Weatherford Artificial Lift Systems, Inc. v. A & E Systems SDN BHD

470 S.W.3d 604, 2015 Tex. App. LEXIS 7216, 2015 WL 4260996
CourtCourt of Appeals of Texas
DecidedJuly 14, 2015
DocketNO. 01-14-00863-CV
StatusPublished
Cited by5 cases

This text of 470 S.W.3d 604 (Weatherford Artificial Lift Systems, Inc. v. A & E Systems SDN BHD) 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
Weatherford Artificial Lift Systems, Inc. v. A & E Systems SDN BHD, 470 S.W.3d 604, 2015 Tex. App. LEXIS 7216, 2015 WL 4260996 (Tex. Ct. App. 2015).

Opinion

OPINION

Sherry Radack, Chief Justice

In this interlocutory appeal, Weather-ford Artificial Lift Systems, Inc. [hereafter, “Weatherford”] appeals the trial court’s granting the special appearance of A & E Systems SDN BHD [hereafter, “A & E Malaysia”]. See Tex. Civ. PRAo. & Rem Code Ann. § 51.014(a)(7)- (West ’ Supp. 2012). Weatherford contends that the trial court erred by' granting the special appearance because A & E Malaysia is subject to specific personal jurisdiction- in Texas.' We affirm.-

BACKGROUND

Appellant, Weatherford Artificial Lift Systems, Inc., is a subsidiary of Weather-ford International, Ltd. Weatherford is a Texas corporation that maintains a principal office and headquarters in Houston, Texas.

A & E Systems SDN BHD is a Malay-, sian corporation that specializes in the manufacturing and provision of anti-corrosion coatings and paints typically used in oil and gas activities. Its trademark products are Alocit and Enviropeel, two kinds of anti-corrosion coatings designed for asset protection in the oil and gas industry. A & E Malaysia’s principal office and headquarters are in Malaysia.

A & E Anti-Corrosion Systems, L.L.C. [hereafter, A & E USA] is a Florida limited liability company with its sole office and headquarters in Ponte Vedra, Florida. It was established as a Florida company in November 2009; prior to that A & E USA was a Delaware limited liability company, but the Delaware company was merged into the Florida company in December 2009. A & E USA is a wholly owned subsidiary of A- & E Malaysia. The two companies have separate, but somewhat overlapping, management. A & E Mayla-sia’s management consists of the following: Arthur Haycox, CEO; David Lee, CFO; Simon Haycox, Technical Director; and Mazlan Abdul Majid, Chairman. A & E USA’s management consists of the following: Richard Hoyland, Manager; Arthur Haycox, Manager; and Mazlan Abdul Ma-jid, Manager.' Of significance to this case, Arthur Haycox serves in management positions in both companies; he is the CEO of A & E Malaysia and a manager of A & E USA. A & E Malaysia often uses the [607]*607name “A & E Group” to collectively refer to itself and its subsidiaries, though “A & E Group” is not a legal entity.

There is evidence that whenever A&E USA would receive a purchase order from a United States-based company, A&E USA would place an order with A&E Malaysia for the manufacture of the equipment or product specified. Once the United States customer paid A&E USA, A & E USA would then pay A&E Malaysia a portion of the payment it received for the product.

In the summer of 2009, a Weatherford employee brought the Enviropeel and Alo-cit products to the attention of Todd Travis, Weatherford’s Global Business Manager. Shortly thereafter, Travis initiated contact with “A & E Group” by clicking on a link through its global website, which generated an email to an officer at A & E Malaysia. Arthur Haycox eventually responded to Travis’s inquiry about Enviro-peel and Alocit.

Shortly thereafter, in August 2009, Travis wrote Arthur Haycox, stating that Weatherford was interested in pursuing a joint venture with “A & E Systems, USA.” The letter, addressed to Mr. Arthur Hay-cox at “A & E Systems,” stated:

This letter is to confirm Weatherford’s (WFT) interest in forming a joint venture (JV) with A&E Systems, USA for the exclusive distribution and application of coating Enviropeel and Alocit, here after termed “the coatings”, within North and South America regions. The JV will include licensing agreement for sales and application of the coatings for all wellheads globally.

(Emphasis added). Also in August 2009, Haycox invited Travis to attend a “grand opening” of A & E Malaysia’s warehouse in Malaysia, which Travis did in August 2009.

Around the same time that Travis visited the Malaysian warehouse, Weatherford began to purchase Alocit and- Enviropeel units for potential markéting to Weather-ford customers. The purchase-orders list the supplier as “A & É Anti Corrosion Systems, LLC,” or A &1E USA, as the supplier. The record contains seven such purchase orders, the earliest dated August 3, 2009, and the last one dated February 11, 2010. While there is evidence that Arthur Haycox told Weatherford it could issue purchase orders to- A & E Malaysia, Weatherford did not. Weatherford’s purchases' were all from A & E 'USA. Travis testified by affidavit that Arthur Haycox told him that “if Weatherford and A&E Group’s relationship did not work out at any point during the first year, that A&E Group would repurchase the products from Weatherford.” Only two of the units purchased were actually shipped to Weather-ford; the -rest remained at the warehouse in Malaysia while the -parties worked toward establishing the joint venture-.

During negotiations to work out the joint venture with A&E USA, draft contracts prepared by Weatherford provided that Harris County, Texas, would be the site of any arbitration, in the event of a dispute. The draft “Product Supply and Distribution Agreement” also stated that title to the goods would transfer to Weath-erford “at the port in Malaysia.”

Also during negotiations for the joint venture, in October 2009, Arthur Haycox sent marketing tools to Weatherford for use in showing the products to Weather-ford’s clients. And, in the fall of 2009, Richard Hoyland, of A & E USA, and Simon Haycox, of A & E Malaysia, went to Houston to train Weatherford employees about the use of the Alocit and Enviropeel products at Weatherford’s facilities in Houston. ■

[608]*608By March 2010, the parties -had still not agreed to terms regarding the joint venture. On March 2, 2010, Arthur Haycox traveled to Houston and, along with A & E USA’s Richard Hoyland, met with Weath-erford’s Vice President, David Colley about moving forward with the parties’ relationship. Haycox swore by affidavit that he attended this meeting in his capacity at a manager of A & E USA. According to Weatherford’s second amended petition, during the next few months, the parties “struggled to communicate about or agree upon how to proceed forward,” and “it became clear” that the relationship “required termination.” It is undisputed that no joint venture was ever reached, and Weatherford’s second amended petition contains no claim or causes of action relating to the aborted attempts to form a joint venture with A & E USA.

On June 16, 2010, Weatherford manager Travis traveled to Kuala Lumpur, Malaysia, to meet with Arthur Haycox and negotiate a return of the products. After the meetings, Haycox emailed Travis their agreed negotiated terms, which the parties refer to as the Exit Agreement.1 The Exit Agreement is the contract giving rise to the underlying lawsuit. The term of the Exit Agreement giving rise to the present dispute provides:

A & E will purchase all unused Enviro-peel Units from [Weatherford] on or before 31st Dec 2010 (a list of the numbered units is attached), at the original purchase price from [A & E USA].

After the Exit Agreement was reached, Weatherford returned the products it had received to A & E USA in Florida. The items purchased, but never shipped, remained in the warehouse in Malaysia.

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470 S.W.3d 604, 2015 Tex. App. LEXIS 7216, 2015 WL 4260996, Counsel Stack Legal Research, https://law.counselstack.com/opinion/weatherford-artificial-lift-systems-inc-v-a-e-systems-sdn-bhd-texapp-2015.