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515 S.W.3d 1
Tex. App.
2016
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Background

  • Wellshire (three related Texas entities) sued several TMX-related entities and two individuals for misappropriation of trade secrets and tortious interference; most TMX co-defendants did not contest Texas jurisdiction.
  • TMX Finance, LLC (TMX-Finance) is an in-state subsidiary; TMX Finance Holdings, Inc. (TMX-Holdings) is an out-of-state parent holding company that allegedly has no employees, operations, or Texas contacts.
  • Wellshire alleged TMX-Holdings is the alter ego of TMX-Finance and sought to impute TMX-Finance’s Texas contacts to TMX-Holdings.
  • TMX-Holdings filed a special appearance asserting it has no Texas contacts; it submitted an affidavit from its VP (Christopher Wall) denying operational control over TMX-Finance.
  • The trial court denied the special appearance on alter-ego grounds; the court of appeals reversed and rendered dismissal of TMX-Holdings.

Issues

Issue Plaintiff's Argument Defendant's Argument Held
Whether Wellshire waived alter-ego theory by not pleading it in the original petition Wellshire relied on its special-appearance response to allege alter-ego and submitted evidence; the court may consider those filings TMX-Holdings contended Wellshire waived the theory by failing to plead it earlier The court held no waiver: Rule 120a allows consideration of pleadings and special-appearance response when deciding jurisdiction
Whether Wellshire proved TMX-Holdings is the alter ego of TMX-Finance (sufficient to impute contacts) TMX-Holdings (through common ownership, shared officers/headquarters, capital infusions, undocumented liabilities, and lack of formalities) exerts abnormal control over TMX-Finance and should be fused for jurisdictional purposes TMX-Holdings showed no involvement in TMX-Finance’s operations, marketing, personnel, or policies; parental monitoring and ownership alone are insufficient to prove atypical control The court held Wellshire failed to prove the requisite abnormal/atypical control; alter-ego not established; special appearance should have been granted

Key Cases Cited

  • Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653 (Tex. 2010) (standard and burden-shifting for special appearances)
  • BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789 (Tex. 2002) (implied findings and proof required to pierce corporate veil for jurisdiction)
  • PHC-Minden, L.P. v. Kimberly-Clark Corp., 235 S.W.3d 163 (Tex. 2007) (PHC‑Minden factors and requirement of a "plus" factor showing atypical control for alter-ego jurisdiction)
  • Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569 (Tex. 2007) (long-arm statute reaches to the extent of due process)
  • Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333 (Tex. 2009) (purposeful availment minimum-contacts framework)
  • Spir Star AG v. Kimich, 310 S.W.3d 868 (Tex. 2010) (fair play and substantial justice factors in jurisdictional analysis)
  • Cappuccitti v. Gulf Indus. Prods., Inc., 222 S.W.3d 468 (Tex. App.—Houston [1st Dist.] 2007) (upholding alter-ego jurisdiction where individual and corporate control and intermingling were established)
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Case Details

Case Name: TMX Finance Holdings, Inc. v. Wellshire Financial Services, LLC D/B/A Loanstart Title Loans D/B/A Moneymax Title Loans and D/B/A Loanmax Meadowwood Financial Services, LLC D/B/A Loanstar Title Loans and D/B/A Moneymax Title Loans And Integrity Texas Funding, LP
Court Name: Court of Appeals of Texas
Date Published: Oct 11, 2016
Citations: 515 S.W.3d 1; 2016 Tex. App. LEXIS 11059; 2016 WL 5920776; NO. 01-16-00044-CV
Docket Number: NO. 01-16-00044-CV
Court Abbreviation: Tex. App.
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