m-f-worldwide-corp-mcg-intermediate-holdings-inc-mafco-worldwide ( 2014 )

Affirmed and Opinion filed December 18, 2014.
In The
Fourteenth Court of Appeals
NO. 14-14-00045-CV
M & F WORLDWIDE CORP., MCG INTERMEDIATE HOLDINGS, INC.,
MAFCO WORLDWIDE CORPORATION, MAFCO CONSOLIDATED
GROUP LLC, AND PCT INTERNATIONAL HOLDINGS, INC., Appellants
V.
PEPSI-COLA METROPOLITAN BOTTLING COMPANY, Appellee
On Appeal from the 80th District Court
Harris County, Texas
Trial Court Cause No. 2011-77606
OPINION
This is an interlocutory appeal1 from the denial of the special appearances
filed by defendants M & F Worldwide Corp. (M&F Worldwide), MCG
Intermediate Holdings Inc. (MCG Holdings), Mafco Worldwide Corporation
(Mafco Worldwide), Mafco Consolidated Group LLC (Mafco Consolidated), and
1
See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(7).
PCT International Holdings Inc. (PCT International), collectively, the “Mafco
Defendants,” in this tortious interference suit brought by Pepsi-Cola Metropolitan
Bottling Company (Pepsi). Because we conclude that the trial court properly
denied these nonresident defendants’ special appearances, we affirm.
BACKGROUND
Pepsi filed this lawsuit in Texas in December 2011, asserting various tort
claims, including tortious interference with a 1988 stock purchase agreement,
fraudulent transfer, and conversion of certain insurance assets against the Mafco
Defendants and others, 2 including Cooper Industries, LLC; 3 Cooper Industries,
Ltd.; 4 Cooper Holdings, Ltd.;5 Cooper US, Inc.;6 and Cooper Industries plc.,7
companies that we will refer to hereinafter as the “Cooper companies” for ease of
reference. Pepsi also sued the Pneumo Abex Asbetos Claims Settlement Trust (the
Trust), which is a Delaware trust managed by a Texas company, Integra
2
The parties initially agreed that Pepsi’s First Amended Petition is the operative pleading
for this appeal. The Mafco Defendants have since requested that this court take judicial notice of
Pepsi’s Motion for Leave to Amend and Third Amended Petition, filed on June 20, 2014, and
Pepsi’s notice of non-suit of the Trust, filed June 28, 2014. Pepsi has not opposed this request;
thus we grant it. We note that there is nothing to indicate that the trial court actually permitted
Pepsi to amend its pleadings; thus the operative pleading for our jurisdictional analysis remains
the one identified by the parties in this proceeding. Moreover, the jurisdictional contacts by the
Mafco Defendants have not changed despite this amendment and non-suit. Thus, our taking
judicial notice of these filings by Pepsi has no bearing on our disposition of this appeal.
3
Cooper Industries, LLC is a Delaware corporation headquartered in Houston.
4
Cooper Industries, Ltd. Is a foreign corporation organized and existing under the laws of
Bermuda.
5
Cooper Holdings, Ltd. was a Bermuda corporation headquartered in Bermuda, but
allegedly merged into Cooper UK Subco, LLC in July 2011.
6
Cooper US, Inc. is a Delaware corporation headquartered in Houston.
7
Cooper Industries plc. is a foreign corporation organized and existing under the laws of
Ireland.
2
Management Company, LLC (Integra). In its First Amended Petition, Pepsi alleged
that torts had been committed in whole or in part in Texas:
Through the Plan C Agreement, which was designed to interfere with
Pneumo Abex’s [contractual] indemnity and hold harmless
obligations to [Pepsi], these defendants: (1) created and funded the
Trust; (2) impaired or converted [Pepsi]’s rights to insurance proceeds
and other insurance related and/or property rights, and transferred
certain of those rights or property to the Trust; (3) engaged in
conspiracies with Texas residents; and (4) committed all of these acts
with the knowledge that the Trust and its agent (Integra) would pay
for and administer thousands of [asbestos] Products Claims cases
through Integra’s offices and actions in Texas.
As background to the underlying suit, through a series of transactions and
corporate transformations, Pepsi acquired certain indemnity rights associated with
asbestos-related claims. The responsibility to provide Pepsi that indemnity traces
through a more complex series of transactions; corporate transformations, a
bankruptcy, a lawsuit, and a settlement agreement. The relationships between the
various parties, nonparties, and agreements are all relevant to our analysis of Texas
contacts and, therefore, we set them forth in some detail.
First, the 1988 stock purchase agreement (1988 SPA) created certain
indemnity rights for asbestos-related claims as follows. 8 IC Industries, Pepsi’s
predecessor in interest, owned two corporations that produced asbestos containing
products: Pneumo Abex Corp. and Abex Corp. Through the 1988 SPA, IC
Industries transferred these corporations to PA Holdings. 9 Pneumo Abex Corp.
and Abex Corp. agreed, as part of the 1988 SPA, to indemnify IC Holdings for, as
is relevant here, all asbestos-related claims filed after August 1998. PA Holdings
8
The SPA closed in New York City and contained a New York choice-of-law clause.
9
Both IC Industries and PA Holdings were Delaware corporations. So too were Pneumo
Abex Corp. and Abex Corp.
3
later merged with Pneumo Abex Corp. and Abex Corp., and the companies became
Pneumo Abex Corp. As such, Pneumo Abex Corp. thereafter owed the post-
August 1998 indemnification obligation to IC Industries. Through succession,
Pepsi became entitled to IC Industries’ indemnification rights.10
Several subsequent transfers of the assets and liabilities of Pneumo Abex
Corp. occurred among affiliates of MacAndrews & Forbes Holdings Inc.
