Court Opinion

ID: 3089474
Source: CourtListenerOpinion
Date Created: 2015-10-16 03:42:33.023706+00
Date Added: 2024-06-11T11:43:20.514652
License: Public Domain

NUMBER 13-12-00347-CV

                          COURT OF APPEALS

                THIRTEENTH DISTRICT OF TEXAS

                   CORPUS CHRISTI – EDINBURG

MT. MCKINLEY INSURANCE COMPANY
AND EVEREST REINSURANCE COMPANY,                                       Appellants,

                                         v.

GRUPO MEXICO, S.A.B. DE C.V.,                                             Appellee.

                  On appeal from the 319th District Court
                        of Nueces County, Texas.

                       MEMORANDUM OPINION
   Before Chief Justice Valdez and Justices Benavides and Perkes
           Memorandum Opinion by Chief Justice Valdez
      In this appeal, we are asked whether the trial court erred by granting a special

appearance filed by appellee Grupo Mexico, S.A.B. de C.V. (“Grupo”) in a lawsuit

brought by appellants Mt. McKinley Insurance Company (“Mt. McKinley”) and Everest

Reinsurance Company (“Everest”). By two issues, appellants argue (1) that the trial
court erred by granting the special appearance, and (2) in the alternative, that the trial

court erred by denying Mt. McKinley’s motion for continuance. We reverse and remand.

                                        I. BACKGROUND

       In 1999, Grupo, an international mining concern based in Mexico City, acquired

Asarco, Inc. (“Asarco”)1 in a leveraged buyout.              Grupo formed a wholly-owned

subsidiary, Americas Mining Corporation (“AMC”), to hold the shares of Asarco. In

2001, Asarco sued Mt. McKinley and other insurers in Nueces County, Texas, seeking

payment under an insurance policy for asbestos claims made against Asarco. Grupo

was not a party to that litigation. On March 20, 2003, Asarco and Mt. McKinley entered

into a “Settlement Agreement, Release and Policy Buy-Back” whereby Mt. McKinley

agreed to pay $12 million in exchange for the release of all claims against it and the

voiding of the insurance policy. The agreement further provided:

       ASARCO agrees that it shall defend, indemnify, save and hold harmless
       Mt. McKinley from and against any and all claims, crossclaims, actions or
       liability of any kind (including, but not limited to, direct action suits, suits for
       contribution, indemnification or subrogation, claims by other insurers and
       any claims for coverage by any other insured or alleged insured under the
       Policies) encompassed by this Agreement and from all costs or expenses,
       including reasonable attorneys’ fees incurred in defending against any
       such claims, crossclaims, actions or liabilities.

The settlement agreement contained definitions of certain terms, including the following:

       “ASARCO” means ASARCO Incorporated, Lac d’Amiante du Quebec
       (hereinafter “LAQ”) and Capco Pipe Company, Inc. (hereinafter “Capco”),
       Grupo Mexico S.A. de C.V., Corporation Minera Nor Peru, and any all of
       their predecessors, any and all of their past, present and future
       successors, assigns, subsidiaries, divisions, joint ventures, affiliates,
       holding companies, parent companies, agents, servants, employees,
       officers, and directors, and any and all other Persons (as herein defined)
       insured or claiming, or which in the future may claim, any right, title or
       interest in or under any of the Policies (as herein defined) as named

       1
          Asarco is an acronym derived from the company’s former name, the American Smelting and
Refining Company.

                                                2
       insureds, additional insureds, additional named insureds or otherwise.

       In 2005, Asarco and several of its wholly-owned subsidiaries filed for bankruptcy.

Two years later, Asarco initiated adversary proceedings against Mt. McKinley in

bankruptcy court, in which it sought to avoid the 2003 release as a constructive

fraudulent transfer.      See FED. R. BANKR. P. 7001–7087 (regarding adversary

proceedings). In the adversary proceedings, Asarco contended that it released its right

to insurance coverage for less than “reasonably equivalent value” and that it was

insolvent at the time or became insolvent as the result of the release. See 11 U.S.C. §

548 (stating that the bankruptcy trustee “may avoid any transfer . . . of an interest of the

debtor in property . . . if the debtor . . . received less than a reasonably equivalent value

in exchange for such transfer . . . and . . . was insolvent on the date that such transfer

was made . . . or became insolvent as a result of such transfer”).

       Mt. McKinley then asked Grupo to acknowledge its duty, pursuant to the 2003

settlement agreement, to defend and indemnify it for the adversary proceedings in

bankruptcy court.      Grupo refused to do so.     Subsequently, Mt. McKinley filed the

underlying suit in Nueces County against Grupo, Asarco, and AMC, seeking a

declaratory judgment that the defendants were obliged to defend and indemnify Mt.

McKinley under the settlement agreement.         McKinley also sought damages for the

amount it incurred and will incur in connection with the bankruptcy adversary

proceedings.

       When Grupo did not answer the lawsuit within the time prescribed by law, Mt.

