Preview
017-292197-17 FILED
TARRANT COUNTY
7/17/2017 9:06 AM
THOMAS A. WILDER
DISTRICT CLERK
CAUSE NO. 017-292197-17
STATE FARM LLOYDS AS SUBROGEE § IN THE DISTRICT COURT
OF JOSEPH AND MICHAEL §
BILLINGSLEY §
§
Plaintiff, §
§
vs. § 17TH JUDICIAL DISTRICT
§
INTERLINE BRANDS, INC., LINX, LTD., §
WATTS PLUMBING TECHNOLOGIES §
(TAIZHOU) CO., LTD., and WATTS §
REGULATOR CO., §
§
Defendant. § TARRANT COUNTY, TEXAS
DEFENDANT WATTS REGULATOR CO.’S MOTION TO DISMISS AND, SUBJECT
THERETO, SPECIAL EXCEPTIONS, ORIGINAL ANSWER TO PLAINTIFF’S
ORIGINAL PETITION AND REQUEST FOR DISCLOSURE
TO THE HONORABLE JUDGE OF SAID COURT:
Defendant Watts Regulator Co. (“WRC”) files this Motion to Dismiss and, subject
thereto, Special Exceptions, and Original Answer to Plaintiff’s Petition and Request for
Disclosure, and would respectfully show the Court as follows:
I.
MOTION TO DISMISS
1. Plaintiffs incorrectly assert WRC should be held jointly and severally liable for
Plaintiff’s alleged damages.
2. WRC is a Massachusetts corporation with its principal place of business in North
Andover, Massachusetts. 1
3. Watts Plumbing Technologies (Taizhou) Co., Ltd. (“WPT”) is a Chinese
company formed under the laws of China, and exists pursuant to the laws of that country. WPT's
1
See Ex. A ¶ 3 (Affidavit of Timothy MacPhee). The Affidavit will be filed upon receipt.
DEFENDANT WATTS REGULATOR CO.’S MOTION TO DISMISS AND,
SUBJECT THERETO, SPECIAL EXCEPTIONS, ORIGINAL ANSWER
TO PLAINTIFF’S ORIGINAL PETITION AND REQUEST FOR DISCLOSURE PAGE 1
principal (and only) place of business is in the Mechanical & Electrical Industry Zone, Yuhuan
County, Taizhou, Zhejiang, China. 2
4. WRC is a separate and distinct entity from WPT. 3
5. WRC is not an agent of WPT and does not and did not have authority to act for or
on behalf of WPT. It does not and did not have any authority to enter into, modify, accept
performance of, or terminate contractual obligations between WPT and other third parties. 4
6. WRC does not and did not transact any business on behalf of WPT and does not
and did not have responsibility for WPT’s business affairs. 5
7. WRC does not and did not sell products on behalf of WPT, nor does it conduct or
has it ever conducted any promotions or advertisements on behalf of WPT. 6
8. In sum, WRC does not and did not have any involvement with or control over
WPT’s day-to-day activities. 7
9. Two Texas courts in the Northern District of Texas, including a federal judge in
Tarrant County, in cases involving the same claims and one involving the same parties, have
ruled WPT is not subject to personal jurisdiction in Texas. 8 Plaintiff is collaterally and judicially
estopped from asserting otherwise and is further barred by the principles of res judicata.
10. WRC did not design, manufacture, process, market, service, distribute or sell the
2
Id. ¶ 7.
3
Id. ¶¶ 8-18.
4
Id.
5
Id.
6
Id.
7
Id.
8
See Ex. B (Order Granting Mtn. to Dismiss for Lack of Jurisdiction in State Farm Lloyds As Subrogee of Steve and
Lisa Watson v. Interline Brands, Inc., et al., Action No. 4:13-CV-033-Y, in the Northern District of Texas, Fort
Worth Division); see also Ex. C (Mem. Op. and Order Granting Watts Plumbing Co.’s Motion to Dismiss for Lack
of Personal Jurisdiction in Allstate Ins. Co. et al. v. Interline Brands, Inc. et al., Civil Action No. 3:13-CV-946-B, in
the Northern District of Texas, Dallas Division).
DEFENDANT WATTS REGULATOR CO.’S MOTION TO DISMISS AND,
SUBJECT THERETO, SPECIAL EXCEPTIONS, ORIGINAL ANSWER
TO PLAINTIFF’S ORIGINAL PETITION AND REQUEST FOR DISCLOSURE PAGE 2
supply line as alleged in Plaintiff’s Petition, or any component part thereof. 9
11. Accordingly, because Plaintiff’s claims all arise from alleged defects or
warranties with respect to a supply line manufactured, marketed, and/or distributed by other
parties, WRC cannot be held liable as a matter of law.
12. Further, WRC, as a separate and distinct entity from WPT, cannot be held liable
for any alleged acts or omissions of WPT, a Chinese company, which is not subject to this
Court’s jurisdiction.
A. Plaintiff’s claims should be dismissed in their entirety because defects in their Petition
are not curable by amendment.
13. Generally, when a basis for dismissal is the failure to state a cause of action, the
party requesting dismissal must first file a special exception. 10 If the special exception is
sustained, the opposing party must be given an opportunity to amend its pleading before the case
can be dismissed for failure to state a cause of action. 11 However, special exceptions are not
required when a party pleads himself or herself out of court. 12 The right to amend only exists if
the defect in the pleadings is curable. 13
14. As stated by the Hunter court:
The trial court need not give the . . .plaintiff an opportunity to
amend if the pleading defect is the type which amendment cannot
cure. . . . If there is no reasonable probability that further
amendment would disclose facts legally sufficient to sustain a
cause of action, the trial court may properly refuse further leave to
amend. 14
9
See Ex. A ¶¶ 5, 19-20.
10
Tex. Dep’t of Corr. v. Herring, 513 S.W.2d 6, 10 (Tex. 1974); Hunter v. Johnson, 25 S.W.3d 247, 249 (Tex.
App.CEl Paso 2000, no pet.).
11
Hunter, 25 S.W.3d at 249.
12
Id. at 250.
13
Mowbray v. Avery, 76 S.W.3d 663, 678 (Tex. App.—Corpus Christi 2002, pet. denied).
14
Id. at 678 (internal citations omitted) (emphasis added).
DEFENDANT WATTS REGULATOR CO.’S MOTION TO DISMISS AND,
SUBJECT THERETO, SPECIAL EXCEPTIONS, ORIGINAL ANSWER
TO PLAINTIFF’S ORIGINAL PETITION AND REQUEST FOR DISCLOSURE PAGE 3
15. Because the defects in Plaintiff’s Petition are not curable by amendment, for the
reasons stated above, all of Plaintiff’s claims should be dismissed in their entirety.
II.
SPECIAL EXCEPTIONS
16. In the alternative to its Motion to Dismiss, WRC specially excepts and objects to
the entirety of Plaintiff’s Original Petition for failure to state a cause of action against WRC for
which relief can be granted. Specifically, Plaintiff conflates its theories of liability against all
defendants by using the plural, but has failed to sufficiently plead individual allegations against
WRC, including that WRC designed, manufactured, and/or marketed the subject water supply
line. In the alternative to granting WRC’s Motion to Dismiss, WRC requests this Court to
sustain its Special Exception and order Plaintiff to replead its claims, pleading facts that would
entitle Plaintiff to relief against WRC individually. Furthermore, WRC prays the Court order
Plaintiff to replead within seven (7) days, the failure of which will result in the striking of all
Plaintiff’s claims and causes of action against WRC.
I.
ORIGINAL ANSWER
17. Pursuant to Texas Rule of Civil Procedure 92, WRC generally denies the material
allegations contained in Plaintiff’s Petition on file herein, demands strict proof thereof, and says
this is a matter for jury decision.
18. Pleading further, alternatively, and by way of affirmative defense, WRC would
show that at the time and on the occasion in question, Plaintiff and/or Plaintiff’s insured failed to
use that degree of care and caution that would have been used by a person with ordinary
prudence under the same or similar circumstances, and that such failure was a proximate cause or
a producing cause or the sole proximate cause or the sole producing cause of the incident in
DEFENDANT WATTS REGULATOR CO.’S MOTION TO DISMISS AND,
SUBJECT THERETO, SPECIAL EXCEPTIONS, ORIGINAL ANSWER
TO PLAINTIFF’S ORIGINAL PETITION AND REQUEST FOR DISCLOSURE PAGE 4
question and any alleged damages stemming therefrom. Defendant WRC, therefore, invokes the
comparative responsibility provisions of the TEXAS CIVIL PRACTICE & REMEDIES CODE § 33.001,
et seq.
19. Pleading further, alternatively, and by way of affirmative defense, WRC would
show the incident in question and Plaintiff’s alleged resulting damages were the result of
negligent acts and/or omissions of others beyond WRC’s control, whose acts or omissions were a
proximate cause or a producing cause or the sole proximate or the sole producing cause of the
incident in question and Plaintiff’s alleged resulting damages.
20. Pleading further, alternatively, and by way of affirmative defense, WRC would
show, in the unlikely event that any liability be found on the part of WRC, that such liability be
reduced by the percentage of the causation found to have resulted from the negligence and/or
from the acts or omissions of Plaintiff, Plaintiff’s insured and any other third parties.
21. Pleading further, alternatively, and by way of affirmative defense, WRC asserts
the limitation of damages recoverable as provided by applicable portions of the Texas Business
& Commerce Code (including, but not limited to, §§ 17.505 and 2.719); the Texas Civil Practice
and Remedies Code (including but not limited to Chapters 32, 33 and 38); the exclusion of
implied warranties as provided by applicable portions of the Texas Business & Commerce Code
(including, but not limited to, § 2.316); and any other applicable statute or rule of law, and any
other applicable affirmative defenses contained in the Texas Business & Commerce Code and
the Texas Civil Practice & Remedies Code.
22. Pleading further, alternatively, and by way of affirmative defense, WRC would
state that in the unlikely event that an adverse judgment would be rendered against it, WRC
would respectfully request all available credits and/or offsets as provided by the Texas Civil
DEFENDANT WATTS REGULATOR CO.’S MOTION TO DISMISS AND,
SUBJECT THERETO, SPECIAL EXCEPTIONS, ORIGINAL ANSWER
TO PLAINTIFF’S ORIGINAL PETITION AND REQUEST FOR DISCLOSURE PAGE 5
Practice and Remedies Code and under Texas law.
23. Pleading further, alternatively, and by way of affirmative defense, WRC would
show that Plaintiff and/or Plaintiff’s insured failed to mitigate its/their damages, if any.
24. Pleading further, alternatively, and by way of affirmative defense, WRC states
Plaintiff’s claims and causes of action for breach of warranty may be barred under the terms of
the express warranty limiting coverage.
25. Pleading further, alternatively, and by way of affirmative defense, WRC would
show that Plaintiff’s breach of warranty claims are barred because Plaintiff failed to provide
WRC with reasonable and proper notice of its breach of warranty claims as required by TEX.
BUS. & COMM. CODE § 2.607.
