                                                                                      ACCEPTED
                                                                                 04-14-00827-CV
                                                                      FOURTH COURT OF APPEALS
                                                                           SAN ANTONIO, TEXAS
                                                                           3/24/2015 11:45:26 AM
                                                                                   KEITH HOTTLE
                                                                                          CLERK


                      NO. 04-14-00827-CV
_____________________________________________________________
                                                         FILED IN
                                                  4th COURT OF APPEALS
                      IN THE COURT OF APPEALS      SAN ANTONIO, TEXAS
               FOR   THE FOURTH DISTRICT OF TEXAS03/24/2015 11:45:26 AM
                       AT SAN ANTONIO, TEXAS        KEITH E. HOTTLE
                                                          Clerk
______________________________________________________________

             PT INTERMEDIATE HOLDING, INC. AND
              PERSONAL TOUCH HOLDING CORP.,
                         Appellants,
                             v.
                    LMS CONSULTING LLC,
                          Appellee.


  On Appeal from the 45th Judicial District Court of Bexar County, Texas
   (Honorable Peter Sakai, of the 225th Judicial District Court, Presiding)
                  Trial Court Cause No. 2014-CI-00450
______________________________________________________________

                     APPELLANTS’ REPLY BRIEF


                                     Monte F. James
                                     State Bar No. 10547520
                                     mjames@jw.com
                                     Joshua A. Romero
                                     State Bar No. 24046754
                                     jromero@jw.com
                                     Kimberly A. Gdula
                                     State Bar No. 24052209
                                     kgdula@jw.com
                                     JACKSON WALKER L.L.P.
                                     100 Congress Avenue, Suite 1100
                                     Austin, Texas 78701
                                     (512) 236-2000
                                     (512) 236-2002 – Fax
                                     COUNSEL FOR APPELLANTS
                                       TABLE OF CONTENTS

TABLE OF CONTENTS .........................................................................................i 
TABLE OF AUTHORITIES ................................................................................. ii 
        1.      LMS CONSULTING’S   NEW JURISDICTIONAL ARGUMENTS WERE
                NOT RAISED IN THE TRIAL COURT AND THEREFORE CANNOT BE
                CONSIDERED ON APPEAL. ........................................................................ 1 

                A.       LMS Consulting never asserted that Appellants breached
                         any contracts with LMS Consulting. ........................................... 2 
                B.       LMS Consulting never asserted that Appellants recruited
                         employees in Texas or contracted with Texas residents. ............ 7 
        2.      LMS CONSULTING’S      JUDICIAL ADMISSIONS ESTABLISH THAT
                THERE IS NO BASIS FOR JURISDICTION OVER APPELLANTS. ................... 10 

                A.       The doctrine of judicial admissions. ......................................... 11 
                B.       LMS Consulting judicially admitted that the Texas
                         Entities entered into the recruitment and staffing
                         agreements at issue. .................................................................. 11 
                C.       LMS Consulting judicially admitted that the Texas
                         Entities recruited employees in Texas and contracted
                         with Texas residents. ................................................................. 13 
                D.       LMS Consulting’s jurisdictional argument based on
                         Appellants’ alleged tortious interference fails. ........................ 13 
        3.      THE EXERCISE OF JURISDICTION OVER APPELLANTS DOES NOT
                COMPORT WITH FAIR PLAY AND SUBSTANTIAL JUSTICE. ........................ 15 

        4.      LMS CONSULTING’S VEIL-PIERCING THEORY OF JURISDICTION
                FAILS. ................................................................................................... 17 

CONCLUSION AND PRAYER ........................................................................... 19 
RULE 9.4 CERTIFICATE OF COMPLIANCE ................................................ 21 
CERTIFICATE OF SERVICE ............................................................................ 20 




                                                            i
                                   TABLE OF AUTHORITIES


CASES                                                                                              PAGE(S)
Coleman v. Klockner & Co. AG,
  180 S.W.3d 577 (Tex. App—Houston [14th Dist.] 2005, no pet.) ............5, 6, 10

Conner v. Conticarriers & Terminals, Inc.,
  944 S.W.2d 405 (Tex. App.—Houston [14th Dist.] 1997, no writ) ................... 18

Favour Leasing, LLC v. Mulligan,
  No. 05-13-01000, 2014 Tex. App. LEXIS 9180 (Tex. App.—Dallas
  Aug. 19, 2014, no pet.) .......................................................................9, 13, 14, 15

Hargrave v. Fibreboard Corp.,
  710 F.2d 1154 (5th Cir. 1983) ...................................................................... 15, 16

Hennigan v. I.P. Petroleum Co.,
  858 S.W.2d 371 (Tex. 1993) .............................................................................. 11

Horizon/CMS Healthcare Corp. v. Auld,
  34 S.W.3d 877 (Tex. 2000)...........................................................................12, 13

In re A.E.A.,
    406 S.W.3d 404 (Tex. App.—Fort Worth 2013, no pet.)................................... 11

Low v. Henry,
  221 S.W.3d 609 (Tex. 2007) ................................................................................ 7

