Danielle Dawn Smalley Foundation, Inc. v. Elledge et al

Filing 17

Memorandum Opinion and Order denying 4 Motion to dismiss for lack of personal jurisdiction. (Ordered by Senior Judge A. Joe Fish on 9/17/2013) (ctf)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION

DANIELLE DAWN SMALLEY
FOUNDATION, INC.,
Plaintiff,
VS.
JULIE ELLEDGE, ET AL.,
Defendants.

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CIVIL ACTION NO.
3:12-CV-4721-G

MEMORANDUM OPINION AND ORDER
Before the court is the motion of the defendants Julie Elledge (“Elledge”) and
Story Quest Institute, Inc. (“Story Quest”) to dismiss the plaintiff’s claims against
them for lack of personal jurisdiction (docket entry 4). For the reasons set forth
below, the motion is denied.
I. BACKGROUND
In 2010, the plaintiff Smalley Foundation, Inc. (“Foundation”) began working
with BP America, Inc. (“BP”) to develop a youth safety program for students in East
Texas. Plaintiff’s Response to Defendants’ Motion to Dismiss for Lack of Personal
Jurisdiction and Brief in Support (“Response”) ¶ 3 (docket entry 10). In March

2011, a BP employee recommended that the Foundation contact Elledge as an
educational consultant to help develop the program’s curriculum and introduce it to
teachers. Id. ¶ 4. Over a series of telephone conversations and email exchanges, the
Foundation and Elledge discussed the educational program. Id. ¶ 5. In June 2011,
the Foundation hired Elledge as an educational consultant. Id. Elledge and
employees of her company, Story Quest, traveled to Texas several times to work with
the Foundation to develop the curriculum and present it at Texas teacher workshops.
Id. ¶¶ 6-9, 11-12. In September 2012, the Foundation learned of Elledge’s
involvement as a marriage therapist in a business called “Videos for Lovers,” which
distributes videos depicting explicit sexual activities and informed BP of its concerns.
Id. ¶ 13. Thereafter, BP terminated its relationship with the Foundation. Id.
The Foundation subsequently brought this action against Elledge and Story
Quest for breach of contract, tortious interference with contractual relations,
misrepresentation, and failure to disclose. The defendants move to dismiss the
Foundation’s claims against them for lack of personal jurisdiction. Defendants’
Motion to Dismiss for Lack of Personal Jurisdiction (“Motion”) at 1 (docket entry 4).
II. ANALYSIS
A. The Factual Standard: A Prima Facie Case
When a nonresident defendant moves to dismiss for lack of personal
jurisdiction, the plaintiff bears the burden of establishing the district court’s

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jurisdiction over the nonresident. Wilson v. Belin, 20 F.3d 644, 648 (5th Cir.), cert.
denied, 513 U.S. 930 (1994); Gardemal v. Westin Hotel Company, 186 F.3d 588, 592
(5th Cir. 1999). If the district court chooses to decide the matter without an
evidentiary hearing, the plaintiff may meet its burden by presenting a prima facie case
for personal jurisdiction. Wilson, 20 F.3d at 648; Gardemal, 186 F.3d at 592.
The court will take the allegations of the complaint as true, except where they
are controverted by opposing affidavits, and all conflicts in the facts are resolved in
favor of the plaintiff. Wilson, 20 F.3d at 648; Gardemal, 186 F.3d at 592. In making
its determination, the court may consider affidavits, interrogatories, depositions, oral
testimony, or any combination of recognized discovery methods. Allred v. Moore &
Peterson, 117 F.3d 278, 281(5th Cir. 1997), cert. denied, 522 U.S. 1048(1998);
Thompson v. Chrysler Motors Corporation, 755 F.2d 1162, 1165 (5th Cir. 1985).
B. The Legal Standard
A federal district court may exercise personal jurisdiction over a nonresident
defendant if (1) the long-arm statute of the forum state permits the exercise of
personal jurisdiction over the defendant; and (2) the exercise of such jurisdiction by
the forum state is consistent with due process under the United States Constitution.
Revell v. Lidov, 317 F.3d 467, 469 (5th Cir. 2002). A defendant is amenable to the
personal jurisdiction of a federal court sitting in diversity to the same extent that it
would be amenable to the jurisdiction of a state court in the same forum. Pedelahore v.

