Court Opinion

ID: 9404781
Source: CourtListenerOpinion
Date Created: 2023-06-26 07:09:21.775131+00
Date Added: 2024-06-11T17:20:17.258761
License: Public Domain

Opinion issued June 22, 2023

                                      In The

                               Court of Appeals
                                      For The

                          First District of Texas
                             ————————————
                               NO. 01-22-00779-CV
                            ———————————
                  VERTELLUS HOLDINGS LLC, Appellant
                                         V.
                          PHILIP JOHNSON, Appellee

                    On Appeal from the 189th District Court
                             Harris County, Texas
                       Trial Court Case No. 2020-23434

                                  OPINION

      Appellant Vertellus Holdings LLC (“VH”) appeals from the trial court’s

denial of its special appearance. In four issues, VH argues that: (1) appellee Philip

Johnson failed to plead sufficient facts to demonstrate personal jurisdiction under

the Texas long-arm statute; (2) it negated all grounds for assertion of specific or
general personal jurisdiction; (3) it was neither a citizen nor resident of Texas; and

(4) the citizenship of a business entity for the purpose of federal diversity

jurisdiction is irrelevant to a determination of personal jurisdiction in Texas.

      We reverse the trial court’s order denying the special appearance and render

judgment dismissing Johnson’s claims against VH.

                                    Background

      Philip Johnson sued Vertellus Specialties for breach of contract. Johnson

alleged that, in February 2013, he and Vertellus Specialties entered into a

consulting agreement, which stated that he would receive a success fee when

Vertellus Specialties acquired any company on the “Target List,” including Bercen

Inc. (“Bercen”). The agreement specified Johnson’s address in Houston, Texas,

where all notices to him would be sent, and Vertellus Specialties’s address in

Indianapolis, Indiana, where notices to the company would be sent. The agreement

stated that it would be governed by Indiana law, and that venue was proper only in

Marion County, Indiana. The agreement also stated that it would be “binding upon

and . . . inure to the benefit of the parties . . . and their heirs, personal

representatives, transferees, successors and assigns.”

      Throughout 2013, Johnson worked with John Andrews, who was the vice

president of Vertellus Specialties, on the Bercen acquisition, but their efforts were

unsuccessful at that time. In May 2016, Vertellus Specialties filed for Chapter 11

                                           2
bankruptcy. Vertellus Specialties was one of several related entities at issue in the

bankruptcy proceeding. As part of the resolution of the bankruptcy proceeding,

Vertellus Specialties sold all its assets to prior term loan lenders, who had jointly

formed Valencia Bidco LLC for that purpose. The bankruptcy court approved the

asset purchase agreement in an order, which stated:

      Except for the Assumed Liabilities or as otherwise expressly set forth
      in . . . this Order, the Purchaser shall not have any liability for any
      obligation of the Debtors arising under or related to the Purchased
      Assets. Without limiting the generality of the foregoing, and except
      for the Assumed Liabilities provided in the [asset purchase
      agreement], the Purchaser shall not be liable for any Claims against
      the Debtors or any of their predecessors or affiliates. By virtue of the
      Sale, to the extent allowed by applicable law and except as otherwise
      set forth in this Order, the Purchaser and its affiliates, successors and
      assigns shall not be deemed or considered to, (a) be a legal successor,
      or otherwise be deemed a successor to any of the Debtors, (b) have, de
      facto or otherwise, merged with or into any or all Debtors, or (c) be a
      continuation or substantial continuation, of any of the Debtors or their
      respective estates, businesses or operations, or any enterprise of the
      Debtors, in each case by any law or equity, and the Purchaser has not
      assumed nor is it in any way responsible for any liability or obligation
      of the Debtors or the Debtors’ estates, except with respect for the
      Assumed Liabilities. To the extent allowed by applicable law and
      except as otherwise set forth in this Order, the Purchaser shall have no
      successor or vicarious liabilities of any kind or character, including . .
      . successor or transferee liability . . . de facto merger or substantial
      continuity, whether known or unknown as of the Closing Date, now
      existing or hereafter arising, whether fixed or contingent, with respect
      to the Debtors or any obligations of the Debtors arising prior to the
      Closing Date . . . .

