M & F Worldwide Corp. v. Pepsi-Cola Metropolitan Bottling Co.

512 S.W.3d 878, 60 Tex. Sup. Ct. J. 531, 2017 WL 889938, 2017 Tex. LEXIS 231
CourtTexas Supreme Court
DecidedMarch 3, 2017
DocketNo. 15-0083
StatusPublished
Cited by104 cases

This text of 512 S.W.3d 878 (M & F Worldwide Corp. v. Pepsi-Cola Metropolitan Bottling Co.) is published on Counsel Stack Legal Research, covering Texas Supreme Court primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
M & F Worldwide Corp. v. Pepsi-Cola Metropolitan Bottling Co., 512 S.W.3d 878, 60 Tex. Sup. Ct. J. 531, 2017 WL 889938, 2017 Tex. LEXIS 231 (Tex. 2017).

Opinion

Justice Lehrmann

delivered the opinion of the Court.

In this case involving issues of personal jurisdiction, we consider the trial court’s denial of special appearances filed by several related nonresident corporate defendants that entered into an agreement with Texas companies to settle a New York lawsuit. The nonresident plaintiff in this [880]*880suit alleges that, by virtue of the settlement agreement, the parties to the agreement tortiously interfered with another nonresident company’s indemnity obligations to the plaintiff. To support Texas’s specific jurisdiction over the nonresident defendants, the plaintiff alleges that the agreement was partially negotiated in Texas, both during in-person meetings and by communications directed to Texas, and that the agreement was substantially performed in Texas. The trial court and court of appeals concluded that Texas has specific jurisdiction over the nonresident defendants. We disagree and reverse the court of appeals’ judgment.

I. Background

A. Overview

We will attempt to distill the complex facts of the underlying lawsuit to those necessary to resolve the special appearances under review. The plaintiff is Pepsi-Cola Metropolitan Bottling Company, Inc. (Pepsi), a New Jersey company with its principal place of business in New York. Pepsi sued two groups of defendants: the Cooper defendants,1 which are either based or have operations in Texas and are not parties to this interlocutory appeal, and the Mafco defendants. The Mafco defendants, all related Delaware companies with principal places of business in either New York or New Jersey, include M & P Worldwide Corp. (M & F Worldwide), MCG Intermediate Holdings, Inc. (Intermediate Holdings), Mafco Worldwide Corp. (Mafco Worldwide), Mafco Consolidated Group LLC (Mafco Consolidated), and PCT International Holdings, Inc. (International Holdings). The Cooper and Mafco defendants have no corporate relationship with each other.

In this suit, Pepsi complains about the effect of a 2011 settlement agreement, along with several associated ancillary agreements, that resolved a New York lawsuit filed by Pneumo Abex, LLC, a then-subsidiary of International Holdings, against the Cooper defendants and an unrelated entity. As discussed further below, the New York lawsuit arose from alleged disputes over indemnity obligations that some of the Cooper and Mafco defendants owed Pneumo Abex for asbestos-related claims. Pneumo Abex in turn had asbestos-related indemnity obligations to Pepsi, and Pepsi claims that the settlement agreement interfered with those obligations. The Mafco defendants’ corporate relationship immediately before execution of the settlement agreement is illustrated below2:

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[881]*881B. Development of the Parties’ Indemnity Obligations

Pursuant to a 1988 stock-purchase agreement between Pepsi’s and Pneumo Abex’s predecessors, Pneumo Abex agreed to indemnify Pepsi for certain product-liability claims, including asbestos-related claims (Product Claims).4 In 1995, Pneumo Abex became a wholly owned subsidiary of International Holdings (itself a subsidiary of M & F Worldwide). As part of this transaction, newly created Intermediate Holdings (a subsidiary of Mafco Consolidated) began managing a subset of the Product Claims brought against Pneumo Abex. Under various unrelated transactions and agreements, both Cooper Industries, LLC (Cooper) and International Holdings subsidiary Mafco Worldwide assumed indemnity obligations to Pneumo Abex covering the same Product Claims for which Pneumo Abex owed indemnity to Pepsi. Cooper assumed its indemnity obligations under a 1994 guaranty agreement executed when Cooper’s subsidiary purchased Pneumo Abex’s friction-products business, and Mafco Worldwide assumed separate indemnity obligations during a 2004 corporate restructuring for Product Claims arising from aerospace products.5 Mafco Worldwide also agreed to advance funds that were owed, but not yet paid, to Pneumo Abex by third-party indemnitors or insurers for Product Claims. Cooper’s indemnity obligations to Pneumo Abex were administered separately from Mafco Worldwide’s. Since 2004, Pneumo Abex has conducted no business operations and owns no assets other than the indemnity rights and obligations related to the Product Claims.

C. The Rise of “Plan C”

For several years before Pneumo Abex filed the New York lawsuit in 2010, representatives of the Cooper and Mafco defendants had discussions about their respective obligations with respect to Pneumo Abex’s liabilities. Between December 2007 and March 2010, MacAndrews, Mafco Consolidated, Pneumo Abex, M & F Worldwide, and Mafco Worldwide entered into a series of tolling agreements with the Cooper defendants regarding their potential claims against each other. The parties to this suit characterize the ongoing discussions during this time period quite differently. According to the Mafco defendants, the discussions arose out of concerns about Pneumo Abex’s ongoing reliance on other entities to manage and fund its liabilities, as well as disputes between the Mafco and Cooper defendants over the allocation and management of those liabilities. Pepsi counters that the defendants engaged in a “joint scheme to rid themselves” of their indemnity obligations that culminated in the filing and settlement of the New York lawsuit.

In early 2008, the Mafco and Cooper defendants began general discussions about what was informally called Plan C, which at that time generally referenced attempts to resolve the Pneumo Abex in[882]*882demnity issues.6 One of the early Plan C proposals involved the creation of a trust to assume ownership of Pneumo Abex, with asset contributions to be made to the trust by International Holdings (Pneumo Abex’s parent company) and Cooper.

In February 2009, representatives of the Mafco defendants traveled to Houston to meet with Texas-based Cooper representatives “about Plan C.” In a subsequent email exchange, a Cooper executive wrote to Steven Fasman, who was authorized to represent all the Mafco defendants, that “we will need an IRS private letter ruling to do this deal.” In July 2009, five months after the Houston meeting, M & F Worldwide sent a letter to the Internal Revenue Service regarding Mafco Worldwide’s intent to submit a request for a ruling on the tax implications of a proposed transaction — the then-embodiment of Plan C— involving the creation of a trust intended to qualify under IRS regulations as a “qualified settlement fund.” According to the letter, the trust would be part of the settlement of disputed claims between Pneumo Abex and Cooper regarding Cooper’s indemnity obligations for the Product Claims. The transaction contemplated that Pneumo Abex and Cooper would assert their claims against each other “in an appropriate court” and obtain court approval of the settlement. The proposal involved payments to the trust by Cooper, mutual releases of the disputed claims and a release of Cooper’s indemnity obligations, and International Holdings’ assignment to the trust of all its interest in Pneumo Abex, resulting in the trust’s being primarily liable for the Product Claims.

In November 2009, Fasman traveled to Texas to meet with Cooper representatives and an attorney hired by Cooper’s board to serve as an independent advisor regarding Plan C.

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Bluebook (online)
512 S.W.3d 878, 60 Tex. Sup. Ct. J. 531, 2017 WL 889938, 2017 Tex. LEXIS 231, Counsel Stack Legal Research, https://law.counselstack.com/opinion/m-f-worldwide-corp-v-pepsi-cola-metropolitan-bottling-co-tex-2017.