Opinion ID: 35237
Heading Depth: 2
Heading Rank: 1

Heading: Teal USA's Principal Place of Business 10

Text: 9 Teal USA asserts that the situs of its principal place of business is not Texas, as determined by the district court, but Canada, where its executive offices are located. To this end, Teal USA notes that its shareholders and directors meetings are held in Calgary, its president and corporate accountants reside in Calgary, and all major decisions related to the corporation are made in Calgary. Teal USA also notes that its corporate minutes reflect that Calgary was established as the headquarters and official office of Teal USA, and that, according to the deposition testimony of Allen Knight, Teal USA's president, Calgary was chosen as the corporation's principal office out of a desire to avoid what its officers' perceived to be an unjust Texas state court system. 10 The court accepted these facts as uncontroverted and found that Calgary was indeed the nerve center of Teal USA. This evidence was not enough, however, to satisfy the court that Calgary was also Teal USA's principal place of business. Citing the affidavit of Teal USA's former vice-president and current director, John Glenn, the court noted that all of the revenue Teal USA earned in 2001, the year in which suit was filed, was derived from Teal USA's Texas oil and gas operations. The court further observed that, despite Glenn's statement that Teal USA reviewed, investigated, and seriously considered proposals involving land development in several other states, the corporation put forth no evidence that it actually engaged in operations in any state other than Texas. As Teal USA did not establish that it engaged in far-flung and varied activities in different states, the court reasoned that the nerve center did not predominate in determining its principal place of business. 11 11 Turning to Teal USA's place of activity, the court considered first the deposition testimony of Gordon Andrus, a shareholder of Teal Canada. 12 Andrus testified that Teal USA was established to pursue Texas oil and gas prospects and that its only oil and gas operations were located in Texas. Additionally, Andrus testified that all of Teal USA's business assets and accounting records were in Texas, its day-to-day operations were conducted in Texas, and the only two wells that Teal USA had arranged to have drilled were located in Texas. 12 The district court also noted that Glenn was one of Teal USA's two principal officers, and he resided in Houston, Texas, as did two of the corporation's three directors and all of its employees. Finally, the court observed that Teal USA's filings with the Secretary of State of Delaware and with the Internal Revenue Service specified the Houston office address as the corporation's principal place of business. Considering the weight of this evidence, as well as Teal USA's failure to produce any substantial controverting evidence, the court concluded that the place of corporate activity was Texas. It then held that the situs of Teal USA's principal place of business was Texas, noting that, [u]nder the total activity test, a corporation ... with significant administrative authority and activity in one state and lesser executive offices but principal operations in another state has its principal place of business in the latter. 13 13 We hold that the district court's determination was not clearly erroneous. Although Teal USA argues that the court erred in finding that its activities were not far-flung and widely dispersed across several states, it cites to only one consummated business transaction that occurred outside of Texas — its acquisition of a two-percent overriding royalty interest from a natural gas company in Louisiana. This is not enough, in our view, to warrant a finding that Teal USA's operations were far-flung for purposes of application of the total activity test. 14 Accordingly, we conclude that the court did not misapply that test as Teal USA contends. 14 We are equally unpersuaded by Teal USA's evidentiary challenges to the court's discrete factual findings. Specifically, Teal USA argues that Andrus's deposition testimony was not credible, citing two passages of his deposition in which he admits that he might be wrong about the location of some of the corporation's activities. It suffices to say that these concessions, viewed in context, do not render the district court's reliance on Andrus's testimony clearly erroneous. Besides, credibility calls are the unique province of the trial judge. 15 Teal USA also argues that the court erred in relying on the corporation's filings with the Secretary of State of Delaware and the IRS, as these documents were unauthenticated. Although our review of the record confirms Teal USA's assertion that these documents were not authenticated, we are convinced that enough evidence exists to support the court's determination of Teal USA's principal place of business, so that any reliance on these filings does not render that ultimate determination clearly erroneous. 15 16 In sum, Teal USA's evidentiary challenges are unavailing. 16 As the weight of the evidence shows that Teal USA is not a far-flung corporation, and that its corporate activities take place almost entirely in Texas where one of its principal officers, two of its three directors, and all of its employees are located, we affirm the district court's ruling that Teal USA's principal place of business for diversity purposes is in Texas. 17