Opinion
No. 05-08-01727-CV
Opinion issued November 20, 2009.
On Appeal from the 160th Judicial District Court, Dallas County, Texas, Trial Court Cause No. 08-05764-H.
Before Chief Justice WRIGHT and Justices RICHTER and LANG.
MEMORANDUM OPINION
Tampa Bay Marine Towing and Service, Inc. d/b/a Sea Tow Tampa Bay (Tampa Bay) brings this interlocutory appeal from the trial court's order denying its special appearance. In three points of error, Tampa Bay contends the trial court erred by denying its special appearance because (1) Christopher Moyer failed to plead sufficient facts to confer jurisdiction, (2) Moyer failed to prove Tampa Bay and its franchisor, Sea Tow Services International, Inc., were alter egos or a single business enterprise, and (3) asserting jurisdiction over it offends traditional notions of fair play and substantial justice. We sustain Tampa Bay's second issue, reverse the trial court's order denying Tampa Bay's special appearance, and render judgment dismissing the claims against Tampa Bay for want of jurisdiction.
Background
Moyer, a St. Petersburg, Florida resident and employee of Tampa Bay, sued Tampa Bay, Sea Tow Services International, Inc. and Harborage Marina, LLC after Moyer was seriously injured while refueling a vessel at Haborage Marina's dock in St. Petersburg, Florida. Thereafter, Tampa Bay filed a special appearance claiming Texas does not have jurisdiction over it because it is a Florida company without contacts with Texas. In support of its special appearance, Tampa Bay relied on its president, Eugene Shute, IV's, affidavit. In his affidavit, Shute testified Tampa Bay is a company incorporated in Florida that does business solely in Florida. In addition to a litany of things such as the facts that Tampa Bay does not own or lease property in Texas, pay taxes in Texas, advertise in Texas, and has never entered into any agreement with a person or entity in Texas to perform work or services, Shute also testified that Tampa Bay is a franchisee of Sea Tow International that is conducted as a separate business entity. Shute testified the two companies file separate tax returns, do not have common stock ownership, keep separate books and accounts, and do not have common officers or directors. Finally, Shute testified Tampa Bay controls the day-to day operations of its business, including but not limited to personnel decisions, its employees are paid by Tampa Bay, and its employees do not receive insurance benefits from Sea Tow International.
Although both Sea Tow International and Harborage Marina have filed motions to dismiss for forum non conveniens, neither Sea Tow International nor Harborage Marina dispute that Texas has jurisdiction over them.
Moyer responded, claiming Texas has jurisdiction over both Tampa Bay and Sea Tow International because of Sea Tow International's systematic and continuous contacts with Texas, and that Texas may impute Sea Tow International's contacts with Texas to Tampa Bay because they operate as a single business enterprise/alter ego and should be "jurisdictionally fused." In support of this argument Moyer relied on Shute's deposition testimony in which he stated Sea Tow International controls the following aspects of Tampa Bay's business:
(1) The type of boat Sea Tow Tampa utilizes;
(2) The capabilities of the boat Sea Tow Tampa utilizes;
(3) The insurance carrier Sea Tow Tampa utilizes;
(4) The type and amount of insurance Sea Tow Tampa carries on its boats;
(5) The types of establishments Sea Tow Tampa may broker member discounts with;
(6) The color of Sea Tow Tampa boats;
(7) Corporate software utilized by Sea Tow Tampa;
(8) The universal Sea Tow logo;
(9) The lifejackets worn by Sea Tow Tampa employees;
(10) Marketing materials and promotional brochures for potential members;
(11) E-mail capability of Sea Tow Tampa;
(12) The hotline members call for service and assistance;
(13) The membership directory for all Sea Tow entities;
(14) The membership marketing done by Sea Tow Tampa;
(15) The Sea Tow website;
(16) The training program its franchisees are required to attend;
(17) Sea Tow Tampa's area of operation;
(18) The royalties Sea Tow Tampa pays on every dollar it earns; and
(19) The policy and procedure changes made at various intervals for all of Sea Tow.
After considering this and other evidence, the trial court denied Tampa Bay's special appearance. This interlocutory appeal followed.
