# John T. Preston and C Change Investments, LLC v. Emjo Investments, Ltd. and H.J. Von Der Goltz > Texas Court of Appeals, 1st District (Houston) · June 12, 2015 URL: https://www.frixlaw.com/law-library/cases/4057489 ## Case - **Court:** Texas Court of Appeals, 1st District (Houston) - **Decided:** June 12, 2015 - **Precedential status:** Published - **Opinion:** Opinion - **Cited by:** 0 later opinions in the Frix Law Library ## Citator (automated) - No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases. - Full citator and citing cases: https://www.frixlaw.com/law-library/cases/4057489 ## How later opinions describe it (automated extraction) - holding that conspiracy to defraud claim was owned by bondholders, not estate - applying Texas choice of law rules and concluding that Nevada law governs internal affairs of corporation incorporated in Nevada - holding that there was ''strong indication that the Nevada Supreme Court would find fiduciary obligations between shareholders in a corporation such as FFUSA operated by shareholder· djrectors'' ## Opinion text ACCEPTED 01-15-00390-CV FIRST COURT OF APPEALS HOUSTON, TEXAS 6/12/2015 9:25:40 PM CHRISTOPHER PRINE CLERK No. 01-15-00390-CV _______________________________________________________________ FILED IN 1st COURT OF APPEALS IN THE FIRST COURT OF APPEALS HOUSTON, TEXAS HOUSTON, TEXAS 6/12/2015 9:25:40 PM _______________________________________________________________ CHRISTOPHER A. PRINE Clerk JOHN T. PRESTON and C CHANGE INVESTMENTS, LLC, Appellants, v. EMJO INVESTMENTS, LTD. and H.J. VON DER GOLTZ, Appellees. _______________________________________________________________ On Appeal from the 215th District Court of Harris County, Texas, Hon. Elaine H. Palmer, presiding Trial Court Cause No. 2011-44058 ____________________________________________________________________ BRIEF OF APPELLANT JOHN T. PRESTON ____________________________________________________________________ Jane Langdell Robinson Texas Bar No. 24062970 Monica Uddin Texas Bar No. 24075195 Jamie A. Aycock Texas Bar No. 24050241 AHMAD, ZAVITSANOS, ANAIPAKOS, ALAVI & MENSING 1221 McKinney Street, Ste. 3460 Houston, Texas 77010 Telephone: (713) 655-1101 Facsimile: (713) 655-0062 jrobinson@azalaw.com muddin@azalaw.com Counsel for Appellant Oral Argument Requested No. 01-14-00703-CV JOHN T. PRESTON and C CHANGE INVESTMENTS, LLC, Appellant, v. EMJO INVESTMENTS, LTD. and H.J. VON DER GOLTZ, Appellees. IDENTITY OF PARTIES AND COUNSEL Appellants: John T. Preston and C Change Investments, LLC Trial counsel for Sean Gorman, Texas Bar No. 08218100 appellants: sgorman@azalaw.com Jamie A. Aycock, Texas Bar No. 24050241 jamieaycock@azalaw.com AHMAD, ZAVITSANOS, ANAIPAKOS, ALAVI & MENSING 1221 McKinney St., Ste. 3460, Houston, Texas 77010 Telephone: (713) 655-1101; Facsimile: (713) 655-0062 Appellate counsel Jane Langdell Robinson, Texas Bar No. 24062970 for appellants: jrobinson@azalaw.com Monica Uddin, Texas Bar No. 24075195 muddin@azalaw.com AHMAD, ZAVITSANOS, ANAIPAKOS, ALAVI & MENSING 1221 McKinney St., Ste. 3460, Houston, Texas 77010 Telephone: (713) 655-1101; Facsimile: (713) 655-0062 2 Appellees: Emjo Investments, Ltd. H.J. von der Goltz Trial counsel for F. Eric Fryar, Texas Bar No. 07495770 appellees: eric@fryarlawfirm.com Matthew Buschi, Texas Bar No. 24064982 mbuschi@fryarlawfirm.com Christina Richardson, Texas Bar No. 24070495 crichardson@fryarlawfirm.com Fryar Law Firm, P.C. 1001 Texas Ave., 14th Floor, Houston, Texas 77002 Telephone: (281) 715-6396; Facsimile: (281) 715-6397 Trial and appellate Kelley M. Keller, Texas Bar No. 11198240 counsel for kkeller@ellison-keller.com appellees: Tracey N. Ellison, Texas Bar No. 15054720 tellison@ellison-keller.com ELLISON KELLER 5120 Woodway Dr., Ste. 6019, Houston, Texas 77056 Telephone: 713-266-8200; Fax: 713-266-8201 3 TABLE OF CONTENTS IDENTITY OF PARTIES AND COUNSEL .........................................................2 TABLE OF CONTENTS ........................................................................................4 INDEX OF AUTHORITIES ...................................................................................7 INDEX OF RECORD REFERENCES ................................................................10 STATEMENT OF THE CASE .............................................................................11 STATEMENT ON ORAL ARGUMENT ............................................................12 ISSUE PRESENTED .............................................................................................12 I.  INTRODUCTION ..................................................................................13 II.  STATEMENT OF FACTS ....................................................................14 A.    The lawsuit arises out of a failed coal gasification startup. .....................14 B.    The bankruptcy court dismisses all but two causes of action. .................16 C.    Only two claims remain against Preston. .................................................18 D.    Appellees do not allege a single act taken in Texas by Preston, much less any act in Texas that is connected to their surviving misrepresentation claims........................................................................................................18 E.    Preston does no individual business and maintains no presence in Texas. .......................................................................................................23 1.   Preston does not do business in Texas in his individual capacity. ....23 2.   Preston does not maintain any presence in Texas..............................25 F.    After two years and jurisdictional discovery, Appellees fail to allege a single act by Preston in Texas that gives rise to their surviving claims, and fail to show systematic and continuous Texas contacts that render Preston “at home” in Texas. .....................................................................25 III.  SUMMARY OF THE ARGUMENT ....................................................30 IV.  STANDARD OF REVIEW ...................................................................33 A.    De novo review applies. ...........................................................................33 B.    Jurisdiction over nonresidents requires allegations or proof of purposeful availment. .................................................................................................34 4 1. The plaintiff bears the initial burden to plead allegations showing jurisdiction over the defendant. ........................................................34 2.   The long-arm statute is limited by due process considerations. ........34 3. When the plaintiff fails to meet its initial burden of alleging sufficient purposeful minimum contacts, the fact that the defendant is a nonresident defeats personal jurisdiction. ........................................35 V.  ARGUMENT ..........................................................................................38 A.    Appellees failed to meet their initial burden of pleading facts to show that Preston is subject to personal jurisdiction in Texas. ................................38 B.    Because Appellees do not allege that any of Preston’s alleged contacts with Texas give rise the surviving claims and no evidence suggests any link, there is no specific jurisdiction as a matter of law...........................40 1. Specific jurisdiction requires that the alleged jurisdictional contacts give rise to the plaintiff’s alleged injury...........................................42 2.  There are no allegations in the intervenors’ petition that could give rise to specific jurisdiction over Preston...........................................44 3.  There are no allegations or evidence in Appellees’ special appearance briefing that could give rise to specific jurisdiction over Preston. .............................................................................................45 4.  Appellees’ claim that Preston “could reasonably foresee that NC12 and its shareholders and investors would suffer direct economic injury” because of his alleged misrepresentations is not a basis for specific jurisdiction as a matter of law. ............................................53 C.    Because Preston’s alleged contacts with Texas are not substantial, continuous, or systematic, there is no general jurisdiction as a matter of law. ...........................................................................................................54 1.  General jurisdiction requires the defendant to have substantial, continuous, and systematic contacts with Texas. .............................54 2.  The sporadic contacts with Texas in a representative capacity that Appellees allege are nothing like the substantial, continuous, and systematic contacts required to establish general jurisdiction..........56 5 3.  Preston lacks any substantial, continuous, or systematic contact that would render him at “at home” in Texas. .........................................68 VI.  CONCLUSION AND PRAYER ...........................................................70 6 INDEX OF AUTHORITIES Cases Access Telecom, Inc. v. MCI Telecom. Corp., 197 F.3d 694 (5th Cir. 1999) ...............................................................................69 All Star Enter., Inc. v. Buchanan, 298 S.W.3d 404 (Tex. App.—Houston [14th Dist.] 2009, no pet)............... 36, 59 Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801 (Tex. 2002) ..................................................................................57 Ashdon, Inc. v. Gary Brown & Assocs., Inc., 260 S.W.3d 101 (Tex. App.—Houston [1st Dist.] 2008, no pet.) .......................69 BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789 (Tex. 2002) ............................................................... 33, 43, 46, 54 Frank A. Smith Sales, Inc. v. Atl. Aero, Inc., 31 S.W.3d 742 (Tex. App.—Corpus Christi 2000, no pet.) ................................39 Garza v. Alviar, 395 S.W.2d 821(Tex. 1965) .................................................................................68 Glencoe Capital Partners II, L.P. v. Gernsbacher, 269 S.W.3d 157 (Tex. App.—Fort Worth 2008, no pet.) ....................................43 Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846, 180 L. Ed. 2d 796 (2011) ............................................. 34, 42, 55 Guardian Royal Exch. Assur., Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223 (Tex. 1991) .......................................... 51, 55, 62, 64, 65 Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 104 S. Ct. 1868 (1984) ............................. 51, 52, 62, 64, 65, 69, 70 Hoffmann v. Dandurand, 180 S.W.3d 340 (Tex. App.—Dallas 2005, no pet.) .................................... 58, 59 7 Howell v. Hilton Hotels Corp., 84 S.W.3d 708 (Tex. App.—Houston [1st Dist.] 2002, pet. denied) ..................67 International Shoe Co. v. Washington, 326 U.S. 310, 66 S. Ct. 154, 90 L. Ed. 95 (1945) ................................................35 Johnston v. Multidata Sys. Intern. Corp., 523 F.3d 602 (5th Cir. 2008) ...............................................................................70 Kelly v. Gen. Interior Const., Inc., 301 S.W.3d 653 (Tex. 2010) ........................................................................ passim Kulko v. Cal. Super. Ct., 436 U.S. 84, 98 S. Ct. 1690 (1978) ......................................................... 62, 64, 65 Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777 (Tex. 2005) ................................................................... 35, 36, 54 Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569 (Tex. 2007) ............................................................. 34, 35, 37, 42 Nat'l Indus. Sand Ass’n v. Gibson, 897 S.W.2d 769 (Tex. 1995) ................................................................................44 Perkins v. Benguet Consol. Mining Co., 42 U.S. 437, 72 S. Ct. 413 (1952) ................................................................ 69, 70 PHC-Minden, L.P. v. Kimberly-Clark Corp., 235 S.W.3d 163 (Tex. 2007) ........................................................................ passim Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333 (Tex. 2009) ......................................................................... 35, 43 Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266 (5th Cir. 2006) ...............................................................................43 Serv. Corp. Intern. v. Guerra, 348 S.W.3d 221 (Tex. 2011) ................................................................................68 8 Shaffer v. Heitner, 433 U.S. 186, 97 S. Ct. 2569, 53 L. Ed. 2d 683 (1977) ................................ 45, 57 Siskind v. Villa Found. for Educ., Inc., 642 S.W.2d 434 (Tex. 1982) ................................................................... 40, 44, 58 Stuart v. Spademan, 772 F.2d 1185 (5th Cir. 1985) .............................................................................58 Tryco Enter., Inc. v. Robinson, 390 S.W.3d 497 (Tex. App.—Houston [1st Dist.] 2012, pet. dism’d) ................60 Vosko v. Chase Manhattan Bank, N.A., 909 S.W.2d 95 (Tex. App.—Houston [14th Dist.] 1995, writ denied) ........ 40, 59 Washington DC Party Shuttle, LLC v. IGuide Tours, 406 S.W.3d 723 (Tex. App.—Houston [14th Dist.] 2013, pet. denied) ....... 38, 58 Waterman Steamship Corp. v. Ruiz, 355 S.W.3d 387 (Tex. App.—Houston [1st Dist.] 2011, pet. denied) ... 39, 43, 69 Wright v. Sage Eng’g, Inc., 137 S.W.3d 238 (Tex. App.—Houston [1st Dist.] 2004, pet. denied) ................58 Statutes TEX. CIV. PRAC. & REM. CODE § 17.042 ..................................................................35 Rules TEX. R. CIV. P. 45 .....................................................................................................41 TEX. R. CIV. P. 120a .......................................................................................... 41, 67 Other 4 Wright & Miller, FEDERAL PRACTICE & PROCEDURE § 1067.5 ............................55 9 INDEX OF RECORD REFERENCES CR Clerk’s Record filed May 21, 2015 Citation to documents included in the Appendix are noted by “Tab #.” 10 STATEMENT OF THE CASE Nature of Case: This is a case alleging “common law and statutory securities fraud” by investors in a failed technology startup. Course of Proceedings: The intervenors, including Appellees, intervened in an original petition against Preston and other defendants. Preston specially appeared and asserted that he was not subject to personal jurisdiction in Texas because he is a nonresident, and does not have sufficient minimum contacts with Texas for the exercise of personal jurisdiction. Because the claims involved a corporation, NC12, Inc., that subsequently declared bankruptcy, defendants removed the case to bankruptcy court. The bankruptcy court dismissed or abated all the claims in the original petition and all the claims in the intervenors’ petition but two: fraud and conspiracy to commit fraud with respect to alleged misrepresentations regarding the value of NC12 shares. The bankruptcy court remanded these remaining two claims to the district court. Trial Court Disposition: Of the intervenors, only Appellees opposed Preston’s special appearance. Preston filed his special appearance on September 28, 2011. The court denied the special appearance on November 17, 2014. Preston appeals from that order. 