Court Opinion

ID: 9589650
Source: CourtListenerOpinion
Date Created: 2023-08-21 23:47:04.806947+00
Date Added: 2024-06-11T13:27:41.513835
License: Public Domain

McMurray, Presiding Judge,
concurring specially in part and dissenting in part.
I respectfully dissent as to Division 1 of the majority opinion affirming dismissal of The Jones Group, P.L.C., the Jones U. S. Holdings, Inc. and Jones Environmental, Inc. (“the Jones defendants”) based on lack of personal jurisdiction as it is my view that there is such an alliance of control, identity and purpose between the Jones defendants and Enviroquip, Inc. and Escor, Inc. that the actions of the latter are attributable to the former for purposes of satisfying requirements under Georgia’s Long Arm Statute as well as “minimum contacts” requirements of the Due Process Clause of the Fourteenth Amendment. With respect to Division 12 of the majority opinion, I am compelled to concur specially as I agree that Cobb County is the appropriate venue for Jack U. Greenlees as an alleged joint tortfeasor, but I do not agree with the majority’s holding that Greenlees waived venue simply by admitting that Cobb County was an appropriate venue for resolving an unrelated divorce action.
1. The evidentiary material relied on by the Jones defendants in support of their motion to dismiss and admissions by the attorney representing the Jones defendants during the hearing on this motion to dismiss reveal that a corporation from the Republic of Ireland known as The Jones Group, P.L.C. sent one of its directors, Jim Porteous, a native of Ireland, to the United States in 1985 for the purpose of developing business in the area of environmental engineering. To this end, Porteous incorporated Jones U. S. Holdings, Inc. as a subsidiary of his Irish principal and then incorporated Jones Environmental, Inc. as a subsidiary to Jones U. S. Holdings, Inc. Porteous set himself up as president and director of both corporations.
In 1987, Porteous formed Enviroquip, Inc. as a second subsidiary of Jones U. S. Holdings, Inc. for the purpose of developing business in the area of environmental engineering. Of course, Porteous was a director of Enviroquip, Inc. and he became president of this subsidiary in 1988. Porteous capitalized Enviroquip, Inc. via acquiring all of the assets of a Texas limited partnership known as Enviroquip, Ltd. These assets included the illegally gained contracts which are subjects of the RICO violations involving defendant Greenlees and allegedly involving defendant Walton.
Porteous then formed Escor, Inc. as a third subsidiary of Jones U. S. Holdings, Inc. This subsidiary was also formed for the purpose of developing environmental engineering in the United States. *158Porteous was named as a director of Escor, Inc. and defendant Walton, formerly president of Escor, Inc.’s predecessor corporation (also known as Escor, Inc. and involved in the alleged RICO violations), remained as a sales consultant for Jones U. S. Holdings, Inc.’s newest subsidiary.
In 1992, Jones U. S. Holdings, Inc. transferred all of the stock of its first subsidiary, Jones Environmental, Inc., to its second subsidiary, Enviroquip, Inc., and then sold Enviroquip, Inc. to “a buy-out group” which included Porteous. Thereafter, the actions which form the basis of the cases sub judice were filed and Jim Porteous submitted his affidavit and deposed (in pertinent part) as follows: “Cobb County . . . alleges that ‘profits which Enviroquip and Escor derived from their participation in the RICO scheme with Greenlees were channeled up to the Jones Defendants. The Jones Defendants would be hard pressed to deny that allegation, by affidavit or otherwise.’ In fact, no profits, dividends or revenues were ever paid by Delaware Enviroquip to any of the Jones Defendants, for the simple reason that Delaware Enviroquip was never, from its formation in July of 1987 until it was sold at the end of 1992, profitable enough to pay a dividend. Thus contrary to plaintiff’s allegations, none of the Jones Defendants realized ‘great financial gains at the expense of Cobb County.’ ”
“In 1925 the United States Supreme Court held that a corporation in one state did not subject itself to personal jurisdiction in another state simply because it conducted business in that state through a subsidiary corporation. Cannon Manufacturing Co. v. Cudahy Packing Co., 267 U. S. 333, 45 S. Ct. 250, 69 L. Ed. 634 (1925). However, the holding of this case was substantially refined in International Shoe Co. v. Washington, 326 U. S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945), and more recently the [United States Supreme] Court recognized that ‘(t)he limits imposed on state jurisdiction by the Due Process Clause, in its role as guarantor against inconvenient litigation has been substantially relaxed over the years.’ World-Wide Volkswagen Corp. v. Woodson, 444 U. S. 286, 292, 100 S. Ct. 559, 563, 62 L.Ed.2d 490 (1980). See also Hanson v. Denckla, 357 U. S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1952). [Considering this trend, Judge Vining of the United States District Court in the Northern District of Georgia concluded] that the harsh strictures of Cannon Manufacturing are no longer applicable [and that] neither the Due Process Clause nor traditional notions of fair play and substantial justice preclude the exercise of personal jurisdiction [under Georgia’s Long Arm Statute] over a parent corporation if the parent’s control over the subsidiaries’ activities is so complete that the subsidiary is, in fact, merely a division or department of the parent. See Katz Agency, Inc. v. Evening News Association, 514 F.Supp. 423 (S.D.N.Y. 1981).” *159Coca-Cola Co. v. Procter & Gamble Co., 595 FSupp. 304, 307-308 (N.D. Ga. 1983).
