In Happy vs. Tanner, Tanner sued Retire Happy for breach of fiduciary duty, negligent misrepresentation, fraud, conversion, negligence, promissory estoppel, quantum meruit, and violation of the Texas Securities Act arising from Retire Happy, a Nevada entity, inducing Tanner, a Texas resident, to unsuccessfully invest funds with another Nevada corporation known as the Horizon Group. No. 07-16-00134-CV, 2017 Tex. App. LEXIS 777 (Tex. App.—Amarillo January 27, 2017, no pet. history). Retire Happy filed a special appearance objecting to the court’s exercise of jurisdiction as allegedly Texas had no personal jurisdiction over Retire Happy. The trial court denied the objection, and Retire Happy appealed.

The court of appeals reversed, finding that the trial court did not have specific or general jurisdiction. The court of appeals discussed the various rules regarding personal jurisdiction thusly:

Personal jurisdiction over a nonresident exists when the Texas long-arm statute authorizes it and the exercise of it comports with due process. [Cornerstone Healthcare Grp. Holding, Inc. v. Nautic Mgmt. VI, L.P., 493 S.W.3d 65, 70 (Tex. 2016)]. It is the limitations implicit in due process that guide our analysis. See id. Those limitations mandate not only that minimum contacts exist between the defendant and our State but also that the exercise of jurisdiction avoids offending traditional notions of fair play and substantial justice. See id.

As for minimum contacts, they are judged or tested against the standard of purposeful availment. See id. That is, minimum contacts arise when the defendant purposefully avails himself of the privilege of conducting activities in forum state and thereby invokes the benefits and protections of the forum’s laws. Id. Assessing whether that transpired entails consideration of (1) only the defendant’s contacts with the forum, as opposed to those of the plaintiff or some third party, (2) whether the contacts are purposeful, as opposed to random, isolated, or fortuitous, and (3) whether the defendant sought some benefit, advantage, or profit by availing himself of the jurisdiction. See id. at 70-71.

Next, the contacts of which we speak can be viewed as creating two types of personal or in personam jurisdiction. One is specific in nature and involves the relationship between the cause of action and the defendant’s contacts with Texas. That is, the focus lies upon the relationship between the defendant, the forum, and the litigation. [TV Azteca v. Ruiz, 490 S.W.3d 29, 42 (Tex. 2016)] (quoting Walden v. Fiore, 571 U.S. , 134 S. Ct. 1115, 1121, 188 L. Ed. 2d 12 (2014)); My Vacation Eur., Inc v. Sigel, No. 05-14-00435-CV, 2015 Tex. App. LEXIS 667, at *6-7 (Tex. App.—Dallas Jan. 26, 2015, no pet.) (mem. op.). And, the test used contains two components. Not only must there be evidence of purposeful availment, but also a nexus must exist between the contacts evincing purposeful availment and the plaintiff’s claim. See TV Azteca, 490 S.W.3d at 37, 52. As said in Azteca, “[f]or specific-jurisdiction purposes, purposeful availment has no jurisdictional relevance unless the defendant’s liability arises from or relates to the forum contacts.” Id. at 52. So, even if there is purposeful availment, specific jurisdiction does not exist unless the defendant’s liability arises from its contacts with the forum. See My Vacation, 2015 Tex. App. LEXIS 667, at *6-7 (stating that “[i]f we conclude a nonresident defendant has made minimum contacts with Texas by purposefully availing itself of the privilege of conducting activities here, then we address whether the defendant’s alleged liability arises out of or is related to those contacts”).

Next, to satisfy the purposeful-availment prong, the evidence must illustrate not only that the aforementioned contacts existed but also that the defendant’s contacts were purposefully directed to the forum state. TV Azteca, 490 S.W.3d at 38. Consequently, the defendant’s contacts with the forum itself are paramount, not the defendant’s contacts with the plaintiff who resides in the forum. See id. at 42.

