TPC Group Litigation v. the State of Texas

• Court: Court of Appeals of Texas
• Decided: June 27, 2024
• Docket: 09-22-00159-CV
• Status: Published

Opinion

In The

Court of Appeals

Ninth District of Texas at Beaumont

__________________

NO. 09-22-00159-CV __________________

TPC GROUP LITIGATION

__________________________________________________________________

On Appeal from the 128th District Court Orange County, Texas Trial Cause No. A2020-0236-MDL __________________________________________________________________

MEMORANDUM OPINION

In this multi-district litigation (MDL) arising from explosions at the TPC

petrochemical processing plant in Port Neches, Texas, Appellees (collectively

referred to as “Plaintiffs”) 1 asserted claims against Appellants: First Reserve

Management, L.P.; First Reserve Corporation, L.L.C.; FR XII Alpha AIV, L.P.; FR

XII-A Alpha AIV, L.P.; FR Sawgrass LP; SK Second Reserve, L.P. f/k/a SK Capital

Partners, LP; and SK Sawgrass, L.P. (collectively referred to as “the Investors”).

1Appellees/Plaintiffs comprise residents of Southeast Texas with cases pending in Cause No. A2020-0236-MDL, In re: TPC Group Litigation, in the 128th Judicial District Court of Orange County, Texas (“MDL court”). 1 The Investors are non-resident entities, including, among others, a private

equity investment firm, private equity funds, holding companies, and some Investors

that have indirect ownership interests in the TPC Group (“TPC”). 2 The Investors

include two groups that filed separate appellate briefs, which challenge the MDL

court’s denial of their special appearances and contest whether the MDL court may

exercise general or specific jurisdiction over the Plaintiffs’ suit. The first group

includes: First Reserve Management, L.P.; First Reserve Corporation, L.L.C.; FR

XII Alpha AIV, L.P.; FR XII-A Alpha AIV, L.P.; and FR Sawgrass LP (collectively

referred to as “the First Reserve Defendants”). The second group includes: SK

Second Reserve, L.P. f/k/a SK Capital Partners, LP and SK Sawgrass, L.P.

(collectively referred to as “the SK Defendants”). The record contains the following

organizational charts, which depict the Investors’ structure and how the corporate

ownership interests in them indirectly connect them to TPC.

2Plaintiffs sued TPC Group Inc. and TPC Group LLC, alleging the LLC is the

TPC entity that operates the TPC plant. The difference between the two entities is not relevant to this appeal. See In re First Reserve Mgmt., L.P., 671 S.W.3d 653, 657 n.4 (Tex. 2023) (orig. proceeding). 2 3 The record shows TPC is indirectly owned by Sawgrass Holdings LP

(“Sawgrass Holdings”), which is owned by FR Sawgrass, LP (“FR Sawgrass”),

which is owned by two of the First Reserve Defendants, FR XII Alpha AIV, L.P.

and FR XII-A Alpha AIV, L.P. (collectively referred to as “the Alpha entities”). First

Reserve Management, L.P. and First Reserve Corporation, L.L.C. (we refer to First

Reserve Management and First Reserve Corporation collectively as “First Reserve”)

invested money in the Alpha entities, which are separate entities and are entities in

which First Reserve owns no interest. The Alpha entities are limited partners in FR

4 Sawgrass, which is a limited partner with one of the SK Defendants, SK Sawgrass,

LP (“SK Sawgrass”), which is the limited partnership in Sawgrass Holdings.

Sawgrass Holdings’ general partner is the GP Board, comprised of a five-member

Board of Managers. The First Reserve Defendants and the SK Defendants each

appoint two members to the GP Board, and the fifth member is TPC’s Chief

Executive Officer. 3 The parties concede that the GP Board operates as TPC’s Board.

Plaintiffs seek to hold the Investors directly liable for TPC’s torts, and they

alleged the Investors exercised abnormal control over TPC’s operations through the

GP Board, thus the MDL court has personal jurisdiction under the specific

jurisdiction test. In this interlocutory appeal, the Investors challenge the MDL

court’s orders denying their special appearances. See Tex. Civ. Prac. & Rem. Code

Ann. § 51.014(a)(7) (authorizing interlocutory appeal). 4 They maintain that Texas

3Sawgrass Holdings LP and Sawgrass Holdings GP LLC are not parties in this

appeal. 4In a previous mandamus proceeding, the Texas Supreme Court denied a

petition for mandamus filed by First Reserve Management, L.P.; First Reserve Corporation, L.L.C.; FR XII Alpha AIV, L.P.; FR XII-A Alpha AIV, L.P.; FR Sawgrass, L.P.; and Sawgrass Holdings, L.P. (collectively “First Reserve”) and failed to direct the MDL court to take action despite holding that the MDL court should have granted First Reserve’s Motion to Dismiss. See In re First Reserve Mgmt., L.P., 671 S.W.3d at 658 & n.9, 662–64 (denying mandamus relief and holding that Plaintiffs’ negligent undertaking claim had no basis in law or fact and that the MDL court should have granted First Reserve’s motion to dismiss); see also In re First Reserve Mgmt., L.P., 665 S.W.3d 44, 46 (Tex. App.—Beaumont 2022, orig. proceeding) (denying mandamus relief and concluding that Plaintiffs’ petition provided First Reserve with fair notice of the legal and factual basis of Plaintiffs’ claims). The Texas Supreme Court held that First Reserve’s ownership interest in 5 courts do not have general or specific personal jurisdiction over them because the

jurisdictional evidence rebuts Plaintiffs’ allegations that the Investors exercised

direct operational control over TPC through the GP Board. For the reasons explained

below, we reverse the MDL court’s orders denying the Investors’ special

appearances and render the judgment the MDL court should have rendered,

dismissing Plaintiffs’ claims against the Investors for lack of personal jurisdiction.

See Tex. R. App. P. 43.2(c).

PERTINENT BACKGROUND

In November 2019, TPC’s facility in Port Neches, Texas (“the Port Neches

facility”) exploded, which the Plaintiffs allege resulted in extensive personal injury,

property damage, chemical releases, and other damages. Plaintiffs sued TPC and its

plant manager for damages from the explosion. Plaintiffs’ Fifth Amended Master

Consolidated Petition, their live pleadings, alleges claims against the Investors on

TPC, appointment of directors to TPC’s board, and any other actions consistent with investor status were insufficient to make it liable for TPC’s conduct and that Plaintiffs failed to plead facts sufficient to show that First Reserve undertook in other ways to run TPC’s day-to-day operations. See In re First Reserve Mgmt., L.P., 671 S.W.3d at 662–63. The Texas Supreme Court concluded that Plaintiffs failed to sufficiently plead “factual allegations to show a cause of action with a basis in law” that First Reserve was directly liable for the damages. See id. at 663 (emphasis original).

6 theories of negligence, trespass, nuisance, negligent misrepresentation, fraud, veil

piercing, disregard of corporate identities, and failure to warn.

Plaintiffs alleged that the Investors are subject to personal jurisdiction under

the specific jurisdiction test because they purposely availed themselves of the

protection of Texas laws by doing business in Texas and have the requisite minimum

contacts with Texas, and because their claims relate to the Investors’ business

activities within Texas so they could reasonably anticipate being haled into a Texas

court. Plaintiffs alleged that the Investors purposely availed themselves of Texas’s

jurisdiction “by their ownership and decision-making control and/or managerial

authority and/or assumption and/or usurpation of safety and management duties

including turnaround5 governance of TPC management duties.” Plaintiffs alleged

that the Investors and TPC are “fused for jurisdictional purposes” due to the

Investors’ “control over the internal business operations and affairs [of] TPC beyond

their role as investors.” Plaintiffs pleaded that the Investors exercised control over

TPC through the GP Board, which includes two members from the First Reserve

Defendants and two members from the SK Defendants. Plaintiffs pleaded that the

Investors, “through their financial, interest, ownership, and control dictate the day-

5A turnaround is a scheduled event where the entire process unit of an industrial plant is taken offline for an extended period for revamp and renewal. Id. at 657 n.5. A turnaround is expensive in both terms of direct costs and because it results in lost production. Id. 7 to-day operations and maintain complete governance over TPC and its business

affairs[.]”

