Cantex Energy Corporation v. World Stock Exchange LLC et al

Filing 17

ORDER DENYING 3 Motion to Dismiss. Signed by Judge Xavier Rodriguez. (rf)

Download PDF
In the United States District Court for the Western District of Texas CANTEX ENERGY CORP. Plaintiff, v. WORLD STOCK EXCHANGE, LLC; and BRETT REISS Defendants. Civ. No. SA-09-CA-0218-XR ORDER O n this date, the Court considered Defendants' Rule 12(b)(2) Motion to D is m is s under 28 U.S.C. 1406(a) and Rule 12(b)(1), 12(b)(2), and 12(b)(6) (d o c k e t no.3), Plaintiff's Response (docket no. 10), and Defendants' Reply (docket n o . 11). After careful consideration, the Court denies the motion. I . Factual Background 1 P la in t iff Cantex Energy Corp. ("Cantex") is an oil and gas exploration c o m p a n y organized under the laws of Nevada with its principal place of business in San Antonio, Texas. Compl. 7. In February 2007, Brett Reiss, an officer of D e fe n d a n t World Stock Exchange ("WSE"), contacted Trace Maurin, the P r e s id e n t of Cantex, by telephone at Cantex's office in San Antonio. Decl. of When ruling on a motion to dismiss for lack of personal jurisdiction without first holding an evidentiary hearing, a court takes as true the uncontroverted allegations in the complaint and resolves factual conflicts in the affidavits in favor of the plaintiff. Bullion v. Gillespie, 895 F.2d 213, 217 (5th Cir. 1990). The Court notes that Defendants have not submitted any affidavits or other evidence with their motion to dismiss or their reply. 1 T r a c e Maurin at 1, 3. This was a "cold call," and Maurin had never heard of W S E before. Id. at 3; Compl. 16. WSE is a Nevada LLC that has its p r in c ip a l place of business in Scottsdale, Arizona. Compl. 8; Reply at 2.2 Reiss r e p r e s e n te d that his company raised capital and investments for companies like C a n t e x . Decl. of Trace Maurin at 4. Maurin chose not to contract with WSE at th a t time. Id. Reiss telephoned Maurin at his San Antonio office "many more times"3 t h r o u g h o u t the first half of 2007, requesting that Cantex enter into an a g r e e m e n t with WSE. Id. at 5. In each call, Reiss promised that he could r a is e funds for investment in Cantex and "could get the share price of Cantex to r is e . " Id. In August 2007, in response to another telephone call from Reiss, M a u r in agreed that Cantex would hire Reiss and WSE. Id. at 6. Maurin states th a t he agreed to hire WSE based on Reiss's promises that WSE would help C a n te x raise new investments, introduce Cantex to wealthy investors, and would p e r fo r m other services to raise Cantex's share price. Id. at 6. M a u r in states that, relying on these promises, he caused Cantex to enter in to the first agreement with WSE on August 22, 2007. Id. at 7. Reiss and W S E drafted the one-page "Consulting Agreement" and emailed it to Maurin in Plaintiff's Complaint alleges that WSE is an LLC organized under Arizona law. However, WSE's Reply states that it is a Nevada LLC. Maurin does not specify the number of times in his affidavit; however, the Complaint alleges that it was ten to fifteen times. Compl. 17. 2 3 2 T e x a s . Id. at 7. Under the agreement, Reiss and WSE 4 would provide "certain c o n s u lt in g services" on a "non-exclusive, best-efforts basis" to Cantex, and C a n t e x would pay WSE a $5,000 non-refundable retainer plus 10% of the value o f any financing transaction. Id. at 8; Pl. Ex. A. WSE could elect to take 7% o f the 10% in restricted shares of Cantex stock issued in Reiss's name. Pl. Ex. A . The Consulting Agreement did not include a term or expiration date. O n August 24, 2007, Cantex signed a second one-page agreement for "IR s e r v ic e s ,"5 which was also drafted by Reiss and WSE and emailed to Maurin in T e x a s . Id. at 9. Reiss asserted that "IR services" warranted further c o m p e n s a t io n , and he promised that these services would raise Cantex's share p r ic e , introduce Cantex to wealthy investors interested in investing in Cantex, a n d provide additional business opportunities. Id. at 10. Under the terms of t h e "IR Agreement," WSE would provide "certain IR services," which were not d e fin e d , on a non-exclusive, best-efforts basis for a period of six months, and C a n t e x would pay WSE $259,200, consisting of six installments of $9,800 per m o n th and a lump sum payment of $200,400 in Cantex shares issued in the n a m e of Reiss or his designee. Id. at 11; Pl. Ex. B. Both agreements contained a "No Dispute" clause, which stated that "No dispute regarding this [Consulting o r IR] Agreement that is signed by both parties shall be enforced. CTXE u n d e r s ta n d s and agrees completely that WSE has and will provide the necessary The Consulting Agreement states both that WSE and Reiss will provide consulting services. 