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AEG Power Solutions GMBH v. Creation Technologies Texas, LLC

Court of Appeals of Texas, Fifth District, Dallas

November 12, 2019

AEG POWER SOLUTIONS GMBH, Appellant
v.
CREATION TECHNOLOGIES TEXAS, LLC, Appellee

          On Appeal from the 14th Judicial District Court Dallas County, Texas Trial Court Cause No. DC-18-15065

          Before Justices Myers, Osborne, and Nowell

          MEMORANDUM OPINION

          LANA MYERS JUSTICE

         This is an accelerated interlocutory appeal from an order denying appellant AEG Power Solutions GmbH's special appearance. In one issue, it argues the trial court erred in denying the special appearance because the record does not support specific personal jurisdiction. We reverse and render judgment dismissing for lack of jurisdiction.

         Background and Procedural History

         In September of 2012, Creation Technologies Texas, LLC ("Creation"), a Texas company, entered into a Manufacturing Agreement with a Texas-based company, AEG Power Solutions USA, Inc., subsequently known as 3W Power Solutions USA, Inc. ("AEG USA"). In line with the Manufacturing Agreement, AEG USA placed purchase orders with Creation in June of 2013 for the manufacture of solar inverters, which convert the output of a solar panel into a utility frequency. These purchase orders were placed, at least in part, to fulfill an order from another company, Power Max Co., Ltd., which was in the business of, among other things, developing and selling solar electric power plants in Japan to investors. Power Max, however, failed to pay AEG USA, and by January of 2014 AEG USA owed Creation over $2 million under the terms of the Manufacturing Agreement. In February of 2014, AEG USA entered into a Security Agreement with Creation to avoid termination of the Manufacturing Agreement. The Security Agreement, executed in the Netherlands on AEG USA's behalf by Jeffrey Casper, a non-Texas resident, gave Creation a continuing security interest in AEG USA's accounts, equipment, and inventory.

         AEG USA, meanwhile, sued Power Max in a Texas court in June of 2015 for breach of contract, and the case was removed to federal court in October of 2015. AEG USA subsequently settled the case, and the proceeds of the settlement were paid to Creation, which had intervened in the case.[1]

         AEG USA is the United States subsidiary of AEG Power Solutions, B.V., its Dutch parent company ("AEG Power Solutions"). In March of 2017, Creation's German counsel wrote to the general counsel for AEG Power Solutions' German subsidiary, AEG Power Solutions GmbH ("AEG Germany"). This letter stated that it appeared AEG USA had defaulted under the terms of the Manufacturing Agreement and had "only accepted (and paid) a rather small portion of the goods ordered under the Manufacturing Agreement." The letter also stated that "[t]he aggregate amount owed to Creation at this stage amounts to approx. $5 million, plus interest," and noted that AEG USA had "closed down its R&D and sales office in the United States and has transferred the existing products and activities to AEG [Germany]." AEG Germany was in insolvency proceedings in Germany at the time, as acknowledged in Creation's letter, and the letter noted that counsel had "been asked to assist our U.S. co-counsel in possible legal action in federal court in Dallas County, Texas against" AEG USA, AEG Germany, and "other associated enterprises." In December of 2017, Creation's German counsel made a demand upon AEG Germany for $8.976 million. On August 3, 2018, two months before the underlying lawsuit was filed, Creation's Texas counsel sent a letter to AEG Germany notifying it to preserve evidence and electronically stored information. Attached to the letter was a draft of a complaint to be filed in the judicial district court of Dallas County, Texas.

         According to the declaration of Paul Van Der Harten, the chief financial officer of AEG Power Solutions Group and the managing director of AEG Germany, AEG Germany is a German company headquartered in Warstein, Germany. Jeffrey Casper--currently the CEO of AEG Power Solutions and, at the time of the events that formed the basis for the underlying lawsuit, a director for AEG USA and AEG Power Solution's chief restructuring officer and chief financial officer--states in his January 31, 2019 declaration[2] that AEG Germany was formed under the laws of Germany in Warstein-Belecke, "registered at the District Court of Arnsberg." Casper declares that, like its sister company AEG USA, AEG Germany is a subsidiary of AEG Power Solutions "and was not part of the decision to enter into the Manufacturing Agreement," nor was it "a party thereto." Casper adds that AEG Germany was not a part of the "order process" with Power Max and AEG USA, nor was it a party to the Security Agreement between AEG USA and Creation.

