Opinion issued March 2, 2006
In The
Court of Appeals
For The
First District of Texas
NO. 01-05-00707-CV
VERIZON CALIFORNIA INC., Appellant
V.
DIANA DOUGLAS, INDIVIDUALLY AND AS PERSONAL REPRESENTATIVE FOR THE HEIRS AND ESTATE OF CAROLYN HARTON, Appellees
On Appeal from the 122nd District Court
Galveston County, Texas
Trial Court Cause No. 03CV0171
MEMORANDUM OPINION
This is an accelerated interlocutory appeal from the trial court’s denial of a special appearance filed by appellant, Verizon California Inc. (“Verizon California”). We conclude that (1) Verizon California did not generally appear in the case by violating the due order of pleadings rule, and (2) viewing the facts in a light favorable to the trial court’s ruling, the record does not satisfy the requirements of due process and the Texas long-arm statute so as to confer personal jurisdiction on the trial court. We therefore reverse and render judgment dismissing the claims against Verizon California for lack of personal jurisdiction.
I. BACKGROUND
In 2003, Diana Douglas, individually and as the personal representative for the estate of Carolyn Harton, sued Verizon Communications Inc., along with numerous other defendants, alleging tort claims related to Harton’s asbestos exposure and subsequent death.[1] Harton’s husband worked for Verizon California in California. Douglas alleges that he was exposed to asbestos during the course of his employment. Douglas further alleges that Harton was also exposed to the asbestos by doing her husband’s laundry and riding in his car. Verizon Communications Inc. responded with a special appearance, a motion to transfer venue, and an original answer. The trial court did not immediately consider Verizon Communications Inc.’s special appearance.
Over a year later, Douglas filed an eighth amended petition, which names both “Verizon Communications, Inc.” and “Verizon Communications, Inc., d/b/a Verizon California Inc., f/k/a GTE California, Inc.” as defendants. Verizon Communications Inc. answered the eighth amended petition on January 24, 2005, stating both that Douglas had incorrectly inserted a comma in its corporate name, and had incorrectly sued it as “Verizon Communications, Inc. d/b/a Verizon California, Inc. f/k/a GTE California, Inc.” Three months later, the trial court granted Verizon Communications Inc.’s special appearance.
On April 25, 2005, the trial court signed a default judgment in the amount of $4.5 million against “Verizon California Inc., f/k/a GTE California, Inc.” About one hour before the entry of the default judgment, Douglas had filed a ninth amended petition, in which she names “Verizon California, Inc., f/k/a GTE California, Inc.” as a defendant. In that petition, Douglas asserts that she “previously incorrectly sued” Verizon California, Inc., f/k/a GTE California, Inc. as “Verizon Communications, Inc., d/b/a Verizon California Inc., f/k/a GTE California, Inc.”
Verizon California filed a special appearance and brief in support on May 25, 2005. Following the filing of its special appearance, Verizon California also moved to vacate the default judgment, or in the alternative to grant a new trial, or in the further alternative to modify, correct, or reform the default judgment, all subject to its special appearance (“motion for new trial”). On July 5, 2005, the trial court heard Verizon California’s special appearance, as well as its motion for new trial. The court denied the special appearance but granted the motion for new trial. This interlocutory appeal followed.[2]
II. STANDARD OF REVIEW
The plaintiff bears the initial burden of pleading sufficient allegations to bring a nonresident defendant within the provisions of the Texas long-arm statute. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 793 (Tex. 2002). The burden of proof then shifts to the nonresident to negate all possible grounds for personal jurisdiction. Kawasaki Steel Corp. v. Middleton, 699 S.W.2d 199, 203 (Tex. 1985). The existence of personal jurisdiction is a question of law, which must sometimes be preceded by the resolution of underlying factual disputes. Preussag Aktiengesellschaft v. Coleman, 16 S.W.3d 110, 113 (Tex. App.—Houston [1st Dist.] 2000, pet. dism’d w.o.j.). When the underlying facts are undisputed or otherwise established, we review a trial court’s denial of a special appearance de novo. Id. Where, as here, a trial court does not issue findings of fact or conclusions of law with its special appearance ruling, all fact findings necessary to support the judgment and supported by the evidence are implied. BMC Software, 83 S.W.3d at 79.
