June 24, 2014 – Cathy Trei v. AMTX Hotel Corporation d/b/a Holiday Inn, No. 33,048

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IN THE COURT OF APPEALS OF THE STATE OF NEW MEXICO

Opinion Number:

Filing Date: June 24, 2014

NO. 33,048
CATHY TREL

Plaintiff-A ppellant,
V.

AMTX HOTEL CORPORATION,
d/b/a HOLIDAY INN,

Defendant- Appellee.

APPEAL FROM THE DISTRICT COURT OF VALENCIA COUNTY
William A. Sanchez, District Judge

Amavalise F. Jaramillo
‘Tome, NM

for Appellant

Peterson Famis Byrd & Parker
Rhett J. Hubbard

Amanilo, TX

for Appellee

1 There is nothing in the record indicating IHG’s state of incorporation. Neither	18
party alleges that New Mexico is the state of incorporation. We analyze the	19
jurisdictional issue accordingly.	20
OPINION
SUTIN, Judge.
{1} 	Plaintiff Cathy Trei appeals the district court’s grant of Defendant AMTX Hotel
Corporation’s motion to dismiss for lack of personal jurisdiction. Plaintiff argues that
the district court erred in finding insufficient contacts with New Mexico to establish
jurisdiction. She also argues that even if the contacts were insufficient, Defendant
waived its jurisdictional defense by engaging in non-jurisdictional discovery. 	We
conclude that the out-of-state franchisor’s national advertising does not provide a
basis to establish personal jurisdiction in New Mexico over the nonresident franchisee
Defendant in this case. Additionally, we conclude that Defendant did not waive its
jurisdictional defense. We therefore affirm the district court’s dismissal for lack of
personal jurisdiction.
BACKGROUND
{2} 	Plaintiff is a resident of New Mexico. Defendant is a New York corporation
that owns and operates a hotel in Amarillo, Texas. Defendant’s hotel does business
as a “Holiday Inn,” pursuant to its franchise agreement with Intercontinental Hotels
Group (IHG), which owns the “Holiday Inn” brand. 1

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{3} 	In March 2012, Plaintiff was a guest at Defendant’s hotel in Amarillo, Texas.
She was injured while using equipment in the hotel’s exercise facility. Plaintiff sued
in Valencia County, New Mexico, seeking damages for personal injuries at the hotel.
In response, Defendant filed a motion to dismiss based on lack of jurisdiction, along
with an answer to the complaint. Defendant also sent Plaintiff a set of interrogatories,
a request for production of documents, and requested authorizations to obtain various
records relating to Plaintiff.
{4} 	Following a hearing on Defendant’s motion to dismiss, the district court
determined that there were not sufficient contacts between New Mexico and
Defendant to establish jurisdiction and entered an order dismissing the case on that
basis. This appeal followed.
DISCUSSION
{5} 	“The determination whether a district court has personal jurisdiction over a
nonresident defendant is a question of law that we review de novo.” Sproul v. Rob &
Charlies, Inc., 2013-NMCA-072, ¶ 6, 304 P.3d 18. Where the district court bases its
ruling on the parties’ pleadings and affidavits, we apply a standard of review
mirroring that of our standard governing appeals from summary judgment. 	See
Sublett v. Wallin, 2004-NMCA-089, ¶ 11, 136 N.M. 102, 94 P.3d 845. “We construe
the pleadings and affidavits in the light most favorable to the complainant, and the

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complainant need only make a prima facie showing that personal jurisdiction exists.”
Id.
{6} 	“[W]e consider the long-arm statute as being coextensive with the requirements
of due process and undertake a single search for the outer limits of what due process
permits.” M.R. v. SereniCare Funeral Home, L.L.C., 2013-NMCA-022, ¶ 8, 296 P.3d
492 (internal quotation marks and citation omitted). “Due 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.’ ” Alto Eldorado P’ship v. Amrep Corp., 2005-NMCA-131, ¶ 31, 138 N.M.
607, 124 P.3d 585 (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).
Personal jurisdiction can be either general (all-purpose) or specific (case-linked).
Sproul, 2013-NMCA-072, ¶ 9. 	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. See Zavala v. El Paso Cnty. Hosp. Dist., 2007-NMCA-149, ¶ 12,
143 N.M. 36, 172 P.3d 173.
Plaintiff’s Agency Theory
{7} 	Plaintiff can point to no direct contact between New Mexico and Defendant.
Defendant has no facilities, hotels, offices, or employees in New Mexico, has no agent

