Predator Downhole Inc. and Nancy Vermeulen v. Flotek Industries, Inc. , 504 S.W.3d 394 ( 2016 )

Opinion issued August 18, 2016
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-15-00846-CV
———————————
PREDATOR DOWNHOLE INC. AND NANCY VERMEULEN, Appellants
V.
FLOTEK INDUSTRIES, INC., Appellee
On Appeal from the 157th District Court
Harris County, Texas
Trial Court Case No. 2013-64649
OPINION
In this interlocutory appeal, Predator Downhole, Inc. [hereafter, “Predator”],
and Nancy Vermeulen [hereafter, “Nancy”] appeal the trial court’s order denying
their special appearances in a suit by Flotek Industries, Inc. [hereafter, “Flotek”].
See TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(7) (West Supp. 2012).
Predator and Nancy contend that they are not subject to personal jurisdiction in
Texas because they do not have the requisite minimum contacts with Texas that
would support jurisdiction and because the trial court’s exercise of jurisdiction
would violate traditional notions of fair play and justice. We reverse.
BACKGROUND
The Vermeulens Work for Flotek
Flotek is an energy services company specializing in downhole oilfield tools.
Flotek hired Chris Vermeulen [hereafter, “Chris”], Nancy’s husband, as an
Operations Coordinator in March 2008. Chris’s employment was governed by a
letter agreement and a Bonus Agreement, which required him to disclose and
convey to Flotek any inventions or ideas that he developed during his employment
and to preserve the confidentiality of Flotek’s confidential information. The bonus
agreement also prohibited him from competing with Flotek “anywhere in North
America or in any other geographical area in or with respect to which [Chris] has
any duties or responsibilities during [his] employment with [Flotek],” both during
his employment and for thirty-six months after the termination of his employment
by Flotek.1
1
We do not express any opinion on the enforceability of any particular term of the
Bonus Agreement or the merits of any of Flotek’s claims based on that agreement.
2
Flotek also employed Nancy, beginning in 2008. Chris was the highest-
ranking Flotek employee in Flotek’s office in Casper, Wyoming, and Nancy was
the office manager for that location.
The Vermeulens Leave Flotek
Chris resigned from Flotek on July 26, 2013. He established a new
company, Tycoon Oilfield Services [hereafter, “Tycoon”], which Flotek alleges
that Chris is now using to compete with Flotek in violation of the Bonus
Agreement. By August 1, 2013, Chris was communicating via email using a
tycoonoilfield.com email address and a signature referencing Tycoon Oilfield
Services. In deposition testimony in this case, he affirmed that he is the sole
employee of Tycoon, and Nancy confirmed that he is the sole owner.
Nancy resigned from Flotek in or around September 2013. She became a
co-owner and vice president of Predator, which was founded around the same
time.2 Predator is incorporated in Wyoming and has its headquarters and principal
place of business in Casper, Wyoming, its only office location. As Flotek states in
its live petition, “Predator is located directly across the street from Flotek,” that is,
in Casper. Predator rents, sells, and services downhole drilling motors and related
2
The other co-owners of Predator are Stacy Hall, Lionie Fladeland, Zeke DeCol,
and Chase Fladeland. Chris is not an owner or employee of Predator.
3
products and parts. Predator has six employees, all of whom work at Predator’s
facility in Casper.
Flotek Sues Predator and the Vermeulens
In October 2013, Flotek sued Chris in Texas, alleging that Chris breached
the Bonus Agreement, converted trade secrets and confidential information, and
tortiously interfered with Flotek’s current and prospective business relationships.
It also alleged that Chris “or someone at his direction” engaged in a conspiracy
with unspecified persons to “accept[] kick-backs from various machine shop
operators for placing certain orders.”
Flotek subsequently amended its petition, naming Predator and Nancy as
additional defendants. In its live pleading, Flotek first alleges that Chris breached
the Bonus Agreement, “both individually and working in concert with [Nancy]
Vermeulen and Predator.” Second, Flotek asserts that all three defendants have
converted Flotek’s confidential information, “including but not limited to,
customer lists, vendor information, cost and pricing information, and motor
designs, for the express purpose of wrongfully competing with Flotek and in an
effort to damage Flotek.” Third, Flotek argues that each defendant has
misappropriated Flotek’s trade secrets, listing the same general categories of
information identified in the original petition. Fourth, it argues that the defendants
have tortiously interfered with Flotek’s current and prospective business
4
relationships by using Flotek’s confidential and proprietary information to compete
with Flotek, although it does not specify which current or prospective relationships
or what the defendants did to interfere with them. Finally, Flotek argues that the
defendants have engaged in two civil conspiracies: first, that Chris has engaged in
the previously-alleged kick-back conspiracy with unspecified third parties and,
second, that Chris and Nancy “conspired to set up Predator in order to circumvent
the Bonus Agreement, to misappropriate Flotek’s trade secrets, and to tortiously
interfere with Flotek’s current and prospective customers.”