III. ANALYSIS
A. Waiver
Initially, we determine whether Verizon California waived its special appearance, as Douglas contends. In doing so, we consider whether Verizon California violated the due order of pleadings rule by making a general appearance before obtaining a ruling on its special appearance.
1. Due Order of Pleadings Rule
Douglas contends Verizon California violated the due order of pleadings rule, which provides that a special appearance must be filed prior to “any other plea, pleading or motion.” Tex. R. Civ. P. 120a(1). Here, after learning that a default judgment had been taken against it, Verizon California properly filed a special appearance and then a motion for new trial, subject to its special appearance.[3] See id. (“[A] special appearance shall be made by sworn motion filed prior to motion to transfer venue or any other plea, pleading or motion; provided however, that a motion to transfer venue and any other plea, pleading, or motion may be contained in the same instrument or filed subsequent thereto without waiver of such special appearance . . . .”); see also Puri v. Mansukhani, 973 S.W.2d 701, 707 (Tex. App.—Houston [14th Dist.] 1998, no pet.) (“Many Texas courts generally recognize that if a non-resident defendant discovers a default judgment was entered, he should file a special appearance and then a motion for new trial subject to his special appearance.”). Verizon California also announced “not ready” at the hearing on the motion for new trial and insisted that the trial court rule on the special appearance first.
Douglas nonetheless asserts that Verizon California violated the due order of pleadings rule because it argued to the trial court at the special appearance hearing that, if the trial court believed it had been properly sued, then the court should also find that it had answered by way of Verizon Communications Inc.’s answer. Douglas maintains that since Verizon Communications Inc.’s answer was filed on January 24, 2005, and Verizon California’s special appearance was not filed until May 25, 2005, Verizon California violated the due order of pleadings rule by raising this argument to the trial court.
We disagree. The Texas Rules of Civil Procedure expressly permit a party to argue in the alternative. Tex. R. Civ. P. 48; Regency Advantage Ltd. P’ship v. Bingo Idea-Watauga, Inc., 936 S.W.2d 275, 278 (Tex. 1996) (“[O]ur rules expressly permit parties to proceed on alternative theories of relief.”). At the special appearance hearing, in response to questioning from the trial court, Verizon California primarily argued that the default judgment was improper because Verizon California was not a named defendant in the lawsuit by being listed as a “d/b/a” entity of Verizon Communications Inc. in the eighth amended petition. In the alternative, Verizon California argued that if the trial court concluded it was properly added as a defendant in the lawsuit brought against Verizon Communications Inc., then Verizon Communications Inc.’s answer constituted an answer for Verizon California. By arguing in the alternative that Verizon Communications Inc.’s answer should be attributed to Verizon California, Verizon California did not violate the due order of pleadings rule. “A party may . . . state as many separate . . . defenses as he has regardless of consistency . . . .” Tex. R. Civ. P. 48 (emphasis added). We therefore reject Douglas’s contention that Verizon California waived its special appearance by violating the due order of pleadings rule.
2. General Appearance
Douglas further contends Verizon California waived its special appearance by asking, in its motion for new trial, that the trial court modify the default judgment interest rate and consider its entitlement to a settlement credit. Douglas urges that by doing so, Verizon California sought affirmative relief from the trial court and therefore made a general appearance.
