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Trei v. AMTX Hotel Corp. d/b/a Holiday Inn,
2014 N.M. App. LEXIS 63 (New Mexico Court of Appeals, June 24, 2014)
On June 24, 2014, the New Mexico Court of Appeals concluded that the national advertising by the franchisor, Intercontinental Hotels Group (IHG) which owns the “Holiday Inn” brand, does not provide a basis to establish personal jurisdiction in New Mexico over a franchisee operating a Holiday Inn in Texas. The court thus affirmed the trial court's dismissal for lack of personal jurisdiction.
FACTS AND RULINGS
The Plaintiff was a resident of New Mexico. In March 2012, the Plaintiff was a guest at a Holiday Inn hotel in Amarillo, Texas. She was injured while using equipment in the hotel's exercise facility. Plaintiff then sued the hotel’s operator AMTX Hotel Corporation (AMTX) in her home state of New Mexico. The Defendant franchisee filed a motion to dismiss the action asserting that the courts of New Mexico lacked personal jurisdiction over it because the franchisee had no contacts with New Mexico. The trial court granted the franchisee’s motion and the Plaintiff appealed.
The evidence established that the Defendant is a New York corporation, which owns and operates the hotel in Amarillo, Texas as a "Holiday Inn," pursuant to its franchise agreement with Intercontinental Hotels Group (IHG), which owns the "Holiday Inn" brand. IHG was not a party to the lawsuit. (2014 N.M. App. LEXIS 63 at *1.)
Discussing the applicable law, the Court of Appeals found that "[d]ue process requires that an out-of-state defendant have 'minimum contacts' with the forum state such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. Personal jurisdiction can be either general (all-purpose) or specific (case-linked). Because the jurisdiction asserted in this case is specific, we must determine whether Defendant purposely established contact with New Mexico and, if so, whether Plaintiff's cause of action arose out of those contacts with New Mexico.” (Id. at *4, citations and quotes omitted.)
The Plaintiff argued that the Defendant's purposeful contact with New Mexico stemmed from IHG’s national advertising on television and radio which she alleged she saw and heard prior to her stay at Defendant's hotel. Plaintiff also pointed out that she was a member of IHG's Priority Club at the time of her injury, which is also advertised nationally. The Plaintiff argued that IHG's advertisements should be attributed to Defendant "through theories of agency or apparent agency." [Id. at *5.]
The court rejected Plaintiff’s arguments finding that under New Mexico law, "[t]he existence of a franchisor-franchisee relationship alone is insufficient to create a principal-agent relationship." (citing, Campos Enters., Inc. v. Edwin K. Williams & Co., 1998-NMCA-131, ΒΆ 18, 125 N.M. 691, 964 P.2d 855.) The court determined that it could not impute the contacts of the franchisor to the non-resident franchisee “unless Plaintiff has proved sufficient facts to demonstrate that Defendant, the party over which Plaintiff seeks jurisdiction, has exerted some level of control over IHG, the party that has the alleged contacts with New Mexico through its national advertising.” (Id. at *5, citations omitted.) The court found that the Plaintiff had failed to make such showing.
As additional grounds to reject Plaintiff’s arguments, the court further held that Plaintiff failed to make a sufficient showing of contacts “because national advertisements alone by a nonresident defendant cannot support personal jurisdiction over that nonresident defendant.” (citing, Giangola v. Walt Disney World Co., 753 F. Supp. 148, 155-56 (D.N.J. 1990) and Jacobs v. Walt Disney World, Co., 309 N.J. Super. 443, 707 A.2d 477, 485 (N.J. Super. Ct. App. Div. 1998). The court thus concluded that invoking personal jurisdiction when based on national advertisements directed solely to the general public does not pass the fairness and reasonable tests for jurisdiction. (Id. at *8.)
Accordingly, the court ruled that the Plaintiff could not rely upon the national advertising by the franchisor to establish jurisdiction over an out-of-state franchisee. The court thus upheld the dismissal ordered by the trial court.
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