Hause v. LG Chem, Ltd.

658 S.W.3d 714

Jeffrey HAUSE, Appellant,

v.LG CHEM, LTD., Appellee.

No. 08-20-00197-CV

Court of Appeals of Texas, El Paso.

October 6, 2022

ATTORNEYS FOR APPELLANT: A. Craig Eiland, The Law Offices of Craig Eiland, 1220 Colorado Sreet, Suite 300, Austin, TX 78701, Angela J. Nehmens, Levin Simes Abrams LLP, 1700 Montgomery Street, Ste. 250, San Francisco, CA 94111.

ATTORNEY FOR APPELLEE: Sean M. Higgins, Lewis Brisbois Bisgaard & Smith, LLP, 24 Greenway PLaza Suite 1400, Houston, TX 77046-2410.

Before Rodriguez, C.J., Palafox, and Alley, JJ.

OPINION

YVONNE T. RODRIGUEZ, Chief Justice

Factual Background

This appeal is one of several others in the state of Texas involving allegedly defective battery cells used in vaping devices. At the time of the incident, Appellant, Jeffrey Hause, was a resident of Texas who purchased a vaping device containing a lithium-ion 18650 battery cell from the defendant-retailer JD Nova Group LLC (d/b/a "Vapolocity"). Vapolocity purchased the battery and vaping device from a vaping equipment wholesaler in California. Appellant left the device in his pants pocket when it exploded, causing severe burns. Appellee, LG Chem, Ltd. ("LG Chem"), is a manufacturer of lithium-ion 18650 battery cells, the same kind Appellant found in his vaping device. LG Chem manufactures these sells for use by "sophisticated companies," who incorporate them into battery packs and place them in products like power tools, laptops, and other equipment. Appellant sued LG Chem; its wholly owned subsidiary, LG Chem America, Inc. ("LGC America"); the retailer, Vapolocity; and the wholesaler, IE Vapor Inc. for products liability claims.

Procedural Background

Both LG Chem and LGC America filed special appearances, the former of which is the subject of this appeal. To rebut the propriety of asserting jurisdiction over it, LG Chem averred it is a Korean company based in Seoul, South Korea and has never been registered to do business in the state of Texas. It has no offices in Texas; no leased or owned real property in Texas; no registered agent for the service of process in Texas; and no telephone number, post office box, mailing address, or bank account in Texas. LG Chem further stated it does not foster a market for standalone batteries in Texas or anywhere else. Instead, it manufactures lithium-ion batteries for use in specific applications, not including electronic cigarettes or vaping devices, by sophisticated companies—meaning LG Chem does not sell to individual consumers like Appellant. Finally, LG Chem stated if the battery cell used in Appellant's vaping device is an LG Chem battery cell, it was not manufactured in Texas, and LG Chem never authorized any party, including Vapolocity with whom it has no relationship, to advertise, distribute, or sell its battery cells as replaceable power cells for vaping devices to individual consumers.

In response to LG Chem's special appearance, Appellant argued LG Chem targets the Texas market by shipping lithium-ion batteries, like the battery at issue here, directly into the State of Texas. Appellant pointed to a transcript in Turner v. South Carolina , a case in Houston where LG Chem was defending against a products liability claim involving very similar facts, for proof LG Chem conceded to shipping lithium-ion 18650 batteries directly into Texas. Appellant also obtained import data from U.S. Customs detailing imports from LG Chem between November 1, 2006 and May 29, 2019. Lastly, Appellant attached excerpts from Stanley Black and Decker's ("SBD") website stating it has manufacturing facilities in Texas, and lists LG Chem as its "peers in innovation," which, Appellant argues, demonstrates SBD is one of the sophisticated companies to whom LG Chem sells its products.

LG Chem filed written objections to many of Appellant's exhibits for lack of authentication and hearsay. At the special appearance hearing, counsels on both sides called the court's attention to the objections, but the trial court chose to rule on the objections at a later time, stating the court would indicate in LG Chem's proposed order which objections it overruled or sustained. The trial court never ruled on LG Chem's objections but ultimately granted LG Chem's special appearance. This appeal ensued.

Issues

In their first issue, Appellant contends that the trial court erred in granting LG Chem's special appearance because LG Chem directly targets the Texas market for its products, and there is a substantial connection between LG Chem's Texas contacts and the underlying litigation. Therefore, Appellant asks this Court to reverse the trial court's ruling granting LG Chem's special appearance. As a conditional cross point, Appellant contends the trial court erred by not ruling on Appellant's request for jurisdictional discovery.

