Opinion
No. 14-00-00671-CV
Affirmed and Opinion filed April 26, 2001.
On Appeal from the 80th District Court, Harris County, Texas, Trial Court Cause No. 99-53326
Panel consists of Justices ANDERSON, FOWLER, and EDELMAN.
OPINION
This is an appeal of the trial court's order granting defendant Sue Luster's special appearance. In the underlying suit, appellants, all students at the Houston campus of Computer Learning Centers, Inc. ("CLC"), constitute a class of plaintiffs suing CLC and Sue Luster, its director in charge of advertising, for violations of the Texas Deceptive Trade Practices Act, negligent misrepresentation, and common law fraud. As to Ms. Luster, appellants allege that, by approving misleading company advertising, she misrepresented to potential students the adequacy of education provided at the Houston campus and misrepresented the computer capabilities of the Houston campus.
In addition to Sue Luster, appellants' suit originally included the following officers: Reid Bechtle, Charles Cosgrove, Ira Cohen, Stephen Reynolds, Harry Gaines, John Corse, Ralph Clark and Mark Nasser. At oral argument, counsel for appellants informed us that appellants wish to pursue an appeal from the trial court's dismissal of Sue Luster, but not as to any of the other individual defendants.
Luster neither resides, nor does business in Texas. Consequently, she filed a special appearance which the trial court granted, dismissing Luster from the suit. Appellants complain that the trial court erred in granting Luster's special appearance. We affirm.
At oral argument, counsel for appellants conceded the following:
Appellants no longer argue that Luster waived her special appearance by filing a motion to quash discovery;
No issues for review, other than whether the trial court erred in granting the special appearance as to Luster, are now pending before this court.
FACTUAL BACKGROUND
Sue Luster serves as vice president and chief operating officer of CLC. In connection with these positions, she is in charge of all media and audio advertising for the corporation. Appellants, who are all students of the Houston campus of CLC, in addition to suing CLC, sued Luster individually. On appeal they claim that she approved misleading advertisements for CLC.
DISCUSSION AND HOLDINGS JURISDICTION IN TEXAS A. Standard of Review
On an appeal from a special appearance, an appellate court reviews all evidence in the record to determine if the nonresident defendant negated all possible grounds for personal jurisdiction. Kawasaki Steel Corp. v. Middleton, 699 S.W.2d 199, 203 (Tex. 1985); Abacan Tech. Servs. Ltd. v. Global Marine Int'l Servs. Corp., 994 S.W.2d 839, 843 (Tex.App.-Houston [1st Dist.] 1999, no pet.). The existence of personal jurisdiction is a question of law. Cartlidge v. Hernandez, 9 S.W.3d 341, 346 (Tex.App.-Houston [14th Dist.] 2000, no pet.). We find no case in which the Texas Supreme Court has expressed the appropriate standard of review for a decision on a special appearance. Texas appellate courts, however, generally have reviewed the trial courts's challenged findings of fact in a special appearance for sufficiency of the evidence, while reviewing the trial courts's conclusions of law under a de novo standard of review.
See, e.g., Hotel Partners v. KPMG Peat Marwick, 847 S.W.2d 630, 632 (Tex.App.-Dallas 1993, writ denied); Cartlidge, 9 S.W.3d at 346; C-Loc Retention Sys., Inc. v. Hendrix, 993 S.W.2d 473, 476 (Tex.App.-Houston [14th Dist.] 1999, no pet.); Conner v. ContiCarriers and Terminals, Inc., 944 S.W.2d 405, 411 (Tex.App.-Houston [14th Dist.] 1997, no writ); Linton v. Airbus Industrie, 934 S.W.2d 754, 757 (Tex.App.-Houston [14th Dist.] 1996, writ denied).
In this case, although requested to do so by the appellants, the trial court made no findings of fact or conclusions of law. Neither party assigned error to the trial court's failure to do so. All questions of fact are therefore presumed to have been found in support of the judgment, and we must affirm the judgment on any legal theory supported by the pleadings and the evidence. IKB Indus. (Nigeria) Ltd. v. Pro-Line Corp., 938 S.W.2d 440, 445 (Tex. 1997).
