1

United States Court of Appeals,

Fifth Circuit.

No. 95-20155.

GUNDLE LINING CONSTRUCTION CORPORATION, Plaintiff,

and

United States Fidelity & Guaranty Company, Defendant/Third-party

Plaintiff/Appellee,

v.

ADAMS COUNTY ASPHALT, INC., Kimbob, Inc., and Robert M. Mumma,

II, Third-party Defendants/Appellants.

June 13, 1996.

Appeal from the United States District Court for the Southern

District of Texas.

Before BARKSDALE, DeMOSS and PARKER, Circuit Judges.

ROBERT M. PARKER, Circuit Judge:

This diversity case was filed in the Southern District of

Texas by a Texas corporation seeking to recover on a bond issued by

the defendant. The defendant, a resident of Maryland, filed a

third-party complaint seeking indemnification from the third-party

defendants, who were the principals on the bond. The third-party

defendants, all residents of Pennsylvania, filed motions to dismiss

wherein they challenged the district court's in personam

jurisdiction. The district court denied their motions. The

plaintiff and defendant ultimately settled the underlying claim.

The district court then granted summary judgment to the third-party

plaintiff on its indemnity claim. The third-party defendants

appealed, challenging the district court's decisions as to personal

jurisdiction, venue, and the grant of summary judgment to the
2

third-party plaintiff. Finding that personal jurisdiction was

proper as to only one of the third-party defendants, we affirm in

part and reverse in part.

FACTS AND PROCEDURAL HISTORY

Adams County Asphalt, Inc. ("Adams Inc.") contracted with the

City of Harrisburg, Pennsylvania to perform a large project

("Harrisburg project") involving the city's waste disposal system.

Adams Inc. is owned by Robert Mumma II ("Mumma"), who also owns

Kimbob, Inc ("Kimbob Inc."). Adams Inc. obtained a payment bond

for the benefit of all persons furnishing labor, material, or both

on the Harrisburg project from United States Fidelity & Guaranty

Company ("USF & G"). USF & G entered into a Master Security

Agreement ("MSA") with Adams Inc., Kimbob Inc., and Mumma as

indemnitors to secure reimbursement to USF & G of any payments it

made in good faith on claims against the bond.

Adams Inc., as general contractor, entered into a subcontract

with Gundle Lining Construction Corporation ("Gundle") of Houston,

Texas to supply and install certain materials for the Harrisburg

project. The project owner had specified that Adams Inc.

subcontract with Gundle because Gundle had designed the portion of

the project that was to employ Gundle's materials.

During the course of construction, a dispute arose between

Adams Inc. and Gundle regarding the quantity of the material Gundle

had agreed to supply for the project and the quality of its

installation. Adams Inc. paid Gundle the amount for which it had

contracted but refused to pay Gundle for amounts in excess of the
3

original contract.

Rather than pursue Adams Inc. on its claim, Gundle elected to

make a claim for payment against the payment bond. After USF & G

refused to pay the claim, Gundle filed suit against USF & G in

Texas state court to recover on the bond. The suit was then

removed to federal district court based upon diversity

jurisdiction. Seeking indemnification, USF & G filed third-party

complaints against Adams Inc., Kimbob Inc., and Mumma ("third-party

defendants"), claiming that it was entitled to recover all amounts

paid to Gundle from its indemnitors. Shortly thereafter, Gundle

and USF & G settled their action for $121,000 (the amount of

Gundle's claim against the bond), and Gundle agreed to dismiss its

claim against USF & G.

The third-party defendants, all non-residents of Texas, filed,

inter alia, motions to dismiss for lack of personal jurisdiction.

USF & G countered with a motion for summary judgment. In October

1993, the district court denied the third-party defendants' motions

for dismissal. Then, nearly a year and a half later, the district

court granted USF & G's motion for summary judgment. The

third-party defendants then timely perfected this appeal.

ANALYSIS

I. Personal Jurisdiction

It is undisputed that none of the parties to this appeal are

residents of Texas. When the jurisdictional facts are not in

dispute this court conducts a de novo review of the district

court's determination that its exercise of personal jurisdiction
4

over a nonresident defendant is proper. Bullion v. Gillespie, 895

F.2d 213, 216 (5th Cir.1990). In analyzing the district court's

decision to exercise personal jurisdiction over a nonresident

defendant, it is important to bear in mind that the plaintiff bears

the burden of establishing the district court's jurisdiction over

the nonresident. Stuart v. Spademan, 772 F.2d 1185, 1192 (5th

Cir.1985).