Mack Trucks, Inc. v. Tamez,
  206 S.W.2d 572 (Tex. 2006) ................................................................................ 2

Marin Real Estate Partners, L.P. v. Vogt,
  373 S.W.3d 57 (Tex. App.—San Antonio 2011, no pet.) ............................2, 3, 4

Moncrief Oil Int’l, Inc. v. OAO Gazprom,
  414 S.W.3d 142 (Tex. 2013) .............................................................................. 14

PHC-Minden v. Kimberly-Clark Corp.,
  235 S.W.3d 163 (Tex. 2007) ........................................................................17, 18




                                                      ii
Rippey v. Chase Home Fin., LLC,
   No. 02-13-00190, 2014 Tex. App. LEXIS 2911 (Tex. App.—Fort Worth
   Mar. 13, 2014, no pet.)..................................................................................10, 11

Riverside Exports Inc. v. B.R. Crane & Equip., LLC,
   362 S.W.3d 649 (Tex. App.—Houston [14th Dist.] 2011, pet. denied) ............. 17

Siskind v. Villa Found. For Educ., Inc.,
   642 S.W.2d 434 (Tex. 1982) ................................................................................ 5

Velco Chems., Inc. v. Polimeri Europa Americas, Inc.,
   No. 14-03-00395, 2004 Tex. App. LEXIS 8133 (Tex. App.—Fort Worth
   Sept. 7, 2004, no pet.) ......................................................................................... 11

Woodward v. AFI, S.A.,
  No. 05-94-01498, 1995 Tex. App. LEXIS 3540 (Tex. App.—Dallas July
  31, 1995, no pet.) .........................................................................................passim

OTHER AUTHORITIES
TEX. R. APP. P. 33.1(a)(1) .......................................................................................... 2

U.S. CONSTITUTION .................................................................................................. 14




                                                          iii
TO THE HONORABLE JUSTICES OF THE FOURTH COURT OF APPEALS:

      Apparently recognizing the weakness of its veil-piercing theory of

jurisdiction, Appellee LMS Consulting LLC (“LMS Consulting”) now asserts for

the first time on appeal several new theories of jurisdiction. These new-found

arguments fail for the following reasons:

      First, they were not raised in the trial court and are therefore waived.

      Second, LMS Consulting’s judicial admissions negate its new
      jurisdictional arguments. It judicially admitted that it contracted only
      with the Texas Entities, and not with Appellants. It also judicially
      admitted that Appellants did not recruit employees in Texas or
      contract with Texas residents.

      Third, LMS Consulting’s allegations of tortious interference against
      Appellants fail to establish personal jurisdiction.

      Fourth, LMS Consulting’s veil-piercing theory of jurisdiction—the
      only theory it asserted in the trial court—fails as a matter of law.

      Each of these independent grounds for rejecting LMS Consulting’s

jurisdictional arguments is discussed below.

1.    LMS CONSULTING’S NEW JURISDICTIONAL ARGUMENTS WERE NOT RAISED
      IN THE TRIAL COURT AND THEREFORE CANNOT BE CONSIDERED ON APPEAL.

      In its response brief, LMS Consulting argues for the first time on appeal that

Appellants1 failed to negate: (1) jurisdiction arising out of Appellants’ recruitment

and staffing agreements with LMS Consulting; and (2) the allegation that

Appellants recruited employees in Texas and contracted with Texas residents. As
      1
               “Appellants” refer collectively to PT Intermediate Holding, Inc. (“PT
Intermediate”) and Personal Touch Holding Corp. (“Personal Touch Holding”).


                                            1
set forth below, LMS Consulting never raised these jurisdictional arguments in the

trial court and, therefore, they may not be considered on appeal. See TEX. R. APP.

P. 33.1(a)(1) (arguments not raised in trial court are waived on appeal); Mack

Trucks, Inc. v. Tamez, 206 S.W.2d 572, 577 (Tex. 2006) (“Except for fundamental

error, appellate courts are not authorized to consider issues not properly raised by

the parties.”). As this Court has explained, “[e]ven constitutional error can be

waived if not raised in the trial court.” Marin Real Estate Partners, L.P. v. Vogt,

373 S.W.3d 57, 83 (Tex. App.—San Antonio 2011, no pet.).

       A.     LMS Consulting never asserted that Appellants breached any
              contracts with LMS Consulting.

       LMS Consulting sued, among others, the two Texas Entities2 and pled that

the two Texas Entities did business as “Personal-Touch Home Care, Inc.” C.R.