5 4 "IR" refers to investor relations. 3 s e r v ic e s to CTXE. Consequently, there will not be any disputes about this [ C o n s u lt in g or IR] Agreement in the future." Pl. Ex. A, B. Further, both a g r e e m e n t s contained a bold clause under the signature lines that stated, "Faxed t r a n sm is s io n of signature will be considered a legal and binding signature, and W S E will be entitled to any legal fees incurred resulting from the enforcing of t h e Agreement according to AZ law." Pl. Ex. A, B. I n November 2007, Reiss and WSE asked Cantex to enter into another "IR S e r v ic e s " Agreement, again promising to raise the share price, raise capital, and in t r o d u c e Cantex to investors. Decl. of Trace Maurin at 12. Cantex was h e s it a n t to enter another agreement because it had seen little, if any, work p ro d u ct by WSE. Id. Reiss urged Cantex to enter into the new Agreement b e c a u s e he alleged that a potential investor who was about to invest in Cantex " w a n t e d to know that there will be market support after any funding," although t h e alleged investor never invested money in Cantex, nor did Cantex receive in fo r m a tio n about the investor. Id. at 13. Reiss told Maurin that the terms o f the Agreement were identical to the prior agreement other than the monetary te r m s and duration. Id. at 14. Because Cantex was in a difficult financial p o s it io n , of which Reiss was aware, and because of Reiss's aforementioned p r o m is e s , Cantex entered the new deal. Id. at 12, 15. Reiss and WSE drafted th e third IR Agreement and emailed it to Maurin in Texas. Id. at 15. The IR A g r e e m e n t , dated November 19, 2007, was substantially similar to the prior a g r e e m e n t, except that the term of the new agreement was twelve months, the 4 p a y m e n t s to WSE and Reiss were larger, the deal was made contingent upon W S E getting an offer for funding for Cantex and Cantex accepting the offer, and th e faxed transmission clause under the signature lines was altered. Maurin w a s not informed and did not see that a portion of the faxed transmission clause w a s changed by Reiss and WSE. Id. at 17, 18. The new clause provided that " [f]a x e d transmission of signature will be considered a legal and binding s ig n a t u r e , and WSE will be entitled to any legal fees incurred resulting from the e n f o r c in g of this Agreement and will be litigated in AZ." Pl. Ex. C (emphasis a d d e d ). On February 11, 2008, Cantex and WSE entered into an " A d d e n d u m /A m e n d m e n t to Agreement" that removed the contingency clause fr o m the second IR Services Agreement. Decl. of Trace Maurin at 19. Maurin e n t e r e d this amendment only because Reiss claimed to have $250,000 "ready for h im to pull the trigger." Id. D u r in g the term of the Agreement, Maurin received numerous e-mail c o m m u n ic a tio n s from Reiss requesting monies he alleged were owed under the A g r e e m e n ts . Id. at 21. Reiss additionally requested money for personal e x p e n s e s . Id. at 24. Specifically, in March and April 2008, Reiss sent Maurin a t least seven emails requesting money so that he could pay his realtor and close o n his home. Id. at 25. Further, Reiss represented that he and WSE were p e r fo r m in g work on behalf of Cantex and that WSE was raising Cantex's share p r ic e , but Cantex never received any work product from WSE, never received a 5 s in g le investment in the company as a result of WSE, and never saw any a p p r e c ia b le rise in its share price. Id. at 21-23. However, Cantex paid WSE a n d Reiss $376,000 in cash and issued 8.65 million shares of Cantex stock to R e is s and his family members. Id. at 26. O n March 23, 2009, Cantex filed this lawsuit, alleging claims for fr a u d u le n t inducement, fraud, breach of contract, deceptive trade practices, and t o r tio u s interference with Cantex's prospective business relationships. S p e c ific a lly , Plaintiff brings a fraudulent inducement claim against both WSE a n d Reiss, alleging that they made misrepresentations to Cantex in Texas with t h e intent that Cantex rely on the misrepresentations. Plaintiff also brings a fr a u d claim against both WSE and Reiss, alleging that they made material m is r e p r e s e n t a tio n s about the services they were providing to Cantex, intending t h a t Cantex rely on the misrepresentations. Plaintiff asserts a claim for tortious in t e r fe r e n c e with prospective business relations against both WSE and Reiss, a lle g in g that their acts with regard to holding onto the Cantex shares and d isb u rs in g them to other parties prevents Cantex from entering into agreements w ith other potential investors. Against WSE alone, Plaintiff brings causes of