Massengale says Tax Code Section 171.255 [providing for personal liability of corporate officers when corporate privileges of corporation are forfeited based on non-payment of tax] does not provide an independent basis for personal jurisdiction over nonresident officer or director of Delaware company.

 
A panel of the First Court of Appeals, in an opinion penned by Justice Michael Massengale, has ruled that the manager of Delaware company could not be sued in Texas based on the corporation's forfeiture of corporate privileges in Texas for failure to pay state taxes in the absence of any other basis for personal jurisdiction over him. The appeals panel accordingly affirmed the individual defendant's dismissal from the pending suit against the Delaware company in the 333rd District Court Harris County in an interlocutory appeal.
  
Trial court judge: Joseph J. Halbach aka Tad Halbach 
      
ACS Partners, LLC v. Gross  (Tex.App. - Houston [1st Dist.] April 4, 2012, no pet. h.)
(personal jurisdiction over foreign defendant, grant of special appearance affirmed).
  

MEMORANDUM OPINION

 
Appellant ACS Partners, LLC appeals the trial court’s interlocutory order granting appellee Allen Gross’s special appearance. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(7) (West 2008); Tex. R. Civ. P. 120a. ACS argues that the trial court has personal jurisdiction over Gross, who is the manager of a Delaware limited liability company, because the company’s certificate of authority was forfeited for failure to satisfy Texas franchise tax requirements. We affirm the trial court’s order dismissing Gross from the case.
 
Background
 
In 2009, ACS contracted with Chateau Carmel, LP and Windswept Realty, LP, which are both Delaware limited partnerships, to perform improvements to two apartment complexes located in Houston and respectively owned by Chateau Carmel and Windswept. Alleging that it was not paid for work under those contracts, ACS sued GFI Houston Holdings Management, LLC and Allen Gross. GFI is a Delaware limited liability company, and Gross is a resident of New York. ACS alleged in its original petition that GFI was a general partner of both Chateau Carmel and Windswept, and that Gross was a manager of GFI. ACS further alleged that GFI and Gross are subject to the personal jurisdiction of the court “because they do business in Texas.”
 
Gross filed a special appearance supported by his sworn affidavit, wherein he testified that he was an employee of GFI, had a business address in New York City, and lived in the state of New York his entire life. GFI filed an answer but did not file a special appearance.
 
Before the trial court held a hearing on Gross’s special appearance, ACS filed a second amended petition. As to GFI, ACS alleged that jurisdiction is proper in Texas because “GFI is the general partner of the two entities that entered into the subject contracts in Texas . . . .” As to Gross, ACS alleged that jurisdiction is proper because GFI’s certificate of authority had been forfeited in 2005, and thus under an “alter ego theory,” GFI’s jurisdictional contacts became imputable to Gross. ACS did not allege any other facts in the second amended petition to support jurisdiction over Gross.
 
At the hearing on Gross’s special appearance, the trial court ordered the parties to submit legal briefs on the special appearance issue. ACS attached to one of its briefs a “Certificate of Account Status” issued by the Texas Comptroller of Public Accounts reflecting that GFI was not in good standing because “it has not satisfied all franchise tax requirements.” ACS argued that Section 171.255(a) of the Tax Code—which under certain circumstances makes corporate directors and officers liable for corporate debts incurred after a tax becomes due but is unpaid—operated not only to make Gross personally liable for the debts of GFI, but also to confer personal jurisdiction over Gross. See Tex. Tax Code Ann. § 171.255(a) (West 2008). ACS also presented to the trial court printouts from the Texas Secretary of State website. The documents showed that in “last updates” dated September 2006, GFI was listed as the general partner of Chateau Carmel and Windswept. They also showed that in a “last update” dated June 2003, Gross was listed as a manager of GFI.
  
Gross denied having sufficient contacts with Texas or the underlying litigation to be subject to personal jurisdiction in the state. Gross submitted his sworn affidavit stating that he was a resident of New York and not of Texas. Gross also stated that by the time Chateau Carmel and Windswept executed the contracts at issue, GFI was no longer the general partner of those companies. To support this, Gross submitted the affidavit of attorney Moshe Lehrfied, stating that in 2004 and 2005 GFI transferred all its interests in Chateau Carmel and Windswept to other entities. Lehrfield’s affidavit did not state, and the appellate record does not otherwise reflect, who owns or manages the transferee companies.
    
