in financial markets" and Bollen
"conferred with [the Investors] about Guidewave's
technology and uses." Emery "for his own benefit
and that of Guidewave, secured signed buy/sell agreements
with" the Investors.
• The Guidewave parties used "sales tactics"
that included sending the Investors Guidewave's
newsletter, "as well as hand-picked 'Guidewave
Alerts' and 'Guidewave Indicators of the Day,'
which purported to show how closely Guidewave predicted
market movements, but always after the predictions had come
• Emery represented "that KPMG had expressed an
interest in acquiring as much as 50% of Guidewave, which,
according to Mr. Emery, would '. . . make [Guidewave] a
billion dollar company. . . .'"
• Emery became Guidewave's chief operating officer
with a 35% ownership interest in June 2014 and
"immediately agreed to sell a portion of his 35%
interest in order to help capitalize Guidewave."
• Investors "understood that their investment
equated to a 9.9% ownership interest in Guidewave"
collectively and that their total investment was $495, 000.
• "In June 2014, the [Investors] became suspicious
that something was amiss. More specifically, by this time
period, none of the [Investors] had received membership
certificates or any other documentation showing that they
were members of Guidewave. This was particularly worrisome
because several of the [Investors] had reached out to Mr.
Emery asking for such documentation. Mr. Emery would always
assure those who inquired that the documents would be
• Emery resigned his position as Guidewave's COO in
December 2014 "because he planned to form a hedge fund
using Guidewave's analytics." Emery "divested
himself of his interest in Guidewave" by transferring
his units to Bollen, "ostensibly to avoid any appearance
of a conflict of interest." ...