Opinion
CIVIL ACTION NO. 3:02-CV-0310-P
July 2, 2002
MEMORANDUM OPINION AND ORDER
Now before the Court for consideration are:
1. Motion of Defendants Leo J. Hindery, Jr. and Richard M. Millman to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(2), with brief in support, copy of original complaint, and declarations filed April 15, 2002;
2. Plaintiff Admiral Insurance Company's Response to Defendant Leo J. Hindery, Jr. and Richard M. Millman's Motion to Dismiss Pursuant to Fed.R.Civ.P. 12 (b)(2), with brief in support and appendix, filed May 6, 2002; and
3. Defendants Leo J. Hindery, Jr. and Richard M. Millman's Reply in Support of Defendants' Motion to Dismiss Pursuant to Fed.R.Civ.P. 12(b)(2), filed May 21, 2002.
After reviewing all of the pleadings, briefs, and attachments in conjunction with the relevant law, the Court hereby GRANTS IN PART AND DENIES IN PART Defendants' Motion to Dismiss for Lack of Personal Jurisdiction. Defendant's motion is GRANTED with respect to Defendant Hindery and DENIED with respect to Defendant Millman.
BACKGROUND
Defendant Leo J. Hindery, Jr. ("Hindery") functioned as the Director of Cool Partners, Inc. d/b/a Coolink.com ("CPI"), a Texas based Internet service provider, from September 18, 2000 until March 1, 2001. Decl. of Leo J. Hindery, Jr. ¶ 11 (hereinafter referred to as "Hindery Decl."). Hindery is a citizen of the State of California and has resided there continuously since January 1985. Id. ¶ 2. Defendant Richard M. Millman ("Millman") was elected President and Chief Executive Officer of CPI in April, 2001 and continued in that capacity until CPI filed a Chapter 7 Voluntary Petition in bankruptcy on January 22, 2002. Decl. of Richard M. Millman ¶ 13 (hereinafter referred to as "Millman Decl."). Millman is a citizen of the Commonwealth of Virginia and has resided there since July 1992. Id. ¶ 3.
Plaintiff Admiral Insurance Company, Inc. ("Admiral") is a Delaware corporation which has its principal place of business in Cherry Hill, New Jersey. Pl.'s Am. Pet. ¶ 1. Admiral issued Management Liability Insurance Policy Number 6251421 ("the Policy") to CPI, the named insured, on January 10, 2000 for a one year period. Id. ¶ 22. The Policy included Directors and Officers Liability coverage, Corporate Liability coverage, and Employment Practices coverage and had an initial aggregate limit of $2 million for the policy period. Id. Admiral increased the Policy's aggregate limit to $5 million on March 21, 2000. Id. ¶ 23. On January 24, 2001, Admiral extended coverage under the Policy until January 24, 2002. Id. ¶ 24.
Two lawsuits prompted Hindery and Millman (collectively, "Defendants") to demand a defense from Admiral under the Policy. Pl.'s Resp. to Defs.' Mot. to Dismiss ¶¶ 5-6 (hereinafter referred to as "Pl.'s Resp."). In October 2001, CB Parkway Business Center II, Ltd. filed suit against CPI and its past and present Directors and Officers alleging securities and real estate fraud, negligent misrepresentation, and tortious interference with a lien ("CB Parkway suit"). Pl.'s Am. Pet. ¶ 33. On January 23, 2002 CPI shareholders led by Mitchell Rosenthal filed suit against CPI and its Directors and Officers in Dallas County, Texas alleging breach of fiduciary duty, fraud, misrepresentation, and negligence ("Rosenthal suit"). Id. ¶ 38. Defendants Millman and Hindery assert the same jurisdictional arguments in state court. However, according to Defendants' counsel, there have been no rulings on their Motion to Dismiss for Lack of Personal Jurisdiction in these suits.