26. Pleading further, alternatively, and by way of affirmative defense, WRC states
Plaintiff’s claims for breach of warranty are barred because WRC was not given a reasonable
opportunity to cure the alleged deficiencies.
27. Pleading further, alternatively, and by way of affirmative defense, WRC states
Plaintiff’s breach of warranty claims and causes of action are barred and/or recovery is limited in
whole or in part by applicable written, contractual warranty exclusions, modifications, limitation
of liability, and/or limitation of damages or remedies available.
28. WRC hereby gives notice that it intends to rely upon such other defenses or
denials as may become available or appear during discovery as it proceeds in this matter, and
hereby reserves the right to amend its Answer to assert such defenses.
II.
JURY DEMAND
29. WRC demands a jury be impaneled to try the facts and issues of this cause.
DEFENDANT WATTS REGULATOR CO.’S MOTION TO DISMISS AND,
SUBJECT THERETO, SPECIAL EXCEPTIONS, ORIGINAL ANSWER
TO PLAINTIFF’S ORIGINAL PETITION AND REQUEST FOR DISCLOSURE PAGE 6
III.
COURT REPORTER
30. WRC respectfully requests that a court reporter attend all sessions in Court in
connection with this case and that said reporter take full notes of all testimony offered, together
with any objections, rulings, and remarks of the Court and exemptions thereto and such other
proceedings as may be needed or requested by said Defendant. See Christie v. Price, 558
S.W.2d 922 (Tex. Civ. App. — Texarkana 1977, no writ).
IV.
REQUEST FOR DISCLOSURE
31. Pursuant to Rule 194, you are requested to disclose, within thirty (30) days of
service of this request, the information or material described in Rule 194.2 (a) through (l).
V.
PRAYER
Defendant Watts Regulator Co. prays that Plaintiff’s case against it be dismissed; that,
alternatively, Plaintiff be required to replead with specificity as stated herein; and that Plaintiff
takes nothing; that WRC recover its costs herein expended; and for such other and further relief,
in law or in equity, to which it may show itself justly entitled.
DEFENDANT WATTS REGULATOR CO.’S MOTION TO DISMISS AND,
SUBJECT THERETO, SPECIAL EXCEPTIONS, ORIGINAL ANSWER
TO PLAINTIFF’S ORIGINAL PETITION AND REQUEST FOR DISCLOSURE PAGE 7
Respectfully submitted,
/s/ C. Vernon Hartline, Jr.
C. VERNON HARTLINE, JR. (Attorney in Charge)
State Bar No. 09159500
vhartline@hdbdlaw.com
L. ABIGAIL FOREMAN
State Bar No. 24056371
aforeman@hdbdlaw.com
DREW M. THOMAS
State Bar No. 24086841
dthomas@hdbdlaw.com
HARTLINE DACUS BARGER DREYER LLP
8750 North Central Expressway, Suite 1600
Dallas, Texas 75231
(214) 346-3700
(214) 369-2118 (fax)
ATTORNEYS FOR DEFENDANT
WATTS REGULATOR CO.
CERTIFICATE OF SERVICE
I hereby certify that a true and correct copy of the foregoing document has been
forwarded to all known counsel of record in accordance with the Texas Rules of Civil Procedure
on this 17th day of July, 2017.
/s/ C. Vernon Hartline, Jr.
C. VERNON HARTLINE, JR.
DEFENDANT WATTS REGULATOR CO.’S MOTION TO DISMISS AND,
SUBJECT THERETO, SPECIAL EXCEPTIONS, ORIGINAL ANSWER
TO PLAINTIFF’S ORIGINAL PETITION AND REQUEST FOR DISCLOSURE PAGE 8
EXHIBIT A
(will be filed upon receipt)
EXHIBIT B
Case 4:13-cv-00033-Y Document 171 Filed 06/19/14 Page 1 of 3 PageID 4915
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF TEXAS
FORT WORTH DIVISION
STATE FARM LLOYDS AS SUBROGEE §
OF STEVE AND LISA WATSON §
§
VS. § ACTION NO. 4:13-CV-033-Y
§
INTERLINE BRANDS, INC., ET AL. §
ORDER GRANTING MOTION TO DISMISS FOR LACK OF JURISDICTION
Pending before the Court is the Motion to Dismiss for Lack of
Personal Jurisdiction, Motion to Dismiss for Failure to State a Claim
Upon Which Relief can be Granted, and Motion for a More Definite
Statement to Plaintiffs' First Amended Complaint (doc. 85), which
was filed in this cause by defendant Watts Plumbing Technologies
(Taizhou) Co., Ltd. ("Watts"). In the motion, Watts, a corporation
organized under the laws of China with its principal place of business
in Yuhuan County, Taizhou, Zhejiang, China, seeks dismissal of
Plaintiff's claims against it for, inter alia, lack of personal
jurisdiction. After review of the motion, the response filed by
plaintiff State Farm Lloyds ("State Farm"), Watts's reply, the
evidence highlighted in the parties' briefs, and the applicable law,
the Court concludes that State Farm has failed to demonstrate that
the exercise of jurisdiction over Watts is appropriate.
This is a subrogation action in which State Farm contends that
Watts manufactured "[a] defective DuraPro brand toilet supply line
and/or integral connectors/components" that caused water damage to
the property and contents of its insureds, Steve and Lisa Watson.
(Notice of Removal [doc. 1] 7-8, Pl.'s Pet. ¶9.) State Farm contends
ORDER GRANTING MOTION TO DISMISS FOR LACK OF JURISDICTION - Page 1
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Case 4:13-cv-00033-Y Document 171 Filed 06/19/14 Page 2 of 3 PageID 4916
that this Court can exercise specific jurisdiction over Watts under
the "stream-of-commerce doctrine" and that it can exercise general
jurisdiction over Watts due to fifty-four shipments Watts made to
Texas over the course of eight years. As the plaintiff, State Farm
bears the burden of establishing a prima-facie case that the exercise
of personal jurisdiction over Watts in this forum is proper. See
Wilson v. Belin, 20 F.3d 644, 648 (5th Cir. 1994).
Recently, Judge Jane Boyle of this Court was presented with a
similar case involving Watts and its allegedly defective toilet supply
lines. See Allstate Ins. Co. v. Interline Brands, Inc., et al., No.
3:13-CV-946-B, 2014 WL 462814 (N.D. Tex. Feb. 5, 2014).1 Judge Boyle
concluded that the insurance-company plaintiffs in that action failed
to demonstrate that the exercise of either specific or general
personal jurisdiction over Watts in this forum would be proper. The
judge in this case has reviewed the record in both cases and noted
that State Farm's response brief to Watts's motion to dismiss in this
case is identical to the brief filed by the insurance companies in
response to Watts's motion to dismiss in Judge Boyle's case. Judge
Boyle analyzed the insurance companies' stream-of-commerce theory
and the fifty-four shipments Watts made to Texas and concluded that
they were insufficient to warrant the exercise of jurisdiction over
Watts in Texas. After reviewing the briefs and Judge Boyle's opinion,
this judge also concludes that State Farm has failed to demonstrate,
prima facie, that the exercise of personal jurisdiction over Watts
1
A copy of Judge Boyle's opinion is attached as an exhibit to Watts's
Motion for Leave to File Supplemental Authority (doc. 162) filed in this case,
which motion was granted by this Court (doc. 165).
ORDER GRANTING MOTION TO DISMISS FOR LACK OF JURISDICTION - Page 2
TRM/chr
Case 4:13-cv-00033-Y Document 171 Filed 06/19/14 Page 3 of 3 PageID 4917
in this forum is appropriate, for the reasons articulated by Judge
Boyle.
It is, therefore, ORDERED that Watts's Motion to Dismiss (doc.
85) State Farm's claims is GRANTED. State Farm's claims against Watts
are hereby DISMISSED due to lack of personal jurisdiction, without
prejudice to their refiling in an appropriate forum.
SIGNED June 19, 2014.
____________________________
TERRY R. MEANS
UNITED STATES DISTRICT JUDGE
ORDER GRANTING MOTION TO DISMISS FOR LACK OF JURISDICTION - Page 3
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EXHIBIT C
Case 3:13-cv-00946-B Document 77 Filed 02/05/14 Page 1 of 16 PageID 2226
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
ALLSTATE INSURANCE COMPANY, §
A/S/O JASON V. YEONG, ET AL., §
§
§
Plaintiff, §
§
and §
§
FIRE INSURANCE EXCHANGE, §
A/S/O, RAYMOND LEHMKUHL, §
§
Intervenor, §
§
v. § CIVIL ACTION NO. 3:13-CV-946-B
§
INTERLINE BRANDS, INC., LINX, §
LTD., and WATTS PLUMBING §
TECHNOLOGIES (TAIZHOU) CO., §
LTD., §
§
Defendants. §
MEMORANDUM OPINION AND ORDER
In this subrogation action, Allstate Insurance Company (“Allstate”) and Fire Insurance
Exchange (“Fire Insurance”) (together, “Plaintiffs”) allege that Defendant Watts Plumbing
Technologies (Taizhou) Co., LTD (“Watts”) manufactured defective toilet supply lines that caused
water-related damage in a number of insured individuals’ homes. Watts, which does business out of
its sole facility in China, now moves to (among other things) dismiss the claims against it for lack of
personal jurisdiction. Plaintiffs’ primary response is that jurisdiction is proper under the stream of
commerce doctrine. Because it finds that Plaintiffs fail to make out a prima facie case of personal
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Case 3:13-cv-00946-B Document 77 Filed 02/05/14 Page 2 of 16 PageID 2227
jurisdiction over Watts, the Court GRANTS the pending Motions to Dismiss for Lack of Personal
Jurisdiction (docs. 27, 43), and DISMISSES WITHOUT PREJUDICE the claims against
Defendant Watts.1
I.
BACKGROUND
This is a subrogation action removed from Texas state court on March 4, 2013. (Doc. 1,
Notice of Removal). Plaintiffs are the subrogees of thirteen insured homeowners residing in eight
different states, including three from Texas.2 Over the course of a year-and-a-half (May 2011 to
September 2012), each insured homeowner allegedly sustained water-related property damage when
the plastic ballcock nut on one end of the toilet supply lines installed in their residences “cracked as
a result of a defect.” (Doc. 24, Am. Compl. ¶¶ 9, 16.) The defective toilet supply lines—which share
mostly the same features and were sold under the “DuraPro” label—were allegedly manufactured by
Watts and sold to Defendant Linx, Ltd. (“Linx”), who re-sold the lines to Defendant Interline Brands,
Inc. (“Interline”), who then distributed the lines throughout the U.S. market, eventually ending up
in the insureds’ residences. (Id. ¶ 9.)
While all three defendants deny liability, only Watts seeks dismissal at this time, primarily
1
As such, the Court need not address Watts’s other pending motions, including Motions to Dismiss
for Failure to State a Claim and Motions for a More Definite Statement (docs. 27, 43). The Court declares
these Motions to be MOOT in light of this Order’s dismissal of the claims against Watts.