In response, ACS argued that even if GFI transferred all its interests in the limited partnerships before the 2009 contracts were executed, GFI remained liable for the debts of the limited partnerships because according to the 2006 “last updates” on record with the Secretary of State, GFI failed to amend the limited partnerships’ registrations as required by law to reflect the change in general partners. Thus, ACS argued, personal jurisdiction could be asserted over Gross by virtue of GFI’s status as the officially registered general partner and the forfeiture of GFI’s certificate of authority.
The trial court granted Gross’s special appearance, thereby dismissing him from the suit for want of jurisdiction. The trial court did not file findings of fact or conclusions of law related to that order.
 
Analysis
  I. Standard of review
  
Whether a trial court has personal jurisdiction over a nonresident defendant is a mixed question of fact and law. See BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002); Glattly v. CMS Viron Corp., 177 S.W.3d 438, 445 (Tex. App.—Houston [1st Dist.] 2005, no pet.). The trial court’s factual findings concerning the existence of personal jurisdiction may be reviewed for legal and factual sufficiency, while the legal conclusions based upon those findings constitute a question of law subject to de novo review. See BMC Software, 83 S.W.3d at 794; Glattly, 177 S.W.3d at 445. When, as in this case, the trial court does not make findings of fact and conclusions of law in support of its determination on a special appearance, “all facts necessary to support the judgment and supported by the evidence are implied.” BMC Software, 83 S.W.3d at 795.
  
II. Personal jurisdiction
  
In the context of a special appearance, “the plaintiff and the defendant bear shifting burdens of proof in a challenge to personal jurisdiction.” Kelly v. Gen. Interior Const., Inc., 301 S.W.3d 653, 658 (Tex. 2010). Ordinarily, the plaintiff bears the initial burden of pleading allegations sufficient to assert personal jurisdiction over a nonresident defendant, and upon filing a special appearance, the nonresident defendant assumes the burden to negate all of the plaintiff’s alleged bases of personal jurisdiction. Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 807 (Tex. 2002). “Because the plaintiff defines the scope and nature of the lawsuit, the defendant’s corresponding burden to negate jurisdiction is tied to the allegations in the plaintiff’s pleading.” Kelly, 301 S.W.3d at 658.
  
The alleged basis for personal jurisdiction over a nonresident defendant must be consistent with both the Texas long-arm statute and the Due Process Clause of the Fourteenth Amendment. See Moki Mak River Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex. 2007); Lamar v. Poncon, 305 S.W.3d 130, 136 (Tex. App.—Houston [1st Dist.] 2009, pet. denied). The long-arm statute lists several activities that constitute “doing business” in Texas for jurisdictional purposes. Tex Civ. Prac. & Rem. Code Ann. § 17.042 (West 2008); see also BMC Software, 83 S.W.3d at 795 (noting that listed activities are “not exclusive”).
  
ACS, as the plaintiff, bears the initial burden to allege in the trial court a valid basis for personal jurisdiction under the long-arm statute. Coleman, 83 S.W.3d at 807. However, in its live petition, ACS did not allege that Gross performed any of the acts listed in the long-arm statute, or that Gross did anything else that constituted “doing business” in Texas. “If the plaintiff fails to plead facts bringing the defendant within reach of the long-arm statute . . . the defendant need only prove that it does not live in Texas to negate jurisdiction.” Kelly, 301 S.W.3d at 658–59. The defendant can meet this burden by filing an affidavit testifying to that fact. See Touradji v. Beach Capital P’ship, L.P., 316 S.W.3d 15, 25 (Tex. App.—Houston [1st Dist.] 2010, no pet.) (citing Kelly, 301 S.W.3d at 659).
  
Gross’s special appearance was supported by his sworn affidavit, in which he states that he is a full-time resident of New York, has been domiciled in New York for over forty years, does not reside in Texas, and has never resided in Texas. Thus, given ACS’s failure to allege jurisdictional facts relevant to the long-arm statute, Gross has met his burden to negate personal jurisdiction based upon his own forum contacts. See Kelly, 301 S.W.3d at 658–59; Touradji, 316 S.W.3d at 25.
  
However, ACS has also alleged personal jurisdiction over Gross based on an “alter ego theory.” This circumstance presents an exception to the general rule about the burdens of proof. See Tri-State Bldg. Specialties, Inc. v. NCI Bldg. Sys., L.P., 184 S.W.3d 242, 250 (Tex. App.—Houston [1st Dist.] 2005, no pet.) (citing BMC Software, 83 S.W.3d at 798–99). When the plaintiff alleges jurisdiction based on an alter ego theory, it bears the initial burden to prove facts that justify imputing another party’s contacts with the forum to the defendant. See BMC Software, 83 S.W.3d at 799.
  
In BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789 (Tex. 2002), the Texas Supreme Court referenced the alter ego exception for pleading burdens in the context of a plaintiff seeking to “fuse” a parent company and its subsidiary for jurisdictional purposes. See BMC Software, 83 S.W.3d at 798–99. Our court has “logically . . . extended” that exception to attempts to “fuse” a corporation with its corporate officers, “because the same presumption of legal separateness exists with regard to a corporation and its officers.” Tri-State, 184 S.W.3d at 250. Similarly, there is a presumption of legal separateness between a limited liability company and its managers. See McCarthy v. Wani Venture, A.S., 251 S.W.3d 573, 590 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) (“Generally, members are not individually liable for the debts of the LLC.”). This presumption holds regardless of whether the limited liability company was formed in Texas or in Delaware. Compare Tex. Bus. Orgs. Code Ann. § 101.114 (West 2009) (providing that managers are ordinarily not liable for limited liability company’s debts), with Del. Code tit. 6, § 18-303(a) (same); see also Tex. Bus. Orgs. Code Ann. § 9.203 (West 2009) (“[I]n any matter that affects the transaction of intrastate business in this state, a foreign entity and each member, owner, or managerial official of the entity is subject to the same duties, restrictions, penalties, and liabilities imposed on a domestic entity to which it most closely corresponds or on a member, owner, or managerial official of that domestic entity.”). Therefore, ACS, as the plaintiff, bears the burden of proving that the forum contacts of GFI and Gross should be “fused” for jurisdictional purposes.
  
ACS does not premise its jurisdictional veil-piercing theory on the jurisdictional alter ego doctrine reflected in our state’s case law, which ordinarily requires the plaintiff to show that one of two entities exerted a level of control over the other such that in reality they constituted the same entity. See, e.g., PHC-Minden, L.P. v. Kimberly-Clark Corp., 235 S.W.3d 163, 175 (Tex. 2007); BMC Software, 83 S.W.3d at 799. Rather, ACS asserts that Gross is subject to personal jurisdiction in Texas by virtue of the Tax Code, which provides in relevant part:
  

If the corporate privileges of a corporation are forfeited for the failure to file a report or pay a tax or penalty, each director or officer of the corporation is liable for each debt of the corporation that is created or incurred in this state after the date on which the report, tax, or penalty is due and before the corporate privileges are revived.

Tex. Tax Code Ann. § 171.255(a). ACS argues that the forfeiture of GFI’s certificate of authority pursuant to Section 171.255(a) means that GFI became “fused” with Gross for jurisdictional purposes such that GFI’s contacts in Texas are imputable to Gross.
  
“In construing statutes, ‘our primary objective is to ascertain and give effect to the Legislature’s intent.’” Hernandez v. Ebrom, 289 S.W.3d 316, 318 (Tex. 2009) (quoting City of Marshall v. City of Uncertain, 206 S.W.3d 97, 105 (Tex. 2006)). “However, it is cardinal law in Texas that a court construes a statute, ‘first, by looking to the plain and common meaning of the statute’s words.’” Fitzgerald v. Advanced Spine Fixation Sys., Inc., 996 S.W.2d 864, 865 (Tex. 1999) (quoting Liberty Mut. Ins. Co. v. Garrison Contractors, 966 S.W.2d 482, 484 (Tex. 1998)). “Unambiguous statutory language is interpreted according to its plain language unless such an interpretation would lead to absurd results.” Hernandez, 289 S.W.3d at 318 (citing Fleming Foods of Tex., Inc. v. Rylander, 6 S.W.3d 278, 284 (Tex. 1999)). When construing a statute according to its plain language, we “may not add language that is not implicitly contained in the language of the statute.” Villarreal v. Wells Fargo Brokerage Servs., LLC, 315 S.W.3d 109, 122 (Tex. App.—Houston [1st Dist.] 2010, no pet.). Moreover, “[i]t is well-settled that section 171.255 must be strictly construed to protect those individuals against whom liability is sought because it is penal in nature and cannot be extended beyond the clear meaning of its language.” Tri-State, 184 S.W.3d at 251.
  
