Partners Secure Significant Appellate Result Against Product Liability, Construction Defect Claims of $100M

Partners Raymond Kutch, Danny Buechler, and Matthew Kolodoski obtained a significant result in an interlocutory appeal for their manufacturer client when the Fifth District Court of Appeals reversed the trial court’s order denying its special appearance and granted a dismissal of claims for lack of personal jurisdiction.

Personal Jurisdiction in Product Liability Claims

The client was a German pipe manufacturer, Aquatherm GmbH, whose products were sourced and installed in the Statler Hotel during its recent renovations. Statler contended the European pipe used in the renovation of the Hotel was not compatible with the fittings used on the freshwater system. Statler sued several parties over the alleged product defect, breach of warranty, construction defect, and design defect and sought more than $100 million for damages to its cold-water plumbing system.

The Plaintiff pursued jurisdictional discovery and the district trial court judge denied GmbH’s special appearance to contest personal jurisdiction. Product liability cases involve personal jurisdiction and require courts to assess if they can hear the case against a defendant, typically a manufacturer, even if they are not located in the forum state but have sufficient connections to the state to be subject to its courts.

Specific Jurisdiction is Not Expanded

The Court of Appeals rejected Statler’s argument that a subsidiary’s contacts with Texas could be imputed to a foreign manufacturer for the purpose of defeating specific jurisdiction. Applying the Supreme Court precedents in Luciano v. Sprayfoam; Morgan v. LG Chem; and State v. Volkswagen Aktiengesellschaft, the Fifth Court of Appeal resoundingly put a stop to the “anything goes” jurisdiction the Supreme Court of the United States warned about in its 2020 opinion in Ford v. Montana.

The Court carefully evaluated the record and each of the purported nine contacts Aquatherm GmbH had with Texas in order to determine whether or not they served as an instance of purposeful availament, and whether those purported contacts arise from or related to Statler’s injuries. Ultimently, based on the record, the Court noted a complete absence of the necessary “plus factors” necessary to support stream of commerce jurisdiction against Aquatherm GmbH.

Jurisdictional challenges are tricky and fact-intensive. Reach out to our critical motions and Appellate teams for help