A party waives its special appearance if it seeks “affirmative relief or invoke[s] the trial court’s jurisdiction on any question other than the court’s jurisdiction prior to the trial court ruling on the special appearance.” Lang v. Capital Res. Invs., I & II, LLC, 102 S.W.3d 861, 864 (Tex. App.—Dallas 2003, no pet.) (citing Dawson-Austin v. Austin, 968 S.W.2d 319, 322 (Tex. 1998)). Here, although Verizon California’s motion for new trial seeks affirmative relief from the trial court, Verizon California did not seek such relief prior to the trial court ruling on the special appearance. To the contrary, Verizon California not only made its motion for new trial subject to the special appearance, it also expressly announced “not ready” at the hearing on the motion for new trial until the court ruled on the special appearance.[4] By announcing “not ready” at the hearing on the motion for new trial, Verizon California clearly indicated it was not seeking affirmative relief or invoking the trial court’s jurisdiction with respect to the motion for new trial until the trial court had ruled on the special appearance. Accordingly, we hold that Verizon California did not make a general appearance, thereby waiving its special appearance. See Dawson-Austin, 968 S.W.2d at 322–23 (holding that motion to quash service, plea to jurisdiction, and plea in abatement, all contained in same instrument as special appearance but not expressly made subject to special appearance, did not constitute general appearance); Lang, 102 S.W.3d at 864–65 (in default judgment case, holding that appellant’s offer in motion for new trial to participate in all necessary hearings and proceed to trial on merits did not constitute general appearance because motion for new trial was made subject to special appearance, and further holding that where appellant set motion for new trial and special appearance for hearing on same day, appellant did not make general appearance because he objected to trial court’s decision to proceed on motion for new trial before ruling on special appearance); Minucci v. Sogevalor, S.A., 14 S.W.3d 790, 800 (Tex. App.—Houston [1st Dist.] 2000, no pet.) (“[Appellant] did not waive his special appearance by simply filing a notice of oral hearing on the motion to dissolve writ of garnishment.”); Puri, 973 S.W.2d at 706–07 (in default judgment case, holding that appellant did not make general appearance, even though his motion for new trial expressly stated he was “ready to go to trial,” because motion for new trial was expressly made subject to special appearance).
B. Special Appearance
Verizon California contends the trial court erred in determining that it is subject to the personal jurisdiction of a Texas state court. Specifically, Verizon California asserts that no evidence demonstrates it has minimum contacts with Texas sufficient to warrant the exercise of jurisdiction, and further asserts that general jurisdiction does not comport with traditional notions of fair play and substantial justice.
A Texas court may assert personal jurisdiction over a nonresident defendant only if the requirements of both the Fourteenth Amendment’s due process clause and the Texas long-arm statute are satisfied. See U.S. Const. amend. XIV, § 1; Tex. Civ. Prac. & Rem. Code Ann. § 17.042 (Vernon 1997); CSR Ltd. v. Link, 925 S.W.2d 591, 594 (Tex. 1996). The Texas long-arm statute allows a court to exercise personal jurisdiction over a nonresident defendant who does business in Texas. Tex. Civ. Prac. & Rem. Code Ann. § 17.042. The Texas Supreme Court has repeatedly interpreted this broad statutory language “to reach as far as the federal constitutional requirements of due process will allow.” CSR Ltd., 925 S.W.2d at 594 (citations omitted). Therefore, the requirements of the Texas long-arm statute are satisfied if the exercise of personal jurisdiction comports with federal due process limitations. Id.
The United States Constitution permits a state to assert personal jurisdiction over a nonresident defendant only if the defendant has some minimum, purposeful contacts with the state and if the exercise of jurisdiction will not offend traditional notions of fair play and substantial justice. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475–76, 105 S. Ct. 2174, 2183–84 (1985); Dawson-Austin, 968 S.W.2d at 326. A nonresident that has purposefully availed itself of the privileges and benefits of conducting business in the state has sufficient contacts with the state to confer personal jurisdiction. CSR Ltd., 925 S.W.2d at 594.
The “purposeful availment” requirement has recently been characterized by the Texas Supreme Court as the “touchstone of jurisdictional due process.” Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 784 (Tex. 2005). In Michiana, the Texas Supreme Court articulated three important aspects of the purposeful availment inquiry. Id. at 785. First, only the defendant’s contacts with the forum count. Id. This ensures that a defendant is not haled into a jurisdiction solely by the unilateral activities of a third party. Id. (citing Burger King, 471 U.S. at 475, 105 S. Ct. at 2183). Second, the acts relied on must be purposeful; a defendant may not be haled into a jurisdiction solely based on contacts that are “random, isolated, or fortuitous.” Id. (citing Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774, 104 S. Ct. 1473, 1478 (1984)). Third, a defendant “must seek some benefit, advantage, or profit by ‘availing’ itself of the jurisdiction” because “[j]urisdiction is premised on notions of implied consent—that by invoking the benefits and protections of a forum’s laws, a nonresident consents to suit there.” Id. (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S. Ct. 559, 567 (1980)).
