Northern Frac Proppants, II, LLC, Lamstex Material Handling, LLC, Jeffries Alston, J & P Capital LLC, Patrick A. Tesson, and Badger Mining Corporation v. 2011 NF Holdings, LLC F/K/A NF Holdings, LLC and Northern Frac Proppants, LLC, Series 1
05-16-00319-CV
| Tex. App. | Jul 27, 2017Background
- Plaintiffs (Texas-linked entities NF Holdings and Northern Frac Proppants and its series) allege defendants conspired to steal their frac-sand business assets (leases, permits, trade secrets) and sold them to Badger Mining. The sand operations and physical assets were located in Wisconsin/Minnesota.
- Defendants include individuals and entities domiciled outside Texas: Alston (Louisiana), NFP II (Delaware, operated mainly from Louisiana and Wisconsin), Lamstex (Louisiana), Badger (Wisconsin), J&P Capital (Delaware/New Orleans), and Tesson (Florida).
- Plaintiffs sued in Texas asserting statutory and common-law trade-secret misappropriation, conversion, fraudulent transfer, conspiracy, and fiduciary breach; all defendants filed special appearances contesting personal jurisdiction.
- Trial court granted special appearances for J&P and Tesson and denied them for Alston, Lamstex, NFP II, and Badger; both sides appealed. The central jurisdictional question concerned whether non‑Texas actors who acquired and sold out‑of‑state sand assets — knowing much product would ultimately be sold into Texas — purposefully availed themselves of Texas.
- The court analyzed both specific and general jurisdiction, applying the purposeful‑availment/minimum‑contacts and "at‑home" standards, and concluded Texas lacked both specific and general jurisdiction over Alston, Lamstex, NFP II, Badger and upheld that J&P and Tesson lacked jurisdiction. Judgment: reverse denials, affirm grants, and dismiss for lack of personal jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Alston (and related entities) is subject to general jurisdiction in Texas | Alston conducts substantial business in Texas via mobile office, Texas offices, Texas advertising, and repeated Texas meetings; thus he is "at home" | Alston is domiciled in Louisiana; contacts in Texas are episodic, not comparable to domicile or principal place of business | No general jurisdiction — contacts insufficient to make Alston "at home" in Texas |
| Whether Alston (and related entities) is subject to specific jurisdiction for theft/misappropriation and related torts | Theft of plaintiffs’ (Texas) intangibles and sale to Badger was aimed at Texas companies and affected Texas commerce, establishing purposeful availment | Alston acquired out‑of‑state assets, did not obtain them in Texas or target Texas as a legal forum; effects in Texas are fortuitous under Walden | No specific jurisdiction — acquisition and sale of out‑of‑state assets insufficiently connected to Texas; plaintiff’s injury in Texas alone is inadequate |
| Whether NFP II and Lamstex are subject to general or specific jurisdiction in Texas | NFP II held itself out as headquartered in Houston (press releases, contracts using Houston notice addr.), sold sand to Texas customers, hired Texas professionals; Lamstex did business in Texas | NFP II’s operations, employees, and plant were in Louisiana/Wisconsin; Houston address was access to an office and publicity only; Lamstex is Louisiana‑based and contacts are insufficient | No general or specific jurisdiction over NFP II or Lamstex — not "at home" and alleged Texas contacts are not substantially connected to the claims |
| Whether Badger Mining is subject to general or specific jurisdiction in Texas | Badger does business in Texas (agent for service, facility, sales ~15%, Texas employees) and bought the allegedly stolen assets affecting Texas plaintiffs | Badger is incorporated and headquartered in Wisconsin; asset purchase and related negotiations occurred outside Texas; sales into Texas are typical commercial contacts, not "at home" contacts | No general or specific jurisdiction — Badger’s Texas contacts are ordinary commercial ties and not sufficiently related to the operative facts of the litigation |
Key Cases Cited
- Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569 (Tex. 2007) (Texas long‑arm reaches as far as due process; purposeful‑availment framework)
- Walden v. Fiore, 134 S. Ct. 1115 (2014) (specific jurisdiction requires defendant‑centric contacts with forum; plaintiff's injury in forum alone insufficient)
- Daimler AG v. Bauman, 134 S. Ct. 746 (2014) (general jurisdiction limited to where corporation is "at home"; exceptional cases narrowly construed)
- Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (2011) (paradigm forums for corporations are state of incorporation and principal place of business)
- Moncrief Oil Int’l, Inc. v. OAO Gazprom, 414 S.W.3d 142 (Tex. 2013) (receiving trade secrets at forum meetings can support specific jurisdiction when aimed at forum business)
- Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333 (Tex. 2009) (acquisition of in‑forum real property supports specific jurisdiction for related claims)
- Cornerstone Healthcare Grp. Holding, Inc. v. Nautic Mgmt. VI, L.P., 493 S.W.3d 65 (Tex. 2016) (nonresidents who fund and cause acquisition of Texas businesses may have specific jurisdiction for claims tied to those acquisitions)
- Searcy v. Parex Res., Inc., 496 S.W.3d 58 (Tex. 2016) (knowledge that the brunt of harm will be felt in forum is insufficient for specific jurisdiction)
- BNSF Ry. Co. v. Tyrrell, 137 S. Ct. 1549 (2017) (general jurisdiction requires more than substantial in‑forum operations; mere presence of employees or facilities is not dispositive)
- PHC‑Minden, L.P. v. Kimberly‑Clark Corp., 235 S.W.3d 163 (Tex. 2007) (limits on veil‑piercing/alter‑ego for jurisdictional imputation)