Koll Real Estate Group, Inc. v. Howard

• Decision Date: 12 February 2004
• Docket Number: No. 14-03-00528-CV.,14-03-00528-CV.
• Citation: 130 S.W.3d 308
• Parties: KOLL REAL ESTATE GROUP, INC., Appellant, v. Alton P. HOWARD, et al., Appellees.
• Court: Texas Court of Appeals

130 S.W.3d 308

KOLL REAL ESTATE GROUP, INC., Appellant, v. Alton P. HOWARD, et al., Appellees.

No. 14-03-00528-CV.

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

February 12, 2004.

Jonathan C. Allen, Patricia Chamblin, T. Phillip Brent, Beaumont, for appellant.

Helen A. Cassidy, Ian Patrick Cloud, Houston, M.C. Carrington, Beaumont, for appellees.

Panel consists of Justices HUDSON, EDELMAN, and GUZMAN.

OPINION

EVA M. GUZMAN, Justice.

In this accelerated appeal, Koll Real Estate Group, Inc. ("Koll"), challenges the trial court's denial of its special appearance. We reverse and remand.

I. Background

In the underlying action, thirteen plaintiffs¹ filed suit against Koll and numerous other defendants, alleging asbestos related injuries. In their pleadings, plaintiffs sued Koll as "successor in interest to M.W. [K]ellogg Company and Pullman, Inc." Koll filed a special appearance in the trial court asserting it lacked sufficient contacts with Texas and it was not the corporate successor to M.W. Kellogg Company ("Kellogg"). Plaintiffs responded, arguing that Koll had sufficient contacts because "its constituent predecessor corporations, M.W. Kellogg and Pullman, Inc. had contacts with Texas that are imputed to Koll."

There was no oral hearing conducted on Koll's special appearance; the trial court decided the matter based on the special appearance, plaintiffs' response, and the evidence on file. The trial court signed an order overruling Koll's special appearance on April 10, 2003. Koll requested findings of fact and conclusions of law, but none were issued. This appeal ensued.

On appeal, Koll argues the trial court erred in denying its special appearance because it is not the successor to Kellogg, it did not assume Kellogg's liabilities, and it lacks any relationship to Texas which would make an exercise of personal jurisdiction proper.

A. Corporate Entities Involved

The record indicates that Pullman began its corporate existence in 1927. In late 1980, Wheelabrator Chicago, Inc. ("Wheelabrator") merged with Pullman, and the new corporate entity became Pullman, Inc. Wheelabrator-Frye, Inc. ("WFI") acquired all the stock of Pullman. Thereafter, Pullman was a wholly owned subsidiary of WFI. At that time, M.W. Kellogg Division, an engineering and construction firm, was an unincorporated division of Pullman. In January 1981, WFI caused Pullman, Inc. to be renamed Kellogg. At the same time, it spun off Pullman's transportation businesses into separate companies, but retained the M.W. Kellogg engineering business in the renamed entity.

In 1983, WFI became a wholly owned subsidiary of The Signal Companies, Inc. ("Signal"). In 1985, Signal merged with Allied Corporation and became a wholly owned subsidiary of Allied-Signal, Inc. ("Allied-Signal"). In 1986, Allied-Signal spun off thirty-nine of its businesses into a new corporation called The Henley Group, Inc. ("Henley I"). Among the companies which Allied-Signal contributed to Henley I was Kellogg.

By Purchase Agreement dated January 11, 1988, Henley I (at the time of the agreement, The Henley Group, Inc.), Kellogg, and Kellogg Newco One, Inc., sold Kellogg's various assets to Dresser Industries; specifically, those assets relating to "Open Contracts or Jobs." In the agreement, Dresser also assumed all liabilities in connection with "Open Contracts or Jobs;" other "excluded liabilities" were not assumed by Dresser, specifically those related to "Closed Contracts or Jobs." Further, the agreement contained an exchange of indemnities whereby Henley I, Kellogg, and Newco One indemnified Dresser against any loss or liability arising from, among other things, a "Closed Contract or Job," and Dresser indemnified those same parties from any loss or claims regarding any "Open Contract or Job."

In December 1988, Henley I entered into a Transition Agreement with Henley Newco, Inc. in which it completed a reverse spinoff, placing certain assets and businesses into a subsidiary.² At that time, Henley I changed its name to the Wheelabrator Group, Inc. ("WGI") and the spinoff corporation was renamed The Henley Group, Inc. ("Henley II"). Specifically, relative to this appeal, Henley II acquired Henley I's assets and obligations regarding the "M.W. Kellogg Company Disposition." In addition, the Transition Agreement contains an exchange of indemnities, whereby each company agreed to indemnify the other against losses arising out of or due to the failure of either party to perform their obligations arising under the Transition agreement. The indemnifications occur only under certain circumstances and pursuant to procedures contained within the agreement.

