Opinion
CIVIL ACTION NO. 4:22-cv-01614
2022-11-29
VORTEX COMPANIES, LLC, Plaintiff, v. AMEX SANIVAR HOLDING AG, et al., Defendants.
Logan E. Johnson, Varant Yegparian, Schiffer Hicks Johnson PLLC, Houston, TX, for Plaintiff. Darryl Wade Anderson, Layne Edwin Kruse, Norton Rose Fulbright U.S. LLP, Houston, TX, for Defendants.
Logan E. Johnson, Varant Yegparian, Schiffer Hicks Johnson PLLC, Houston, TX, for Plaintiff. Darryl Wade Anderson, Layne Edwin Kruse, Norton Rose Fulbright U.S. LLP, Houston, TX, for Defendants. ORDER Andrew S. Hanen, United States District Judge
Pending before the Court is Defendants Amex Sanivar Holding AG ("Amex-10"), Amex Sanivar AG, and Amex Sanivar GmbH's (collectively "Defendants" or "Amex") Motion to Dismiss (Doc. No. 3). Plaintiff Vortex Companies, LLC ("Plaintiff" or "Vortex") responded in opposition and requested this Court to stay Defendants' Motion so that it could conduct limited jurisdictional discovery. (Doc. No. 7) Defendants replied (Doc. No. 10). Having considered the pleadings and applicable law, the Court hereby GRANTS Defendants' Motion to Dismiss based on lack of personal jurisdiction and DENIES Plaintiff's request for a stay to conduct discovery.
I. Factual Background
This case arises out of an unconsummated business transaction between the parties. The parties are providers of water, sewer, and industrial pipe related services. According to Vortex, it found out that Amex was interested in being purchased and initiated the business relationship. (Doc. No. 7 at 6). In 2021, Vortex and Amex entered into negotiations for a proposed transaction where Vortex would acquire Amex-10 and the company's subsidiaries, Amex GmbH and Amex AG. (Id. at 1-2). Vortex is based in Texas and does business in Texas. Amex Sanivar Holding AG and Amex Sanivar AG are Swiss companies headquartered in Switzerland, while Amex Sanivar GmbH is a German company headquartered in Germany. All three Defendants do business in Europe.
On November 13, 2020, Quadex International US, Inc., a subsidiary of Vortex, and Amex Sanivar AG entered a Non-Disclosure Agreement ("NDA") (Doc. No. 3-3) to facilitate a due diligence investigation (Doc. No. 7 at 9). On January 18, 2021, Vortex and Amex-10, Amex Sanivar AG, and Amex GmbH signed a Letter of Intent ("LOI"), which primarily outlined the contours of the proposed acquisition. (Doc. No. 3-4). Both the NDA and LOI included confidentiality and exclusivity provisions that required that neither party would disclose information about the negotiations or details of the potential acquisition. (Id.). Section 10 of the LOI is a confidentiality provision that states that the terms and conditions of the LOI would remain confidential and neither party would disclose information about the LOI or the negotiation process without written permission of the other party. (Id.). Section 10 also states that "[t]he Nondisclosure Agreement dated November 13, 2020 remains in full force and effect." (Id.). Section 11 of the LOI was an exclusivity provision, which required Amex to work exclusively with Vortex and to not solicit or discuss with competing bidders regarding a transaction while negotiations with Vortex were ongoing. (Id.).
In April 2021, just before representatives from Vortex were scheduled to meet in-person with representatives from Amex in Texas, Amex withdrew from the negotiations. (Doc. No. 1-7 at 4). Vortex alleges that Amex withdrew from negotiations because it used confidential information about Vortex and its negotiating posture as a bargaining chip in parallel negotiations with competing third parties. (Id. at 4-5).
Vortex initially filed this lawsuit against Amex in the 61st Judicial District of Harris County, Texas on September 16, 2021. (Doc. Nos. 1-5, 1-7). Based on its First Amended Petition, Vortex is suing Amex for breach of the confidentiality and exclusivity provisions contained in the LOI. (Doc. No. 1-7 at 5). Specifically, Vortex alleges that Amex acted in bad faith and violated the LOI by meeting with competing European companies Amiblu and Kanalservice Gruppe in parallel negotiations. (Doc. No. 1-7 at 4-5).
Amex removed the case to this Court based on diversity jurisdiction and filed this Motion to Dismiss. (Doc. Nos. 1, 3). In its Motion, Amex argues that there is a lack of personal jurisdiction over all three Defendants. In the alternative, Amex contends that the case should be litigated in Switzerland because of forum non conveniens and a valid and enforceable forum selection clause in the NDA that was allegedly incorporated into Section 10 of the parties' LOI. (Id.). Vortex responded in opposition (Doc. No. 7) and Amex replied (Doc. No 10).