On April 1, 2002 Admiral filed suit in this Court seeking a declaratory judgment with regard to the rights and obligations of all parties under the Policy. Id. ¶¶ 40-64. Specifically, Admiral seeks a declaration that it has no duty to defend or indemnify Defendants in the CB Parkway and Rosenthal suits. Id. ¶¶ 10-15. In the alternative, Admiral seeks declaratory judgment that its liability under the Policy for the Rosenthal suit, and two other lawsuits that do not name the Defendants, is limited to $2 million. Id. ¶¶ 12-14.
In its claim, Admiral asserts that: (1) CPI made material misrepresentations in its insurance policy application that entitle Admiral to rescind the entire policy, (2) alternatively, CPI materially breached the cooperation clause found in Section VIII(C) of the Policy thereby relieving Admiral of its obligations under the Policy, (3) alternatively, CPI made misrepresentations in its request to increase the aggregate Policy limits and therefore the Policy should be reformed to reflect the initial $2 million aggregate limit, (4) Admiral's liability under the Policy for Rosenthal, and two other lawsuits that do not name the Defendants, comprise the same claim and are subject to the $2 million aggregate limit, and (5) Admiral has no duty to defend Defendants in the CB Parkway action because all claims in that action are excluded by the Policy. Id. ¶ 66.
Defendant Hindery asserts that he has never resided in Texas, never maintained a place of business here, and has never acquired property nor maintained a bank account in Texas. Hindery Decl. ¶¶ 3-6. Defendant Millman admits to an extended stay in Texas in the late 1950's for Air National Guard training, but has never maintained a residence in Texas, has never maintained a bank account in Texas, and has never acquired any real property within the state. Millman Decl. ¶¶ 4-7.
Both Defendants assert that their only contacts with the state of Texas have been made on behalf of CPI and for this reason they have jointly filed a motion to dismiss Admiral's claim against them due to lack of personal jurisdiction. Defs.' Br. in Supp. of Mot. to Dismiss at 2-3 (hereinafter referred to as "Defs.' Br.").
DISCUSSION
I. Personal Jurisdiction Standard
Whether a federal court sitting in diversity may exercise personal jurisdiction over a non-resident defendant is determined by the applicable state long-arm statute as interpreted by the state court and by due process guarantees under the Fourteenth Amendment. See Allred v. Moore Peterson, 117 F.3d 278, 281 (5th Cir. 1997).
The Texas long-arm statute, Tex. Civ. Prac. Rem. Code Ann. §§ 17.041-.045 (Vernon 1997), is interpreted by Texas courts to reach "as far as the federal Constitutional requirements of due process will allow." Guardian Royal Exchange Assur., Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex. 1991). Therefore, under the Texas long-arm statute, state and constitutional concerns effectively collapse into one and the court is authorized to assert personal jurisdiction over non-resident defendants so long as that assertion is permissible within the limits of due process. Stuart v. Spademan, 772 F.2d 1185, 1189 (5th Cir. 1985).
Where non-resident defendants file a 12(b)(2) motion to dismiss for lack of personal jurisdiction, the plaintiff bears the burden of establishing the court's personal jurisdiction over those defendants. Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir. 1999); Wilson v. Belin, 20 F.3d 644, 648 (5th Cir. 1994); Spademan, 772 F.2d at 1192. When a district court rules on this motion without conducting an evidentiary hearing, the plaintiff need not prove personal jurisdiction by a preponderance of the evidence but can meet its burden by presenting a prima facie case for jurisdiction. Wilson, 20 F.3d at 648; Fetch v. Transportes Lar-Mex SA DE CV, 92 F.3d 320, 326 (5th Cir. 1996). The court accepts plaintiff's uncontested allegations as true and resolves all conflicting facts in plaintiff's favor. Wilson, 20 F.3d at 648.
The plaintiff must establish the court's personal jurisdiction over non-resident defendants by demonstrating both that the non-resident had sufficient minimum contacts with the forum state to satisfy due process and that it would be fair and reasonable to expect him to defend a suit in that forum. Burger King v. Rudzewicz, 471 U.S. 462, 473-77 (1985); see also Leonard v. USA Petroleum Corp., 829 F. Supp. 882, 889 (S.D. Tex. 1993). Plaintiff must satisfy the due process minimum contact standard by showing that the non-resident "purposefully availed himself of the privilege of conducting activities within the forum state" thereby invoking the benefits and protections of its laws. Hanson v. Denckla, 357 U.S. 235, 253 (1958).
