text:
    LEESBORO CORPORATION, Appellant, v. Claude HENDRICKSON, Appellee.
    No. 03-09-00069-CV.
    Court of Appeals of Texas, Austin.
    Oct. 1, 2010.

      Leesboro Corporation, New Orleans, LA, for Appellant.
    Scott A. Brister, Rex VanMiddlesworth, Andrews Kurth LLP, Austin, for Appellee.
    Before Justices PATTERSON, PURYEAR and PEMBERTON.
   OPINION

DAVID PURYEAR, Justice.

In this interlocutory appeal, appellant Leesboro Corporation challenges the trial court’s grant of appellee Claude Hendrick-son’s special appearance. Leesboro sued Dixie Demolition, Hendrickson, who is the owner and manager of Dixie Demolition, and several other defendants on various claims related to a salvage operation at a power plant in Rockdale, Texas. Leesboro brought tort claims against Hendrickson based on an alleged fraudulent misrepresentation Hendrickson made while in Texas. Hendrickson filed a special appearance, asserting that he was not amenable to personal jurisdiction because he was a resident of Alabama and did not have sufficient minimum contacts with Texas. The trial court granted his special appearance and dismissed all claims against him for lack of personal jurisdiction. We will affirm the trial court’s order.

BACKGROUND

Hendrickson owns and operates Dixie Demolition, LLC (“Dixie”), a power plant demolition company that operates out of Birmingham, Alabama. In September 2007, Dixie’s parent company, Dixie Equipment, entered into a contract with Alcoa, Inc., to purchase and demolish certain power plants at Alcoa’s aluminum plant in Rockdale, Texas. Dixie Equipment assigned its rights in the Alcoa contract to Dixie, which later entered into a contract to sell most of the salvage from the plant to Airways Recycling Group. Airways then entered into a contract with JNS Enterprises to sell it some of the salvage from the Alcoa plant. Finally, Leesboro, a Texas corporation, entered into a contract with JNS to purchase salvage materials from the Alcoa plant.

Leesboro, however, was never able to purchase any of the salvage from the Rockdale plant because, according to Dixie, Airways defaulted on its contract with Dixie, and Dixie made other arrangements to sell the salvage materials. As a result, the subsequent contracts flowing down from the defaulted contract, including Leesboro’s, were never completed. Based on the failure to perform these contracts, Leesboro sued Dixie, Airways, and JNS for breach of contract. Leesboro also sued Dixie, Hendrickson, and Airways for fraud in the inducement, fraudulent concealment, interference with contractual relations, conversion, and violations of the Texas Theft Liability Act.

Leesboro’s fraud claims against Hen-drickson were based on its allegation that Hendrickson had represented that he had signed, on behalf of Dixie, an agreement guaranteeing that Leesboro would receive its salvage materials from the Rockdale plant regardless of the status of the intervening contracts (“performance guarantee”). Specifically, Leesboro alleged that Hendrickson, in order to induce Leesboro to enter into an agreement with JNS to purchase salvage rights and deposit money under that purchase agreement, told Lees-boro’s representative that he — i.e., Hen-drickson — had signed the performance guarantee and that Leesboro would start receiving its contracted salvage shipments once Leesboro paid the required deposit.

In response to Leesboro’s claims against him, Hendrickson filed a special appearance asserting that he was not subject to the personal jurisdiction of Texas courts because he was a resident of Alabama and did not have sufficient minimum contacts with Texas to establish specific jurisdiction over him. Hendrickson also filed an affidavit and corroborating deposition testimony to support his assertion that he neither signed the performance guarantee nor represented that he had signed the performance guarantee. Leesboro responded by offering the deposition testimony of its representative stating that Hendrickson had made the representation. Leesboro also objected to the admission of Hen-drickson’s affidavit on the grounds that it contained inadmissible evidence. After a hearing, the trial court granted the special appearance and dismissed Leesboro’s claims against Hendrickson for lack of jurisdiction. Leesboro appeals.

DISCUSSION

Personal Jurisdiction

Leesboro’s first four issues on appeal challenge the trial court’s decision to grant Hendrickson’s special appearance and its finding that it did not have personal jurisdiction over Hendrickson. Specifically, Leesboro argues that (1) the trial court erred as a matter of law in granting Hen-drickson’s special appearance, (2) the evidence established as a matter of law that the trial court had specific jurisdiction over Hendrickson, (3) the trial court erred in impliedly finding and concluding that Hen-drickson negated the existence of personal jurisdiction, and (4) the evidence was legally and factually insufficient to support the trial court’s implied finding that Hendrick-son negated the existence of personal jurisdiction. Because these issues are closely related, we will address them together.

(i) Standard of Review

[1-4] Whether a trial court has personal jurisdiction over a defendant is a question of law that we review de novo. Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex.2007). The plaintiff bears the initial burden of pleading sufficient allegations to invoke jurisdiction under the Texas long-arm statute. American Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 807 (Tex.2002). Once the plaintiff has pleaded sufficient jurisdictional allegations, the defendant filing a special appearance then assumes the burden of negating all bases of personal jurisdiction alleged by the plaintiff. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 793 (Tex.2002). “Because the plaintiff defines the scope and nature of the lawsuit, the defendant’s corresponding burden to negate jurisdiction is tied to the allegations in the plaintiffs pleading.” Kelly v. General Interior Constr., Inc., 301 S.W.3d 653, 658 (Tex.2010). However, the plaintiffs pleadings are not dispositive of the jurisdictional dispute, thus, both parties can present evidence either proving or disproving the allegations. Id. at 658-59. The defendant can also negate jurisdiction on a legal basis. Id. at 659.

In making its jurisdictional determination, the trial court must, if necessary, resolve questions of jurisdictional fact. BMC Software, 83 S.W.3d at 794. When the trial court does not issue findings of fact and conclusions of law with its special-appearance ruling, as in this case, we infer all fact findings necessary to support the trial court’s jurisdictional determination and any legal theory that is supported by the evidence. GJP, Inc. v. Ghosh, 251 S.W.3d 854, 870 (Tex.App.-Austin 2008, no pet.) (citing BMC Software, 83 S.W.3d at 795). Further, when the appellate record includes the reporter’s and clerk’s records, as it does in this case, any implied findings are not conclusive and may be challenged for legal and factual sufficiency. BMC Software, 83 S.W.3d at 795. Evidence is legally sufficient if there is more than a mere scintilla of evidence to support the finding. Merrell Dow Pharms., Inc. v. Havner, 953 S.W.2d 706, 711 (Tex.1997). More than a scintilla of evidence exists when the evidence supporting the finding, as a whole, “rises to the level that would enable reasonable and fair-minded people to differ in their conclusions.” Burroughs Wellcome v. Crye, 907 S.W.2d 497, 499 (Tex.1995) (quoting Transportation Ins. Co. v. Moriel, 879 S.W.2d 10, 25 (Tex.1994)). Evidence is factually insufficient only if, in light of the entire record, a finding is so against the great weight and preponderance of the evidence as to be manifestly erroneous or unjust. Cain v. Bain, 709 S.W.2d 175, 176 (Tex.1986). The trial court is the sole judge of witness credibility and the weight to be given to testimony, and we “will not disturb a trial court’s resolution of conflicting evidence that turns on the credibility or weight of the evidence.” Ennis v. Loiseau, 164 S.W.3d 698, 706 (Tex.App.-Austin 2005, no pet.). If we determine that the trial court’s findings of jurisdictional fact are supported by sufficient evidence, we decide as a matter of law whether those findings negate all bases for personal jurisdiction. GJP, Inc., 251 S.W.3d at 871. In conducting our factual and legal sufficiency inquiry, we review all relevant evidence that was before the trial court. Id.

(ii) General Principles

A Texas court may exercise personal jurisdiction over a nonresident if (1) the Texas long-arm statute authorizes the exercise of jurisdiction, and (2) the exercise of jurisdiction is consistent with constitutional due-process guarantees. Moki Mac, 221 S.W.3d at 574. The Texas long-arm statute authorizes the exercise of jurisdiction over nonresidents who do business in Texas. Schlobohm v. Schapiro, 784 S.W.2d 355, 356 (Tex.1990). “In addition to other acts that may constitute doing business, a nonresident does business” in Texas if he “commits a tort in whole or in part in [Texas].” Tex. Civ. Prac. & Rem.Code Ann. § 17.042(2) (West 2008). The long-arm statute’s broad “doing business” language allows the statute to reach as far as the federal constitutional requirements of due process will allow. Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex.1991).