II. Legal Standard
When a district court rules on a Rule 12(b)(2) motion without a hearing, the plaintiff must make a prima facie showing of jurisdiction Johnston v. Multidata Sys. Int'l Corp., 523 F.3d 602, 609 (5th Cir. 2008). The court may consider the contents of the record, including affidavits or other recognized methods of discovery, in deciding whether to exercise personal jurisdiction. Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985). Generally, the court accepts the plaintiff's non-conclusory, uncontroverted allegations as true and resolves conflicts between the facts contained in the parties' affidavits in the plaintiff's favor. Panda Brandywine Corp. v. Potomac Elec. Power Co., 253 F.3d 865, 868 (5th Cir. 2001).
A federal court may exercise personal jurisdiction over a non-resident defendant if: (1) the long-arm statute of the forum state allows the exercise of personal jurisdiction over the defendant; and (2) the exercise of personal jurisdiction over that defendant is consistent with Fourteenth Amendment to the United States Constitution. Mullins v. TestAmerica, Inc., 564 F.3d 386, 398 (5th Cir. 2009). The two-part jurisdictional inquiry collapses into a single step in this forum because the Texas long-arm statute extends to the limits of federal due process. Tex. Civ. Prac. & Rem. Code § 17.042; Johnston, 523 F.3d at 609; Schlobohm v. Schapiro, 784 S.W.2d 355, 357 (Tex. 1990). To meet the requirements of due process, the plaintiff must demonstrate: (1) that the non-resident purposely availed himself of the benefits of the forum state by establishing minimum contacts with the state; and (2) that the exercise of jurisdiction does not offend traditional notions of fair play and substantial justice. Mullins, 564 F.3d at 398.
"Minimum contacts" can give rise to either specific personal jurisdiction or general personal jurisdiction. Lewis v. Fresne, 252 F.3d 352, 358 (5th Cir. 2001). "[A] court may assert general jurisdiction over foreign (sister-state or foreign-country) corporations to hear any and all claims against them when their affiliations with the State are so 'continuous and systematic' as to render them essentially at home in the forum State." Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919, 131 S.Ct. 2846, 180 L.Ed.2d 796 (2011). Vortex has made no assertion that the Court has general jurisdiction over Defendants.
The court "may exercise 'specific' jurisdiction in a suit arising out of or related to the defendant's contacts with the forum." Luv N' care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 469 (5th Cir. 2006). The Fifth Circuit has articulated a three-step analysis for determining whether specific jurisdiction exists: "(1) whether the defendant has minimum contacts with the forum state, i.e., whether it purposely directed its activities toward the forum state or purposefully availed itself of the privileges of conducting activities there; (2) whether the plaintiff's cause of action arises out of or results from the defendant's forum-related contacts; and (3) whether the exercise of personal jurisdiction is fair and reasonable." McFadin v. Gerber, 587 F.3d 753, 759 (5th Cir. 2009). The touchstone of the minimum contacts inquiry is whether the defendant's conduct shows that it "reasonably anticipates being hauled into court" in the forum state. Id.
III. Analysis
Amex argues that the Defendants should be dismissed for lack of personal jurisdiction. (Doc. No. 3 at 11). Amex contends that Vortex filed this lawsuit against Amex in Texas, despite the fact that each of the Defendants are foreign entities that do not do business in Texas, have no operations or personnel in Texas, and have no connections with Texas. (Id. at 6). As discussed previously, Amex Sanivar Holding AG and Amex Sanivar AG are Swiss companies headquartered in Switzerland, while Amex Sanivar GmbH is a German company headquartered in Germany. (Id. at 9). Defendants do business in Europe. (Id.).
Amex argues that Vortex fails to satisfy the requirements for a finding of specific jurisdiction but has made no assertion that the Court has general jurisdiction. (Id. at 13). First, Amex argues that Vortex has failed to plead a single Texas-based connection necessary for establishing the minimum contacts required for specific jurisdiction outside of the fact that Vortex is based in Texas. (Id.). Second, Amex avers that Vortex's breach of contract claim does not arise out of or result from contacts between Amex and Texas. (Id. at 16). Third, Amex contends that an assertion of personal jurisdiction over Amex would offend traditional notions of fair play and substantial justice. (Id. at 18).
