Reversed and Rendered and Opinion filed August 23, 2018.




                                      In The

                    Fourteenth Court of Appeals

                              NO. 14-18-00002-CV

  MOMENTUM ENGINEERING, LLC, JAMES C. LARSEN AND FRAN
                  LARSEN, Appellants

                                        V.

                      LEE LAVERNE TABLER, Appellee

                    On Appeal from the 55th District Court
                            Harris County, Texas
                      Trial Court Cause No. 2016-39375

                                 OPINION


      In this appeal from the denial of a special appearance, we are asked to decide
whether a foreign limited liability company is subject to general jurisdiction in a
Texas court based on the company’s history of purchasing supplies from Texas
vendors for shipment overseas and on the Texas residency of a member of the
company. Because these contacts are insufficient to support general jurisdiction and
no evidence supports the imputation of the individual co-defendants’ contacts to the
company, we reverse the denial of the special appearance and we render judgment
granting the special appearance, dismissing the claims against the company, and
severing those claims from the remainder of the case.

                                  I. BACKGROUND

      Appellant Lee Laverne Tabler is the assignee of a $1.5 million promissory
note and addendum signed by Dubai limited liability company Momentum
Engineering, L.L.C.       Alleging that the debt had not been paid, Tabler sued
Momentum, its managing director James Larsen, Larsen’s wife, and the promissory
note’s guarantor Yarmouth Holdings, Ltd. As the basis for exercising personal
jurisdiction over Momentum, Tabler alleged that the Larsens are Houston residents
and that they used Momentum as a sham to perpetrate fraud or that Momentum was
the Larsens’ alter ego.

      Momentum filed a special appearance supported by Larsen’s affidavit
attesting that Momentum is not a resident of Texas but was organized in Dubai and
has its headquarters there. The trial court sustained the special appearance and
dismissed the claims against Momentum.

      Months later, Tabler amended his pleadings but again asserted claims against
Momentum based on the same jurisdictional bases. At the same time, Tabler filed a
motion for reconsideration of the special appearance and for sanctions, alleging that
Larsen had concealed evidence of Momentum’s Texas contacts and had falsely
represented that the company is a corporation rather than a limited liability company.
The trial court granted the motion, vacated its order sustaining Momentum’s special
appearance, and instead denied the special appearance.




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                                 II. GOVERNING LAW

      The state long-arm statute “extends Texas courts’ personal jurisdiction ‘as far
as the federal constitutional requirements of due process will permit.’” M & F
Worldwide Corp. v. Pepsi-Cola Metro. Bottling Co., 512 S.W.3d 878, 885 (Tex.
2017) (quoting BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 795 (Tex.
2002)).    Federal due-process requirements are satisfied if (a) the nonresident
defendant has “minimum contacts” with the forum state, and (b) the court’s exercise
of jurisdiction “does not offend ‘traditional notions of fair play and substantial
justice.’” Id. (quoting Walden v. Fiore, –U.S.–, 134 S. Ct. 1115, 1121 (2014)).

      The principle underlying minimum-contacts analysis is that “[t]he defendant’s
activities, whether they consist of direct acts within Texas or conduct outside Texas,
must justify a conclusion that the defendant could reasonably anticipate being called
into a Texas court.” M & F Worldwide, 512 S.W.3d at 886 (quoting Retamco
Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 338 (Tex. 2009)). A
defendant has established minimum contacts with the forum state if it has
“purposefully avail[ed] itself of the privilege of conducting activities within the
forum state, thus invoking the benefits and protections of its laws.” Id. (quoting
Moncrief Oil Int’l, Inc. v. OAO Gazprom, 414 S.W.3d 142, 150 (Tex. 2013)). When
determining whether the defendant has purposefully availed itself of the privilege of
conducting activities in Texas, three rules are paramount. First, only the defendant’s
contacts are relevant, not the unilateral activity of someone else. See id. (citing
Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 785 (Tex. 2005)).
Second, the defendant’s acts must be purposeful and not random or fortuitous. See
id. And third, the defendant “must seek some benefit, advantage, or profit by
‘availing’ itself of the jurisdiction” such that it impliedly consents to suit in the forum
state. Id. (quoting Michiana, 168 S.W.3d at 785).

