ECIGRUSA LLC d/b/a WORLDWIDE VAPE DISTRIBUTION v. SILVER STATE TRADING LLC, EMPIRE IMPORTS LLC, and JASON ANGEL
CIVIL ACTION NO. 3:21-CV-1846-B
UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF TEXAS DALLAS DIVISION
May 3, 2022
PageID 347
Before the Court is Defendants Silver State Trading LLC (“Silver State“), Empire Imports LLC (“Empire“), and Jason Angel (“Angel“) (collectively, “Defendants“)‘s Motion to Dismiss Plaintiff‘s Original Petition (Doc. 10). For the reasons stated below, the Court GRANTS the motion.
I
BACKGROUND1
This is a breach-of-contract case. Plaintiff Ecigrusa, LLC d/b/a Worldwide Vape Distribution (“Worldwide” or “Plaintiff“) is a Texas-based company that buys and sells “electronic cigarettes, e-liquids, and other vaping products and accessories on a wholesale basis.” Doc. 1-5, Original Pet., ¶ 2. Silver State is a Nevada company that is “in the vaping and e-cigarette business,” and “transports, ships, purchases, and . . . sells products within the State of California and in Riverside County[, California]. Id. ¶ 3. Empire is a “company headquartered in Riverside County, California.”
Id. ¶ 4. “Angel is a merchant who deals in the purchase and sale of electronic cigarettes, electronic
On August 9, 2019, Worldwide‘s representative Muhammad Kahn (“Kahn“) entered into an oral agreement with “Angel, on behalf of himself, Silver State, and Empire,” “to purchase 1,086 ‘JUUL Pods Master Cases’ [(each consisting of a 48-pack of four pods for use in JUUL e-cigarette devices)] in eight flavors” (“the JUUL Pods“). Id. ¶¶ 9-10. Worldwide “agreed to pay Defendants . . . $736,992 (‘the Purchase Price‘) . . . for the [JUUL Pods] in advance,” and Angel “advised Worldwide that Silver State would ship [the JUUL Pods] in approximately two weeks.” Id. ¶¶ 12-13. Worldwide tendered the $736,992 to Silver State but “shortly after the [JUUL Pods] Order was placed . . . Angel advised Worldwide that Defendants would not be able to fulfill the [JUUL Pods] Order, and . . . would instead return the entire Purchase Price to Worldwide via wire or bank transfer.” Id. ¶ 15.
On September 13, 2019, Angel wired Worldwide $350,000 and sent Kahn a “text message stat[ing], ‘[$350,000] is all my bank limit allows for today. I will send or deposit [the] balance [of $386,992] on Monday [September 16, 2019].‘” Id. ¶¶ 16-17 (second alteration in original). On September 16, 2019, Kahn texted Angel about the funds, “asking ‘[w]hen are you sending the rest of it.‘” Id. ¶ 19. (alteration in original). Angel responded, “by the end of the day. Will get it done[,]” but the funds were not returned. Id. Instead, “without notice, later . . . [that day] Worldwide
On April 1, 2021, Worldwide filed suit against Defendants in Texas state court, bringing claims for breach of contract, conversion, breach of the implied warranty of merchantability, and violations of the Texas Deceptive Trade Practices Act (DTPA).4 Doc. 1-5, Original Pet., ¶¶ 39-70. Plaintiff‘s Original Petition averred that “pursuant to Chapter 17, Subchapter C[,] ‘Long-Arm Jurisdiction in suit on Business Transaction or Tort’ of the [Texas] Civil Practice & Remedies Code,” each Defendant could be served with process “by substituted service on the Secretary of State of Texas . . . [who] shall . . . send the process . . . by registered mail or certified mail, return receipt requested to the registered agent of the corporation: . . . Angel, 16378 Greenridge Circle, Riverside,
CA 92503-9717.” Id. ¶¶ 3-5. The Secretary of State‘s office received Worldwide‘s filings on July 9,
Defendants timely removed the action to this Court. Doc. 1, Not. Removal. On September 15, 2021, after being granted two extensions of time to answer, Defendants filed the present motion to dismiss Plaintiff‘s claims for lack of jurisdiction. Doc. 6, Elec. Order; Doc. 9, Elec. Order; Doc. 10, Mot. On November 3, 2021, one week after Defendants filed their reply brief, Worldwide filed an Opposed Motion for Leave to Supplement its Response to the motion, claiming that due to technological, travel, and communication issues affecting Kahn and Plaintiff‘s counsel in September and October 2021, Plaintiff‘s counsel had not been able to secure affidavits authenticating certain business records attached to Worldwide‘s response, and requesting leave to file the authenticating affidavits. Doc. 16, Sur-Reply, 2-4. The Court construed the Motion for Leave as a Sur-Reply to the motion to dismiss, granted leave to file the supplemental documents attached to the Sur-Reply (which included Sales Orders, Text Messages, and the Kahn Affidavit), and allowed Defendants to file a Sur-Sur-Reply. Doc. 16-1, Suppl. Docs.; Doc. 19, Order; Doc. 21, Sur-Sur-Reply.