action for breach of contract b a s e d on WSE's alleged failure to provide the contracted-for services and for D T P A violations. The DTPA violations are that WSE allegedly engaged in false, m is le a d in g , and deceptive practices as defined in 17.46, including representing t h a t its services have sponsorship, approval, characteristics, ingredients, uses, 6 b e n e fit s , or quantities that they do not have or that a person has a sponsorship, a p p r o v a l, status, affiliation, or connection that he does not have; representing t h a t its services are of a particular quality, standard, or grade if they are of a n o t h e r ; representing that work or services have been performed when they w e r e not; and failing to disclose information concerning services that was known a t the time of the transaction, and such failure was intended to induce Cantex in to a transaction that it would not otherwise have entered. D e fe n d a n t s filed the instant motion to dismiss, arguing that this Court la ck s personal jurisdiction over them and that there is a mandatory forum se lec tion clause setting venue in Arizona. Personal jurisdiction is typically d e c id e d in advance of venue,6 and the Court thus turns to that issue first. I I . Motion to Dismiss For Lack of Personal Jurisdiction A "federal court sitting in diversity may assert jurisdiction if (1) the state's lo n g -a rm statute applies, as interpreted by the state's courts; and (2) if due p r o c e ss is satisfied under the fourteenth amendment to the United States C o n s t it u t io n ." Johnson v. Multidata Systems Int'l Corp., 523 F.3d 602, 609 (5th C ir . 2008) (quoting Cycles, Ltd. v. W.J. Digby, Inc., 889 F.2d 612, 616 (5th Cir. 1 9 8 9 ) ). Texas's long-arm statute extends to the limits of federal due process; t h e r e fo r e , the two-step inquiry folds into one due process analysis. Due process r e q u ir e s the plaintiff to prove that 1) the non-resident purposely availed himself o f the benefits and protections of the forum state by establishing "minimum Leroy v. Great W. United Co., 443 U.S. 173, 180 (1979); Assetworks v. City of Cincinnati, Civ. A. No. SA:02-CV-351, 2003 WL 25463096 (W.D. Tex. Mar. 31, 2003). 7 6 c o n ta ct s " with the state; and 2) the exercise of the jurisdiction does not offend tr a d itio n a l notions of fair play and substantial justice. Wilson v. Belin, 20 F.3d 6 4 4 , 647 (5th Cir. 1994). T h e due process clause of the Fourteenth Amendment protects an in d ivid u a l's liberty interest in not being subject to the binding judgments of a f o r u m within which he has no meaningful "`contacts, ties, or relations.'" Burger K in g Corp. v. Rudzewicz, 471 U.S. 462, 472 (1985) (quoting Int'l Shoe Co. v. W a s h in g t o n , 326 U.S. 310, 319 (1945)). Minimum contacts with a state may a r is e incident to a federal court's general or specific jurisdiction over a n o n r e s id e n t defendant. Bullion v. Gillespie, 895 F.2d 213, 216 (5th Cir. 1990). I n a "no hearing situation, a plaintiff satisfies his burden by presenting a prima fa c ie case for personal jurisdiction." Id. Plaintiff does not contend that this Court has general jurisdiction over R e is s and WSE. However, it does contend that Texas courts have specific ju r is d ic tio n over both defendants. The Fifth Circuit has articulated a three-step a n a ly s is for the specific jurisdiction inquiry: "(1) whether the defendant has m in im u m contacts with the forum state, i.e., whether it purposely directed its a c t iv it ie s toward the forum state or purposefully availed itself of the privileges o f conducting activities there; (2) whether the plaintiff's cause of action arises o u t of or results from the defendant's forum-related contacts; and (3) whether t h e exercise of personal jurisdiction is fair and reasonable." See Nuovo Pignone, S p A v. STORMAN ASIA M/V, 310 F.3d 374, 378 (5th Cir. 2002). If the Plaintiff 8 s u c c e s s f u l ly satisfies the first two prongs, the burden shifts to the Defendants t o defeat jurisdiction by showing that its exercise would be unfair or u n r e a s o n a b le . Id. at 382. F u r th e r , the Fifth Circuit rather recently decided as an issue of first im p r e s s io n that specific personal jurisdiction is a claim-specific inquiry, holding t h a t "[a] plaintiff bringing multiple claims that arise out of different forum c o n ta c ts of the defendant must establish personal jurisdiction for each claim." S e ife r th v. Helicopteros Atuneros, Inc., 472 F.3d 266, 274 (5th Cir. 2006).7 A c c o rd i n g ly , in the absence of general personal jurisdiction, the Due Process C la u s e prohibits the exercise of jurisdiction over any claim that does not arise o u t of or result from the defendant's forum contacts. Id. at 275. This Court has