11 STATEMENT ON ORAL ARGUMENT If upheld, the trial court’s ruling will significantly broaden the reach of Texas long-arm jurisdiction over foreign defendants. The trial court’s ruling departed considerably from existing precedent by asserting jurisdiction over a nonresident not alleged to have conducted any activity in Texas giving rise to the claims in the lawsuit, and whose only alleged contacts with Texas consists of periodic business trips on behalf of other entities over the last 25 years. This is an important issue and Appellant believes oral argument could assist the panel in considering it. Appellant therefore requests oral argument. ISSUE PRESENTED Sole issue: The trial court erred by denying Preston’s special appearance because Appellees failed to plead sufficient allegations to establish personal jurisdiction and because Preston is not subject to specific or general jurisdiction in Texas. 12 I. INTRODUCTION This lawsuit was brought by disgruntled investors in a failed technology startup in an attempt to recover their investments from the now-bankrupt company’s directors and officers. The investors’ claims related almost exclusively to harms to the company, and when the bankruptcy court dismissed these claims as belonging to the bankruptcy trustee, the investors were left with a detailed petition that has little to do with the surviving claims, and nothing to do with any action taking place in Texas. It is difficult to see how Texas courts have any interest in this case, much less personal jurisdiction over Preston. There is no allegation that Preston took any action in Texas connected in any way to the surviving claims. Preston is a Massachusetts resident who has never conducted business in Texas in his personal capacity, and none of the intervenors (the only plaintiffs remaining in this lawsuit) are Texas residents either. The only Texas contacts Appellees allege concern Preston’s mere status as a board member in Nevada corporations with offices in Texas, and Preston’s periodic business trips to Texas on behalf of a variety of other entities. There are no facts that could give rise to specific jurisdiction because there are no allegations that any of the surviving claims arise from or relate to any action by Preston in Texas. There is no basis for general jurisdiction because almost all 13 of Preston’s alleged contacts with Texas took place in his representative capacity and still come nowhere close to the continuous and systematic contacts with Texas that would render Preston at home here. The mere fact that a startup with some Texas operations went out of business does not warrant the exercise of personal jurisdiction over a Massachusetts resident in a fraud suit brought by nonresident investors who do not allege he did anything in Texas that gives rise to their claims. The trial court’s order overruling Preston’s special appearance runs contrary to both Texas and federal law limiting the exercise of personal jurisdiction over nonresidents. It should be reversed. II. STATEMENT OF FACTS1 A. The lawsuit arises out of a failed coal gasification startup. This suit arises out of a developmental technology intended to produce synthetic natural gas and other fuels from coal, also known as coal gasification. CR 114–16 (Tab 2).2 A Nevada corporation, Texas Syngas, Inc. (“TSI”), acquired the technology and began seeking investors in 2007. CR 116 (Tab 2). In 2009 another Nevada corporation, NC12, Inc. (“NC12”), acquired the technology from TSI. CR 122 ¶ 63 (Tab 2). Despite extensive efforts and the partial development 1 Sections II.A and II.B are the same in this brief and C Change’s appellant’s brief. 2 Certain of the plaintiffs’ and intervenors’ allegations are recited in this statement of facts for the Court’s background, but Preston does not concede any of the plaintiffs’ or intervenors’ allegations. 14 of a test reactor in Massachusetts, NC12 did not succeed. CR 118–19, 127–29 (Tab 2); CR 138; CR 208 (Tab 3). As often happens when businesses fail, litigation ensued. The original plaintiffs, primarily NC12 shareholders, sued several of NC12’s directors and officers on July 26, 2011, including directors Michael Sydow, Christoph Henkel, and John Preston. CR 6. NC12 declared bankruptcy in October 2011. CR 208 (Tab 3). In November 2011, several NC12 investors, including Appellees, intervened in the lawsuit. CR 102–08 (Tab 2). The intervenors had invested variously in convertible notes and shares of TSI and NC12. CR 104–08 (Tab 2). When NC12 acquired the gasification technology and attracted more investment, the intervenors’ TSI shares and notes converted into NC12 shares. Accordingly, all of the intervenors3 are now shareholders in NC12. Id. Both the original plaintiffs’ and the intervenors’ petitions attacked the defendants’ management of TSI and NC12. See CR 28–37; CR 129–33 (Tab 2). The original plaintiffs alleged breach of fiduciary duty and conversion claims. CR 35–37. The intervenors alleged four causes of action: (1) breach of fiduciary duty against Sydow, Henkel, and Preston; (2) shareholder oppression by Sydow, 3 One possible exception is appellee H.J. von der Goltz. It is unclear whether von der Goltz is an NC12 shareholder or simply a creditor. CR 105 ¶ 5 (Tab 2) (“all Intervenors are currently common shareholders of NC12, Inc.”); CR 108 ¶ 23 (Tab 2) (stating only that von der Goltz holds an NC12 promissory note). 15 Henkel, and Preston; (3) “Knowing Participation/Civil Conspiracy” against all 10 defendants; and (4) “Securities Fraud—Common Law Fraud and Statutory4 Fraud” against Sydow and Preston. CR 109–10, 129–33 (Tab 2). B. The bankruptcy court dismisses all but two causes of action. The defendants removed the case to the bankruptcy court on December 15, 2011 on the grounds that the plaintiffs’ and intervenors’ claims alleging mismanagement of TSI / NC12 belonged to the bankruptcy estate. CR 198–205. The intervenors moved to remand the case to state court. CR 206–07 (Tab 3). On August 31, 2012, Bankruptcy Judge Marvin Isgur granted in part and denied in part the motions to remand, significantly limiting the claims that remain in this case. CR 207, 237 (Tab 3). Judge Isgur dismissed all of the original plaintiffs’ and intervenors’ claims relating to harms to TSI5 and NC12, holding that these claims belonged to the bankruptcy estate. See CR 198–205. Judge Isgur reasoned that any claims based on the defendants’ alleged asset-stripping, self- dealing, dilution of corporate value, and misappropriation of corporate assets 4 Although the title of the cause of action refers to “Statutory Fraud,” the intervenors do not reference any statute. See CR 132–33 (Tab 2). 5 The bankruptcy court order treats NC12 as TSI’s successor and thus refers to them collectively as NC12. CR 211 (“NC12 began as a Texas limited liability company named Texas Syngas, LLC.”), CR 212 (“Texas Syngas was reorganized as a new Nevada corporation, Texas Syngas, Inc., in May 2006.”), CR 214 (“Also in 2009, Texas Syngas became NC12.”) (Tab 3). 16 stemmed from harm to NC12 and, accordingly, may only be asserted by the bankruptcy trustee on behalf of the bankruptcy estate. CR 237 (Tab 3). The bankruptcy court dismissed or abated all of the original plaintiffs’ claims. CR 237, 225–27, 234–35 (Tab 3). As a result, none of the original plaintiffs’ claims were remanded to state court and those claims are not at issue here. CR 237 (Tab 3). With respect to the intervenors’ claims, the bankruptcy court held that the intervenors’ shareholder oppression and breach of fiduciary duty claims belonged to the estate and therefore dismissed those claims. CR 221–27, 237 (Tab 3). The court also dismissed the intervenors’ conspiracy claim to the extent it related to the dismissed causes of action. CR 235–37 (Tab 3). This left only causes of action for fraud and conspiracy to commit fraud. CR 237 (Tab 3). In remanding the fraud and conspiracy claims, the court instructed: Because the Intervenors are shareholders, their fraud claim is based on the alleged difference between the price they paid in reliance on the alleged misrepresentations and the actual value of NC12’s shares at the time of their investment. The Intervenors may not recover damages for the difference between the price they paid for the shares and what the shares would have been worth if not for the alleged post-purchase misconduct in the operation of the corporation. CR 228 (Tab 3) (emphasis added). 17 C. Only two claims remain against Preston. The only remaining causes of action against Preston are “Securities Fraud— Common Law Fraud and Statutory6 Fraud” asserted against Preston and Sydow, and “Knowing Participation/Civil Conspiracy,”7 asserted against all 10 defendants. CR 237 (Tab 3); CR 132–33 ¶¶ 89–90 (Tab 2). Significantly, these claims survive only to the extent they deal with the alleged misrepresentation of NC12’s value at the time of the intervenors’ investment (hereinafter, the “surviving claims” or “misrepresentation claims”). CR 228 (Tab 3). The last alleged investment by any intervenor occurred in August 2010. CR 104–08, 105 ¶ 8 (Tab 2). D. Appellees do not allege a single act taken in Texas by Preston, much less any act in Texas that is connected to their surviving misrepresentation claims. The only basis for jurisdiction over Preston in the intervenors’ petition are the generic allegations that “Preston has engaged in business in Texas” and “the tortious conduct alleged herein occurred in or was directed at the State of Texas.” CR 110 ¶ 33, 114 ¶ 44 (Tab 2). The intervenors explicitly plead that Preston is a Massachusetts resident who is employed in Cambridge, Massachusetts. CR 110 ¶ 33 (Tab 2). Yet in their 6 Although the title of the cause of action refers to “Statutory Fraud,” the intervenors do not reference any statute. See CR 132–33 (Tab 2). 7 Judge Isgur’s Order also mentions “Intervenors’ aiding and abetting claims” relating to fraud. CR 237 (Tab 3). Since the intervenors did not plead an aiding and abetting claim (see CR 129– 33 (Tab 2)), it is treated here as part of the conspiracy claim. 18 petition, the intervenors fail to allege any act performed by Preston in Texas, much less an act involving the intervenors’ surviving misrepresentation claims. This is perhaps unsurprising, as none of the intervenors are Texas residents who might have relied on misrepresentations in Texas. See CR 105–08 (Tab 2) (showing intervenors reside in Luxembourg, Guatemala, the British Virgin Islands, Panama, Germany, New York, the Bahamas, Montana, Tennessee, the Cayman Islands, and Florida, but not Texas). The few allegations in the intervenors’ petition that relate to Preston say nothing to indicate a Texas connection, as shown below:  In fall 2007, Preston “approached the shareholders of Atomic Ordered Materials (AOM), another company in which Preston was involved” and “brought Sydow and Collins to an AOM shareholders’ meeting,” where Sydow presented the [TSI] technology and “solicited investments in that company.” CR 116 ¶ 51 (Tab 2). The intervenors do not allege that any of Preston’s representations to AOM8 or its shareholders were made in Texas.  After the AOM meeting, Preston “approached” intervenor von der Goltz, who had been in attendance. CR 117 ¶ 52 (Tab 2). Preston “informed von der Goltz that [Preston] had negotiated a $100 million pre-money investment valuation for [TSI] and was trying to raise $12 million to build a demonstration reactor . . . .” Id. 8 The intervenors do not allege any other facts regarding AOM whatsoever, much less allege that AOM is a Texas entity or has offices in Texas. 19  “Preston represented that the value of the technology was in excess of $100 million but suggested that von der Goltz meet with Collins and Sydow to negotiate a discounted valuation to put together an initial investor group for the $12 million needed. Preston represented that he was assisting [TSI], but never disclosed that he owned or controlled any equity interest in [TSI].” Id. The intervenors do not allege that Preston’s representations to von der Goltz were made or relied on in Texas. Nor is there any basis to make such an inference. Von der Goltz is a Florida resident. CR 108 ¶ 23 (Tab 2).  “In November 2007, von der Goltz met with Collins and Sydow in Houston. Collins and Sydow agreed to accept new investors based on a pre-money valuation of $78 million and a post-money valuation of $90 million.” CR 117 ¶ 52 (Tab 2).  Von der Goltz “brought the opportunity to friends, family, and business associates, who ultimately invested $11.75 million . . . . Among this group were the Shareholder Intervenors. Sydow and Preston represented to the Shareholder Intervenors, both directly and through Mr. von der Goltz, that the value of the technology exceeded $100 million and that the money being raised would be used primarily for building the demonstration reactor.” CR 117 ¶ 53 (Tab 2). The intervenors do not allege that Preston attended the November 2007 Houston, Texas meeting or even that any misrepresentation was made to von der Goltz at this meeting. There are no allegations, or basis for any inference, that any Preston representation was made or relied on in Texas—whether directly or “through von der Goltz.” Neither Preston nor any intervenor, including the Shareholder Intervenors, are residents of Texas. CR 105–08 (Tab 2). None of the intervenors’ 20 detailed allegations include any suggestion that any of the alleged representations or “promises” were made in Texas:  Preston made various representations in 2008 to “[TSI] shareholders” that the value of the company was now $300 million as a result of a gas utility contract; representations regarding new financing, and representations regarding the company’s purchase of Fall River, Massachusetts property. CR 118 ¶ 55 (Tab 2).  Preston and Sydow “had no intention of using shareholder money as represented to the shareholders,” squandered shareholder money, and engaged in self-dealing. CR 119 ¶ 58 (Tab 2).  “Despite his numerous promises and despite being compensated to do so Preston failed to raise additional funds for [TSI] in 2009, and by mid-year [TSI] desperately needed funding.” CR 120 ¶ 60 (Tab 2). Moreover, these alleged representations, as the intervenors themselves plead, were addressed to TSI’s shareholders and were thus made after their investment in TSI. These allegations are thus relevant only to the intervenors’ dismissed claims concerning the management of TSI, not their surviving misrepresentation claims. See CR 223–28 (Tab 3).  “Preston and Sydow again turned to Mr. von der Goltz for assistance.” CR 120 ¶ 60 (Tab 2). Von der Goltz raised $6.1 million in investment from the Note Holder Intervenors. Id. “Preston and Sydow, both directly and through their statements to von der Golz, represented to the Note Holder Intervenors that [TSI] was worth $300 million as of 2009, based on the value of the technology and the [gas utility] and Turkish contracts. However, Preston and Sydow failed to disclose that the [gas utility] contract had been canceled.” CR 121 ¶ 61 (Tab 2). 21  “Preston and Sydow also represented [to the Note Holder Intervenors] that the money would be used primarily to build the test reactor; however, their later conduct and misuse of the funds demonstrate that they had no intention of using the money for that purpose.” Id. The intervenors do not allege that any Preston representation to any Note Holder Intervenor or to von der Goltz (or to anyone) was made or relied on in Texas. And any representations regarding the ultimate use of the solicited investment funds are beyond the scope of the surviving claims. CR 223–28 (Tab 3). Similarly, every subsequent reference to Preston in the remaining 14 pages of the intervenors’ petition concerns political infighting on the TSI / NC12 board of directors, alleged mismanagement and asset-stripping of the entity, and alleged self-dealing. CR 121–29 (Tab 2). These allegations only relate to the fiduciary duty, shareholder oppression, and shareholder fraud claims that have been dismissed from this matter. The remaining references to Preston do not support any surviving claim against him. See CR 223–28 (Tab 3). And still, none of the remaining allegations state or suggest any action taken by Preston in Texas. In sum, not a single allegation in the intervenors’ petition—the only petition containing any live claims—connects Preston to Texas. 22 E. Preston does no individual business and maintains no presence in Texas. Preston filed a special appearance on September 28, 2011 objecting to the court’s exercise of personal jurisdiction over him.9 CR 74 (Tab 1). 1. Preston does not do business in Texas in his individual capacity. Preston is a resident of Massachusetts and is employed in Massachusetts. CR 86–87 ¶¶ 3, 8 (Tab 1); CR 110 ¶ 33 (Tab 2). He has not been a resident of Texas for the last 60 years.10 In the last 60 years, Preston has not travelled to or visited Texas in his individual capacity. CR 86 ¶ 4 (Tab 1). In the last 30 years, Preston has visited Texas exclusively on behalf of entities for whom he served as a director, principal, or managing partner, including a Delaware nonprofit, Molten Metal Technologies, Inc. (“MMT”), Quantum Catalytics, LLC (“Quantum”), C Change Investments, LLC (“C Change”), NC12, and Transformative Energy & Materials Capital, Inc. (“TEM Capital”), or on behalf of the Massachusetts Institute of Technology (“MIT”), where he was a faculty member and Director of Technology and Licensing, and retains an appointment. See CR 87 ¶¶ 5–6 (Tab 1); CR 330–31, 356 at 63:18–23 (Tab 4); CR 672–73 ¶¶ 3–8 (Tab 6); CR 118 ¶ 53 (Tab 2). Preston served as a director of two 9 Preston’s special appearance was filed before the intervenors filed their petition. CR 74 (Tab 1); CR 102 (Tab 2). 10 Preston, who was 61 years old at the time of his affidavit executed in 2011, resided in Texas for less than one year when he was an infant. See CR 86 ¶ 4 (Tab 1); CR 672 (Tab 6) (showing date of birth). 23 Texas entities, one from 2004–2006 and the other from 2012–2014 and has otherwise never been a director, officer, or employee of a Texas person or company. CR 330, 388 (Tab 4); CR 87 ¶ 8 (Tab 1). While Preston was an officer of TSI and NC12, both Nevada corporations with a Texas office, Preston participated in board meetings from Massachusetts, Switzerland, or Germany, but never Texas.11 See CR 86–87 ¶¶ 2, 7 (Tab 1); CR 325, 328 (Tab 4). Preston has never done business in Texas in his individual capacity. CR 86 ¶ 4 (Tab 1). Preston has never maintained an office in Texas, or employed any person who either resides or regularly travels to Texas in connection with his or her business. CR 87 ¶¶ 8, 9 (Tab 1). Preston has never engaged in routine sales or other profit-making activities in Texas. Id. ¶ 8. Preston owns no private Texas businesses. Id. In his individual capacity, Preston has never entered into any contracts in Texas or with Texas residents, contracts calling for performance in Texas, or contracts with mandatory venue provision in Texas, other than contracts with his defense counsel. Id. Because Preston does not do business in Texas, he does not maintain a registered agent in Texas and is not required to do so. Id. As he does not work or 11 There are no allegations that Preston made any misrepresentation, or any action in furtherance of any conspiracy to make any misrepresentation, while participating in any board meetings. 24 own property in Texas, Preston has never personally incurred or paid any taxes in Texas, nor filed a personal tax return in Texas. CR 87 ¶ 9 (Tab 1). 2. Preston does not maintain any presence in Texas. As Preston’s Texas ties consist exclusively of his status as director of predominantly foreign entities and business trips to Texas in his representative capacity, Preston has no presence in Texas. He has never maintained an office or any other facility, telephone listing, post office box, or mailing address in Texas. CR 87 ¶ 9 (Tab 1). Preston has never rented, owned, or possessed any real property or personal property in Texas. Id. He does not hold a mortgage or other lien on any real or personal property in Texas. Id. He does not have any investments or assets in Texas. Id. Preston has never taken out a loan in Texas or guaranteed any debt owed to a Texas resident. Id. F. After two years and jurisdictional discovery, Appellees fail to allege a single act by Preston in Texas that gives rise to their surviving claims, and fail to show systematic and continuous Texas contacts that render Preston “at home” in Texas. The intervenors had two years and the opportunity to conduct jurisdictional discovery between the bankruptcy court’s remand order and the hearing on Preston’s special appearance. CR 102 (Tab 2); CR 206 (Tab 3); CR 613. Yet they never amended their petition to add any allegations connecting any aspect of their surviving claims to Texas. This is because no such connection exists. 25 To evade this problem, Appellees concocted a tornado of smoke and innuendo in response to Preston’s special appearance. They doggedly conflate the two distinct types of personal jurisdiction (specific and general), jumble allegations about dismissed claims in discussing surviving claims, confuse individual with representative actions by Preston, and mix diverse assertions of Preston’s tangential links to Texas: business trips for other entities, decade-old business calls with original plaintiff and former TSI director Collins, a personal check, and a convoluted story about a 2012 Texas corporation that is allegedly an alter-ego of Preston’s, allegedly created to pursue claims against Collins in a different lawsuit. These attenuated links to Texas have nothing to do with any of the surviving claims, and fall far short of establishing the continuous contact with Texas that is otherwise required to support general personal jurisdiction. Appellees alleged the following forum contacts by Preston: (a) Director of foreign entities. Preston served as a director of three foreign entities which registered to do business in Texas. CR 287 (“MMT”), CR 281 (Texas Syngas, Inc. (“TSI”)), CR 284 (NC12) (Tab 4). There are no allegations that Preston did anything in Texas in connection with these entities that gives rise to any of the intervenors’ claims. (b) Business trips to Texas. In the past 25 years, Preston has allegedly made the following brief business trips to Texas: 26 o 1990s: Five board meetings in Texas for a Delaware nonprofit and three board meetings for MMT. CR 87 ¶ 5 (Tab 1). o 1990s: Approximately three business trips for MMT.12 CR 408 ¶ 4, CR 409 ¶ 12, CR 260 (Tab 4). o 2004: Three trips on behalf of Quantum. CR 409 ¶¶ 6–8 (Tab 4); CR 673 ¶ 8 (Tab 6). o 2008–11: Five one-day trips on behalf of C Change.13 CR 319 at 25:3–28:21, 335–38, 343–48 (Tab 4); CR 672–73 ¶¶ 5–6 (Tab 6). o 2009–10: One trip on behalf of C Change or MIT. CR 262, 323 at 49:13-24 (Tab 4). o 2010: One trip on behalf of NC12 to testify in Sydow’s divorce proceeding. CR 352–70, 339–42 (Tab 4). o 2011: One two-day trip on behalf of TEM Capital for a foreclosure sale and to inspect a cement plant. CR 349– 50 (Tab 4); CR 673 ¶ 7 (Tab 6).14 There is no allegation that any of these trips relate to the claims in this lawsuit. (c) 2004: Phone calls and mail. Collins claims that in 2004, Preston telephoned him and shipped him “records regarding 12 It is not clear from the record whether these trips are distinct from those on which Preston attended MMT board meetings. CR 87 ¶ 5 (Tab 1). 13 Preston initially mistakenly identified these trips as on behalf TEM Capital, and submitted a correction in a subsequent declaration. See CR 87 ¶ 5; CR 330–31 (Tab 4); CR 672 ¶ 5 (Tab 6). Former C Change director Russell Read testified C Change “effectively merged” into TEM Capital in 2011. CR 320 at 31:5–10 (Tab 4). 14 In their special appearance briefing, Appellees refer to, but attach no evidence regarding, allegations made by nonparty EMC Cement, BV in an unrelated 2014 lawsuit suggesting that Preston made two other visits to Texas in August 2010 and January 2011 with C Change or TEM Capital. See CR 263–64 (Tab 4) (failing to attach EMC complaint). 27 MMT and its patented technology” following Preston’s 2004 business trips to meet with Collins. CR 409 ¶ 9 (Tab 4). These trips and communications concerned catalytic energy processing (“CEP”) technology patents belonging to Quantum. Id. ¶¶ 5–8; CR 673 ¶ 8 (Tab 6). There are no allegations linking these communications to the claims in the lawsuit. (d) 2006: Alleged address at TSI office for foreign entity Metal Catalyst Ventures. Preston was listed as a director of Nevada corporation Metal Catalyst Ventures, Inc. in June 2006. CR 315 (Tab 4). Preston’s “address” was the same as TSI’s. See id.; CR 281 (Tab 4). Preston did not prepare the document. CR 315 (Tab 4); CR 673 ¶ 9 (Tab 6). The intervenors allege no other facts regarding Metal Catalyst Ventures, and there are no allegations linking Metal Catalyst Ventures to the surviving claims. (e) 2008: Personal check to foreign entity BOS, Inc. In 2008, Preston allegedly wrote a personal check to BOS, Inc., a Turks and Caicos corporation with, allegedly, an office and bank account in Texas. CR 387 (Tab 4); CR 25 ¶ 2. In 2010, BOS, Inc. wired Preston back the same sum. CR 384 (Tab 4). There are no allegations linking these payments to the claims in the lawsuit. (f) 2012: Alleged purchase of claims in unrelated Kaiser Litigation via alleged alter ego JK Claims. JK Claims was formed by Quantum to purchase the plaintiffs’ claims in Cause No. 2007-38533, Jeffrey B. Kaiser v. Texas Syngas LLC, Michael A. Collins, Michael D. Sydow and M. Sameer Ahmed, in the 152nd District Court of Harris County, Texas (the “Kaiser Litigation”).15 CR 432, 495 at 57:2–3, 498 at 66:19– 15 Kaiser brought suit on behalf of himself and “all similarly situated” members of Texas Syngas LLC. CR 432 (Tab 5). Quantum, a member of Texas Syngas LLC, had intervened in the Kaiser Litigation. CR 452 (Tab 5). 28 67:20 (Tab 5). After Kaiser filed for bankruptcy, JK Claims purchased the Kaiser Litigation claims from the bankruptcy estate with the approval of the bankruptcy trustee. CR 534–41, 545–47 (Tab 5). In a supplemental response to the special appearance, Appellees assert that JK Claims is Preston’s alter ego and that JK Claims’ contacts with Texas should be imputed to Preston. CR 414 (Tab 5). Appellees’ own evidence shows that Quantum, not Preston, is the sole owner of JK Claims. CR 495 at 57:2–3, 498 at 66:19–67:20 (Tab 5). See also CR 673 ¶ 10. Yet Appellees never allege that Quantum is an alter ego of Preston. There are no allegations linking these actions to the claims in the lawsuit. Most significantly, all alleged JK Claims actions took place after this lawsuit was filed and are therefore outside of the relevant jurisdictional period, as discussed below. Almost none of these tenuous forum contacts are pleaded in the intervenors’ petition. See section II.D, supra. None have anything to do with any alleged misrepresentation to TSI or NC12 investors, and none demonstrate continuous and systematic contacts that would establish that Preston is “at home” in the state of Texas. After briefing and argument, however, the trial court denied Preston’s special appearance. CR 674–75 (Tab 7). Preston timely appealed to this Court. CR 678–80; CR 681–83. 