2
The individuals (with the locations of their insured residences) include: Edde Smith (Texas), Betty
D. Johnson (Maryland), Karen Kelly (California), Michael Goodwin (Louisiana), Jason V. Yeong (Texas),
Dorothy Micklo (California), Neal Shipon (Pennsylvania), John Alvin Renee (Lousiana), Barry Lentnek (New
York), Pamela O. Brucker (Maine), Jose Gallardo (Texas), Travis Justus (Arizona), and Raymond Luehmkuhl
(California). Am. Compl. ¶ 2; Compl. in Intervention ¶ 8.
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Case 3:13-cv-00946-B Document 77 Filed 02/05/14 Page 3 of 16 PageID 2228
arguing that this Court lacks personal jurisdiction. Watts is a Chinese corporation that manufactures
various plumbing products, which it sells to distributors and re-sellers (but not directly to consumers)
in foreign and domestic markets. (See Doc. 27 Ex. 1, Aff. of Penngfei Zhao (“Zhao Aff.”); Doc. 66,
3
App. Supp. Pl.’s Resp. (“Pl.’s App.”) at 372.) Since its inception in 2002, Watts’s “principal (and only)
place of business” has been its manufacturing facility located on the eastern coast of China. (Zhao Aff.
¶ 2.)
The record reveals that Watts-manufactured products made their way into the United States
in two relevant ways. First, various products originating from Watts’s facility in China were shipped
to businesses in the United States between 2003 and 2011, including fifty-four shipments to
companies located in Texas. (Pl.’s App. 494-543.) Many of these shipments were made to Watts’s
parent company, Watts Regulator Co. (“Watts Regulator”), a separate and distinct entity also involved
in the plumbing industry. (See id. at 372, 377, 494-543; Zhao Aff. ¶¶ 19, 22.) Though some contained
toilet supply lines, none of these shipments are alleged to have contained the defective products at
issue in this case.
Second, the record shows that over a two-and-a-half year period (February 18, 2003 to August
25, 2005) Watts-manufactured plumbing products—including 765,025 toilet supply lines like the ones
at issue here—were shipped to a facility in Nashville, Tennessee. (Pl.’s App. 7-9.) That facility was a
national distribution center owned by Interline, a publically-traded corporation based in the United
3
Though Watts formerly operated under the name Taizhou Shida Plumbing Manufacturing Co.,
Ltd. (“Taizhou Shida”), the record shows that, at least for purposes of this Order, Watts and Taizhou
Shida are functionally the same entities, simply operating under different names and slightly different
ownership structures. (See Pl.’s App. 354, 357, 372, 377.) To avoid confusion, the Court simply refers
to “Watts” whenever the record cites Taizhou Shida.
-3-
Case 3:13-cv-00946-B Document 77 Filed 02/05/14 Page 4 of 16 PageID 2229
States that markets and distributes maintenance, repair, and operations products to customers in the
United States and Canada. (Id. at 253, 269, 285, 297-98.) Before reaching Tennessee, the products
were purchased by Linx—a small U.S.-based entity involved in (among other things) the resale of
products offered by companies in China—pursuant to its “Import Supplier Partnership Agreement”
with Interline, signed in 2002. (Id. at 157-58, 355-56.) Though Linx had never worked with Watts
before 2002, it decided to do business with the Chinese manufacturer after learning of Watts’s
certificate of listing with IAPMO, Inc. (“IAPMO”), an association that certifies products for
compliance with the Uniform Plumbing Code. (Id. at 169, 171-72, 229.) After Watts had IAPMO add
Linx and Interline to the certificate of listing (id. at 126, 130), Interline began placing orders through
Linx. More precisely, Interline sent purchase orders to Linx, who would then submit an identical order
to Watts, and Watts, in turn, would fill the order and send it free-on-board (“F.O.B.”) to Linx’s facility
in Shanghai, China. (Id. at 182-84; Zhao Aff. ¶ 23.) Linx then shipped the product to Interline’s
national distribution center in Nashville, Tennessee, from which the toilet supply lines could have
gone on to any of the fifty to seventy-plus regional distribution centers Interline operated at this time.
(See, e.g., id. at 260, 272, 304-05.) From there, Interline could have sold the DuraPro lines to any of
the three customer bases it served—“facilities maintenance, professional contractors, and other
distributors” (Id. at 253)—although Plaintiffs allege that the lines at issue here “made their way to store
shelves, before they were installed in [the] insureds’ residences.” (Am. Compl. ¶ 17.)
On April 16, 2013, Watts filed four motions in response to Allstate’s Amended Complaint
(doc. 24), and later re-filed these same four motions in response to Fire Insurance’s Complaint in
Intervention (doc. 43). Watts subsequently withdrew one of its four pairs of motions (doc. 52)—its
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Motion to Dismiss for Insufficient Service of Process—leaving the Court to resolve the following three
pairs of outstanding motions: Motion to Dismiss for Lack of Personal Jurisdiction, Motion to Dismiss
for Failure to State a Claim, and Motion for a More Definite Statement.
Briefing on these motions was delayed (docs. 34, 45) so that Magistrate Judge Ramirez could
resolve Plaintiffs’ Amended Motion for Leave to Conduct Jurisdictional and Claims Discovery (doc.
28). On October 3, 2013, Judge Ramirez issued an Order (doc. 58) denying Plaintiffs’ discovery
motion, finding that Plaintiffs had failed make a preliminary showing of personal jurisdiction.
Plaintiffs objected to Judge Ramirez’s Order, which this Court overruled on October 8, 2013 (doc. 62).
On October 25, 2013, Plaintiffs filed joint responses (docs. 65, 67, 68) to Watts’s motions.
Watts replied on November 8, 2013 (doc. 70), but only with respect to its Motion to Dismiss for Lack
of Personal Jurisdiction. Along with its reply, Watts filed a Motion for Leave to File Appendix (doc.
72), which the Court now DENIES given that the Motion for Leave is opposed and Plaintiffs had no
opportunity to respond to the new evidence presented in Watts’s appendix (doc. 74). See Springs
Industries, Inc. v. American Motorists Insurance Co., 137 F.R.D. 238, 239-40 (N.D. Tex. 1991) (“The office
of the reply brief . . . is to rebut the nonmovant’s response . . . , not [to present] new supporting
materials . .. [unless] no injustice is likely to result [and] the parties should agree [otherwise].”).
Accordingly, the Court gives no consideration to Watts’s reply appendix (doc. 74). Having reviewed
the relevant filings and law, the Court is now prepared to issue its resolution.
II.
RULE 12(b)(2) LEGAL STANDARD
Federal Rule of Civil Procedure 12(b)(2) allows for dismissal of an action when a court lacks
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personal jurisdiction over the defendant. In resolving a Rule 12(b)(2) motion, the Court may consider
"affidavits, interrogatories, depositions, oral testimony, or any combination of the recognized methods
of discovery." Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985). Parties “seeking to invoke the
power of the court bea[r] the burden of proving that jurisdiction [over the moving defendant] exists.”
Luv n’ Care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 469 (5th Cir. 2006). But plaintiffs are not required
to “establish jurisdiction by a preponderance of the evidence; a prima facie showing suffices.” Id. at 469.
Moreover, any factual conflict contained in the parties' submissions must be resolved in the plaintiff’s
favor. Cent. Freight Lines, Inc. v. APA Transp. Corp., 322 F.3d 376, 380 (5th Cir. 2003).
Two preconditions must be satisfied before this Court may assert personal jurisdiction: (1) the
defendant must be amenable to service of process under Texas' long-arm statute; and (2) the assertion
of jurisdiction over the defendant must comport with the Due Process Clause of the United States
Constitution. Jones v. Petty–Ray Geophysical Geosource, Inc., 954 F.2d 1061, 1067 (5th Cir. 1992).
Because Texas' long-arm statute has been held to extend to the limits of due process, only the second
jurisdictional precondition must be examined. Id. at 1067-68 (citing, inter alia, Schlobohm v. Schapiro,
784 S.W.2d 355, 357 (Tex. 1990)). For personal jurisdiction to comport with due process, the plaintiff
must show that: (1) the defendant purposefully availed itself of the benefits and protections of the
forum state by establishing "minimum contacts" with that state such that it would reasonably anticipate
being haled into court there; and (2) exercising jurisdiction over the defendant would not offend
traditional notions of fair play and substantial justice. Id. at 1068 (citations omitted).
The "minimum contacts" prong of the due process analysis can be met through contacts giving
rise to either specific or general jurisdiction. Gundle Lining Constr. Corp. v. Adams Cnty. Asphalt, Inc.,
-6-
Case 3:13-cv-00946-B Document 77 Filed 02/05/14 Page 7 of 16 PageID 2232
85 F.3d 201, 205 (5th Cir. 1996). "General personal jurisdiction is found when the nonresident
defendant's contacts with the forum state, even if un
Related Content
in Tarrant County
Ruling
MICKEY ANGELO QIU VS. WORLDPAC, INC. ET AL
Jul 24, 2024 |
CGC23608404
Matter on the Law & Motion calendar for Wednesday, July 24, 2024, Line 4. DEFENDANT WORLDPAC, INC. AND FRED PANKRATIUS' MOTION FOR SUMMARY ADJUDICATION. Defendants' Worldpac, Inc. and Frederick Pankratius' motion for summary adjudication on the claim for punitive damages is denied. Defendants failed to maintain their burden of production and demonstrate that the claim "cannot be established." (CCP 437c(p)(2).) (The Court's complete tentative ruling has been emailed to the parties.) For the 9:30 a.m. Law & Motion calendar, all attorneys and parties may appear in Department 302 remotely. Remote hearings will be conducted by videoconference using Zoom. To appear remotely at the hearing, go to the court's website at sfsuperiorcourt.org under "Online Services," navigate to "Tentative Rulings," and click on the appropriate link, or dial the corresponding phone number. Any party who contests a tentative ruling must send an email to contestdept302tr@sftc.org with a copy to all other parties by 4pm stating, without argument, the portion(s) of the tentative ruling that the party contests. The subject line of the email shall include the line number, case name and case number. The text of the email shall include the name and contact information, including email address, of the attorney or party who will appear at the hearing. Counsel for the prevailing party is required to prepare a proposed order which repeats verbatim the substantive portion of the tentative ruling and must email it to contestdept302tr@sftc.org prior to the hearing even if the tentative ruling is not contested. The court no longer provides a court reporter in the Law & Motion Department. Parties may retain their own reporter, who may appear in the courtroom or remotely. A retained reporter must be a California certified court reporter (CSR), for only a CSR's transcript may be used in California courts. If a CSR is being retained, include in your email all of the following: their name, CSR and telephone numbers, and their individual work email address. =(302/RBU)
Ruling
WESCO INSURANCE COMPANY, A CORPORATION VS EDGAR CISNEROS, AN INDIVIDUAL
Jul 24, 2024 |
23PSCV03961
Case Number:
23PSCV03961
Hearing Date:
July 24, 2024
Dept:
K
Plaintiff Wesco Insurance Companys Motion for Leave to File Second Amended Complaint is GRANTED.
