William Morris, as Administrator of the Estate of Larry Morris v. H G Spec Inc.

In The

Court of Appeals
Ninth District of Texas at Beaumont
____________________
NO. 09-15-00283-CV
____________________

WILLIAM MORRIS, AS ADMINISTRATOR
OF THE ESTATE OF LARRY MORRIS, Appellant

V.

H G SPEC INC., ET AL, Appellees

________________________________________________________________________

On Appeal from the 172nd District Court
Jefferson County, Texas
Trial Cause No. E-190,617
________________________________________________________________________

MEMORANDUM OPINION

In this interlocutory appeal, Plaintiff William Morris, as administrator of the

Estate of Larry Morris (Plaintiff or Appellant), appeals the trial court’s orders

granting the special appearances of defendants Reliance Worldwide Pty Ltd, GSA

Group Pty Ltd, GSA Industries (Aust) Pty Ltd (the Reliance Defendants), and H G

1
Spec, Inc. (H G Spec) (collectively Appellees) and dismissing the claims against

Appellees with prejudice.1 We affirm.

Background

Plaintiff contends that on or about July 22, 2011, Larry Morris was a resident

at the EduCare Community Living Corporation – Gulf Coast (EduCare) adult care

facility, and he sustained second-degree and third-degree burns from hot water

during a bath given by his caregiver. According to Plaintiff, Larry died as a result of

his burns. Plaintiff filed suit against EduCare, Decresha Jenkins (Jenkins), Cash

Acme, the Reliance Defendants, and H G Spec.2 In Plaintiff’s Fourth Amended

1
Reliance Worldwide Pty Ltd filed its special appearance as “Defendant
Reliance Worldwide Pty Ltd. Incorrectly Named as Reliance Worldwide a/k/a
Reliance Worldwide Corporation, Individually and d/b/a Cash Acme[.]” GSA Group
Pty Ltd filed its special appearance as “Defendant GSA Group Pty Ltd Incorrectly
Named as the GSA Group, Individually and d/b/a Reliance Worldwide and Cash
Acme[.]” GSA Industries (Aust) Pty Ltd filed its special appearance as “Defendant,
GSA Industries (Aust) Pty Ltd d/b/a Reliance Manufacturing Co. and Its Division,
Reliance Worldwide[.]”
2
In August of 2011, Plaintiff William Morris, as Larry Morris’s next friend,
initially filed “Petitioner’s Rule 202 Action to Discover Evidence and Perpetuate
Testimony and Application for Temporary Restraining Order and Temporary
Injunction[,]” naming EduCare Community Living – Texas and EduCare
Community Living – Texas Living Centers, Inc. as Respondents (collectively
EduCare). The Rule 202 suit regarding EduCare was assigned to the 172nd Judicial
District Court, bearing Cause No. E-190,617. Plaintiff William Morris, as
administrator of the Estate of Larry Morris, filed a separate suit against Cash Acme,
a Division of the Reliance Worldwide Corporation and Decresha D. Jenkins, and it
was assigned to the 136th Judicial District, bearing Cause No. D-194,356. In July
2
Petition (hereinafter “the petition”), the live petition at the time the trial court heard

the Appellees’ special appearances,3 Plaintiff asserted that on the alleged date, one

of EduCare’s employees, Jenkins, was giving Larry Morris a bath, Jenkins turned on

the water, and she left Larry Morris unattended. According to the petition, when

Jenkins returned, she discovered that Larry Morris had been burned by scalding hot

water in the bathtub even though a “scald protector” or Thermostatic Mixing Valve

(TMV) allegedly designed, manufactured, and marketed by the Reliance Defendants

and H G Spec, had been installed. In the petition, the Plaintiff specifically alleged

2013, the trial court granted Plaintiff’s motion to consolidate the cases into the case
pending in the 172nd Judicial District Court. H G Spec filed bankruptcy and the trial
court severed the claims against H G Spec into a separate cause number to allow the
matter to proceed against the remaining defendants. On January 28, 2015, the United
States Bankruptcy Court entered an agreed order lifting the automatic stay solely to
allow the parties to proceed with the litigation to “obtain, collect and enforce a
judgment against any available insurance proceeds of Debtor H G Spec Inc.” After
the bankruptcy court lifted the automatic stay, the 172nd Judicial District Court then
merged the claim against H G Spec back into the original case. On June 1, 2015,
Plaintiff filed a motion for voluntary dismissal with prejudice of the claims against
EduCare, announcing to the trial court that Plaintiff and EduCare had entered into a
confidential settlement. The next day, the trial court granted the motion to dismiss
EduCare. According to the appellate record now before us, Cash Acme did not
challenge the trial court’s jurisdiction and Cash Acme remains a party in the trial
court below.
3
On June 19, 2015, the trial court signed an order regarding Plaintiff’s motion
for leave to file his Fourth Amended Petition and “ORDERED that the Court will
consider the allegations and claims made in Plaintiff’s Amended Petition in ruling
on Defendant’s Special Appearance.”
3
that EduCare and Jenkins were negligent in caring for Larry Morris, and Plaintiff

also alleged negligence and strict liability causes of action against the Reliance

Defendants and H G Spec.

The Reliance Defendants filed separate special appearances, and H G Spec

filed a special appearance. The trial court held a hearing on the special appearances.

The parties presented arguments to the trial court and relied on documents on file

and exhibits admitted at the hearing, but offered no live testimony at the hearing.

The trial court granted all four special appearances in separate orders. Plaintiff

timely appealed.

Issues on Appeal

In his first and second issues, Appellant maintains that the trial court erred in

granting H G Spec’s special appearance because personal jurisdiction exists as to H

G Spec under the theories of both general and specific jurisdiction. In his third issue,

Appellant asserts that the trial court erred in granting the Reliance Defendants’

special appearances because the trial court had specific jurisdiction over all of the

Reliance Defendants.

Standard of Review and Applicable Law

Whether a trial court has personal jurisdiction over a defendant is ultimately

a question of law that we review de novo. Moncrief Oil Int’l, Inc. v. OAO Gazprom,

4
414 S.W.3d 142, 150 (Tex. 2013); BMC Software Belgium, N.V. v. Marchand, 83

S.W.3d 789, 794-95 (Tex. 2002). The plaintiff has the initial burden of pleading

sufficient allegations to bring a nonresident defendant within the jurisdiction of a

Texas court. Moncrief, 414 S.W.3d at 149; Kelly v. Gen. Interior Constr., Inc., 301

S.W.3d 653, 658 (Tex. 2010); Retamco Operating, Inc. v. Republic Drilling, Co.,

278 S.W.3d 333, 337 (Tex. 2009). If the plaintiff meets this initial burden, “the

burden shifts to the defendant to negate all potential bases for personal jurisdiction

the plaintiff pled.” Moncrief, 414 S.W.3d at 149; BMC Software, 83 S.W.3d at 793.