Plaintiffs also alleged the Investors improperly dictated corporate spending

and “whether TPC may, as necessary, spend monies on necessary turnarounds,

which here would have altogether avoided the reasonably foreseeable explosions

resulting from a never ameliorated infection of popcorn polymerization at TPC

. . . .” Plaintiffs pleaded that the Investors, “by assuming turnaround governance,

undertook direct operational control and governing authority over whether or not

necessary safety repairs were or were not made” at TPC by “exercising turnaround

expense approval[.]” Plaintiffs alleged the Investors denied and/or delayed requests

for necessary capital improvements and denied funds to adequately supply spare

parts and perform necessary maintenance. Plaintiffs alleged that through the GP

Board, the Investors controlled the timing of the turnaround necessary to prevent the

explosions and chose to repeatedly delay the turnaround required to address the

popcorn polymerization issues. Plaintiffs pleaded that the Investors are TPC’s

ultimate parent and “control, manage, operate,” and treat TPC as “their personal

bank accounts” so that TPC is the Investors’ alter ego, and “the lines between parent

and subsidiary are substantially blurred” making it impossible to determine where

the Investors end and TPC begins. Plaintiffs alleged that there is such unity between

8 TPC and the Investors, through their control of the GP Board, that their separateness

ceased to exist.

First Reserve Defendants’ Special Appearance

The First Reserve Defendants filed a Special Appearance challenging the

MDL Court’s personal jurisdiction over them. They first challenged the MDL

court’s general jurisdiction over them. The First Reserve Defendants explained that

First Reserve Management, L.P. (“First Reserve Management”) is an exempted

limited partnership organized under the laws of the Cayman Islands with its principal

place of business in Stamford, Connecticut, and the First Reserve Corporation,

L.L.C. (“First Reserve Corporation”) is a Delaware limited liability company with

its principal place of business in Stamford, Connecticut. The First Reserve

Defendants explained that the Alpha entities are exempted limited liability

partnerships organized under the laws of the Cayman Islands with their principal

place of business in Stamford, Connecticut, and that FR Sawgrass is a Delaware

limited partnership with its principal place of business in Stamford, Connecticut.

The First Reserve Defendants argued that Plaintiffs failed to show the MDL court

has general jurisdiction over them because they are neither incorporated in Texas

nor maintain their principal places of business in Texas.

The First Reserve Defendants argued that Plaintiffs failed to plead any

jurisdictional facts showing personal jurisdiction over them is proper in this forum.

9 The First Reserve Defendants contended that rather than establishing personal

jurisdiction as to each defendant, Plaintiffs lumped all defendants together and in

conclusory pleadings alleged that the “‘causes of action asserted arose from, or are

substantially connected with, purposeful acts committed by Defendants in Texas

because [they] executed their contracts, and . . . conducted business within, the State

of Texas.’” The First Reserve Defendants argued that Plaintiffs made conclusory

allegations that defendants intentionally availed themselves of the protection of

Texas laws by doing business and having minimum contacts with Texas, and that

the claims made the basis of this lawsuit arose from defendants’ business activities,

which included owning and operating plants and industrial services businesses in

Texas.

The First Reserve Defendants next challenged Plaintiffs’ alter ego theory of

jurisdiction. The First Reserve Defendants maintained that the declaration attached

to their special appearance showed they are separate and distinct entities from TPC

and did not operate or maintain the Port Neches facility. The First Reserve

Defendants explained that First Reserve Management is a private equity investment

firm that sponsors private equity funds and provides investment advice, and the First

Reserve Corporation is a limited liability company managed by First Reserve

Management. The First Reserve Defendants asserted that First Reserve has no

ownership in TPC, and the Alpha entities and FR Sawgrass have only indirect

10 limited partnership ownership interests in TPC. The First Reserve Defendants also

stated that while the Alpha entities made capital contributions to TPC through FR

Sawgrass, a passive holding company, the Alpha entities and FR Sawgrass do not

pay any of TPC’s operational expenses.

The First Reserve Defendants maintained that they are distinct, separate

entities without operational control over TPC, no managerial oversight over TPC’s

operations, and did not run its day-to-day operations. The First Reserve Defendants

argued that Plaintiffs failed to show they had sufficient contacts with Texas, and the

fact that First Reserve has an office in Texas does not make it “at home” in Texas.

The First Reserve Defendants also argued that Plaintiffs failed to establish TPC is

any First Reserve Defendant’s alter ego since they asserted no facts showing that

they controlled TPC’s internal business operations and affairs so much that any of

them should be “fused together” with TPC for jurisdictional purposes. The First

Reserve Defendants asserted that TPC Senior Vice President of Operations,

Courtney Ruth’s testimony established: (1) TPC exclusively managed its Port

Neches facility; (2) TPC’s officers and employees managed TPC’s day-to-day

business operations or affairs; and (3) TPC had operational control and

independence over its facility’s day-to-day operations.

Finally, the First Reserve Defendants also argued that Plaintiffs failed to

establish specific jurisdiction because they did not show a substantial connection

11 between their alleged contacts with Texas and the incident. The First Reserve

Defendants explained that contacts with the forum state unrelated to the events

underlying the lawsuit cannot establish specific jurisdiction. They also contended

Plaintiffs’ conclusory allegations failed to distinguish between conduct potentially

attributable to the First Reserve Defendants versus TPC or the other defendants. The

First Reserve Defendants maintained that the evidence disputes any potential

connection between their Texas contacts and Plaintiffs’ claims of their operational

control of TPC.

To support their request that the MDL court dismiss Plaintiffs’ claims against

them for lack of personal jurisdiction, the First Reserve Defendants included the

Declaration of Neil A. Wizel (“Wizel”), the Managing Director of First Reserve

Corporation. Wizel stated he was familiar with the First Reserve Defendants’

corporate and business records, and he confirmed none of the First Reserve

Defendants are incorporated in Texas or have their principal place of business in

Texas. Wizel explained that most of First Reserve Management’s senior leadership

team, including its President, Chief Executive Officer, Chief Financial Officer, Head

of Human Resources, and Chief Compliance Officer and General Counsel, are

stationed at its headquarters in Connecticut, and First Reserve Management’s

financial documents and most of its regulatory filings are made from its Connecticut

headquarters. Wizel also stated that before the pandemic, First Reserve

12 Management’s board meetings took place in Connecticut but are currently held via

teleconference.

In his Declaration, Wizel said that the Alpha entities are private equity funds

managed but not owned by First Reserve. According to Wizel, the Alpha entities

own FR Sawgrass, a passive holding company, and invested in TPC through FR

Sawgrass. Wizel stated that the Alpha entities and FR Sawgrass indirectly hold

limited partnership ownership interests in entities that indirectly own TPC, but he

said they do not pay any of the operation expenses that TPC incurs in managing its

business at the Port Neches facility. Wizel explained that FR Sawgrass is managed

by its general partner, a non-party to the litigation, and that the board of directors of

FR Sawgrass’s general partner entity, the GP Board, consists of the following: two

First Reserve representatives, including himself; two SK Defendants

representatives; and TPC’s CFO. According to Wizel, the GP Board performs

certain board-level functions for TPC, but GP’s Board is not involved in TPC’s

operational affairs.

In his Declaration, Wizel also addressed First Reserve and he explained that

it is not directly involved in operating TPC. For instance, he stated that First Reserve

does not have an ownership interest in TPC. He explained that First Reserve

maintains a Houston office, which supports some of their general business

operations involving private equity investment in the energy sector, but he said that

13 no TPC employees work at First Reserve’s Houston office. Wizel also stated that

First Reserve does not pay any expenses TPC incurs in operating its business at its

Port Neches facility. Wizel also explained that the Alpha entities made “capital

contributions to TPC” in 2012 and 2016 that flowed through other entities.

According to Wizel, the First Reserve Defendants’ operations in Texas do not

involve managing operations at TPC’s Port Neches facility, and the First Reserve

Defendants maintain separate and independent internal human resources, payroll,

and accounting departments. Wizel stated that TPC has separate offices and

headquarters from the First Reserve Defendants and maintains separate financial

books, records, and accounts. Wizel said that TPC has different email domains,

websites, phone numbers, branding, and trademarks than the First Reserve

Defendants. Wizel explained that the First Reserve Defendants did not: provide or

train employees to work at the Port Neches facility; run day-to-day operations;

provide any managerial oversight of operations; issue any policies, procedures, or

other operational or safety documents; hire, train, or mange any TPC employees or

contractors; or maintain any of the assets, facilities, or infrastructure. Wizel stated

the First Reserve Defendants are not involved in direct operational control or risk

mitigation at the Port Neches facility, nor did they control that facility’s safety. Wizel

asserted that TPC is not any First Reserve Defendant’s alter ego, and before the

14 incident, TPC was not inadequately capitalized. Rather, it was an economically

viable, independent separate entity from the First Reserve Defendants.

