Gulf Coast International, L.L.C. v. the Research Corporation of the University of Hawaii , 490 S.W.3d 577 ( 2016 )

Opinion issued February 25, 2016
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-15-00625-CV
———————————
GULF COAST INTERNATIONAL, L.L.C., Appellant
V.
THE RESEARCH CORPORATION
OF THE UNIVERSITY OF HAWAII, Appellee
On Appeal from the 333rd District Court
Harris County, Texas
Trial Court Case No. 2014-05868
OPINION
Gulf Coast International, a Louisiana manufacturer, supplier, and service
provider with offices in Ohio and Houston, sued the Research Corporation of the
University of Hawaii, an agency of the State of Hawaii with no offices, property,
or employees in Texas, for breach of contract for overdue payments that Hawaii
Research owed Gulf Coast. After a hearing on Hawaii Research’s special
appearance challenging personal jurisdiction, the trial court dismissed Gulf Coast’s
lawsuit for lack of personal jurisdiction over Hawaii Research. Gulf Coast appeals
the trial court’s dismissal. We affirm.
Background
This case originated from a dispute over payments Hawaii Research owed
Gulf Coast for repairs and other services provided by Gulf Coast for a single-
hulled research vessel owned by the State of Hawaii. This vessel is both the
primary support ship for a few submersibles and a multi-purpose oceanographic
research vessel. It is comprised of over 1,050 square feet for four laboratories and
over 3,000 square feet of exterior working space on the main deck. It is operated
by the University of Hawaii out of its home port in Honolulu, Hawaii and has
worked throughout the Pacific over the past two decades. Gulf Coast repaired the
vessel at various docking sites in Hawaii, Costa Rica, Panama, and Oregon. Gulf
Coast made no repairs in Texas. In fact, the vessel has never been to a Texas port
or entered Texas waters.
A. Hawaii Research and Gulf Coast
Hawaii Research is an agency of the State of Hawaii that, according to
Leonard Ajifu, its Director of Finance and Project Administration, “support[s] the
research and training programs of the University of Hawaii and . . . enhance[s]
2
research, development, and training generally in Hawaii.” On behalf of the
University of Hawaii, Hawaii Research has contracted with Gulf Coast for various
services and equipment for the vessel for over 20 years.
Gulf Coast is a Louisiana limited liability company. According to its filings
with the Texas Secretary of State from 2010 to 2014, its principal place of
business, its principal office, and a manufacturing plant are in Louisiana. In
addition to the manufacturing plant and office in Louisiana, it has an office in Ohio
and a facility in Houston. According to Jack Van Vleit, its Chief Operations
Officer, the Houston location “serves as the primary base for the company’s
manufacturing and service operations” because of “its proximity to [Gulf Coast’s]
major suppliers, distributors, and customers and a talented labor pool . . . . ”
Hawaii Research dealt primarily with Gulf Coast’s Houston office for the two
contracts at dispute here.
B. First contract
In the first contract, Hawaii Research accepted a Gulf Coast proposal to
“upgrade certain electronics” on the vessel. According to Ajifu, the contract
“contemplated that [Gulf Coast’s] work on the [vessel] was to be performed
outside the state of Texas.” All of the work, according to Ajifu, took place outside
of Texas; it took place on the vessel while it was “at sea or in port in Costa Rica,
Panama, Oregon, and/or Hawaii.” All of the parts and equipment installed on the
3
vessel under that contract were delivered to Hawaii Research outside of Texas.
Hawaii Research did not send any payment to Texas under that contract. The
contract’s choice-of-law provision provided that Hawaii law governed. Hawaii
Research sent the purchase order for this contract to Gulf Coast’s Louisiana
address, and Gulf Coast’s corresponding invoices list only its Louisiana address.
C. Second contract
After the first contract was completed, the vessel’s control systems still were
not functioning properly. While Gulf Coast was upgrading the electronics under
the first contract, it determined that various old, defective, and deteriorated
electrical components on the vessel needed to be replaced so that the control
system would function properly. Thus, Gulf Coast and Hawaii Research signed a
second contract, in Hawaii, and agreed that Gulf Coast would replace that
equipment as well. The second contract charged Hawaii Research for certain
“components” that Gulf Coast would “furnish” to the vessel, for labor to install and
train Hawaii Research on how to use the components, and expenses including
airfare and lodging.
All of the work under the second contract also, according to Ajifu, “took
place outside the state of Texas.” Van Vliet started the design while aboard the
vessel in Hawaii, and all of the parts and equipment were delivered to Hawaii
Research in Hawaii. Although this second contract listed both Gulf Coast’s
4
Louisiana and Texas offices, Hawaii Research sent its payments under this contract
to Gulf Coast’s Louisiana office.
Gulf Coast alleges that Hawaii Research has refused to pay Gulf Coast’s
outstanding invoices and charges under both contracts and sued it for breach of
contract in a Texas court. Hawaii Research filed a special appearance and plea to
the jurisdiction, arguing that, because it is a nonresident defendant with no
purposeful ties to Texas, it is not subject to personal jurisdiction in Texas.
