minimum contacts and this holds true even where as here the defended himself or their counsel doesn't show up at the trial to provide active opposition and so while this case arises in a novel procedural posture to be sure the controlling legal rules are rather orthodox the plaintiffs didn't prove the minimum contacts of jurisdiction and the plaintiffs didn't prove the lion's share of this damages ward and so with the panel's indulgence i'd like to focus most of my time on the damages question but i don't want to give jurisdiction short shrift because while we recognize that it's a close question on the merits i don't think we have a slam dunk argument i don't think they do either we do submit that the moncrief decision from the circuit on the wall the decision compel the reversal what i'd like to focus on about jurisdiction today is the waiver point i'd like to give the court one additional record citation to i think put the nail in the coffin of this idea that the question of jurisdiction was waived that there's been sandbagging and we've given you already the arguments about rule twelve which says that the issue of personal jurisdiction can be raised in a motion to dismiss or an answer which all of the defendants did here we've also given you the precedent saying that when a motion to dismiss is denied that doesn't take personal jurisdiction out of the case and we've given you the by you still which says that if you assert a counter claim that too doesn't take personal jurisdiction off the case the citation i want to give you pertains to the sandbagging idea because the plaintiff has taken the position that they didn't prove personal jurisdictions minimum contacts because they were somehow tricked into thinking it was off the table but if you look at the record of page four zero eight what you'll see is the plaintiff's response to  motion to dismiss and at four await the plaintiffs tell the court you should deny the motion to dismiss because the facts about personal jurisdiction are intertwined with the merits and what they say on for a way that is at the jurisdictional issues should be referred to the merits and so one way to solve this question is to look at what we filed with the court because we consistently denied personal jurisdiction throughout but you can also see that the plaintiff them himself ask the court to put jurisdiction into the trial so that we think puts really the nail in the coffin of this idea that jurisdiction is somehow waived now the merits i know are going to require a close reading of the court's precedents there are a lot and so i think the better use of the court's time today is to turn to the damages issue i think we can add more value to the case in that let me be as precise as i can about the relief that we're asking for you have before you a judgment that awards both actual damage and loss of use damages and we don't challenge the actual damages those account for the cost of replacing that's right there system so i think each system has a few pieces but yeah we'll talk about four systems three were returned all together one wasn't returned and i think one that was returned was damaged so we have a little bit of the edge but all of those damages the replacement for the one that a returned and repair costs are accounted for in the fifty three thousand dollars of actual damages but we're challenging here is the court's imposition of the loss abuse damages that's apart from the actual damages i just described and that amounts to eight hundred seventy eight thousand dollars and the reason that that's reversible error is because neither of the causes of action that they try to found that on are valid we have a fraud cause of action but there's no proof of detrimental reliance so there's no fraud whatsoever and they also have a breach of contract cause of action and that does give rise to the actual damages i just described the fifty three thousand dollars but that's all there's no valid evidence of the loss abuse damages here and to be clear we're not saying that in this kind of case a failure to return the property case that the loss of these damages are never recovered we think they could be with the proper proof they just aren't here so let me focus on each version let's start with the fraud action to prove the fraud cause of action they needed to prove detrimental reliance and remember the misrepresentations we're talking about here aren't the representations that form the original contract it wasn't representation we will pay you in exchange for the property that is for we're going to send you stuff that's right after the br so they would need to prove that they took some action in reliance on that statement and you have two kinds of evidence your problems with that first of all you have an absence of evidence they put the gentleman on the stand mr pena he's their operations manager who should have testified to this and they just didn't ask him the question they never asked him because of what they told you what did you do differently what would you have done there are no questions like that and the other problems you have the only evidence about this goes in our favor you don't think that's because  detriment it doesn't show that you suffered any injury or harm because of the delay if you didn't have plans for the equipment or didn't have to put it to any other use it serves no detriment here so that's a distinct element of the fraud cause of action you need both reliance and detriment because questions and two answers and i can read it to you now if the court will indulge me the question is all of this equipment was acquitted which you could have leased had it been back in the united states is that correct and the answer is yes so he said it could have been leas rent this equipment and you also don't get any questions about supply which is to say that they didn't have other commitments in inventory to satisfy that demand so i can give the court a simple analogy that might be familiar imagine a rental car situation fire in a car for a week from enterprise and keep it a week too long and the question under the common law is can they prove lost profits when they can but they have to prove that someone came