We conclude that the operation of Section 171.255 does not create a basis for asserting personal jurisdiction over a nonresident officer or director of an entity that enjoys or once enjoyed corporate privileges in Texas. Notably, Section 171.255 does not mention jurisdiction in any way. The “central concern of the inquiry into personal jurisdiction” is “the relationship among the defendant, the forum, and the litigation.” Shaffer v. Heitner, 433 U.S. 186, 204, 97 S. Ct. 2569, 2580 (1977). Even if the plaintiff proves that the entity’s privileges have been forfeited, that fact only establishes the potential liability of the entity’s officers or directors, not personal jurisdiction over those persons. This is because the defendant’s potential liability to the plaintiff is not dispositive of our personal-jurisdiction inquiry. Cf. Glattly, 177 S.W.3d at 449 (“Ultimate tort liability is not a jurisdictional fact; the merits of claims are not at issue during a special appearance; and the proof necessary to show personal jurisdiction is only that the purposeful act was committed in Texas.”). The crucial distinction between liability and personal jurisdiction must be observed because “personal jurisdiction involves due process considerations that may not be overridden by statutes or the common law.” PHC-Minden, 235 S.W.3d at 174. Given the absence of any mention of jurisdiction in Section 171.255, the important distinction between liability and personal jurisdiction, and the rule that Section 171.255 should be “strictly construed,” we conclude that Section 171.255 does not provide an independent basis for personal jurisdiction over Gross, a nonresident defendant.
  
Because ACS has failed to suggest any other factual basis for asserting personal jurisdiction over Gross, we overrule ACS’s sole issue.
  
Conclusion
  
We affirm the order of the trial court granting Gross’s special appearance and dismissing him from the suit.
  
Michael Massengale
  
Justice
  
Panel consists of Justices Keyes, Higley, and Massengale.

Out-of-state company had sufficient minimum contacts with Texas to be sued here

  

Court of appeals affirms trial court's denial of special appearance on finding that corporate Defendant had sufficient minimum contacts with Texas for purposes of in-personam jurisdiction. Litigation thus proper in Texas court.  

Morris Industries, Inc. v. Trident Steel Corporation 

(Tex.App.- Houston [1st Dist] Dec. 1, 2011, no pet. h.)

MEMORANDUM OPINION

In this interlocutory appeal, Morris Industries, Inc., appeals the trial court’s order denying its special appearance.1  Trident Steel Corporation sued Morris, a New Jersey corporation, alleging claims for breach of contract and breach of warranty.  Morris filed a special appearance subject to its answer, which the trial court denied.  Morris appeals, contending that it lacks the minimum contacts with Texas required for a Texas court to exercise jurisdiction over it.  Finding no error, we affirm the trial court’s order.

Background

Morris is a New Jersey corporation headquartered in New Jersey. Morris makes and distributes pipes, casings, and other items used in the oil and gas industry.  In February 2008, Trident, a Missouri corporation with offices in Texas, began ordering oilfield couplings from Morris for delivery to its Houston location.

Pursuant to its contract with Trident, Morris shipped couplings to the Port of Houston. Upon their arrival, Morris paid and arranged for the couplings to be offloaded from the ships and trucked to threading facilities designated by Trident.  Morris retained title to the couplings and bore the risk of their loss until this point; possession and title to the couplings transferred to Trident at the threading facilities.  In November 2008, Trident became dissatisfied with Morris’s couplings, asserting that they had failed testing performed by Trident and Trident’s customers.  Trident began rejecting Morris’s deliveries.

In September 2009, Trident sued Morris in Harris County, alleging claims for breach of contract and breach of warranty.  Morris specially appeared, asserting that it was not subject to personal jurisdiction in Texas. Trident moved for a continuance before the special appearance hearing.  The trial court, without ruling on Trident’s motion for continuance, denied Morris’s special appearance.  Morris then appealed the trial court’s ruling to this Court.  On appeal, we held that Morris had negated Trident’s jurisdictional allegations, but remanded the case to the trial court to consider Trident’s request for jurisdictional discovery, pending at the time the trial court denied Morris’s motion. Morris Indus., Inc. v. Trident Steel Corp., No. 01-09-01094-CV, 2010 WL 4484351, at *5 (Tex. App.—Houston [1st Dist.] Nov. 10, 2010, no pet.) (mem. op).  On remand, Trident adduced additional jurisdictional facts relevant to Morris’s contacts with Texas.  

Morris maintains offices in New Jersey, New York, Pennsylvania, and Connecticut.  Morris has no offices in Texas, no employees in Texas and no agent in Texas for service of process.  Morris sells its products via a toll-free number listed on its website and through Iron Angeles of Colorado, Inc., an independent distributor located in Colorado.

