Court Opinion

ID: 5122819
Source: CourtListenerOpinion
Date Created: 2021-11-03 06:17:48.080203+00
Date Added: 2024-06-11T08:22:30.149869
License: Public Domain

Vacated and Dismissed and Opinion Filed November 1, 2021

                                       In The
                            Court of Appeals
                     Fifth District of Texas at Dallas
                               No. 05-21-00004-CV

            INFORMATION SERVICES GROUP, INC., Appellant
                              V.
                  MARIO VOLLBRACHT, Appellee

                On Appeal from the 44th Judicial District Court
                            Dallas County, Texas
                     Trial Court Cause No. DC-20-13872

                        MEMORANDUM OPINION
                Before Justices Osborne, Pedersen, III, and Nowell
                         Opinion by Justice Pedersen, III
      Appellant Information Services Group, Inc. (ISG) appeals the trial court’s

Order Denying Defendant Information Services Group, Inc.’s Special Appearance

(the Order). In three issues, ISG challenges the legal arguments and evidentiary basis

urged by appellee Mario Vollbracht to support the trial court’s specific or general

jurisdiction over ISG in this case. We conclude the trial court lacked jurisdiction

over ISG. We vacate the trial court’s Order, grant ISG’s Special Appearance, and

dismiss Vollbracht’s claims against ISG for lack of jurisdiction.
                                        BACKGROUND

        Beginning in April 2016, Vollbracht was employed by Alsbridge, Inc., which

is described in the record as a “global management consulting firm that helps

companies enable their businesses and reduce costs by optimizing their service

provider relationships.” In December of that same year, Alsbridge terminated

Vollbracht’s employment and offered him a position as an independent contractor.

Vollbracht accepted the position and—pursuant to the contract attached to both his

amended petition and ISG’s Special Appearance—he was to be paid by commission.

The contract states that “[t]he commission percentage earned will vary based on the

fee structure of the services sold,” i.e. the commission amount was determined based

upon whether his sales were “contingency based services” or “fixed fee and ‘time

and materials’ based services.” Vollbracht alleges in this lawsuit that he was not paid

four commissions he was due pursuant to this contract, and he sued Alsbridge to

recover those commissions.

        Vollbracht also sued appellant ISG, a Delaware holding company

headquartered in Connecticut, which had indirectly acquired Alsbridge through a

stock purchase in December 2016.1 ISG specially appeared, arguing that the Texas

trial court lacked personal jurisdiction over it. The Special Appearance was

    1
       According to the record, defendant Alsbridge Inc. is owned by Alsbridge Holdings, Inc. As a result
of the stock purchase, Alsbridge Holdings, Inc. was acquired by ISG Information Services Group Americas,
Inc., which is owned, in turn, by International Consulting Acquisition Corp.; that entity is owned by
International Advisory Holding Corp., which is owned by appellant ISG.
                                                  –2–
supported by the Declaration of Richard L. Fogel, who is Vice President, Legal of

ISG and General Counsel for Alsbridge. Fogel testified to the following concerning

ISG’s lack of contact with the state of Texas:

           • ISG is a holding company incorporated in Delaware with its
             headquarters and principal place of business in Connecticut. ISG
             is affiliated with over forty legal entities.

           • ISG has fewer than five employees, all of whom are located in
             Connecticut.

           • ISG has no operations or employees in Texas.

           • ISG and Alsbridge are not joint employers, nor are they engaged
             in any joint enterprise.

           • ISG has no bank accounts in Texas, is not registered to do
             business in Texas, and owns no property in Texas. ISG does not
             file a state tax return in Texas and has no tax nexus in Texas.

           • ISG and Alsbridge are separate and distinct entities. ISG and
             Alsbridge have separate headquarters, and observe separate
             corporate formalities.

           • Alsbridge has its own structure and operations in Texas.

           • ISG does not exercise control over Alsbridge greater than that
             normally associated with common ownership and directorship.