For purposes of asserting personal jurisdiction over a nonresident who does not consent to jurisdiction, federal constitutional due-process requirements are met when the nonresident defendant has established “minimum contacts” with the forum state and the exercise of jurisdiction is consistent with “traditional notions of fair play and substantial justice.” Moki Mac, 221 S.W.3d at 575. A “minimum-contacts analysis focuses solely on the actions and reasonable expectations of the defendant.” Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 790 (Tex.2005). Minimum contacts are sufficient for personal jurisdiction when the nonresident defendant “‘purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws.’” Moki Mac, 221 S.W.3d at 575 (quoting Hanson v. Denckla, 357 U.S. 235, 253, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958) (quoting International Shoe Co. v. State of Washington, 326 U.S. 310, 319, 66 S.Ct. 154, 90 L.Ed. 95 (1945))). In determining whether a nonresident defendant has purposefully availed itself of the privilege of conducting activities in Texas, “only the defendant’s contacts with Texas are relevant, not the unilateral activity of another party or third person.” Id. Further, “the contacts relied upon must be purposeful, rather than random, fortuitous, or attenuated,” and the “ ‘defendant must seek some benefit, advantage, or profit by “availing” itself of the jurisdiction.’ ” Id. (quoting Michiana, 168 S.W.3d at 785).

A nonresident’s contacts with Texas may give rise to two types of personal jurisdiction — general jurisdiction and specific jurisdiction. BMC Software, 83 S.W.3d at 795. General jurisdiction is established when a nonresident defendant’s contacts with Texas are “continuous and systematic,” regardless of whether the alleged liability arises from those contacts. Id. at 796. In contrast, specific jurisdiction, which is the only ground for personal jurisdiction alleged against Hendrickson in the present case, focuses on “the relationship among the defendant, the forum[,] and the litigation.” Moki Mac, 221 S.W.3d at 575-76. “Specific jurisdiction is established if the defendant’s alleged liability arises from or is related to an activity conducted within the forum.” BMC Software, 83 S.W.3d at 796. Thus, for a Texas court to properly exercise specific jurisdiction over Hendrickson in the present case, (1) Hendrickson must have made minimum contacts with Texas by purposefully availing himself of the privilege of conducting activities here, and (2) Hendrickson’s contacts with Texas must be substantially connected to the operative facts of this litigation. See Moki Mac, 221 S.W.3d at 576, 585. If both of these requirements are met, we then must determine if the exercise of specific jurisdiction over Hendrick-son comports with “traditional notions of fair play and substantial justice.” Id. at 575 (quoting International Shoe, 326 U.S. at 316, 66 S.Ct. 154).

(in) Hendrickson’s Special Appearance

Leesboro satisfied its initial jurisdictional burden by pleading sufficient allegations to come within the Texas long-arm statute. See BMC Software, 83 S.W.3d at 793. Specifically, Leesboro alleged that Hendrickson “committed fraud, fraudulent concealment, conversion, and other torts in Texas” when Hendrickson made “material representations to plaintiff in June 2008, at meetings in Rockdale, Texas, that Hen-drickson [had signed a] performance guarantee agreement.”

In response, Hendrickson filed a special appearance asserting that he was not subject to personal jurisdiction in Texas because he was a resident of Alabama, not Texas, does not have real estate, a bank account, or personal records in Texas, and has never entered into a contract or conducted any business with any Texas business, citizen, or resident. Hendrickson also asserted that he did not sign the performance guarantee as alleged by Leesboro. Hendrickson later filed an affidavit in support of his special appearance attesting to those same facts and additionally asserting that he never represented to Leesboro’s agent that he had signed the performance guarantee. Hendrickson also offered the deposition testimony of Conrad Bar, another participant in the Rockdale meeting, who corroborated Hendrickson’s affidavit testimony.

Leesboro responded to Hendrickson’s special appearance and evidence by asserting that the trial court had personal jurisdiction over Hendrickson for the following reasons:

• Hendrickson attended meetings in Rockdale, Texas and made representations regarding the performance guarantee;
• Hendrickson committed torts in Texas; and
• Given Hendrickson’s numerous, substantial contacts with Texas, the assertion of personal jurisdiction over him would not offend traditional notions of due process.

As evidence, Leesboro relied on Hendrick-son’s admission that he attended the Rock-dale meeting and also on the deposition testimony of Daniel Lee, Leesboro’s representative to whom Leesboro alleges Hen-drickson made the misrepresentations at issue in this case. Leesboro also objected to portions of Hendrickson’s affidavit on the grounds that they were impermissible factual and legal conclusions. After reviewing the pleadings, evidence, and arguments of counsel, the trial court sustained Hendrickson’s special appearance and dismissed the claims against Hendrickson for lack of personal jurisdiction.

In granting Hendrickson’s special appearance, the trial court did not make explicit findings of fact or conclusions of law. However, to hold that Hendrickson was not amenable to specific jurisdiction in Texas, the trial court impliedly determined that either (1) Hendrickson did not have minimum contacts with Texas by purposefully availing himself of the privilege of conducting activities in Texas, (2) Hen-drickson’s contacts with Texas were not substantially connected to the operative facts of the litigation, or (3) that its exercise of jurisdiction over Hendrickson would offend traditional notions of fair play and substantial justice. We must infer all findings of jurisdictional fact necessary to support the trial court’s ruling. BMC Software, 83 S.W.3d at 795.

(iv) Hendrickson’s Contacts

We begin our jurisdictional analysis by examining Hendrickson’s alleged contacts with Texas. See GJP, Inc., 251 S.W.3d at 868. Leesboro alleges that Hendrickson made the following contacts with Texas:

• “[Substantial business activity” for Dixie in Pasadena, Texas and Rock-dale, Texas;
• Frequent travel to and from Texas on Dixie’s business;
• Attendance at a business meeting in Rockdale, Texas regarding Dixie’s Alcoa plant contract; and
• A Representation to Daniel Lee, Leesboro’s representative, at the Rock-dale meeting, that Hendrickson has signed the performance guarantee.

Only the last of these alleged contacts could provide a basis for asserting specific jurisdiction over Hendrickson individually because it alleges that Hendrickson committed fraud while in Texas. See Niehaus v. Cedar Bridge, Inc., 208 S.W.3d 575, 581 (Tex.App.-Austin 2006, no pet.) (explaining that individual acting in corporate capacity may be subject to personal jurisdiction for fraudulent or tortious actions). In contrast, the first three of these alleged contacts (collectively, “general business contacts”) provide no basis for asserting specific jurisdiction over Hendrickson because they are Dixie’s contacts with Texas, not Hendrickson’s. See, e.g., International Shoe, 326 U.S. at 316, 66 S.Ct. 154 (“Since the corporate personality is a fiction, although a fiction intended to be acted upon as though it were a fact, ... it is clear that unlike an individual its ‘presence’ without, as well as within, the state of its origin can be manifested only by activities carried on in its behalf by those who are authorized to act for it.”). A corporate representative’s acts on the corporation’s behalf are considered acts of the corporation itself, Latch v. Grotty, Inc., 107 S.W.3d 543, 545 (Tex.2003), and, thus, a corporate representative’s non-tor-tious acts on the corporation’s behalf do not constitute a contact for purposes of personal jurisdiction over the corporate representative, see, e.g., Wolf v. Summers-Wood, L.P., 214 S.W.3d 783, 792 (Tex.App.-Dallas 2007, no pet.) (concluding that no specific jurisdiction existed where officer contracted in corporate capacity). Leesboro does not assert that Hendrick-son individually conducted business in Texas. Accordingly, Hendrickson’s general business contacts with Texas as a representative of Dixie cannot provide a basis for specific jurisdiction over Hendrickson.

In contrast, Leesboro’s allegation that Hendrickson committed fraud in Texas could provide a basis for exercising specific jurisdiction over Hendrickson because tor-tious or fraudulent contacts by a corporate representative are attributable to that representative individually. See Niehaus, 208 S.W.3d at 581; see also Kelly, 301 S.W.3d at 660 (explaining that specific jurisdiction over corporation’s officers for alleged wrongdoing requires that plaintiff “plead and, when challenged by the defendant ], present evidence that the Officer[’]s[ ] relevant acts (i.e., those connected to [plaintiffs] claims) occurred, at least in part, in Texas”). Further, Hendrickson’s alleged contact — i.e., the alleged misrepresentation — is substantially connected to the operative facts of Leesboro’s fraud claim. See Moki Mac, 221 S.W.3d at 585; see also In re FirstMerit Bank, N.A., 52 S.W.3d 749, 758 (Tex.2001) (elements of fraud). Finally, if Hendrickson committed a tort in Texas, the exercise of specific jurisdiction over him would not normally offend traditional notions of fair play and substantial justice. See Morris v. Kohls-York, 164 S.W.3d 686, 694-95 (Tex.App.-Austin 2005, pet. dism’d) (concluding that the “allegation that the [defendants] committed torts while in Texas leads us to conclude that the exercise of specific jurisdiction over the [defendants] does not offend ‘traditional notions of fair play and substantial justice’”). Thus, Leesboro’s allegation that Hendrickson committed a tort at the Rock-dale meeting is the only contact asserted by Leesboro that can provide a basis for exercising specific jurisdiction over Hen-drickson.