 In a diversity suit a federal court has jurisdiction over a

nonresident defendant to the same extent that a state court in that

forum has such jurisdiction. Wilson v. Belin, 20 F.3d 644, 646

(5th Cir.), cert. denied, --- U.S. ----, 115 S.Ct. 322, 130 L.Ed.2d

282 (1994). The reach of a state court's jurisdiction is delimited

by: (1) the state's long-arm statute; and (2) the Due Process

Clause of the Fourteenth Amendment to the federal Constitution.

Bullion, 895 F.2d at 215. The Texas long-arm statute authorizes

the exercise of jurisdiction over nonresidents "doing business" in

Texas. Tex.Civ.Prac. & Rem.Code § 17.042. The Texas Supreme Court

has interpreted the "doing business" requirement broadly, allowing

the long-arm statute to reach as far as the federal Constitution

permits. Schlobohm v. Schapiro, 784 S.W.2d 355, 357 (Tex.1990).

Consequently, we will analyze the exercise of personal jurisdiction

over nonresidents with reference to federal constitutional limits.

See Insurance Corp. of Ireland, Ltd. v. Compagnie des Bauxites de

Guinee, 456 U.S. 694, 702 n. 10, 102 S.Ct. 2099, 2104 n. 10, 72

L.Ed.2d 492 (1982) (the restriction on state power to subject a

nonresident to suit is "ultimately a function of the individual
5

liberty interest preserved by the Due Process Clause").

The exercise of personal jurisdiction over a nonresident will

not violate due process principles if two requirements are met.

First, the nonresident defendant must have purposefully availed

himself of the benefits and protections of the forum state by

establishing "minimum contacts" with that forum state.

International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.Ct.

154, 158, 90 L.Ed. 95 (1945). The defendant's conduct and

connection with the forum state must be such that he should

reasonably anticipate being haled into court in the forum state.

World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 296, 100

S.Ct. 559, 567, 62 L.Ed.2d 490 (1980).

Second, the exercise of jurisdiction over the nonresident

defendant must not offend "traditional notions of fair play and

substantial justice." Asahi Metal Indus. Co. v. Superior Court,

480 U.S. 102, 113, 107 S.Ct. 1026, 1033, 94 L.Ed.2d 92 (1987)

(quoting International Shoe, 326 U.S. at 316, 66 S.Ct. at 158).

The "minimum contacts" prong of the inquiry may be further

subdivided into contacts that give rise to "specific" personal

jurisdiction and those that give rise to "general" personal

jurisdiction. It is indisputable that if there is personal

jurisdiction over the defendants in the instant case it exists by

virtue of "specific" personal jurisdiction. Consequently, our

review is limited to this subdivision of the minimum contacts

analysis.

 The district court's exercise of specific jurisdiction is
6

appropriate only when the nonresident defendant's contacts with the

forum state arise from, or are directly related to, the cause of

action. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466

U.S. 408, 414 n. 8, 104 S.Ct. 1868, 1872 n. 8, 80 L.Ed.2d 404

(1984). To exercise specific jurisdiction, the court must examine

the relationship among the defendant, the forum, and the litigation

to determine whether maintaining the suit offends traditional

notions of fair play and substantial justice. Shaffer v. Heitner,

433 U.S. 186, 204, 97 S.Ct. 2569, 2579, 53 L.Ed.2d 683 (1977).

A. Jurisdiction as to Adams, Inc.

1. "Minimum contacts"

Adams Inc.'s contacts with Texas can be summarized as

follows: (1) Adams Inc. entered into a contract with Gundle, a

Texas entity, pertaining to the construction project in

Pennsylvania, (2) it mailed payments to Gundle at Gundle's Texas

address, and (3) it, a nonresident, engaged in communications with

a resident during the course of developing and carrying out the

contract. We have previously held that the combination of mailing

payments to the forum state, engaging in communications surrounding

the execution and performance of a contract, and the fact that a

nonresident enters into a contract with a resident are insufficient

to establish the requisite minimum contacts necessary to support

the exercise of personal jurisdiction over a nonresident defendant.

See Spademan, 772 F.2d at 1193.

