Glas v. Adame

• Citation: 178 S.W.3d 307
• Decision Date: 20 October 2005
• Docket Number: No. 14-04-00560-CV.,14-04-00560-CV.
• Parties: Schott GLAS, Appellant, v. Arturo ADAME et al. and Marshall Coleman et al., Appellees.
• Court: Supreme Court of Texas

178 S.W.3d 307

Schott GLAS, Appellant, v. Arturo ADAME et al. and Marshall Coleman et al., Appellees.

No. 14-04-00560-CV.

Court of Appeals of Texas, Houston (14th Dist.).

August 16, 2005.

Rehearing Overruled October 20, 2005.

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Alene R. Levy, Lynne Liberato, Houston, for appellant.

Francis I. Spagnoletti, James T. Liston, Houston, for appellees.

Panel consists of Justices YATES, ANDERSON, and HUDSON.

OPINION

LESLIE BROCK YATES, Justice.

This is an interlocutory appeal from the denial of the special appearance of appellant Schott Glas. Concluding the trial court erred in denying the special appearance, we reverse.

FACTUAL AND PROCEDURAL BACKGROUND

Appellees are a class consisting of veterans of the 1991 Persian Gulf War, along with their families and others. The suit was filed in June 1994 and alleges that the defendants caused or contributed to their injuries from so-called "Gulf War Syndrome." In September 1995, appellees named as additional defendants Schott Glas, a German commercial enterprise, and its subsidiary, Schott Corporation, a New York corporation.¹ Schott Glas is a German entity that manufactures and sells specialized glassware, and appellees allege that Schott Glas sold specialized glass vessels to Iraq that were later used in chemical warfare during the Gulf War. At the time of the special appearance hearing, there were over 3,000 named plaintiffs and over 50 defendants, and appellees assert that the putative class will number as many as 100,000.

Schott Glas filed its special appearance in February 1996, and after extensive jurisdictional discovery, briefing, and hearings, the trial court denied Schott Glas's special appearance. This appeal followed. In three issues, Schott Glas argues that the trial court erred in denying its special appearance because (1) it had insufficient "minimum contacts" with Texas to establish general jurisdiction, (2) exercising jurisdiction over it would violate "traditional notions of fair play and substantial justice," and (3) the trial court erred in overruling its objections to appellees' special appearance evidence.

ANALYSIS

Legal Standard

Whether a trial court has personal jurisdiction over a defendant is a question of law. American Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 805-06 (Tex.2002) ("ATCC"). When the relevant jurisdictional facts are undisputed, we review the trial court's determination de novo. See id. at 806; Preussag Aktiengesellschaft v. Coleman, 16 S.W.3d 110, 113 (Tex.App.-Houston [1st Dist.] 2000, pet. dism'd w.o.j.). However, when the relevant facts are disputed, a party may challenge the trial court's underlying factual conclusions for legal and factual sufficiency before determining whether the trial court erred in granting or denying a special appearance. ATCC, 83 S.W.3d at 806. If the trial court does not issue findings of fact, we presume the trial court resolved all factual disputes in favor of its judgment. Id.

The Texas long-arm statute governs Texas courts' exercise of personal jurisdiction over a nonresident defendant. See TEX. CIV. PRAC. & REM.CODE ANN. §§ 17.041-.045 (Vernon 1997 & Supp.2004-2005); Alenia Spazio, S.p.A. v. Reid, 130 S.W.3d 201, 210 (Tex.App.-Houston [14th Dist.] 2003, pet. filed). The long-arm statute reaches as far as federal constitutional due process will allow, and thus we rely on both federal and state precedent in reviewing the trial court's personal jurisdiction decision. ATCC, 83 S.W.3d at 806; Alenia Spazio, 130 S.W.3d at 210.

Personal jurisdiction is proper if the defendant has established "minimum contacts" with Texas and the exercise of jurisdiction comports with "traditional notions of fair play and substantial justice." ATCC, 83 S.W.3d at 806 (citing Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 90 L.Ed. 95 (1945)). "The purpose of the minimum-contacts analysis is to protect the defendant from being haled into court when its relationship with Texas is too attenuated to support jurisdiction." Id. Thus, a defendant must "purposefully avail" itself of the benefits and protections of Texas law such that the defendant could reasonably anticipate being called into a Texas court. See id.; Koll Real Estate Group, Inc. v. Howard, 130 S.W.3d 308, 312 (Tex.App.-Houston [14th Dist.] 2004, no pet.). This ensures that a defendant is subject to personal jurisdiction based on its own purposeful activity and not the unilateral acts of a third party. ATCC, 83 S.W.3d at 806; Koll Real Estate, 130 S.W.3d at 312. Personal jurisdiction may not be based on Texas contacts that are random, fortuitous, or attenuated. ATCC, 83 S.W.3d at 806; Koll Real Estate, 130 S.W.3d at 312. It is the quality and nature of the defendant's contacts, rather than the quantity, that is important to the minimum-contacts analysis. ATCC, 83 S.W.3d at 809-10.