Hendrickson, however, disputed that he made the alleged misrepresentation and provided evidence to the trial court supporting his contention. This presented a jurisdictional question of fact that the trial court had to resolve, see BMC Software, 83 S.W.3d at 795 (“[T]he trial court frequently must resolve questions of fact before deciding the jurisdiction question.”), because it involved Hendrickson’s alleged contacts with Texas, see Michiana, 168 S.W.3d at 785 (holding that only defendant’s contacts with Texas are considered in determining purposeful availment). It was necessary for the trial court to resolve this question of fact because if Hendrick-son did not make a misrepresentation to Leesboro, he individually did not contact Texas for jurisdictional purposes. Without a Texas contact, Texas courts cannot assert personal jurisdiction over a nonresident defendant. See World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S.Ct. 580, 62 L.Ed.2d 490 (1980) (“[T]he foreseeability that is critical to due process analysis .... is that the defendant’s conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.”). Therefore, because Hendrick-son’s alleged contact with Texas is the only jurisdictional inquiry at issue here and because the trial court found that it lacked personal jurisdiction over Hendrickson, we must infer that the trial court found that Hendrickson did not have sufficient minimum contacts with Texas because Hen-drickson did not make the alleged misrepresentation. See GJP, Inc., 251 S.W.3d at 870. Having determined that the trial court made that implied finding, we must now determine if that implied finding is supported by legally and factually sufficient evidence. See Kelly, 301 S.W.3d at 659 n. 7.

(v) Legal and Factual Sufficiency

In support of his contention that he did not make a misrepresentation at the Rockdale meeting, Hendrickson offered into evidence his own affidavit and the deposition testimony of Conrad Bar, who also participated in the Rockdale meeting. Hendrickson’s affidavit states “I have never represented to [Leesboro’s representative] or anyone else that I signed the [performance guarantee].” Bar corroborated Hendrickson’s affidavit by confirming that he did not hear Hendrickson make any representations regarding the performance guarantee during the Rockdale meeting. At deposition, Bar testified:

Q: Were you there for that whole meeting, the whole — there’s a first meeting in the trailer?
A: Yes, sir.
Q: Were you there for that whole meeting?
A: I believe so.
Q: Were — did you ever see Mr. Hen-drickson and [Leesboro’s representative] go off for a private meeting outside your presence?
A: I did not.
Q: Did that occur?
A: Not that I saw.
Q: Were you there for the discussions that Mr. Hendrickson was involved in?
A: Yes.
Q: And did Mr. Hendrickson make any statement to [Leesboro’s representative] that indicated that he had in any way signed [the performance guarantee]?
A: I did not hear of any statements. I have no knowledge of that.
Q: You were there for the whole meeting?
A: Yes, sir.
Q: And you were there for the whole dinner at the piano bar?
A: Yeah, yes, sir.
Q: And did Mr. Hendrickson say anything to [Leesboro’s representative] or anybody that indicated that he had signed the [performance guarantee]?
A: Not to my knowledge.
Q: Did you ever hear Mr. Hendrickson say anything that indicated that he had signed or agreed to the — -the [performance guarantee]?
A: No.
Q: Did you have any reason to believe that he had?
A: No.

Leesboro offered the deposition testimony of Daniel Lee (Leesboro’s representative) to support its contention that Hendrickson made the alleged representation at the Rockdale meeting:

Q: Aside from [the performance guarantee], do you have any writing that [Hendrickson] has signed guar-ant[ee]ing anything to Leesboro?
A: Actually, I tried, but he — he denied it. He said he already signed one guarantiee], he is not going to sign another one.
Q: [Hendrickson] told you he signed a guarantee]?
A: Yes. Yes.
Q: And what guarantiee] was he referring to?
A: This one (indicating).
Q: [The performance guarantee]?
A: Yes.
Q: [Hendrickson] told you he signed [the performance guarantee]?
A: Yes.
Q: When did he tell you that?
A: On our first meeting, on or about the first week of June.

Considering the evidence in the light most favorable to the judgment and indulging every reasonable inference that would support the trial court’s implied finding, we conclude that a reasonable and fair-minded person could conclude that Hendrickson made no misrepresentation at the Rockdale meeting regarding the performance guarantee. Accordingly, the evidence is legally sufficient to support the trial court’s implied finding. Based on our review of all the evidence, we also conclude that the trial court’s implied finding that Hendrickson made no representation regarding the performance guarantee was not against the great weight and preponderance of the evidence. While there was testimony from Leesboro’s representative that Hendrickson made the representation to him at the Rockdale meeting, there is conflicting testimony suggesting that Hen-drickson made no misrepresentation at that meeting. It is for the trial court, however, to resolve such conflicts. McGalliard v. Kuhlmann, 722 S.W.2d 694, 696-97 (Tex.1986). The court could have credited the testimony of Hendrickson and Bar to conclude that Hendrickson made no representation. Accordingly, we conclude that the trial court’s implied finding was supported by factually sufficient evidence.

(vi) Jurisdictional Questions of Fact

Leesboro argues that the question of whether Hendrickson made the representation is not a jurisdictional fact that the trial court can resolve at a special-appearance hearing because the existence of a misrepresentation is an “essential element” of Leesboro’s fraud claims. Specifically, Leesboro contends that Michiana held that a judge should decide personal jurisdiction based on “physical facts” and not on whether tort liability exists, and, therefore, a trial court cannot determine any jurisdictional facts that may ultimately implicate the merits of the plaintiffs claim. Leesboro bases this assertion on the following language in Michiana:

Business contacts are generally 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 their jurisdictional decisions to the former rather than involving themselves in trying the latter.

Michiana, 168 S.W.3d at 791. Leesboro contends that the only relevant jurisdictional fact in the present case is that Hendrickson attended the meeting in Rockdale, Texas where the alleged misrepresentation occurred. Therefore, Leesboro argues, the trial court erred if it made a fact finding that Hendrickson did not make the representation and then used that finding to determine jurisdiction. We disagree with Leesboro’s interpretation of Michiana.

First, the question of whether Hendrick-son uttered the words in the Rockdale meeting involves a “physical” fact. Regardless, however, and crucial to our decision here, Michiana does not stand for the proposition that a trial court may never consider facts that may affect ultimate liability when determining specific jurisdiction. Michiana stands for the proposition that a minimum-contacts analysis must focus only on the actions and reasonable expectations of the defendant, and that specific jurisdiction depends on whether the defendant had sufficient contacts with Texas, not on whether those contacts were tortious. Id. at 790-92. Further, Michia-na recognizes that a trial court may have to resolve questions of fact in deciding personal jurisdiction issues, but cautions against unnecessary inquiries into liability issues. See id. Thus, while it is preferable to avoid factual inquiries involving underlying liability, a trial court must analyze the defendant’s contacts with Texas, if any, and resolve any necessary factual questions relating to those contacts even if those questions may relate to liability.

Here, Hendrickson’s only individual contact with Texas was the disputed misrepresentation to Leesboro’s agent. As discussed previously, all of the other contacts with Texas, including his attendance at the meeting and any non-tortious acts or statements on behalf of Dixie, were Dixie’s jurisdictional contacts with Texas because Hendrickson made them as Dixie’s representative. See Wolf, 214 S.W.3d at 792. In other words, as long as Hendrickson was conducting Dixie business, he was surrounded by a protective “cocoon” that insulated him from making jurisdictional contact with Texas. But he could step out of that cocoon, and thus make jurisdictional contact with Texas, by, for example, committing a tort. So, although Hendrick-son was physically present in Texas when he was conducting business for Dixie, his presence here did not satisfy jurisdictional contact requirements unless and until he made the alleged misrepresentation. Accordingly, the alleged action by Hendrick-son that gave rise to Leesboro’s fraud claims is also the only basis for asserting specific jurisdiction over Hendrickson individually.

Because the parties provided conflicting evidence regarding whether the misrepresentation occurred, the trial court was required to resolve whether Hendrick-son made the alleged statement in order to make its jurisdictional determination. Thus, the trial court had to make a factual determination or resolve a credibility issue regarding a matter that related to liability. To do otherwise — i.e., to refuse to consider whether Hendrickson made the alleged contact because it is also the basis for the underlying liability — would mean that Hendrickson’s “purposeful availment depends on the form of [the] claim selected by the plaintiff.” See Michiana, 168 S.W.3d at 791 (rejecting such a standard). Under that standard, a plaintiff could establish specific jurisdiction over a corporate representative conducting corporate business in Texas by simply alleging that the representative committed a tort while in Texas. But Michiana expressly rejects any specific jurisdictional analysis that is dependent on the plaintiff’s actions or choices. Id. at 791-92; see also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S.Ct. 2174, 85 L.Ed.2d 528 (1985) (“Jurisdiction is proper ... where the contacts proximately result from actions by the defendant himself that create a substantial connection with the forum State.”). Accordingly, we hold that if the nonresident defendant’s only jurisdictional contact with Texas is an alleged misrepresentation and the nonresident defendant denies that the misrepresentation occurred and provides evidence to support his denial, then the trial court must decide for jurisdictional purposes whether the misrepresentation — and therefore the nonresident’s contact — occurred, regardless of whether that contact is also an element of liability. See Kelly, 301 S.W.3d at 659 (“Factually, the defendant can present evidence that it has no contacts with Texas, effectively disproving the plaintiffs allegations.”).