McKinley filed a motion for default judgment. Grupo then filed a special appearance on

                                             3
February 27, 2009,2 some fifteen months after suit was initially filed, contending that the

trial court lacked personal jurisdiction over it. Mt. McKinley propounded interrogatories

and requests for production seeking evidence relevant to the jurisdictional inquiry. In a

letter to Mt. McKinley’s counsel dated May 13, 2009, Grupo’s counsel refused to comply

with the discovery requests, claiming that Grupo “is under no obligation to respond until

the court considers and rules on” the motion for default judgment and the special

appearance. Appellants filed a motion to compel discovery, which the trial court granted

by order dated September 30, 2009.                  However, Grupo objected to each of Mt.

McKinley’s initial requests for production and produced no discovery related to the

jurisdictional issue.3

        Grupo filed an amended special appearance on March 4, 2010. On November

28, 2011, the trial court heard arguments on the amended special appearance as well

as on various motions filed by appellants regarding discovery, including a motion for

continuance of the special appearance hearing in light of the fact that Grupo was

allegedly refusing to provide discovery related to the jurisdiction issue. The trial court

denied the motion for continuance and granted Grupo’s special appearance, dismissing

Grupo from the case. This appeal followed. See TEX. CIV. PRAC. & REM. CODE ANN. §

51.014(a)(7) (West Supp. 2011) (stating that a person may appeal from an interlocutory

        2
            Appellants argue that Mt. McKinley was not served with the special appearance until April of
2009.
        3
          Grupo even demurred to appellants’ request for an admission that “Grupo is a Mexican
Corporation with its principal place of business in Mexico.” In its response to the request, Grupo
complained that the request “seeks admission of a principal place of business, which is a legal
conclusion.” Grupo’s response further stated that, “after making a reasonable inquiry, the information
known or easily obtained by [Grupo] is insufficient to enable [Grupo] to admit or deny this request.” This
is despite the fact that, as set forth herein, Grupo had already submitted an affidavit by its general
counsel in which it admitted that it is “organized under the laws of Mexico” and has its principal place of
business in Mexico.

                                                    4
order that “grants or denies the special appearance of a defendant under Rule 120a,

Texas Rules of Civil Procedure, except in a suit brought under the Family Code”).

                                       II. DISCUSSION

A.     Personal Jurisdiction

       By its first issue, Mt. McKinley contends that the trial court has personal

jurisdiction over Grupo under both general jurisdiction and specific jurisdiction theories.

       1.     Standard of Review and Applicable Law

       Issues of personal jurisdiction are questions of law and are reviewed de novo.

Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 337 (Tex. 2009)

(citing BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex. 2002)). The

plaintiff has the initial burden to “plead sufficient allegations to confer jurisdiction.” Id.

Once that burden is met, the defendant seeking to avoid the court's jurisdiction takes on

the burden to negate “all potential bases for jurisdiction pled by the plaintiff.” Id. Where,

as here, the lower court does not make findings of fact and conclusions of law in

support of its ruling, “all facts necessary to support the judgment and supported by the

evidence are implied.” Id. (citing BMC Software Belg., 83 S.W.3d at 795).

       Non-residents are subject to the personal jurisdiction of Texas courts if: (1)

jurisdiction is authorized under the state’s long-arm statute; and (2) it comports with

guarantees of the United States and Texas Constitutions. Id. (quoting Moki Mac River

Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex. 2007)).            Under Texas’s long-arm

statute, a non-resident defendant is within the court’s jurisdiction if the defendant

conducts business in the state. See PHC-Minden, L.P. v. Kimberly-Clark Corp., 235
S.W.3d 163, 166 (Tex. 2007).            Thus, the exercise of personal jurisdiction is

                                              5
constitutional when: (1) the non-resident defendant has established minimum contacts

with the forum; and (2) the exercise of jurisdiction follows the traditional notions of fair

play and substantial justice. Id. (citing Int’l Shoe Co. v. Washington, 326 U.S. 310, 316

(1945)).

       Although this “fair play” and “substantial justice” test is well known to
       appellate courts, the expression is imprecise. It gains meaning, however,
       when viewed in light of the “minimum contacts” a defendant has with the
       forum.    Significant contacts suggest that the defendant has taken
       advantage of forum-related benefits, while minor ones imply that the forum
       itself was beside the point.           When a nonresident defendant has
       purposefully availed itself of the privilege of conducting business in a
       foreign jurisdiction, it is both fair and just to subject that defendant to the
       authority of that forum's courts.

Spir Star AG v. Kimich, 310 S.W.3d 868, 872 (Tex. 2010) (citations omitted).

       “A defendant’s contacts with a forum can give rise to either specific or general

jurisdiction.” Id. (citing CSR Ltd. v. Link, 925 S.W.2d 591, 595 (Tex. 1996)). “General

jurisdiction exists when a defendant’s contacts are continuous and systematic, even if

the cause of action did not arise from activities performed in the forum state.” Id. (citing

CSR, 925 S.W.2d at 595).        A court has specific jurisdiction over a defendant if its

alleged liability arises from or is related to an activity conducted within the forum. Id.