A defendant’s contacts with a forum can give rise to either general or specific jurisdiction. Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 227 (Tex. 1991). Douglas concedes that this case is one of general jurisdiction.[5] General jurisdiction arises when a defendant’s “general business contacts” with the forum state are “continuous and systematic,” allowing the forum to exercise personal jurisdiction over the defendant even though the cause of action does not arise from or relate to activities conducted within the forum. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 416, 104 S. Ct. 1868, 1873 (1984); CSR Ltd., 925 S.W.2d at 595. When general jurisdiction is asserted, the minimum contacts analysis is more demanding and requires a showing that the defendant conducted “substantial activities” in the forum state. CSR Ltd., 925 S.W.2d at 595.
1. Minimum Contacts
The uncontroverted evidence before the trial court shows that Verizon California is incorporated and authorized to do business in California. Its principal place of business is in California—it is not qualified to do business in Texas. It does not have a bank account in Texas. Nor does it own or lease any real property in Texas.
Douglas nonetheless contends the trial court properly determined that Verizon California is subject to the general jurisdiction of a Texas court for the following reasons: (1) Verizon California does business in Texas from a permanent office location; (2) at least one of Verizon California’s corporate officers works from that Texas location; (3) Verizon California pays its California property taxes from the same Texas location; and (4) the tariff that allows Verizon California to collect End User Common Line charges from its customers was drafted and issued from a Texas address.[6] We address each in turn.
a. Permanent Office Location
Verizon California is a wholly-owned subsidiary of GTE Corporation. Douglas provided the trial court with print copies of internet webpages stating that GTE moved its corporate headquarters to Irving, Texas in 1998. Douglas also furnished the trial court with an internet copy of the Dallas Central Appraisal District’s record for GTE Realty Corp.’s property located at 600 Hidden Ridge Drive in Irving, Texas. Douglas asserts that even though the property is “technically owned” in GTE’s name, it is used, at least in part, by Verizon California.
Douglas does not dispute that Verizon California and GTE are distinct corporate entities. If a party seeks to ascribe one corporation’s activities to another corporation by disregarding their distinct corporate entities, that party must prove that the corporate fiction should be disregarded. BMC Software, 83 S.W.3d at 798. More specifically, “[t]o ‘fuse’ the parent company and its subsidiary for jurisdictional purposes, the plaintiffs must prove the parent controls the internal business operations and affairs of the subsidiary.” Id. at 799. Here, Douglas did not provide the trial court with any evidence indicating GTE controls the internal business operations and affairs of Verizon California; nor did she provide any evidence to substantiate her assertion that Verizon California conducts business from GTE’s Texas facility. Accordingly, we cannot base general jurisdiction on Douglas’s assumption that Verizon California operates from a permanent office location in Texas.
b. Location of Corporate Officer
In support of its special appearance, Verizon California provided the affidavit of its Assistant Secretary, Rosalynn Christian. Christian signed the affidavit and had it notarized in Dallas County, Texas. On the morning of the special appearance hearing, Verizon California furnished the trial court with another affidavit from Christian, which she also signed and notarized in Dallas County. Douglas asserts that because both affidavits were signed and notarized in Texas, this is some evidence Verizon California was doing business in Texas. We disagree. The fact that Christian signed and notarized the affidavits in Texas proves that she was physically present in Texas at that time, but it does not prove that Christian is a resident of Texas or that she conducts business in Texas on behalf of Verizon California. Douglas’s counsel conceded as much at the special appearance hearing: “[Y]ou will see that [the affidavit is] signed in the State of Texas, County of Dallas, by Rosalynn [Christian] today, this morning. . . . Now that doesn’t prove anything except she was in Dallas this morning . . . .”[7]
Douglas also points out that her counsel testified at the special appearance hearing, over a hearsay objection, that he attempted to reach Christian on the morning of the hearing by calling the telephone number for Verizon Communications Inc. listed on its website. The operator provided a 972 phone number for Christian. Douglas contends this is some evidence that Verizon California has a telephone number in Texas. Again, however, this testimony merely shows that Christian could be reached at a Dallas-area telephone number.[8] This is insufficient to show Christian conducts business from a Texas location on behalf of Verizon California on a continuous and systematic basis.