29 III. SUMMARY OF THE ARGUMENT There is no basis for asserting personal jurisdiction over Preston. Appellees, neither of whom reside in Texas, bring claims of fraud and conspiracy to commit fraud in relation to representations about TSI / NC12’s value. Appellees do not allege that any representations were made or relied on in Texas. The petition does not contain a single allegation that places Preston in Texas or describes any act that Preston is alleged to have done in Texas, much less any act in Texas that gives rise to the claims in this case. Appellees have never amended their petition to include such allegations because no such facts exist. Appellees failed to meet their burden to plead sufficient allegations to establish personal jurisdiction over Preston. It is the plaintiff’s initial burden to plead sufficient allegations to allege personal jurisdiction over a defendant. Because Appellees have failed to do so, Preston needed only to establish that he does not reside in Texas to negate personal jurisdiction. There is no dispute: Preston resides in Massachusetts and is not a Texas resident. The trial court erred in overruling Preston’s special appearance on this basis alone. Appellees’ special appearance evidence supports neither specific nor general jurisdiction. Texas courts can exercise personal jurisdiction over a nonresident only if the plaintiff’s claims arise out of the defendant’s contacts with the forum (specific jurisdiction) or if the defendant has continuous and systematic 30 contacts with the forum (general jurisdiction). Though it is not clear from their briefing below, Appellees appear to argue that there is both specific and general jurisdiction over Preston. See CR 270 (Tab 4). Appellees are wrong on both counts. There is no specific jurisdiction because Appellees fail to link any alleged action by Preston giving rise to their claims to Texas. Appellees contend there is specific jurisdiction over Preston because “[t]he acts and events complained of in this litigation all arise directly from Preston’s activities as a director of and fund raiser for TSI and NC12 – both Texas companies” and because “[i]n raiding funds for TSI and NC12, through fraudulent misrepresentations and then denuding the companies of their assets, Preston . . . could reasonably foresee that NC12 and its shareholders and investors would suffer direct economic injury.” CR 269–70 (Tab 4). The mere fact that Preston was a director of a corporation with a Texas office while allegedly making misrepresentations to nonresident investors outside of Texas is insufficient to establish that any alleged misrepresentation relates to Preston’s contacts with Texas. The “reasonable foreseeability” test has been rejected by the Texas Supreme Court. And Appellees’ “denuding” claims are not germane: the bankruptcy court dismissed all claims relating to harms to TSI and NC12. The only surviving claims regard alleged misrepresentations made by 31 Preston in connection with the value of TSI / NC12 at the time of the intervenors’ investment, and conspiracy to commit those misrepresentations. For jurisdictional purposes, the relevant location for fraudulent misrepresentation is the place where the misrepresentation was made. There are no allegations that Preston committed any acts giving rise to these claims in Texas, either in the petition or in Appellees’ voluminous briefing below. As a matter of black-letter law, there is no specific jurisdiction over Preston. There is no general jurisdiction because all of Preston’s forum contacts were in his representational capacity and still do not amount to continuous and systematic contacts with Texas. Preston is a Massachusetts resident who lives and works in Massachusetts. Other than periodically traveling to Texas on business trips on behalf of foreign entities, Preston has no Texas ties at all. Preston’s contacts with Texas on behalf of corporations do not subject him to general jurisdiction absent a showing either that these contacts themselves were tortious or that the corporations were his alter ego. While Appellees claim one corporation, JK Claims, is Preston’s alter ego, JK Claims’ alleged contacts with Texas began in June 2012—one year after the Appellees filed their suit—and are thus outside of the relevant period to determine jurisdictional contacts. There is no evidence of any purposeful contacts with Texas so substantial that it would render 32 Preston “at home” in the state of Texas. There is no general jurisdiction over Preston as a matter of law. For all of these reasons, the trial court erred in overruling Preston’s special appearance. IV. STANDARD OF REVIEW16 A. De novo review applies. Whether a court can exercise personal jurisdiction over a nonresident defendant is a question of law reviewed de novo by this Court. Kelly v. Gen. Interior Const., Inc., 301 S.W.3d 653, 657 (Tex. 2010) (Tab 8). When, as here, a trial court does not issue findings of fact and conclusion of law with its special appearance ruling, this Court implies all the facts necessary to support the judgment as long as those facts are supported by the evidence. Id.; CR 678–80; CR 684–86. The appellant can challenge the sufficiency of the evidence to support the implied facts. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002) (Tab 9). 16 Section IV is the same in both this brief and C Change’s appellant’s brief, excluding Section IV.B.4 of C Change’s brief. 33 B. Jurisdiction over nonresidents requires allegations or proof of purposeful availment. 1. The plaintiff bears the initial burden to plead allegations showing jurisdiction over the defendant. In suits involving a challenge to personal jurisdiction, the Texas Supreme Court has “consistently held that the plaintiff bears the initial burden to plead sufficient allegations to bring the nonresident defendant within the reach of Texas’s long-arm statute.” Kelly, 301 S.W.3d at 658 (Tab 8). “When the pleading is wholly devoid of jurisdictional facts, the plaintiff should amend the pleading to include the necessary factual allegations.” Id. at 659. 2. The long-arm statute is limited by due process considerations. The exercise of personal jurisdiction “exposes defendants to the State’s coercive power” and therefore it must comply with the Fourteenth Amendment’s due process clause. Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846, 2850, 180 L. Ed. 2d 796 (2011). “A nonresident defendant is subject to the personal jurisdiction of Texas courts if (1) the Texas long-arm statute authorizes the exercise of jurisdiction, and (2) the exercise of jurisdiction does not violate federal and state constitutional due process guarantees.” Kelly, 301 S.W.3d at 657 (Tab 8). The critical inquiry is whether the exercise of jurisdiction comports with due process because the Texas long-arm statute reaches “as far as the federal constitutional requirements of due process will allow.” Id. (quoting Moki Mac 34 River Expeditions v. Drugg, 221 S.W.3d 569, 575 (Tex. 2007); TEX. CIV. PRAC. & REM. CODE § 17.042. Because the due process requirement arises out of federal constitutional law, the Texas Supreme Court relies on precedent from the United States Supreme Court and other federal courts in evaluating the exercise of personal jurisdiction. PHC-Minden, L.P. v. Kimberly-Clark Corp., 235 S.W.3d 163, 166 (Tex. 2007) (Tab 10). The exercise of personal jurisdiction over a nonresident defendant is consistent with due process when the defendant “has established minimum contacts with the forum state, and the exercise of jurisdiction comports with traditional notions of fair play and substantial justice.” Kelly, 301 S.W.3d at 657 (Tab 8) (quoting Moki Mac, 221 S.W.3d at 575 and International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 90 L. Ed. 95 (1945). 3. When the plaintiff fails to meet its initial burden of alleging sufficient purposeful minimum contacts, the fact that the defendant is a nonresident defeats personal jurisdiction. A defendant establishes minimum contacts with a state “when it purposefully avails itself of the privilege of conducting activities within the forum state, thus invoking the benefits and protections of its laws.” Kelly, 301 S.W.3d at 657–58 (Tab 8) (quoting Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 338 (Tex. 2009). There are “three parts to a ‘purposeful availment’ inquiry.” Moki Mac, 221 S.W.3d at 575 (quoting Michiana Easy Livin’ Country, 35 Inc. v. Holten, 168 S.W.3d 777, 784–85 (Tex. 2005)). First, only the defendant’s contacts with the forum are relevant, “not the unilateral activity of another party or a third person.” Id. Second, the contacts relied on “must be purposeful rather than random, fortuitous, or attenuated.” Id. And third, the “defendant must seek some benefit, advantage, or profit by ‘availing’ itself of the jurisdiction.” Id. (quoting Michiana, 168 S.W.3d at 785). It is not enough, however, merely to take any purposeful action in Texas. The defendant’s actions must satisfy the requirements of either general or specific jurisdiction. All Star Enter., Inc. v. Buchanan, 298 S.W.3d 404, 412 (Tex. App.— Houston [14th Dist.] 2009, no pet.) (“There are two types of personal jurisdiction: specific and general.”); PHC-Minden, 235 S.W.3d at 166 (United States Supreme Court has “adopted the terms ‘specific’ and ‘general’ to describe the differing types of personal jurisdiction”) (Tab 10). Specific jurisdiction is “based on contacts arising from the dispute at issue,” while general jurisdiction is “predicated on a party’s ‘continuous and systematic’ contacts with the forum.” PHC-Minden, 235 S.W.3d at 165 (Tab 10). The plaintiff has the initial burden of pleading that a nonresident defendant made purposeful minimum contacts with the state. Kelly, 301 S.W.3d at 658 (Tab 8). For the minimum contacts analysis, the plaintiff must allege that its claims arose out of or are substantially related to the defendant’s contacts with Texas, or 36 that the defendant has continuous and systematic contacts with the state. Id.; Moki Mac, 221 S.W.3d at 585; PHC-Minden, 235 S.W.3d at 165 (Tab 10). Only if the plaintiffs meet the initial burden—by making specific allegations sufficient to establish general or specific jurisdiction—must the defendant respond by negating all grounds of jurisdiction. Kelly, 301 S.W.3d at 658 (Tab 8). “Because the plaintiff defines the scope and nature of the lawsuit, the defendant’s corresponding burden to negate jurisdiction is tied to the allegations in the plaintiff’s pleading.” Id. When the plaintiffs do not meet their burden of alleging purposeful minimum contacts, the defendant need only submit an affidavit stating that it is not a Texas resident to defeat personal jurisdiction. Id. at 658–59 (“If the plaintiff fails to plead facts bringing the defendant within reach of the long-arm statute (i.e., for a tort claim, that the defendant committed tortious acts in Texas), the defendant need only prove that it does not live in Texas to negate jurisdiction.”). Even where the plaintiffs do allege purposeful minimum contacts, the defendant can negate jurisdiction either factually or legally. Id. at 659. Factually, it can present evidence that it has no contacts with Texas, thus disproving the plaintiff’s allegations. Id. The plaintiff “risks dismissal of its lawsuit if it cannot present the trial court with evidence establishing personal jurisdiction.” Id. Legally, “the defendant can show that even if the plaintiff’s alleged facts are true, 37 the evidence is legally insufficient to establish jurisdiction.” Id. In other words, the defendant prevails if it shows the claims do not arise from the contacts or that its contacts with the state are not continuous and systematic. Id.; PHC-Minden, 235 S.W.3d at 165 (Tab 10). V. ARGUMENT Sole issue: The trial court erred by denying Preston’s special appearance because Appellees failed to plead sufficient allegations to establish personal jurisdiction and because Preston is not subject to specific or general jurisdiction in Texas. A. Appellees failed to meet their initial burden of pleading facts to show that Preston is subject to personal jurisdiction in Texas. Though it was not addressed in the intervenors’ petition and not clear from their briefing, Appellees have claimed that Preston is subject both to specific and general personal jurisdiction in Texas court. CR 269–70 (Tab 4). The allegations in the petition and evidence offered in Appellees’ responses to Preston’s special appearance,17 however, were insufficient to establish either. In their petition, the intervenors failed to allege that Preston committed any act in Texas, much less any act that gave rise to their claims. As discussed in detail above, while the intervenors pleaded generally that Preston misrepresented the value of TSI/NC12 to potential investors and “all Defendants conspired to commit 17 Appellees also argued that even though Preston supported his special appearance with a sworn affidavit attesting to every material fact, the special appearance was not verified. CR 264–65 (Tab 4). This argument has been explicitly rejected by this court. Washington DC Party Shuttle, LLC v. iGuide Tours, LLC, 406 S.W.3d 723, 731 (Tex. App.—Houston [14th Dist.] 2013, pet. denied) (en banc). 38 fraud,” not a single allegation connects any misrepresentation or act in furtherance of any conspiracy to Texas. See CR 132 ¶ 89 (Tab 2); section II.D, supra. None of the intervenors are even Texas residents. CR 105–08 (Tab 2). Instead, the only pleaded basis for personal jurisdiction over Preston are the generic allegations that “Preston has engaged in business in Texas” and “[p]ersonal jurisdiction over all defendants is proper in the state of Texas because NC12 is headquartered in Houston, Texas and the tortious conduct alleged herein occurred in or was directed at the State of Texas.” CR 110 ¶ 33, 114 ¶ 44 (Tab 2). This type of generalization is insufficient to meet the pleading burden. Waterman Steamship Corp. v. Ruiz, 355 S.W.3d 387, 398, 403–04 (Tex. App.—Houston [1st Dist.] 2011, pet. denied). See also Frank A. Smith Sales, Inc. v. Atl. Aero, Inc., 31 S.W.3d 742, 747 (Tex. App.—Corpus Christi 2000, no pet.) (The “third-party petition stated only that [the defendant] had committed acts of negligence, without specifying what those negligent acts were, or where they occurred. Therefore, [the] petition fell well short of pleading sufficient allegations to show jurisdiction in Texas.”). The intervenors failed to plead any facts showing that Preston in fact engaged in business, or committed any tort, in Texas. Indeed, the petition fails to allege a single action taken by Preston in Texas. See, e.g., CR 114–33 (Tab 2). Because the intervenors failed to plead facts showing that Preston made misrepresentations or conspired to make misrepresentations in Texas, or any facts 39 showing that Preston had any continuous and systematic contacts with this state, Preston needed only prove that he is not a Texas resident to defeat personal jurisdiction. See Kelly v. Gen. Interior Const., Inc., 301 S.W.3d 653, 658–59 (Tex. 2010) (Tab 8) (“If the plaintiff fails to plead facts bringing the defendant within reach of the long-arm statute (i.e., for a tort claim, that the defendant committed tortious acts in Texas), the defendant need only prove that it does not live in Texas to negate jurisdiction.”); Vosko v. Chase Manhattan Bank, N.A., 909 S.W.2d 95, 99 (Tex. App.