Cobb County v. Jones Group P.L.C.

• Decision Date: 26 June 1995
• Docket Number: Nos. A95A0791,s. A95A0791
• Citation: 218 Ga.App. 149,460 S.E.2d 516
• Parties: , RICO Bus.Disp.Guide 8849 COBB COUNTY v. JONES GROUP P.L.C. et al. WALTON v. COBB COUNTY. GREENLEES et al. v. COBB COUNTY. ENVIROQUIP, INC. et al. v. COBB COUNTY. WICKLIFFE COMPANY v. JONES GROUP P.L.C. et al. GREENLEES et al. v. WICKLIFFE COMPANY. WALTON v. WICKLIFFE COMPANY. ENVIROQUIP, INC. et al. v. WICKLIFFE COMPANY. MAYES, SUDDERTH & ETHEREDGE, INC. v. JONES GROUP P.L.C. et al. WALTON v. MAYES, SUDDERTH & ETHEREDGE, INC. GREENLEES et al. v. MAYES, SUDDERTH & ETHEREDGE, INC. ENVIROQUIP, INC. et al. v. MAYES, SUDDERTH & ETHEREDGE, INC. to A95A0802.
• Court: Georgia Court of Appeals

Page 516

460 S.E.2d 516

218 Ga.App. 149, RICO Bus.Disp.Guide 8849

COBB COUNTY v. JONES GROUP P.L.C. et al.

WALTON v. COBB COUNTY.

GREENLEES et al. v. COBB COUNTY.

ENVIROQUIP, INC. et al. v. COBB COUNTY.

WICKLIFFE COMPANY v. JONES GROUP P.L.C. et al.

GREENLEES et al. v. WICKLIFFE COMPANY.

WALTON v. WICKLIFFE COMPANY.

ENVIROQUIP, INC. et al. v. WICKLIFFE COMPANY.

MAYES, SUDDERTH & ETHEREDGE, INC. v. JONES GROUP P.L.C. et al.

WALTON v. MAYES, SUDDERTH & ETHEREDGE, INC.

GREENLEES et al. v. MAYES, SUDDERTH & ETHEREDGE, INC.

ENVIROQUIP, INC. et al. v. MAYES, SUDDERTH & ETHEREDGE, INC.

Nos. A95A0791 to A95A0802.

Court of Appeals of Georgia.

June 26, 1995.

Reconsideration Denied July 26, 1995.

Certiorari Granted Oct. 20, 1995.

Cofer, Beauchamp & Butler, Larry K. Butler, Bryant K. Smith, John L. Lindsay, Atlanta, for Cobb County, The Wickliffe Co. & Mayes, Sudderth & Etheredge, Inc.

Alston & Bird, Robert D. McCallum, Jr., David M. Maxwell, H. Suzanne Smith, Atlanta, Hughes, Hubbard & Reed, John M. Townsend, Mark H. Duesenberg, Washington, DC, for The Jones Group & Enviroquip, Inc.

Adele Grubbs, Marietta, for Walton.

Boyce, Ekonomou & Atkinson, Andrew J. Ekonomou, Atlanta, William M. Coolidge III, Duluth, Custer & Hill, Lawrence B. Custer, Marietta, for Greenlees.

BLACKBURN, Judge.

This appeal is a combination of three related actions filed under the Georgia RICO Act, OCGA § 16-14-1 et seq., concerning the development of water treatment facilities in Cobb County, Georgia. The issues on appeal arise from the trial court's grant or denial of motions to dismiss filed by various defendants in the underlying actions.

Case Nos. A95A0791,

A95A0795 and A95A0799

1. Appellants, Cobb County, Georgia, The Wickliffe Company, and Mayes, Sudderth & Etheredge, Inc., appeal the trial court's grant of defendants', The Jones Group, P.L.C., Jones U.S. Holdings, Inc., and Jones Environmental, Inc. (referred to collectively as the Jones defendants) motions to dismiss for lack of personal jurisdiction. "Our precedents establish that a defendant who files a motion to dismiss for lack of personal jurisdiction has the burden of proving lack of jurisdiction. A motion to dismiss for lack of personal jurisdiction must be granted if there are insufficient facts to support a reasonable inference that defendant[s] can be subjected to the jurisdiction of the court. To demonstrate that the court lacks jurisdiction, defendant[s] may raise matters not contained in the pleadings. However, when the outcome of the motion depends on unstipulated facts, it must be accompanied by supporting affidavits or citations to evidentiary material in the record. Further, to the extent that defendant[s'] evidence controverts the allegations of the complaint, plaintiff may not rely on mere allegations, but must also submit supporting affidavits or documentary evidence.... [I]f a motion is decided on the basis of the written submissions, the reviewing court is in an equal position with the trial court to determine the facts and therefore examines the facts under a non-deferential standard." (Citations and punctuation omitted.) Scovill Fasteners v. Sure-Snap Corp., 207 Ga.App. 539, 540, 428 S.E.2d 435 (1993).

