Motion for Appearance and Examination in GULF SYSTEMS INC (D/B/A GULF PACKAGING) vs. FRISVOLD, RANDAL L| Trellis.Law

On February 01, 2012 a Motion-Secondary was filed involving a dispute between Gulf Packaging, Gulf Systems Inc, and Frisvold, Randal L, for BREACH OF CONTRACT in the District Court of Harris County.

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Filed 12 April 20 P4:08
Chris Daniel - District Clerk
Harris Coun!
ED101) 016840959
By: jeanetta spencer
NO. 2012-06392

GULF SYSTEMS INC. d/b/a IN THE DISTRICT COURT OF
GULF PACKAGING,

Plaintiff,

Vv. HARRIS COUNTY, TEXAS

RANDAL L. FRISVOLD,

Defendant. 215TH JUDICIAL DISTRICT

PLAINTIFF’S RESPONSE TO DEFENDANT’S SPECIAL APPEARANCE

Plaintiff Gulf Systems Inc. d/b/a Gulf Packaging (“Gulf Packaging”) files this Response

to Defendant’s Special Appearance.

SUMMARY OF THE RESPONSE

This court has specific jurisdiction over Defendant Randal Frisvold (“Defendant”), a

citizen of Washington, because he purposefully availed himself of the advantage of doing

business with Gulf Packaging, a thirty-three-year-old family-owned business located in Humble,

Texas.

Defendant purposefully represented his sales capabilities and numbers to Gulf Packaging

in Texas to induce Gulf Packaging to provide him a draw from Texas. As part of the agreement,

Gulf Packaging processed his orders, helped him collect and accounted for the monies all from

Texas. By engaging with Gulf Packaging over several years and receiving credit from Gulf

Packaging in Texas, Defendant should have foreseen that he could be subject to a lawsuit over

the very relationship where he benefited from dealing with a Texas company. Exercising

jurisdiction over Defendant does not offend notions of fair play and substantial justice. Several

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courts have looked at similar sales agent relationships and determined these agents can be the

subject of lawsuits in this State.

ARGUMENT & AUTHORITY

A. Specific Jurisdiction Allows This Court To Exercise Jurisdiction As Long As The
Constitution Is Not Violated.

This Court may assert personal jurisdiction over Defendant as long as the Due Process

Clause of the Fourteenth Amendment to the U.S. Constitution and the Texas long-arm statute are

satisfied. CSR Lid vy, Link, 925 S.W.2d 591, 594 (Tex. 1996) (orig. proceeding); see U.S.

Const. amend. XIV, § 1; Tex. Civ. PRAC. & REM. CODE ANN. § 17.042 (West 2008).

Under the long-arm statute, Texas courts can exercise personal jurisdiction over a

nonresident defendant who “does business” in Texas. TEX. Crv. PRAC. & REM. CODE ANN. §

17.042; BMC Sofiware Belg., N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002). The statute

lists three activities that constitute “doing business” in Texas: (1) contracting with a Texas

resident when either party is to perform the contract in whole or in part in Texas; (2) committing

a tort in whole or in part in Texas; and (3) recruiting Texas residents for employment inside or

outside of Texas. TEx. Civ. PRAC. & REM. CODE ANN. § 17.042. But the statute also provides

that “other acts” by the nonresident may constitute “doing business” in Texas, id., and the Texas

Supreme Court has repeatedly interpreted this broad statutory language to reach “as far as the

federal constitutional requirements for due process will allow.” Spir Star AG v. Kimich, 310

S.W.3d 868, 872 (Tex. 2010). Therefore, the requirements of the Texas long-arm statute are

satisfied if the exercise of personal jurisdiction comports with federal due process limitations.

Id.

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The U.S. Constitution permits a state to assert personal jurisdiction over a nonresident

defendant when two conditions are met: (1) the defendant has established minimum contacts

with the forum state; and (2) the exercise of jurisdiction comports with traditional notions of fair

play and substantial justice. BMC Software, 83 S.W.3d at 795. Minimum contacts are sufficient

for personal jurisdiction when the nonresident defendant “purposefully avails itself of the

privilege of conducting activities within the forum state, thus invoking the benefits and

protections of its laws.” Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 784

(Tex. 2005).
There are three parts to a purposeful availment inquiry: (1) only the nonresident

defendant’s contacts with the forum are relevant, not the unilateral activity of another party or a

third person; (2) the contacts relied on must be purposeful rather than random, fortuitous, or

attenuated; and (3) the nonresident defendant must seek some benefit, advantage, or profit by

availing itself of the jurisdiction. Moki Mac Expeditions v. Drugg, 221 S.W.3d 569, 575 (Tex.

2007); Michiana, 168 S.W.3d at 784-85.