269.3 It defined the two Texas Entities collectively as “Personal-Touch.” Id. It

never pled that Appellants are “Personal Touch Home Care, Inc.,” the argument it

now asserts on appeal. Instead, it alleged that the Texas Entities are “Personal



       2
                The “Texas Entities” refer collectively to PT Home Services of Dallas, Inc. and
PT Home Services of San Antonio, Inc.
        3
                LMS Consulting’s petition names “PT Homes Services of Dallas, Inc. d/b/a
Personal-Touch Home Care Inc.” and “PT Home Services of San Antonio, Inc. d/b/a
Personal-Touch Home Care, Inc.” C.R. 269 (emphasis added). LMS Consulting’s petition
does not even allege that Appellants did business as “Personal-Touch Home Care, Inc.” The
contracts at issue are between LMS Consulting and “Personal-Touch Home Care, Inc.,” an entity
that LMS Consulting asserts are d/b/a’s for the Texas Entities. Id. at 271. Additionally, LMS
Consulting pled that the Texas Entities “each hold themselves out as doing business under a
single name—‘Personal-Touch Home Care, Inc.’” Id. at 278.


                                              2
Touch Home Care Inc.”4 LMS Consulting’s petition separately defined Appellants

Personal Touch Intermediate Holding Corp. as “PT Intermediate” and Personal

Touch Holding Corp. as “Personal Touch Holding.” Id. As discussed below, LMS

Consulting did not plead—much less argue in opposition to Appellants’ special

appearances—that it contracted with Appellants. In fact, it pled the opposite—that

it contracted with the Texas Entities. Accordingly, it cannot assert on appeal its

new jurisdictional arguments.

      LMS Consulting’s argument in the trial court for personal jurisdiction over

Appellant Personal Touch Holding was as follows: “Defendant PT Holding is

subject to personal jurisdiction in this Court because it controls the internal

business operations and affairs of both Personal-Touch Dallas and Personal-Touch

San Antonio.” C.R. 331. Similarly, its argument for jurisdiction over Appellant PT

Intermediate was as follows: “Defendant PT Intermediate is subject to personal

jurisdiction in this Court because it is the alter ego of both Personal-Touch Dallas

and of Personal-Touch San Antonio.” Id. at 183.5




      4
                LMS Consulting also argued at the special appearance hearing that Personal-
Touch Home Care of New York was “Personal Touch Home Care, Inc.” R.R. 30:8-15; see also
id. at 35:8-12 (“THE COURT: And then you’re saying that Personal Touch-Home Care, Inc. is
actually the Personal-Touch Home Care of New York, Inc.? MR. MORA: Yes, Your Honor.”).
        5
                At the special appearance hearing, LMS Consulting’s argument focused
exclusively on Personal Touch Holding. It did not address in any substantive manner
jurisdiction over Appellant PT Intermediate. See generally R.R. 57:1–72:2.


                                            3
      LMS Consulting unambiguously alleged in its petition that the Texas

Entities—which it defined in the petition as “Personal-Touch”—were parties to

and breached the contracts at issue:

            “Personal-Touch entered into a series of contracts with LMSC
             whereby LMSC agreed to provide recruiting and/or staffing
             services. . . .” C.R. 274 (emphasis added).

            “Personal-Touch entered into and breached the following Contract
             Staffing Agreements (‘Staffing Agreements’) with LMSC. . . .” Id.
             (emphasis added).

            “Personal-Touch entered into the following written Recruiting Fee
             Agreements (‘Recruiting Agreements’) with LMSC. . . .” Id. at 276
             (emphasis added).

            “Under the terms of the Staffing Agreements, Personal-Touch was
             obligated to pay to LMSC an amount no less than the agreed rate
             times an agreed minimum number of units for each Contractor
             provided by LMSC under the Staffing Agreements. . . .” Id. (emphasis
             added).

            “Certain of the Staffing Agreements included a provision permitting
             Personal-Touch to hire the LMSC provided Contractor as an
             employee of Personal-Touch. . . .” Id. (emphasis added).

            “Under the Recruiting Agreements, Personal-Touch agreed to pay a
             recruiting fee to LMSC for each candidate. . . .” Id. at 277 (emphasis
             added).

            “Personal-Touch, however, have failed and refused to pay amounts
             owed to LMSC under the terms of the Recruiting Agreements.” Id.
             (emphasis added).

            “As a result of Personal Touches’ [sic] breaches of their contractual
             obligations to LMSC under the Staffing Agreements and the
             Recruiting Agreements, LMSC sent demand letters. . . .” Id.
             (emphasis added).


                                         4
       Thus, while LMS Consulting now argues that Appellants “failed to negate

jurisdiction” arising from Appellants’ alleged breach of the recruiting and staffing

contracts, the fact is that LMS Consulting never alleged that Appellants entered

into any such contracts with LMS Consulting.6 As set forth above, it specifically

pled to the contrary—that the Texas Entities entered into the subject contracts. As

such, LMS Consulting is now barred from arguing on appeal that jurisdiction exists

over Appellants because they entered into contracts with LMS Consulting.

       The Houston Court of Appeal’s decision in Coleman v. Klockner & Co. AG,

180 S.W.3d 577 (Tex. App—Houston [14th Dist.] 2005, no pet.), is instructive on

this point. In Coleman, the plaintiff argued for the first time on appeal that the

court had personal jurisdiction over the defendants based on an alter-ego theory.