(MacAndrews) and the Cooper companies. The MacAndrews-affiliated companies
include all of the Mafco Defendants.11 Through these various transfers, Pneumo
Abex Corp. acquired indemnity obligations for the same asbestos claims for which
it owed Pepsi indemnification. In 1995, Pneumo Abex Corp. became an affiliate of
MacAndrews, and MCG Holdings began managing and funding Pneumo Abex
Corp.’s non-friction related asbestos indemnification obligations; Pneumo Abex
Corp. remained financially responsible for all of these liabilities, however.
Meanwhile, from 1998 to 2001, the indemnification owed to Pepsi by Pneumo
Abex Corp. for automotive-related asbestos claims was provided by another
corporation to which Cooper had transferred ownership of its automotive products
business. This corporation, Federal Mogul Corp., filed for bankruptcy protection in
2001, and under the terms of a guaranty, Cooper again became responsible for
Pneumo Abex’s automotive friction products indemnification obligations.
In 2004, Pneumo Abex Corp. disposed of all assets and liabilities relating to
its only business and merged into Pneumo Abex LLC (hereafter, Pneumo Abex).
Also in 2004, Mafco Worldwide became responsible for the indemnification and
defense obligations Pneumo Abex owed to Pepsi for asbestos claims arising from
10
Pepsi is a New Jersey corporation with its headquarters and principal place of business
located in New York.
11
It is undisputed that none of the Mafco Defendants are Texas residents and they do not
have offices or employees in Texas.
4
aerospace products, a much smaller subset of the overall asbestos-related claims.
The Cooper companies provided indemnities and defense obligations to Pepsi for
the much larger portion of asbestos claims arising from Pneumo Abex’s
automotive friction products. Since 2004, Pneumo Abex “has not conducted any
business operations nor owned any assets other than insurance and indemnity
rights directly related” to the various product claims.
Pneumo Abex, the Mafco Defendants, and the Cooper companies discussed
disputed issues relating to Pneumo Abex’s asbestos liabilities and assets. In 2006,
the Mafco Defendants, through representatives Steven Fasman, Barry Schwartz,
and their attorney, 12 traveled to Texas to meet with the Cooper companies about
the Federal Mogul bankruptcy. In 2007, as part of the bankruptcy proceedings of
Federal Mogul, the Cooper companies and Pneumo Abex proposed two alternative
plans to address the Pneumo Abex indemnity obligations. Plan A involved the
creation of a subfund of the Federal Mogul bankruptcy trust to address certain
Pneumo Abex asbestos claims, including those related to the non-friction business
indemnified by the Mafco Defendants.
As early as January 2008, the Cooper companies and MacAndrews were
discussing “various alternatives to Plan B . . . in the event that Plan A [was]
rejected.” In February 2008, Fasman outlined several proposals “for Cooper
LLC’s consideration” to address “possible structures intended to address
alternatives superior to Plan B, should Plan A prove unsuccessful.” Plan A was
publicly proposed and briefed to the Federal Mogul bankruptcy court, but the court
rejected this plan. Plan B, under which Pneumo Abex and the Cooper companies
12
The record reflects that, as of the date of the Plan C settlement agreement discussed
infra, Fasman was the Senior Vice President of M&F Worldwide, the President of Pneumo Abex
LLC, the Assistant Secretary of Mafco Worldwide, the Senior Vice President of Mafco
Consolidated, and the Senior Vice President of PCT International. Barry Schwartz was the
Executive Vice Chairman and Chief Administrative Officer of MacAndrews in January 2008.
5
received $140 million to resolve claims against Federal Mogul, was approved by
the bankruptcy court.
A year later, on February 5, 2009, Mafco Defendants’ representatives
Schwartz and Fasman traveled to Houston and met with Cooper executives. The
record reflects that Kirk Hachigian, Chairman and Chief Executive Officer of
Cooper Industries, emailed Schwartz the next day, thanking him for the “trip to
Houston” and stating that they had a “good post meeting,” which resulted in a “few
ideas.” In this email, Hachigian stated, “[I]n the end, it would be best for both of
us to find a middle ground here and put something together.” Hachigian also
thanked Schwartz for “reaching out.”
After this meeting, it appears that negotiations of what became known as
Plan C ramped up. 13 On February 12, 2009, Cooper Industries representative
Heath Monesmith emailed Fasman, explaining that the Cooper companies would
“need an IRS private letter ruling to do this deal” and suggesting that “that process
be started immediately.” Beginning in June 2009 and throughout the entire
negotiation leading up to the execution of the April 2011 Plan C settlement
agreement, the Mafco Defendants, Pneumo Abex (which was then a subsidiary of
M&F Worldwide), and the Cooper companies entered tolling and standstill
agreements regarding their allegedly disputed claims.
In July 2009, M&F Worldwide sent a written request to the IRS, requesting
a pre-submission conference (the July 2009 IRS letter). In this letter, M&F
Worldwide outlined the general structure of Plan C, noting that it was the indirect
owner of all interest in Pneumo Abex and PCT International, and explaining its
13
Although the details of Plan C changed over time, this plan generally involved
discussions of various ways to resolve the parties’ disputed claims concerning the future asbestos
liabilities of Pneumo Abex.