Personal jurisdiction may take two forms: specific "in personam" jurisdiction and general "in personam" jurisdiction.
A. Specific In Personam Jurisdiction
Where the cause of action relates to or arises out of the non-resident's sufficient minimum contacts with the forum and those contacts satisfy the due process standard, then specific jurisdiction exists. Wilson, 20 F.3d at 647; Spademan, 772 F.3d at 1190. In the context of specific jurisdiction, sufficient minimum contacts are deliberate actions taken by the non-resident and purposefully directed toward the forum state. Spademan, 772 F.2d at 1190; Burger King, 471 U.S. at 472. To determine if sufficient minimum contacts exist, the court considers the quality and nature of any contacts with the state and examines the relationship among the non-resident defendant, the forum, and the litigation. Int'l Shoe C'o. v. Washington, 326 U.S. 310, 318 (1945); Thompson v. Chrysler Motors Corp., 755 F.2d 1162, 1171 (5th Cir. 1985); see also Calder v. Jones, 465 U.S. 783 (1994) (considering non-resident's intent to direct out of state activities toward a citizen of the forum state). "The appropriate inquiry is whether the defendant[s] purposefully availed [themselves] of the privilege of conducting activities in-state thereby invoking the benefits and protections of the forum state's laws." Bullion v. Gillespie, 895 F.2d 213, 216 (5th Cir. 1990). Without such minimum contacts, exercise of jurisdiction would violate a defendant's Fourteenth Amendment federal constitutional right to due process.
Even if a defendant has the requisite "minimum contacts" with the forum state, the court will not exercise jurisdiction if considerations of "fair play and substantial justice" would require making a non-resident defend in the forum state so unreasonable as to constitute a due process violation. Wien Air Alaska, Inc. v. Brant, 195 F.3d 208, 215 (5th Cir. 1999); Asahi Metal Indus. Co., Ltd. v. Super. Ct. of Cal., Solano County, 480 U.S. 102, 105 (1987). In considering issues of fairness, the court takes into account the foreseeability of the non-resident defendant being haled into court in that state. In addition, the court evaluates the interests of the forum state in providing redress to its citizens, considers plaintiffs convenience, and determines other states' interests in enforcing their substantive law. World-Wide Volkswagon Corp. v. Woodson, 444 U.S. 286, 292 (1980); Asahi, 480 U.S. at 113.
If minimum contacts exist but are less than substantial, fairness factors can "tip the scales" to establish jurisdiction. Conversely, even when there are compelling minimum contacts, the case may be dismissed if the fairness factors are against establishing personal jurisdiction. See Asahi, 480 U.S. at 102. However, issues of fairness and convenience alone are not sufficient to establish personal jurisdiction. "[The State] does not aquire . . . jurisdiction by being the "center of gravity' of the controversy or the most convenient location for litigation, the issue is personal jurisdiction, not choice of law. It is resolved by considering the acts of the [defendants]." Hanson, 357 U.S. at 254.
B. General In Personam Jurisdiction
Plaintiffs attempting to show general in personam jurisdiction must meet the higher standard of establishing that defendants' in-state contacts were substantial and continuous but need not show that the claim arises from those contacts. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 415 (1984); Guardian Royal, 815 S.W.2d at 228. For general jurisdiction to exist, Defendants' contacts with the forum must be so substantial that they would expect to be sued in the state for any claim even one not arising from its activities in that state. Shaffer v. Heitner, 433 U.S. 186, 216 (1977). Once a defendant's substantial and continuous activities have been demonstrated, the court must then consider if exercising general jurisdiction over the defendant comports with due process requirements of substantial justice and fair play.
