Opinion
NO. 01-11-00383-CV
01-19-2012
MIKUNI CORPORATION, Appellant v. TODD FOSTER, CANDY FOSTER, AND CLASSIC HONDA MINI TRAILS, Appellees
On Appeal from the 215th District Court
Harris County, Texas
Trial Court Case No. 2009-05755
MEMORANDUM OPINION
This is a products liability lawsuit arising from a motorcycle accident. Appellees Todd and Candy Foster sued Classic Honda Mini Trails ("CHT") for distributing an allegedly defective carburetor that was installed on the bike. CHT filed third-party claims against several parties including appellant Mikuni Corporation ("Mikuni"). Mikuni brings this interlocutory appeal from the trial court's denial of its special appearance. See Tex. Civ. Prac & Rem. Code Ann. § 51.014(a)(7) (West 2008). Because Mikuni has negated all of the alleged bases for personal jurisdiction, we vacate the order denying Mikuni's special appearance and render judgment dismissing Mikuni from the case.
Background
Todd Foster was severely injured while riding his Kawasaki KLX110 motorcycle on private property in Harris County. The Fosters allege that the motorcycle's throttle became stuck, causing Todd to fall backwards and suffer injuries to his spinal cord. The previous owner of the motorcycle had a kit installed which enhanced the motorcycle's performance. Attributing the accident to the defective design and assembly of the throttle and alleging negligence and strict liability, Foster and his wife sued the motorcycle manufacturer and CHT, which packaged the component parts of the performance kit. CHT in turn sued Mikuni, which is a Japanese company that manufactured the carburetor included with the kit, and Mikuni's California-based subsidiary, Mikuni American Corporation ("MAC").
Mikuni specially appeared and challenged the court's exercise of personal jurisdiction over it. Mikuni supported its special appearance with an employee's affidavit swearing, among other things, that Mikuni had never done business in Texas. MAC does not dispute that it is subject to the jurisdiction of the trial court, and it is not a party to this interlocutory appeal.
The Fosters and CHT conducted jurisdictional discovery. CHT's president testified in a deposition that he had purchased the Mikuni carburetor on Foster's motorcycle from a Japanese distributor, Kitaco. Mikuni was not a party to that transaction. CHT initiated the transaction with Kitaco in Japan by sending a purchase order, wiring money, and then accepting delivery of the product in Japan through an agent.
MAC's president stated in an affidavit that, based on the part number and production code, MAC did not manufacture, design, market, or sell the carburetor installed on Foster's motorcycle. MAC's president also testified in a deposition that he considered the Mikuni chairman to be his supervisor and that there was a "mutual understanding" that MAC handles the marketing of Mikuni products for the "American continent."
The Fosters opposed Mikuni's special appearance motion, arguing that Mikuni directed business to Texas through MAC as its alter ego, and therefore Mikuni was subject to the court's jurisdiction. CHT made similar alter-ego arguments, and it additionally argued that Mikuni's affidavit supporting the special appearance motion was improperly verified.
The trial court denied Mikuni's special appearance without making specific findings of fact or conclusions of law. Mikuni timely filed this interlocutory appeal.
Analysis
I. Verification of affidavit
As a threshold issue, CHT argues that we should not consider the affidavit supporting Mikuni's special appearance because it does not expressly state that the facts set forth therein are true. Mikuni argues that this cross-issue is being argued for the first time on appeal, and therefore it has been waived.
The Rules of Civil Procedure provide that a "special appearance shall be made by sworn motion" and that "[e]very appearance, prior to judgment, not in compliance with this rule is a general appearance." TEX. R. CIV. P. 120a(1). A general prerequisite to presenting an issue for appellate review is that the complaining party made a motion to the trial court in which it stated the grounds for complaint, and that the trial court made an adverse ruling. TEX. R. APP. P. 33.1(a). Had this objection to form been made in the trial court, Mikuni may have been able to cure the defect by amending its special appearance and supporting affidavit. See TEX. R. CIV. P. 120a(1) (allowing a special appearance to "be amended to cure defects"); Dawson-Austin v. Austin, 968 S.W.2d 319, 322 (Tex. 1998) (interpreting Rule 120a(1) to "not limit the kinds of defects that can be cured").
The record does not show that CHT objected to the form of Mikuni's affidavit in the trial court, depriving Mikuni of the opportunity to cure the defect. Thus, this argument has not been preserved for our review, and Mikuni's affidavit supporting its special appearance can be included in our review of the special appearance issue.
