Personal Touch Holding Corp., and PT Intermediate Holding, Inc. v. LMS Consulting, LLC ( 2015 )

ACCEPTED
04-14-00827-CV
FOURTH COURT OF APPEALS
SAN ANTONIO, TEXAS
1/12/2015 5:25:46 PM
KEITH HOTTLE
CLERK
NO. 04-14-00827-CV
_____________________________________________________________
FILED IN
4th COURT OF APPEALS
IN THE COURT OF APPEALS SAN ANTONIO, TEXAS
FOR THE FOURTH DISTRICT OF TEXAS01/12/2015 5:25:46 PM
AT SAN ANTONIO, TEXAS KEITH E. HOTTLE
Clerk
______________________________________________________________
PT INTERMEDIATE HOLDING, INC. AND
PERSONAL TOUCH HOLDING CORP.,
Appellants,
v.
LMS CONSULTING LLC,
Appellee.
On Appeal from the 45th Judicial District Court of Bexar County, Texas
(Honorable Peter Sakai, of the 225th Judicial District Court, Presiding)
Trial Court Cause No. 2014-CI-00450
______________________________________________________________
APPELLANTS’ BRIEF
Monte F. James
State Bar No. 10547520
mjames@jw.com
Kimberly A. Gdula
State Bar No. 24052209
kgdula@jw.com
JACKSON WALKER L.L.P.
100 Congress Avenue, Suite 1100
Austin, Texas 78701
(512) 236-2000
(512) 236-2002 – Fax
COUNSEL FOR APPELLANTS
IDENTITY OF PARTIES AND COUNSEL
1. Appellants
PT Intermediate Holding, Inc. and Personal Touch
Holding Corp.
Represented by:
Monte F. James
State Bar No. 10547520
mjames@jw.com
Kimberly A. Gdula
State Bar No. 24052209
kgdula@jw.com
JACKSON WALKER L.L.P.
100 Congress Avenue, Suite 1100
Austin, Texas 78701
Telephone: (512) 236-2000
Facsimile: (512) 236-2002
2. Appellee
LMS Consulting LLC
Represented by:
Alejandro Mora
State Bar No. 24051076
alejandro@morahealthcarelaw.com
LAW OFFICES OF ALEJANDRO MORA, PLLC
7000 North MoPac Expressway
Suite 200
Austin, Texas 78731
Telephone: (512) 514-6683
Facsimile: (888) 320-0589
i
TABLE OF CONTENTS
IDENTITY OF PARTIES AND COUNSEL .............................................................i
TABLE OF AUTHORITIES ....................................................................................iv
STATEMENT OF CASE .......................................................................................... 1
STATEMENT OF JURISDICTION.......................................................................... 2
STATEMENT REGARDING ORAL ARGUMENT ............................................... 3
ISSUES PRESENTED............................................................................................... 4
ISSUE 1. Did the trial court err in denying PT Intermediate Holding
Inc.’s Special Appearance when PT Intermediate Holding, Inc.
does not have minimum contacts with Texas sufficient to
subject it to personal jurisdiction in Texas? .......................................... 4
ISSUE 2. Did the trial court err in denying Personal Touch Holding
Corp.’s Special Appearance when Personal Touch Holding
Corp. does not have minimum contacts with Texas sufficient to
subject it to personal jurisdiction in Texas? .......................................... 4
PRELIMINARY STATEMENT ............................................................................... 5
STATEMENT OF THE FACTS ............................................................................... 6
SUMMARY OF THE ARGUMENT ........................................................................ 9
ARGUMENT AND AUTHORITIES ...................................................................... 10
I. STANDARD OF REVIEW AND APPLICABLE LAW .................................... 10
II. LMS CONSULTING FAILED TO ESTABLISH SPECIFIC
JURISDICTION OVER APPELLANTS………………. ............................... 13
A. Appellants do not control the internal operations of the
Texas Entities. ........................................................................... 13
B. Even assuming arguendo that Appellants maintain
internal control over the Texas Entities, the alleged level
of control is insufficient to establish personal
jurisdiction. ............................................................................... 15
ii
III. LMS CONSULTING FAILED TO ESTABLISH GENERAL
JURISDICTION OVER APPELLANTS. ....................................................... 22
A. General jurisdiction requires continues and systematic
contacts with the forum state. ................................................... 22
B. There is no basis for the exercise of general jurisdiction
over Appellants in this case. ..................................................... 24
C. Appellant Personal Touch Holding Corp.’s Texas
Taxpayer Number does not subject it to personal
jurisdiction in Texas. ................................................................. 25
IV. THE EXERCISE OF PERSONAL JURISDICTION OVER APPELLANTS
WOULD OFFEND TRADITIONAL NOTIONS OF FAIR PLAY AND
SUBSTANTIAL JUSTICE.......................................................................... 27
CONCLUSION AND PRAYER ............................................................................. 28
RULE 9.4 CERTIFICATE OF COMPLIANCE ..................................................... 30
CERTIFICATE OF SERVICE ................................................................................ 31
APPENDIX ............................................................................................................. 32
iii
TABLE OF AUTHORITIES
Page(s)
CASES
BMC Software of Belg., N.V. v. Marchand,
83 S.W.3d 789 (Tex. 2002)..........................................................................passim
Conner v. Conticarriers & Terminals, Inc.,
944 S.W.2d 405 (Tex. App.—Houston [14th Dist.] 1997, no writ) .......10, 16, 17
CSR, Ltd. v. Link,
925 S.W.2d 591 (Tex. 1996) .............................................................................. 22
De Elizondo v. Elizondo,
No. 04-08-00384-CV, 2009 Tex. App. LEXIS 4101 (Tex. App.—San
Antonio Jun. 10, 2009, no pet.) .......................................................................... 26
Equitable Prod. Co. v. Canales-Trevino,
136 S.W.3d 235 (Tex. App.—San Antonio 2004, pet. denied) .......................... 12
Gentry v. Credit Plan Corp. of Houston,
528 S.W.2d 571 (Tex. 1975) ........................................................................17, 20
Grand Aerie Fraternal Order of Eagles v. Haygood,
402 S.W.3d 766, 774 (Tex. App.—Eastland 2013, no pet.) ............................... 26
Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C.,
815 S.W.2d 223 (Tex. 1991) .............................................................................. 12