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in New Mexico, does not advertise in New Mexico, and does not conduct any business
in New Mexico. In short, Defendant has no presence whatsoever in New Mexico.
Plaintiff argues that Defendant’s purposeful contact with New Mexico stems from
“the advertising and marketing activities of Holiday Inn in New Mexico, which can
be imputed or attributed to [Defendant.]” 	Plaintiff relies on “[IHG’s national]
advertising . . . on television and radio,” which she alleges she saw and heard prior to
her stay at Defendant’s hotel. She also points out that she was a member of IHG’s
Priority Club at the time of her injury, which is also advertised nationally. Plaintiff
asks this Court to impute IHG’s advertising to Defendant in order to demonstrate
contacts between Defendant and New Mexico. She argues that IHG’s advertisements
should be attributed to Defendant “through theories of agency or apparent agency.”
In her reply brief, Plaintiff states that her position is “premised on [Defendant’s] use
of the Holiday Inn name, and how it benefits from that advertisement and promotional
activities conducted via its agent [IHG].” 	We reject Plaintiff’s imputation and
attribution contacts theories.
{8} 	“The existence of a franchisor-franchisee relationship alone is insufficient to
create a principal-agent relationship.” Campos Enters., Inc. v. Edwin K. Williams &
Co., 1998-NMCA-131, ¶ 18, 125 N.M. 691, 964 P.2d 855; see also Sublett, 2004-
NMCA-089, ¶¶ 14-22, 28 (declining to find an agency relationship between a

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nonresident franchisor defendant and a New Mexico franchisee for the purpose of
establishing jurisdiction over the franchisor, and emphasizing that “it is a defendant’s
activities which must provide the basis for personal jurisdiction, not the acts of other
defendants or third parties” (alterations, internal quotation marks, and citation
omitted)); Alto Eldorado P’ship, 2005-NMCA-131, ¶ 32 (“[T]he mere relationship of
[a] parent corporation and subsidiary corporation is not in itself a sufficient basis for
subjecting both to the jurisdiction of the forum state, where one is a nonresident and
is not otherwise present or doing business in the forum state. 	When speaking of
jurisdiction, this rule is only common sense, since personal jurisdiction is precisely
that: personal.” (internal quotation marks and citation omitted)).
{9} 	These cases involve attempts to assert jurisdiction over a nonresident defendant
based on the contacts of a resident franchisee or subsidiary. In the case now before
us, Plaintiff is attempting to use alleged New Mexico contacts of a nonresident
franchisor to sustain jurisdiction over a nonresident franchisee. 	Although not on
point, Campos, Sublett, and Alto are instructive. 	We examine whether one party
exerted control over the other to the extent that one party’s contacts with New Mexico
can be imputed to the other. We will not impute the alleged contacts of nonresident
franchisor IHG to nonresident franchisee Defendant unless Plaintiff has proved
sufficient facts to demonstrate that Defendant, the party over which Plaintiff seeks