previously applied Seiferth in a case involving claims for breach of contract and tort, concluding that Seiferth does not require a plaintiff to separately establish specific personal jurisdiction for each claim when all claims arise out of the same forum contacts, but rather that due process permits a court to assert jurisdiction over all related claims that arise out of a defendant's minimum contacts with the forum. Sutton v. Advanced Aquaculture Systems, Inc., Civ. A. No. SA-07-CA175-XR, 2007 WL 2220900 (W.D. Tex. 2007). Similarly, in Kapche v. Philip Seifert & Liberty Capitol, Civ. A. No. H-06-00083, 2007 WL 2915003 (S.D. Tex. Oct. 4, 2007), Judge Miller acknowledged Seiferth, but noted that specific jurisdiction for each claim did not need to be addressed separately because the actions giving rise to the claims of breach of contract, fraud, and negligent misrepresentation were "either the same or intertwined and also involve the same parties." Plaintiff in this case fails to differentiate among its five claims and never expressly mentions or discusses its breach-of-contract, DTPA, and tortious interference claims, apparently relying solely on the allegations supporting its fraud and fraudulent inducement claims to establish personal jurisdiction. As a result, Plaintiff fails to specify whether all its claims arise out of the same contacts or whether they arise from different contacts such that they must be analyzed separately. After reviewing the pleadings and evidence, the Court concludes that the claims generally arise out of the same forum contacts. However, in an abundance of caution and to ensure compliance with the Due Process Clause, the Court will analyze each claim separately. 9 7 A . Minimum Contacts and Specific Jurisdiction The first steps of the analysis ask whether the Defendants have minimum c o n t a c ts with Texas, and whether the Plaintiff's cause of action arises out of or r e s u lts from the Defendants' forum-related contacts. 1. Fraudulent Inducement (against WSE and Reiss) P la in t iff alleges that Defendants sent communications containing m is r e p r e s e n t a tio n s to the Plaintiff in Texas with the intent that Plaintiff rely on t h e m . Specifically, Plaintiff references ten to fifteen phone calls made by Reiss t o Cantex between February and August 2007, each of which contained fr a u d u l e n t promises and misrepresentations that Reiss and WSE intended that C a n t e x rely on, and which Cantex did rely on in entering the August 2007 C o n s u lt in g and IR Services Agreements. In addition, Plaintiff points to similar m is re p r e s e n t a t io n s , as well as a specific misrepresentation concerning a p o te n tia l investor, Mike Brette, that Reiss made in communications with Maurin in Texas, with the intent that Plaintiff rely, and on which it did rely in entering t h e November 2007 IR Services Agreement. T h e Fifth Circuit has held that "[w]hen the actual content of c o m m u n ic a tio n s with a forum gives rise to intentional tort causes of action, this a lo n e constitutes purposeful availment. The defendant is purposefully availing h im s e l f of `the privileges of causing a consequence' in Texas." Wein Air Alaska I n c . v. Brandt, 195 F.3d 208, 213 (5th Cir. 1999); see also Lewis v. Fresne, 252 F .3 d 352, 359 (5th Cir. 2001); Guidry v. United States Tobacco Co., Inc., 188 F.3d 10 6 1 9 , 628 (5th Cir. 1999) ("[W]hen a nonresident defendant commits a tort within t h e state, or an act outside the state that causes tortious injury within the state, t h a t tortious conduct amounts to sufficient minimum contacts with the state by t h e defendant to constitutionally permit courts within that state, including fe d e r a l courts, to exercise personal adjudicative jurisdiction over the tortfeasor a n d the causes of action arising from its offenses or quasi-offenses."). Personal ju r is d ic tio n is not established for even an intentional tort where the only ju r is d ic tio n a l basis is the alleged harm to a Texas resident. Stroman Realty v. W e r c in s k i, 513 F.3d 476, 486 (5th Cir. 2008). Rather, the effects of an alleged in te n tio n a l tort are to be assessed as part of the analysis of the defendant's r e le v a n t contacts with the forum. Id. P la in t iff's fraudulent inducement claims are based on the actual content o f communications that WSE and Reiss purposefully directed toward a Texas c o m p a n y in Texas. Accepting the Plaintiff's allegations as true, WSE and Reiss o n numerous occasions misrepresented their abilities and intentions to perform s e r v ic e s on Cantex's behalf, intending that Cantex would rely on the m is r e p re s e n ta tio n s . Plaintiff has alleged that WSE and Reiss knew and in te n d e d that Cantex, a Texas resident, would rely on the information it p r o v id e d via email and phone conversations to enter into an ongoing business r e la tio n s h ip with WSE, and that the communications would have an effect in T e x a s , and thus WSE and Reiss could foresee that they would be haled into court in Texas based on those purposeful contacts with the forum. This is sufficient 11 t o establish a prima facie case of specific personal jurisdiction. 