W. Techs., Inc. v. Omnivations Ii, L.L.C.

583 S.W.3d 786

WESTERN TECHNOLOGIES, INC., an Arizona Corporation, Appellant,

v.OMNIVATIONS II, L.L.C., a Texas Limited Liability Company, Appellee.

No. 08-17-00232-CV

Court of Appeals of Texas, El Paso.

April 5, 2019

Hon. Robert L. Blumenfeld, 1013 Montana Ave., El Paso, TX 79902, for Appellant.

Hon. Troy Brown, Mendel Blumenfeld PLLC, 5809 Acacia Circle, El Paso, TX 79912, for Appellee.

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

OPINION

YVONNE T. RODRIGUEZ, Justice Western Technologies, Inc. (WTI) appeals the trial court’s denial of its special appearance requesting dismissal for lack of personal jurisdiction. We will affirm.

BACKGROUND

WTI is an Arizona corporation headquartered in Phoenix that provides clients with engineering and consulting services. WTI states that its service area encompasses only the states of Arizona, Nevada, Utah, Colorado, and New Mexico, and the company asserts that it has no business activity, operations, presence, personnel, or registered agents located in Texas.

In January 2015, WTI and Omnivations II, L.L.C., (OMNI) entered into a contract under which OMNI would provide WTI with GPS tracking services for WTI’s vehicle fleet (the Service Contract). The Service Contract stated that the parties' agreement would be governed by Arizona law and that disputes arising under the contract must be brought "in a court of competent jurisdiction in Maricopa County, Arizona." The Service Contract also stated that the contract’s terms "may not be varied, modified, or changed except by written agreement of both parties executed by a corporate officer of each party." The Service Contract was signed in Phoenix, and lasted for a period of one year, but would continue on a month-to-month basis unless there was a written termination notice. At the time the Service Contract was signed, OMNI was an Arizona-based company. However, OMNI later moved its operations to El Paso, Texas. OMNI invoices showed that OMNI charged WTI for tracking WTI vehicles in Phoenix; Tucson, Arizona; Las Vegas, Nevada; Salt Lake City, Utah; Albuquerque, New Mexico; and Farmington, New Mexico. OMNI’s invoicing operations occurred from El Paso.

In March 2016, WTI representative John Lyon, OMNI manager John Warren, and others participated in a telephone conference call. During the call, Lyons asked if OMNI could provide custom software development services for WTI. What happened thereafter is a matter of dispute. According to OMNI, Lyon and Warren verbally agreed that OMNI would provide software development at a seventy-five percent discounted rate ($ 2,500 as opposed to $ 10,000) in exchange for WTI entering into a two-year subscription for continued GPS tracking services.

Following these discussions, in June 2016, OMNI circulated a document entitled Subscription and Services Agreement (the Draft Subscriber Agreement). The Draft Subscriber Agreement’s terms and conditions contained a choice-of-law and forum selection clause providing that the Agreement would be governed by and construed in accordance with Texas law, that the parties agreed to submit to the jurisdiction of the State of Texas, and that any and all disputes arising from or in connection to the agreement would be brought in the state or federal courts of El Paso County, Texas. Section 1.2 of the agreement dealing with methods of acceptance provided, in relevant part:

Placement of a purchase order by the Customer, whether in writing, on the internet, or by e-mail shall mean acceptance of these Terms that are deemed incorporated in any purchase order and shall form the contract between the parties. Digital signature by Customer shall be proof of agreement.

There is no signed version of the Draft Subscriber Agreement appearing in the record.

An invoice in the record indicates that on July 6, 2016, WTI paid $ 2,500 for development services. On July 28, 2016, Lyons requested an addendum to the agreement. On August 1, Warren sent Lyons an email confirming that OMNI would provide an addendum with the following terms: (1) a description of the development work; (2) the cost of the development ($ 2,500); and (3) the pricing per unit at the rate of $ 19.95.

In May 2017, WTI stopped paying for OMNI’s services. On June 2, 2017, WTI requested that OMNI terminate its services.

Procedural History

OMNI sued WTI for contract-related claims in an El Paso district court. WTI filed a special appearance challenging the El Paso district court’s jurisdiction.

The trial court held a hearing at which Warren testified for OMNI. WTI did not present any witnesses of its own, but it briefly cross-examined Warren on whether a digitally signed version of the Draft Subscriber Agreement existed. Warren testified that he did not know, but that he did not have a signed copy available.