Due to the MDL court’s Stipulation and Protective Order governing the case,

the First Reserve Defendants filed a less redacted version of their Special

Appearance. The First Reserve Defendants included excerpts from the testimony of

Ruth, TPC’s Senior Vice President of Operations. Ruth testified that in November

2019, TPC controlled the decision-making at the South Unit in Port Neches, and the

TPC management senior leadership team controlled the operations of the South Unit.

Ruth testified that TPC is the only entity that controlled the South Unit’s operations

or equipment, and in his experience, the holding companies never made operational

decisions for TPC. The First Reserve Defendants argued that Ruth’s testimony

shows that TPC had exclusive right to manage and control the Port Neches facility.

The First Reserve Defendants also argued that there is no basis for imputing

Sawgrass Holdings’ contacts with TPC to the First Reserve Defendants based on any

testimony that Sawgrass Holdings performs board-level oversight of TPC or that two

members of GP’s Board were placed there by First Reserve. The First Reserve

Defendants explained that Sawgrass Holdings’ general partner is the GP Board, and

the GP Board’s oversight of TPC is consistent with Sawgrass Holdings’ investor

status, However, that membership on a corporation’s board are not contacts that give

rise to jurisdiction over the company, even where through its ownership interest it

15 has members on a Texas company’s board. The oversight that GP’s board exercises

over TPC includes receiving monthly operational updates and a financial review plus

carrying out quarterly board meetings that involve updates, strategy, and long-range

plans. According to the First Reserve Defendants, the GP Board’s activities are

typical of those of an investor and are therefore irrelevant as factors for purposes of

a plaintiff’s jurisdictional veil-piercing claim.

The First Reserve Defendants attached excerpts from the deposition of Peggy

Macatangay, TPC’s Vice President of Technology and Engineering, who testified

about Sawgrass Holdings and the GP Board. Macatangay testified that both she and

TPC’s senior leadership team attend the GP Board’s quarterly meetings at TPC’s

corporate office in Houston. They also attend the GP Board’s monthly sponsor

reviews, and those meetings include brief operational updates and monthly financial

reviews. She explained that capital projects with expenditures exceeding $1 million

required the approval of GP Board. Macatangay testified that the GP Board did not

approve the annual operating plan for the expenses at the Port Neches facility, and

in her position, she did not regularly communicate with the GP Board. Macatangay

testified that the GP Board did not deny any requests for capital expenditures at the

Port Neches facility for 2019.

16 SK Defendants’ Special Appearance

The SK Defendants filed a Special Appearance, arguing that Plaintiffs’

Petition should be dismissed for lack of personal jurisdiction over them. The SK

Defendants explained that they are Delaware limited partnerships with no Texas

contacts. The SK Defendants stated that they do not have an office in Texas, there

are no “exceptional circumstances” present that would render them “at home” in

Texas, and Plaintiffs failed to adequately allege how any of their purported activities

are substantially connected to the operative facts of the litigation.

The SK Defendants explained that as a limited partner in Sawgrass Holdings,

SK Sawgrass did not possess any authority or control over TPC that warrants

imputing TPC’s Texas contacts to SK Sawgrass for purposes of general jurisdiction.

The SK Defendants also explained that SK Second Reserve, L.P. f/k/a SK Capital

Partners, LP (we refer to SK Second Reserve, L.P. f/k/a SK Capital Partners, LP as

“SK Second Reserve” and to a second entity called SK Capital Partners, LP, which

is a non-party to this appeal, as “SK Capital Partners”) holds no partnership interest

in Sawgrass Holdings or any other named defendant. The SK Defendants attached

the Declaration of Jerome “Jerry” Truzzolino (“Truzzolino”) to support their

argument that the MDL court lacks personal jurisdiction over them.

In his Declaration, Truzzolino stated that SK Sawgrass is a Delaware limited

partnership with no office or employees, and SK Sawgrass has no ownership interest

17 in or authority over TPC. Truzzolino stated that SK Sawgrass was not involved in

the day-to-day operations at the Port Neches facility and did not train or supervise

any TPC employees. Truzzolino explained that SK Sawgrass holds a minority

limited partnership interest in Sawgrass Holdings, and that SK Sawgrass, Sawgrass

Holdings, and TPC are separate and distinct legal entities. Truzzolino also explained

that SK Sawgrass was never directly involved in the operations, operational control,

or risk mitigation at the Port Neches facility.

The SK Defendants supported their Special Appearance with the Declaration

of Carrie Pierce (“Pierce”), in which she explains that she is familiar with SK Second

Reserve. In her Declaration, Pierce states that SK Second Reserve is a Delaware

limited partnership with no office or employees, and it does not hold a partnership

or any other interest in any named defendant. Pierce also stated that SK Second

Reserve has no authority over Sawgrass Holdings or TPC, and SK Second Reserve,

TPC, and Sawgrass Holdings are separate and distinct legal entities. Pierce said that

SK Second Reserve has never been directly involved in operations, operational

control, or risk mitigation at the Port Neches facility, the facility which forms the

basis of the plaintiffs’ claims.

The SK Defendants argued that Plaintiffs failed to meet their initial burden to

plead sufficient facts to bring them within the MDL court’s jurisdictional reach. The

SK Defendants complained that Plaintiffs’ allegations that they intentionally availed

18 themselves of the protection of Texas laws by doing business in Texas and have

minimum contacts with Texas are conclusory. The SK Defendants also argued that

Plaintiffs did not establish that they are subject to Texas jurisdiction through an

“alter ego” or “piercing the corporate veil theory” because Plaintiffs made broad

allegations against all the Investors. The SK Defendants explained that there is no

veil-piercing analysis to undertake because TPC is not a subsidiary of the SK

Defendants.

The SK Defendants also explained that the MDL court lacks specific

jurisdiction over them because there is no substantial connection between their

alleged activities in Texas and the operative facts of the litigation. The SK

Defendants asserted that Plaintiffs’ claims relate to the Port Neches facility’s

management and operational control, but SK Sawgrass did not perform, manage, or

direct the day-to-day activities at the Port Neches facility, and SK Second Reserve

had no authority over TPC or its operations at the Port Neches facility. The SK

Defendants argued the MDL court should dismiss Plaintiffs’ claims against them for

lack of personal jurisdiction.

Plaintiffs’ Response to Special Appearances

In “Plaintiffs’ Verified Motion to Continue Special Appearance Hearing and

Plaintiffs’ Preliminary Response to Same[,]” Plaintiffs argued, among other things,

that the Investors had availed themselves of Texas jurisdiction. Plaintiffs argued that

19 First Reserve having a lease agreement in Houston and Wizel’s residence in Houston

shows that the First Reserve Defendants have contacts in Texas that amount to an

admission of personal jurisdiction. Plaintiffs maintained that First Reserve

Corporation engaged in longstanding business in Texas by performing services and

maintaining an office which is enough to establish general personal jurisdiction.

Plaintiffs also argued that Wizel and other employees or representatives of

First Reserve attended several meetings of the GP Board’s Audit Committee, which

included discussions about, among other issues: TPC’s long range plan; turnaround

governance and costs; safety and environmental topics; financial forecast;

technology and engineering overviews; operational excellence; and the explosion at

the Port Neches facility. Plaintiffs argued the First Reserve Defendants’ participation

in “operations” conversations in Houston and their approval of TPC’s 2020 Capital

and Turnaround Plan showed they controlled TPC’s checkbook and day-to-day

operations. Plaintiffs argued that First Reserve’s participation in physical meetings,

office presence, and record of decision making before the explosion is enough to

establish specific jurisdiction.

As to the Alpha entities and FR Sawgrass, Plaintiffs explained that FR XII

Alpha AIV, L.P. is at the top of the FR Sawgrass pyramid and that more discovery

was needed to prove jurisdiction. Plaintiffs also noted FR Sawgrass owns 70.65% of

the GP Board and 71.24% of TPC and that there is either a 70.65% or 71.24% chance

20 that FR Sawgrass’s substantial investment in the GP Board and/or TPC confers the

MDL court with jurisdiction.

As to the SK Defendants, Plaintiffs argued that SK Sawgrass “owns

27.75587% of Sawgrass Holdings, LP, which owns 100% of TPC Holdings, Inc.,

which owns TPC.” Plaintiffs argued that SK Sawgrass’s ownership interest involves

some benefit, advantage, or profit from TPC’s business activities in Houston and

Port Neches. Plaintiffs explained that SK Sawgrass’s 27.75587% ownership shows

a substantial connection between its business interests and contacts with Texas and

points to its corporate control over Sawgrass Holdings, which impacted the Houston

and Port Neches operations. Plaintiffs argued that SK Capital Partners participated

in, among other meetings, an in-person meeting of the GP Board at TPC’s

headquarters in Houston, and that meeting concerned TPC’s goals, long range

planning, turnaround governance, and operational excellence. Plaintiffs maintained

that SK Capital Partners’ in-person involvement in the Houston meetings is “evident

of actions” to secure a benefit, advantage, or profit from the Port Neches facility and

shows it deliberately engaged in significant activities and purposely availed itself of

Texas jurisdiction. Plaintiffs attached exhibits supporting its jurisdictional

allegations.