       In response to the Special Appearance, Vollbracht offered his own

declaration, which authenticated five exhibits related to Alsbridge’s acquisition by

ISG.2 Vollbracht testified that “[His] employment with Alsbridge was converted to

   2
       Vollbracht’s exhibits are: (1) an Alsbridge internal memo to Alsbridge Managing Directors dated
December 1, 2016; (2) an Alsbridge press release to all Alsbridge Team members dated December 1, 20l6;
(3) an ISG Press Release dated December 1, 2016; (4) an industry news article dated December 2, 2016
from HorsesForSources.com; and (5) a document from ISG and Alsbridge titled “Employee FAQs:
Alsbridge Acquisition Announcement,” dated December 1, 2016.
                                                –3–
an independent contractor relationship as a result of the aforesaid combination of

Alsbridge and ISG. This suit is for [his] claims arising out of the independent

contractor relationship.”3 The legal arguments made in the Special Appearance and

response are set out below.

        The trial court denied ISG’s special appearance, and this interlocutory appeal

followed.

                               THE SPECIAL APPEARANCE

        Vollbracht invoked Texas’s long arm jurisdiction by pleading that ISG does

business in the state. The burden thus fell upon ISG to negate all potential bases for

personal jurisdiction that Vollbracht asserted. See Moncrief Oil Intern. Inc. v. OAO

Gazprom, 414 S.W.3d 142, 149 (Tex. 2013). Whether a trial court has personal

jurisdiction over a nonresident defendant is a question of law that appellate courts

review de novo. Old Republic Nat’l Title Ins. Co. v. Bell, 549 S.W.3d 550, 558 (Tex.

2018). When, as here, a trial court does not issue findings of fact and conclusions of

law related to its special appearance ruling, all facts necessary to support the order

and supported by the evidence are implied. Id.

   3
       Vollbracht does not allege that he was wrongfully terminated by Alsbridge.

                                                  –4–
                                  Joint Enterprise

      In its first issue, ISG contends that Vollbracht cannot rely upon a theory of

joint enterprise to support a finding of personal jurisdiction in this case. After

acknowledging that ISG is a foreign corporation with its headquarters in

Connecticut, Vollbracht pleaded that:

      Defendant Information Services Group, Inc. is conducting business in
      Texas by means of a joint enterprise with Defendant Alsbridge so that
      ISG purposely established minimum contacts with the State of Texas,
      giving this court personal jurisdiction over ISG, and can therefore be
      served by substituted service on the Texas Secretary of State pursuant
      to TPRC §17.044.
Joint enterprise is a theory of tort liability whereby each party is responsible for the

tortious act of the other. See Tex. Dep’t of Transp. v. Able, 35 S.W.3d 608, 613 (Tex.

2000) (addressing allegedly negligent conduct of defendants).

      Texas courts, however, have consistently refused to accept allegations of joint

enterprise liability as a basis for personal jurisdiction over a nonresident defendant.

See, e.g., Ahrens & DeAngeli, P.L.L.C. v. Flinn, 318 S.W.3d 474, 486 (Tex. App.—

Dallas 2010, pet. denied), overruled on other grounds by Steward Health Care Sys.

LLC v. Saidara, No. 05-19-00274-CV, 2021 WL 3707995 (Tex. App.—Dallas Aug.

20, 2021, no pet. h.); S.L.A. Studio Land, Inc. v. SRC Const., Inc., No. 14-10-01129-

CV, 2011 WL 5118902, at *7 (Tex. App.—Houston [14th Dist.] Oct. 27, 2011, pet.

denied) (mem. op.); see also PHC-Minden, L.P. v. Kimberly-Clark Corp., 235

S.W.3d 163, 173 (Tex. 2007) (rejecting a “single business enterprise” theory of

jurisdiction over the nonresident business). Texas law “presumes that two separate
                                        –5–
corporations are distinct entities.” PHC-Minden, L.P., 235 S.W.3d at 173. Vollbracht

acknowledges that, as a general rule, contacts of a resident subsidiary cannot be

attributed to its nonresident parent.