—Houston [14th Dist.] 1995, writ denied) (citing Siskind v. Villa Found. for Educ., Inc., 642 S.W.2d 434, 437–38 (Tex. 1982)) (When “the plaintiff does not allege that the defendant performed a specific act in Texas, the defendant's evidence that he is a nonresident is enough to carry his burden of proof.”). Preston’s unrefuted affidavit establishes he is a Massachusetts resident and not a Texas resident. CR 87 ¶ 5 (Tab 1). The intervenors affirmatively plead that Preston is a Massachusetts resident. CR 110 ¶ 33 (Tab 2). The trial court erred by denying Preston’s special appearance on this basis alone. B. Because Appellees do not allege that any of Preston’s alleged contacts with Texas give rise the surviving claims and no evidence suggests any link, there is no specific jurisdiction as a matter of law. Although nearly two years passed between the bankruptcy court’s order dismissing all other causes of action and Appellees’ two briefs in opposition to 40 Preston’s special appearance, Appellees never amended their petition to include any jurisdictional facts relating to the claims remanded by the bankruptcy court. CR 237 (Tab 3); CR 257 (Tab 4); CR 413 (Tab 5). See also Kelly, 301 S.W.3d at 659 n.6 (Tab 8) (If “the plaintiff’s evidence does not fall within the scope of the factual allegations in the pleading, then the plaintiff should amend the pleading for consistency.”). Appellees tried to overcome their failure to plead jurisdictional facts by including more detail in their response and supplemental response opposing Preston’s special appearance, but the evidence considered by trial court in addition to the petition must comply with the requirements of Rule 120a, and even then, it “merely supports or undermines the allegations in the pleadings.” Id. at 658 n.4; TEX. R. CIV. P. 120a, 45(a) (defining pleadings as petitions and answers). Regardless, there is no allegation, much less any evidence, that Preston’s alleged misrepresentations of TSI / NC12’s value to investors, or any act in furtherance of his alleged conspiracy to commit these misrepresentations, were made in Texas. The intervenors do not make any such allegation in their petition or in their response or supplemental response to Preston’s special appearance. Rather, Appellees assert that there is specific jurisdiction over Preston because: “[t]he acts and events complained of in this litigation [] arise directly from Preston’s activities as a director of and fundraiser for TSI and NC12 – both 41 Texas companies” and because “[i]n raiding funds for TSI and NC12, through fraudulent misrepresentations and then denuding the companies of their assets, Preston . . . could reasonably foresee that NC12 and its shareholders and investors would suffer direct economic injury.” CR 269–70 (Tab 4). Appellees mistake the law. Preston’s mere status as a director of even a “Texas corporation” would be insufficient to support Texas jurisdiction for misrepresentation claims that were not made or relied on in Texas. The “reasonable foreseeability” analysis for personal jurisdiction has been explicitly rejected by the Texas Supreme Court. All claims relating to the “denuding” of corporate assets have been dismissed by the bankruptcy court. There is no allegation, much less any evidence, that any of Preston’s contacts with Texas give rise to the surviving claims. There is no specific jurisdiction as a matter of law. 1. Specific jurisdiction requires that the alleged jurisdictional contacts give rise to the plaintiff’s alleged injury. Specific jurisdiction exists when the defendant purposefully avails himself of conducting activities in the forum and “the cause of action arises from or is related to those contacts or activities.” Kelly, 301 S.W.3d at 658 (Tab 8). See also Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 576 (Tex. 2007) (“liability must have arisen from or related to those contacts.”). Specific jurisdiction depends on an “activity or an occurrence that takes place in the forum State and is therefore subject to the State’s regulation.” Goodyear Dunlop Tires Operations, S.A. v. 42 Brown, 131 S. Ct. 2846, 2851, 180 L. Ed. 2d 796 (2011) (citation omitted). In a specific jurisdiction analysis, the court thus focuses on “the relationship among the defendant, the forum[,] and the litigation.” Kelly, 301 S.W.3d at 658 (Tab 8) (quoting Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 338 (Tex. 2009)) (alteration in original). Jurisdiction for each claim must stand on its own merits. Id. at 660. (performing claim-by-claim analysis to determine whether each claim arose out of alleged forum contacts); Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 274–75 (5th Cir. 2006) (specific jurisdiction is a claim-specific inquiry). This is especially significant here, as all of the original plaintiffs’ claims, and the intervenors’ shareholder oppression, fiduciary duty, and related conspiracy claims, have been dismissed. CR 237 (Tab 3). For a tort claim, the plaintiff must plead that the defendant committed a tortious act in Texas. Waterman Steamship, 355 S.W.3d at 403. For misrepresentation claims, the relevant location for jurisdiction is the place where the misrepresentation was made. BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 796–97 (Tex. 2002) (Tab 9); Kelly, 301 S.W.3d at 660 (Tab 8); Glencoe Capital Partners II, L.P. v. Gernsbacher, 269 S.W.3d 157, 167 (Tex. App.—Fort Worth 2008, no pet.). “[D]ue process will not permit the plaintiff to use insignificant acts in the forum to assert jurisdiction over all co-conspirators.” 43 Nat’l Indus. Sand Ass’n v. Gibson, 897 S.W.2d 769, 773 (Tex. 1995) (quoting Siskind v. Villa Found. for Educ., Inc., 642 S.W.2d 434, 438 (Tex. 1982)). Nor can the acts of co-conspirators be imputed to a nonresident defendant for the purposes of personal jurisdiction. See id. 2. There are no allegations in the intervenors’ petition that could give rise to specific jurisdiction over Preston. As discussed at length above, there is no allegation in the intervenors’ petition that Preston’s alleged misrepresentations of NC12’s value to investors, or any act in furtherance of his alleged conspiracy to commit these misrepresentations, occurred in Texas. Appellees do not attempt to remedy this problem in their special appearance briefing or the evidence attached thereto. Rather, Appellees compile a list of Preston’s alleged business trips and director positions on behalf of a variety of entities over the last 25 years. See, e.g., CR 260–64, 269 (Tab 4). Appellees make no attempt to link any of Preston’s alleged forum contacts to Preston’s alleged misrepresentations of the value of TSI / NC12 to potential investors, or to any conspiracy to commit such a misrepresentation. 44 3. There are no allegations or evidence in Appellees’ special appearance briefing that could give rise to specific jurisdiction over Preston. Appellees refer to the same set of alleged forum contacts to support both specific and general jurisdiction over Preston. CR 260–64, 269 (Tab 4). See section II.F, supra. Each is examined in turn below. a) Service as a director of foreign entities. Appellees assert generally that their claims against Preston “arise directly from Preston’s activities as a director of and fundraiser for TSI and NC12 – both Texas companies.”18 CR 269–79 (Tab 4). The United States Supreme Court has held that service as a director of a corporation, by itself, does not create personal jurisdiction over that director—even when the corporation is organized in the forum state. Shaffer v. Heitner, 433 U.S. 186, 215–16, 97 S. Ct. 2569, 53 L. Ed. 2d 683 (1977) (in shareholder derivative suit against Delaware corporation’s directors and officers alleging that defendants “misus[ed] their power,” Delaware court did not have personal jurisdiction over defendants because plaintiffs did not allege any acts by the defendants in Delaware, and service as a director did not show that defendants purposefully availed themselves of conducting activities in Delaware). 18 Appellees also refer generally to Preston’s status as director of Nevada corporation MMT as supporting personal jurisdiction. CR 260–61, 269–70 (Tab 4). There is no allegation and no basis whatsoever to link Preston’s service as director of Nevada corporation MMT in the 1990s to any claim in this matter. See id.; CR 287–89 (Tab 4); CR 132 ¶ 89 (Tab 2). 45 There is even less of a basis to claim that Preston’s service as a director of a Nevada corporation with an office in Texas created personal jurisdiction over him. This is because the real locus of Appellees’ harm is the place where the misrepresentations were made. BMC Software, 83 S.W.3d at 796–97 (Tab 9) (“Here, Marchand alleges that his fraud and negligent misrepresentation claims arise from the alleged Watson–Ordelheide conversation in Texas. But they do not. The nature of the claims demonstrate that they can only arise from BMCB’s contact with Marchand, which all occurred outside of Texas. … BMCB made no representations to Marchand in Texas, and he did not rely to his detriment on the conversation in Texas.”) (citation omitted). See also Kelly, 301 S.W.3d at 660 (Tab 8) (in order to establish specific jurisdiction for fraud, the plaintiff must allege that the fraudulent acts occurred in Texas). BMC Software involved an alleged fraudulent misrepresentation made in Europe. 83 S.W.3d at 796–97 (Tab 9). The plaintiff claimed that jurisdiction was proper in Texas because the defendant’s officers met in Texas and, during that meeting, planned to defraud the plaintiff. Id. at 796. The Texas Supreme Court disagreed, however, noting that even if the defendant’s officers discussed the plan to defraud the plaintiff in Texas, it was the misrepresentations themselves—made in Europe—that gave rise to the cause of action. Id. at 796–97. 46 Here, Appellees have neither pleaded nor offered evidence to show that any of the alleged misrepresentations giving rise to their claims took place in Texas. See sections II.D, II.F, supra. Further, there is no allegation or evidence that Preston ever even did business out of the TSI or NC12 Texas office. Preston participated in board meetings from Massachusetts, Switzerland, or Germany, never Texas. See CR 86–87 ¶¶ 2, 7 (Tab 1); CR 325, 328 (Tab 4). Appellees do not allege that Preston made any representation or undertook any action supporting any conspiracy while participating in these board meetings. Preston is not subject to specific jurisdiction on the bare fact of his status as director for corporations with Texas offices. b) Business trips to Texas. Appellees spill much ink describing the business trips Preston took in a representative capacity over the last 25 years. CR 260–64 (Tab 4). For the most part, these trips fall well before or well after the relevant window for investment into TSI or NC12, making it impossible that they give rise to the Appellees’ remaining claims. Most significant, however, is Appellees’ conspicuous failure to allege any connection between a single one of these business trips and the alleged misrepresentations or conspiracy. Board meetings and business trips in the 1990s. Appellees never allege that Preston’s 1990s-era Texas business trips give rise to their claims. CR 87 ¶ 5 (Tab 47 1); CR 260 (Tab 4). Nor could they. Appellees themselves state that MMT’s business in Texas concerned a waste recycling project using MMT’s catalytic extraction processing (“CEP”) technology, not potential investors in TSI or NC12. CR 260–61, 408–09 (Tab 4). TSI would not be formed until 2006, or do business in Texas until 2008. CR 281 (Tab 4). Preston’s MMT business trips do not form a basis for specific jurisdiction. Business trips with Quantum in 2004. Appellees never claim that Preston’s alleged three business trips to Texas in 2004 to meet with Collins19 give rise to their claims that Preston allegedly misrepresented the value of NC12 to potential investors. CR 408–09, 261 (Tab 4). Indeed, TSI still would not exist for another two years or do business for another four. CR 281 (Tab 4). Preston’s Quantum business trips do not form a basis for specific jurisdiction. Business trips with C Change between 2008–2011. Appellees never allege that any of Preston’s business trips with C Change related in any way to misrepresentations to investors about the value of TSI / NC12. CR 262–64, 319 at 25:3–28:21, 323 at 49:13-24, 335–38, 343–48 (Tab 4); CR 672–73 ¶¶ 5–6 (Tab 6). Appellees do not claim that Preston’s 2008 meeting in Houston with Collins and Sydow related to any alleged misrepresentations to investors. CR 262, 269, 19 Collins is not an intervenor, but an original plaintiff and former TSI/NC12 director whose fiduciary duty and conversion claims against Preston were dismissed and abated by the bankruptcy court. CR 234–37 (Tab 3). 48 319 at 25:3–28:21, 339–42 (Tab 4). With respect to the meeting in 2009 or early 2010, Preston’s C Change colleague Russell Read testified that he and Preston20 travelled to Texas during that period for one meeting with Russian technology partners for the formation of a joint venture MIT was exploring with the Russian government. CR 323 at 49:13–50:4 (Tab 4). Preston gave evidence of four other approximately one-day trips for C Change between 2009–2011.21 There is no evidence, nor even any allegation, that any of these trips related in any way to the Appellees’ surviving claims. Business trip to testify regarding NC12 in divorce proceeding. Preston traveled to Texas in October 2010 to testify in Sydow’s divorce proceeding. CR 339–42 (Tab 4). Preston testified exclusively about NC12 assets and financial operation. See CR 352–70 (Tab 4). But there can be no connection between any alleged post-August 2010 contacts with Texas and misrepresentations to potential investors in NC12, including this testimony, because August 2010 is the last alleged investment giving rise to the surviving claims, and there is no allegation or 20 Preston does not recall this trip. CR 673 ¶ 6 (Tab 6). Read discusses the matter in context with his work with Preston at C Change. CR 323 at 49:13-24 (Tab 4). While it is not clear from the record whether this alleged trip occurred on behalf of MIT or C Change, either way, there is no evidence that it related in any way to Appellees’ surviving claims. 21 Preston’s flight records establish these trips occurred April 2–3, 2009 (Houston) (CR 335–38), May 3–4, 2009 (Houston) (CR 343–44), December 30–31, 2010 (Dallas) (CR 347–48), and March 16–17, 2011 (Austin) (CR 345–46) (Tab 4). See also CR 672–73 ¶¶ 5–6 (Tab 6). As the intervenors affirmatively plead, the last intervenor’s investment was in August 2010. CR 104– 08 (Tab 2). Preston thus could not have made any relevant misrepresentations nor furthered the alleged conspiracy to misrepresent NC12’s value to the intervenors on the latter two trips. 