Having determined that it was proper for the trial court to resolve the question of fact regarding Hendrickson’s contacts with Texas and having determined that there is legally and factually sufficient evidence to support the trial court’s implied finding that Hendrickson did not make the alleged representation, we conclude that, as a matter of law, Hendrickson lacked sufficient minimum contacts with Texas to support the assertion of specific jurisdiction. Accordingly, the trial court did not err in granting Hendrickson’s special appearance and dismissing all claims against him. We overrule Leesboro’s first four issues.

Objections to Hendrickson’s Affidavit

In its final issue on appeal, Leesboro argues that the trial court erred in overruling its objections to certain statements in Hendrickson’s affidavit because those statements are vague, “conclusory,” and failed to set forth facts admissible in evidence. Specifically, Leesboro objects to the following statements:

• “I have never, in my individual capacity, entered into a contract or conducted any business with any Texas businesses, citizen or resident.”
• “I did not sign, nor did I have any involvement with the document attached as Exhibit ‘A’ to Leesboro’s Third Amended Petition.”
• “I did not receive or accept pay'ments from JNS Enterprises or its agents.”

Assuming without deciding that the trial court erred by not striking these statements, that error was harmless because these statements do not affect the analysis of whether specific jurisdiction is proper in this case. See Tex.R.App. P. 44.1; see also Gee v. Liberty Mut. Fire Ins. Co., 765 S.W.2d 394, 396 (Tex.1989). To show harm from an evidentiary ruling, the complaining party usually must demonstrate that the judgment turns on the particular evidence excluded or admitted. City of Brownsville v. Alvarado, 897 S.W.2d 750, 753-54 (Tex.1995). A jurisdictional analysis turns on the nonresident defendant’s contacts with Texas. See Michiana, 168 S.W.3d at 791-92. Here, Leesboro did not allege that Hendrickson conducted business in Texas. Instead, Leesboro alleged that Hendrickson was subject to specific jurisdiction based on Dixie’s general business contacts and because Hendrickson committed a tort in Texas by making a misrepresentation about signing the performance guarantee. The statements to which Leesboro objects do not directly relate to either of those contentions. Rather, they address whether Hendrick-son conducted business in Texas or had any “involvement” with the performance guarantee. Further, assuming that “involvement” with the performance guarantee also encompasses making the alleged misrepresentation, any error in admitting this statement is harmless because the information was cumulative of another affidavit statement to which Leesboro did not object. See Reina v. General Accident Fire and Life Assurance Corp., Ltd., 611 S.W.2d 415, 417 (Tex.1981) (holding that the “exclusion of cumulative evidence is not reversible error”); Mauzey v. Sutliff, 125 S.W.3d 71, 80 (Tex.App.-Austin 2003, pet. denied) (determining that cumulative nature of testimony renders error harmless); see also Volkswagen of Am., Inc. v. Ramirez, 159 S.W.3d 897, 907 (Tex.2004) (“The general rule is error in the admission of testimony is deemed harmless and is waived if the objecting party subsequently permits the same or similar evidence to be introduced without objection.”). Thus, any error in admitting the affidavit testimony was harmless because it could not have resulted in an improper jurisdictional determination. Accordingly, we overrule Leesboro’s fifth issue.

CONCLUSION

We hold that the trial court properly granted Hendrickson’s special appearance because Hendrickson successfully negated specific jurisdiction by establishing that he had no individual contacts with Texas sufficient to meet the minimum contacts required by due-process concerns. We affirm the order of the trial court granting Hendrickson’s special appearance and dismissing the claims against him for lack of personal jurisdiction.


source: Caselaw Access Project

author: Justice SCOTT.

license: Public Domain

text:
    CROMWELL LOUISVILLE ASSOCIATES, Limited Partnership, Appellant v. COMMONWEALTH of Kentucky, Jefferson County Property Valuation Administrator, Appellee.
    No. 2008-SC-000644-DG.
    Supreme Court of Kentucky.
    Sept. 23, 2010.
    Thomas J. Luber, Mitzi Denise Wyrick, Sara Christine Veeneman, Wyatt, Tarrant, & Combs, LLP, Louisville, KY, Counsel for Appellant.
    Lawrence E. Osterhage, Jefferson County Attorney’s Office, Louisville, KY, Counsel for Appellee.
   Opinion of the Court by

Justice SCOTT.

I. Introduction

This is an appeal from an opinion of the Court of Appeals reversing the Jefferson Circuit Court, which in turn reversed the Kentucky Board of Tax Appeals. The Board of Tax Appeals dismissed Appellant’s challenge to the Jefferson County Property Valuation Administrator’s (PVA) 2001 property value assessment as untimely under KRS 133.120.

Because Appellant, Cromwell Louisville Associates, Limited Partnership, failed to comply with the administrative procedures mandated by KRS 133.120, we hold that the trial court erroneously reversed the Board of Tax Appeals’ decision. We, therefore, affirm the decision of the Court of Appeals and remand this matter to the trial court with instructions that the court dismiss this action in accordance with the decision of the Board of Tax Appeals.

II. Background

Because the parties stipulated most of the relevant facts and this case centers on statutory interpretation, we find a lengthy recitation of the facts unnecessary. This case originated from an administrative appeal based on the PVA’s alleged overvaluation of Appellant’s two commercial lots for the 2001 tax year. According to Appellant, the PVA valued its property at $3,040,600 for the 1998, 1999, and 2000 tax years. This amount ballooned to $7,733,640 for the 2001 tax year. During the time the property was in receivership, the receiver paid an allegedly inflated 2001 property tax.

Appellant first contested the PVA’s 2001 tax assessment on April 30, 2002, claiming that the PVA drastically overvalued its property. A conference between Appellant’s counsel and a PVA representative failed to produce an agreeable solution regarding the 2001 tax assessment. Appellant subsequently filed an appeal to the Jefferson County Board of Assessment Appeals; however, the Board declined to address the 2001 tax assessment. Consequently, Appellant appealed the decision to the Kentucky Board of Tax Appeals.

During the pendency of the administrative appeal to the Kentucky Board of Tax Appeals, both parties agreed that if the Board found in Appellant’s favor, the stipulated amount that Appellant overpaid in state and local tax for 2001 was $67,327.80. Ultimately, the Kentucky Board of Tax Appeals declined to rule on Appellant’s challenge to the 2001 assessment, finding that KRS 133.120 required Appellant to challenge the 2001 assessment during the 2001 inspection period.

The Jefferson Circuit Court thereafter reversed, finding that KRS 133.120 did not require the conference and appeal in the same year. The Court of Appeals then reversed, construing KRS 133.120 as requiring Appellant to contest the 2001 property assessment in 2001. Consequently, the court found that Appellant failed to comply with the mandatory administrative appeals procedures, preventing it from seeking a refund under KRS 134.590 for overpayment of taxes.

We also hold Appellant did not comply with the statutory requirements contained in KRS 133.120 and, therefore, affirm the Court of Appeals.

III. Analysis

As Benjamin Franklin stated, “in this world nothing can be said to be certain, except death and taxes.” Experience — and we might add, age — certainly confirm his wit and wisdom. In this Commonwealth, taxpayers can certainly expect annual property assessments, with taxes due near the end of every year. KRS 134.015. However, in this case, what is less certain is the applicable time period each taxpayer has to challenge this annual assessment.

Kentucky provides a statutorily codified right to inspect the real property tax rolls during the first thirteen days of May. KRS 133.045(1). In the case of an overvalued property assessment, the General Assembly authorized a refund of the re-suiting overpaid taxes. KRS 134.590. Notably, the refund provision contains an important condition precedent: a taxpayer must exhaust the administrative remedy procedures before seeking a refund. KRS 134.590(2), (6). With this framework in mind, we turn to Appellant’s arguments.

Appellant’s arguments hinge on the applicable time period in which a taxpayer must protest the PVA’s property assessment. Appellant contends that KRS 133.120(l)(a)’s reference to the “inspection period,” defined by KRS 133.045(1), restricts only the period of days, not the year, the initial conference and subsequent appeal challenging the property assessment can occur. KRS 133.120(l)(a) reads:

Any taxpayer desiring to appeal an assessment on real property made by the property valuation administrator shall first request a conference with the property valuation administrator or his or her designated deputy. The conference shall be held prior to or during the inspection period provided for in KRS 133.045.