The motion to dismiss is ripe for determination and the Court considers it below.
LEGAL STANDARDS
A. Rule 12(b)(2)
When defendants move to dismiss for lack of personal jurisdiction under
Personal jurisdiction exists when “the state‘s long-arm statute extends to the defendant and exercise of such jurisdiction is consistent with due process. Because the Texas long-arm statute extends to the limits of federal due process, the two-step inquiry collapses into one federal due process analysis.” Sangha v. Navig8 ShipManagement Priv. Ltd., 882 F.3d 96, 101, 109 (5th Cir. 2018) (quoting Johnston v. Multidata Sys. Int‘l Corp., 523 F.3d 602, 609 (5th Cir. 2008)).
B. Rule 12(b)(5)
Under
III.
ANALYSIS
First, the Court considers whether it can exercise personal jurisdiction over each Defendant. Because no Defendant established minimum contacts with Texas for any claim asserted, the Court finds that this action must be dismissed pursuant to Rule 12(b)(2). Because the Court dismisses on the basis of personal jurisdition, it does not consider whether dismissal would be warranted under Rule 12(b)(5).
A. Lack of Personal Jurisdiction
To begin, the Court finds that it does not have general jurisdiction over any Defendant in this case because no Defendant is essentially “at home” in Texas.5 Indeed, Plaintiff essentially concedes this point. See Doc. 14, Resp., 7 (presenting no argument for general jurisdiction). Accordingly, the Court limits its analysis to specific jurisdiction.
Plaintiff argues that the Court has specific jurisdiction over each Defendant. Specifically, Plaintiff asserts that “Plaintiff and Defendants engaged in at least 35 transactions involving the State
As a threshold matter, the Court notes that while Plaintiff alleges that Silver State and Empire, collectively, engaged in “at least 35” transactions with Worldwide in Texas, it has not argued why Silver State and Empire‘s transactions may be aggregated for purposes of a personal-jurisdiction analysis. See id. at 6; Diece-Lisa Indus., Inc. v. Disney Enters., Inc., 943 F.3d 239, 251 (5th Cir. 2019) (“[Plaintiff] fails to allege any facts that suggest an alter ego relationship between the [Defendant] entities.“). The Supreme Court instructs that “the requirements of [minimum contacts and fairness] must be met as to each defendant over whom a state court exercises jurisdiction.” Rush v. Savchuk, 444 U.S. 320, 332 (1980). It is therefore error to “consider[] the ‘defending parties’ together and aggregat[e] their forum contacts in determining . . . jurisdiction” although “[n]aturally, the parties’ relationships with each other may be significant in evaluating their ties to the forum.” Id. at 331-32. Thus, the Court considers each Defendant‘s contacts with Texas separately.
Further, different tests for minimum contacts may apply to different types of claims. See Danziger & De Llano, L.L.P. v. Morgan Verkamp, L.L.C., 24 F.4th 491, 495-96, 500 (5th Cir. 2022) (separately analyzing personal jurisdiction for intentional tort claims and breach-of-contract claims). Thus, the Court also separately considers minimum contacts for each claim.
