Tony Sarp v. Lloyd McConnell D/B/A Cactus Custom Knives

COURT OF APPEALS COURT OF APPEALS EIGHTH DISTRICT OF TEXAS EL PASO, TEXAS TONY SARP,                                                       ) ) No. 08-03-00114-CV Appellant, ) ) Appeal from the v. ) ) County Court at Law LLOYD MCCONNELL d/b/a CACTUS ) CUSTOM KNIVES, ) of Ector County, Texas ) Appellee. ) (TC# CC-14,857) ) MEMORANDUM  OPINION Texas resident Lloyd McConnell d/b/a Cactus Custom Knives sued Washington resident Tony Sarp for failing to pay for $6,200 of custom knives. The trial court denied Mr. Sarp=s special appearance, and he filed this interlocutory appeal. See Tex.Civ.Prac.&Rem.Code Ann. ' 51.014(a)(7)(Vernon Supp. 2004). He brings four related issues, in which he asserts that the trial court erred in denying the special appearance for lack of personal jurisdiction in Texas. We affirm. Mr. McConnell and Mr. Sarp met at the Safari Club International Show in Las Vegas, Nevada in 1998 and again at the same event in the following years. For years, Mr. McConnell has been building custom knives. Mr. McConnell has regularly rented a booth at the Safari Club International Show in Las Vegas to sell his knives. At the 1999 Safari Club International Show, Mr. McConnell and Mr. Sarp made a deal where Mr. Sarp=s business, Katmai Lodge Limited, would trade a fishing trip to Alaska for two custom-built knives and a display case made by Mr. McConnell. At the same 1999 show, Mr. Sarp also ordered another knife which would not be part of the fishing trip trade. According to Mr. McConnell, he and Mr. Sarp discussed the design of the display case and knives several times over the telephone. Mr. McConnell would call Mr. Sarp at his Washington office to let him know the status of the project and about having the display case made. They also had discussions about the design and placement of the scrimshaw carvings on the knife handles. Mr. McConnell testified that he told Mr. Sarp where he lived and where he manufactured his goods, which was in his shop in Odessa. Mr. McConnell delivered the knives at the Las Vegas show the following year. Mr. McConnell made reservations to go on the fishing trip, but had to cancel due to family illness. At some point, Mr. McConnell wanted to take his wife along on the Alaska fishing trip and Mr. Sarp told him she could go. At the hearing, Mr. McConnell explained that he and Mr. Sarp had never discussed the dollar amount for the fishing trip, but he later found out from a brochure Mr. Sarp mailed him that the fishing trip was worth about $3,900. Since his wife would be going, Mr. McConnell decided to make Mr. Sarp another knife, to send as a goodwill gesture for his accompanying wife. Mr. McConnell made a reservation for the Alaskan lodge, but a week or two later he received a call from the Washington office informing him that he could not go on the selected date because it was the prime fishing time of the year and the lodge was booked up. At the special appearance hearing, Mr. McConnell testified that he sent Mr. Sarp invoices for the knives with the understanding that Mr. Sarp would pay for the $2,200 knife and the others were in exchange for the fishing trip. Mr. McConnell sent the following invoices: (1) two knives and a display case in the amount of $3,200 by invoice dated February 14, 2000; (2) one knife in the amount of $2,200 by invoice dated March 17, 2000; and (3) one knife in the amount of $800 by invoice dated May 15, 2000. Mr. Sarp did not respond to the billing. Mr. McConnell later received a letter from Mr. Sarp on Katmai Lodge letterhead dated August 18, 2000, stating that he never received a bill and still wanted to do the trade as agreed. In the letter, Mr. Sarp requested that Mr. McConnell rebill him for what he owed on the third knife. Mr. Sarp also stated, AI will send you a letter verifying the trade agreement amount, along with a check for the third knife.