However, the Spademan court was careful to recognize that one

factor that might affect the minimum contacts analysis is the
7

actual language present in the contract itself. Id. The court,

quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 105 S.Ct.

2174, 85 L.Ed.2d 528 (1985), stated:

If the question is whether an individual's contract with an

out-of-state party alone can automatically establish

sufficient minimum contacts in the other party's home forum,

we believe the answer clearly is that it cannot.... Instead,

we have emphasized the need for a "highly realistic" approach

that recognizes that a "contract" is "ordinarily but an

intermediate step serving to tie up prior business

negotiations and contemplated future consequences which

themselves are the real object of the business transaction."

... It is these factors—prior negotiations and contemplated

future consequences, along with the terms of the contract and

the parties' actual course of dealing—that must be evaluated

in determining whether the defendant purposefully established

minimum contacts within the forum.

Spademan, 772 F.2d at 1193 (citations omitted). Guided by the

direction of the Supreme Court and this court's well-reasoned

opinion in Spademan, we review the terms of the contracts at issue

in the instant case in order to determine if they, along with the

defendant's other contacts with Texas, were sufficient to confer

jurisdiction over Adams Inc.

In examining the terms of the contracts in the instant case,

Adams Inc. contends that we should look only to the Master Security

Agreement ("MSA") which was executed between USF & G and Adams Inc.

on April 10, 1990. In the MSA, Adams Inc. agreed to:

exonerate, indemnify, and keep indemnified SURETY [USF & G]

from and against any and all liabilities, losses and expenses

of whatsoever kind or nature ... incurred by SURETY by reason

of: (1) Surety having executed, provided or procured BOND(S)

in behalf of PRINCIPAL [Adams Inc.], or (2) UNDERSIGNED'S

failure to perform or comply with any provisions of this

AGREEMENT.

Examining this document alone, we would agree with Adams Inc. that

it is insufficient to confer jurisdiction over them. However, when
8

examining personal jurisdiction we do not subscribe to such a

myopic approach. Instead, our approach is "highly realistic",

cognizant of the commercial realities of the transactions that form

the basis of the nonresident defendant's contacts with the forum

state. Therefore, we look not only to the MSA but also to the bond

agreement between Adams Inc. and USF & G, which states:

[a]ll persons who have performed labor, rendered services or

furnished materials ... shall have a direct right of action

against the Principal [Adams Inc.] and Surety [USF & G] on

this bond, which right of action shall be asserted in

proceedings instituted in the State in which such labor was

performed, services rendered, or materials furnished.

In Spademan the plaintiffs argued that a choice-of-law

provision contained in the contract between the parties was

sufficient to establish the necessary contacts with the forum

state. The provision "specified that the agreement would be

construed and enforced in accordance with the law of the state in

which the "aggrieved party' is residing at the time of the breach

or grievance." Spademan, 772 F.2d at 1194. The court found that

the provision was insufficient, either standing alone or when

considered with the other contacts, so as to justify the exercise

of jurisdiction over the defendant. Spademan, 772 F.2d at 1196.

In its analysis of the choice-of-law provision the court stated:

At the outset, we note that the plaintiffs misapprehend the

very nature of this contractual provision. The provision

contemplates a choice of law not forum. Hence, despite

plaintiffs' protestations to the contrary, the provision of

itself does not evince [plaintiffs'] anticipation of being

haled into a Texas court.

Spademan, 772 F.2d at 1195 (emphasis added). Although the

contractual provision contained in the labor and materialman's bond
9

executed between USF & G and Adams Inc. is neither a choice-of-law

provision nor an express choice-of-forum provision, it resembles

the latter.

We recognize that under the labor and materialman's bond Adams

Inc. did not agree to have any disputes arising between itself and

USF & G settled in a specific forum. However, it agreed that any

cause of action brought to recover on the labor and materialman's

bond was subject to being tried in any "State in which such labor

was performed, services rendered, or materials furnished." This

acknowledgment by Adams Inc. weighs heavily against its contention

that the Texas court's decision to exercise jurisdiction over it

would somehow be unreasonable. See Kevlin Sevrs. Inc. v. Lexington

State Bank, 46 F.3d 13, 15 (5th Cir.1995) (district court erred in

refusing to enforce forum selection clause and subsequently

dismissing suit for lack of personal jurisdiction because a forum

selection clause in a written contract is prima facie valid and

enforceable unless the opposing party can show that the enforcement

of the provision would be unreasonable).

