CORPORATION CAN BE A TEXAS RESIDENT, EVEN IF IT WASN’T “BORN” HERE

Winnsboro Auto Ventures LLC v. Santander Consumer USA, Inc.
Dallas Court of Appeals, No. 05-17-00895-CV (April 19, 2018)
Bridges, Myers, and Schenck (opinion available here)

Kelli Hinson

The Texas long-arm statute allows Texas courts to exercise personal jurisdiction over non-resident defendants “doing business” in Texas. Among other things, the statute provides that contracting with a “Texas resident,” where either party is to perform the contract in whole or in part in Texas, constitutes “doing business” in this state. This case involved a breach-of-contract claim brought against a Louisiana company, Winnsboro, by Santander, a company incorporated in Illinois but with its principal place of business and corporate headquarters in Texas. Winnsboro contested personal jurisdiction, arguing that Santander was not a Texas resident able to take advantage of the long-arm statute because it was incorporated in Illinois.

The term “Texas resident” is not defined; so Winnsboro looked to other statutes that define “non-residents” or “foreign corporations” as corporations formed under the laws of another state. It argued that, if corporations formed in another state are “non-residents” or “foreign corporations,” they cannot also be “residents.” The Court of Appeals disagreed, holding that the cited definitions are not applicable to the long-arm statute and, in any event, do not purport to define “resident.” The Court could find no language in the statute, and no logical rationale, to support the conclusion that the legislature meant to exclude corporations incorporated in another state but maintaining their principal place of business here from invoking the Texas courts’ long-arm power. To hold otherwise would have the practical effect of preventing businesses located in this state from having access to Texas courts, which would give rise to constitutional concerns.