KRS 133.045(1) provides:

The real property tax roll being prepared by the property valuation administrator for the current year, shall be open for inspection in the property valuation administrator’s office for thirteen (13) days beginning on the first Monday in May of each year and shall be open for inspection for six (6) days each week, one (1) of which shall be Saturday ... (emphasis added). According to Appellant, the applicable year restriction for the initial conference and appeal is the two year statute of limitations found in KRS 134.590, the ad valorem refund statute. That statute reads, in pertinent part:
(2) No state government agency shall authorize a refund unless each taxpayer individually applies for a refund within two (2) years from the date the taxpayer paid the tax. Each claim or application for a refund shall be in writing and state the specific grounds upon which it is based. Denials of refund claims or applications may be protested and appealed in accordance with KRS 131.110 and 131.340. No state government agency shall refund ad valorem taxes, except those held unconstitutional, unless the taxpayer has properly followed the administrative remedy procedures established through the protest provisions of KRS 131.110, the appeal provisions of KRS 133.120, the correction provisions of KRS 133.110 and 133.130, or other administrative remedy procedures.
(6) No refund shall be made unless each taxpayer individually applies within two (2) years from the date payment was made. If the amount of taxes due is in litigation, the taxpayer shall individually apply for refund within two (2) years from the date the amount due is finally determined. Each claim or application for a refund shall be in writing and state the specific grounds upon which it is based. No refund for ad valorem taxes, except those held unconstitutional, shall be made unless the taxpayer has properly followed the administrative remedy procedures established through the protest provisions of KRS IS 1.110, the appeal provisions of KRS 133.120, the correction provisions of KRS 133.110 and 133.130, or other administrative remedy procedures.

KRS 134.590(2), (6) (emphasis added).

Appellant synthesizes these three statutes by contending that a taxpayer is in compliance with all the administrative procedures relating to assessment appeals, if he requests the initial conference (KRS 133.120(l)(a)) during the first thirteen days of May (KRS 133.045(1)), and within two years of paying the disputed taxes (KRS 134.590(2), (6)). Thus, Appellant contends it complied with all applicable statutes for the 2001 property assessment by requesting an initial KRS 133.120(l)(a) conference the next year on April 30, 2002. Furthermore, Appellant claims that if we do not reverse the Court of Appeals, taxpayers will only have thirteen days, during the inspection period, to challenge improper property tax assessments.

In its response the PVA adopts the Court of Appeals’ reasoning. It avers that the only reasonable reading of the assessment appeal procedures defined in KRS 133.120, which references KRS 133.045’s current year language, leads to the conclusion that each tax year stands on its own. Additionally, the PVA argues that KRS 134.590 is not a substitute for KRS 133.120. Consequently, the PVA argues that Appellant’s failure to properly perfect its appeal of the 2001 tax bill in 2001 is fatal.

A. Statutory Construction: Plain Language of the Statute

When interpreting a statute we adhere to the general and oft-repeated maxim that, “[o]ur main objective is to construe the statute in accordance with its plain language and in order to effectuate the legislative intent.” Cabinet for Families and Children v. Cummings, 163 S.W.3d 425, 430 (Ky.2005).

A simple reading of KRS 133.120(l)(a)’s explicit reference to KRS 133.045 reveals the plain language requiring the taxpayer to request a conference during the inspection period. The inspection period, KRS 133.045(1), is explicitly framed in terms of the current year. Only the present year’s tax roll is available for examination during the inspection period. As the Board of Tax Appeals appropriately stated, the taxpayer must request a conference during the inspection period for the “current year” tax rolls. Thus, in construing the statute’s plain language to effectuate the legislative intent, we are unable to hold that the General Assembly intended the inspection period to be limited to only the stated period of days, and not the year, in which a taxpayer must appeal an unresolved property assessment.

The above conclusion is bolstered when considering Appellant’s argument that the Court of Appeals’ decision limits taxpayers to thirteen days to challenge an improper property tax. Appellant’s argument ignores KRS 133.120(9), a provision that allows a taxpayer, while disputing the assessment, to pay the property taxes based on his estimate of the property’s value (claimed value), pending the resolution of the disputed property valuation. If the valuation is more than the claimed value, the taxpayer pays the difference plus the tax interest rate. The crucial factor within this provision is claimed value provision.

Pursuant to KRS 133.1200(d), the taxpayer presents the claimed value of his property at the KRS 133.120(l)(a) conference. Consequently, in order for this claimed value option to be available, the assessment conference must be held during the same year; if the conference did not occur until the next tax year, the taxpayer would have no claimed value figure to use when paying taxes while disputing the property valuation.

Therefore, we conclude that the plain meaning of KRS 133.120(l)(a), with its reference to the inspection period, mandates that the taxpayer request the conference during the current tax year.

B. Statutory Interpretation: Avoid Absurd Results

We have long held “that a statute must not be interpreted so as to bring about an absurd or unreasonable result.” George v. Alcoholic Beverage Control Bd., 421 S.W.2d 569, 571 (Ky.1967). Appellant’s contention that KRS 133.120 does not restrict the conference to the current tax year would bring about such an absurd result. When interpreting the statute without a year limit, the initial conference may occur during the first thirteen days of any May. Based on this reading, a taxpayer could theoretically request a conference with the PVA years after the assessment in question, so long as it is within the inspection period. Furthermore, under the compulsory language of KRS 133.120, the PVA would have no choice but to attend and explain “the procedures followed in deriving the assessed value for the taxpayer’s property.” KRS 133.120(l)(c). Thus, as is evident in the above logic, construing the statute’s time-frame for the conference to a period of days without a limitation to the current year produces an absurd result, something this Court has declined to allow. See Floyd v. Gray, 657 S.W.2d 936, 941 (Ky.1988) (Leibson, J., dissenting) (“We should not suppose that the legislature intended to be intentionally illogical, nor should we interpret the statute to bring about an obviously illogical result.”).

C. KRS 134.590’s Statute of Limitations Inapplicable

Appellant’s proposed solution to the above quandary resulting from construing the inspection period without a current year limitation is to import the statute of limitations from the refund statute, KRS 134.590. Disregarding the plain language of the statute and trying to take part of another statute to extend the time line only perpetuates the absurdity. KRS 133.120 and 134.590 apply to patently different situations: the former is applicable to administrative proceedings for challenging the PYA’s assessment of property value, while the latter provides for refunds of ad valorem or unconstitutional taxes. We recognize the fundamental distinction between a statute elucidating all mandatory administrative procedures relating to the initial assessment and the statute of limitations for applying for a refund, the ultimate remedy. Consequently, we decline Appellant’s invitation to misconstrue the administrative procedures relating to the assessment statute.

Furthermore, the references to KRS 133.120 within KRS 134.590(2) and (6) do not change the analysis; rather, it merely establishes a prerequisite to applying for a refund, insuring taxpayers do not circumvent the administrative procedures. Notably, KRS 133.120(l)(a) does not refer to KRS 134.590(2) or (6) for the time period within which a taxpayer must request a conference and appeal. However, KRS 133.120(l)(a) does explicitly reference KRS 133.045 for the applicable time frame, which, as previously stated, unambiguously applies a current year framework to the inspection period. We have oft-stated, “[w]e are not at liberty to add or subtract from the legislative enactment.” Commonwealth v. Harrelson, 14 S.W.3d 541, 546 (Ky.2000). Accordingly, we cannot subtract the reference to KRS 133.045 from KRS 133.120(l)(a), and substitute KRS 134.590(2) or (6) in its place.

D. Procedural Due Process

Appellant also contends that it has a constitutional right to a refund. Appellant claims that it is entitled to obtain a pre-deprivation determination or, alternatively, the Commonwealth must provide meaningful backward looking relief to rectify any unconstitutional deprivation. McKesson Corp. v. Division of Alcoholic Beverages and Tobacco, 496 U.S. 18, 110 S.Ct. 2238, 110 L.Ed.2d 17 (1990). Additionally, Appellant contends that the Supreme Court of the United States has also held that states may not “bait and switch” by holding out what plainly appears to be a post-deprivation remedy and then, after taxes are paid, declare no such remedy exists. Reich v. Collins, 513 U.S. 106, 115 S.Ct. 547, 130 L.Ed.2d 454 (1994). Appellant claims that this is exactly what occurred when it was prevented from applying for a refund. We disagree.