Unlike general jurisdiction, which requires a “more demanding minimum contacts

analysis,” specific jurisdiction “may be asserted when the defendant’s forum contacts

are isolated or sporadic, but the plaintiff’s cause of action arises out of those contacts

with the state.” Id. (citing CSR, 925 S.W.2d at 595; 4A CHARLES ALAN W RIGHT & ARTHUR

R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1067.5 (3d ed. 2002)). In such cases,

“we focus on the ‘relationship among the defendant, the forum[,] and the litigation.’” Id.

(citing Moki Mac, 221 S.W.3d at 575–76). Specific jurisdiction is appropriate when (1)

                                             6
the defendant’s contacts with the forum state are purposeful, and (2) the cause of action

arises from or relates to the defendant’s contacts. Id. (citing Retamco, 278 S.W.3d at

338).

        2.    Evidence

        The evidence pertinent to the jurisdictional inquiry includes the 2003 settlement

agreement, which, as noted, defined “ASARCO” to include Grupo.           The agreement

further provides:

        The persons signing this Agreement represent and warrant that they are
        duly authorized to execute this Agreement on behalf of ASARCO and Mt.
        McKinley, as defined in this Agreement, respectively, and to bind said
        corporations to the terms, conditions, provisions, duties and obligations
        set forth in this Agreement.

Appellants argue that Grupo was therefore a named signatory to the agreement.

        Kevin McCaffrey, Asarco’s in-house counsel, negotiated and drafted the 2003

agreement.     He testified at his deposition that, prior to executing the settlement

agreement, he presented the agreement to Gennaro Larrea, the president of Asarco

and AMC and one of Grupo’s vice presidents.           McCaffrey testified that Gennaro

approved the agreement after consulting by telephone with his brother German Larrea,

who is Grupo’s chairman and chief executive officer.         After Gennaro spoke with

German, Gennaro told McCaffrey: “Okay. Sign the agreement.”

        According to McCaffrey, after Grupo’s 1999 acquisition of Asarco, Asarco’s board

of directors consisted entirely of Grupo representatives. He testified: “[D]uring my time

at Asarco, and after the Grupo acquisition, there was no decision, whether it was paper

clips or a $100 million insurance settlement, that wasn’t presented to German Larrea.”

                                            7
       In support of its special appearance, Grupo submitted the affidavit of Alberto de

la Parra, its general counsel. De la Parra averred, in relevant part, as follows:

       3.     [Grupo] is organized under the laws of Mexico with its principal
       place of business in Mexico;

       4.     [Grupo] has no connection or continuous or systematic contacts
       with Texas;

       5.     [Grupo] is not a resident of Texas and is not required to maintain a
       registered agent for service in Texas;

       6.    [Grupo] does not maintain a place of business in Texas and has no
       employees, servants, or agents within the state;

       7.    [Grupo] has not entered into a contract with a Texas resident that is
       performable, in whole or in part, in Texas;

       8.     [Grupo] has not committed any tort, in whole or in part, in Texas;

       9.    [Grupo] has not recruited Texas residents, directly or through an
       intermediary located in Texas, for employment inside or outside
       Texas . . .

       10.    [Grupo] has no substantial connection with Texas.

       11.    [Grupo] was not a named insured, additional insured, or beneficiary
       of the insurance policies underlying the Settlement Agreement . . . .
       [Grupo] did not have any right, title or interest in the insurance policies
       such that it could make a claim to the proceeds of the insurance policies.

       12.   [Grupo] was not a party or a signatory to the Settlement
       Agreement . . . . [Grupo] did not authorize any person or entity to sign or
       execute the Settlement Agreement.

       13.    Kevin McCaffrey has never been an officer, director or employee of
       [Grupo]. Further, [Grupo] never authorized Kevin McCaffrey to execute or
       enter the Settlement Agreement on [Grupo]’s behalf.

       14.  [Grupo] received        no   consideration    under    the   Settlement
       Agreement . . . .

       15.   [Grupo]’s subsidiaries that do business in the United States
       maintain separate physical offices, have separate employees, and
       conduct separate operations from [Grupo]. For instance, [Asarco], a New

                                             8
       Jersey corporation, maintained separate offices in New York, New York.
       [Asarco] was later re-organized into a limited liability company under
       Delaware law, at which time it moved its offices to Phoenix, Arizona.

       3.     Analysis

       Mt. McKinley first argues that the trial court has general jurisdiction over Grupo

because (1) Asarco and AMC have extensive contacts with Texas, and (2) the contacts

of those subsidiaries must be imputed to Grupo under the alter ego doctrine.