Guarino v. 11327 Reeder Rd., Inc.,
No. 05-12-01573-CV, 2013 Tex. App. LEXIS 10497 (Tex. App.—Dallas
Aug. 20, 2013, no pet.) (mem. op.)..................................................................... 21
Hargrave v. Fibreboard Corp.,
710 F.2d 1154 (5th Cir. 1983) ............................................................................ 16
Helicopteros Nacionales de Colombia, S.A. v. Hall,
466 U.S. 408 (1984) ............................................................................................ 23
Lewis v. Indian Springs Land Corp.,
175 S.W.3d 906 (Tex. App.—Dallas 2005, no pet.) ....................................12, 13
iv
Michiana Easy Livin' Country, Inc. v. Holten,
168 S.W.3d 777 (Tex. 2005) .............................................................................. 10
Oryx Capital Int’l, Inc. v. Sage Apartments, L.L.C.,
167 S.W.3d 432 (Tex. App.—San Antonio 2005, no pet.) ................................ 11
Petrie v. Widby,
194 S.W.3d 168 (Tex. App.—Dallas 2006, no pet.) ....................................10, 11
PHC-Minden, L.P. v. Kimberly-Clark Corp.,
235 S.W.3d 163 (Tex. 2007) .......................................................................passim
Retamco Operating, Inc. v. Republic Drilling Co.,
278 S.W.3d 333 (Tex. 2009) ..................................................................11, 15, 28
Riverside Exports, Inc. v. B.R. Crane & Equip., LLC,
362 S.W.3d 649 (Tex. App.—Houston [14th Dist.] 2011, pet. denied) ............. 19
S. Stucco, Inc. v. GC Multifamily-New Orleans, L.P.,
205 S.W.3d 570 (Tex. App.—Dallas 2006, no pet.) .......................................... 12
Spir Star AG v. Kimich,
310 S.W.3d 868 (Tex. 2010) .............................................................................. 22
Submersible Sys., Inv. v. Perforadora Cent., S.A. de C.V.,
249 F.3d 413 (5th Cir. 2001) ..................................................................22, 23, 24
Transportes Aereos de Coahuila, S.A. v. Falcon,
5 S.W.3d 712 (Tex. App.—San Antonio 1999, pet. denied) .............................. 27
STATUTES
TEX. CIV. PRAC. & REM. CODE § 51.014(a)(7) .......................................................... 2
RULES
TEX. R. CIV. P. 120a ............................................................................................. 6, 15
OTHER AUTHORITIES
6 MOORE’S FEDERAL PRACTICE § 108.41[3] ............................................................ 22
4 WRIGHT & MILLER, FEDERAL PRACTICE & PROCEDURE § 1067.5 ..................22, 23
v
STATEMENT OF CASE
Nature of Underlying This case involves claims of breach of contract and
Proceeding: tortious interference with existing contracts arising
from certain staffing and recruiting agreements
allegedly entered into by parties other than
Appellants. Appellee LMS Consulting LLC added
Appellants as defendants under a theory of
vicarious liability. Appellants do not, however,
have minimum contacts with Texas sufficient for
the trial court to exercise personal jurisdiction over
Appellants in this matter. Appellants filed special
appearances, which the trial court denied. That
denial forms the basis of this appeal.
Parties in the Trial Plaintiff: LMS Consulting LLC
Court:
Defendants: PT Intermediate Holding, Inc. and
Personal Touch Holding Corp. (collectively
“Appellants”), and PT Home Services of Dallas,
Inc. and PT Home Services of San Antonio, Inc.1
Course of Proceedings: Appellee filed suit on January 13, 2014. C.R. 1.
Appellant PT Intermediate Holding Inc. was added
as a defendant on May 16, 2014, and filed its
special appearance on June 5, 2014. C.R 68–69, 80.
Appellant Personal Touch Holding Corp. was added
as a defendant on August 13, 2014, and filed its
special appearance on October 6, 2014. C.R. 269–
71, 294.
Trial Court: Hon. Peter Sakai, 225th District Court, Bexar
County
Trial Court Disposition: The trial court denied Appellants’ special
appearances following a hearing on October 28,
2014. R.R. 74. The trial court entered orders
denying the special appearances on November 7,
2014. C.R. 339–42.
1
Personal-Touch Home Care of N.Y., Inc. was named as a defendant when this
lawsuit was initially filed, and its special appearance sustained on November 7, 2014.
1
STATEMENT OF JURISDICTION
The Court has jurisdiction of this appeal pursuant to Section 51.014(a)(7) of
the Texas Civil Practice and Remedies Code.
2
STATEMENT REGARDING ORAL ARGUMENT
Appellants believe oral argument may assist the Court in making a
determination on the jurisdictional issues presented herein.
3
ISSUES PRESENTED
ISSUE 1. Did the trial court err in denying PT Intermediate Holding
Inc.’s Special Appearance when PT Intermediate Holding, Inc.
does not have minimum contacts with Texas sufficient to
subject it to personal jurisdiction in Texas?
ISSUE 2. Did the trial court err in denying Personal Touch Holding
Corp.’s Special Appearance when Personal Touch Holding
Corp. does not have minimum contacts with Texas sufficient to
subject it to personal jurisdiction in Texas?
4
PRELIMINARY STATEMENT
The limits of personal jurisdiction are well defined. When a nonresident
defendant lacks minimum contacts with the forum state, dismissal for lack of
personal jurisdiction is required. In this case, Appellants lack any relevant contacts
with the State of Texas. They are foreign entities based in New York that do not
conduct any business in Texas. Appellants are merely the parent companies of two
subsidiary companies that conduct business in Texas.
Recognzing that Appellants lack minimum contacts with this state, LMS
Consulting seeks to impute to Appellants the contacts of its two subsidiary
companies in Texas for jurdicational purposes. While courts have recognized a
limited veil-pericing theory for jurisdictional purposes, they have imposed a heavy
burden on the party seeking to establish personal jurisdiction under that doctrine.
Here, LMS Consulting has failed in whole to carry its burden. LMS Consulting
cannot overcome the fact that Appellants have no minimum contacts with Texas
and they do not exercise the requiste level of control over their subsidiary
companies to impute their contacts for jurisdictional purposes. The exercise of
personal jurisdiction over Appellants in this case would undoubtedly violate fair
play and substantial justice. As such, the trial court erred when it denied
Appellants’ special appearances.