We addressed Appellant’s first claim in regards to pre- and post-deprivation review above. As previously noted, KRS 133.120(9) permits the taxpayer to pay property taxes based on the claimed value of his property, pending a final valuation determination. Thus, there can be no deprivation for taxes not yet paid. We also find Appellant’s citation to Reich inappo-site. In that case, Georgia’s tax refund statute clearly provided for refunds, yet the Court found that Georgia reconfigured its scheme, unfairly, in midcourse to prohibit taxpayers from receiving refunds for disputed taxes. Reich, 513 U.S. at 110, 115 S.Ct. 547. In the present case, Appellant admits the statutory scheme governing refunds has remained unchanged since 1992. Thus, there is no “bait and switch” in the refund statute. Appellant’s claim of due process deprivation is disingenuous, as we find that nothing unfairly constraining a taxpayer’s right to receive a refund. Simply put, the taxpayer must comply with the statutory language, stated in KRS 184.590, which requires the exhaustion of administrative remedies before applying for a refund.

E. Other Assertions

The remainder of Appellant’s arguments are alternative theories under which KRS 134.590’s two year time frame is applicable to the assessment appeal procedures of KRS 133.120. Appellant’s arguments however, collapse with our finding that KRS 133.120(l)(a)’s assessment conference and appeal shall occur within the same tax year. Consequently, we succinctly discuss and dismiss the remainder of Appellant’s alternative arguments.

Appellant’s general statutory construction argument again attempts to combine two statutes that bear only a loose connection. We find this argument unpersuasive for the reasons previously stated. Next, Appellant’s argument regarding the legislative history is unpersuasive, largely due to Appellant’s failure to include any legislative history supporting its assertions. Finally, Appellant rehashes the argument that it exhausted its administrative remedies under KRS 134.590, entitling it to apply for a refund. As we found above, Appellant failed to request the assessment conference pursuant to KRS 133.120(l)(a) during the same tax year, thereby failing to comply with KRS 133.120. Consequently, Appellant cannot seek a refund under KRS 134.590 as it did not exhaust its administrative remedies.

IV. Conclusion

For the above reasons, we affirm the Court of Appeals’ decision and remand this matter to the trial court with instructions that the court dismiss this action in accordance with the decision of the Kentucky Board of Tax Appeals.

MINTON, C.J.; CUNNINGHAM, NOBLE, SCHRODER, and VENTERS, JJ., concur. ABRAMSON, J., not sitting.

      . That assessment figure was the same for the 2002 and 2003 tax years.

      . The receiver, CB Commercial-Nicklies, Inc., paid the $94,153.20 2001 tax in January 2002.

      . Appellant apparently regained control of the property sometime after the receiver paid the 2001 property tax and before April 29, 2002; although the precise time is unclear.

      . The parties reached a settlement for the 2002 and 2003 tax years. For those tax years, the fair cash value of the property was reduced to $2,100,000. These tax years are not before us.

      . For a contextual frame, we briefly detail the steps a taxpayer undertakes when seeking to challenge a properly assessment:

        Notice: "If the property valuation administrator assesses any properly at a greater value than that listed by the taxpayer or assesses unlisted property, the property valuation administrator shall serve notice on the taxpayer of such action. The notice shall be given by first-class mail or as provided in the Kentucky Rules of Civil Procedure.” KRS 132.450(4) Step 1: Conference with the PVA or its deputy during the inspection period. KRS 133.120(l)(a)
      a. Inspection period held the first thirteen (13) days of May, beginning with a Monday. KRS 133.045(1)
      b. During the week prior to the inspection period, the PVA shall publish, once, a display type advertisement containing, inter alia,:

      i. dates of the inspection period

        ii. the "fact that any taxpayer desiring to appeal an assessment shall first request a conference with the property valuation administrator to be held prior to or during the inspection period.” KRS 133.045(2)(d) (emphasis added).
      iii. Instructions on the manner in which an aggrieved taxpayer may file an appeal after the conference.

        Step 2: Appeal to County Board of Assessments. KRS 133.120(2)(a)
      a. No later than one workday following the conclusion of the inspection period

        Step 3: Appeal to the Kentucky Board of Tax Appeals. KRS 133.120(10)

        Step 4: Appeal to the appropriate County Circuit Court. KRS 13B, KRS 131.370

        Step 5: Appeal to the Kentucky Court of Appeals as a matter of right.

        Step 6: Seek discretionary review in the Supreme Court of Kentucky.

      . Notably, the inspection period for the 2001 tax year ended on June 29, 2001. This extension was presumably pursuant to the second sentence of KRS 133.045(1), which allows the Department of Revenue to order a reasonable extension of time for the inspection period of the tax roll.

      . The inspection period defined by KRS 133.045(1).

      . Although not dispositive, the title of each chapter is indicative of the clear delineation between the chapters. KRS 133 is entitled, "Supervision, Equalization, And Review Of Assessments;” KRS 134 is entitled, "Payment, Collection, And Refund Of Taxes.”


author: DIXON, Judge:

text:
    Betty G. RUNNER, Appellant, v. COMMONWEALTH of Kentucky, et al.; Kentucky Unemployment Insurance Commission; Department of Workforce Development and Investment; Education Cabinet; Cabinet for Health and Family Services, Commission for Children with Special Health Care Needs (CCSHCN); Kentucky Office Unemployment and Training; and Division of Unemployment Insurance, Appellees.
    No. 2009-CA-001245-MR.
    Court of Appeals of Kentucky.
    July 2, 2010.
    As Modified Sept. 24, 2010.

      Betty Runner, Louisville, KY, pro se.
    D. Brent Irvin, Frankfort, KY, for ap-pellee Cabinet for Health and Family Services, Commission for Children with Special Health Care Needs.
    Patrick B. Shirley, Frankfort, KY, for appellee Kentucky Unemployment Insurance Commission.
    Before DIXON and NICKELL, Judges; LAMBERT, Senior Judge.

      . Senior Judge Joseph Lambert sitting as Special Judge by assignment of the Chief Justice pursuant to Section 110(5)(b) of the Kentucky Constitution and Kentucky Revised Statutes (KRS) 2L.580.

   OPINION

DIXON, Judge:

Appellant, Betty Runner, appeals pro se from a judgment of the Jefferson Circuit Court upholding the Kentucky Unemployment Insurance Commission’s decision to deny her claim for unemployment insurance benefits. Finding no error, we affirm.

On March 20, 2008, Appellant was terminated from employment with the Cabinet for Health and Family Services, Commission for Children with Special Health Care Needs. Appellant thereafter filed for unemployment insurance benefits. On April 4, the Division of Unemployment Insurance denied Appellant’s claim based upon a determination that the reasons for her discharge included misconduct connected with her employment.

Appellant subsequently appealed the denial to the Division of Unemployment Insurance Appeals Branch of the Department of Workforce Investment and to the Kentucky Unemployment Insurance Commission. Following an evidentiary hearing, the unemployment insurance referee rendered a decision finding that Appellant was discharged for misconduct and was thus disqualified from receiving unemployment benefits. In his decision, the referee noted that Runner was given two written reprimands on August 15, 2006, the first of which was based upon thirteen specific instances where she sent disruptive and insubordinate e-mails to her supervisor. The second reprimand was for failing to perform assigned work. On April 11, 2007, Runner was suspended for disregarding a directive repeatedly issued by her supervisor. Further, the referee concluded that Runner exhibited obstinate behavior by refusing to sign any of her interim or annual personnel evaluations, refusing to provide her supervisor with a notebook that she claimed was work-related, and continuing to send disruptive emails. The referee determined that “[e]redible, probative evidence establishes that claimant’s failure to correct her performance and attitude to levels within her proven capabilities following numerous warnings and ample opportunity to make such corrections was the result of willful and wanton disregard for the work and the employer’s interests.” In addition, the referee found that Runner was guilty of “refusing to obey reasonable instructions,” a separate statutory ground to deny unemployment insurance. KRS 341.370(6). On November 18, 2008, the Commission adopted the referee’s findings and conclusions.

On December 8, 2008, Appellant filed an original action in the Jefferson Circuit Court seeking review of the Commission’s decision. Appellant argued that her termination was solely for the “unsatisfactory performance of duties” and that termination for such cause made her eligible to receive benefits. On June 5, 2009, the trial court rendered an opinion affirming the Commission’s denial of Runner’s claim. Therein, the trial court noted:

Ms. Runner’s primary argument is a semantic one. She seems to believe that the phrase “unsatisfactory performance of duties” serves as a talisman warding off any allegations that misconduct played a role in her termination. But, in fact, the two concepts are inter-related.
For example, in 2007, Ms. Runner repeatedly disregarded her supervisor’s instruction to notify the back-up staff of changes in her schedule. She was subsequently suspended for “unsatisfactory performance of duties.” Regardless of the label applied to the behavior ... her conduct met the legal definition of misconduct. In relation to [KRS 341.370(6) ], her conduct was a “knowing violation” of a reasonable rule and a refusal to obey “reasonable instructions.” Further, ... Ms. Runner’s actions meet the standard for misconduct because she disregarded her employer’s interests and her obligations to her employer. (Citation omitted).

Runner thereafter appealed to this Court.