D. Hawaii Research’s alleged contacts with Texas
Gulf Coast, relying primarily on two affidavits of Van Vleit, argues that
Hawaii Research is subject to specific personal jurisdiction in Texas for three
reasons: (1) Hawaii Research sent a request for proposal to its main Gulf Coast
contact in Houston, thereby soliciting business from Texas; (2) Gulf Coast did
work for Hawaii Research out of its Houston office; and (3) the second contract
passed title and the risk of loss to Hawaii Research in Houston.
Alternatively, Gulf Coast argues that Hawaii Research is subject to general
personal jurisdiction in Texas because it hired other Texas service providers for
work on the vessel during the past 20 years.
The trial court granted Hawaii Research’s special appearance and dismissed
the lawsuit for lack of jurisdiction. Gulf Coast appeals that dismissal.
5
Standard of Review
We review an order granting or denying a special appearance de novo. Moki
Mac River Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex. 2007); Lensing v.
Card, 417 S.W.3d 152, 155 (Tex. App.—Dallas 2013, no pet.). If the trial court
does not issue findings of fact or conclusions of law, like has occurred in this case,
we “imply all fact findings supported by the evidence that are necessary to support
the ruling.” Lensing, 417 S.W.3d at 155. We must “imply all findings of fact that
are supported by the evidence in favor of the trial judge’s ruling.” Id. at 157.
In a special appearance, “the plaintiff bears the initial burden of pleading
sufficient facts to bring a nonresident defendant within the reach of the Texas long-
arm statute” that grants personal jurisdiction over a nonresident defendant. Id. at
155. Once the plaintiff meets that burden, the defendant must then “negate all
bases of personal jurisdiction that have been pleaded by the plaintiff.” Id. “In
determining whether a defendant has negated all bases, we examine all the
evidence in the record.” Fleischer v. Coffey, 270 S.W.3d 334, 337 (Tex. App.—
Dallas 2008, no pet.).
Personal jurisdiction
Gulf Coast argues that Hawaii Research should be subject to both general
and specific personal jurisdiction in Texas because it “purposefully established
6
minimum contacts with Texas over the course of many years as a regular consumer
of [Gulf Coast’s] products and services.”
A nonresident defendant, like Hawaii Research, is subject to personal
jurisdiction in Texas if Texas’s “long-arm” statute authorizes personal jurisdiction
and personal jurisdiction is consistent with federal and state constitutional due
process. Drugg, 221 S.W.3d at 574. Because the “long-arm” statute authorizes
Texas courts to exercise personal jurisdiction as far as federal constitutional
requirements of due process allow, the requirements of the statute are met if the
constitutional tests are satisfied. Id. at 575. “Consequently, in many cases, the
analysis of whether a Texas court may assert personal jurisdiction over a
nonresident collapses into the single inquiry of whether jurisdiction comports with
federal due-process limitations.” GJP, Inc. v. Ghosh, 251 S.W.3d 854, 868 (Tex.
App.—Austin 2008, no pet.).
Constitutional due process considerations are satisfied when the plaintiff
shows (1) the defendant has “minimum contacts” with Texas and (2) a Texas court
exercising personal jurisdiction over that defendant would not offend “traditional
notions of fair play and substantial justice.” BMC Software Belg., N.V. v.
Marchand, 83 S.W.3d 789, 795 (Tex. 2002) (citing Int’l Shoe Co. v. Washington,
326 U.S. 310, 316, 66 S. Ct. 154, 158 (1945)).
7
“The minimum-contacts test focuses on the question of whether the
defendant has purposefully availed himself of the privilege of conducting activities
in the forum state.” Lensing, 417 S.W.3d at 155. In determining whether the
defendant “purposefully availed himself” of the privilege of conducting activities
in Texas, (1) we must “disregard any forum contacts by the defendant that resulted
solely from the unilateral activity of another party or a third person”; (2) “the
defendant’s contacts with the forum state must be purposeful rather than random,
isolated, or fortuitous”; and (3) “the defendant must have sought some benefit,
advantage, or profit” from its activities in Texas or invoke the benefits and
protections of Texas law. Id. at 156. “[I]t is only the defendant’s contacts with the
forum that count: purposeful availment ensures that a defendant will not be haled
into a jurisdiction solely as a result of the unilateral activity of another party or a
third person.” Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 785
(Tex. 2005) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 475, 105
S. Ct. 2174, 2183 (1985)) (internal quotation marks and ellipses omitted). “The
courts consider the quality and nature of the defendant’s contacts, not their number
or the ubiquity of their means.” Proppant Sols., LLC v. Delgado, 471 S.W.3d 529,
547 (Tex. App.—Houston [1st Dist.] 2015, no pet.). The defendant’s “minimum
contacts” should be such that it can “reasonably anticipate being sued there.” Id. at
546 (citing Burger King, 471 U.S at 475–76, 105 S. Ct. at 2183–84).