Gulf Packaging is relying upon specific jurisdiction. For a court to exercise specific

jurisdiction over a nonresident defendant, two requirements must be met: (1) the nonresident

defendant’s contacts with the forum state must be purposeful; and (2) the cause of action must

arise from or relate to those contacts. Am. Type Culture Collection, Inc. v. Coleman, 83 8.W.3d

801, 806 (Tex. 2002). The minimum-contacts analysis for specific jurisdiction focuses on the

relationship among the defendant, the forum, and the litigation. Moki Mac, 221 S.W.3d at 575-

76.

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B. Defendant Has Not Satisfied His Burden of Proof.

Plaintiffs bear the initial burden to plead sufficient allegations to bring the nonresident

defendant within the reach of Texas’s long-arm statute. See Retamco Operating, Inc. v. Republic

Drilling Co., 278 S.W.3d 333, 337 (Tex. 2009); Moki Mac, 221 S.W.3d at 574. Gulf Packing’s

petition as well as this response can be considered in determining whether Gulf Packaging has

satisfied its burden. Touradji v. Beach Capital P’ship, L.P., 316 S.W.3d 15, 23 (Tex. App.-

Houston [1st Dist.] 2010, no pet.); see TEx. R. Civ. P. 120a(3). Once the plaintiff has pleaded

sufficient jurisdictional allegations, the defendant filing a special appearance bears the burden to

negate all bases of personal jurisdiction alleged by the plaintiff. See Retamco Operating, 278

S.W.3d at 337.

C. Specific Jurisdiction Applies Because Defendant Purposefully Contracted in Texas —
and Then Breached.

Because Gulf Packaging is relying on specific jurisdiction, the analysis focuses on the

relationship among the defendants, the forum, and the litigation. Zinc Nacional, S.A. v. Bouche

Trucking, Inc., 308 S.W.3d 395, 397 (Tex. 2010). For a nonresident defendant’s forum contacts

to support an exercise of specific jurisdiction, there must be a substantial connection between

those contacts and the operative facts of the litigation. Moki Mac, 221 S.W.3d at 585, 588.

There is a nexus between the specific actions of Defendant targeted at Texas and this litigation.

As explained in the attached affidavit, Gulf has offered a draw system to its sales

representatives for years. Based on representations made by Defendant, Gulf Packaging agreed

to provide a set amount of monies from Texas to Defendant in Washington to give him some

certainty for his commission-based compensation. The intent was that any negative balances on

the draw would be quickly made up when Defendant earned money through his commissions. If

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the monies were not paid back through commissions, Defendant was and is expected to pay them

back to Gulf Packaging in Texas. The draws were meant to provide a flow or money for

Defendant from Texas to help with his cash flow should Defendant’s commissions fluctuate.

Gulf maintains accounts and records in Texas that track commissions actually earned versus

draws provided to Defendant by Gulf Packaging in Texas. Gulf Packaging developed and

implements the draw system at its Texas headquarters. Defendant purposefully availed himself

of the benefits of the draw system implemented and managed in Texas.

Defendant directed communications regarding potential employment to the Texas

headquarters on subjects including, but not limited to, his credentials, past sales figures, and
'
compensation packages. Defendant specifically requested that he be compensated pursuant to

Gulf Packaging’s draw system. As a result, Gulf Packaging relied on these representations in its

decision, made in Texas, to hire Defendant.

Each decision regarding the nature of Defendant’s employment was made at the Texas

headquarters. Consequently, each communication before and after his Gulf Packaging

employment was directed to the Texas headquarters.

During his employment, Defendant directed communications to the Texas headquarters.

Most of the sales materials utilized by Defendant promoted Gulf Packaging’s extensive

manufacturing and national distribution operations based in Texas.

Each sales contract executed by Defendant in Washington was partly performable in

Texas because his orders were fulfilled in and managed by the Texas headquarters. Gulf

Packaging also provided extensive support to Defendant’s sales operation from Texas.

Defendant relied on the Texas headquarters to invoice his clients, fulfill his inventory and collect

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the accounts receivable generated by his clients, Defendant regularly directed correspondence to

the Texas headquarters on these subjects.

Gulf extended credit to Defendant from Texas with the expectation that Defendant would

remit payment to Gulf Packaging’s bank account in Texas. Each payment to Defendant was

calculated and processed in Texas. Had Defendant lived up to his end of the bargain, he would

have paid the money back in Texas.

In the Special Appearance, Defendant summarily states:

In this case, Texas courts do not have specific jurisdiction over Defendant because Defendant did

not direct his activities to Texas, and Plaintiff's cause of action did not arise from or relate to

Defendant’s contacts with Texas. Rather, Plaintiff's cause of action arose from the alleged acts

and omissions by Defendant in the State of Washington or in states other than Texas.

