On
Appeal from the 14th Judicial District Court Dallas County,
Texas Trial Court Cause No. DC-18-015065
Before
Justices Myers, Osborne, and Nowell
MEMORANDUM OPINION
ERIN
A. NOWELL JUSTICE
This is
an accelerated interlocutory appeal from an order granting
the special appearance filed by AEG Power Solutions B.V.
("AEG B.V."). In four issues, Creation Technologies
Texas, LLC ("Creation") asserts the trial court
erred by granting AEG B.V.'s special appearance because
AEG B.V. is subject to general and specific jurisdiction in
Texas. We modify the trial court's order and affirm as
modified.
Background
and Procedural History
In
September of 2012, 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]
On
October 3, 2018, Creation filed the underlying lawsuit
against AEG B.V.; AEG USA; AEG Power Solutions GmbH
("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 who, at the time of the
events that form the basis for this suit, was a director of
AEG USA and AEG Power Solutions'[2] chief restructuring officer
and chief financial officer (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. Creation filed an amended
petition on November 5, 2018.[3] AEG B.V. and AEG Germany filed
special appearances that argued Creation had not alleged
sufficient contacts with Texas to warrant the exercise of
personal jurisdiction.
According
to Casper's declaration, AEG Power Solutions is comprised
of AEG B.V. and its twenty-three subsidiaries, which include
AEG Germany and AEG USA. AEG B.V. is a Dutch company
headquartered in Zwanenburg, Netherlands. AEG B.V. is the
operational holding company, which primarily provides
administrative services to the various AEG subsidiaries;
"[a]lthough this entity does some sales and service
sales [sic] activities, it does most of the central
supporting and administrative activities. The executive
management, i.e., CEO and CFO, is centralized within
[AEG B.V.]." AEG B.V. provides some oversight to AEG USA
and AEG Germany, but those entities are self-governed.
Casper's declaration states that at all relevant times,
"AEG BV has not 'controlled' AEG Germany or USA
as suggested in Creation's Petition." AEG B.V. does
not have any bank accounts, property, offices, employees, or
agents in Texas. The vast majority of AEG Power
Solutions' production and manufacturing is carried out by
AEG Germany.
Casper
stated the decision to enter into the Manufacturing Agreement
in 2012 was made by AEG USA, which, at that time, was
"run at the USA level with some oversight from the
parent company, AEG BV. The decision to enter into the
Manufacturing Agreement was not subject to oversight from AEG
BV or any other AEG entity." Casper's declaration
states that while in operation, AEG USA maintained its own
board of directors; filed tax returns in the United States;
employed individuals in the State of Texas, paid them for
their services, and provided them with benefits including
health care; and maintained separate and distinct bank
accounts from any other defendants. To the extent there were
any intra-company transfers of funds, those transfers were
documented, and AEG USA was required to repay the transferor.
When common positions were used to provide services to
different subsidiaries, such as the general counsel position,
AEG USA would pay a share of the person's salary.
Casper
averred that AEG B.V. has not contracted by mail or otherwise
with a Texas resident or Texas business; has not agreed to
perform a contract in whole or in part in the State of Texas;
has not recruited directly or through an intermediary a Texas
resident for employment; does not own real property or have
any other assets in Texas; does not maintain an office or
other point of contact in Texas; has not purposefully availed
itself of the privilege of conducting activities within the
State of Texas, and any contact it might have had with Texas
does not give rise to specific or general jurisdiction; has
not placed any product in the stream of commerce knowing that
some of them would reach Texas and did not otherwise engage
in conduct indicating an intent to serve the Texas market;
has not solicited business in Texas or with any other person
or entity in Texas; has not entered into any agreement with
Creation; does not maintain a registered agent in the State
of Texas; and has not committed a tort or statutory violation
in the State of Texas. He further averred that AEG B.V. never
sold any inverters. Additionally, no inverters were sold by
AEG Power Solutions in the State of Texas.