8
Analyzing a defendant’s contacts with Texas is further divided into specific
jurisdiction and general jurisdiction. Marchand, 83 S.W.3d at 795. Specific
jurisdiction is transaction specific; it “is established if the defendant’s alleged
liability arises from or is related to an activity conducted within the forum” state.
Id. at 796; see Johnson v. Kindred, 285 S.W.3d 895, 899 (Tex. App.—Dallas 2009,
no pet.). General jurisdiction is party-specific; it is “jurisdiction over a defendant in
a suit not arising out of or related to the defendant’s contacts with the forum” but
instead arises from the defendant’s general “systematic and continuous” presence
within the forum state. PHC-Minden, L.P. v. Kimberly-Clark Corp., 235 S.W.3d
163, 166 (Tex. 2007). General jurisdiction, thus, “is very different” from specific
jurisdiction and “involves a more demanding minimum contacts analysis.” Id. at
168.
In addition to establishing that the defendant has “minimum contacts” with
Texas, the exercise of such jurisdiction must “also comport with traditional notions
of fair play and substantial justice.” Lensing, 417 S.W.3d at 156. To determine
whether this test is met, we must consider “(1) the burden on the nonresident
defendant, (2) the forum’s interest in adjudicating the dispute, (3) the plaintiff’s
interest in convenient and effective relief, (4) the interstate judicial system’s
interest in the most efficient resolution of controversies, and (5) the shared interest
9
of the several states in furthering substantive social policies.” Id. We first address
Gulf Coast’s assertion of Hawaii Research’s specific jurisdiction contacts.
A. Specific jurisdiction
Texas courts have specific personal jurisdiction over a nonresident defendant
if “(1) the defendant has purposefully availed himself of the privilege of
conducting activities in the forum state, and (2) there is a substantial connection
between those contacts and the operative facts of the litigation.” Lensing, 417
S.W.3d at 156. A single contact “can support jurisdiction, as long as it creates a
substantial connection with the forum state.” Id.
For reasons discussed below, we conclude the three contacts alleged by Gulf
Coast are insufficient to create personal specific jurisdiction over Hawaii Research
in Texas.1
1. Soliciting business from Gulf Coast’s Texas office
Gulf Coast argues that Hawaii Research “solicited” business from Texas—
particularly with regard to the second contract. Hawaii Research exchanged
multiple emails and phone calls with Van Vleit, who worked in Gulf Coast’s
1
Gulf Coast, in its reply brief, also argues that we are “not limited to the individual
transactions” at issue in the case and can look to the “long-term nature of the
parties’ relationship” to determine whether Hawaii Research is subject to specific
jurisdiction in Texas. This, however, is an old rule that has been superseded by
Moki Mac River Expeditions v. Drugg, which held that “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.” 221 S.W.3d at 585.
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Houston office and was Hawaii Research’s main point of contact.2 After Gulf
Coast told Hawaii Research about the problems with the vessel’s electrical
components discovered during the repairs under the first contract, Hawaii Research
sent Van Vleit a proposal request that led to the second contract at issue here.
Hawaii Research disputes Gulf Coast’s characterization of the lead-in to the second
contract as Hawaii Research “soliciting” business from Gulf Coast and asserts,
instead, that Gulf Coast initiated the second contract by proposing those repairs.
A buyer who merely orders a good from a Texas seller, who ships that good
to the nonresident buyer in another state, is generally not, based on that fact alone,
subject to specific jurisdiction in Texas. Gordon & Doner, P.A. v. Joros, 287
S.W.3d 325, 332 (Tex. App.—Fort Worth 2009, no pet.); Laykin v. McFall, 830
S.W.2d 266, 268–71 (Tex. App.—Amarillo 1992, orig. proceeding) (holding that
nonresident defendant who purchased ring from Texas that was mailed to her in
California was not subject to personal jurisdiction in Texas because she did not
travel to Texas to take possession of ring). The general rule is that “contracting
with a Texas company and requiring payments in Texas do not alone necessarily
establish sufficient minimum contacts to demonstrate specific jurisdiction.”
2
Some emails, however, indicate that Hawaii Research also communicated with
Gulf Coast’s employees in Louisiana. Although Van Vleit avers that the
communications with him in Houston were “roughly 90% of the contacts”
between Gulf Coast and Hawaii Research, this number does not indicate that Van
Vleit or Gulf Coast did 90% of the work on the contracts in Texas.
11
Internet Advert. Grp., Inc. v. Accudata, Inc., 301 S.W.3d 383, 389–90 (Tex.
App.—Dallas 2009, no pet.).
On the other hand, if the nonresident buyer comes to Texas to take
possession of property and either removes it from Texas or sells it in Texas, it may
be subject to personal jurisdiction in Texas under a specific jurisdiction theory.
