Court Opinion

ID: 4670360
Source: CourtListenerOpinion
Date Created: 2021-03-23 09:13:47.906052+00
Date Added: 2024-06-11T08:01:54.826947
License: Public Domain

TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN

                                      NO. 03-19-00721-CV

Embark Holdco Management, LLC; Embark Corporate Services LLC; ACPI (Assignment
 for the Benefit of Creditors), LLC; ACPAHM (Assignment for the Benefit of Creditors),
  LLC; AGIA (Assignment for the Benefit of Creditors), LLC; ACS (Assignment for the
 Benefit of Creditors), LLC; AGIAC (Assignment for the Benefit of Creditors), LLC; and
             APF (Assignment for the Benefit of Creditors), LLC, Appellants

                                                 v.

                                Cantilo & Bennett, L.L.P.,
              Special Deputy Receiver of Access Insurance Company, Appellee

                FROM THE 261ST DISTRICT COURT OF TRAVIS COUNTY
        NO. D-1-GN-18-001285, THE HONORABLE TIM SULAK, JUDGE PRESIDING

                            MEMORANDUM OPINION

               This is an interlocutory appeal from an order denying special appearances filed by

non-resident defendants Embark Holdco Management, LLC and Embark Corporate Services,

LLC (collectively, “the Embark Respondents”); and non-resident defendants ACPI (Assignment

for the Benefit of Creditors), LLC; ACPAHM (Assignment for the Benefit of Creditors), LLC;

AGIA (Assignment for the Benefit of Creditors), LLC; ACS (Assignment for the Benefit of

Creditors), LLC; AGIAC (Assignment for the Benefit of Creditors), LLC; and APF (Assignment

for the Benefit of Creditors), LLC (collectively, “the ABC Respondents”). See Tex. Civ. Prac. &

Rem. Code § 51.014(a)(7) (authorizing appeal from interlocutory order that “grants or denies the

special appearance of a defendant under Rule 120a, Texas Rules of Civil Procedure”). In their

sole issue on appeal, Appellants contend that the trial court erred in denying each of their special
appearances. We will reverse the trial court’s order denying the special appearances and render

judgment dismissing the claims against the appellants for lack of personal jurisdiction.

                                        BACKGROUND

               In March 2018, the Texas Department of Insurance (the Department) sued Access

Insurance Company (Access) in Travis County district court seeking an order designating the

Department’s Commissioner as the liquidator of Access pursuant to the Texas Insurance Code.

See Tex. Ins. Code § 443.151 (“An order to liquidate the business of an insurer shall appoint the

commissioner and any successor in office as the liquidator and shall direct the liquidator to take

possession of the property of the insurer and to administer it subject to this chapter.”). The

district court signed an agreed order that appointed the Commissioner the liquidator and vested

in him title to all Access’s property (the Agreed Order). The Agreed Order authorized the

Commissioner, as liquidator, to appoint a Special Deputy Receiver, who would be vested with all

rights and powers of the liquidator. The Commissioner then appointed Cantilo & Bennett, L.L.P.,

as Special Deputy Receiver (SDR). The Agreed Order included a permanent injunction against

Access and its agents, among others, enjoining them from, among other things, (1) operating,

conducting, or transacting any of Access’s business; (2) wasting, disposing of, converting,

dissipating, or concealing any of Access’s property; (3) selling, transferring or assigning any of

Access’s property, including accounts receivable and causes of action; and (4) directly or

indirectly preventing the liquidator or his designees from gaining access to, acquiring,

examining, or investigating any of Access’s property or any books, records, or other material

concerning Access’s business.

               Until it was placed into receivership, Access was a Texas-domiciled insurance

company regulated by the Department that specialized in private passenger nonstandard

                                                2
automobile liability and physical damage policies. Access’s business was conducted through a

series of services agreements with Access Holdco Management, LLC (Access Holdco

Management), which as of 2015 was an unrelated company, and its subsidiaries.1 By 2018,

Access’s business deteriorated, causing Access to be placed into receivership. Having lost their

primary revenue stream due to Access’s insolvency, Access Holdco Management and a number

of its subsidiaries instituted what it refers to as an “assignment for the benefit of creditors”

proceeding in Delaware Chancery Court. See 10 Del. C. §§ 7301-87 (providing for proceedings

for discharge of debt upon insolvency).     As part of that process, which was governed by

Delaware law, Access Holdco Management and its subsidiaries assigned all of their assignable

assets and property to a group of newly created entities—the ABC Respondents. The ABC

Respondents were then responsible for liquidating those assets for the benefit of Access Holdco

Management’s creditors. Id. § 7328 (disposition of proceeds).