Below, the Court concludes that no Defendant has established minimum contacts with Texas for any claim asserted. Further, none of the asserted claims arise out of any of Empire‘s or Angel‘s
1. Minimum Contacts: Breach of Contract
“When determining whether a court has personal jurisdiction over a breach[-]of[-]contract claim, ‘only those acts which relate to the formation of the contract and the subsequent breach are relevant,’ including ‘prior negotiations and contemplated future consequences, along with the terms of the contract and the parties’ actual course of dealing.‘” Danziger & De Llano, 24 F.4th at 500; see also Stuart, 772 F.2d at 1193 (discussing Burger King v. Rudzewicz, 471 U.S. 462 (1985)). Factors that the Fifth Circuit has considered relevant to this analysis are: (1) which party solicited the contract; (2) the extent of negotiations; (3) the location of the communications; (4) the length of the contract performance contemplated; (5) the presence of a choice-of-forum clause or similar provision; (6) the place of performance; (7) the amount of control over performance in the forum state; and (8) whether the defendant contracted with the plaintiff because of the plaintiff‘s location within the forum state. See Stuart, 772 F.2d at 1193-94; Hydrokinetics, Inc. v. Alaska Mech., Inc., 700 F.2d 1026, 1029 (5th Cir. 1983); Electrosource, Inc. v. Horizon Battery Techs., Ltd., 176 F.3d 867, 872 (5th Cir. 1999); Sw. Offset, Inc. v. Hudco Pub‘g Co., 622 F.2d 149, 152 (5th Cir. 1980); Gundle, 85 F.3d at 206; Moncrief Oil Int‘l, Inc. v. OAO Gazprom, 481 F.3d 309, 313 (5th Cir. 2007); see also Lansing Trade Grp., LLC v. 3B Biofuels GmbH & Co., KG, 612 F. Supp. 2d 813, 822-28 (S.D. Tex. 2009) (providing an overview of Fifth Circuit cases that illustrate the various considerations in a minimum contacts analysis). The ultimate question is whether the allegedly breached contract had a substantial relationship to the forum state, considering the totality of the circumstances. See Burger King, 471
i. Silver State
Plaintiff argues that “[the] Court . . . has personal jurisdiction over Silver State . . . through [Silver State‘s] repeated intentional contact with the State of Texas” through contracting with Plaintiff and shipping product to Texas. Doc. 14, Resp., 6. So, the Court finds that the substantial relationship minimum contacts analysis from Burger King is applicable.
The record contains the following relevant evidence submitted by Worldwide: First, Sales Orders showing that Silver State: (1) contracted with Worldwide to ship product to Texas on May 17, 2019; (2) emailed a quote to Worldwide on May 17, 2019; (3) contracted with Worldwide to ship product to Texas on July 24, 2019; (4) contracted with Worldwide to ship product to Texas on August 5, 2019; (5) invoiced Worldwide for shipping on several prior orders on June 18, 2019; and (6) contracted with Worldwide to ship product to Texas on August 9, 2019 (the JUUL Pods order).6 Doc. 16-1, Sales Orders, 3-24. Second, an affidavit averring that Silver State‘s representative, Angel, entered into an oral agreement for the JUUL Pods order with Worldwide‘s representative,
Kahn, presumably by phone since Kahn has not averred that he and Angel met in person. Doc. 1-5,
Further, the record includes Silver State‘s uncontroverted representations that it does not and has never had any employees or agents in Texas, has no property in Texas or bank accounts in Texas, does not advertise in Texas, is not licensed to do business in Texas, and has designated an agent for service of process for the limited purpose of complying with a federal act regulating cigarette trafficking but not for other matters. Doc. 10, Mot., 3-4.