      However, Vollbracht contends that the operations of ISG and Alsbridge are

“so close that the operations can be deemed ‘fused’” so that jurisdiction over ISG

can be asserted based upon activities of Alsbridge. Our supreme court has spoken to

this theory of “fusing” entities for jurisdictional purposes:

      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. 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.
BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 798–99 (Tex. 2002)

(internal citations omitted). When a party attempts to disregard distinct corporate

entities and to ascribe one corporation’s actions to another, we assign the burden of

proof to the party attempting to do so. PHC-Minden, L.P., 235 S.W.3d at 173.

      To satisfy this burden, Vollbracht points to a statement issued jointly by ISG

and Alsbridge in the form of “Employee FAQs” following announcement of the

acquisition. In response to the questions: “How do we plan to go to market? Will

Alsbridge retain its business name?” the companies responded:

      Alsbridge is retiring its name and adopting the ISG brand from day one.
      We will also combine our online presence under a single website.

                                          –6–
Vollbracht argues that because Alsbridge was retiring its name and because “[a]ll

online business was going to be conducted over the ISG website,” Alsbridge

essentially ceased to exist. We disagree. The fact two related entities share a common

name does not affect whether either has sufficient contacts with the forum for

jurisdictional purposes. Id. at 175. Moreover, the record before us does not indicate

that either defendant conducted business of any sort on this website or that potential

clients could interact with either defendant on the site. A “passive” website, used

only for advertising, is not sufficient to establish a significant contact by a

nonresident. Reiff v. Roy, 115 S.W.3d 700, 705 (Tex. App.—Dallas 2003, pet.

denied). The special appearance record does not establish that the ISG website was

any more than a passive site.

      Vollbracht has offered no evidence that ISG controls the internal business

operations and affairs of Alsbridge to such an extent that the two entities should be

“fused” for jurisdictional purposes. We conclude Vollbracht’s joint enterprise

argument, even if viewed as an alter ego argument in this case, cannot support

personal jurisdiction over ISG. Accordingly, we sustain ISG’s first issue.

                                Specific Jurisdiction

      In its second issue, ISG challenges Vollbracht’s contention that the trial court

may exercise specific jurisdiction over ISG in this case. A trial court may exercise

personal jurisdiction only when a nonresident defendant has established minimum

contacts with the forum state and the court’s exercise of jurisdiction would comport

                                         –7–
with traditional notions of fair play and substantial justice. Moki Mac River

Expeditions v. Drugg, 221 S.W.3d 569, 575 (Tex. 2007). Specific jurisdiction exists

when the nonresident defendant’s alleged liability arises from or is related to its

activity conducted within the forum. Id. at 576. Thus, for a Texas court to exercise

specific jurisdiction over a nonresident defendant, the defendant’s contacts with

Texas must be purposeful, and the cause of action must arise from those contacts.

Old Republic, 549 S.W.3d at 559. “[W]hen analyzing specific jurisdiction, we focus

on the relationship between the forum, the defendant, and the litigation.” Id.

         Purposeful Contacts Connected Substantially to Operative Facts

      ISG argues that it has negated the required minimum contacts for specific

jurisdiction in this case because the evidence shows that Vollbracht’s claims have

no connection to any contact between ISG and Texas. “[F]or a nonresident

defendant’s forum contacts to support an exercise of specific jurisdiction, there must

be a substantial connection between those contacts and the operative facts of the

litigation.” Moki Mac River Expeditions, 221 S.W.3d at 585. “Operative facts” are

those that a trial would focus on to prove the liability of the nonresident defendant.

Kaye/Bassman Intern. Corp. v. Dhanuka, 418 S.W.3d 352, 357 (Tex. App.—Dallas

2013, no pet.). In this case, Vollbracht has sued both defendants for failing to pay

him commissions he allegedly was due under his contract. For our purposes, the

operative facts in a trial of ISG would involve (1) the existence of a contractual

                                         –8–
relationship between ISG and Vollbracht, (2) Vollbracht’s performance under the

contract, and (3) ISG’s payment of, or failure to pay, any commissions due.