2 . Fraud (against WSE and Reiss) C a n t e x 's fraud claim alleges that WSE and Reiss made material m is r e p r e s e n t a tio n s about the services they were providing to Cantex during the t e r m of the Agreements, including statements that they were increasing the C a n t e x share price, investing monies in Cantex, and were encouraging and s u c c e e d in g in getting others to invest in Cantex. Compl. 62. Cantex alleges t h a t Defendants knew the statements were false and misleading, and that they in t e n d e d that Cantex rely on them. Compl. 63, 64. Further, Cantex alleges t h a t it justifiably relied on the fraudulent misrepresentations by continuing to b e engaged in the Agreements and paying WSE and Reiss compensation. Compl. 65. The Court concludes that, like the fraudulent inducement claim, Cantex h a s put forth a prima facie case of jurisdiction based on Defendants' alleged in t e n t io n a l misrepresentations directed at the forum. R e is s attempts to invoke the fiduciary shield doctrine to preclude this C o u r t 's exercise of personal jurisdiction over him. The fiduciary-shield doctrine h o ld s that an individual's transaction of business within the state solely as a c o r p o r a te officer does not create personal jurisdiction over that individual, th o u g h the state has personal jurisdiction over the corporation. Stuart v. S p a d em a n , 772 F.2d 1185, 1197 (5th Cir. 1985). The court may assert ju r is d ic tio n over the officer, however, where the corporation is the alter ego of th e officer. Id. Plaintiff did not claim in its Original Complaint that Reiss is the 12 a lt e r ego of WSE. Rather, Plaintiff alleged facts to support an alter ego theory fo r the first time in its Response brief to Defendant's motion to dismiss, and R e is s argues that Cantex is therefore precluded from asserting an alter ego t h e o r y . The Court need not consider this issue, however, because, even if the c o r p o r a te officer is not an alter ego of the company, the fiduciary shield doctrine d o e s not prohibit jurisdiction where an individual defendant is sued for his own t o r t io u s acts that had reasonably foreseeable consequences in the forum. See G e n er a l Retail Services, Inc. v. Wireless Toyz Franchise, LLC, 255 Fed.Appx. 7 7 5 , 795 (5th Cir. 2007) ("[W]hile the fiduciary-shield doctrine could prohibit this c o u r t from ascribing acts of Wireless Toyz to Simtob, it does not prohibit Simtob fr o m being held personally liable for his own tortious conduct simply because he is an officer of a corporation."). Prior to Cantex's entering the Agreement, Reiss personally made all of the p h o n e calls to Cantex misrepresenting the marketing efforts that WSE would p e r fo r m . Reiss also communicated to Cantex during the Agreement that he was p e r fo r m in g services on behalf of Cantex. Furthermore, Reiss knew that Cantex w a s a Texas company and knew that any communications or acts directed at C a n t e x would have effects in Texas. Cantex is not trying to assert personal ju r is d ic tio n over Reiss based on jurisdiction over WSE, and thus the fiduciary s h ie ld doctrine does not bar the exercise of personal jurisdiction over Reiss. 3. Deceptive Trade Practices Act Violations (against WSE) C a n t e x 's DTPA claim is based on the same misrepresentations underlying 13 it s fraudulent inducement and fraud claims, and thus the Court concludes that C a n t e x has established a prima facie case for personal jurisdiction on its DTPA c la im based on WSE's alleged intentional misrepresentations directed at the fo r u m . 4 . Breach of Contract (against WSE) M e r e ly contracting with a resident of Texas and the preparatory exchange o f communication do not meet the minimum contacts standard. See Holt Oil & G a s Corp. v. Harvey, 801 F.2d 773, 778 (5th Cir. 1986). Rather, "prior n e g o t ia tio n s and contemplated future consequences, along with the terms of the c o n tr a c t and the parties' actual course of dealing ... must be evaluated in d e t e r m in in g whether the defendant purposefully established minimum contacts w it h in the forum." Burger King v. Rudzewicz, 471 U.S. 462, 479 (1985); see also L a t s h a w v. Johnston, 167 F.3d 208, 211 (5th Cir. 1999). Defendant WSE relies on Hydrokinetics, Inc. v. Alaska Mechanical, Inc., 7 0 0 F.2d 1026 (5th Cir. 1983), in support of