Opinion
NO. 01-17-00475-CV
01-30-2018
BRADLEY MCDANIEL, Appellant v. BP AMOCO EXPLORATION (IN AMENAS) LIMITED, Appellee
On Appeal from the 152nd District Court Harris County, Texas
Trial Court Case No. 2014-54027
MEMORANDUM OPINION
Bradley McDaniel appeals from the trial court's order granting BP Amoco Exploration (In Amenas) Limited's special appearance. We conclude that the trial court lacked personal jurisdiction over this defendant and therefore affirm.
BACKGROUND
McDaniel's suit arises out of a terrorist attack abroad. In 2013, terrorists seized an Algerian gas plant jointly operated under a contract between (1) Algeria's state oil company, (2) a subsidiary of a Norwegian oil company, and (3) BP Amoco Amenas. The attackers killed multiple people at the plant. McDaniel lived and worked as a drilling supervisor at a rig located about 7.5 miles southwest of the plant. McDaniel alleges that he suffered a knee injury while reacting to a security alarm during the attack, and that he and others were stranded at the rig for four days under conditions that caused him emotional distress and mental anguish.
McDaniel sued his employer, BP America Production Company, three other BP-affiliated companies, including BP Amoco Amenas, and Mark Cobb, a senior manager at the facility. McDaniel asserts claims for negligence, breach of contract, fraud, and intentional infliction of emotional distress. The gravamen of his claims is that the defendants did not provide adequate security and protection and misrepresented the venture's safety.
BP Amoco Amenas is incorporated and has its principal place of business in the United Kingdom. It filed a special appearance, contending that its only connection to Texas was that it was part of a larger group of affiliated companies, some of which operated in Texas.
In support of its special appearance, BP Amoco Amenas submitted evidence that it does not have a headquarters, offices, or facilities in Texas. It does not own or lease real property in Texas or own an interest in any wells or conduct exploration in Texas. It does not conduct business or have any operations, including the sale of oil or gas, in Texas; pay any property or production taxes in Texas; have any bank accounts in Texas; have any employees assigned to work in Texas; recruit any employees in Texas; enter into contracts with Texas residents that provide for performance in Texas; or market or advertise in Texas. Based on this and other evidence, the trial court granted BP Amoco Amenas's special appearance and dismissed it from the suit.
DISCUSSION
On appeal, McDaniel contends that the evidence shows that the trial court has both specific and general personal jurisdiction over BP Amoco Amenas. He maintains that the trial court may exercise general jurisdiction over BP Amoco Amenas because it is an alter ego of another company—BP plc, which conceded personal jurisdiction in the trial court. McDaniel further contends that the trial court may exercise specific jurisdiction over BP Amoco Amenas because the company "purposefully conducts activities in Texas in pursuit of a benefit, profit, or advantage."
A. Standard of review
Whether there is personal jurisdiction over a nonresident defendant is a question of law, which we review de novo. Moncrief Oil Int'l v. OAO Gazprom, 414 S.W.3d 142, 150 (Tex. 2013). However, a trial court often must resolve fact questions before deciding whether there is jurisdiction. BMC Software Belgium v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). When, as here, it does not issue findings of fact or conclusions of law, we imply the relevant fact findings necessary to support its ruling so long as legally and factually sufficient evidence supports them. Moncrief Oil, 414 S.W.3d at 150; BMC Software, 83 S.W.3d at 795. We will affirm the trial court's ruling on any legal theory that has evidentiary support. Hatzenbuehler v. Essig, 526 S.W.3d 657, 662 (Tex. App.—Houston [1st Dist.] 2017, no pet.).
B. Burden of proof
The plaintiff bears the initial burden to plead factual allegations sufficient to confer personal jurisdiction over the defendant under Texas's long-arm statute. Moncrief Oil, 414 S.W.3d at 149; Kelly v. Gen. Interior Constr., 301 S.W.3d 653, 658-59 (Tex. 2010). If the plaintiff meets that burden, the burden then shifts to the defendant to negate the bases for jurisdiction pleaded by the plaintiff. Moncrief Oil, 414 S.W.3d at 149. The defendant can negate jurisdiction either by disproving the plaintiff's allegations or by showing that the evidence is legally insufficient to establish jurisdiction, even though the plaintiff's allegations are true. Kelly, 301 S.W.3d at 659.