         Casper states in his declaration that, as a German company, AEG Germany files its tax returns in Germany. Additionally, "[d]uring the relevant time period," AEG Germany "employed individuals in Germany," "paid them for their services," and "provided them with benefits including health care." "AEG Germany maintains separate and distinct bank accounts from any of the other defendants," and "[t]o the extent there were any intra-company transfer of funds, those transfers were documented, and Germany was required to repay the transferor." "In situations where common positions were used to provide services to different subsidiaries," such as the general counsel position, "AEG Germany would pay a share of that person's salary." "AEG Germany does not have any bank accounts, real property, offices, employees or agents in Texas."

         Casper's declaration explains that AEG Germany "manufacturers and distributes products in the oil & gas segment in compliance with the International Electrotechnical Commission ('IEC') standards which are recognized worldwide with the exception of a few countries, including the United States, and Japan." Casper states: "AEG Germany does not manufacture, market, sell, or distribute products in the oil & gas segment anywhere in the United States, which requires compliance with standards set by Underwriters Laboratories, Inc. ('UL')." AEG Germany's IEC-compliant products cannot "be used in the United States because they are not UL-compliant," according to Casper. Regarding the Germany insolvency proceedings, Casper states that AEG Germany went through insolvency proceedings in Germany beginning on November 22, 2016, and continuing through the first two quarters of 2017, with a final order dated May 1, 2017. Casper adds that "Creation did not file any claims in those proceedings."

         According to Van Der Harten's declaration, AEG Germany has not agreed to perform a contract in whole or part in Texas; it does not own real property or have any assets in Texas; it does not maintain an office or other point of contact in Texas; it has not purposefully availed itself of the privilege of conducting activities in Texas; it has not solicited business in Texas or with any person or entity in Texas; it does not maintain a registered agent in Texas; and it has not committed a tort or statutory violation in Texas.

         Van Der Harten's declaration acknowledges that, after the execution of the Security Agreement, AEG Germany "facilitated the sale of component parts of the inverters (originally ordered by AEG Power Solutions USA) to companies outside of the United States to mitigate [Creation's] damages." Van Der Harten states that, as part of this effort, AEG Germany "paid [Creation] directly based on invoices from [Creation]." Invoices from Creation that are included in the record show there were six individual sales from Creation to AEG Germany. The dates on these invoices indicate the sales took place on 4/30/15, 9/1/15, 10/29/15, 12/16/15, 7/12/16, and 7/14/16. However, Van Der Harten signals that there was no previous or ongoing business relationship between Creation and AEG Germany, stating that "[n]o other agreements, contracts, or purchase orders have been entered into between AEG [Germany] and a Texas company." Furthermore, according to Van Der Harten, AEG Germany "has never sold any inverters" and "no inverters or inverter components were sold by AEG [Germany] in the State of Texas."

         On October 3, 2018, Creation filed the underlying lawsuit against AEG Power Solutions; AEG USA; AEG Germany; AEG Power Solutions Sdn Bhd, AEG Power Solutions' Malaysian subsidiary ("AEG Malaysia"); 3W Power S.A., AEG Power Solutions' Luxembourg-based holding company ("AEG Luxembourg"); and Jeffrey Casper (collectively, "the AEG Defendants"). This lawsuit seeks millions of dollars allegedly owed to Creation for the manufacture of commercial solar inverters under theories of alter ego, breach of the written Security Agreement, fraud, fraudulent transfer, and negligent misrepresentation.

         An amended petition was filed by Creation on November 5, 2018. AEG Luxembourg, AEG Power Solutions, and AEG Germany all filed special appearances that argued Creation had not alleged sufficient contacts or other conduct with Texas to warrant the exercise of personal jurisdiction. AEG Malaysia and Jeffrey Casper were not named as parties in the amended petition, and, after the filing of the special appearances, Creation non-suited AEG Luxembourg, leaving AEG USA, AEG Power Solutions, and AEG Germany.

         Creation's response to the special appearances argued that AEG Germany was subject to specific jurisdiction in Texas because it had purposefully availed itself of conducting activities in Texas, and that AEG Power Solutions was subject to both general and specific jurisdiction in Texas. After holding a hearing on both special appearances and listening to the arguments of counsel, the trial court signed separate orders granting AEG Power Solution's special appearance and ...


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