The Court finds that the totality of the circumstances shows that Silver State did not establish minimum contacts with Texas by its contractual dealings with Worldwide. See Danziger & De Llano, 24 F.4th at 500. Plaintiff or another Defendant appears to have initiated these orders, not Silver State. See Doc. 16-1, Sales Orders, 3-24; Doc. 16-1, Kahn Aff., ¶¶ 3 (“On August 9, 2019, [Worldwide] placed an order with Silver State.“), 6 (“Empire . . . shipped an old order back to [Worldwide] . . . and indicated that Silver State was seeking to offset the owed balance of $386,992 with the returned goods.“); see Hydrokinetics, 700 F.2d at 1029. Plaintiff has not demonstrated that Worldwide and Silver State conducted contract negotiations of any length or alleged that Silver State sent the order confirmation emails and invoices from Texas. See Doc. 16-1, Sales Orders, 3-24. Rather, the communications that took place in Texas were Worldwide‘s, and “a plaintiff‘s . . . unilateral activities [in Texas] cannot establish minimum contacts between the defendant and forum.” Moncrief, 481 F.3d at 311. There is no evidence to suggest a long-term contract that required
Further, Plaintiff has not argued that any of its contracts with Silver State included a choice-of-forum clause or similar provision. See Hydrokinetics, 700 F.2d at 1028 n.3. And Silver State was presumably supposed to ship the goods from California, not Texas, so the place of performance was not Texas. See Doc. 1-5, Original Pet., ¶ 14 (“Defendants never shipped the Order for the JUUL Pods Master Cases.“); see Electrosource, 176 F.3d at 874. Also, Silver State had little to no control over performance in Texas—Plaintiff has not asserted that Silver State should have personally delivered the JUUL Pods to Texas. See Sw. Offset, 622 F.2d at 152. Nor has Worldwide suggested that Silver State contracted with Worldwide because Worldwide is Texas-based. See Moncrief, 481 F.3d at 313.
Finally, while Worldwide alleges that “a procurement manager employed by Silver State and/or Empire” visited Worldwide‘s place of business in Texas “on at least one occasion” in early 2019 “to discuss business,” it does not explain the relationship between this visit and the breached oral Silver State contract. Doc. 16-1, Kahn Aff., ¶ 17; see Danziger & De Llano, 24 F.4th at 500. While parties’ course of dealings is relevant to minimum contacts, given that: (1) the visitor was a “procurement manager,” who presumably procures goods instead of selling them; and (2) all of the Sales Orders in the record dated around “early 2019” are contracts with Empire for the purchase of
In sum, Silver State‘s contracts with Worldwide, together with its communications about those orders, are not sufficient minimum contacts with Texas for the court to exercise personal jurisdiction over Silver State on this breach-of-contract claim. Cf. Stuart, 772 F.2d at 1189, 1194 (“[T]he isolated shipment of goods to the forum at the instigation of the resident plaintiffs[] and the mailing of payments to the forum do not constitute the minimum contacts necessary to constitutionally exercise jurisdiction.“); Moncrief, 481 F.3d at 312 (“An exchange of communications in the course of developing and carrying out a contract also does not, by itself, constitute the required purposeful availment of the benefits and protections of Texas law.“); Danziger & De Llano, 24 F.4th at 502 (5th Cir. 2022) (explaining that “mere fortuity that one company happens to be a Texas resident . . . is not enough to confer jurisdiction” (quoting Moncrief, 481 F.3d at 313)).
ii. Empire
As with Silver State, Plaintiff argues that “[the] Court . . . has personal jurisdiction over . . . Empire through [its] repeated intentional contact with the State of Texas.” Doc. 14, Resp., 6. The
The Court finds that Empire has not established minimum contacts with Texas to support personal jurisdiction on this breach-of-contract claim. First, and most importantly, the claimed injury is not based on a breach of any contract with Empire or by Empire. See supra note 6; Danziger & De Llano, 24 F.4th at 502 (analyzing the “connection between the alleged contract and Texas“); G-2 Automated Techs., LLC v. Aleco, Inc., 2012 WL 2358147, at *2 (N.D. Tex. June 21, 2012) (“In order to establish specific jurisdiction, [Plaintiff] must show that [Defendant‘s] contacts with Texas emanate from or are directly related to the asserted breach of contract claim.“).
