VS. APPELLANT BRAD CAMAC'S BRIEF ON APPEAL ORAL ARGUMENT REQUESTED

Transcription

1 No CV 5th Court of Appeals FILED: 8/15/11 14:00 Lisa Matz, Clerk IN THE FIFTH COURT OF APPEALS DALLAS, TEXAS BRADCAMAC, Appellant; VS. JORDAN DONTOS, JENNIFER DONTOS & CRA VB, LLC,. Appellees. APPELLANT BRAD CAMAC'S BRIEF ON APPEAL ORAL ARGUMENT REQUESTED WILSON, ELSER, MOSKOWITZ, EDELMAN & DICKER, LLP Sean Higgins. State Bar No San Felipe, Suite 2300 HouSton, Texas Telephone (713) 353.:2000 Facsimile (713) John Henderson State Bar No Bank of America Plaza. 901 Main Street Dallas, TX 7~ Telephone: (214) Facsimile: (214) ATTORNEYS FOR APPELLANT BRADCAMAC August-12, 2011.

2 No CV IN THE FIFTH COURT OF APPEALS DALLAS, TEXAS BRADCAMAC, Appellant; VS. JORDAN DONTOS, JENNIFER DONTOS & CRA VB, LLC,. Appellees. APPELLANT BRAD CAMAC'S BRIEF ON APPEAL ORAL ARGillv1ENT REQUESTED WILSON, ELSER, MOSKOWITZ, EDELMAN & DICKER, LLP Sean Higgins State BarNo San Felipe, Suite 2300 Houston, Texas Telephone (713) Facsimile (713) John Henderson State Bar No Bank of America Plaza 901 Main Street Dallas, TX Telephone: (214) Facsimile: (214) ATIORNEYS FOR APPELLANT BRADCAMAC August 12, 2011.

3 Appellant Brad Camac IDENTITY OF PARTIES & COUNSEL WILSON, ELSER, MOSKOWITZ, EDELMAN & DICKER, LLP Mr. Sean Higgins 5847 San Felipe, Suite 2300 Houston, Texas Telephone (713) Facsimile (713) Mr. John Henderson 901 Main Street, Suite 4800 Dallas, Texas Telephone (214) Facsimile (214) Appellee Jordon Dontos & Jennifer Dontos GRAHAM, BRIGHT & SMITH P.C. Gary E. Smith Two Lincoln Centre 5420 LBJ Freeway, Suite 300 Dallas, Texas Telephone: (972) Facsimile: (972) Banco Popular North Americ~- Defendant Mr. Robert L. Knebel, Jr McKinnon, Suite 570 Dallas, Texas Telephone: (214) Facsimile: (214) Pro, Se - Defendant Mr. JeffVelliquette 9520 Valley Ranch Parkway, Suite 1029 Irving, Texas 75063

4 TABLE OF CONTENTS IDENTITY OF PARTIES & COUNSEL... i INDEX OF AUTHORlTIES... iv STATEMENT REGARDING ORAL ARGUMENT... vi STATEMENT OF TfIE CASE... vii STATEMENT OF ISSUE PRESENTED... viii STA'fEMENT OF FACTS... 1 A. Introduction B. Brad Camac does not have personal contacts with Texas... 1 C. Plaintiffs' allegations against Camac... 2 D. Jordan Dontos' affidavit.... 3" SUMMARY OF ARGUMENT... 5 ARGlJMENT... :... 6 I. The burden ofproof.... ~... 6 II. Brad Camac is not subject to general personal jurisdiction in Texas.. 7 III. Brad Camac is not subject to specific personal jurisdiction in Texas.. 9 A. Courts must decide whether specific personal jurisdiction exists based on the defendant's contacts, not the alleged torts... 9 B. Camac did not purposefully avail himself of jurisdiction in the state of Texas

5 C. Plaintiffs' allegations against Camac do not establish personal jurisdiction The allegations are vague and conclusory Plaintiffs' allegations against Camac are unrelated to the operative facts of this case... i.s D. Plaintiffs' also failed to present evidence supporting their jurisdictional allegations REQUEST FOR RELIEF APPENDIX App.A App.B Order Denying Special Appearance Docket Control Order iii

