Court Denies Objection To Personal Jurisdiction Concerning Breach of Fiduciary Duty Claim Against Former Employee

by Winstead PC

In Turman v. POS Partners, LLC, a Texas employer asserted contract and breach-of-fiduciary-duty claims against a former Oklahoma employee. No. 14-17-00105-CV, 2018 Tex. App. LEXIS 95 (Tex. App.—Houston [14th Dist.] January 4, 2018). The defendant asserted a special appearance objecting to the Texas court’s exercise of personal jurisdiction over him. The trial court denied the special appearance, and the court of appeals affirmed. The court of appeals stated the general rules of jurisdiction as follows:

The extent of a defendant’s contacts that are sufficient to support personal jurisdiction depends upon whether general jurisdiction or specific jurisdiction is alleged. A court may exercise general jurisdiction over a nonresident defendant if the defendant’s contacts with the forum state “are so ‘continuous and systematic’ as to render [it] essentially at home in the forum State.” A court may exercise specific jurisdiction if the nonresident defendant’s “alleged liability arises from or is related to an activity conducted within the forum,” even if the defendant’s contacts with the forum state are isolated or sporadic.

Id. The court held that there were not sufficient contacts to establish general jurisdiction. The court then turned to specific jurisdiction and held:

Regarding POSP’s tort claim for breach of fiduciary duty, the Texas long-arm statute authorizes the exercise of personal jurisdiction over a defendant who “commits a tort in whole or in part in this state.” But as previously mentioned, specific jurisdiction exists only if there is a “substantial connection” between the defendant’s forum contacts and the operative facts of the litigation. When analyzing Turman’s arguments concerning POSP’s tort claim, we accordingly begin by identifying the elements of the claim and determining whether there is a substantial connection between Texas and the operative facts that must be proved to establish the claim.

Breach of fiduciary duty requires proof that (1) a fiduciary relationship existed between the plaintiff and the defendant, (2) the defendant breached its fiduciary duty, and (3) the breach resulted in injury to the plaintiff or benefit to the defendant. In identifying the facts to be adjudicated at trial, we note that POSP does not allege that the parties had an informal fiduciary relationship, and that whether the parties have a formal fiduciary relationship is generally a question of law for the court. On the other hand, the parties disagree about whether the cash register Turman sold to Robbin’s True Value Hardware was a model carried by POSP, and thus, whether Turman usurped POSP’s opportunity to make the sale. When the facts are disputed, the question of whether a party breached a fiduciary duty is a question of fact. If a breach is proven, then POSP additionally would have to prove damages. The evidence at trial therefore will be primarily concerned with (1) whether, in this and similar instances, Turman breached any fiduciary duty to POSP by making sales on behalf of his own company that he instead should have made on behalf of POSP; and if so, (2) the extent to which Turman benefitted or POSP was injured by Turman’s conduct. In this example, Turman is said to have breached his fiduciary duty in Texas by selling equipment to POSP’s Texas customer. Thus, in this instance, the evidence at trial likely will focus on events that occurred in Texas.

The record before us accordingly supports the existence of specific jurisdiction over POSP’s breach-of-fiduciary duty claim.… We accordingly affirm the denial of Turman’s special appearance as it applies to POSP’s claim for breach of fiduciary duty.


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