We are aware of the fact that, unlike the choice-of-law

provision at issue in Spademan involving an agreement between a

non-resident and a resident, the agreements between USF & G and

Adams Inc. involve only non-residents. While this fact, standing

alone, would appear to move the bond agreement outside of our

jurisdictional analysis, it is relevant to the analysis in that it

indicates what future consequences Adams Inc. should have

contemplated when it contracted with Gundle.
10

But for USF & G's decision to act as surety for Adams Inc.,

USF & G never would have found itself being sued by a Texas

corporation in a Texas court. Under the MSA, Adams Inc., prior to

entering into the subcontract with Gundle, agreed to indemnify USF

& G for any payments made under the bonds it issued. On April 23,

1990, Adams Inc. and USF & G executed the labor and materialman's

bond in which Adams Inc. acknowledged that, as contractor, it could

be subject to suit in any state in which labor was performed or

materials were furnished. Then, on May 24, 1990, Adams Inc.

entered into a subcontract with Gundle, a Texas corporation which

Adams Inc. knew would be performing services and rendering labor in

Texas.

The sequence of contractual commitments made by Adams Inc.,

concluding with the subcontract with Gundle, should have made Adams

Inc. aware that it was subject to being haled into a Texas court.

See World-Wide Volkswagon Corp., 444 U.S. at 296, 100 S.Ct. at 567.

Consequently, we find that Adams Inc.'s express acknowledgment that

it was subject to suit in any state where labor was performed or

materials furnished and its subsequent decision to contract with

Gundle, along with the other aforementioned contacts, are

sufficient to satisfy the "minimum contacts" prong of the personal

jurisdiction analysis.

2. "Fair play and substantial justice"

Once there has been a determination that the defendant

purposefully directed its activities at the forum state, the

defendant "must present a compelling case that the presence of some
 

1Of course, the nonresident third-party defendants to which

we refer would still have to have "minimum contacts" with the

forum state in order to justify the district court's exercise of

jurisdiction. 

11

other considerations would render jurisdiction unreasonable."

Burger King Corp., 471 U.S. at 477, 105 S.Ct. at 2185. When

determining the fundamental fairness issue this court will normally

examine (1) the defendant's burden; (2) the forum state's

interests; (3) the plaintiff's interest in convenient and

effective relief; (4) the judicial system's interest in efficient

resolution of controversies; and (5) the shared interest of the

several states in furthering fundamental substantive social

policies. Asahi, 480 U.S. at 113, 107 S.Ct. at 1033; World-Wide

Volkswagon Corp., 444 U.S. at 292, 100 S.Ct. at 564.

Adams Inc. again urges us to restrict our view when examining

whether the exercise of personal jurisdiction over it comports with

fair play and substantial justice, asserting that Texas has no

interest in this litigation because the Texas company that filed

this lawsuit, Gundle, is no longer a party to the action by virtue

of its decision to settle with USF & G. If we were to adopt this

argument then we would be discouraging parties, such as USF & G,

from settling for fear that they might have to pursue third-party

defendants in separate actions in order to obtain the

indemnification that those third-party defendants had contractually

bound themselves to provide.1 This approach is contrary to a

convenient and effective resolution of the dispute for the

plaintiff; it is contrary to the judicial systems' interest of
12

efficiently resolving controversies; and it is contrary to the

forum state's interest in providing for an effective means of

redress for its citizens.

We recognize that there is some burden placed on Adams Inc.,

a Pennsylvania corporation, as a result of the case being tried in

Texas. However those burdens do not present the type of compelling

reasons necessary to justify a finding that the exercise of

jurisdiction over Adams Inc. is contrary to notions of fair play

and substantial justice.

B. Jurisdiction as to Mumma and Kimbob Inc.

 It is undisputed that Mumma and Kimbob Inc. had no contacts

with Texas. However, USF & G offered three arguments as to why the

exercise of jurisdiction over them would be proper. First, USF &

G argues that by signing the MSA, Mumma and Kimbob Inc. somehow

entered into a contract that was performable in Texas. While

Mumma's and Kimbob Inc.'s signatures on the MSA might obligate them

to indemnify USF & G, the MSA, standing alone, is insufficient to

establish the requisite contacts with the forum state.