6 INDEX OF AUTHORlTIES Cases A.G. Nichols v. Tseng Hsiang Lin, 282 S.W.3d 743 (Tex. App. -Dal. 2009, no pet.)... 8 BMC Software, Belgium, NVv. Marchand, 83 S.W. 3d 789 (Tex. 2002)... 7 Cerbone v. Farb, 225 S.W.3d 764 (Tex. App. -Hou [14 th Dist. 2007, no pet.) Corella v. Magnuson, 2008 WL *6 (Tex. App. -Corpus Christi 2008, no pet.) De Santis v. Wackenhut Corp., 793 S.W.2d 670 (Tex. 1990) Hansen v. Denckla 357 U.S. 235, 78 S. Ct (1959) Helicopteros Nacionales De Columbia v. Hall, 466 U.S. 408, 104 S.Ct. 1968, 1872 (1984)... 7 Johnston v. MultiData Systems International, Inc., 523 F.3d 602 (5 th Cir. 2008)... 7 Joiner v. Coast Paper & Supply, 2008 WL , *8 (Tex. App. -Corpus Christi 2008, no pet.)... 8, 12 Kelly v. Gen'l Interior Construction, Inc., 301 S.W.3d 653 (Tex. 2010)... 6, 7, 18 Nichols v. Lightle, 153 S.W.3d 563 (Tex. App.-Amarillo 2004, pet. den.)... 8, 19 Siskindv. Villa Foundation/or Education, Inc., 642 S.W.2d 434 (Tex. 1982) 11, 13 Stone v, Lawyers Title Ins. Corp., 554 S.W.2d 183 (Tex. 1977) Tangv. Garcia, 2007 WL *6 (Tex. App. -Corpus Christi 2007, pet. den.) Urban v. Barker, 2007 WL (Tex. App. -Hou [14th Dist.] 2007, no pet.)... 13,19 iv

7 Wolfv. Summers-Wood LP J 214 S.W.3d 783 (Tex. App. -Dal. 2007, no pet.)... 8 Statutes Federal Trade Commission Disclosure Rule, 16 C.F.R. 436.l Texas Civil Practice & Remedies Code v Texas Rule of Civil Procedure 120a(3) v

8 STATEMENT REGARDING ORAL ARGUl'vlENT This case is appropriate for oral argument. This appeal relates to personal jurisdiction, which is an area that has been the subject of multiple recent opinions by the Texas Supreme Court. Oral argument will permit the parties to elucidate their argument and the legal authorities on which they rely. It will also pennit the Court to further explore the parties' arguments and secure answers to any questions the Court may have. vi

9 STATEMENT OF THE CASE This lawsuit arises from the alleged breach of a franchise agreement. This case is pending in the 68 th Judicial District Court of Dallas County, Texas, before the Hon. Martin Hoffman. Appellant Brad Camacis oneof ten Defendants sued by Plaintiffs. 1 6 th Am. Pet., CR Appellant Brad Camac ("Camac") timely filed a Special Appearance. CR The Court heard Camac's Special Appearance on June 8, The Court denied the Special Appearance in an order signed on June 12,2001. App. A & CR 120. Camac filed a Notice of Appeal from the Court's order on June 20, CR This is an interlocutory appeal taken pursuant to S1.04 of the Texas Civil Practice & Remedies Code. The Court subsequently entered a Docket Control Order that schedules trial for November 1, App. B & Supp. CR The Plaintiffs below, Appellees here, are Jordon and JeIUlifer Dontos and Crave, Inc. Z The Clerk's Record is cited using the letters "CR" followed by the relevant page numbers. 3 Supplemental Clerk's Record. vii

10 STATE1\.1ENT OF ISSUE PRESENTED Whether the Trial Court erred by denying the special appearance of Brad Camac, a California resident, whose only contacts with Texas were on behalf of and at the direction of his employer, where: A. Plaintiffs alleged that Camac is subject to general personal jurisdiction based solely on contacts with Texas made on behalf of his employer. B. Camac's only contacts with Texas were made on behalf of his employer and, therefore, were not the result of Camac's own decisions and purposeful conduct, and Camac did not seek or obtain any personal benefit from his Texas contacts. C. Plaintiffs' allegations against Camac were conclusory and bore no legal or factual relationship to Plaintiffs' alleged legal theories. D. Camac negated Plaintiffs' jurisdictional allegations and Piaintiffs' only purported evidence supporting personal jurisdiction was a conclusory affidavit. viii

11 STATEMENT OF FACTS A. Introduction. This case arises from a franchise agreement between Plaintiffs and 24Seven (USA) Ltd. ("24Seven"). Plaintiffs sued ten separate defendants, including Brad Camac. 6 th Am. Pet., CR Plaintiffs allege counts against all of the defendants for violation of a federal franchise rule, violation of the Texas Business Opportunities Act and Deceptive Trade Practices Act, violation of Washington state law, fraud, breach of contract and interference with contractual and business relationships. Id. Camac filed a special appearance with his original answer. CR Camac subsequently filed an affidavit and a supplemental affidavit supporting the Special Appearance. CR & The Trial Court overruled the special appearance in an order dated June 12,2011. App. A. B. Brad Camac does not have personal contacts with Texas. Camac was an employee and vice president of 24Seven. Camac Aff., -,r2, CR 87. He testified that he worked in 24Seven's California office. Camac Supp. Aff.,7, CR 114. His job title was Vice President for Franchise Sales. Id. He was not a party to the franchise agreement between Plaintiffs and 24Seven. Id. at,,3 & 5, CR 114. Camac did not receive any money from the Plaintiffs. Id. at,6, CR