Plaintiffs filed their Response to the Investors’ Special Appearances.

Plaintiffs argued First Reserve maintains a substantial Houston office that contains

21 50% of its Managing Directors and is the location where all due diligence, contract

negotiations, and investor solicitation for the purchase or investment in TPC occurs.

Plaintiffs argued that First Reserve’s employees and directors sit on TPC’s board

and vote to make major financial decisions for TPC. Plaintiffs maintained that First

Reserve, its subsidiary, investment funds, and holding company all have significant

ties to Texas and are essentially “at home” in Texas.

Plaintiffs argued the Investors purposefully availed themselves and

established minimum contacts with Texas by choosing to invest in Texas, reap the

benefits of Texas’s business friendly laws, and profit off Texas labor by operating a

chemical plant. Plaintiffs alleged that First Reserve has significant purposeful ties

with Texas, and their claims relate to First Reserve’s ties and contacts through First

Reserve Management’s administration and investment in TPC. Plaintiffs explained

First Reserve Corporation’s employees sat on the GP Board and made executive-

level decisions for TPC with “considerable power in the ultimate decisions regarding

maintenance, remodeling, turnaround, and direction of the company[.]”

As for the Alpha entities and FR Sawgrass, Plaintiffs alleged that the Alpha

entities have ownership in FR Sawgrass, which has invested in Sawgrass Holdings,

a company holding an interest in TPC. Plaintiffs argued that the Alpha entities are

“legal fictions incorporated in the Cayman Islands solely for the purpose of investors

to buy an interest” in First Reserve Management’s investment in TPC. Plaintiffs

22 argued that FR Sawgrass “is not truly a separate entity with employees, holdings, or

an office[,]” but a “legal vehicle” for First Reserve Management to hold its interest

in TPC. Plaintiffs argued that there is “a direct line of money being transferred

down” from First Reserve Management through the Alpha entities and FR Sawgrass

into TPC. Plaintiffs maintained that the Alpha entities and FR Sawgrass are

extensions of First Reserve Management, which directly controls them. Plaintiffs

argued that their claims directly relate to the Investors’ investments and decisions,

which ultimately led to the actions or omissions that caused the explosions.

As for SK Sawgrass, Plaintiffs argued that SK Sawgrass is a Delaware limited

partnership acting as a holding company for a majority interest in Sawgrass

Holdings. Plaintiffs argued that it is a vehicle for SK Capital Partners to hold its

investment in TPC. Plaintiffs explained SK Sawgrass is operated by SK Capital

Partners in New York, and SK Sawgrass’s general partner is run by Barry Siadat

(“Siadat”), a founder and director of SK Capital Partners and former member of the

GP Board. Plaintiffs explained that John “Jack” Norris (“Norris”), a GP Board

member, is an SK Capital Partners executive and runs SK Sawgrass. Plaintiffs

alleged that Siadat and Norris traveled to Texas to close the TPC investment deal

and for their duties as members of the GP Board, which included deciding on

maintenance, remodeling, turnarounds, and the direction of TPC’s business.

Plaintiffs argued SK Sawgrass could not hide its purposeful availment of Texas and

23 key personnel’s visits concerning its investment in TPC and ultimate decision

making concerning TPC’s operations. Plaintiffs argued that since no Investors met

their burden to refute the jurisdictional allegations, their special appearances should

be denied.

The Investors’ Reply in Support of Their Special Appearance

The Investors filed a Reply in Support of Special Appearance, arguing

Plaintiffs cannot establish personal jurisdiction over any of them. They argued that

the only facts Plaintiffs point to are contacts unrelated to the substance of their

claims, and those facts are insufficient to establish general or specific jurisdiction.

The Investors maintained that the MDL court should grant their special appearances

because Plaintiffs failed to meet their burden.

The Investors explained that Wizel’s affidavit disproved Plaintiffs’

allegations that the MDL court had general jurisdiction over them since it established

their principal places of businesses are in Connecticut and that they are organized

under the laws of Delaware or the Cayman Islands. The Investors argued that

Plaintiffs failed to meet their burden to establish specific jurisdiction over them

because they failed to provide evidence of contacts in Texas which are substantially

related to the operative facts underlying their claims. The Investors explained

Wizel’s testimony that TPC operated and maintained the Port Neches facility and

Ruth’s testimony that TPC management made all critical operational decisions at the

24 Port Neches facility without orders or guidance from investors or parent entities

disproves Plaintiffs’ allegations that First Reserve’s employees made executive level

decisions about the Port Neches facility. The Investors also argued that while Wizel

and another First Reserve Managing Director served on the GP Board, their contacts

made while acting in a capacity for TPC cannot be attributed to any of the Investors.

As for the Alpha entities and FR Sawgrass, the Investors argued that while

Plaintiffs allege that First Reserve Management directs the actions of these entities

from its Houston office and reaps the reward of their ownership in TPC, Plaintiffs

failed to point to particular facts proving these allegations. The Investors contended

that the Alpha entities “have done nothing but buy and hold ownership interests in

other entities.” The Investors argued that the Alpha entities’ indirect capital

contributions to TPC in 2012 and 2016, which flowed through FR Sawgrass, are not

substantially related to Plaintiffs’ claims. The Investors also argued that, besides

conclusory assertions, Plaintiffs made no attempt to show that First Reserve

Management’s alleged control exceeded that normally associated with common

ownership and directorship such that disregarding the corporate fiction was

warranted to prevent fraud or injustice.

The Investors urged the MDL court to dismiss Plaintiffs’ claims against them

for lack of personal jurisdiction. To support their arguments, the Investors attached

excerpts from Wizel’s deposition, where he explained that he and Siadat sat on the

25 GP Board, which had meetings with TPC’s management at TPC’s Houston office.

Wizel testified that the GP Board functioned as a “typical board[]” and considered

“typical board matters.” Wizel explained that management discussed topics,

including operations and turnarounds, and management offered and recommended

decisions considering certain monetary issues even though the GP Board had the

authority to “say yes or no[.]” Wizel testified he could not recall a time when the GP

Board “ever said no[,]” and he explained that TPC’s management team made

operational decisions for TPC. Wizel testified the GP Board never refused or delayed

a turnaround.

Wizel testified that he is on the GP Board, and when making voting decisions

as a director, he is acting on behalf of TPC. Wizel explained that Plaintiffs’

allegations in their Fifth Amended Petition about the First Reserve Defendants’

alleged control over the Port Neches facility’s operations are inaccurate. Wizel

testified the First Reserve Defendants did not control the operations at the Port

Neches facility, provide managerial oversight of the operations, or operate or

maintain any part of the Port Neches facility. Wizel testified that First Reserve does

not have an ownership in TPC, and the Alpha entities and FR Sawgrass have indirect

ownership interests in TPC. Wizel testified that TPC is a separate and distinct entity

from the First Reserve Defendants, and no First Reserve Defendant has taken any

distributions from TPC.

26 Plaintiffs’ Second Supplemental Response to Special Appearances

Plaintiffs filed their Second Supplement to their Response to the Special

Appearances of the Investors, arguing that Texas courts will disregard the corporate

fiction under alter ego theory when a corporation is organized and operated as a mere

tool or business conduit of another corporation. Plaintiffs argued that under the alter

ego theory, personal jurisdiction may be established by imputing the jurisdictional

contacts of a corporate entity to its owners or parent corporation. Plaintiffs explained

that while Texas law generally presumes separate entities are distinct entities and

that jurisdiction over a parent corporation does not automatically establish

jurisdiction over a subsidiary, two or more distinct entities may be “fused” together

when a parent entity controls the internal operations and affairs of the subsidiary to

an extent beyond its role as an investor.

Plaintiffs argued that SK Sawgrass and Sawgrass Holdings are entity vehicles

for SK Capital Partners to hold its investment in TPC and that SK Sawgrass,

Sawgrass Holdings, SK Capital Partners, and the GP Board are interchangeable and

one in the same. Plaintiffs explained that the deposition testimony of Jared Kramer

(“Kramer”), a principal and Vice President of SK Capital Partners who offices in

New York, shows he attended in person quarterly GP Board meetings at TPC’s

headquarters in Houston and considered TPC business. Plaintiffs explained that

Kramer also attended monthly sponsorship review meetings in Houston relative to

27 SK Capital Partners’ involvement with TPC. Plaintiffs argued that Kramer’s

testimony shows that SK Capital Partners has a “very substantial” investment and

business interest in Texas through its portfolio of Texas-based chemical plants.