to the counter while i had the car overdue and wanted a sedan and they also have to prove they don't have a lot f sudan's to fulfill that demand that they charge you the direct for that additional if the contract provided for it yes but that's a separate issue right if you're just looking at the question of direct and consequential damages right the restatement says that unless you prove the lost profits in the fashion i just described then the remedy is to replace the property right or to repair its name here do we have a situation where the damages were the the right all for you they will they lost during the time period that your court so the answer is no that's not a valid way to assess the damages let me divided into two periods you have the six month period where we actually agreed to rent the property that's the six months that the contract covers and we do owe those names that's the actual damages of fifty three thousand but after six months there is no contract right that's this false idea that really what this is is a conversion and that if i take your stuff the law doesn't create a new contract and extend it into perpetuity right it's conversion  theft and that's not just our position that's the position that the plaintiffs which is to say after the original six month period the contract was over if you want to see that in the findings and conclusions that they asked for and got you can see that conclusion number four where they say that after the term of the lease the contract was terminated as a page ninety four of the record and so the way the law deals with this is if i don't give your stuff back then you have a cause of action for taking it the law doesn't impose a contract and there are also two other problems with this argument about a contract based basis for the damages and one of them is that the only provision they've pointed to in the contract is a provision that refers to damaged equipment and as you noted just south of we have four systems here and only one of them was damaged so that couldn't solve for the eight hundred thousand dollars of damages here and the other problem is that if you look at this clause it's a liquidated damages clause it's not enforceable and the reason it's not enforceable is because this kind of penalty the idea that you pay the day rate every day twenty four seven three sixty five isn't actually a reasonable forecast of just compensation and if you really think about this if they're making the kind of profit they say they're making you know every single day i think we're all in the wrong business but they rely on your client to report when the equipment was being in use because they were there we you are only required to send them the money for the day the equipment that's right your honor that's a point in our favor not theirs because the damages theory assumes that we pay for every day no matter what but the only proof on the record says that under the contract we had if we had the equipment and there was evidence that the equipment was in use during days when you didn't report that it was  there is your honor but we don't think that passes the threshold texas law imposes right if this is a lost profits case they have to prove it with reasonable certainty that it's ok for me to deceive them but they still have to prove that they were that they weren't deceived every day so other than actual damages we think they're entitled to zero because they didn't prove that they had other deals to devote this equipment to that they had other demands so they actually suffered no harm right there trying to get the benefit that we never made never contracted for to pay them this money past six months we just essentially took their stuff it would be as though after six months you could treat the case as though we we took the property which robs of the first contract never occurred in that situation you wouldn't impose a new contract that was never made you would ask well they took the property from me what loss did that costs and so that's the fundamental problem here is that for both the fraud cause of action and the breach of contract action what the plaintiff has done is sort of assume that they could have devoted the property to other business but they never actually prove this one reason me this is not a conversion action for the period after six months it is the continuing your current that it's on its way and delaying purchasing of alternative that is evidence that because we were telling them what we told them they didn't go out and replace the equipment for some period of time and because they didn't have the equipment they were able to satisfy some demand there may be a reliance here but it's not detrimental reliance unless they prove that they couldn't carry on their business and they didn't give that kind of proof remember we have the evidence for mr mccullough he's that general counsel and he says that almost from the very beginning he didn't believe them when they were saying we're about to bring the equipment back right and so we've have any proof of it i think it would have been easy for them the burden here be quite low to ask them because they lied to you did you not replace the equipment or did you you know not get not get new equipment or rent out and they just didn't ask that question o could have at least let's see all of this equipment was acquitted which you could have leased had it been back in the united states if i can draw you back to the rental car analogy that's like saying i could have leased you a car that wasn't brought back but it's also tru full of other cars and it wasn't actually a problem i could have leased to this car i could have used to one of the ten other cars right if they're going to prove a lost profits model texas law says there has to be reasonable certainty and the plaintiff has the burden of proving one complete calculation that hits each of the elements and i want to emphasize that i think the plaintiffs and they can clarify in a minute i think they've abandoned this idea i don't think they're saying that they prove the lost profits model i think they're saying they prove some other type of damage model if that's the case we think it's  sentially over