its argument that personal ju r is d ic t io n is lacking. In Hydrokinetics, a Texas resident brought a breach-ofc o n t r a c t suit against an Alaskan defendant. The Fifth Circuit held that, " a lt h o u g h the defendant negotiated a contract by phone and telefax with a Texas c o m p a n y , traveled to Texas to `close' the deal, and agreed to purchase goods m a n u f a c t u r e d in Texas, there was no personal jurisdiction over the Alaskan d e f e n d a n t because (1) the defendant's only contacts with the state were related t o a single transaction; (2) the plaintiff had initiated this single transaction by 14 c o n t a c tin g the defendant in Alaska; (3) the agreement's choice-of-law provision s p e c ifie d Alaskan law; and (4) the plaintiff delivered the goods it produced under t h e contract to the defendant in Seattle, Washington." Latshaw, 167 F.3d at 2 1 2 -1 3 . In distinguishing Hydrokinetics in Latshaw v. Johnston, the Fifth Circuit n o t e d that, "[i]n Hydrokinetics, the defendant had no more than a fortuitous c o n n e c t io n to Texas related to a single transaction, initiated by the Texas p l a in t iff, and carried out in large part outside the Texas state boundaries. J o h n s t o n , by contrast, was much more than a one-shot purchaser of Texas goods w h o s e only connection with the state grew out of a Texas manufacturer's m a r k e t in g efforts. Rather, according to Latshaw's complaint and affidavit, J o h n s t o n entered into an ongoing business relationship with a Texas resident (a n d his company) and made multiple trips and phone calls to Texas in f u r t h e r a n c e of that relationship." Latshaw, 167 F.3d at 213. This case is more lik e Latshaw and the cases cited therein 8 than Hydrokinetics. Further, in Central Freight Lines, Inc. v. APA Transport Corp., 322 F.3d 3 7 6 , 382 (5th Cir. 2003), the Fifth Circuit found sufficient contacts for specific See Polythane Sys., Inc. v. Marina Ventures Int'l, Ltd., 993 F.2d 1201, 1206 (5th Cir. 1993) ("The parties had an ongoing business relationship, and the [nonresident defendant's] contacts with the forum state were not fortuitous."); cf. Trinity Indus., Inc. v. Myers & Assocs., Ltd., 41 F.3d 229, 231 (5th Cir. 1995) (holding attorneys subject to personal jurisdiction when they had "deliberately availed themselves of benefits of ongoing relationship" with Texas client); Bullion, 895 F.2d at 217 (specific jurisdiction over nonresident doctor when forum state patient had ongoing relationship with doctor and treatment occurred partly in forum state). 8 15 p e r s o n a l jurisdiction based on the "fact that, during the course of negotiations, [t h e defendant] specifically and deliberately `reached out' to a Texas corporation b y telephone and mail with the deliberate aim of entering into a long-standing c o n t r a c t u a l relationship with a Texas corporation." The Court noted that "a d e fe n d a n t can purposefully contact the forum state and avail itself of the b e n e fit s and protections of the forum's laws by creating continuing obligations b e t w e e n itself and residents of the forum. Thus, this circuit has held that a n o n r e s id e n t can establish contact with the forum by taking purposeful and a ffir m a tiv e action, the effect of which is to cause business activity (foreseeable b y the defendant) in the forum state." Id. at 382 n.6 (citation omitted). I n this situation, WSE's contacts with Texas are not random and fo r t u it o u s . Rather, WSE intentionally reached out to a Texas company with the p u r p o s e of establishing an ongoing relationship and causing business activity in T e x a s in the form of investments in a Texas company. Reiss, on behalf of WSE, m a d e repeated calls to Cantex in Texas over a period of several months to e s t a b lis h the initial contractual relationship, and WSE eventually entered into fo u r different contracts with Cantex, the collective terms of which exceeded one y e a r. It is undisputed that the purpose of the contract was to benefit Cantex by fin d i n g investors for Cantex and thus the contract was intended to have business e ffe c t s in Texas. In addition, as part of its performance under the contract, WSE s e n t updates and information regarding potential investors to Cantex in Texas, a n d the contracts required ongoing contacts between WSE and Cantex in Texas. 