Under the Transition Agreement, Henley I retained several businesses, including Resco Holdings, Inc., Wheelabrator Technologies, Inc., The Henley Group, Inc., and KELL Holding Corporation. All stock of Kellogg, then a corporate shell with no assets or operations, went to WGI. Kellogg has remained a wholly owned subsidiary of WGI.³

Also, in December 1988, Henley I, Henley II, and Dresser entered into an Assignment, Assumption and Release Agreement whereby Henley II agreed to assume Henley I's obligations under the Dresser Purchase Agreement.

B. Koll Real Estate Group, Inc.

Koll's successor was Henley II. In 1989, Henley II's name was changed to Henley Properties, Inc., and then to Bolsa Chica Company in 1992. In 1993, the corporate entity became the Koll Real Estate Group.⁴

II. Arguments and Authorities

In three issues, Koll argues the trial court erred in overruling its special appearance because: (1) Koll is not the corporate successor of Kellogg; (2) Koll did not agree to assume the liabilities of Kellogg; and (3) Koll's "only relationship with Texas is that its predecessor was the assignee of the assignor's liability as indemnitor in connection with the sale of certain assets and businesses by the assignor's subsidiary, Kellogg, to the purchaser, Dresser." Appellees contend that jurisdiction is proper because Koll's corporate predecessor assumed liability for the acts of Kellogg and Pullman.⁵

A. Standard of Review

The plaintiff has the initial burden of pleading sufficient allegations to bring the nonresident defendant within the provisions of the Texas long-arm statute. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 793 (Tex.2002); Walker Ins. Servs. v. Bottle Rock Power Corp., 108 S.W.3d 538, 548 (Tex.App.-Houston [14th Dist.] 2003, no pet.). At the special appearance hearing, the burden shifts to the nonresident defendant to negate the bases of personal jurisdiction asserted by the plaintiff. Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 807 (Tex. 2002); Bottle Rock, 108 S.W.3d at 548. On appeal, an appellate court reviews all evidence in the record to determine if the nonresident defendant negated the grounds for personal jurisdiction. Bottle Rock, 108 S.W.3d at 548.

Whether a court has personal jurisdiction over a defendant is a question of law. Coleman, 83 S.W.3d at 805-06; Marchand, 83 S.W.3d.at 794. However, in resolving this question of law, a trial court must frequently resolve questions of fact. Coleman, 83 S.W.3d at 806. On appeal, a trial court's determination to deny a special appearance is subject to de novo review, but appellate courts may be called upon to review the trial court's resolution of a factual dispute. Id. When the trial court does not issue findings of fact, as in this case, reviewing courts should presume the trial court resolved all factual disputes in favor of its judgment. Id.

Here, Koll contends there are no disputed facts because the only issue is whether Koll assumed the liabilities of its predecessors, which, according to Koll, is a question of law based upon the interpretation of contracts. On review, for legal sufficiency points, if there is more than a scintilla of evidence to support the finding, the legal sufficiency challenge fails. Marchand, 83 S.W.3d at 795.

B. Personal Jurisdiction

Texas courts may exercise jurisdiction over a nonresident defendant if two conditions are satisfied: (1) the Texas long-arm statute authorizes the exercise of personal jurisdiction; and (2) the exercise of jurisdiction is consistent with federal and state constitutional guarantees of due process. Bottle Rock, 108 S.W.3d at 546 (citing Schlobohm v. Schapiro, 784 S.W.2d 355, 356 (Tex.1990)). The Texas long-arm statute authorizes the exercise of jurisdiction over a nonresident defendant who does business in Texas. See Tex. Civ. Prac. & Rem.Code § 17.042; CSR Ltd. v. Link, 925 S.W.2d 591, 594 (Tex.1996). The Texas Supreme Court has interpreted the broad language of the Texas long-arm statute to extend Texas courts' personal jurisdiction "as far as the federal constitutional requirements of due process will permit." Marchand, 83 S.W.3d at 795. As a result, we consider only whether it is consistent with federal constitutional requirements of due process for Texas courts to assert in personam jurisdiction over Koll. Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex.1991); Bottle Rock, 108 S.W.3d at 546-47.

Under federal constitutional requirements of due process, personal jurisdiction over nonresident defendants is constitutional when two conditions are met: (1) the defendant has established minimum contacts with the forum state; and (2) the exercise of jurisdiction comports with traditional notions of fair play and substantial justice. Marchand, 83 S.W.3d at 795; Bottle Rock, 108 S.W.3d at 547.

The minimum contacts analysis focuses on the relationship among the defendant, the forum, and the litigation. See Guardian Royal, 815 S.W.2d at 228. We must determine whether the nonresident defendant has "`purposefully avail[ed] itself of the privilege of conducting activities within the forum State,'" invoking the benefits and protections of the state's laws. Bottle Rock, 108 S.W.3d at 547 (quoting Hanson v. Denckla, 357 U.S. 235,...