As for determining the existence of the requisite nexus between the minimum contacts and the claim, proof “that the plaintiff would have no claim ‘but for’ the contacts, or that the contacts were a ‘proximate cause’ of the liability” is unnecessary. Id. at 52-53. Instead, we look to the substance of the claim, whether the defendant’s contacts with the forum will be the focus of the trial and consume most if not all the litigation’s attention, and whether those contacts relate to the operative facts of the claim. See id. at 53.

The other manner to gain jurisdiction is more general in nature. There, we see if the minimum contacts with the forum were sufficiently continuous and systematic so as to render the defendant at home in the forum irrespective of the interrelationship between the claim and contacts. Cornerstone Healthcare Grp., 493 S.W.3d at 71. This mode of gaining jurisdiction over a nonresident defendant entails a more demanding analysis of the minimum contacts than that applicable to specific jurisdiction and has a “‘substantially higher’ threshold.” PHC-Minden, L.P. v. Kimberly-Clark Corp., 235 S.W.3d 163, 168 (Tex. 2007) (quoting 4 Charles Alan Wright & Arthur R. Miller, Federal Practice & Procedure § 1067.5 (3d ed. 2007)). Normally, the nonresident must be engaged in long-standing business within the forum, such as through marketing or shipping products to it, performing services in it, or maintaining one or more offices there. Id. Less extensive activities will not qualify for general in personam jurisdiction. Id. Moreover, the contacts weighed are those occurring within a reasonable time before the suit was filed, and are not simply those related to or from which the claim arose. See id. at 170.

The court of appeals first reviewed whether the trial court had specific jurisdiction over the defendant. The record did not show how either Tanner or her husband came in contact with Retire Happy, but it did show that any and all interaction by her and him with Retire Happy occurred through email, the telephone, and a website. The court held:

Evidence of a website (irrespective of whether it is interactive) simply illustrates the potential for activity from the forum in question and the website owner’s knowledge of that potentiality. It does not illustrate actual use or its extent. In short, there needs to be more than the existence of a website (whether interactive or not) to support an inference that the forum was targeted by the website owner or that the latter directed its marketing efforts at the forum. And, the additional evidence or conduct is missing here.

. . . .

Nor do we have any idea of how many people access its website on any given day, how many are from Texas, or whether they utilize it for anything other than informational purposes. Nor do we know if Retire Happy structured its website or any other marketing effort in some way to target people in Texas, as opposed to residents of this nation’s other forty-nine states and the other innumerable nations and countries on this earth wherein people have internet access. It is conceivable to suggest that the company should have reasonably known that someone in Texas could access its site, but more is needed than that if the lessons of TV Azteca are to be heeded.

The court also noted that less than 4% of the defendant’s clients were in Texas and there was no evidence how much those clients made up the defendant’s business. “Phone calls, emails and fax messages between Tanner and Retire Happy; twenty-two of 600 ‘clients’ in some form or fashion residing or having resided in the forum at some time or another; and the existence of a website that may be accessed in any state one encounters the internet is not the sufficient additional conduct upon which to reasonably infer an intent to target or direct activities at Texas.” The court concluded that the defendant did not purposefully availed itself of the privilege of conducting activities in the forum.

The court took less time to reject any contention of general jurisdiction:

As for the contacts here, we have no offices, employees or resident agents of Retire Happy in Texas. No one from the entity visited Texas for business purposes. Nor do we have evidence that the investment opportunities allegedly afforded by Retire Happy encompassed realty, personalty, or businesses in Texas. Indeed, they were in Florida. So too does it appear that monies used to fund the investments were transferred from locales outside Texas. Nor we have evidence of any marketing directed at Texas. Of the entities twenty-two “clients” who “reside or resided” in Texas, we have no information about how or where they were secured. The nature and extent of their interaction with Retire Happy is also unknown, as is how the entity even communicates with them. To suggest that they or anyone else in Texas (other than the Tanners) utilized the Retire Happy website is also nothing but conjecture. Simply put, the evidence—when viewed in a light most favorable to the trial court’s decision—falls short of illustrating that Retire Happy engaged in or developed a long-standing business within the forum or otherwise maintained continuous and systematic contact with Texas so as to render it at home in the forum.