II. Personal jurisdiction over Mikuni
When, as in this case, the trial court does not make findings of fact and conclusions of law in support of its denial of a special appearance, "all facts necessary to support the judgment and supported by the evidence are implied." BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002). As a court of appeals, we may review the trial court's implied findings for both legal and factual sufficiency. Id. at 794. However, whether those implied findings of fact establish personal jurisdiction is a question of law which we review de novo. Id.
"[T]he plaintiff and the defendant bear shifting burdens of proof in a challenge to personal jurisdiction." Kelly v. Gen. Interior Const., Inc., 301 S.W.3d 653, 658 (Tex. 2010). "The plaintiff bears the initial burden of pleading allegations sufficient to bring a nonresident defendant within the provisions of the long-arm statute," thus conferring jurisdiction. Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 807 (Tex. 2002); see also TEX CIV. PRAC & REM CODE ANN. § 17.042 (West 2008) (long-arm statute). "But upon filing a special appearance, the nonresident defendant assumes the burden to negate all the bases of personal jurisdiction alleged by the plaintiff." Am. Type Culture Collection, 83 S.W.3d at 807 (citing Kawasaki Steel Corp. v. Middleton, 699 S.W.2d 199, 203 (Tex. 1985)). "Because the plaintiff defines the scope and nature of the lawsuit, the defendant's corresponding burden to negate jurisdiction is tied to the allegations in the plaintiff's pleading." Kelly, 301 S.W.3d at 658. The defendant can then negate jurisdiction on either a factual or legal basis. See id. at 659.
CHT and the Fosters allege that Mikuni "does business" in Texas, which is sufficient to meet their initial burden to assert personal jurisdiction over Mikuni. See Tex. Civ. Prac. & Rem. Code Ann. § 17.042; Am. Type Culture Collection, 83 S.W.3d at 807. Thus, we examine whether Mikuni has met its burden of negating this basis for personal jurisdiction.
"Texas courts may assert in personam jurisdiction over a nonresident if (1) the Texas long-arm statute authorizes the exercise of jurisdiction, and (2) the exercise ofjurisdiction is consistent with federal and state due-process guarantees." Moki Mak River Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex. 2007). The Texas long-arm statute provides that a nonresident who "does business" in the state is subject to personal jurisdiction. TEX. CIV. PRAC. & REM. CODE ANN. § 17.042. "[T]he long-arm statute's broad doing-business language allows the statute to 'reach as far as the federal constitutional requirements of due process will allow.'" Moki Mak, 221 S.W.3d at 574 (quoting Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex. 1991)). Thus, when "doing business" is the alleged ground for personal jurisdiction, "we only analyze whether [the nonresident defendant's] acts would bring [it] within Texas' jurisdiction consistent with constitutional due process requirements." Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 337 (Tex. 2009).
Personal jurisdiction is proper 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." Int'l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158 (1945). Minimum contacts are sufficient for personal jurisdiction when the nonresident defendant "purposefully avails itself of the privilege of conducting activities within the forum State, thus invoking the benefits and protections of its laws." Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct. 1228, 1240 (1958). The Supreme Court of Texas has identified three aspects embedded in the concept of purposeful availment. See Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 785 (Tex. 2005). First, it is only the defendant's contacts with the forum that count, rather than the unilateral activity of another party or a third person. Id. Second, the acts relied upon must be purposeful rather than random, isolated, or fortuitous. Id. Third, a defendant must seek some benefit, advantage, or profit by availing itself of the jurisdiction. Id.
A nonresident defendant's purposeful availment of the forum state may give rise to one of two types of personal jurisdiction: specific or general. See Helicopteros Nacionales de Colom., S.A. v. Hall, 466 U.S. 408, 414-15, 104 S. Ct. 1868, 1872 (1984). Specific jurisdiction is established when two conditions are met: (1) the nonresident defendant has "made minimum contacts with Texas by purposefully availing itself of the privilege of conducting activities here," and (2) the nonresident defendant's alleged liability arose "from or related to those contacts." Moki Mak, 221 S.W.3d at 576. The second "relatedness" requirement means that "for a nonresident defendant's forum contacts to support an exercise of specific jurisdiction, there must be a substantial connection between those contacts and the operative facts of the litigation." Id. at 585.