According to Flotek, Chris “has used the Confidential Information and
technology developed during his employment at Flotek, to produce, and market, a
five-inch mud lube motors [sic] in order to poach current customers of Flotek.”
Specifically, Flotek alleges that Chris obtained his five-inch motor’s design from a
Chinese supplier identified in the briefing and in the record only as “Shanghai,” an
“undercover name” that Chris used for the supplier. Flotek alleges that “Shanghai”
is also a Flotek supplier and that Flotek considers “Shanghai’s” identity to be a
trade secret or otherwise confidential. Thus, Flotek alleges that Chris developed
and priced the five-inch motor using Flotek’s confidential information and trade
secrets, including the identity of “Shanghai,” the supplier that manufactured it.
In its live pleading, Flotek advances several theories as to why the trial court
has jurisdiction over Predator and Nancy:
5
Predator and Mrs. Vermeulen have purposefully availed themselves of
the privileges and benefits of conducting business in Texas by
engaging in business in Texas. Predator, through Mrs. Vermeulen[,]
placed hundreds of orders with Texas companies for the purchase and
repair of downhole oilfield tools from 2013 to 2015. These orders
were for motor parts shipped to Predator from Texas. Additionally,
Predator shipped motors to Texas for service in Texas. Predator paid
Texas companies in excess of $4,000,000 for the purchase of motor
parts and for servicing motors. Vermeulen’s five-inch mud lube
motor was among the motors serviced in Texas. Parts to assemble the
five-inch motor were also purchased in Texas. From April 30, 2014
to February 19, 2015, Predator issued over 150 invoices to former
Flotek customer and Texas corporation, Integrity Directional Services
(“Integrity”). These invoices were for the rental, service and repair of
motors. Many of these motors were purchased, serviced and/or
repaired by those Texas companies to whom Predator paid over
$4,000,000 from 2013 to 2015. Predator and Mrs. Vermeulen have
purposefully availed themselves of the privilege of conducting
business in Texas. This Court has specific personal jurisdiction over
Predator and Mrs. Vermeulen because their contacts with this State
are directly related to the causes of action alleged against them in this
petition.
Taken as a whole, Flotek’s petition alleges that (1) Chris developed and sold
a five-inch motor, with assistance from “Shanghai”; (2) in so doing, he breached
the Bonus Agreement and committed various torts against Flotek; (3) Predator and
Nancy conspired to assist Chris in doing so; and (4) Predator, through Nancy,
purchased and sold goods and services in Texas in furtherance of this conspiracy.
These allegations, taken together, constitute the only link in the live petition,
Flotek’s filings below, or the briefing on appeal between a cause of action asserted
against Predator or Nancy on the one hand and Texas on the other.
6
The Trial Court Denies Predator’s and Nancy’s Special Appearances
Predator and Nancy filed special appearances. Predator argued that it has no
or minimal contacts with Texas and is not a party to the Bonus Agreement. It
submitted as supporting evidence an affidavit by Stacy Hall, president and co-
owner of Predator. Hall testified, “[a]ll of Predator[’s] sales, rentals, and services
of motors have been provided to customers only in Wyoming, Colorado, or North
Dakota.” Hall further testified that Predator has never had a mailing address,
business license, inventory, phone listing, real or personal property, or registered
agent in Texas and has never maintained operations or had employees in Texas. In
addition, no Predator employee or representative has traveled to Texas on
Predator’s behalf. She also testified that Predator “has not received revenues for
motors shipped to a Texas address or serviced any motors or other equipment in
Texas.”
For her part, Nancy argued that she is and has been a resident of Wyoming
since 1977, does not own or rent real property in Texas, does not own or operate
any business in Texas, does not engage in any personal or business activities in
Texas, does not have a Texas mailing address or phone number, and has no assets
in Texas. She also observed that she is not a party to the Bonus Agreement and
has only traveled to Texas “a handful of times,” all on behalf of a former employer
unrelated to Predator.
7
Flotek responded to the special appearances, attaching evidence that
Predator has sold parts and services to Texas companies Integrity Directional
Services and Advanced Concepts Equipment, as well as purchased goods and
services from Texas companies, detailed more fully below. It alleges that these
contacts are both evidence of and in furtherance of the alleged conspiracies
between Predator and the Vermeulens. Critically, the evidence showed that
Predator billed various goods and services to Texas addresses and even shipped
some parts to Texas, but Flotek did not explain the relationship between those sales
and shipments, on the one hand, and the five-inch motor, “Shanghai,” or Flotek’s
purportedly confidential or trade secret information, on the other.
The trial court denied the special appearances, and this appeal followed.