@ Mr. McConnell testified that the letter from Mr. Sarp was sent to his shop address in Odessa, Texas. By invoice dated September 12, 2000, Mr. McConnell sent out a duplicate invoice for the $2,200 knife. The invoice notes Mr. McConnell=s mailing address in Odessa, Texas. Mr. McConnell testified that he did not receive a check, a fishing trip, and does not have the knives. Denial of Special Appearance Whether a court has personal jurisdiction over a defendant is a question of law. American Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 805-06 (Tex. 2002), citing, BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). On appeal, the trial court=s order granting or denying a special appearance is reviewed de novo, though in doing so an appellate court may need to review the trial court=s resolution of disputed facts. American Type Culture Collection, 83 S.W.3d at 806. When the trial court does not issue findings of fact, as in this case, we presume that the trial court resolved all factual disputes in favor of its judgment. See American Type Culture Collection, 83 S.W.3d at 806. When the appellate record includes the reporter=s and clerk=s records, these implied findings are not conclusive and may be challenged for legal and factual sufficiency. BMC Software, 83 S.W.3d at 795. For legal sufficiency points, the no evidence challenge fails if there is more than a scintilla of evidence to support the finding. Id. In reviewing a factual sufficiency challenge, we examine the entire record, both in favor of and contrary to the challenged finding in determining whether the finding in question is so against the great weight and preponderance of the evidence as to be clearly wrong and manifestly unjust. See Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex. 1986); Oechsner v. Ameritrust Texas, N.A., 840 S.W.2d 131, 136 (Tex.App.--El Paso 1992, writ denied). Texas courts may exercise jurisdiction over a nonresident when: (1) the Texas long-arm statute authorizes jurisdiction; and (2) the exercise of jurisdiction is consistent with federal and state constitutional guarantees of due process. See Tex.Civ.Prac.&Rem.Code Ann. '' 17.041-17.069 (Vernon 1997 & Supp. 2004); Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex. 1991). The long-arm statute authorizes jurisdiction over a nonresident defendant Adoing business@ in Texas.[1] See Tex.Civ.Prac.&Rem.Code Ann. ' 17.042. The Texas long-arm statute reaches Aas far as the federal constitutional requirements of due process will allow.@ Guardian Royal, 815 S.W.2d at 226. Under the federal constitutional requirements for due process, a nonresident defendant must have established Aminimum contacts@ with Texas and if so, the exercise of jurisdiction must comport with Atraditional notions of fair play and substantial justice.@ American Type Culture Collection, 83 S.W.3d at 806, citing, International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158, 90 L.Ed. 95 (1940). Minimum contacts analysis requires that a nonresident defendant purposefully avail itself of the privilege of conducting activities within Texas, thus invoking the benefits and protections of our laws. Id., citing, Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 2183, 85 L.Ed.2d 528 (1985). The goal of the Apurposefully avail@ requirement is to protect a nonresident defendant from being haled into a jurisdiction based on random, fortuitous, or attenuated contacts or the unilateral acts of another party. See id.; Guardian Royal, 815 S.W.2d at 226. A nonresident defendant=s activities, whether through direct acts within Texas or conduct outside of Texas, must justify a conclusion that the defendant could reasonably anticipate being called into a Texas court. American Type Culture Collection, 83 S.W.3d at 801, citing, World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 559, 567, 62 L.Ed.2d 490 (1980). A defendant=s contacts with a forum can give rise to either specific or general jurisdiction. American Type Culture Collection, 83 S.W.3d at 806. Specific jurisdiction is established if (1) the defendant=s contacts with the forum is purposeful, and (2) the cause of action arises from or is related to those contacts. Id.; BMC Software, 83 S.W.3d at 796. When specific jurisdiction is asserted, our minimum contacts analysis must focus on the relationship between the defendant, the state of Texas, and the litigation. See Guardian Royal, 815 S.W.2d at 228; Schlobohm v. Schapiro, 784 S.W.2d 355, 357 (Tex. 1990). In contrast, general jurisdiction is present a defendant=s contacts with Texas are continuous and systematic, permitting the exercise of personal jurisdiction over the defendant even if the cause of action did not arise from or relate to activities conducted within Texas. CSR Ltd. v. Link, 925 S.W.2d 591, 595 (Tex. 1996). General jurisdiction requires a showing of substantial activities within Texas, a more demanding minimum contacts analysis than specific jurisdiction. Id.; American Type Culture Collection, 83 S.W.3d at 807. The plaintiff bears the initial burden of pleading facts sufficient to bring a nonresident defendant within the provisions of the Texas long-arm statute. See McKanna v. Edgar, 388 S.W.2d 927, 930 (Tex. 1965); Hotel Partners v. KPMG Peat Marwick, 847 S.W.2d 630, 633 (Tex.App.