By entering into a contract with Gulf Packaging to benefit from Gulf Packaging’s work in

Texas that was partially performable in Texas this Court can exercise jurisdiction over

Defendant. Standing alone, entering a contract with a Texas resident does not necessarily

establish minimum contacts sufficient to support personal jurisdiction. See Nogle & Black

Aviation, Inc. v. Faveretto, 290 S.W.3d 277, 283 (Tex.App.-Houston [14th Dist.] 2009, no pet.).

But a single contract may establish sufficient minimum contacts when considered against a

backdrop of “prior negotiations and contemplated future consequences, along with the terms of

the contract and the parties’ actual course of dealing[.]” Burger King Corp. v. Rudzewicz, 471

U.S. 462, 479 (1985).

The contract’s place of partial performance is an important consideration. See Fleischer

v, Coffey, 270 S.W.3d 334, 338 (Tex.App.-Dallas 2008, no pet.). The Texas long-arm statute

1003417,1
specifically references place of performance. See TEx. Civ. Prac. & REM.CODE ANN. §

17.042(1). It is reasonable to subject a nonresident defendant to personal jurisdiction in Texas in

connection with litigation arising from a contract specifically designed to benefit from the skills

of a Texas resident who performs contractual obligations in Texas. See Nogle & Black Aviation,

Inc., 290 §.W.3d at 283.

D. Defendant Focused His Misrepresentation to Texas.

Even if the contractual relationship between Gulf Packaging and Defendant does not

establish jurisdiction, Defendant’s misrepresentations targeted to the Texas headquarters of Gulf

Packaging causing Gulf Packaging to take in action in Texas should suffice. Specific

jurisdiction is not necessarily established by evidence that a nonresident defendant made

misrepresentations in a single telephone call to a Texas resident. Michiana Easy Livin’ Country,

Inc. v. Holten, 168 8.W.3d 777, 791-92 (Tex. 2005). But misrepresentations made over a series

of contacts to induce a party to enter a transaction can support personal jurisdiction. See Glencoe

Capital Partners II, L.P. v. Gernsbacher, 269 S.W.3d 157, 164-67 (Tex.App.-Fort Worth 2008,

no pet.). Defendant’s continuing misrepresentations resulted in the draw continuing to be

processed and paid out of Texas during his engagement with Gulf Packaging.

One of the specific jurisdiction factors is foreseeability. “Where a defendant sends false

information into a state, knowing it will be relied upon by a resident of the forum state, there is a

foreseeable consequence of direct economic injury to the resident at its domicile.” Shapolsky v.

Brewton, 56 8.W.3d 120, 134 (Tex.App.—Houston fa" Dist.] 2001, pet. denied).

E. On-Point Texas Case Law Supports Jurisdiction.

Gulf Packaging respectfully requests that this Court review three particular cases, Talent

Tree, Inc. v, Madlock, 2008 WL8082752 (S.D.Tex.), Billingsley Parts and Equipment, Inc. v.

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Vose, 881 S.W.2d 165 (Tex.App.—Houston [1" Dist.] 1994, write denied) and Fidelity Union

Life Ins. Co. y. Orr, 648 S.W.2d 36 (Tex.App.—Dallas 1983, no writ)}—all of which are

attached.

In Vose, the Texas company plaintiff sued its former sales representative based in Illinois

to enforce a noncompete. After noting the Texas company signed the agreement in Texas, the

court wrote: “During Vose’s one-year tenure with Billingsley [the Company], she placed orders

by mail and telephone calls to the company’s Huntsville office. Billingsley shipped the

merchandise directly to the customer. . . Wells testified Billingsley had the authority to bind

Billingsley on a sale, but could not alter the payment terms. Wells testified Vose [the out-of-

state employee] never came to Texas or made any sales in Texas. Vose was paid commissions

by check drawn on a Texas bank.” Vose, 881 S.W.2d at 167. The court concluded:

We hold that Vose’s contracts were sufficient to give Texas
courts specific jurisdiction over her. Vose made the initial contact
with the Texas company; she inquired if the Texas company was
interested in an Illinois representative; she signed and mailed her
contract with the Texas company to Texas to be executed here; the
contract provided that it was to be governed by Texas law and was
performable in Texas; she sent orders to Texas; and she received
and cashed checks drawn on a Texas bank for her commissions.

Id. at 169-70 (citing a string of cases where the out of state defendant contracted with the Texas

entity).

In Talent Tree, the Texas corporation and its Georgia-based employee disagreed about

the incentive plan. The Texas company sued the employee in Texas federal court in Houston.