PERSONAL JURISDICTION
Predator and Nancy raise nine issues on appeal, which in actuality represent
a single attack on the trial court’s order denying Predator’s and Nancy’s special
appearances. In issues 1, 2, 3, and 8, Predator argues that Texas has neither
general nor specific jurisdiction over Flotek’s claims against it.3 In issues 4, 5, 6,
and 9, Nancy makes essentially the same arguments with respect to the trial court’s
3
The issues are presented as (1) whether Predator has sufficient minimum contacts
with Texas to support personal jurisdiction at all, (2) whether Predator’s contacts
give rise to specific jurisdiction over Flotek’s claims, (3) whether Predator has
sufficient continuous and systematic contacts to permit Texas courts to exercise
general jurisdiction over it, and (8) whether Predator has sufficient minimum
contacts with Texas to satisfy federal due process requirements.
8
assertion of jurisdiction over her.4 Finally, in issue 7, Nancy argues that Texas
courts cannot exercise jurisdiction over her for actions taken in a purely
representative capacity. These issues can be summarized as a single contention:
the trial court erred in denying Predator’s and Nancy’s special appearances because
Texas has neither general jurisdiction nor specific jurisdiction over Predator and
Nancy.
Standard of Review
“Personal jurisdiction is a question of law for the court, even if it requires
resolving questions of fact.” Michiana Easy Livin’ Country, Inc. v. Holten, 168
S.W.3d 777, 790–91 (Tex. 2005); see also BMC Software Belgium, N.V. v.
Marchand, 83 S.W.3d 789, 794 (Tex. 2002). Because the trial court’s exercise of
personal jurisdiction over a nonresident defendant involves a question of law, an
appellate court reviews the trial court’s determination of a special appearance de
novo. Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex. 2007);
BMC Software, 83 S.W.3d at 794. However, the trial court frequently must resolve
fact questions before deciding the jurisdictional question. BMC Software, 83
S.W.3d at 794; Capital Tech. Info. Servs., Inc. v. Arias & Arias, Consultores, 270
4
The issues are presented as (4) whether Nancy has sufficient minimum contacts
with Texas to support personal jurisdiction at all, (5) whether Nancy’s contacts
give rise to specific jurisdiction over Flotek’s claims, (6) whether Nancy has
sufficient continuous and systematic contacts to permit Texas courts to exercise
general jurisdiction over her, and (9) whether Nancy has sufficient minimum
contacts with Texas to satisfy federal due process requirements.
9
S.W.3d 741, 748 (Tex. App.—Dallas 2008, pet. denied) (en banc). In a special
appearance, the trial court is the sole judge of the witnesses’ credibility and the
weight to be given their testimony. Leesboro Corp. v. Hendrickson, 322 S.W.3d
922, 926 (Tex. App.—Austin 2010, no pet.). We do not “disturb a trial court’s
resolution of conflicting evidence that turns on the credibility or weight of the
evidence.” Ennis v. Loiseau, 164 S.W.3d 698, 706 (Tex. App.—Austin 2005, no
pet.). When a trial court does not issue findings of fact or conclusions of law, “all
facts necessary to support the judgment and supported by the evidence are
implied.” BMC Software, 83 S.W.3d at 795. We will affirm the trial court’s ruling
on any legal theory that finds support in the record. Dukatt v. Dukatt, 355 S.W.3d
231, 237 (Tex. App.—Dallas 2011, pet. denied).
In a special appearance, the parties bear shifting evidentiary burdens. “[T]he
plaintiff bears the initial burden to plead sufficient allegations to bring the
nonresident defendant within the reach of Texas’s long-arm statute.” Kelly v. Gen.
Interior Constr., Inc., 301 S.W.3d 653, 658 (Tex. 2010). The plaintiff may carry
that burden in its petition or in response to the defendants’ special appearance.
Proppant Sols., LLC v. Delgado, 471 S.W.3d 529, 536 (Tex. App.—Houston [1st
Dist.] 2015, no pet.); Stull v. LaPlant, 411 S.W.3d 129, 134 (Tex. App.—Dallas
2013, no pet.). If the plaintiff meets this initial burden, the burden shifts to the
defendant filing the special appearance, who must negate all bases of personal
10
jurisdiction alleged by the plaintiff. Kelly, 310 S.W.3d at 658; Proppant Sols., 471
S.W.3d at 536. “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, 310 S.W.3d at 658. The defendant
can negate jurisdiction on either a factual or legal basis. Id. at 659. A defendant
negates the legal basis for jurisdiction by showing that “if the plaintiff’s alleged
facts are true, the evidence is legally insufficient to establish jurisdiction; the
defendant’s contacts . . . fall short of purposeful availment; . . . the claims do not
arise from the contacts; or . . . traditional notions of fair play and substantial justice
are offended by the exercise of jurisdiction.” Id.
If the nonresident defendant produces evidence negating personal
jurisdiction, the burden returns to the plaintiff to show that the court has personal
jurisdiction over the nonresident defendant. Stull, 411 S.W.3d at 134. A court
should dismiss a lawsuit against a nonresident defendant if the exercise of personal
jurisdiction lacks an adequate factual or legal basis. Id.
