Travis Hough v. Boll Medical (Memorandum Decision)

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STATE OF WEST VIRGINIA SUPREME COURT OF APPEALS FILED Travis Hough, Plaintiff Below, Petitioner March 9, 2012 RORY L. PERRY II, CLERK SUPREME COURT OF APPEALS OF WEST VIRGINIA vs) No. 11-0814 (Kanawha County 10-Misc-463) Boll Medical, Inc., Defendant Below, Respondent MEMORANDUM DECISION Petitioner Travis Hough, plaintiff below, appeals the Circuit Court of Kanawha County s order staying and vacating a default judgment order entered in the State of Texas. The circuit court found that the Texas court lacked personal jurisdiction over the respondent herein, defendant below, Boll Medical, Inc., a West Virginia corporation. Petitioner appears by counsel Todd A. Mount and K. Brian Adkins, while respondent appears by counsel Christopher S. Smith and Nicola D. Smith. This Court has considered the parties briefs and the record on appeal. The facts and legal arguments are adequately presented in the parties written briefs and the record on appeal, and the decisional process would not be significantly aided by oral argument. Upon consideration of the standard of review, the briefs, and the record presented, the Court finds no substantial question of law and no prejudicial error. For these reasons, a memorandum decision is appropriate under Rule 21 of the Revised Rules of Appellate Procedure. In reviewing challenges to the findings and conclusions of a circuit court, we apply a threepronged standard of review. The final order and the ultimate disposition are reviewed under an abuse of discretion standard, the underlying factual findings are reviewed under a clearly erroneous standard, and questions of law are subject to de novo review. Syl. Pt. 2, Walker v. W.Va. Ethics Comm n, 201 W.Va. 108, 492 S.E.2d 167 (1997); Syl. Pt. 1, Evans Geophysical, Inc. v. Ramsey Associated Petroleum, Inc., 217 W.Va. 45, 614 S.E.2d 692 (2005) (per curiam). Upon a careful review of the relevant legal authority and the parties arguments, we conclude that the circuit court ruled correctly and should be affirmed. We adopt by reference the circuit court s Order Granting the Defendant s Motion for Entry of an Order Vacating a Foreign Default 1 Judgment entered April 15, 2011. The Clerk of Court is directed to attach a copy of the circuit court s order to this memorandum decision. Affirmed. ISSUED: March 9, 2012 CONCURRED IN BY: Chief Justice Menis E. Ketchum Justice Robin Jean Davis Justice Brent D. Benjamin Justice Margaret L. Workman Justice Thomas E. McHugh 2 TRAVIS EOUGH, 1PlaiHlltiff, v. BOLL MEJlUCAL, ][NC., Defendant. ORDER GRAN'JrJING TJl3lJE DEFENDANT'S MOTION FOR ENTRY OF AN ORDER VACATJr.NG A }FOREIGN DEFAULT .1lllJ]I)GMENT On November 5, 2010, came the Defendant, Boll Medical, Inc., by its Counsel, Christopher S. Smith ofHoyer, Hoyer & Smith, PLLC, upon the Defendant's Motion to Vacate a Foreign Default Judgment, and the Plaintiff appeared by his Counsel, Todd A. Mount and K: Brian Adkins of Shaffer & Shaffer, PLLC. This matter arises in connection with the Plaintiffs attempt to enforce a $313,413.08 Default Judgment entered in Texas against Boll Medical, Inc. on May 24~ 2010. The Court makes the following findings of fact and conclusions oflaw. 1. Boll Medical, Inc. C'Bolll!) is a West Virginia corporation with its principal place of business in Charleston, West Virginia. Boll is engaged in selling and leasing home medical equipment to individuals in the Kanawha, Putnam, and surrounding counties ofWest Virginia. 2. The contract in issue was executed in West Virginia, was to be governed by West Virginia law, and pertained to assets located in West Virginia and owned by a West Virginia limited liability company of which the Plaintiff was tbe majority member. Paragraph 10 ofthe contract provides for mandatory arb,itration. 3. The Defendant's Motion is supported by the Affidavit of Charles E. Boll, II. The Plaintiff also filed an Affidavit, but it differs only slightly in substance from MI. Boll's Affidavit in that it alleges that the Plaintiff performed acts in pursuance if his contractual obligations in Texas. The substance of Mr. Bo1l's A-ffidavit is not otherwise disputed in the Plaintiffs Response. 