WH SMITH V. BENAGES

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WH SMITH V. BENAGES

State: Florida

Court: Florida Third District Court

Docket No: 10-1509

Case Date: 12/29/2010

Preview:Third District Court of Appeal
State of Florida, July Term, A.D. 2010
Opinion filed December 29, 2010. Not final until disposition of timely filed motion for rehearing. ________________ No. 3D10-1509 Lower Tribunal No. 03-29841 ________________

WH Smith, PLC,
Appellant, vs.

Benages & Associates, Inc.,
Appellee.

An Appeal from a non-final order from the Circuit Court for Miami-Dade County, Victoria S. Sigler, Judge. Hunton & Williams and Christopher N. Johnson, for appellant. Joseph A. Carballo and John Rodriguez, for appellee.

Before RAMIREZ, C.J., and SUAREZ and ROTHENBERG, JJ. PER CURIAM. This is an appeal from a non-final order denying WH Smith, PLC's ("Smith

PLC") motion to dismiss for lack of personal jurisdiction, based on the trial court's finding that Benages & Associates, Inc. ("Benages") established personal jurisdiction under an alter ego theory. Following our de novo review, see Wendt v. Horowitz, 822 So. 2d 1252 (Fla. 2002), we reverse and remand with instructions to grant Smith PLC's motion to dismiss as Benages failed to, and cannot, establish personal jurisdiction against Smith PLC under the alter ego theory. On March 30, 2001, Benages and W.H. Smith, Inc. entered into an Agreement for Consultancy Services ("Agreement"), in which Benages agreed to assist W.H. Smith, Inc. to obtain a five-year lease for retail concessions at Miami International Airport ("MIA"). The Agreement provides that it can be terminated by giving ninety days written notice, but once W.H. Smith, Inc. is operating retail concessions at MIA, the Agreement cannot be terminated. Further, W.H. Smith, Inc. agreed to pay Benages a monthly retainer fee until the lease is executed, and thereafter, a success fee for five years. The Agreement was signed by Sean

Anderson as Chief Executive Officer ("CEO") of W.H. Smith, Inc., which is located in Georgia. On October 1, 2003, W.H. Smith, Inc. notified Benages that it was terminating the Agreement because W.H. Smith Group Holdings (USA), Inc. decided to exit the United States airport and hotel markets, and therefore, neither WH Smith Airports, Inc. nor any other WH Smith entity would be pursuing or

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entering into a lease to operate retail concessions at MIA. Benages was paid the monthly retainer for ninety days as required by the Agreement, but did not receive the success fee. In 2003, Benages filed an action against W.H. Smith, Inc., W.H. Smith Airport Partners, Inc., W.H. Smith of Florida, Inc., and W.H. Smith Group Holdings, Inc. ("Smith U.S. Defendants") and others, alleging, in part, a breach of the Agreement. In August 2009, a final default judgment was entered against the Smith U.S. Defendants, which are now defunct. Thereafter, in February 2010, Benages filed its Amended Motion to Pierce the Corporate Veil of W.H. Smith Group Holdings and to Implead W.H. Smith, P.L.C. ("Motion to Pierce"), setting forth jurisdictional allegations based on an alter ego theory. The Motion to Pierce requested that the trial court enter an order (1) piercing the corporate veil of the Smith U.S. Defendants; (2) impleading the alter ego corporate parent of the Smith U.S. Defendants--Smith PLC; and (3) holding Smith PLC liable as the alter ego of the Smith U.S. Defendants. The Motion to Pierce asserted, in part, that the Smith U.S. Defendants were dominated and controlled by their corporate parent, Smith PLC, and Smith PLC used the Smith U.S. Defendants for an improper purpose--Smith PLC directed the Smith U.S. Defendants to breach the Agreement knowing that any judgment against the Smith U.S. Defendants would be uncollectible. The Motion to Pierce relied, in

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part, on the 2009 deposition of Sean Anderson, the former CEO of W.H. Smith, Inc., who testified that "all decisions with regard to U.S.A. were made in London." In response, Smith PLC filed a Motion to Dismiss for Lack of Personal Jurisdiction ("Motion to Dismiss") and several affidavits in support of its Motion to Dismiss, asserting as follows. W.H. Smith Group Holdings, Inc. is a Nevada corporation which directly or indirectly owned the remaining three Smith U.S. entities--W.H. Smith, Inc., W.H. Smith Airport Partners, Inc., and W.H. Smith of Florida, Inc. Smith PLC asserted that it has no minimum contacts with Florida

because it does not own or lease property in Florida; has no agents, offices, registered agent, or employees in Florida; has never held a meeting in Florida; and has never done business in Florida. Further, Smith PLC is a public limited

company organized under the laws of England and Wales, with its principal place of business in the United Kingdom, and the Smith U.S. Defendants are United States-based, indirect subsidiaries of Smith PLC. Smith PLC argued that Benages failed to allege any facts to support its allegations that the Smith U.S. Defendants had no independence or that the Smith U.S. Defendants were mere "shams" or "shells." Rather, the affidavits reflect that the WH Smith entities in the United States had thousands of employees and hundreds of retail stores, and had significant assets and revenues, with W.H. Smith Group Holdings, Inc. reaching over $300 million in sales in 2003. The Smith U.S.

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Defendants had their own bank accounts, with United States-based employees and managers who were signatories on these bank accounts. The Smith U.S.

Defendants never leased any property from Smith PLC, and instead, the Smith U.S. Defendants leased properties in their own names, with none being co-signed or guaranteed by Smith PLC. Further, decisions relating to the Smith U.S.

Defendants were not made by Smith PLC, and the Smith U.S. Defendants operated independently. As to the Agreement, Smith PLC was not a party to the

Agreement; Smith PLC has never had business dealings with Benages; and Smith PLC did not have any involvement in any attempt to obtain a concession at MIA. Although Smith PLC and the Smith U.S. Defendants had separate board of directors and officers, at various times, they did have one overlapping officer. Following the Motion to Dismiss, Benages filed the affidavit of Michael Benages, who, in essence, averred that by April 2002--which is after Benages and W.H. Smith, Inc. entered into the Agreement but before the "formal Concession bidding process began"--Smith PLC already had decided to exit the United States markets and to sell the Smith U.S. Defendants. To make the sale of the Smith U.S. Defendants more attractive to potential buyers, Smith PLC used the Smith U.S. Defendants to "fool" Benages into believing that the Smith U.S. Defendants intended to actually operate concessions at MIA once it obtained the concessions through the bidding process. Benages, however, was not aware that Smith PLC

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was making "all significant decisions" for the Smith U.S. Defendants and that Smith PLC had already decided to sell off the Smith U.S. Defendants. In addition to Mr. Benages' affidavit, Benages also filed a second affidavit which was executed by Mr. Anderson, stating: "[D]uring my tenure with W.H. Smith, Inc., WH Smith PLC dominated the Smith U.S. Defendants and made all significant decisions for the Smith U.S. Defendants, each of which took direction from Smith PLC." Following a hearing, at which no live testimony was taken, the trial court, relying on the voluminous discovery, denied the Motion to Dismiss, concluding: Well, motion to dismiss is denied. Not because of the allegations I heard about bid rigging or campaign contributions or securities fraud. But my belief is the acts of PLC in terms of

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