Runner argues in this Court, as she did below, that the phrase “unsatisfactory performance of duties” essentially prohibits a finding that misconduct played a role in her termination. Quoting Boynton Cab Company v. Neubeck, 237 Wis. 249, 296 N.W. 636, 640 (1941), Runner states that “mere inefficiency, unsatisfactory conduct, failure in good performance as the result of inability or incapacity, inadvertencies or ordinary negligence in isolated instances, or good faith errors in judgment or discretion are not deemed ‘misconduct’ within the meaning of the statute.” Runner also claims that the reprimands and suspension without pay were “unfair” and “discriminatory.”

In reviewing an administrative decision, a circuit court must determine whether the agency’s decision was based upon substantial evidence. Kentucky Commission on Human Rights v. Fraser, 625 S.W.2d 852 (Ky.1981). See also Kentucky Retirement Systems v. Heavrin, 172 S.W.3d 808 (Ky.App.2005). Substantial evidence has been defined as evidence which “has sufficient probative value to induce conviction in the minds of reasonable men.” Kentucky State Racing Commission v. Fuller, 481 S.W.2d 298, 308 (Ky.1972). The circuit court’s role is to review the administrative decision, not to reinterpret or reconsider the merits of the claim. Kentucky Unemployment Insurance Commission v. King, 657 S.W.2d 250, 251 (Ky.App.1983). If the record contains substantial evidence supporting the agency’s decision, the circuit court must defer to the administrative agency, even if conflicting evidence is present. Fraser, 625 S.W.2d at 856. See also Bowling v. Natural Resources and Environmental Protection Cabinet, 891 S.W.2d 406 (Ky.App.1995).

On appeal to this Court, “[o]ur task is to determine whether or not the circuit court’s findings upholding the [administrative decision] are clearly erroneous. CR 52.01.” Jones v. Cabinet for Human Resources, 710 S.W.2d 862, 866 (Ky.App.1986). Thus, at this level of review, Runner has the burden of demonstrating that the trial court was clearly erroneous in finding that the Commission’s decision was supported by substantial evidence.

KRS 341.370(1) states, in relevant part, “A worker shall be disqualified from receiving benefits for the duration of any period of unemployment with respect to which: ... (b) He has been discharged for misconduct or dishonesty connected with his most recent work[.]” Although the statute does not specifically define “discharge for misconduct,” it describes the term as including, but not being limited, to:

[Separation initiated by an employer for falsification of an employment application to obtain employment through subterfuge; knowing violation of a reasonable and uniformly enforced rule of an employer; unsatisfactory attendance if the worker cannot show good cause for absences or tardiness; damaging the employer’s property through gross negligence; refusing to obey reasonable instructions; reporting to work under the influence of alcohol or drugs or consuming alcohol or drugs on employer’s premises during working hours; conduct endangering safety of self or co-workers; and incarceration in jail following conviction of a misdemean- or or felony by a court of competent jurisdiction, which results in missing at least five (5) days work.

KRS 341.370(6)(emphasis added).

In Douthitt v. Kentucky Unemployment Insurance Commission, 676 S.W.2d 472, 474 (Ky.App.1984), a panel of this Court noted that KRS 341.370(6) defines misconduct approximately the same way as it is defined in Boynton Cab Company v. Neubeck, 237 Wis. 249, 296 N.W. 636 (1941), and that the principle of Boynton had been followed in Kentucky. In Boynton, the Wisconsin Supreme Court defined the intended meaning of “misconduct” as:

Id. at 640.

Without question, “[t]he underlying principle of the statutory scheme for unemployment compensation evinces a humanitarian spirit and it should be so construed.” Alliant Health System v. Kentucky Unemployment Insurance Commission, 912 S.W.2d 452, 454 (Ky.App.1995). However, as noted by a panel of this Court in Shamrock Coal Company, Inc. v. Taylor, 697 S.W.2d 952, 954 (Ky.App.1985), “an employer is entitled to the faithful and obedient service of his employee, and that failure to render same may constitute misconduct by the employee.” See also Brown Hotel v. White, 365 S.W.2d 306 (Ky.1963). Moreover, “[wjhere an employee manifests an intent to disobey the reasonable instructions of his employer, the denial of unemployment compensation benefits on the basis of misconduct is proper.” City of Lancaster v. Trumbo, 660 S.W.2d 954, 956 (Ky.App.1983). See also Holbrook v. Kentucky Unemployment Insurance Commission, 290 S.W.3d 81 (Ky.App.2009).

Substantial evidence in the record supports the finding that Runner’s termination was for misconduct in connection with her work. She was aware of her responsibilities, was capable of performing her duties, and had been warned of the consequences of her actions. Contrary to Runner’s assertions, we are of the opinion that her actions and behavior did not represent mere inefficiency or unsatisfactory conduct, but rather a refusal to perform her work as ordered over a lengthy period of time. Such clearly satisfies the common-law test for misconduct. Douthitt, 676 S.W.2d at 474.

As the Commission’s decision was based upon substantial evidence, we are not free to substitute our judgment for that of the administrative agency. McManus v. Kentucky Retirement Systems, 124 S.W.3d 454, 458 (Ky.App.2003) (citing Johnson v. Galen Health Care, Inc., 39 S.W.3d 828, 832 (Ky.App.2001)). Accordingly, we hold that the Commission did not misapply the law when it found that Runner had been discharged for misconduct and, as such, the trial court properly affirmed the Commission’s decision.

The decision of the Jefferson Circuit Court is affirmed.

ALL CONCUR.


author: HARRIS, Senior Judge:

text:
    Sheila CARPENTER-MOORE, Appellant, v. Chad CARPENTER; R.M.F.C., M.S.C., and L.B.C., Children, Appellees.
    No. 2010-CA-000164-ME.
    Court of Appeals of Kentucky.
    Sept. 24, 2010.

      R. Kim Yocke, Covington, KY, for appellant.

      M. Patia R. Tabar, Florence, KY, for appellee.
    Before KELLER and THOMPSON, Judges; HARRIS, Senior Judge.

      . Senior Judge William R. Harris sitting as Special Judge by assignment of the Chief Justice pursuant to Section 110(5)(b) of the Kentucky Constitution and Kentucky Revised Statutes (KRS) 21.580.

   OPINION

HARRIS, Senior Judge:

Sheila Carpenter-Moore appeals from the Kenton Family Court’s decision denying her motion to relocate with the parties’ three minor children. For the reasons stated herein, we affirm.

Chad Carpenter initiated divorce proceedings against Sheila Carpenter in June 2004. Before the parties were divorced, the court entered an order on December 9, 2004, that the parties would share joint legal custody of their children.

Thereafter, the family court entered a bifurcated divorce decree on August 31, 2005, dissolving the marriage but reserving all other issues, including child custody, and stating that all temporary orders would remain in effect pending future resolution.

An agreed order was entered on March 21, 2007, stating that the parties would have joint legal custody, with Sheila as the primary residential parent.

On November 1, 2007, Sheila filed a motion requesting to relocate the children to Glade Springs, Virginia to be with her fiancé. At a hearing held on November 13, 2007, Chad’s counsel stated on the record that Chad did not want the relocation. The judge set a hearing date for February 7, 2008, stating that she wanted to hear all of the evidence in the matter. The court also appointed a guardian ad litem (“GAL”).

On January 30, 2008, Chad filed a motion for review of parenting time, which was set for hearing on February 7, 2008, the same date as the motion for relocation. Meanwhile, on February 4, 2008, the GAL issued a report stating that she believed it was not in the best interests of the children to be relocated.

On February 6, 2008, Sheila filed a motion for the court to summarily grant her relocation motion based on the fact that Chad had not complied with Femvick v. Femvick, 114 S.W.3d 767 (Ky.2003), and KRS 403.340 and 403.350. This motion was also set to be heard on February 7, 2008.

On the morning of February 7, 2008, in response to the motion to summarily grant relocation, Chad filed a motion for a change of custody with two affidavits attached. That same day, at the scheduled hearing the judge requested briefing on the legal issues involved with the motion to relocate and the motion to modify custody. The court also gave Sheila time to file a response to Chad’s motion for a change of custody, but no response was filed.

In response to the family court’s briefing request, Sheila filed a memorandum in support of her motion to relocate, again arguing that Chad had failed to comply with the procedures described in Fenwick, as well as KRS 430.340. Chad filed a memorandum in support of his motion for a change of custody, arguing that he had followed the procedures described in Fen-wick, and therefore that the court should consider his motion for a change of custody.

On June 2, 2008, the court held a hearing in chambers, which was apparently not on the record. Thereafter, the judge issued findings of fact and conclusions of law on August 11, 2008, stating that Chad had submitted sufficient evidence of emotional harm to the children, necessitating a full evidentiary hearing under KRS 403.340(2).

On October 23, 2008, the Kentucky Supreme Court rendered Pennington v. Marcum, 266 S.W.3d 759 (Ky.2008), which specifically dealt with relocation issues and made a change in relocation motion procedures previously mandated by Fenwick.