Peter Brebach, a sales agent for Iron Angeles, brokers sales between Morris and its customers.  Brebach conducts research on behalf of Morris, locates Texas buyers interested in purchasing steel couplings, and communicates the results of his research to Morris.  For the contracts at issue in this case, Brebach negotiated purchase orders with Trident on behalf of Morris; Morris paid Brebach a commission for these sales pursuant to a “formal agreement.”  Brebach routinely copied corporate representatives from Morris and Trident on his correspondence.  In some instances, Morris directly communicated to Trident its progress in performing the orders.

Morris purchased couplings from a Chinese foundry and shipped them from China F.O.B. the Port of Houston.  Once the couplings arrived, Morris hired a local trucking company to pick up each order from a shipyard facility and transport the couplings to Trident’s designated “threading” facilities.  Craig Laine, a purchasing agent for Morris, travelled to Houston during the product delivery process to familiarize himself with the threading facilities and to determine how to transport Morris’s couplings to those facilities.  It was Laine who arranged for trucks to deliver Morris’s products from the Port of Houston to the Houston threading facilities.  Morris owned the couplings until their delivery to the threading facilities; Morris therefore bore the risk of loss from the time it shipped the couplings until it transferred possession to Trident at the threading facilities.  After delivering each order, Morris prepared and sent Trident an invoice for expenses.

After Trident notified Morris of the alleged defects, Morris attempted to cure its imperfect tender.  Morris leased a storage facility in Houston so that Laine and Mike Stern, Morris’s Vice President, could inspect the couplings.  Laine travelled to Houston approximately six times on business related to the contracts between Morris and Trident.  While in Houston, he personally segregated the couplings by heat number.  Once Laine segregated the couplings, he arranged for two Houston companies to test them for defects.  One company tested the couplings on behalf of both Trident and Morris, but the other tested the couplings solely at Morris’s direction.  Despite Morris’s efforts to cure, Trident rejected the couplings and filed this suit.

Apart from Morris’s contracts with Trident, Morris has filled sixty‑two purchase orders from Texas residents, shipping goods to fifteen different customers in Texas.  Some orders indicate Morris delivered its products by common carrier, while others reveal Morris arranged for trucks to deliver goods within Texas.

Standard of Review

We review de novo a trial court’s exercise of personal jurisdiction as a question of law, but the resolution of underlying factual disputes may precede that conclusion.  Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 805–06 (Tex. 2002); BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002).  When the trial court issues findings of fact, we review them for legal and factual sufficiency.  BMC Software Belg., N.V., 83 S.W.3d at 795.  When, as here, the trial court does not issue fact findings, “we presume that the trial court resolved all factual disputes in favor of its ruling.” Glatty v. CMS Viron Corp., 177 S.W.3d 438, 445 (Tex. App.—Houston [1st Dist.] 2005, no pet.) (citing Am. Type Culture Collection, 83 S.W.3d at 805–06); Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex. 2007).

Discussion

Texas courts may exercise personal jurisdiction over a non-resident defendant if the requirements of the Due Process Clause of the United States Constitution2 and the Texas long-arm statute3 are both satisfied. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414, 104 S. Ct. 1868, 1872 (1984); Am. Type Culture Collection, 83 S.W.3d at 806.  The long-arm statute provides that Texas may assert personal jurisdiction over non-resident defendants who conduct business in the state.  It provides in relevant part, “In addition to other acts that may constitute doing business, a nonresident does business in this state if the nonresident contracts by mail or otherwise with a Texas resident and either party is to perform the contract in whole or in part in this state.” TEX. CIV. PRAC. & REM. CODE ANN. § 17.042.  “Because the Texas long-arm statute reaches ‘as far as the federal constitutional requirements of due process will allow,’ the statute is satisfied if the exercise of personal jurisdiction comports with federal due process.”  Preussag Aktiengesellschaft v. Coleman, 16 S.W.3d 110, 113 (Tex. App.—Houston [1st Dist.] 2000, pet. dism’d w.o.j.) (quoting CSR, Ltd. v. Link, 925 S.W.2d 591, 594 (Tex. 1996)).  We thus examine whether a Texas court’s exercise of jurisdiction over Morris comports with the requirements of federal due process.  See id.

To comply with federal due process requirements, “the nonresident defendant must have purposefully established such minimum contacts with the forum state that it could reasonably anticipate being sued there.” Id. (citing Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105 S. Ct. 2174, 2183 (1985)).  “If the nonresident defendant has purposefully availed itself of the privileges and benefits of conducting business in a state, it has sufficient contacts to confer personal jurisdiction.” Id. (citing Burger King, 471 U.S. at 475, 105 S. Ct. at 2183).  The defendant’s activities must justify the conclusion that the defendant could anticipate being sued in a Texas court.  Am. Type Culture Collection, 83 S.W.3d at 806.  A defendant is not subject to jurisdiction in Texas if its contacts with the state are “random, fortuitous, or attenuated.”  Id.  “Nor can a defendant be haled into a Texas court for the unilateral acts of a third party.” Id.