c. Property Tax Payments
Douglas provided the trial court with a document from the California Board of Equalization, which is responsible for collecting property taxes from California companies. The document lists Verizon California as an assessee and gives the following mailing address: “Care Of: Verizon Corporate Svcs Group Inc., PO Box 152206, Irving, Texas 75015-2206.” Douglas asserts that because Christian works for Verizon Corporate Services Group, this document provides some evidence that Christian conducts business on behalf of Verizon California—namely, paying its California property taxes—from her location in Texas.
The only evidence concerning Christian’s job duties for Verizon Corporate Services Group indicates that she is a “Specialist-Legal Support,” which means she “oversee[s] the corporate governance for certain subsidiaries of Verizon Communications Inc.” We cannot infer from this evidence that Verizon California conducts business in Texas. To the contrary, Douglas’s evidence shows that Verizon Corporate Services Group, a separate corporate entity, receives Verizon California’s California property tax assessment notices at a Texas address. This is insufficient to show Verizon California has continuous and systematic contacts with Texas.
d. FCC Tariff
In 1983, the Federal Communications Commission (“FCC”) established a regulatory mechanism to compensate local exchange carriers for providing long-distance carriers access to their local networks. Verizon Tel. Cos. v. FCC, 269 F.3d 1098, 1101 (D.C. Cir. 2001). Pursuant to these regulations, local exchange carriers may collect End User Common Line (“EUCL”) charges from end users. Id. FCC Tariff No. 16 specifically allows Verizon California to collect EUCL charges from its customers. Douglas furnished the trial court with a copy of FCC Tariff No. 16, which was prepared by the “Director-Tariffs” for Verizon Telephone Companies from an address in Irving, Texas. Douglas asserts that because the tariff that allows Verizon California to collect EUCL charges from its customers was drafted and issued from a Texas address, this is sufficient to establish general jurisdiction.
We disagree. The fact that the Director of Tariffs for Verizon Telephone Companies prepares and issues the tariff statements for each individual Verizon entity from an address in Texas does not demonstrate that Verizon California conducts substantial activities in Texas. If anything, the document indicates that Verizon California is the “issuing carrier” for California and Arizona, while Verizon Southwest, Inc. is the “issuing carrier” for Texas. Accordingly, we hold that general jurisdiction over Verizon California is not warranted based on the tariff statement Douglas provided.
* * *
We hold that Verizon California does not have sufficient minimum contacts with Texas to warrant the exercise of general jurisdiction. Based on the evidence before the trial court, Verizon California does not conduct substantial activities in Texas on a continuous and systematic basis. Rather, the contacts alleged by Douglas are precisely the type of “random, isolated, or fortuitous” contacts insufficient to support general jurisdiction. Keeton, 465 U.S. at 774, 104 S. Ct. at 1478. Accordingly, the trial court erred in denying Verizon California’s special appearance.
2. Traditional Notions of Fair Play and Substantial Justice
Nor does general jurisdiction over Verizon California comport with traditional notions of “fair play and substantial justice.” Guardian Royal, 815 S.W.2d at 232. In making this determination, we consider the following factors: (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. Id. These factors weigh against the exercise of personal jurisdiction over Verizon California.