Quoting Burger King, the court wrote: “In cases involving interstate contractual obligations,

parties who ‘reach out beyond one state and create continuing relationships and obligations with

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citizens of another state’ are subject to regulation and sanctions in State for the consequences of

their activities.” Jd. at *4. On the factual specifics, the court wrote:

Although the... agreement. . . clearly had contemplated
consequences in Georgia and the Southeast region where Ms.
Madlock carried out her work, the agreement also anticipated
consequences in Houston. The company surpervised Ms.
Madlock’s work and budget and made decisions regarding the
incentive compensation plan in Houston. The Compensation
Committee reviewed claims regarding employee disputes over
bonus payments in Houston. ...

Finally, Ms. Madlock sought to invoke the terms of the
RVP incentive compensation plan by sending an email to Ms.
Harris and Mr. Manser in Houston.

Ms. Madlock did . . enter into an ongoing business
relationship with a company whose headquarters were located in
Texas and made “multiple trips and phone calls to Texas in
furtherance of that relationship.” Ms. Madlock’s contacts with
Texas do not appear to be random, fortuitous, or attenuated. The
Court believes that Ms. Madlock, through her employment and
RVP incentive compensation agreement, contemplated continuing
obligations and wide-reaching contacts with Texas. The existing
cause of action arises out of or is at least related to those contacts.
The court finds, therefore, that Ms. Madlock could reasonably
anticipate being haled into court in Texas as a result of those
contacts.

Id. at *5.

In Orr, the Texas insurance company sued its insurance agent based in Illinois for a

balance due on the agent’s ledger account for moneys advanced and other items. The out-of-

state defendant was required to pay to the company at its home office in Dallas, Texas, all sums

due to the company, including repayment of cash advances made to the agent. The defendant

solicited applications for insurance in Wisconsin from residents of Wisconsin and elsewhere, and

sent the applications and premium payments to the home office in Dallas. He also accepted from

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the applicants at least thirty-one promissory notes payable to the company in Dallas, endorsed

his personal guaranty on these notes, and sent them in to the Dallas Office. 648 S.W.2d at 37.

Reversing the Special Appearance, the court of appeals wrote:

In U-Anchor [Advertising, Inc. v. Burt, 553 S.W.2d 760,
762 (Tex. 1977)], the Supreme Court emphasized that the
defendant in that case “was a passive customer of a Texas
corporation who neither sought, initiated, nor profited from his
single and fortuitous contact with Texas.” The present case is
quite different. Here the agent was an integral part of an insurance
marketing enterprise based in Texas. He was required to devote
his full working time to the company’s business and to send all
policy applications to the company’s home office in Dallas. His
regular method of doing business, as contemplated by the contract,
was to obtain from policyholders promissory notes payable to the
company in Dallas, to personally guarantee these notes, and send
them in to the Dallas office. He attended a school for agents in
Dallas, and presumably all his activities in Wisconsin were
pursuant to the instructions he received at the school. He expressly
obligated himself to make payments in Dallas of whatever sums
might be owing by him to the company. In short, his contract
established a substantial economic relationship with the state of
Texas.

Id. at 38.

More recently, the court explained in Citrin Holdings, LLC v. Minnis, 305 S.W.3d 269

(Tex.App.—Houston [14" Dist.] 2009, no pet.) that these facts would allow for personal

jurisdiction in Texas:

[Defendant] contracted with [Plaintiff], a Texas resident, in
contemplation of an ongoing business relationship to be performed
at least in part in Texas. . Here... the circumstances involve
multiple Texas contacts over many months in the course of an
ongoing relationship that was not unilaterally initiated by the
Texas resident. These circumstances demonstrate [Defendant]’s
purposeful contact with Texas along with an intent to obtain
benefits from those contacts, and they defeat any suggestion that
[Defendant]’s business-related presence in Texas was merely
random, isolated, or fortuitous.

1003417.1 10
These multiple contacts culminated in the Cargo Ventures
Operating Agreement, which obligated [Plaintiff] and [Defendant]
to “devote such time, attention, and effort to the Company as is
reasonably necessary for the management of the Company and the
conduct of its business.” [Plaintiff] performed his obligations
under the Cargo Ventures Operating Agreement in Texas. In his
affidavit, [Plaintiff] states that he actively pursued and developed
potential projects, assisted in bringing potential projects to closing,
and participated in ongoing management and decision-making
responsibilities from his office in Texas. These facts demonstrate
that the parties’ contractual dispute has a substantial connection.
Id.