We apply three principles to determine whether a non-resident defendant has purposefully availed himself of the privileges and benefits of conducting business in Texas.  See Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 785 (Tex. 2005).  First, only the defendant’s actions may constitute purposeful availment; a defendant may not be haled into a jurisdiction based on the unilateral activities of a third party.  Id. (citing Burger King, 471 U.S. at 475, 105 S. Ct. at 2174).  Second, the defendant’s acts must be purposeful; a showing of random, isolated, or fortuitous contacts is insufficient.  Id. (citing Burger King, 471 U.S. at 475, 105 S. Ct. at 2183, and Keeton v. Hustler Magazine, Inc., 465 U.S. 770, 774, 104 S. Ct. 1473, 1479 (1984)).  Third, a defendant must seek some benefit, advantage, or profit through his purposeful availment, because jurisdiction is based on notions of implied consent; that is, by seeking the benefits and protections of a forum’s laws, a non-resident consents to suit there.  Id. (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297, 100 S. Ct. 559, 567 (1980)).  The purposeful availment test focuses on “the defendant’s efforts to avail itself of the forum” and not “the form of the action chosen by the plaintiff.”  Moki Mac, 221 S.W.3d at 576.  Due process also requires that the exercise of personal jurisdiction over a nonresident defendant “comport with fair play and substantial justice.”  Preussag Aktiengesellschaft, 16 S.W.3d at 114.

Minimum-contacts analysis is further divided into general jurisdiction and specific jurisdiction.  Preussag Aktiengesellschaft, 16 S.W.3d at 114.  Personal jurisdiction exists if the nonresident defendant’s minimum contacts give rise to either general or specific jurisdiction. Helicopteros Nacionales de Colombia, 466 U.S. at 413–14, 104 S. Ct. at 1872.  In determining whether a nonresident defendant purposefully established minimum contacts with Texas, a court should consider the “quality and nature of the defendant’s contacts, rather than their number.” Am. Type Culture Collection, 83 S.W.3d at 806.

Morris contends that the trial court does not have general jurisdiction over it because Morris does not have systematic and continuous contacts with Texas.  Morris also contends that the trial court does not have specific jurisdiction because it conducted no activity in Texas.  For reasons set forth below, we conclude that Morris’s contacts with Texas demonstrate Morris purposefully availed itself of the privilege of conducting activities in Texas and that Trident’s suit against Morris arises out of those contacts.  We thus do not examine whether Morris’s contacts give rise to general jurisdiction. 

Specific Jurisdiction

A court may exercise specific personal jurisdiction over a non‑resident defendant if: (1) the non-resident purposely directed its activities toward the forum state or purposely availed itself of the privileges of conducting activities there, and (2) the controversy arises out of or is related to the non-resident’s contacts with the forum state.  Freudensprung v. Offshore Tech. Servs., Inc., 379 F.3d 327, 343 (5th Cir. 2004); see Moki Mac, 221 S.W.3d at 576.  The non-resident defendant’s purposeful conduct, not the plaintiff’s unilateral acts, must have caused the contact.  See Helicopteros Nacionales de Colombia, 466 U.S. at 414, 104 S. Ct. at 1872; see also Michiana, 168 S.W.3d at 788.

1)    Purposeful availment

Morris contends that its contacts with the forum state do not confer specific jurisdiction, because Trident initiated them.  Morris argues that its few contacts with Texas—inspecting and testing the couplings—occurred after Trident complained of defects.  We disagree.

Peter Brebach of Iron Angeles serves as a sales agent for various steel suppliers, including Morris.  Brebach solicited Trident’s business in Texas on behalf of Morris.  Trident asks this Court to impute Brebach’s contacts to Morris.