12 He was compensated on a straight salary and did not receive a bonus or any other payment as a result of Plaintiffs' entry into the franchise agreement. Id. Camac resides in California, not in Texas. Camac Aff. ~2, CR 87. does not, and has never, owned or rented property in Texas. Id. at ~110. Camac And he does not maintain a place of business, physical address, telephone number, post office box or bank account in Texas. Id. at ~~5-6. Camac, in his individual capacity, never transacted busin~ss with a Texas corporation or. resident, including Plaintiffs. Id. at ~3. He never conducted business in Texas on his own behalf. Id. at ~4. All of Camac's contacts with Texas were at the direction of his employer, 24 Seven, for the purpose of conducting 24Seven's business. Id. at ~4. C. Plaintiffs' allegations against Camac. Camac's name appears in just one of the 41 paragraphs in Plaintiffs' Sixth Amended Petition, filed after Camac set his Special Appearance for hearing. CR In Paragraph 10, Plaintiffs allege that Camac "is an individual residing and working, at all material times, through the 24Seven offices in Dallas County, Texas," that he was 24Seven's Vice President of Franchise Sales and that he met with and communicated with Plaintiffs in Dallas. CR Plaintiffs filed a Seventh Amended Petition after the Court denied Camac's Special Appearance and after he perfected this Appeal. The Seventh Amended Petition does not contain new or different allegations against Camac. CR

13 Plaintiffs alleged two instances of conduct by Camac in Texas that they characterized as tortious. First, Plaintiffs claim that Camac failed to tell them that 24Seven was in "dire financial condition" during a meeting on March 2, CR 101. Second, they allege that, on an unspecified date before August 31, 2007, Camac told them that certain vending routes were available and that an acquisition of 24Seven by Defendant Bacon Whitney was a good thing. Id. Plaintiffs conclude paragraph 10 by alleging th~t Camac is subject to specific personal jurisdiction in Texas because, referencing the above meetings, ''these tortuous [sic.] acts of fraud were committed in Dallas County, Texas." CR They allege that Camac is subject to general personal jurisdiction in Texas because "his title, duties and apparent authority as 'head of sales' of the Dallas office constitutes sufficient general contact with Texas to confer jurisdiction." CR 102. D. Jordan Dontos' affidavit. Plaintiff Jordan Dontos submitted an affidavit in opposition to Camac's Special Appearance. CR Dontos testified that he met with Camac on or around March 2, 2007 and, at that time, Camac "knew or should have known that 24Seven was in dire financial straits, that it was in or nearing receivership and that the Routes (as defmed below) were not available." Dontos Aff., ~3, CR

14 Dontos asserts that Camac "had a duty to pass this information on" to Plaintiffs, "but failed to do so." [d. Dontos' affidavit sets forth no other facts concerning this meeting. [d. He does not describe any affirmative statements by Camac during the meeting. [d. Nor does he set forth facts indicating how Camac knew or should have known that 24Seven was in "dire financial straits" on March 2, [d.. Dontos testified that Camac later assured _him that two vending routes, numbers 116 and 117, would be available. [d. at ~6, CR 91. As a result of the alleged verbal assurances, he claims that he and his wife deposited money with 24Seven, sold their home in Seattle, Washington; quit their jobs and moved to Dallas. [d. Dontos does not testify to when and where Camac provided these alleged assurances. [d: Dontos testified that, after they arrived in Dallas, he and his wife were in constant contact with Camac by telephone and . Id. at ~7, CR 91. He claims that Camac made the calls and sent the s from Dallas, Texas. [d. Dontos' Affidavit does not disclose his basis for this belief. [d. Dontos described a second alleged face to face meeting with Camac. Id. at ~9, CR 92. He claims that, during this meeting, Camac told him that the sale of 24Seven was "best for everyone" and that Plaintiffs would be better off with the 4

15 sale. Id. Dontos' affidavit is silent as to the basis for his claim that these alleged statements were false at the time they were made. S~YOFARGUMlliNT Brad Camac is subject to neither general nor specific personal jurisdiction. With respect to general jurisdiction, Plaintiffs allege that Camac;s "title, duties and constant presence in Texas as 'Head of Sales' of the Dallas Office constitutes sufficient general contact in Texas." This allegation, on its face, will not support general jurisdiction. This Court and other Texas courts recognize the fiduciary shield doctrine. Under that rule, Texas contacts by a corporate employee or officer, made on the employer's behalf, will not support general personal jurisdiction. Camac testified, unequivocally, that his only contacts with Texas were on behalf of his employer. Camac is not subject to general personal jurisdiction. Nor is Camac subject to specific personal jurisdiction. First, Camac did not - purposefully avail himself of the jurisdiction of Texas courts. All of his contacts with Texas were at the direction of his employer. None of the contacts resulted from Camac's own decisions. And Camac did not seek or obtain any personal benefit from his contacts with Texas. Second, Plaintiffs have failed to plead facts that support personal jurisdiction over Camac. In this regard, they have not alleged facts showing that Camac 5

