REVISED JUNE 18, 2008
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 05-20803 FILED
May 14, 2008
Charles R. Fulbruge III
STROMAN REALTY, INC., Clerk
Plaintiff-Appellee,
v.
JIM ANTT, JR., ET AL.,
Defendants,
SIMONE MARSTILLER,
Secretary of the Department of Business and Professional Regulation
for the State of Florida;
JEFF DAVI,
Commissioner of Department of Real Estate for the State of California,
Defendants-Appellants.
Appeals from the United States District Court
for the Southern District of Texas
Before GARWOOD, SMITH, and DeMOSS, Circuit Judges.
JERRY E. SMITH, Circuit Judge:
Stroman Realty, Inc. (“Stroman”), a Texas-based real-estate broker en-
No. 05-20803
gaged in the resale of timeshares, filed a declaratory judgment action in Texas
to enjoin California and Florida officials from imposing their states’ respective
licensing and regulatory requirements on real estate transactions in their states
or involving their citizens, alleging that application of these requirements vio-
lates the dormant Commerce Clause. The district court enjoined Florida and
California from enforcing their requirements on Stroman. Because the district
court lacked personal jurisdiction over the defendants, we reverse and render a
judgment of dismissal.
I.
Although Stroman’s only office is in Conroe, Texas, it has sold properties
in 47 states and 29 countries and has served purchasers in every state and in 87
countries. It establishes a large database of available timeshares; it does not use
cold calls or pressure sales but focuses instead on advertising to customers
through direct mail, the Internet, and newspapers. Its website displays its avail-
able properties, and its computer system matches potential sellers with buyers.
All of its agents and brokers are licensed in Texas.
Stroman generates revenue through advance listing fees and commissions.
It charges sellers a one-time $500 non-refundable advance fee to be listed on its
website, as well as a commission of 10% or $750, whichever is greater, upon sale.
In 1997, the year during which most discovery in this case occurred, Stroman
made the vast majority of its revenue through advance fees, and most homes it
listed were never sold. The parties argue strenuously about the prevalence of
advance fees in the resale industry and about the policy arguments for and
against advance fees.
A.
Florida requires all real-estate brokers to be licensed and declares that all
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No. 05-20803
contracts with its residents procured by agents who are unlicensed in Florida are
void. Although Florida originally claimed that a real-estate agent would need
to be licensed to sell a Florida timeshare regardless of where the owner or seller
resides, it now claims that brokers only need to be licensed when they interact
with Florida citizens. Florida licenses are available to out-of-state residents,
although the residents must complete educational requirements and pay license
fees. Renewal of a Florida license requires continuing education and additional
fees.
Florida prohibits brokers from collecting advance listing fees for Florida
timeshares (although they may collect such fees for traditional real estate). That
ban explicitly applies to advance fees charged to non-resident owners of Florida
timeshares. Out-of-state brokers must be approved by the Secretary of State
and must consent to service of process in Florida.
B.
California also requires that all brokers who serve its residents have Cali-
fornia licenses, participate in continuing education, and pay licensing fees.
Though California allows advance fees, it requires brokers to keep such fees in
a trust account in an in-state bank until they are spent for the customer’s bene-
fit. Brokers must account for those funds, and advertising materials soliciting
fees must be approved by the state.
California also has a unique regulation: Licensed brokers must maintain
an office in California that “shall serve as [their] office for the transaction of
business.” CAL. BUS. & PROF. CODE § 10162 (2007). The parties dispute whether
all work must be done from that office, as the district court found. California
claims that licenses are still available to non-residents, who need not maintain
an in-state office until after they have acquired a license. California also urges
that although the in-state office must be the broker’s principal place of business,
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No. 05-20803
it need not be the exclusive place of business.
II.
In 1990, California, by mail, ordered Stroman to cease advertising and bro-
kerage activities in California. In 1997, the Commissioner of the California Real
Estate Department signed an order citing Stroman for violating California
statutes and regulations in 1997. The order was mailed to the Texas Real Estate
Commission, which investigated and determined that Stroman had complied
with California’s orders.
Invoking 42 U.S.C. § 1983, Stroman sued Florida’s Secretary of the De-
partment of Business and Professional Regulation, seeking an injunction to pre-
vent Florida officials from enforcing their brokerage laws, after the Secretary
had commenced enforcement proceedings in 1998. The California Commissioner
was later joined as a defendant.
The defendants unsuccessfully moved to dismiss for want of personal juris-
diction. On cross-motions for summary judgment, the district court granted
Stroman an injunction, finding that the real-estate licensing requirements of
Florida and California violate the Dormant Commerce Clause when applied to
Stroman’s timeshare resale business in Texas.
III.
We adopt Texas’s jurisdictional statutes to reach out-of-state defendants,
because § 1983 lacks a provision for services of process. See FED. R. CIV. P.
4(e), (k). The Texas long-arm statute extends to the limits of the Constitution;
our inquiry is therefore limited to the reach of the Fourteenth Amendment’s Due
Process Clause. See Religious Tech. Ctr. v. Liebreich, 339 F.3d 369, 373 (5th Cir.
2003).
The Fourteenth Amendment allows a court to assert personal jurisdiction
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No. 05-20803
over defendants who have meaningful “contacts, ties, or relations” with the for-
um state. Int’l Shoe Co. v. Washington, 326 U.S. 310, 319 (1945). Such contacts
can give rise to general or specific jurisdiction. Courts exercise “general jurisdic-
tion” over any action where the defendant has “continuous and systematic gener-
al business contacts” with the forum state. Helicopteros Nacionales de Colum-
bia, S.A. v. Hall, 466 U.S. 408, 415 n.9, 416 (1984). If the contacts are less per-
vasive, courts may exercise “specific jurisdiction” in “a suit arising out of or relat-
ed to the defendant’s contact with the forum.” Id. at 414 n.8.