C. Applicable law
Texas's long-arm statute extends personal jurisdiction as far as federal due process allows. M&F Worldwide Corp. v. Pepsi-Cola Metro. Bottling Co., 512 S.W.3d 878, 885 (Tex. 2017). Federal due process allows a state court to exercise jurisdiction over nonresident defendants so long as they have "minimum contacts" with the state and the exercise of jurisdiction "does not offend traditional notions of fair play and substantial justice." Id. (quoting Walden v. Fiore, 134 S. Ct. 1115, 1121 (2014), and Int'l Shoe Co. v. Wash., 326 U.S. 310, 316 (1945)).
A defendant's contacts may give rise to either general or specific personal jurisdiction. Id. General or all-purpose jurisdiction exists when a defendant's contacts are so extensive that it essentially is "at home" in the forum state. Bristol-Myers Squibb Co. v. Sup. Ct. of Cal., San Francisco Cty., 137 S. Ct. 1773, 1780 (2017). A corporate defendant is at home in its place of incorporation and its principal place of business. BNSF Ry. Co. v. Tyrrell, 137 S. Ct. 1549, 1558 (2017) (relying on Daimler AG v. Bauman, 134 S. Ct. 746, 760 (2014), and Goodyear Dunlop Tires Operations v. Brown, 564 U.S. 915, 924 (2011)). Outside of these limited circumstances, general jurisdiction over a corporate defendant may be had in exceptional cases in which the defendant's in-state operations are so substantial that they render it at home there. Id.; see, e.g., Perkins v. Benguet Consol. Min. Co., 342 U.S. 437, 447-48 (1952) (wartime relocation of corporation's headquarters to state made it at home there).
Specific or case-linked jurisdiction is narrower, existing only when the suit relates to the defendant's contacts with the forum. Bristol-Myers, 137 S. Ct. at 1780 (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472-73 (1985), and Helicopteros Nacionales de Columbia v. Hall, 466 U.S. 408, 414 (1984)). There must be an affiliation between the forum and the underlying controversy—an event or activity in the state—and only issues connected with the controversy that establishes jurisdiction may be decided. Id. at 1780-81. Absent a connection, specific jurisdiction does not exist, regardless of the scale or scope of the defendant's unrelated in-state activities. Id. at 1781. For example, regularly occurring product sales in a state cannot form a basis for the exercise of specific jurisdiction there with respect to claims unrelated to those sales. Id.; Goodyear, 564 U.S. at 930 n.6.
For both general and specific jurisdiction, we consider whether a defendant has purposefully availed itself of the privilege of conducting activities in Texas, thereby invoking the benefits and protections of this state's laws. Cornerstone Healthcare Grp. Holding v. Nautic Mgmt. VI, 493 S.W.3d 65, 70 (Tex. 2016); TV Azteca v. Ruiz, 490 S.W.3d 29, 37 (Tex. 2016). Three principles guide our assessment as to whether a nonresident defendant has purposefully availed itself of the privilege of acting in Texas:
(1) only the defendant's contacts with Texas matter, not the unilateral activities of other parties or third persons;Cornerstone, 493 S.W.3d at 70-71; TV Azteca, 490 S.W.3d at 38.
(2) contacts with this state must be purposeful instead of random, fortuitous, isolated, or attenuated; and
(3) the defendant must seek some benefit, advantage, or profit by availing itself of the jurisdiction.
Another party's contacts with the forum may be imputed to a nonresident defendant if that defendant is the other party's alter ego. See BMC Software, 83 S.W.3d at 798-99; Cappuccitti v. Gulf Indus. Prods., 222 S.W.3d 468, 481-82 (Tex. App.—Houston [1st Dist.] 2007, no pet.). A corporation is the alter ego of another when that other controls the corporation's business operations and affairs to an atypical degree, exerting authority greater than that normally associated with ownership and directorship. PHC-Minden, L.P. v. Kimberly-Clark Corp., 235 S.W.3d 163, 175 (Tex. 2007). The evidence must show that the corporation and the other entity ceased to be separate so that the corporate fiction should be disregarded to prevent fraud or injustice. Id. Texas law presumes that two separate corporations are distinct entities; thus, the party alleging an alter-ego relationship for jurisdictional purposes bears the burden of proof. See BMC Software, 83 S.W.3d at 798; Cappuccitti, 222 S.W.3d at 482. Conflicting jurisdictional evidence about the degree of control exercised by a separate entity presents a question of fact for the trial court. See BMC Software, 83 S.W.3d at 798-800; Capital Fin. & Commerce v. Sinopec Overseas Oil & Gas, 260 S.W.3d 67, 85 (Tex. App.—Houston [1st Dist.] 2008, no pet.).