Texas has no interest in adjudicating this dispute. Harton’s alleged asbestos exposure and related injury and death occurred in California—not Texas. The parties are California residents; thus, Texas has no interest either in protecting its citizens or in policing the activities of a corporation authorized to do business in the state. Verizon California would be burdened by being haled into Texas to defend suit, while Douglas would obtain more convenient and effective relief in California, which is where the witnesses, documents, and property at issue are located. See James v. Ill. Cent. R.R., 965 S.W.2d 594, 599 (Tex. App.—Houston [1st Dist.] 1998, no pet.) (holding that Texas had no interest in adjudicating cause of action that arose in Tennessee because neither plaintiff nor corporate defendant was resident of Texas, Texas would not be protecting its citizens from potential future wrongdoings of corporate defendant, and all witnesses and evidence were located in Tennessee). In addition, California is an available appropriate forum for governing the actions of a California corporation in the interest of furthering substantive social policies. We therefore conclude that the exercise of personal jurisdiction over Verizon California does not comport with traditional concepts of fair play and substantial justice.
IV. CONCLUSION
We hold that Verizon California did not waive its special appearance by violating the due order of pleadings rule. We further hold that no evidence supports the trial court’s conclusion that Verizon California’s contacts with Texas are sufficient to confer personal jurisdiction; nor does the exercise of personal jurisdiction comport with traditional notions of fair play and substantial justice. Accordingly, we reverse the order of the trial court and render judgment dismissing the case against Verizon California for lack of personal jurisdiction.
Jane Bland
Justice
Panel consists of Justices Taft, Higley, and Bland.
[1] Douglas is Harton’s daughter.
[2] See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(7) (Vernon Supp. 2005).
[3] Specifically, the motion for new trial is styled “Verizon California’s Motion to Vacate Default Judgment, or in the Alternative Grant a New Trial, or in the Further Alternative, to Modify, Correct, or Reform the Default Judgment, Subject to Its Special Appearance.”
[4] Specifically, counsel for Verizon California stated as follows: “We are not ready to proceed on the motion to set aside the default judgment until the Court has made a ruling on the special appearance that we filed.”
[5] Specific jurisdiction is not applicable here because Harton’s alleged asbestos exposure and related injury and death occurred in California—not Texas. See Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 227 (Tex. 1991) (explaining that specific jurisdiction is established if a defendant’s alleged liability arises from or is related to an activity conducted within the forum state).
[6] Douglas has also asked us to take judicial notice of three pages of public records, under official seal from the California Secretary of State, indicating that Verizon California’s corporate address is in Texas and that several corporate officers work from two different physical addresses in Texas. At the special appearance hearing, Douglas asked the trial court to take judicial notice of the same information, but the court refused to do so because the documents were not certified and instead expressly provided that they were “for information purposes only.” See Tex. R. Evid. 1005 (providing that contents of official public record may be proved by certified copy); Tex. R. Evid. 201(d) (providing that court is required to take judicial notice only when supplied with necessary information). As the trial court properly refused to take judicial notice of these documents, we decline to do so now on appeal. See In re K.L.R., 162 S.W.3d 291, 306 (Tex. App.—Tyler 2005, no pet.) (refusing to take judicial notice of court records not properly admitted into evidence before trial court); Van Tran v. Fiorenza, 934 S.W.2d 740, 742 (Tex. App.—Houston [1st Dist.] 1996, no writ) (“[A]ppellate courts are reluctant to take judicial notice of evidence when the trial court was not afforded the opportunity to examine and take into consideration that evidence.”). We therefore deny Douglas’s motion to take judicial notice.
[7] We note that Christian’s first affidavit was filed on May 19, 2005, nearly a month and a half before the special appearance hearing, providing Douglas’s counsel with ample opportunity to either depose Christian or subpoena her to testify at the hearing regarding her residency and office location, as well as the extent of her activities, if any, conducted in Texas on behalf of Verizon California.
[8] In her affidavit, Christian states that she is both a “Specialist-Legal Support” for Verizon Corporate Services Group Inc., as well as the Assistant Secretary for Verizon California. The fact that Christian could be reached on the morning of the hearing at a Dallas-area phone number is no evidence that Christian offices at a Texas location on behalf of Verizon California.