The plaintiff asserted that it did not waive its new jurisdictional argument because

fairness and the lack of surprise supported a finding of no waiver. The appellate

court disagreed, noting that the plaintiff bears the burden to plead sufficient

grounds for personal jurisdiction. Id. at 582.              The court held that, “[w]hile

avoidance of surprise to the opposing party is one of the justifications requiring a

       6
               As courts have explained, a non-resident defendant does not have to “negate
‘every possible ground in the universe,’ but rather the acts in Texas alleged by the plaintiff to
support personal jurisdiction.” Woodward v. AFI, S.A., No. 05-94-01498, 1995 Tex. App. LEXIS
3540, at *25 (Tex. App.—Dallas July 31, 1995, no pet.) (quoting Scott v. Huey L. Cheramie,
Inc., 833 S.W.2d 240, 241 (Tex. App.—Houston [14th Dist.] 1992, no writ)) (emphasis added);
see also Siskind v. Villa Found. For Educ., Inc., 642 S.W.2d 434, 438 (Tex. 1982). As set forth
herein, LMS Consulting did not plead or allege the new bases for jurisdiction on which it now
relies. Accordingly, Appellants had no obligation to negate the new contentions. In any event,
Appellants’ opening brief negated LMS Consulting’s jurisdictional arguments.


                                               5
party to plead a theory relied upon, an equally important justification is to prevent

an appellate court from reversing an otherwise error-free judgment based on an

argument that was not raised in the trial court.” Id. at 587. The court, therefore,

refused to consider the plaintiff’s jurisdictional argument raised for the first time

on appeal. See id. The same result is appropriate here, where LMS Consulting is

relying on a jurisdictional argument it failed to assert in the trial court.

       LMS Consulting attempts to conceal this fatal flaw by citing a partial

allegation in its pleading that “Defendants entered into valid and enforceable

Staffing Agreements with LMSC” and “Defendants entered into valid and

enforceable Recruiting Agreements with LMSC.” Appellee Br. 17.                           But the

entirety of the allegations—and the portion LMS Consulting omits in its response

brief—state: “As set forth in detail above, Defendants entered into valid and

enforceable Staffing Agreements with LMSC” and “[a]s set forth in detail above,

Defendants entered into valid and enforceable Recruit Agreements with LMSC.”

C.R. 279.7 The qualifier “as set forth in detail above” is key because LMS


       7
                 The petition defined “Staffing Agreements” as the agreements between the Texas
Entities, i.e., Personal-Touch, and LMS Consulting. C.R. 274. Likewise, the petition defined the
“Recruiting Agreements” as the agreements between the Texas Entities and LMS Consulting. Id.
at 276. Thus, it is clear that LMS Consulting’s allegations regarding the breach of the Staffing
Agreements and the Recruiting Agreements relate to the Texas Entities (as parties to those
agreements), and not to Appellants (as non-parties to those contracts).
        LMS Consulting’s selective and incomplete quotes run throughout its briefing. For
example, in its Statement of Facts section, it contends that Appellants’ counsel stated that his
“client is a home health agency that operates in 11 states, . . . including Texas.” Appellee Br. 3.
The entirety of the statement in context, however, states that “when I say my client, Personal-


                                                6
Consulting clearly asserted above its general allegations and throughout its petition

that only the Texas Entities contracted with LMS Consulting, as discussed above.8

Thus, LMS Consulting’s petition clarifies that the Texas Entities (and not

Appellants) contracted with LMS Consulting. And Appellants do not have to

negate a basis for jurisdiction that LMS Consulting never asserted, namely that

Appellants were parties to contracts with LMS Consulting and breached those

contracts. See Scott, 833 S.W.2d at 241.

       Because LMS Consulting never raised these new jurisdictional arguments in

the trial court, its attempt to do so now should be rejected.

       B.     LMS Consulting never asserted that Appellants recruited
              employees in Texas or contracted with Texas residents.

       LMS Consulting’s next argument that Appellants “failed to negate the

allegation that they recruit employees in Texas and contracted with Texas

residents,” is also misguided. As discussed below, LMS Consulting never pled or

argued that Appellants recruited employees in Texas or contracted with Texas

residents.    Instead, it alleged that, pursuant to the staffing and recruiting




Touch—or PT Home Services of Dallas, Inc. and PT Home Services of San Antonio Inc. are two
Texas entities that operate in Texas and provide home healthcare services.” R.R. 5:1-6.
        8
                The Texas Supreme Court has warned against such generalized “group
pleadings.” See Low v. Henry, 221 S.W.3d 609, 615 (Tex. 2007) (“The fact that an allegation or
claim is alleged against several defendants—so called “group pleadings”—does not relieve the
party from meeting the express requirements of Chapter 10.”).


                                              7
agreements at issue, the Texas Entities recruited and contracted with Texas

residents.9 Accordingly, its new jurisdictional argument fails.

       A review of LMS Consulting’s petition reveals that LMS Consulting never

pled that Appellants recruited employees in Texas or contracted with Texas

residents. For example, it pled that three LMS Consulting contractors—Carla

Clark, Hollie Richard, and Angela Dickson—“began working directly for

Personal-Touch,” which LMS Consulting defined as the Texas Entities. C.R. 277.