A defendant's contacts with the forum can give rise to either specific or general jurisdiction. Specific jurisdiction is based on purposeful contacts that give rise to the cause of action. Id. at 806. General jurisdiction allows personal jurisdiction based on contacts unrelated to the litigation as long as those contacts are "continuous and systematic." Id. at 806-07. In this case, appellees allege only general jurisdiction.

The plaintiff has the initial burden of pleading sufficient allegations to bring the nonresident defendant within the provisions of the Texas long-arm statute. Id. at 807; Walker Ins. Servs. v. Bottle Rock Power Corp., 108 S.W.3d 538, 548 (Tex.App.-Houston [14th Dist.] 2003, no pet.). Upon the filing of a special appearance, the burden shifts to the defendant to negate all bases of personal jurisdiction alleged by the plaintiff. ATCC, 83 S.W.3d at 807; Bottle Rock, 108 S.W.3d at 548. "This standard does not mean that the nonresident defendant must negate every possible ground in the universe, but rather the acts in Texas alleged by the appellant to support personal jurisdiction." Bottle Rock, 108 S.W.3d at 548.

Jurisdictional Time Frame

Before we analyze whether Schott Glas had sufficient minimum contacts with Texas to support the exercise of personal jurisdiction, we must first determine the relevant time frame during which those contacts must have occurred. The parties agree that the jurisdictional time frame begins in January 1986; the issue is when it ends. Schott Glas contends that its only relevant contacts are those up until the date of appellees' injuries, which is, at the latest, when the Gulf War ended in the summer of 1991. Appellees maintain the jurisdictional time frame ends either on the date the suit was filed, as some federal courts have held,² or the date of the injury.³

This court and other Texas courts have held that the relevant jurisdictional time frame ends on the date of the injury. See Scott v. Huey L. Cheramie, Inc., 833 S.W.2d 240, 241 (Tex.App.-Houston [14th Dist.] 1992, no writ) (holding that contract signed after injury occurred was irrelevant to jurisdiction); Middleton v. Kawasaki Steel Corp., 687 S.W.2d 42, 45 (Tex.App.-Houston [14th Dist.] 1985, writ ref'd n.r.e.) (finding the "crucial period" for assessing personal jurisdiction to be when the allegedly defective product was sold and caused injury); see also MedCost, L.L.C. v. Loiseau, 166 S.W.3d 421, 434 (Tex.App.-Austin, 2005, no pet. h.) ("The relevant contacts are those up to the time of injury."); Moni Pulo Ltd. v. Trutec Oil & Gas, Inc., 130 S.W.3d 170, 173 n. 1 (Tex.App.-Houston [14th Dist.] 2003, pet. denied) (citing Scott with approval); AmQuip Corp. v. Cloud, 73 S.W.3d 380, 388 (Tex.App.-Houston [1st Dist.] 2002, no pet.) (holding that telephone calls made after accident date were irrelevant to jurisdiction). Accordingly, we hold that the jurisdictional time frame in this case extends from January 1986 to the summer of 1991, the latest appellees could have been injured. Thus, we will discuss only those contacts occurring during that time period.

Minimum Contacts

Appellees argue that Schott Glas has sufficient minimum contacts with Texas on the following three bases: (1) by imputing to Schott Glas the contacts of related German entities on the basis that they are a "single business enterprise," (2) by concluding that Hank Merino of Merino Sales, Inc., a sales representative based in Dallas, is Schott Glas's agent and thus imputing Merino's contacts to Schott Glas, and (3) the sale of Schott Glas products in Texas and Schott Glas's alleged post-sale service of goods in Texas. We consider each of these theories in turn.

Contacts of Related Entities

Schott Glas is one of two German affiliates of a third entity, a foundation established under German law over 100 years ago called a "Stiftung." Appellees have, through various theories in their amended petitions, attempted to impute to Schott Glas the contacts of these other two related entities.

In Texas, corporate entities are presumed to be separate, and a plaintiff attempting to assert personal jurisdiction against one defendant based on the contacts of another entity has the burden of proving a basis for doing so. See BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 798 (Tex.2002); Le Meridien Hotels & Resorts v. LaSalle Hotel Operating P'ship, 141 S.W.3d 870, 881 (Tex.App.-Dallas 2004, no pet.); Koll Real Estate, 130 S.W.3d at 313. Furthermore, each basis for disregarding this presumption of corporate separateness must be specifically pleaded or it is waived. See Villanueva v. Astroworld, Inc., 866 S.W.2d 690, 695 (Tex.App.-Houston [1st Dist.] 1993, writ denied).

In their latest amended petition, appellees attempt to combine the Texas contacts of these three German entities under the German law theory of "Konzern," asserting that "these entities are to be considered a Konzern (group) because they share unified management, participate in a common scheme to make profit, and are under the...