16 committed a tort in the state of Texas. Furthermore, their factual allegations have no connection to the operative facts of this case. Plaintiffs' failure to meet their burden of pleading is dispositive. Nevertheless, Plaintiffs also failed to present evidence that Camac is subject to personal jurisdiction. While Camac negated Plaintiffs' jurisdictional allegations in two affidavits, Plaintiffs offered conclusory and speculative testimony by Jordan Dontos. Dontos' affidavit is not evidence of specific personal jurisdiction. Camac respectfully requests the Court to reverse the trial court's order denying his special appearance and to render judgment in his favor. ARGUMENT I. The burden of proof. In a special appearance, "the plaintiff and the defendant bear shifting burdens of proof." Kelly v. Gen'[ Interior Construction, Inc., 301 S.W.3d 653, 658 (Tex. 2010). "The plaintiff bears the initial burden to plead sufficient allegations... to bring the defendant within the reach of Texas' long ann statute." Id. If the plaintiff meets his pleading burden, the defendant must negate the jurisdictional allegations. Id. The defendant may "negate jurisdiction on a factual or legal basis." Id. at

17 Once the defendant negates the plaintiff s allegations, the evidentiary burden shifts to the plaintiff to present evidence supporting its jurisdictional allegations. Id. Courts must consider only whether the evidence supports or undermines the pleadings. Id. at 658, n. 4. Thus, evidence of conduct that is not set forth in the Petition is irrelevant. The existence of personal jurisdiction is a legal question. Id. at 657; BMe Software, Belgium, NV v. Marchand, 83 S.W. 3d 789, 894 (Tex. 2002). This court, therefore, must conduct de novo review of the trial court's decision. Kelly, 301 S.W.3d at 657. Plaintiffs failed to meet their initial burden of pleading. The Sixth Amended Petition fails to set forth facts that establish general or specific personal jurisdiction over Camac. Even so, Camac negated Plaintiffs' jurisdictional allegations and.. Plaintiffs failed to present evidence of personal jurisdiction. Camac, therefore, requests the Court to reverse and render judgment in his favor. n. Brad Camac is not subject to general personal jurisdiction in Texas. General personal jurisdiction exists only if the defendant's "contacts with the forum state are substantial, continuous and systematic." Johnston v. MultiData Systems International, Inc., 523 F.3d 602, 609 (5 th Cir. 2008), citing Helicopteros Nacionales De Columbia v. Hall, 466 U.S. 408, , 104 S.Ct. 1968, 1872 (1984). 7

18 Plaintiffs allege that Camac is subject to general personal jurisdiction solely because "his title, duties and apparent authority and constant presence in Texas as 'Head of Sales' of the Dallas office constitutes sufficient general contact with Texas." 6 th Am. Pet. ~10, CR But general jurisdiction cannot arise from a defendant's actions on behalf of his employer. This Court has recognized that "the fiduciary shield doctrine protects a nonresident corporate officer or employee from... general jurisdiction when all of the individual's contacts with Texas were made on behalf of the employer." Wolfv. Summers-Wood LP, 214 S.W.3d 783, 790 (Tex. App. -Dal. 2007, no pet.) See also, A.G. Nichols v. Tseng Hsiang Lin, 282 S.W.3d 743, 750 (Tex. App. -Dal. 2009, no pet.); Joiner v. Coast Paper & Supply, 2008 WL , *8 (Tex. App. -Corpus Christi 2008, no pet.) ("Because all of Carol's trips were in her capacity as an officer... we cannot say that Carol's contacts with Texas were continuous and systematic in accordance with general jurisdiction principles.") Plaintiffs' general jurisdiction allegation against Camac falls squarely within the fiduciary shield doctrine. Consequently, they failed to carry their initial burden of pleading. Given this failure, Camac was not required to present evidence rebutting general personal jurisdiction. Nevertheless, Camac did so. 8

19 Camac testified that his only contacts with Texas were on behalf of his r employer, 24Seven. Camac Aff., ~4, CR 87. Camac is a California resident and has never maintained a physical address of any kind in Texas. Id. at ~~2 & 6. He never, in his individual capacity, owned or leased real estate or any other asset in Texas. Id. at ~1 O. And he never entered into a contract, on his own behalf, with a Texas resident or company. Id. at ~3. Camac is not subject to general personal. ~ jurisdiction -in Texas. III. Brad Camac is not subject to specific personal jurisdiction in Texas. Nor is Camac subject to specific personal jurisdiction. Plaintiffs allege that specific personal jurisdiction exists because Camac "committed tortuous [sic.] acts of fraud in Dallas County." 6 th Am Pet. ~10, CR But mere allegations that the defendant committed a tort in Texas are insufficient to establish specific personal jurisdiction. Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 788 (Tex. 2005) [Michiana]. A. Courts must decide whether specific personal jurisdiction exists based on the defendant's contacts, not the alleged torts. In Michiana, the Supreme Court squarely rejected the theory that specific personal jurisdiction arises based solely on allegations that the defendant directed a tort at the state of Texas. Rather, the defendant's contacts with Texas must rise to the level of purposeful availment. Id. at