Background
Plaintiff Wesco Insurance Company (Plaintiff) seeks subrogation for a September 25, 2022 motor vehicle accident. On March 1, 2024, Edgar Cisneros (Defendant) default was entered on the complaint. On May 29, 2024, Plaintiff filed a First Amended Complaint (FAC), asserting a cause of action against Defendant and Does 1-10 for:
1.
Subrogation
On June 27, 2024, the court denied Plaintiffs Ex Parte Application for Leave to File a Second Amended Complaint. A Case Management Conference is set for August 14, 2024.
Legal Standard
The court may, in furtherance of justice, and on any terms as may be proper, allow a party to amend any pleading& (Code Civ. Proc., § 473, subd. (a)(1); and see § 576 [Any judge, at any time before or after commencement of trial, in the furtherance of justice, and upon such terms as may be proper, may allow the amendment of any pleading or pretrial conference order].) [T]he trial court has wide discretion in allowing the amendment of any pleading. (
Bedolla v. Logan & Frazer
(1975) 52 Cal.App.3d 118, 135.) [I]t is irrelevant that new legal theories are introduced as long as the proposed amendments relate to the same general set of facts. (
Kittredge Sports Co. v. Superior Court
(1989) 213 Cal.App.3d 1045, 1048 [quotation marks and citation omitted].) [E]ven if the proposed legal theory is a novel one, the preferable practice would be to permit the amendment and allow the parties to test its
legal sufficiency by demurrer, motion for judgment on the pleadings or other appropriate proceedings. (
Id.
[quotation marks and citation omitted].) With that said, the failure of a proposed amendment to state facts sufficient to constitute a cause of action or defense may support an order denying a motion to amend. (
California Casualty Gen. Ins. Co. v. Superior Court
(1985) 173 Cal.App.3d 274, 280, disapproved of on other grounds in
Kransco v. American Empire Surplus Lines Ins. Co.
(2000) 23 Cal.4
th
390)
Courts must apply a policy of great liberality in permitting amendments to the complaint at any stage of the proceedings, up to and including trial, when no prejudice is shown to the adverse party. (
Atkinson v. Elk Corp.
(2003) 109 Cal.App.4th 739, 761.) However, even if a good amendment is proposed in proper form, unwarranted delay in presenting it mayof itselfbe a valid reason for denial. . . denial may rest upon the element of lack of diligence in offering the amendment after knowledge of the facts, or the effect of the delay on the adverse party. (
Roemer v. Retail Credit Co.
(1975) 44 Cal.App.3d 926, 940.)
A motion to amend a pleading before trial must: (1) Include a copy of the proposed amendment or amended pleading, which must be serially numbered to differentiate it from previous pleadings or amendments; (2) State what allegations in the previous pleading are proposed to be deleted, if any, and where, by page, paragraph, and line number, the deleted allegations are located; and (3) State what allegations are proposed to be added to the previous pleading, if any, and where, by page, paragraph, and line number, the additional allegations are located. (Cal. Rules of Court, rule 3.1324(a).)
Additionally, [a] separate declaration must accompany the motion and must specify: (1) The effect of the amendment; (2) Why the amendment is necessary and proper; (3) When the facts giving rise to the amended allegations were discovered; and (4) The reasons why the request for amendment was not made earlier. (Cal. Rules of Court, rule 3.1324(b).)
Discussion
Plaintiff moves the court, per Code of Civil Procedure § 473, for leave to file its proposed Second Amended Complaint (SAC). Plaintiff represents that the proposed SAC is necessitated based on an error contained in the First Amended Complaint with respect to PLAINTIFFS alleged damages. (Motion, 1:27-28). The motion is unopposed. Defendants default was previously entered as to Plaintiffs complaint. Court records reflect that Defendant was substitute served with Plaintiffs FAC on June 7, 2024 (completed June 17, 2024). Defendant has not appeared, to date (i.e., as of July 17, 2024, 3:45 p.m.). Plaintiffs counsel Michael Daniels (Daniels) attests that he has made multiple attempts to contact Defendant telephonically to obtain his consent to the filing of the proposed SAC, without success. (Daniels Decl., ¶ 3). The motion is granted. The proposed SAC is deemed filed as of this date.
Ruling
MACKENZIE WOO VS. UNIVERSITY OF SAN FRANCISCO ET AL
Jul 26, 2024 |
CGC23605270
Matter on the Discovery Calendar for Friday, Jul-26-2024, Line 5, DEFENDANT UNIVERSITY OF SAN FRANCISCO'S Motion For Leave To Take Subsequent Deposition Of Plaintiff Mackenzie Woo (Code Civ. Proc. 2025.610(B)). Pro Tem Judge Aaron Minnis, a member of the California State Bar who meets all the requirements set forth in CRC 2.812 to serve as a temporary judge, has been assigned to hear this motion. Prior to the hearing all parties to the motion will be asked to sign a stipulation agreeing that the motion may be heard by the Pro Tem Judge. If all parties to the motion sign the stipulation, the hearing will proceed before the Judge Pro Tem who will decide the motion with the same authority as a Superior Court Judge. If a party appears by telephone, the stipulation may be signed via fax or consent to sign given by email. If not all parties to the motion sign the stipulation, the Pro Tem Judge will hold a hearing on the motion and, based on the papers submitted by the parties and the hearing, issue a report in the nature of a recommendation to the Dept. 302 Judge, who will then decide the motion. If a party does not appear at the hearing, the party will be deemed to have stipulated that the motion will be decided by the Pro Tem Judge with the same authority as a Superior Court Judge. The Pro Tem Judge has issued the following tentative ruling: Granted. Within 10 days Plaintiff shall appear for deposition at a mutually convenient date and time to testify regarding the previously redacted information in the SFGH records. For the 9:00 a.m. Discovery calendar, all attorneys and parties are required to appear remotely. Hearings will be conducted by videoconference using Zoom. To appear at the hearing, go to the court's website at sfsuperiorcourt.org under "Online Services," navigate to "Tentative Rulings," and click on the appropriate link (DISCOVERY, DEPARTMENT 302 DAILY AT 9:00 A.M.), or dial the corresponding number and use the meeting ID, and password for Discovery Department 302. Any party who contests a tentative ruling must send an email to aaron@minnisandsmallets.com with a copy to all other parties by 4pm stating, without argument, the portion(s) of the tentative ruling that the party contests. The subject line of the email shall include the line number, case name and case number. If the tentative ruling is not contested, the parties are deemed to have stipulated to the Pro Tem hearing the motion and the Pro Tem will sign an order confirming the tentative ruling. The prevailing party is required to prepare a proposed order repeating verbatim the substantive portion of the tentative ruling and must e-mail it to the Judge Pro Tem. The court no longer provides a court reporter in the Discovery Department. Parties may retain their own reporter, who may appear remotely. A retained reporter must be a California certified court reporter (CSR), for only a CSR's transcript may be used in California courts. If a CSR is being retained, include in your email all of the following: their name, CSR and telephone numbers, and their individual work email address. =(302/JPT)
Ruling
Rachel Perez, et al. vs Abdul Khattak, et al.
Jul 24, 2024 |
23CV-00483
23CV-00483 Rachael Perez, et al. v. Abdul Khattak, et al.
Case Management Conference
Appearance required. Remote appearances are permitted. Parties who wish to appear
remotely must contact the clerk of the court at (209) 725-4111 to arrange for a remote
appearance. Appear to address the status of mediation.
Ruling
FCS057491 - MILBOURN, JAMES V. COMCAST CORP, et al (DMS)
Jul 23, 2024 |
FCS057491
FCS057491
Motion by Plaintiff to Consolidate
TENTATIVE RULING
As acknowledged in both oppositions filed to this motion, both of which quoted the
statute, C.C.P. §403 authorizes a judge to order a case from another court to be
transferred to that judge’s court for coordination and consolidation for trial.
Once cases are in the same court, that court has discretion under C.C.P. §1048 to
consolidate them, for all purposes, or for limited purposes, either for pre-trial only, or
trial only.
Among the factors the court should consider on a consolidation motion are timeliness
of the motion, whether consolidation would cause juror confusion, and whether
consolidation would cause any party prejudice. Edmon & Karnow (Weil & Brown), Civil
Procedure Before Trial, §12:362, p. 12(I)-70.
While this motion is far from timely, no trial has yet been set in either case, and
therefore no discovery completion deadlines have passed.
Furthermore, if trial is not consolidated, there is a significant risk of inconsistent trier of
fact findings on the common issue of proportionate liability when the same plaintiff is
alleging similar injuries from different motor vehicle accidents occurring three months
apart.
Ruling
CHAUDHRY vs SHARMA, D.D.S
Jul 23, 2024 |
CVRI2202087
MOTION FOR AN ORDER REQUIRING
CHAUDHRY VS SHARMA,
CVRI2202087 PLAINTIFF TO POST AN
D.D.S
UNDERTAKING
Tentative Ruling: Appearances required.
Ruling
AKEMI MINAMI, INDIVIDUALLY, ET AL. VS WESLEY MINAMI, AN INDIVIDUAL, ET AL.
Jul 26, 2024 |
24STCV10898
Case Number:
24STCV10898
Hearing Date:
July 26, 2024
Dept:
37
HEARING DATE:
Friday, July 26, 2024
CASE NUMBER:
24STCV10898
CASE NAME:
Akemi Minami v. Wesley Minami, et al.
MOVING PARTY:
Defendants Wesley Minami, Raquel Minami, and Bekon Corporation
OPPOSING PARTY:
Plaintiff Akemi Minami
TRIAL DATE:
Not Set
PROOF OF SERVICE:
OK
PROCEEDING:
Motion for Order Requiring Plaintiff to Post Bond
OPPOSITION:
11 July 2024
REPLY:
17 July 2024
TENTATIVE:
Defendants Motion requiring Plaintiff to Post Bond pursuant to Corp. Code § 800(c) is denied. Defendants to give notice.
Background
On May 1, 2024, Akemi Minami (Plaintiff), individually and derivatively on behalf of the Nominal Defendant Bekon Corporation, filed a Complaint against Wesley Minami (Wesley); Raquel Minami (Raquel), and Bekon Corporation (collectively Defendants).
The Complaint alleges the following ten causes of action:
1)
Breach of Fiduciary Duty (derivatively) against Defendants Wesley and Raquel;
2)
Breach of Fiduciary Duty - against Defendants Wesley and Raquel;
3)
Fraud - against Defendants Wesley and Raquel;
4)
Conversion - against Defendants Wesley and Raquel;
5)
Violation of Pen. Code § 496 - against Defendants Wesley and Raquel;
6)
Violation of corp. Code § 1001 - against Defendants Wesley and Raquel;
7)
Failure to Permit Inspection of Records - against Defendants Wesley and Raquel;
8)
Unjust Enrichment (individually and derivatively) - against Defendants Wesley and Raquel; and
9)
Unfair Competition (Bus. & Prof. Code § 17200) - against Defendants Wesley and Raquel.
On June 21, 2024, Defendants filed a motion requiring Plaintiff to Post a Bond pursuant to Corp. Code § 800(d). Plaintiff opposes the Motion. The matter is now before the court.
motIon requiring plaintiff to post bond
I.