      According to Johnson’s pleading, Valencia Bidco LLC later became V

Global Holdings LLC, which is now the corporate parent of Vertellus Holdings

                                          3
(“VH”). Johnson alleged that Richard Preziotti, who had been the president of

Vertellus Specialties, and John Andrews worked for the new entity, and they

continued working to acquire Bercen. Johnson further alleged that both Preziotti

and Andrews left VH before 2020, but VH then engaged Andrews as a consultant

for the purposes of the acquisition of Bercen. Johnson pleaded that when VH

acquired Bercen in early 2020, VH paid Andrews a success fee. It paid nothing to

Johnson in connection with the Bercen acquisition.

      In April 2020, Johnson sued Vertellus Specialties in Texas. After difficulty

serving Vertellus Specialties and verbal assertions that the trial court lacked

jurisdiction, Johnson filed suit in federal district court in Indiana against VH and

VSI Liquidating, Inc., which Johnson characterized as “f/k/a Vertellus Specialties,

Inc.”1 In March 2022, Johnson nonsuited his federal claims because defense

counsel had represented that a member of VH, a limited liability company, was a

citizen of Texas for the purposes of federal diversity jurisdiction.

      In May 2022, Johnson amended his petition in Texas court, pleading a claim

for breach of contract against Vertellus Specialties and claims for unjust

enrichment and quantum meruit against VH.            VH filed a special appearance,

arguing that the trial court lacked personal jurisdiction because VH is not a resident

of Texas, was not a party to the consulting agreement, and did not have sufficient

1
      The record in this interlocutory appeal does not entirely clarify the relationships
      among, or the timing of formation of, the various Vertellus entities.
                                           4
contacts with Texas for the long-arm statute to apply. It attached the following

jurisdictional evidence to its special appearance: (1) Johnson’s original complaint

in the federal court case; (2) a copy of the federal district court’s docket sheet in

that case; (3) VH’s response to interrogatories in the federal case; (4) VH’s

objections to a motion for extension of time and request for discovery in the

federal case; (5) the order approving the asset purchase agreement from the

bankruptcy court; (6) a sworn declaration from Anne Frye, secretary and general

counsel for VH; and (7) a sworn declaration from VH’s counsel authenticating the

other documents attached to the special appearance. In her declaration, Frye stated:

             By virtue of my duties and responsibilities to Vertellus
      Holdings LLC, I am familiar with the place where Vertellus Holdings
      LLC was organized and when, which state’s laws govern its internal
      affairs, where its principal place of business is, where its business
      operations are conducted, and whether it maintains a registered agent
      for service in Texas.

            Vertellus Holdings LLC was organized in Delaware on August
      31, 2016. Its internal affairs are governed by the laws of Delaware.
      The principal place of business of Vertellus Holdings LLC is 201
      North Illinois Street, Suite 1800, Indianapolis, Indiana 46204.
      Vertellus Holdings LLC has not sought and thus not received
      authorization to do business in the State of Texas because it does not
      do business in the State of Texas. Vertellus Holdings LLC does not
      have a registered agent for service in the State of Texas.

            Vertellus Holdings LLC is an entity separate and apart from
      Vertellus Specialties, Inc. Vertellus Holdings LLC has never had the
      name Vertellus Specialties, Inc. and has never merged or been
      consolidated with or acquired any ownership interest in Vertellus
      Specialties, Inc. Vertellus Specialties, Inc. has never merged or been

                                         5
      consolidated with or acquired any ownership interest in Vertellus
      Holdings LLC.

            Vertellus Holdings LLC has never filed for bankruptcy.

      In response, Johnson argued that VH admitted in federal court that it was a

Texas citizen, and therefore it is also a Texas resident. He further alleged that he

initially introduced Vertellus Specialties to Bercen, and but for that introduction,

VH “would not have even known of Bercen, let alone had an opportunity to

potentially acquire it.” He alleged that because he lived in Texas, Preziotti and

Andrews acquired information about “potential acquisitions in the anhydrides

market” from him. He also argued that VH failed to compensate him in Texas;

thus, the cause of action arose in Texas. Johnson did not attach any jurisdictional

evidence to his response.

      In reply, VH challenged the timeliness of Johnson’s response and argued

that citizenship for the purposes of diversity jurisdiction is not the same as

residency for the purpose of personal jurisdiction, and that Vertellus Specialties’s

contacts with Texas could not be imputed to VH.