The parties must refer the appellate court to those portions of the record that
support their arguments. TEX. R. APP. P. 38.1(i) (“The [appellant’s] brief must
contain a clear and concise argument for the contentions made, with appropriate
citations to authorities and to the record.”), 38.2(a) (“An appellee’s brief must
conform to the requirements of Rule 38.1 . . . .”); see also Wade v. Comm’n for
11
Lawyer Discipline, 961 S.W.2d 366, 373 (Tex. App.—Houston [1st Dist.] 1997, no
writ); Brandon v. Am. Sterilizer Co., 880 S.W.2d 488, 493 (Tex. App.—Austin
1994, no writ). An appellate court is under no duty to make an independent search
of the record for evidence supporting a party’s position. Univ. Gen. Hosp., LP v.
Prexus Health Consultants, LLC, 403 S.W.3d 547, 557 n.6 (Tex. App.—Houston
[14th Dist.] 2013, no pet.); Hakemy Bros. v. State Bank & Trust Co., Dallas, 189
S.W.3d 920, 927–28 (Tex. App.—Dallas 2006, pet. denied); see also Wade, 961
S.W.2d at 373; Brandon, 880 S.W.2d at 493.
Applicable Principles of Law
A Texas court may assert personal jurisdiction over a nonresident defendant
if (1) the Texas long-arm statute authorizes the exercise of jurisdiction, and (2) the
exercise of jurisdiction is consistent with federal and state constitutional due
process guarantees. Moki Mac, 221 S.W.3d at 574. “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)).
“Personal jurisdiction is proper when the nonresident defendant has
established minimum contacts with the forum state, and the exercise of jurisdiction
12
comports with ‘traditional notions of fair play and substantial justice.’” Moki Mac,
221 S.W.3d at 575 (citing Int’l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.
Ct. 154, 158 (1945)). Minimum contacts are sufficient for personal jurisdiction
when the nonresident defendant has purposefully availed himself of the privileges
of conducting activities within the forum state, thus invoking the benefits and
protections of its laws. Id. (citing Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct.
1228, 1240 (1958)). But “a defendant can only trigger specific jurisdiction through
its own conduct, not the unilateral acts of third parties.” IRA Res., Inc. v. Griego,
221 S.W.3d 592, 596 (Tex. 2007).
A nonresident defendant’s forum-state contacts may give rise to two types of
personal jurisdiction: specific and general. Moki Mac, 221 S.W.3d at 575. When
specific jurisdiction is alleged, the inquiry focuses on the relationship among the
defendant, the forum, and the litigation. Id. at 575–76. “[P]urposeful availment
alone will not support an exercise of specific jurisdiction.” Id. at 579. Rather,
specific jurisdiction has “two co-equal components,” and “purposeful availment
has no jurisdictional relevance unless the defendant’s liability arises from or relates
to the forum contacts.” Id. For a nonresident defendant’s forum contacts to
support an exercise of specific jurisdiction, “there must be a substantial connection
between those contacts and the operative facts of the litigation.” Id. at 585; see
Rush v. Savchuk, 444 U.S. 320, 329, 100 S. Ct. 571, 578 (1980)). The operative
13
facts of the litigation are those facts that would be the focus of the trial. Pulmosan
Safety Equip. Corp. v. Lamb, 273 S.W.3d 829, 839 (Tex. App.—Houston [14th
Dist.] 2008, pet. denied) (citing Moki Mac, 221 S.W.3d at 585).
A general jurisdiction inquiry is very different from a specific jurisdiction
inquiry. It requires a “more demanding minimum contacts analysis,” PHC–
Minden, L.P. v. Kimberly–Clark Corp., 235 S.W.3d 163, 168 (Tex. 2007) (quoting
CSR, Ltd. v. Link, 925 S.W.2d 591, 595 (Tex. 1996)), with a “substantially higher”
threshold. Id. (quoting 4 WRIGHT & MILLER, FEDERAL PRACTICE & PROCEDURE
§ 1067.5 (2007)). Usually, “the defendant must be engaged in longstanding
business in the forum state, such as marketing or shipping products, or performing
services or maintaining one or more offices there; activities that are less extensive
than that will not qualify for general in personam jurisdiction.” Id. General
jurisdiction is “dispute-blind,” meaning that it is an exercise of the court’s
jurisdiction made without regard to the nature of the claim presented or whether
the defendant’s alleged liability arises from those contacts. Id. The central
question is whether the defendant’s contacts are “continuous and systematic” such
that the relationship between the nonresident and the state approaches the
relationship between the state and its own residents. Id. (citing Helicopteros
Nacionales de Colombia, S.A. v. Hall, 638 S.W.2d 870, 882 (Tex. 1982) (Pope, J.,
dissenting), rev’d, 466 U.S. 408, 418–19, 104 S. Ct. 1868, 1874 (1984)).