D. Analysis
1. General jurisdiction
McDaniel named BP plc as one of multiple defendants, and BP plc made a general appearance, thereby conceding personal jurisdiction. McDaniel contends that BP Amoco Amenas is the alter ego of BP plc and therefore is subject to the court's general jurisdiction just like BP plc.
In support of his alter ego argument, McDaniel contends that the evidence established that:
• BP Amoco Amenas is an indirect subsidiary or affiliate of BP plc;
• BP Amoco Amenas "ultimately is managed by BP plc's CEO Bob Dudley and by BP plc's board of directors";
• BP plc's board of directors manages all of its subsidiaries, including BP Amoco Amenas, as a group to transact its business;
• BP Amoco Amenas does nothing other than manage BP plc's investment in the Algerian gas venture;
• nonetheless, other BP affiliates, rather than BP Amoco Amenas, make budgetary decisions about the Algerian gas venture; and
• BP Amoco Amenas has no employees, and BP plc instead assigns its employees or employees of other BP affiliates to work on the venture.
Even taking this evidence as true, it will not alone support a jurisdictional allegation of alter ego. A company's status as a subsidiary, even a wholly owned one, of another does not in and of itself support jurisdictional veil piercing. PHC-Minden, 235 S.W.3d at 172 (relying on Keeton v. Hustler Magazine, 465 U.S. 770, 781 n.13 (1984)). Stock ownership, including the exercise of control by shareholders, likewise is insufficient. Id. at 172-73, 175. Even commonality of officers and directors standing alone will not justify a finding of alter ego. Id.; BMC Software, 83 S.W.3d at 799. Appropriate supervision of a subsidiary by an affiliated entity includes supervision of financial and budgetary decisions, as well as the formulation of the subsidiary's general policies. PHC-Minden, 235 S.W.3d at 176. Similarly, close coordination and cooperation between related corporate entities in pursuit of common goals is neither uncommon nor improper. See TMX Fin. Holdings v. Wellshire Fin. Servs., 515 S.W.3d 1, 11 (Tex. App.—Houston [1st Dist.] 2016, pet. filed) (citing SSP Partners v. Gladstrong Invs. (USA) Corp., 275 S.W.3d 444, 454-56 (Tex. 2008)); see also Preussag Aktiengesellschaft v. Coleman, 16 S.W.3d 110, 118-25 (Tex. App.—Houston [1st Dist.] 2000, pet. dism'd w.o.j.) (close business relationship between foreign corporate parent and in-state subsidiaries—including unified financial procedures for annual reports, unified corporate banking system, and parental approval of subsidiaries' budgets—insufficient to support imputation of their contacts to parent). Thus, in the absence of allegations and supporting evidence of disregard of BP Amoco Amenas's corporate formalities or some other indication that BP plc exerted control beyond that of the typical corporate parent, BP plc and BP Amoco Amenas's parent-subsidiary relationship is insufficient to support a finding of alter ego.
The record lacks evidence of the disregard of corporate formalities. On the contrary, the record included evidence that:
• BP Amoco Amenas was a separate legal entity from all other BP-affiliated entities and had its own board of directors;In addition, there is evidence that BP Amoco Amenas maintained separate offices from BP plc and managed its own business affairs on a day-to-day basis. While there is evidence that BP Amoco Amenas's day-to-day business was carried out by employees of BP-affiliated entities, they were not employees of BP plc, and BP Amoco Amenas paid for these services. Cf. BMC Software, 83 S.W.3d at 800 (parent providing and charging subsidiary for services is not evidence of alter ego).
• BP Amoco Amenas had a minority interest in the Algerian gas venture, and no other BP-affiliated entity had any interest in the venture;
• BP Amoco Amenas had a separate bank account within an intra-corporate banking or finance system managed by another BP-affiliated entity;
• the funds in BP Amoco Amenas's separate bank account belonged to it alone and these funds were accessible solely by BP Amoco Amenas signatories;
• BP Amoco Amenas's revenues from the Algerian gas venture were paid into this separate account, and it paid its share of the venture's costs from it;
• the funds in BP Amoco Amenas's bank account were not commingled with the funds of other BP-affiliated entities, and all transfers involving the account were documented;
• BP Amoco Amenas filed its own tax returns and other statutorily required filings separate from those of all other BP-affiliated entities; and
• BP Amoco Amenas's financial statements were separate from the statements of other BP-affiliated entities.