      The trial court granted Johnson leave for the late-filed response and denied

the special appearance “because the pleadings show[] Defendant is a citizen of the

State of Texas–entities can be citizens of different states at the same time unlike

natural persons. Texas courts have general jurisdiction over its citizens, both

natural and legal persons such as Defendant.”

                                         6
      VH appealed.

                                      Analysis

      On appeal, VH presents four issues, each of which states a reason why the

trial court erred by denying its special appearance. VH argues that: (1) Johnson

failed to plead sufficient facts to demonstrate personal jurisdiction over VH;

(2) VH negated all grounds for assertion of specific or general personal

jurisdiction; (3) VH is not a citizen or a resident of Texas for the purpose of

determining whether the court has personal jurisdiction over it; and (4) the

citizenship of a business entity for the purpose of federal diversity jurisdiction is

irrelevant to a determination of personal jurisdiction.

      In the trial court and on appeal, Johnson argues that because VH argued that

it was a citizen of Texas to oppose diversity jurisdiction in federal court, it is a

citizen and therefore a resident of Texas for the purpose of personal jurisdiction.

To support this conclusion, Johnson further argues that the long-arm statute does

not include limited liability companies, like VH, in the list of examples of

“nonresidents.”

      Because citizenship for the purpose of diversity jurisdiction does not confer

personal jurisdiction in a Texas state court, and because Johnson did not plead or

proffer jurisdictional evidence showing that VH had sufficient contacts with Texas

                                          7
to establish specific or general personal jurisdiction, we will reverse the trial

court’s order and render judgment in favor of VH.

I.    Personal jurisdiction law and standards

      A.     Standard of review

      Whether a court has personal jurisdiction over a nonresident defendant is a

question of law, and we therefore review de novo the trial court’s ruling on a

special appearance. Moncrief Oil Int’l Inc. v. OAO Gazprom, 414 S.W.3d 142, 150

(Tex. 2013) (citing Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 574

(Tex. 2007)).

      B.     Personal jurisdiction over residents

      A court must possess both subject-matter jurisdiction over a case and

personal jurisdiction over a party to issue a binding judgment. Luciano v.

SprayFoamPolymers.com, LLC, 625 S.W.3d 1, 7–8 (Tex. 2021). While subject-

matter jurisdiction refers to the court’s power to hear a particular type of suit,

personal jurisdiction concerns the court’s power to bind a particular person or

party. Id. at 8. A court obtains personal jurisdiction over a defendant through valid

service of process or through the defendant’s appearance. Tomlinson v. Khoury,

624 S.W.3d 601, 606 (Tex. App.—Houston [1st Dist.] 2020, pet. denied); see

Velasco v. Ayala, 312 S.W.3d 783, 798 (Tex. App.—Houston [1st Dist.] 2009, no

pet.) (“Personal jurisdiction is comprised of two elements: (1) the defendant must

                                         8
be amenable to the jurisdiction of the court and (2) the plaintiff must validly

invoke that jurisdiction by valid service of process on the defendant.”); see also

Cantu v. Gray & Becker, P.C., No. 03-02-00099-CV, 2002 WL 31599470, at *4

(Tex. App.—Austin Nov. 21, 2002, pet. denied) (mem. op., not designated for

publication) (“Texas courts are courts of general jurisdiction and have personal

jurisdiction over Texas residents and all other persons who are amenable to process

issued by the courts of this state.”).

      C.     Personal jurisdiction over nonresidents and the Texas long-arm
             statute

      Texas courts may assert personal jurisdiction over a nonresident if (1) the

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

of jurisdiction is consistent with federal due-process guarantees. Luciano, 625

S.W.3d at 8. The Texas long-arm statute provides that “‘nonresident’ includes:

(1) an individual who is not a resident of this state; and (2) a foreign corporation,

joint-stock company, association, or partnership.” TEX. CIV. PRAC. & REM. CODE

§ 17.041. Texas courts, including this one, have implicitly determined that the

nonexclusive definition of nonresident also includes limited liability companies.

