KF Franchising, Ltd. v. TASONE inc et al

Filing 22

MEMORANDUM OPINION AND ORDER granting 8 MOTION to Dismiss 1 Complaint for Lack of Personal Jurisdiction (Signed by Judge Sim Lake) Parties notified. (aboyd, 4)

United States District Court
Southern District of Texas

ENTERED

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION

KF FRANCHISING, LTD.,

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§
§
§

Plaintiff,
v.

TASONE INC., STEVE BOLES,
and RAZIJE ELEZ,
Defendants.

April 18, 2018
David J. Bradley, Clerk

CIVIL ACTION NO. H-17-3849

MEMORANDUM OPINION AND ORDER

Plaintiff,

KF Franchising,

action against defendants,
Elez

(collectively,

Defendants'

Ltd.

("Plaintiff"),

Tasone Inc.,

"Defendants").

brought this

Steve Boles,

and Razije

Pending before the court are

Motion to Dismiss for Lack of Personal Jurisdiction

("Motion to Dismiss")

(Docket Entry No. 8), Plaintiff's Response to

Defendants' Motion to Dismiss for Lack of Personal Jurisdiction and
Brief in Support

("Plaintiff's Response")

(Docket Entry No. 14),

and Defendants' Reply to Plaintiff's Response to Defendants' Motion
to Dismiss for Lack of Personal Jurisdiction ("Defendants' Reply")
(Docket Entry No. 17).

For the reasons stated below, Defendants'

Motion to Dismiss will be granted.
"A

court

sitting

in

jurisdiction only to the
applicable state law. '"
F.

App'x 338,

Peterson,

342

'may

extent permitted a
Dontos v.

(5th Cir.

117 F.3d 278,

diversity

281

2014)

exercise

personal

state court under

Vendomation NZ Limited,
(quoting Allred v.

(5th Cir.

1997),

cert.

582

Moore

denied,

&

118

S. Ct. 691 (1998)).

"In Texas, collateral estoppel precludes the

relitigation of any ultimate issue actually litigated and essential
to the judgment in the prior suit."

Deckert v. Wachovia Student

Financial Services, Inc., 963 F.2d 816, 819 (5th Cir. 1992)
Suber v. Ohio Medical Products,

811 S.W.2d 646,

652

(citing

(Tex. App.--

Houston [14th Dist.] 1991, writ requested)).
Plaintiff sued Defendants in a Texas state court for breach of
a franchise agreement, breach of a guaranty, violation of the Texas
Uniform Trade Secrets Act,

and unfair competition. 1

Defendants

filed a Verified Special Appearance seeking to dismiss the case for
lack of personal jurisdiction and a Motions to Dismiss for Lack of
Personal Jurisdiction. 2

Plaintiff filed a response to Defendants'

Motion to Dismiss for Lack of Personal Jurisdiction. 3
2017,

On March 31,

the Texas court granted Defendants' Motions to Dismiss for

Lack of Personal Jurisdiction. 4

The Texas court ordered that

1

See Plaintiff's Verified Original Petition and Application
for Permanent Injunction ("Original Petition"), Exhibit 1 to Motion
to Dismiss, Docket Entry No. 8-1, pp. 11-15.
2

See Defendants' Verified Special Appearances & Original
Answers, Exhibit 3 to Defendants' Reply, Docket Entry No. 17-1;
Defendants' Motions to Dismiss for Lack of Personal Jurisdiction &
First Supplemental Special Appearances, Exhibit 4 to Defendants'
Reply, Docket Entry No. 17-2.
3

See Plaintiff's Response to Defendants' Motions to Dismiss
for Lack of Personal Jurisdiction and First Supplemental Special
Appearances, Exhibit 5 to Defendants' Reply, Docket Entry No. 17-3.
4

0rder Granting Motions to Dismiss for Lack of Personal
Jurisdiction (Special Appearances) in the 215th Judicial District
Court of Harris County, Texas ("Texas Order"), Cause No. 2016-65698,
Exhibit 2 to Motion to Dismiss, Docket Entry No. 8-2, pp. 2-3.
-2-

with the sole exception of plaintiff's breach of contract
claims .
. all of plaintiff's claims, including KFF's
claims involving intellectual property, misappropriation,
trade secrets, infringement of trade marks or copyrights,
violations of the Texas Uniform Trade Secrets Act, unfair
competition,
competition,
breach
of
non-compete
agreements, holding over and continuing to operate, and
the
breach of
contract
claims
based upon
these
allegations,
are
dismissed
for
want
of
5
jurisdiction."
Instead of appealing the state court dismissal Plaintiff filed
the pending action in this court for (1)
Agreement-Covenant

Against

alleging

that

Defendants

"owning,

operating,

"Breach of the Franchise

Competition"
breached

accepting

the

against

all

Franchise

employment

by

Agreement

and/or

interest in a bakery" and by violating the covenant;
of the Lanham Act for copyright infringement;
of trade secrets;
defendant Tasone;
and Elez;
(7)

( 5)

( 4)

is

holding

by
an

(2) violations

misappropriation

breach of the franchise agreement against
breach of guaranty against defendants Boles

(5)

violation of the Texas Uniform Trade Secrets Act;

unfair competition;

Complaint

(3)

Defendants

based

on

and
the

(8)

same

attorneys'
facts

alleged

6

Plaintiff's

in

fees.

Plaintiff's

Verified Original Petition in state court.
Plaintiff argues that the state court dismissed Plaintiff's
claims

for

lack

jurisdiction,

of

subject

because

the

matter
Texas

jurisdiction,
court

held

not

that

it

personal
lacked

jurisdiction over Plaintiff's "claims" but "contained no rulings as

5

Id.

6

Plaintiff' s Verified Complaint

No. 1, pp. 11-28.
-3-

("Complaint") ,

Docket Entry

to

jurisdiction

over

the

Defendants'

person

or

property." 7

Plaintiff therefore argues that collateral estoppel does not bar
this action for lack of personal jurisdiction. 8
The court is not persuaded by Plaintiff's arguments.
clear

from

the

state

court

record

that

the

parties

litigated the question of personal

jurisdiction.

Texas

"personal"

court

did not

use

the

word

or

It is

actually

Although the
"in personam"

jurisdiction, the court granted "defendants' Motions to Dismiss for
Lack of Personal Jurisdiction (Special Appearances)" and concluded
that "defendants'

motions are meritorious." 3

Because the Texas

court

it

jurisdiction

held

Defendants,

that

did

not

have

personal

over

Plaintiff "cannot now seek to relitigate in federal

court the personal jurisdiction issue which was the basis of the
state court's order of dismissal."
Defendants'

Deckert,

963

F. 2d at

819.

Motion to Dismiss for Lack of Personal Jurisdiction

(Docket Entry No. 8) is therefore GRANTED, and this action will be
dismissed for lack of personal jurisdiction.
SIGNED at Houston, Texas, on this the 18th day of April, 2018.

LAKE
UNITED STATES DISTRICT JUDGE
7

Plaintiff's Response, Docket Entry No. 14, pp. 3-4.

8

Id.

9

Texas Order,
No. 8- 2 , p. 2 .

Exhibit 2 to Motion to Dismiss,
-4-

Docket Entry