6
“ongoing disputes” with the Cooper companies. According to the July 2009 IRS
letter, Pneumo Abex and the Cooper companies had “disputed claims” against each
other regarding various corporate transactions and the scope of the Cooper
companies’ obligations to Pneumo Abex. In this letter, M&F Worldwide proposed
a transaction through which Pneumo Abex and the Cooper companies would assert
their “disputed claims” against each other in “an appropriate court.” The parties
intended to propose a settlement agreement that would include a qualified
settlement trust. Drafts of this letter were communicated to the Cooper companies’
tax representative located in Texas.
In November 2009, Fasman again traveled to Texas, this time to Dallas.
Fasman described the purpose of this trip as “to speak with a lawyer retained by
the Cooper board. . . . It was a discussion with this lawyer about his opinions
regarding Plan C.” During breaks at this meeting, Fasman acknowledged that
there were also discussions with the Cooper companies’ representatives about Plan
C. Then, in January 2010, M&F Worldwide, on its own behalf and on behalf of
Pneumo Abex and PCT International, sent a second letter to the IRS, requesting a
ruling regarding the proposed transaction outlined in its July 2009 IRS letter and
discussed at a July 2009 conference with IRS personnel. In this letter, M&F
Worldwide stated that it and the Cooper companies intended to have Pneumo Abex
and the Cooper companies initiate a lawsuit in a Texas court “agreed upon by
Pneumo and Cooper.” The parties would then negotiate proposed settlement
documents and set a settlement conference with a Texas court for approval. The
Texas court would retain continuing jurisdiction over the settlement agreement and
the qualified settlement trust set up pursuant to it. Attached to this letter was a
detailed settlement timeline and a draft of a memorandum of understanding (MOU)
7
between M&F Worldwide, Pneumo Abex, and the Cooper companies embodying
the terms of Plan C. This request for a ruling was later withdrawn.
In May 2010, Pneumo Abex filed suit against several of the Cooper
companies in a New York state court seeking to enjoin them from entering into a
proposed transaction with another defendant, Danaher Corporation. Prior to filing
suit, an unidentified Mafco representative contacted Kirk Hachigian to discuss the
suit. Notes for this conversation indicate that litigators have been instructed “to
proceed full-steam-ahead,” but the representative wanted Haghigian to know that
M&F Worldwide “continue[d] to believe that Plan C (a Cooper-funded trust that
would own Pneumo Abex and would release and indemnify both Cooper and
[M&F Worldwide]) is the better way to go.” These notes further indicate that the
Mafco Defendants “made the decision to sue now” because they were “no longer
optimistic that Plan C, or any other long-term solution, is possible.”
In the New York litigation, Pneumo Abex alleged that the proposed
transaction would interfere with the integrity of the Cooper companies’
indemnification obligations. After the New York litigation was filed, Pneumo
Abex, the Cooper companies, and the Mafco Defendants re-engaged in
negotiations concerning Pneumo Abex’s asbestos-claims obligations and their
indemnification of them. A new IRS letter ruling was requested by the Mafco
Defendants, seeking rulings regarding the settlement of the New York litigation
and the creation of a qualified settlement trust. Starting in February 2009, hundreds
of emails and phone calls were exchanged between the Mafco Defendants, Cooper
personnel, and their respective attorneys about “Plan C.” The Mafco Defendants
had weekly conference calls about Plan C with Cooper representatives. When
negotiations stalled several times, Mafco representatives reached out to Cooper
representatives. Ultimately, the parties settled the New York litigation and all
8
existing disputes regarding Pneumo Abex’s contingent asbestos liabilities by
entering into a settlement agreement in New York and numerous ancillary
agreements effectuating the terms of the settlement agreement (collectively, the
Plan C Agreement).
The parties to the Plan C Agreement included the Mafco Defendants (except
MCG Holdings), Pneumo Abex, and the Cooper companies. Under the terms of the
Plan C Agreement, the Mafco Defendants, except MCG Holdings, agreed to: (1)
release any claims against the Cooper companies; (2) obtain court approval of the
settlement agreement; (3) establish the Pneumo Abex Asbestos Claims Settlement
Trust (the Trust) under Delaware law; (4) transfer ownership and control of
Pneumo Abex to the Trust; (5) transfer millions of dollars to Pneumo Abex and the
Trust; (6) establish a management company to be owned by the Trust to manage
day-to-day operations of Pneumo Abex; (7) pay, post-closing of the agreement,
any insurance proceeds received on behalf of Pneumo Abex to Pneumo Abex;
(8) transfer to Pneumo Abex all then-existing rights under the 1988 SPA and all
other agreements through which Pneumo Abex directly or indirectly might be
entitled to indemnification, contribution or reimbursement from anyone; and
(9) cooperate with the Trust on defense of asbestos claims for nine months
following the agreement. The agreement closed in April 2011 in New York. The
Mafco Defendants executed the documents effectuating the details of the Plan C
Agreement at the New York closing of the Plan C Agreement.
The Plan C Agreement allegedly terminated the Mafco Defendants’ and the
Cooper companies’ indemnity and defense obligations to Pneumo Abex. The Trust
indemnified the Mafco Defendants and the Cooper companies for product claims
involving Pneumo Abex. Pursuant to the terms of the Plan C Agreement, Integra
Management Company LLC was created to manage Pneumo Abex’s product
9
claims and insurance recovery efforts. Integra is a Deleware corporation with a
Spring, Texas principal place of business. The Mafco Defendants agreed that
Integra would be managed by former Cooper employee and Texas resident Keith
Odenweller. In April 2011, after the closing of the Plan C Agreement, the Mafco
Defendants notified Pepsi that Pneumo Abex could be contacted in care of Integra
at Integra’s Texas address.