       The alter ego doctrine provides that a parent company and its subsidiary may be

“fused” for jurisdictional purposes if the plaintiff proves that “the parent controls the

internal business operations and affairs of the subsidiary.” BMC Software Belg., 83
S.W.3d at 799. “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.” Id. A parent company cannot be subjected to

personal jurisdiction based on the local activities of its subsidiary when “the subsidiary’s

presence in the state is primarily for the purpose of carrying on its own business and the

subsidiary has preserved some semblance of independence from the parent and is not

acting as merely one of its departments . . . .” 4A W RIGHT & MILLER, FEDERAL PRACTICE

AND   PROCEDURE § 1069.4; see Landmark Land Co. v. Bennett, No. 13-12-00117-CV,

2012 Tex. App. LEXIS 8026, at *19 (Tex. App.—Corpus Christi Sept. 20, 2012, pet.

denied) (mem. op.). “[T]he party seeking to ascribe one corporation’s actions to another

by disregarding their distinct corporate entities [must] prove this allegation, because

Texas law presumes that two separate corporations are distinct entities.” PHC-Minden,
235 S.W.3d at 173.

                                             9
        It is undisputed that Asarco and AMC have continuous and systematic contacts

with Texas such that the exercise of general jurisdiction over those entities is proper.

The question for this Court, then, is whether those entities may be fused with Grupo for

jurisdictional purposes. The Texas Supreme Court has relied on the following factors in

determining whether a subsidiary is separate and distinct from its parent corporation for

personal jurisdiction purposes: (1) the amount of the subsidiary’s stock owned by the

parent corporation; (2) the existence of separate headquarters; (3) the observance of

corporate formalities; and (4) the degree of the parent’s control over the general policy

and administration of the subsidiary. Id. at 175 (citing 4A W RIGHT & MILLER, FEDERAL

PRACTICE    AND   PROCEDURE § 1069.4); cf. El Puerto de Liverpool, S.A. de C.V. v. Servi

Mundo Llantero, S.A. de C.V., 82 S.W.3d 622, 634–35 (Tex. App.—Corpus Christi

2002, pet. dism’d w.o.j.).4 It is undisputed that AMC is a wholly-owned subsidiary of

        4
          In El Puerto de Liverpool, this Court, citing pre-PHC-Minden case law, enumerated the following
factors relevant to the alter ego inquiry:

        (1) whether distinct and adequately capitalized financial units are incorporated and
        maintained;

        (2) whether daily operations of the corporations are separate;

        (3) whether formal barriers between the management of the entities are erected, with
        each functioning in its own best interest;

        (4) whether the companies filed consolidated tax returns;

        (5) whether operating capital is financed by the parent or borrowed from other sources;

        (6) whether the subsidiary’s stock is owned by the parent;

        (7) whether the companies share common officers and directors;

        (8) the extent to which separate books and accounts are kept;

        (9) whether the companies have common departments of businesses;

        (10) whether the companies have separate meetings of shareholders and directors;

        (11) whether an officer or director of one corporation is permitted to determine the

                                                   10
Grupo and that AMC owned 100% of Asarco’s stock; and yet, it is also undisputed that

the subsidiaries maintain separate headquarters from Grupo. Accordingly, application

of the first two factors enumerated in PHC-Minden does not resolve the jurisdictional

question.

        We next evaluate the extent of the observance of corporate formalities and the

degree of the parent’s control over the subsidiaries. See PHC-Minden, 235 S.W.3d at

175. McCaffrey testified that Asarco’s board of directors consisted entirely of Grupo

representatives, and that “after the Grupo acquisition, there was no decision, whether it

was paper clips or a $100 million insurance settlement, that wasn’t presented to

German Larrea,” Grupo’s president and chief executive officer. He also averred that

Asarco’s president consulted with German Larrea before approving the 2003 settlement

agreement.5 But parent companies normally exercise at least some control over their

subsidiaries, and “[a] subsidiary corporation will not be regarded as the alter ego of its

parent merely because of stock ownership, a duplication of some or all of the directors

or officers, or an exercise of the control that stock ownership gives to stockholders.”

Gentry v. Credit Plan Corp. of Houston, 528 S.W.2d 571, 573 (Tex. 1975). Indeed, the

        policies of the other;

        (12) whether those with whom the corporation comes into contact are apprized of their
        separate identity; and

        (13) the extent to which contracts between the parent and subsidiary favor one over the
        other.

El Puerto de Liverpool, S.A. de C.V. v. Servi Mundo Llantero, S.A. de C.V., 82 S.W.3d 622, 634–35 (Tex.
App.—Corpus Christi 2002, pet. dism’d w.o.j.) (citing Daimler-Benz Aktiengesellschaft v. Olson, 21
S.W.3d 707, 721 (Tex. App.—Austin 2000, pet. dism’d w.o.j.) (noting that “[n]ot all of the above factors
need be present or considered”)).
        5
            Appellants also claim that Grupo once issued a press release on behalf of Asarco regarding the
payment of certain bonds. However, the record evidence to which appellants direct this Court is merely
an Asarco press release; appellants do not direct this Court to any evidence that such press release was
in fact “issued” by Grupo.