20 The Supreme Court explained that the "touchstone" of jurisdictional due process is the requirement "that there be some act by which the defendant purposefully avails itself of the privilege of conducting activities within the forum state." Id. at (quoting, Hansen v. Denckla 357 U.S. 235, 253, 78 S. Ct (1959)). The Court cited three elements that must be present for a court to find purposeful availment: (1) the contacts must be the result of the defendant's actions, and not the acts of a third party; (2) the defendant's acts must be "purposeful," and not fortuitous; and (3) the "defendant must seek some benefit, advantage or profit by 'availing' itself of the jurisdiction." Id. The Supreme Court rejected the proposition that personal jurisdiction exists "if the tortfeasor knows that the brunt of the injury will be felt by a particular resident in the forum state." Id. at 788. Rather, courts must evaluate "the defendant's conduct and connection to the forum" and determine whether the contacts constitute purposeful availment Id. The Supreme Court, therefore, instructed lower courts to decide whether specific personal jurisdiction exists based on the defendant's contacts with Texas, 10

21 which are "physical facts," and not the plaintiff s tort allegations. The Court explained, Id. at 791. availment Business contacts are a matter of physical fact, while tort liability (especially in misrepresentation cases) turns on what the parties thought, said or intended. Far better that judges should limit themselves to the former rather than involving themselves in trying the latter. B. Camac did not purposefully avail himself of jurisdiction in the state of Texas. Camac's contacts with Texas do not satisfy the Michiana test for purposeful First, Camac's Texas contacts did not result from his own conduct. They resulted from the decisions of his employer, 24Seven. Camac Aff. ~4, CR 87. All ofcamac's contacts with Texas were in the course of his employment by 24Seven, for the purpose of performing 24Seven's business. Id. He had no other Texas contacts. Id. Thus, while 24Seven purposefully availed itself of Texas' jurisdiction, Camac did not. 24Seven's contacts are not imputed to Camac. Siskind v. Villa Foundation/or Education, Inc., 642 S.W.2d 434, (Tex. 1982). Second, Camac's contacts with Texas are not purposeful. As with the first element, Camac's only contacts with Texas resulted from his responsibilities to his employer, 24Seven. Camac Aff. ~4, CR

22 Third, Camac did not seek "some benefit, advantage or profit from availing" himself of Texas' jurisdiction. Michiana, 168 S.W.3d 777. Camac testified that 24Seven compensated him with a straight salary; Camac SUpp. Aff. ~6, CR 174. He did not receive extra compensation as a result of his interactions with Plaintiffs. ld. Camac received no money from the Plaintiffs. ld. Camac came into contact with Texas in the performance of his job. Texas courts have held that an employee, like Camac, does not seek his own benefit, advantage or profit from such contacts and, consequently, does not purposefully avail himself of Texas' jurisdiction. Corella v. Magnuson, 2008 WL *6 (Tex. App. -Corpus Christi 2008, no pet.) (No evidence supported a finding that the employees sought benefit or advantage from their contacts with Texas); Joiner, 2008 WL *8 (Plaintiff did not establish that corporate officer "sought some benefit, advantage or profit from Texas in her individual capacity.") th. Cerbone v. Farb, 225 S.W.3d 764, 771 (Tex. App. -Hou [14 Dist. 2007, no pet.) (Defendant received no benefit by executing a promissory note in a representative capacity). Camac's contacts with Texas do not satisfy the Michiana test for purposeful availment. As a result, he is not subject to specific personal jurisdiction in Texas

23 C. Plaintiffs' allegations against Camac do not establish personal jurisdiction. Even if one sets aside the Supreme Court's instruction in Michiana, and looks to Plaintiffs' tort allegations, Plaintiffs still do not establish personal jurisdiction. First, Plaintiffs' allegations against Camac are conclusory. As a result, Plaintiffs did not satisfy their burden of pleading facts. Siskind, 642 S.W.2d at (Finding no personal jurisdiction where the petition alleged "no specific acts of conspiracy or misrepresentations" by the defendant employees.); Tang v. Garcia, 2007 WL *6 (Tex. App. -Corpus Christi 2007, pet. den.) (Plaintiff s "vague accusations are entirely inadequate when measured by [Michiana's] requirement of physical facts."); Urban v. Barker, 2007 WL (Tex. App. -Hou [14th Dist.] 2007, no pet.) ("The torts of fraud and misrepresentation... have not been alleged with the specific contacts necessary to warrant the exercise of jurisdiction over Urban.") Second, Plaintiffs' allegations fail because Camac's alleged Texas contacts are not connected to the operative facts of Plaintiffs' claim. Such a connection is essential for specific personal jurisdiction. Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569,585 (Tex. 2007) [Moki Mac]. 13

