Datatreasury Corporation v. Wells Fargo & Company et al

Filing 536

REPLY to Response to Motion re #85 MOTION to Dismiss for Lack of Jurisdiction filed by HSBC North America Holdings Inc. (Attachments: #1 Exhibit #2 Exhibit #3 Exhibit #4 Exhibit #5 Exhibit #6 Exhibit #7 Exhibit #8 Exhibit #9 Exhibit #10 Exhibit #11 Exhibit #12 Exhibit #13 Exhibit)(Boudreaux, Glen)

Datatreasury Corporation v. Wells Fargo & Company et al

Doc. 536 Att. 4

Case 2:06-cv-00072-DF-CMC

Document 536

Filed 02/23/2007

Page 1 of 3

EV I D E N C E PROVING THE GUNDLE FACTORS ARE NOT SATISFIED Gundle Factor No . 3 - the parent and subsidiary have common business departments Evidence Proving That the Factor it Is Not Satisfied (1) HNAH and HBUS do not have common business departments. For example, HBUS has its own Marketing, Accounting and Human Resources Departments.; (2) Although HNAH, as the top-tier parent of all North American operations, does provide some consolidating functions in the accounting, tax, legal and insurance areas, such consolidating functions are provided to all North American subsidiaries and not just HBUS.; and, (3) The insurance coverage which HNAH negotiates provides "insurance for accidents that could happen anywhere in North America", not just Texas. Please see Exhibit 2: (1) page 43, lines 14-25, page 60, lines 7-12; page 144, lines 11-17; and page 158, lines 3-6); (2) page 14, lines 19-25; page 23, lines 3-9; page 23, line 22 - page 24, line 5; page 41, lines 10-15; page 60, line 2 - page 61, line 7; and page 81, lines 6-16; and, (3) page 10, line 21 - page 11, line 3; page 15, lines 14-17; page 17, line 14 - page 18, line 3; page 18, lines 7-11; page 20, lines 15-25; page 55, lines 8-14; and page 97, lines 14-19. No . 5 - the parent finances the subsidiary HNAH does not provide financial support to HBUS, and HBUS does not need any financial support. As reported by the FFIEC1, as of December 31, 2006, HBUS had Total Assets of $165.6 billion, and total Common & Preferred Capital of $12.2 billion. Please see the FFIEC's Uniform Bank Performance Report, attached hereto and fully incorporated herein as Exhibit 8, page 3.

The Federal Financial Institutions Examination Counsel ("FFIEC") "is a formal inter age ncy body empowered to prescribe uniform principles, standards, and report forms for the feder al examination of financial institutes by the Board of Governors of the Federal Reserve System (FRB), the Federal Deposit Insurance Coporation (FDIC), the National Credit Union Administration (NCUA), the Office of the Comptroller of the Currency (OCC), and the Office of Thrift Supervision (OTS) and to make recommendations to promote uniformity in the supervision of financial institutions." (http://www.ffiec.gov).

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Dockets.Justia.com

Case 2:06-cv-00072-DF-CMC

Document 536

Filed 02/23/2007

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Gundle Factor No . 6 - the parent cau sed the incor po ration of the subsidiary No . 7 - the subsidiary operates wit h grossly inade qu at e capital No . 8 - the parent pays the salaries and other expenses of the subsidiary

Evidence Proving That the Factor it Is Not Satisfied HUSI, not HNAH, caused HBUS to be incorporated. Please see HUSI's March 23, 2004 8-K attached hereto and fully incorp orat ed herein as Exhibit 9, page 3. HBUS has sufficient operating capital. As of December 31, 2006, HBUS had total assets of $165.6 billion and total Common & Preferred Capital of $12.2 billion Please see Exhibit 8, pages 2-3. (1) HNAH does not pay the salaries of HBUS' employees; and, (2) Any expense that HNAH incurs on a subsidiary's behalf (e.g., insurance premiums), is allocated back to the subsidiary. Please see Exhibit 2: (1) page 21, lines 4-24 and (2) page 18, line 22 page 19, line 4.

No . 9 - the subsidiary receives no business except that given to it by the parent

(1) Even prior to HNAH's incorporation, HSBC Bank USA - a New Yo rk state chartered bank (n/k/a HBUS), had more than 400 branches in New York state alone; and, (2) As reflected by the FDIC's Uniform Bank Performance Report, HBUS' operations have grown since that time Please see (1) Exhibit 9, pages 3-4 and (2) Exhibit 8.

No . 10 - the parent uses the subsidiaries propert y as its own

(1) HBUS owns or leases its own property; (2) HNAH leases its own property. Please see Exhibit 2: (1) page 20, lines 3-10 and (2) page 17, lines 1-6.

Case 2:06-cv-00072-DF-CMC

Document 536

Filed 02/23/2007

Page 3 of 3

Gundle Factor No . 11 - the daily op erat ions of the two corporations are not kept separate

Evidence Proving That the Factor it Is Not Satisfied (1) HNAH is not involved in, and does not control, HBUS' daily operations. (2) Once a year, HBUS presents its strategic operating plan to Mr. Bobby Mehta outside the presence of HNAH's Board of Directors. Mr. Mehta is a member of HBUS' Board of Directors, as well as HNAH's Chief Executive Officer and a member of its Board of Director.;; and, (3) HNAH does not have any management committee, or any other committee, consisting of its subsidiaries' executives and/or officers. Please see Exhibit 2: (1) page 58, lines 13-20; page 65, lines 5-9; and page 68, lines 1025; page 72, lines 5-14; and page 91, line 25 - page 92, line 4; (2) page 34, line 22 - page 35, line 6 and page 36, lines 8-15; and page 28, lines 1-20; and, (3) page 34, lines 9-16.

No . 12 - the subsidiary does not obse rve the basic corporate formalities, such as keeping separate books and records and holding shar eho lder and board meetings

In response to DataTreasury's Request for Production No. 12, HNAH produced: (a) (b) (c) (d) HI NO 's Corporate Profile showing that HNAH is its sole share holder ; HN AI's Corporate Profile showing that HINO is its sole shareholder; HU SI 's Corporate Profile showing that HNAI is its sole shareholder; and, HBUS 's Corporate Profile showing that HUSI is its sole shareholder.

Please see the Corporate Profiles attached hereto and fully incorporated herein as Exhibits 10-13.