              In August 2018, the ABC Respondents executed an asset purchase agreement

whereby the Embark Respondents acquired certain of the assets that had previously been

assigned to the ABC Respondents. In addition to purchasing certain assets, which were identified

in a schedule to the asset purchase agreement, the Embark Respondents assumed one contract, a

Transition Services Agreement (the ABC TSA), that ACS (Assignment for the Benefit of

Creditors), LLC had entered into with Access Corporate Services, LLC, a subsidiary of Access

Holdco Management, in order to facilitate ACS (Assignment for the Benefit of Creditors),

       1
           Until 2015, Access and Access Holdco Management were under common ownership.
In 2015, ownership of Access Holdco Management was transferred to a third party. As part of
that transaction, Access and Access Holdco Management entered into a contract whereby Access
Holdco Management and its subsidiaries operated Access’s day-to-day operations pursuant to a
series of services agreements.
                                             3
LLC’s sale and transfer of the assets that Access Holdco Management had assigned to the

ABC Respondents.

              On February 21, 2019, the SDR submitted a proof of claim in the Delaware

Chancery Court seeking to recover any proceeds that the ABC Respondents might receive in

connection with the sale of the assets assigned to them by Access Holdco Management and its

subsidiaries. The SDR also objected to the Delaware Chancery Court’s exercise of jurisdiction

over the assignment for the benefit of creditors proceedings based on its allegation that the

proceedings involved property owned by Access, title to which had been vested in the SDR. The

SDR argued that the Texas Insurance Code vested jurisdiction over any proceeding affecting that

property in the Texas receivership proceeding in Travis County district court. The SDR also

filed a separate lawsuit (the Texas Lawsuit) in Travis County district court against the ABC

Respondents, the Embark Respondents, and other entities and individuals alleging causes of

action for breach of contract and breach of fiduciary duties arising out of alleged failures to

perform obligations owed to Access. The SDR sought damages as well as the avoidance of

transfers conducted by Access Holdco Management and its subsidiaries, including the assignment

of their assets to the ABC Respondents, and of the asset purchase agreement executed between

the ABC Respondents and the Embark Respondents.

              In response to the Texas Lawsuit, the ABC Respondents and the Embark

Respondents filed an action against the SDR in the Delaware Chancery Court seeking

declarations that the Delaware Chancery Court had subject-matter jurisdiction over the

assignment for the benefit of creditors proceedings, that neither those proceedings nor the asset

purchase agreement between the ABC Respondents and the Embark Respondents involved

                                               4
transfers of any property belonging to Access and, consequently, that they did not violate the

Agreed Order.

                In August 2019, the SDR filed an application to enforce the Agreed Order in the

Texas receivership proceeding, requesting injunctive relief against the ABC Respondents and

the Embark Respondents. The SDR sought to enjoin these entities from “pursuing claims against

the SDR, Access, or property of the estate in any forum other that the Receivership Court.” The

SDR alleged that all of the entities it sought to enjoin were “parties to a scheme to defraud the

receivership estate, its policyholders and creditors” and that they violated the Agreed Order by

seeking declaratory relief in the Delaware Chancery Court. All of the entities the SDR sought to

enjoin are Delaware limited liability companies. The SDR alleged that the district court had

personal jurisdiction over these entities because (1) the Texas Insurance Receivership Act

(TIRA) extends the scope of personal jurisdiction over debtors of the insurer located outside of

Texas; (2) each of the entities violated the Agreed Order by filing a lawsuit against the SDR and

serving the SDR at its office in Texas; (3) each of the entities hold property of Access, which

property is subject to the district court’s exclusive jurisdiction; (4) each of the entities had

“wasted, converted, and concealed” Access’s property, which property is subject to the district

court’s exclusive jurisdiction; (5) personal jurisdiction over the entities was conferred by statute,

specifically Texas Insurance Code section 443.005(d) and the Texas long-arm statute; and (6) the

exercise of jurisdiction comports with fair play and substantial justice and complies with the

United States and Texas Constitutions. The SDR further alleged that the injunctive relief sought

arose from or related to each of the entities’ contacts with the State of Texas, that each of the

entities engaged in activities constituting business in the State of Texas as provided by the Texas

long-arm statute, and that each entity is a “successor in contracts” with Texas residents. Finally,

                                                 5
the SDR alleged that each of the entities was subject to personal jurisdiction in Texas because

each had “taken action in violation of a final judgment entered against them”—specifically, the

Agreed Order.