        Fogel testified that Vollbracht has never been an employee of lSG and that

lSG has never owed or paid Vollbracht commissions. He testified further, and

Vollbracht has not disputed, that lSG was not a party to Vollbracht’s agreement and

has never had a contract with Vollbracht. Vollbracht has not offered evidence that

ISG directed Alsbridge not to pay his commissions. And we have concluded above

that he has not evidenced any control of Alsbridge by ISG that would support the

law’s treating them as a single entity so as to make ISG liable under Alsbridge’s

contract. Vollbracht has not offered evidence of any Texas contact by ISG that was

directly related to his contract or to any unpaid commissions.4

        Indeed, Vollbracht charges ISG with only one purposeful contact with Texas:

its acquisition of Alsbridge. In this regard, Vollbracht relies upon the Texas Supreme

Court’s recent opinion in Cornerstone Healthcare Group Holding, Inc. v. Nautic

Management VI, L.P., 493 S.W.3d 65 (Tex. 2016). In that case, Cornerstone—which

owns and operates hospitals in Texas and other states—sued a group of its former

executives for usurping a corporate opportunity and a number of nonresident entities

    4
       In his amended pleading, Vollbracht—when discussing one of his client transactions—stated: “The
CEO of ISG (Todd LaVieri) himself even asked Plaintiff about it in the beginning of March 2017.”
Vollbracht repeats this allegation in his appellate brief with no more detail. Neither reference to the
conversation alleges that the contact occurred in Texas, and we know from Vollbracht’s declaration that he
resides in Georgia. Moreover, Vollbracht’s declaration does not address this purported contact in any
fashion. We cannot consider it as a purposeful contact with the state of Texas.
                                                  –9–
for related torts. The executives had identified Reliant Hospital Partners, LLC, which

owned a chain of inpatient rehabilitation facilities in Texas, as a possible takeover

target. Id. at 67–68. But rather than bringing the Reliant prospect to Cornerstone’s

board, the executives approached a Rhode Island private-equity firm, Nautic

Partners, LLC,5 in an attempt to obtain funding for such a purchase with the

understanding that the executives would control the purchased business. Id. at 68. In

a complex series of transactions, three nonresident equity funds created a Texas

entity to purchase Reliant.6 Id. at 69. The executives then resigned from Cornerstone

and took over operation of the Reliant businesses. Id.

        Cornerstone sued its former executives, the Texas entity formed to purchase

Reliant, the three funds that owned the purchasing entity, and Nautic Partners as

   5
       The opinion describes Nautic Partners this way:
        Nautic Partners is a management advisor that identifies and conducts due diligence on
        potential investments for several private-equity funds. The three funds at issue here—
        Nautic Partners VI, L.P., Reliant Splitter, L.P., and Kennedy Plaza Partners VI, L.P.
        (collectively, the Funds)—are Delaware limited partnerships with their principal places of
        business in Rhode Island. Nautic Management VI, L.P., also a Delaware limited
        partnership, is the general partner of two of the Funds and manager of the third.

493 S.W.3d at 68.

   6
       According to the opinion, the defendants described the transactions as the following series of events:
        [Nautic Partners] met in Rhode Island for presentations by Nautic Partners and the
        prospective Reliant management team (i.e., the Cornerstone executives) about the
        investment; the General Partner authorized the Funds to invest in Reliant Holding and
        issued a capital call (actions that also took place in Rhode Island); the Funds created Reliant
        Holding pursuant to that authorization; Reliant Holding formed Reliant Pledgor and Reliant
        Opco; Reliant Pledgor and Reliant Opco formed New Reliant; and New Reliant acquired
        the hospitals.

