Masterguard, L.P. v. Eco Technologies International LLC D/B/A Yellowblue
441 S.W.3d 367
Tex. App.2013Background
- MasterGuard (Texas) sued Eco Technologies (Iowa LLC) and former MasterGuard president Billy Cox, alleging Cox breached a Texas severance agreement and that Eco interfered with MasterGuard’s Texas dealer contracts, unfairly competed, and conspired to recruit MasterGuard dealers to Eco.
- Eco Technologies filed a special appearance claiming it is an Iowa LLC that does not conduct business in Texas; its operating agreement states the company is member‑managed in Iowa.
- Cox is a member of Eco, lives and works in Texas, and (according to MasterGuard) recruited Texas dealers to become Eco independent dealers after forming Eco.
- Eco’s president, Schroder, testified Eco sells only to independent dealers (contracts are with Eco, shipments from Iowa), Eco has dealers in Texas, and Cox recruited dealers “through” a Texas dealer; some dealers were former MasterGuard dealers.
- The trial court granted Eco’s special appearance, finding Eco had not conducted business in Texas; MasterGuard appealed asserting primarily that Eco is subject to specific jurisdiction because Eco, through Cox, committed torts in Texas.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Eco is subject to specific jurisdiction in Texas based on torts committed in Texas | Eco: Eco’s Texas contacts arise from Cox’s recruitment of Texas dealers on Eco’s behalf, which interfered with Texas contracts and caused tortious injury in Texas | Eco: It is an Iowa LLC that does not do business in Texas; Cox is not Eco’s agent for jurisdictional purposes and Eco did not commit torts in Texas | Court: Reversed — Cox’s acts are attributable to Eco (member‑managed LLC with express member authority); Eco purposefully availed itself and sought profit from Texas contacts, so specific jurisdiction exists |
Key Cases Cited
- Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569 (Tex. 2007) (framework for purposeful availment and specific jurisdiction)
- Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223 (Tex. 1991) (Texas long‑arm construed to the limits of due process)
- Int’l Shoe Co. v. Washington, 326 U.S. 310 (1945) (minimum contacts and fair play principles)
- Schlobohm v. Schapiro, 784 S.W.2d 355 (Tex. 1990) (long‑arm and due process prerequisites)
- BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789 (Tex. 2002) (distinction between specific and general jurisdiction)
- Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653 (Tex. 2010) (plaintiff’s pleading establishes a long‑arm basis and burden shifts on special appearance)
- Holloway v. Skinner, 898 S.W.2d 793 (Tex. 1995) (acts of corporate agents imputed to the corporation)