in contrast to specific jurisdiction, general jurisdiction arises "where the defendant's activities in the forum are continuing and systematic," in which case jurisdiction may be properly exercised "without a relationship between defendant's particular act and the cause of action." Schlobohm v. Schapiro, 784 S.W.2d 355, 357 (Tex. 1990) (citing Helicopteros, 466 U.S. at 414 n.9, 104 S. Ct. at 1872 n.9). "The minimum contacts inquiry is broader and more demanding when general jurisdiction is alleged, requiring a showing of substantial activities in the forum state." Id. For a corporation, the "paradigm forum" for the exercise of general jurisdiction is "one in which the corporation is fairly regarded as at home." Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846, 2853-54 (2011).
A. Jurisdictional alter ego
Before we examine whether Mikuni's contacts give rise to either general or specific personal jurisdiction, we first address an argument raised by CHT and the Fosters bearing upon what forum contacts are imputable to Mikuni. Given the arguments and proof presented in connection with the special appearance, the trial court may have concluded that Mikuni and MAC were jurisdictional alter egos. if the trial court made such a conclusion, it would have imputed MAC's contacts to Mikuni, and Mikuni's special appearance may have been denied on that basis. We review the trial court's implied findings for legal and factual sufficiency. See BMC Software, 83 S.W.3d at 795.
CHT argues that Mikuni and MAC can be fused together as "alter egos" for jurisdictional purposes because Mikuni exercises control over MAC's internal business operations. The Fosters similarly argue that Mikuni manifested an intent to serve the Texas market because its subsidiary, MAC, does business in Texas and Mikuni has direct control over MAC. Mikuni contends that the Fosters and CHT presented no evidence showing that Mikuni exercises the necessary level of control over MAC to disregard their corporate separateness for jurisdictional purposes.
A parent company and its subsidiary may be "fused" for jurisdictional purposes if the plaintiff proves that "the parent controls the internal business operations and affairs of the subsidiary." Id. at 799. "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." Id. (citing Hargrave v. Fibreboard Corp., 710 F.2d 1154, 1159 (5th Cir. 1983)). A parent company cannot be subjected to personal jurisdiction based on the local activities of its subsidiary when "the subsidiary's presence in the state is primarily for the purpose of carrying on its own business and the subsidiary has preserved some semblance of independence from the parent and is not acting as merely one of its departments . . . ." 4A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1069.4 (3d ed. 2002). "[T]he party seeking to ascribe one corporation's actions to another by disregarding their distinct corporate entities [must] prove this allegation, because Texas law presumes that two separate corporations are distinct entities." PHC-Minden, L.P. v. Kimberly-Clark Corp., 235 S.W.3d 163, 173 (Tex. 2007). "[V]eil-piercing for purposes of liability ('substantive veil-piercing') is distinct from imputing one entity's contacts to another for jurisdictional purposes ('jurisdictional veil-piercing')." Id. at 174.
our Supreme Court has identified four relevant factors in the jurisdictional veil-piercing analysis: (1) the amount of the subsidiary's stock owned by the parent corporation; (2) the existence of separate headquarters; (3) the observance of corporate formalities; and (4) the degree of the parent's control over the general policy and administration of the subsidiary. Id. at 175 (citing 4A Wright & Miller, supra, § 1069.4). Parent companies normally exercise at least some control over their subsidiaries, and "[a] subsidiary corporation will not be regarded as the alter ego of its parent merely because of stock ownership, a duplication of some or all of the directors or officers, or an exercise of the control that stock ownership gives to stockholders." Gentry v. Credit Plan Corp. of Houston, 528 S.W.2d 571, 573 (Tex. 1975). Thus, the factors favoring alter-ego status must be applied to the facts to determine whether a parent exercises the sort of control over the subsidiary that is required to fuse them for jurisdictional purposes. See PHC-Minden, 235 S.W.3d at 176 (weighing multiple indicia of corporate separateness).
The Fosters and CHT have pointed to several facts in the record to establish Mikuni's control over MAC. First, Mikuni is the majority shareholder of MAC, and MAC's profits and losses are reflected on Mikuni's balance sheet. MAC's president takes direction from Mikuni's chairman—who is, incidentally, the father of MAC's president—and considers him a "supervisor." Mikuni could "assign" business development assignments to MAC. Except for the president and the chief financial officer of MAC, all other directors on MAC's board are Mikuni employees. The only formal agreement existing between the companies is a "technical service agreement," which licenses MAC to manufacture Mikuni-designed products in exchange for compensation. MAC provides Mikuni with market research upon request, and MAC performs at least some services free of charge. MAC's president also stated that there is a "mutual understanding" that MAC is responsible for Mikuni's sales on the "American continent" and that Mikuni would not compete with MAC. Mikuni's website calls MAC its "American arm."