                The ABC Respondents and the Embark Respondents filed a special appearance

objecting to the district court’s exercise of jurisdiction over them. See Tex. R. Civ. P. 120a. After

a hearing, the trial court denied the special appearance as to each of the ABC Respondents and

the Embark Respondents, and this appeal followed.

                                          DISCUSSION

                Texas courts may exercise personal jurisdiction over a non-resident if (1) the

Texas long-arm statute authorizes the exercise of jurisdiction, and (2) the exercise of jurisdiction

is consistent with federal and state constitutional guarantees of due process. Moki Mac River

Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex. 2007); see Tex. Civ. Prac. & Rem. Code

§ 17.042 (Texas long-arm statute). The Texas long-arm statute allows Texas courts to exercise

personal jurisdiction “as far as the federal constitutional requirements of due process will permit.”

BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002) (quoting U-Anchor

Advert., Inc. v. Burt, 553 S.W.2d 760, 762 (Tex. 1977)). Consequently, “the requirements of the

Texas long-arm statute are satisfied if an assertion of jurisdiction accords with federal due-

process limitations.” Moki Mac River Expeditions, 221 S.W.3d at 575.

                The exercise of jurisdiction over a non-resident comports with due process when

(1) the non-resident has minimum contacts with the forum state, and (2) asserting jurisdiction

complies with traditional notions of fair play and substantial justice. Moncrief Oil Int’l, Inc. v.

OAO Gazprom, 414 S.W.3d 142, 150 (Tex. 2013); see International Shoe Co. v. Washington,

326 U.S. 310, 316 (1945). “A defendant establishes minimum contacts with a state when it

                                                 6
purposefully avails itself of the privilege of conducting activities within the forum state, thus

invoking the benefits and protections of its laws.” Retamco Operating, Inc. v. Republic Drilling

Co., 278 S.W.3d 333, 338 (Tex. 2009). If a non-resident defendant’s Texas contacts are random,

fortuitous, or attenuated, the defendant is not subject to jurisdiction in Texas courts. Michiana

Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 785 (Tex. 2005). In addition, a defendant

must seek some benefit, advantage, or profit by availing itself of the jurisdiction of Texas. Id.

The defendant’s activities, whether they consist of direct acts within Texas or conduct outside of

Texas, “must justify a conclusion that the defendant could reasonably anticipate being called into

a Texas court.” American Type Culture Collection, Inc. v. Coleman, 83 S.w.3d 801, 806 (Tex.

2002) (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)).

               A non-resident defendant’s contacts can give rise to either specific or general

jurisdiction. BMC Software, 83 S.W.3d at 795.            Specific jurisdiction is established if the

defendant’s alleged liability arises out of or is related to the defendant’s contacts with the forum.

Moki Mac River Expeditions, 221 S.W.3d at 575 (citing Helicopteros Nacionales de Colombia,

S.A. v. Hall, 466 U.S. 408, 414 (1984)). When, as in this case, only specific jurisdiction is

alleged, our minimum-contacts analysis must focus on the relationship among the defendant, the

forum, and the litigation. Id. at 575-76. For a non-resident’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. Id. at 585.

               Whether a court has jurisdiction is a question of law that we review de novo.

Moncrief Oil, 414 S.W.3d at 150. The plaintiff bears “the initial burden of pleading allegations

sufficient to confer jurisdiction,” and the burden then shifts to the defendant “to negate all

potential bases for personal jurisdiction the plaintiff pled.” Id. at 149. A defendant can negate

                                                   7
jurisdiction either legally or factually. Kelly v. General Interior Constr., Inc., 301 S.W.3d 653,

659 (Tex. 2010). Legally, the defendant can show that the plaintiff’s alleged jurisdictional facts,

even if true, do not meet the personal jurisdiction requirement. Id. Factually, the defendant can

present evidence that negates one or more of the requirements, controverting the plaintiff’s

contrary allegations. Id. The plaintiff can then respond with evidence supporting the allegations.