49 evidence that this or any post-August 2010 Preston contact relates in any way to any conspiracy claim. CR 104–08 (Tab 2). Indeed, Appellees never allege any link between this trip to Texas and any surviving claim. CR 269 (Tab 4). Preston’s October 6, 2010 trip to Texas to give testimony in Sydow’s divorce proceeding does not give rise to specific jurisdiction. Business trip with TEM Capital. Appellees never allege that Preston’s May 2–4, 2011 business trip to Texas to attend a foreclosure sale and cement plant inspection for TEM Capital relates in any way to their surviving claims. See CR 673 ¶ 7 (Tab 6); 263–64, 269, 349–50 (Tab 4); CR 414, 427 (Tab 5); CR 673 ¶ 7 (Tab 6). Again, the last relevant investment occurred nearly a year before, and no evidence suggests this trip was related to any conspiracy to defraud NC12’s investors regarding the value of NC12’s shares. CR 104–08 (Tab 2). In sum, not a single one of Preston’s business trips give rise to the Appellees’ surviving claims. Thus, not a single one supports specific jurisdiction. c) 2004: Phone calls and mail to Collins. As discussed above, Preston’s 2004 business trips to Texas to meet with Collins did not relate to the surviving claims. As Collin himself states, Preston’s subsequent telephone calls and shipment of records related to the same purposes as his business trips: the commercial development of the CEP technology, not plans 50 to mislead investors of TSI two years later about the value of TSI. CR 409 ¶ 9 (Tab 4). These alleged contacts do not provide a basis for specific jurisdiction. d) 2006: Metal Catalyst Ventures’ designation of address as TSI address. A 2006 Nevada state record shows someone named Linda Kulik listed Preston as a director of Nevada corporation Metal Catalyst Ventures, Inc. CR 315 (Tab 4). Kulik listed TSI’s Houston address as Preston’s address. See id.; CR 281 (Tab 4). Appellees allege no other facts regarding Metal Catalyst Ventures, not even in their briefing. See CR 262 (Tab 4). Appellees never allege any link between Metal Catalyst Ventures to the claims in the lawsuit, nor do they provide any evidence that Preston actually resided at or did business at TSI’s address. See section II.D, II.F, supra. Preston submitted an unrefuted affidavit stating that he never served as a director of Metal Catalyst Ventures and never listed the TSI address as his own. CR 673 ¶ 9. (Tab 6). Preston has never maintained an office in Texas. CR 87 ¶ 8 (Tab 1). This is not a purposeful minimum contact supporting jurisdiction over Preston because it is not a contact by Preston. See Guardian Royal Exch. Assur., Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 227 (Tex. 1991) (“the contact must have resulted from the nonresident defendant's purposeful conduct and not the unilateral activity of the plaintiff or others”). See also Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 417, 104 S. Ct. 1868, 1873 51 (1984) (the “unilateral activity of another party or a third person is not an appropriate consideration when determining whether a defendant has sufficient contacts with a forum State to justify an assertion of jurisdiction.”). This alleged “contact” provides no basis for specific jurisdiction over Preston. e) 2008: Personal check. In 2008, Preston allegedly wrote a personal check to BOS, Inc., a Turks and Caicos corporation with an alleged bank account in Texas. CR 387 (Tab 4); CR 25 ¶ 2. Two years later, BOS, Inc. wired Preston back the same sum. CR 384 (Tab 4). There is no indication that Preston purposefully availed himself of any Texas- related benefits by writing a personal check to a foreign entity, or that this transaction has any relationship to the litigation. See Helicopteros, 466 U.S. at 416–17 (“Common sense and everyday experience suggest that, absent unusual circumstances, the bank on which a check is drawn is generally of little consequence to the payee and is a matter left to the discretion of the drawer.”) (footnote omitted). The BOS, Inc. payments are not a minimum contact with Texas and do not give rise to specific jurisdiction. f) 2012: Alleged alter-ego JK Claims’ purchase of litigation claims in the Kaiser Litigation. Appellees’ fantastical story of Preston secretly purchasing the claims in the Kaiser Litigation through alleged alter-ego JK Claims still does not relate in any way to any potential misrepresentation to investors of NC12—the last of which 52 invested two years prior—or give any conceivable support to a conspiracy to defraud potential investors in NC12. CR 414–24 (Tab 5). The Kaiser Litigation concerned disputes between the members of Texas Syngas LLC, not misrepresentations to potential investors in TSI or NC12 of TSI or NC12’s value. CR 432–40 (Tab 5). The first action intervenors allege relating to JK Claims, an application to reserve its name, occurred in June 2012, two years after the last investor invested in NC12. CR 527, 414–24 (Tab 5). Even if taken as true—which they should not be—the intervenors’ conspiracy theories regarding JK Claims have nothing to do with the claims at issue in this matter and do not form a basis for specific jurisdiction. In sum, none of Preston’s alleged contacts with Texas relate to the claims in this case. Appellees’ allegations and evidence do not support the exercise of specific jurisdiction. Kelly, 301 S.W.3d at 659 (Tab 8). 4. Appellees’ claim that Preston “could reasonably foresee that NC12 and its shareholders and investors would suffer direct economic injury” because of his alleged misrepresentations is not a basis for specific jurisdiction as a matter of law. Appellees claim that Preston is subject to specific jurisdiction because “[i]n raiding funds for TSI and NC12, through fraudulent misrepresentations and then denuding the companies of their assets, Preston . . . could reasonably foresee that NC12 and its shareholders and investors would suffer direct economic injury.” CR 269 (Tab 4). This argument echoes the intervenors’ general allegation in the 53 petition that there is personal jurisdiction because tortious conduct “was directed at the State of Texas.” CR 114 ¶ 44 (Tab 2). The Texas Supreme Court has unequivocally rejected the notion that jurisdiction can arise purely because actions caused harm to Texas residents or because a tort is “directed” at Texas residents. Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 788–92 (Tex. 2005) (surveying case law and constitutional considerations). And in this case, because there are no claims belonging to the original plaintiffs, and no intervenor is a Texas resident (including Appellees), the only conceivable Texas harm Appellees allege is harm to NC12, a Nevada corporation—but the bankruptcy court dismissed those claims. There is thus no basis in the pleadings, the evidence, or the law for specific jurisdiction over Preston. C. Because Preston’s alleged contacts with Texas are not substantial, continuous, or systematic, there is no general jurisdiction as a matter of law. 1. General jurisdiction requires the defendant to have substantial, continuous, and systematic contacts with Texas. General jurisdiction exists “when a defendant’s contacts in a forum are continuous and systematic so that the forum may exercise personal jurisdiction over the defendant even if the cause of action did not arise from or relate to activities conducted within the forum state.” BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 796 (Tex. 2002) (Tab 9). For general jurisdiction, the 54 plaintiff must show the nonresident defendant engaged in “substantial activities” in Texas. Guardian Royal Exch. Assur., Ltd. v. English China Clays, PLC, 815 S.W.2d 223, 230 (Tex. 1991). A general jurisdiction inquiry “involves a ‘more demanding minimum contacts analysis’” than a specific jurisdiction inquiry, with a “substantially higher threshold.” PHC-Minden, L.P. v. Kimberly-Clark Corp., 235 S.W.3d 163, 168 (Tex. 2007) (Tab 10). “Usually, ‘the defendant must be engaged in longstanding business in the forum state, such as marketing or shipping products, or performing services or maintaining one or more offices there; activities that are less extensive than that will not qualify for general in personam jurisdiction.’” Id. (quoting 4 Wright & Miller, FEDERAL PRACTICE & PROCEDURE § 1067.5). The defendant’s activities must be so extensive that it is essentially at home in the state, and therefore should be subject to suit there for any claim—regardless of where the claim occurred—as a resident would be. Goodyear Dunlop Tires Operations, S.A. v. Brown, 131 S. Ct. 2846, 2853–54, 180 L. Ed. 2d 796 (2011) (“For an individual, the paradigm forum for the exercise of general jurisdiction is the individual’s domicile; for a corporation, it is an equivalent place, one in which the corporation is fairly regarded as at home.”). As general jurisdiction is “dispute- blind,” the alleged actions underlying the lawsuit “should not be the focus in assessing continuous and systematic contacts—contacts on which jurisdiction over 55 any claim,” not just the one at issue, may be based. PHC-Minden, 235 S.W.3d at 169 (Tab 10). The relevant period for consideration of forum contacts for general jurisdiction ends at the time the suit is filed. Id. Because it is so easy to let case-specific facts improperly weight a general jurisdiction analysis, the Texas Supreme Court has suggested a test that “properly frames the issue”: would the nonresident’s contacts with Texas “support jurisdiction even for a hypothetical cause of action arising from its sale of a product in Germany that injured a German citizen?” Id. (citation omitted). In other words: are Preston’s Texas activities in Texas so pervasive that he should be sued in Texas in a case where none of the operative facts relate to Texas? The answer here is no. 2. The sporadic contacts with Texas in a representative capacity that Appellees allege are nothing like the substantial, continuous, and systematic contacts required to establish general jurisdiction. Appellees refer to the same set of alleged forum contacts to support both specific and general jurisdiction over Preston. CR 260–64, 269 (Tab 4); section II.F, supra. The vast majority of alleged contacts cannot be considered contacts for purposes of establishing general jurisdiction over Preston, either because they do not demonstrate that Preston availed himself of the privilege of conducting activities in Texas (service as a director of a foreign entity) or they were made in a representative capacity (business travel). Each is examined again in turn below in 56 the context of general jurisdiction. See Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 809 (Tex. 2002) (for general jurisdiction, all alleged forum contacts in the relevant time period must be “carefully investigated, compiled, sorted, and analyzed for proof of a pattern of continuing and systematic activity.”). The quality, not quantity, of the contacts is relevant, and the relevant period ends at the date of filing of the suit—here, July 26, 2011. Id.; CR 6. a) Director of foreign entities. The mere fact of service as a director of corporations which reside in Texas, without more, is insufficient as a matter of law to create general jurisdiction over Preston in Texas. Shaffer v. Heitner, 433 U.S. 186, 215–16, 97 S. Ct. 2569, 53 L. Ed. 2d 683 (1977) (fact that defendants were directors and officers of Delaware corporation did not demonstrate that they had purposefully availed themselves of the privilege of conducting activities in Delaware in a way that would justify bringing them before a Delaware tribunal). Preston participated in TSI and NC12 board meetings from Massachusetts, Switzerland, or Germany, never Texas. See CR 86–87 ¶¶ 2, 7 (Tab 1); CR 325, 328 (Tab 4). Indeed, Appellees allege no acts taken by Preston in Texas in connection with his service as a director for TSI and NC12, or any other entity. Even if they had, as discussed in detail below, any such acts would not be sufficient to subject him to general jurisdiction in Texas as an individual because 57 he did not do them in his individual capacity. Wright v. Sage Eng’g, Inc., 137 S.W.3d 238, 250 (Tex. App.—Houston [1st Dist.] 2004, pet. denied).22 b) Business trips to Texas. Preston’s contacts with Texas in his representative capacity do not qualify as contacts for general jurisdiction because there is no allegation that these contacts involved tortious activities or that the entities were Preston’s alter ego. Under Texas law, corporations are presumed to be separate entities from their directors, officers, and shareholders. See Washington DC Party Shuttle, LLC v. IGuide Tours, 406 S.W.3d 723, 738–39 (Tex. App.—Houston [14th Dist.] 2013, pet. denied). An individual's transaction of business within the state solely as a corporate officer does not create personal jurisdiction over that individual though the state may have personam jurisdiction over the corporation. Stuart v. Spademan, 772 F.2d 1185, 1197 (5th Cir. 1985). An individual’s representative contacts are not their own absent other evidence that the contact was independently tortious, or proof sufficient to pierce the corporate veil. Siskind v. Villa Found. for Educ., Inc., 642 S.W.2d 434, 438 (Tex. 1982); Hoffmann v. Dandurand, 180 S.W.3d 340, 347 (Tex. App.—Dallas 2005, no pet.). 22 This rule is sometimes referred to as the fiduciary shield doctrine. Id. Appellees cite Wright for the proposition that Preston’s acts as a director can create personal jurisdiction if it is those acts which give rise to the lawsuit. CR 270 (Tab 4). However, that is only true in the case of specific jurisdiction, not general jurisdiction, as the Wright court explicitly noted. 137 S.W.3d at 250. As already discussed above, Appellees do not allege any acts by Preston in Texas—in his capacity as a director or otherwise—that relate to the claims in this case. 58 This Court has held that general jurisdiction over an individual may not be based on jurisdiction over an entity with which an individual is associated unless the entity is his or her alter ego. Vosko v. Chase Manhattan Bank, N.A., 909 S.W.2d 95, 99 (Tex. App.—Houston [14th Dist.] 1995, writ denied). See also Hoffmann, 180 S.W.3d at 347. The alter ego doctrine applies only when there is such unity between the corporation and the individual that the separateness of the corporation has ceased. Vosko, 909 S.W.2d at 99. Courts consider evidence such as (1) the payment of alleged corporate debts with personal checks or other comingling of personal and corporate funds; (2) representations that the individual will financially back the corporation; (3) diversion of company profits to the individual for personal use; (4) inadequate capitalization; (5) other failures to keep corporate and personal assets separate. Hoffmann, 180 S.W.3d at 347. Because personal jurisdiction involves due-process considerations that may not be overridden by statutes or case law, jurisdictional veil-piercing and substantive veil-piercing involve different elements of proof. All Star Enter., 298 S.W.3d at 422; PHC-Minden, 235 S.W.3d at 174 (Tab 10). For jurisdictional purposes, the factors considered must relate to the actor’s forum contacts. See PHC Minden, 235 S.W.3d at 174 (Tab 10) (observing that common veil-piercing factors such undercapitalization and common names between entities do “not 59 affect whether each has sufficient contacts with the forum for jurisdictional purposes.”). Notably, while Appellees occasionally suggest Preston “controls” certain entities, with the exception of JK Claims (discussed below), Appellees never allege nor present any evidence that the various entities Preston represented in his contacts with Texas were Preston’s alter ego. Mere status as an officer, director or majority shareholder of an entity alone is insufficient to support a finding of alter ego. Tryco Enter., Inc. v. Robinson, 390 S.W.3d 497, 525 (Tex. App.