The defendant may negate the jurisdictional allegations on either a factual basis or a

legal basis. Kelly, 301 S.W.3d at 659.

Factually, the defendant can present evidence that it has no contacts
with Texas, effectively disproving the plaintiff’s allegations. The
plaintiff can then respond with its own evidence that affirms its
allegations, and it risks dismissal of its lawsuit if it cannot present the
trial court with evidence establishing personal jurisdiction. Legally, the
defendant can show that even if the plaintiff’s alleged facts are true, the
evidence is legally insufficient to establish jurisdiction; the defendant’s
contacts with Texas fall short of purposeful availment; for specific
jurisdiction, that the claims do not arise from the contacts; or that
traditional notions of fair play and substantial justice are offended by
the exercise of jurisdiction.

Id. (footnotes omitted). There being no timely filed findings of fact and conclusions

of law, “all facts necessary to support the judgment and supported by the evidence

5
are implied.” BMC Software, 83 S.W.3d at 795.4 If the appellate record includes the

reporter’s and clerk’s records, these implied findings are not conclusive and may be

challenged for legal and factual sufficiency in the appellate court. Id.

A trial court has personal jurisdiction over a nonresident defendant if the

exercise of jurisdiction is authorized by statute and is consistent with federal and

state constitutional due process guarantees. Moncrief, 414 S.W.3d at 149; Spir Star

AG v. Kimich, 310 S.W.3d 868, 872 (Tex. 2010); see also Tex. Civ. Prac. & Rem.

Code Ann. § 17.042 (West 2015). The Texas long-arm statute provides that certain

acts constitute doing business in Texas, including, but not limited to, the following:

(1) contracts by mail or otherwise with a Texas resident and either party
is to perform the contract in whole or in part in this state;

(2) commits a tort in whole or in part in this state; or

(3) recruits Texas residents, directly or through an intermediary located
in this state, for employment inside or outside this state.

Tex. Civ. Prac. & Rem. Code Ann. § 17.042. Although an allegation of jurisdiction

may satisfy the Texas long-arm statute, the allegation still may not necessarily

4
Appellant asserts that this Court “should not imply facts in support of the
trial court ruling, since there was no live testimony presented to the trial [c]ourt[,]”
and that we “can (and should) conduct a full[] de novo review.” As in Moncrief, our
conclusions are unaffected by the operation of implied findings of fact and therefore
we need not address this argument. See Moncrief Oil Int’l, Inc. v. OAO Gazprom,
414 S.W.3d 142, 150 n.4 (Tex. 2013).
6
satisfy the United States Constitution. Moncrief, 414 S.W.3d at 149. Accordingly,

even if a court determines the facts satisfy the Texas long-arm statute, a court must

also examine the facts to determine if the exercise of personal jurisdiction over the

defendant comports with due process. See CSR Ltd. v. Link, 925 S.W.2d 591, 594

(Tex. 1996).

Asserting personal jurisdiction over a nonresident defendant comports with

due process when (1) the nonresident defendant has minimum contacts with the

forum state, and (2) asserting jurisdiction comports with traditional notions of fair

play and substantial justice. Retamco, 278 S.W.3d at 338. The minimum contacts

analysis requires “‘some act by which the defendant purposefully avails itself of the

privilege of conducting activities within the forum State, thus invoking the benefits

and protections of its laws.’” Michiana Easy Livin’ Country, Inc. v. Holten, 168

S.W.3d 777, 784 (Tex. 2005) (quoting Hanson v. Denckla, 357 U.S. 235, 253

(1958)). The focus is on the defendant’s activities and expectations. Am. Type

Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 806 (Tex. 2002). A defendant’s

contacts may give rise to either general jurisdiction or specific jurisdiction. See

Moncrief, 414 S.W.3d at 150; Zinc Nacional, S.A. v. Bouche Trucking, Inc., 308

S.W.3d 395, 397 (Tex. 2010). Continuous and systematic contacts with Texas may

give rise to general jurisdiction, while specific jurisdiction exists when the cause of

7
action arises out of or is related to specific purposeful activities of the defendant in

Texas. Moncrief, 414 S.W.3d at 150. “The exercise of personal jurisdiction is proper

when the contacts proximately result from actions of the nonresident defendant

which create a substantial connection with the forum state.” Guardian Royal Exch.

Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex. 1991)

(citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474-75 (1985)).

A trial court has general jurisdiction over a nonresident defendant when the

defendant’s contacts with the forum are systematic and continuous. Spir Star, 310

S.W.3d at 872. A court has general jurisdiction when the nonresident defendant’s

affiliations with the State in which suit is brought are so constant and pervasive “‘as

to render [the nonresident defendant] essentially at home in the forum State.’”

Daimler AG v. Bauman, 134 S. Ct. 746, 751 (2014) (quoting Goodyear Dunlop Tires

Operations, S.A. v. Brown, 131 S. Ct. 2846, 2851 (2011)).

Specific jurisdiction exists when there is evidence that the defendant

purposefully availed itself of the forum’s jurisdiction by contacts or activities in the

forum state, and the cause of action arises from or is related to those contacts or

activities. Retamco, 278 S.W.3d at 338 (citing Burger King, 471 U.S. at 472); BMC

Software, 83 S.W.3d at 795-96. Under specific jurisdiction, the focus is on the

relationship between the forum, the defendant, and the litigation. Moncrief, 414

8
S.W.3d at 150; Retamco, 278 S.W.3d at 338. There must be a substantial connection

between the defendant’s contacts and the operative facts of the litigation. Moncrief,

414 S.W.3d at 156. The contacts must be such that the defendant “should reasonably

anticipate being haled into court” in Texas. World-Wide Volkswagen Corp. v.

Woodson, 444 U.S. 286, 297 (1980). With respect to tort claims, Texas’s interest in

protecting its citizens against torts is insufficient to automatically exercise personal

jurisdiction when the nonresident directs a tort from outside the forum. Michiana,

168 SW.3d at 790-91. We must analyze the jurisdictional contacts on a “claim-by-

claim basis” unless all claims arise from the same forum contacts. Moncrief, 414

S.W.3d at 150-51.

When considering whether the nonresident purposefully availed itself of the

privilege of conducting activities within Texas, we look at three factors: (1) whether

the defendant had contacts and activity in and with Texas; (2) whether the contacts

relied upon were purposeful rather than random, fortuitous, or attenuated; and, (3)

whether the defendant sought some benefit, advantage, or profit by availing itself of

the jurisdiction. Id. at 151.