24 1. The allegations are vague and conclusory. Plaintiffs refer to Camac in only one of the 41 paragraphs in their Sixth Amended Petition. In paragraph 10, which appears under the heading "parties,". they allege that Camac attended two meetings with Plaintiffs. CR 101. First, Plaintiffs allege they met with Camac on March 2, Id. They claim that, on that date, Camac "knew or should have known that 24Seven was in dire financial straits, was in or near receivership and that the routes were not available." Id. They claim that "Camac had a duty to pass this information on to Plaintiffs, but failed to do so." Id. But the Sixth Amended Petition does not set forth any facts that support these allegations. There are no facts substantiating Plaintiffs' claim that 24Seven was in "dire financial straits" on March 2, Id. No facts are alleged to establish how Camac knew that 24Seven was in such a condition. Id. Nor are any facts alleged to demonstrate that, on March 2, 2007, Camac has a duty to tell Plaintiffs that 24Seven was in "dire fmancial straits." Id. Second, Plaintiffs allege they met with Camac on unspecified date that was "sometime prior" to August 31, Id. They claim that Camac "represented that Routes 116 and 117 were available when he knew or should have lmown they were not" and that an "acquisition by Bacon Whitney was a 'good deal.'" Id. But there is no factual allegation that the routes in question were unavailable at the time of 14

25 the meeting. Nor is there an allegation that Camac' s alleged statement concerning the acquisition was false at the time of the meeting. Id. Plaintiffs' conclusory allegations do not satisfy their burden of pleading facts that support specific personal jurisdiction. 2. Plaintiffs' allegations against Camac are unrelated to the operative facts of this case. Plaintiffs' allegations against Camac also fail because his alleged contacts are not substantially connected to the operative facts of Plaintiffs' claim, as the Supreme Court required in Mold Mac. There, the Court explained that specific personal jurisdiction will arise only if there is a "substantial connection" between the defendant's alleged contacts with Texas and "the operative facts of the litigation." Mold Mac, 221 S.W.3d at 585. In Moki Mac, the plaintiffs sued an out of state expedition company for the death of their child during a hiking trip in Arizona. They alleged that they relied on the defendant's representations, directed to the state of Texas, that its trips were safe. They claimed that, "but for the promises," they would not have sent their child on the trip. Id. at 585. The Supreme Court held that these alleged representations did not give rise to specific personal jurisdiction because they were not sufficiently related to the plaintiffs' claims. Rather, the Court explained, "the operative facts of the... lawsuit concern principally the guides' conduct of the hiking expedition," which 15

26 occurred in Arizona. Id. Consequently, the defendant's alleged misrepresentations were "not the subject matter of the case" and the connection between "promotional materials sent to Texas and the operative facts" was not "sufficiently direct to meet due process concerns." Id. The same is true of this case. Plaintiffs allege that Camac either withheld information or made incorrect statements in two alleged meetings. 6 th Am. Pet. ~1 0, CR 101. But when one compares Plaintiffs' factual allegations against Cama~ to their liability theories, it becomes apparent that Camac' s alleged conduct is not related to the operative facts of this case. First, Plaintiffs allege that the Defendants violated the Federal Trade Commission Disclosure Rule, 16 C.F.R et seq., and, as a result, the Texas Business Opportunity Act and the Deceptive Trade Practices Act. 6 th Am. Pet. ~~27-32, CR But Plaintiffs' factual allegations, which concern Camac's actions at two alleged meetings, do not set forth a violation of the F.T.C. Rule. 16 C.F.R et seq. Second, Plaintiffs claim the Defendants "solicited and sold franchises in the state of Washington," in violation of Washington law. 6 th Am. Pet. ~33, CR 109. Such acts, however, occurred in the state of Washington, not in the state of Texas. By definition, they do not subject Camac to jurisdiction in Texas. See Michiana, 168 S.W.3d at

27 Third, Plaintiffs allege that all of the defendants committed fraud. 6 th Am. Pet. ~34, CRl10. But their allegations against Camac do not amount to fraud. They allege that Camac "had a duty to pass on" the alleged financial state of 24Seven. 6 th Am. Pet. ~10, CR 101. And they claim that Camac either knew or should have known that the routes were unavailable and that the acquisition was not a "good deal." Id. Proof of fraud requires more. Plaintiffs must show that Camac made a material representation that was false at the time he made it and did so knowingly or recklessly. De Santis v. Wackenhut Corp., 793 S.W.2d 670, 688 (Tex. 1990); Stone v, Lawyers Title Ins. Corp., 554 S.W.2d 183, 185 (Tex. 1977). Plaintiffs made no such allegations. As a result, Camac's conduct at the two alleged meetings is not substantially related to Plaintiffs' fraud claim; Third, Plaintiffs allege a claim for breach of contract. 6 th Am. Pet. ~35, CR 110. But there is no allegation that Camac was party to a contract with Plaintiffs. In fact, Camac testified that he never contracted with Plaintiffs. Fourth, Plaintiffs claim that all of the defendants, except 24Seven, interfered with the contract between Plaintiffs and 24Seven. 6 th Am. Pet. ~37, CR 110. Plaintiffs, however, alleged no act of interference by Camac. 17