--Dallas 1993, writ denied). A defendant may contest the Texas court=s personal jurisdiction over it by filing a special appearance.[2] See Tex.R.Civ.P. 120a(1). Upon filing a special appearance, the defendant must negate all personal jurisdiction bases alleged by the plaintiff. Kawasaki Steel Corp. v. Middleton, 699 S.W.2d 199, 203 (Tex. 1985). In Issue One, Mr. Sarp argues that Mr. McConnell in his original petition made no allegations that would bring him within the Texas long-arm statute. In his petition, Mr. McConnell pleaded that he was a resident of Texas and Mr. Sarp was an individual who may be served in Washington state. According to the pleadings, Mr. Sarp purchased certain goods, services, wares, equipment, and/or merchandise from Mr. McConnell in Texas as evidenced by attached invoices. Mr. McConnell demanded payment from Mr. Sarp for the sums due, but has not been paid in full as agreed upon by Mr. Sarp. While Mr. McConnell did not specifically state that Mr. Sarp was subject to the Texas long-arm statute under Section 17.042 of the Texas Civil Practice and Remedies Code, he pled sufficient facts to bring Mr. Sarp under the long-arm statute. See Kawasaki Steel Corp., 669 S.W.2d at 203 (nonresident defendant may not contest curable defective jurisdictional allegations in the petition in a special appearance). Issue One is overruled. In Issues Two and Three, Mr. Sarp contends the trial court erred because Texas does not have general nor specific jurisdiction over him. Because Mr. McConnell pled sufficient facts, the burden shifted to Mr. Sarp to negate all possible bases for personal jurisdiction. See id. at 203. In his brief, Mr. Sarp points out that: (1) all in-person contact between him and Mr. McConnell occurred in Las Vegas, Nevada; (2) the only telephone calls between them were placed by Mr. McConnell; (3) the August 18, 2000 letter is on the letterhead of the corporation Katmai Lodge, Ltd.; and (4) he is not a resident of Texas and does not engage in business in Texas. Mr. Sarp asserts that the alleged contract was between Katmai Lodge, Ltd. and Mr. McConnell and was made in Las Vegas, Nevada. Without admitting the existence of a contract between him individually and Mr. McConnell, Mr. Sarp argues that such a contract would have been made in Nevada. After reviewing the record, we conclude there is sufficient evidence to support the trial court=s implied finding that Mr. Sarp=s conduct outside of Texas was purposefully directed to Texas such that he could reasonably anticipate being called into a Texas court. In this case, Mr. Sarp and Mr. McConnell agreed to an exchange of custom knives for a fishing trip in Alaska furnished by Mr. Sarp=s business, Katmai Lodge Ltd. By telephone, the parties discussed the design of the display case and knives. Mr. McConnell testified that he told Mr. Sarp where he lived and where he manufactured his goods. By letter dated August 18, 2000, Mr. Sarp requested that Mr. McConnell rebill him for the amount due on one of the custom knives. Mr. Sarp also stated that he would send a letter verifying the trade agreement with his payment for the custom knife. Mr. McConnell testified that he received the August 2000 letter at his mailing address in Odessa, Texas. For purposes of the long-arm statute, these facts support the allegation that a contract had been formed by the parties, in which Mr. McConnell was to perform part of the contract in Texas in accordance with Mr. Sarp=s requests.[3] See Tex.Civ.Prac.&Rem.Code Ann. ' 17.042(1). Mr. McConnell brought a cause of action for default in payment for the custom knives purchased by Mr. Sarp. Specific jurisdiction was established in that Mr. Sarp=s contacts with Texas were purposeful and Mr. McConnell=s cause of action is directly related to these contacts. We conclude that Mr. Sarp failed to negate specific jurisdiction as a basis for jurisdiction over him in this cause. Issues Two and Three are overruled. Having concluded that Mr. Sarp purposefully established minimum contacts with Texas, we must also determine whether the assertion of personal jurisdiction over Mr. Sarp comports with traditional notions of fair play and substance justice. See Guardian Royal, 815 S.W.2d at 228. In deciding this issue, we consider the following factors when appropriate: (1) the burden on the defendant; (2) the interests of the forum state in adjudicating the dispute; (3) the plaintiff's interest in obtaining convenient and effective relief; (4) the interstate judicial system=s interest in obtaining the most efficient resolution of controversies; and (5) the shared interest of the several states in furthering fundamental substantive social policies. Guardian Royal, 815 S.W.2d at 231. We are mindful, however, that only in rare cases will the exercise of jurisdiction not comport with fair play and substantial justice when the nonresident defendant has purposefully established minimum contacts with the forum state. Id. It is incumbent upon the defendant to present Aa compelling case that the presence of some other considerations would render jurisdiction unreasonable.