Appeals court rules in favor of Liu in suit against Hsu

By Steve Korris | Nov 28, 2007

Bobby Yu-Chen Liu of Arizona owes Shwurong Hsu of Texas $40,000, but according to the Ninth District Court of Appeals in Beaumont, Hsu can't recover it in a Texas court.

Ninth District judges agreed Nov. 15 that Liu lacked the minimum contacts with Texas that would allow a Texas court to exercise jurisdiction over him.

The judges affirmed Montgomery County District Judge Frederick Edwards, who granted Liu a special appearance to challenge the court's personal jurisdiction.

Hsu sued Liu in 2004, charging fraud, fraudulent inducement, misrepresentation and breach of contract.

Hsu alleged that Liu called her three or more times asking for money and promising to repay it in three months.

Hsu alleged that she wired $40,000 to a California bank account but Liu did not repay it, though he promised in telephone conversations that he would.

Liu, upon receiving notice of the suit, filed a special appearance. He maintained he was in Arizona and took no affirmative actions in Texas to facilitate the transaction.

He claimed any phone calls between him and Hsu concerned other matters.

Judge Edwards ruled in Liu's favor, finding that the parties spoke on the phone while Liu was in Arizona.

Hsu asked Edwards to make findings as to who initiated the call, where Hsu was, and whether the call related to Liu's request for money.

Edwards denied the request.

Hsu appealed. Her attorneys, Clifford Lawrence and David George, asked the Ninth District to require additional findings.

They relied on a decision of the Texarkana Court of Appeals, Rynone v. Republic, requiring judges to evaluate not only contract terms but also prior negotiations and contemplated consequences in determining whether a defendant established minimum contacts.

Ninth District judges didn't see a connection between the cases.

Justice Charles Kreger wrote, "Rynone, unlike Liu, placed objects into the 'stream of commerce' and advertised in a national trade publication. These facts, in combination with Rynone's solicitation of Republic's business, established that Rynone purposefully availed itself of the benefits of Texas law."

Kreger wrote, "Even if the facts alleged by Hsu are correct, Liu was an individual who entered into an isolated contract with Hsu."

He wrote, "Even if Liu initiated the call, he did not purposefully avail himself of the benefits and protections of Texas law and he was not selling goods or services in Texas, or advertising here."

Justices David Gaultney and Hollis Horton agreed.

David Ryan represented Liu.

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