Case Study: Cornerstone V. Texas
FACTS:
Cornerstone is a Texas company that owns hospitals and was in the market to grow its business. Some of the Cornerstone executives, the Respondent, came across an investment and used Cornerstone funds to expand and buy new companies without consulting Cornerstone’s board. These executives later resigned and continued to make business under the new formed companies. Cornerstone filed a suit stating that Respondent’s actions were against their fiduciary duty. One of the investments was made with Nautic Partners whose firm is in Rhode Island. Since the company was from out of state, the court had to determine if there were minimum contacts in Texas in order to have personal jurisdiction.
ISSUES:
Did the Supreme Court of Texas have personal jurisdiction over the nonresident
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This requires the respondent to have minimum contacts in Texas. There are three elements that establish minimum contacts. The law explained, “(1) only the defendant's contacts with the forum are relevant, not the unilateral activity of another party or third person; (2) the defendant's acts must be purposeful and not random, isolated, or fortuitous; and (3) the defendant must seek some benefit, advantage, or profit by availing itself of the jurisdiction" (Cornerstone v. Nautic, 2016, p.2).
REASON:
It was proven that the Court had personal jurisdiction over the nonresident Respondent due to the minimum contacts in Texas. These minimum contacts were established when the Respondent invested in New Reliant who purchased hospitals and other assets in Texas. The Supreme Court believed that it was fair to sue them because the Respondent was aware of the revenue they would receive when investing in the companies in Texas. With this, the court concluded that the Respondent’s actions were purposeful and resulted in profit that gave the Court personal
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