The facts above tend to show that Mikuni exercises some degree of control over MAC; however, the question remains whether Mikuni exercises control over MAC's internal business operations in a way that is inconsistent with investor status. PHC-Minden v. Kimberly-Clark Corp., 235 S.W.3d 163 (Tex. 2007), is especially instructive to answering this question. in that case, the Supreme Court considered whether the Texas-related contacts of a parent company should be imputed to its non-resident subsidiary. PHC-Minden, 235 S.W.3d at 172. While a patient in a Louisiana hospital, a woman acquired toxic shock syndrome and died from the infection. Id. at 165. The woman's next friend and estate representative sued in Texas the manufacturer of her tampons, which in turn sued the hospital, alleging that the hospital's parent company, though based in Tennessee, had contacts with Texas that were imputable to the hospital in Louisiana. Id. at 165-66.
The Supreme Court relied on the following facts to conclude that the Texas-related contacts of the Tennessee parent were not imputable to the Louisiana hospital:
The two entities maintain separate headquarters, Minden [the subsidiary hospital] in Louisiana and Province [the parent company] in Tennessee. Minden's Board of Governors approves Minden's budget and oversees day-to-day operations, and Minden alone establishes its policies and procedures for providing health care to patients. Province is not involved in Minden's physician recruitment, and the two entities share no directors. While Minden's chief executive officer, chief nursing officer, and chief financial officer receive their paychecks from Province, their salaries are intercompany payables; that is, the monies come from Minden's revenues. Similarly, while Province provides Minden's general liability insurance and a group health insurance policy for its employees, the policies are funded from Minden's revenues. There is no indication that Minden and Province have disregarded corporate formalities. The court of appeals cited evidence that two Minden employees received Province stock options, but we have said that a parent company's offering a stock option plan to a subsidiary's employees is acceptable under IRS regulations and is not evidence of abnormal control over the subsidiary. Put simply, we find no evidence of control other than that consistent with Province's investor status . . . .Id. at 176 (citation omitted). PHC-Minden demonstrates that there is no bright-line rule for determining jurisdictional alter-ego status, and that it takes more than some evidence of a close business relationship to disregard formal corporate separateness. See also Preussag Aktiengesellschaft v. Coleman, 16 S.W.3d 110, 118, 123 (Tex. App.—Houston [1st Dist.] 2000, pet. dism'd w.o.j.) (refusing to impute contacts between companies with allegedly "close business relationship").
The finding of no alter-ego status in PHC-Minden can be contrasted with the opposite result in Cappuccitti v. Gulf Industrial Products, Inc., 222 S.W.3d 468 (Tex. App.—Houston [1st Dist.] 2007, no pet.). Cappuccitti, a chemical industry businessman, incorporated two Bahamian corporations on the same day. Id. at 474. He owned 100% of the parent company, which in turn owned 90% of the subsidiary. Id. The subsidiary entered into a business relationship with a Texas corporation that manufactured chemicals used in mining. Id. at 474-75. When the subsidiary subsequently became insolvent and failed to pay external debts, the Texas-based manufacturer sued Cappuccitti's parent company and Cappuccitti in his individual capacity, in addition to the subsidiary with which it had a direct contractual relationship. Id. at 480. The subsidiary did not challenge personal jurisdiction, but Cappuccitti and his parent company appealed from the trial court's denial of their special appearances. Id.
This court affirmed denial of the special appearances, finding that the plaintiff had presented sufficient proof to pierce the corporate veil for jurisdictional purposes. Id. at 484. Cappuccitti was the president of both corporations, the only employee of the parent corporation, and one of only two employees of the subsidiary. Id. at 474. Both companies operated out of Cappuccitti's home. Id. The subsidiary company directly paid Cappuccitti $10,000 per month as a "consultant," and Cappuccitti on at least one occasion covered the subsidiary's bills with a check drawn on his personal account. Id. at 475. As president of the subsidiary, Cappuccitti negotiated with the Texas-based manufacturer to grant valuable rights of first refusal to his wholly-owned parent company. Id. After the subsidiary company became insolvent, Cappuccitti acted as president of both companies to transfer all the assets from the subsidiary to the parent company for no value. Id. at 476. On these facts, this court concluded that the plaintiff had met its burden in proving that Cappuccitti, the parent company, and the subsidiary were alter egos of one another and therefore Texas had personal jurisdiction over all of them. Id. at 484.
