HOUSTON (SE Texas Record) — A Texas appeals court recently upheld a "special appearance" in a security fraud lawsuit that was dismissed by a lower court.
In a 25-page memorandum opinion issued Nov. 5, a Texas First District Court of Appeals three-judge panel sustained Harris County District Court's decision to grant a plea to the jurisdiction by an Indiana professor being sued in the lawsuit.
"Because we conclude that the investors failed to allege or provide any evidence of Bollen's purported contacts with Texas that gave rise to this litigation, we affirm the trial court's grant of Bollen's plea to the jurisdiction.
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Appeals court Justice Richard Hightower wrote the opinion in which Justice Peter Kelly and Justice Countiss concurred.
Investors David Franke, Bruce Nickel, Mike Schankenburg, Kent Schankenburg and Rick Zimmer challenged the trial court's decision to grand a special appearance by Johan Bollen, an associate professor at the Indiana University School of Informatics and Computing. Bollen also is owner of Guidewave Consulting.
"The Investors assert that Bollen had contacts with Texas in connection with the sale of securities to Texas residents and that his status as a control person of an entity that engaged in securities fraud in Texas supports the exercise of personal jurisdiction over him," the opinion said. "Because we conclude that the Investors failed to allege or provide any evidence of Bollen’s purported contacts with Texas that gave rise to this litigation, we affirm the trial court’s grant of Bollen’s plea to the jurisdiction."
The investors are suing Bollen and Guidewave Consulting, along with another Guidewave officer, alleging fraudulent inducement and securities fraud in connection with their decision to invest $495,000 in predictive technology.
Bollen filed a special appearance, saying that he lives in Indiana and has no especial ties to Texas, which the Harris County Court granted. The trial court also dismissed all claims against Bollen, finding that the professor "has not had any dealings or contacts with Texas except for two trips to Texas in 2014 for meetings with third parties and a meeting in 2012 to speak at a conference in Austin," the opinion said.
The investors argued that Bollen does have ties in Texas, including his direction and recruitment of investors in the state.
The appeals court disagreed.
"The Investors have not pointed to any contacts between Bollen and Texas that could form the basis of their fraudulent inducement or securities fraud claims," the opinion said.