Opinion
No. 05-18-00783-CV
06-19-2019
ROBERT B. SPURGEON, SR., Appellant v. EMPIRE PETROLEUM PARTNERS, LLC, Appellee
On Appeal from the 193rd Judicial District Court Dallas County, Texas
Trial Court Cause No. DC-17-07687
MEMORANDUM OPINION
Before Justices Myers, Osborne, and Nowell
Opinion by Justice Nowell
Appellant Robert Bruce Spurgeon, Sr. appeals the trial court's order denying his special appearance. See TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(7) (appeal from interlocutory order denying special appearance). Spurgeon argues the trial court erred by denying his special appearance because the fiduciary shield doctrine prevents attribution of his contacts with Texas that resulted solely from transacting his company's business in Texas, and appellee Empire Petroleum Partners, LLC (Empire) failed to establish an exception to the doctrine. We affirm the trial court's order.
FACTUAL BACKGROUND
Empire owns and operates convenience stores. Empire employed Robert Spurgeon, II (Rob) as its Director of Food Service Programs and Merchandise. In that capacity, Rob was responsible for purchasing printed materials such as signs, banners, name tags, and coupon books, as well as disposable goods such as beverage containers. Rob sourced many of these materials from Innovations in Print, Inc. (Innovations), a Florida corporation.
Rob is a defendant in the underlying lawsuit, but is not a party to this appeal.
Innovations is a defendant in the underlying lawsuit, but is not a party to this appeal.
Innovations is wholly owned and operated by Spurgeon and his wife. Spurgeon, a resident of Florida, is Rob's father. Spurgeon made six business trips to Texas between January 2016 and February 2017 on behalf of Innovations as part of its work with Empire. During these trips, Spurgeon and Rob discussed marketing materials Empire needed, and Spurgeon visited some of Empire's stores. On behalf of Innovations, Spurgeon rented warehouse space in The Colony and Fort Worth to store items his company sold to Empire; Spurgeon personally guaranteed the leases. During 2016 and 2017, Empire was Innovations's only customer outside of South Florida.
Haley Hess was an administrative assistant for Empire, and she worked with Rob almost daily. Hess knew Rob purchased materials from Innovations and she spoke to "Bruce with Innovations in Print" on the phone. However, "Bruce" never used his last name and Rob did not tell Hess that his father owned and operated Innovations. After Empire terminated Rob, Hess continued having frequent contact with "Bruce." She learned "Bruce" was Rob's father in April 2017. Likewise, Jeffrey Goodwin, Empire's Chief Operating Officer and Rob's former boss, did not know Rob purchased materials from his father's company until after Empire terminated Rob's employment. Had Goodwin known Rob's father owned Innovations, he would have terminated Rob's employment immediately.
Empire alleges that after terminating Rob's employment in November 2016, Empire discovered Rob's father owns and operates Innovations and Rob purchased printed materials and disposable goods from Innovations at inflated prices. Empire sued Spurgeon for fraud and conspiracy. It alleges that by purchasing goods from his father's company at inflated prices, Rob committed common-law actual or constructive fraud and Spurgeon knowingly participated in and reaped the benefits of that fraud. Additionally, Empire alleges Rob owed a fiduciary duty to Empire, his employer; Spurgeon knew Rob owed that duty; the men engaged in a conspiracy to breach Rob's fiduciary duty to Empire; and they "committed unlawful, overt acts in furtherance of the conspiracy" by concealing their relationship and pricing the goods sold to Empire above the prices at which goods of a like grade and quality could have been obtained through competitive purchasing.
The first amended petition asserts Spurgeon did business in Texas as that term is defined in section 17.042 of the civil practice and remedies code. Spurgeon filed a special appearance, which the trial court denied. This interlocutory appeal followed.
Section 17.042 states:
In addition to other acts that may constitute doing business, a nonresident does business in this state if the nonresident:TEX. CIV. PRAC. & REM. CODE ANN. § 17.042.
(1) contracts by mail or otherwise with a Texas resident and either party is to perform the contract in whole or in part in this state;
(2) commits a tort in whole or in part in this state; or
(3) recruits Texas residents, directly or through an intermediary located in this state, for employment inside or outside this state.