The jurisdiction-related facts in the present case more closely resemble those in PHC-Minden than in Cappuccitti. Mikuni and MAC maintain separate headquarters, and there is no evidence that Mikuni and MAC commingle corporate assets. Although deposition testimony suggested that a loss to MAC would have "a negative impact" on the "books" of Mikuni because it is a "consolidated company," this evidence does not support a reasonable inference that Mikuni considered MAC's revenue as its own. See BMC Software, 83 S.W.3d at 799 (noting that referencing subsidiaries in annual reports is "common business practice"). Mikuni does have control over MAC through its placement of employees on MAC's board, but this control is derivative of its status as an investor and the exercise of valid shareholder rights. See PHC-Minden, 235 S.W.3d at 176 (noting that conduct consistent with investor status is not "atypical control"). MAC's president testified at a deposition that the Mikuni chairman does not tell him what to do on a day-to-day basis, nor does he direct MAC regarding which market to sell into or which parts to sell. That the two companies share marketing data and Mikuni sets some of MAC's strategic priorities is not unusual, since MAC is branded as a "Mikuni" company and regularly distributes and manufactures Mikuni products. That said, MAC is more than a mere department of Mikuni, considering that MAC distributes products manufactured by other companies, as well.
The totality of circumstances does not show that Mikuni exercises control over MAC's internal business operations in a manner that is inconsistent with its status as an investor. Cf. Alpine View Co. v. Atlas Copco AB, 205 F.3d 208, 218 (5th Cir. 2000) (examining jurisdictional alter-ego status "based on a consideration of totality of the circumstances" to conclude that atypical control was not established). We conclude that the evidence is legally insufficient to support imputation of MAC's jurisdictional contacts to Mikuni. Therefore, the presumption of corporate separateness has not been overcome.
B. Specific jurisdiction
CHT and the Fosters argue that the trial court had enough proof before it to find that Mikuni is subject to specific jurisdiction in a Texas court. To support their argument, they rely principally on the "stream of commerce" jurisprudence of the Supreme Courts of Texas and the United States addressing specific jurisdiction in the context of products liability claims. E.g., Asahi Metal Indus. Co. v. Superior Court of Cal., 480 U.S. 102, 107 S. Ct. 1026 (1987); Spir Star AG v. Kimich, 310 S.W.3d 868 (Tex. 2010).
Texas courts generally follow the stream-of-commerce analysis in Justice O'Connor's plurality opinion in Asahi Metal Industrial Co. v. Superior Court of California, 480 U.S. 102, 107 S. Ct. 1026 (1987). See Spir Star, 310 S.W.3d at 87. Justice O'Connor wrote:
The "substantial connection" between the defendant and the forum State necessary for a finding of minimum contacts must come about by an action of the defendant purposefully directed toward the forum State. The placement of a product into the stream of commerce, without more, is not an act of the defendant purposefully directed toward the forum State. Additional conduct of the defendant may indicate an intent or purpose to serve the market in the forum State, for example, designing the product for the market in the forum State, advertising in the forum State, establishing channels for providing regular advice to customers in the forum State, or marketing the product through a distributor who has agreed to serve as the sales agent in the forum State. But a defendant's awareness that the streamAsahi, 480 U.S. at 112, 107 S. Ct. at 1032 (emphasis and citations omitted). Thus, for personal jurisdiction to extend to a nonresident manufacturer, "the manufacturer must have intended to serve the Texas market." Spir Star, 310 S.W.3d at 875.
of commerce may or will sweep the product into the forum State does not convert the mere act of placing the product into the stream into an act purposefully directed toward the forum State.