In the present case, jurisdiction over the non-resident defendants allegedly was conferred pursuant to OCGA § 9-10-91(1), (2) and (3). Based upon the allegations in the complaint, personal jurisdiction of the Jones defendants, if any, rests upon the jurisdiction of Enviroquip, Inc. and Escor, Inc., which have transacted business in Cobb County, Georgia. Enviroquip's and Escor's employees, agents, and directors, Bill Walton, Jack Greenlees, and Jim Porteous, allegedly committed acts in Georgia constituting RICO violations. The complaints further alleged: (1) the defendant The Jones Group, P.L.C. is a corporation organized and existing under the laws of the Republic of Ireland, and is a successor corporation or owner of defendants Enviroquip, Inc. and Escor, Inc.; (2) the defendant Jones U.S. Holdings, Inc. is a corporation organized and existing under the laws of the State of Delaware, is a wholly-owned subsidiary of defendant The Jones Group, P.L.C., and is a successor corporation or owner of defendants Enviroquip, Inc. and Escor, Inc.; and (3) the defendant Jones Environmental, Inc. is a wholly-owned subsidiary of or owner of defendants Enviroquip, Inc. and Escor, Inc.

In support of their motions to dismiss, the Jones defendants averred that The Jones Group, P.L.C., an Irish company, invested in companies through Jones U.S. Holdings, Inc., a Delaware corporation, which acted as a holding company for The Jones Group's American holdings. All of the issued common stock of Jones U.S. is owned by The Jones Group, P.L.C. Jones U.S. acts solely as a holding company, owns no real property, and does not carry on any business activity. From mid-1987 until late 1992, Jones U.S. owned all the shares of Enviroquip, Inc., a Delaware corporation. A controlling interest in Delaware Enviroquip was sold to a management buy-out group in December 1992. From October 1987 to December 1991, Escor, Inc., a Delaware corporation, was a wholly-owned subsidiary of Jones U.S.

Jim Porteous averred that he was a director of Enviroquip and Escor, president and a director of Jones Environmental, president and a director of Jones U.S., and until the end of 1992, a director of The Jones Group, P.L.C. Porteous averred that no profits, dividends or revenues were ever paid by Enviroquip to any of the Jones defendants, as it was not profitable enough to pay such from its formation in July 1987 until it was sold at the end of 1992.

Jones Environmental, a wholly-owned subsidiary of Jones U.S., engages in environmental engineering in the United States, and is headquartered in Austin, Texas. Jones Environmental has never had any role or involvement in any project for or related to Cobb County, Georgia. Jones Environmental has never been a successor to or owner of any entity called Enviroquip, Inc. or Escor, Inc.

In Coca-Cola Co. v. Procter & Gamble Co., 595 F.Supp. 304, 308 (N.D.Ga.1983), the court held "that neither the Due Process Clause nor traditional notions of fair play and substantial justice preclude the exercise of personal jurisdiction over a parent corporation if the parent's control over the subsidiaries' activities is so complete that, the subsidiary is, in fact, merely a division or department of the parent." In the present case, there is no evidence indicating the Jones defendants exercised any control over Enviroquip or Escor. The existence of Porteous as an officer and director of various subsidiaries is the only fact presented of common personnel between the companies.

The unrebutted affidavits supporting the Jones defendants' motion to dismiss establish that they did none of the acts set forth in the Long Arm Statute which would subject them to the personal jurisdiction in Georgia. ¹ Under these circumstances, we agree with the trial court's well-written order, that the Jones defendants lacked the minimum contacts with Georgia that due process requires prior to the exercise of personal jurisdiction.

Case Nos. A95A0794,

A95A0798, and A95A0802

Escor and Enviroquip cross appeal the trial court's denial of their motion to dismiss the complaints brought against them by Cobb County, The Wickliffe Company, and Mayes, Sudderth & Etheredge.

The complaints alleged that Greenlees began representing a Texas company called Enviroquip, in the early 1980s. Enviroquip's primary business was the design, manufacture, and sale of products and equipment used in water and wastewater treatment facilities. Bill Walton was the president of this Texas company. The complaints contain allegations that Greenlees and Walton worked closely together for many years conspiring to illegally manipulate the procurement process for equipment used in water and wastewater treatment plants. In 1987, Jones U.S. purchased the assets of the Texas company called Enviroquip, and continued its business under a company also named Enviroquip, but one that was incorporated in Delaware. According to the allegations contained in the complaints, after the purchase, Walton continued to work with the new Enviroquip in much the same capacity, at least, from the perspective of the company's customers.

Escor's primary business was to provide engineering services, including designing water and wastewater treatment facilities, particularly those implementing Enviroquip's equipment. The complaints allege that Walton was a director, managerial officer or employee, agent shareholder and/or representative of Escor. However, Porteous averred that Escor was a Delaware corporation incorporated on October 1, 1987, as a wholly-owned subsidiary of Jones U.S. Escor, which was dissolved in December 1991, never was a subsidiary of any entity called Enviroquip. Porteous further averred that, "upon information and belief, any dealings with Cobb County by an 'Escor' prior to October 1987 must have been by a Texas corporation called 'Escor, Inc.,' which was at some time an affiliate of Texas Enviroquip. Delaware Escor was not related to Texas Enviroquip ... or the Texas Escor." Porteous' affidavit did not address the capacity, if any, in which Walton worked for Escor.

2. Initially, Enviroquip and Escor contend the complaints brought against them failed to state a claim upon which relief could be granted. "When the sufficiency of the complaint is questioned by a motion to dismiss for failure to state a claim for which relief may be granted, the rules require that it be construed in the light most favorable to the plaintiff with all doubts resolved in his favor even though unfavorable constructions are possible. Not unless the allegations of the complaint disclose with certainty that the plaintiff would not be entitled to relief under any state of provable facts should the complaint be dismissed." (Citations and punctuation omitted.)...