Alto Eldorado Partnership v. Amrep Corp.

SUTIN, Judge

(specially concurring).

{39} I agree with the district court’s denial of Amrep Corpoi-ation’s (Amrep’s) motion to dismiss for lack of personal jurisdiction. However, the legal analysis can be less complex.

{40} Amrep did not itself transact the business of which Plaintiffs complain. Whatever contacts Amrep itself had with New Mexico were not in and of themselves sufficient for jurisdiction over Amrep. For jurisdiction over Amrep, Plaintiffs can ton only to legal theories through which Eldorado Utilities, Inc.’s (EUI’s) transactions and contacts are attributable or imputable to Amrep. Those theories, usually, are alter ego, agency, and conspiracy. See, e.g., NMSA 1978, § 38-1-16(A) (1971) (“Any person ... who in person or through an agent does any of the acts enumerated ... submits himself ... to the jurisdiction of the courts of this state[.]”); Jemez Agency, Inc. v. CIGNA Corp., 866 F.Supp. 1340, 1343 (D.N.M.1994) (stating that a court can invoke jurisdiction over a foreign parent predicated on the acts of its subsidiary under alter ego and agency theories); Santa Fe Techs., Inc. v. Argus Networks, Inc., 2002-NMCA-030, ¶¶ 26-47, 131 N.M. 772, 42 P.3d 1221 (stating that a court can invoke jurisdiction over a foreign parent predicated on the acts of its subsidiary under agency and conspiracy theories).

{41} Plaintiffs were required to make a prima facie showing in the present case of alter ego or agency. See Sanchez v. Church of Scientology, 115 N.M. 660, 663, 857 P.2d 771, 774 (1993) (determining that the plaintiff failed to make a prima facie showing of conspiracy for jurisdiction); Santa Fe Techs., 2002-NMCA-030, ¶¶ 12, 26 (stating that the plaintiff bore the burden of proof to make a prima facie showing of personal jurisdiction, including its establishment based on an agency theory). On appeal, Plaintiffs do not argue agency; they argue only alter ego. Thus, only alter ego is at issue in this appeal.

{42} When the issue of jurisdiction is submitted to the district court on affidavits and the plaintiff makes a prima facie showing of all of the elements of the substantive alter ego theory of liability of a parent for the transactions of its subsidiary, little question exists that the district court would appropriately deny a pretrial motion to dismiss. In the present case, Plaintiffs did not make a prima facie showing of the second and third elements of the substantive theory of liability, namely, the elements of improper or fraudulent purpose for incorporation and proximate causation. See Jemez Agency, 866 F.Supp. at 1343-44 (setting out the three requirements in order to pierce the corporate veil in New Mexico as “(1) a showing of instrumentality or domination; (2) a demonstration of improper or fraudulent purpose for incorporation; and (3) proximate causation”). The question is whether a prima facie showing of the first element of the substantive theory, that of instrumentality or domination, is sufficient for jurisdiction.

{43} In a plaintiffs quest to establish alter ego liability, in proving instrumentality or domination, the plaintiff must show that “the subsidiaries are mere business conduit[s] for the parent or [that] there is such unity of interest and ownership that the individuality or separateness of the two corporations has ceased.” Id. at 1344 (internal quotation marks and citation omitted) (alterations in original). This is the “alter ego” aspect of the alter ego theory. See id. (“In other words, [in establishing the first requirement of instrumentality or domination,] the subsidiaries must be shown to be mere ‘alter egos’ of [the parent].”).

{44} Jemez Agency speaks of the application of “principles” of alter ego “as a component of [the] due process analysis” for jurisdiction. Id. at 1346. The Court in Jemez Agency states: “The Court does not suggest ... that any one state’s principles of traditional alter ego analysis are mandated by due process.” Id. at 1348. The Court further states: “Nor should this opinion be construed as holding that alter ego principles constitute the totality of the due process analysis. Other facts, aside from ownership of a subsidiary corporation, may indicate that the parent corporation has minimum contacts with the forum state.” Id. These analyses in Jemez Agency are applicable in the present case.

{45} A prima facie showing of instrumentality or domination should be sufficient to establish the minimum contacts necessary for jurisdiction without also having to prove the improper or fraudulent purpose and proximate causation elements required to establish liability. A plaintiff can also show other activity of a parent in the forum state to bolster an attempt to establish minimum contacts.

{46} Placing the facts in the record in this case against the guidelines in Cruttenden v. Mantura, 97 N.M. 432, 434-35, 640 P.2d 932, 934-35 (1982), and a minimum contacts analysis, I support the denial of Amrep’s motion to dismiss at this early stage of the case based on the instrumentality/domination element of the substantive alter ego theory, together with Amrep’s overall involvement in relation to New Mexico.

{47} Plaintiffs’ showing is thin, to be sure, and affirming the district court’s denial of Amrep’s motion to dismiss is by little more than a hair’s breadth, but it is in line with our standard that we review what is before us in a light most favorable to the party asserting jurisdiction. See Santa Fe Techs., 2002-NMCA-030, ¶ 12 (“When the district court bases its ruling on the pleadings and affidavits ... the appellate court reviews [the record] in the light most favorable to the party asserting jurisdiction.”).

{48} Because there was no evidentiary hearing on the issue of jurisdiction, if the district court during trial determines that the evidence of Amrep’s control or domination of EUI, or Amrep’s disregard of EUI’s separate, independent, corporate existence, and evidence of Amrep’s own other contacts with New Mexico are insufficient to constitute the minimum contacts required under due process, the court can dismiss for lack of jurisdiction at that point. See Mimco Inc. v. Va. Iron & Metal Recycling, Inc., 840 F.Supp. 1171, 1174-75 (S.D.Ohio 1993) (“For the foregoing reasons the Court finds that the Plaintiff has met its burden of demonstrating facts which support a prima facie finding of jurisdiction. In doing so the Court makes no judgement concerning the merits of the parties’ claims. Furthermore, the issue of personal jurisdiction may be raised again at the trial on the merits, after complete discovery, where further factual issues may be argued and where the Plaintiff bears the burden of proving personal jurisdiction by a preponderance of the evidence.” (citation omitted)).