The subject lawsuit ensued. The Mafco Defendants filed special
appearances. The gravamen of Pepsi’s jurisdictional argument in response (and on
appeal) was that from 2008 to 2011, the Mafco Defendants acted in concert with
the Cooper companies to negotiate Plan C, which stripped Pneumo Abex of its
back-up for the contractual indemnification obligations it owed to Pepsi away from
the large and well-funded MacAndrews and Cooper families of business. Pepsi
further asserted that these indemnification obligations were transfered to a trust
that is administered from Texas. Stated differently, Pepsi urges that the Trust is the
tool by which the Mafco Defendants and Cooper have collaborated to impair
Pepsi’s contractual indemnification rights.
The trial court denied the Mafco Defendants’ special appearances after a
December 2013 hearing. No findings of fact or conclusions of law were issued.
The Mafco Defendants filed this interlocutory appeal.
ANALYSIS
In four issues, the Mafco Defendants assert that the trial court erred in
denying their special appearances. First, they urge that the trial court erred because
Pepsi made global jurisdictional allegations, rather than specific allegations as to
each of the Mafco Defendants, and the five Mafco Defendants proved that they are
not Texas entities or residents. Second, the Mafo Defendants argue that (a) there is
no evidence that any of them had sufficient minimum contacts with Texas, (b) as a
10
matter of law, there is no substantial connection between any of the Mafco
Defendants’ contacts with Texas and the operative facts of this litigation, and
(c) allowing a Texas court to exercise specific jurisdiction over the Mafco
Defendants would offend traditional notions of fair play and substantial justice.
Third, they contend that the trial court lacked general jurisdiction over them
because there is no evidence that any of the Mafco Defendants have continuous
and systematic contacts with Texas such that they are essentially at home in Texas.
Fourth and finally, the Mafco Defendants maintain that there is no sufficient basis
for the trial court to exercise personal jurisdiction over them under a conspiracy,
alter ego, or agency theory.
We begin our analysis of these issues by reviewing the principles of personal
jurisdiction. We then identify the purported contacts of each of the Mafco
Defendants so that we may determine whether Pepsi alleged sufficient facts against
each defendant to bring it under the purview of the Texas long-arm statute. We
then examine these contacts to determine whether the Mafco Defendants
purposefully availed themselves of the privilege of conducting business in Texas.
Finally, we consider whether traditional notions of fair play and substantial justice
are offended by the exercise of personal jurisdiction over these defendants. After
examining the principles of jurisdiction at play in this case and the jurisdictional
facts alleged, we conclude that the trial court properly denied the Mafco
Defendants’ special appearances.
I. Standard of Review and Applicable Law
We review de novo a trial court’s determination of a special appearance.
Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex. 2007). When,
as here, the trial court does not make findings of fact and conclusions of law, all
facts necessary to support the ruling and supported by the evidence are implied.
11
Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 337 (Tex.
2009). Any implied findings are not conclusive and may be challenged under the
well-settled standards for legal and factual sufficiency. See Baker Hughes Inc. v.
Brooks, 405 S.W.3d 246, 249 (Tex. App.—Houston [14th Dist.] 2013, pet. denied)
(citing BMC Software Belg., N. V. v. Marchand, 83 S.W.3d 789, 794–95 (Tex.
2002)). Here, the Mafco Defendants assert that the material facts are undisputed;
thus they do not challenge the sufficiency of the evidence to support the trial
court’s implied findings.
The Texas long-arm statute authorizes Texas courts to exercise jurisdiction
over a nonresident defendant who “does business” in the state. Tex. Civ. Prac. &
Rem. Code Ann. § 17.042. The Supreme Court of Texas 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.” BMC Software, 83 S.W.3d at 795. A plaintiff bears the initial burden of
pleading allegations sufficient to bring a nonresident defendant within the terms of
the long-arm statute. Id. at 794–95. A defendant challenging a Texas court’s
personal jurisdiction over it must negate all jurisdictional bases alleged. Id.
A trial court may constitutionally exercise personal jurisdiction over a party
when (1) the nonresident defendant has minimum contacts with the forum state and
(2) the assertion of jurisdiction complies with traditional notions of fair play and
substantial justice. Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945); Peters
v. Top Gun Exec. Group, 396 S.W.3d 57, 62 (Tex. App.—Houston [14th Dist.]
2013, no pet.). 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. Retamco, 278 S.W.3d at 338. “The defendant’s activities, whether they
12
consist of direct acts within Texas or conduct outside Texas, must justify a
conclusion that the defendant could reasonably anticipate being called into a Texas
court.” Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 806 (Tex.
2002) (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297
(1980))
Texas courts may exercise two types of jurisdiction based on a nonresident’s
contacts with the state. General jurisdiction arises when a defendant’s contacts
with the forum state are “continuous and systematic.” Retamco, 278 S.W.3d at
338–39. In analyzing specific jurisdiction, on the other hand, we focus on the
relationship among the defendant, the forum, and the litigation. Moki Mac, 221
S.W.3d at 575–76. Specific jurisdiction is established if the defendant’s alleged
liability arises out of or is related to an activity conducted within the forum. Id. at
576. Here, because we determine that the exercise of specific jurisdiction over the
Mafco Defendants is appropriate, we need not consider the Mafco Defendants’
general jurisdiction issues.