i think they're resting it really on this provision about damaged equipment which as we say has the three problems so i think it's important to get maybe a clear answer in my friend's presentation of what exactly the model is because i don't think their position is that they prove what texas requires of lost profits that is sort of assumed by the courts questions the last thing that i had to say my friend might talk about is what we were doing with the equipment and the idea that while we said we were going to give it back had damages occurring which we say they didn't but if they did then there would need to be a mining and then and then what law says i have an obligation to mitigate my damages by spending money i did latin bammer with it to read and that mitigates my name well it depends on we have an obligation under the law to do that to mitigate the contract action you definitely do that's restatement section three fifty we've given you that says the illustration we've given you is perfectly a pluggable to machinery used to make income that says you have an obligation to buy a new piece of machinery now i don't want to over my time but just to give a complete answer for the fraud action i don't think there's a mitigation requirement and so the law is a little bit different there but for the fraud actually to show continually reasonable i'm sure there's a reason why he did which is that i don't think this court really needs to go any further than a minimum contacts analysis to determine that there is there is an ample basis for jurisdiction they devoted a lot of time in their brief it seems to me a disproportionate amount brief to the issue of minimum contacts and they side of the walden cases as somehow being relevant to that to their side of the case but to me the issue of minimum contacts has been  basically the same it's purposeful of ailment of the forum by the defendant and we're not contesting that what we're saying is that ample contacts exist and to summarize what we've said about that the defendants initiated contact  with d p s they wanted to get equipment shipped down into the bay of camp ichi you know mexican gulf of mexico and this is pretty much the area of the u s gulf in the mexican gulf where d p s was doing business they sought this contact they twice applied for a credit application so that their so that they would get their credit approved and they would be able to do business with our contact with our client since those applications to texas they followed that up with attending personally a meeting where mr el shari shows up i think with his father and they have discussions about what this relationship is going to be like and the expectation is there's going to be a relationship and that is further proved by the fact that for this first six month period of rental my client basically gave them an accommodation something that they wouldn't necessarily do with most other clients because these guys were starting out and wanted wanted to build this relationship so what they did was they gave them the right to only charge for the days or rental during this first six month period that they had the equipment that's not a money making proposition over a long period of time for my client but it was it was a way to get these people involved in a relationship and for the jurisdictional purposes it contemplates that they intended to have a relationship and that that relationship was going to go over time and further into that relationship they ordered equipment down to to mexico where their operation was not once but several times they shipped equipment back for repairs to the to texas you know they have they continued a relationship with texas and i think the case that we cited that really is on all four square with this case would be that central freight lines case from the fifth circuit back and i guess two thousand and two where there there was a there was a freight line where where they were doing business on the east coast but people from the east coast came to texas and how to visit to start this relationship in the relationship continued and was ongoing they had an expectation to be inhaled into court there for breaching that agreement that's exactly what we've got here the defendants in this case certainly had an expectation to be here there's no question about that so i think right off the bat you can start with with minimum contacts and say that we satisfy that i don't think it's a close question if we needed to talk any further we also have this interesting issue of waiver that existed and the waiver kind of goes to a lot of things including their conduct in this case which was basically to drag this out as far as they could and then not show up for trial at the last minute and at a being that to me is the quintessential definition of sandbagging on a lot of levels but it certainly was sandbagging as respects the personal jurisdiction issue and you heard opposing counsel say at the very beginning he was  said he he referenced our response to the most the quote motion to dismiss of the defendants in the briefs they've also done this and they try to lump all the defendants together but that's not what was going on in the in the course of this case what they originally did is they filed an answer where they included the stock personal jurisdiction so if it matters stiction whatever all of the answer and then that goes away completely for global tech then they never mentioned global tech again and the reason that they did that i believe is that they were trying to get the mr and mrs all shari out of the case on personal jurisdiction and they didn't care what happened to global tech they very were fine with the judgment being taken against them well that backfired on them because we took a deposition of mr l shari in march of two thousand and fourteen and he pierced the corporate veil for us and they don't contest that in this case they know the corporate veil was pierced they know that these people did observe corporate formalities so now the situation has radically changed they still file their motion to dismiss for lack of personal jurisdiction for themselves not for global tech they have the opportunity to do that