Texas contacts of an agent are attributable to the principal.  See Walker Ins. Servs. v. Bottle Rock Power Corp., 108 S.W.3d 538, 549 (Tex. App.—Houston [14th Dist.] 2003, no pet.); see also Schott Glas v. Adame, 178 S.W.3d 307, 315 (Tex. App.—Houston [14th Dist.] 2005, pet. denied), abrogated on other grounds by PHC-Minden, L.P. v. Kimberly‑Clark Corp., 235 S.W.3d 163, 169 (Tex. 2007).  An “agent” is one who is authorized by a person or entity to transact business on behalf of the person or entity.  Bottle Rock Power Corp., 108 S.W.3d at 549.  The defining feature of an agency relationship is the principal’s control over the agent.  Id.  Whether an agency relationship exists is a question of fact.  Schott Glas, 178 S.W.3d at 315. The trial court did not expressly conclude that Brebach acted as Morris’s agent, but we presume that the trial court impliedly found all facts necessary to support its judgment.  Glatty, 177 S.W.3d at 445.

The trial court reasonably could have concluded that Brebach acted as Morris’s agent in these transactions.  Morris exercised control over Brebach and paid him a commission for the sales pursuant to a “formal agreement” between Morris and Brebach.  Laine testified that Brebach conducted research on behalf of Morris, communicated the results of his research to Morris, and entered into contracts with Texas clients on behalf of Morris.  In an affidavit in the trial court, the President of Trident averred that when Brebach first approached Trident, Brebach represented that Morris retained him to develop business in the Gulf Coast.  Thus, some evidence shows that Morris worked directly with Brebach, dictating the means and details of where to target business on Morris’s behalf.

In these particular transactions, Brebach located Trident as a customer for Morris’s couplings.  Brebach negotiated and executed the sales agreements with Trident; Brebach had actual authority to enter into and negotiate these contracts on behalf of Morris.  After Brebach solicited Trident’s business, Morris paid Brebach a commission for his sales.  Based on this evidence, the trial court could have found that Morris exercised a degree of control over Brebach sufficient to make Brebach Morris’s sales agent in these transactions. Cf. Schott Glass, 178 S.W.3d at 315–16 (concluding no agency relationship existed between parent company and Texas distributor to impute contacts for general jurisdiction where agent alone decided how to conduct sales).  These marketing contacts reveal that Morris purposefully availed itself of Texas by soliciting coupling sales from Trident.  “A nonresident defendant that directs marketing efforts to Texas in the hope of soliciting sales is subject to suit here for alleged liability arising from or relating to that business.”  Moki Mac, 221 S.W.3d at 576; accord IRA Res. v. Griego, 221 S.W.3d 592, 597 (Tex. 2007) (“[T]argeting marketing efforts in a state to generate business there suffices to justify jurisdiction in disputes arising from that business.”).

Morris also purposefully availed itself of Texas by performing parts of the underlying contracts in Texas.  Morris delivered couplings to the Port of Houston.  Morris then paid and arranged for the couplings to be offloaded and trucked to Houston threading facilities.  Morris sent its corporate representative to Houston to investigate the threading facilities and directly arrange for transportation to those facilities.  The companies Morris hired to deliver the couplings all operated within Texas.  Morris maintained title and possession throughout the delivery process, transferring ownership to the couplings in Texas.  Morris therefore bore the risk of loss for the transactions until it delivered the couplings to Trident at the threading facilities.  We conclude that these contacts demonstrate Morris partially performed its contracts with Trident in Texas and purposefully availed itself of the privileges of conducting business here.  See Max Protetch, Inc. v. Herrin, 340 S.W.3d 878, 886–88 (Tex. App.—Houston [14th Dist.] 2011, no pet.) (finding delivery to Houston, regular communication, and visit to Houston to inspect product conferred specific jurisdiction); Nogle & Black Aviation, Inc. v. Faveretto, 290 S.W.3d 277, 283 (Tex. App.—Houston [14th Dist.] 2009, no pet.) (finding specific jurisdiction in a negligence action based on plane defect where defendant chose to hire Texas resident to perform engineering work on plane); Fleischer v. Coffey, 270 S.W.3d 334, 338 (Tex. App.—Dallas 2007, no pet.) (finding specific jurisdiction where buyer of German Shepherd knew dog was trained in Texas, travelled twice to Texas to oversee training, and picked up dog in Texas).