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jurisdiction, has exerted some level of control over IHG, the party that has the alleged
contacts with New Mexico through its national advertising. 	See Coleman v. Chen,
712 F. Supp. 117, 122 (S.D. Ohio 1988) (addressing a plaintiff’s attempt to impute
Holiday Inn’s national advertising to its franchisee for the purpose of establishing
jurisdiction and rejecting the argument because “[t]here [was] no evidence that [the
d]efendants [(the franchisee)] control[led] the time, place, or manner of [the
d]efendant Holiday Inns’ solicitation” and, therefore, “no jurisdiction [could] be based
upon the franchisor’s being an agent of the franchisee”).
{10} 	Asserting that IHG has contacts in New Mexico via national advertisements,
Plaintiff asks this Court to impute those alleged contacts to Defendant through a
theory of agency. In other words, Plaintiff argues that IHG acted as Defendant’s agent
with respect to IHG’s advertisements. The argument fails because no evidence exists
that Defendant exerted any control over IHG in any respect, much less in regard to
IHG’s national advertising program. Further, without any facts about the relationship,
all of Plaintiff’s assertions about an agency relationship are speculative and hollow.
We, therefore, decline to impute IHG’s alleged contacts with New Mexico to
Defendant.
{11} 	Plaintiff’s claim also fails because national advertisements alone by a
nonresident defendant cannot support personal jurisdiction over that nonresident

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defendant. See Giangola v. Walt Disney World Co., 753 F. Supp. 148, 155-56 (D.N.J.
1990) (concluding that advertising to the general public on television and in
newspapers cannot constitute minimum contacts necessary to satisfy due process);
Jacobs v. Walt Disney World, Co., 707 A.2d 477, 485 (N.J. Super. Ct. App. Div.
1998) (indicating that advertisements, national in scope, for the purpose of informing
the general public and not designed to solicit business from a specific geographic area
should not form the basis for jurisdiction). In relation to advertisements to the general
public and national in design, the court in Giangola insightfully concluded:
In an age of modern advertising and national media publications and
markets, [the] plaintiffs’ argument that such conduct would make a
defendant amenable to suit wherever the advertisements were aired
would substantially undermine the law of personal jurisdiction. Courts
generally have refused to adopt such a standard and embark on such a
course.
753 F. Supp. at 156. 	Invoking personal jurisdiction when based on national
advertisements directed solely to the general public, as in the present case, does not
pass the fairness and reasonable tests for jurisdiction. See Roberts v. Piper Aircraft
Corp., 1983-NMCA-110, ¶ 24, 100 N.M. 363, 670 P.2d 974 (indicating that whether
personal jurisdiction exists is a question of fairness and reasonableness).
{12} 	Plaintiff’s reliance on Roberts is of no benefit to her. Roberts does not support
Plaintiff’s agency and imputation theory either factually or legally. In Roberts, the
injury at issue occurred in New Mexico, id. ¶¶ 2-4, and the advertisements at issue,

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which came directly from one of the nonresident defendants, specifically directed
customers in New Mexico to its business through national trade publications that were
circulated in New Mexico. Id. ¶¶ 21-22. Here, the circumstances differ significantly.
Plaintiff’s injury occurred in Texas at the nonresident franchisee Defendant’s hotel,
and the purely national advertising came from a non-party, nonresident franchsior.
No evidence exists that Defendant had any control over IHG’s advertisements. No
evidence exists that IHG’s advertisements related specifically to Defendant’s Amarillo
hotel, or to the Texas panhandle area, or directed customers to Defendant’s hotel.
{13} 	Nor does Cronin v. Sierra Medical Center, on which Plaintiff also relies,
support Plaintiff’s arguments. 2000-NMCA-082, 129 N.M. 521, 10 P.3d 845. The
nonresident defendant in Cronin was a hospital that “intentionally, purposefully, and
persistently 	solicit[ed] 	the 	business 	of 	New 	Mexico 	customers.” 	Id. 	¶ 	22.
Specifically, “[i]t placed advertisements in several New Mexico telephone directories,
produced television commercials that could be and were viewed by potential
customers in New Mexico, and previously performed health care services for other
New Mexico customers.” Id. Like in Roberts, and unlike here, the advertisements at
issue in Cronin came directly from the nonresident defendant and specifically directed
customers to its business. 	See id. 	Plaintiff’s out-of-state authorities are equally
distinguishable and inapposite, and we see no reason to discuss them.