4. Under the contract, the Plaintiffs compensation was to be based upon his ability to negotiate smaller payoffs owing to the commercial lessors of the equipment to be purchased byB 011 from the limited liability companythat was a bankruptcy Debtor in the Bankruptcy Court for the Southern District ofWest Virginia. However~ the Bankruptcy Court required the leases to be assumed at their full payoff. Therefore, as it was not possible to obtain smaller payoffs from the equipment lessors, Mr. Boll's Mfidavit asserts that the Plaintiffnever performed under the contract. The Affidavit further establishes that none of equipment lessors with whom the Plaintiffwas to negotiate were located in Texas. 5. Pursuant to the Uniform Enforcement of Foreign Judgments Act, W. Va. Code, § 55~14-1 et seq., a foreign judgment His entitled to full faith arid credit in this state.'! W. Va. Code, § 55-14-2. However, for a judgment to be entitled to full faith and credit, the Court issuing the judgment must have personal jurisdiction over the persop. against whom the judgment was entered. Evans Geophysical, Inc. v. Ramsey Assoc. Petroleum, Inc., 217 W.Va. 45, 47) 614 S.E.2d 692, 694 (2005). The law ofthe foreign state governs whether the Court ofthe foreign state has jurisdiction, except when the exercise ofjurisdiction violates the Due Process clause of the United States Constitution. Cook v. Cook, 199 W.Va. 309; 311,484 S.E.2d 192, 194 (1997). 2 6. A person is subject to jUrisdiction of a Texas Court under its Long-Ann Statute when that person purposely avails himselfofthe privilege;of conducting activities in Texas such as to invoke the benefits and protections of the laws·ofTexas. Nationwide Capital Funding, Inc. v. Epps, 2006 Tex.App. LEXIS 3152, 10-11.(2006). This test for the appropriate reach of a Texas Court's jurisdiction is governed by federal cases concerningthe Due Process requirements for invokingjurisdiction under state Long-Arm statutes. BMC Software Belgium v. Marchard, 83 S.W.3d 789, 795 (rex. 2002). 7. In a line of cases beginning with International Shoe Co. v. Washington) 326 U.S. 310 (1945), the United States Supreme Court held that under the Due Process clause, before a non-resident defendant could be subject to in personarnjurisdiction in a forum state, there must be a showing ofsufficient "minimum contacts" of the non-resident with the forum state so as not to offend "traditional notions of fair play and substantial justice. I! World-Wide Volkswagen Com. v. Woodson, 444 U.S: 286, 291-92 (19S'0). Minimum contacts are established where there has been "some act by. which the defendant purposely avails [himself] of the privllege of conducting activities within the forum state, thus evoking the benefits and protections of its laws. 1I Hanson v. Denckla~ 357 U.S. 235~ 253 (1958) (brackets added). Minimum contacts are established by a foreseeability standard. II [T]he foreseeability that is critical to due process analysis ... is that the defendant1s conduct ~d .connection with the forum State are such that he should reasonably anticipate being haled into court there. n World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). 3 8. In the present case, the only possible contact with Texas is that the Plaintiff, Mr. Hough, a Texas resident, would have presumably contacted equipment lessors, all ofwhom were located outside of Texas, from his telephone in Texas.. The Plaintiff alleges that these negotiations were prevented by the Bankruptcy Court's Order that the equipment leases had to be assumed at their full payoffs. 9. Assuming that telephone calls were made by l\1r. Hough to the equipment lessors, this would be insufficient to. establish minimum contacts for Due Process purposes. West Virginia Supreme Court's decision in Evans Geophysical, Inc. v. Ramsey Associated Petrole1m1 217 W.Va. 45, 614 S.E.2d 692 (2005), is outcome determinative in this regard. 10. In Evans Geophysical, Inc., the Supreme Court of Wel?t Virginia affirmed the Circuit Court ofGilmer County's denial ofa motion to reconsider its decision to void a Michigan default judgment. "Ramsey [the West VrrginiaDefendantJ strategically.chosenotto defend the action in Michigan, or otherwise submit the company to the jurisdiction ofthe Michigan courts." Evans Geophysical, Inc.! 217 W.Va. At 46,614 S.E.2d at 692 (brackets added). 11. In Evans Geophysical, Inc., the Court relied on two federal cases, Michigan Steelcon. Inc. v. Beaver Ins. Co., 650 F.Supp. 520 (W.D. Mich. 1986), and Neighbors v. Fenske Leasing,!Inc., 45 F.Supp.2d 593 (B.D. Mich. 1999). Both cases applied Michigan's Long-Arm statute that provides for an extension of personal jurisdiction to the umaximum limits of due process". Michigan Steelcon. Inc., 650 F .Supp. at 522-23; Neighbors, 45 F. Supp.2d at 597. The Texas Long-Arm statute in issue also extends the jurisdiction of Texas Courts II as far as the 4 federal constitutional requirement of due pwcess will pennit." BMC Software Belgium v. Marchard, 83 S.W.3d 789, 795 (Tex. 2002). 