See Gramercy Advisor LLC v. R.K. Lowery, No. 01-14-00904-CV, 2015 WL

3981610, at *15 (Tex. App.—Houston [1st Dist.] June 30, 2015, no pet.) (mem.

op.) (determining whether personal jurisdiction existed over defendant LLC under

Texas long-arm statute); Favour Leasing, LLC v. Mulligan, No. 05-13-01000-CV,

                                         9
2014 WL 4090130, at *9 (Tex. App.—Dallas Aug. 19, 2014, no pet.) (same);

MasterGuard L.P. v. Eco Techs. Int’l LLC, 441 S.W.3d 367, 382 (Tex. App.—

Dallas Aug. 22, 2013, no pet.) (same).

      The Texas long-arm statute “broadly permits jurisdiction over a nonresident

doing ‘business in this state,’” if the nonresident also satisfies one of the three

statutory requirements, and it establishes alternative methods of effectuating

service of process on nonresidents. Luciano, 625 S.W.3d at 8 (quoting TEX. CIV.

PRAC. & REM. CODE § 17.042); see generally, TEX. CIV. PRAC. & REM. CODE

§§ 17.01–.093. Section 17.042 provides that

      a nonresident does business in this state if the nonresident:

      (1)   contracts by mail or otherwise with a Texas resident and either
            party is to perform the contract in whole or in part in this state;

      (2)   commits a tort in whole or in part in this state; or

      (3)   recruits Texas residents, directly or through an intermediary
            located in this state, for employment inside or outside this state.

TEX. CIV. PRAC. & REM. CODE § 17.042.

      D.    Due process considerations in the exercise of personal jurisdiction

      Consistent with federal due-process protections, a state court may assert

personal jurisdiction over a nonresident defendant only if the defendant has

established “minimum contacts” with the forum state such that maintenance of the

                                         10
suit does not offend “traditional notions of fair play and substantial justice.” Int’l

Shoe Co. v. Washington, 326 U.S. 310, 316 (1945); see Luciano, 625 S.W.3d at 8.

             1.    General and specific personal jurisdiction

      A defendant’s contacts with the forum can give rise to either general or

specific jurisdiction. Luciano, 625 S.W.3d at 8. A court has general jurisdiction

over a nonresident defendant whose “affiliations with the State are so ‘continuous

and systematic’ as to render [it] essentially at home in the forum State.” Id.

(citations omitted). By contrast, specific jurisdiction “covers defendants less

intimately connected with a State, but only as to a narrower class of claims.” Id.

(citing Ford Motor Co. v. Montana Eighth Jud. Dist. Ct., 141 S. Ct. 1017, 1024

(2021)). “The minimum contacts necessary for specific jurisdiction are established

if the defendant purposefully avails itself of the privilege of conducting activities

in the forum state . . . and the suit “arise[s] out of or relate[s] to the defendant’s

contacts with the forum.’” Luciano, 625 S.W.3d at 8–9 (quoting Bristol-Myers

Squibb Co. v. Superior Ct. of Cal., 582 U.S. 255, 262–64 (2017)).

             2.    Purposeful availment through minimum contacts

      The “touchstone of jurisdictional due process [is] ‘purposeful availment.’”

Spir Star AG v. Kimich, 310 S.W.3d 868, 873 (Tex. 2010) (alteration in original)

(quoting Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 784 (Tex.

2005)). In Michiana, the Texas Supreme Court articulated three important aspects

                                         11
of the purposeful availment inquiry. 168 S.W.3d at 785. First, only the nonresident

defendant’s contacts with the forum count. Id. This ensures that the nonresident

defendant is not haled into a jurisdiction solely by the unilateral activities of a third

party. Id. (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475 (1985)).

Second, the acts relied on must be purposeful; the nonresident defendant may not

be haled into a jurisdiction solely based on contacts that are “random, isolated, or

fortuitous.” Id. (quoting Keeton v. Hustler Mag., Inc., 465 U.S. 770, 774 (1984)).

Third, the nonresident defendant “must seek some benefit, advantage, or profit by

‘availing’ itself of the jurisdiction” because “[j]urisdiction is premised on notions

of implied consent” and by “invoking the benefits and protections of a forum’s

laws, . . . [the] nonresident consents to suit there.” Id. (citing World-Wide

Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)).

      With respect to a business organization, the “paradigm” forums for the

exercise of general jurisdiction are the place of organization and principal place of

business. Ford Motor Co., 141 S. Ct. at 1024; see also Daimler AG v. Bauman,

571 U.S. 117, 137 (2014). “Those affiliations have the virtue of being unique—that

is, each ordinarily indicates only one place—as well as easily ascertainable.”