Plaintiff’s Jurisdictional Allegations

9
 Plaintiff alleged in the petition that H G Spec is “a Canadian company doing

business in the State of Texas.” Plaintiff made no further jurisdictional allegations

in the petition as to H G Spec. Plaintiff alleged that Reliance Worldwide Pty Ltd and

GSA Group Pty Ltd are “Australian compan[ies] doing business in the State of

Texas[,]” and that GSA Industries Pty Ltd is “an Australian company[.]” Plaintiff

further alleged that the Reliance Defendants “along with other affiliated companies

. . . are all the same entity, created with the purpose of falsely portraying GSA

Industries (Australia) Pty. Ltd. . . . as disconnected from the sale and distribution of

Thermostatic Mixing Valves in the United States in general and Texas specifically.”

Plaintiff alleged that the Reliance Defendants “had continuous, systematic and

sufficient minimum contracts[sic] with Texas, their actions were directed to the State

of Texas, and they purposefully availed themselves of the benefit, advantage and

profit of this jurisdiction[]” and that “[f]or purposes of the manufacture and

distribution of products at issue in this case such as ‘scald protectors’ or thermostatic

mixing valves, these Defendants operated not as separate entities but rather as a

single business enterprise.”

Plaintiff also alleged that H G Spec and the Reliance Defendants “acted in

concert and with a specific joint intent to create corporate fictions and misleading

paper agreements, when in fact the true relationship between [H G Spec and the

10
Reliance Defendants] ha[s] always been one of manufacturer and direct distributor

of Reliance products into the United States generally and Texas specifically.”

According to the Plaintiff, “during a period of time, the Reliance Defendants

possessed and exercised actual control of HG Spec’s U.S. Sales Manager and

network of Manufacturer’s Reps, although during that time it also engaged in the

subterfuge of having those persons remain related on paper to HG Spec when in fact

Reliance was reimbursing HG Spec for the costs of said operations.”

Plaintiff’s Causes of Action

Plaintiff generally alleged that the defendants were negligent. Plaintiff alleged

that H G Spec and the Reliance Defendants “are strictly liable to Plaintiff[] for

designing, manufacturing, and placing into the stream of commerce the scald

preventer, which was unreasonably dangerous for its reasonably foreseeable uses at

the time it left the control of the Product Defendants because of design, manufacture

and manufacturing defects, which were a producing cause of the occurrence in

question.” Plaintiff also alleged that one or more of the Reliance Defendants, Cash

Acme, and H G Spec were negligent “in the design, manufacture, marketing and

distribution of the scald preventer in question[.]”

11
 Personal Jurisdiction as to H G Spec

According to the appellate record, during certain periods of time H G Spec

was a supplier of certain plumbing products manufactured by others. In Plaintiff’s

petition, Plaintiff alleged that H G Spec is “doing business in the State of Texas.” In

its verified special appearance, H G Spec alleged that it is “a corporation organized

under the laws of Canada[,] . . . is not a publically traded company[,]” . . . and “has

its principal place of business in Quebec, Canada.” According to the special

appearance, “[t]here is no nexus between any act or omission by [H G Spec] in

Texas[] and the death of Larry Morris[,] . . . the allegations against [H G Spec] do

not arise out of any contacts between [H G Spec] and Texas[,] [H G Spec] has not

consented to the jurisdiction of a Texas court[,]” [and] “[m]aintenance of this action

against [H G Spec] in Texas would violate traditional notions of fair play and

substantial justice[.] With respect to whether sufficient minimum contacts with

Texas allow the trial court to exercise jurisdiction over H G Spec, H G Spec asserted

the following in its special appearance:

. . . [H G Spec] is a corporation organized under the laws of Canada.

. . . [H G Spec] has its principal place of business in Quebec, Canada.

. . . [H G Spec] has no offices, facilities or other places of business in
Texas.

12
. . . [H G Spec] is not required to and has not maintained an agent for
service of process in Texas.

. . . [H G Spec] is not registered to do business in Texas.

. . . [H G Spec] does not maintain a telephone listing in a Texas
telephone directory.

. . . [H G Spec] has not contracted by mail or otherwise with a Texas
resident with performance either in whole or in part in Texas.

. . . [H G Spec] does not solicit business in Texas.

. . . [H G Spec] does not have any bank accounts in Texas.

. . . [H G Spec] has not paid in taxes in Texas.

. . . [H G Spec] had not made application for or received a loan of money
in Texas.

. . . [H G Spec] does not own any real property in Texas.

. . . [H G Spec] has not owned or maintained a warehouse or
manufacturing plant within Texas.

. . . [H G Spec] has no members of its Board of Directors who live in
Texas.

. . . [H G Spec] does not manufacture products sold in Texas.

. . . [H G Spec] does not distribute products for sale into Texas.

. . . [H G Spec] had no employees located in Texas.

. . . [H G Spec] has not committed any tort, in whole or in part, within
the State of Texas.

13
Attached to the special appearance was a notarized affidavit of Jean Pichette, the

President of H G Spec, wherein Pichette attested that he had read the special

appearance, he had personal knowledge of the facts set forth in the special

appearance, and that the facts are true and correct. H G Spec later filed a

“Memorandum of Law of Defendant H G Spec Inc. In Support of Its Special

Appearance Pursuant to Rule 120a.” H G Spec attached an affidavit from Jean

Pichette, as well as excerpts from the depositions of Terrence Scott and Troy L. Robb

as exhibits thereto.

In the Memorandum of Law, H G Spec alleged that the TMV at issue in the

case bears the marks “Heatguard #HG101” and “HG Specialties” on its cap. In

Pichette’s sworn affidavit attached to the memorandum of law, he further states as

follows:

. . . From approximately 1987 until January 28, 2002, at the latest, HG
(known as HG Specialties, Inc. until approximately 2005) distributed
plumbing and other products to wholesalers in Texas. During that time,
HG had independent contractor agreements with manufacturers’
representatives (also known as manufacturers’ selling agents) in the
United States (its “Rep Network”), including in Texas. HG’s
independent contractor manufacturers’ representatives located in Texas
solicited business for HG with Texas wholesalers. HG did not sell
directly to end users in Texas; HG did not know the identity of the end
users of products distributed by HG in Texas; and HG did not exercise
control over to whom wholesalers in Texas sold products distributed by
HG.