In response, LG Chem asks this Court to affirm the trial court's ruling granting its special appearance. First, LG Chem argues it has not engaged in any purposeful acts directed towards Texas, and its contacts, if any, are not substantially connected to the underlying litigation. Second, LG Chem argues we should affirm the trial court's ruling because Appellant's evidence is inadmissible hearsay and lacks authentication, and the trial court erred by impliedly overruling its objections to Appellant's evidence. Because we find the issue regarding the trial court's failure to rule on LG Chem's objections dispositive for our jurisdictional analysis, we address this first. For the reasons set forth below, we reverse the trial court's granting of LG Chem's special appearance.

Standard of Review

We review challenges to trial courts’ granting of special appearances de novo. Fed. Corp., Inc. v. Truhlar , 632 S.W.3d 697, 716 (Tex.App.—El Paso 2021, pet. denied). When, as here, the trial court did not issue any findings of fact or conclusions of law, we resolve all questions of fact in favor of the trial court's ruling. BMC Software Belg., N.V. v. Marchand , 83 S.W.3d 789, 795 (Tex. 2002). A reviewing court must affirm the trial court's judgment on any legal theory that can be supported by the evidence. LeBlanc v. Kyle , 28 S.W.3d 99, 102 (Tex.App.—Texarkana 2000, pet. denied). In challenges to personal jurisdiction, the parties bear shifting burdens. Old Republic Nat'l Title Ins. Co. v. Bell , 549 S.W.3d 550, 559 (Tex. 2018). The plaintiff bears the initial burden of pleading sufficient facts to bring the nonresident defendant within ambit of the Texas long-arm statute. Id. Once this is satisfied, the defendant then bears the burden "to negate all bases of personal jurisdiction alleged by the plaintiff," which the defendant can do on legal or factual grounds. Id. For example, the defendant might challenge the factual basis for jurisdiction by presenting evidence of its lack of contacts with Texas. Kelly v. Gen. Interior Const., Inc. , 301 S.W.3d 653, 659 (Tex. 2010). Legally, the defendant might show that even if the plaintiff's factual allegations were true, the "evidence is legally insufficient to establish jurisdiction; the defendant's contacts with Texas fall short of purposeful availment; for specific jurisdiction, that the claims do not arise from the contacts; or that traditional notions of fair play and substantial justice are offended by the exercise of jurisdiction." Id.

Waiver of LG Chem's Objections to the Evidence

LG Chem contends the trial court erred in impliedly overruling its objections to Appellant's evidence supporting jurisdiction by failing to rule. LG Chem filed written objections with the trial court objecting to Appellant's jurisdictional evidence on the grounds of hearsay and lack of authentication. As stated above, the trial court did not rule on the objections at the special appearance hearing and stated it would rule on the objections at a later time, when it would designate on LG Chem's proposed order which objections it overruled and sustained. The trial court granted the special appearance without ruling on the objections.

To preserve error on appeal, a party must timely object and obtain an explicit or implicit ruling from the trial court. TEX.R.APP.P. 33.1. If the trial court refuses to rule on the objection, the complaining party must object to the refusal. Id. Here, LG Chem did not object to the trial court's decision to rule on its objections at a later time. Instead, LG Chem argues the court's failure to rule on its objections amounts to an implicit overruling. However, the trial court's inaction is not indicative of its impliedly overruling LG Chem's objections. See Trevino v. City of Pearland , 531 S.W.3d 290, 299 (Tex.App.—Houston [14th Dist.] 2017, no pet.) ("An implicit overruling is one that, though unspoken, reasonably can be inferred from something else."). A court's implicit ruling may be sufficient to preserve error on appeal. In re Z.L.T. , 124 S.W.3d 163, 165 (Tex. 2003). But the implicit ruling must be ascertainable from the record. Strunk v. Belt Line Rd. Realty Co. , 225 S.W.3d 91, 99 (Tex.App.—El Paso 2005, no pet.). The Texas Supreme Court has said that a ruling might be implied from the record when the implication is "clear." Seim v. Allstate Tex. Lloyds , 551 S.W.3d 161, 166 (Tex. 2018) (citing In re Z.L.T. , 124 S.W.3d at 165 )(finding where the trial court proceeded to trial without ruling on the request for a bench warrant, it was clear the trial court implicitly denied the request).

On the other hand, when a court rules on a motion without first addressing a party's objections to the evidence, the court's disposition on the objections is not as clear. See id. (observing an implied overruling of objections to summary judgment evidence could not be inferred where the trial court granted the summary judgment motion because granting the motion could just as easily be understood to mean the trial court did not find a fact issue).

Here, the trial court issued an order stating it considered the evidence submitted and sustained the special appearance. But App...