28 Plaintiffs' allegations against Camac are an attempt to establish personal jurisdiction, not a cause of action... Their attempt fails because the allegations are not substantially connected to the operative facts of their case. D. Plaintiffs' also failed to present evidence supporting their jurisdictional allegations. Plaintiffs' failure to plead jurisdictional facts should be dispositive. Camac, however, also presented evidence negating the existence of specific personal jurisdiction. In response, Plaintiffs failed to present evidence supporting their allegations. Camac, through two affidavits, negated the existence of jurisdiction in the state of Texas. He testified that he is not a Texas resident and has never owned property in Texas, that he lives in California and worked out of 24Seven's California office; and that his only contacts with Texas were on behalf of 24Seven. CR & Plaintiffs, therefore, had the burden of presenting evidence that supported their jurisdictional allegations. Kelly, 301 S.W.3d at 659. They attempted to meet this burden by submitting the affidavit of Jordan Dontos. But Dontos' affidavit does not meet t he substantive requirements of Texas Rule of Civil Procedure 120a(3). The affidavit is not "made on personal knowledge," does not "set forth specific facts as would be admissible in evidence" and does not show 18

29 "affirmatively that the affiant is competent to testify" to those facts. Tex. R. Civ. P.120a(3). The Houston Court of Appeals' decision in Urban illustrates the deficiencies in Dontos' Affidavit.s There, a widow, as her husband's sole executor and beneficiary, sued a Colorado resident for breach of fiduciary duty? breach of contract, conspiracy, and violation of various Texas statutes in connection with her husband's sale of stock. Urban, 2007 WL , * 1. The defendant filed a special appearance and the plaintiff responded with an affidavit. The court rejected the affidavit because the plaintiff stated "no basis to show how she acquired personal knowledge as to the statements in made in her affidavit." Id. at *2. She made statements concerning the operation of the company but did not explain how she had this knowledge. Id. She testified that the defendant and her husband founded the company in question, but presented no documentary evidence to support this assertion. Id. And the affidavit was not direct, unmistakable or unequivocal as it stated only approximate dates for relevant events. Id. Dontos' affidavit suffers from similar defects. In his affidavit, Dontos made numerous assertions, but he failed to set forth the factual basis for his statements. For example, he testified that Camac worked out of 24Seven's Dallas office, but he 5 In Urban, the defendant had objected to the plaintiff's affidavit. This is unnecessary. A conclusory affidavit may be challenged for the first time on appeal. See, e.g., Nichols v. Lightle, 153 S.W.3d 563, 570 (Tex. App. -Amarillo 2004, pet. den.) 19

30 provided no explanation of why this statement was within his personal knowledge. Dontos Aff. ~2, CR 90. Dontos speculated that Camac would receive a bonus from Plaintiffs' execution of the franchise agreement. Dontos Aff., ~7, CR 91. Camac, however, categorically rebutted this allegation, testifying that he was paid a straight salary and received no money from the Plaintiffs. Camac Supp. App. ~6, CR 114. Dontos, likewise, claimed that Camac _ed and called him and his wife from Dallas. Dontos Aff., ~7, CR 91. But Dontos did not explain how he knew that the calls and soriginatedfromdallas.ld. As it relates to Camac's alleged statements, Dontos failed to identify facts supporting his conclusion that Camac made statements that were untrue at the time he made them. CR Finally, Dontos testified that Camac was "ultimately responsible" for alleged omissions from a Uniform Franchise Offering Circular because he was "head of sales for the Dallas office." Dontos Aff. ~17, CR 94. Camac, however, was not head of sales for 24Seven's Dallas office. Rather, Camac was Vice President for Franchise Sales, and worked in 24Seven's California office. Camac Supp. Aff. ~7. In any event, Dontos offers no facts to support his conclusion that Camac was responsible for the Circular. 20

31 Dontos failed to meet both his pleading burden and his evidentiary burden. The Court should reverse and render judgment in favor of Camac. REQUEST FOR RELIEF F or the foregoing reasons, Appellant Brad Camac requests the Court to reverse the Trial Court's Order denying his Special Appearance, render judgment in his favor and grant him all other relief to which he may be entitled. Respectfully submitted, WILSON, ELSER, MOSKOWITZ, EDE~ & DICKER, LLP BY:,,~~ Sean Higgins State Bar No San Felipe, Suite 2300 Houston, Texas Telephone (713) Facsimile (713) John Henderson State Bar No Main Street, Suite 4800 Dallas, Texas Telephone (214) Facsimile (214) ATTORNEYS FOR APPELLANT BRADCAMAC 21

32 CERTIFICATE OF SERVICE The foregoing Brief has been served on the following counsel of record pursuant to the Texas Rules of Appellate Procedure via Certified Mail on the 12th day of August, Gary E. Smith Two Lincoln Centre 5420 LBJ Freeway, Suite 300 Dallas, Texas Attorneys for Appellee Jordon Dontos & Jennifer Dontos Mr. Robert L. Knebel, Jr McKinnon, Suite 570 Dallas, Texas Attorney for Banco Popular North America - Defendant Mr. JeffVelliquette 9520 Valley Ranch Parkway, Suite 1029 Irving, Texas Pro, Se - Defendant Sean Higgins " 22