14
 . . . HG sold its existing inventory of products, including its existing
inventory of Heatguard #HG101 thermostatic mixing valves (TMVs)
marked “HG SPECIALTIES” on the cap, as well as its Rep Network in
the United States, to Reliance Worldwide Corporation through a
Purchase Agreement made on August 27, 2001. Pursuant to this
Purchase Agreement, the date for the transfer of HG’s Rep Network
and for payment of its inventory was January 28, 2002. Also pursuant
to the terms of the Purchase Agreement, from September 2001 through
January 2002, Reliance Worldwide Corporation agreed to make
monthly payments to HG in exchange for Reliance Worldwide
Corporation being given full direction of HG’s sales manager, Rick
Proulx, and the “USA business” on a day-to-day basis. Once HG
transferred its inventory to Reliance Worldwide Corporation, HG had
no control over any decisions regarding the sale or distribution of that
inventory.

. . . After January 28, 2002, HG never distributed any products in Texas
nor in any other way solicited business in Texas.

H G Spec attached a copy of a 2001 purchase agreement between H G Spec and

Reliance Worldwide Corporation to the Memorandum of Law.

In his first issue on appeal, Appellant asserts the trial court erred in granting

H G Spec’s special appearance because general jurisdiction exists as to H G Spec in

Texas. According to Appellant, the trial court had general jurisdiction over H G

Spec, a distributor, based on H G Spec’s written agreements with various

manufacturer’s representatives, two of which were responsible for Texas and were

under the direction of “Sales Rep” Rick Proulx, who was allegedly employed by H G

Spec and promoted products throughout the United States, including Texas. As an

additional basis for general jurisdiction, Plaintiff alleged that H G Spec
15
 . . . had for over a decade been contracting with a Dallas manufacturer
of Beckett Corporation for items which it then distributed throughout
Canada. In support of this business relationship, Mr. Pichette himself
traveled to Dallas, Beckett Corporation’s headquarters, on about 15-20
occasions. Considering that HG Spec only had a relatively small
number of product lines, the fact that it contracted with a Dallas
company for the supply of an entire segment of its operations shows
that it was “at home” in Texas for business purposes and as such cannot
claim that it is “foreign” to Texas merely when a suit is filed.

In Pichette’s deposition, Pichette testified that H G Spec was a distributor of

Beckett Corporation’s “water gardening, ponds” products from 1987 to about 2008.

He testified that his fifteen to twenty visits with Beckett Corporation during that time

at Beckett’s headquarters in Dallas were for the purpose of discussing “how to

distribute the product into the Canadian market.” Pichette swore in his affidavit that

from 1987 to 2002 H G Spec distributed plumbing and other products to Texas, that

H G Spec had independent contractor agreements with manufacturer’s

representatives across the United States and in Texas, and that H G Spec did not sell

directly to end users in Texas, did not know the identity of the end users of products

distributed by H G Spec in Texas, and did not exercise control over to whom

wholesalers in Texas sold products distributed by H G Spec. According to Pichette,

H G Spec then sold its inventory of TMVs to Reliance Worldwide Corporation

pursuant to an August 2001 purchase agreement, Reliance Worldwide paid H G Spec

to have the full direction of H G Spec’s Sales Manager Rick Proulx and the daily

16
business in the United States from September 2001 through January 2002, and after

January 28, 2002, H G Spec had no control over the distribution of its prior inventory

and never distributed any products in Texas nor did it solicit business in Texas.

A court has general jurisdiction over a nonresident defendant who has

“[c]ontinuous and systematic” contacts with the state. Moncrief Oil, 414 S.W.3d at

150. This test requires “substantial activities within the forum.” BMC Software, 83

S.W.3d at 797. When a court has general jurisdiction over a nonresident, it may

exercise jurisdiction “even if the cause of action did not arise from activities

performed in the forum state.” Spir Star, 310 S.W.3d at 872.

In PHC-Minden, L.P. v. Kimberly-Clark Corporation, the Texas Supreme

Court characterized the inquiry for general jurisdiction as a “‘more demanding

minimum contacts analysis’ with a ‘substantially higher’ threshold[]” than the

requirements for specific jurisdiction. 235 S.W.3d 163, 168 (Tex. 2007) (quoting

CSR, 925 S.W.2d at 595 and 4 Wright & Miller, Federal Practice & Procedure

§ 1067.5). Nevertheless, there is no “precise formulation[]” for determining which

general jurisdictional contacts will be sufficient to “reach a tipping point[.]” Id. at

167.

“Usually, ‘the defendant must be engaged in longstanding business in the

forum state, such as marketing or shipping products, or performing services or

17
maintaining one or more offices there; activities that are less extensive than that will

not qualify for general in personam jurisdiction.’” Id. (quoting 4 Wright & Miller,

Federal Practice & Procedure § 1067.5). For general jurisdiction purposes, we do

not view each contact in isolation. Am. Type Culture Collection, 83 S.W.3d at 809.

The reviewing court carefully considers the contacts and analyzes them for “proof

of a pattern of continuing and systematic activity[,]” and we look at the quality of

those contacts, not just the quantity. See id. at 809-10.

Furthermore, even multiple contacts with a state may not be sufficient to

establish general jurisdiction. See, e.g., Helicopteros Nacionales de Colombia, S.A.

v. Hall, 466 U.S. 408, 415-19 (1984) (finding no “continuous and systematic”

contacts with Texas, despite the fact that defendant had gone to Texas to negotiate a

contract, purchased helicopters and related equipment from Texas vendors at regular

intervals, and sent prospective pilots and other personnel to Texas for training); see

also Am. Type Culture Collection, 83 S.W.3d at 807-10. (finding no general

jurisdiction despite the fact that defendant had sold its products to Texas residents

for eighteen years, had purchased supplies from Texas vendors, had attended

conferences in Texas, and had served as a repository for Texas researchers).

In order for Texas courts to exercise general jurisdiction over H G Spec, H G

Spec’s contacts must be continuous, systematic, and substantial. Moki Mac River

18
Expeditions v. Drugg, 221 S.W.3d 569, 575 (Tex. 2007); CSR Ltd., 925 S.W.2d at

595. The question is whether Plaintiff met his burden to present the trial court with

evidence that H G Spec had substantial systematic and continuous contacts with the

State of Texas to meet due process requirements and to allow the trial court to have

general jurisdiction over H G Spec. The plaintiff must present more than isolated or

sporadic visits with the forum before such contacts will constitute the type of

continuous, systematic, and substantial contacts necessary for general jurisdiction.

See Helicopteros, 466 U.S. at 415-19. After reviewing the entire record, we conclude

the contacts between H G Spec and Texas have been sporadic and limited and fall

short of the continuous, systematic, and substantial contacts necessary for a finding

of general jurisdiction. See id. at 416; Moki Mac, 221 S.W.3d at 575. Issue one is

overruled.

