Control Solutions, Inc. v. Gharda Chemicals Ltd.

245 S.W.3d 550, 2007 Tex. App. LEXIS 7446, 2007 WL 2671379
CourtCourt of Appeals of Texas
DecidedSeptember 13, 2007
Docket01-06-00802-CV
StatusPublished
Cited by13 cases

This text of 245 S.W.3d 550 (Control Solutions, Inc. v. Gharda Chemicals Ltd.) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Control Solutions, Inc. v. Gharda Chemicals Ltd., 245 S.W.3d 550, 2007 Tex. App. LEXIS 7446, 2007 WL 2671379 (Tex. Ct. App. 2007).

Opinion

OPINION

EVELYN V. KEYES, Justice.

Appellants, Control Solutions, Inc. and United Phosphorous, Inc. (collectively, “CSI”), file this interlocutory appeal challenging the trial court’s order that granted the special appearance motion of Gharda Chemicals, Ltd. (“Gharda Chemicals”). In four issues, CSI argues that the trial court erred when (1) it ruled that it did not have specific jurisdiction over Gharda Chemicals; (2) it failed to consider Gharda Chemicals’s post-injury contacts with Texas in its general jurisdictional analysis; (3) it did not find the exercise of jurisdiction reasonable in light of traditional notions of fair play and substantial justice; and (4) it ruled that jurisdiction over Gharda Chemir cals could not be imputed through the application of the alter ego, single business enterprise, and agency doctrines.

We reverse and remand.

Facts

Control Solutions is a Texas corporation that, among other things, mixes and sells insecticides. Its principal place of business is located in Harris County, Texas. Mark Boyd serves as the president of Control Solutions.

Gharda Chemicals is an Indian corporation with several manufacturing facilities in India. It was founded by Dr. Keki Gharda, its chairman, managing director, and principal shareholder, in 1964.

Sometime in the 1990s, Gharda Chemicals began manufacturing Chlorpyrifos, an insecticide, and Dicamba, an herbicide, and decided to enter the United States market. After its first attempt at entering that market failed, Gharda Chemicals hired Larry Miller as a consultant to aid in the registration of Chlorpyrifos and Dicamba with the Environmental Protection Agency (“EPA”); without registration, the chemicals could not legally be sold in the United States. Gharda Chemicals applied for registration in its own name in 1996, and the EPA conditionally approved the registration in early 1997.

In March 1997, Gharda Chemicals established Gharda USA, Inc. (“GUSA”) as a wholly-owned subsidiary “specifically to *555 represent Gharda Chemical[s] in the United States.” Gharda Chemicals solely capitalized GUSA and retained total ownership of all GUSA stock. Dr. Gharda and J.A. Somaiya, who are both directors of Gharda Chemicals, served as two of the four directors of GUSA. The third director was Uda Maroo, Gharda Chemicals’ chief financial officer, and the fourth was Mamu Tab-baykan, the sole “US director.” Anthony Maro became president of GUSA in 2000. As president of GUSA, Maro wrote monthly reports to Dr. Gharda that included how much product had been sold, to whom, and at what price; how much money was outstanding; and, according to Dr. Gharda, why Maro “constantly needed infusions of money from Gharda Chemicals to keep himself afloat.”

After GUSA was formed, Gharda Chemicals transferred the EPA registrations for Chlorpyrifos and Dicamba to GUSA; but, according to Maro, GUSA made no cash payments for these transfers because there was “no money to do that with, and ... no assets to do it with.” Ten million dollars that Gharda Chemicals had paid to Dow Chemicals and BASF for the right to cite their data to the EPA for registration purposes were transferred onto GUSA’s books. Gharda Chemicals also initially paid for GUSA’s membership in various task forces because, according to Dr. Gharda, “GUSA was just a shell company initially. It didn’t ... have any business. So it didn’t have any resources to pay.” GUSA was thus created, owned, and controlled by Gharda Chemicals and served as the U.S. distributor for Chlorpyrifos and Dicamba.

In making purchases of the Chlorpyrifos manufactured by Gharda Chemicals, Boyd, the president of Control Solutions, initially dealt with Miller, the consultant who had been hired by Gharda Chemicals. During his deposition, Boyd testified that when he was dealing with Miller, he believed Miller to be associated with Gharda Chemicals because “his stuff that came to me [Boyd] said ‘Agent of Gharda Chemicals]’ ” and he said that he was “[a]n agent for Gharda Chemical[s]” and “worked for Dr. Ghar-da.” Boyd also testified that he did not know that GUSA existed until he began dealing with Maro and learned that Maro worked for GUSA. Boyd further testified that Maro did not make pricing decisions but “went back to Dr. Gharda to get all these decisions made” and that “typically, it was Dr. Gharda that cut the deals with me.”

Sometime in 2002, at Dr. Gharda’s request, Boyd traveled from Texas to Chicago to meet with Dr. Gharda. According to Boyd, he and Dr. Gharda discussed “what new products Dr. Gharda could make for [Boyd] in India to sell in Texas” and how they could sell more Chlorpyrifos and Dicamba. Boyd suggested that they could sell substantial quantities of Chlorpyrifos if the price were lowered and they entered into the professional termitieide market, which later happened. According to Dr. Gharda, a significant amount of its sales of both Chlorpyrifos and Dicamba, amounting to millions of dollars, “were centered around Control Solutions.”

In October 2002, Hoshang Patel, a member of Gharda Chemicals’s board of directors, accompanied Maro, GUSA’s president, on a visit to Control Solutions. At his deposition, Patel explained that the purpose of his visit was to let Control Solutions know that Gharda Chemicals “was also interested in the products sold here,” that it “was watching this deal,” and if there were ever a problem, Gharda Chemicals would “stand by its products.” Gharda also provided support by communicating with Howard Stoddard of Control Solutions regarding the procedure for melting Chlorpyrifos and providing other *556 technological support when GUSA’s representatives were not able to answer customers’ questions.

On March 8, 2004, 32 drums containing the solid chemical Chlorpyrifos, which had been manufactured by Gharda Chemicals in India, sold to Control Solutions by Gharda Chemicals’s wholly-owned subsidiary, GUSA, and subsequently shipped from India to Houston, Texas, were placed in a “hot box” in Control Solutions’ warehouse for melting pursuant to a procedure received from Gharda Chemicals. Each drum had been sealed at Gharda Chemicals’s plant in India, and the seals on the drums were not broken until immediately before the drums were put in the hot box. At some point during the melting process, the Chlorpyrifos caught on fire and blew open the doors of the hot box. The fire spread throughout the warehouse and to a second building. Everything inside those two buildings was destroyed, including some inventory belonging to United Phosphorous. Subsequent analysis by Control Solutions revealed that the drums of Chlorpyrifos were contaminated with flammable chemicals.

In September 2004, Gharda Chemicals dissolved GUSA. GUSA’s assets were transferred to Gharda Chemicals and, according to Patel, GUSA “stop[ped] doing business” and “Gharda Chemicals ... stepped into the same offices with the same employees, same warehouse, same customers and start[ed] doing business.”

On December 1, 2004, Control Solutions filed suit against several parties, including GUSA and Gharda Chemicals, for products liability, breach of express warranty, breach of implied warranty of merchantability, and negligence. At some point thereafter, United Phosphorous intervened in Control Solutions’ suit.

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245 S.W.3d 550, 2007 Tex. App. LEXIS 7446, 2007 WL 2671379, Counsel Stack Legal Research, https://law.counselstack.com/opinion/control-solutions-inc-v-gharda-chemicals-ltd-texapp-2007.