Suppliers of construction products and materials frequently find that their products and materials are used in projects located in states where the supplier may not have an office, factory, or production facility. Some suppliers may believe that because they don’t have an office or factory in Texas, they cannot be sued in a Texas court. A recent opinion from the Texas Supreme Court provides suppliers whose products and materials are involved in a Texas project a clearer picture of when they can be subject to the jurisdiction of a Texas court.
SprayFoamPolymers.com, LLC is a Connecticut corporation with its principal place of business and sole office in Connecticut. SprayFoam’s business focuses on the manufacture and sale of spray foam insulation to residential and commercial customers. SprayFoam receives and processes all customer orders from its Connecticut office.
In 2013, Texas homeowners hired Old World Cast Stone to install spray foam insulation into the wall cavities and roof deck of their new home. After moving into the home, the homeowners alleged that the insulation caused coughing spells, itchy and burning eyes, allergies, and headaches. In 2014, the homeowners determined that Old World had utilized a SprayFoam insulation product in their home. In response, SprayFoam sent a Texas-based “independent contractor sales representative” to inspect the home. Thereafter, the homeowners sued Old World and SprayFoam in Texas state court. SprayFoam fought the Texas state court’s exercise of jurisdiction. Following a decision from the trial court that SprayFoam was subject to jurisdiction in Texas, and the court of appeals’ subsequent decision that SprayFoam was not, the homeowners appealed the case to the Texas Supreme Court.
The Texas Supreme Court’s analysis focused on this question: Despite SprayFoam’s presence in Connecticut, had SprayFoam demonstrated that it intended to serve the Texas market, such that SprayFoam should be subject to the jurisdiction of Texas courts?
The Texas Supreme Court noted that SprayFoam had utilized a Texas distribution center to handle logistics for SprayFoam’s products in Texas. The court also focused on SprayFoam’s retention of a Texas-based “independent contractor sales representative” to find customers in Texas for SprayFoam’s products. The fact that the Texas-based individual was not a SprayFoam employee did not override SprayFoam’s intent behind working with the individual, which was to tap into the Texas market and reap the economic benefits from the individual’s sale of SprayFoam products in Texas. Finally, the court’s analysis found that the homeowners’ suit against SprayFoam arose out of the installation of a SprayFoam product that SprayFoam intended to market and sell in Texas. Accordingly, the Texas Supreme Court found that the Texas court’s exercise of jurisdiction over SprayFoam was proper.
Considerations for Suppliers of Construction Products and Materials
- Do you utilize Texas-based facilities to distribute or store your products or materials?
- Do you work with Texas-based independent contractors or employees to sell or market your products or materials?
If the answer to the above questions is “yes,” that supplier may be subject to the jurisdiction of Texas courts, even where the supplier does not have an office or factory in Texas.