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In re Meeks

Supreme Court of Colorado, En Banc

September 26, 2016

In Re Khalid Meeks, as Attorney-in-Fact of Gera Meeks, Plaintiff
v.
SSC Colorado Springs Colonial Columns Operating Company, LLC, d/b/a Colonial Columns Nursing Center; SavaSeniorCare Administrative Services, LLC; SavaSeniorCare Consulting LLC; SSC Disbursement Company LLC; Colorado Holdco LLC; SSC Equity Holdings LLC; SavaSeniorCare LLC; Master Tenant Parent Holdco LLC; Proto Equity Holdings LLC; Terpax Inc.; and Micky Belinski, in his capacity as Administrator of Colonial Columns Nursing Home, Defendants

         Original Proceeding Pursuant to C.A.R. 21 El Paso County District Court Case No. 15CV31423 Honorable Thomas Kelly Kane, Judge

          Attorneys for Plaintiff: Reddick Moss, PLLC Brent L. Moss Brian D. Reddick Robert W. Francis Joshua K. Smith Little Rock, Arkansas

          Attorneys for Defendants: Gordon & Rees LLP Thomas B. Quinn Joshua G. Urquhart David M. Clarke Denver, Colorado

          RICE CHIEF JUSTICE

         ¶1 In this case, we hold that the trial court must apply the test announced in Griffith v. SSC Pueblo Belmont Operating Co., 2016 CO 60, __ P.3d __, to determine whether nonresident parent companies may be haled into court in Colorado based on the actions of their resident subsidiaries. We also hold that, while an evidentiary hearing is not always required for a ruling on a C.R.C.P. 12(b)(2) motion, this case requires a hearing to fully address this case's complex record and to apply the fact-intensive Griffith test. The trial court must hold a hearing to resolve disputed jurisdictional facts and develop the record before determining whether the nonresident defendants are subject to personal jurisdiction in Colorado. We therefore make our rule to show cause absolute and remand the case for proceedings consistent with this opinion.

         I. Facts and Procedural History

         ¶2 The facts of this case are similar to those in Griffith, which we also announce today. Here, the plaintiff, Khalid Meeks, filed a complaint against ten entities and one individual alleging that the parties injured his mother, who was a resident of Colonial Columns Nursing Center. He seeks relief based on two causes of action: (1) negligence, and (2) violations of Colorado's Consumer Protection Act, §§ 6-1-101 to -1121, C.R.S. (2016). The individual and four of the ten entities conceded jurisdiction and answered the complaint. As in Griffith, the other six entities (the "Nonresident Defendants") contested jurisdiction, arguing that they are not subject to personal jurisdiction in Colorado. See ¶ 2. The Nonresident Defendants are upstream parent companies of the resident company (the nursing center) and the entities that conceded jurisdiction. See id. at ¶¶ 3-5.

         ¶3 In a brief written order, the trial court denied the Nonresident Defendants' request for an evidentiary hearing and their C.R.C.P. 12(b)(2) motion to dismiss. It found that "the 'nonresident' Defendants have sufficient contacts in the state of Colorado to justify Colorado courts extending general jurisdiction over these Defendants." It then concluded that exercising personal jurisdiction was proper because the resident and nonresident companies were "not operated as distinct entities."

         ¶4 The Nonresident Defendants petitioned this court for relief under C.A.R. 21, arguing that the trial court erred by (1) denying their request for an evidentiary hearing, (2) failing to apply an alter-ego or agency test before determining that the entities were not distinct, and (3) finding that it had general personal jurisdiction over them. We issued a rule to show cause why the trial court's order should not be vacated.

         II. Analysis

         ¶5 The Nonresident Defendants first argue that the trial court should have applied a more stringent test before exercising general personal jurisdiction over them. We agree.

         ¶6 In Griffith, we held that a trial court must apply the following test to determine whether it may exercise personal jurisdiction over a nonresident parent company:

First, the trial court shall determine whether it may pierce the corporate veil and impute the resident subsidiary's contacts to the nonresident parent company. If the resident subsidiary's contacts may be imputed to the nonresident parent company, the court shall analyze all of the nonresident company's contacts with Colorado-including the resident subsidiary's contacts-to determine whether exercising either general or specific personal jurisdiction over the company comports with due process. However, if the trial court concludes that it may not pierce the corporate veil, it shall treat each entity separately and analyze only the contacts that each parent company has with the state when performing the personal jurisdiction analysis.

         ¶ 1. A nonresident company "is subject to general jurisdiction only where it is incorporated, has its principal place of business, or is 'essentially at home.'" Id. at ¶ 19; accord Magill v. Ford Motor Co., 2016 CO 57, ¶ 22, __ P.3d ("A corporation that operates in many places can scarcely be deemed at home in all of them." (quoting Daimler A.G. v. Bauman, 134 S.Ct. 746, 762 n.20 (2014))). However, even if a nonresident company cannot be subjected to general jurisdiction in Colorado, a Colorado court may exercise specific jurisdiction over it if the company has "'certain minimum contacts' with Colorado and the cause of action arises out of those contacts." Griffith, ¶ 20.

         ¶7 Like the trial court in Griffith, the trial court here did not apply this test before concluding that the Nonresident Defendants were subject to personal jurisdiction in Colorado. The trial court's statement that the Nonresident Defendants were "not operated as distinct entities" was inadequate to support piercing the corporate veil to reach the upstream parent entities. See id. at ¶¶ 15-16. Without considering the resident nursing center's Colorado contacts, it is not clear which in-state contacts would support exercising personal jurisdiction over the Nonresident Defendants. Moreover, while the trial court concluded that the Nonresident Defendants were subject to general personal jurisdiction, it failed to explain which contacts rendered the Nonresident Defendants "essentially at home" in Colorado. See Magill, ...


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