By accepting the draw payments from Gulf Packaging in Texas, effectively, Gulf

Packaging extended credit to Plaintiff. The court in North Coast Commercial Roofing Systems,

Inc. v. RMax, Inc., 130 S.W.3d 491, 495 (Tex.App.—Dallas 2004, no pet.) concluded that by

contracting with a Texas entity, purchasing goods from them and “obtaining credit from

RMAX’s Texas office are sufficient to show [Defendant] purposefully availed itself of the

privilege of doing business in Texas.”

F. Fair Play And Substantial Justice Are Satisfied In This Case.

In determining whether the exercise of personal jurisdiction over a defendant comports

with traditional notions of fair play and substantial justice, courts consider the defendant’s

contacts in light of: (1) the burden on the defendant; (2) the interests of the forum state in

adjudicating the dispute; (3) the plaintiffs interest in obtaining convenient and effective relief;

(4) the interstate judicial system’s interest in obtaining the most efficient resolution of

controversies; and (5) the shared interest of the several states in furthering fundamental,

substantive social policies. Spir Star, 310 S.W.3d at 878; Guardian Royal, 815 S.W.3d at 231.

Only in rare cases will the exercise of jurisdiction not comport with fair play and

substantial justice when the nonresident defendant has purposefully established minimum

1003417.1 11
contacts with the forum state. Spir Star, 310 S.W.3d at 878. To defeat jurisdiction, the defendant

must present “a compelling case that the presence of some consideration would render

jurisdiction unreasonable.” Jd. at 878-79. When a Texas resident pursues a cause of action for

harm committed within Texas, “the fairness considerations have little impact.” Michel v. Rocket

Eng’g Corp., 45 S.W.3d 658, 683 (Tex. App.—Fort Worth 2001, no pet).

Talent Tree (attached) also speaks to the fair play and substantial justice elements

analysis.

The burden of requiring Ms. Madlock to litigate in Texas appears
to be no greater than the burden of requiring Talent Tree to litigate
in Alabama. .. Furthermore, even though it is plausible that there
might be some witnesses located in Alabama, the primary
witnesses in this case appear to be the parties themselves. Finally,
given modern communications, many interactions with the Court,
including hearings, can be conducted electronically or by
telephone. Texas has some interest in determining a compensation
dispute between a corporate resident and its employee. .. The
Court does not believe, therefore, that concerns for efficiency
render the exercise of jurisdiction in this case “unconstitutionally
offensive to traditional notions of fair play and substantial justice.”

Id. at *6; see also Control Solutions, Inc. v. Gharda Chems. Ltd., 245 S.W.3d 550, 562 (Tex.

App.—Houston [1st Dist.] 2007, no pet.) (recognizing Texas’ interest in resolving dispute

involving injury to Texas corporation).

In the Special Appearance, Defendant simply summarily repeated the elements and

claimed litigating the suit in Texas would not be fair. Defendant may well incur greater

expenses defending this suit in Texas compared to Washington, but that is true for any

nonresident defendant. See Conner v. ContiCarriers & Terminals, Inc., 944 S.W.2d 405, 411

(Tex.App.-Houston [14th Dist.] 1997, no writ). Distance to travel is generally not a significant

consideration due to modern transportation. See Glencoe Capital Partners II, L.P. vy.

1003417.1 12
Gernsbacher, 269 S.W.3d 157, 168 (Tex.App.-Fort Worth 2008, no pet.). Gulf Packaging would

be no further inconvenienced with a lawsuit in Washington.

FOR THESE REASONS, Plaintiff Gulf Packaging respectfully requests that this Court

deny Defendant’s Special Appearance and allow this case to proceed on the merits, and granting

such other relief as may be appropriate.

Respectfully submitted,

AWE.
Looper REED & MCGRAW, I
——
By EE ao
Travis Crabtree
State Bar No. 24015192
terabtree@Irmlaw.com
David Leonard
State Bar No. 24078847
dleonard Irmlaw.com
1300 Post Oak Blvd., Suite 2000
Houston, Texas 77056
(713) 986-7000
(713) 986-7100 (FAX)

ATTORNEYS FOR PLAINTIFF GULF
PACKAGING

1003417,1 13
CERTIFICATE OF SERVICE

The undersigned hereby certifies that a true and correct copy of the foregoing was served
upon the attorney of record via certified mail, return receipt requested on this the 20" day of
April, 2012:

Dinesh Singhal Via Certified Mail, RRR
Attorney at Law
700 Louisiana Street, Suite 3850
Houston, Texas 77002

ae
eo

Travis Crabtree

1003417.1 14
Westlaw
Page |

Slip Copy, 2008 WL 8082752 (S.D.Tex.)
(Cite as: 2008 WL 8082752 (S.D.Tex.))

fendant, and because the Court believes that venue is
Only the Westlaw citation is currently available. proper in the Southern District of Texas, Defendant's
Motion is hereby DENIED IN PART. The Court
requires further briefing to determine whether it
United States District Court,
should exercise jurisdiction over this claim under the
S.D. Texas,
Declaratory Judgment Act, however. Parties will have
Houston Division.
until Wednesday, April 16, 2008 to provide further
TALENT TREE, INC., Plaintiff,
briefing regarding which state's law applies to the
causes of action at issue in this lawsuit.
Donna MADLOCK, Defendant.