Plaintiffs explained that SK Capital Partners’ managing directors, Siadat and Norris,

regularly attended the GP Board’s meetings at TPC’s Houston headquarters, and SK

Capital Partners was “intimately involved in the management of TPC[]” due to the

GP Board’s “ultimate authority to approve (or not approve) whether and when a

maintenance turnaround would occur” at the Port Neches facility.

Plaintiffs concluded that whether by disregarding the corporate fiction under

the Texas alter ego theory, piercing the corporate veil, or fusing related entities, the

Investors exercised substantial control over TPC and its day-to-day operations,

vesting the MDL court with personal jurisdiction over them. Plaintiffs also

concluded that the MDL court has specific jurisdiction over the Investors, which had

purposeful contacts directly with Texas. In support of Plaintiffs’ Supplement to their

Response to the Investors’ Special Appearances, Plaintiffs supplemented the record

with the complete deposition transcripts of Macatangay, Ruth, Truzzolino, Pierce,

Wizel, Siadat, Norris, and Kramer.

SK Defendants’ Reply to Plaintiffs’ Response to Special Appearances

The SK Defendants filed a Reply to Plaintiffs’ Response to Defendants’

Special Appearances, arguing that the attendance of individuals who work for other

28 distinct entities at the GP Board’s meetings is insufficient to create specific

jurisdiction since it does not signify control of TPC’s internal business operations at

the Port Neches facility. The SK Defendants argued that Plaintiffs failed to support

their claim for specific jurisdiction because their jurisdictional evidence did not

show a substantial connection between SK Sawgrass’s alleged contacts with the

forum and the operative facts of the litigation. The SK Defendants added that

Plaintiffs’ Response included no arguments about SK Second Reserve. The SK

Defendants argued that Plaintiffs’ conclusory assertions of corporate formalities

being disregarded and control beyond a typical corporate parent are insufficient to

overcome the presumption that separate entities are distinct for jurisdiction purposes.

The SK Defendants argued that neither SK Sawgrass’s minority limited partnership

interest in Sawgrass Holdings nor Siadat’s and Norris’s board memberships justify

imputing TPC’s actions on SK Sawgrass.

In support of its Reply, the SK Defendants attached excerpts from the

depositions of Pierce, Truzzolino, Norris, and Siadat. In Pierce’s deposition, she

testified that SK Second Reserve, which was formerly known as SK Capital Partners,

had no Texas contacts and no relationship with TPC. Truzzolino, who provides

accounting services to SK Capital Partners, testified that as SK Sawgrass’s corporate

representative, he never used SK Sawgrass’s name to refer to SK Capital Partners.

Norris testified he did not attend the GP Board’s meetings on behalf of SK Capital

29 Partners. He also explained SK Capital Partners and SK Sawgrass did not invest in

TPC and that no SK entity controlled or directed TPC’s operations. Siadat testified

that SK Capital Partners was based in New York and had a Florida office. Siadat

testified that he attended the GP Board’s meetings as a TPC director and not on

behalf of SK Capital Partners, which had no investment in TPC. Siadat testified that

no SK entity controlled TPC’s operations.

Hearing on the Special Appearances

During the hearing the MDL court held on the Investors’ special appearances,

the Investors argued that the Plaintiffs failed to meet their burden to show the MDL

court has personal jurisdiction over them. According to the Investors, the Plaintiffs

failed to show the MDL court has specific jurisdiction over them because the

evidence does not show a substantial connection between the forum contacts of each

entity independently and the operative facts of the litigation. The Investors argued

that Plaintiffs’ evidence failed to show that any of them had a role in TPC’s operation

or maintenance.

As the Investors see, Wizel’s testimony supports the conclusion that his

contacts with TPC as a GP Board member cannot be attributed to First Reserve as a

matter of law. The Investors argued that Plaintiffs failed to present evidence to

support its theory that First Reserve ceased to be operated separately so that the

corporate fiction should be disregarded to prevent fraud or injustice, and

30 consequently none TPC’s or the GP Board’s contacts may be attributed to the

Investors. Finally, the Investors maintained that the Alpha entities and FR Sawgrass

have no Texas contacts related to the litigation.

Plaintiffs argued that the MDL court has specific jurisdiction and that First

Reserve’s actionable conduct in Texas stems from its Houston managing directors

making decisions while serving on the GP Board. Plaintiffs explained that they sued

the Alpha entities and FR Sawgrass because they were used to purchase and hold

interest in TPC which constituted the Texas contacts, and they are the vehicle in

which First Reserve Management controls TPC. Plaintiffs argued that First Reserve

directly controls the Alpha entities and FR Sawgrass, which are subject to

jurisdiction because their actions are only directed toward their TPC ownership.

Plaintiffs argued that their claims relate to the Investors’ investments and

management in Texas and to their Texas contacts, including their negligence and

decision-making while serving on the GP Board.

The SK Defendants argued that Plaintiffs set forth no facts about jurisdiction

of SK Second Reserve and that SK Sawgrass has no Texas contacts. The SK

Defendants argued there is no general or specific jurisdiction over SK Sawgrass, and

the evidence shows it had no role in operating or maintaining the Port Neches

facility. The SK Defendants explained that Plaintiffs’ facts relate to other non-party

SK entities.

31 Plaintiffs explained they sued SK Second Reserve because they were formerly

known as SK Capital Partners, but they intended to sue another entity called SK

Capital Partners, a registered investment advisor, that currently exists. Plaintiffs

admitted they did not know when SK Second Reserve and the former SK Capital

Partners separated or when the current SK Capital Partners was formed and that they

made a “misrepresentation error[.]” Plaintiffs explained that the current SK Capital

Partners has some ownership interest in SK Sawgrass, which has an interest in the

GP Board. Plaintiffs claimed that Siadat and Norris of SK Capital Partners control

TPC’s decisions and operations by acting on the GP Board.

The SK Defendants responded by noting that Siadat testified that he attended

the GP Board meetings on behalf of TPC and that SK Sawgrass does not have any

ownership in TPC or play any role in TPC’s operations at the Port Neches facility.

The SK Defendants stated that Siadat and Norris both testified that no SK entity

controlled operations or provided any managerial oversight at the Port Neches

facility.

Plaintiffs’ Supplemental Post-Hearing Briefing

After considering the parties’ arguments, the MDL court allowed Plaintiffs

and the SK Defendants to submit additional briefing. In Plaintiffs’ Second

Supplement to Their Response to the Investors’ Special Appearances, Plaintiffs

included excerpts from the depositions of Kramer, Siadat, and Norris. Plaintiffs

32 argued that Siadat and Norris, who are both executives of SK Capital Partners, have

a role in Sawgrass Holdings and in running the GP Board. Plaintiffs argued that SK

Capital Partners is the ultimate parent company of TPC and that Siadat and Norris

traveled to Texas to conduct TPC business on SK Capital Partner’s behalf. Plaintiffs

maintained that SK Sawgrass and SK Holdings are no more than shell entity vehicles

for SK Capital Partners to hold its investment in TPC and that they are

“interchangeable and one in the same.” Plaintiffs argued that Siadat and Norris

attending the GP Board’s meetings showed SK Capital Partners controlled

maintenance and turnarounds at the Port Neches facility.

SK Defendants’ Supplemental Post-Hearing Reply

The SK Defendants filed a Supplemental Reply in Support of its Special

Appearances in response to the MDL court allowing the parties to include the

deposition testimony of four non-party witnesses, Kramer, Norris, Siadat, and

Lukemire, who provided investment advisory services to two non-party entities. The

SK Defendants argued that none of their testimony changes the “already-established

fact that neither SK Second Reserve nor SK Sawgrass have any contacts or presence

in Texas.” The SK Defendants concluded that the record confirms they lack

sufficient contacts with or presence in Texas to justify a finding of personal

jurisdiction.

33 The MDL court denied the First Reserve Defendants’ and the SK Defendants’

special appearances.