II. Pepsi’s Jurisdictional Allegations
In their first issue, the Mafco Defendants challenge the trial court’s denial of
their special appearances because Pepsi relied on “jurisdictional allegations in a
blanket fashion against all Mafco Defendants.” When there are multiple
defendants, each defendant’s contacts with the forum must be assessed separately.
Citrin Holdings, LLC v. Minnis, 305 S.W.3d 269, 279 (Tex. App.—Houston [14th
Dist.] 2009, no pet.) (citing Calder v. Jones, 465 U.S. 783, 790 (1984)). We look to
Pepsi’s pleadings and its response to the Mafco Defendants’ special appearances to
assess each of the Mafco Defendants’ alleged contacts. See Max Protech, Inc. v.
Herrin, 340 S.W.3d 878, 883 (Tex. App.—Houston [14th Dist.] 2011, no pet.).
13
Here, Pepsi’s jurisdictional allegations contained in its petition consist
predominately of blanket allegations against the “Mafco Defendants.” In each of
their special appearances, the Mafco Defendants asserted that the jurisdictional
allegations in Pepsi’s petition did not sufficiently identify to which particular
Mafco entity the allegation was aimed. We agree that these jurisdictional
allegations, for the most part, are not sufficient for a court to judge each of the
individual Mafco entities’ forum contacts. See Calder, 466 U.S. at 790 (“Each
defendant’s contacts with the forum must be assessed individually.”).
But Pepsi additionally filed a response to the Mafco Defendants’ special
appearances, which, with its 97 attached exhibits, is nearly 4,000 pages long. See
Max Protech, 340 S.W.3d at 883 (stating that we consider both the plaintiff’s
pleading and the response to a special appearance in assessing jurisdictional
contacts). In its response, Pepsi makes multiple blanket assertions against the
Mafco Defendants as a group. These assertions, however, are supported by
references to attached exhibits, and we can determine to which specific Mafco
entity these allegations refer or if the allegations may fairly be deemed to refer to
all of the Mafco Defendants. And because there are no findings of fact and
conclusions of law, we must imply all findings supported by the record to sustain
the trial court’s denial of the special appearances. See Retamco, 278 S.W.3d at 337.
These more specific allegations are those that we examine to determine whether
the trial court properly determined the jurisdictional question before it.
In short, because Pepsi provided sufficient evidence in its response to the
Mafco Defendants’ special appearances to allow a court to individually assess the
Mafco Defendants’ jurisdictional contacts, we overrule the Mafco Defendants’ first
issue.
14
III. Specific Jurisdiction
In their second issue, the Mafco Defendants assert that the trial court lacked
specific jurisdiction over each of them. In this issue, they assert that they lacked
sufficient minimum contacts with Texas, that there is no substantial connection
between any of their Texas contacts and the operative facts of the litigation, and
that allowing a Texas court to exercise specific jurisdiction over them would
offend traditional notions of fair play and substantial justice. We address each of
these assertions in turn below, concluding that the record supports the trial court’s
denial of the Mafco Defendants’ special appearances because the exercise of
specific jurisdiction over these defendants is appropriate.
A. Minimum Contacts
For a Texas court to properly exercise specific jurisdiction in this case,
(1) the Mafco Defendants must have made minimum contacts with Texas by
purposefully availing themselves of the privilege of conducting activities here, and
(2) their liability must have arisen from or be related to those contacts. Moki Mac,
221 S.W.3d at 576. The “touchstone” of jurisdictional due process is “purposeful
availment.” Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 784
(Tex. 2005). Purposeful availment requires a defendant to seek some benefit,
advantage, or profit by availing itself of the jurisdiction. Id. We thus consider the
contacts alleged by Pepsi to determine whether any of the Mafco Defendants
purposefully availed themselves of the privilege of conducting activities in Texas.
Pepsi alleges the following contacts in support of the trial court’s exercise of
specific jurisdiction over the Mafco Defendants:
• Steven Fasman, the corporate representative of the Mafco Defendants
who, as described above, is employed in some capacity by each of the
15
individual Mafco entities involved in this litigation, traveled to Texas in
2006 to attend a meeting with Cooper representatives to discuss Plan A.
This contact is shared by all the Mafco Defendants. 14
• Representatives of the Mafco Defendants communicated about Plan A
with “a person located in the State of Texas or who claimed to work in
the State of Texas.” These contacts are shared by all the Mafco
Defendants.
• Mafco representatives acknowledged that they communicated remotely
with a person either located in Texas or who claimed to work in Texas
about Plan B. The Mafco Defendants acknowledged this same fact as to
Plan C. These contacts are shared by all the Mafco Defendants.
• Numerous tolling agreements were executed by the Mafco Defendants
and the Cooper companies during the negotiations of Plan C. MCG
Holdings was not a party to any of these tolling agreements, but the rest
of the Mafco Defendants were.
• In 2009, as described above, Fasman made two trips to Texas: one in
February, where he was accompanied by MacAndrews’ representative
Barry Schwartz and an attorney, and another in November. These
contacts were on behalf of MacAndrews, which is not a defendant here,
and are otherwise shared by the Mafco Defendants.
14
In his affidavits filed in support of the Mafco Defendants’ special appearances, Fasman
refers to all of the Mafco entities collectively as the “Mafco Defendants” and does not
distinguish to which entity any of the facts he averred to relate. Because we imply all findings in
favor of the trial court’s denial of the special appearance, see Retamco, 278 S.W.3d at 337,
where appropriate and supported by the record, we determine that Fasman’s contacts with Texas
were on behalf of all of the Mafco Defendants.