In sum, the record does not contain the proof of the disregard of corporate formalities or the exertion of parental control to an atypical or abnormal degree necessary to support a finding of alter ego. Because McDaniel did not carry his burden of proof as to alter ego, we affirm the trial court's implicit determination that BP Amoco Amenas was not BP plc's alter ego and hold that BP plc's consent to the court's jurisdiction cannot be imputed to BP Amoco Amenas.
2. Specific jurisdiction
McDaniel contends that BP Amoco Amenas is subject to specific jurisdiction because it "purposefully conducts activities in Texas in pursuit of a benefit, profit, or advantage." In particular, he alleges that BP Amoco Amenas:
• recruited Texans, including McDaniel, to work at the Algerian gas venture and fraudulently induced them to do so by misrepresenting its security;
• drew on the resources and personnel of BP-affiliated entities in Texas to satisfy its contractual and security obligations; and
• that BP America Production employee Mark Cobb worked on security-related matters on BP Amoco Amenas's behalf from his Texas home.
For a Texas court to exercise specific personal jurisdiction over BP Amoco Amenas, McDaniel's suit must arise from, or substantially relate to, the company's contacts with this state. See Bristol-Myers, 137 S. Ct. at 1780-82. The Texan recruits that McDaniel refers to are himself and Cobb, both of whom were hired by another BP-affiliated entity, BP America Production Company, not BP Amoco Amenas. The record discloses several other Texans who worked at the Algerian gas plant, but they too were employees of BP America Production Company. BP Amoco Amenas did not hire employees in Texas. Personal jurisdiction must turn on BP Amoco Amenas's contacts with Texas, not an affiliated company's, unless BP Amoco Amenas was its alter ego. See BMC Software, 83 S.W.3d at 798. McDaniel cites no evidence that BP Amoco Amenas was BP America Production's alter ego.
For the same reason, McDaniel's allegations as to BP Amoco Amenas's reliance on the resources and personnel of BP-affiliated entities in Texas are not sufficient to establish jurisdiction. McDaniel alleges that BP Amoco Amenas "created and maintained continuing relationships" with BP plc and BP America Production's "Texas offices" for support services, including security-related services. Separate but related corporate entities, however, are presumed to be distinct absent contrary proof. See BMC Software, 83 S.W.3d at 798. Close coordination does not render them alter egos. See TMX Fin. Holdings, 515 S.W.3d at 11; Preussag, 16 S.W.3d at 118-25. Nor does the provision of services to one another, at least not so long as the company receiving the services pays for them. See BMC Software, 83 S.W.3d at 800. There is evidence that BP Amoco Amenas paid BP-affiliated companies for services rendered to it by their employees.
Finally, jurisdiction over BP Amoco Amenas cannot rest on Cobb's part-time presence in Texas. McDaniel concedes that Cobb was an employee of BP America Production, but contends that he represented BP Amoco Amenas. Therefore, McDaniel argues, Cobb's in-state work activities, which included communications—primarily receipt of e-mails—about security-related matters, subject BP Amoco Amenas to jurisdiction in Texas. BP Amoco Amenas denies that Cobb worked on its behalf rather than the Algerian joint venture as a whole; however, even if Cobb's work activities in Texas were on behalf of BP Amoco Amenas, these activities cannot support specific jurisdiction over the company because McDaniel's claims do not arise out of or relate to them. See Bristol-Myers, 137 S. Ct. at 1780-82; Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 585-88 (Tex. 2007). Cobb usually worked at the Algerian gas plant for two consecutive weeks followed by two weeks off. During his off periods, he worked from his home in Texas for a few hours each business day, but was not always in Texas during these off periods. Cobb testified that he generally did not make any decisions about security at the Algerian gas plant while in Texas; he instead deferred to the decisions of those who were present in Algeria at the time. Cobb was present at the Algerian gas plant during the attack. The evidence therefore suffices to support an implied finding that none of McDaniel's claims, which focus on inadequate security in Algeria, relate to communications in which Cobb participated while in Texas, and that his communications from Texas are "too attenuated to satisfy specific jurisdiction's due-process concerns." Moki Mac, 221 S.W.3d at 588.
Based on this record, we hold that BP Amoco Amenas lacks sufficient case-related contacts with Texas to permit the exercise of specific personal jurisdiction over it.
CONCLUSION
We affirm order of the trial court granting BP Amoco Exploration (In Amenas) Limited's special appearance.
Jane Bland
Justice Panel consists of Chief Justice Radack and Justices Higley and Bland.