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Astropark, Inc., 745 F.2d 346, 347 (5th Cir. 1984). Applying state law, this court
must first determine whether Texas, the forum state, could assert long-arm
jurisdiction. Id. Because the Texas long-arm statute confers jurisdiction to the limits
of the federal constitution, Access Telecom, Inc. v. MCI Telecommunications Corporation,
197 F.3d 694, 716 (5th Cir. 1999), cert. denied, 531 U.S. 917 (2000); Hall v.
Helicopteros Nacionales de Colombia, S.A., 638 S.W.2d 870, 872 (Tex. 1982), rev’d on
other grounds, 466 U.S. 408 (1984), the court need only concern itself with the federal
due process inquiry. Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir. 1999); Wilson,
20 F.3d at 647 n.1; see also TEX. CIV. PRAC. & REM. CODE ANN. § 17.041, et seq.
(Vernon 1997) (Texas long-arm statute).
C. Due Process Requirements
1. Minimum Contacts
Due process requires the satisfaction of two elements to exercise personal
jurisdiction over a nonresident defendant: (1) the nonresident must have some
minimum contact with the forum that results from an affirmative act on its part such
that the nonresident defendant could anticipate being haled into the courts of the
forum state; and (2) it must be fair or reasonable to require the nonresident to defend
the suit in the forum state. Burger King Corporation v. Rudzewicz, 471 U.S. 462, 47478 (1985); Gulf Consolidated Services, Inc. v. Corinth Pipeworks, S.A., 898 F.2d 1071,
1073 (5th Cir.), cert. denied, 498 U.S. 900 (1990). The Due Process Clause ensures

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that persons have a “fair warning that a particular activity may subject [them] to the
jurisdiction of a foreign sovereign.” Burger King, 471 U.S. at 472 (quoting Shaffer v.
Heitner, 433 U.S. 186, 218 (1977) (Stevens, J., concurring)).
To establish minimum contacts with the forum, a nonresident defendant must
do some act by which it “purposefully avails itself of the privilege of conducting
activities within the forum State, thus invoking the benefits and protections of its
laws.” Burger King, 471 U.S. at 474-75 (quoting Hanson v. Denckla, 357 U.S. 235,
253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958)). However, the unilateral activity of one
asserting a relationship with the nonresident defendant does not satisfy this
requirement. Burger King, 471 U.S. at 474 (quoting Hanson, 357 U.S. at 253);
Helicopteros Nacionales, 466 U.S. at 417 (citing Kulko v. California Superior Court, 436
U.S. 84, 93-94 (1978); Hanson, 357 U.S. at 253). In determining whether the
exercise of jurisdiction is appropriate, the Supreme Court has focused less on presence
in the forum state as a means to establish jurisdiction and looked increasingly to
whether a defendant’s contacts with the forum state make it reasonable to require the
defendant to defend the particular suit in that forum. Quill Corporation v. North
Dakota, 504 U.S. 298, 307 (1992).
Two types of in personam jurisdiction may be exercised over a nonresident
defendant: specific jurisdiction and general jurisdiction. Specific jurisdiction exists if
the cause of action is related to, or arises out of, the defendant’s contacts with the

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forum state and those contacts meet the due process standard. J.R. Stripling v. Jordan
Production Company, LLC, 234 F.3d 863, 871 (5th Cir. 2000) (quotations and
citations omitted). “When a court exercises personal jurisdiction over a defendant
based on contacts with the forum related to the particular controversy, the court is
exercising ‘specific jurisdiction.’” Holt Oil & Gas Corporation v. Harvey, 801 F.2d 773,
777 (5th Cir. 1986) (citations omitted), cert. denied, 481 U.S. 1015 (1987). General
jurisdiction, on the other hand, may be found when the nonresident's contacts with
the forum are “continuous and systematic,” even though the claim is unrelated to
those contacts. Helicopteros Nacionales, 466 U.S. at 415-16.
Under either a specific or general jurisdiction analysis, however, “the
constitutional touchstone remains whether the defendant purposefully established
‘minimum contacts’ in the forum [s]tate.” Burger King, 471 U.S. at 474 (quoting
International Shoe Company v. Washington, 326 U.S. 310, 316 (1945)). The
“purposeful availment” requirement of the minimum contacts inquiry “ensures that a
defendant will not be haled into a jurisdiction solely as a result of ‘random,’
‘fortuitous,’ or ‘attenuated’ contacts . . . or of the ‘unilateral activity of another party
or a third person.’” Id. at 475 (citations omitted). A plaintiff must establish a
substantial connection between the nonresident defendant and the forum state. Jones
v. Petty-Ray Geophysical, Geosource, Inc., 954 F.2d 1061, 1068 n.9 (5th Cir.), cert.
denied, 506 U.S. 867 (1992); Bearry v. Beech Aircraft Corporation, 818 F.2d 370, 374