Id. If the parties present conflicting evidence that raises a fact issue, we will resolve the dispute

by upholding the trial court’s determination. See Retamco Operating, 278 S.W.3d at 337;

see also BMC Software, 83 S.W.3d at 795. “When, as here, the trial court does not issue findings

of fact and conclusions of law, we imply all relevant facts necessary to support the judgment

that are supported by the evidence.” Moncrief Oil, 414 S.W.3d at 150. If the appellate record

includes, as it does in this case, the reporter’s record and the clerk’s record, the trial court’s

implied findings are not conclusive but may be reviewed for legal and factual sufficiency of the

evidence. BMC Software, 83 S.W.3d at 795. On appeal, the scope of the record includes all

of the evidence in the record. Washington DC Party Shuffle, LLC v. IGuide Tours, LLC,

406 S.W.3d 723, 729 (Tex. App.—Houston [14th Dist.] 2013, pet. denied). With these principles

in mind, we consider the allegations and evidence presented to the trial court to determine

whether the trial court erred by denying the special appearances filed by the ABC Respondents

and the Embark Respondents.

The ABC Respondents

               The SDR alleged that the district court had personal jurisdiction over all the non-

resident ABC Respondents pursuant to various provisions contained in chapter 443 of the Texas

Insurance Code. See Tex. Ins. Code §§ 443.001-.402 (Texas Insurance Receivership Act (TIRA)).

First, the SDR alleged that TIRA section 443.001(e)(5)(B) “extends the scope of personal

                                                 8
jurisdiction over debtors of the insured located outside of Texas.” Section 443.001(e)(5)(B)

provides that “the purpose of this chapter is to protect the interests of insureds, claimants,

creditors, and the public generally, through [] lessening the problems of interstate receivership by

[] extending the scope of personal jurisdiction over debtors of the insured located outside this

state.” Id. § 443.001(e)(5)(B). In its pleading, the SDR does not identify any debts that the ABC

Respondents owe Access nor does it allege how the ABC Respondents could be considered

“debtors” of Access. At the hearing on the special appearances, the SDR presented two witnesses:

Susan Salch, a partner in the SDR (the Cantilo & Bennett law firm), who was the individual with

the primary responsibility for the liquidation of Access, and Brian Falligant, a subcontractor of

the SDR, who was tasked with identifying and locating Access’s electronic and paper records,

securing them, and ultimately transferring them to the SDR.           Neither Salch nor Falligant

presented any testimony or exhibits tending to show that any of the ABC Respondents were

debtors of Access.     Consequently, TIRA section 443.001(e)(5)(B) is not implicated in the

jurisdictional analysis.

                The SDR also asserted that the ABC Respondents committed a tort in Texas by

violating the Agreed Order when they sought declaratory relief in the Delaware Chancery Court.

As an initial matter, the ABC Respondents were not parties to the receivership proceeding in

which the Agreed Order was entered. The ABC Respondents were not named in the Agreed

Order, nor was it directed at them. Nevertheless, the SDR asserts that the ABC Respondents are

still subject to the Agreed Order because they acted “in concert” with persons to whom the

Agreed Order did apply. There is no evidence, testimonial or otherwise, to support the notion

that the ABC Respondents acted “in concert” with any entity or person named in or otherwise

subject to the Agreed Order when they filed their request for declaratory relief in the Delaware

                                                 9
Chancery Court. Thus, there is nothing to support the SDR’s allegation that the ABC Respondents

were subject to or violated the Agreed Order. Moreover, even assuming the Agreed Order

purported to impose obligations or restraints on the ABC Respondents, it could not effectively do

so in the absence of personal jurisdiction over the ABC Respondents. See PNS Stores, Inc. v.

Rivera, 379 S.W.3d 267, 272 (Tex. 2012) (judgment rendered by trial court that lacks

jurisdiction over party is void); Gauci v. Gauci, 471 S.W.3d 899, 901 (Tex. App.—Houston

[1st Dist.] 2015, no pet.) (same); Whatley v. Walker, 302 S.W.3d 314, 321 (Tex. App.—Houston

[14th Dist.] 2009, pet. denied) (“Before a Court may enter judgment against a party, the court

must have obtained jurisdiction over that party pursuant to applicable rules or statutes.”). Thus,

we disagree with the SDR’s assertion that conduct inconsistent with the terms of the Agreed

Order could alone serve as a basis for the exercise of personal jurisdiction.