Legal Standard
Corp. Code § 800 states in relevant part:
(c) [In a shareholder derivative suit], at any time within 30 days after service of summons upon the corporation or upon any defendant who is an officer or director of the corporation, or held such office at the time of the acts complained of, the corporation or the defendant may move the court for an order, upon notice and hearing, requiring the plaintiff to furnish a bond as hereinafter provided. The motion shall be based upon one or both of the following grounds:
(1) That there is no reasonable possibility that the prosecution of the cause of action alleged in the complaint against the moving party will benefit the corporation or its shareholders.
(2) That the moving party, if other than the corporation, did not participate in the transaction complained of in any capacity.
The court on application of the corporation or any defendant may, for good cause shown, extend the 30-day period for an additional period or periods not exceeding 60 days.
(d) At the hearing upon any motion pursuant to subdivision (c), the court shall consider such evidence, written or oral, by witnesses or affidavit, as may be material (1) to the ground or grounds upon which the motion is based, or (2) to a determination of the probable reasonable expenses, including attorneys' fees, of the corporation and the moving party which will be incurred in the defense of the action. If the court determines, after hearing the evidence adduced by the parties, that the moving party has established a probability in support of any of the grounds upon which the motion is based, the court shall fix the amount of the bond, not to exceed fifty thousand dollars ($50,000), to be furnished by the plaintiff for reasonable expenses, including attorneys' fees, which may be incurred by the moving party and the corporation in connection with the action, including expenses for which the corporation may become liable pursuant to
Section 317
. A ruling by the court on the motion shall not be a determination of any issue in the action or of the merits thereof. If the court, upon the motion, makes a determination that a bond shall be furnished by the plaintiff as to any one or more defendants, the action shall be dismissed as to the defendant or defendants, unless the bond required by the court has been furnished within such reasonable time as may be fixed by the court.
III.
Discussion
Plaintiff brought this action to assert her ownership rights in the Bekon Corporation. The Complaint alleges that after her husband passed away in 2001, his brother, Masaru Minami (Masaru), hid the fact that Plaintiff was the successor in interest of her husbands 23.3% shares in the Bekon Corporation. (Corp. Code, ¶¶ 5, 7, 8.)
After Masaru passed away in December 2023, his wife Raquel Masaru (Raquel) and his son Wesley Minami (Wesley) tried to pressure Plaintiff into selling her ownership interest in the Bekon Corporation and excluded Plaintiff from the corporation, failed to give Plaintiff notice of shareholders meetings as the Bylaws require, failed to permit Plaintiff to exercise votes on corporate decisions, and paid Masaru and his family members distributions, thinly disguised as officer compensation, without similarly paying Plaintiff distributions proportionate to her 23.3% interest in the Corporation. (Compl. ¶¶ 12, 26.) Moreover, Wesley and Raquel hid the sale of Bekons sole asset, the Fairview Property, without Plaintiffs knowledge or consent and caused Bekon to purchase a property in North Carolina as part of a 1031 exchange transaction in a manner that placed the interest of Wesley and Raquel ahead of Plaintiffs interest. (Compl. ¶ 26.)
Defendants request that Plaintiff post a bond in the amount of $50,000.00 pursuant to Corp. Code § 800(c) on the grounds that (1) there is no reasonable possibility that the prosecution of the purported causes of action alleged in the Complaint will benefit Defendant Bekon Corporation or its shareholders; and (2) Bekon Corporation will incur fees and costs more than $200,000.00 defending this action.
The purpose of the section 800 security provision is to prevent unwarranted shareholder derivative lawsuits. [Citations.] The justification for the security is derived from the fact that the cause of action and potential remedy belong to the corporation, not the shareholder [citation], and the corporation has chosen not to pursue the litigation. (
Donner Management Co. v. Schaffer
(
2006) 142 Cal.App.4th 1296, 1305 (
Donner
).) In assessing whether there is no reasonable possibility the action will benefit the corporation, the court must evaluate the possible defenses which the plaintiffs would have to overcome before they could prevail at trial. (
Id
. at pp. 13031304.)
The burden lies with Defendants to show that this action is not beneficial to the corporation. (
Donner
,
supra
, 142 Cal.App.4th at p. 1307.) Specifically, th
ere is no reasonable possibility that the prosecution of the cause[s] of action alleged in the complaint against the [Defendants] will benefit the [Bekon Corporation] or its shareholders. (Corp. Code, § 800(c)(1).)
Defendants admit that Masaru was the only shareholder in attendance at the 2023 annual shareholder meeting when he appointed himself, his wife, and his sons as the sole directors of the Bekon Corporation. (Wesley Minami Decl., ¶ 4; Compl. ¶ 23.) Plaintiffs Complaint alleges that she was never given notice of this shareholder meeting or Board meeting when the Board of Directors made up exclusively of Defendants, retroactively approved all corporate actions for the past 50 years. (Compl., ¶¶ 23, 24.) The Complaint further alleges that on March 13, 2024, Bekons sole asset, the Fairview Property was sold, without Plaintiffs knowledge or consent. (Compl., ¶ 15.) Defendants admit that it was not until May 14, 2024, that Plaintiff was allowed to participate in Bekon Corporations annual shareholder meeting, which occurred after the sale of the Fairview Property and the filing of this action. (Wesley Minami Decl., ¶ 22.)
Moreover, the Complaint alleges a derivative cause of action on behalf of the corporation because it alleges that Defendants failed to preserve Bekons assets and comply with its bylaws and engaged in self-dealing by paying themselves an excessive officer compensation thereby depriving Bekon the bulk of its profits. (Comp., ¶¶ 32, 33, 34.) The Complaint further alleges that Defendants sold the Fairview Property and purchased the North Carolina Property outside the usual and regular course of business in violation of Corp. Code § 1001(a). (Compl., ¶¶ 63, 64.) The
Complaint also alleges that Bekon Corporation was harmed because Defendants engaged in self-dealing because they paid themselves dividends disguised as Officer compensation. (Compl, ¶ 74-77.)
A shareholder derivative suit seeks to enforce the corporations rights and redress the corporations injuries when the board of directors fails or refuses to do so. (
Grosset v. Wenaas
(2008) 42 Cal.4th 1100, 1108.)
An action is deemed derivative if the gravamen of the complaint is injury to the corporation, or to the whole body of its stock and property without any severance or distribution among individual holders, or it seeks to recover assets for the corporation or to prevent the dissipation of its assets. [Citation]. (
Ibid
. [internal quotation marks omitted].)
The court finds that the first, sixth, eighth, and ninth causes of actions allege facts to show that Plaintiffs seek recovery of assets in the form of payments made to Defendants under the guise of Officer compensation and to force Defendants to adhere to Bekons bylaws and the Corporations Code.
As to Plaintiffs other allegations, such as the fact that Plaintiff has been prevented from participating in the affairs of the corporation and denied the right to inspect the books, they are intended to assert Plaintiffs personal rights as a shareholder, and not those of the corporation such that a bond is not required. (See
Hagan v. Superior Court of Los Angeles County
(1960) 53 Cal.2d 498, 503 [T
his
part of the complaint in intervention asserts rights that are indisputably personal to petitioners . . . It is therefore in excess of the jurisdiction of respondent court to condition the vindication of these rights upon a posting of security.])
In sum, Defendants failed to meet their burden of showing that this action will not be beneficial to the Bekon Corporation or its shareholders. To the extent that Defendants argue that Plaintiff does not assert a derivative claim or lacks standing to bring a derivative action because she failed to make a litigation demand to the board pursuant to Corp. Code § 800(b)(2), such a finding would also compel this court to deny the motion to post a bond because section 800(c) is only applicable to derivative actions, not individual suits. For this reason, the court declines to decide the above issues on the merits because it has no bearing on whether Plaintiff is required to post a bond.
Based on the above, the Motion is denied.
Conclusion
Defendants Motion requiring Plaintiff to Post Bond pursuant to Corp. Code § 800(c) is denied. Defendants to give notice.
Ruling
Gjetley vs. Sandoval
Jul 26, 2024 |
23CV-0203634
GJETLEY VS. SANDOVAL
Case Number: 23CV-0203634
Tentative Ruling on Discovery Motions: Defendant Gary Sandoval moves for an order deeming Defendant’s
Requests for Admissions, Set One admitted based on a lack of response from Plaintiff. In a separate motion,
Defendant moves for an order compelling responses to Defendant’s Form Interrogatories, Set One, Special
Interrogatories, Set One, and Request for Production, Set One. The motions were originally noticed for a hearing
on June 10, 2024. On June 10, 2024, the Court continued the hearing to today’s date because Plaintiff Lester
Gjetley had filed a document titled “Plaintiff Lester Gjetley Response to Motion and Discovery” that included a
copy of what appear to be verified responses to Requests for Admissions, Set One and Special Interrogatories,
Set One. Plaintiff was ordered to serve Defendant with these responses. It is unclear if that has occurred. On July
15, 2024, as directed by the Court, Defendant filed a Brief Statement Regarding Outstanding Discovery Issues.
This Statement is not supported by evidence. There are procedural and evidentiary defects on both sides of these
motions. The Court exercises its discretion to consider the merits of the motions despite these defects.
A party has thirty days after service to respond to a Request for Production, Request for Admissions, Form
Interrogatories, or Special Interrogatories. See CCP §§ 2031.260(a), 2033.250(a), and 2030.260(a). Not
providing a timely response to propounded discovery results in a waiver of objections. CCP §§ 2031.300(a).
2033.280(a), and 2030.290(a). If a party to whom a discovery request is directed fails to serve a timely response,
the party propounding discovery may move for an order compelling a response. CCP §§ 2031.300(b) and
2030.290(c). For Request for Admissions specifically, the party can move for an Order that the Request for
Admissions be deemed admitted. CCP § 2033.280(b). “The court shall make this order, unless it finds that the
party to whom the requests for admission have been directed has served, before the hearing on the motion, a
proposed response to the requests for admission that is in substantial compliance with Section 2033.220.” CCP
§ 2033.280(c).
Motion for Order Deeming Admitted Truth of Facts.
Requests for Admissions. Plaintiff filed verified response to Requests for Admissions, Set One on May 28, 2024.
Plaintiff was ordered to serve these on Defendant. It is unclear whether Plaintiff did so as there is no proof of
service. However, the Court made it clear in its June 10, 2024, tentative ruling that a response to Requests for
Admissions, Set One had been filed. Even if these responses may have not been served prior to the June 10, 2024,
hearing, they were filed and available in the court file. Defendant presented no argument regarding whether the
Requests for Admissions responses were in substantial compliance. As Plaintiff filed verified responses prior to
the hearing, the Court DENIES Plaintiff’s request for the Defendant’s Requests for Admissions, Set One to be
admitted. It is mandatory that the Court impose a monetary sanction on the party whose failure to serve a timely
response to requests for admission necessitated this motion. CCP § 2033.280(c). The Court imposes monetary
sanctions against Plaintiff in the amount of $585 which is comprised of a $60 filing fee and three hours of attorney
time at $175 per hour.