                                            3
      The minimum contacts sufficient to establish personal jurisdiction vary
depending on whether general jurisdiction or specific jurisdiction is alleged. See
Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 658 (Tex. 2010) (pointing out
that the burden borne by a defendant who files a special appearance is to “negate all
bases of personal jurisdiction alleged by the plaintiff”).        Here, only general
jurisdiction is at issue. A court may exercise general jurisdiction over a nonresident
defendant if the defendant’s contacts with the forum state “are so ‘continuous and
systematic’ as to render [it] essentially at home in the forum State.” M & F
Worldwide, 512 S.W.3d at 885 (quoting Goodyear Dunlop Tires Operations, SA v.
Brown, 564 U.S. 915, 919 (2011)) (alteration in original).

                             III. STANDARD OF REVIEW

      Whether a court can exercise personal jurisdiction over a nonresident
defendant is a question of law, which we review de novo. Kelly, 301 S.W.3d at 657.
If the trial court must resolve a factual dispute to decide the jurisdictional issue but
does not issue findings of fact, then all facts necessary to support the judgment and
supported by the evidence are implied. BMC Software, 83 S.W.3d at 795. If the
appellate record includes the reporter’s and clerk’s records, then the express or
implied findings may be challenged and reviewed for legal and factual sufficiency.
Id.

      In its first issue, Momentum argues that we should review any implied factual
findings de novo because there was no evidentiary hearing on its special appearance;
however, Momentum identifies no implied jurisdictional factual findings that
require review. Momentum admits both to its status as a foreign limited liability
company and to the Texas contacts that Tabler alleged in his motion for
reconsideration.   Although Tabler sought to impute the Larsens’ contacts to
Momentum with allegations of alter ego, sham to perpetrate a fraud, and evasion of

                                           4
the Larsens’ legal obligations, he offered no evidence in support of those allegations;
thus, there was no conflicting evidence requiring a factual finding on those issues.
The parties disagree about whether Momentum was intentionally deceptive
regarding its contacts, but in this interlocutory appeal, we have jurisdiction only to
determine whether the trial court erred in denying Momentum’s special appearance.
See TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(7) (West Supp. 2017).
Regarding that issue, we must determine whether the undisputed jurisdictional facts
support the trial court’s denial of Momentum’s special appearance. Where the
jurisdictional facts are undisputed, the existence of personal jurisdiction is a question
of law which we review de novo. Old Republic Nat’l Title Ins. Co. v. Bell, 549
S.W.3d 550, 558 (Tex. 2018) (citing Tex. Dep’t of Parks & Wildlife v. Miranda, 133
S.W.3d 217, 226 (Tex. 2004)). Momentum’s first issue therefore presents nothing
for our review.

                           IV. MOMENTUM’S CONTACTS

      Tabler does not dispute that Momentum was organized in Dubai and has its
headquarters and principal place of business in Dubai. He instead alleges that two
categories of contacts that Momentum had with Texas are sufficient to support the
trial court’s exercise of general jurisdiction, and he additionally alleged several bases
for imputing the Larsens’ contacts to the company. First, Tabler contends that
Momentum’s history of purchasing goods and freight-shipping services from Texas
companies, and Larsen’s meeting in Houston to find out if a Texas company was
interested in selling assets abroad, are so continuous and systematic as to render
Momentum “at home” in Texas. Second, Tabler maintains that Momentum is a
citizen of Texas because Larsen, a member of the limited liability company, resides
in Texas. Third, Tabler alleged that Momentum was the Larsens’ alter ego, or was



                                           5
used a sham to perpetrate a fraud, or was used by the Larsens to evade their legal
obligations to him.

A.    Momentum’s Purchases and Negotiations

      Momentum purchased parts, supplies, and equipment—including a $6 million
oil rig—from various companies in Houston and arranged for another Houston
company to ship the material overseas. Momentum also had a meeting in Houston
with a representative of Parker Drilling to find out if Parker was interested in
disposing of its assets in the Caspian Sea. The negotiations for the purchase took
place in Switzerland, and were unsuccessful.