Discussion
Whether a trial court has personal jurisdiction over a nonresident defendant is a question of law. Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 790-91 (Tex. 2005); BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002); Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 805-06 (Tex. 2002); Hoffmann v. Dandurand, 180 S.W.3d 340, 345 (Tex. App.-Dallas 2005, no pet.). Because the trial court's exercise of personal jurisdiction over a nonresident defendant is one of law, we review the trial court's determination of a special appearance de novo. Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex. 2007); BMC Software, 83 S.W.3d at 794. However, the trial court must frequently resolve fact questions before deciding the jurisdictional question. BMC Software, 83 S.W.3d at 794; Hoffmann, 180 S.W.3d at 345.
If a trial court enters an order granting or denying a special appearance but does not issue findings of fact and conclusions of law, all facts supported by the evidence that are necessary to support the judgment are implied. See Moki Mac, 221 S.W.3d at 574; BMC Software, 83 S.W.3d at 795; Am. Type, 83 S.W.3d at 806. When the appellate record includes the reporter's and clerk's records, the trial court's implied findings are not conclusive and may be challenged for legal and factual sufficiency on appeal. BMC Software, 83 S.W.3d at 795.
The plaintiff bears the initial burden of pleading sufficient allegations to bring a nonresident defendant within the provisions of the Texas long-arm statute. Moki Mac, 221 S.W.3d at 574; BMC Software, 83 S.W.3d at 793; Am. Type, 83 S.W.3d at 807. The nonresident defendant has the burden of negating all bases of jurisdiction alleged in the plaintiff's petition. Moki Mac, 221 S.W.3d at 574; BMC Software, 83 S.W.3d at 793; Am. Type, 83 S.W.3d at 807. An exception arises when the plaintiff asserts personal jurisdiction exists under a corporate veil-piercing theory. See BMC Software, 83 S.W.3d at 798-99; Wolf v. Summers-Wood, L.P., 214 S.W.3d 783, 787 (Tex. App.-Dallas 2007, no pet.). A court cannot find personal jurisdiction based on a theory of corporate veil-piercing unless the plaintiff proves the allegation. See BMC Software, 83 S.W.3d at 798; Wolf, 214 S.W.3d at 787-88.
The Texas long-arm statute permits Texas courts to exercise jurisdiction over nonresident defendants that do business in Texas. See Tex. Civ. Prac. Rem. Code §§ 17.041-.045 (Vernon 2008); PHC-Minden, L.P. v. Kimberly-Clark Corp., 235 S.W.3d 163, 166 (Tex. 2007); BMC Software, 83 S.W.3d at 795. The broad language of section 17.042 extends Texas courts' personal jurisdiction "as far as the federal constitutional requirements of due process will permit." PHC-Minden, 235 S.W.3d at 166.
The Due Process Clause of the Fourteenth Amendment operates to limit the power of a state to assert personal jurisdiction over a nonresident defendant. Asahi Metal Indus. Co., Ltd. v. Superior Court of Cal., Solano County, 480 U.S. 102, 108 (1987); Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 413-14 (1984). The Due Process Clause protects an individual's liberty interest in not being subject to the binding judgments of a forum with which he has established no meaningful contacts, ties, or relations. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-72 (1985); World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 294 (1980); Int'l Shoe Co. v. Washington, 326 U.S. 310, 319 (1945). Under the Due Process Clause, personal jurisdiction over a nonresident defendant is constitutional when the nonresident defendant has established minimum contacts with the forum state and the exercise of jurisdiction comports with traditional notions of fair play and substantial justice. Burger King, 471 U.S. at 476.
General jurisdiction may exist over a nonresident defendant in a lawsuit where the cause of action does not arise out of or relate to the nonresident defendant's contacts with the forum state. See Helicopteros, 466 U.S. at 414 n. 9; PHC-Minden, 235 S.W.3d at 168. General jurisdiction is present when the nonresident defendant's contacts in a forum state are continuous and systematic. Helicopteros, 466 U.S. at 416-17; PHC-Minden, 235 S.W.3d at 167-69. General jurisdiction over a parent corporation does not automatically establish general jurisdiction over a wholly-owned subsidiary. See Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 781 n. 13 (1984); PHC-Minden, 235 S.W.3d at 172; see also Hargrave v. Fibreboard Corp., 710 F.2d 1154, 1159 (5th Cir. 1983).