Second, USF & G contends that by signing the MSA, Mumma and

Kimbob Inc. put themselves at financial risk so that Adams Inc.

could procure the project contract and do business with Gundle in

Texas, and that this fact is somehow sufficient to support the

exercise of jurisdiction over these two defendants. In support of

this argument they cite this court to National Can Corp. v. K.

Beverage Co., 674 F.2d 1134 (6th Cir.1982), a case that is readily

distinguishable.
13

In National Can the court examined the contacts of nonresident

individual guarantors in order to determine if those contacts

supported the forum state's exercise of jurisdiction over the

nonresidents. At issue, inter alia, were the contacts of two

individual guarantors who had never set foot in the forum state.

The court ultimately found that the defendants had sufficient

contacts to support the exercise of jurisdiction and cited three

factors in support of its decision.

First, the court found that the defendants knew that the

business they were guaranteeing was to be located in Kentucky, the

forum state, which made it reasonable for the defendants to

anticipate being haled into court in Kentucky. Id. at 1138.

Second, the guaranty agreements formed the basis of the action.

Id. Third, the court found that the dispute had a substantial

enough connection with Kentucky to compel the defendants to defend

the suit there. Id.

The first two criteria that supported the exercise of

jurisdiction over the nonresident defendants in National Can weigh

against exercising jurisdiction over Mumma and Kimbob Inc. First,

the guarantee agreement in the instant case, the MSA, contained no

statement concerning where the obligations that the defendants were

guaranteeing were to be performed. In fact, the bonds that Mumma

and Kimbob Inc. were purporting to guarantee had not yet been

issued. Second, the guarantee agreement was not the basis of the

initial lawsuit initiated by Gundle. While the dispute may have a

connection with Texas, that fact alone is insufficient to justify
 

2The district court made no findings and issued no opinion

on the issue of personal jurisdiction. The trial court's

disposition of this issue is limited to a one sentence denial of

the defendants' motions to dismiss for lack of personal

jurisdiction. 

 

3We are mindful that we are not dealing with a

parent-subsidiary relationship in the instant case. However, the

factors used for determining whether a subsidiary is an alter ego

14

the exercise of jurisdiction over Mumma and Kimbob Inc.

USF & G's final argument in support of the exercise of

jurisdiction over Mumma and Kimbob Inc. is that we should regard

them as alter egos of Adams Inc. They contend that, as alter egos,

the contacts of Adams Inc. are attributable to both Mumma and

Kimbob Inc., thereby justifying the exercise of jurisdiction.

Although USF & G cites no binding authority for this argument, we

agree that under Texas law, a finding by the district court that

Mumma and Kimbob Inc. were alter egos of Adams Inc. would have

permitted the lower court to disregard the corporate fiction and

pierce the corporate veil, thereby attributing Adams Inc.'s

contacts to its codefendants. See S. Villar, Etc., et al. v.

Crowley Maritime Corp., 990 F.2d 1489, 1496 (5th Cir.1993). The

only evidence offered to the trial court by USF & G in support of

its alter ego theory was to provide financial evidence relating to

Kimbob Inc. and Adams Inc. Consequently, our review is limited to

examining this evidence in order to determine if it is sufficient

to support a finding of alter ego status.2

This circuit has developed the following laundry list of

factors to be used when determining whether a subsidiary is the

alter ego of the parent:3
of its parent provide guidance in determining whether Kimbob is

an alter ego of Adams Inc. This court has also approved of the

application of the Jon-T factors to situations where it is

asserted that an individual is an alter ego of a corporation. 

See Century Hotels v. United States, 952 F.2d 107, 110 (5th

Cir.1992). 

 

4In 1989 the Texas legislature amended it Business

Corporation Act. The amendments removed "failure to observe

corporate formalities" from the list of factors used in proving

alter ego theories. See Tex.Bus.Corp. art. 2.21 A(3); see also

Western Horizontal Drilling, Inc. v. Jonnet Energy Corp., 11 F.3d

65, 67 (5th Cir.1994) (interpreting the effect of art. 2.21

A(3)). Consequently, we will not consider this factor in our

analysis. 

