Searcy v. Parex Res., Inc.

496 S.W.3d 58

Jason R. Searcy, as Trustee of the Exempt Assets Trust, Petitioner,¹

v.Parex Resources, Inc., Respondent

No. 14–0293

No. 14–0295

Supreme Court of Texas.

Argued December 10, 2015

OPINION DELIVERED: June 17, 2016

Rehearing Denied September 23, 2016

Jeffrey C. Kubin, Anthony N. Kaim, Angus Joseph Dodson, Michael R. Absmeier, Robin C. Gibbs, Gibbs & Bruns LLP, Houston TX, for Petitioner.

Amy C. Falcon, Eugene M. Nettles, Jim D. Aycock Jr., Lauren Beck Harris, Mark Harris Stamey, Richard Runions, Porter Hedges, L.L.P., Houston TX, O'Neill, Harriet, Law Office of Harriet O'Neill, PC, Austin TX, for Ramshorn Intrn'l Ltd.

Amy C. Falcon, Eugene M. Nettles, Jim D. Aycock Jr., Lauren Beck Harris, Mark Harris Stamey, Richard Runions, Porter Hedges, L.L.P., Houston TX, for Parex Resources, Inc.

JUSTICE WILLETT delivered the opinion of the Court, in which CHIEF JUSTICE HECHT, JUSTICE GREEN, JUSTICE JOHNSON, JUSTICE LEHRMANN, and JUSTICE DEVINE joined.

This complicated jurisdiction case involves multiple corporations, countries, and continents.

Here is the SparkNotes summary. A Bermudian entity was the sole shareholder of Class A shares of another Bermudian entity that owns certain Colombian oil and gas operations. The Bermudian shareholder sought to sell these shares and entered into a share purchase agreement, negotiated in Texas, with a Texan entity. The deal fell through, and so the Bermudian shareholder searched for other buyers. After a Canadian entity pursued the shares, the Texan entity sued both the Canadian entity and the Bermudian shareholder in Texas for tortious interference with its share purchase agreement. The Texan entity also sued the Bermudian owner of the Colombian oil and gas operations in Texas for fraud.

We hold that when the Canadian entity sought to purchase shares of a Bermudian entity that owns Colombian assets from a Bermudian shareholder and did not intend to develop a Texas business, it did not purposefully avail itself of Texas's jurisdiction. The Canadian entity's contacts with Texas were too fortuitous and attenuated for the exercise of specific jurisdiction over the entity to be consistent with due process. Indeed, even considering the extent of the communications between the Canadian entity and the Bermudian shareholder's executives in Texas—communications that were certainly voluminous, and, as is usual these days, electronic—the Canadian entity had no control over where the employees of the Bermudian shareholder happened to be located. Moreover, the Canadian company did not desire to create an ongoing relationship with Texas, enjoy the benefits of our laws, or profit from our thriving economy. The Bermudian shareholder who owned shares related to the Colombian assets—and it does matter that those assets were Colombian, not Texan—could have employees located anywhere in the world; the location of its executives in Texas, and their corresponding communications with the Canadian entity, were totally fortuitous. This coincidence is insufficient to confer jurisdiction over the Canadian entity.

We also hold, however, that Texas courts have specific—although not general—jurisdiction over the Bermudian owner of the Colombian oil and gas operations. The claims against the Bermudian owner turn on its Texas-based executives' alleged misrepresentations in Texas to a Texas entity. These executives had the authority to sell the shares, and held themselves out as such over many years. Such entanglement with Texas is thus substantial enough to confer specific jurisdiction, and the trial court had sufficient evidence to so hold. But while this relationship between Texas and the claims alleging malfeasance stemming from the actions of the executives here, and of those to whom they gave marching orders, is relevant to the specific jurisdiction analysis, these contacts are insufficient to confer general jurisdiction over the Bermudian owner.

We thus affirm judgment of the court of appeals.

I. Factual Background.

Several corporate entities are involved in this case:

• ERG is a company based in Houston.²

• Parex Resources, Inc. (“Parex Canada”) is a Canadian energy company that focuses on Latin American assets.

• Nabors Industries, Limited (“Nabors”) is a Bermudian company with operations in Houston.

• Ramshorn International, Limited (“Ramshorn”) is a Bermudian company that maintained oil and gas operations in Colombia. Nabors' subsidiary owned all the Class A shares of Ramshorn.

Nabors decided to divest its stake in Ramshorn, and requested bids for its Class A shares during Fall 2011. ERG expressed an interest in purchasing the shares. Claudia Arango, Ramshorn's general manager in Colombia, prepared a presentation about the company's operations there. The presentation indicated that Ramshorn had rights to explore a certain portion of the outer continental shelf off Colombia via the waters of the so-called “Jag–A block.”