@ Id., quoting, Burger King, 471 U.S. at 477, 105 S.Ct. at 2185. In his fourth issue, Mr. Sarp argues that his burden of litigating in Texas is considerable because he is a resident of Washington state and president of Katmai Lodge, Ltd. in Alaska. Distance alone is not ordinarily sufficient to defeat jurisdiction. Guardian Royal, 815 S.W.2d at 231. A[M]odern transportation and communication have made it much less burdensome for a party sued to defend himself in a State where he engages in economic activity.@ Id., quoting, McGee v. Int=l Life Ins. Co., 355 U.S. 220, 223, 78 S.Ct. 199, 201, 2 L.Ed.2d 223, 226 (1957). Requiring Mr. Sarp to defend a suit in Texas does not appear overly burdensome, particularly considering the fact that a trial in Nevada would likewise present a burden for Mr. Sarp. We find that this factor weighs in favor of Texas. Mr. Sarp also argues that Texas= interest in adjudicating the matter is tenuous because the alleged contract was formed in Nevada and allegedly breached in Washington. As discussed above, the alleged contract between the parties was to be partly performed in Texas and Mr. McConnell testified that Mr. Sarp corresponded about their trade agreement and about billing for the merchandise ordered to Mr. McConnell who was in Texas. We find that Texas has a strong interest in adjudicating this breach of contract dispute. Further, Mr. Sarp contends Mr. McConnell=s interest in litigating in Texas does not weigh heavily in the balance, since he should expect to prosecute his claim in either Nevada or Washington, while Mr. Sarp could not have foreseen being haled into a Texas court to defend an alleged contract he did not enter as an individual. As discussed above, Mr. McConnell=s claims arise out of or are related to Mr. Sarp=s conduct, which was purposefully directed to Texas. Mr. McConnell offered unchallenged testimony that indicated Mr. Sarp knew that he was conducting business with a resident of Texas, ordered merchandise to be manufactured at Mr. McConnell=s shop in Texas, and corresponded with Mr. McConnell through his mailing address in Texas. Mr. Sarp has failed to make a compelling case that exercise of personal jurisdiction in this case would be unreasonable. See Guardian Royal, 815 S.W.2d at 231. Based on the facts in evidence, we find that Mr. McConnell=s interest in obtaining convenient and effective relief outweighs the burden on Mr. Sarp in having to defend himself in Texas. After carefully considering all relevant factors, we conclude that exercise of personal jurisdiction over Mr. Sarp comports with traditional notions of fair play and substantial justice. Issue Four is overruled. We affirm the trial court=s order denying the special appearance. February 5, 2004 DAVID WELLINGTON CHEW, Justice Before Panel No. 3 Barajas, C.J., Larsen, and Chew, JJ. [1] In pertinent part, Section 17.042 provides that a nonresident Adoing business@ in Texas where it Acontracts by mail or otherwise with a Texas resident and either party is to perform the contract in whole or in part in this state . . . .@ See Tex.Civ.Prac.&Rem.Code Ann. ' 17.042(1). [2] Rule 120a(3) of the Texas Rules of Civil Procedure provides that the trial court Ashall determine the special appearance on the basis of the pleadings, any stipulations made by and between the parties, such affidavits and attachments as may be filed by the parties, the results of the discovery processes, and any oral testimony.@ Tex.R.Civ.P. 120a(3). [3] In deciding this case, we do not consider the merits of the parties= claims regarding the existence of a contract between the parties, but rather limit our examination to the jurisdictional question at issue. See e.g., Zac Smith & Co., Inc. v. Otis Elevator Co., 734 S.W.2d 662, 666 (Tex. 1987), cert. denied, 484 U.S. 1063, 108 S.Ct. 1022, 98 L.Ed.2d 986 (1988)(question of jurisdiction does not reach substantive merit of alleged breach claim).