33 A

34 I JORDAN DONTOS AND JENNIFER DONTOS, Plaintiffs, v. 24SEVEN (USA) LIMITED, VTL GROUP LIMITED, VENDING TECHNOLOGY LIMITED, BACON WHITNEY CORPORATION nlk/a BACON WHITNEY LLC, GREG HATCH,JEFFVALUQUE1TE, PAUL HETZER, BRAD CAMAC, MARK BRUNO, and JOHN HOTCHIN Defendants. CAUSE NO. OC C ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) IN THE DISTRICT COURT DALLAS COUNTY, TEXAS 68th JUDICIAL DISTRICT ORDER DENYING SPECIAL APPEARANCE On June 8, 2011, the Court heard the Special Appearance of Defendant Brad Camac. After reviewing the Special Appearance, the pleadings, and the Affidavits filed in support and in opposition to the Special Appearance, as well as considering the arguments of counsel, the Court is of the opinion and finds that it has specific jurisdiction over Defendant Brad Camac and that the Special Appearance should be denied. Accordingly, it is hereby ORDERED that the Special Appearance of Defendant Brad Climae is DENIED. Signed lh-is Qh.day of June, JUDGE PRESIDING Go.A.U E. ~,~ ~\4 Gary Smith IIx1. flh'''''i~~9'wu Attorney for Plaintiffs ORDER

35 B

36 CAUSE NO. DC-07-14S76-C JORDAN DONTOSAND JENNIFER DONTOS and CRAVE, LLC I PLAINTIFFS, IN THE DISTRICT COURT v. 68 1b JUDICIAL DISTRICT 24SEVEN (USA) LIMITED, VTL GROUP LIMITED, VENDING TECHNOLOGY LIMITED, BACON WHITNEY CORPORATION, GREG I HATCH, JEFF VELLIQUETTE, PAUL I HETZER, BRAD CAMAC, MARK BRUNO, JOHN HOTCHIN, BANCO POPULAR NORTH AMERICA. DEFENDANTS DALLAS COUNTY, TEXAS AGREED SCHEDULING ORDER 1. All parties must be added and served whether by amendment or third party practice, by August 30, All discovery requests and deposition notices must be filed as follows: a. 9/30/11 : Close of fact discovery b. 10/10/11: Deadline to file motion to compel responses to discovery c : Close of expert discovery d. 10/14/11: Deadline to exchange designations of deposition testimony and list of exhibits e : Deadline for parties to exchange objections in writing to opposing party's proposed exhibits and deposition testimony. f. Each side may have 3S hours of depositions and each party may have 25 interrogatories, subject to the conditions of Rule 190.3(b)(2) and (3)

37 3. Expert Witness Designation shall be as follows:. 1 a. 8/15/11: b. 8/30/11: c. 9/15111: d. 9/30/11: Deadline for party seeking affinnative relief to designate experts and provide expert reports. Deadline for party opposing affinnative relief to designate experts and provide expert reports. Deadline for party seeking affinnative relief to designate rebuttal experts and provide expert reports. Deadline to file objections or motions to exclude or limit expert testimony due to qualification of the expert or reliability of the opinions. 4. The parties shall mediate this case no later than September 30, 2011, unless otherwise provided by court order. Mediation will be conducted in accordance with the Standing Dallas County Civil District Court Order Regarding Mediation, which is available from the District Court. Unless otherwise ordered by the Court, the parties shall select a mediator by agreement, if the parties are unable to agree on a mediator, they shall advise the Court, Which will then appoint a mediator. 5. a. The parties shall exchange a list of exhibits, including any demonstrative aids and affidavits and shall exchange copies of any exhibits not previously produced in discovery by October 21, Over designation is strongly discouraged and may be sanctioned. Except for records to be offered by way of business record affidavits, each exhibit must be identified separately and not by category or group designation. b. By October 28, 2011 the parties shall exchange in writing their objections to the opposing party's proposed exhibits, including objections under-rule and deposition testimony..1 c. By October 21, 20 II the attorneys in charge for all parties and all pro se parties shall meet in person to confer on stipu1ations regarding the materials to be submitted to the Court under this paragraph and attempt to maximize agreement on such matters. d. By 4:00 p.m. on the Thursday before trial, the parties shall file with the Court all materials stated in Rule 166(e)-(I), an estimate of the length oftriaj, designation of deposition testimony to be offered in direct examination and any Motions in Limine. No fonnal Pre-Trial is necessary

38 6. All amendments and supplements to pleadings must be filed by September 15, All Special Appearances or other please to the jurisdiction shall be heard by September I, Trial: November 1,2011 SIGNED this the?.j. day of ItlV) if' ~, Judicial Dlstnct Court Dallas County, Texas AGREED IN SUBSTANCE: Row KYle..b..R, ~'P"""~~ Robert L. Knebel, Jr. II\.. COW1Sel for Defendant Banco Popular North America ~\~ J R. Henderson Counsel for Defendant Brad Camac