16 T h u s , the facts of this case are more in line with Latshaw and Central F r e ig h t than in those contract cases where specific personal jurisdiction has been fo u n d lacking. Under these circumstances, Defendant WSE could reasonably a n t ic ip a t e being haled into a Texas court.9 A lte r n a tiv e ly , even if the breach-of-contract claim standing alone is in s u ffic ie n t for personal jurisdiction, to the extent that Defendant could r e a s o n a b ly anticipate being haled into a Texas court based on the alleged in te n tio n a l torts, which involve the same contacts that form the basis of the b r e a c h - o f- c o n t r a c t claim, due process would not be offended by allowing WSE to b e brought before a Texas court on the breach-of-contract claim arising out of th o s e same contacts. See Sutton v. Advanced Aquaculture Sys., Civ. A. No. SA0 7 -C A -1 7 5 -X R , 2007 WL 2220900 at *4-5 (considering the contract claim in c o n ju n c t io n with the fraud claim arising from the same set of contacts in c o n c lu d in g that personal jurisdiction existed); see also S&D Trading Academy v . AAFIS, Inc., 494 F. Supp. 2d 558, 567 (S.D. Tex. 2007) (noting that plaintiff's t o r t claim was so intertwined with its breach-of-contract claim that due process w o u ld not be offended by an exercise of specific jurisdiction over both claims a risin g out of the same contacts). The Court recognizes that Defendants would assert that the forum selection clause would negate any such anticipation. However, as discussed more fully below, the Court finds that the forum selection clause is not a mandatory forum selection clause. Moreover, the disputed clause is contained in only one of the contracts, entered in November 2007, and thus, even if mandatory, would not negate reasonable anticipation with regard to Defendants' contacts related to the first two contracts. 17 9 5 . Tortious Interference with Prospective Business Relations (against WSE a n d Reiss) I n this claim, Cantex alleges that it has been and is currently engaged w it h private investors who are seeking to invest in Cantex, that Defendants' acts w it h respect to holding onto the shares of Cantex and disbursing them to other p a r tie s , as well as continually demanding further compensation from Cantex h a v e prevented and continue to prevent Cantex from entering into any a g r e e m e n ts with its potential investors. Compl. 78, 79. Cantex alleges that W S E and Reiss, by purposefully holding on to Cantex shares, refusing to r e lin q u is h control thereof, and continuing to demand more monies while k n o w in g that Cantex is seeking investors, intended and knew that this conduct w o u ld prevent Cantex from entering into other investor relationships. Compl. 80. T h e Fifth Circuit has applied Calder's effects test to claims for tortious in t e r f e r e n c e with contract claims in several cases. In this context, the Fifth C ir c u it has held, the Court must determine whether the alleged tortfeasor e x p r e s s ly aimed his out-of-state conduct at the forum state by examining the n e x u s between the forum and the injured contractual relationship. Mullins v. T e s tA m e r ic a , Inc., 564 F.3d 386, 402 (5th Cir. 2009); see also Central Freight L i n e s , Inc. v. APA Transport Corp., 322 F.3d 376, 382 (5th Cir. 2003). P r e s u m a b l y , a similar analysis would apply to a claim for tortious interference w it h prospective business relations. However, because Plaintiff fails to address t h is claim in its Response, the Court lacks the necessary information to conduct 18 a well-informed analysis of the nexus between the forum and the injured p r o s p e c tiv e business relationship(s). Of course, portions of the facts underlying this claim overlap with the c o n tr a ct and other tort claims, given that Reiss could not have obtained the s h a re s without the parties' other dealings and contacts. The Court has already c o n c lu d e d that Defendants could reasonably anticipate being haled into a Texas c o u r t based on those contacts, and thus the Court finds that due process would n o t be offended by this Court's exercising jurisdiction over the tortious in te r fe r e n c e claim. Further, the alleged acts of retaining the stocks and k n o w in g ly preventing Cantex from obtaining investors in Texas are purposefully d i r e c te d at Cantex in Texas. Thus, Cantex has established a prima facie case of ju r is d ic t io n on this claim. However, Cantex retains its ultimate burden to prove p e r s o n a l jurisdiction by a preponderance of the evidence, and thus Cantex would d o well to introduce evidence regarding the nexus between the forum and the a lle g e d ly injured business relationships to satisfy its ultimate burden of proof fo r personal jurisdiction. B . Traditional Notions of Fair Play and Substantial Justice " O n c e a plaintiff has established minimum contacts, the burden shifts to d e fe n d a n t to show the assertion of jurisdiction would be unfair. To show that an e x e r c is e of jurisdiction is unreasonable once minimum contacts are established, t h e defendant must make a `compelling case' against it." Wein Air Alaska, Inc. v . Brandt, 195 