It also never alleged or argued that Appellants, through an intermediary, recruited

Texas residents.      Instead, it alleged that the Texas Entities recruited Texas

residents for employment with the Texas Entities. Id. at 274. It remains that “a

foreign corporation is not subject to the jurisdiction of the forum state merely

because an affiliate conducts business in the forum state.” Woodward v. AFI, S.A.,

No. 05-94-01498, 1995 Tex. App. LEXIS 3540, at *22 (Tex. App.—Dallas July

31, 1995, no pet.). There simply is no allegation that Appellants recruited one

single employee in Texas or that they ever contracted with any Texas resident (or

did so through an intermediary).          Thus, LMS Consulting’s new jurisdictional

argument should be rejected.



       9
               In addition, LMS Consulting pled that Personal-Touch Home Care of N.Y.
“actively recruits Texas residents for employment inside and outside of Texas.” C.R. 271. LMS
Consulting never pled any such allegation against Appellants, although it now attempts to press
that argument for the first time on appeal.


                                              8
      In another attempt to divert attention from this fatal flaw, LMS Consulting

partially cites its “group pleading” allegation that “Defendants entered into valid

and enforceable Recruiting Agreements with LMSC.” Appellee Br. 17.              The

critical qualifying language of that allegation, however, is omitted. The complete

allegation states as follows: “As set forth in detail above, Defendants entered into

valid and enforceable Recruiting Agreements with LMSC.” The information “set

forth above” in the petition unambiguously states that only the Texas Entities

entered into contracts with LMS Consulting and allegedly breached those

contracts. C.R. 274–76. LMS Consulting’s petition unequivocally asserts that the

Texas Entities recruited employees in Texas for employment with the Texas

Entities and that the Texas Entities contracted with Texas residents. Id. It never

alleged that Appellants did so.

      In short, LMS Consulting never pled—much less argued in opposition to

Appellants’ special appearances—that it had contracts with Appellants or that

Appellants recruited employees in Texas or contracted with Texas residents.

Indeed, LMS Consulting pled the exact opposite—that the Texas Entities

contracted with LMS Consulting and that the Texas Entities recruited employees in

Texas and contracted with Texas residents. Because LMS Consulting waived its

new jurisdictional arguments, Appellants had no obligation to negate these new

theories. See Favour Leasing, LLC v. Mulligan, No. 05-13-01000, 2014 Tex. App.



                                         9
LEXIS 9180, at *16 (Tex. App.—Dallas Aug. 19, 2014, no pet.) (“The initial

burden is carried by the plaintiff, who must plead sufficient facts to bring a

nonresident defendant within the provisions of the Texas long-arm statute.”).

2.    LMS CONSULTING’S    JUDICIAL ADMISSIONS ESTABLISH THAT THERE IS NO
      BASIS FOR JURISDICTION OVER APPELLANTS.

      Even if LMS Consulting did not waive its new jurisdictional arguments

(which it did), its arguments are still barred by its judicial admissions. LMS

Consulting argues on appeal that Appellants failed to negate (1) jurisdiction arising

out of Appellants’ recruitment and staffing agreements with LMS Consulting; (2)

the allegation that Appellants recruited employees in Texas and contracted with

Texas residents; and (3) that Appellants committed a tort in Texas. As set forth

below, however, each of these arguments is barred by the doctrine of judicial

admissions, since LMS Consulting affirmatively pled facts contrary to the new

jurisdictional arguments asserted in its response brief. Indeed, contrary to its

burden “of pleading sufficient allegations to bring the non-resident defendant

within the personal jurisdiction of a Texas court,”10 LMS Consulting pled facts

conclusively disproving personal jurisdiction over Appellants.




      10
               Coleman v. Klockner & Co. AG, 180 S.W.3d 577, 582 (Tex. App.—Houston
[14th Dist.] 2005, no pet.).


                                         10
      A.     The doctrine of judicial admissions.

      “Admissions in trial pleadings are judicial admissions in the case in which

the pleadings are filed; the facts judicially admitted require no proof and preclude

the introduction of evidence to the contrary.” Rippey v. Chase Home Fin., LLC,

No. 02-13-00190, 2014 Tex. App. LEXIS 2911, at *11 (Tex. App.—Fort Worth

Mar. 13, 2014, no pet.) (quoting In re A.E.A., 406 S.W.3d 404, 410 (Tex. App.—

Fort Worth 2013, no pet.)). In fact, a “judicial admission is conclusive upon the

party making it, relieves the opposing party’s burden of proving the admitted fact,

and bars the admitting party from disputing it.” Id.; see also Hennigan v. I.P.

Petroleum Co., 858 S.W.2d 371, 372 (Tex. 1993). The policy behind this doctrine

is that “a party should not be allowed to prevail on its assertions after clearly

negating those assertions before a judicial tribunal.” Velco Chems., Inc. v. Polimeri

Europa Americas, Inc., No. 14-03-00395, 2004 Tex. App. LEXIS 8133, at *13

(Tex. App.—Fort Worth Sept. 7, 2004, no pet.).