5
STATEMENT OF THE FACTS
This is a breach-of-contract and tortious interference case arising from
certain staffing and recruiting agreements. Appellee LMS Consulting, Inc. (“LMS
Consulting”), the plaintiff in the case, provides recruiting and staffing services.
LMS Consulting locates, recruits, and engages healthcare workers for employment
with certain healthcare companies. In return, the healthcare companies pay LMS
Consulting certain fees for its recruiting services. Appellants, the defendants in the
litigation, are the parent companies of two home healthcare companies, PT Home
Services of Dallas, Inc. and PT Home Services of San Antonio, Inc. (collectively
the “Texas Entities”)2, among other companies.
LMS Consulting asserts that it entered into various recruiting agreements
with the Texas Entities to recruit healthcare workers for their locations in Dallas,
San Antonio, Welsaco, and El Paso. C.R. 274–78. Appellants, as the parent
companies of the Texas Entities, are not parties to any of the agreements at issue.
C.R. 294–95.
2
The Texas Entities did not file Rule 120a Special Appearances and are before the
trial court in this case for all purposes.
6
The corporate structure of the Personal Touch-affiliated companies at issue
here is as follows:
Despite the lack of any contacts with Texas sufficient to support the exercise
personal jurisdiction, LMS Consulting sued Appellants in Texas, under a theory of
vicarious liability, for damages LMS Consulting purportedly incurred when the
Texas Entities allegedly breached the recruiting agreements. C.R. 278–79. LMS
Consulting also sued Appellants, under a theory of vicarious liability, for damages
LMS Consulting allegedly incurred when the Texas Entitles’ tortiously interfered
with LMS Consulting’s contractors. Id. While Appellants adamantly dispute these
claims, this appeal is unrelated to the merits, or lack thereof, of LMS Consulting’s
claims. Instead, this appeal only concerns whether the trial court properly
exercised personal jurisdiction over Appellants.
7
LMS Consulting alleges personal jurisdiction under a veil-piercing theory by
which the contacts of the Texas Entities are imputed to Appellants. LMS
Consulting did not (and cannot) carry its heavy burden under that theory to support
the exercise of personal jurisdiction. The following undisputed facts are
dispositive on the personal jurisdiction issue:
 Appellant Personal Touch Holding Corp. is a foreign corporation
organized and existing under the laws of the State of Delaware. C.R.
296.
 Appellant PT Intermediate Holding, Inc. is a foreign corporation
organized and existing under the laws of the State of New York. Id.
82.
 Appellants both maintain their principal office in Bayside, New York.
Id. 82, 296.
 Appellants do not operate or do business in Texas. Id
 Appellants did not contract with LMS Consulting or commit any of
the acts about which LMS Consulting complains. Id. 269, 274–79.
Instead, to the extent any valid contracts with LMS Consulting exist,
they were entered into between LMS Consulting and the Texas
Entities, companies separately formed and owned by Appellants. Id.
274–76.
 Appellants do not control the internal operations of the Texas Entities.
Id. 85–86, 299–300.
 Appellants do not have offices or mailing addresses in Texas. Id. 82,
94, 296, 323.
 Appellants do not have a certificate of authority to do business or a
registered agent for service of process in Texas (nor are they required
to do so). Id.
8
 Appellants have never owned or leased real property in Texas or
maintained bank accounts in Texas. Id.
 Appellants have never owned, leased, or held a security interest or
lien on any personal property in Texas. Id.
 Appellants have never participated in any kind of legal proceeding in
Texas, aside from specially appearing in this case. Id.
In short, Appellants have no purposeful contacts with the State of Texas, and
it does not comport with due process for a Texas court to exercise personal
jurisdiction over them.
SUMMARY OF THE ARGUMENT
The trial court erred when it denied Appellants’ special appearances because
Appellants lack sufficient contacts with Texas to justify the exercise of either
specific or general jurisdiction. LMS Consulting relies solely on a corporate veil-
piercing theory for jurisdiction by which the contacts of the Texas Entities are
imputed to Appellants. Texas courts, including the Texas Supreme Court, have
repeatedly held that before the corporate form may be disregarded for jurisdictional
purposes, the party asserting jurisdiction must prove that the degree of control the
parent exercises is significantly greater than that normally associated with
common ownership and directorship. In other words, LMS Consulting must prove
that Appellants exercised “atypical” control over the Texas Entities before the
contacts of the Texas Entities are imputed to Appellants for jurisdictional purposes.
9
While Appellants perform certain normal functions for or on behalf of the
Texas Entities, they absolutely do not exercise the requisite level of atypical
control sufficient to warrant personal jurisdiction in Texas. Texas courts facing
instances in which a parent entity exercised far more control over a subsidiary than
Appellants do here have refused to pierce the corporate veil for jurisdictional
purposes. See, e.g., Conner v. Conticarriers & Terminals, Inc., 944 S.W.2d 405,
419 (Tex. App.—Houston [14th Dist.] 1997, no writ). Appellants are simply not
within the trial court’s jurisdiction, and the trial court erred when it denied
Appellants’ special appearances.
ARGUMENT AND AUTHORITIES
I. Standard of Review and Applicable Law
The trial court’s orders denying Appellants’ special appearances are
reviewed de novo. BMC Software of Belg., N.V. v. Marchand, 83 S.W.3d 789, 795
(Tex. 2002).
Texas courts may exercise jurisdiction over a nonresident defendant only if:
(1) the Texas long-arm statute authorizes the exercise of jurisdiction; and (2) the
exercise of jurisdiction comports with the state and federal guarantees of due
process. Id.; Petrie v. Widby, 194 S.W.3d 168, 174 (Tex. App.—Dallas 2006, no
pet.). The long-arm statute allows a Texas court to exercise jurisdiction only as far
as the United States Constitution permits. Michiana Easy Livin' Country, Inc. v.
10
Holten, 168 S.W.3d 777, 788 (Tex. 2005). The long-arm statute requires a plaintiff
to first satisfy its initial burden to plead allegations sufficient to confer jurisdiction
on Texas courts. Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d
333, 337 (Tex. 2009).
If a plaintiff satisfies its initial burden, courts then examine whether the
exercise of jurisdiction comports with state and federal guarantees of due process.