Also pending before the Court is Plaintiff's Mo-
No. 4:07-cv-03735.
tion for Summary Judgment, Docket No. 11. Given
April 8, 2008.
that no discovery has taken place, the Court agrees
that Plaintiffs Motion appears premature, The Court
West KeySummaryFederal Courts 170B £76.30 further instructs the parties to identify, by April 16,
2008, any issues raised in the Motion for Summary
170B Federal Courts Judgment that properly can be resolved by the Court
170BII Venue without discovery.
7OBU(A) In General
170Bk76 Actions Against Non-Residents; I. BACKGROUND
“Long-Arm’” Jurisdiction in General
170Bk76.30 k. Contract Cases. Most
A. Procedural History
Cited Cases
Federal district court sitting in Texas had personal
jurisdiction over former employee and resident of Plaintiff, Talent Tree, Inc. (Talent Tree), is a
Georgia. Employer, whose principal place of business Delaware corporation with its principal place of
and headquarters was in Texas, filed suit in Texas business and headquarters in Houston, Texas. De-
seeking a declaratory judgment declaring that no fendant, Ms. Donna Madlock, is a former Talent Tree
contractual relationship existed between it and em- employee and a resident of Georgia.
ployee. Employee had minimum contacts with Texas
since she had an ongoing relationship with the com- In October 2007, Ms. Madlock sent a demand
pany based in Texas, had made multiple trips and letter to Talent Tree claiming unpaid bonus money
phone calls to Texas in furtherance of that relation- allegedly due for Defendant's 2005-2006, 2006-2007,
ship, and her existing cause of action against employer and 2007-2008 plan years. In the letter, sent by her
was related to those contacts. present attorney, Ms, Madlock also asserted allega-
tions of fraud and breach of the bonus contract.
Eliot P. Tucker, Barbara J. Gardner, Tucker Vaughan
et al, Houston, TX, for Plaintiff. On November 5, 2007, Talent Tree filed this
lawsuit seeking a declaratory judgment pursuant to
Robert _E. Rigrish, Bodker, Ramsey, Andrews, Federal Rule of Civil Procedure 47 and 28 U.S.C. §§
Winograd & Wildstein, P.C., Atlanta, GA, for De- 2201, 2202. Talent Tree asks the Court to declare that
fendant. there is no contractual relationship between Talent
Tree and Ms. Madlock and, as a result, Talent Tree is
not obliged to pay additional bonus money to Ms.
MEMORANDUM AND ORDER Madlock. In the alternative, Talent Tree asks the Court
KEITH P. ELLISON, District Judge.
to find that even if a contractual relationship existed,
*1 Pending before the Court is Defendant's Mo-
Talent Tree still owes no money to Ms. Madlock be-
tion to Dismiss, Docket No. 6. Because the Court finds
cause of a final and binding determination by Plain-
that it may exercise personal jurisdiction over De-

Slip Copy, 2008 WL 8082752 ($.D.Tex.)
(Cite as: 2008 WL 8082752 (S.D.Tex.))