The Fosters and CHT argue that Mikuni manifested its intent to serve the Texas market by selling to distributors that sell into Texas. They point to Mikuni's website, which states that the company markets its products to "almost all the countries in the world," including the United States. By logical extension, they reason, Mikuni markets to Texas. They further argue that Mikuni's use of its California-based subsidiary to distribute products in Texas proves that Mikuni intended to serve Texas along with the entire U.S. market. See Asahi, 480 U.S. at 112, 107 S.Ct. at 1032 (listing "marketing the product through a distributor who has agreed to serve as the sales agent in the forum State" as conduct that supports specific jurisdiction). For the proposition that intending to market to the entire United States manifests an intent to market to a particular state, the Fosters and CHT rely principally on two cases: LeBlanc v. Kyle, 28 S.W.3d 99, 104 (Tex. App.—Texarkana 2000, pet. denied) (finding personal jurisdiction over foreign manufacturer when it contracted with an independent national distributor), and Tobin v. Astra Pharmaceutical Products, Inc., 993 F.2d 528, 544 (6th Cir. 1993) (rejecting notion that foreign manufacturer could insulate itself from personal jurisdiction in all fifty states by selling to an independent national distributor).
A key fact distinguishes LeBlanc and Tobin from the present case. In each of those cases, the plaintiffs based their actions on products that the foreign manufacturers had purposefully directed toward the U.S. market through contractual relationships with national distributors. See LeBlanc, 28 S.W.3d at 101; Tobin, 993 F.2d at 544. By contrast, the Mikuni carburetor installed on Foster's motorcycle was not delivered by Mikuni to MAC for distribution to the U.S. market. Instead, the carburetor at issue was sold by Mikuni to Kitaco, a third-party company in Japan. There is nothing in the appellate record showing that Kitaco had a contractual arrangement with Mikuni to distribute to the United States or to Texas, which would be conduct that could support specific jurisdiction under the plaintiffs' theory. See Spir Star, 310 S.W.3d at 880 (finding personal jurisdiction over foreign manufacturer when Texas-based distributor agreed to be its sales agent in Texas). Absent proof of such a contractual arrangement, there was no purposeful availment by Mikuni, from whose perspective it is entirely fortuitous that the stream of commerce carried the carburetor at issue to Texas. Fortuitous contacts do not support personal jurisdiction. See Michiana, 168 S.W.3d at 785.
CHT and the Fosters cannot transfer Mikuni's alleged intention to serve the Texas market through MAC to whatever arrangement it had with Kitaco. "[T]here must be a 'substantial connection' between the defendant's contacts and the operative facts of the litigation." Spir Star, 310 S.W.3d at 874. There is no "substantial connection" between Mikuni's alleged intention to sell carburetors to the Texas market through MAC and the carburetor that ended up on Foster's motorcycle.
Alternatively, the trial court may have found that Mikuni intended to serve the Texas market when it sold the carburetor at issue to Kitaco. However, there is no evidence in the record to support this implied finding, either. At most, the trial court could have inferred from the proof before it that Mikuni foresaw the carburetor ending up in Texas after selling it to Kitaco, given that Kitaco sold "thousands" of carburetors to CHT in Texas and MAC shared marketing data with Mikuni. However, "foreseeability alone will not support personal jurisdiction." CSR Ltd. v. Link, 925 S.W.2d 591, 595 (Tex. 1996).
When, as here, the record contains no evidence that the nonresident defendant took any act purposefully directed toward selling or distributing the product at issue into Texas, specific jurisdiction cannot be exercised over the defendant consistent with due process. Id. at 596. Mikuni's representative swore in his affidavit supporting the special appearance that "Mikuni Corporation does not specifically target residents of the State of Texas and specifically does not direct its business affairs to the State of Texas." With no other evidence in the record to contradict this statement as it related to the carburetor at issue, Mikuni has met its burden to negate specific jurisdiction on a "doing business" theory. See Kelly, 301 S.W.3d at 659. If the trial court found specific jurisdiction because Mikuni intended to serve the Texas market when it sold the carburetor at issue to Kitaco, that implied finding was error because no proof supported the implied finding and the only proof on the matter contradicted it.
C. General jurisdiction
CHT argues that the trial court could have found general jurisdiction over Mikuni either based on Mikuni's own contacts with Texas, or based upon MAC's contacts as imputed to Mikuni. Because we have already concluded that MAC's forum contacts are not imputable to Mikuni, we will consider only whether Mikuni is subject to the general jurisdiction of Texas based upon its own contacts.