The court reversed the trial court’s denial of the special appearance and dismissed Retire Happy.

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Photo of David Fowler Johnson David Fowler Johnson

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David maintains an active trial and appellate practice and has consistently worked on financial institution litigation matters throughout his career. David is the primary author of the The Fiduciary Litigator blog, which reports on legal cases and issues impacting the fiduciary…

[email protected]

David maintains an active trial and appellate practice and has consistently worked on financial institution litigation matters throughout his career. David is the primary author of the The Fiduciary Litigator blog, which reports on legal cases and issues impacting the fiduciary field in Texas. Read More

David’s financial institution experience includes (but is not limited to): breach of contract, foreclosure litigation, lender liability, receivership and injunction remedies upon default, non-recourse and other real estate lending, class action, RICO actions, usury, various tort causes of action, breach of fiduciary duty claims, and preference and other related claims raised by receivers.

David also has experience in estate and trust disputes including will contests, mental competency issues, undue influence, trust modification/clarification, breach of fiduciary duty and related claims, and accountings. David’s recent trial experience includes:

  • Representing a bank in federal class action suit where trust beneficiaries challenged whether the bank was the authorized trustee of over 220 trusts;
  • Representing a bank in state court regarding claims that it mismanaged oil and gas assets;
  • Representing a bank who filed suit in probate court to modify three trusts to remove a charitable beneficiary that had substantially changed operations;
  • Represented an individual executor of an estate against claims raised by a beneficiary for breach of fiduciary duty and an accounting; and
  • Represented an individual trustee against claims raised by a beneficiary for breach of fiduciary duty, mental competence of the settlor, and undue influence.

David is one of twenty attorneys in the state (of the 84,000 licensed) that has the triple Board Certification in Civil Trial Law, Civil Appellate and Personal Injury Trial Law by the Texas Board of Legal Specialization.

Additionally, David is a member of the Civil Trial Law Commission of the Texas Board of Legal Specialization. This commission writes and grades the exam for new applicants for civil trial law certification.

David maintains an active appellate practice, which includes:

  • Appeals from final judgments after pre-trial orders such as summary judgments or after jury trials;
  • Interlocutory appeals dealing with temporary injunctions, arbitration, special appearances, sealing the record, and receiverships;
  • Original proceedings such as seeking and defending against mandamus relief; and
  • Seeking emergency relief staying trial court’s orders pending appeal or mandamus.

For example, David was the lead appellate lawyer in the Texas Supreme Court in In re Weekley Homes, LP, 295 S.W.3d 309 (Tex. 2009). The Court issued a ground-breaking opinion in favor of David’s client regarding the standards that a trial court should follow in ordering the production of computers in discovery.

David previously taught Appellate Advocacy at Texas Wesleyan University School of Law located in Fort Worth. David is licensed and has practiced in the U.S. Supreme Court; the Fifth, Seventh, and Eleventh Federal Circuits; the Federal District Courts for the Northern, Eastern, and Western Districts of Texas; the Texas Supreme Court and various Texas intermediate appellate courts. David also served as an adjunct professor at Baylor University Law School, where he taught products liability and portions of health law. He has authored many legal articles and spoken at numerous legal education courses on both trial and appellate issues. His articles have been cited as authority by the Texas Supreme Court (twice) and the Texas Courts of Appeals located in Waco, Texarkana, Beaumont, Tyler and Houston (Fourteenth District), and a federal district court in Pennsylvania. David’s articles also have been cited by McDonald and Carlson in their Texas Civil Practice treatise, William v. Dorsaneo in the Texas Litigation Guide, and various authors in the Baylor Law ReviewSt. Mary’s Law JournalSouth Texas Law Review and Tennessee Law Review.

Representative Experience

  • Civil Litigation and Appellate Law