B. The Texas Long-Arm Statute
A Texas court may exercise jurisdiction over a nonresident where (1) the Texas long-arm statute authorizes the exercise of jurisdiction; and (2) the exercise of jurisdiction is compatible with federal and state constitutional guarantees. Schlobohm v. Schapiro, 784 S.W.2d 355, 356 (Tex. 1990); Shearson Lehman Bros., Inc., v. Hughes, Hubbard Reed, 902 S.W.2d 60, 63 (Tex.App.-Houston [1st Dist.] 1995, writ denied).
The Texas long-arm statute provides that, "[i]n addition to other acts that may constitute doing business, a nonresident does business in this state if the nonresident . . . commits a tort in whole or in part in this state. . . ." Tex. Civ. Prac. Rem. Code Ann. § 17.0421 (Vernon 1997). The broad language of the Texas long-arm statute's "doing business" requirement has been construed to reach as far as the federal constitution allows. Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex. 1991). Accordingly, to determine whether a Texas state court may exercise jurisdiction over a nonresident, we look to federal due process requirements. Id.
Federal due process requirements limit a state's power to assert personal jurisdiction over nonresident defendants. Helicopteros Nacionales de Colombia v. Hall, 466 U.S. 408, 413-14, 104 S.Ct. 1868, 1871-72, 80 L.Ed.2d 404 (1984). In a state court's exercise of personal jurisdiction, it determines whether due process is satisfied by deciding (1) whether the nonresident defendant has purposely established minimum contacts with the forum state; and (2) if so, whether the exercise of jurisdiction comports with traditional notions of "fair play and substantial justice." Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475-76, 105 S.Ct. 2174, 2183-84, 85 L.Ed.2d 528 (1985).
In essence, the minimum contacts analysis turns on a determination of whether the nonresident defendant "purposely availed" herself of the privilege of doing business in a forum, which in turn invokes the benefits and protections of its laws. Guardian Royal, 815 S.W.2d at 226. The "purposeful availment" requirement ensures that a nonresident defendant cannot be haled into a jurisdiction for merely random, attenuated, or fortuitous contacts, or for the unilateral act of another party or other person. Id.
There are two types of jurisdiction: general and specific. Schlobohm v. Schapiro, 784 S.W.2d 355, 358 (Tex. 1990). Appellants allege that Texas can exercise only specific jurisdiction over Luster; they do not allege that Texas has general jurisdiction over Luster. For a court to exercise specific jurisdiction over a nonresident defendant, the cause of action must arise out of, or relate to, the nonresident defendant's contact with the forum state. Guardian Royal, 815 S.W.2d at 227. Otherwise, the minimum contacts' requirement is left unsatisfied. Id. "When specific jurisdiction is asserted, the minimum contacts analysis focuses on the relationship among the defendant, the forum and the litigation." Id. at 228. Thus, ultimately, the question before us is whether appellant's claims arose out of contacts that Luster purposefully directed toward this State.
Appellants allege that the trial court erred in sustaining Luster's special appearance because it failed to consider evidence that a tort occurred in Texas. Since no findings of fact were filed, we assume that the trial court made all findings of fact necessary to support the judgment — in this case, that Luster did not commit a tort in whole or in part in the State of Texas. See Garner v. Furmanite Australia Pty., Ltd., 966 S.W.2d 798, 803 (Tex.App.-Houston [1st Dist.] 1998, pet. denied). Therefore, after we review all the evidence, we then may reverse the trial court's decision only if its ruling is so against the great weight and preponderance of the evidence as to be manifestly erroneous or unjust. In re King's Estate, 150 Tex. 662, 244 S.W.2d 660, 661 (1951); Cartlidge, 9 S.W.3d at 346; Runnells v. Firestone, 746 S.W.2d 845, 849 (Tex.App.-Houston [14th Dist.] 1988), writ denied per curium, 760 S.W.2d 240 (Tex. 1988).
Luster is a resident of Virginia. She does not own property in Texas, nor maintain a place of business in Texas. She is vice president, and chief operating officer of CLC, a Delaware Corporation with its principal place of business in Fairfax, Virginia. Her duties in CLC include overseeing all media and audio advertising, including advertising that reached appellants.