Motion for Order Compelling Plaintiff to Answer Form Interrogatories, Special Interrogatories, and Respond to
Request for Production.
Form Interrogatories. It appears from Defendant’s Statement filed on July 15, 2024 that verified responses were
provided as Defendant wrote, “but his verified response to Form Interrogatory 11.0 omits any mention of this
suit.” A lack of service of verified responses is what the original motion alleged. If Plaintiff has served verified
responses and Defendant deems them to be insufficient, Defendant may file a motion compelling further responses
after sufficient meet and confer efforts. In order for the Court to rule on such a motion, the Form Interrogatories
and responses would need to be provided to the Court. As it appears that Plaintiff responded to Form
Interrogatories, Set One, the Court DENIES this request as moot. If the Court is incorrect and Plaintiff did not
serve responses to Form Interrogatories, Set One, Defendant may raise the issue at the hearing.
Special Interrogatories. Verified responses to Special Interrogatories, Set One were filed by Plaintiff on May 28,
2024. As discussed above regarding the Requests for Admissions, these were in the court file. If Defendant
deems the response to be insufficient, Defendant may file a motion compelling further responses after sufficient
meet and confer efforts. As Plaintiff responded to Special Interrogatories, Set One, the Court DENIES this request
as moot.
Request for Production. It appears from Defendant’s Statement that Plaintiff has not formally responded to
Request for Production, Set One but did provide some documents. Despite a partial production, Defendant
maintains that many records in possession or available to Plaintiff have not been provided. The Court finds good
cause for each of the categories listed in Request for Production, Set One. Defendant’s motion is GRANTED as
to the Request for Production. Plaintiff is ORDERED to provide a verified response to Request for Production,
Set One and produce all responsive records within twenty days of the filing of the Notice of Entry of Order.
Sanctions. CCP §§ 2031.300(c) and 2030.290(c) only provide for sanctions when an unsuccessful opposition is
made, however, the Court may award sanctions under the Discovery Act in favor of a party who files a motion to
compel discovery even when no opposition was filed. CRC 3.1348. As it appears that Plaintiff has still not served
a verified response to Request for Production, Set One, the Court finds that sanctions are appropriate. The Court
imposes monetary sanctions against Plaintiff in the amount of $410 which is comprised of a $60 filing fee and
two hours of attorney time. The third hour requested is not awarded as time to attend the hearing has already been
accounted for in Defendant’s Motion for Order Deeming Truth of Facts.
In the Statement filed by Defendant on July 15, 2024, Defendant requested that Plaintiff be ordered to sit for
another deposition at Plaintiff’s expense. This request is not properly before the Court and will not be addressed.
Defendant did not provide proposed Orders as required by Local Rule of Court 5.17(D). Defendant is to provide
a proposed Order for each motion that is consistent with the Court’s ruling.
Preview
017-292197-17 FILED TARRANT COUNTY 7/17/2017 9:06 AM THOMAS A. WILDER DISTRICT CLERK CAUSE NO. 017-292197-17 STATE FARM LLOYDS AS SUBROGEE § IN THE DISTRICT COURT OF JOSEPH AND MICHAEL § BILLINGSLEY § § Plaintiff, § § vs. § 17TH JUDICIAL DISTRICT § INTERLINE BRANDS, INC., LINX, LTD., § WATTS PLUMBING TECHNOLOGIES § (TAIZHOU) CO., LTD., and WATTS § REGULATOR CO., § § Defendant. § TARRANT COUNTY, TEXAS DEFENDANT WATTS REGULATOR CO.’S MOTION TO DISMISS AND, SUBJECT THERETO, SPECIAL EXCEPTIONS, ORIGINAL ANSWER TO PLAINTIFF’S ORIGINAL PETITION AND REQUEST FOR DISCLOSURE TO THE HONORABLE JUDGE OF SAID COURT: Defendant Watts Regulator Co. (“WRC”) files this Motion to Dismiss and, subject thereto, Special Exceptions, and Original Answer to Plaintiff’s Petition and Request for Disclosure, and would respectfully show the Court as follows: I. MOTION TO DISMISS 1. Plaintiffs incorrectly assert WRC should be held jointly and severally liable for Plaintiff’s alleged damages. 2. WRC is a Massachusetts corporation with its principal place of business in North Andover, Massachusetts. 1 3. Watts Plumbing Technologies (Taizhou) Co., Ltd. (“WPT”) is a Chinese company formed under the laws of China, and exists pursuant to the laws of that country. WPT's 1 See Ex. A ¶ 3 (Affidavit of Timothy MacPhee). The Affidavit will be filed upon receipt. DEFENDANT WATTS REGULATOR CO.’S MOTION TO DISMISS AND, SUBJECT THERETO, SPECIAL EXCEPTIONS, ORIGINAL ANSWER TO PLAINTIFF’S ORIGINAL PETITION AND REQUEST FOR DISCLOSURE PAGE 1 principal (and only) place of business is in the Mechanical & Electrical Industry Zone, Yuhuan County, Taizhou, Zhejiang, China. 2 4. WRC is a separate and distinct entity from WPT. 3 5. WRC is not an agent of WPT and does not and did not have authority to act for or on behalf of WPT. It does not and did not have any authority to enter into, modify, accept performance of, or terminate contractual obligations between WPT and other third parties. 4 6. WRC does not and did not transact any business on behalf of WPT and does not and did not have responsibility for WPT’s business affairs. 5 7. WRC does not and did not sell products on behalf of WPT, nor does it conduct or has it ever conducted any promotions or advertisements on behalf of WPT. 6 8. In sum, WRC does not and did not have any involvement with or control over WPT’s day-to-day activities. 7 9. Two Texas courts in the Northern District of Texas, including a federal judge in Tarrant County, in cases involving the same claims and one involving the same parties, have ruled WPT is not subject to personal jurisdiction in Texas. 8 Plaintiff is collaterally and judicially estopped from asserting otherwise and is further barred by the principles of res judicata. 10. WRC did not design, manufacture, process, market, service, distribute or sell the 2 Id. ¶ 7. 3 Id. ¶¶ 8-18. 4 Id. 5 Id. 6 Id. 7 Id. 8 See Ex. B (Order Granting Mtn. to Dismiss for Lack of Jurisdiction in State Farm Lloyds As Subrogee of Steve and Lisa Watson v. Interline Brands, Inc., et al., Action No. 4:13-CV-033-Y, in the Northern District of Texas, Fort Worth Division); see also Ex. C (Mem. Op. and Order Granting Watts Plumbing Co.’s Motion to Dismiss for Lack of Personal Jurisdiction in Allstate Ins. Co. et al. v. Interline Brands, Inc. et al., Civil Action No. 3:13-CV-946-B, in the Northern District of Texas, Dallas Division). DEFENDANT WATTS REGULATOR CO.’S MOTION TO DISMISS AND, SUBJECT THERETO, SPECIAL EXCEPTIONS, ORIGINAL ANSWER TO PLAINTIFF’S ORIGINAL PETITION AND REQUEST FOR DISCLOSURE PAGE 2 supply line as alleged in Plaintiff’s Petition, or any component part thereof. 9 11. Accordingly, because Plaintiff’s claims all arise from alleged defects or warranties with respect to a supply line manufactured, marketed, and/or distributed by other parties, WRC cannot be held liable as a matter of law. 12. Further, WRC, as a separate and distinct entity from WPT, cannot be held liable for any alleged acts or omissions of WPT, a Chinese company, which is not subject to this Court’s jurisdiction. A. Plaintiff’s claims should be dismissed in their entirety because defects in their Petition are not curable by amendment. 13. Generally, when a basis for dismissal is the failure to state a cause of action, the party requesting dismissal must first file a special exception. 10 If the special exception is sustained, the opposing party must be given an opportunity to amend its pleading before the case can be dismissed for failure to state a cause of action. 11 However, special exceptions are not required when a party pleads himself or herself out of court. 12 The right to amend only exists if the defect in the pleadings is curable. 13 14. As stated by the Hunter court: The trial court need not give the . . .plaintiff an opportunity to amend if the pleading defect is the type which amendment cannot cure. . . . If there is no reasonable probability that further amendment would disclose facts legally sufficient to sustain a cause of action, the trial court may properly refuse further leave to amend. 14 9 See Ex. A ¶¶ 5, 19-20. 10 Tex. Dep’t of Corr. v. Herring, 513 S.W.2d 6, 10 (Tex. 1974); Hunter v. Johnson, 25 S.W.3d 247, 249 (Tex. App.CEl Paso 2000, no pet.). 11 Hunter, 25 S.W.3d at 249. 12 Id. at 250. 13 Mowbray v. Avery, 76 S.W.3d 663, 678 (Tex. App.—Corpus Christi 2002, pet. denied). 14 Id. at 678 (internal citations omitted) (emphasis added). DEFENDANT WATTS REGULATOR CO.’S MOTION TO DISMISS AND, SUBJECT THERETO, SPECIAL EXCEPTIONS, ORIGINAL ANSWER TO PLAINTIFF’S ORIGINAL PETITION AND REQUEST FOR DISCLOSURE PAGE 3 15. Because the defects in Plaintiff’s Petition are not curable by amendment, for the reasons stated above, all of Plaintiff’s claims should be dismissed in their entirety. II. SPECIAL EXCEPTIONS 16. In the alternative to its Motion to Dismiss, WRC specially excepts and objects to the entirety of Plaintiff’s Original Petition for failure to state a cause of action against WRC for which relief can be granted. Specifically, Plaintiff conflates its theories of liability against all defendants by using the plural, but has failed to sufficiently plead individual allegations against WRC, including that WRC designed, manufactured, and/or marketed the subject water supply line. In the alternative to granting WRC’s Motion to Dismiss, WRC requests this Court to sustain its Special Exception and order Plaintiff to replead its claims, pleading facts that would entitle Plaintiff to relief against WRC individually. Furthermore, WRC prays the Court order Plaintiff to replead within seven (7) days, the failure of which will result in the striking of all Plaintiff’s claims and causes of action against WRC. I. ORIGINAL ANSWER 17. Pursuant to Texas Rule of Civil Procedure 92, WRC generally denies the material allegations contained in Plaintiff’s Petition on file herein, demands strict proof thereof, and says this is a matter for jury decision. 18. Pleading further, alternatively, and by way of affirmative defense, WRC would show that at the time and on the occasion in question, Plaintiff and/or Plaintiff’s insured failed to use that degree of care and caution that would have been used by a person with ordinary prudence under the same or similar circumstances, and that such failure was a proximate cause or a producing cause or the sole proximate cause or the sole producing cause of the incident in DEFENDANT WATTS REGULATOR CO.’S MOTION TO DISMISS AND, SUBJECT THERETO, SPECIAL EXCEPTIONS, ORIGINAL ANSWER TO PLAINTIFF’S ORIGINAL PETITION AND REQUEST FOR DISCLOSURE PAGE 4 question and any alleged damages stemming therefrom. Defendant WRC, therefore, invokes the comparative responsibility provisions of the TEXAS CIVIL PRACTICE & REMEDIES CODE § 33.001, et seq. 19. Pleading further, alternatively, and by way of affirmative defense, WRC would show the incident in question and Plaintiff’s alleged resulting damages were the result of negligent acts and/or omissions of others beyond WRC’s control, whose acts or omissions were a proximate cause or a producing cause or the sole proximate or the sole producing cause of the incident in question and Plaintiff’s alleged resulting damages. 