      B.     LMS Consulting judicially admitted that the Texas Entities
             entered into the recruitment and staffing agreements at issue.

      As discussed above in Section 1(A), LMS Consulting unambiguously pled

that it entered into the relevant recruiting and staffing agreements with the Texas

Entities. See, e.g., C.R. 274–77.     It did not assert (nor could it assert) that




                                         11
Appellants entered into or breached the relevant agreements.11 As a result, LMS

Consulting judicially admitted that the Texas Entities, and not Appellants, entered

into the relevant contracts with LMS Consulting.               It cannot now argue that

Appellants entered into the relevant contracts. See In re A.E.A., 406 S.W.3d at 410

(“David’s allegation of changed circumstances constituted a judicial admission of

that fact and established that element of Ginger’s claim for modification, so Ginger

was not required to put on proof of this admitted fact.”).

       Thus, while LMS Consulting now argues that Appellants “failed to negate

jurisdiction” arising from Appellants’ alleged breach of recruiting and staffing

contracts, the fact is that it never pled that Appellants entered into any such

contracts with LMS Consulting. In fact, it judicially admitted contrary facts—that

the Texas Entities entered into the subject contracts. As such, LMS Consulting

itself has negated jurisdiction over Appellants through its judicial admissions. See

Horizon/CMS Healthcare Corp. v. Auld, 34 S.W.3d 877, 905 (Tex. 2000) (“A

judicial admission not only relieves an adversary from proof of the fact admitted,

but also bars the party himself from disputing it.”) (internal citations and

quotations omitted).



       11
                LMS Consulting cannot assert that Appellants entered into any of the contracts
made the basis of this dispute and appeal because there simply are no such contracts with
Appellants. If there were such contracts, LMS Consulting would have certainly asserted them in
its pleadings as well as its arguments at the special appearance hearing.


                                             12
      C.     LMS Consulting judicially admitted that the Texas Entities
             recruited employees in Texas and contracted with Texas
             residents.

      As discussed above in Section 1(B), LMS Consulting pled that the Texas

Entities recruited and contracted with Texas residents. See, e.g., C.R. 274–75, 277.

This judicial admission is fatal to LMS Consulting’s new position that Appellants

(not the Texas Entities) recruited employees in Texas and contracted with Texas

residents. Aside from failing to plead this allegation, LMS Consulting judicially

admitted that the Texas Entities (not Appellants) recruited employees for

employment with the Texas Entities and contracted with Texas residents for the

Texas Entities. Id. As such, it is now barred from changing its position on appeal.

See Horizon, 34 S.W.3d at 905.

      D.     LMS Consulting’s jurisdictional argument based on Appellants’
             alleged tortious interference fails.

      LMS Consulting asserts generally that Appellants “committed an intentional

tort” that “was purposefully directed toward Texas.” C.R. 272. Its petition also

alleges that Appellants interfered with certain contracts “by soliciting those and

other individuals to terminate their contract(s) with LMSC.” Id. at 280. Its petition

then states in a conclusory manner that such actions were “directed at residents of

Texas and directed toward Texas.” Id.

      The Dallas Court of Appeal’s decision in Favour Leasing, LLC v. Mulligan,

No. 05-13-01000, 2014 Tex. App. LEXIS 9180, at *22 (Tex. App.—Dallas Aug.


                                         13
19, 2014, no pet.), is instructive on the lack of jurisdiction in this case. In Favour,

the plaintiff argued that the non-resident defendants committed a tort in Texas by

receiving fraudulently transferred assets and by participating in a scheme to hide

assets from the plaintiff. In determining that the allegations failed to adequately

assert jurisdiction over the non-resident defendants, the court found it outcome

determinative that the plaintiff “did not assert that any alleged tortious actions

occurred in Texas.” Id. at *22 (emphasis added).

       Similar to the pleading in Favour, LMS Consulting never asserted that any

alleged tortious conduct occurred in Texas.               Instead, it vaguely asserted that

Appellants’ alleged misconduct was “directed” at Texas. This is insufficient to

confer jurisdiction since “a nonresident directing a tort at Texas from afar is

insufficient to confer specific jurisdiction.” Moncrief Oil Int’l, Inc. v. OAO

Gazprom, 414 S.W.3d 142, 157 (Tex. 2013). Indeed, LMS Consulting appears to

concede that the alleged tortious conduct actually occurred through Appellants’

headquarters in New York.12 As such, the allegations against Appellants for

tortious interference fail to warrant the exercise of personal jurisdiction. See id.




       12
              See, e.g., Appellee Br. 3 (“Appellants . . . are all part of a family of corporations
based out of Bayside, New York. . . .”); id. at 13 (“The New York personnel of Appellants
prepared a referral form specifically for LMS Consulting’s use in Texas.”); id. (“[D]ecisions
about whether to pay or not to pay LMS came from Dr. Balk and the Appellants in New York.”).