WTI argued that absent a digitally signed copy of the Draft Subscriber Agreement, OMNI could not prove the existence of an enforceable contact containing a forum selection clause. The trial court denied WTI’s special appearance, finding among other things that WTI had accepted the terms of the proposed contract containing the forum selection clause by placing a purchase order for the software development, that the requested addendum did not change the terms of the agreement but merely supplemented it, and that OMNI and WTI performed pursuant to the terms of the agreement.

This interlocutory appeal followed. See TEX.CIV.PRAC.&REM.CODE ANN. § 51.014(a)(7).

DISCUSSION

In four issues, WTI contends that the trial court erred by not granting a special appearance.¹ OMNI counters that the trial court correctly concluded that WTI accepted the terms of an agreement containing a Texas-designated forum selection clause, which waives any objection to personal jurisdiction.

Standard of Review

"[A] court must have both subject matter jurisdiction over the controversy and personal jurisdiction over the parties" before it may exercise its power over a legal dispute. Spir Star AG v. Kimich , 310 S.W.3d 868, 871 (Tex. 2010). "Subject matter jurisdiction involves a court's ‘power to hear a particular type of suit,’ while personal jurisdiction ‘concerns the court's power to bind a particular person or party.’ " TV Azteca v. Ruiz , 490 S.W.3d 29, 36 (Tex. 2016). This case deals with the trial court's ability to exercise personal jurisdiction. A state court may exercise personal jurisdiction over a non-resident defendant so long as that state’s long-arm statute permits it, and so long as the jurisdictional exercise is consistent with the due process limitations imposed on state courts by the federal constitution. Id. Because the Texas long-arm statute allows state courts to exercise personal jurisdiction over nonresident tortfeasors to the fullest extent permitted by the federal constitution, our jurisdictional analysis rises and falls entirely in tandem with federal due process case law, which we will summarize later in this opinion. Id. ; see also TEX.CIV.PRAC.&REM.CODE ANN. § 17.042 (Texas long-arm statute).

A party may challenge personal jurisdiction by filing a special appearance. See TEX.R.CIV.P. 120a. We review the trial court’s decision on a special appearance under a mixed standard, deferring to the trial court’s resolution of contested facts so long as the court’s findings are supported by legally and factually sufficient evidence, and reviewing the trial court’s application of those facts to the law de novo. Epicous Adventure Travel, L.L.C. v. Tateossian, Inc., No. 08-18-00057-CV, 573 S.W.3d 375, 381–82, 2019 WL 926278, at *3 (Tex.App.—El Paso Feb. 26, 2019, no pet. h.).

The plaintiff and the defendant "bear shifting burdens of proof in a challenge to personal jurisdiction." Kelly v. Gen. Interior Constr., Inc. , 301 S.W.3d 653, 658 (Tex. 2010). "[T]he plaintiff bears the initial burden to plead sufficient allegations to bring the nonresident defendant within the reach of Texas's long-arm statute." Id. Once the plaintiff satisfies this initial burden, the defendant challenging jurisdiction "bears the burden to negate all bases of personal jurisdiction" and must tie its jurisdictional arguments "to the allegations in the plaintiff's pleading." Id. The defendant can challenge personal jurisdiction "on either a factual or legal basis." Id. at 658-59. "Factually, the defendant can present evidence that it has no contacts with Texas, effectively disproving the plaintiff's allegations." Id. at 659. "Legally, the defendant can show that even if the plaintiff's alleged facts are 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.

Analysis

The exercise of personal jurisdiction is constitutionally permissible "when the nonresident defendant has established minimum contacts with the forum state, and the exercise of jurisdiction comports with traditional notions of fair play and substantial justice." [Internal citation and quotation marks omitted]. Moki Mac River Expeditions v. Drugg , 221 S.W.3d 569, 579 (Tex. 2007). There are two types of personal jurisdiction: general and specific. We recently summarized the difference between general and specific jurisdiction this way:

1. If a corporate defendant is incorporated or headquartered in Texas , Texas state courts have general jurisdiction over the defendant. The courts may hale the defendant to answer any claim brought by any plaintiff—even where the claims involve actions occurring outside the forum of Texas, and even where the plaintiff is not a Texas resident.

2. If a corporate defendant is not incorporated or headquartered in Texas, Texas state courts may only exercise specific jurisdiction over the out-of-state defendant if the defendant's actions are sufficiently related to Texas so as to subject the defendant to specific

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