CHT contends that multiple facts in the record establish Mikuni's "continuous and systematic contacts" with Texas. Mikuni Texas Company was established in 1996, and it had an office in McAllen, Texas that oversaw production of Mikuni products on the Mexican side of the border. Though the Mikuni Texas Company ceased to exist as an entity in 2003, the McAllen office remains active and five MAC employees work there. Mikuni board members, the chairman, and employees have visited Texas and the United States in the past. Finally, thousands of Mikuni's carburetors are sold into Texas through CHT alone, and Mikuni probably knew about the Texas sales through MAC's marketing reports.
The facts that CHT relies upon to show Mikuni's alleged "continuous and systematic contacts" are insufficient to establish general jurisdiction. The Mikuni Texas Corporation was established and wholly owned by MAC, not Mikuni. Also, the current workers at the McAllen office are employed by MAC, not Mikuni. The fact that Mikuni's officers, directors, and employees have occasionally visited Texas and the United States does not subject Mikuni to general jurisdiction. See Helicopteros, 466 U.S. at 417, 104 S. Ct. at 1874 ("[P]urchases and related trips, standing alone, are not a sufficient basis for a State's assertion of [general] jurisdiction"). Finally, the fact that Mikuni puts products into the stream of commerce leading to Texas is only relevant to a specific jurisdiction analysis. "Flow of a manufacturer's products into the forum . . . may bolster an affiliation germane to specific jurisdiction. But ties serving to bolster the exercise of specific jurisdiction do not warrant a determination that, based on those ties, the forum has general jurisdiction over a defendant." Goodyear Dunlop, 131 S. Ct. at 2849 (emphasis in original, citation omitted). Thus, CHT has indicated insufficient contacts to establish general jurisdiction over Mikuni.
For a corporation, the "paradigm forum" for the exercise of general jurisdiction is "one in which the corporation is fairly regarded as at home." Id. at 2853-54. Mikuni's affidavit states that Mikuni was incorporated in 1948 under the laws of Japan and its principal place of business is Tokyo. Even if these facts were not enough to make Japan Mikuni's home, there is little to commend Texas as its home, since, according to Mikuni's affidavit, Mikuni is not registered to do business in Texas, has no directors, officers, or employees in Texas, and does not own any assets in Texas. Thus, Mikuni has negated the bases for general jurisdiction in Texas. See Kelly, 301 S.W.3d at 659. To the extent the trial court may have found general jurisdiction over Mikuni, that implied finding was erroneous because no proof supported it and the only proof on the matter contradicted it.
III. Appellees' request for remand and additional discovery
The appellees contend that if we reverse the denial of Mikuni's special appearance, we should remand the case for further jurisdictional discovery. In the trial court, CHT moved for a continuance to conduct additional discovery, and it moved to compel the deposition of Mikuni's corporate representative. The appellate record does not reflect that Mikuni was ever served with a proper corporate representative deposition notice, describing "with reasonable particularity the matters on which examination is requested," see TEX. R. CIV. P. 199.2(b)(1), or that the trial court was ever provided the proposed deposition topics. The court expressly denied CHT's motion to compel the deposition in a signed order, and it implicitly denied the continuance by ruling in CHT's favor against Mikuni's special appearance. CHT prays that this court remand the case with instructions allowing CHT to "complete all necessary discovery regarding Mikuni's jurisdictional arguments and evidence," although the only additional discovery requested in the trial court was a corporate representative deposition on unidentified topics.
On an interlocutory appeal from a denial of a special appearance, we will not disturb a trial court's order denying a motion concerning jurisdictional discovery unless the trial court committed a clear abuse of discretion. See BMC Software, 83 S.W.3d at 800. A trial court abuses its discretion when it reaches a decision so arbitrary and unreasonable as to amount to a clear and prejudicial error of law. Id.
The appellees do not contend that the trial court's denial of CHT's motion to compel an additional deposition was an abuse of discretion; they simply contend that they should be afforded a further opportunity to take a deposition in the hopes of undermining the evidence supporting Mikuni's special appearance. Under the circumstances of this case, in which the additional discovery was not properly requested in the trial court, we find no abuse of discretion in the trial court's discovery ruling. Accordingly, there is no reason for a remand with respect to claims against Mikuni. Cf. TEX. R. APP. P. 33.1.
Conclusion
We reverse the trial court's order denying Mikuni's special appearance and render judgment dismissing the case against it for lack of personal jurisdiction.
Michael Massengale
Justice
Panel consists of Justices Keyes, Higley, and Massengale