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Civil Litigation No. 06-02-00078-CV, 5/2/2003. Click here for the full text of this decision FACTS: Hitachi Shin Din Cable Ltd. contends the trial court erred by denying HSD’s special appearance and by sustaining Wanda Lou Cain’s and Marcus Stribling’s objections to HSD’s affidavits in support of its special appearance. On Sept. 25, 1999, between 5 p.m. and 5:25 p.m., a clock radio in the home of Wanda Lou Cain caught fire and caused structural damage to her home. Cain sued Wal-Mart (who allegedly sold the clock radio), HSD (the alleged manufacturer of the electrical plug), and a second Chinese corporation (the alleged manufacturer of the electrical wiring) claiming the defendants were strictly liable. Cain’s insurance carrier, Texas Farm Bureau Insurance, was subrograted to her claims. According to the record, Hitachi Cable directly owns approximately 28 percent of HSD’s common stock and indirectly owns an additional 22 percent of HSD’s common stock. HSD has six executive directors, none of whom hold a position with HC. Two non-executive directors of HSD hold staff (nondirector) positions with HC. There are contractual agreements for technical support between HC and HSD, but none of those agreements involve the plug at issue in this case. HC’s financial statements are prepared without consolidating HSD’s financial figures into them. The two companies file separate tax returns in China. HSD is a corporate citizen of Hong Kong. Several years ago, HSD contracted with Thomson Multimedia, a French company. The laws of France and China govern the primary Thomson contract. The contract does not cover the sale, purchase or delivery of any tangible product deliverable in Texas. Instead, HSD receives purchase orders from Thomson’s Indianapolis affiliate directing HSD to deliver certain products – none of which include the plug made the subject of this suit-to an El Paso freight agent that facilitates transport of HSD’s products to Thomson’s offices in Juarez and Chihuahua, Mexico. The HSD components are then incorporated into Thomson products in Mexico for distribution elsewhere. No HSD products are introduced into the stream of commerce in Texas. The shipping contract with Thomson’s subsidiary is governed by the laws of Indiana, France or China. In the trial court, HSD filed a verified special appearance challenging the trial court’s in personam jurisdiction over HSD. HSD supported its special appearance with two affidavits from one of HSD’s directors, Chan Ka Ming. Chan’s affidavits state HSD has not registered as a foreign corporation with Texas’ secretary of state, has no offices in Texas, does not have a registered agent for service in Texas, and does not directly sell any of its products to persons or companies in Texas. The affidavits also declare HSD has not specifically targeted any of its advertising to people or companies in Texas. By parsing individual phrases of the affidavits in support of the special appearance, Cain argued before the trial court that HSD’s special appearance was supported by a legally inadequate affidavit, thereby converting the special appearance into a general appearance and subjecting HSD to personal jurisdiction in Texas. HSD asserted the affidavits were legally adequate to show no “minimum contacts” with Texas and any semantic problems with the language of the documents was a product of cultural and language barriers rather than an attempt to hide from liability. HSD also argued it was not subject to specific jurisdiction. Cain does not assert HSD had ever maintained an office, warehouse, business address, telephone listing, answering service, or other business location in Texas. After presentation of evidence and argument of counsel, the trial court denied the special appearance, issued findings of fact, and HSD filed this interlocutory appeal. HOLDING: The court reverses the trial court’s decision, grants the special appearance of Hitachi Shin Din Cable Ltd., and dismisses all claims herein against it for lack of jurisdiction. Cain contends HSD’s contacts with Texas can be found in three places: 1. HSD’s contract with Thomson to ship products to El Paso; 2. the corporate structure and relationships of the various Hitachi entities with HSD, including Hitachi America Limited (the American subsidiary of Hitachi Ltd., and an entity Cain presumes has ties to Texas); and 3. HSD’s internet presence. Cain does not allege that jurisdiction exists because HSD has maintained an office, warehouse space, a mailing address, a telephone listing, subscribed to an answering service or has any other direct business location in Texas. The evidence demonstrates that HSD contracted with Thomson, a French company, for the shipment of certain goods. The terms of the contract provided that Thomson directed where those goods would be shipped. Therefore, HSD’s direct contacts with Texas occur at the direction of a third party. Such contact cannot be said to meet the requirements for “purposeful availment” because this contact comes at the direction of a third party. The contract and its performance are insufficient to provide a basis for the exercise of general personal jurisdiction. Additionally, as there was no evidence that the plug that allegedly caused the fire was shipped as part of the Thomson contract, and because there was evidence to refute such a claim, the Thomson contract supports the exercise of neither specific nor general jurisdiction by a Texas trial court. Chan’s affidavits declare HSD and HC have separate managerial staffs, file separate tax returns, and are, in essence, separate companies. Cain presented no evidence to refute HSD’s position that the two companies are operated by separate managerial staffs. The only evidence Cain offered to show common management is information that HSD’s website contains links to HC’s website and that HC retains the copyright to the content of HSD’s website. There was no showing of duplicate corporate officers, nor of control of HSD’s day-to-day affairs by HC officials. In fact, HSD expressly denied such accusations by Cain during the discovery process. That HC claims the copyright to HSD’s web content demonstrates nothing more than HC’s provision of technical support to HSD’s website. It does not demonstrate HSD is the alter ego of HC, nor does it demonstrate control of HSD’s corporate policy or execution of HSD’s day-to-day affairs. The sole Securities and Exchange Commission filing in the record before the court is for Hitachi Ltd. – not HSD or HC – and Hitachi Ltd.’s SEC filing does not list HSD as a subsidiary of either Hitachi Ltd. or HC. Nor does HC’s reference to HSD in its annual financial report, without more, support an alter ego claim. Therefore, the evidence in the record is insufficient to establish that HSD is the alter ego of HC for the purpose of exercising general personal jurisdiction over HSD based on HC’s contacts with Texas. The record contains no evidence that Texans have ever completed transactions over the Internet with HSD. This information, if entered into evidence and included in the appellate record, would strongly support the trial court’s exercise of general personal jurisdiction over a foreign corporation such as HSD. Absent such evidence, there is nothing to show HSD has any minimum contacts with Texas via its Internet presence. OPINION: Morriss, C.J.; Morriss, C.J., Ross and Grant, JJ.

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