The due process clause permits the exercise jurisdiction over a nonresident
defendant only if: (1) the defendant has purposefully established minimum
contacts with the forum state; and (2) the exercise of jurisdiction comports with
traditional notions of fair play and substantial justice. BMC Software, 83 S.W.3d at
795. It constitutes reversible error to exercise jurisdiction that does not comport
with due process.3 See Petrie, 194 S.W.3d at 174. The minimum-contacts analysis
requires a defendant to “purposefully avail” itself of the privileges and benefits of
conducting business in the forum state before a court may exercise jurisdiction. Id.;
Oryx Capital Int’l, Inc. v. Sage Apartments, L.L.C., 167 S.W.3d 432, 440 (Tex.
App.—San Antonio 2005, no pet.).
There are two types of personal jurisdiction—specific and general
jurisdiction. Retamco Operating, Inc., 278 S.W.3d at 337; BMC Software, 83
3
Texas courts, in determining whether jurisdiction exists, may rely on precedent
from the United States Supreme Court and other federal courts, as well as decisions from Texas
courts of appeal. BMC Software, 83 S.W.3d at 795.
11
S.W.3d at 796–96. Specific jurisdiction exists when the plaintiff’s claim arises
from or is related to the nonresident’s purposeful contact with Texas. BMC
Software, 83 S.W.3d at 796. In other words, there must be a “nexus” between the
plaintiff’s claims and the nonresident’s contacts with the forum state. Equitable
Prod. Co. v. Canales-Trevino, 136 S.W.3d 235, 239 (Tex. App.—San Antonio
2004, pet. denied). General jurisdiction, in contrast, exists when a defendant’s
contacts in a forum are continuous and systematic so that the forum may exercise
jurisdiction even if the plaintiff’s claims do not arise from or relate to the
nonresident’s activities in the forum state. BMC Software, 83 S.W.3d at 796.
When general jurisdiction is asserted, the minimum-contacts analysis is more
demanding and requires the plaintiff to show substantial and continuous activities
in the forum state. S. Stucco, Inc. v. GC Multifamily-New Orleans, L.P., 205
S.W.3d 570, 575 (Tex. App.—Dallas 2006, no pet.) (citing Guardian Royal Exch.
Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 228 (Tex. 1991)).
Finally, the exercise of personal jurisdiction must comport with traditional
notions of fair play and substantial justice. BMC Software, 83 S.W.3d at 795;
Lewis v. Indian Springs Land Corp., 175 S.W.3d 906, 915 (Tex. App.—Dallas
2005, no pet.). In making this determination, courts consider the following factors:
(1) the burden on the nonresident defendant; (2) the forum state’s interest in
adjudicating the dispute; (3) the plaintiff’s interest in obtaining convenient and
12
effective relief; (4) the interstate judicial system’s interest in obtaining the most
efficient resolution of controversies; and (5) the shared interest of the several states
in furthering substantive policies. Lewis, 175 S.W.3d at 915.
II. LMS Consulting Failed to Establish Specific Jurisdiction Over
Appellants.
To give rise to specific jurisdiction, the plaintiff’s claim must arise from or
relate to the nonresident’s contacts with Texas. BMC Software, 83 S.W.3d at 796.
The only basis upon which LMS Consulting asserts jurisdiction over Appellants is
through a corporate veil-piercing theory, arguing that the contacts of the Texas
Entities may be imputed to Appellants. C.R. 272–73. Texas Supreme Court
precedent shows that LMS Consulting has wholly failed to meet its heavy burden
under a veil-piercing theory of jurisdiction; thus, Appellants are not subject to the
trial court’s jurisdiction and must be dismissed.
A. Appellants do not control the internal operations of the Texas
Entities.
LMS Consulting bears a heavy burden to prove its corporate veil-piercing
theory of jurisdiction. BMC Software, 83 S.W.3d at 798 (“The Party seeking to
ascribe one corporation’s actions to another by disregarding their distinct corporate
entities must prove this allegation.”). Texas law presumes that two separate
corporations are distinct entities. Id. In an effort to overcome this presumption,
LMS Consulting claims that Appellants “control the internal business operations
13
and affairs of Personal-Touch, including Personal Touch Dallas and Personal
Touch San Antonio.” C.R. 272–73. As evidence, LMS Consulting alleges that
Appellants control the following internal operations of the Texas Entities:
(1) handle all personnel decisions;
(2) managing/making payments to vendors from a New
York bank account;
(3) managing payroll and making payroll payments from
a New York bank account;
(4) managing and controlling the website used by all of
the Personal Touch Home Care companies nationwide,
including marketing in Texas by Personal Touch Dallas
and Personal Touch San Antonio;
(5) managing and requiring their approval of contracts;
(6) sharing the corporate offices with Personal-Touch;
(7) sharing common directors and officers;
(8) controlling and managing employee benefits to be
provided to employees of Personal Touch Dallas and
Personal Touch San Antonio; and
(9) overseeing billing for services provided.
Id. Allegations (1) and (5) are simply untrue. As Vice President of Operations for
the Personal Touch Home Services companies, Dr. Trudy Balk merely supervised
manager-level personnel. C.R. 316. This hardly equates to “handling all personnel
decisions,” as LMS Consulting alleges; rather, Dr. Balk’s responsibilities do not
extend below administrative-level personnel. Id. 323–24.
Moreover, Appellants do not approve agreements entered into by the Texas
Entities. Id. 324. Although recognizing this fact, LMS Consulting points out that
14
the Texas Entities’ contract manager reports to Dr. Balk. Id. 315. But LMS
Consulting draws false inferences from this fact. LMS Consulting has not (and
cannot) show that Appellants approved the contracts at issue entered into by the
Texas Entities. Id. 324. In fact, Appellants did not approve the contracts at issue in
this case. Id. 29, 324. Finally, while Appellants generally oversee the billing
processes, each Texas Entity separately bills for the services it provides. Id. 320,
324.
The record is devoid of any evidence indicating (much less establishing) that
Appellants control the internal operations of the Texas Entities. LMS Consulting
has failed to carry its burden to establish facts sufficient to confer personal
jurisdiction. Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333,
337 (Tex. 2009). As such, Appellants must be dismissed.
Finally, LMS Consulting has the proper entities already in the lawsuit. As
set forth above, the Texas Entities did not file Rule 120a Special Appearances and
are before the trial court for all purposes.
B. Even assuming arguendo that Appellants maintain internal
control over the Texas Entities, the alleged level of control is
insufficient to establish personal jurisdiction.
