United States District Court, E.D. Texas, Sherman Division
MEMORANDUM OPINION AND ORDER
L. MAZZANT UNITED STATES DISTRICT JUDGE.
before the Court is Third Party Defendant's Motion to
Dismiss for Lack of Personal Jurisdiction (Dkt. #22). After
reviewing the pleadings, the Court finds the motion should be
Clement Group, LLC (“Clement”), is an
Alabama-based company operating in Montgomery, Alabama (Dkt.
#10 at p. 11). Clement's members are Alabama citizens
(Dkt. #10 at p. 12). ETD Services, LLC d/b/a The Davitz Group
(“ETD”), is a Texas-based company operating in
McKinney, Texas (Dkt. #10 at p. 10). ETD's sole member is
a Texas citizen (Dkt. #10 at p. 12). Bill's Bookkeeping
Services, LLC (“BBS”) is an Alabama-based company
operating in Montgomery, Alabama (Dkt. #10 at p. 11).
BBS's members are Alabama citizens (Dkt. #10 at p. 12).
Clement and ETD operate as construction companies (Dkt. #10).
On May 3, 2013, Clement and ETD agreed to become partners as
part of the United States Small Business Association's
Mentor/ Protégé Program (the “SBA Mentor
Program”) (Dkt. #10 at p. 17). Under this program, ETD,
the protégé, sought to gain business insight
and experience in providing contacting services to federal
government agencies in construction and renovation projects
on military installations (Dkt. #10 at p. 17). The program
allowed joint ventures between Clement and ETD to bid for
federal contracts for which the companies individually would
otherwise not have been eligible to bid (Dkt. #10 at p. 17).
about May 2014, ETD and Clement formed a joint venture known
as ETD-TCG, LLC (Dkt. #10 at p. 18). On July 17, 2014, ETD
and Clement entered into a Joint Venture Agreement to bid for
projects involving construction services for the United
States Army Corp of Engineers (the “USACE”),
Norfolk District (Dkt. #10 at p. 18). On August 12, 2014 and
December 18, 2014, ETD-TCG, LLC entered into two addenda to
the Joint Venture Agreement to provide construction services
for the USACE, Mobile District (Dkt. #10 at p. 18). On
January 20, 2015, ETD-TCG, LLC entered into another addendum
to the Joint Venture Agreement to provide design-build
construction services to the USACE, Louisville District
(collectively, the “Joint Ventures”) (Dkt. #10 at
to Clement and ETD forming ETD-TCG, LLC, BBS performed
bookkeeping services for Clement (Dkt. #22, Exhibit 1 at
¶ 10). BBS managed a “pooling arrangement”
in which participants contributed a percentage of their
revenue from construction projects to a general fund.
Participants could use the fund to pay their overhead
expenses as well as direct and indirect costs (Dkt. #10 at p.
15). ETD alleges it was required to participate in the
“pooling arrangement” as part of the Joint
Ventures (Dkt. #10 at p. 16).
to ETD's managing member, Earl Davis, the “pooling
arrangement” included all of ETD's project in
“any location and particularly its projects in
Texas.” (Dkt. #27, Davis Decl. ¶ 11). Davis states
that BBs provided “significant project management
oversight for all the construction projects in which ETD was
engaged throughout Texas and the United States” (Dkt.
#27, Davis Decl. ¶ 12). The project oversight included
oversight of the bidding opportunities, preparation of bids,
management of project budgets, management of contract
acquisition and execution for subcontractors, job costs and
profit estimation, and payment of bonds for projects in Texas
and elsewhere (Dkt. #27, Davis Decl. ¶ 13-15). Davis
further states that BBS provided and organized marketing
efforts for the participants of the “pooling
arrangement” for areas including Texas (Dkt. #27, Davis
Decl. ¶ 13). Davis states that BBS was responsible for
bid solicitation of construction projects in Fort Hood in
Kileen, Texas, the Veterans Administration facility in
Dallas, Texas and Fort Sam Houston in San Antonio, Texas
(Dkt. #27, Davis Decl. ¶ 14). According to Davis, BBS
maintained relationships with the United States Small
Business Association in Fort Worth, Texas for the purpose of
managing construction contracts that fell within the
oversight of that Small Business Association (Dkt. #27, Davis
Decl. ¶ 15).
alleges that “from the beginning of the operation of
the Joint Ventures” ETD expressed concerns to Clement
that “all did not seem appropriate with respect to the
allocations for costs and expenses of the Joint Ventures, the
profits and losses of the Joint Ventures.” (Dkt. #10 at
p. 19). ETD alleges it received limited financial reports and
that BBS and Clement ignored its requests for project
information and pay requests (Dkt. #10 at p. 19-20).
Specifically, ETD alleges that in September 2015, it sought
bonding coverage for a construction project in Arkansas from
Baldwin Cox (Dkt. #10 at p. 20). ETD alleges that as part of
its bond application, it provided Baldwin Cox a set of
financial records prepared by BBS (Dkt. #10 at ¶ 20).
ETD alleges that Baldwin Cox found the financial records
reflected a $1.1 million distribution to ETD's members
(Dkt. #10 at p. 20). ETD alleges that during that same
period, BBS advised Earl Davis that ETD's financial
records reflected at $600, 000 loss (Dkt. #10 at p. 20).
alleges it continued to ask BBS and Clement about this
apparent discrepancy and BBS and Clement refused to respond
to ETD. ETD alleges that, on information and belief, Clement
and BBS charged ETD-TCG, LLC excessive consulting fees (Dkt.
#10 at p. 20). ETD alleges that Clement and BBS were unjustly
enriched by portions of ETD-TCG, LLC's assets to which
they were not entitled, that Clement and BBS misdirected
funds that should have been paid to ETD-TCG, LLC, and that
BBS's representations regarding the “pooling
arrangement” were false, misleading, and deceptive
(Dkt. #10 at pp. 27-28).
October 7, 2016, Clement brought suit against ETD, alleging
breach of contract, breach of fiduciary duty, defamation,
conversion, unjust enrichment and fraud (Dkt. #1). Clement
alleged ETD breached the Joint Venture Agreement and withdrew
funds from ETD-TCG, LLC accounts without Clement's
approval (Dkt. #1)
December 26, 2016, ETD filed a First Amended Original Answer,
Affirmative Defenses, and Counter-Complaint (Dkt. #10). ETD
brought counter-claims against Clement for breach of
contract, breach of fiduciary duty, unjust enrichment, common
law fraud, and statutory fraud under the Texas Deceptive
Trade Practices Act (“DTPA”) (Dkt. #10).
ETD's Counter-Complaint included a Third-Party Complaint
against BBS alleging unjust enrichment, common law fraud, and
statutory fraud under the DTPA (Dkt. #10).
March 15, 2017, BBS filed the pending Motion to Dismiss for
Lack of Personal Jurisdiction (Dkt. #22). On April 7, 2017,
ETD filed a response (Dkt. #27). On April 14, 2017, BBS filed
a reply (Dkt. #28).