20. Pleading further, alternatively, and by way of affirmative defense, WRC would show, in the unlikely event that any liability be found on the part of WRC, that such liability be reduced by the percentage of the causation found to have resulted from the negligence and/or from the acts or omissions of Plaintiff, Plaintiff’s insured and any other third parties. 21. Pleading further, alternatively, and by way of affirmative defense, WRC asserts the limitation of damages recoverable as provided by applicable portions of the Texas Business & Commerce Code (including, but not limited to, §§ 17.505 and 2.719); the Texas Civil Practice and Remedies Code (including but not limited to Chapters 32, 33 and 38); the exclusion of implied warranties as provided by applicable portions of the Texas Business & Commerce Code (including, but not limited to, § 2.316); and any other applicable statute or rule of law, and any other applicable affirmative defenses contained in the Texas Business & Commerce Code and the Texas Civil Practice & Remedies Code. 22. Pleading further, alternatively, and by way of affirmative defense, WRC would state that in the unlikely event that an adverse judgment would be rendered against it, WRC would respectfully request all available credits and/or offsets as provided by the Texas Civil DEFENDANT WATTS REGULATOR CO.’S MOTION TO DISMISS AND, SUBJECT THERETO, SPECIAL EXCEPTIONS, ORIGINAL ANSWER TO PLAINTIFF’S ORIGINAL PETITION AND REQUEST FOR DISCLOSURE PAGE 5 Practice and Remedies Code and under Texas law. 23. Pleading further, alternatively, and by way of affirmative defense, WRC would show that Plaintiff and/or Plaintiff’s insured failed to mitigate its/their damages, if any. 24. Pleading further, alternatively, and by way of affirmative defense, WRC states Plaintiff’s claims and causes of action for breach of warranty may be barred under the terms of the express warranty limiting coverage. 25. Pleading further, alternatively, and by way of affirmative defense, WRC would show that Plaintiff’s breach of warranty claims are barred because Plaintiff failed to provide WRC with reasonable and proper notice of its breach of warranty claims as required by TEX. BUS. & COMM. CODE § 2.607. 26. Pleading further, alternatively, and by way of affirmative defense, WRC states Plaintiff’s claims for breach of warranty are barred because WRC was not given a reasonable opportunity to cure the alleged deficiencies. 27. Pleading further, alternatively, and by way of affirmative defense, WRC states Plaintiff’s breach of warranty claims and causes of action are barred and/or recovery is limited in whole or in part by applicable written, contractual warranty exclusions, modifications, limitation of liability, and/or limitation of damages or remedies available. 28. WRC hereby gives notice that it intends to rely upon such other defenses or denials as may become available or appear during discovery as it proceeds in this matter, and hereby reserves the right to amend its Answer to assert such defenses. II. JURY DEMAND 29. WRC demands a jury be impaneled to try the facts and issues of this cause. DEFENDANT WATTS REGULATOR CO.’S MOTION TO DISMISS AND, SUBJECT THERETO, SPECIAL EXCEPTIONS, ORIGINAL ANSWER TO PLAINTIFF’S ORIGINAL PETITION AND REQUEST FOR DISCLOSURE PAGE 6 III. COURT REPORTER 30. WRC respectfully requests that a court reporter attend all sessions in Court in connection with this case and that said reporter take full notes of all testimony offered, together with any objections, rulings, and remarks of the Court and exemptions thereto and such other proceedings as may be needed or requested by said Defendant. See Christie v. Price, 558 S.W.2d 922 (Tex. Civ. App. — Texarkana 1977, no writ). IV. REQUEST FOR DISCLOSURE 31. Pursuant to Rule 194, you are requested to disclose, within thirty (30) days of service of this request, the information or material described in Rule 194.2 (a) through (l). V. PRAYER Defendant Watts Regulator Co. prays that Plaintiff’s case against it be dismissed; that, alternatively, Plaintiff be required to replead with specificity as stated herein; and that Plaintiff takes nothing; that WRC recover its costs herein expended; and for such other and further relief, in law or in equity, to which it may show itself justly entitled. DEFENDANT WATTS REGULATOR CO.’S MOTION TO DISMISS AND, SUBJECT THERETO, SPECIAL EXCEPTIONS, ORIGINAL ANSWER TO PLAINTIFF’S ORIGINAL PETITION AND REQUEST FOR DISCLOSURE PAGE 7 Respectfully submitted, /s/ C. Vernon Hartline, Jr. C. VERNON HARTLINE, JR. (Attorney in Charge) State Bar No. 09159500 vhartline@hdbdlaw.com L. ABIGAIL FOREMAN State Bar No. 24056371 aforeman@hdbdlaw.com DREW M. THOMAS State Bar No. 24086841 dthomas@hdbdlaw.com HARTLINE DACUS BARGER DREYER LLP 8750 North Central Expressway, Suite 1600 Dallas, Texas 75231 (214) 346-3700 (214) 369-2118 (fax) ATTORNEYS FOR DEFENDANT WATTS REGULATOR CO. CERTIFICATE OF SERVICE I hereby certify that a true and correct copy of the foregoing document has been forwarded to all known counsel of record in accordance with the Texas Rules of Civil Procedure on this 17th day of July, 2017. /s/ C. Vernon Hartline, Jr. C. VERNON HARTLINE, JR. DEFENDANT WATTS REGULATOR CO.’S MOTION TO DISMISS AND, SUBJECT THERETO, SPECIAL EXCEPTIONS, ORIGINAL ANSWER TO PLAINTIFF’S ORIGINAL PETITION AND REQUEST FOR DISCLOSURE PAGE 8 EXHIBIT A (will be filed upon receipt) EXHIBIT B Case 4:13-cv-00033-Y Document 171 Filed 06/19/14 Page 1 of 3 PageID 4915 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF TEXAS FORT WORTH DIVISION STATE FARM LLOYDS AS SUBROGEE § OF STEVE AND LISA WATSON § § VS. § ACTION NO. 4:13-CV-033-Y § INTERLINE BRANDS, INC., ET AL. § ORDER GRANTING MOTION TO DISMISS FOR LACK OF JURISDICTION Pending before the Court is the Motion to Dismiss for Lack of Personal Jurisdiction, Motion to Dismiss for Failure to State a Claim Upon Which Relief can be Granted, and Motion for a More Definite Statement to Plaintiffs' First Amended Complaint (doc. 85), which was filed in this cause by defendant Watts Plumbing Technologies (Taizhou) Co., Ltd. ("Watts"). In the motion, Watts, a corporation organized under the laws of China with its principal place of business in Yuhuan County, Taizhou, Zhejiang, China, seeks dismissal of Plaintiff's claims against it for, inter alia, lack of personal jurisdiction. After review of the motion, the response filed by plaintiff State Farm Lloyds ("State Farm"), Watts's reply, the evidence highlighted in the parties' briefs, and the applicable law, the Court concludes that State Farm has failed to demonstrate that the exercise of jurisdiction over Watts is appropriate. This is a subrogation action in which State Farm contends that Watts manufactured "[a] defective DuraPro brand toilet supply line and/or integral connectors/components" that caused water damage to the property and contents of its insureds, Steve and Lisa Watson. (Notice of Removal [doc. 1] 7-8, Pl.'s Pet. ¶9.) State Farm contends ORDER GRANTING MOTION TO DISMISS FOR LACK OF JURISDICTION - Page 1 TRM/chr Case 4:13-cv-00033-Y Document 171 Filed 06/19/14 Page 2 of 3 PageID 4916 that this Court can exercise specific jurisdiction over Watts under the "stream-of-commerce doctrine" and that it can exercise general jurisdiction over Watts due to fifty-four shipments Watts made to Texas over the course of eight years. As the plaintiff, State Farm bears the burden of establishing a prima-facie case that the exercise of personal jurisdiction over Watts in this forum is proper. See Wilson v. Belin, 20 F.3d 644, 648 (5th Cir. 1994). Recently, Judge Jane Boyle of this Court was presented with a similar case involving Watts and its allegedly defective toilet supply lines. See Allstate Ins. Co. v. Interline Brands, Inc., et al., No. 3:13-CV-946-B, 2014 WL 462814 (N.D. Tex. Feb. 5, 2014).1 Judge Boyle concluded that the insurance-company plaintiffs in that action failed to demonstrate that the exercise of either specific or general personal jurisdiction over Watts in this forum would be proper. The judge in this case has reviewed the record in both cases and noted that State Farm's response brief to Watts's motion to dismiss in this case is identical to the brief filed by the insurance companies in response to Watts's motion to dismiss in Judge Boyle's case. Judge Boyle analyzed the insurance companies' stream-of-commerce theory and the fifty-four shipments Watts made to Texas and concluded that they were insufficient to warrant the exercise of jurisdiction over Watts in Texas. After reviewing the briefs and Judge Boyle's opinion, this judge also concludes that State Farm has failed to demonstrate, prima facie, that the exercise of personal jurisdiction over Watts 1 A copy of Judge Boyle's opinion is attached as an exhibit to Watts's Motion for Leave to File Supplemental Authority (doc. 162) filed in this case, which motion was granted by this Court (doc. 165). ORDER GRANTING MOTION TO DISMISS FOR LACK OF JURISDICTION - Page 2 TRM/chr Case 4:13-cv-00033-Y Document 171 Filed 06/19/14 Page 3 of 3 PageID 4917 in this forum is appropriate, for the reasons articulated by Judge Boyle. It is, therefore, ORDERED that Watts's Motion to Dismiss (doc. 85) State Farm's claims is GRANTED. State Farm's claims against Watts are hereby DISMISSED due to lack of personal jurisdiction, without prejudice to their refiling in an appropriate forum. SIGNED June 19, 2014. ____________________________ TERRY R. MEANS UNITED STATES DISTRICT JUDGE ORDER GRANTING MOTION TO DISMISS FOR LACK OF JURISDICTION - Page 3 TRM/chr EXHIBIT C Case 3:13-cv-00946-B Document 77 Filed 02/05/14 Page 1 of 16 PageID 2226 UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF TEXAS DALLAS DIVISION ALLSTATE INSURANCE COMPANY, § A/S/O JASON V. YEONG, ET AL., § § § Plaintiff, § § and § § FIRE INSURANCE EXCHANGE, § A/S/O, RAYMOND LEHMKUHL, § § Intervenor, § § v. § CIVIL ACTION NO. 3:13-CV-946-B § INTERLINE BRANDS, INC., LINX, § LTD., and WATTS PLUMBING § TECHNOLOGIES (TAIZHOU) CO., § LTD., § § Defendants. § MEMORANDUM OPINION AND ORDER In this subrogation action, Allstate Insurance Company (“Allstate”) and Fire Insurance Exchange (“Fire Insurance”) (together, “Plaintiffs”) allege that Defendant Watts Plumbing Technologies (Taizhou) Co., LTD (“Watts”) manufactured defective toilet supply lines that caused water-related damage in a number of insured individuals’ homes. Watts, which does business out of its sole facility in