Under the doctrine of jurisdictional veil-piercing, a court may exercise
jurisdiction over a nonresident parent corporation only when the parent corporation
and the subsidiary can be “fused” for jurisdictional purposes. BMC Software of
15
Belg., N.V. v. Marchand, 83 S.W.3d 789, 799 (Tex. 2002). To “fuse” the parent
corporation and its subsidiary for jurisdictional purposes,
the plaintiffs must prove the parent controls the internal
business operations and affairs of the subsidiary. But the
degree of control the parent exercises must be greater
than that normally associated with common
ownership and directorship; the evidence must show
that the two entities cease to be separate so that the
corporate fiction should be disregarded to prevent fraud
or injustice.
Id. (emphasis added). The rationale for exercising jurisdiction in such a scenario is
that “the parent corporation exerts such domination and control over its subsidiary
that they do not in reality constitute separate and distinct corporate entities but are
one and the same corporation for purposes of jurisdiction.” Hargrave v.
Fibreboard Corp., 710 F.2d 1154, 1159 (5th Cir. 1983). Texas courts are careful,
however, to distinguish between parental involvement—control typically exerted
by a parent company over a subsidiary—and atypical control. PHC-Minden, L.P. v.
Kimberly-Clark Corp., 235 S.W.3d 163, 176 (Tex. 2007). Indeed, when the parent
company exercises a normal degree of control over its subsidiary, a court may not
impute the subsidiary’s contacts with the forum state to the parent company for
jurisdictional purposes. Id.
In determining the level of control sufficient to “fuse” a parent corporation
with its subsidiary, Texas courts consider many factors. See, e.g., Conner v.
Conticarriers & Terminals, Inc., 944 S.W.2d 405, 419 (Tex. App.—Houston [14th
16
Dist.] 1997, no writ). But only those factors that collectively demonstrate
“atypical” control are sufficient. See PHC-Minden, L.P., 235 S.W.3d at 176. Thus,
the fact that a parent and its subsidiary share some or all of the same directors or
officers is not evidence of atypical involvement. Gentry v. Credit Plan Corp. of
Houston, 528 S.W.2d 571, 573 (Tex. 1975). Nor is it “atypical” control for a
parent corporation to issue paychecks to the subsidiary’s employees, provided that
the salaries are “intercompany payables; that is, the monies [that] come from the
[subsidiary’s] revenues.” PHC-Minden, L.P., 235 S.W.3d at 176. Similarly, a
parent corporation does not exert “atypical” control if it provides group health
insurance to a subsidiary’s employees, provided that such polices are funded from
the subsidiary’s revenues. Id. Even when a parent and subsidiary share the same
legal and accounting services, bank accounts, and common officers, it is not the
amount of control required to “make alter ego jurisdiction proper.” Conner, 944
S.W.2d at 419.
LMS Consulting has not met its burden to prove its corporate veil-piercing
theory of jurisdiction. Its allegations do not establish that Appellants maintained
“atypical” control over the Texas Entities. Id. Instead, the allegations demonstrate
a normal relationship between a parent corporation and its subsidiaries. Despite
these facts, as set forth above, LMS Consulting alleges Appellants perform the
following functions for the Texas Entities:
17
(1) handling all personnel decisions;
(2) managing/making payments to vendors from a New
York bank account;
(3) managing payroll and making payroll payments from
a New York bank account;
(4) managing and controlling the website used by all of
the Personal Touch Home Care companies nationwide,
including marketing in Texas by Personal Touch Dallas
and Personal Touch San Antonio;
(5) managing and requiring their approval of contracts;
(6) sharing the corporate officers with Personal-Touch;
(7) sharing common directors and officers;
(8) controlling and managing employee benefits to be
provided to employees of Personal Touch Dallas and
Personal Touch San Antonio; and
(9) overseeing billing for services provided.
C.R. 272–73.
Assuming arguendo the factual accuracy of these allegations (which are
untrue for the reasons set forth above), they do not establish an “atypical” degree
of control necessary to confer jurisdiction. PHC-Minden, L.P., 235 S.W.3d at 175.
LMS Consulting alleges that Appellants manage payroll and make payroll
payments from a New York account. C.R. 272–73. This allegation is based on Dr.
Balk’s testimony that each of the Texas Entities is responsible for their respective
payroll obligations, but the payments themselves come from “one pot.” Id. 319.
Courts have held, however, that it is not atypical for a parent corporation to issue
18
paychecks to the subsidiary’s employees, provided that the salaries are
“intercompany payables; that is, the monies come from the [subsidiary’s]
revenues.” PHC-Minden, L.P., 235 S.W.3d at 176. And in this case, they are.
Though the payments come from “one pot,” those payments are “attributed to each
of the companies.” C.R. 319, 324–25. The payments are “intercompany payables”
and, therefore, this allegation fails to demonstrate “atypical” control.
LMS Consulting also alleges that Appellants manage and control a website
that each of its subsidiaries use for marketing purposes. Id. 272–73. Appellants do
manage and control a website, but contrary to LMS Consulting’s assertions,
Appellants do not provide marketing materials for the Texas Entities through the
website. Id. 65–70. Rather, each of the Texas Entities is responsible for their own
marketing. Id. 318, 324. Further, as courts have instructed, an informational
website like the one maintained by Appellants that presents only passive
advertising, is not sufficient to support the exercise of personal jurisdiction over an
entity. Riverside Exports, Inc. v. B.R. Crane & Equip., LLC, 362 S.W.3d 649, 655
(Tex. App.—Houston [14th Dist.] 2011, pet. denied).
LMS Consulting further alleges that Appellants and the Texas Entities share
common directors and officers and the same corporate offices. C.R. 272–73. The
Texas Supreme Court has refused to pierce the corporate veil on the basis that the
parent corporation and subsidiary share “some or all of the [same] directors or
19
officers.” Gentry v. Credit Plan Corp. of Houston, 528 S.W.2d 571, 573 (Tex.
1975). Further, LMS Consulting’s allegation that Appellants (Personal Touch
Holding Corp and PT Intermediate Holding, Inc.) share corporate offices is
irrelevant, since the subsidiaries at issue are the Texas Entities. The Texas Entities
do not share corporate offices with Appellants. C.R. 324.