16
• Attorneys for MacAndrews & Forbes and Pneumo Abex emailed the first
draft of the Plan C Agreement to a Cooper representative
• PCT International purposefully moved Pneumo Abex to Texas and
transferred ownership of Pneumo Abex to the Trust.
• M&F Worldwide, PCT International, Mafco Worldwide, and Mafco
Consolidated established the Trust, assisted in selecting Texas resident
and former Cooper employee Keith Odenweller as the manager of
Integra, knew Odenweller would run Integra, the Trust, and Pneumo
Abex from Texas, coordinated with Odenweller in selecting office space,
and trained Odenweller.
• M&F Worldwide agreed to assist the Trust and Integra for nine months in
defending products claims; MCG Holdings agreed to provide consulting
services to Integra for six months.
• M&F Worldwide, PCT International, Mafco Worldwide, and Mafco
Consolidated transferred Pepsi’s insurance assets and $15 million to
either the Trust or Pneumo Abex. They shipped thousands of boxes of
Pneumo Abex’s records to Texas.
• The Trust owes indemnification obligations to M&F Worldwide, Mafco
Worldwide, Mafco Consolidated, and PCT International.
Based on these alleged contacts, we conclude that the trial court properly
concluded that the Mafco Defendants each purposefully availed themselves of the
privilege of conducting activities in Texas for the following reasons.
17
B. Operative Facts
“[F]or specific-jurisdiction purposes, purposeful availment has no
jurisdictional relevance unless the defendant’s liability arises from or relates to the
forum contacts.” Moki Mac, 221 S.W.3d at 579. 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 584–88. The operative facts are those facts that would be the focus
of the trial. Id. at 575; see also Pulmosan Safety Equip. Corp. v. Lamb, 273 S.W.3d
829, 839 (Tex. App.—Houston [14th Dist.] 2008, pet. denied). “To identify the
operative facts of the litigation, we look to the plaintiff’s allegations.” Transportes
de Zima Real S.A. de C.V. v. Lizarraga, No. 14-13-00933-CV, 2014 WL 3512858,
at *2 (Tex. App.—Houston [14th Dist.] July 15, 2014, no pet.) (mem. op.) (citing
Moki Mac, 221 S.W.3d at 585).
In its response to the Mafco Defendants’ special appearances, Pepsi
identified the operative facts of the lawsuit as follows: 15
Here, [Pepsi] asserts claims for tortious interference,
conversion, fraudulent transfer, and civil conspiracy against the Mafco
defendants. The Mafco defendants interfered with the 1988 SPA
between [Pepsi] and Pneumo Abex, converted [Pepsi]’s insurance
assets, fraudulently transferred a lump-sum payment for a release of
the Cooper and Mafco defense and indemnity obligations or conspired
to do the same. All of these activities or their effects are continuing in
nature, and are continuing in Texas. The operative facts of this lawsuit
surround the Mafco and Cooper defendants’ Plans A, B, and C
schemes to extinguish their obligations to Pneumo Abex. These
schemes and actions in concert with the Cooper defendants
culminated in the Plan C Agreement. The Mafco defendants’ Texas
15
We need not assess contacts on a claim-by-claim basis if, as alleged here, all claims
arise from the same forum contacts. Moncrief Oil Int’l Inc. v. OAO Gazprom, 414 S.W.3d 142,
150–51 (Tex. 2013).
18
contacts related to these schemes include: (1) the 2006 and 2009
Texas meetings; (2) the communications between the Mafco and
Cooper defendants about Plans A, B, and C; (3) the negotiation and
drafting of the Plan C Agreement; (4) performance of the Plan C
Agreement; and (5) the selection of the Trustees and the selection of
the manager of Integra.
These allegations identify the focus of this trial—i.e., the operative facts of the
lawsuit—as concerning the negotiation, execution, and implementation of the Plan
C Agreement, and its alleged effect on Pepsi’s indemnification rights under the
1988 SPA. With this proper narrowing of the focus of the jurisdictional allegations
at issue, we next consider the Mafco Defendants’ alleged minimum contacts to
determine whether they are substantially connected to the operative facts of this
litigation. And again, because there are no findings of fact or conclusions of law,
we must imply all findings supported by the record to uphold the trial court’s
denial of the Mafco Defendants’ special appearances. See Retamco, 278 S.W.3d at
337.
C. Mafco Defendants Purposefully Availed Themselves of the
Privileges of Doing Business in Texas
As noted above, the Mafco Defendants traveled to Texas on three occasions:
first in 2006, to discuss Plan A, and then twice in 2009, to discuss Plan C. We do
not consider the 2006 meeting to discuss Plan A to be relevant to the operative
facts of this lawsuit because there is nothing to indicate that Plan C arose from this
meeting. See, e.g., Moki Mac, 221 S.W.3d at 588. But the 2009 trips to Texas are,
we believe, dispositive of the issue of whether the Mafco Defendants purposefully
availed themselves of the privileges of doing business in Texas.
19
In Moncrief Oil International, Inc. v. OAO Gazprom,16 the Supreme Court
of Texas determined that a Texas court had jurisdiction over the nonresident
defendant based largely on two meetings in Texas where trade secrets were alleged
to have been exchanged. 414 S.W.3d at 147. The Moncrief Court further concluded
that the nonresident defendants’ contacts with Texas were neither “unilateral
activities” nor “random and fortuitous” because the defendants agreed to attend
Texas meetings and accepted the plaintiff’s alleged trade secrets at those meetings.