In his second appellate issue, Appellant asserts the trial court erred in granting

H G Spec’s special appearance because the trial court has specific jurisdiction over

H G Spec. According to Plaintiff’s Response to Defendants’ Special Appearance, as

well as Appellant’s brief,

. . . HG Spec set out, after having ended its prior distribution agreement
for specialty plum[b]ing products, to replace it. HG Spec proposed to
Reliance that it distribute Reliance TMVs and other specialty plumbing
products throughout North America, that is to say throughout both
Canada and the United States. Since HG Spec had previously
distributed only in Canada, HG Spec, with the specific intent of
19
 furthering its business, entered into a series of written agreements with
various local companies that served as “Manufacturer’s Reps” on its
behalf throughout the United States. Two of these Manufacturers Reps
encompassed the entire State of Texas between the[n]. These
Manufacturers Reps, under the direction of a “Sales Rep” (Mr. Proulx)
directly employed at first by HG Spec, promoted the HG Spec-branded
products throughout the United States including Texas.
These efforts were hardly insignificant; in fact when Reliance
later attempted to “cut HG Spec out” of the distribution process, HG
Spec protested and ultimately ended up being paid nearly $500,000 for
the distribution network that it had set up and the agreements that it had
entered into with its Texas Manufacturers Reps and those from other
States. Mr. Proulx frequently traveled through the U.S. including
Texas; and HG Spec advertised in various trade magazines with
distribution in Texas; all naturally for the goal of making sales and
thereby profit for HG Spec and Reliance. As such, traditional notions
of fair play and substantial justice support the argument that HG Spec,
having taken these extensive affirmative steps to open up and promote
the Texas market, should reasonably expect to have to answer a claim
that one of the products that it promoted was defective.

Specific jurisdiction is limited to claims that “arise out of or relate to” a non-

resident’s forum contacts. Burger King, 471 U.S. at 472 (quoting Helicopteros, 466

U.S. at 414); Retamco, 278 S.W.3d at 338. In such cases, there must be a “substantial

connection” between the defendant’s contacts and the operative facts of the

litigation. See Moki Mac, 221 S.W.3d at 585. Pichette’s affidavit asserted that H G

Spec sold its inventory pursuant to an August 2001 purchase agreement and that,

after January 28, 2002, H G Spec did not distribute any TMVs in Texas or anywhere

else. Plaintiff’s counsel acknowledged at the hearing on the special appearances that

“[t]here is some theoretical possibility that [the TMV in this case] actually got sold
20
to this [adult care facility] in Beaumont after HG Spec was out of the business[.]”

After H G Spec negated Plaintiff’s jurisdictional allegations as stated in the petition,

the burden shifted back to Plaintiff to present some evidence to support Plaintiff’s

basis for personal jurisdiction as to H G Spec. See Kelly, 301 S.W.3d at 659.

As to Plaintiff’s argument that the trial court had specific jurisdiction over

H G Spec, Plaintiff had the burden to establish a substantial connection between H G

Spec’s contacts with Texas and the operative facts of the litigation. See Moncrief,

414 S.W.3d at 156. Although the valve in this litigation bears the marking of “HG

Specialties” on the valve, H G Spec presented evidence that it distributed plumbing

and other products to Texas wholesalers from 1987 to January 28, 2002, and that it

sold both its existing inventory of TMVs marked with the name of “HG Specialties”

and H G Spec’s “Rep Network” in the United States to Reliance Worldwide

Corporation by Purchase Agreement on August 27, 2001. H G Spec also attached a

copy of its Sales and Distribution Agreement which provided that GSA Group Pty

Ltd (trading under the “Reliance” name) could sell the products it purchased from H

G Spec without changing the markings. H G alleged that Plaintiff had failed to

present evidence linking the valve at issue in this litigation to H G Spec and that

Plaintiff failed to establish a “substantial connection” between the operative facts of

the underlying suit and the alleged contacts of H G Spec in Texas. See Moki Mac,

21
221 S.W.3d at 585. (explaining that there must be a substantial connection between

the defendant’s contacts and the operative facts of the litigation).

At the hearing on the special appearances and on appeal, Plaintiff cites to Mi

Gwang Contact Lens Co. v. Chapa, No. 13-13-00306-CV, 2015 Tex. App. LEXIS

5872 (Tex. App.—Corpus Christi June 11, 2015, no pet.) (mem. op.). In Mi Gwang

Contact Lens, fourteen-year-old Victoria Chapa purchased a pair of cosmetic contact

lenses at a mall and subsequently experienced a corneal ulcer and infection in her

left eye as a result of using the contact lenses. 2015 Tex. App. LEXIS 5872, at *1.

Victoria’s mother, individually and on behalf of Victoria, brought suit in Texas

against multiple defendants including Mi Gwang Contact Lens Co., a Korean

manufacturer of colored cosmetic contact lenses, and Clearlab, a Georgia distributor

of Mi Gwang’s contact lenses, for negligence and negligence per se regarding the

sale and distribution of cosmetic contact lenses. See id. at **1, 22, 24. Mi Gwang

Contact Lens and Clearlab filed special appearances contesting both general and

specific jurisdiction. Id. at *2. The Corpus Christi Court of Appeals affirmed the trial

court’s denial of Mi Gwang Contact Lens’s and Clearlab’s special appearances. Id.

at *33. In concluding that the exercise of personal jurisdiction in Texas over Clearlab

was appropriate, the appellate court noted that, among other things, “the record

contains multitudes of invoices and receipts documenting sales of Mi Gwang

22
contacts from Clearlab to dozens of Texas distributors and retailers.” Id. at *24. The

court also noted that “[t]he record indicates substantial sales, with concomitant

profit, of contact lenses manufactured by Mi Gwang and distributed by Clearlab to

the Texas market.” Id. at **24-25. Contrary to the record in Mi Gwang, in the present

case there is no evidence of invoices and receipts documenting sales of TMVs from

H G Spec to any distributors, nor is there evidence in the record of a volume of sales

or profits resulting from H G Spec’s sales of TMVs to any distributor, seller, or

wholesaler during the time period H G Spec sold TMVs, and further there is no

evidence in the record as to the amount of inventory of TMVs transferred to

“Reliance” as a result of the Purchase Agreement.

We conclude that, based upon the record before us, the trial court did not err

in granting H G Spec’s special appearance because the Plaintiff failed to present

evidence to establish a substantial connection between H G Spec’s forum contacts

and the operative facts. H G Spec presented evidence to affirmatively rebut the

jurisdictional allegation that it was “doing business in Texas.” To the extent that the

Plaintiff is generally alleging that H G Spec sold TMVs in Texas from 1987 to 2002,

even if such allegations are taken as true, such facts would not, without something

more linking that conduct to the operative facts in question, satisfy the “substantial

connection” required for specific jurisdiction. See Retamco, 278 S.W.3d at 340; see

23
also Spir Star, 310 S.W.3d at 875 (“That similar products were sold in Texas would

not create a substantial connection as to products that were not.”). There is no

evidence in the record that H G Spec supplied the valve at issue to the Texas EduCare

facility, or that the valve was connected to the conduct of H G Spec in Texas. Issue

two is overruled.