In addition, LMS Consulting alleges that Appellants control and manage
employee benefits for the Texas Entities’ employees. Id. 272–73. Although
Appellant Personal Touch Holding Corp. is responsible for employee health
benefits, the Texas Entities pay for the benefits. Id. 317, 324. The Texas Supreme
Court has expressly held that a group health insurance policy administered by a
parent for its subsidiaries is not atypical control, provided that such polices are
funded from the subsidiary’s revenues. PHC-Minden, L.P. v. Kimberly-Clark
Corp., 235 S.W.3d 163, 176 (Tex. 2007). Here, the Texas Entities’ group health
insurance policy is funded from the Texas Entities’ revenues. C.R. 324. Thus, this
allegation is not evidence of atypical control.
LMS Consulting next alleges that Appellants oversee billing for the services
provided by the Texas Entities, including “managing/making” payments to vendors
from a New York bank account. Id. 272–73. This allegation is simply untrue.
Each of the Texas Entities separately bills for the services it provides. Id. 320, 324.
As a result, this is not a basis for jurisdiction.
20
Finally, LMS Consulting alleges that Appellants manage and make
payments to the Texas Entities’ vendors from a New York bank account. Id. 272–
73. While courts do consider the payment of corporate debt as evidence of alter
ego,4 such evidence is not dispositive. The key here is Appellants’ financial
structure. Appellant Personal Touch Holding Corp. collects the revenues
generated by each subsidiary. Id. 325. The revenues are then attributed to each
company. Id. Thus, the funds generated by each subsidiary are used to pay the
vendors with whom it has a relationship. Id. 325. And while Appellant Personal
Touch Holding Corp. issues checks to vendors, it uses funds generated by the
respective Texas Entities with whom the vendor has a relationship. Id.
Additionally, the vendor payments in question here are not paid to or from Texas.
Indeed, while the payments to LMS Consulting are made for services rendered in
Texas, the actual payments are mailed to Washington State. Id.
In summary, even assuming the truth of LMS Consulting’s allegations
(which are contradicted by the facts), those allegations are legally insufficient and
fail to demonstrate that Appellants exercised “atypical” control over the Texas
Entities. LMS Consulting has failed to overcome the presumption that two
separate corporations are distinct entities. BMC Software of Belg., N.V. v.
4
See Guarino v. 11327 Reeder Rd., Inc., No. 05-12-01573-CV, 2013 Tex. App.
LEXIS 10497, at *11 (Tex. App.—Dallas Aug. 20, 2013, no pet.) (mem. op.) (observing that the
type of evidence a court will consider as proof of alter ego includes “payment of alleged
corporate debt with personal checks or other commingling of funds….”).
21
Marchand, 83 S.W.3d 789, 798 (Tex. 2002). Because LMS Consulting’s
allegations are insufficient to support jurisdictional veil-piercing, Appellants must
be dismissed.
III. LMS Consulting Failed to Establish General Jurisdiction Over
Appellants.
A general jurisdiction inquiry involves a “more demanding minimum
contacts analysis.” CSR, Ltd. v. Link, 925 S.W.2d 591, 595 (Tex. 1996). This
general-jurisdiction, minimum-contacts analysis imposes a substantially higher
burden on the plaintiff. PHC-Minden, L.P. v. Kimberly-Clark Corp., 235 S.W.3d
163, 168 (Tex. 2007) (“A general jurisdiction inquiry . . . involves a more
demanding minimum contacts analysis . . . with a substantially higher threshold.”)
(citing 4 WRIGHT & MILLER, FEDERAL PRACTICE & PROCEDURE § 1067.5); see also
6 MOORE’S FEDERAL PRACTICE § 108.41[3] (stating that general jurisdiction
“typically requires the defendant to have an office in the forum state”);
Submersible Sys., Inv. v. Perforadora Cent., S.A. de C.V., 249 F.3d 413, 419 (5th
Cir. 2001) (“[T]he continuous and systematic contacts test is a difficult one to
meet, requiring extensive contacts between the defendant and a forum.”).
A. General jurisdiction requires continues and systematic contacts
with the forum state.
General jurisdiction exists only when a defendant’s contacts are continuous
and systematic. Spir Star AG v. Kimich, 310 S.W.3d 868, 872 (Tex. 2010).
22
Usually, “the defendant must be engaged in longstanding business in the forum
state, such as marketing or shipping products, or performing services or
maintaining one or more offices there; activities that are less extensive than that
will not qualify for general in personam jurisdiction.” PHC-Minden, 235 S.W.3d at
168 (citing 4 WRIGHT & MILLER, FEDERAL PRACTICE & PROCEDURE § 1067.5).
In Helicopteros Nacionales de Colombia, S.A. v. Hall, the U.S. Supreme
Court rejected the exercise of general jurisdiction despite the nonresident
defendant’s extensive contacts with Texas. 466 U.S. 408 (1984). The plaintiff in
Helicopteros brought a tort claim against the Colombian helicopter operator arising
from a helicopter crash in Columbia. Id. at 409–10. The Columbian company had
negotiated a contract in Houston to provide for the services that led to the crash.
Id. at 411. The Columbian company had also purchased about 80 percent of its
helicopter fleet from a Texas company, sent its pilots to Texas for training, sent
members of its management to Texas for technical consultations in connection
with the purchase of its fleet, and accepted payment for the services that led to the
crash in funds drawn on a Texas bank. Id. Despite all of these contacts, the
Supreme Court held that they were not “continuous and systematic” so as to confer
general jurisdiction over the Columbian company.
The Fifth Circuit’s holding in Submersible Systems, Inc. v. Perforadora
Central, S.A. de C.V., is also instructive. 249 F.3d 413 (5th Cir. 2001). In
23
Submersible Systems, the court found no general jurisdiction despite the fact that
the nonresident defendant communicated and contracted with a forum resident to
build a marine drilling rig, maintained an office in the forum state during
construction of the rig, and kept three employees in the forum state to monitor the
construction. Id. at 419. In reaching its conclusion, the court emphasized that the
nonresident had an out-of-state headquarters, did business almost exclusively out
of state in a foreign country, and that its only contacts with the forum state were in
relation to the drilling rig contract. Id. at 420.
B. There is no basis for the exercise of general jurisdiction over
Appellants in this case.
Appellants do not have “continuous and systematic contacts” with Texas.