Daimler AG, 571 U.S. at 137. Such bases afford a plaintiff “recourse to at least one

clear and certain forum in which a corporate defendant may be sued on any and all

claims.” Id.

                                           12
              3.    Fair play and substantial justice

      “Once it has been determined that the nonresident defendant purposefully

established minimum contacts with the forum state, the contacts are evaluated in

light of other factors to determine whether the assertion of personal jurisdiction

comports with fair play and substantial justice.” Guardian Royal Exch. Assurance,

Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 228 (Tex. 1991). The burden

is on the nonresident defendants to present a compelling case that despite the

existence of minimum contacts, the presence of some other considerations renders

the exercise of jurisdiction unreasonable. Id. at 231. In making this determination,

a court generally must look to the following factors: (1) the burden on the

nonresident defendants; (2) the interests of the forum state in adjudicating the

dispute; (3) the plaintiff’s interest in obtaining convenient and effective relief;

(4) the interstate judicial system’s interest in obtaining the most efficient resolution

of controversies; and (5) the shared interest of the several states in furthering

substantive social policies. Id. at 228, 231. Only in rare cases will the exercise of

jurisdiction not comport with fair play and substantial justice when the nonresident

defendants have purposefully established minimum contacts with the forum state.

Id. at 231.

                                          13
      E.     The burden shifting procedure for establishing or challenging
             personal jurisdiction

      Initially, the plaintiff bears the burden to plead factual allegations that

demonstrate the court has personal jurisdiction over the defendant either as a

resident of Texas or, if a nonresident, under Texas’s long-arm statute. Kelly v. Gen.

Interior Constr., Inc., 301 S.W.3d 653, 658 (Tex. 2010). A nonresident defendant

can challenge personal jurisdiction by filing a special appearance in which it

negates all bases of personal jurisdiction alleged by the plaintiff. Id. If the plaintiff

fails to plead jurisdictional facts alleging personal jurisdiction, the defendant may

defeat personal jurisdiction with evidence showing that it is not a Texas resident.

Id. at 659. When the pleading is wholly devoid of jurisdictional facts establishing

personal jurisdiction over a nonresident defendant, the plaintiff should amend the

pleading in response to the special appearance. See id.

      The defendant may also challenge personal jurisdiction by presenting

evidence that disproves the plaintiff’s jurisdictional allegations. Id. For example,

the defendant may show that it has had no contacts with Texas. Id. Alternatively,

the defendant may argue that even if the plaintiff’s allegations are true, the court

does not have personal jurisdiction because the evidence is legally insufficient to

show purposeful availment, the claims do not arise from the contacts if specific

jurisdiction is alleged, or the exercise of jurisdiction would offend traditional

notions of fair play and substantial justice. Id.

                                           14
II.   The trial court does not have personal jurisdiction over VH.

      A.     Citizenship for the purpose of federal diversity jurisdiction is
             different from and not relevant to residency for the purpose of
             personal jurisdiction.

      As a preliminary matter, we address the argument that it is unnecessary to

consider the applicability of the Texas long-arm statute because VH is a Texas

resident by virtue of its judicial admission in federal court that it is a Texas citizen.

The Fourteenth Court of Appeals addressed a similar issue in Momentum

Engineering, LLC v. Tabler, No. 14-18-00002-CV, 2018 WL 4037411, at *3 (Tex.

App.—Houston [14th Dist.] Aug. 23, 2018, pet. denied) (mem. op.). In Momentum

Engineering, the plaintiff argued that the trial court had jurisdiction over the

foreign defendant because it was “a limited liability company with a member who

resides in Houston.” Id. The plaintiff relied on Americold Realty Trust v. Conagra

Foods, Inc., 577 U.S. 378, 381 (2016), which held that for the purpose of federal

diversity jurisdiction, an unincorporated association is a citizen in every place in

which a member is a citizen. See Momentum Eng’g, 2018 WL 4037411, at *3. The

Fourteenth Court of Appeals stated: “The question of whether a federal court has

diversity jurisdiction over a given case is a distinct inquiry from whether a court

has personal jurisdiction over a defendant.” Id. The court explained:

      The requirements of federal diversity jurisdiction flow from Article III
      of the Constitution. See U.S. CONST. art. III, § 2, cl. 1; Ins. Corp. of
      Ir., Ltd. v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 701
      (1982). Such restrictions on a federal court’s subject-matter

                                           15
       jurisdiction are the result of the limited nature of the federal
       judiciary’s powers. See Ins. Corp. of Ir., 456 U.S. at 702. The
       requirements applicable to personal jurisdiction, on the other hand,
       flow from the Due Process Clause and protect individual liberty
       interests. Id. Thus, a federal court can have diversity jurisdiction over
       a case and yet lack personal jurisdiction over the foreign defendant.
       Cf. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 464 (1985)
       (analyzing personal jurisdiction despite the existence of diversity
       jurisdiction); Trois v. Apple Tree Auction Ctr., Inc., 882 F.3d 485, 487
       (5th Cir. 2018) (federal district court with diversity jurisdiction over
       the case had personal jurisdiction over only one of plaintiff’s two
       claims).

Momentum Eng’g, 2018 WL 4037411, at *4.

       The court of appeals concluded that there is no legal authority that states that

“a limited liability company is subject to general personal jurisdiction in every

state in which a member is a citizen.” Id. “The rule instead is that limited liability

companies are treated as partnerships for the purpose of federal diversity

jurisdiction, but they are treated as corporations for the purpose of general personal

jurisdiction.” Id.

       We agree with the Fourteenth Court of Appeals, and we conclude that VH’s

arguments in federal court about federal diversity jurisdiction play no role in our

analysis of personal jurisdiction.

       B.     Personal jurisdiction is not supported by the pleadings or the
              jurisdictional evidence.

       We now consider whether the trial court had personal jurisdiction over VH

based on the Texas long-arm statute and federal due process requirements.

                                          16
Johnson’s live pleading is his first amended petition. In this pleading, he alleged:

“Defendant Vertellus Holdings LLC is a limited liability company organized under

the laws of the State of Delaware with its principal place of business in

Indianapolis, Marion County, Indiana.” Johnson alleged that “a substantial part of

the events or omissions giving rise to the claim occurred in Harris County, Texas.”

Most of Johnson’s allegations describe his consulting contract and work for

Vertellus Specialties. Johnson also stated that after Vertellus Specialties filed for

bankruptcy, its assets were sold to Valencia Bidco LLC, which is now V Global

Holdings LLC, the corporate parent for VH. He further alleged that Preziotti and

Andrews, who were the president and vice president of Vertellus Specialties, then

began working in the same or similar positions for VH. According to Johnson, VH

later acquired Bercen. Johnson maintains that but for his consulting work with

Vertellus Specialties, VH would not have been able to acquire Bercen.

      First, Johnson’s allegations demonstrate that VH is a nonresident. Johnson

has argued that VH does not fit the statutory definition of a nonresident in the long-

arm statute because it is a limited liability company and not a corporation. See TEX.

CIV. PRAC. & REM. CODE § 17.041 (defining “nonresident” by a nonexclusive list

that includes other business organizations but does not expressly mention LLCs).

Johnson argues that this is a matter of first impression because no Texas court has

expressly held that the long-arm statute applies to LLCs. We have noted, however,

                                         17
that this Court (and others) have applied the long-arm statute to LLCs. See, e.g.,

Gramercy Advisor LLC, 2015 WL 3981610, at *15 (holding that nonresident

defendant LLC had sufficient minimum contacts with Texas to justify personal

jurisdiction, when such jurisdiction did not offend traditional notions of fair play

and substantial justice); Favour Leasing, LLC, 2014 WL 4090130, at *9 (holding

that court lacked personal jurisdiction over LLC because plaintiff did not show

substantial connection to state of Texas); MasterGuard L.P., 441 S.W.3d at 382

(holding that court had personal jurisdiction over nonresident LLC under Texas

long-arm statute).

      Second, Johnson affirmatively pleaded that VH’s “paradigm forums” for the

exercise of general jurisdiction were Indiana and Delaware. Ford Motor Co., 141

S. Ct. at 1024 (holding that paradigm forums are place of organization and

principal place of business).

      Third, Johnson has not pleaded any factual allegations connecting VH—as

an entity distinct from Vertellus Specialties—to Texas. He did not allege that VH

did business in Texas, contracted with him, or had any connection to Texas at all.