12. In that both the Mich~gap. ¥1d Texas Long-Arm statutes identically reaoh to the outer limits of the Due Process clause of the Federal Constitution, Evans Geophysical, Inc.~ provides the clear precedent for this case. Thus, under clear West Virginia precedent, even if the Plaintiff, :rv.rr. Hough, did make telephone calls from Texas to the equipment lessors located outside of Texas, this would not cause Texas to have jurisdiction over Boll. 13. Our Supreme Court's decision in Evans Geophy~ica1, Inc. provides as follows: Two federal district courts have addressed the ·Michigan long-ann statute. In Michigan Steelcon, Inc: v. Be~ver Ins. Co., 650 ~.Supp. 520 (W.D.lv,lich.198?), th~co}.u1fOl.ind.~at~~e~~)l~~~n~:ractillJlg with an ol:lt-of-sta~e cmrpo:r!ltion by a ·M~~Jrlgan rc.sident is inBoffi.cient to i;nvoke .personal jurisdictipn ·o'\!er·-ihe out-of-state defendant. Fu..1:hermor!3, in NeighborS v. Peruike·Leasmg, Inc.:45 F.S':lpp.2d 593 (RD. M;ich. 1999),·t4~··c.ourt':(~~~ih:at an ~u.~-~f state ·c~rlPOJratip)!1, ·whos~ ·sole ·U~k:·to ·l\1li~IJ;igari was ·a~ily commumi~atimI1ls by telelPhoJ[ie~ matl~ or.facsimiie·io. ~ s~JllP~ieJr in ~c~~gan~ WR$ ~~s~~fici~llllt ~o~t~~t ·t~ ·.~:~~?bJi:!lh .1jmi~ed persOlrnal jln:isdidion 1!llndher the Micl!lligan E~ngR;:llrm statute. Much "like .the foreign .corporatiol). in Neighbors, the appellee's contact with the state o~Mi~higa;n w~ Umii~d ,~oJ9mmilnications with appelJlant by telephone, m~jj, and facs~mne. to The appellee's limited contll-ct wiJh the st~t~ of·M;ichigan did not provide sufficient grounds on which to establish personal iiniited jurisdiction in Michigan. The circuit court did not ab1,lse its discretion in finding that the .M~chiga,n court did not have Hmited personal jurisdiction over the appellee; Ramsey Associated Petroleum, Inc. Bvans Geophysical, Inc, 217 W.Va. at 47-48,614 S.E.2d at 694-95 (emphasis. added). 5 14. Due Process centers on the Defendant's activities in the forum state~ not the Plaintiffs. Burger King Corp. v. Rudzewic~ 471 U.SAq2, 472 (1985). Under the contract, Boll Medical was not going to make calls from Texas to the equipment lessors. The undisputed fact .is that Boll Medical conducted no activity in Texas. 15. Finally, in determining the Due Process r~ach of a statets Long~Arm statute> the Court must consider the inconvenienceto the Defendant in litigating inTexas and whether Texas has some policy interest in enforcingthe claim in its courts. World-;Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 292 (1980). The mere fact that the Plaintiff is a Texas resident is insufficienttoinvokepersonaljurisdiction. "It is axiomatic that jurisdiction cannot be predicated on the plaintiffs residence." Michigan Stee1con. Inc., 650 F.Supp. at 524-25. Texas has no conceivable interest in enforcing a cOntract in its courts that in all respects is a West Virginia contract. The inconvenience ofBoll oftraveling to Texas and hiring Texas counsel is obvious. 16. This is not to say that the Plaintiff is without a remedy. He is free to institute a legal prqceeding in West Virginia to enforce a contract that was made in West Virginia and that involves the assets ofa West Virginia limited liability company ofwhich he was a member. Based upon the foregoing, it is clear that the undisputed evidence shows that Boll Medical, Inc. did not have sufficient minimum contacts with Texas to be haled into the jurisdiction of a Texas Court in an action to enforce a contract, which in all respects, is a West Virginia contract. Therefore, it is ORIDJElR.EID that the enforcement of that certain "Order Default Judgment!! 'entered on May 24,2010, in Cause No. DC-0917054C by the 68th Judicial District, 6 Dallas County) Texas, by Martin Hoffman, J~dge, in the amount of$313,413.08 in favor ofthe Plaintiff, Travis Hough, and against the Defendant, Boll Medical, Inc., is STAYED and said foreign Default Judgment is hereby set aside and VACATED. Entered~ I s: ,J.," / ) Submitted by: Christopher S. Smith. wv State Bar #34S? Nicola D. Smith. WV'StllteBarf/11251 Hoyer, Hoyer & Smith, PLLC 22 Capitol Street Charleston, WV 25301 (304) 344~9821; (304) 344~9519 - Fax Chris@hhsmlaw.com Counsel/or Boll Medicallinc. 7 ~. Paul Zakaib r. dge

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