However, even if the breach was based on an Empire contract, Empire‘s course of dealings with Worldwide would not establish minimum contacts with Texas. While Empire‘s contracts with Worldwide were more numerous than the Silver State contracts discussed above, their connection to Texas is similarly unsubstantial. See id. at 31-82; Stuart, 772 F.2d at 1194 (“The quality of the contacts as demonstrating purposeful availment is the issue, not their number.“). There is no evidence that any of these orders was placed in Texas or that Empire contracted with Worldwide because of Worldwide‘s location in Texas. See Doc. 16-1, Sales Orders, 31-82. The contracts were for individual shipments, not a significant ongoing relationship that would give rise to a long-term
Further, the Court finds that the early 2019 visit by the “procurement manager employed by Silver State and/or Empire” to Worldwide‘s Texas premises “to discuss business,” Doc. 16-1, Kahn Aff., ¶ 17, did not create minimum contacts sufficient for the Court to exercise jurisdiction over Empire for the instant breach-of-contract claim. Though even a single contact of sufficient quality can support a finding of specific jurisdiction, see Moncrief, 481 F.3d at 311, that is not the case here for two reasons.
First, Plaintiff alleges that the “Silver State and/or Empire” employee was a “procurement manager.” Doc. 16-1, Kahn Aff., ¶ 17. As discussed above, since the contracts occurring between the parties around the time of the visit, in early 2019, were all sales by Worldwide to Empire, for products to be shipped to California, the reasonable inference to draw is that the procurement manager‘s purpose was to discuss procuring products from Worldwide for Empire‘s California operations. See Doc. 16-1, Sales Orders, 31-82. So, there is no evidence to show that Empire was seeking, by this procurement manager‘s visit, to purposefully avail itself of the protections and benefits of Texas law by soliciting business from Texas. Cf. Hydrokinetics, 700 F.2d at 1027-28
Second, even if the procurement manager‘s visit did constitute minimum contacts for an injury arising out of one of Worldwide‘s subsequent contracts with Empire, the instant dispute has only an attenuated relationship to any such Empire contract. The Court has found that Worldwide‘s breach-of-contract claim arises from the oral contract made between Worldwide and Angel on behalf of Silver State. See Doc. 1-5, Original Pet., ¶¶ 9-11; see supra note 6. To the extent that Worldwide alleges an indirect connection between the claimed breach and the April 10, 2019, Empire order—namely, that the August 9, 2019, Silver State JUUL Pods order was part of a scheme Angel cooked up to allow him to return the months-old SKOL Pods, see Doc. 16-1, Kahn Aff., ¶ 17—such an attenuated relationship between the contact and the injury-producing contract does not justify exercising personal jurisdiction over Empire in Texas. See Moncrief, 481 F.3d at 312 (“Random, fortuitous, or attenuated contacts are not sufficient to establish jurisdiction.” (citing Burger King, 471 U.S. at 476)).
iii. Angel
Finally, Plaintiff asserts that Angel is an officer of Silver State and Empire who personally made representations inducing Worldwide to enter the underlying transaction. Doc. 14, Resp., 8. However, the record does not include sufficient evidence to show that Angel, acting in his individual capacity and not as an officer or agent of Silver State or Empire, established minimum contacts with
As explained supra note 6, Worldwide does not plead that Angel hid his status as an agent contracting on behalf of Silver State for the August 9, 2019, JUUL Pods order. Instead, the pleadings and Kahn‘s affidavit allege that Angel acted on behalf of Silver State, arranged for payment to Silver State, and promised shipment from Silver State. See Doc. 1-5, Original Pet., ¶¶ 39-40; Doc. 16-1, Kahn Aff., ¶ 3 (“[Worldwide] placed an order with Silver State . . . in the amount of $736,992 . . . Silver State stated that the order would be filled in approximately two weeks.“). Lacking any evidence of agreement to the contrary, under Texas law, Angel is not individually a party to the contract. See, e.g., Instone Travel Tech Marine & Offshore v. Int‘l Shipping Partners, Inc., 334 F.3d 423, 428 (5th Cir. 2003) (stating that under Texas law “[i]t is well established that an agent acting for a disclosed principal is not liable for claims arising out of contracts executed by the agent on behalf of its principal” unless the parties have “alter[ed] this general rule by agreement“). Thus, the fiduciary shield doctrine would preclude this Court from exercising personal jurisdiction over Angel for the breach-of-contract claim, even if his actions on behalf of Silver State otherwise constituted minimum contacts with Texas. See Organic Metals v. Aquasium Techs., Ltd., 2004 WL 718960, at *3 (N.D. Tex. Apr. 2, 2004) (“[T]he fiduciary-shield doctrine prohibits a court from exercising personal jurisdiction over an individual whose only actions in the forum state were taken in the individual‘s capacity as a corporate representative, even if the court has personal jurisdiction over the corporation itself.“) (citing Stuart, 772 F.2d at 1197).