In early 2012, Edgar Dunne, ERG's Chief Operating Officer, and Jordan Smith, Nabors' Head of Global Explorations, went to Colombia where Ramshorn allegedly represented that it had a 95 percent interest in the Jag–A block, subject to approval by the Colombian government. Ramshorn allegedly claimed that it acquired this interest through an agreement with a different company, Columbus Energy Limited (“Columbus”).

Later in January 2012, Dunne and various colleagues from ERG attended a meeting with Nabors representatives in Houston. A Nabors attorney, Scott Peterson, allegedly claimed that Ramshorn had clean title to the Colombian operations, and that it controlled Columbus. ERG then sent Nabors a formal letter of intent dated February 17, 2012, offering to purchase the shares for $31.5 million. On the road to a deal, ERG continued to conduct due diligence, in part by reviewing documents in a virtual data room that was hosted by a Texas server. During the ongoing negotiations, Nabors' head of global exploration, Jordan Smith, made various representations about the Colombian assets; Nabors' due diligence materials identified him as Ramshorn's president; and Arango appeared to think him to be her boss. Smith was instrumental in Ramshorn's critical decision-making, and Arango was required to seek his permission for many large capital expenditures. Moreover, Smith was in charge of Nabors' divestment of shares like the Ramshorn shares, and worked with Arango to sell them.

But the deal's progress began to falter. Back in 2010, Nabors had publicly announced its desire to sell the Ramshorn shares, and had retained Royal Bank of Canada (RBC), which is, of course Canadian, as its financial adviser. Smith had then contacted a Calgary-based RBC employee, Bevin Wirzba, who worked on facilitating the prior sale which ultimately did not occur. Now fearing that the ERG transaction would not close, Smith again reached out to Wirzba, as Smith indicated in his deposition by ERG:

Q: Okay. And did there come a later point in time in 2011 or 2012 when you went back to RBC and asked them if they could help you sell shares and associate in that sense?

A: Yes. Once ERG had declined any interest in pursuing the project any further, I contacted Royal Bank of Canada and asked them if they wanted to go back to various of the companies that we had talked to in 2010 and see if they knew if they were interested in buying the shares....

As a result of Smith's request that Wirzba to reinitiate contact with these prior putative buyers, RBC—aware that Parex Canada wanted to expand its Colombian portfolio—notified Parex Canada about Nabors' renewed desire to sell the shares:

Q: Who were ... the people that you wanted RBC to contact?

A: The people that had been previously contacted during the 2010 effort to sell.

Q: Well, who had—who were those—who were those people?

A: Oh, gee whiz. I think that all told back in 2010 we had ... probably contacted 50 companies.

Q: Okay. Did it include Parex?

A: Included Parex.

After being contacted by RBC, Parex Canada drafted a letter of intent, sent it to RBC, and thus formally engaged RBC to facilitate the deal. Wirzba then sent the letter to Nabors on behalf of Parex Colombia, which is wholly owned by one of Parex Canada's wholly owned subsidiaries, Parex Barbados. Parex Colombia has its own board of directors and corporate officers, distinct from those of Parex Canada. The purchase price was $40 million. Nabors and Parex Colombia entered into a confidentiality agreement after which Nabors gave Parex Colombia access to the data room. The confidentiality agreement included a Texas choice of law clause, but Parex Colombia requested that it be changed to New York instead.

Nabors then began entertaining multiple bids for the shares, and the purchase prices went higher and higher.³ Although Parex Colombia was the named bidder, the bidding process was orchestrated by Parex Canada's executives. During the process, Parex Canada's executives exchanged numerous emails, calls, and voicemails with their Nabors counterparts. The Parex Canada executives knew that the Nabors executives worked in Texas.

Eventually, on March 9, 2012, Nabors arranged for its Bermudian subsidiary, Nabors Global Holdings II, Limited (Nabors Global), to enter into a share purchase agreement with ERG (ERG SPA). Under the terms of the agreement, ERG agreed to pay $45 million for the shares, with the deal set to close at 9 a.m. on March 15. ERG provided $3 million to be held in escrow. Nabors did not make Ramshorn a party to the ERG SPA, but it continued to provide ERG with diligence materials. On the day the ERG SPA was executed, Nabors emailed Wirzba to tell him that it had found another purchaser, but did not name ERG or expressly mention the ERG SPA. Nonetheless, Nabors continued to keep its data room open for other bidders to access the diligence materials. It was after this that Parex Colombia increased its bid to $55 million. Wirzba told Parex Canada that “if there is a hiccup in closing ... you'll be the first to know.” After this, Parex Canada...