Indeed, Appellants have drastically fewer contacts with Texas than the defendants
in both Helicopteros and Submersible Systems—they have none. Appellants do
not operate in Texas. C.R. 82, 296. As noted above, Appellants:
 are corporations formed under the laws of the states of Delaware
(Appellant Personal Touch Holding Corp.) and New York (Appellant
PT Intermediate Holding, Inc.), with their principal offices in New
York, id.;
 do not have an office in Texas, id. at 82, 94, 296, 323;
 do not have a mailing address in Texas, id.;
 do not maintain any bank accounts in Texas, id.;
24
 have never owned any real property in Texas, never leased any real
property in Texas, and never had a lien on any real property in Texas,
id.;
 have never participated in any kind of legal proceeding in Texas, other
than this case, id.;
 have never owned, leased, or held a security interest in personal
property located in Texas, id.;
 do not have a registered agent for service of process in Texas, id.; and
 do not have a certificate of authority to do business in Texas, id.
LMS Consulting’s assertion of general jurisdiction relies on the same
corporate veil-piercing theory as its specific jurisdiction argument: jurisdiction
over Appellants depends on imputation of the Texas Entities’ contacts to
Appellants. Id. 272–73. For the same reasons described in Section II(B), supra,
the evidence is legally insufficient to demonstrate that Appellants exercised
“atypical” control over the Texas Entities necessary to impute the Texas Entities’
contacts to Appellants.
C. Appellant Personal Touch Holding Corp.’s Texas Taxpayer
Number does not subject it to personal jurisdiction in Texas.
LMS Consulting argues that the exercise of personal jurisdiction is proper
over Appellant Personal Touch Holding Corp. because it “maintains with the
Texas Comptroller the right to transact business in Texas under Texas Taxpayer
25
Number 32050538902.”5 C.R. 273. But a Texas Taxpayer Number does not satisfy
the minimum contacts analysis, nor is it even relevant to the issue of jurisdiction.
In Grand Aerie Fraternal Order of Eagles v. Haygood, a foreign corporation
applied for, and received, a taxpayer number. 402 S.W.3d 766, 774 (Tex. App.—
Eastland 2013, no pet.). The court concluded that the existence of a taxpayer
number “is not evidence of a contact between [the foreign corporation] and Texas.”
Id. at 782. The court’s analysis is predicated on facts distinguishable from this
case, but it demonstrates that a Texas Taxpayer Number does not satisfy the
minimum contacts analysis. If it did, the Grand Aerie court would have reached a
different conclusion.
Even if a taxpayer number did qualify as a “contact” with Texas (which it
does not), that is no evidence of “continuous and systematic” contacts sufficient to
confer general jurisdiction. For example, a number of Texas cases have considered
when a nonresident defendant may be subject to general jurisdiction based on the
use of a Texas bank account. These cases show that a nonresident defendant is
subject to general jurisdiction only when it engages in a pattern of numerous and
repeated transactions involving the Texas bank account. De Elizondo v. Elizondo,
5
Appellant Personal Touch Holding Corp. files a consolidated federal income tax
return for all of its affiliated companies and, as a result, is required to have a Texas Taxpayer
Number. C.R. 325 However, all of Personal Touch Holding Corp.’s affiliated companies
maintain separate accounting books and records which account for all expenses and income to
the appropriate affiliated company. Id.
26
No. 04-08-00384-CV, 2009 Tex. App. LEXIS 4101 (Tex. App.—San Antonio Jun.
10, 2009, no pet.); Transportes Aereos de Coahuila, S.A. v. Falcon, 5 S.W.3d 712,
720 (Tex. App.—San Antonio 1999, pet. denied) (holding that infrequent use of
bank account to assist in sporadic purchases insufficient to warrant general
jurisdiction).
While these cases are limited to the context of Texas bank accounts, their
reasoning applies here. Appellant Personal Touch Holding Corp. is a foreign
defendant that maintains a Texas Taxpayer Number, but does not exercise its right
to conduct business in Texas. C.R. 82, 94, 296, 323. It has not engaged in
“numerous and repeated” transactions involving its Texas Taxpayer Number; in
fact, it has never conducted a single transaction in Texas. Id. Therefore, Appellant
Personal Touch Holding Corp.’s Texas Taxpayer Number is not a sufficient
contact with Texas to justify the exercise personal jurisdiction.
IV. The Exercise of Personal Jurisdiction Over Appellants Would Offend
Traditional Notions of Fair Play and Substantial Justice.
The exercise of personal jurisdiction over Appellants would offend
traditional notions of fair play and substantial justice. In determining whether the
exercise of personal jurisdictions comports with fair play and substantial justice,
courts consider: (1) the burden on the defendant; (2) the interest of the forum state
in adjudicating the dispute; (3) the plaintiff’s interest in obtaining convenient and
effective relief; (4) the interstate judicial system’s interest in obtaining the most
27
efficient resolution of controversies; and (5) the shared interest of the several states
in furthering fundamental substantive social policies. Retamco Operating, Inc. v.
Republic Drilling Co., 278 S.W.3d 333, 341 (Tex. 2009). Appellants, which have
their principal places of business in New York and no operations in Texas, would
be uniquely burdened by litigating this case in Texas.
Moreover, dismissing this case against Appellants for lack of personal
jurisdiction will not impair LMS Consulting’s ability to seek resolution of its
claims against Appellants in a proper forum. More importantly, the proper parties
to this dispute are the Texas Entities which are in the case and before the trial court
for all purposes. Because the exercise of jurisdiction over Appellants would offend
the traditional notions of fair play and substantial justice, the trial court erred in
refusing to dismiss this case against Appellants.
CONCLUSION AND PRAYER
For the reasons set forth herein and in their special appearances, Appellants
are entitled to dismissal for lack of personal jurisdiction. The record
unambiguously reflects that the trial court erred when it denied Appellants’ special
appearances. Accordingly, Appellants respectfully request this Court to reverse
the trial court’s denial of Appellants’ special appearances, dismiss Appellants from
this case, and for all other relief to which they may be entitled.
28
Respectfully submitted,
JACKSON WALKER L.L.P.
By: /s/ Monte F. James
Monte F. James
State Bar No. 10547520
mjames@jw.com
Kimberly A. Gdula
State Bar No. 24052209
kgdula@jw.com
100 Congress Avenue, Suite 1100
Austin, Texas 78701
(512) 236-2000
(512) 236-2002 – Fax
ATTORNEYS FOR APPELLANTS
PERSONAL TOUCH HOLDING
CORP. AND PT INTERMEDIATE
HOLDING, INC.