The majority holds that the Jones defendants “did none of the acts set forth in the Long Arm statute which would subject them to . . . personal jurisdiction in Georgia” and relies on averments that “no profits, dividends or revenues were ever paid by Enviroquip to any of the Jones defendants”; that Jones Environmental “never had any role or involvement in any project for or related to Cobb County, Georgia” and that “Jones Environmental has never been a successor to or owner of any entity called Enviroquip, Inc. or Escor, Inc.” The problem with this analysis is that it fails to account for the fact that Porteous did not depose that the Jones defendants did not benefit at all via ownership of its subsidiary corporations. Porteous merely deposes that “none of the Jones Defendants realized ‘great financial gains at the expense of Cobb County.’ ” Moreover, I cannot accept any conclusion that a parent corporation does not benefit via ownership of a capitalized subsidiary. At the very least, the value of a parent corporation is increased to the extent of the value of its wholly-owned subsidiary corporations. Further, while quoting from Coca-Cola Co. v. Procter & Gamble Co., supra, the majority misses the mark of Judge Vining’s decision by failing to consider the relationship between the Jones defendants and the remaining subsidiary or affiliate corporate defendants. In fact, the majority completely discounts proof regarding the Jones defendants’ complete control over Enviroquip, Inc. and Escor, Inc. via the mutual agent of the defendant corporations, Jim Porteous.
There is no question but that Jim Porteous was seeking to develop business in the area of environmental engineering on behalf of his corporate principals, i.e., the Jones defendants, Enviroquip, Inc. and Escor, Inc. It is my view, that such singularity of purpose would authorize a finding that Porteous exercised complete control over Enviroquip, Inc. and Escor, Inc. on behalf of The Jones Group, P.L.C. and its corporate subsidiaries (Jones U. S. Holdings, Inc. and Jones Environmental, Inc.) so as to impute the acts of Enviroquip, Inc. and Escor, Inc. to the Jones defendants for purposes of establishing jurisdiction under Georgia’s Long Arm Statute, OCGA § 9-10-91 (1), (2) and (3), and satisfying notions of fair play and substantial justice under the Due Process Clause of the Fourteenth Amendment. See Coca-Cola Co. v. Procter & Gamble Co., supra at 308. In other words, I agree with this Court’s holding that “[t]o permit a foreign [corporation] to insulate itself from foreseeable liability by setting up a separate but wholly-owned subsidiary for conducting its business in the United States would deny the notion of fair play to [citizens] of this state.” Showa Denko K.K. v. Pangle, 202 Ga. App. 245, 248 (2) (414 SE2d 658).
*160Decided June 26, 1995
Reconsideration denied July 26, 1995
Cofer, Beauchamp & Butler, Larry K. Butler, Bryant K. Smith, John L. Lindsay, for Cobb County, The Wickliffe Company & Mayes, Sudderth & Etheredge, Inc.
Alston & Bird, Robert D. McCallum, Jr., David M. Maxwell, H. Suzanne Smith, Hughes, Hubbard & Reed, John M. Townsend, Mark H. Duesenberg, for The Jones Group & Enviroquip, Inc.
Adele Grubbs, for Walton.,
Boyce, Ekonomou & Atkinson, Andrew J. Ekonomou, William M. Coolidge III, Custer & Hill, Lawrence B. Custer, for Greenlee.
2. With respect to Division 12 of the majority opinion, I am compelled to concur specially as I agree that Cobb County is an appropriate venue for Jack U. Greenlees in light of allegations indicating that Greenlees is a joint tortfeasor with at least one other defendant over which venue is proper in Cobb County. See Ray v. Atkins, 205 Ga. App. 85, 90 (4) (421 SE2d 317). However, I do not agree with the majority’s holding that Greenlees waived venue simply by admitting that Cobb County was an appropriate venue for resolving an unrelated divorce action. The majority cites no authority for this holding and I do not think it prudent to engage such a rule when it is unnecessary to do so.
I am authorized to state that Chief Judge Beasley and Judge Ruffin join in this opinion.