Weatherford Artifical Lift Systems, Inc. v. a & E Anti-Corrosion Systems, L.L.C. and A& E Systems SDN BHD
01-14-00863-CV
| Tex. App. | Feb 17, 2015Background
- Weatherford (Texas) contracted with A&E Systems Sdn Bhd (Malaysia) for custom-branded coating products; A&E shipped products from Malaysia to Weatherford in Houston and accepted payment there.
- The parties negotiated a distributorship relationship over ~2009–2010; A&E personnel (including CEO Arthur Haycox and technical lead Simon Haycox) communicated with and travelled to Houston to market and demo products.
- The business relationship soured; Weatherford returned product expecting agreed refunds but alleges A&E retained payment and resold the goods, resulting in claims for breach of contract, unjust enrichment, fraud, and negligent misrepresentation.
- An "Exit Agreement" was executed addressing ongoing vendor/client relations and anticipates A&E support and Weatherford marketing performed in Texas.
- The trial court granted A&E Malaysia’s special appearance (dismissal for lack of personal jurisdiction). Weatherford appeals and argues the Texas court has specific jurisdiction over A&E based on its purposeful contacts with Texas and A&E USA’s role as agent/alter ego.
Issues
| Issue | Plaintiff's Argument (Weatherford) | Defendant's Argument (A&E) | Held / Posture in Brief |
|---|---|---|---|
| Whether Texas court has specific jurisdiction over A&E Malaysia | A&E purposefully availed itself of Texas by designing, marketing, shipping products to Weatherford in Texas, sending personnel to Houston, communicating with Texas contacts, and contracting for performance in Texas; claims "arise out of or relate to" those contacts | Jurisdiction lacking because operative contacts (final Exit Agreement negotiation and refusal to pay) occurred in Malaysia; A&E Malaysia and A&E USA are separate and any US contacts are A&E USA’s | Trial court granted special appearance; Weatherford asks appellate court to reverse, arguing substantial connection exists between A&E’s Texas-directed activities and Weatherford’s claims |
| Scope of contacts to consider for minimum-contacts analysis | Court should consider prior negotiations, contemplated future consequences, terms of contract, and course of dealings (Burger King framework) — i.e., aggregate contacts leading to the dispute | A&E urges narrowing analysis to a few discrete contacts (location of contract negotiation/payment) | Weatherford argues broader Burger King approach applies; asks court to consider cumulative contacts |
| Whether contacts of A&E USA are attributable to A&E Malaysia (agency/alter ego) | A&E USA operated as agent/alter ego: A&E HQ controlled operations, issued instructions (credit notes), and A&E personnel led dealings; Texas contacts of agent/principal impute to principal | A&E claims corporate separateness; interactions were with A&E USA, not A&E Malaysia | Weatherford contends record shows control by A&E Malaysia and that agency/alter-ego rules render A&E Malaysia accountable for US/Texas contacts |
| Whether operative facts of Weatherford’s claims are substantially connected to A&E’s Texas contacts | The operative facts include the relationship formation, marketing, product delivery and returns, credit note issuance, and A&E’s resale — all connected to Texas-based performance and Weatherford’s harms | A&E minimizes operative facts to discrete events outside Texas to defeat nexus | Weatherford argues operative facts are tied to Texas contacts and thus satisfy the "arise out of or relate to" prong for specific jurisdiction |
Key Cases Cited
- Burger King v. Rudzewicz, 471 U.S. 462 (U.S. 1985) (prior negotiations, future consequences, contract terms, and course of dealing inform purposeful availment)
- Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569 (Tex. 2007) (purposeful availment standard in Texas)
- IRA Res. v. Griego, 221 S.W.3d 592 (Tex. 2007) (targeted marketing to a forum supports jurisdiction)
- Information Servs. Group, Inc. v. Rawlinson, 302 S.W.3d 392 (Tex. App.—Houston [14th Dist.] 2009) (defining operative facts for jurisdictional analysis)
- BMC Software Belgium v. Marchand, 83 S.W.3d 789 (Tex. 2002) (imputing contacts of parent/subsidiary for jurisdiction when control/alter ego shown)
- Citrin Holdings L.L.C. v. Minnis, 305 S.W.3d 269 (Tex. App.—Houston [14th Dist.] 2010) (place of performance and intent to benefit from forum resident factor into jurisdictional analysis)