493 S.W.3d at 72. The court concluded, though, that “these events were all part of one overarching
transaction that closed March 23, 2011.” Id.
                                                    –10–
general partner of the funds. The funds and Nautic Partners filed special

appearances. Id. The supreme court reasoned that the Reliant purchase did not result

from the newly formed Texas purchaser’s unilateral activity. Instead, the purchase

“was the result of a transaction stemming from the activity of the respondents

themselves.” Id. at 73. The court concluded:

      [T]he respondents here specifically sought both a Texas seller and
      Texas assets. Accordingly, we hold that the respondents’ contacts with
      Texas were “purposeful” and that the respondents sought “some
      benefit, advantage, or profit by availing [themselves] of the
      jurisdiction” such that they impliedly consented to suit here.

Id.
      Vollbracht argues that because ISG acquired the Texas business of Alsbridge,

our case should be governed by Cornerstone. Again, we disagree. While in both

cases a nonresident entity acquired a Texas business, the claims raised in

Cornerstone were substantially connected to that acquisition. Cornerstone sued its

former executives for usurping a corporate opportunity and for misappropriating

confidential information and breaching their fiduciary duties in the process. See id.

at 69. It sued the various entities involved for tortious interference and for conspiring

with the executive tortfeasors. Id. The supreme court concluded that all of those

claims related directly to the purposeful acquisition of the Reliant hospitals. See id.

at 74 (“Because the facts surrounding the Reliant transaction—which is the crux of

the respondents’ purposeful contact with Texas—will be the focus of the claims

against the respondents at trial, we hold that those claims arise out of the

                                         –11–
respondents’ Texas contacts.”) (footnote omitted). In Vollbracht’s case, by contrast,

none of his claims relate to ISG’s acquisition of Alsbridge. He does not allege that

the acquisition was wrongful in any way. Accordingly, Cornerstone does not support

his argument for specific jurisdiction.

      We conclude that the evidence in the Special Appearance record does not

support a conclusion that ISG engaged in purposeful contacts with the state of Texas

that bore any substantial connection to Vollbracht’s litigation. Nor does that

evidence support the implication of any facts showing such a connection. See Old

Republic, 549 S.W.3d at 558 (allowing facts necessary to support the order to be

implied when “supported by the evidence”). Therefore, Vollbracht’s argument

cannot support a conclusion—or an inference—that ISG is subject to the exercise of

specific jurisdiction.

                     Texas Business & Commerce Code § 54.005

      Vollbracht also pleaded that “Defendant Information Services Group, Inc. can

also be served and this court has jurisdiction, under Tex. Bus. & Comm. Code

§ 54.005.” That statute provides:

      A principal who is not a resident of this state and who enters into a
      contract subject to this chapter is considered to be transacting business
      in this state for purposes of the exercise of personal jurisdiction over
      the principal.

TEX. BUS. & COM. CODE ANN. § 54.005. Chapter 54 applies to a written contract

between a “principal” and a “sales representative.” Id. § 54.002. Both of those

                                          –12–
contractual-party references are defined terms. To be subject to the chapter as a

principal, the contracting party must:

      (A) manufacture[], produce[], import[], or distribute[] a product for
      sale;

      (B) use[] a sales representative to solicit orders for the product; and
      (C) compensate[] the sales representative wholly or partly by
      commission.

Id. § 54.001(2). A sales representative must be “an independent contractor who

solicits, on behalf of a principal, orders for the purchase at wholesale of the

principal’s product.” Id. § 54.001(3).

      As a threshold matter, no party alleges that a contract exists between ISG—as

the purported principal in Vollbracht’s invocation of section 54.005—and

Vollbracht. Instead, Vollbracht stresses that ISG and Alsbridge “describe their

transaction as a combination of the two companies.” He cites no authority that the

acquisition of Alsbridge by ISG—regardless of the terminology used to describe it—

could make ISG liable for Alsbridge’s contractual obligations. Affiliated corporate

entities generally exist “to separate the businesses, liabilities, and contracts of each.”

In re Merrill Lynch Tr. Co. FSB, 235 S.W.3d 185, 191 (Tex. 2007) (a contract with

one corporation is generally not a contract with any other corporate affiliates). An

exception to this rule exists in the case of alter egos, when two corporations are

actually operated as one. Id. However, we have concluded that the record contains

                                          –13–
no evidence that ISG and Alsbridge fall within such an exception. We conclude that

no contractual relationship exists between ISG and Vollbracht.