15

(1) the parent and the subsidiary have common stock

ownership;

(2) the parent and the subsidiary have common directors or

officers;

 (3) the parent and the subsidiary have common business

departments;

(4) the parent and the subsidiary file consolidated financial

statements and tax returns;

 (5) the parent finances the subsidiary;

 (6) the parent caused the incorporation of the subsidiary;

(7) the subsidiary operates with grossly inadequate capital;

 (8) the parent pays the salaries and other expenses of the

subsidiary;

(9) the subsidiary receives no business except that given to

it by the parent;

(10) the parent uses the subsidiaries property as its own;

(11) the daily operations of the two corporations are not kept

separate; and

(12) the subsidiary does not observe the basic corporate

formalities, such as keeping separate books and records

and holding shareholder and board meetings.4

United States v. Jon-T Chemicals, Inc., 768 F.2d 686, 691-92 (5th
16

Cir.1985) (internal citations omitted), cert. denied, 475 U.S.

1014, 106 S.Ct. 1194, 89 L.Ed.2d 309 (1986). Resolution of alter

ego issues must be based on a consideration of "the totality of the

circumstances." Id. at 694.

Concerning its argument that Kimbob Inc. is the alter ego of

Adams Inc., USF & G presented no evidence or argument on the

following factors listed above: (1) common stock ownership, (2)

common officers and directors (with the exception of Mumma), (3)

common business departments, (4) the filing of joint tax returns,

(5) who caused the incorporation of Kimbob Inc. or Adams Inc., (6)

how the corporations receive their business, (7) whether the

corporations share property, and (8) the daily operations of the

two corporations. In fact, the evidence that USF & G did submit on

this issue indicates that the corporations neither operate with

grossly inadequate capital nor do they pay one another's salaries

and expenses. In short, USF & G failed to present sufficient

evidence to demonstrates that Kimbob Inc. is an alter ego of Adams

Inc.

In addition to examining the Jon-T factors for purposes of

determining whether an individual is an alter ego of a corporation,

courts will examine the total dealings of the corporation and the

individual, the amount of financial interest the individual has in

the corporation, the ownership and the control that the individual

maintains over the corporation, and whether the corporation has

been used for personal purposes. Permian Petroleum Co. v.

Petroleos Mexicanos, a/k/a Pemex, 934 F.2d 635, 642 (5th Cir.1991)
 

5"A motion to transfer venue is addressed to the discretion

of the trial court and will not be reversed on appeal absent an

abuse of discretion." Peteet v. Dow Chemical, 868 F.2d 1428,

1436 (5th Cir.1989). 

17

(citing Castleberry v. Branscum, 721 S.W.2d 270, 272 (Tex.1986)).

In support of its alter ego theory between Mumma and Adams

Inc., USF & G offered evidence of Mumma's signature on the MSA and

on checks from Adams Inc. to Gundle. USF & G also asserts that

Mumma's personal assets guarantee the bank debt of Adams Inc.

However, it offered no evidence to support this assertion.

Therefore, the only evidence to support its alter ego theory is

Mumma's signature on the MSA and on Adams Inc.'s checks to Gundle.

This evidence is wholly insufficient to support an alter ego

theory. USF & G had the burden of establishing that the court had

personal jurisdiction over Mumma and Kimbob. They failed to meet

that burden.

II. Venue

Adams Inc. argues that even if we find that it was subject to

the court's jurisdiction, then the district court abused its

discretion in denying its motion to transfer venue. Although we

would agree that a district court's decision denying a motion to

transfer venue is typically reviewed under the abuse of discretion

standard,5 we are not dealing with a typical motion to transfer

venue. The motion to transfer venue in the instant case is

atypical because it was filed by a third-party defendant.

"[S]tatutory venue limitations have no application to Rule 14

claims even if they would require the third-party action to be
18

heard in another district had it been brought as an independent

action." Charles Alan Wright, Arthur R. Miller and Mary Kay Kane,

6 Fed.Prac. & Proc.Civ.2d § 1445 (1990); see also Southern Milling

Co. v. U.S., 270 F.2d 80 (5th Cir.1959) (dictum) ("In the absence

of a showing of substantial inconvenience to a third-party

defendant, leave to file a third-party complaint should not be

denied on the ground of venue."). "[T]he third-party defendant is

protected against an inconvenient forum ... by the requirement that

the court have personal jurisdiction over him and the court's

ability to take account of venue considerations when exercising its

discretion to decide whether to disallow impleader or to sever the

third-party claim." Charles Alan Wright, Arthur R. Miller & Mary

Kay Kane, 6 Fed.Prac. & Proc.Civ.2d § 1445. Consequently, we find

that the district court did not err when it denied Adams Inc.'s

motion to transfer.