LAW & ANALYSIS
Texas courts have personal jurisdiction over a defendant when two criteria are satisfied: (1) the Texas long arm statute grants jurisdiction; and (2) the exercise of jurisdiction comports with federal and state constitutional guarantees of due process. Searcy v. Parex Res., Inc., 496 S.W.3d 58, 66 (Tex. 2016). The Texas long arm statute lists activities that constitute doing business in Texas, including committing a tort in whole or in part in the state. See TEX. CIV. PRAC. & REM. CODE ANN. § 17.042(2).
A defendant's contacts with a forum may give rise to either general or specific jurisdiction. KC Smash 01, LLC v. Gerdes, Hendrichson, Ltd., L.L.P., 384 S.W.3d 389, 392 (Tex. App.—Dallas 2012, no pet.); Nevada Nat'l Advert., Inc. v. Silverleaf Resorts, Inc., No. 05-16-00694-CV, 2017 WL 655949, at *2 (Tex. App.—Dallas Feb. 17, 2017, no pet.) (mem. op.). Empire does not argue general jurisdiction is available in this case; Empire only argues Spurgeon's contacts with Texas give rise to specific jurisdiction. Specific jurisdiction exists when the plaintiff's claims "arise out of" or are "related to" the defendant's contacts with the forum. Nevada Nat'l Advert., Inc., 2017 WL 655949, at *2.
The plaintiff bears the initial burden of pleading allegations to permit a court's exercise of personal jurisdiction over the nonresident defendant. Id. (citing Searcy, 496 S.W.3d at 66). Alleging the defendant committed torts in Texas satisfies the plaintiff's initial burden. See Lombardo v. Bhattacharyya, 437 S.W.3d 658, 679 (Tex. App.—Dallas 2014, pet. denied) (citing TEX. CIV. PRAC. & REM. CODE ANN. § 17.042). Once the plaintiff meets this burden, the defendant assumes the burden of negating all potential bases for personal jurisdiction that exist in the plaintiff's pleadings. Searcy, 496 S.W.3d at 66. The defendant can negate jurisdiction on either a factual or legal basis. See, e.g., Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 659 (Tex. 2010); Nevada Nat'l Advert., Inc., 2017 WL 655949, at *2. A defendant negates jurisdiction on a factual basis by presenting evidence to disprove the plaintiff's jurisdictional allegations. See Kelly, 301 S.W.3d at 659. A defendant negates jurisdiction on a legal basis by showing 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.
We review a trial court's ruling on a special appearance de novo. Searcy, 496 S.W.3d at 66. "When, as here, the trial court does not issue findings of fact and conclusions of law, we imply all relevant facts necessary to support the judgment that are supported by the evidence." Nevada Nat'l Advert., Inc., 2017 WL 655949, at *3 (quoting Moncrief Oil Int'l, Inc. v. OAO Gazprom, 414 S.W.3d 142, 150 (Tex. 2013)).
Empire's allegations that Spurgeon committed torts in Texas satisfied its initial burden to allege a cause of action sufficient to confer jurisdiction under the Texas long-arm statute. See Lombardo, 437 S.W.3d at 679; TEX. CIV. PRAC. & REM. CODE ANN. § 17.04(2). The burden then shifted to Spurgeon to negate all potential bases for personal jurisdiction in Empire's pleading. See Searcy, 496 S.W.3d at 66. Arguing he acted exclusively in his corporate capacity, Spurgeon relies on the fiduciary shield doctrine to meet his burden.
Spurgeon's brief lists three issues:
1. The trial court erred in denying Appellant's Special Appearance/Plea to the Personal Jurisdiction because the undisputed evidence showed that all of Appellant's contacts with Texas were in his capacity as a corporate agent of his company, Innovations in Print, Inc., and the fiduciary shield doctrine prevents the attribution to corporate agents of contacts with Texas resulting solely from transacting the corporate principal's business in the state.
2. The trial court erred in denying Appellant's Special Appearance/Plea to the Personal Jurisdiction because the Appellee failed to establish the tort exception to the fiduciary shield doctrine—specifically, Appellee failed to present evidence to show that it had a valid fraud or breach of fiduciary duty claim against Appellant.
3. The trial court erred in denying Appellant's Special Appearance/Plea to the Personal Jurisdiction because the Appellee failed to establish the piercing the corporate veil exception to the fiduciary shield doctrine—specifically, Appellee failed to present evidence to show that it had a valid piercing the corporate veil claim against Appellant.
However, in the argument portion of his brief, Spurgeon does not argue each issue individually. Rather, in a single argument, he argues that because fiduciary shield doctrine applies and Empire failed to show an exception to the doctrine, the trial court erred by denying his special appearance.