Id. at 154 (citing Retamco, 278 S.W.3d at 340). The Court explained that the
nonresident defendants’ contacts with Texas were purposeful because the
defendants sought some “‘benefit, advantage, or profit’ by availing [themselves] of
the forum.” Id. (citing Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d
777, 785 (Tex. 2005)). Similarly, the Mafco Defendants’ two meetings in Texas
can fairly be construed as purposeful availment of the privileges of doing business
in Texas for the following reasons.
First, as described above, after the February 2009 visit to Texas by Fasman
and Schwartz, the negotiation of what became the Plan C Agreement ratcheted up.
Although there was correspondence between the Cooper companies and the Mafco
Defendants regarding possible scenarios through which their indemnification
obligations and issues could be resolved prior to this meeting, after this meeting,
the Mafco Defendants took the first concrete steps towards implementing Plan C:
M&W Worldwide, on behalf of itself and its subsidiaries PCT International and
Pneumo Abex, drafted and sent a letter to the IRS describing a potential lawsuit
and resolution of the Mafco Defendants and the Cooper companies’ disputes that
16
The Moncrief Court concluded that the plaintiff’s tortious interference claims,
however, either arose from a meeting in California or the formation of a competing enterprise in
Texas not subject to jurisdiction in the proceedings at bar, and thus a Texas court lacked
jurisdiction over these claims. Moncrief, 414 S.W.3d at 147.
20
tracked the ultimate resolution of the New York litigation. And the record reflects
that the Mafco Defendants “reached out” to the Cooper companies to begin these
negotiations. These facts support an implied finding that, at the February 2009
meeting in Texas between the Mafco Defendants and the Cooper companies, the
parties began formulating Plan C, a plan through which Pepsi alleges its rights
under the 1988 SPA were impaired. Cf. id. at 156–57 (concluding that Texas court
lacked specific jurisdiction over tortious interference claim in part because this
claim arose from meetings in California, i.e., this claim was tantamount to
“directing a tort at Texas from afar,” which is insufficient to confer specific
jurisdiction).
Further, hundreds of emails and telephone calls between the Mafco
Defendants and the Cooper companies were exchanged after this meeting. Even if
these contacts, standing alone, are insufficient to confer specific jurisdiction,17 we
consider the timing and content of these contacts show context for the Mafco
Defendants’ and the Cooper companies’ collaboration to develop Plan C, a plan
that can fairly be said to have been developed during a meeting in Texas. And as
noted above, shortly after the second meeting in Texas in November 2009, M&F
Worldwide drafted and sent a request for a letter ruling to the IRS regarding a
proposed Texas resolution of the Mafco Defendants’ and Cooper companies’
alleged disputes over indemnification obligations. The trial court could have found
that the Mafco Defendants and the Cooper companies further honed Plan C during
this Texas meeting. Thus the record supports a finding that these Texas meetings
were not “unilateral,” “random,” or “fortuitous.” See Moncrief, 414 S.W.3d at
153. And although the Mafco Defendants denied any intent to commit these torts,
17
See Parex Resources, Inc. v. ERG Resources, LLC, 427 S.W.3d 407, 426–27 (Tex.
App.—Houston [14th Dist.] 2014, pet. filed) (stating that telephone calls and emails sent to
Texas by non-resident defendant were insufficient to establish purposeful availment).
21
at the jurisdiction phase, we must examine business contacts, not what the parties
thought or intended. See id. at 154. The record supports a finding that the Mafco
Defendants attended two Texas meetings during which time a scheme was hatched
and launched to interfere with Pepsi’s contractual indemnification rights. Cf. id. at
153.
We are not persuaded by the Mafco Defendants’ efforts to recast this case as
an alleged New York tort that, at most, is directed at Texas. The Supreme Court of
Texas has rejected personal jurisdiction based solely on the consequences of a tort
committed in another forum that has repercussions in Texas. See Michiana, 168
S.W.3d at 790–91 (“Several problems arise if jurisdiction turns not on a
defendant’s contacts, but on where it ‘directed a tort.’”); see also Cerbone v. Farb,
225 S.W.3d 764, 772 (Tex. App.—Houston [14th Dist.] 2007, no pet.) (“[I]n
Michiana, the Texas Supreme Court expressly rejected personal jurisdiction based
solely on the effects or consequences of an alleged tort committed in another forum
that had repercussions in Texas.”). But this case is not a “directed a tort” at Texas
case; instead, as discussed above, this is a case where the record supports a finding
that an integral part of the tort alleged occurred in Texas. See Tex. Civ. Prac. &
Rem. Code Ann. § 17.042(2) (nonresident does business in Texas when it commits
a tort in whole or in part in Texas). And the fact that the schemes hatched at these
Texas meetings resulted in further contacts by and between Texas and the Mafco
Defendants strengthens the Mafco Defendants’ ties to Texas. For example, prior to
executing the Plan C Agreement, Fasman was aware that Integra was going to be
located in Texas and run by a Texas resident. Fasman was further aware that
Integra would be managing the Trust, which in turn was to be the sole shareholder
of Pneumo Abex after closing of the Plan C Agreement. Finally, after closing of
the agreement. M&F Worldwide agreed to assist the Trust and Integra for nine
22
months in defending products claims; MCG Holdings agreed to provide consulting
services to Integra for six months; M&F Worldwide, PCT International, Mafco
Worldwide, and Mafco Consolidated transferred Pepsi’s insurance assets and $15
million to either the Trust or Pneumo Abex; the Mafco Defendants shipped
thousands of boxes of Pneumo Abex’s records to Texas; and the Trust owes
indemnification obligations to M&F Worldwide, Mafco Worldwide, Mafco
Consolidated, and PCT International. These Texas contacts show a continuing
course of dealing under the terms of the Plan C Agreement that supports an
inference that the Plan C Agreement, although executed in New York, was to be
performed in Texas. Cf. Citrin, 305 S.W.3d at 283 (“Here, . . . the circumstances
involve multiple Texas contacts over many months in the course of an ongoing
relationship that ‘was not unilaterally initiated by the Texas resident.’ These
circumstances demonstrate Citrin’s purposeful contact with Texas along with an
intent to obtain benefits from these contacts.” (citations omitted)).