Lensing, 417 S.W.3d at 158. For example, a nonresident buyer who flew from
Illinois to Texas, purchased and took possession of a grave marker in Texas, and
then transported it back to Illinois was subject to specific jurisdiction in Texas. Id.;
see generally Jake Sweeney Auto. Leasing, Inc. v. Tipton, No. 04-08-00176-CV,
2008 WL 2743961, at *2–3 (Tex. App.—San Antonio July 16, 2008, no pet.)
(mem. op.) (holding specific jurisdiction existed over nonresident defendant that
entered Texas, paid mechanic’s lien on vehicle, and purchased vehicle in Texas);
Small v. Small, 216 S.W.3d 872, 875–78 (Tex. App.—Beaumont 2007, no pet.)
(holding specific jurisdiction existed over Virginia woman who entered Texas to
receive diamond for engagement ring from her in-laws).
Insofar as Gulf Coast argues that Hawaii Research is subject to specific
personal jurisdiction in Texas for both contracts because of its general contacts
with Van Vleit, our analysis for both contracts is the same. See Delgado, 471
S.W.3d at 537 (“a court need not assess contacts on a claim-by-claim basis if all
claims arise from the same forum contacts”). Hawaii Research’s relationship with
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Gulf Coast fits within the general rule that merely interacting with a company
representative who is in Texas does not subject a nonresident buyer to personal
jurisdiction in Texas. Hawaii Research dealt with a Gulf Coast employee in Texas
but never came to Texas to pick up good from Gulf Coast, nor did it sell any goods
or services in Texas. This case is similar to Laykin: even viewing Gulf Coast as a
Texas (rather than Louisiana) company, Hawaii Research purchased goods and
services from a Texas company but those goods and services were shipped to
Hawaii Research in Oregon, Hawaii, and Costa Rica. Thus, Hawaii Research’s
interactions with Van Vleit do not establish “minimum contacts” with Texas.
Gulf Coast relies on the general principle that a nonresident seller soliciting
business from a Texas buyer weighs in favor of Texas having specific personal
jurisdiction over the non-resident seller. See Michiana, 168 S.W.3d at 785 (“a
nonresident [seller] that directs marketing efforts to Texas . . . is subject to suit
here”). This general principle is inapplicable here because Hawaii Research was a
nonresident buyer, not a nonresident seller. In any event, a fact dispute exists3 over
whether Hawaii Research or Gulf Coast solicited the second contract. Because we
3
Gulf Coast and Van Vleit argue that Hawaii Research “does not dispute that
[Hawaii Research] solicited the work . . . .” This, however, overlooks that Hawaii
Research argued in its reply to Gulf Coast’s response to Hawaii Research’s special
appearance that Gulf Coast “asserted that an upgrade” was necessary and sent
Hawaii Research a “proposed upgrade.” Hawaii Research, in response to this
proposal, issued a purchase order for the upgrade that led to the second contract.
Thus, a factual dispute exists.
13
must “imply all findings of fact that are supported by the evidence in favor of the
trial judge’s ruling,” we cannot agree with Gulf Coast that Hawaii Research
“solicited” the second contract. See Lensing, 417 S.W.3d at 157.
The case law Gulf Coast cites with the transaction going the correct
direction (i.e., a nonresident buyer) also does not support its “solicitation”
argument as a basis for personal jurisdiction over Hawaii Research. First, it cites
North Coast Commercial Roofing Sys. v. RMAX, Inc., 130 S.W.3d 491 (Tex.
App.—Dallas 2004, no pet.). In North Coast, a resident seller sued a nonresident
buyer. Id. at 493. The nonresident buyer contracted with the Texas seller knowing
that all of the manufacturing would be done in Texas and secured credit from that
Texas company for the contract. Id. at 495. This combination of facts subjected the
nonresident buyer–defendant to personal jurisdiction in Texas. Id.
The personal jurisdiction facts in this case do not rise to the level of those in
North Coast. First, Hawaii Research did not obtain credit from a Texas company, a
contact emphasized in North Coast. Unlike the buyer in North Coast, Hawaii
Research did not know that any work would be done in Texas; to the contrary,
Ajifu stated that he did not “contemplate” that any work would be done in Texas
and the installation work called for in the contract would not be performed in
Texas. Nor is there any evidence that the contract contemplated that required
training of Hawaii Research employees would occur in Texas. Finally, Gulf Coast
14
is a Louisiana company with an office in Texas and another office in a third state
unlike the seller in North Coast, which was a Texas company. Thus, North Coast is
not analogous to this case.
Second, Gulf Coast’s reliance on Nogle & Black Aviation, Inc. v. Faveretto
is misplaced. 290 S.W.3d 277, 282–83 (Tex. App.—Houston [14th Dist.] 2009, no
pet.). In that case, the nonresident buyer “specifically chose” a Texas engineer to
do certain work. Id. at 283. Because the seller did this work in Texas and that work
in Texas “was not unilaterally initiated by the Texas resident,” the buyer was
subject to personal jurisdiction in Texas. Id.