To be clear, the fiduciary-shield doctrine does not shield an individual from the consequences of their own tortious actions in the forum state. Gen. Retail Servs., Inc. v. Wireless Toyz Franchise, LLC, 255 F. App‘x 775, 795 (5th Cir. 2007) (“[W]hile the fiduciary-shield doctrine could prohibit
First, Worldwide has not brought a fraud claim against Angel or asserted that he acted in his own personal, not Silver State‘s, interest. See Doc. 1-5, Original Pet., ¶¶ 38-70 (presenting claims for breach of contract, conversion, breach of implied warranty of merchantability, and DTPA violations); Nat‘l Union Fire Ins. Co. of Pittsburgh v. Puget Plastics Corp., 532 F.3d 398, 402 (5th Cir. 2008) (“[K]nowing violations of the DTPA are not intentional torts.“); cf. Gen. Retail Servs., Inc., 255 F. App‘x at 795 (finding sufficient minimum contacts based on a corporate officer‘s allegedly fraudulent misrepresentations in a fraud case); McAfee, LLC v. Kinney, 2019 WL 4077647, at *6 (E.D. Tex. Aug. 29, 2019) (finding personal jurisdiction based on an exchange of text messages where “the text messages [Defendant] sent to [Plaintiff] are the basis of Plaintiff‘s intentional torts . . . causes of action. It is important to note that [Defendant] initiated many of the text conversations, was an active participant in the text conversation he did not initiate, and, at all times during these conversations knew [Plaintiff] lived and worked in Texas.” (emphasis added)). In the Fifth Circuit, “[w]hen the actual content of communications with a forum gives rise to intentional tort causes of action, this alone constitutes purposeful availment.” Lewis, 252 F.3d at 359 (alteration in original) (quoting Wien Air Alaska, Inc. v. Brandt, 195 F.3d 208, 213 (5th Cir. 1999)). For a breach-of-contract claim, by contrast, Angel‘s communications with Kahn and Worldwide in Texas do not alone constitute purposeful availment but are considered in the Burger King totality of the
Second, even if Angel‘s contacts with Worldwide and Kahn were not shielded and were taken in his individual capacity, they are not sufficient minimum contacts with Texas for this breach-of-contract claim. The record indicates that “Angel himself contacted [Worldwide], a company located in . . . Texas . . . to induce [Worldwide] into approving [the Order],” Doc. 16-1, Kahn Aff., ¶ 14, and that Angel and Kahn exchanged texts about the SKOL Pods and about the JUUL Pod refund,8 Doc. 16-1, Text Messages, 93-97. Worldwide does not allege that Angel traveled to Texas in the course of his dealings with Worldwide or that any of his communications with Kahn took place in Texas. See Doc. 16-1, Kahn Aff. Angel avers that his only travel to Texas has been an airport layover. Doc. 10, Mot., ¶ 17. There is no evidence that Angel contracted or sought to do business with Kahn because of Kahn‘s location in Texas. See generally Doc. 16-1, Suppl. Docs., Doc. 1-5, Original Pet. In sum, applying the Burger King analysis outlined above, Angel individually did not establish minimum contacts with Texas, for the breach-of-contract claim, by his texts with Kahn or by other actions related to this contract.