14
For Texas to exercise specific jurisdiction over Predator in this case,
(1) Predator must have made minimum contacts with Texas by “purposefully
availing” itself of the privilege of conducting activities here, and (2) its liability
must have arisen from or be related to those contacts. See Moki Mac, 221 S.W.3d
at 576. Likewise, for Texas to exercise specific jurisdiction over Nancy
Vermeulen, her own contacts and alleged liability must satisfy these requirements.
Even if there is “purposeful availment” in Texas, minimum contacts will not exist,
and jurisdiction will not attach, if there is not a “substantial connection” between
the alleged contacts and the operative facts of the litigation. See Info. Servs. Grp.,
Inc. v. Rawlinson, 302 S.W.3d 392, 404–05 (Tex. App.—Houston [14th Dist.]
2009, pet. denied).
In Moki Mac River Expeditions v. Drugg, the supreme court analyzed
whether there was a substantial connection between the alleged contact and the
operative facts of the suit. 221 S.W.3d at 569. In doing so, the court considered
whether the alleged contact would “be the focus of the trial,” or “[would] consume
most if not all of the litigation’s attention[.]” Id. at 585. In sum, the court
instructed us to consider whether the alleged contact was “the subject matter of the
case,” or was “related to the operative facts” of the cause of action asserted. Id.
The court concluded that the alleged contact—a misrepresentation in a sales
brochure—was not substantially related to the cause of action asserted—
15
negligence of tour guides in leading a hike of the Grand Canyon that resulted in the
plaintiffs’ son’s death. Id. “Whatever connection there may be between Moki
Mac’s promotional materials sent to Texas and the operative facts that led to
Andy’s death, we do not believe it is sufficiently direct to meet due process
concerns.” Id.
“[A]n individual’s contract with an out-of-state party alone [cannot]
automatically establish sufficient minimum contacts in the other party’s home
forum . . . .” Burger King v. Rudzewicz, 471 U.S. 462, 478, 105 S. Ct. 2174, 2185
(1985). “Merely contracting with a Texas resident does not satisfy the minimum
contacts requirement[;] [n]or is jurisdiction justified by the single fact that a
contract is payable in Texas.” Blair Commc’ns, Inc. v. SES Survey Equip. Servs.,
Inc., 80 S.W.3d 723, 729 (Tex. App.—Houston [1st Dist.] 2002, no pet.) (citations
omitted). A contract is “ordinarily but an intermediate step serving to tie up prior
business negotiations with future consequences which themselves are the real
object of the business transaction.” Burger King, 471 U.S. at 479, 105 S. Ct. at
2185. However, a single purposeful act may suffice to establish minimum contacts
providing the basis for jurisdiction. 471 U.S. at 475 n.18, 105 S. Ct. at 1284 n.18.
But, purposeful availment requires a defendant to seek some benefit, advantage, or
profit by availing itself of the jurisdiction. Michiana, 168 S.W.3d at 784.
16
In Michiana Easy Livin’ Country, Inc. v. Holten, the supreme court stated
that the contacts of parties “who reach out beyond one state and create continuing
relationships and obligations with citizens of another state” are purposeful rather
than fortuitous. Id. at 785. The court in Michiana concluded that a single sale of a
motorhome to a Texas resident was not a purposeful availment because the
relationship between the parties would end once the sale was consummated. Id. at
786–87.
In contrast, the Court in Burger King v. Rudzewicz found that a franchise
agreement between a Michigan franchisee, Rudzewicz, and a Florida franchisor,
Burger King, resulted in personal jurisdiction over Rudzewicz in Florida because
he voluntarily accepted the “long-term and exacting regulation” of his franchise
from Burger King’s Florida headquarters, and his relationship to Florida could not
be considered fortuitous. 471 U.S. at 480, 105 S. Ct. at 2186.
“[B]are assertions of . . . conspiracy, without more, are neither material nor
relevant in assessing contacts to determine personal jurisdiction over a nonresident
defendant.” Capital Fin. & Commerce AG v. Sinopec Overseas Oil & Gas, Ltd.,
260 S.W.3d 67, 78 (Tex. App—Houston [1st Dist.] 2008, no pet.). The Supreme
Court of Texas “decline[d] to recognize the assertion of personal jurisdiction over
a nonresident defendant based solely upon the effects or consequences of an
alleged conspiracy with a resident in the forum state.” Nat’l Indus. Sand Ass’n v.
17
Gibson, 897 S.W.2d 769, 773 (Tex. 1995); see also MasterGuard L.P. v. Eco
Techs. Int’l LLC, 441 S.W.3d 367, 376 (Tex. App—Dallas 2013, no pet.) (“A
conspiracy claim alone is not enough to establish personal jurisdiction.”). Instead,
a jurisdictional inquiry focuses on the “critical” concern: “the defendant’s conduct
and connection with the forum.” Michiana, 168 S.W.3d at 789.