II. Analysis
A. Admiral Asserts Specific Jurisdiction
Admiral argues primarily that this court has specific jurisdiction over Defendants. The facts alleged in Admiral's petition support this allegation with respect to Defendant Millman but not with regard to Defendant Hindery. It is undisputed that Hindery and Millman are residents of California and Virginia, respectively. Hindery Decl. ¶ 2; Millman Decl. ¶ 3. Admiral bases its first jurisdictional allegation against these nonresident individuals, in part, on their leadership status within CPI. Pl.'s Resp. ¶ 8. However, Defendants' status as CPI directors and officers, alone, is not sufficient to establish personal jurisdiction. Shaffer, 433 U.S. at 215-216.
In addition, Admiral enumerates activities that it contends constitute Defendants' deliberate conduct directed at the state of Texas such as: engaging in business in Texas on behalf of a Texas corporation, Hindery's telephone conversations and travel on behalf of CPI, and Millman's telephone conversations and travel on behalf of CPI. Pl.'s Resp. ¶¶ 11-13. Where communications by phone, email, and regular trips were performed for the corporation and not performed in an individual capacity, the fiduciary shield doctrine has precluded jurisdiction over the individual defendant. Burchfield, 2002 WL 318341, at *7; Spademan, 772 F.2d at 1198. "Under the fiduciary shield doctrine, an individual's transaction of business within the state solely as a corporate officer does not create personal jurisdiction over that individual though the state has in personam jurisdiction over the corporation." Spademan, 772 F.2d at 1197. Defendants' actions as enumerated by Plaintiff were performed in their capacity as executive officers within CPI. Hindery Decl. ¶¶ 12-13; Millman Decl. ¶¶ 14-15. The court may not base its jurisdiction over Hindery and Millman solely on its jurisdiction over the corporation that employs them. Spademan, 772 F.2d at 1198.
1. Applicability of the Fiduciary Shield Doctrine
Admiral claims that in their prime leadership role, Hindery and Millman solicited investors and sought protection of Texas bankruptcy courts. Pl.'s Resp. ¶ 16. Defendants argue that they acted on behalf of CPI while functioning in their capacity as officers of the corporation and for the benefit of the corporation thereby triggering the fiduciary shield doctrine. See Saktides v. Cooper, 742 F. Supp. 382, 385 (W.D. Tex. 1990).
Admiral contends that the fiduciary shield doctrine should not apply to Hindery and Millman because they abused their privileges as corporate officers for their individual benefit. Pl.'s Resp. ¶ 26, n. 4. To support its argument, Admiral points to allegations of alter ego and sham to perpetuate a fraud in the CB Parkway action and allegations of mismanagement for personal gain in Rosenthal. Id. It is true that courts have recognized an exception to the fiduciary shield rule when the corporation is the alter ego of the individual officer or when the individual officer perpetrates a fraud. Spademan, 772 F.2d at 1198 n. 12 (citing Marine Midland Bank, N.A. v. Miller, 664 F.2d 899, 904 (2d Cir. 1981)).
While Admiral at no time specifies sufficient facts to support the underlying alter ego and fraud allegations against Defendant Hindery, this Court finds that Admiral has met its burden with respect to the tortious interference claim against Defendant Millman.
a. Defendant Hindery
"The fiduciary shield doctrine precludes the use of [the alter ego] theory to exercise personal jurisdiction over [a defendant] absent a prima facie showing that [defendant] is an alter ego of [the corporation]." Kisiel v. RAS Sec. Corp., No. 3:01-CV-294-X, 2001 WL 912425 at *5 (N.D. Tex. Aug 9, 2001) (Kendall, J.).
Admiral's attempt to "pierce the corporate veil" with respect to Hindery is based on allegations of fraud made by other parties in the underlying suits against certain venture capital groups of which Hindery is part. Federal Rule of Civil Procedure 9(b) states that allegations of fraud must be pled with particularity. Even if these suits had made their allegations against Hindery in his individual capacity, there still are insufficient facts to support a prima facie case him. "Bare allegations of fraud against the defendants in their "individual capacities' do not satisfy the prima facie requirements for jurisdiction." Burchfield v. Stein, No. Civ.A. 3:01-CV-2529-G, 2002 WL 318341 at *6 (N.D. Tex. Feb. 27, 2002) (Fish, J.); see also Southern Bleacher Co., Inc. v. Husco, Inc., No. 7:01-CV-009-R, 2001 WL 497772 at *6 (N.D. Tex. May 7, 2001) (Buchmeyer, Chief J.).