Vortex contends in its First Amended Complaint that this Court has specific jurisdiction over Amex because each Defendant has sufficient minimum contacts with Texas. (Doc. No. 1-7 at 3). In this Complaint, Vortex does not make any claims concerning general jurisdiction over Amex, nor does it detail specific contacts in support of its conclusion regarding the existence of specific jurisdiction. In its Response, Vortex attempts to elaborate on Amex's alleged "numerous contacts with Texas" but does not specify with which Defendants these contacts occurred and instead asserts the allegations against Defendants as a group. (Doc. No. 7 at 11). First, Vortex argues that "the parties engaged in extensive negotiations and entered into two agreements: [the NDA], and the LOI] in relation to the proposed merger." (Doc. No. 7 at 8) (cleaned up). Second, Vortex contends that the "defendants placed calls, sent correspondence, and transferred data to Texas." (Id.). In addition, Vortex also argues that "the LOI was drafted by a Texas lawyer working for a Texas based company [Vortex]" and that it took various actions in Texas related to negotiating the deal with Amex and contends that the LOI and proposed merger "contemplated performance, in part, in Texas." (Id. at 6-7, 10).
The Court notes that while the LOI contemplates compliance with the NDA, Vortex is not actually a party to that agreement. (Doc. No. 3-3). Moreover, the NDA has a venue selection clause in Section 7 that states that the NDA "shall be subject to Swiss law to the exclusion of any conflicts-of-law provisions. Exclusive venue shall be at Zurich, Switzerland." (Id. at 4).
1. Amex Does Not Have Minimum Contacts with Texas
The Court addresses all Defendants under the Amex designation because that is the manner Vortex addresses them.
The Court does not find that Vortex has sufficiently shown that there Amex has developed the necessary minimum contacts with Texas to establish jurisdiction over it. It is clear that Amex has not directed its activities toward Texas or purposefully availed itself of the privileges of conducting activities there. From the out-set of the relationship between Amex and Vortex, it was Vortex that approached Amex in hopes of acquiring and purchasing them with plans to expand in Europe, where Amex is based. (Doc. No. 7 at 6) ("Vortex learned that Amex was shopping a deal and reached out."). Amex, however, has never done any business in Texas, nor does it have plans to expand into Texas. Amex is not registered to conduct business in Texas and does not have any employees there. Further, no agents or representatives of Amex have ever visited Texas during the course of negotiations with Vortex. In fact, Vortex admits that a visit was planned, but did not end up taking place. (Doc. Nos. 1-7 at 4, 7 at 11).
Although Amex may have communicated via email or telephone with Vortex during negotiations, this alone is not enough to establish minimum contacts. The Fifth Circuit has consistently held that communications and negotiations between the parties do not create the minimum contacts needed in a breach of contract action for jurisdiction in Texas. Freudensprung v. Offshore Tech. Servs., Inc., 379 F.3d 327, 344 (5th Cir. 2004) In fact, the Fifth Circuit has repeatedly held that mailing payments to a forum state, engaging in communications related to the execution and performance of a contract, and even the existence of a contract is insufficient to establish minimum contacts. Id.
Furthermore, Vortex's own activities that took place in Texas with a Texas based lawyer and the potential contacts Amex might have had with Texas had the merger gone through are irrelevant. When considering whether a defendant has purposefully availed itself of the jurisdiction of a forum state, it is the defendant's activities that a court considers, not the plaintiff's. Evergreen Media Holdings, LLC v. Safran Co., 68 F.Supp.3d 664, 681 (S.D. Tex. 2014) ("It is the [Defendants]' purposeful contacts with Texas, not Plaintiffs' that matter"). Being a Texas company, Vortex would clearly have contact with Texas—that is not what personal jurisdiction analysis requires. Vortex's own contacts with Texas are not a basis upon it can assert personal jurisdiction over Amex. Amex's only contacts with Texas arose from its communications with Vortex, a Texas based company about a transaction that was initiated by Vortex and remains unconsummated. This alone is not enough to establish jurisdiction over Amex.
Not only has it failed to detail sufficient contacts in Texas for the Defendants as a group, Vortex also has failed to establish jurisdiction individually over each Defendant. The Fifth Circuit has consistently held that the contacts of each defendant with the forum state must be assessed individually without grouping them together. Calder v. Jones, 465 U.S. 783, 790, 104 S.Ct. 1482, 79 L.Ed.2d 804 (1984); Libersat v. Sundance Energy, Inc., 978 F.3d 315, 319 (5th Cir. 2020); Head v. Las Vegas Sands, Ltd. Liab. Corp., 760 F.App'x 281, 284 (5th Cir. 2019). Here, Vortex has grouped the individual Defendants together and has only asserted allegations against Amex as a group. Nowhere in its First Amended Petition or Response does it address the Defendants individually with specific allegations. There are not sufficient contacts to establish specific jurisdiction either individually or as a group.