—Houston [1st Dist.] 2012, pet. dism’d). Yet nearly all of Preston’s alleged Texas contacts relate to business trips to Texas on behalf of entities for whom Preston was a director or manager: Business trips with a nonprofit and MMT in the 1990s. Appellees never allege the nonprofit or MMT were alter-egos of Preston’s, or that Preston committed any torts on his trips that would give rise to jurisdiction over Preston in his personal capacity. CR 288–89 (Tab 4); CR 87 ¶ 5 (Tab 1). Preston’s 1990s-era Texas trips or Texas-related projects on behalf of the nonprofit and MMT do not constitute contacts supporting general jurisdiction over Preston as a matter of law. 60 Business trips with C Change between 2008–2011.23 With C Change, Preston allegedly visited Texas in November 2008 with Read to attend a meeting with Collins and Sydow; in “2009 or early 2010” with Read regarding a joint venture with MIT and Russian technology partners; and four other times between 2009–2011 for one-day business trips. CR 319 at 25:3–28:21, 323 at 49:13-24, 335–48 (Tab 4); CR 672–73 ¶¶ 5–6 (Tab 6). Appellees do not dispute that Preston took these trips in his representative capacity on behalf of C Change. CR 262–64 (Tab 4). Nor do Appellees allege that C Change is an alter ego of Preston’s, or that Preston committed fraud or any other tort in the course of his contacts with Texas through C Change. Preston’s Texas trips on behalf of C Change between do not constitute contacts supporting general jurisdiction as a matter of law. Business trip in 2010 to testify regarding NC12 in divorce proceeding. It is undisputed that Preston traveled to Texas on October 6, 2010 to testify about NC12’s assets and operations in Sydow’s divorce proceeding. CR 331–70 (Tab 4). While Appellees complain that the hearing transcript does not say “corporate representative,” it is indisputable that Preston’s testimony exclusively concerned NC12 assets and NC12’s financial operation. See CR 357 (discussing purpose of Preston’s testimony as whether Sydow or NC12 owned a particular asset, or 23 Preston’s alleged 2004 contacts with Collins are discussed together in the next subsection. See section V.C.2(c), infra. 61 whether Sydow was receiving money from NC12). The transcript contains no questions whatsoever regarding Preston’s personal relationship with Sydow—or indeed, anything other than NC12 financial operations and NC12 assets. CR 331– 70 (Tab 4). Even if Preston had testified in his personal capacity, it would not be evidence of purposeful availment of the benefits of acting in Texas. Preston did not file for divorce in Texas, Sydow did. See Guardian Royal Exch. Assur., Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 227 (Tex. 1991) (“the contact must have resulted from the nonresident defendant's purposeful conduct and not the unilateral activity of the plaintiff or others”). See also Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 417–18, 104 S. Ct. 1868, 1873 (1984) (the “unilateral activity of another party or a third person is not an appropriate consideration when determining whether a defendant has sufficient contacts with a forum State to justify an assertion of jurisdiction.”); Kulko v. Cal. Super. Ct., 436 U.S. 84, 93, 98 S. Ct. 1690, 1697 (1978) (holding it arbitrary to subject one parent to suit in any state where other parent chooses to spend time while having custody of child). One isolated trip to give testimony in a divorce proceeding is no evidence of any continuous and systematic relationship with Texas. Preston’s October 6, 2010 business trip does not support general jurisdiction. 62 Business trip with TEM Capital. Again, there is no dispute that Preston made his May 2–4, 2011 trip to Texas to attend a foreclosure sale and inspect a cement plant in connection with that sale as a representative of TEM Capital. CR 673 ¶ 7 (Tab 6); CR 349–51 (Tab 4). And again, there is simply no allegation, much less any evidence, that TEM Capital is an alter ego of Preston’s or that Preston did anything tortious on his trip that would support individual jurisdiction over him. In sum, not a single one of Preston’s business trips support general jurisdiction over Preston individually. c) 2004: Business trips, phone calls, and shipment of records with Quantum. While Collins disputes whether Preston acted as a representative of Quantum during their 2004 interactions,24 there is no dispute that these 2004 contacts pertained to the development of MMT’s patented CEP technology. CR 408–09 ¶¶ 3–9 (Tab 4); CR 673 ¶¶ 6–8 (Tab 6). The intervenors affirmatively assert that Quantum, not Preston, acquired MMT’s CEP technology in 1999 and that Quantum, not Preston, licensed the CEP patents CR 115–16 ¶¶ 48, 50 (Tab 2). 24 Preston’s sworn declaration states that all his interactions with Collins during this time period were as a representative of Quantum. CR 673 ¶ 8 (Tab 6). Collins claims he believed Preston to be operating in his personal capacity, rather than as a representative of Quantum during these 2004 meetings and communications. CR 408–09 ¶¶ 3–9, 11 (Tab 4). 63 While intervenors allege Quantum is “controlled” by Preston, there are no allegations or evidence that Quantum is Preston’s alter ago. See, e.g., CR 115 ¶ 48 (Tab 2); CR 673 ¶ 10 (Tab 6) (Preston is one of 21 shareholders of Quantum). There are no allegations or evidence, for example, that Preston comingled his funds with Quantum, or personally diverted Quantum’s assets, or used Quantum’s corporate form for his personal benefit. Despite Collins’ claims about his beliefs, there is no evidence Preston was acting in anything other than his representative capacity in his dealings with Collins in 2004, and there are no allegations that Preston committed any tortious acts in the course of these 2004 dealings. Moreover, none of the alleged 2004 contacts indicate Preston purposefully availed himself of the privileges of acting within Texas. Even if Preston were acting in his individual capacity, nothing indicates that Collins’ state of residence was anything but incidental. Collins, not Preston, chose to reside in Texas. See Guardian Royal Exch., 815 S.W.2d at 227; Helicopteros, 466 U.S. at 417–18; Kulko, 436 U.S. at 93. Even if these limited 2004 contacts—three trips, some telephone calls, and one shipment of technical records—were included in a general jurisdiction analysis, they hardly support the continuous and systematic contacts necessary to give rise to general jurisdiction. See Helicopteros, 466 U.S. at 417–18. 64 d) 2006: Metal Catalyst Ventures’ designation of business address at TSI address The fact that an unrelated individual listed TSI’s Texas office address as Preston’s address on a Nevada document regarding a Nevada corporation is not minimum contact with Texas, much less one that would support general jurisdiction. CR 315, 281 (Tab 4); CR 673 ¶ 9 (Tab 6). See Guardian Royal Exch., 815 S.W.2d at 227; Helicopteros, 466 U.S. at 417–18; Kulko, 436 U.S. at 93. e) 2008: Personal check Appellees present no evidence regarding the context surrounding the personal check Preston allegedly wrote to BOS, Inc., a Turks and Caicos corporation. CR 387 (Tab 4); CR 25 ¶ 2. Certainly, they present no explanation as to why Preston would know the foreign entity had a Texas bank account, or how Preston could be said to have purposefully availed himself of benefits of doing business in Texas by writing a check to such an entity. Guardian Royal Exch., 815 S.W.2d at 227; Helicopteros, 466 U.S. at 417–18; Kulko, 436 U.S. at 93. This is not the type of purposeful, continuous, and systemic contact with Texas that gives rise to general jurisdiction. 65 f) 2012: Alleged alter-ego JK Claims’ purchase of litigation claims in the Kaiser Litigation As a matter of law, Preston’s alleged Texas contacts in connection with JK Claims occur too late to qualify for a general jurisdiction analysis in this case. PHC-Minden, 235 S.W.3d at 169 (“the relevant period ends at the time suit is filed.”) (Tab 10). Not only do Appellees fail to establish that JK Claims is an alter ego of Preston’s, most significantly, they ignore the damning fact that the earliest of JK Claims’ alleged activities, its application for name reservation with the Texas Secretary of State, dates back to June 2012. CR 417, 527 (Tab 6). This is over a year after the original plaintiffs filed suit, and nearly a year after Appellees themselves filed their suit in intervention. CR 6; CR 102 (Tab 2). Appellees’ convoluted alter-ego story amounts to nothing more than an allegation that JK Claims kept poor records. Appellees fail entirely to establish JK Claims as an alter ego of Preston’s. Preston’s declaration and Sydow’s deposition testimony are unrefuted and establish that Quantum is the sole owner of JK Claims. CR 432, 495 at 57:2–3, 498 at 66:19–67:20 (Tab 5); CR 673 ¶ 10 (Tab 6). Appellees do not allege that Quantum is an alter ego of Preston. Rather, Appellees simply assert that JK Claims is Preston’s alter ego on the bases that: half of the funds for the Kaiser claims purchase came “from Boston” and half from Sydow; certain JK Claims corporate documents are unsigned; and certain JK Claims 66 corporate documents do not reflect the ownership of shares in JK Claims (though others do). CR 415–24, 529–31 (Tab 5). There is no evidence that Preston personally supplied any funds for JK Claims. Rather, Sydow testified the funds came from Quantum. CR 495 at 57:2– 3, 498 at 66:19–67:20 (Tab 5). And failure to comply with corporate formalities is not a factor in considering whether alter ego exists. Howell v. Hilton Hotels Corp., 84 S.W.3d 708, 714 (Tex. App.—Houston [1st Dist.] 2002, pet. denied). There is no evidence that Preston comingled his personal debts or assets with JK Claims or any of the others indicia of an alter ego entity. There is no evidence that Preston personally funded the acquisition of the Kaiser litigation and no evidence that the bankruptcy trustee would have objected if he had.25 There is no evidence that Preston (or JK Claims or Quantum) did anything improper with respect to JK Claims’ formation, or its acquisition or management of the Kaiser claims. TEX. R. CIV. P. 120a(3) (requiring the trial court to consider the pleadings and the evidence, not speculation and inference). 25 Appellees rely heavily on documents produced in the Kaiser litigation showing discussions between JK Claims’ counsel and the bankruptcy trustee’s counsel, Gretchen McCord, in connection with the sale. CR 421–24 (Tab 5) (referencing “Ex. I,” at CR 548–80). While one half of the source of the funding is unclear, the other half is explicitly from Sydow. CR 564 (Tab 5). If the trustee objected to a defendant in the Kaiser litigation funding JK Claims’ acquisition of the Kaiser claims, the trustee would have objected to Sydow, who was also a defendant in the Kaiser litigation. CR 432 (Tab 5). 67 Therefore, even if the alleged JK Claims activity were not too late to support jurisdiction of a matter of law, there would still be insufficient evidence to support any finding that JK Claims was Preston’s alter ego. Serv. Corp. Intern. v. Guerra, 348 S.W.3d 221, 228 (Tex. 2011) (evidence is legally insufficient if there is there is a complete absence of evidence of a vital fact, or the evidence offered to prove a vital fact is no more than a mere scintilla); Garza v. Alviar, 395 S.W.2d 821, 823 (Tex. 1965) (evidence is factually insufficient if it is so weak that the finding should be set aside). 3. Preston lacks any substantial, continuous, or systematic contact that would render him at “at home” in Texas. Standing against these tenuous Texas contacts are the following facts: Preston has not lived in Texas since his infancy; has never done business in Texas in his individual capacity; has never maintained an office in Texas; has never engaged in any routine sales or other profit-making activities in Texas; does not rent, own, or possess any real or personal property in Texas; has never taken out a loan in Texas or guaranteed a debt owed to a Texas resident; does not maintain a telephone, post office box, or other address in Texas; does not employ any persons who live in or regularly travel to Texas for work; and has never incurred or paid taxes in Texas. CR 86–89 ¶¶ 2–14, 74–85 (Tab 1). An out-of-state defendant who merely does business with Texas businesses or customers will not be subject to general jurisdiction if he does not have a lasting physical presence in the state. 68 Access Telecom, Inc. v. MCI Telecom. Corp., 197 F.3d 694, 717 (5th Cir. 1999). Preston indisputably does not. The Texas and United States Supreme Courts have made clear that brief, sporadic trips to a forum state are insufficient to create general jurisdiction, particularly when they are made in a representative capacity. PHC-Minden, 235 S.W.3d at 170 (Tab 9); Ashdon, Inc. v. Gary Brown & Assocs., Inc., 260 S.W.3d 101, 113 (Tex. App.—Houston [1st Dist.] 2008, no pet.) (Florida business owner’s 20+ sales meetings in Texas over 13-year period insufficient to establish general jurisdiction); Waterman Steamship, 355 S.W.3d at 406 (18 port calls over a seven- year period “is better characterized as sporadic rather than ‘continuous and systematic’ contacts”). In Helicopteros, the United States Supreme Court overturned the Texas Supreme Court, holding that because Helicol lacked any place of business in Texas, lacked a license to do business in Texas, took only sporadic trips to Texas through its CEO and employees, purchased products in Texas, and accepted checks drawn on Texas bank accounts, Helicol’s Texas contacts were insufficient for general personal jurisdiction. Helicopteros, 466 U.S. at 416–19. By contrast, in Perkins v. Benguet Consol. Mining Co., the nonresident defendant’s mining properties were located in the Philippines, but its operations were stopped by the Japanese occupation of the islands. 