                                                14
(confirming grant of special appearance to non-resident defendant in tortious

interference case since alleged interference occurred outside of Texas).13

       Moreover, even when a plaintiff alleges that Texas residents were involved

in the alleged tort and that the resulting injury would be suffered in Texas, “the

plaintiff must show the defendant has established minimum contacts with the state

and the exercise of jurisdiction comports with traditional notions of fair play and

substantial justice.” Favour, 2014 Tex. App. LEXIS 9180, at *22. And since “a

showing of foreseeability of harm in the forum state is insufficient” to establish

personal jurisdiction, “the plaintiff must show a substantial connection between the

contacts and the operative facts of the litigation.” Id. As discussed below, even

assuming arguendo that Appellants committed a tort in Texas (which they did not),

LMS Consulting cannot establish that Appellants have sufficient minimum

contacts with Texas to warrant the exercise of personal jurisdiction.

3.     THE EXERCISE OF JURISDICTION OVER APPELLANTS DOES NOT COMPORT
       WITH FAIR PLAY AND SUBSTANTIAL JUSTICE.

       In its response brief, LMS Consulting gives short shrift to the minimum

contacts analysis and skips straight to the argument that the exercise of personal

jurisdiction over Appellants comports with fair play and substantial justice. But

       13
               The Texas Supreme Court recently warned that although “allegations that a tort
was committed in Texas satisfy our long-arm statute, such allegations do not necessarily satisfy
the U.S. Constitution.” Moncrief, 414 S.W.3d at 149. Here, LMS Consulting never even alleged
that the tortious interference was committed in Texas. Instead, it indicated that any such
interference occurred in New York.


                                              15
courts have recognized that the “fair play and substantial justice inquiry is separate

and distinct from the minimum contacts issue.” Woodward v. AFI, S.A., No. 05-94-

01498, 1995 Tex. App. LEXIS 3540, at *21 (Tex. App.—Dallas July 31, 1995, no

pet.). And as Appellants established in their opening brief, they lack sufficient

minimum contacts with Texas to support personal jurisdiction—a fact LMS

Consulting simply glosses over. The Fifth Circuit has correctly noted: “The Lone

Star of Texas may shine brightly throughout the world, but its long arm is not

judicially all encompassing.” Hargrave v. Fibreboard Corp., 710 F.2d 1154, 1161

(5th Cir. 1983).

      Aside from lacking sufficient minimum contacts to support personal

jurisdiction, the exercise of jurisdiction over Appellants would also offend

traditional notions of fair play and substantial justice. As Appellants highlighted in

their opening brief, it would be tremendously burdensome for the two New York-

based Appellants to defend themselves in Texas, and LMS Consulting has already

sued the actual parties to the contracts at issue—the Texas Entities. Thus, there is

no reason to force Appellants to defend themselves in a contract dispute where

they are not even parties to the contracts at issue.       And to the extent LMS

Consulting wishes to purse a claim against Appellants for allegedly tortuously

interfering with certain contracts, it may attempt to do so in New York.




                                         16
4.    LMS CONSULTING’S VEIL-PIERCING THEORY OF JURISDICTION FAILS.

      LMS Consulting’s singular basis for jurisdiction over Appellants throughout

this case has been a veil-piercing theory. See e.g., C.R. 272–73; R.R. 60:3-11; id.

61:13-17. Appellants’ opening brief firmly established that LMS Consulting failed

to carry its heavy burden to establish its veil-piercing theory.          Indeed, Texas

jurisprudence dictates the outcome in this case:

            “A merely formal corporate separation may be sufficient to prevent
             imputation of contacts if the separation is real.”14

            “A subsidiary will not be regarded as the alter ego of its parent
             company merely because of stock ownership, a duplication of some or
             all of the directors or officers, or an exercise of control that stock
             ownership gives stockholders.”15

            “Commonality of officers alone is not enough to establish an alter ego
             relationship.”16

            “Evidence that the two corporations office in the same building does
             not invoke the alter ego doctrine.”17

            “A showing that the two corporations are related in some ways is not
             enough. The relationship must be so close that the two are
             interchangeable.”18




      14
              Woodward, 1995 Tex. App. LEXIS 3540, at *22 (citing 3-D Elec. Co., Inc. v.
Barnett Constr. Co., 706 S.W.2d 135, 139 (Tex. App.—Dallas 1986, writ ref’d n.r.e.)).
       15
              Id. (citing McFee v. Chevron Int’l Oil Co., 753 S.W.2d 469, 471 (Tex. App.—
Houston [1st Dist.] 1988, no writ)).
       16
              Id. at *24 (citing 3-D Elec., 706 S.W.2d at 139).
       17
              Id. (citing 3-D Elec., 706 S.W.2d at 140).
       18
              Id. (citing Equinox Enter. v. Associated Media, 730 S.W.2d 872, 876-77 (Tex.
App.—Dallas 1987, no writ)).