      These contacts do not support the trial court’s ruling. It is well-established
that merely purchasing material from the forum state for use elsewhere is an
insufficient basis for finding general personal jurisdiction. Goodyear Dunlop Tires,
564 U.S. at 929 (“Helicopteros concluded that ‘mere purchases [made in the forum
State], even if occurring at regular intervals, are not enough to warrant a State’s
assertion of [general] jurisdiction over a nonresident corporation in a cause of action
not related to those purchase transactions.’” (quoting Helicopteros Nacionales de
Colombia, S.A. v. Hall, 466 U.S. 408, 418 (1984)); Helicopteros Nacionales, 466
U.S. at 410–11, 418–19 (defendant’s purchase of 80% of its helicopter fleet and
Texas visits by company personnel to negotiate that contract and for training and
technical consultations did not support general jurisdiction). The meeting in Texas
about purchasing assets located in the Caspian Sea does not even rise to the level of
a purchase.

      We therefore turn to the next basis Tabler alleges for jurisdiction.




                                          6
B.     Citizenship of a Member of the Limited Liability Company

       Tabler next argues that the trial court has personal jurisdiction over
Momentum because Momentum is a limited liability company with a member who
resides in Houston.1 In support of this position, Tabler relies on Americold Realty
Trust v. Conagra Foods, Inc., –U.S.–, 136 S. Ct. 1012, 1015 (2016), in which the
Supreme Court of the United States held that, for the purpose of federal diversity
jurisdiction, an unincorporated association is a citizen of every place in which a
member is a citizen. Because that principle applies to a limited liability company
only when identifying its citizenship for the purpose of diversity jurisdiction in a
federal court, the case does not support the trial court’s ruling.

       The question of whether a federal court has diversity jurisdiction over a given
case is a distinct inquiry from whether a court has personal jurisdiction over a
defendant. See Carruth v. Michot, No. A-15-CA-189-SS, 2015 WL 6506550, at *6–
7 (W.D. Tex. Oct. 26, 2015) (rejecting the argument that a member’s citizenship is
sufficient to establish personal jurisdiction over a limited liability company). The
requirements of federal diversity jurisdiction flow from Article III of the
Constitution. See U.S. CONST. art. III, § 2, cl. 1; Ins. Corp. of Ir., Ltd. v. Compagnie
des Bauxites de Guinee, 456 U.S. 694, 701 (1982). Such restrictions on a federal
court’s subject-matter jurisdiction are the result of the limited nature of the federal
judiciary’s powers. See Ins. Corp. of Ir., 456 U.S. at 702. The requirements
applicable to personal jurisdiction, on the other hand, flow from the Due Process
Clause and protect individual liberty interests. Id. Thus, a federal court can have
diversity jurisdiction over a case and yet lack personal jurisdiction over the foreign

       1
          We presume that the law of the United Arab Emirates regarding limited liability
companies is the same as our federal and state law, and thus, a limited liability company organized
under the law of Dubai is similar to one organized in Texas. See Brown v. Lanier Worldwide, Inc.,
124 S.W.3d 883, 894 n.20 (Tex. App.—Houston [14th Dist.] 2004, no pet.).

                                                7
defendant.    Cf. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 464 (1985)
(analyzing personal jurisdiction despite the existence of diversity jurisdiction); Trois
v. Apple Tree Auction Ctr., Inc., 882 F.3d 485, 487 (5th Cir. 2018) (federal district
court with diversity jurisdiction over the case had personal jurisdiction over only one
of plaintiff’s two claims).

      Tabler’s reliance on Americold is misplaced because that case concerned only
the determination of an unincorporated association’s citizenship for the purpose of
establishing diversity jurisdiction in a federal court. See Americold, 136 S. Ct. at
1016. It is true that certain specific factors may be sufficient both to establish
citizenship for diversity-jurisdiction purposes and to establish general personal
jurisdiction. For example, for the purpose of diversity jurisdiction, a corporation is
a citizen of the place in which it was incorporated and the place in which it has its
principal place of business, see 26 U.S.C. § 1332(c), and the place of incorporation
and principal place of business also are the “paradig[m] . . . bases for general
jurisdiction.” Daimler AG v. Bauman, 571 U.S. 117, 137 (2014) (quoting Lea
Brilmayer et al., A General Look at General Jurisdiction, 66 TEX. L. REV. 721, 735
(1988) (alteration in original)). But Tabler cites no authority, nor have we found
any, holding that a limited liability company is subject to general personal
jurisdiction in every State in which a member is a citizen. The rule instead is that
limited liability companies are treated as partnerships for the purpose of federal




                                           8
diversity jurisdiction,2 but they are treated as corporations for the purpose of general
personal jurisdiction.3

       We conclude that the citizenship of a limited liability company’s members is
not a factor to be considered, for when evaluating personal jurisdiction, we consider
only the defendant’s contacts, and a limited liability company is a distinct legal entity
from its members. Sherman v. Boston, 486 S.W.3d 88, 94 (Tex. App.—Houston
[14th Dist.] 2016, pet. denied) (citing Geis v. Colina Del Rio, L.P., 362 S.W.3d 100,
109 (Tex. App.—San Antonio 2011, pet. denied)).