In addition, Admiral's complaint fails to allege any specific instances of fraudulent activity that can be attributed to Hindery with respect to the insurance contract. Instead, Admiral points to alleged misrepresentations made by a former CPI director when applying for CPI's insurance coverage and attempts to attribute those misrepresentations to both Defendants by virtue of the positions they held within the corporation. Pl.'s Am. Compl. and Req. for Declaratory J. ¶¶ 21, 23, 24. "A plaintiffs mere assertion' of a claim against a Defendant will not support the exercise of jurisdiction absent minimum contacts." Star Technology, Inc. v. Tultex Corp., 844 F. Supp. 295, 299 (ND. Tex. 1993) (Kendall, J.). Regarding Defendant Hindery, Plaintiff has not shown that the fraud exception to the fiduciary shield doctrine applies with regard to the insurance contract or the underlying cases.
B. Defendant Millman
Texas' long-arm statute permits service of process on nonresidents who have engaged in business within Texas so long as the lawsuit relates to that business. Tex. Civ. Prac. Rem. Code Ann. § 17.042 (Vernon 1997). This statute states that "in addition to other acts that may constitute doing business, a nonresident does business in this state if the non-resident . . . commits a tort in whole or in part in this state." Tex. Civ. Prac. Rem. Code Ann. § 17.042(2) (Vernon 1997).
The underlying CB Parkway suit contains specific allegations that Millman tortiously interfered with the landlord's lien CB Parkway had attached to all Coollink property located on its leased premises. CB Parkway alleges that Millman with full knowledge of that lien directed that the property be moved surreptitiously without notifying CB Parkway. Admiral Resp. App. 4 at 9, ¶ 35. CB Parkway further alleges that Coollink, under Millman's direction, allowed two other defendant corporations to take a lien on that property with the specific intention of defeating CB Parkway's lien. Id. at 9, ¶ 36-37.
However remote Millman's physical presence in Texas, his alleged direction to remove the property gave rise to an alleged intentional tort within the state that constitutes purposeful availment of the benefit and protections of Texas law. See Lewis v. Fresne, 252 F.3d 352, 359 (5th Cir. 2001). For purposes of long-arm jurisdiction, a tort is committed where the resulting injury occurs. Magna Group, Inc. v. Gordon Floor Covering, Inc., No. Civ.A.3-99-CV-1926-P, 1999 WL 1204483 *3 (N.D. Tex. 1999) (Solis, J.); see Hupp v. Siroflex of America, Inc., 848 F. Supp. 744, (S.D. Tex. 1994).
When an intentional tort is alleged, a single act by a defendant may be enough to confer personal jurisdiction, if the claim arises from that act. See Lewis v. Fresne, 252 F.3d 352 (5th Cir. May 14, 2001) (holding that asserting allegedly false statements via telephone to Texas, and mailing of loan documents and stock certificates containing allegedly false statements to Texas constituted evidence of minimum contacts which supported personal jurisdiction).
Admiral's request for declaratory judgment is clearly related to Millman's alleged tortious acts within the state of Texas, as is his request for a defense against claims arising from those acts. Though Millman's insured status under the Policy does not automatically confer personal jurisdiction, as an individual allegedly committing a tortious act within Texas, Millman is no longer immune from suit under the fiduciary shield doctrine. See Calder v. Jones, 465 U.S. 783, 790 (1984) (reporter and editor of allegedly defamatory magazine article were subject to personal jurisdiction); General Elec. v. Brown Ross Int'l Distrib., 804 S.W.2d 527, 532 (Tex.App — Houston [1st Dist.] 1990, writ denied) (officers who personally arranged theft of design plans, ordered counterfeit and mislabeled parts, and made misrepresentations to customers were subject to personal jurisdiction in Texas). The underlying claim in CB Parkway rests not on Millman's status as a corporate officer, but on the contention that he deliberately interfered with the lien to exploit the rent-free lease and eventually abandon the lease entirely to his benefit. "The shield is removed if the individual's personal interests motivate his actions." Lewis, 252 F.3d at 359 (quoting Darovec Marketing Group, Inc. v. Bio-Genics, Inc., 42 F. Supp.2d 810, 819 (N.D. Ill. 1999)).
