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
...