In contrast, the work that Gulf Coast performed for Hawaii Research in
Texas was “unilaterally initiated” by Gulf Coast in Texas. Ajifu’s affidavit for
Hawaii Research specifically states that Hawaii Research did not “contemplate”
that the work would be done in Houston. Unlike Nogle, where the buyer could
“expect that the choice to use” that particular Texas seller would result in the work
being done in Texas, nothing in the record shows that Hawaii Research could
“expect” that Gulf Coast would do work in Texas versus one of its other locations.
Gulf Coast is a Louisiana company with an office in Ohio, making it at least as
likely that the work would be performed outside of Texas. This differs from the
seller in Nogle, who was a Texas engineer working in Texas. Because the seller in
Nogle contracted with an individual who did not travel to do the work, it was
15
reasonable to assume that the individual would do the work in Texas. Gulf Coast,
however, is an entity with multiple offices in different states that sent workers to
the vessel in Costa Rica, Panama, Oregon, and Hawaii. Thus, we cannot say that
Hawaii Research “specifically chose” a Texas entity and could “expect” that the
work would be done in Texas.
Finally, Rynone Manufacturing Corporation v. Republic Industries, Inc. is
also distinguishable. 96 S.W.3d 636, 639–40 (Tex. App.—Texarkana 2002, no
pet.). In that case, the nonresident defendant-seller called a Texas business to try to
sell it kitchen countertops. Id. at 639. Because the seller personally solicited a sale
from a Texas business, the seller was subject to personal jurisdiction for the
kitchen countertops it sent to the business in Texas. Id. at 639–40.
Again, although Gulf Coast has a Houston office, it is a Louisiana company
with an office in Ohio, unlike the business in Rynone, which was a solely Texas
business. Second, the defendant in Rynone was the seller in the transaction and sent
its goods to Texas; here, the defendant was the buyer who never entered Texas nor
contemplated that work would be done in Texas. Instead, Gulf Coast sent the
goods out of Texas and most of the work consisted of repairs performed outside of
Texas. Third, Gulf Coast did at least some of the work for Hawaii Research out of
Louisiana—unlike Rynone in which all of the work to manufacture the countertops
was done in Texas. Finally, unlike the seller in Rynone who solicited business from
16
Texas, we cannot say that Hawaii Research solicited Gulf Coast’s business. A fact
dispute exists over whether Hawaii Research or Gulf Coast initiated the contracts
at issue in this case and, because we must “imply all findings of fact that are
supported by the evidence in favor of the trial judge’s ruling,” we cannot agree that
Hawaii Research “solicited” the contract in this case. See Lensing, 417 S.W.3d at
157.
2. Gulf Coast’s work in Houston
Although the work on the vessel itself did not take place in Texas, Gulf
Coast did some of the work necessary to fulfill its contractual obligations in
Houston. For example, Gulf Coast conducted the “analysis, planning, design,
sourcing, ordering, assembly, and shipping” of different components at its Houston
office. Gulf Coast’s Houston office remotely monitored equipment used to
complete its work. Gulf Coast’s personnel traveled—and invoiced Hawaii
Research for that travel—to the vessel from Houston.
Ajifu, however, averred in his affidavit that Hawaii Research “contemplated
that [Gulf Coast’s] work was to be performed outside of the state of Texas.”
Hawaii Research argues that the work Gulf Coast did in Texas was minor; it points
out that the August proposal that led to the first contract, which included a
breakdown of various charges, only charged $16,500 out of approximately
$286,000—about 5% of the contract—for the engineering design labor, print
17
fabrication, and programming services that Gulf Coast asserts were done in
Houston. The second contract did not charge anything for these services, instead
only charging for the components themselves, expenses for Gulf Coast employees
to travel to Hawaii, and labor to install the components on the vessel outside of
Texas.
“[O]nly the defendant’s contacts with the forum are relevant, not the
unilateral activity of another party or a third person.” Retamco Operating, Inc. v.
Republic Drilling Co., 278 S.W.3d 333, 339 (Tex. 2009). If “the forum plaintiff’s
decision to perform its contractual obligation within its own forum state is totally
unilateral, it cannot be viewed as purposeful on the part of the nonresident and the
weight necessarily is diminished.” Command-Aire Corp. v. Ontario Mech. Sales
and Serv. Inc., 963 F.2d 90, 94 (5th Cir. 1992). Thus, unilateral work done by the
plaintiff in Texas—even if done for a nonresident defendant—does not subject the
defendant to personal jurisdiction in Texas.
For example, in Accudata, the plaintiff “utilized its facilities, equipment and
database in Allen, Texas to provide” the relevant services. Accudata, 301 S.W.3d
at 389. The contract, however, did not “require performance in Texas.” Id. Nothing
in that case showed that “it mattered to [the defendant] where the contract was
performed . . . . ” Id. Thus, no “purposeful contact” existed to subject the
nonresident defendant to personal jurisdiction in Texas. Id.