               The SDR asserted that the ABC Respondents were subject to personal jurisdiction

in Texas because “they held property of the Estate, which is subject to [the Travis County district

court’s] exclusive jurisdiction wherever it is located,” presumably pursuant to TIRA. Similarly,

the SDR asserted that the ABC Respondents have “wasted, converted, and concealed property of

the estate.” There was no evidence, testimonial or otherwise, identifying what that property was

or how the ABC Respondents allegedly “wasted,” “converted,” or “concealed” it. The ABC

Respondents and the Embark Respondents submitted affidavits stating that neither possessed any

property belonging to Access. To the extent the SDR is referring to the series of transactions

whereby the ABC Respondents were assigned property of Access Holdco Management and its

subsidiaries and then conveyed certain of the assigned assets to the Embark Respondents,

the SDR did not identify what property it was referring to or present evidence tending to show

                                                 10
that the referenced property and assets belonged to Access or that Access had any ownership

interest in them.

               The SDR also alleged that the ABC Respondents fall under the court’s “statutory

personal jurisdiction” set out in TIRA section 443.005(d)(5). That section provides that the court

has jurisdiction over a properly served person if that person “is obligated to the insurer in

any way, in any action on or incident to the obligation.” Tex. Ins. Code § 443.005(d)(5). The

pleadings do not include allegations, the record does not contain evidence, and the SDR’s brief

includes no argument, explaining either the nature of any obligation the ABC Respondents had

to Access or how the action to enjoin the ABC Respondents from pursuing declaratory relief in

the Delaware Chancery Court was “on or incident to” any such obligation. Thus, this allegation

is not one sufficient to confer jurisdiction. See Moncrief Oil, 414 S.W.3d at 149 (plaintiff bears

“the initial burden of pleading allegations sufficient to confer jurisdiction”).

               Finally, the SDR alleged that the ABC Respondents engaged in activities

constituting business in the State of Texas.       See Tex. Civ. Prac. & Rem. Code § 17.042.

Specifically, the SDR alleged that the ABC Respondents were “successors” to Access Holdco

Management and its subsidiaries and, consequently, were “successors in contracts” with Texas

residents. As an initial matter, the ABC Respondents acquired the assets previously held by

Access Holdco Management and its subsidiaries by an assignment, not by a stock transfer.

Thus, the ABC Respondents are not “successors” to any of the liabilities or obligations of

Access Holdco Management or its subsidiaries. See McKee v. American Transfer & Storage,

946 F. Supp. 485, 487 (N.D. Tex. 1996) (“Texas law does not generally recognize successor

liability for subsequent purchases of corporate assets.”). Thus, the ABC Respondents’ acquisition

of assets owned by Access Holdco Management and its subsidiaries does not establish that they

                                                  11
should have reasonably foreseen being haled into Texas courts in connection with any business

conducted between Access Holdco Management and its subsidiaries and Access. There is no

evidence that the ABC Respondents assumed, and therefore had any responsibility for any

liabilities of Access Holdco Management or its subsidiaries. Cf. Kelly Inv., Inc. v. Basic Capital

Mgmt., 85 S.W.3d 371, 375-76 (Tex. App.—Dallas 2002, no pet.) (purchase of contracts with

Texas residents with knowledge that contracts were subject of pending litigation in Texas

constituted sufficient minimum contacts with Texas to confer personal jurisdiction). In Kelly,

the court held that the non-resident defendant was subject to personal jurisdiction in Texas

because it purchased contracts with Texas residents knowing that, at the time of the purchase,

those contracts were the subject of pending litigation in Texas and expressly assumed the

“litigation risk” of the Texas cases. Here, however, the ABC Respondents did not assume any

existing obligations or liabilities related to any of the assets it acquired by assignment. Moreover,

the SDR presented no evidence of what specific contracts it was relying on to confer personal

jurisdiction over the ABC Respondents other than to allege that they were with “Texas residents.”

There is nothing in the record from which this Court may conclude that the claims made by the

SDR in the underlying proceeding arose out of or were related to the unidentified contracts.