"[General,] [p]ersonal jurisdiction may exist over a nonresident defendant if the relationship between the foreign corporation and its parent corporation that does business in the forum state is one that would allow the court to impute the parent corporation's `doing business' to the subsidiary." BMC Software, 83 S.W.3d at 798 (citing Hargrave, 710 F.2d. at 1159). The rationale for exercising jurisdiction is that "the parent corporation exerts such domination and control over its subsidiary `that they do not in reality constitute separate and distinct corporate entities but are one and the same corporation for purposes of jurisdiction.'" Id. at 798 (quoting Hargrave, 710 F.2d. at 1159).
The party seeking to ascribe one corporation's actions to another by disregarding their distinct corporate entities must prove this allegation. PHC-Minden, 235 S.W.3d at 173; BMC Software, 83 S.W.3d at 798. The degree of control the parent exercises must be greater than that normally associated with common ownership and directorship. PHC-Minden, 235 S.W.3d at 175; BMC Software, 83 S.W.3d at 799. The relevant factors for jurisdictional veil piercing were described in BMC Software:
To "fuse" the parent company and its subsidiary for jurisdictional purposes, the plaintiffs must prove the parent controls the internal business operations and affairs of the subsidiary. But the degree of control the parent exercises must be greater than that normally associated with common ownership and directorship; the evidence must show that the two entities cease to be separate so that the corporate fiction should be disregarded to prevent fraud or injustice.
BMC Software, 83 S.W.3d at 799 (citations omitted).
All of the relevant facts and circumstances surrounding the operations of the parent and subsidiary must be examined to determine whether two separate and distinct corporate entities exist. PHC-Minden, 235 S.W.3d at 173. A subsidiary corporation will not be regarded as the alter ego of its parent corporation merely because of: (1) stock ownership; (2) a duplication of some or all of the directors or officers; or (3) an exercise of the control that stock ownership gives to stockholders. PHC-Minden, 235 S.W.3d at 175; BMC Software, 83 S.W.3d at 799.
Applying these standards to the facts in this case, we cannot conclude Moyer met his burden to prove his allegation that personal jurisdiction exists under a corporate veil-piercing theory. Although Sea Tow International retains control over many of Tampa Bay's operations, the control of marketing schemes, methods of operation, uniforms, vehicles, logos, suppliers and other necessary forms of franchise operations are common between franchisors and franchisees. See e.g., Burger King, 471 U.S. at 464-65. Retention of such control as well as the right to veto proposed structural changes is not sufficient to support a determination that a franchisor "operates" the franchisee or its premises. See Alonzo v. Mr. Gatti's Pizza, Inc., 933 S.W.2d 294, 296 (Tex. App.-Corpus Christi 1996, no writ) (discussing liability of corporate franchisor for alleged violations of Americans With Disabilities Act by franchisee). Nor does access to Tampa Bay through Sea Tow International's website establish jurisdiction without evidence that the website was so interactive as to justify the exercise of jurisdiction over Tampa Bay. See Reiff v. Roy, 115 S.W.3d 700, 706 (Tex. App.-Dallas 2003, pet. denied). Tampa Bay produced evidence showing it does not have common stock ownership, nor common officers or directors. Further, it files its own tax returns, maintains separate books, and pays its own employees. Finally, Shute testified Tampa Bay controls the day-to day operations of its business, including but not limited to personnel decisions, and its employees do not receive insurance benefits from Sea Tow International. Under these circumstances, we cannot conclude that the degree of control exercised by Sea Tow International over Tampa Bay is so great that the two entities have ceased to be separate and the corporate fiction should be disregarded to prevent fraud or injustice. Tampa Bay is a Florida company that does not do business in Texas, and there is no basis for imputing Sea Tow International's contacts to Tampa Bay. We sustain Tampa Bay's second point of error. Having done so, we need not address its remaining points of error. See Tex. R. App. P. 47.1.
Accordingly, we reverse the trial court's judgment and render judgment dismissing the claims against Tampa Bay for want of jurisdiction. See PHC-Minden, 235 S.W.3d at 176.