18
The situation here is indistinguishable from that in Accudata. Although Gulf
Coast did some work for Hawaii Research from its Houston office, nothing in the
record shows that it “matter[ed] to” Hawaii Research “where the contract was
performed,” nor did the contract “require[] performance in Texas.” See Accudata,
301 S.W.3d at 389. In fact, unlike Accudata in which the contract listed the
plaintiff’s Texas location as one of thirteen possible locations for the work to be
done, Ajifu’s affidavit for Hawaii Research stated that it did not even
“contemplate” that any work under the contracts with this Louisiana entity would
take place in Texas. See id. Finally, any work done in Houston appears to be
minor: Gulf Coast charged Hawaii Research only 5% of the amount under the first
contract for work it says was performed in Houston and did not separately charge
Hawaii Research anything for work done in Houston under the second contract.
Thus, Gulf Coast’s unilateral performance of a small portion of the contract in
Texas does not establish specific personal jurisdiction in Texas over Hawaii
Research.
3. Ex-works provision of second contract
The second contract provided that certain equipment for upgrading the
vessel’s generator and drive electronics would be shipped “ex-works”4 from Gulf
4
“Ex works” means that “[t]he seller’s delivery is complete (and the risk of loss
passes to the buyer) when the goods are made available to the buyer at a location
of the seller’s choice without requiring a collecting vehicle to be loaded, as at the
19
Coast’s Houston facility. Although title to those items passed contractually in
Houston, Ajifu, states that all “parts, equipment, and/or documents” provided to
Hawaii Research under the contract “were delivered” to it “outside of the state of
Texas.” The “ex-works” provision merely shifted “costs and risks involved in
taking the goods from the seller’s premises to the desired destination” to the buyer
for insurance and related purposes. Henry Gabriel, The International Chamber of
Commerce INCOTERMS 1990—A Guide to their Usage, 3 VINDOBONA J. INT’L
COM. L. & ARB. 61, 63 (1999), http://www.cisg.law.pace.edu/cisg/biblio/
gabriel1.html (last visited February 18, 2016). It does not equate to a distant buyer
physically arriving in the seller’s forum to take possession. See Hendrix, 993
S.W.2d at 479.
Gulf Coast does not cite any case law, nor can we find any, holding that an
“ex-works” provision of a contract, by itself, establishes specific personal
seller’s showroom, factory, or warehouse.” Ex Works, BLACK’S LAW DICTIONARY
667 (9th Ed. 2010). An “ex-works” provision is similar to a “free-on-board”
provision of a contract in that the seller’s performance of a contract is complete
and title passes to the buyer “at the time and place of shipment” rather than “at
destination.” See TEX. BUS. & COM. CODE ANN. § 2.401(b) (West 2009).
From a practical standpoint, however, in an “ex-works” contract, the buyer may
never go the location of the seller’s choice and load the vehicle. Instead, the seller
may ship or otherwise deliver the goods to the buyer at the buyer’s place of
business but include the “ex-works” or “free-on-board” provision to pass the risk
of damage during shipment to the buyer. See, e.g., C-Loc Retention Sys., Inc. v.
Hendrix, 993 S.W.2d 473, 479 (Tex. App.—Houston [14th Dist.] 1999, no pet.)
(although contract provided for “free on board” delivery in Michigan, buyer never
traveled to Michigan because seller shipped goods to buyer’s Texas residence).
20
jurisdiction over a defendant; indeed, Texas law holds that such a provision is not
sufficient to create personal jurisdiction over a defendant in Texas. See Hendrix,
993 S.W.2d at 479. The fact that the goods were shipped free-on-board in the
forum state cannot “be the sole determining factor. Instead, we shall look to other
facts surrounding the sale of the [goods].” See id. at 478 (determining whether
contract that provided for “free-on-board” delivery in Michigan for goods that
were eventually delivered to Texas plaintiff established personal jurisdiction in
Texas over Michigan defendant); Plains Bag & Bagging Co. v. Golby Bag Co.,
643 S.W.2d 509, 512 (Tex. App.—Amarillo 1982, no pet.) (looking to final
shipment destination instead of “free-on-board” location to determine where
contract was performed because Texas buyer could decline goods after receiving
them in Texas from nonresident seller).
Gulf Coast cites two cases to support the argument that an “ex-works”
provision is a factor to consider in determining whether a nonresident is subject to
personal jurisdiction in Texas. That is a factor, but it is not enough to establish
personal jurisdiction over Hawaii Research. In the first “ex-works” case relied on
by Gulf Coast, P.V.F., Inc. v. Pro Metals, Inc., the court noted that an free-on-
board provision was one factor, among seven listed, that courts had considered in
determining whether a defendant was subject to personal jurisdiction in Texas. 60
S.W.3d 320, 325 n.10 (Tex. App.—Houston [14th Dist.] 2001, pet. denied). P.V.F.