The district court found general and specific jurisdiction. We review those
findings de novo. Freudensprung v. Offshore Tech. Servs., 379 F.3d 327, 342 (5th
Cir. 2004).1
A.
The district court held that it had general jurisdiction because the State
of California Franchise Tax Board and the Florida Department of Revenue had
offices in Houston, Texas, according to the phone directory. See SOUTHWESTERN
BELL, GREATER HOUSTON BUSINESS WHITE PAGES 129, 265 (1998). Neither of the
two departments that were sued had an office in Texas, however, nor did the dis-
trict court make findings regarding the officers’ particular contacts that could
give rise to general jurisdiction.
Instead, the court reasoned that because the officers are parts of larger ad-
ministrative apparatuses, segments of which had a permanent presence in Tex-
as, this could give rise to general jurisdiction. The court went further by assert-
1
Stroman maintains that appellants have waived their objections to personal jurisdic-
tion. This is incorrect. In its opinion denying appellants’ motion to dismiss for lack of personal
jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(2), the district court explicitly
held that appellants were subject to the court’s jurisdiction. Because appellants appropriately
moved for dismissal for want of personal jurisdiction, they have not waived the issue for pur-
poses of appeal. See FED. R. CIV. P. 12(h).
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No. 05-20803
ing that because “[the court] is part of a government that is clearly and directly
related to the two states and their governments,” it had jurisdiction over the de-
fendants. In other words, courts in the Southern District of Texas have jurisdic-
tion over California and Florida officials because they are all members of the fed-
eral Union.
The district court did not cite any authority for these propositions; there
is none. To draw no distinction between officers of a state (or the department of
which the officer is a member) and the state itself would allow, as a matter of
constitutional due process, an Oklahoma resident to sue a California state troop-
er in Texas for civil rights violations occurring in California. In other words, the
practical consequence of this approach would be that any state action by a Flori-
da or California official could be challenged in Texas. This is not the general jur-
isdiction contemplated in Helicopteros, which arises out of continuous and sys-
tematic contacts with a forum. See Helicopteros, 466 U.S. at 415-16. Rather, it
is an attempt at universal jurisdiction, by a federal district court, for which there
are no limiting principles.2
B.
The district court lacks specific jurisdiction in light of Stroman Realty, Inc.
v. Wercinski, 513 F.3d 476, 483-84 (5th Cir. 2008), petition for cert. filed (May 5,
2008) (No. 07-1387), in which we held that a district court in Texas did not have
personal jurisdiction over Stroman’s suit against the Commissioner of the De-
partment of Real Estate for Arizona, because the latter did not have sufficient
minimum contacts with the forum. The contacts between the commissioner and
2
We take no position on whether, for example, the Florida Department of Revenue is
subject to general jurisdiction Texas. Nor do we decide the precise scope of whatever general
jurisdiction may arise out of one state’s having an office in another. We conclude only that
finding general jurisdiction under the facts presented here would violate the Due Process
Clause of the Fourteenth Amendment.
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No. 05-20803
Texas were a cease-and-desist order and correspondence with Stroman’s attor-
neys. Id. at 484.
Stroman urges that the contacts in this case are more extensive than those
in our earlier case.3 In addition to cease-and-desist letters such as those found
in the earlier case, Stroman alleges that California attacked Stroman in letters
to the Texas Real Estate Commission, and Florida used the Texas Attorney Gen-
eral’s office to get information. Neither of those additional contacts is sufficient
to create personal jurisdiction.
Purposeful availment of the privileges of conducting business in a forum
is indicative that a defendant has contacts with a state. See Nuovo Pignone v.
Storman Asia M/V, 310 F.3d 374, 378 (5th Cir. 2002). Stroman urges that Cali-
fornia purposefully availed itself of the privileges of conducting business in Tex-
as when it sent its cease-and-desist order to the Texas Real Estate Commission,
resulting in the Commissions’s investigation of Stroman’s compliance with the
order.
If Stroman’s characterization of the communication were accurate, it
would therefore go toward satisfying the “minimum contacts” test. It is incor-
rect, however, to characterize that contact as purposeful availment. The letter
served only to notify the Commission that an order to cease and desist had is-
sued against Stroman. It did not request any action on the part of the Commis-
sion. In other words, California did not avail itself of any of Texas’s protections.
Ordinarily, minimum contacts are a proxy for determining whether a de-
fendant could reasonably anticipate being haled into federal court. See World-
Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980). Because the letter
does not evidence any such anticipation, nor puts a party on notice that it might
be sued, it is insufficient to establish personal jurisdiction.
3
Despite its claim in that regard, Stroman said this case was virtually identical to the
earlier one, and it attempted to consolidate them.
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No. 05-20803
Stroman also alleges that Florida used the Texas Attorney General’s Office
to obtain information as a basis for its Florida lawsuit. Florida made a Texas
Public Information Act request for public documents, but that is not a sufficient
contact. Only those contacts out of which the claim arises count in specific juris-
diction analysis. See Nuovo Pignone, 310 F.3d at 378. There is no way to con-
strue that contact as the basis for the suit; Stroman’s cause of action does not
arise out of that request. More importantly, however, Florida’s secretary could
not have reasonably expected to be haled into court for requesting public infor-
mation.
Because the district court did not have personal jurisdiction over this mat-
ter, it is inappropriate for us to reach the merits of the case. The judgment is
VACATED, and judgment of dismissal for lack of personal jurisdiction is
RENDERED.
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