Appellants claim that advertising, approved by Luster, misrepresented the quality of the education offered by CLC and misrepresented the characteristics and qualities of the CLC Houston staff, as well as its facilities and computers. However, we do not have the advertising in our record. Moreover, in the record, advertising is mentioned only twice. One is found in appellants' live pleading, which alleges misleading advertising. The other is found in Luster's interrogatory response that she is responsible for all video and audio media. In her special appearance, Luster stated that she never made any representations to any of the appellants, and never committed any tort outside of the State of Texas which had its effects felt in the State of Texas. Additionally, at the special appearance hearing, the court asked appellants what Luster did in an individual capacity to confer Texas jurisdiction on her. Appellants replied "[In h]er individual capacity [as] such, I can't sit here and look the Court in the eye with any candor and say[.] I don't know of anything individually."
In the record, this is punctuated with a comma, rather than a period. After reading this sentence in its context, it appears that, in order for the sentence to make sense, the punctuation should have been a period.
Appellants assert that, by approving these advertisements, Luster made misrepresentations on behalf of CLC and is therefore subject to jurisdiction in Texas in her individual capacity. The case law does not support this proposition. Generally, jurisdiction over an individual cannot be based on jurisdiction over a corporation unless the corporation is the alter ego of the individual. Clark v. Noyes, 871 S.W.2d 508, 518 (Tex.App.-Dallas 1994, no writ); MacMorran v. Wood, 960 S.W.2d 891, 898 (Tex.App.-El Paso 1997, writ denied); Vosko v. Chase Manhattan Bank, N.A., 909 S.W.2d 95, 99 (Tex.App.-Houston [14th Dist.] 1995, writ denied). Here, appellants made no allegations that CLC is the alter ego of Luster. Thus, the fact that CLC has a Houston campus and Luster, in her capacity as vice president and CEO of CLC, approved advertising that reached appellants, does not provide any basis for specific jurisdiction in the State of Texas over Luster. See MacMorran, 960 S.W.2d at 898.
In response to this line of cases, appellants direct us to Weitzel v. Barnes in support of their argument that Luster could be held individually liable under the Texas Deceptive Trade Practices Act for making misrepresentations to a consumer, and should accordingly be subject to jurisdiction in Texas. 691 S.W.2d 598, 601 (Tex. 1985). In Weitzel, the supreme court held that under the Texas DTPA, "there can be individual liability on the part of a corporate agent for misrepresentations made by [her]." Id.; see Dominguez v. Brackey Enterprises, Inc., 756 S.W.2d 788, 793 (Tex.App.-El Paso 1988, writ denied). But see Commercial Escrow Co. v. Rockport Rebel, Inc., 778 S.W.2d 532, 541 (Tex.App.-Corpus Christi 1989, writ denied) (holding that because a corporate agent personally and knowingly participated in the corporate wrongdoing, he should be held personally liable under the Texas DTPA). Weitzel is not the controlling authority here. It only addresses the circumstances in which an employee of a corporation may be held liable, not the court which has jurisdiction over the employee to determine that liability. 691 S.W.2d 598. Therefore, when determining where a plaintiff may sue an employee and not violate due process concerns, we must turn instead to those cases that outline when an out of state individual may be sued in Texas. Those cases hold that, absent evidence that the individual was the alter ego of the corporation, Texas cannot assert jurisdiction over an individual who merely acts as the agent of the corporation. Vosko, 909 S.W.2d at 99; Cadle v. Graubart, 990 S.W.2d 469, 472 (Tex.App.-Beaumont 1999, no writ); MacMorran, 960 S.W.2d at 898.
With respect to holding an individual corporate agent liable for actions he or she took on behalf of the corporation, Weitzel is somewhat of a departure from non-DTPA cases which hold that an agent of a corporation can be held liable in his or her individual capacity only when they knowingly participate in a tortious or fraudulent act on behalf of the company. Compare Weitzel, 691 S.W.2d at 601 (holding an individual liable under the DTPA for misrepresentations without requiring such misrepresentations to be made knowingly) with Grierson v. Parker Energy Partners, 737 S.W.2d 375, 377 (Tex.App.-Houston [14th Dist.] 1987, no writ) (holding a corporate agent who knowingly participates in tortious or fraudulent acts individually liable to a third party, though the corporate agent performed the act as an agent of the company). In the instant case, as appellees conceded at oral argument, nothing in the record reflects that Luster had any knowledge that any advertisements (which are not in the record) that she approved misrepresented facts about the Houston CLC campus. Furthermore, none of these advertisements appear in the record.
After reviewing the record in its entirety, we find that the court's implied finding that it had no personal jurisdiction over Luster was not against the great weight and preponderance of the evidence. Accordingly, we affirm the trial court's decision to grant Luster's special appearance.