                                           17
            “Whether two related entities share a common name . . . does not
             affect whether each has sufficient contacts with the forum for
             jurisdictional purposes.”19

            “Appropriate parental involvement includes monitoring the
             subsidiary’s performance, supervision of the subsidiary’s finance and
             capital budget decisions, and articulation of general policies.”20

            “[A] parent company’s offering a stock option plan to a subsidiary’s
             employees is acceptable under IRS regulations and is not evidence of
             abnormal control over the subsidiary.”21

            “[A] website that is merely informational, presenting only ‘passive
             advertising,’ generally will not support the exercise of personal
             jurisdiction.”22

            The Texas Supreme Court refused to pierce the corporate veil for
             jurisdictional purposes even where “Province and [Minden] have at
             least one common employee and that Province pays certain [Minden]
             employees, although the salaries are intercompany payables. The
             names of the two companies are similar, and Province employees
             provide various services to assist [Minden] in its operations. Province
             exercises control over [Minden]’s revenues and expenditures and
             oversees [Minden]’s operations, financial performance, and
             completion of strategic initiatives. Further, Province audits
             [Minden]’s financial goals to determine if [Minden] will be able to
             meet these goals.”23

            “As parent and subsidiary, Continental Grain and ContiCarriers
             maintain significant ties. ContiCarriers received its initial capital from
             Continental Grain. The corporations share office headquarters in
             Chicago, Illinois. Their salaried employees have the same benefits and
             are paid by the same payroll system. Employees for Continental Grain

      19
           PHC-Minden v. Kimberly-Clark Corp., 235 S.W.3d 163, 175 (Tex. 2007).
      20
           Id. at 176 (internal citations and quotations omitted).
     21
           Id. (internal citations and quotations omitted).
     22
           Riverside Exports Inc. v. B.R. Crane & Equip., LLC, 362 S.W.3d 649, 655 (Tex.
App.—Houston [14th Dist.] 2011, pet. denied).
     23
           PHC-Minden, 235 S.W.3d at 175-76 (Tex. 2007).


                                          18
             provide legal, accounting and other services to ContiCarriers.
             ContiCarriers and Continental Grain’s North American Grain
             Division (‘NAGD’) share a bank account and two of ContiCarriers’
             officers are also officers of NAGD. Further, approximately 50 percent
             of ContiCarriers’ revenue comes from providing shipping services to
             Continental Grain.        Despite these connections, we find that
             Continental Grain did not disregard corporate formalities or
             exercise such control and dominance over ContiCarriers as to make
             alter ego jurisdiction proper.”24

      These cases firmly establish that LMS Consulting has failed to meet its

heavy burden to pierce the corporate veil for jurisdictional purposes.

                          CONCLUSION AND PRAYER

      For the reasons set forth herein and in their special appearances, Appellants

are entitled to dismissal for lack of personal jurisdiction.               The record

unambiguously reflects that the trial court erred when it denied Appellants’ special

appearances. Accordingly, Appellants respectfully request this Court reverse the

trial court’s denial of Appellants’ special appearances, dismiss Appellants from

this case, and for all other relief to which they may be entitled.




      24
              Conner v. Conticarriers & Terminals, Inc., 944 S.W.2d 405, 419 (Tex. App.—
Houston [14th Dist.] 1997, no writ) (emphasis added).


                                          19
 Respectfully submitted,

 JACKSON WALKER L.L.P.

 By: /s/ Monte F. James
     Monte F. James
     State Bar No. 10547520
     mjames@jw.com
     Joshua A. Romero
     State Bar No. 24047654
     jromero@jw.com
     Kimberly A. Gdula
     State Bar No. 24052209
     kgdula@jw.com

     100 Congress Avenue, Suite 1100
     Austin, Texas 78701
     (512) 236-2000
     (512) 236-2002 – Fax

 ATTORNEYS FOR APPELLANTS




20
                 RULE 9.4 CERTIFICATE OF COMPLIANCE

       This document complies with the typeface requirements of TEX. R. APP. P.
9.4(e) because it has been prepared in a conventional typeface no smaller than 14-
point for text and 12-point for footnotes. This document also complies with the
word-count limitations of TEX. R. APP. P. 9.4(i), if applicable, because it contains
4,766 words, excluding any parts exempted by TEX. R. APP. P. 9.4(i)(1).


                                        /s/ Monte F. James
                                        Monte F. James


                          CERTIFICATE OF SERVICE

       This is to certify that on this 24th day of March, 2015, a true and correct
copy of the above and foregoing document was electronically mailed to the parties
registered or otherwise entitled to receive electronic notices in this case pursuant to
the Electronic Filing Procedures in this Court and/or via certified mail, return
receipt requested upon:

        Alejandro Mora
        7000 North MoPac Expressway
        Suite 200
        Austin, Texas 78731
        alejandro@morahealthcarelaw.com

        David Dunham
        Taylor Dunham & Rodriguez LLP
        301 Congress Ave., Suite 1050
        Austin, Texas 78701
        ddunham@taylordunham.com


                                        /s/ Monte F. James
                                        Monte F. James




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