ANALYSIS

The First Reserve Defendants raise three issues on appeal. In issue one, the

First Reserve Defendants argue that Texas courts do not have general personal

jurisdiction over them because they are not headquartered in Texas and do not have

principal places of business in Texas, and the fact that a non-resident defendant

maintains an office in Texas is an insufficient basis for exercising general personal

jurisdiction. In issue two, the First Reserve Defendants argue that Texas courts do

not have specific personal jurisdiction over them because Plaintiffs’ claims do not

arise out of, or relate to the First Reserve Defendants’ Texas contacts as there is no

“substantial connection between those forum contacts” and “the operative facts of

the litigation.” In issue three, the First Reserve Defendants argue that none of them

are a jurisdictional alter ego of TPC or the GP Board because the undisputed

evidence demonstrates that no First Reserve Defendant exercised abnormal control

over TPC or the GP Board, and Plaintiffs expressly disclaimed any theory of “fraud

or anything like that.”

The SK Defendants also raise three issues on appeal. In issue one, the SK

Defendants argue that the MDL court does not have general personal jurisdiction

over them. In issue two, the SK Defendants argue the MDL court lacks specific

34 personal jurisdiction over SK Second Reserve because it has no Texas contacts. In

issue three, the SK Defendants argue the MDL court lacks specific personal

jurisdiction over SK Sawgrass because it has no relevant Texas contacts and that

Plaintiffs’ specific-jurisdiction theory fails as a matter of law because it lacks

evidentiary support.

Standard of Review and Personal Jurisdiction Generally

A nonresident defendant may challenge a Texas court’s personal jurisdiction

over it by filing a special appearance. Tex. R. Civ. P. 120a. “Whether a trial court

has personal jurisdiction over a nonresident defendant is ultimately a question of law

that we review de novo.” Oshman v. Wilkison, No. 09-23-00201-CV, 2024 WL

1100005, at *5 (Tex. App.—Beaumont Mar. 14, 2024, no pet.) (mem. op.) (citations

omitted); see LG Chem Am., Inc. v. Morgan, 670 S.W.3d 341, 346 (Tex. 2023)

(hereafter “LG Chem”); Moncrief Oil Int’l, Inc. v. OAO Gazprom, 414 S.W.3d 142,

150 (Tex. 2013); BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex.

2002). The plaintiff has the initial burden of pleading sufficient allegations to bring

a nonresident defendant within the jurisdiction of a Texas court. LG Chem, 670

S.W.3d at 346; Moncrief Oil Int’l, Inc., 414 S.W.3d at 149; Kelly v. Gen. Interior

Constr., Inc., 301 S.W.3d 653, 658 (Tex. 2010); Retamco Operating, Inc. v. Republic

Drilling Co., 278 S.W.3d 333, 337 (Tex. 2009); Booth v. Kontomitras, 485 S.W.3d

461, 476 (Tex. App.—Beaumont 2016, no pet.). If the plaintiff meets this initial

35 burden, defendant then bears the burden to negate all bases of personal jurisdiction

alleged by plaintiff. See LG Chem, 670 S.W.3d at 346 (citing Kelly, 301 S.W.3d at

658). The defendant may negate the jurisdictional allegations on either a factual or

legal basis. Kelly, 301 S.W.3d at 659.

Factually, the defendant can present evidence that it has no contacts with Texas, effectively disproving the plaintiff’s allegations. The plaintiff can then respond with its own evidence that affirms its allegations, and it risks dismissal of its lawsuit if it cannot present the trial court with evidence establishing personal jurisdiction. Legally, the defendant can show that even if the plaintiff’s alleged facts are true, the evidence is legally insufficient to establish jurisdiction; the defendant’s contacts with Texas fall short of purposeful availment; for specific jurisdiction, that the claims do not arise from the contacts; or that traditional notions of fair play and substantial justice are offended by the exercise of jurisdiction.

Id. (footnotes omitted). If plaintiff does not plead facts bringing a defendant within

reach of the Texas long-arm statute, defendant need only prove that it does not live

in Texas to negate jurisdiction. Id. at 658–59 (citing Siskind v. Villa Found. for

Educ., Inc., 642 S.W.2d 434, 438 (Tex. 1982)); Booth, 485 S.W.3d at 476. Thus the

“paradig[m] . . . bases for general jurisdiction” over a foreign entity are its “place of

incorporation and principal place of business.” Skylift, Inc. v. Nash, No. 09-19-

00389-CV, 2020 WL 1879655, at *3 (Tex. App.—Beaumont Apr. 16, 2020, no pet.)

(mem. op.) (citation omitted).

Where jurisdictional facts are undisputed, we do not consider any implied

findings of fact, instead we consider only the legal question whether the undisputed

36 facts establish Texas jurisdiction. See Old Republic Nat’l Title Ins. Co. v. Bell, 549

S.W.3d 550, 558 (Tex. 2018). When reviewing plaintiffs’ jurisdictional allegations,

we ask only whether the allegations are sufficient to invoke the exercise of personal

jurisdiction over the defendant regardless of the claims’ merits. See Booth, 485

S.W.3d at 477.

“A court must have personal jurisdiction over a defendant to issue a binding

judgment.” LG Chem, 670 S.W.3d at 346 (citing Luciano v.

SprayFoamPolymers.com, LLC, 625 S.W.3d 1, 7–8 (Tex. 2021)). Texas courts may

exercise jurisdiction over a nonresident as authorized by the Texas long-arm statute

and when consistent with federal due-process guarantees. See Tex. Civ. Prac. &

Rem. Code Ann. §§ 17.041–.045 (Texas long-arm statute); LG Chem, 670 S.W.3d

at 346; Luciano, 625 S.W.3d at 8. The Texas long-arm statute provides that a non-

resident does business in the state if the nonresident commits certain acts in Texas,

including, but not limited to, the following:

(1) contracts by mail or otherwise with a Texas resident and either party is to perform the contract in whole or in part in this state;

(2) commits a tort in whole or in part in this state; or

(3) recruits Texas residents, directly or through an intermediary located in this state, for employment inside or outside this state.

Tex. Civ. Prac. & Rem. Code Ann. § 17.042. An allegation of jurisdiction may

satisfy the Texas long-arm statute, but the allegation may not satisfy the United

37 States Constitution. Moncrief Oil Int’l, Inc., 414 S.W.3d at 149. Therefore, even if a

court determines the facts satisfy the Texas long-arm statute, the court must also

examine the facts to determine whether the exercise of personal jurisdiction over the

defendant comports with due process. See CSR Ltd. v. Link, 925 S.W.2d 591, 594

(Tex. 1996). Personal jurisdiction is consistent with due process when (1) the

nonresident defendant has established minimum contacts with the forum state, and

(2) the exercise of jurisdiction comports with traditional notions of fair play and

substantial justice. Kelly, 301 S.W.3d at 657 (citation omitted).

The minimum contacts analysis requires “‘some act by which the defendant

purposely 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) (quoting Hanson v.

Denckla, 357 U.S. 235, 253 (1958)). The focus is on defendant’s activities and

expectations. Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 806

(Tex. 2002). A defendant’s contacts may support either general personal jurisdiction

or specific personal jurisdiction. See Moncrief Oil Int’l, Inc., 414 S.W.3d at 150;

Zinc Nacional, S.A. v. Bouché Trucking, Inc., 308 S.W.3d 395, 397 (Tex. 2010).

General Jurisdiction

General jurisdiction arises when a defendant’s contacts with the forum state

are so “‘continuous and systematic’” that defendant is “‘essentially at home[]’” in

38 the forum state. State v. Volkswagen Aktiengesellschaft, 669 S.W.3d 399, 412 (Tex.

2023) (citations omitted). This kind of personal jurisdiction allows courts to render

a binding judgment against a defendant even if plaintiff’s claims neither arise from

activities conducted in the forum state nor “‘relate to the forum [s]tate or the

defendant’s activity there[.]’” Id. (quoting Ford Motor Co. v. Mont. Eighth Jud. Dist.

Ct., 592 U.S. 351, 358 (2021)).

The MDL Court Does Not Have General Jurisdiction over the Investors

The record shows the Investors are not organized under the laws of Texas and

do not have principal places of business in Texas. Since the Investors are not

organized under Texas law and do not have a principal place of business in Texas,

the “paradig[m] . . . bases for general jurisdiction” are missing here. See Skylift, 2020

WL 1879655, at *3.

