Creation Technologies Texas, LLC v. AEG Power Solutions B v.

Court of Appeals of Texas·Decided November 12, 2019·No. 05-19-00331-CV·Published

Opinion

Modify and affirm as modified; Opinion Filed November 12, 2019

In The

Court of Appeals

Fifth District of Texas at Dallas No. 05-19-00331-CV

CREATION TECHNOLOGIES TEXAS, LLC, Appellant V.

AEG POWER SOLUTIONS B.V., Appellee

On Appeal from the 14th Judicial District Court Dallas County, Texas

Trial Court Cause No. DC-18-015065

MEMORANDUM OPINION

Before Justices Myers, Osborne, and Nowell Opinion by Justice Nowell This is an accelerated interlocutory appeal from an order granting the special appearance

filed by AEG Power Solutions B.V. (“AEG B.V.”). In four issues, Creation Technologies Texas, LLC (“Creation”) asserts the trial court erred by granting AEG B.V.’s special appearance because AEG B.V. is subject to general and specific jurisdiction in Texas. We modify the trial court’s order and affirm as modified.

BACKGROUND AND PROCEDURAL HISTORY In September of 2012, Creation, a Texas company, entered into a Manufacturing Agreement with a Texas-based company, AEG Power Solutions USA, Inc., subsequently known as 3W Power Solutions USA, Inc. (“AEG USA”). In line with the Manufacturing Agreement, AEG USA placed purchase orders with Creation in June of 2013 for the manufacture of solar

inverters, which convert the output of a solar panel into a utility frequency. These purchase orders were placed, at least in part, to fulfill an order from another company, Power Max Co., Ltd., which was in the business of, among other things, developing and selling solar electric power plants in Japan to investors. Power Max, however, failed to pay AEG USA, and by January of 2014 AEG USA owed Creation over $2 million under the terms of the Manufacturing Agreement. In February of 2014, AEG USA entered into a Security Agreement with Creation to avoid termination of the Manufacturing Agreement. The Security Agreement, executed in the Netherlands on AEG USA’s behalf by Jeffrey Casper, a non-Texas resident, gave Creation a continuing security interest in AEG USA’s accounts, equipment, and inventory.

AEG USA, meanwhile, sued Power Max in a Texas court in June of 2015 for breach of contract, and the case was removed to federal court in October of 2015. AEG USA subsequently settled the case, and the proceeds of the settlement were paid to Creation, which had intervened in the case.1 On October 3, 2018, Creation filed the underlying lawsuit against AEG B.V.; AEG USA;

AEG Power Solutions GmbH (“AEG Germany”); AEG Power Solutions Sdn Bhd, AEG Power Solutions’ Malaysian subsidiary (“AEG Malaysia”); 3W Power S.A., AEG Power Solutions’ Luxembourg-based holding company (“AEG Luxembourg”); and Jeffrey Casper who, at the time of the events that form the basis for this suit, was a director of AEG USA and AEG Power Solutions’2 chief restructuring officer and chief financial officer (collectively, “the AEG Defendants”). This lawsuit seeks millions of dollars allegedly owed to Creation for the

1 We take judicial notice of the United States District Court for the Eastern District of Texas, Sherman Division’s November 7, 2016 corrected memorandum opinion and order granting in part plaintiff’s motion for summary judgment and denying defendant’s motion for partial summary judgment; the court’s order of March 21, 2017; the parties’ joint status report of March 31, 2017; and the court’s agreed order of dismissal of June 16, 2017. See, e.g., 3W Power USA, Inc. f/k/a AEG Power Solutions USA, Inc. v. PowerMax Co., Ltd., Case No. 4:15-CV-677, 2016 WL 6581996 (E. D. Tex. Nov. 7, 2016).

2 Casper’s declaration attached to AEG B.V.’s special appearance states: “AEG Power Solutions is comprised of AEG Power Solutions B.V.

and its approximately 23 subsidiaries, which include AEG Power Solutions GmbH and 3W Power USA, Inc.” AEG Power Solutions is not a party to the lawsuit.

manufacture of commercial solar inverters under theories of alter ego, breach of the written Security Agreement, fraud, fraudulent transfer, and negligent misrepresentation. Creation filed an amended petition on November 5, 2018.3 AEG B.V. and AEG Germany filed special appearances that argued Creation had not alleged sufficient contacts with Texas to warrant the exercise of personal jurisdiction.

According to Casper’s declaration, AEG Power Solutions is comprised of AEG B.V. and its twenty-three subsidiaries, which include AEG Germany and AEG USA. AEG B.V. is a Dutch company headquartered in Zwanenburg, Netherlands. AEG B.V. is the operational holding company, which primarily provides administrative services to the various AEG subsidiaries; “[a]lthough this entity does some sales and service sales [sic] activities, it does most of the central supporting and administrative activities. The executive management, i.e., CEO and CFO, is centralized within [AEG B.V.].” AEG B.V. provides some oversight to AEG USA and AEG Germany, but those entities are self-governed. Casper’s declaration states that at all relevant times, “AEG BV has not ‘controlled’ AEG Germany or USA as suggested in Creation’s Petition.” AEG B.V. does not have any bank accounts, property, offices, employees, or agents in Texas. The vast majority of AEG Power Solutions’ production and manufacturing is carried out by AEG Germany.

Casper stated the decision to enter into the Manufacturing Agreement in 2012 was made by AEG USA, which, at that time, was “run at the USA level with some oversight from the parent company, AEG BV. The decision to enter into the Manufacturing Agreement was not subject to oversight from AEG BV or any other AEG entity.” Casper’s declaration states that while in operation, AEG USA maintained its own board of directors; filed tax returns in the United States; employed individuals in the State of Texas, paid them for their services, and provided them with benefits including health care; and maintained separate and distinct bank accounts from any other

3 AEG Malaysia and Jeffrey Casper were not named as parties in the amended petition; Creation subsequently non-suited AEG Luxembourg.

defendants. To the extent there were any intra-company transfers of funds, those transfers were documented, and AEG USA was required to repay the transferor. When common positions were used to provide services to different subsidiaries, such as the general counsel position, AEG USA would pay a share of the person’s salary.

Casper averred that AEG B.V. has not contracted by mail or otherwise with a Texas resident or Texas business; has not agreed to perform a contract in whole or in part in the State of Texas; has not recruited directly or through an intermediary a Texas resident for employment; does not own real property or have any other assets in Texas; does not maintain an office or other point of contact in Texas; has not purposefully availed itself of the privilege of conducting activities within the State of Texas, and any contact it might have had with Texas does not give rise to specific or general jurisdiction; has not placed any product in the stream of commerce knowing that some of them would reach Texas and did not otherwise engage in conduct indicating an intent to serve the Texas market; has not solicited business in Texas or with any other person or entity in Texas; has not entered into any agreement with Creation; does not maintain a registered agent in the State of Texas; and has not committed a tort or statutory violation in the State of Texas. He further averred that AEG B.V. never sold any inverters. Additionally, no inverters were sold by AEG Power Solutions in the State of Texas.

In its response to AEG B.V.’s special appearance, Creation argued that AEG B.V. was subject to general and specific jurisdiction in Texas because there was no distinction between AEG B.V. and its American subsidiary, AEG USA; Creation asserted AEG B.V. was “fused” to AEG USA. Following a hearing, the trial court granted AEG B.V.’s special appearance. Creation appealed.

PERSONAL JURISDICTION

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