Specific Jurisdiction as to the Reliance Defendants

In his third issue on appeal, Appellant asserts the trial court erred in granting

the Reliance Defendants’ special appearances because specific jurisdiction exists in

Texas over the Reliance Defendants. We will examine the jurisdictional allegations

as to each of the Reliance Defendants and the Appellant’s alter ego theory as to the

Reliance Defendants.

As stated above, Plaintiff alleged in his petition that Reliance Worldwide Pty

Ltd and GSA Group Pty Ltd are “Australian compan[ies] doing business in the State

of Texas[,]” and that GSA Industries Pty Ltd is “an Australian company[.]” Plaintiff

also alleged that the Reliance Defendants “had continuous, systematic and sufficient

minimum [contacts] with Texas, their actions were directed to the State of Texas,

and they purposefully availed themselves of the benefit, advantage and profit of this

jurisdiction.”

a. Reliance Worldwide Pty Ltd

24
 Reliance Worldwide Pty Ltd attached an affidavit to its special appearance

from its Company Secretary, Dale Hudson. Hudson swore to the following:

. . . The business name “Reliance Worldwide” is owned by Reliance
Worldwide Pty Ltd.

. . . Reliance Worldwide Pty Ltd is located in Melbourne, Australia, and
is registered in Australia as a proprietary limited company.

. . . Reliance Worldwide Pty Ltd is not a resident of Texas.

. . . Reliance Worldwide Pty Ltd is not registered in Texas or any state
in the United States. It does not conduct regular or systematic business
in Texas or any state in the United States.

. . . Reliance Worldwide Pty Ltd does not maintain a registered agent
for service of process in Texas.
. . . Reliance Worldwide Pty Ltd does not maintain a place of business
or an office in the State of Texas.

. . . Reliance Worldwide Pty Ltd does not own or lease any property in
Texas.

. . . Reliance Worldwide Pty Ltd does not own or operate any vehicles
that are registered in Texas.

. . . Reliance Worldwide Pty Ltd has not paid and does not owe any
taxes to the State of Texas or any of its political subdivisions.

. . . Reliance Worldwide Pty Ltd does not maintain a bank account,
business records, employees or telephone numbers in Texas.

. . . Reliance Worldwide Pty Ltd has no officers or directors residing or
domiciled in the State of Texas.

. . . Reliance Worldwide Pty Ltd has not held any executive, shareholder
or board meetings in the State of Texas.
25
 . . . Reliance Worldwide Pty Ltd does not advertise or solicit business
in the State of Texas.

. . . Reliance Worldwide Pty Ltd does not hold regular consultations
with customers in Texas.

. . . Reliance Worldwide Pty Ltd does not manufacture or design
products specifically for the Texas market.

. . . Reliance Worldwide Pty Ltd did not create, control or employ any
distribution system that may have brought any product to Texas.

. . . Reliance Worldwide Pty Ltd does not market products through a
distributor who has agreed to serve as a sales agent in the State of Texas.

. . . Reliance Worldwide Pty Ltd has not purposely done any act or
consummated any transaction within the State of Texas.

Reliance Worldwide Pty Ltd asserted that it had not purposefully availed itself of

the privilege of conducting activities within Texas, and Plaintiff’s litigation did not

result from injuries that arose from Reliance Worldwide Pty Ltd’s contacts with

Texas. Reliance Worldwide Pty Ltd also argued that it had not engaged in any

“additional conduct” to support jurisdiction, and that “[t]he mere fact that products

allegedly placed into the stream of commerce at some point by Reliance Worldwide

Pty Ltd. caused harm to Plaintiff is insufficient to subject Reliance Worldwide Pty

Ltd. to jurisdiction in Texas.”

A deposition transcript of Dale Hudson, a corporate representative of Reliance

Worldwide Pty Ltd and GSA Group Pty Ltd, was attached to Reliance Worldwide
26
Pty Ltd’s Supplement to its Special Appearance. Hudson testified that Reliance

Worldwide Pty Ltd generally sold valves and “was effectively a branch operation of

one of the other companies within the group where it sold product into Southeast

Asia[,]” and that Worldwide Pty Ltd was dormant and the “last year of [its] trading

operations was 2003.”

In Plaintiff’s Response to Defendants’ Special Appearance as well as in

Appellant’s brief, Plaintiff argued as to Reliance Worldwide Pty Ltd that “[s]ince all

of these different Reliance entities are all part of the same identity for purposes of

the grand effort to sell TMVs and other specialty plumbing products in the United

States, specific personal jurisdiction is appropriate as to them also.”

After Reliance Worldwide Pty Ltd negated Plaintiff’s jurisdictional

allegations, Plaintiff had the burden to come forward with evidence that Reliance

Worldwide Pty Ltd had purposeful contacts and that such contacts were substantially

connected to the litigation. Because the Plaintiff failed to meet his burden, the trial

court did not err in granting Reliance Worldwide Pty Ltd’s special appearance.

b. GSA Group Pty Ltd

In GSA Group Pty Ltd’s special appearance, GSA Group Pty Ltd attached an

affidavit from Dale Hudson, the Company Secretary of GSA Group Pty Ltd, wherein

Hudson swore to the following:

27
. . . GSA Group Pty Ltd is located in Melbourne, Australia, and is
registered in Australia as a proprietary limited company.

. . . GSA Group Pty Ltd is not a resident of Texas.

. . . GSA Group Pty Ltd is not registered in Texas or any state in the
United States. It does not conduct regular or systematic business in
Texas or any state in the United States.

. . . GSA Group Pty Ltd does not maintain a registered agent for service
of process in Texas.

. . . GSA Group Pty Ltd does not maintain a place of business or an
office in the State of Texas.
. . . GSA Group Pty Ltd does not own or lease any property in Texas.

. . . GSA Group Pty Ltd does not own or operate any vehicles that are
registered in Texas.

. . . GSA Group Pty Ltd has not paid and does not owe any taxes to the
State of Texas or any of its political subdivisions.

. . . GSA Group Pty Ltd does not maintain a bank account, business
records, employees or telephone numbers in Texas.

. . . GSA Group Pty Ltd has no officers or directors residing or
domiciled in the State of Texas.

. . . GSA Group Pty Ltd has not held any executive, shareholder or board
meetings in the State of Texas.

. . . GSA Group Pty Ltd does not advertise or solicit business in the
State of Texas.

. . . GSA Group Pty Ltd does not hold regular consultations with
customers in Texas.

28
 . . . GSA Group Pty Ltd does not manufacture or design products
specifically for the Texas market.