tiffs Compensation Commit tee that no bonus pay- Manser Aff. 3.) According to Plaintiff, Ms. Harris
ments were due. From the face of the Complaint, it (presumably as Southeast Regional Vice President)
does not appear that Talent Tree seeks declaratory solicited and sold the Mercedes account. (Harris Aff.
relief related to Ms. Madlock's claims of fraud. 2.) Susan Morris handles the Hestair program for
Mercedes, and reports directly to Talent Tree Presi-
On March 31, 2008, Defendant filed a complaint dent Ms. Harris, not to Ms. Madlock. (Harris Aff. 2,
in the Circuit Court of Tuscaloosa County, Alabama Manser Aff. 3.) Plaintiff emphasizes that Ms. Madlock
against Talent Tree and others alleging claims of never met the Mercedes clients, never went on site,
fraud, promissory fraud, conspiracy to defraud, breach and did not handle the Hestair programs or the Hestair
of contract, and breach of implied-in-fact contract, all employees. (Manser 4; see also Harris Aff. 3.) There
arising out of the same facts that underlie the present is a second part of the Mercedes account, however,
declaratory judgment action. involving “traditional services such as temporary
staffing,” which is handled directly through Talent
Tree and not The Hestair Group. (Manser Aff. 4.)
B. Factual Background
Temporaries are provided, for example, by the Bir-
Ms. Madlock was hired by Talent Tree in August
mingham and Tuscaloosa branches of Talent Tree,
2002 as a District Manager, and was promoted to Vice
which were supervised by Ms. Madlock.
President of Sales and Enterprise Training on July 1,
2003. (Harris Aff. 1.) Ms Madlock was laid off in
February 2004. In March 2004, after a new group of Ms. Madlock maintains that Ms. Harris told her
investors purchased Talent Tree, Ms. Madlock was that her incentive compensation as Southeast Regional
re-hired as an area vice president. (Madlock Aff. § 2.) Vice President would be calculated based on the ac-
On December 1, 2004, Ms. Madlock was promoted to counts in her region, which included the Mer-
the position of Southeast Regional Vice President by cedes-Benz accounts in Alabama. (Madlock Aff. {| 3;
Brenda Harris! (Harris Aff. 1.) Ms. Harris had Complaint at § 15, Madlock v. Harris et al.,
previously served as the Southeast Regional Vice 63-cy-2008-900183.00.) Plaintiff admits that Ms.
President, but was then named President and CEO of Madlock was entitled to receive incentive compensa-
Talent Tree. (Madlock Aff. 3.) Ms. Madlock main- tion for the temporary staffing services program at the
tains that she was told that the new position “provided Mercedes plant, but not for the Hestair program.
significant opportunities for bonus compensation (Harris Aff. 2.) Ms. Harris also insists that she told
calculated on the earnings [‘EBITDA’] of the South- Ms. Madlock that she would not be paid incentive
east Region” through the company's Variable Com- compensation for the Hestair program (Harris Aff.
pensation for Regional Vice Presidents plan (“RVP 2.) Plaintiff admits that the Mercedes-Benz plant was
incentive compensation plan”). (Madlock Aff. | 3). physically located within Ms. Madlock's geographical
She initially reported to Ms. Harris and later began region, (Harris Aff. 3), but contends that the Hestair
reporting to Michael Manser, both of whom worked at program was not in Ms. Madlock's “scope of control,”
the corporate office in Houston, Texas. (Harris Aff. as allegedly required by the RVP incentive compen-
1-2.) sation plan, (Harris Aff. 3, Manser Aff. 4). Ms.
Madlock was paid bonus compensation for the Hestair
program for the 2004-2005 plan year, but Plaintiff
FNL. In both positions, Ms. Madlock worked
claims that this payment was the result of an ac-
out of the company's Atlanta, Georgia office.
counting error. (Harris Aff. 3.) In March 2006, Ms.
Madlock sent an email to Ms, Harris and Mr. Manser
*2 The current dispute centers on whether Ms. with an attached letter to the Talent Tree Compensa-
Madlock should have been paid incentive or bonus tion Commit tee asking for special dispensation to
compensation for accounts at the Mercedes-Benz receive incentive compensation for the Hestair pro-
manufacturing plant in Vance, Alabama. According to gram at the Mercedes plant. (Pl.'s Ex. 4.) Plaintiff
Plaintiff, The Hestair Group, LLC, a wholly owned claims that Mr. Manser and Ms. Harris then had a
subsidiary of Talent Tree, handles half of the Mer- conference call with Ms. Madlock, again explaining
cedes account. (Harris Aff. 2; Manser Aff. 3.) Under why she should not be paid a bonus for the Hestair
the Hestair program, employees are hired on a program 53 (Harris Aff. 3.)
semi-permanent basis, or what Plaintiff refers to as a
“try before you buy” arrangement. (Harris Aff. 2,

Slip Copy, 2008 WL 8082752 (S.D.Tex.)
(Cite as: 2008 WL 8082752 (S.D.Tex.))

