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A Better Partnership
June 25, 2014

COA reminds lower court to follow specific directives of a remand order

In Glenn v. Valero Energy Corporation, No. 308636, the court held that (1) the trial court’s failure to comply with the “very specific directives” of the appellate court on remand necessitated vacating the trial court’s second order denying summary disposition to the defendant, and (2) the plaintiffs failed to carry their burden of establishing the existence of either general or limited personal jurisdiction over the defendants in this matter. 

This case stems from an action brought by the plaintiffs, alleging contamination of their local properties from leaks in underground storage tanks originating from a property that was operated as a gasoline station in Detroit, MI.  At the trial level, Defendant Valero Energy Corporation (“Valero”) moved for summary disposition pursuant to MCR 2.116(C)(1) for lack of personal jurisdiction.  The trial court denied Valero’s motion, and Valero appealed the trial court’s decision.  The appellate court reversed and remanded the trial court’s decision, instructing the trial court to address the following issues:
  • To conduct a proper personal jurisdiction analysis and determine whether “the exercise of jurisdiction was consistent with the requirements of the Due Process Clause of the Fourteenth Amendment”;
  • To articulate what facts the trial court relied on  in exercising jurisdiction under MCL § 600.715 and identify which subsection it relied on, given Valero’s evidence that showed an actor in the alleged contamination, Wideman, was not an employee of Valero; and
  • To explain its statement that the companies that Wideman worked for “all trace[d] back to Valero,” and to explain why it was not treating the two companies as separate entities, “especially where the complaint does not assert a claim to pierce the corporate veil.” 

On remand, Valero again moved for summary disposition for lack of personal jurisdiction, and the trial court denied the motion again.  Appealing the trial court’s denial of the motion, Valero first contended that (1) the trial court failed to follow, on remand, the appellate court’s instructions to “explain aspects of its ruling.”   The Court Appeals agreed.  It stated that “when an appellate court gives clear instructions in its remand order, it is improper for a lower court to exceed the scope of the order.” (quoting K & K Constr, Inc v Dep’t of Environmental Quality, 267 Mich App 523, 544-545; 705 NW2d 365 (2005)).  Examining the trial court’s actions on remand, the appellate court found that “other than citing to Electrolines, Inc v Prudential Assurance Co, Ltd, 260 Mich App 144, 167; 677 NW2d 874 (2003), as the applicable standard for determining whether the exercise of jurisdiction is constitutional, and identifying the issues to be addressed on remand, the trial court failed to identify the evidence it relied on to address the issues raised by the appellate court.  Moreover, the trial court failed to identify what subsection of MCL § 600.715 it relied on to establish personal jurisdiction.  Because of the trial court’s actions, the appellate court found it necessary to vacate the trial court’s second order.

Valero also contended that the plaintiffs failed to establish either general or limited personal jurisdiction over the defendant.  The Court of Appeals applied MCL § 600.711 to the facts of the case.  This section allows a court to exercise general personal jurisdiction over any corporation that (1) has incorporated under Michigan law, (2) has consented to the litigation, or (3) has a continuous and systematic part of its general business” in Michigan.  It was undisputed that Valero was not incorporated in Michigan, nor did it consent to the litigation; thus, the plaintiffs had to prove that Valero had a continuous and systematic part of its general business in Michigan in order for the court to exercise general personal jurisdiction over it. 
The Court interpreted the terms “continuous and systematic” business as having a “general plan for conducting business on a regular basis” within Michigan.  It held that the plaintiffs failed to establish general jurisdiction within this meaning, reasoning that at best, the plaintiffs suggested that Valero was conjoined with various subsidiaries, which is not sufficient to establish general personal jurisdiction. 

Concerning limited personal jurisdiction, the appellate court applied a “two-step analysis” to determine if it existed in this case.  First, the Court ascertained whether jurisdiction was authorized by Michigan’s long-arm statute, MCL § 600.715, which allows a court to exercise limited personal jurisdiction over a defendant if a number of relationships exist between a corporation and its agent and the state.  The Court found that the plaintiffs failed to establish any of those relationships in their pleadings.  Accordingly, because the plaintiffs failed to establish limited personal jurisdiction under Michigan’s long-arm statute, the appellate court found the second inquiry of whether the exercise of jurisdiction was consistent with due process to be unnecessary. 

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