29
RULE 9.4 CERTIFICATE OF COMPLIANCE
This document complies with the typeface requirements of TEX. R. APP. P.
9.4(e) because it has been prepared in a conventional typeface no smaller than 14-
point for text and 12-point for footnotes. This document also complies with the
word-count limitations of TEX. R. APP. P. 9.4(i), if applicable, because it contains
5,330 words, excluding any parts exempted by TEX. R. APP. P. 9.4(i)(1).
/s/ Monte F. James
Monte F. James
30
CERTIFICATE OF SERVICE
This is to certify that on this 12th day of January, 2015, a true and correct
copy of the above and foregoing document was electronically mailed to the parties
registered or otherwise entitled to receive electronic notices in this case pursuant to
the Electronic Filing Procedures in this Court and/or via certified mail, return
receipt requested upon:
Alejandro Mora
7000 North MoPac Expressway
Suite 200
Austin, Texas 78731
alejandro@morahealthcarelaw.com
/s/ Monte F. James
Monte F. James
31
NO. 04-14-00827-CV
_____________________________________________________________
IN THE COURT OF APPEALS
FOR THE FOURTH DISTRICT OF TEXAS
AT SAN ANTONIO, TEXAS
______________________________________________________________
PT INTERMEDIATE HOLDING, INC. AND
PERSONAL TOUCH HOLDING CORP.,
Appellants,
v.
LMS CONSULTING LLC,
Appellee.
On Appeal from the 45th Judicial District Court of Bexar County, Texas
(Honorable Peter Sakai, of the 225th Judicial District Court, Presiding)
Trial Court Cause No. 2014-CI-00450
______________________________________________________________
APPENDIX
APPENDIX A November 7, 2014 Orders Denying Appellants’ Special
Appearances
11893140v.3
32
DOCUMENT SCANNED AS FILED
2014CI00450 -0045
- - - - ·- -- - --
CAUSE NO. 2014-CI-00450
LMS CONSULTING LLC, § IN THE DISTRICT COURT
§
Plaintiff, §
§
V. § BEXAR COUNTY, TEXAS
§
PT HOME SERVICES OF DALLAS, INC. §
d/b/a Personal-Touch Home Care, Inc., PT §
HOME SERVICES OF SAN ANTONIO, §
INC. d/b/a Personal-Touch Home Care, § 45TH DISTRICT COURT
Inc., and PERSONAL-TOUCH HOME §
CARE OF N.Y., INC. f/k/a PERSONAL- §
TOUCH .HOME CARE, INC., §
§
Defendants.
ORDER DENYING SPECIAL APPEARANCE
After considering Defendant PT Intennediate Holding, Inc.'s Special Appearance, the
response thereto, the pleadings, the relevant case law, the competent evidence on file, and the
arguments of counsel, this Court DENIES PT lntennediate Holding, Inc.'s Special Appearance .
.,
NOV ... 7 2014
Signed on this _ _ day of _ _ _ _ __
~
L.
4
2
9
2
DOCUMENT SCANNED AS FILED .
APPROVED AS TO FORM:
JACKSON WALKER L.L.P.
By: l/{Jt&
MoeF:James
State BarNo. 10547520
mjames@jw.com
Kimberly Gdula
State Bar No. 24052209
kgdula@jw.com
100 Congress Avenue, Suite 1100
Austin, TX 78701
(512) 236-2000
(512) 236-2002- Fax
ATTORNEY FOR DEFENDANT
PERSONAL-TOUCH HOME CARE OF
N.Y., INC. FIK/A PERSONAL-TOUCH
HOME CARE, INC.
APPROVED AND ENTRY REQUESTED BY:
LAW OFFICES OF ALEJANDRO MORA, PLLC
By:
1 ``~--------------------------
Alejandro Mora
1 State Bar No. 24051076
0
f
7000 North Mopac Expressway,
Suite 200
2
0
Austin, TX 78731
(512) 514-6683
a (888) 320-0589- Fax
ATTORNEY FOR PLAINTIFF
v
e
4
2
9
2
p l1504726v.l
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3
g
1
DOCUMENT SCANNED AS FILED
1111 ``·``Mil Ill
- -2014CI00450
--- -0045
CAUSE NO. 2014-CI-00450
LMS CONSULTING LLC, § IN THE DISTRICT COURT
§
Plaintiff, §
§
V. § BEXAR COUNTY, TEXAS
§
PT HOME ~ERVICES OF DALLAS, INC. §
d/b/a Personal-Touch Home Care, Inc., PT §
HOME SERVICES OF SAN ANTONIO, §
INC. d/b/a Personal-Touch Home Care, § 45TH DISTRICT COURT
Inc., and PERSONAL-TOUCH HOME §
CARE OF N.Y., INC. flk/a PERSONAL- §
TOUCH HOME CARE, INC., §
§
Defendants.
ORDER DENYING SPECIAL APPEARANCE
After considering Defendant Personal Touch Holding Corp.'s Special Appearance, the
response thereto, the pleadings, the relevant case Jaw, the competent evidence on file, and the
arguments of counsel, this Court DENIES Personal Touch Holding Corp.'s Special Appearance.
NOV -7 2014
Signed on this _ _ day of · , 2014.
j
b
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0
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e
4
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9
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DOCUMENT SCANNED AS FILED
APPROVED AS TO FORM:
JACKSON WALKER L.L.P.
By: t/,~
Monte . ames
State Bar No. 10547520
mjames@jw.com
Kimberly Gdula
State Bar No. 24052209
kgdula@jw.com
100 Congress Avenue, Suite 1100
Austin, TX 78701
(5 12) 236-2000
(512) 236-2002- Fax
ATTORNEY FOR DEFENDANT
PERSONAL-TOUCH HOME CARE OF
N.Y., INC. F/K/A PERSONAL-TOUCH
HOME CARE, INC.
APPROVED AND ENTRY REQUESTED BY:
LAW OFFICES OF ALEJANDRO MORA, PLLC
~() /)/~d:.-
By:
t ------------------------
Alejandro Mora
State Bar No. 24051076
~/ 7000 North Mopac Expressway,
Suite 200
Austin, TX 78731
2 (512) 514-6683
0
(888) 320-0589- Fax
a ATTORNEY FOR PLAINTIFF
v
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2
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