Personal Jurisdiction in Contract Case with Successor in Interest

The Fourteenth District Court of Appeals in Houston has held that a corporation's jurisdictional contacts could not be imputed to a nonresident that succeeded to the corporation's contract rights.

Under the core facts in Motor Components LLC v. Devon Energy Corp., Pennzoil Company, a Delaware corporation located in Texas, contracted with its subsidiary, Purolator Products Company, a Delaware corporation located in Oklahoma.  Under the contract, Pennzoil agreed to indemnify Purolator for certain remediation costs of Purolator's real property located in New York and Michigan.  Motor Components, which is a Delaware corporation with its principal place of business in New York, succeeded to Purolator's rights under the contract by transactions not described in the appellate record.  Motor Components subsequently invoked certain provisions of the contract and called upon Pennzoil's successor-in-interest, Devon Energy Corporation, to respond.  Devon is a Delaware corporation with its principal place of business in Oklahoma.  Devon then filed a declaratory judgment action in Texas and sought personal jurisdiction over Motor Components.

The court holds that there are insufficient contacts to find personal jurisdiction over Motor Components.  At the outset, it should be noted that the court's opinion is framed by the allegations Devon, as plaintiff, made insofar as its assertion of jurisdictional contacts.  Thus, a different argument and set of contacts in another case might yield a different result.  Here, based upon the alleged contacts and arguments, the court of appeals rejected basing jurisdiction upon case law imposing liability upon a successor corporation due to the acts of its predecessor.  Jurisdictional contacts and liability are not the same.  The court also pointed out that the nature of the action was one in which Devon sought clarification of its own contractual obligations to Motor Corporation, and not an action in which Devon sought to impose contractual liability on Motor Corporation.  The court noted that the contract itself did not contain an agreement to submit to Texas jurisdiction.  And finally, the court held that jurisdiction could not be based upon three letters sent by Motor Component's attorney to Devon's attorney, who was located in Houston, Texas, because this only supports Devon's unilateral choice to locate the offices of its in-house counsel in Texas and was not purposeful conduct of Motor Components to avail itself of Texas jurisdiction.  The court's opinion may be found here.