                                                   11
Texas Supreme Court has held that “‘[a]ppropriate parental involvement includes

monitoring the subsidiary’s performance, supervision of the subsidiary’s finance and

capital budget decisions, and articulation of general policies.’”      PHC-Minden, 235
S.W.3d at 176 (quoting 16 MOORE’S FEDERAL PRACTICE § 108.42[3][b]). To pierce the

corporate veil in the context of personal jurisdiction, there must be “something beyond

the subsidiary’s mere presence within the bosom of the corporate family.” Id. (quoting

Dickson Marine, Inc. v. Panalpina, Inc., 179 F.3d 331, 338 (5th Cir. 1999)). McCaffrey’s

testimony did not establish that Grupo “controls the internal business operations and

affairs” of Asarco and AMC such that exercise of jurisdiction over Grupo would be

necessary to prevent fraud or injustice. See BMC Software Belg., 83 S.W.3d at 799.

We therefore conclude that Grupo’s special appearance should not have been denied

on the basis of general jurisdiction.

       We next consider the issue of specific jurisdiction. Appellants urge that specific

jurisdiction lies because (1) Grupo was a named party to the 2003 settlement

agreement, (2) the 2003 agreement settled a pending Texas lawsuit, (3) McCaffrey had

authority to execute the settlement agreement on behalf of Grupo, and (4) Mt.

McKinley’s claims for indemnification arose out of that agreement. In response, Grupo

argues that no one had authority to bind Grupo to the terms of the settlement

agreement. It further argues that, even if it were bound by the settlement agreement,

that would not give rise to specific jurisdiction because it would not mean that Grupo

directed actions at Texas or otherwise purposefully availed itself of the Texas forum.

       Appellants are correct that the 2003 agreement settles Texas litigation; that Mt.

McKinley’s claims against Asarco arose out of that agreement; and that the agreement

                                           12
defines Asarco to include, among other entities, Grupo.         However, the affidavit of

Grupo’s general counsel, de la Parra, established that McCaffrey was never an officer,

director, or employee of Grupo and that Grupo did not authorize McCaffrey or anyone

else to execute the 2003 settlement agreement on Grupo’s behalf. Although our review

of a special appearance ruling is de novo, “all facts necessary to support the judgment

and supported by the evidence are implied” where no findings of fact or conclusions of

law are filed. Retamco, 278 S.W.3d at 337 (citing BMC Software Belg., 83 S.W.3d at

795). An implicit finding that McCaffrey had no authority to bind Grupo is necessary to

support the trial court’s judgment and is supported by de la Parra’s affidavit.

Accordingly, we may not disturb the implicit finding that McCaffrey had no authority to

bind Grupo and, in turn, that Grupo was not bound by the settlement agreement.

       Even if Grupo were bound as a signatory to the agreement, its entrance into that

agreement would not alone establish that Grupo purposefully availed itself of the

benefits of the Texas forum. “It is essential in each case that there be some act by

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

within the forum State, thus invoking the benefits and protections of its laws.” Michiana

Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 784 (Tex. 2005). “It is true that in

some circumstances a single contract may meet the purposeful-availment standard, but

not when it involves a single contact taking place outside the forum state.” Id. at 787;

see Ashdon, Inc. v. Gary Brown & Assocs., 260 S.W.3d 101, 113 (Tex. App.—Houston

[1st Dist.] 2008, no pet.) (“Generally, a contract calling for performance outside of Texas

does not subject a party to jurisdiction here.”); Turner Schilling L.L.P. v. Gaunce Mgmt.,

Inc., 247 S.W.3d 447, 456–57 (Tex. App.—Dallas 2008, no pet.). This is true even if the

                                            13
contract is related to the settlement of a Texas lawsuit. See Cerbone v. Farb, 225
S.W.3d 764, 769–71 (Tex. App.—Houston [1st Dist.] 2007, no pet.) (reversing denial of

special appearance where appellants’ only contact with Texas was the execution of a

promissory note in Illinois that was related to the settlement of a pending Texas lawsuit).

Here, the only evidence that Grupo purposefully availed itself of the Texas forum was

that it authorized McCaffrey to execute the settlement agreement on Grupo’s behalf.

But even if we were to assume the truth of that allegation, that would not change the

facts that: (1) the agreement was executed in New Jersey, (2) performance of the

contract was not required to take place in Texas, and (3) Grupo was not a party to the

settled Texas litigation. See id. at 770–71.6 Accordingly, Grupo’s alleged status as a

signatory to the agreement cannot, by itself, support specific jurisdiction. See Michiana,
168 S.W.3d at 784.

        We conclude that, on the evidence presented, the trial court did not err in

granting Grupo’s special appearance. Appellants’ first issue is overruled.