Prior to the hearing on October 31, 2008, Chad filed a motion to plead in the alternative for a modification of visitation/time-sharing to name him the residential parent, specifically citing the Pennington case as the basis of his motion. The record does not reflect any response by Sheila to this motion. The family court ultimately determined that Pennington applied to the case and that, according to Pennington, the best interests of the child standard applied to motions for relocation.

Additionally, on November 13, 2008, Sheila filed a motion to change Chad’s visitation/timesharing and/or award Sheila sole custody of the children without any supporting affidavits.

On January 6, 2009, the family court heard the remainder of the relocation, custody modification, and visitation/timeshar-ing modification evidence. Chad’s counsel made an oral motion to deny Sheila’s change of custody motion, which was granted. At the conclusion of the hearing, the judge asked for position statements from the parties, which both parties subsequently filed.

On March 30, 2009, the family court issued an opinion and order denying Sheila’s motion to relocate. No decision was made on any other issue, including Chad’s custodial modification motion and his alternative motion to modify timesharing. All other issues were reserved for future rulings.

Sheila filed an appeal of the March 30, 2009 decision. That appeal was dismissed by this Court as premature, as Chad’s motions for modification of custody and timesharing had not been ruled upon. Thereafter, the family court entered an amended opinion and order on December 22, 2009, denying all other outstanding motions, which maintained the status quo, making no custody changes, and stating that the order was final and appealable. The court also reaffirmed the decision to deny the motion to relocate. Sheila has filed the present appeal from the orders entered on March 30, 2009 and December 22, 2009.

Under Kentucky Civil Rule (CR) 52.01, a court’s findings of fact shall not be set aside unless clearly erroneous. We review the family court’s legal conclusions under a de novo standard. Brewick v. Brewick, 121 S.W.3d 524, 526 (Ky.App.2003).

Sheila first argues that the court erred when it failed to summarily grant her motion to relocate. The basis of the motion was that Chad had failed to comply with the procedure described in Fenwick, which states that:

[Wjhen a primary residential custodian gives notice of his or her intent to relocate with the parties’ child, the burden is then upon any party objecting to file a custody modification motion within a reasonable time and after that, to satisfy the modification standard of KRS 403.340 in order to change the designation of primary residential custodian.

Fenwick, 114 S.W.3d at 786. Sheila contends that because Chad did not file a motion for modification until three months after Sheila’s motion for relocation, and because his motion did not allege that the relocation would endanger the children, but simply alleged that it would not be in their best interests, he did not allege sufficient grounds for the court to conduct an evidentiary hearing. Additionally, Sheila argues that, because the family court based its decision to hold an evidentiary hearing based on the GAL’s report and other evidence, and not merely on the affidavits, it was error for the court to hold an evidentiary hearing.

Chad argues that Sheila failed to preserve the issue for appellate review because she did not object to the family court’s finding that there was sufficient evidence of emotional harm to hold an evidentiary hearing. Because Sheila argued in her motion to summarily grant her motion to relocate and her memorandum in support of her motion to relocate that Chad had not complied with Fenwick, we find that the issue was sufficiently preserved for our review.

We find that Chad and the court complied with the procedures required in Fen-wick. Given the motions filed and the amount of activity in the case, we do not find that three months was an unreasonable time in which to file the motion for a change of custody. In Fowler v. Sowers, 151 S.W.3d 357 (Ky.App.2004), this Court held that a father was not required to allege serious physical or emotional endangerment to a child to support his motion for a change of custody. Rather, the removal of a child from its known surroundings and extended family was a change of circumstances that merited a full hearing under KRS 403.340. Id. at 359.

Most importantly, as explained in Pennington, much of the procedural discussion in Fenwick must be disregarded because the Court applied the incorrect standard in that case. The relocation in Fenwick was raised prior to entry of the final custody decree. Had the relocation motion been made post-decree, as it was here, the focus should have been on whether an actual change in custody was being sought.

Fenwick directed the parent opposing relocation to file a motion for change of custody pursuant to KRS 403.340, yet subsequently acknowledged that “the essence of joint custody is shared decision-making,” and that “the joint custody itself will remain unaffected by [the mother’s] relocation because [the father] will still be able to continue sharing substantial time with his children through personal contact and other means ... [.] ” Fenwick, 114 S.W.3d at 789. Therefore, a parent opposed to relocation but not seeking a change in joint custody does not need to make a motion for a change of custody, but rather a motion for modification of timesharing. Pennington, 266 S.W.3d at 768. “[S]ince the nature of the custody does not change, the trial court is not bound by the statutory requirements that must be met for a change of custody, but can modify time-sharing based on the best interests of the child as is done in modifying visitation.” Id. Because Fenwick is not applicable to this case, any error in failing to follow its procedural mandates is harmless, as the custody decree was never modified. Therefore, the family court did not err in failing to summarily grant Sheila’s motion to relocate.

Sheila next argues that the family court erred in “retroactively” applying the decision in Pennington. Chad again argues that, because Sheila did not file any responsive documents to Chad’s motion to change custody, and filed no documents arguing that the family court should not apply the Pennington case, she failed to preserve this issue for appellate review. Sheila argues in her brief that this issue was preserved for review when her counsel discussed the applicable law and standard of review during the January 6, 2009 hearing. During that discussion, Sheila’s lawyer stated as follows:

And [the court is] going to have to determine the applicability of Pennington or ... you know, and I don’t know ... it’s kind of an unusual situation of, is this particular case going to apply to something that’s already been filed and hasn’t concluded, so ... is it retroactive and does Fenwick apply ... I don’t know if I have an answer to that ...[.]

Although there is no evidence of an objection in the record made to the family court’s final decision to apply Pennington, we find that the issue was sufficiently preserved for our review.

The family court stated in its March 30, 2009 order that “Pennington governs because it is the law in effect at the time a decision is made, rather than at the time the case is filed that governs,” and cited BellSouth Telecommunications, Inc. v. Southeast Telephone, Inc. and Public Service Commission of Kentucky, 462 F.3d 650, 657 (6th Cir.2006). Sheila quotes the portion of BellSouth which discusses the retroactive application of new law to substantive rights, including several citations which state that retroactivity is disfavored.

However, all of the cases cited by Sheila dealt with the application of new statutes or regulations retroactively to events which had already occurred. Pennington is not a statute or a regulation, it is a judicial decision rendered during the proceedings in this case. Therefore, the more appropriate discussion should revolve around the retroactive applicability of new judicial precedent. In cases involving new judicial precedent, “a court is to apply the law in effect at the time it renders its decision.” Commonwealth v. Alexander, 5 S.W.3d 104, 106 (Ky.1999). In Alexander, the courts looked to whether the decision resulted in a procedural or a substantive change in the law. Id.

In this case, the Pennington case did not affect Sheila’s substantive rights. Rather, Pennington clarified the procedures that currently exist under KRS 403.340 and 403.320 for the process of challenging a motion for relocation.

Additionally, it must be noted that no decision or event had actually taken place to which Pennington could have been applied retroactively. No decision had been rendered on the appealed issue at the time that Pennington was rendered. No final hearing had been held on the motion to relocate, the motion to summarily grant the motion to relocate, or Chad’s custodial modification motion. The final decision of the family court had not been made. Therefore, the family court did not err in its determination that Pennington was the applicable law in this case.

Finally, Sheila argues that the family court failed to give appropriate weight to the GAL for the children and made findings of fact that were not appropriate or supported by the record. Sheila argues that, although the original report from the GAL indicated that the GAL was opposed to relocation, her supplemental report stated the following:

“My original concern with taking the children from their father seems to be not as critical, given the fact that R. says his dad is never around to play with, all he does is play video games and that he is afraid his dad will get mad because he does that a lot. Another concern I previously had was that the children were going to miss out on after-school activities and sports, but dad is unable to attend many practices and games due to his 2-10 schedule. R. seems to really like Dad’s fiancée, but spending time with Dad rather than fi-ancée is the important issue here.”

The report also states that “If the burden the Court has placed on the parties to prove is that a move from dad would cause irreparable harm, I do not feel it would cause irreparable harm to the children if they were to move with their mother.”

As already stated, this Court will not disturb the court’s findings of fact unless they are clearly erroneous. In this case, based on the evidence, we are unable to find that the family court clearly erred when it found that relocation was not in the best interests of the children.

For the foregoing reasons, the judgment of the Kenton Family Court is affirmed.

THOMPSON, Judge, concurs.

KELLER, Judge, concurs in result only.

      . Sheila has remarried and now goes by Sheila Carpenter-Moore.

      .In a pretrial hearing on February 7, 2008, Chad’s counsel was told that Sheila intended to move to Ohio and not Virginia as previously indicated. Chad had not been notified of that fact prior to that time.