21
only cited Uvalde Rock Asphalt Co. v. Consolidated Carpet Corporation to support
this factor. 457 S.W.2d 649 (Tex. Civ. App.—Beaumont 1970, writ ref’d n.r.e.). In
Uvalde, the Texas seller shipped certain goods free-on-board Houston to the buyer
at different destinations in Texas. Id. at 651–52. The Uvalde court noted the free-
on-board provision supported personal jurisdiction but held that “[i]t is our opinion
that the payment . . . in Texas determined that the foreign corporation . . . had
sufficient contact[s], ties or relations with the forum . . . .” Id. at 651. Similarly, in
P.V.F., the court noted that the nonresident buyer (1) sent purchase orders to the
seller’s Texas office; (2) sent payment to Texas; and (3) bought the goods on credit
from the Texas seller. P.V.F., 60 S.W.3d at 327. Neither P.V.F. nor Uvalde are
similar to this case because Hawaii Research sent payments to Gulf Coast’s
Louisiana office.
Second, Gulf Coast cites Nance International, Inc. v. OceanMaster
Engineering PTE, Ltd., No. 01-11-00664-CV, 2012 WL 5381224 (Tex. App.—
Houston [1st Dist.] Nov. 1, 2012, no pet.) (mem. op.). In that case, this Court held
that “an F.O.B. term is a relevant factor to consider in a minimum contacts
analysis.” Id. at *6 n.1. We recognized, however, “an F.O.B. term alone is not
sufficient.” Id. at *8. Personal jurisdiction over the nonresident buyer was
established because, in addition to the free-on-board term, the buyer–defendant
accepted credit from the Texas seller and participated in the manufacturing process
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in Texas. Id. Nance is distinguishable from this case because Hawaii Research (1)
did not obtain credit from Gulf Coast in Texas and (2) did not participate in the
manufacturing process in Texas.
Thus, the “ex-works” provision of the second contract cannot, by itself,
establish personal jurisdiction over Hawaii Research in Texas.
4. Combination of all contacts
Finally, the combination of Hawaii Research’s contacts with Texas—which
are each individually insufficient—does not establish personal jurisdiction over it
in Texas. For the first contract, cases with combinations of contacts similar to those
in this case have been held insufficient to create personal jurisdiction. For example,
in Stuart v. Spademan, the nonresident buyer–defendant engaged in extensive
communications with a Texas seller–plaintiff and mailed payment to the seller’s
Texas address while the plaintiff performed unilateral work on the contract in
Texas. 772 F.2d 1185, 1193–94 (5th Cir. 1985). The communications between the
plaintiff and defendant “leading up to the agreement [were] insufficient to support
an exercise of jurisdiction by a Texas court over” the defendant. Id. at 1194. The
“agreement to mail payment checks into the forum state [did] not weigh heavily in
the calculus of contacts” and did not establish personal jurisdiction over the
defendant in Texas. Id. Although the underlying agreement created a “continuing
obligation” for the buyer to aid the seller with work the seller unilaterally
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performed in Texas, that obligation fell “short of a connection giving rise to a
reasonable anticipation on the part of [the buyer] of being haled into court in the
forum state.” Id. at 1029.
Likewise, in Hydrokinetics, Inc. v. Alaska Mechanical, Inc., the nonresident
buyer–defendant engaged in extensive communications with the Texas seller–
plaintiff and mailed payment to Texas for goods that the contract provided would
be manufactured in Texas. 700 F.2d 1026, 1028 (5th Cir. 1983). In addition, unlike
Hawaii Research which never sent buyer–employees to Texas, the defendant in
Hydrokinetics traveled to Texas to close the deal. Id. Nonetheless, these contacts
did not establish personal jurisdiction over the defendant in Texas because “no
performance” by the defendant, except for payment, took place in Texas. Id.
Like both Spademan and Hydrokinetics, Hawaii Research communicated
with Gulf Coast’s Houston office. And Gulf Coast unilaterally performed part of
the work on the contracts in Texas. In analyzing the contacts with Texas under the
first contract, we follow the reasoning in both Spademan and Hydrokinetics and
conclude that these contacts, taken together, do not establish personal jurisdiction
over Hawaii Research in Texas.
Gulf Coast cites to two cases in arguing that the combination of contacts
Hawaii Research has with Texas amounts to sufficient “minimum contacts” to
subject it to specific personal jurisdiction in Texas. Both are distinguishable. In the
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first, Southwest Offset, Inc. v. Hudco Publishing Co., the nonresident buyer–
defendant signed a contract with the seller–plaintiff, a contract printer that had only
a Texas office, to print telephone directories. 622 F.2d 149, 150 (5th Cir. 1980).
The nonresident buyer mailed payments and proofs of the telephone directories to
the seller’s Texas office. Id. The buyer “was no mere passive customer of a Texas
corporation,” instead it “repeatedly placed orders with the Texas corporation.” Id.
at 152. The key fact that established personal jurisdiction, however, was that the
buyer–defendant mailed proofs to the plaintiff in Texas, “the sending of the copy
to Texas was a necessary part of [the defendant’s] contract performance.” Id. This
sending of proofs was “considerably more” than “mailing payments to an office”
in Texas. Id.