. . . GSA Group Pty Ltd did not create, control or employ any
distribution system that may have brought any product to Texas.

. . . GSA Group Pty Ltd does not market products through a distributor
who has agreed to serve as a sales agent in the State of Texas.

. . . GSA Group Pty Ltd has not purposely done any act or consummated
any transaction within the State of Texas.

We construe the argument in Plaintiff’s Response to Defendants’ Special

Appearance as well as the argument in his appellate brief to be that GSA Group Pty

Ltd is a corporate entity related to the other Reliance entities and that, “although the

[Sales and Distribution Agreement] purports to be made on behalf of GSA Group

Pty. Ltd[,]” GSA Group Pty Ltd “naming was a sham[]” and Hudson testified that

GSA Group Pty Ltd never had any active operations. The Sales and Distribution

Agreement dated May 23, 2000, between “H G Specialties, Inc.” and “GSA Group

Pty. Ltd. (ACN 002 634 335)” is attached to Plaintiff’s Response to Defendants’

Special Appearance.

Hudson’s deposition transcript attached to GSA Group Pty Ltd’s Supplement

to its Special Appearance addressed the Sales and Distribution Agreement and the

parties involved in the agreement. Hudson also testified that GSA Group Pty Ltd is

a holding company that does not have any operations. The agreement also does not

29
establish whether the parties to the agreement desired for the TMVs to be sold or

distributed in Texas. Regardless of whether defendant GSA Group Pty Ltd was a

party to the agreement,5 the Sales and Distribution Agreement would be insufficient

to establish contacts by GSA Group Pty Ltd with Texas because nothing therein

evidences a substantial connection between GSA Group Pty Ltd and the forum state

or the operative facts of this litigation. See Moki Mac, 221 S.W.3d at 585. After GSA

Group Pty Ltd negated Plaintiff’s jurisdictional allegations, Plaintiff failed to present

evidence to support its allegations that GSA Group Pty Ltd had any role in the

design, manufacture, marketing, sale, or distribution of the TMV made the basis of

the suit. The trial court did not err in granting GSA Group Pty Ltd’s special

appearance.

c. GSA Industries (Aust) Pty Ltd

In its special appearance, GSA Industries (Aust) Pty Ltd asserted that it is

located in Melbourne, Australia, is registered in Australia as a privately owned

proprietary company, there is no nexus between any act by GSA Industries (Aust)

5
Hudson testified that Defendant GSA Group Pty Ltd, which has an
Australian Corporate Number (ACN) 004 948 298, was not a party to the Sales and
Distribution Agreement, but a different entity that previously had the same name but
the ACN 002 634 335 was the party to the agreement with HG Specialties Inc.
According to Hudson, the entity that was a party to the agreement with HG
Specialties Inc. changed its name in March 2007 to Carnegie Holdings Pty Ltd (ACN
002 634 335).
30
Pty Ltd in Texas and the death of Larry Morris, the allegations in the lawsuit against

GSA Industries (Aust) Pty Ltd do not arise out of any contacts between it and Texas,

and GSA Industries (Aust) Pty Ltd has not consented to the jurisdiction of a Texas

court. In support of its argument that GSA Industries (Aust) Pty Ltd does not have

sufficient minimum contacts with Texas to allow the trial court to exercise

jurisdiction over GSA Industries (Aust) Pty Ltd, the company asserted the following:

. . . GSA Industries (Aust) Pty Ltd is a corporation organized under the
laws of Australia.

. . . GSA Industries (Aust) Pty Ltd has its registered office in
Melbourne, Australia.

. . . GSA Industries (Aust) Pty Ltd is not registered in Texas or any of
the United States and does not conduct regular or systematic business
in Texas.

. . . GSA Industries (Aust) Pty Ltd does not maintain a registered agent
for service of process in Texas.
. . . GSA Industries (Aust) Pty Ltd also does not maintain a place of
business in Texas.

. . . GSA Industries (Aust) Pty Ltd does not own or lease any property
in Texas.

. . . GSA Industries (Aust) Pty Ltd also does not own or operate any
vehicles that are registered in Texas.

. . . GSA Industries (Aust) Pty Ltd has not paid or owed any taxes to
the State of Texas or any of its political subdivisions.

. . . GSA Industries (Aust) Pty Ltd does not maintain a bank account,
business records, employees, or telephone numbers in Texas.
31
 . . . GSA Industries (Aust) Pty Ltd has no officers or directors residing
or domiciled within the State of Texas.

. . . GSA Industries (Aust) Pty Ltd has not held any executive,
shareholder, or board meetings in the State of Texas.

. . . GSA Industries (Aust) Pty Ltd does not advertise or solicit business
in Texas or provide regular advice to customers in Texas.

. . . GSA Industries (Aust) Pty Ltd does not regularly consult with any
customers in Texas.

. . . GSA Industries (Aust) Pty Ltd does not distribute products for sale
directly into Texas.

We construe Appellant’s argument in Plaintiff’s Response to Defendants’

Special Appearance and his brief to argue that GSA Industries (Aust) Pty Ltd

manufactures TMVs in Australia and places them into the stream of commerce for

sale in the United States and, therefore, the trial court has specific jurisdiction over

GSA Industries (Aust) Pty Ltd. Hudson’s deposition transcript attached to Plaintiff’s

Response to Defendants’ Special Appearance reflects that the company that

manufactured the majority of the product that Reliance Worldwide Pty Ltd sold was

a company called GSA Industries (Aust) Pty Ltd, which he explained is “now called

Reliance Worldwide Corporation (Aust). Pty. Ltd.” It appears that Appellant is

contending that because GSA Industries (Aust) Pty Ltd placed TMVs into the stream

of commerce that the trial court has jurisdiction over GSA Industries (Aust) Pty Ltd.

32
Appellant relies to some degree on Hudson’s testimony that the only company in the

group of related entities that would have directly distributed products to the United

States in 2000 or 2003 would have been GSA Industries (Aust) Pty Ltd.

In Spir Star, the Texas Supreme Court explained the following with respect

to a stream-of-commerce argument:

. . . a seller’s awareness “‘that the stream of commerce may or will
sweep the product into the forum State does not convert the mere act of
placing the product into the stream into an act purposefully directed
toward the forum State.’” CSR, 925 S.W.2d at 595 (quoting Asahi Metal
Indus. Co., Ltd. v. Superior Court of Cal., 480 U.S. 102, 112 . . . (1987)
(plurality opinion)). Instead, our precedent generally follows Justice
O’Connor’s plurality opinion in Asahi, which requires some “additional
conduct”—beyond merely placing the product in the stream of
commerce—that indicates “an intent or purpose to serve the market in
the forum State.” Asahi, 480 U.S. at 112; Moki Mac, 221 S.W.3d at 577;
Michiana, 168 S.W.3d at 786. Examples of this additional conduct
include: (1) “designing the product for the market in the forum State,”
(2) “advertising in the forum State,” (3) “establishing channels for
providing regular advice to customers in the forum State,” and (4)
“marketing the product through a distributor who has agreed to serve
as the sales agent in the forum State.” Asahi, 480 U.S. at 112; see also
Moki Mac, 221 S.W.3d at 577; Michiana, 168 S.W.3d at 786; Kawasaki
Steel Corp. v. Middleton, 699 S.W.2d 199, 201 (Tex. 1985).