Millman has requested a defense from Admiral specifically because of those alleged acts. Because the acts directed at the forum state give rise to the claim being asserted, a single act by the defendant directed at the forum state can be enough to confer personal jurisdiction. Latshaw 167 F.3d at 211. Therefore, the Court has found the minimum contacts necessary to establish specific jurisdiction. WNS. Inc., 884 F.2d at 202-03.
2. Whether "Insured Status" May Establish Minimum Contacts
All parties agree that Defendants did not personally negotiate or sign the insurance contract establishing coverage under the Policy. Pl.'s Resp. ¶ 29, Defs.' Br. at 5. So, in attempting to establish Defendants' minimum contacts with Texas, Admiral relies heavily on Defendants' insured status under the Policy. Pl.'s Resp. ¶ 28. Admiral argues that the Policy gives Defendants individual rights, that by demanding a defense under the Policy, Defendants have invoked the protection of Texas insurance law, and that this constitutes personal availment of Texas law sufficient to establish minimum contact with the forum. Id. ¶¶ 17, 28. However, the Supreme Court has explicitly rejected the argument that if a State's law can properly be applied to a dispute its courts necessarily have jurisdiction over the parties. Shaffer, 433 US at 215.
Admiral cites Massachusetts Bay Ins. Co. v. Portland Water District, 2000 WL 1499493 (D.N.H. 2000), in support of its argument that demanding a defense in an underlying suit confers personal jurisdiction over the insured in a related declaratory judgment action brought by an insurer. Pl.'s Resp. at ¶ 18. However, in that action, defendant Portland Water District committed a tortious act within the forum state and did not challenge jurisdiction in the underlying tort suit. In contrast, Admiral's claim does not allege any tortious acts on Defendant Hindery's part and both Defendants have challenged the court's jurisdiction in both the CB Parkway and Rosenthal suits. Reply Br. in Supp. of Defs.' Mot. to Dismiss at 8 (hereinafter "Defs' Reply").
In Texas, the insurer's duty to defend and indemnify arises directly out of the claims made against the insured and to determine the existence of those duties, the court must look to the eight corners of the applicable policy and the underlying complaint. Nat'l Union Fire Ins. Co. v. Merchants Fast Motor Lines, Inc., 939 S.W.2d 139, 141 (Tex. 1997). But to accurately determine the ramifications of requesting a defense under the Policy, it is necessary to assess to whom that duty is owed and in what capacity.
This is best done by looking at the language in the insurance contract. The Policy lists the Named Insured as "Cool Partners, Inc. dba Coolink.com." Policy Declarations at 1. It defines Directors and Officers as "all persons who were, now are, or shall be duly elected or appointed managers and/or officers of the Named Insured." Policy Endorsement Modification to Section III Limited Liability Company Coverage. Coverage A indemnifies each and every Director and officer for any Wrongful Acts. Policy Insuring Agreement Coverage A. Wrongful Acts are covered if made by "Directors or Officers of an Insured Entity in their respective capacities as such . . . by reason of their status as Directors and Officers" or for outside service in such capacities if "at the specific request of direction of the Insured Entity." Policy at 4. Based on that language, the duty to defend and indemnify for acts attributable to Defendants acting in their capacity as directors and officers is a duty owned to the named insured, CPI, and to insured Defendants not in their individual capacity, but in their role as officers of the corporation.
By providing a defense to the Insured Entity (CPI) and its Directors and Officers in Texas courts, Admiral is carrying out its contractual duty under the insurance contract it established with CPI. As Defendants correctly assert, performing contractual duties in the state of Texas is of little weight in determining jurisdiction if the decision as to performance is not the defendant's and the performance of the insurance contract in Texas is based on the wholly unilateral decision of Admiral. Command-A ire v. Ontario Mechanical Sales Service, 963 F.2d 90, 94; see also Burger King, 471 US. at 475.