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(5th Cir. 1987) (citing Burger King, 471 U.S. at 475 n.18; McGee v. International Life
Insurance Company, 355 U.S. 220, 223 (1957)).
A court must consider all factors when making the purposeful availment
inquiry: “no single factor, particularly the number of contacts, is determinative.”
Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985). “[W]hether the minimum
contacts are sufficient to justify subjection of the non-resident to suit in the forum is
determined not on a mechanical and quantitative test, but rather under the particular
facts upon the quality and nature of the activity with relation to the forum state.”
Mississippi Interstate Express, Inc. v. Transpo, Inc., 681 F.2d 1003, 1006 (5th Cir. 1982);
see also Coats v. Penrod Drilling Corporation, 5 F.3d 877, 884 (5th Cir. 1993), cert.
denied, 510 U.S. 1195 (1994).
2. Fair Play and Substantial Justice
The due process inquiry limits the court’s power to exercise personal
jurisdiction over a nonresident if the exercise of jurisdiction under the circumstances
would offend “traditional notions of fair play and substantial justice.” International
Shoe, 326 U.S. at 316 (quoting Milliken v. Meyer, 311 U.S. 457, 463 (1940)). Once
the plaintiff establishes minimum contacts between the defendants and the forum
State, the burden of proof shifts to the defendants to show that the assertion of
jurisdiction is unfair and unreasonable. Wien Air Alaska, Inc. v. Brandt, 195 F.3d 208,
215 (5th Cir. 1999). To determine whether personal jurisdiction comports with fair

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play and substantial justice, the court must examine a number of factors, including:
(1) the defendants’ burden; (2) the forum state’s interests; (3) the plaintiff’s interest
in convenient and effective relief; (4) the interstate judicial system’s interest in
efficient resolution of controversies; and (5) the shared interests of the several states
in furthering fundamental substantive social policies. Asahi Metal Industry Co., Ltd. v.
Superior Court of California, 480 U.S. 102, 113 (1987). “[O]nce minimum contacts
are established, a defendant must present ‘a compelling case that the presence of
some consideration would render jurisdiction unreasonable.’” Enviro Petroleum, Inc. v.
Kondur Petroleum, 79 F.Supp.2d 720, 725 (S.D. Tex. 1999) (quoting Burger King, 471
U.S. at 477). In fact, “[o]nly 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. (quoting
Guardian Royal Exchange Assurance, Limited v. English China Clays, P.L.C., 815 S.W.2d
223, 231 (Tex. 1991)).
D. Application of the Personal Jurisdiction Standards
1. General Jurisdiction
The claims against Elledge and Story Quest in this case relate to their contact
with Texas, and the Foundation has not alleged that the defendants had continuous
and systematic contacts with Texas. Therefore, the court will not address the issue of
general jurisdiction.

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2. Specific Jurisdiction
To exercise personal jurisdiction over Elledge and Story Quest, the court must
conclude that (1) the movants have established minimum contacts with the state of
Texas, (2) the plaintiff’s cause of action is related to those contacts, and (3) the
exercise of jurisdiction is consistent with traditional notions of fair play and
substantial justice. Luv N’ care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 469 (5th Cir.),
cert. denied, 548 U.S. 904 (2006).
a. Personal Jurisdiction Over Elledge
There is a significant connection between Elledge, Texas, and the Foundation’s
claims that permits the exercise of specific jurisdiction in this case. The Foundation
contends that Elledge negotiated with and entered into a contract with a Texas
corporation, understanding that she would be required to develop educational
materials for the plaintiff and “would be required to travel to Gregg County [, Texas]
to help develop the program and introduce it to the teachers.” Response ¶ 5. In
accordance with this contract, Elledge traveled to Texas to attend a teacher workshop
and also visited the Foundation’s offices in Texas to further discuss the program’s
development. Id. ¶ 6. Subsequently, Elledge entered into another agreement with the
Foundation and BP America, two Texas-based entities, to further develop an
educational curriculum in line with Texas scholastic standards. Id. ¶¶ 7, 19. As part
of this second agreement, Elledge traveled to Texas four more times either to discuss

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the development of the program’s curriculum with Foundation employees or to
present that curriculum to Texas teachers. Id. ¶¶ 9, 11-12. Elledge’s multiple visits to
Texas for the educational conferences and curriculum development meetings, as part
of her ongoing business relationship with two Texas-based companies, are sufficient
to establish minimum contacts. The defendant’s contacts with Texas were not
“random,” “fortuitous,” or “attenuated.” Burger King, 471 U.S. at 480. Accordingly,
the plaintiff has met the first prong of the specific jurisdiction test.
The second prong of the specific jurisdiction test requires that the plaintiff’s
claims be related to Elledge’s contacts with the plaintiff. In the present case, the
plaintiff’s suit clearly arose out of Elledge’s work for the Foundation as an educational
curriculum consultant. See Response ¶ 13. Consequently, the second prong of the
test is satisfied.
Finally, the court must find that it would be fair to exercise jurisdiction over
Elledge. In the case sub judice, Elledge’s interactions with the Foundation while
developing the curriculum and her multiple business trips to Texas gave Elledge fair
warning that she could be haled into court in Texas. See Burger King, 471 U.S. at
472-73. The defendant maintains that litigating as a nonresident places a substantial
burden on her time and finances. Motion ¶ 16. This claim is mitigated by the fact
that the defendants have already have retained local counsel to represent them. See,
e.g., Examination Management Services, Inc. v. Partners for Insurance, L.L.C., 2005 WL