               In its brief on appeal, the SDR advances additional arguments in support of its

contention that the trial court properly denied the ABC Respondents’ special appearance. The

SDR maintains that the ABC Respondents are alleged to have engaged in “two tortious schemes”

that subject them to jurisdiction in Texas: (1) the “improper” transfer of assets and (2) violations

of the Agreed Order. The asset transfer was done pursuant to Delaware law and under the

supervision of the Delaware Chancery Court. Even if the asset transfer could be considered a

                                                 12
tort,2 it was not “committed in whole or in part” in Texas. See Tex. Civ. Prac. & Rem. Code

§ 17.042(2). The SDR did not make any allegations or present any evidence that showed a

factual nexus between the alleged wrongdoing and Texas such that the alleged wrongdoing could

be said to have been committed in whole or in part in Texas. See Searcy v. Parex Res., Inc.,

496 S.W.3d 58, 67-68 (Tex. 2016) (“Thus, ‘the mere fact that a defendant’s conduct affected

plaintiffs with connections to the forum state does not suffice to authorize jurisdiction.’” (quoting

Walden v. Fiore, 571 U.S. 277, 291 (2014)). With regard to the alleged violation of the Agreed

Order, we have already concluded that the allegation that the ABC Respondents violated the

Agreed Order is not sufficient to confer jurisdiction. Moreover, even were we to assume there

was a violation of the Agreed Order, the SDR failed to establish that alleged violations of the

Agreed Order occurred in whole or in part in Texas.

               The SDR also argues that the ABC Respondents are in possession of property

belonging to Access; specifically, electronic data and unidentified books and records related to

Access Holdco Management’s work for Access. The evidence in the record, however, does not

support the assertion that any particular records or data are the property of Access. Nor does the

SDR explain how its claims against the ABC Respondents arise out of or are related to the

possession of such property.

               We conclude that the record does not demonstrate that the ABC Respondents

had contacts with Texas sufficient to support the exercise of personal jurisdiction. Having

determined that the ABC Respondents did not have sufficient minimum contacts with Texas to

       2
           The SDR has not presented any evidence that the proceeding was improper or
constituted tortious conduct. In fact, the SDR has filed a proof of claim in the Delaware
Chancery Court by which it may recover from the estates of Access Holdco Management and its
subsidiaries any money or property to which it can show itself entitled. The SDR has not
identified any evidence of harm Access or the receivership estate suffered as a result of the
assignment of Access Holdco Management and its subsidiaries’ assets to the ABC Respondents.
                                             13
support personal jurisdiction, we need not address whether the exercise of that jurisdiction would

comport with notions of fair play and substantial justice. See Brady v. Kane, No. 05-18-01105-

CV, 2020 WL 2029245, at *14 (Tex. App.—Dallas Apr. 28, 2020, no pet.) (mem. op.).

The Embark Respondents

                For the most part, the allegations and the evidence the SDR relied on to support

personal jurisdiction over the Embark Respondents are the same it relied on for the ABC

Respondents. Indeed, the SDR disclaimed any need to make allegations against any of the

eight defendants in a “repetitive individualized manner” and maintained that its allegation that

all eight defendants “participated is sufficient.” For the same reasons set forth above relating to

the ABC Respondents, we also conclude that the collective allegations and evidence the SDR

relied on to support personal jurisdiction over the Embark Respondents were insufficient to

demonstrate that the Embark Respondents had minimum contacts with Texas that would support

specific jurisdiction.

                The SDR did make an additional argument in support of its position that the

Embark Respondents were subject to personal jurisdiction. The SDR asserted that the Embark

Respondents were party to an agreement with the SDR that included a provision that the Texas

court in which the receivership action was pending would have exclusive jurisdiction over any

litigation arising out of the agreement. The SDR argues that this agreement constitutes consent

by the Embark Respondents to personal jurisdiction in Texas.

                The agreement the SDR refers to is a transition services agreement (the SDR

TSA) that the SDR entered into with Access Holdco Management and its subsidiaries in April

2018, shortly after the Texas receivership proceedings were instituted. The stated purpose of the

SDR TSA was for Access Holdco Management and its subsidiaries to “provide services to the

                                                14
SDR in order to facilitate the orderly liquidation of [Access].” The SDR argues that the Embark

Respondents have assumed the SDR TSA from Access Holdco Management and, consequently,

have consented to personal jurisdiction in Texas for litigation arising out of that agreement.