China, now moves to (among other things) dismiss the claims against it for lack of personal jurisdiction. Plaintiffs’ primary response is that jurisdiction is proper under the stream of commerce doctrine. Because it finds that Plaintiffs fail to make out a prima facie case of personal -1- Case 3:13-cv-00946-B Document 77 Filed 02/05/14 Page 2 of 16 PageID 2227 jurisdiction over Watts, the Court GRANTS the pending Motions to Dismiss for Lack of Personal Jurisdiction (docs. 27, 43), and DISMISSES WITHOUT PREJUDICE the claims against Defendant Watts.1 I. BACKGROUND This is a subrogation action removed from Texas state court on March 4, 2013. (Doc. 1, Notice of Removal). Plaintiffs are the subrogees of thirteen insured homeowners residing in eight different states, including three from Texas.2 Over the course of a year-and-a-half (May 2011 to September 2012), each insured homeowner allegedly sustained water-related property damage when the plastic ballcock nut on one end of the toilet supply lines installed in their residences “cracked as a result of a defect.” (Doc. 24, Am. Compl. ¶¶ 9, 16.) The defective toilet supply lines—which share mostly the same features and were sold under the “DuraPro” label—were allegedly manufactured by Watts and sold to Defendant Linx, Ltd. (“Linx”), who re-sold the lines to Defendant Interline Brands, Inc. (“Interline”), who then distributed the lines throughout the U.S. market, eventually ending up in the insureds’ residences. (Id. ¶ 9.) While all three defendants deny liability, only Watts seeks dismissal at this time, primarily 1 As such, the Court need not address Watts’s other pending motions, including Motions to Dismiss for Failure to State a Claim and Motions for a More Definite Statement (docs. 27, 43). The Court declares these Motions to be MOOT in light of this Order’s dismissal of the claims against Watts. 2 The individuals (with the locations of their insured residences) include: Edde Smith (Texas), Betty D. Johnson (Maryland), Karen Kelly (California), Michael Goodwin (Louisiana), Jason V. Yeong (Texas), Dorothy Micklo (California), Neal Shipon (Pennsylvania), John Alvin Renee (Lousiana), Barry Lentnek (New York), Pamela O. Brucker (Maine), Jose Gallardo (Texas), Travis Justus (Arizona), and Raymond Luehmkuhl (California). Am. Compl. ¶ 2; Compl. in Intervention ¶ 8. -2- Case 3:13-cv-00946-B Document 77 Filed 02/05/14 Page 3 of 16 PageID 2228 arguing that this Court lacks personal jurisdiction. Watts is a Chinese corporation that manufactures various plumbing products, which it sells to distributors and re-sellers (but not directly to consumers) in foreign and domestic markets. (See Doc. 27 Ex. 1, Aff. of Penngfei Zhao (“Zhao Aff.”); Doc. 66, 3 App. Supp. Pl.’s Resp. (“Pl.’s App.”) at 372.) Since its inception in 2002, Watts’s “principal (and only) place of business” has been its manufacturing facility located on the eastern coast of China. (Zhao Aff. ¶ 2.) The record reveals that Watts-manufactured products made their way into the United States in two relevant ways. First, various products originating from Watts’s facility in China were shipped to businesses in the United States between 2003 and 2011, including fifty-four shipments to companies located in Texas. (Pl.’s App. 494-543.) Many of these shipments were made to Watts’s parent company, Watts Regulator Co. (“Watts Regulator”), a separate and distinct entity also involved in the plumbing industry. (See id. at 372, 377, 494-543; Zhao Aff. ¶¶ 19, 22.) Though some contained toilet supply lines, none of these shipments are alleged to have contained the defective products at issue in this case. Second, the record shows that over a two-and-a-half year period (February 18, 2003 to August 25, 2005) Watts-manufactured plumbing products—including 765,025 toilet supply lines like the ones at issue here—were shipped to a facility in Nashville, Tennessee. (Pl.’s App. 7-9.) That facility was a national distribution center owned by Interline, a publically-traded corporation based in the United 3 Though Watts formerly operated under the name Taizhou Shida Plumbing Manufacturing Co., Ltd. (“Taizhou Shida”), the record shows that, at least for purposes of this Order, Watts and Taizhou Shida are functionally the same entities, simply operating under different names and slightly different ownership structures. (See Pl.’s App. 354, 357, 372, 377.) To avoid confusion, the Court simply refers to “Watts” whenever the record cites Taizhou Shida. -3- Case 3:13-cv-00946-B Document 77 Filed 02/05/14 Page 4 of 16 PageID 2229 States that markets and distributes maintenance, repair, and operations products to customers in the United States and Canada. (Id. at 253, 269, 285, 297-98.) Before reaching Tennessee, the products were purchased by Linx—a small U.S.-based entity involved in (among other things) the resale of products offered by companies in China—pursuant to its “Import Supplier Partnership Agreement” with Interline, signed in 2002. (Id. at 157-58, 355-56.) Though Linx had never worked with Watts before 2002, it decided to do business with the Chinese manufacturer after learning of Watts’s certificate of listing with IAPMO, Inc. (“IAPMO”), an association that certifies products for compliance with the Uniform Plumbing Code. (Id. at 169, 171-72, 229.) After Watts had IAPMO add Linx and Interline to the certificate of listing (id. at 126, 130), Interline began placing orders through Linx. More precisely, Interline sent purchase orders to Linx, who would then submit an identical order to Watts, and Watts, in turn, would fill the order and send it free-on-board (“F.O.B.”) to Linx’s facility in Shanghai, China. (Id. at 182-84; Zhao Aff. ¶ 23.) Linx then shipped the product to Interline’s national distribution center in Nashville, Tennessee, from which the toilet supply lines could have gone on to any of the fifty to seventy-plus regional distribution centers Interline operated at this time. (See, e.g., id. at 260, 272, 304-05.) From there, Interline could have sold the DuraPro lines to any of the three customer bases it served—“facilities maintenance, professional contractors, and other distributors” (Id. at 253)—although Plaintiffs allege that the lines at issue here “made their way to store shelves, before they were installed in [the] insureds’ residences.” (Am. Compl. ¶ 17.) On April 16, 2013, Watts filed four motions in response to Allstate’s Amended Complaint (doc. 24), and later re-filed these same four motions in response to Fire Insurance’s Complaint in Intervention (doc. 43). Watts subsequently withdrew one of its four pairs of motions (doc. 52)—its -4- Case 3:13-cv-00946-B Document 77 Filed 02/05/14 Page 5 of 16 PageID 2230 Motion to Dismiss for Insufficient Service of Process—leaving the Court to resolve the following three pairs of outstanding motions: Motion to Dismiss for Lack of Personal Jurisdiction, Motion to Dismiss for Failure to State a Claim, and Motion for a More Definite Statement. Briefing on these motions was delayed (docs. 34, 45) so that Magistrate Judge Ramirez could resolve Plaintiffs’ Amended Motion for Leave to Conduct Jurisdictional and Claims Discovery (doc. 28). On October 3, 2013, Judge Ramirez issued an Order (doc. 58) denying Plaintiffs’ discovery motion, finding that Plaintiffs had failed make a preliminary showing of personal jurisdiction. Plaintiffs objected to Judge Ramirez’s Order, which this Court overruled on October 8, 2013 (doc. 62). On October 25, 2013, Plaintiffs filed joint responses (docs. 65, 67, 68) to Watts’s motions. Watts replied on November 8, 2013 (doc. 70), but only with respect to its Motion to Dismiss for Lack of Personal Jurisdiction. Along with its reply, Watts filed a Motion for Leave to File Appendix (doc. 72), which the Court now DENIES given that the Motion for Leave is opposed and Plaintiffs had no opportunity to respond to the new evidence presented in Watts’s appendix (doc. 74). See Springs Industries, Inc. v. American Motorists Insurance Co., 137 F.R.D. 238, 239-40 (N.D. Tex. 1991) (“The office of the reply brief . . . is to rebut the nonmovant’s response . . . , not [to present] new supporting materials . .. [unless] no injustice is likely to result [and] the parties should agree [otherwise].”). Accordingly, the Court gives no consideration to Watts’s reply appendix (doc. 74). Having reviewed the relevant filings and law, the Court is now prepared to issue its resolution. II. RULE 12(b)(2) LEGAL STANDARD Federal Rule of Civil Procedure 12(b)(2) allows for dismissal of an action when a court lacks -5- Case 3:13-cv-00946-B Document 77 Filed 02/05/14 Page 6 of 16 PageID 2231 personal jurisdiction over the defendant. In resolving a Rule 12(b)(2) motion, the Court may consider "affidavits, interrogatories, depositions, oral testimony, or any combination of the recognized methods of discovery." Stuart v. Spademan, 772 F.2d 1185, 1192 (5th Cir. 1985). Parties “seeking to invoke the power of the court bea[r] the burden of proving that jurisdiction [over the moving defendant] exists.” Luv n’ Care, Ltd. v. Insta-Mix, Inc., 438 F.3d 465, 469 (5th Cir. 2006). But plaintiffs are not required to “establish jurisdiction by a preponderance of the evidence; a prima facie showing suffices.” Id. at 469. Moreover, any factual conflict contained in the parties' submissions must be resolved in the plaintiff’s favor. Cent. Freight Lines, Inc. v. APA Transp. Corp., 322 F.3d 376, 380 (5th Cir. 2003). Two preconditions must be satisfied before this Court may assert personal jurisdiction: (1) the defendant must be amenable to service of process under Texas' long-arm statute; and (2) the assertion of jurisdiction over the defendant must comport with the Due Process Clause of the United States Constitution. Jones v. Petty–Ray Geophysical Geosource, Inc., 954 F.2d 1061, 1067 (5th Cir. 1992). Because Texas' long-arm statute has been held to extend to the limits of due process, only the second jurisdictional precondition must be examined. Id. at 1067-68 (citing, inter alia, Schlobohm v. Schapiro, 784 S.W.2d 355, 357 (Tex. 1990)). For personal jurisdiction to comport with due process, the plaintiff must show that: (1) the defendant purposefully availed itself of the benefits and protections of the forum state by establishing "minimum contacts" with that state such that it would reasonably anticipate being haled into court there; and (2) exercising jurisdiction over the defendant would not offend traditional notions of fair play and substantial justice. Id. at 1068 (citations omitted). The "minimum contacts" prong of the due process analysis can be met through contacts giving rise to either specific or general jurisdiction. Gundle Lining Constr. Corp. v. Adams Cnty. Asphalt, Inc., -6- Case 3:13-cv-00946-B Document 77 Filed 02/05/14 Page 7 of 16 PageID 2232 85 F.3d 201, 205 (5th Cir. 1996). "General personal jurisdiction is found when the nonresident defendant's contacts with the forum state, even if un