F.3d 208, 215 (5th Cir. 1999). "The defendant `must present a 19 c o m p e l lin g case that the presence of some other considerations would render ju r is d ic t io n unreasonable.'" Guidry v. United States Tobacco Co., Inc., 188 F.3d 6 1 9 , 630 (5th Cir. 1999) (citing Gundle Lining Constr. Corp. v. Adams County A s p h a l t, Inc., 85 F.3d 201, 207 (5th Cir. 1996)). "It is rare to say the assertion is unfair after minimum contacts have been shown." Id. When determining the fundamental fairness issue, courts will normally e x a m in e : "(1) the defendant's burden; (2) the forum state's interests; (3) the p la in t if f's interest in convenient and effective relief; (4) the judicial system's in te r e s t in efficient resolution of controversies; and (5) the shared interest of the s e v e r a l states in furthering fundamental substantive social policies." Id. Texas has a significant interest in providing a forum for an action when th e injured party is a Texas resident. Lewis v. Fresne, 252 F.3d 352, 359 (5th C ir . 2001)(stating that where a non-resident law firm's actions injured a Texas p la in tiff , maintenance of the action would not offend traditional notions of fair p l a y and substantial justice). "If a cause of action for fraud committed against a resident of the forum is directly related to the tortious activities that give rise t o personal jurisdiction, an exercise of jurisdiction likely comports with the due p r o c e s s clause, given the obvious interests of the plaintiff and the forum state." W ein , 195 F.3d at 215. In Wein, the Fifth Circuit found jurisdiction to comport w it h notions of fair play and substantial justice notwithstanding the fact that th e defendant was a German citizen. Id. Admittedly, litigation in Texas would place a burden on WSE and Reiss. 20 H o w e v e r , "once minimum contacts are established, the interests of the forum a n d the plaintiff justify even large burdens on the defendant." Id. Resolving the c o n flic ts in a light most favorable to the Plaintiff, there is no overwhelming b u rd e n to WSE or Reiss that outweighs the legitimate interests of the Plaintiff a n d the forum state. Defendants have not satisfied the burden of showing that th e maintenance of this suit in Texas would violate traditional notions of fair p l a y and substantial justice. A c c o r d in g ly , the motion to dismiss for lack of personal jurisdiction is d e n ie d . I I . Motion to Dismiss based on Improper Venue D e fe n d a n t s WSE and Reiss contend that the parties entered a contract w it h a forum selection clause stating that actions under the contract will be litig a te d in Arizona. Plaintiff argues that the clause is ambiguous and invalid a s to Cantex. The clause at issue, which is present in the November 2007 IR S e r v ic e s Agreement but not the other agreements, provides in its entirety: F a x e d transmission of signature will be considered a legal and b in d i n g signature, and WSE will be entitled to any legal fees in c u r r e d resulting from the enforcing of this Agreement and will be lit ig a t e d in AZ. A forum selection clause that is subject to "opposing, yet reasonable, in t e r p r e ta t io n s ," should be construed against the drafting party, in this case W S E . See Keaty v. Freeport Indonesia, Inc., 503 F.2d 955, 957 (5th C i r . 1974). Plaintiff argues that the silence as to Cantex implies that the clause does not a p p ly to Cantex's enforcement of the agreement, but only to suits brought by 21 W S E . Defendants maintain that the relevant clause refers to both WSE and C a n t e x because both parties are signatories to the contract. Because the clause d o e s not clearly demonstrate that Cantex agreed to litigate its claims exclusively in Arizona and could reasonably be interpreted in multiple ways, the clause is a m b ig u o u s and must be construed against WSE. Construed against WSE, the c la u se does not clearly demonstrate the parties' intent to make Arizona the e x c lu s iv e jurisdiction for suits brought by Cantex. 10 The Court need not reach t h e further issue of whether to enforce the clause. Accordingly, the motion to d is m is s based on improper venue is denied. I V . CONCLUSION F o r the reasons stated above, Defendants' Motion to Dismiss under 28 U .S .C . 1406(a), Rule 12(b)(1), and 12(b)(2) (docket no. 3) is DENIED. I t is so ORDERED. S I G N E D this 4th day of August, 2009. _________________________________ X A V IE R RODRIGUEZ U N I T E D STATES DISTRICT JUDGE Moreover, even if the clause were construed to apply to Cantex, the clause by its terms would apply only to disputes arising from the November 2007 Agreement, and not the August 2007 Agreements. 22 10

Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.

Why Is My Information Online?