B.      Motion for Continuance

        6
           The appellee in Cerbone cited Diversified Resources Corp. v. Geodynamics Oil & Gas Inc., 558
S.W.2d 97 (Tex. App.—Corpus Christi 1977, writ ref’d n.r.e.), in support of its argument that the court had
personal jurisdiction over the appellant. Cerbone v. Ferb, 225 S.W.3d 764, 770–71 (Tex. App.—Houston
[1st Dist.] 2007, no pet.). In Diversified, we considered whether the trial court had jurisdiction over a
Nevada resident who entered into an agreement and signed a promissory note to settle litigation filed by
the Texas plaintiff in federal district court in Texas. 558 S.W.2d at 97. The note provided that the
payments be made in Texas. Id. We concluded that “there were contacts by the defendant in Texas
other than making of payments; to-wit, the settling of aforesaid lawsuit between the parties here and the
making of an agreement to implement the settlement.” Id. at 99. We held that executing the note was
sufficient to warrant exercise of specific jurisdiction over the defendant because it “not only purposefully
conducted business in the State of Texas but it also contracted to perform its obligations within the State
of Texas, thus invoking the benefits and protections of this State’s law.” Id. The Cerbone court declined
to follow Diversified, noting that the appellant in Cerbone, unlike the defendant in Diversified, “was not a
defendant in the underlying case that was settled by an agreement and a promissory note.” Cerbone,
225 S.W.3d at 771. The court therefore concluded that execution of the contract did not support specific
jurisdiction. See id. The same rationale applies here.

                                                    14
      By their second issue, appellants argue that, in the event we found no error in the

trial court’s granting of the special appearance, the order must nevertheless be reversed

because the trial court erred in denying its motion for continuance. Appellants argue

that (1) TRCP 120a “specifically provides for jurisdictional discovery” and (2) Mt.

McKinley “diligently pursued” discovery from Grupo but Grupo refused to provide it.

      1.     Standard of Review and Applicable Law

      Texas Rule of Civil Procedure 120a(3) permits a trial court to order continuance

of a special appearance hearing to permit further discovery “should it appear from the

affidavits of the party opposing the motion that he cannot for reasons stated present by

affidavit essential facts to justify his opposition.” TEX. R. CIV. P. 120a(3). The trial

court’s denial of a continuance will not be disturbed absent a clear abuse of discretion,

and “the record should clearly show that the trial court has disregarded a party’s rights

before reversing the trial court’s ruling.” Barron v. Vanier, 190 S.W.3d 841, 847 (Tex.

App.—Fort Worth 2006, no pet.); see also BMC Software Belg., 83 S.W.3d at 800.

      The Texas Supreme Court has considered the following non-exclusive factors

when deciding whether a trial court abused its discretion by denying a motion for

continuance seeking additional time to conduct discovery: (1) the length of time the

case has been on file, (2) the materiality and purpose of the discovery sought, and (3)

whether the party seeking the continuance has exercised due diligence to obtain the

discovery sought. Joe v. Two Thirty Nine Joint Venture, 145 S.W.3d 150, 161 (Tex.

2004); Barron, 190 S.W.3d at 847.

                                           15
        2.      Length of Time on File

        We first consider the length of time the case has been on file. See Joe, 145
S.W.3d at 161. Although Mt. McKinley initially filed its lawsuit on October 25, 2007,

Grupo did not file its special appearance until February 27, 2009.7 A hearing on the

special appearance, and on four pending discovery motions filed by appellants, was

held on November 28, 2011, more than 21 months after the special appearance was

initially filed. Grupo argues that the “sheer magnitude of time” that elapsed between the

filing of the special appearance and the hearing thereon is dispositive of appellants’

issue. Grupo points to BMC Software, in which the Texas Supreme Court rejected the

appellant’s complaint that the trial court erred in denying a continuance where seven

months passed between the filing of the special appearance and the hearing. See BMC

Software Belg., 83 S.W.3d at 800–01.               BMC Software is distinguishable, however,

because, although the defendants in that case objected to several discovery requests,

the plaintiff “[n]ever filed a motion to compel or otherwise attempted to obtain any

discovery [defendants] did not provide.” Id. at 801. The Supreme Court based its

continuance ruling in part on that fact. See id. Here, appellants filed multiple motions to

compel discovery which were not ruled upon until the special appearance hearing.

Therefore, the fact that nearly two years elapsed between the filing of Grupo’s special

appearance and the hearing thereon is not, by itself, conclusive as to the issue of

whether the trial court abused its discretion in denying a continuance.

        7
         The record reflects that much of this delay could be attributed to the fact the case was removed
to bankruptcy court on February 28, 2008 and was not remanded to the trial court until January 22, 2009.