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280323, at *5 (N.D. Tex. 2005). The Supreme Court has stated that “because
‘modern transportation and communications have made it much less burdensome for
a party sued to defend himself in a state where he engages in economic activity,’ it
usually will not be unfair to subject him to the burdens of litigation in another forum
for disputes relating to such activity.” Burger King, 471 U.S. at 474. Also, contrary to
the defendant’s claim the State of Texas has a substantial interest in regulating the
manner in which nonresidents contract with Texas corporations. See id. at 473 (“[a]
State generally has a ‘manifest interest’ in providing its residents with a convenient
forum for redressing injuries inflicted by out-of-state actors”).
The plaintiff is a Texas corporation, located in Kaufman County, Texas.
Response ¶ 1. Therefore, Texas has an interest in the outcome of this litigation.
Additionally, providing a local forum for the resolution of disputes such as the one
before this court certainly comports with “fair play and substantial justice.” The
assertion of personal jurisdiction by this court is fairly and safely within the limits
imposed by due process. Therefore, the court concludes that it has personal
jurisdiction over Elledge.
b. Personal Jurisdiction Over Story Quest
A significant connection also exists between Story Quest, Texas, and the
Foundation. In June 2011, the Foundation, BP, and Elledge entered into an
agreement where BP would pay for Elledge’s consulting services while she continued

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to work with the foundation to develop the curriculum for Texas schools. Response
¶ 7. In July 2011, Elledge incorporated Story Quest, which worked on writing the
program curriculum. Id. ¶ 8. In August 2011, Elledge returned to Texas with three
Story Quest contract employees to participate in a teacher workshop where she
distributed the materials developed by Story Quest and bearing the company’s logo.
Id. ¶ 9. Story Quest featured pictures of the Texas teacher workshop on its company
website. Id. In 2012, Elledge, as the head of Story Quest, twice visited Texas to meet
with the Foundation and discuss the educational program. Id. ¶ 11. In August 2012,
Elledge and other Story Quest employees visited Texas again to help the Foundation
implement the safety education program in Gregg County, Texas. Id. ¶ 12. Although
the defendants created and worked on much of the curriculum in Wyoming, meetings
with the Foundation regarding the program all occurred in Texas, as did the program
rollout and presentation to Texas teachers. See id. ¶¶ 9, 11-12. All of the defendant’s
activities in Texas, taken together, establish that it should have reasonably anticipated
being haled into court in Texas. Burger King, 471 U.S. at 474-75.
Story Quest urges that it would offend traditional notions of fair play and
substantial justice to subject it to litigation in Texas. Motion ¶ 16. In Burger King,
the Supreme Court stated that “with respect to interstate contractual obligations, we
have emphasized that parties who ‘reach out beyond one state and create continuing

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relationships and obligations with citizens of another state’ are subject to regulation
and sanctions in the other State for the consequences of their activities.” Id. at 473.
Turning now to the factors articulated in Asahi previously articulated, the court
concludes that the burden on the defendants is minimal. See Asahi, 480 U.S. at 113.
Elledge, as the head of Story Quest, and several contract employees have already
traveled to Texas on multiple occasions to present their curriculum to Texas teacher
workshops. Response ¶¶ 9, 11-12. Also, Story Quest, like Elledge, has retained local
counsel to represent it in this case. See Notice of Appearance (docket entry 7).
Second, Texas has an interest in “providing its residents with a convenient
forum for redressing injuries inflicted by out-of-state actors.” Burger King, 471 U.S. at
473. The plaintiff is a Texas corporation, and providing a local forum for the
resolution of disputes such as the one before this court certainly comports with “fair
play and substantial justice.” The assertion of personal jurisdiction by this court is
fair and safely within the limits imposed by due process.
Accordingly, the court concludes that the plaintiff has met the burden of
establishing specific personal jurisdiction over Elledge and Story Quest.
III. CONCLUSION
For the reasons stated above, the defendants’ motion to dismiss for lack of
personal jurisdiction is DENIED.

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SO ORDERED.

September 17, 2013.

___________________________________
A. JOE FISH
Senior United States District Judge

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