      Moreover, the special appearance record contains uncontroverted testimony

from Fogel that ISG—the purported principal under section 54.005—“does not

generate revenues and does not manufacture, produce, import, or distribute products

for sale.” In addition, for purposes of this Special Appearance, the record contains

no evidence that Vollbracht sells any product. His brief contends he is a “vendor of

software.” But when his contract addresses compensation, it states, “The

commission percentage earned will vary based on the fee structure of the services

sold.” (Emphasis added.) And in his response to the Special Appearance below,

Vollbracht alleged that ISG “put services in the stream of commerce” knowing that

some of them would reach Texas. (Emphasis added.) Following that allegation,

Vollbracht cited three Texas Supreme Court cases, all of which specifically address

placing a product in the stream of commerce. See Spir Star AG v. Kimich, 310

S.W.3d 868, 873 (Tex. 2010); Moki Mac River Expeditions, 221 S.W.3d at 576–77;

Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 786 (Tex. 2005).

      We conclude that Chapter 54 of the Business and Commerce Code does not

apply to any relationship between ISG and Vollbracht. Thus, section 54.005 cannot

provide a basis for the trial court to exercise specific jurisdiction over ISG.

                                         –14–
      ISG has negated each of Vollbracht’s arguments that the trial court could

properly exercise specific jurisdiction over ISG in this case. We sustain ISG’s

second issue.

                                General Jurisdiction

      In its third issue, ISG argues that the trial court lacked general jurisdiction

over ISG as well. A Texas court may exercise general jurisdiction over a nonresident

defendant if that defendant’s contacts with Texas are continuous and systematic.

Moki Mac River Expeditions, 221 S.W.3d at 575. Those contacts must be so

continuous      and   systematic,   however,    “as    to   render   [the   defendant]

essentially at home in the forum State.” M & F Worldwide Corp. v. Pepsi-Cola

Metro. Bottling Co., Inc., 512 S.W.3d 878, 885 (Tex. 2017) (quoting Goodyear

Dunlop Tires Operations, SA v. Brown, 564 U.S. 915, 919 (2011)).

      Vollbracht’s brief refers to general jurisdiction only once, concluding that

“[o]nce the jurisdictional veil of ISG has been pierced by the fusion/combination of

Alsbridge and ISG, ISG is also subject to both general and specific jurisdiction.” At

oral argument, however, counsel for Vollbracht confirmed that Vollbracht is not

relying on a theory of general jurisdiction in this case. Our review of the evidence

before the trial court leads us to agree that ISG is not essentially “at home” in Texas.

See id. We sustain ISG’s third issue.

                                         –15–
                                 CONCLUSION

      The trial court lacked personal jurisdiction over ISG. Accordingly, we vacate

the trial court’s Order, grant ISG’s Special Appearance, and dismiss Vollbracht’s

claims against ISG for want of jurisdiction.

                                           /Bill Pedersen, III//
210004f.p05                                BILL PEDERSEN, III
                                           JUSTICE

                                       –16–
                             Court of Appeals
                      Fifth District of Texas at Dallas
                                   JUDGMENT

 INFORMATION SERVICES                           On Appeal from the 44th Judicial
 GROUP, INC., Appellant                         District Court, Dallas County, Texas
                                                Trial Court Cause No. DC-20-13872.
 No. 05-21-00004-CV           V.                Opinion delivered by Justice
                                                Pedersen, III. Justices Osborne and
 MARIO VOLLBRACHT, Appellee                     Nowell participating.

       In accordance with this Court’s opinion of this date, the order of the trial
court is VACATED, appellant Information Services Group, Inc.’s Special
Appearance is GRANTED, and appellee Mario Vollbracht’s claims against
Information Services Group, Inc. are DISMISSED for want of jurisdiction.

       It is ORDERED that appellant Information Services Group, Inc. recover its
costs of this appeal from appellee Mario Vollbracht.

Judgment entered this 1st day of November, 2021.

                                         –17–