2. Amex's Alleged Conduct Does Not Arise Out of Contacts with Texas
Amex argues that if the suit-related conduct Vortex is alleging it engaged in occurred at all, it did not take place in Texas and has no connection with Texas. (Doc. No. 3 at 16). In response, Vortex contends that it has "no reason to believe that Defendants' breach was limited to Amiblu and Kanalservice Gruppe" in Europe. (Doc. No. 7 at 17). Furthermore, Vortex argues that even if the alleged breach occurred in Europe, its breach of contract claim arose out of the LOI and Amex's agreement to be acquired by a Texas-based company. (Id.).
If a defendant has relatively few contacts with the forum state, a court may still exercise specific jurisdiction in a suit arising out of or related to the defendant's contacts with the forum. Seifarth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 271 (5th Cir. 2006). For a state to exercise jurisdiction consistent with due process, however, the defendant's suit-related conduct must create a substantial connection with the forum state. Walden v. Fiore, 571 U.S. 277, 284, 134 S.Ct. 1115, 188 L.Ed.2d 12 (2014).
Amex's alleged suit-related conduct does not create a substantial connection with Texas. Amiblu and Kanalservice Gruppe, like Amex, are both European companies. Vortex's allegations of Amex's breach of contract through unauthorized parallel negotiations, if they occurred, presumably took place in Europe. Vortex only speculates that there is a possibility that Amex may have had parallel negotiations or discussions with other Texas competitors but does not offer more. In fact, its initial investigation—as discussed in its First Amended Complaint—only yielded alleged breaches of contract between Amex and Amiblu and Kanalservice Gruppe, neither of which are Texas companies. (Doc. No. 7 at 12). Thus, the Court does not find that Amex's alleged, improper actions arose out of its contacts with Texas.
3. Personal Jurisdiction Over Amex Would Offend Traditional Notions of Fair Play and Substantial Justice
It is clear that none of the individual Defendants have purposefully availed themselves of the benefits of Texas. Vortex initiated the business relationship to potentially acquire Amex. In the parties' LOI, Vortex wrote that it was "excited about the opportunity to combine Vortex and Amex Sanivar and partner to build an industry leading company in Europe and internationally." (Doc. No. 3-4 at 2). All three Defendants are headquartered in Europe, do business in Europe, and do not conduct business or have any relationship with Texas outside of communications with Vortex during negotiations that ultimately fell through. The alleged improper conduct, if it took place, also appears to have taken place in Europe with no relation to Texas. The only link to Texas that Amex seems to have is its communications with Vortex, a Texas based company. Thus, this Court concludes that traditional notions of fair play and justice would not contemplate Amex being sued in Texas.
Based on the facts alleged, it appears Vortex was attempting to acquire Amex to expand its business in Europe and to do business in Europe. None of the Defendants tried to come to Texas or had plans to expand their businesses to Texas. The only connection between Amex and Texas was the fact that Vortex is a Texas-based company and considered acquiring them. Therefore, Defendants have no reasonable expectation of being hauled to court to litigate any disputes in Texas. Given the lack of minimum contacts between Amex and Texas as the forum state, Amex's Motion to Dismiss based on a lack of jurisdiction is granted.
The doctrine of forum non conveniens is only applicable if the Court has jurisdiction over the matter in the first place. Sinochem Intern. Co. Ltd. v. Malaysia Inter. Co. Shipping Corp., 549 U.S. 422, 127 S.Ct. 1184, 167 L.Ed.2d 15 (2007) (quoting Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 504, 67 S. Ct. 839, 91 L.Ed. 1055 (1947)). In the absence of personal jurisdiction, there is no need for this Court to rule on these arguments.
Finally, the Court finds that granting Vortex's request to conduct jurisdictional discovery would not yield a result that differs from what it has found here. In its Response, Vortex concedes its already conducted investigation only yielded alleged parallel negotiations with Amiblu and Kanalservice Gruppe, both of which are European companies. (Id.). Vortex contends that "it is possible" that Amex also solicited other acquisitions from other Texas companies and discussed acquisitions with these companies. (Id. at 25). This is little more than asking the Court for permission to conduct a fishing expedition. Thus, the Court finds that this is not enough to establish a need for jurisdictional discovery. Plaintiff's request to stay Amex's Motion to conduct jurisdictional discovery is denied.
IV. Conclusion
For the foregoing reasons, the Court GRANTS Defendants Amex Sanivar Holding AG, Amex Sanivar AG, and Amex Sanivar GMBH's Motion to Dismiss (Doc. No. 3) and finds that it does not have personal jurisdiction over any of the Defendants. The Court DENIES Plaintiff Vortex's request to stay Amex's Motion to conduct discovery. Defendants are hereby dismissed without prejudice.