EN2, It is not clear from the affidavit when 1, Standard
Ms. Harris allegedly provided Ms Madlock
with this information. In a diversity case,™* the Court may exercise
personal jurisdiction over a nonresident defendant if
FN3. Ms. Madlock claims that she never the forum state's long-arm statute creates personal
participated in a conference call with Mr. jurisdiction over the defendant and if the exercise of
Manser and Ms. Harris in which they ex- that jurisdiction “is consistent with the due process
plained their reasons for excluding the Mer- guarantees of the United States Constitution.” Revell
cedes Hestair program from the calculation y, . Lidov, 317 F.3d 467, 469 (Sth Cir.2002). Because
of her bonus. (Def.'s Resp. to Pl.'s Mot. the Texas Long Arm Statute is coextensive with the
umm. J., Madlock Aff. § 4.) This affidavit limitations of due process, questions of personal ju-
was not attached to Defendant's pending risdiction in Texas are generally analyzed entirely
Motion to Dismiss. Defendant's response to within the framework of constitutional due process.
Plaintiffs Motion for Summary Judgment Religious Tech, Ctr. v. Liebreich, 339 F.3d 369, 373
does address jurisdictional issues, and might Sth Cir.2003). The Due Process Clause of the Four-
be considered a reply to Plaintiffs response to teenth Amendment permits a court to exercise per-
the pending Motion. The Court will consider sonal jurisdiction over a nonresident defendant when
this affidavit in an attempt to fully under- “(1) that defendant has purposefully availed himself of
stand and consider all of the arguments rel- the benefits and protections of the forum state by
evant to the pending motion, but notes that its establishing ‘minimum contacts' with the forum state;
decision does not turn on the representations and (2) the exercise of jurisdiction over that defendant
in this document. does not offend ‘traditional notions of fair play and
substantial justice.’ ” Mink v. AAAA Dev. LLC, 190
*3 Ms. Madlock subsequently accepted her May F.3d 333, 336 (Sth Cir.1999) (quoting Int'l Shoe Co. v.
2006 and June 2007 bonus, which excluded the Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed.
Hestair program. According to Plaintiff, Ms. Madlock '5_(1945)).
did not file claims for underpayment with the Talent
Tree Compensation Commit tee within ten days of EN4. There is no dispute that parties are
receiving those bonuses, as required by the plan. (See, completely diverse and that that the matter in
e.g., Pl.'s Ex. 1, Variable Compensation for Regional controversy exceeds $75,000 See 28 U.S.C. §
Vice Presidents, Effective July 4, 2005 at 3.) Ms. 1332(a).
Madlock presented her demand for unpaid incentive
compensation after being terminated in September The minimum contacts requirement can be met
2007. The Compensation Commit tee subsequently through contacts sufficient to confer either specific or
decided to treat Ms. Madlock's March 2006 email and general jurisdiction, Ceniral Freight Lines, Inc. v.
letter as an appeal, and determined that Ms. Madlock APA Transp. Corp., 322 F.3d 376, 381 (Sth Cir.2003).
was not entitled to any additional bonus payments. To make a prima facie showing of general jurisdiction,
a plaintiff must produce evidence affirmatively
Tl. ANALYSIS demonstrating that the defendant's contacts with the
Ms. Madlock argues, first, that Talent Tree's forum state are substantial, continuous, and system-
complaint should be dismissed because the Court atic. Central Freight, 322 F.3d at 381; Alpine View
lacks personal jurisdiction over her. Ms. Madlock Co. _v, Atlas Copco AB, 205 F.3d_ 208, 217 (Sth
maintains, second, that venue is improper in the Cir.2000). This test is difficult to meet because it
Southern District of Texas. Finally, Ms. Madlock requires a showing of extensive contacts between the
contends that the Court should decline to exercise defendant and the forum state. Submersible Sys., Inc.
jurisdiction over this dispute under the Declaratory v. Perforadora Central, S.A. de C_ V., 249 F.3d 41
Judgment Act. The Court will discuss each of Ms. 9 (Sth Cir.2001). When the plaintiff demonstrates
Madlock's arguments in turn. that a nonresident has “purposefully directed its ac-
tivities at the forum state and the litigation results from
A. Personal Jurisdiction alleged injuries that arise out of or relate to those
activities,” the defendant's contacts are sufficient to

Slip Copy, 2008 WL 8082752 (S.D.Tex.)
(Cite as: 2008 WL 8082752 (S.D.Tex.))

support specific jurisdiction. Burger King Corp. v. this case.
Rudzewiez, 471 462 472. 105 _S. t._ 2174, 85
.Ed.2d 528 (1985); see also Revell, 317 F.3d at 470. Talent Tree argues that the Court may exercise
specific jurisdiction over Ms. Madlock based on the
*4 Furthermore, where jurisdiction is alleged to following contacts, First, Ms. Madlock participated in
rest upon a nonresident defendant's contract with a meetings in Houston at which the Regional Vice
resident of the forum state, the court should evaluate Presidents’ incentive compensation plan was revised,
“prior negotiations and contemplated future conse- reviewed and discussed. Second, Ms. Madlock sent an
quences, along with the terms of the contract and the email to Ms. Harris and Mr. Manser, who were located
parties’ actual course of dealing” in determining in Houston asking them to pay her incentive com-
whether the defendant has purposefully availed itself pensation for the Hestair program and later mailed a
of the privilege of conducting busin

Case Info

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ELAINE H PALMER Track Judge’s New Case

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April 20, 2012

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February 01, 2012

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Motion-Secondary: GULF SYSTEMS INC (D/B/A GULF PACKAGING) vs. FRISVOLD, RANDAL L

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