The Contacts Relied Upon by Flotek
Flotek alleges and relies on ten categories of contacts to establish
jurisdiction over Predator and Nancy. Our review of these allegations and the
evidence upon which Flotek relies reveals that Flotek does not allege and support
with evidence any connection between (1) Predator or Nancy, (2) Texas, and
(3) the “operative facts of the litigation.” See Info. Servs. Grp., 302 S.W.3d at 404.
First, Flotek alleges that Predator has done business with Integrity
Directional Services, a Texas company. Specifically, Predator has sold various
parts and services to Integrity.5 It sent invoices for at least some of those parts and
services to an Integrity address in Fort Worth, Texas. Many of these invoices
contain, below the listing of parts and services covered, addresses in Colorado,
Wyoming, or North Dakota. None of them reflects that any parts were sent to
5
The parts and services are identified in invoices from Predator, using such terms as
“Redress and Inspection,” “Seal Kit,” “Poly Pac Seals,” “Stator Adaptor,” “Catch
Rod,” “Bearing Adaptor,” and “Machined Rotor Head and pushed back lobes.”
None of the invoices explicitly references a five-inch motor, nor does Flotek
identify any invoices that are particularly relevant to a five-inch motor.
18
Texas or that any serviced equipment was sent to or from Texas. Further, Flotek
does not identify any invoices from Predator to Integrity that specifically relate to
the five-inch motor, parts or information obtained from “Shanghai,” or any other
connection between Predator and Flotek’s substantive allegations of wrongdoing.
Second, Flotek points to emails between Nancy and Kelly Molder, an
Integrity employee in Fort Worth, regarding payment of Predator invoices. Nancy
also exchanged emails with Jason Gibson, a “Motor Manager” for Integrity whose
emails have a signature block containing a phone number with an area code
corresponding to the Nacogdoches–Huntsville area of Texas.6 Flotek does not
explain the relevance of these invoices or emails to its causes of action.
Third, Flotek points to what it calls “chargebacks to Integrity for shipping
motors to and from Texas.” As support, it points to a single document bearing the
Predator logo and contact information. This document contains a blank labeled
“Sold To” and completed with the words, “Integrity Directional.” It lists a line
item described as “5" 6 [illegible] Motor [illegible],” with a quantity of forty. It
also has a signature line, but is not signed. Adjacent to the entry referring to
Integrity Directional is a line reading “Company: EOG Resources,” under which
the document refers to a location in Laramie, Wyoming. The document does not
6
According to Flotek, the defendants in this suit have also produced more than 900
pages of emails between Predator and Integrity, although the majority of these are
not in the record before us.
19
explicitly refer to Texas or any location in Texas. Flotek asserts, nonetheless, that
it constitutes a Texas contact by Predator simply because it references Integrity.
Flotek does not, however, identify any evidence in support of its claim that this
document relates to motors shipped to or from Texas, five-inch motors of the type
that it claims are at issue in this case, “Shanghai,” or any other aspect of Flotek’s
substantive claims.
Fourth, Predator purchased motor parts and had motors serviced by Dyna-
Drill Technologies LLC, a Texas company that issued its invoices and shipped
parts from a location in Katy, Texas. Dyna-Drill has invoiced Predator for more
than $3 million in goods and services. It is not clear from the documents upon
which Flotek relies, however, what relevance, if any, these transactions have to
five-inch motors or to “Shanghai.” Flotek does not identify evidence of their
relevance, but makes the conclusory assertion that the purchases include five-inch
motors.
Fifth, United Machine Works, another Texas company, performed services
for Predator. According to Flotek, these services included repairs on downhole
motors, including Predator’s five-inch motor. The documents to which Flotek
cites, however, use terms such as “5" FXD BEND HSG 1.50,” “1.50 FIXED
BEND HOUSING,” and “HARD BANDED PAD.” It is not apparent from the
face of these documents what relevance, if any, they have to the substance of
20
Flotek’s claims, and Flotek does not identify evidence indicating that they have
any such relevance.
Sixth, Fusion, Inc., a Houston-based company, provided services to
Predator. According to Flotek, “Fusion invoices [which Flotek filed in the trial
court] clearly show that [Fusion] services motors for Predator, including [five-
inch] motors.” One of the invoices in question includes line items containing text
such as “PDM ROTOR – 5.00:" 6/7 LOBE 8.0 STAGE.” But again, Flotek does
not identify any evidence regarding the meaning of these entries or showing that
they relate to the five-inch motors that are the basis of many of its claims.
Seventh, BasinTek LLC, another Houston company, received orders from
Predator for goods and services totaling more than $380,000. Flotek does not
allege that these transactions relate to five-inch motors, “Shanghai,” or other
allegedly confidential information.