2. Conversion
Plaintiff and Defendants have focused their argument on the breach-of-contract claim. See Doc. 10, Mot.; Doc. 14, Resp.; Doc. 15, Reply; Doc. 16, Sur-Reply; Doc. 21, Sur-Sur-Reply. Despite the fact that specific jurisdiction is claim-specific, neither party has presented argument on whether the Court may exercise specific jurisdiction over Defendants on the conversion, implied warranty of merchantability, or DTPA violations claims. See id.; Seiferth, 472 F.3d at 274. Nevertheless, the
Plaintiff brings the tort claim of conversion against Defendants for not refunding more than half of the money that Worldwide paid for the JUUL Pods. Doc. 1-5, Original Pet., ¶¶ 50-57. “A forum State‘s exercise of jurisdiction over an out-of-state intentional tortfeasor must be based on intentional conduct by the defendant that creates the necessary contacts with the forum.” Trois, 882 F.3d at 490 (quoting Walden v. Fiore, 571 U.S. 277, 286 (2014)). A nonresident is subject to personal jurisdiction when, in the course of business, “it commits a tort in whole or in part in [Texas].” Pervasive Software Inc., 688 F.3d at 229. Under Texas law, the intentional tort of conversion occurs when a defendant commits “the wrongful exercise of dominion and control over another‘s property in denial of or inconsistent with his rights.” Id. (quoting Bandy v. First State Bank, Overton, Tex., 835 S.W.2d 609, 622 (Tex. 1992)). “The mere fact that the converted item originated in Texas is not sufficient to create personal jurisdiction under the long-arm statute; the item must be in Texas when the conversion actually occurs.” Id. at 230.
Here, Worldwide willingly transferred the money from Texas to Silver State in California. Doc. 1-5, Original Pet., ¶¶ 12, 51, 53. The alleged conversion did not occur until the Defendant refused to return the $368,992 from California. Id. Therefore, the Court finds that it cannot exercise of personal jurisdiction over Defendants on the conversion claim. See Bandy, 835 S.W.2d at 622.
3. Implied Warranty of Merchantability
Plaintiff claims that Defendants violated the implied warranty of merchantability by shipping the nonconforming SKOL Pods product. Doc. 1-5, Original Pet., ¶¶ 58-64. When an implied warranty of merchantability claim is attached to personal injury or products liability claims, courts may apply the stream-of-commerce theory of specific personal jurisdiction, which “recognizes that
By contrast, where—as here—the claim involves alleged injury to a contracting party that cannot sell allegedly unmarketable goods, the Burger King test applies. See Source Network Sales & Mktg., LLC v. Ningbo Desa Elec. Mfg. Co., 2015 WL 2341063, at *10 (N.D. Tex. May 15, 2015) (“These contacts establish specific personal jurisdiction over [Defendant] with respect to the breach of contract and breach of implied warranty of merchantability claims. The contacts furthered the contractual relationship between the parties and thus ‘relate[ ] to’ the contract-based claims.“). Therefore, for the same reasons as the breach-of-contract claims discussed above, the Court finds that no Defendant has established sufficient minimum contacts to support the Court‘s exercise of specific personal jurisdiction on the breach of implied warranty of merchantability claim.
4. DTPA Violations
In the intentional tort context, the Fifth Circuit has held that “a single act. . . directed toward Texas that gives rise to a cause of action . . . can support a finding of minimum contacts.” Wien Air Alaska, 195 F.3d at 211 (citing Calder v. Jones, 465 U.S. 783 (1984)). However, as noted above in the discussion of Angel‘s contacts relevant to the breach-of-contract claim, the Fifth Circuit has also
To conclude, the Court finds that no Defendant established minimum contacts with Texas for any claim presented. Therefore, the Court need not conduct a fairness-factors analysis. Stuart, 772 F.2d at 1191-92 (“[T]he fairness factors cannot of themselves invest the court with jurisdiction over a nonresident when the minimum-contacts analysis weighs against the exercise of jurisdiction.“). Further, because the Court has found that it lacks personal jurisdiction over the Defendants, it does not consider Defendants’ arguments for dismissal pursuant to Rule 12(b)(5). See Smith v. Skopos Fin., LLC, 2019 WL 2374883, at *6 (N.D. Tex. Jan. 22, 2019), report & recommendation adopted, 2019 WL 1552033 (N.D. Tex. Apr. 10, 2019). In sum, for all the reasons given above, the Court GRANTS Defendants’ motion to dismiss Plaintiff‘s claims, pursuant to Rule 12(b)(2), for lack of personal jurisdiction.
CONCLUSION
For the reasons stated above, the Court GRANTS Defendants’ Motion to Dismiss (Doc. 10). The claims against Defendants are DISMISSED WITHOUT PREJUDICE for lack of personal jurisdiction, pursuant to Rule 12(b)(2).
SO ORDERED.
SIGNED: May 3, 2022.
JANE J. BOYLE
UNITED STATES DISTRICT JUDGE