                                                   16
      3.     Materiality and Purpose of Discovery Sought

      Next, we consider “the materiality and purpose of the discovery sought.” See

Joe, 145 S.W.3d at 161. Mt. McKinley’s first requests for production, served upon

Grupo within one month after it contends it was served with Grupo’s special

appearance, asked for, among other things: “[a]ll documents that relate to the authority

of Kevin McCaffrey to sign the Settlement Agreement on behalf of you or any other

entity”; “[a]ny documents upon which you rely in asserting that you are not within the

definition of ‘ASARCO’ contained in the Settlement Agreement”; “[d]ocuments showing

all present and prior relationships between you and Kevin McCaffrey”; and “[a]ny

document indicating that you have were [sic] authorized to do business in Texas or that

you have done business in Texas at any time since January 1, 1998.” Mt. McKinley’s

second request for production additionally sought, among other things:            “[a]ny

correspondence or communication between you and any subsidiary, affiliate, or

company related to you concerning the Settlement Agreement”; “[d]ocuments showing

the relationship between you and (a) [AMC], (b) Minera Nor Peru, (c) Asarco . . . at any

time since January 1, 1998”; and

      [a]ll orders and opinions issued by the court . . . [and] all pleadings,
      motions (including any response and any other document related to each
      such motion), discovery requests, and discovery responses filed by or on
      behalf of any party in Asarco, LLC v. Americas Mining Corp., No. 1:07-CV-
      00018, in the United States District Court for the Southern District of
      Texas, Brownsville Division.

      As noted, Grupo refused the requests and asserted that it “is under no obligation

to respond until the court considers and rules on” the pending motions and special

appearance. Counsel for Grupo, in an email addressed to Mt. McKinley’s counsel,

                                          17
stated that “[w]e . . . do not intend on engaging in any form of discovery until the Court

rules on our special appearance.”

      Subsequently, appellants submitted a supplemental request for production by

letter dated July 19, 2010, to Grupo’s counsel, seeking the following:

      1.     All documents and/or exhibits admitted into evidence in Asarco LLC
             v. Americas Mining Corporation case No. 1:07-CV-00018
             (“Fraudulent Conveyance Litigation”) relating to the settlement or
             alleged monetizing [Asarco’s] insurance coverage in 2002–03,

      2.     All documents and/or exhibits admitted into evidence in the
             Fraudulent Conveyance Litigation relating to Grupo/AMC’s alleged
             exercise of dominion and control over [Asarco] in 2002–03,

      3.     All of the plaintiffs’ exhibits admitted into evidence in the Fraudulent
             Conveyance Litigation,

      4.     All of the defendants’ responses to all of plaintiffs’ Requests to
             Admit in the Fraudulent Conveyance Litigation,

      5.     The deposition transcripts, together with all exhibits to such
             transcripts, taken in the Fraudulent Conveyance Litigation for the
             following individuals:

             a.     German Larrea,

             b.     Gennaro Larrea,

                    ...

             e.     Kevin McCaffrey, . . . and

             k.     Alberto de la Parra.

By their supplemental discovery request, appellants sought to obtain the evidence

presented during the bankruptcy adversary proceedings, which resulted in the

bankruptcy judge finding that “[t]he record establishes without a doubt that German

Larrea rules Grupo and all of its affiliates and no major decision is made without his

approval.” Asarco, LLC v. Ams. Mining Corp., 396 B.R. 278, 300 (S.D. Tex. 2008).

                                            18
This evidence would be relevant to appellants’ theory that personal jurisdiction existed

over Grupo under the alter ego doctrine. See PHC-Minden, 235 S.W.3d at 173.8

        Consideration of the materiality and purpose of the discovery sought, therefore,

weighs in favor of a finding of abuse of discretion on the part of the trial court in denying

a continuance.

        4.      Due Diligence

        We finally consider whether appellants have exercised due diligence in their

efforts to obtain discovery. See Joe, 145 S.W.3d at 161.

        Appellants filed a motion to compel discovery after receiving the letter from

Grupo’s counsel which stated that Grupo had no intention of participating in the

discovery process until its special appearance was ruled upon. The trial court granted

the motion to compel on September 30, 2009, and it ordered Grupo to respond to the

then-pending discovery requests relevant to personal jurisdiction.                        However, in

response, Grupo asserted boilerplate objections to each of Mt. McKinley’s requests and

produced no documents.9           Appellants then filed a second motion to compel and a

motion for sanctions. The trial court granted the motion in part on March 23, 2010 and

awarded $2,500 in sanctions against Grupo “to compensate Mt. McKinley for

preparation and prosecution of the motion.” Grupo then filed amended responses in

which it repeated its boilerplate objections to each request, based in part on the fact that

        8
          Appellants also contend that Grupo has refused to provide discovery regarding whether its
subsidiaries held separate shareholder and board meetings. This information would also be relevant to
the evaluation of appellants’ alter ego theory. See El Puerto de Liverpool, 82 S.W.3d at 634–35 (noting
that one factor considered in the alter ego inquiry is “whether the companies have separate meetings of
shareholders and directors”).
        9
          Grupo’s response to each of the propounded requests for production was as follows: “Grupo
objects to this request because it has a special appearance on file with this Court. Grupo further objects
to this request as it is overly broad, unduly burdensome and not reasonably calculated to lead to the
discovery of admissible evidence as it seeks information unrelated to jurisdictional issues.”

                                                   19
its special appearance was still pending before the trial court.         The trial court

subsequently rendered a protective order stating that Grupo complied with the March

23, 2010 order and prohibiting appellants from “communicating threats or abusive

accusations to Grupo” regarding the requests for production or Grupo’s compliance

therewith.