Eighth, Predator shipped engine parts to and from Apex Blasting, a company
in Baytown, Texas. Again, Flotek does not allege that these transactions relate to
five-inch motors, “Shanghai,” or other allegedly confidential information.
Ninth, Tycoon, Chris’s company, ordered parts called “tread protectors”
from Essentra Pipe Protection, a Texas company, and had them shipped to
Predator. Predator also placed orders on its own behalf with Essentra. Again,
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Flotek does not allege that these transactions relate to five-inch motors,
“Shanghai,” or other allegedly confidential information.
Finally, Predator purchased motor parts from Advanced Concepts
Equipment, a company in Conroe, Texas. Invoices from Advanced Concepts
Equipment appear to show that Chris verbally placed at least some of Predator’s
orders.7 Predator also purchased motor parts from Kalsi Engineering, Inc., a
company in Sugar Land, Texas, and sold Kalsi parts to Advanced Concepts
Equipment.8 Again, Flotek does not allege that these transactions relate to five-
inch motors, “Shanghai,” or other allegedly confidential information.
Considering all ten categories together, Flotek alleges that Predator has
bought and sold goods and services in Texas, including goods and services used by
the defendants to create and sell a five-inch motor. Critically, however, it does not
allege which goods and services are relevant to a five-inch motor, goods or
services obtained from “Shanghai,” or any other aspect of Flotek’s substantive
claims against Predator. Nor does Flotek allege what percentage of the defendants’
total Texas contacts are relevant to a five-inch motor. Thus, Flotek alleges a
variety of contacts between Predator and Texas, and it asserts that these contacts
7
Several invoices to Predator from Advanced Concepts Equipment show a purchase
order number of “Verbal Chris.”
8
The parts are identified as “3 3/4" Kalsi Seals” or “6-1/2" Kalsi Seals.” None of
the invoices in question refer explicitly to a five-inch motor, nor has Flotek alleged
that these purchases are relevant to a five-inch motor.
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are relevant to its claims against Predator and Nancy, but it identifies no evidence
connecting the contacts to the allegations supporting its causes of action. And the
only contacts that Flotek alleges that Nancy has had with Texas that are relevant to
this suit are actions by Nancy as an agent of Predator.
General Jurisdiction
In their third and sixth issues, Predator and Nancy, respectively, argue that
they are not subject to general jurisdiction in Texas because they do not have the
kinds of “continuous and systematic” contacts necessary to support an exercise of
general jurisdiction. See PHC–Minden, 235 S.W.3d at 168. Flotek does not
address these issues in its briefing, nor did it argue below that Predator or Nancy
was subject to general jurisdiction. We agree with Predator and Nancy that Texas
does not have general jurisdiction over Flotek’s claims against them.
In order for a Texas court to exercise general jurisdiction over a defendant,
the defendant usually “must be engaged in longstanding business in the forum
state, such as marketing or shipping products, or performing services or
maintaining one or more offices there; activities that are less extensive than that
will not qualify for general in personam jurisdiction.” Id. (quoting 4 WRIGHT &
MILLER, FEDERAL PRACTICE & PROCEDURE § 1067.5). The contacts must be
“continuous and systematic” before general jurisdiction will attach. Id. As the
Supreme Court of Texas has explained, “purchases from Texas vendors will not
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alone support the exercise of general jurisdiction,” nor will payments to Texas
vendors, nor will hiring a contractor to perform limited services within the state.
Id. at 171 (quoting Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801,
808 (Tex. 2002)); see also Helicopteros Nacionales de Colombia, S.A. v. Hall, 466
U.S. 408, 416–18, 104 S. Ct. 1868, 1873–74 (1984) (trip by company’s chief
executive officer to forum state, purchases of helicopters from company in forum
state, and acceptance of checks drawn on bank in forum state were insufficient to
give rise to general jurisdiction).
Although Predator has had numerous contacts with Texas, those contacts are
all incidental to particular purchases or sales of goods and services. They have not
involved the physical presence of any Predator employees in Texas. And Flotek
has not directed our attention to any evidence that Predator has conducted any
marketing in or specifically directed at Texas. It is undisputed that Predator does
not have any permanent or semi-permanent contacts such as a registered agent,
office, bank account, or assets in Texas.
Predator’s actions in purchasing goods and services from Texas companies
are not enough, taken alone, to subject Predator or, by extension, Nancy to general
jurisdiction in Texas, even though those purchases appear to have occurred at
somewhat regular intervals. See Helicopteros Nacionales, 466 U.S. at 416–18, 104
S. Ct. at 1873–74; PHC–Minden, 235 S.W.3d at 168. And Flotek has not
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established that Predator’s sales of parts or services in the state give rise to general
jurisdiction; indeed, it has established only that various documents show
occasional, not continuous, contacts with residents of the state.