First, the SDR argues that the SDR TSA was one of the “assets” Access Holdco Management

assigned to the ABC Respondents that were then sold to the Embark Respondents. At the

hearing on the special appearances, Salch testified that she understood that the SDR TSA was

assigned to Embark Holdco as part of the August 2018 asset purchase agreement pursuant to

which Embark Holdco Management, LLC and Embark Corporate Services, LLC acquired certain

of the assets that had been assigned to the ABC Respondents. Salch stated that she was not

familiar with the specific assets that were sold or assigned in the August 2018 asset purchase

agreement and that her understanding was based on her review of the transaction documents.

Salch did not identify anything specific in those documents to support her understanding that

either of the Embark Respondents had been assigned or assumed the SDR TSA.

              For their part, the Embark Respondents submitted the sworn declaration of

Thomas A. Minick, president of each of the ABC Respondents. Minick averred that none of the

ABC Respondents had entered into any contract with the SDR or assumed or taken assignment

of any contracts between the SDR and Access Holdco Management. Minick further averred that

the only contract that the ABC Respondents had assumed from Access Holdco Management and

subsequently assigned to the Embark Respondents was a different transition services agreement,

the ABC TSA that ACS (Assignment for the Benefit of Creditors), LLC had entered into with

Access Corporate Services, LLC in order to facilitate ACS (Assignment for the Benefit of

Creditors), LLC’s sale and transfer of the assets that Access Holdco Management had assigned

to the ABC Respondents.      The Embark Respondents submitted the sworn declaration of

                                              15
Raimundo Ruiz, the president of Embark Holdco. Ruiz averred that neither of the Embark

Respondents had entered into any contracts with the SDR and that neither assumed any contract

from Access Holdco Management other than the ABC TSA. The ABC Respondents and the

Embark Respondents also attached as an exhibit to the sworn declaration of Matthew L.

McGinnis a copy of the asset purchase agreement between the ABC Respondents and the

Embark Respondents, which specifies on Schedule 1.1(c) that the only contract assumed by the

Embark Respondents as part of the transaction was the ABC TSA, which is not the same

agreement as the SDR TSA.

              In its brief to this Court, the SDR points to two August 2018 emails from Jack

Genovese, a representative of the Embark Respondents, to counsel for the SDR. In the first

email, Genovese states that in light of the transaction between the ABC Respondents and

the Embark Respondents, he would propose either assigning Access Holdco Management’s

obligations under the SDR TSA to the Embark Respondents or “enter[ing] into a new Transition

Services Agreement with Embark Holdco Management as the services provider.” In the second

follow-up email, Genovese attached a proposed Transition Services Agreement “to continue the

services formerly provided by Access Holdco Management, LLC.” Rather than support the

SDR’s position that the Embark Respondents assumed or were assigned the SDR TSA as part of

the asset purchase agreement between the ABC Respondents and the Embark Respondents, these

emails show an effort by the Embark Respondents to accomplish such an assignment or to enter

into a new transition services agreement with the SDR. Salch testified that the SDR did not

execute the proposed transition services agreement.3

       3
           We also note that even assuming that the Embark Respondents had assumed the SDR
TSA, the SDR does not explain how the injunctive relief it seeks arises out of or relates to a
transition services agreement.
                                              16
               Having reviewed the jurisdiction allegations contained in the SDR’s pleading, and

the evidence presented by the SDR, the Embark Respondents, and the ABC Respondents, we

conclude that the record does not support the conclusion that the Embark Respondents had contacts

with Texas sufficient to support the exercise of personal jurisdiction. Having determined that the

Embark Respondents did not have sufficient minimum contacts with Texas to support personal

jurisdiction, we need not address whether the exercise of that jurisdiction would comport with

notions of fair play and substantial justice. See Brady, 2020 WL 2029245, at *14.

                                         CONCLUSION

               Because the ABC Respondents’ and the Embark Respondents’ contacts with

Texas are insufficient to establish specific jurisdiction, the trial court erred in denying their

special appearance.     Consequently, we reverse the trial court’s order denying the ABC

Respondents’ and the Embark Respondents’ special appearance and render judgment dismissing

all claims against them for want of jurisdiction.

                                              __________________________________________
                                              Chari L. Kelly, Justice

Before Justices Goodwin, Kelly, and Smith

Reversed and Rendered

Filed: March 17, 2021

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