III. Summary Judgment

Having determined that the court properly exercised

jurisdiction over Adams Inc. and that venue was proper, we turn to

Adams Inc.'s challenge to the district court's decision to grant

summary judgment to USF & G on its third-party claim. We conduct

a de novo review of a district court's grant of summary judgment.

Fireman's Fund Ins. Co. v. Murchison, 937 F.2d 204, 207 (5th

Cir.1991). No deference is given to the district court and all

reasonable inferences from the evidence must be resolved in favor

of the nonmovant. United States v. Diebold, Inc., 369 U.S. 654,

665, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962).
19

USF & G filed the third-party complaint against Adams Inc.

alleging that Adams Inc. was contractually obligated to indemnify

and exonerate USF & G for the losses it incurred as a result of USF

& G's decision to execute bonds on behalf of Adams Inc. Adams Inc.

claimed that it was not obligated to indemnify USF & G because USF

& G's decision to pay Gundle on the bond was not made in good

faith. In support of this defense, Adams Inc. relied on the

following provision of the MSA:

IV. (A) The liability of [Adams Inc.] shall extend to and

include all amounts paid by [USF & G] in good faith under

the belief that: (1) [USF & G] was or might be liable

therefor; (2) such payments were necessary or advisable

to protect any of [USF & G's] rights or avoid or lessen

[USF & G's] liability or alleged liability; ...

(C) the voucher(s) or other evidence of such payment(s)

or an itemized statement of payment(s) sworn to by an

officer of [USF & G] shall be prima facie evidence of the

fact and extent of the liability of the [Adams Inc.] to

[USF & G].

(emphasis added). Adams Inc. contends that because USF & G

originally disputed Gundle's claim for payment under the bond, it

cannot now claim that the payments it made to Gundle under that

bond were made in good faith. Therefore, Adams Inc. argues that a

genuine issue of material fact exists as to whether USF & G's

decision to pay the bond was made in good faith, thereby precluding

summary judgment.

In accordance with the requirements of the MSA, USF & G

presented payment vouchers to the district court evidencing the

fact and amount of the indemnitors' liability. Those vouchers were

sworn to as being valid by a surety claim representative of USF &

G. USF & G also presented evidence of the efforts it made to
20

contact Adams Inc. prior to settling with Gundle. This evidence

consisted of a letter written to "Robert Mumma, President, Adams

County Asphalt." In that letter USF & G stated:

Gundle has offered and demanded to settle this claim for

[$121,060.99] until Monday, March 15, 1993, which does not

include attorney's fees or interest. If you continue to fail

to cooperate immediately, USF & G will have no choice but to

settle this case on the best terms possible under the

circumstances, and then seek indemnity from you.

... We have attempted to contact you every day this week in an

effort to get your assistance in resolving this matter.

However, you have failed to return any of our phone calls. As

you must certainly realize, your cooperation is imperative;

the failure to communicate or even return our phone calls

leaves USF & G little choice but to settle on the best terms

it can, by paying up to the amount claimed by Gundle.

(emphasis in original). The statements contained in this letter

were uncontroverted by Adams Inc. and they belie Adams Inc.'s

contentions that USF & G failed to act in good faith.

The fact and extent of [a principal's] liability to [the

surety] may be prima facie established by vouchers or

affidavits. Bad faith on the part of [the surety] may be

urged by [the principal] as a defense, but where a genuine

issue of material fact in such respect is not raised by the

summary judgment evidence, [the principal's] reliance on such

defense would be ineffective.

Ford v. Aetna Ins. Co., 394 S.W.2d 693, 698 (Tex.Civ.App.—Corpus

Christi 1965, writ ref'd n.r.e.); accord Safeco Ins. Co. of

America v. Gaubert, 829 S.W.2d 274, 282 (Tex.App.—Dallas 1992, writ

denied). Because USF & G offered prima facie evidence of its

liability under the bond, and because Adams Inc. failed to present

a genuine issue of material fact that would controvert USF & G's

evidence of its good faith efforts to settle the dispute, we find

that the district court was correct in granting summary judgment to

USF & G.
21

CONCLUSION

For the foregoing reasons, the district court's grant of

summary judgment against Mumma and Kimbob Inc. is VACATED, and, as

to them, the action is DISMISSED for lack of personal jurisdiction.

The judgment is AFFIRMED as to Adams Inc.