Judge Fish, on September 20, 2010, denied Car Smart, Inc.’s motion to dismiss for lack of personal jurisdiction in Santander Consumer USA v. Car Smart. Santander is an Illinois corporation with its principal place of business in Dallas County. Car Smart is a Pennsylvania corporation with its principal place of business in Pennsylvania. After removing the case from state to federal court, Car Smart filed a motion to dismiss for lack of personal jurisdiction.
Santander’s lawsuit claimed that Car Smart breached a non-recourse dealer retail agreement (the “Agreement”). Judge Fish provided a nice summary of the law of personal jurisdiction as follows:
A federal district court may exercise personal jurisdiction over a nonresident defendant if (1) the long-arm statute of the forum state permits the exercise of personal jurisdiction over the defendant; and (2) the exercise of such jurisdiction by the forum state is consistent with due process under the United States Constitution. A defendant is amenable to the personal jurisdiction of a federal court sitting in diversity to the same extent that it would be amenable to the jurisdiction of a state court in the same forum. Applying state law, this court must first determine whether Texas, the forum state, could assert long-arm jurisdiction. Because the Texas long-arm statute confers jurisdiction to the limits of the federal constitution, the court need only concern itself with the federal due process inquiry.
Due process requires the satisfaction of two elements to exercise personal jurisdiction over a nonresident defendant: (1) the nonresident must have some minimum contact with the forum that results from an affirmative act on its part such that the nonresident defendant could anticipate being haled into the courts of the forum state; and (2) it must be fair or reasonable to require the nonresident to defend the suit in the forum state. The Due Process Clause ensures that persons have a “fair warning that a particular activity may subject [them] to the jurisdiction of a foreign sovereign.”
To establish minimum contacts with the forum, a nonresident defendant must do some act by which it “purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.” However, the unilateral activity of one asserting a relationship with the nonresident defendant does not satisfy this requirement. . . .
Two types of in personam jurisdiction may be exercised over a nonresident defendant: specific jurisdiction and general jurisdiction. Specific jurisdiction exists if the cause of action is related to, or arises out of, the defendant’s contacts with the forum state and those contacts meet the due process standard. When a court exercises personal jurisdiction over a defendant based on contacts with the forum related to the particular controversy, the court is exercising ‘specific jurisdiction. General jurisdiction, on the other hand, may be found when the nonresident’s contacts with the forum are “continuous and systematic,” even though the claim is unrelated to those contacts.
(citations and quotations omitted).
Car Smart’s motion basically claimed that it had no connection to Texas. Notably, Car Smart stated that “it does not have a copy of the ‘alleged’ Agreement[,]” but that “[i]f the Agreement exists, Car Smart negotiated its terms entirely from Pennsylvania and signed it in Pennsylvania.” (Car Smart’s argument seems to be similar to the ol’ “I didn’t kill him, but, if I did, it was in self-defense” defense.) Judge Fish rejected Car Smart’s argument, ruling:
By entering into a continuing relationship with Santander, a resident of Texas, Car Smart was purposefully availing itself of the privileges and protections of doing business in Texas. This availment should have alerted Car Smart to the possibility that it might be haled into court in Texas to answer complaints related to this extended contractual relationship. Although Car Smart argues to the contrary, the continuation of the relationship between the parties for over four years, combined with Car Smart’s decision to enter into 28 agreements with Santander, suggests otherwise.
Santander is represented by Donald Hill of Rowlett Hill LLP. Car Smart is represented by Darrell Guthrie, Greg Dimmick, and Lawrence Doss, all of Mullin Hoard & Brown.