We hold that neither Predator’s nor Nancy’s Texas contacts alleged by
Flotek are so “continuous and systematic” as to give rise to general jurisdiction in
Texas courts. We therefore sustain Predator and Nancy’s third and sixth issues.
These issues do not, however, dispose of the entire appeal, so we turn to the
remaining issues on appeal relevant to specific jurisdiction.
“Substantial Connection” to Operative Facts of the Litigation
For Texas to exercise specific jurisdiction in this case, (1) Predator and
Nancy must have made minimum contacts with Texas by “purposefully availing”
themselves of the privilege of conducting activities here, and (2) their liability must
have arisen from or be related to those contacts. See Moki Mac, 221 S.W.3d at
576. Even if there is “purposeful availment” in Texas, minimum contacts will not
exist, and specific jurisdiction will not attach, if there is not a “substantial
connection” between the alleged contacts and the operative facts of the litigation.
Info. Servs. Grp., 302 S.W.3d at 404. Because Predator and Nancy have adduced
evidence that they do not have sufficient contacts with Texas to subject them to
jurisdiction, Flotek bears the burden of identifying evidence that they do. Stull,
411 S.W.3d at 134; Proppant Sols., 471 S.W.3d at 536. Should it fail to do so, an
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appellate court has no obligation to make an independent search of the record for
evidence supporting Flotek’s claims. Univ. Gen. Hosp., 403 S.W.3d at 557 n.6;
Hakemy Bros., 189 S.W.3d at 927–28; see also Wade, 961 S.W.2d at 373;
Brandon, 880 S.W.2d at 493.
Here, the contacts that Flotek alleges between Predator and Texas have at
most a remote relationship to the actual substance of Flotek’s claims and are no
more than effects of the alleged conspiracy. The alleged contacts are transactions
between Predator and various Texas companies for the purchase and sale of
various parts and services. But Flotek has not identified which such parts and
services are relevant to its claims against Predator or Nancy or to the five-inch
motor at the heart of its conspiracy claims. Nor has it clearly articulated how any
parts or services relevant to that motor are connected to its asserted causes of
action, except to assert generally that everything relevant to the five-inch motor is
relevant to the claims against all three defendants. The connections between Texas
and Flotek’s claims are, at most, only implied or stated in a conclusory manner.
Indeed, Flotek has not clearly stated what any of its claims against Predator
or Nancy have to do with Texas. Reading the live petition, Flotek’s filings below,
and Flotek’s brief in this Court as generously as possible, Flotek alleges only that
Predator and Nancy acted to further a conspiracy—conceived and consummated
outside of Texas—by engaging in acts that eventually had effects in Texas. That
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is, Flotek alleges that (1) Chris breached the Bonus Agreement, converted
confidential information, misappropriated trade secrets, and tortiously interfered
with unspecified business relationships; (2) Nancy then acted, outside of Texas, to
assist Chris in these actions by conspiring with Chris to establish Predator;
(3) Predator, Nancy, and Chris then conspired to bring the fruit of Chris’s efforts—
the five-inch motor—to market; and (4) this resulted in some alleged sales of
unspecified parts and services in Texas. In short, Flotek does not allege that
Predator or Nancy actually did anything in Texas that is actionable, with the
exception of acts that are mere results or effects of an alleged conspiracy that was
conceived and carried out entirely outside of Texas.
Flotek’s allegations against Predator and Nancy are, with respect to their
Texas connections, no more than “bare assertions of . . . conspiracy” and thus
“neither material nor relevant in assessing contacts to determine personal
jurisdiction over a nonresident defendant.” Capital Fin. & Commerce AG, 260
S.W.3d at 78; see also Nat’l Indus. Sand Ass’n, 897 S.W.2d at 773 (mere “effects
or consequences of an alleged conspiracy with a resident in the forum state” cannot
support assertion of jurisdiction); MasterGuard, 441 S.W.3d at 376 (“A conspiracy
claim alone is not enough to establish personal jurisdiction.”). Flotek has failed to
demonstrate that, absent the conspiracy allegations, Predator and Nancy have any
“conduct and connection with the forum” that is relevant to Flotek’s claims. See
27
Michiana, 168 S.W.3d at 789. Accordingly, the trial court improperly asserted
jurisdiction over Predator and Nancy.
We sustain Predator and Nancy’s second and fifth issues. We do not reach
the remaining issues, namely issues 1, 4, 7, 8, and 9.
Conclusion
Neither Nancy nor Predator is subject to general jurisdiction in Texas, and
neither has sufficient contacts with Texas that are substantially connected to the
operative facts of this litigation to permit a Texas court to exercise specific
jurisdiction. The trial court therefore erred in denying Predator’s and Nancy’s
special appearances. We reverse and render judgment dismissing without
prejudice Flotek’s claims against Predator and Nancy.
Sherry Radack
Chief Justice
Panel consists of Chief Justice Radack and Justices Jennings and Lloyd.
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