In its
response to AEG B.V.'s special appearance, Creation
argued that AEG B.V. was subject to general and specific
jurisdiction in Texas because there was no distinction
between AEG B.V. and its American subsidiary, AEG USA;
Creation asserted AEG B.V. was "fused" to AEG USA.
Following a hearing, the trial court granted AEG B.V.'s
special appearance. Creation appealed.
Personal
Jurisdiction
Texas
courts may exercise personal jurisdiction over a nonresident
defendant "when the state's long-arm statute
authorizes such jurisdiction and its exercise comports with
due process." Cornerstone Healthcare Grp. Holding,
Inc. v. Nautic Mgmt. VI, L.P., 493 S.W.3d 65, 70 (Tex.
2016). The Texas long-arm statute provides in relevant part
that "[i]n addition to other acts that may constitute
doing business," a nonresident does business in Texas if
the nonresident contracts by mail or otherwise with a Texas
resident and either party is to perform the contract in whole
or in part in this state, or if the nonresident commits a
tort in whole or in part in this state. Tex. Civ. Prac. &
Rem. Code Ann. § 17.042(1), (2). The statute
"provides for personal jurisdiction that extends to the
limits of the United States Constitution, and so federal due
process requirements shape the contours of Texas courts'
jurisdictional reach." Searcy v. Parex Res.,
Inc., 496 S.W.3d 58, 66 (Tex. 2016).
"[W]hether
a trial court's exercise of jurisdiction is consistent
with due process requirements turns on two requirements: (1)
the defendant must have established minimum contacts with the
forum state; and (2) the assertion of jurisdiction cannot
offend traditional notions of fair play and substantial
justice." Id. (citing Int l Shoe Co. v.
Washington, 326 U.S. 310, 316 (1945)). "[Sufficient
minimum contacts exist when the nonresident defendant
'purposefully avails itself of the privilege of
conducting activities within the forum [s]tate, thus invoking
the benefits and protections of its laws.'"
Id. at 66-67 (quoting Hanson v. Denckla,
357 U.S. 235, 253 (1958)). "The nub of the purposeful
availment analysis is whether a nonresident defendant's
conduct in and connection with Texas are such that it could
reasonably anticipate being haled into court here."
Id. at 67. The defendant must purposefully direct
contacts into the forum state. Id. (citing
Guardian Royal Exch. Assurance, Ltd. v. English China
Clays, P.L.C, 815 S.W.2d 223, 228 (Tex. 1991)).
When
determining whether a nonresident purposefully availed itself
of the privilege of conducting activities in Texas, we
consider three factors: (1) only the defendant's contacts
with the forum are relevant, not the unilateral activity of
another party or third person; (2) the contacts relied upon
must be purposeful rather than random, isolated, or
fortuitous; and (3) the defendant must seek some benefit,
advantage, or profit by availing itself of the jurisdiction.
Cornerstone, 493 S.W.3d at 70-71. This analysis
assesses the quality and nature of the contacts, not the
quantity. Moncrief Oil Int'l, Inc. v. OAO
Gazprom, 414 S.W.3d 142, 151 (Tex. 2013). A defendant
will not be haled into a jurisdiction based solely on
contacts that are random, isolated, or fortuitous, or on the
unilateral activity of another party or a third person.
Michiana Easy Livin' Country, Inc. v.
Holten, 168 S.W.3d 777, 785 (Tex. 2005);
Guardian Royal Exch., 815 S.W.2d at 226.
In
addition to minimum contacts, due process requires the
exercise of personal jurisdiction to comply with traditional
notions of fair play and substantial justice. Moncrief
Oil Int'l, 414 S.W.3d at 154 (citing Retamco
Operating, Inc. v. Republic Drilling Co., 278 S.W.3d
333, 338 (Tex. 2009)). The evaluation is undertaken in light
of these factors, when appropriate:
(1) the burden on the defendant; (2) the interests of the
forum state in adjudicating the dispute; (3) the plaintiffs
interest in obtaining convenient and effective relief; (4)
the interstate or international judicial system's
interest in obtaining the most efficient resolution of
controversies; and (5) the shared interest of the ...