Finally, there can be no dispute that the Mafco Defendants gained a benefit
from severing their relationships with Pneumo Abex and transferring their Pneumo
Abex responsibilities to Texas. After attending two meetings in Texas with Texas
residents (Cooper Industries and Cooper U.S.), they relieved themselves of a long-
term indemnity obligation owed by one of their corporate subsidiaries and gained
indemnification for these same obligations from a newly created trust—managed
by Texas resident Integra—that became the sole shareholder of their former
subsidiary. See Moncrief, 414 S.W.3d at 154. The Mafco Defendants entered into
the Plan C Agreement, including the ancillary agreements, with the Cooper
companies and contractually avoided Texas as a forum for suits arising from those
agreements by including forum selection clauses specifying New York or
Delaware in the agreements. But the Mafco Defendants entered into agreements to
23
create and perpetuate a Trust located in and operating in the State of Texas, though
legally formed in Delaware. No doubt, the Mafco Defendants have negotiated to
contractually avoid Texas as a forum available for disputes between the parties to
the Plan C Agreement because Texas would otherwise exist as a forum for suit.
However, the Mafco Defendants may not unilaterally and as a matter of law render
their Texas contacts meaningless through forum selection clauses in contracts to
which Pepsi is not a party. Rather, we consider the evidence that the Mafco
Defendants initiated a complex plan while in Texas meeting with Texas residents.
We consider that the Mafco Defendants refined that complex plan—a plan alleged
here to be tortious interference—through hundreds of emails to Texas to the
Cooper companies and others who would carry out the agreements necessary to
implement the Plan C Agreement. We consider that the Mafco Defendants divested
themselves of Pneumo Abex to a trust operating in Texas and owing continuing
obligations to the Mafco Defendants. We thus conclude that, rather than seeking to
avoid Texas, the Mafco Defendants “sought out Texas and the benefits and
protections of its laws.” Id.
D. Fair Play and Substantial Justice
In addition to sufficient minimum contacts, due process requires the exercise
of personal jurisdiction to comply with traditional notions of fair play and
substantial justice. Retamco, 278 S.W.3d at 338. When a nonresident has minimum
contacts with the form, the exercise of jurisdiction over the nonresident rarely
offends traditional notions of fair play and substantial justice. Moncrief, 414
S.W.3d at 154–55 (citing Retamco, 278 S.W.3d at 338). In evaluating this
component of personal jurisdiction, we consider the following factors: (1) the
burden on the defendant; (2) the interests of the forum in adjudicating the dispute;
(3) the plaintiff’s interest in obtaining convenient and effective relief; (4) the
24
interstate judicial system’s interest in obtaining the most efficient resolution of
controversies; and (5) the shared interest of the several states in furthering
fundamental substantive social policies. Guardian Royal Exch. Assurance, Ltd. v.
English China Clays, P.L.C., 815 S.W.2d 223, 232 (Tex. 1991).
First, subjecting these nonresident defendants to suit in Texas surely imposes
a burden on them, but the same can be said of all nonresidents. “Distance alone
cannot ordinarily defeat jurisdiction.” Moncrief, 414 S.W.3 at 155 (citing Spin
Star AG v. Kimich, 310 S.W.3d 868, 879 (Tex. 2010)). Given the Mafco
Defendants’ meetings with the Cooper companies in Texas and their agreement to
effectively transfer their indemnification obligations to Texas, the burden of
litigating in Texas is not so severe as to defeat jurisdiction. Cf. id. (concluding that
familiarity with forum through meetings in Texas and legal system of Texas by
setting up a subsidiary headquartered in Texas militated against defeating personal
jurisdiction based on burden on defendants). Further, because Pepsi’s claims
against the other defendants, which arise out of the same facts as its claims against
the Mafco Defendants, will be heard in Texas, it is more efficient to adjudicate the
entire case in the same place. See Spin Star, 310 S.W.3d at 879. Finally, the fact
that Pepsi has alleged that the Mafco Defendants have committed a tort in whole or
in part in Texas implicates a state interest in adjudicating this dispute. See Keeton
v. Hustler Magazine, Inc., 465 U.S. 770, 766 (1984) (“A state has an especial
interest in exercising jurisdiction over those who commit torts within its
territory.”).
We conclude that, on balance, asserting personal jurisdiction over the Mafco
Defendants would not offend traditional notions of fair play and substantial justice.
We thus overrule the Mafco Defendants’ second issue.
25
CONCLUSION
We have addressed the dispositive issues in this appeal and determined that
the trial court did not err by denying the Mafco Defendants’ special appearances.
And because we have concluded that the trial court’s denial of the Mafco
Defendants’ special appearances based on specific jurisdiction was proper, we
need not reach their other issues regarding general jurisdiction. We affirm the trial
court’s order denying the Mafco Defendants’ special appearances.
/s/ Sharon McCally
Justice
Panel consists of Justices Christopher, Jamison, and McCally.
26