310 S.W.3d at 873. In discussing whether a non-resident manufacturer’s use of a

Texas distributor could establish “additional conduct,” the Court noted that there are

limitations to the rule that

“[I]f the sale of a product of a manufacturer . . . is not simply an isolated
occurrence, but arises from the efforts of the manufacturer . . . to serve
directly or indirectly, the market for its product in other States, it is not
33
 unreasonable to subject it to suit in one of those States if its allegedly
defective merchandise has there been the source of injury to its owner
or to others.”

Id. at 874 (quoting World-Wide Volkswagen, 444 U.S. at 297 (emphasis added)).

The limitations include the following: the rule only applies to the specific

jurisdiction context because stream-of-commerce analysis is relevant only to the

exercise of specific jurisdiction; when a nonresident’s only contacts with Texas

involve indirect sales through a distributor or subsidiary, specific jurisdiction is

limited to claims arising out of those sales; there must be a substantial connection

between the product claim and the manufacturer (that similar products were sold in

Texas would not create a substantial connection as to products that were not; and,

the manufacturer must have intended to serve the Texas market (i.e., marketing the

product through a distributor who has agreed to serve as the sales agent in the forum

State). Id. at 874-75.

Plaintiff failed to present evidence of “additional conduct” by GSA Industries

(Aust) Pty Ltd: that products manufactured by GSA Industries (Aust) Pty Ltd were

sold or distributed to end users in Texas, that GSA Industries (Aust) Pty Ltd targeted

any marketing towards Texas, that GSA Industries (Aust) Pty Ltd sold the TMV to

a Texas company, that GSA Industries (Aust) Pty Ltd manufactured the TMV made

the basis of the present lawsuit, or how the TMV arrived in Texas. After GSA

34
Industries (Aust) Pty Ltd negated Plaintiff’s jurisdictional allegations, Plaintiff had

the burden to come forward with evidence that GSA Industries (Aust) Pty Ltd had

purposeful contacts and that such contacts were substantially connected to the

litigation. Because the Plaintiff failed to meet his burden, the trial court did not err

in granting GSA Industries (Aust) Pty Ltd’s special appearance.

d. Alter Ego Theory as to the Reliance Defendants

Plaintiff also argues that the trial court had specific jurisdiction over the

Reliance Defendants under an alter ego or single business enterprise theory because

the “Reliance entities are all part of the same identity for purposes of the grand effort

to sell scald-protector/TMVs and other specialty plumbing products in the United

States[.]” In BMC Software, the Texas Supreme Court explained:

Personal jurisdiction may exist over a nonresident defendant if the
relationship between the foreign corporation and its parent corporation
that does business in Texas is one that would allow the court to impute
the parent corporation’s “doing business” to the subsidiary. Hargrave
v. Fibreboard Corp., 710 F.2d 1154, 1159 (5th Cir. 1983); Walker v.
Newgent, 583 F.2d 163, 167 (5th Cir. 1978). The rationale for
exercising jurisdiction is that “the parent corporation exerts such
domination and control over its subsidiary ‘that they do not in reality
constitute separate and distinct corporate entities but are one and the
same corporation for purposes of jurisdiction.’” Hargrave, 710 F.2d at
1159 (citations omitted); see also Conner v. ContiCarriers &
Terminals, Inc., 944 S.W.2d 405, 418 (Tex. App.—Houston [14th
Dist.] 1997, no writ). The party seeking to ascribe one corporation’s
actions to another by disregarding their distinct corporate entities must
prove this allegation. Walker, 583 F.2d at 167; Conner, 944 S.W.2d at
418-19; see also Lucas v. Texas Indus., Inc., 696 S.W.2d 372, 375 (Tex.
35
 1984). This is because Texas law presumes that two separate
corporations are indeed distinct entities:
The general rule seems to be that courts will not because
of stock ownership or interlocking directorship disregard
the separate legal identities of corporations, unless such
relationship is used to defeat public convenience, justify
wrongs, such as violation of the anti-trust laws, protect
fraud, or defend crime. Bell Oil & Gas Co. v. Allied Chem.
Corp., 431 S.W.2d 336, 339 (Tex. 1968) (citations
omitted).

To “fuse” the parent company and its subsidiary for jurisdictional
purposes, the plaintiffs must prove the parent controls the internal
business operations and affairs of the subsidiary. Conner, 944 S.W.2d
at 418-19 (discussing Hargrave, 710 F.2d at 1160; Walker, 583 F.2d at
167). 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.
See Hargrave, 710 F.2d at 1160; Conner, 944 S.W.2d at 419; see also
Gentry v. Credit Plan Corp. of Houston, 528 S.W.2d 571, 573 (Tex.
1975).

83 S.W.3d at 798-99. When a plaintiff asserts jurisdiction over a nonresident

defendant under an alter ego theory, the plaintiff has the burden to overcome the

presumption of separateness by proving its alter ego allegation. Id. at 798. We

conclude that Plaintiff failed to meet his burden to present evidence to support his

allegations and to “fuse” the respective entities, and to overcome the presumption of

separateness of the entities. See id.

Under this record, there is a lack of evidence that any of the Reliance

Defendants purposefully availed themselves of the benefits of conducting activities
36
in Texas. There is a lack of evidence of a substantial connection between each of the

Reliance Defendant’s contacts with Texas, if any, and the operative facts of the

litigation. The trial court did not err in granting the Reliance Defendants’ special

appearances. Issue three is overruled.6

We affirm the trial court’s orders.

AFFIRMED.
_________________________
LEANNE JOHNSON
Justice

Submitted on February 24, 2016
Opinion Delivered February 28, 2017

Before McKeithen, C.J., Horton and Johnson, JJ.

6
Having overruled Appellant’s stated issues, we need not address his
argument that the assertion of personal jurisdiction over Appellees would not offend
traditional notions of fair play and substantial justice. See Shell Compania Argentina
de Petroleo, S.A. v. Reef Expl., Inc., 84 S.W.3d 830, 840-41 (Tex. App.—Houston
[1st Dist.] 2002, pet. denied).

37