      After negotiations with Mt. McKinley’s counsel, Grupo’s counsel eventually

agreed to produce: (1) “a document identifying the Texas proceeding(s) in which Grupo

was a party (e.g., the docket sheet of a legal proceeding)”; (2) “a chart depicting the

corporate structure of Grupo, AMC, Old Asarco, and New Asarco as of March 2003, as

well as a recent one”; and (3) “‘public filings’ made by Grupo to the SEC.” Appellants

claim that, as a result of having reviewed the docket sheet of the bankruptcy adversary

proceedings as provided by Grupo, it determined that “alter ego jurisdiction documents

existed” in the bankruptcy court file.   Appellants then submitted their supplemental

discovery requests to Grupo’s counsel.

      In July 2010, Grupo refused to produce documents responsive to appellants’

supplemental request. Grupo then filed a motion for protection on August 5, 2011, in

which it argued that it is not required to produce documents related to the bankruptcy

adversary proceedings because

      (1) any documents from the [adversary proceedings] do not fall within the
      scope of [appellants’] requests for production because Grupo was not a
      party to that litigation; and (2) AMC is a named defendant in this lawsuit,
      and [appellants] have not directed their collection efforts at AMC. It is
      therefore evident that [appellants] are more interested in fabricating a non-
      compliance case against Grupo than in conducting jurisdictional discovery.

Appellants note that, on October 22, 2010, they submitted a request for production to

AMC seeking documents from the bankruptcy adversary proceeding, but that AMC

                                           20
“ultimately produced no responsive documents.” Appellants also sought to depose the

Larreas, but Grupo denied the request. A motion filed by appellants to compel the

Larreas’ deposition was pending at the time of the special appearance hearing.

       Our review of the record leads us to conclude that appellants exercised due

diligence in pursuing discovery relevant to the jurisdictional issue.     Moreover, as

previously discussed, appellants’ pending discovery requests sought information that

was relevant to personal jurisdiction over Grupo, either under a specific jurisdiction or

general jurisdiction theory. Consideration of this factor weighs in favor of a finding of

abuse of discretion in denying the continuance.

       5.     Analysis

       Although a substantial amount of time passed between the filing of the special

appearance and the hearing thereon, it is apparent that Grupo was engaged in a

strategy of obstruction that went beyond, as it claims, merely “oppos[ing] discovery

requests as needed to protect its rights.” Instead, Grupo sought to avoid even the most

benign and reasonable discovery requests—such as a request to confirm that Grupo is

a Mexican corporation with its principal place of business in Mexico. Moreover, Grupo’s

counsel repeatedly urged that Grupo was under no obligation to respond to discovery

requests until the trial court ruled on the special appearance—a position that is plainly

belied by the rules of civil procedure. See TEX. R. CIV. P. 120a(3) (“The court shall

determine the special appearance on the basis of the pleadings, any stipulations made

by and between the parties, the results of discovery processes, and any oral

testimony . . . .” (Emphasis added)).

                                           21
        Under the circumstances of this case, we conclude that the trial court abused its

discretion by denying appellants’ motion for continuance.10 See Barron, 190 S.W.3d at

850 (finding, where plaintiff “alleged sufficient information which, if existing and

discovered, could support his allegations of personal jurisdiction,” that the trial court

abused its discretion in denying a continuance of a special appearance hearing

“especially in light of [defendants’] apparent strategic avoidance of [plaintiff’s] attempted

discovery”). Appellants’ second issue is sustained.

                                            III. CONCLUSION

        The judgment granting Grupo’s special appearance is reversed, and we remand

the cause to the trial court with instructions to grant the motion for continuance and for

further proceedings consistent with this opinion.

                                                                   ____________________
                                                                   ROGELIO VALDEZ
                                                                   Chief Justice

Delivered and filed the
18th day of April, 2013.

        10
           Grupo contends in its response to appellants’ second issue that, because the parties entered
into a Rule 11 agreement with respect to the date of the special appearance hearing, there could be no
abuse of discretion in failing to continue the hearing. We disagree. The Rule 11 agreement referred to
by Grupo states that an “[o]ral hearing on all pending motions” would take place on Monday, November
28, 2011. Grupo contends that Mt. McKinley impermissibly “changed its mind” when it filed its motion to
continue the special appearance hearing. However, the hearing went ahead as scheduled; and
appellants would arguably not have been in violation of the Rule 11 agreement had it obtained a
continuance from the trial court. It is also noteworthy that among the motions to be heard at the hearing
were four of appellants’ motions to compel discovery. If those motions were granted, it would have been
necessary to continue the special appearance hearing. Accordingly, even though “[a] Rule 11 agreement
is a contract subject to the usual rules of contract interpretation,” Barton v. Fashion Glass & Mirror, Ltd.,
321 S.W.3d 641, 644 (Tex. App.—Houston [14th Dist.] 2010, no pet.), we will not construe this particular
agreement to implicitly foreclose the possibility of a continuance.

                                                    22