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The Jurisdictional Defense
{14} 	Plaintiff argues that Defendant waived its jurisdictional defense by propounding
discovery and seeking certain relief in its answer. Defendant served Plaintiff with a
set of interrogatories, a request for production of documents, and requested
authorizations to obtain certain records about Plaintiff. One day prior, Defendant filed
its motion to dismiss for lack of personal jurisdiction. At the same time, Defendant
also filed an answer to Plaintiff’s complaint in which Defendant requested that it “be
discharged from all liability and recover its costs[.]”
{15} 	“The defense of lack of personal jurisdiction is subject to waiver when not
properly asserted.” 	Stetz v. Skaggs Drug Ctrs., Inc., 1992-NMCA-104, ¶ 18, 114
N.M. 465, 840 P.2d 612. Typically, a waiver occurs when a defendant fails to raise
the defense in a responsive pleading or a Rule 1-012 NMRA motion. 	Defendant
raised the defense in a motion to dismiss, along with its answer to Plaintiff’s
complaint, a procedure permitted in Rule 1-012(B). Id. (“No defense or objection is
waived by being joined with one or more other defenses or objections in a responsive
pleading or motion.”). However, the defense may be waived, even if a defendant has
preserved the defense in an answer, if the defendant substantially participates in the
litigation without actively pursuing its jurisdictional defense. 	See 5C Charles Alan
Wright et al., Federal Practice and Procedure § 1391 (3d ed.) (“[A] party can be held

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to have waived a defense listed in [Federal] Rule 12(h)(1) through conduct, such as
extensive participation in the discovery process or other aspects of the litigation of the
case even if the literal requirements of [the rule] have been met[.]”).
{16} 	We have addressed waiver in this context on at least two occasions. 	In
Williams v. Arcoa International, Inc., 1974-NMCA-037, ¶¶ 11-19, 86 N.M. 288, 523
P.2d 23, this Court held that the defendant waived its personal jurisdiction defense
when it invoked the jurisdiction of the district court by seeking permissive, affirmative
relief in the form of a third-party complaint. In Capco Acquisub, Inc. v. Greka Energy
Corp., 2008-NMCA-153, ¶ 32, 145 N.M. 328, 198 P.3d 354, this Court concluded that
a defendant did not waive its defense when it filed an answer, a motion to dismiss, a
motion for summary judgment, and participated in certain aspects of the pretrial
process because the conduct was defensive in nature. In other words, the defendant
did not seek affirmative relief. Id.
{17} 	We reject Plaintiff’s claim that Defendant waived its jurisdictional defense by
seeking affirmative relief from the district court. A party is permitted under Rule 1-
026 NMRA to propound discovery upon an opposing party once an action has been
instituted. Cf. Sanchez v. Church of Scientology of Orange Cnty., 1993-NMSC-034,
¶ 17, 115 N.M. 660, 857 P.2d 771 (explaining that when challenging personal
jurisdiction, the opportunity for discovery exists from the inception of a case). The

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relief Plaintiff characterizes as “affirmative” was requested in Defendant’s answer,
which was filed simultaneously with its motion to dismiss. Plaintiff points out that
Defendant’s requests “were not limited to jurisdictional discovery[.]” We decline to
penalize Defendant for requesting information that would be relevant to the subject
matter of the action awaiting the district court’s ruling on Defendant’s early filed
motion to dismiss for lack of jurisdiction. An answer to a complaint is defensive in
nature, and we have previously rejected an argument similar to that of Plaintiff. See
Capco Acquisub, Inc., 2008-NMCA-153, ¶¶ 7-8, 31-32.
CONCLUSION
{18} 	New Mexico does not have personal jurisdiction over Defendant in this case,
and Defendant did not waive its jurisdictional defense. Accordingly, we affirm the
district court’s grant of Defendant’s motion to dismiss for lack of personal
jurisdiction.
{19} 	IT IS SO ORDERED.
__________________________________
JONATHAN B. SUTIN, Judge
WE CONCUR:
___________________________________
RODERICK T. KENNEDY, Chief Judge

MICHAEL D. BUSTAMANTE, Judge
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