B. General Jurisdiction Issues
Second, Admiral argues in the alternative that it should be allowed to conduct additional discovery to determine if general jurisdiction exists. By its own admission, Admiral has insufficient evidence to determine general jurisdiction. Pl.'s Resp. ¶ 34. Instead, Admiral provides an Internet printout showing that Hindery is or has been a director or officer of other Texas corporations. Pl.'s Resp. ¶ 36. Admiral does not provide any information that would demonstrate Hindery's activities extend beyond the fiduciary shield. As a basis for its argument, Admiral cites Willamson v. Tucker, 645 F.2d 404, 414 (5th Cir. 1981). The court in Williamson withheld dismissal and allowed plaintiff to conduct additional discovery where the basis of subject matter jurisdiction was also an element of the plaintiffs cause of action. Williamson, 645 F.2d at 415. By contrast, Admiral has brought suit against Defendant Hindery without any evidence that he has minimal contacts with the forum state much less the substantial and continuous contacts required to support this court exercising general in personam jurisdiction over him.
C. Fair Play and Substantial Justice
1. Defendant Hindery
While Texas has a clear regulatory interest with respect to insurance, that interest alone is not sufficient to provide a basis for jurisdiction absent a showing of minimum contacts between Defendants and the forum state. See Guardian, 815 S.W.2d at 229. "Even if the defendant would suffer minimal or no inconvenience from being forced to litigate before the tribunals of another State; even if the forum State has a strong interest in applying its law to the controversy; even if the forum State is the most convenient location for litigation, the Due Process Clause, acting as an instrument of interstate federalism, may sometimes act to divest the State of its power to render a valid judgment." World-Wide Volkswagon, 444 U.S. at 294. Since Admiral has failed to establish that Defendant Hindery has the required minimum contacts with the state of Texas, the court need not consider further whether asserting personal jurisdiction over them complies with principles of fair play and substantial justice. See Burger King, 471 U.S. at 476; Ham v. La Cienega Music Company, 4 F.3d 413, 416 n. 15 (5th Cir. 1993).
C. Defendant Millman
It is fair to call Millman into this Court since, taking the underlying allegations in CB Parkway as true, Millman could have reasonably foreseen being haled into court in Texas for interfering with a Texas property owner's lien. See Brown v. Flowers Indus. Inc., 688 F.2d 328, 334. Since this case concerns the extent of Admiral's duty to defend Millman based on those allegations, it follows that it is also reasonably foreseeable that this action might bring him before this Court, as well. Regarding the forum state's interests, the Fifth Circuit has noted that "Texas has a significant interest in redressing injuries that occur within its borders at the hands of nonresidents." WNS. Inc., 884 F.2d at 204. Certainly Texas has an interest in redressing injuries caused to Texas corporations, like CB Parkway, due to fraudulent activity directed at Texas by non-residents, regardless of whether it occurs by phone, fax, or in person.
Courts have recognized that Defendants may incur a burden in traveling to litigate claims. However, the Supreme Court has stated that when the defendant has conducted some business activity in the forum state, "it usually will not be unfair to subject [defendant] to the burdens of litigating in another forum for disputes relating to such activity." Burger King Corp. V. Rudzewicz, 471 U.S. 462, 474 (1985). Accordingly, allowing Plaintiff to sue Millman in this Court does not violate the Due Process clause.
CONCLUSION
Admiral has failed to show that Defendant Hindery has the requisite minimum contacts with Texas to support the Court's exercise of personal jurisdiction over him. However, Admiral has adequately pled that Defendant Millman's acts within the forum constitute sufficient minimum contacts and the current claim is so related to those acts that this Court may exercise personal jurisdiction over him. Therefore, the motion to dismiss for lack of personal jurisdiction is GRANTED with respect to Defendant Hindery and DENIED with respect to Defendant Millman.