While Plaintiffs’ jurisdictional allegations about First Reserve includes it

maintaining a Houston office, the fact that a non-resident defendant maintains a

Texas office is not a sufficient basis for exercising general, or all-purpose

jurisdiction. See Nunes v. NBCUniversal Media, LLC, 582 F. Supp. 3d 387, 397

(E.D. Tex. 2022) (explaining that having one office, employees, and a general

business presence in Texas are not substantial enough connections to create general

jurisdiction in Texas); Garcia Hamilton & Assocs., L.P. v. RBC Capital Mkts., LLC,

466 F. Supp. 3d 692, 701 (S.D. Tex. 2020) (concluding no general jurisdiction in

39 Texas despite having four offices and 240 employees in Texas); Monkton Ins. Servs.,

Ltd. v. Ritter, 768 F.3d 429, 432 (5th Cir. 2014) (stating it is incredibly difficult to

establish general jurisdiction in a forum other than defendant’s place or

incorporation or its principal place of business). Based on the evidence, we hold that

First Reserve is not “so heavily engaged in activity” in Texas as to render First

Reserve “at home” in Texas. See BNSF Ry. Co. v. Tyrrell, 581 U.S. 402, 405–06,

412–14 (2017) (citations omitted) (holding Montana did not have general

jurisdiction over a Delaware railroad company having had a Montana facility with

more than 2,000 employees, owning and operating more than 2,000 miles of railroad

track in Montana, and advertising in Montana because it was not so heavily engaged

in activity in Montana as to render it essentially at home in that state). Since this is

not an “exceptional case” where First Reserve’s Texas operations are “so substantial

and of such a nature as to render it at home” in Texas, we hold that the First Reserve

Defendants negated Plaintiffs’ jurisdictional allegations and that the evidence does

not support the MDL court’s ruling to the extent that it based its ruling on a finding

that it has general jurisdiction over First Reserve. See id. at 413; see also Volkswagen

Aktiengesellschaft, 669 S.W.3d at 412.

As for the Alpha entities, FR Sawgrass, SK Second Reserve, and SK

Sawgrass, the evidence shows that none of them had direct Texas contacts. We hold

that the Investors negated Plaintiffs’ jurisdictional allegations that the Alpha entities,

40 FR Sawgrass, SK Second Reserve, and SK Sawgrass had minimum contacts with

Texas. See Kelly, 301 S.W.3d at 658–59. Thus, the MDL court does not have general

jurisdiction over them. See id. We sustain the First Reserve Defendants’ and the SK

Defendants’ first issue.

Specific Personal Jurisdiction

Specific personal jurisdiction applies more narrowly than general jurisdiction.

Volkswagen Aktiengesellschaft, 669 S.W.3d at 412 (citing Ford Motor Co., 592 U.S.

at 352). Courts can exercise specific jurisdiction over a nonresident defendant when

two conditions are met: (1) the defendant engages in some act by which it purposely

avails itself of the privilege of conducting activities with the forum state; and (2) the

plaintiff’s claims arise out of or relate to those forum contacts. Id. at 412-13 (citing

Ford Motor Co., 592 U.S. at 352; Luciano, 625 S.W.3d at 8–9); see also Moki Mac

River Expeditions v. Drugg, 221 S.W.3d 569, 579 (Tex. 2007) (stating specific-

jurisdiction analysis involves two co-equal components: purposeful availment and

relatedness). This kind of personal jurisdiction involves a “‘claim-by-claim’”

analysis that focuses on the relationship between the defendant, the forum state, and

the operative facts of the litigation. Volkswagen Aktiengesellschaft, 669 S.W.3d at

413 (quoting Moncrief Oil Int’l, Inc., 414 S.W.3d at 150); see Bristol-Myers Squibb

Co. v. Superior Ct., 582 U.S. 255, 262 (2017) (citation omitted); TV Azteca, S.A.B.

de C.V. v. Ruiz, 490 S.W.3d 29, 42 (Tex. 2016) (quoting Walden v. Fiore, 571 U.S.

41 277, 283–84 (2014)). We consider the “quality and nature of [these] contacts, rather

than their number[.]” Coleman, 83 S.W.3d at 806 (citation omitted). We examine

the Investors’ purposeful conduct and contacts with Texas, rather than another’s

conduct and contacts with Texas. See Walden, 571 U.S. at 291 (“[I]t is the defendant,

not the plaintiff or third parties, who must create contacts with the forum state.”).

There must be a substantial connection between the nonresident’s contacts and the

operative facts of the litigation. Moncrief Oil Int’l, Inc., 414 S.W.3d at 156. A

substantial connection may result, however, from a single purposeful act. Id. at 151–

52. The operative facts are those on which the trial court will focus to prove the

liability of defendant who is challenging jurisdiction. Leonard v. Salinas Concrete,

LP, 470 S.W.3d 178, 188 (Tex. App.—Dallas 2015, no pet.).

Purposeful Availment

The first prong of specific jurisdiction, purposeful availment, is the

“touchstone of jurisdictional due process[.]” Michiana Easy Livin’ Country, Inc.,

168 S.W.3d at 784. The purposeful availment analysis asks whether “‘a

nonresident’s conduct and connection to a forum are such that it could reasonably

anticipate being haled into court there.’” See Volkswagen Aktiengesellschaft, 669

S.W.3d at 413 (quoting Moncrief Oil Int’l, Inc., 414 S.W.3d at 152). “To show

purposeful availment, a plaintiff must prove that a nonresident defendant seeks a

benefit, advantage, or profit from the forum market.” In re Christianson Air

42 Conditioning & Plumbing, LLC, 639 S.W.3d 671, 679 (Tex. 2022) (citing Michiana

Easy Livin’ Country, Inc., 168 S.W.3d at 785). We apply three considerations to

determine purposeful availment:

• “[O]nly the defendant’s contacts with the forum are relevant, not the unilateral activity of another party or a third person”;

• “The contacts relied upon must be purposeful,” not “random, fortuitous, or attenuated”; and

• The defendant “must seek some benefit, advantage[,] or profit by availing itself of [Texas’s] jurisdiction.”

Volkswagen Aktiengesellschaft, 669 S.W.3d at 413–14 (quoting Moncrief Oil Int’l,

Inc., 414 S.W.3d at 151). “‘This analysis assesses the quality and nature of the

contacts, not the quantity.’” Id. (quoting Moncrief Oil Int’l, Inc., 414 S.W.3d at 151).

“Where the defendant has ‘deliberately’ engaged in significant activities within a

state, he ‘manifestly has availed himself of the privilege of conducting business

there.’” Luciano, 625 S.W.3d at 9 (quoting Burger King Corp. v. Rudzewicz, 471

U.S. 462, 475–76 (1985)). Under certain limited circumstances, one entity’s contacts

may be imputed to another entity for jurisdictional purposes, which we discuss

below.

Jurisdictional Veil-Piercing/Alter Ego

Texas law presumes that two separate corporations are distinct entities, and a

party seeking to ascribe one corporation’s actions to another by disregarding their

distinct corporate entities must prove this allegation. BMC Software Belgium, N.V., 43 83 S.W.3d at 798 (citations omitted). “Creation of affiliated corporations to limit

liability while pursuing common goals lies firmly within the law and is

commonplace.” SSP Partners v. Gladstrong Invs. (USA) Corp., 275 S.W.3d 444,

455 (Tex. 2008). “‘[S]o long as a parent and subsidiary maintain separate and distinct

corporate entities, the presence of one in a forum state may not be attributed to the

other[,]’” and “‘100% stock ownership and commonality of officers and directors

are not alone sufficient to establish an alter ego relationship between two

corporations.’” PHC-Minden, L.P. v. Kimberly-Clark Corp., 235 S.W.3d 163, 172

(Tex. 2007) (quoting Hargrave v. Fibreboard Corp., 710 F.2d 1154, 1160 (5th Cir.

1983)).

“[I]t is entirely appropriate for directors of a parent corporation to serve as

directors of its subsidiary[.]” U.S. v. Bestfoods, 524 U.S. 51, 69 (1998) (quoting Am.

Protein Corp. v. AB Volvo, 844 F.2d 56, 57 (2d Cir. 1988) (other citation omitted)).

“‘[C]ases demand proof of control by the parent over the internal business operations

and affairs of the subsidiary in order to fuse the two for jurisdictional purposes[,]’”

and the “‘degree of control exercised by the parent must be greater than that normally

associated with common ownership and directorship.’” PHC-Minden, L.P., 235

S.W.3d at 172–73 (quoting Hargrave, 710 F.2d at 1160). “[T]he evidence must show

that the two entities cease to be separate so that the corporate fiction should be

disregarded to prevent fraud or injustice.” BMC Software Belgium, N.V., 83 S.W.3d

44 at 799 (citations omitted). We must examine all relevant facts and circumstances

surrounding the operations of the parent and subsidiary to determine whether two

separate and distinct corporate entities exist. PHC-Minden, L.P., 235 S.W.3d at 173

(quoting Hargrave, 710 F.2d at 1160).