C.     Sham to Perpetrate a Fraud or Alter Ego

       Tabler additionally sought to impute the Larsens’ Texas contacts to
Momentum by alleging that Momentum was the Larsens’ alter ego and that they
used Momentum as a sham to perpetrate a fraud. Tabler similarly asserted that the
Larsens used Momentum as a means to evade their legal obligations to him.

       These claims fall within an exception to the general rule that the party
contesting jurisdiction bears the burden to negate the jurisdictional allegations
against it. See BMC Software, 83 S.W.3d at 798. Because the law presumes that a
limited liability company is a distinct legal entity, a party wishing to impute
another’s jurisdictional contacts to the company bears the burden to prove the
alleged bases for doing so. See ACS Partners, LLC v. Gross, No. 01-11-00245-CV,

       2
         See, e.g., Lompe v. Sunridge Partners, LLC, 818 F.3d 1041, 1046–47 (10th Cir. 2016);
Lincoln Benefit Life Co. v. AEI Life, LLC, 800 F.3d 99, 104–05 (3d Cir. 2015); White Pearl
Inversiones S.A. (Uru.) v. Cemusa, Inc., 647 F.3d 684, 686 (7th Cir. 2011); Harvey v. Grey Wolf
Drilling Co., 542 F.3d 1077, 1080 (5th Cir. 2008); Johnson v. Columbia Props. Anchorage, LP,
437 F.3d 894, 899 (9th Cir. 2006); Rolling Greens MHP, L.P. v. Comcast SCH Holdings L.L.C.,
374 F.3d 1020, 1022 (11th Cir. 2004); Handelsman v. Bedford Vill. Assocs. Ltd. P’ship, 213 F.3d
48, 51–52 (2d Cir. 2000).
       3
        See Daimler AG, 571 U.S. at 139, 134 S. Ct. at 138 (evaluating general jurisdiction by
determining, for both a corporation and a limited liability company, whether the business was
“incorporated” in the forum state or had its principal place of business there).

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2012 WL 1655547, at *3 (Tex. App.—Houston [1st Dist.] May 4, 2012, no pet.)
(mem. op.).

      As a factual basis for disregarding the company’s separate nature, Tabler
alleged that the Larsens siphoned off corporate assets to avoid corporate debt, then
formed new entities to conduct the same business. He claimed that the company’s
property and the Larsens’ individual property were not kept separate; that the
Larsens exercised financial control over Momentum; that they commingled funds;
that they diverted company profits for their personal use; that they represented they
would provide financial backing to the company; that the company was inadequately
capitalized; and that the money Momentum borrowed was used to pay the Larsens’
personal debts.

      Tabler produced no evidence in support of any of these allegations. Because
he failed to meet his burden regarding his claims of alter ego, sham to perpetrate a
fraud, and evasion of the Larsens’ legal obligations, the Larsens’ Texas contacts
cannot be imputed to Momentum.

      We conclude that Momentum’s contacts are insufficient as a matter of law to
support the exercise of general personal jurisdiction. We sustain Momentum’s
second issue.

                                 V. CONCLUSION

      A foreign limited liability company is not subject to general jurisdiction in a
Texas court based on (a) the company’s history of purchasing equipment and
supplies from Texas vendors, having a Texas company ship the materials overseas,
and having a meeting in Texas about purchasing assets abroad; or (b) the Texas
citizenship of a member. Because Momentum’s contacts are insufficient to support
personal jurisdiction, and no evidence supports the imputation of the Larsens’ Texas


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contacts to the company, we need not consider whether the exercise of personal
jurisdiction would comport with traditional notions of fair play and substantial
justice. We reverse the trial court’s denial of Momentum’s special appearance, and
we render judgment dismissing Tabler’s claims against Momentum and ordering
those claims severed from the remainder of the case.




                                      /s/    Tracy Christopher
                                             Justice



Panel consists of Justices Boyce, Christopher, and Busby.




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