42 U.S. 437, 446–49, 72 69 S. Ct. 413, 419–20 (1952). During the occupation, the president and general manager returned to his home in Ohio and operated his business from there. See id. The United States Supreme Court determined that the company’s Ohio contacts supported a finding of general jurisdiction because the company’s president and general manager maintained an Ohio office, maintained company files in Ohio, corresponded from Ohio, drew and distributed salary checks from his Ohio office, used two Ohio bank accounts for company funds, had an Ohio bank act as transfer agent for the company’s stock, held directors’ meetings in Ohio, and supervised company Philippines property from Ohio. Id. Preston’s brief, sporadic, and representative contacts with Texas do not approach the level of forum contacts in Helicopteros, much less those in Perkins. Preston’s forum contacts are not so substantial that Preston “should have reasonably expected to be sued in Texas on any matter, however remote” from those contacts. Johnston v. Multidata Sys. Intern. Corp., 523 F.3d 602, 613 (5th Cir. 2008). There is no basis for general jurisdiction over Preston as a matter of law. VI. CONCLUSION AND PRAYER Appellees, disgruntled out-of-state investors in TSI and NC12, have not demonstrated why Texas courts should entertain their claims seeking to recover their lost investment against a Massachusetts resident who is not alleged to have 70 done anything in Texas connected to their claims. Appellees failed to meet their initial pleading burden, and there is no basis for the exercise of specific or general jurisdiction. Therefore, Preston requests that this Court reverse the trial court’s order overruling his special appearance, render a judgment granting his special appearance, and order that he be dismissed from the lawsuit. Respectfully submitted, AHMAD, ZAVITSANOS, ANAIPAKOS, ALAVI & MENSING, P.C. By: /s/ Jane Langdell Robinson Jane Langdell Robinson Texas Bar No. 24062970 Monica Uddin Texas Bar No. 24075195 Jamie A. Aycock Texas Bar No. 24050241 1221 McKinney Street, Suite 3460 Houston, Texas 77010 Telephone: 713-655-1101 Fax: 713-655-0062 ATTORNEYS FOR APPELLANT JOHN T. PRESTON 71 CERTIFICATE OF COMPLIANCE I certify that this brief complies with the typeface and word-count requirements set forth in the Rules of Appellate Procedure. This brief has been prepared, using Microsoft Word, in 14-point Times New Roman font for the text and 12-point Times New Roman font for any footnotes. This brief contains 14,507 words, as determined by the word count feature of the word processing program used to prepare this document, excluding those portions exempted by TEX. R. APP. P. 9.4(i)(1). /s/ Jane Langdell Robinson Jane Langdell Robinson 72 CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of this document was served on all counsel of record in this case, identified below, on June 12, 2015, by the electronic filing manager and/or via email: Kelley M. Keller F. Eric Fryar State Bar No. 11198240 State Bar No. 07495770 kkeller@ellison-keller.com eric@fryarlawfirm.com Tracey N. Ellison Matthew Buschi State Bar No. 15054720 State Bar No. 24064982 ELLISON KELLER mbuschi@fryarlawfirm.com 5120 Woodway Dr., Suite 6019 Christina Richardson Houston, Texas 77056 FRYAR LAW FIRM, P.C. Telephone: 713-266-8200 State Bar No. 24070495 Fax: 713-266-8201 912 Prairie, Suite 100 Attorneys for Appellees Emjo Houston, Texas 77002-3145 Investments, Ltd. and Fax: 281-605-1888 H.J. von der Goltz Attorneys for all Intervenors/ Plaintiffs Asher Griffin Chris Sileo Sean Flammer SCOTT, DOUGLASS & MCCONNICO, LLP 600 Congress Ave., Ste 1500 Austin, Texas 78701-2589 Fax: 512-474-0731 Attorneys for Appellees Chalsys, MET, and Lo /s/ Jane Langdell Robinson Jane Langdell Robinson 4834-5746-0004, v. 7 73 Filed 11 September 28 P2:44 Chris Daniel - District Clerk Harris County ED101J016518693 By: jeanetta spencer CAUSE NO. 2011-44058 MICHAEL COLLINS. ELLEN COLLINS. § IN THE DISTRICT COURT OF BOS, TNC.. ENVEN, INC., § METAL CATALYST VENTURES, INC., § FALL RNER REALTY. LTD. , § M. SAMEER AHMED, AND § TSBC SOUTH TEXAS INVESTORS. L.P., ~ § Plaintiffs, § § v. § HARRIS COUNTY, TEXAS ~ MICHAEL SYDOW, JOHN T. PRESTON. § CHRISTOPH HENKEL. C. CHANGE § INVESTMENTS. LLC, SONIA LO. CHALSYS ~ CAPITAL PARTNERS, L.L.P., § BRILLIANT NOVELTY , LL.C.. § and MELIORA ENERGY § TECHNOLOGTES, S.A.R.L., § § Defendants. § 2 15™ JUDICIAL DISTRICT DEFENDANT JOHN T. PRESTO 'S AMENDED SPECIAL APPEARANCE AND, SUBJECT THERETO, ORIGINAL ANSWER Pursuant to Texas Rule of Civil Procedure 120a. Defendant John T. Preston (''Preston") files this Amended Special Appearance, and Subject Thereto, Original Answer. objecting to this Court's personal jurisdiction over him, and in support states as foll ows: PRESTON'S SPECIAL APPEARANCE 1. Plaintiffs have sued eight defendants in Texas even though there is no basis for personal jurisdiction over all of them. Specifically. Preston does not belong in this la wsuit because he has not had contact with the state of Texas in his individual capacity in the past 60 years. nor has he ever done husiness in Texas in his indi vidual capacity. Preston· s limi ted contacts with Texas have been made on behalf of companies for which he is a director. T he contacts of these companies cannot be imputed to Preston to subject him to personal jurisdiction 74 in Texas. Thus, Preston does not have the requisite minimum contacts required by Texas and fe deral law to exercise personal jurisdiction over him. Similarly, because Preston has had no contact with Texas in the past 60 years, subjecting him to the jurisdiction of a Texas court would not comport with notions of fair play and justice. There fore. Preston respectfull y requests that this Court fmd that asserting jurisdiction over him in Texas is improper and dismiss all claims againsl him. Argument and Authorities I. Texas law requires that the exercise of personal jurisdiction be consistent with t'ederaJ due process. 2. A Texas court may only exercise pet sonaljudsdiction over a defendant if it would be consistent with Cederal constitutional requirements of due process. Guardian Royal Exch. Assurance. Ltd. v. English China Clays, P.L. C. , 8 15 S.W.2d 223, 226 (Tex. 199 1). The Texas long-aJm statute authorizes the exercise of j urisdiction over nonresidents who are "doing business" in Texas, but this statute can only reach as far as the federal constitutional requirements of due process will a llow. TEX. CIV. PRAC. & REM. CODE§ 1 7.042 ~ Guardian Royal. 815 S .W.2d at 226 . Thus, Texas courts must look to due process requirements to determine if personaljul'isdiction is proper. Guardian Royal, 8 15 S. W.2d at 226. 3. Personal jurisdiction is consistent with due process if 1) the defendant has purposely established ·'minimum contacts, with Texas: and 2) the exercise of personal jurisdiction comports with " fair play and substantial justice." Nat '[Indus. SOJzd Ass 'n v. Gibson. 897 S.W.2d 769, 772 (Tex. 1995); Guardian Royal, 815 S.W.2d at 226. 48 12-3575·8602. v. I 75 II. Preston does not have the requisite minimum contact., with Texas to give rise to personal jurisdiction. 4. The essential goal of the minimum contacts test is to protect the defendant. Schlobohm v. Schapiro. 784 S.W.2d 355, 357 (Tex. 1990). Thus. the defendant's minimum contacts must constitute a "substantial connection" between lhe defendant and Texas. Guardian Royal, 8 15 S .W.2d at 23 1. A defendant is not subject to ju1·isdiction if his Texas contacts are random. fortuitous or attenuated. Am. Type Culture Collection. Inc. v. Colenum . 83 S.W.3d 801. 806 (Tex. 2002). Instead. to be subject to personal jurisdiction the defcndITERVEN l !ON ;·· nr'...~ 118 was never actually transferred to Texas Syngas. In September 2008, the property was put in the name of FaJJ River Realty, Ltd., an entity in whi ch Sydow owned an individual interest, and for which Sydow served as the managing director Defendants never disclosed to the shareholders that Texas Syngas (and later NC12) did not own the building. Title to the building remained in FaJI River Realty, Ltd., which then proceeded to charge Texas Syngas a monthly rent of $28,000 for use of the facility it should have owned. 57. ln February 2009, MPR, an independent engineering firm, concluded its review of the Texas Syngas technology. MPR confirmed the viability of the reactor' s science and theoretical basis, its design, and the gasification process chemistry. On or about May 14, 2009, Collins and Robert Bach formally assigned the patented technology to Texas Syngas in the records of the United States Patent and Trademark Office. D. Fraud on Texas Syngas and Its Shareholders 58. On infonnation and belief, Preston and Sydow had no intentjon of using shareholder money as represented to the shareholders. Preston is a classic stock promoter and has rai sed (and spent) millions upon millions of shareholder dollars, but has never actually built a commercially successful company. Sydow is a lawyer skilled at hiding assets ami corporate manipulation. During the t}me that Preston and Sydow controlled the board of directors, they made sure that the bulk of the money actually went to them or to several of their related entities, rather than to build the demonstration reactor. In addition to the fraudulent acquisition of the Fall River facility, on infom1ation and belief, C Change was apparently paid a $40,000 per month consuJtjng fee. Additionally, Sydow and Preston had the company pay tens of thousands of dollars evety month to lawyers and consultants and as well as other expenses that did not benefit the shareholders or 119 the corporation, but actually provided benefit for Sydow and his law fim1 and was apparently used by Preston to solicit investors for C Change . 59. Ow-ing 2009, Sydow moved the Texas Syngas corporate headquarters in Houston from 4900 Woodway to more luxwious accommodations on Post Oak Boulevard. Sydow never devoted his full attention to Texas Syngas as promised, but relocated his law practice to the Texas Syngas office space, spent most of his time on his own law practice, and used Texas Syngas employees to do work for hi s firm . Two of Sydow's children worked full time as lawyers in Sydow's law firm at Texas Syngas' expense. Texas Syngas was not compensated for use of its space, suppli es, resources, or personnel. Texas Syngas also paid for the maintenance, storage, and cleaning for Sydow' s airplane. When Texas Syngas was finally ready to construct the test reactor, Sydow and Preston had largely squandered the money raised for that purpose E. Investment by tbe Note Holder Intervenors 60 Despite his numerous promises and despite being compensated to do so, Preston faj led to rai se additim1al funds for Texas Syngas in 2009, and by mid-year Texas Syngas desperately needed funding. In 2009, Preston and Sydow again turned to N[r. von der Goltz for assistance. Mr. von der Goltz was able, through mid-2010, to raise a total of$6,104,000 in additional funds from friends, family, and business assodates. These investors, the Note Holder Intervenors, were issued convertible promissmy notes, which provided for automatic conversion into common shares at a 20% discount of the new investor' s valuation if Texas Syngas obtained qualified financing from a single investor of at least $5 million on or before September 30, 20 10. If no qualified financing occurred, the notes would become due and payable within five days after a demand was made on or after the September 30, 20 10, maturity date. 0Rt(il};Al. PE'l-n'fO~ TN TNiERVl:.l\'l !Oh 120 6 1. Preston and Sydow, both di rectly and through their statements to von der Goltz, represented to the Note Holder Intervenors that Texas Syngas was worth $300 million as of 2009, based on the value of the technology and the CLECO and Turkish contracts. However, Preston and Sydow fai led to di sclose that the CLECO contract had been cancelled. Preston and Sydow also represented that the money would be used prima1ily to build the test reactor; however, their later conduct and misuse of the funds demonstrate that they had no intention of using the money for that purpose. F. Formation of NC12 62. During 2009, Sydow, Henkel, and Preston became increasingly at odds with Collins, who still owned o r controll ed over 60% of the shares. By the end of 2009, Preston, Sydow, and Henkel att.empted to wrest control of the company from Colli ns through a scheme to dilute his interest C Change had received an investment of $15 million from Corinna von Schoenau, which was intended for investment in Texas Syngas; however, Preston withheld $10 million of these funds and proposed that C Change would invest $5 milli on at a pre-money valuati on of $10 million and post-money valuation of $ 15 milli on in exchange for a 33% interest in the company . Collins, as the majmity shareholder, blocked thi s effort, and tension among the board members reached a boiling poi nt- to tJ1e poi nt where moving the business forward seemed impossible. Collins and Sydow approached Mr. von der Goltz to mediate a settlement to save the company . Ultimately. Preston, Sydow, and Collins agreed that Texas Syngas would be reorganized and that a new three-person board of directors compri sed of Sydow and two new directors acceptable to Collins would govern the t1ew corporation. Collins was very hesitant to relinquish hi s position as a director, but agreed to a new board on the conditions that the new board members retained their positions for two years and that no funds would be accepted from C Change. (Preston ultimately O Rt~ TN TmP.RVl:.N 1!ON 121 took von Schoenau 's $ 15 million intended for Texas Syngas and invested it in a different Preston scheme). 63. In late 2009, as part of the reorganizati on, Sydow li quidated Texas Syngas before a new board was named. Sydow transfen-ed Texas Syngas' assets to a new Nevada corporation, NC 12, Inc. The preferred shares of the Shareholder Intervenors in Texas Syngas were convet1ed to common shares in NC12 and the convertible promissory notes held by the Note Holder Intervenors were assumed by NC 12. With Collins' agreemetlt, Sydow remajned as CEO of NC 12 and was joined on the board of directors by Mr. H.J. von der Goltz and Dr. Aydin Muderrisoglu. Von der Goltz was elected to serve as n on~executi ve chairman of the board of directors. Von der Goltz hoped the reorganization would relieve tension between Sydow and Collins, allowing Collins to focus on building the reactor at the Fall River, Massachusetts, facility that supposedly had been purchased by Texas Syngas, and allowi ng Sydow to focus on managi ng the company from the Houston headquat1ers and negotiating contracts with potential customers. 64. Sydow apparently believed that he would be able to manipul ate the new board members and assume greater control. When the new board members made clear their independence and intent to act in the best interest of the corporation and its shareholders, Sydow enl isted Preston and immediately began to undercut the authority of the new board members and to withhold infom1ation from them until they could be removed. Sydow maintained sole signatory authority over all NC 12 bank accounts and refused requests by von der Goltz that certain expenditures require two signatures. 65. Mr. von der Goltz took seriously his new role as a chairman of the board of directors. 1'-Ie met personally with all the Houston and Fall Ri ver employees in January 20 10 and sought to ORlGJNAl. Pt-7Jn'fON TN TNTI:.RVEN'Y'lON 122 clean up NC 12's finances, streamline operations based on his vast operational experience, and above all, see that the demonstration reactor wa.s built. Collins, in the meantime, had moved full- time to Massachusetts and made meaningful progress on constructing the reactor and purchasing necessary equipment with the funds rai sed by von der Goltz. Sydow retained control of the corporation's money and continued his rni sappropriation and profligate spending, which included approxi mately $46,000 that he spent during a nine-day trip to London in mid-2010, a $20,000 per month l [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/4057489. Public record. Not legal advice.