Morris argues that the trial court erred in concluding that it had jurisdiction, relying mainly on Michiana. 168 S.W.3d at 787–88 (finding single product sale stemming from single phone call initiated by Texas buyer to non-resident defendant was not purposeful contact where buyer alone decided where to deliver RV and paid for shipping, and risk of loss for RV passed outside forum state).  But, unlike the RV seller in Michiana, Morris did not only send products to Texas at its customer’s direction, but also solicited Trident’s business and performed its contracts in Texas by hiring local companies to transport couplings within Texas.  During their Texas transit, Morris maintained ownership of the goods and bore the risk of their loss.  Because Morris directed Brebach to locate Texas customers on its behalf and hired local transportation companies to perform its contractual obligations, we conclude that Morris purposefully availed itself of Texas to form and perform its contracts with Trident.[1]

2)    Contacts “arising out of” this dispute

Even if a non-resident has purposefully availed himself of the benefits of conducting business in Texas, Texas courts do not have specific jurisdiction over the non-resident unless the cause of action “arises from or is related to an activity conducted within the forum.”  BMC Software Belg., N.V., 83 S.W.3d at 796.  We focus our analysis on the relationship amongst the non-resident, the forum, and the litigation to determine if the alleged liability arises from or is related to an activity conducted in Texas.  Counter Intelligence, Inc. v. Calypso Waterjet Sys., Inc., 216 S.W.3d 512, 518 (Tex. App.—Dallas 2007, pet. denied).  That is, the non-resident’s conduct must have either purposely been directed towards or occurred in the forum and must have a “substantial connection” with the litigation’s operative facts.  Moki Mac, 221 S.W.3d at 584–85; Glattly, 177 S.W.3d at 447.

We conclude that Trident’s claims against Morris arose out of Morris’s business contacts with Texas.  Trident’s breach of contract and breach of warranty claims all arise out of Morris’s delivery of non‑conforming goods to Trident in Houston.  Morris delivered the couplings to Houston at its own expense and attempted to fix the couplings here after Trident claimed imperfect tender.  Accordingly, we hold that there is a substantial connection between Morris’s business contacts with Texas and the operative facts of the litigation.

Fair Play and Substantial Justice

Having found that Morris purposefully established minimum contacts with Texas, we must consider whether the exercise of personal jurisdiction over Morris comports with traditional notions of fair play and substantial justice.  See Glatty, 177 S.W.3d at 447 (citing Burger King, 471 U.S. at 475‑76, 105 S. Ct at 2183–84).  Where appropriate, we consider: (1) the burden on the defendant; (2) the interests of the forum state in adjudicating the dispute; (3) the plaintiff’s interest in obtaining relief; (4) the interstate judicial system’s interest in obtaining efficient resolution of controversies; and (5) the shared interest of the several states in furthering fundamental, substantive social policies.  Guardian Royal Exch. Assurance Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 231 (Tex. 1991).  Considering these factors, we hold that exercising personal jurisdiction over Morris comports with traditional notions of fair play and substantial justice.  Morris sent products and corporate representatives to Texas in connection with the transactions that are the subject of this suit, supporting a finding that defending itself in Texas would not be unduly burdensome.  Texas has a particular interest in resolving this dispute: its subject, defective oilfield couplings are located in Texas and were intended for use here.  Texas has “a substantial interest in protecting its citizens against [the] harm from breach of contract.”  Cappucitti v. Gulf Indus. Prods., Inc, 222 S.W.3d 468, 487 (Tex. App.—Houston [1st Dist.] 2007, no pet.).  Accordingly, we hold that the trial court’s exercise of jurisdiction over Morris does not offend traditional notions of fair play and substantial justice.

Conclusion

We conclude that Morris has sufficient minimum contacts with Texas to confer specific jurisdiction in this case.  We therefore hold that the trial court did not err in denying Morris’s special appearance.  Accordingly, we affirm the order of the trial court.

  

                                                                   Jane Bland

                                                                   Justice

Panel consists of Chief Justice Radack and Justices Bland and Huddle.

1  See TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(7) (West 2011) (authorizing interlocutory appeal of order denying special appearance).

2  U.S. CONST. AMEND. XIV, § 1.

3  See TEX. CIV. PRAC. & REM. CODE ANN. § 17.042 (West 2011).

[1] Trident contends that we should consider Morris’s further contacts with Texas after Trident rejected the couplings, because Morris stored and tested them for defects in Texas in an effort to cure the alleged problems.  In opposition, Morris claims these curative measures do not confer jurisdiction.  Attempting to fulfill its warranty obligations under the contract, Morris sent corporate representatives to Houston, stored couplings in Houston warehouses, and hired Houston companies to test them for defects.  Trident sued Morris, in part, for failing to meet warranty obligations under the contract.  Morris’s contacts with Houston after Trident claimed defective performance buttress the conclusion that Morris partially performed the underlying contracts in Texas.  However, we need not rely on these particular contacts to hold that Morris purposefully availed itself of Texas because Morris paid Brebach to solicit Trident’s business and hired Texas companies to transport its products.