Instead, he relies on Vertellus Specialties’s contact with Texas, which is limited to

entering into a consulting agreement with a Texas resident. Johnson’s argument

imputes Vertellus Specialties’s contacts with Texas to VH on the grounds that

                                         18
Preziotti and Andrews worked for Valencia Bidco or a related entity after the

bankruptcy sale. Johnson alleged:

             Vertellus [Valencia Bidco] announced that, despite the sale,
      “The Company will be led by the existing leadership team and
      continue to execute against its current strategic plan with a relentless
      focus on safety, quality, efficiency and growth.” . . . Crucially, that
      included both Preziotti and Andrews continuing in the same positions
      as prior to the bankruptcy. . . . In other words, Vertellus Specialties
      continued with business as usual.

      After Vertellus Specialties filed for bankruptcy, it sold its assets and

transferred certain debts and contracts to Valencia Bidco. Although Vertellus

Specialties transferred two other consulting agreements, it did not transfer the

consulting agreement with Johnson. The sale (asset purchase agreement) was

authorized by order of the bankruptcy court. The order stated that it was “binding

in all respects upon . . . all holders of any Claim(s) (as defined in the Bankruptcy

Code) against any Debtor, whether known or unknown . . . .” The order also stated

that except for the liabilities that were expressly assumed as part of the transaction,

the purchaser, Valencia Bidco, “shall not have any liability for any obligation of

the Debtors arising under or related to any of the Purchased Assets.” The order

further stated:

      By virtue of the Sale, to the extent allowed by applicable law and
      except as otherwise set forth in this Order, the Purchaser and its
      affiliates, successors and assigns shall not be deemed or considered to,
      (a) be a legal successor, or otherwise be deemed a successor to any of
      the Debtors, (b) have, de facto or otherwise, merged with or into any
      or all Debtors, or (c) be a continuation or substantial continuation, of
                                          19
      any of the Debtors or their respective estates, businesses or operations,
      or any enterprise of the Debtors, in each case by any law or
      equity . . . .

      The Bankruptcy Code defines “claim” as a “right to payment, whether or not

such right is reduced to judgment, liquidated, unliquidated, fixed, contingent,

matured, unmatured, disputed, undisputed, legal, equitable, secured, or unsecured .

. . .” 11 U.S.C. § 101(5). Johnson’s contract with Vertellus Specialties gave him

the right to payment upon the occurrence of a contingency—the acquisition of a

company on the target list. To the extent that this is a claim under the Bankruptcy

Code, the bankruptcy court’s order is binding on Johnson. And the bankruptcy

court’s order specifically states that the purchaser is not a continuation of the

debtor’s business. Johnson has not explained any legal reason why the contacts of

Vertellus Specialties should be imputed to VH. We conclude that they should not

be.

      Fourth, VH produced jurisdictional evidence that proves it had no contacts

with Texas. In her declaration, Anne Frye, secretary and general counsel to VH,

stated that: (1) VH was organized in Delaware; (2) its internal affairs are governed

by Delaware law; (3) its principal place of business is in Indiana; (4) it has not

sought or received authorization to do business in Texas; (5) it does not do

business in Texas; (6) it does not have a registered agent for service of process in

Texas; (7) it is an entity separate and apart from Vertellus Specialties; (8) it has

                                         20
never used the name Vertellus Specialties; (9) it has never merged with,

consolidated with, or acquired ownership interest in Vertellus Specialties, and

Vertellus Specialties has never merged with, consolidated with, or acquired

ownership interest in VH; and (10) VH has never filed for bankruptcy.

      Considering the pleadings and the jurisdictional evidence, we hold that the

trial court did not have personal jurisdiction over VH because such exercise of

jurisdiction neither satisfies the long-arm statute nor comports with federal due

process guarantees. In light of this conclusion, we do not need to consider whether

the exercise of jurisdiction would comport with traditional notions of fair play and

substantial justice. We sustain VH’s issues on appeal.

                                    Conclusion

      We reverse the trial court’s order, and we render judgment dismissing

Johnson’s claims against VH.

                                             Peter Kelly
                                             Justice

Panel consists of Chief Justice Adams and Justices Kelly and Goodman.

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