The general rule is that a corporate employee is not shielded from the exercise of specific jurisdiction as to torts for which the employee may be held individually liable. Nevada Nat'l Advert., Inc., 2017 WL 655949, at *9 (citing Stull v. LaPlant, 411 S.W.3d 129, 137 (Tex. App.—Dallas 2013, no pet.); Jani-King Franchising, Inc. v. Falco Franchising, S.A., No. 05-15-00335- CV, 2016 WL 2609314, at *2 (Tex. App.—Dallas May 5, 2016, no pet.) (mem. op.)). This is because a corporate officer is primarily liable for his own torts. Id. (citing Morris v. Powell, 150 S.W.3d 212, 221 (Tex. App.—San Antonio 2004, no pet.)). "There is no blanket protection from jurisdiction simply because a defendant's alleged acts were done in a corporate capacity." Id. (quoting SITQ E.U., Inc. v. Reata Rests., Inc., 111 S.W.3d 638, 651 (Tex. App.—Fort Worth 2003, pet. denied)). "Thus, a corporate officer is not protected from the exercise of specific jurisdiction, even if all his contacts were performed in a corporate capacity, if the officer engaged in tortious or fraudulent conduct directed at the forum state for which he may be held individually liable." Id. (quoting Tabacinic v. Frazier, 372 S.W.3d 658, 668-69 (Tex. App.—Dallas 2012, no pet.)). "A corporate officer may not escape liability where he had direct, personal participation in the wrongdoing, as to be the guiding spirit behind the wrongful conduct or the central figure in the challenged corporate activity." Id. (internal quotation marks omitted). Hence, the general rule in Texas that corporate agents are individually liable for fraudulent or tortious acts committed while in the service of the corporation. Id.
The record in this case shows Spurgeon, along with his wife, owns Innovations and benefits from its profits; Spurgeon operates Innovations from his home. He worked with his son to cause Empire to purchase large quantities of products from Innovations at inflated prices. He made contact with other Empire employees without revealing, and perhaps concealing, his identity. Spurgeon only provided his first name or introduced himself as "Bruce with Innovations in Print." He never used his last name, which would have revealed his connection to Rob. Had Empire been aware that Rob was purchasing large quantities of products from his father's company at higher prices than could have been had elsewhere, Rob would have been fired immediately. Spurgeon also executed rental agreements for storage space, which he personally guaranteed, to store the goods that were sold to Empire. As a result of Spurgeon's efforts, Innovations acquired its only customer outside of South Florida—Empire.
Implying all relevant facts necessary to support the trial court's order that are supported by the evidence, we conclude Empire alleged torts for which Spurgeon can be held individually liable assuming Empire successfully proves its allegations against him. "As we noted earlier, the fiduciary shield doctrine does not protect [Spurgeon] from the exercise of specific jurisdiction, even if all of his contacts with Texas were performed in a corporate capacity, if he 'engaged in tortious or fraudulent conduct, directed at the forum, for which he may be held personally liable.'" Nevada Nat'l Advert., Inc. 2017 WL 655949, at *11 (quoting Ennis v. Loiseau, 164 S.W.3d 698, 705 (Tex. App.—Austin 2005, no pet.)). Thus, the fiduciary shield doctrine will not protect Spurgeon from the exercise of specific jurisdiction in this case if personal jurisdiction is otherwise proper. See id. Spurgeon does not assert any challenge to the trial court's denial of his special appearance beyond the fiduciary shield doctrine.
Because Empire met its initial burden of pleading allegations sufficient to permit a court's exercise of personal jurisdiction over Spurgeon, but Spurgeon failed to meet his burden to negate all potential bases for personal jurisdiction in Empire's pleading, we conclude Spurgeon failed to show the trial court erred by denying his special appearance. We affirm the trial court's order.
/Erin A. Nowell/
ERIN A. NOWELL
JUSTICE 180783F.P05
JUDGMENT
On Appeal from the 193rd Judicial District Court, Dallas County, Texas
Trial Court Cause No. DC-17-07687.
Opinion delivered by Justice Nowell. Justices Myers and Osborne participating.
In accordance with this Court's opinion of this date, the trial court's order denying appellant Robert B. Spurgeon Sr.'s special appearance is AFFIRMED.
It is ORDERED that appellee Empire Petroleum Partners, LLC recover its costs of this appeal from appellant Robert B. Spurgeon, Sr. Judgment entered this 19th day of June 2019.