174 A.3d 405
Md. Ct. Spec. App.2017Background
- SP Bancorp (SP) was incorporated in Maryland but headquartered and operated in Texas; its board and most activity were in Texas. Green Bancorp (Green) was a Texas corporation with headquarters in Texas.
- Green negotiated and agreed to merge with SP in Texas; most negotiations, due diligence, proxy solicitations, shareholder vote (in Texas), and alleged misconduct occurred outside Maryland.
- Green formed Searchlight Merger Sub, Inc., a Maryland corporation with a Texas address, solely to effect the merger; Searchlight filed the Articles of Merger in Maryland and then merged into SP.
- Appellants (SP shareholders) sued SP, SP’s directors (nonresidents), Green, and Searchlight in Maryland alleging breaches of fiduciary duty and aiding-and-abetting tied to the merger.
- The circuit court dismissed Green and the SP directors for lack of personal jurisdiction, and dismissed SP and Searchlight for failure to state a claim; the Court of Special Appeals affirmed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Green is subject to general jurisdiction in Maryland because it formed Searchlight | Green is "at home" via its Maryland subsidiary and thus amenable to general jurisdiction | Formation/ownership of a short-lived Maryland subsidiary alone cannot render parent "at home" in Maryland | Not at home; incorporation of a subsidiary in Maryland is insufficient for general jurisdiction (Daimler line) |
| Whether Maryland has specific jurisdiction over Green because Green formed Searchlight and merger was consummated with filing in Maryland | Forming a Maryland merger subsidiary and filing Articles of Merger is "transacting business" and creates continuing obligations invoking Maryland law | The filing was tangential; all operative conduct and alleged torts occurred outside Maryland; mere incorporation/filing is inadequate | No specific jurisdiction: Green did not purposefully avail itself of Maryland; the sole contact (Searchlight filing) was insufficient and unrelated to the alleged misconduct |
| Whether nonresident SP directors are subject to jurisdiction by virtue of their SP directorships or causing filing of Articles of Merger in Maryland | Directors purposely availed themselves by directing or causing the merger to be consummated in Maryland | Acceptance of directorship in a Maryland-incorporated but Texas-operated company (and causing a corporate filing) does not alone confer jurisdiction absent a director-consent statute or other forum-directed acts | No jurisdiction: Shaffer controls—without a director-consent statute, mere directorship or causing corporate filings in Maryland does not satisfy due process; directors lacked purposeful Maryland contacts |
| Whether SP and Searchlight were necessary parties and whether claims against them stated a claim | Appellants contended SP/Searchlight were necessary given merger rescission and thus court erred dismissing them | Appellants conceded no specific allegations against SP/Searchlight; jurisdictional defect disposes of joinder issue | Court did not reach merits; dismissal of Green and directors rendered SP/Searchlight not necessary; dismissal of SP/Searchlight for failure to state a claim was affirmed |
Key Cases Cited
- Int'l Shoe Co. v. Washington, 326 U.S. 310 (basic minimum-contacts due process standard)
- Daimler AG v. Bauman, 571 U.S. 117 (general jurisdiction requires corporation be "at home" in forum)
- Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915 (limits on general jurisdiction; distinguish specific jurisdiction)
- Bristol-Myers Squibb Co. v. Superior Court, 137 S. Ct. 1773 (specific-jurisdiction limits; no sliding-scale to assert jurisdiction for unrelated claims)
- World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (forum contacts must relate to the cause of action; foreseeability insufficient)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (purposeful availment and reasonableness factors for specific jurisdiction)
- Shaffer v. Heitner, 433 U.S. 186 (directorship alone does not subject nonresidents to jurisdiction absent statutory consent)
- CSR, Ltd. v. Taylor, 411 Md. 457 (Maryland long-arm merges statutory and constitutional analysis; significant activities or continuing obligations test)
- Vitro Elecs. v. Milgray Elecs., Inc., 255 Md. 498 (single corporate act may support jurisdiction only if the act was tortious or caused injury in the forum)
- Sleph v. Radtke, 76 Md. App. 418 (quality/quantity of contacts depends on nature of action; continuing obligations analysis)