In determining whether a parent operates a subsidiary’s facility, the United

States Supreme Court has explained that “a participation-and-control test looking to

the parent’s supervision over the subsidiary, especially one that assumes that dual

officers always act on behalf of the parent, cannot be used to identify operation of a

facility[.]” Bestfoods, 524 U.S. at 70–71. The Supreme Court noted that “when the

parent operates the facility in the stead of its subsidiary or alongside the subsidiary

in some sort of joint venture[,]” “a dual officer or director might depart so far from

the norms of parental influence exercised through dual officeholding as to serve the

parent, even when ostensibly acting on behalf of the subsidiary in operating the

facility.” Id. at 71 (citations omitted). Since “‘activities that involve the facility but

which are consistent with the parent’s investor status, such as monitoring of the

subsidiary’s performance, supervision of the subsidiary’s finance and capital budget

decisions, and articulation of general policies and procedures[]” are insufficient to

show the parent operated the facility, the critical question is “whether, in degree and

detail, actions directed to the facility by an agent of the parent alone are eccentric

under accepted norms of parental oversight of a subsidiary’s facility.” Id. at 72

45 (citations omitted). Thus, “acts of direct operation . . . must necessarily be

distinguished from the inference that stems from the normal relationship between

parent and subsidiary.” Id. at 71.

The MDL Court Does Not Have Specific Jurisdiction over the Investors

Plaintiffs’ allegations that the MDL court has specific jurisdiction over the

Investors focuses on the Investors having exercised abnormal control over TPC’s

operations through the GP Board. To support their allegations, Plaintiffs rely on the

Texas Supreme Court’s opinion in Cornerstone Healthcare Group Holding, Inc. v.

Nautic Management VI, L.P., 493 S.W.3d 65 (Tex. 2016). In Cornerstone,

defendants, three nonresident private-equity fund limited partnerships and their

general partner, invested in a newly created Texas subsidiary that purchased a chain

of hospitals from a Texas company. Id. at 67. The plaintiff, a Texas company

allegedly in the market to buy the hospitals, asserted defendants’ conduct was

tortious and subjected defendants to Texas’s jurisdiction over claims arising out of

that conduct. Id. The Cornerstone Court held that Texas courts had jurisdiction over

defendants. Id. While the Cornerstone Court agreed with the nonresident defendants

that the Texas subsidiary’s contacts could not be attributed to them because the

subsidiary was a legally distinct entity, the Court concluded that the creation of the

new subsidiaries to affect the consummation of the transactions contemplated by the

46 Asset Purchase Agreement was part of an “overarching transaction” in which

defendants “specifically sought both a Texas seller and Texas assets.” Id. at 72–73.

Confining its inquiry to specific jurisdiction, which requires a focus on the

relationship among defendant, the forum and the litigation, the Cornerstone Court

held defendants’ contacts were purposeful and they sought some benefit, advantage,

or profit by availing themselves of Texas’s jurisdiction such that they impliedly

consented to suit. Id. at 71, 73. The Cornerstone Court further held that plaintiff’s

causes of action arose from and related to defendants’ purposeful contacts with

Texas. Id. at 73–74. The Cornerstone Court explained that there was a “substantial

connection between those contacts and the operative facts of the litigation[,]”

because plaintiff’s allegations concern defendants’ use of plaintiff’s confidential

information to divert the transaction to themselves, the crux of defendants’

purposeful contact with Texas and the focus at trial. Id. at 74. The Court reasoned

the “deal did not stem from a third party’s unilateral activity; it was the result of a

transaction stemming from the activity of the respondents themselves.” Id. at 73.

We hold that the Cornerstone case is distinguishable because as explained

below, the Investors do not have purposeful contacts with Texas. See id. at 73-74.

Additionally, unlike Cornerstone, the facts surrounding the TPC plant explosion is

not the “crux” of the Investors’ alleged contacts with Texas, which include owning

47 interests in separate and distinct entities and having directors on the GP Board that

serve on TPC’s behalf. See id. at 72-73.

In determining whether the MDL court has specific jurisdiction, we examine

the Investors’ purposeful conduct and contacts with Texas, rather than another’s

conduct and contacts. See Walden, 571 U.S. at 291. First, we note that the Alpha

entities, FR Sawgrass, SK Second Reserve, and SK Sawgrass did not have any

directors on the GP Board. Plaintiffs’ allegations are based on the Alpha entities’

ownership interests in FR Sawgrass and FR Sawgrass’s ownership interests in two

nonparty entities, the GP Board and Sawgrass Holdings, which have an ownership

interest in TPC. Plaintiffs’ allegations against SK Sawgrass are also based on its

ownership interest in Sawgrass Holdings and its alleged connection with SK Capital

Partners, and Plaintiffs’ allegations against SK Second Reserve are only based on

the conduct and contacts of SK Capital Partners, a nonparty Plaintiffs intended to

sue.

Plaintiffs cannot base the Alpha entities’, FR Sawgrass’s, or SK Sawgrass’s

alleged purposeful conduct and contacts with Texas on the conduct and contacts of

the GP Board and Sawgrass Holdings. See id. at 72-73. Nor can Plaintiffs base SK

Second Reserve’s and SK Sawgrass’s alleged purposeful conduct and contacts with

Texas on the conduct of SK Capital Partners. See id. at 73-74. Plaintiffs failed to

provide evidence to overcome the presumption that the Alpha entities, FR Sawgrass,

48 SK Second Reserve, and SK Sawgrass are separate and distinct entities. See PHC-

Minden, L.P., 235 S.W.3d at 172–73; BMC Software Belgium, N.V., 83 S.W.3d at

798. Without such evidence, the contacts of the GP Board, Sawgrass Holdings, and

SK Capital Partners cannot be attributed to any of these entities. See PHC-Minden,

L.P., 235 S.W.3d at 172–73; BMC Software Belgium, N.V., 83 S.W.3d at 798–99.

We hold that since Plaintiffs failed to provide evidence that the Alpha entities, FR

Sawgrass, SK Second Reserve, and SK Sawgrass cease to be separate so that their

corporate fictions should be disregarded, Plaintiffs’ jurisdictional allegations are

insufficient for exercising specific jurisdiction over any of them. See BMC Software

Belgium, N.V., 83 S.W.3d at 799 (citations omitted). We also hold that Plaintiffs

failed to prove the purposeful availment condition required for the MDL court to

exercise specific jurisdiction over the Alpha entities, FR Sawgrass, SK Second

Reserve, and SK Sawgrass. See Volkswagen Aktiengesellschaft, 669 S.W.3d at 413–

14 (citations omitted). We sustain the First Reserve Defendant’s third issue in part,

and we sustain the SK Defendants’ second and third issues.

Plaintiffs’ allegations against First Reserve are based on its two directors on

the GP Board having exercised abnormal control over TPC’s operations. The First

Reserve Defendants rebutted Plaintiffs’ allegations that: First Reserve was fused

with TPC for jurisdictional purposes because of First Reserve’s abnormal control

over TPC’s internal business operations and affairs; First Reserve’s directors on the

49 GP Board were acting on behalf of First Reserve while fulfilling their director duties

for TPC; and First Reserve exercised abnormal operational control over TPC and the

Port Neches facility through the GP Board. Since Plaintiffs failed to provide

evidence to overcome the presumption that First Reserve are separate and distinct

entities, the contacts of TPC, First Reserve’s directors on the GP Board, and the GP

Board cannot be attributed to First Reserve. See PHC-Minden, L.P., 235 S.W.3d at

172–73; BMC Software Belgium, N.V., 83 S.W.3d at 798–99. Accordingly, we hold

that Plaintiffs failed to prove the purposeful availment condition required for the

MDL court to exercise specific jurisdiction over First Reserve. See Volkswagen

Aktiengesellschaft, 669 S.W.3d at 413–14 (citations omitted). We conclude the MDL

court does not have specific jurisdiction over the Investors. We sustain the First

Reserve Defendants’ third issue in part. Having sustained issue three, we need not

consider the First Reserve Defendants’ issue two complaint that Plaintiffs’ claims

do not arise out of or relate to their Texas contacts. See Tex. R. App. P. 47.1

CONCLUSION

Having concluded the MDL court does not have general or specific

jurisdiction over any of the Investors, we further conclude the MDL court erred in

denying the Investors’ special appearances. Accordingly, we reverse the MDL

court’s orders denying the First Reserve Defendants’ and the SK Defendants’ special

appearances and render the judgment the MDL court should have rendered,

50 dismissing Plaintiffs’ claims against the Investors for lack of personal jurisdiction.

REVERESED AND RENDERED.

W. SCOTT GOLEMON Chief Justice Submitted on May 30, 2024 Opinion Delivered June 27, 2024

Before Golemon, C.J., Horton and Wright, JJ.