In an entertaining and somewhat offbeat opinion citing no less an authority on Texas than Lyle Lovett, the Amarillo Court of Appeals has affirmed a trial court order granting special appearances by two Canadian parties in a dispute with a Texas business.
ER Software Canada ULC v. Interdev Technologies Corporation and Valsoft Corporation Inc. (No. 07-23-00366-CV; February 26, 2024) arose from a series of transactions involving the sale by a Canadian company of a Canadian company to a California company with headquarters in Texas, with the assistance of a Texas corporation. At no time during the negotiations and sale did a representative of either Canadian entity set foot in Texas. Instead, representatives of the California and Texas buyers traveled to Canada for due diligence purposes, directed payments for the sale to Canada, and signed a choice of law provision specifying the application of Canadian law to a dispute. As they often do, the deal went sour and the California outfit (ER) decided it wanted out of the sale. It sued the Canadian entities (Interdev and Valsoft) in Travis County. The Canadian defendants filed special appearances, which the trial court granted. Plaintiff filed an interlocutory appeal, which was transferred from the Austin to the Amarillo Court of Appeals under a docket equalization order.
In an opinion by Justice Quinn, the court of appeals affirmed. As characterized by the court, plaintiff’s claim for asserting personal jurisdiction “rest[ed] on the proposition that [defendants] knew they dealt with ‘Texans,’” including Texas entities that were not even parties to the lawsuit. The court, understandably, rejected this argument because only the defendant’s contacts with the forum state matter, and the only communications between the parties took place electronically outside of Texas, more specifically, in Canada and New York. With respect to the purposeful availment prong of the test, the court concluded that the Canadian entities did not seek any particular benefit from Texas as a result of the sale, much less a benefit that supported a finding that those entities expected to be haled into court in Texas or reaped the rewards of Texas law. Consequently, any contacts with Texas were “fortuitous,” not “purposeful.”
This case put the court in mind of the lyrics of “That’s Right”: “That’s right, you’re not from Texas,/That’s right, you’re not from Texas/ . . . but Texas wants you anyway.” But as the court noted, even if Texas wants you, you might not necessarily want it, even if you are dealing with “Texans.”
