Big World, Not-So-Big Texas Jurisdiction

Monkedia, a Texas-based LLC, loaned $40,000 to Sevenly, a business based in North Carolina. Monkedia sued Sevenly in Texas when a payment dispute arose, and the Fifth Court reversed the denial of Sevenly’s special appearance in Sevenly Outfitters LLC v. Monkedia LLC.

The Fifth Court summarized the law in this area as follows:

• Yes jurisdiction: “[T]he courts of appeals of this state have generally found a nonresident defendant purposefully avails itself of this forum when it contracts with a Texas resident as a result of its solicitation of the Texas resident,” citing a 2017 First Court opinion about a similar interstate loan transaction.
• No jurisdiction: “When the solicitation runs the other way and the plaintiff solicits business with the nonresident defendant, we have concluded there was no specific jurisdiction over the nonresident defendant, even though the defendant made payments to Texas under a contract that includes a Texas choice of law provision.”
• Also no jurisdiction: “[W]hen the record is silent as to which party solicited the others business, courts have found the defendant did not purposefully avail itself of the forum.”

Accordingly, Texas courts lacked jurisdiction over Sevenly. While the reocrd showed some communications between the parties that involved Texas, “[a]bsent in the record … is any allegation or evidence showing that Sevenly solicited Monkedia’s business or that Monkedia was engaged by Sevenly to market Sevenly’s products to Texas customers.” No. 05-22-00096-CV (April 19, 2023) (mem. op.).