Hawaii Research, in contrast, did not send anything besides payment to
Texas. No Hawaii Research employee ever traveled to Texas. Further, because
Hawaii Research “contemplated” that all of Gulf Coast’s work “was to be
performed outside of the state of Texas,” Hawaii Research could not have
anticipated the need to come to Texas as the work progressed. Thus, Hudco does
not apply.
The second case, Command-Aire, is likewise distinguishable. 963 F.2d at 90.
In that case, the contract between the seller–plaintiff, a Texas company, and the
nonresident buyer–defendant provided that the goods would be manufactured in
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Texas and that the nonresident buyer would travel to Texas to take possession of
the goods. Id. at 93. But Hawaii Research never traveled to Texas. Nor did Hawaii
Research’s contract with Gulf Coast require that the work be completed in Texas—
to the contrary, Hawaii Research never “contemplated” that any of the work would
be done in Texas. Finally, Gulf Coast is a Louisiana Company with an office in
Texas—unlike the plaintiff in Command-Aire, which was a Texas corporation. In
conclusion, the trial court did not err in holding that Gulf Coast did not establish
specific personal jurisdiction over Hawaii Research in Texas.
It is unnecessary, therefore, for us to address whether exercising specific
personal jurisdiction over Hawaii Research would offend the “traditional notions
of fair play and substantial justice” element of the personal jurisdiction test.
B. General jurisdiction
Gulf Coast argues that Hawaii Research’s “broad reach into Texas through
other service providers subjects it to personal jurisdiction in a Texas court under a
general jurisdictional inquiry.”5
General jurisdiction over a defendant exists “when a defendant’s contacts
with a forum are continuous and systematic, [and requires] a more demanding
5
Gulf Coast combined its arguments on general and specific jurisdiction and did not
identify which facts it believes supports general jurisdiction and which support
specific jurisdiction.We construe the only facts it argues support general
jurisdiction to be Hawaii Research’s general contracting with other Texas
companies because those contacts do not have any connection to the contracts at
issue in this case.
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minimum-contacts analysis than specific jurisdiction.” Am. Type Culture
Collection, Inc. v. Coleman, 83 S.W.3d 801, 807 (Tex. 2002). General jurisdiction
may be asserted over the defendant only when the defendant’s contacts with the
forum state indicate that “the corporation is fairly regarded as at home” in the
forum state. Goodyear Dunlop Tires Operations, S.A. v. Brown, __ U.S. __, 131 S.
Ct. 2846, 2853–54 (2011). If a plaintiff establishes that a defendant is subject to
general personal jurisdiction in Texas, a Texas court may “exercise jurisdiction
over a defendant even if the cause of action did not arise from or relate to a
defendant’s contacts with the forum.” Coleman, 835 S.W.3d at 806–07.
Texas law, however, is clear that “mere purchases, even if occurring at
regular intervals, are not enough to warrant a State’s assertion of in personam
jurisdiction over a nonresident corporation in a cause of action not related to those
purchase transactions.” Id. at 808 (quoting Helicopteros Nacionales de Colombia,
S.A. v. Hall, 466 U.S. 408, 418, 104 S. Ct. 1868, 1874 (1984)). “[P]urchases and
trips related thereto, even if they occur regularly, are not, standing alone, a
sufficient basis for the assertion of jurisdiction.” Id. (quoting Dalton v. R & W
Marine, Inc., 897 F.2d 1359, 1362 n.3 (5th Cir. 1990)).
DENSO Corporation v. Hall provides an example of this rule. 396 S.W.3d
681 (Tex. App.—Houston [14th Dist.] 2013, no pet.). In that case, the nonresident
buyer came to Texas to tour the Texas seller’s facilities, met with the seller in
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Texas and Arizona, negotiated the contract in Texas, and had numerous contracts
with other Texas companies. Id. at 693–95. None of these contacts were sufficient,
however, because none showed that the nonresident buyer “can fairly be regarded
as being at home in Texas because the trips do not establish that [it] had a general
business presence in Texas.” Id. at 694. Thus, no general personal jurisdiction
existed over the nonresident buyer. Id. at 696.
This rule applies here. Gulf Coast does not point us to, nor can we locate,
any case law to support its position that by doing some business with other Texas
service companies, Hawaii Research is subject to general personal jurisdiction in
Texas. Hawaii Research’s contacts with Texas are far fewer than those in Hall:
Hawaii Research never came to Texas to tour Gulf Coast’s Texas facilities nor did
it negotiate the contract in Texas. Thus, we hold that Hawaii Research is not
subject to general personal jurisdiction in Texas.
Conclusion
We affirm the trial court’s order dismissing the lawsuit for lack of personal
jurisdiction.
Harvey Brown
Justice
Panel consists of Chief Justice Radack and Justices Massengale and Brown.
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