didn't do it judge hitler denies that and then what happens a few days later as the equipment shows up after three years the next last gasp effort to avoid going to trial they bring the equipment two years and nine months or whatever miraculously it shows up it shows up until at their lawyer's office in houston and i receive a phone call and i'm asked well you would you like to take a look at this clip and see if it's if it's your client's where do they come from a we don't know you know that you can come look at it though that's how it arrived and i say this because again there's no effort to get to to try to preserve any kind of defense for global tech now we're just in this  five days before trial so we basically have to proceed with a trial without anybody being there there's no effort made to to raise global tax lack of personal jurisdiction by any kind of motion they don't come to trial to cross examine that issue they do nothing to do it and then what happens after the trial is over with after they fired their counsel because they couldn't afford counsel they hired new counsel and new counsel comes in and files a motion for a new trial and  couples that with a counter claim that he asked the court to be allowed to file now putting aside the wisdom of doing that after you've just been hit with a million dollar judgment the fact of the matter is that is now getting into this area of asking for affirmative relief and that's exactly what they did they don't have to do that they ask for affirmative relief in that post trauma and that pretty much ends it right there there's a way for them but it's also that the whole process is certainly sandbagging as well but i don't think you again i don't think you need to reach it because i think it's minimum contacts but i don't think this court ought to countenance this type of behavior which is obviously doing nothing but manipulating the actions at the district court level for their own convenience which is exactly what they well it is certainly we pled fraud and fraud detrimental reliance is a component of fraud i mean with the four things of material misrepresentation the defendant has to know it was false it's made with the intent that the plaintiff would act on it they haven't contested any of those but they have contested detrimental reliance well let's start talking about detrimental reliance because the central point here is that we said we sent this equipment to mexico to a place where realistically it's difficult to retrieve it if somebody wants to steal it or wants to not return it and what they essentially did as we relied on on a representation that we're going to send this equipment back  they didn't send the equipment back to them in six months we actually know now going through discovery they're expensive discovery on my dad because we had to translate that does mexican customs stock images i think for about ten thousand dollars those all in spanish and we learned that they actually while they were telling us that they intended to to return it that they actually intended to permanently import it and so what what is the reliance well the reliance is we would first of all first and foremost is we wouldn't have sent it down there if we knew they were going to steal it but wanted sent down there and then kept it and how did what were the detrimental reliance in this case they represented they were going to run for six well months and they kept it longer than that or did you rely on them caused you to lose some money or profit well there's several things that happened in terms of reliance i mean mr mccullough testified and this wasn't mentioned by opposing counsel but mr mccullough who is the general counsel for form subsea and he was the general counsel for the santa fe for about thirty years before he took that job and he basically explained that by not returning the equipment that now has a has the t a customs issue in mexico because it's been there for more than six months any kind of return especially the way it was returned which is returned with no questions asked here it is in an office we don't have any way of knowing at this stage of the game whether or not that was illegally taken out of mexico whether any customs were paid what the situation is and the damage there that occurs from from that is the fact that now you can't send it back in the boy to mexico so they've lost the market for that piece of equipment for a good bit of their business now it can only be used in the in the u s gulf of mexico because if you send it back to mexico with the serial numbers it could be seized it could be liable for some type of illegal importation so he caused that problem himself his bat that's future course of over a year it's about to come back they has different excuses for why it didn't come back you know we've got we have to pay off that tax you know we need a certificate of origin you know we've got it all lined up here we're going to go shopping  of those were lies and the net result was we didn't do anything or take any action to go by any other but during that period as you heard as you noted before mr pena testified that this was a good market in two thousand and twelve and two thousand and thirteen they could have rented that equipment easily and they didn't go in purchase new equipment because they were good people and they believed in the integrity at least for a while of these individuals they were doing business with the argument of the council on detrimental reliance of the evidence is just too thin here that there's no direct evidence of what the market was impossible or the rentals of how much of similar equipment you had whether it was fully rented is the only evidence of the of the potential rental or what he quoted to us from where you're standing yeah as far as what they knew at the time that's correct i mean this is not a huge company and the way that they may make their money is is they get calls and phone calls or they have a salesman who's going around trying to drum up business for rentals it would be a lot of very difficult undertaking to try to figure out what your your overall company forecast for running this equipment was going to be for two or three years into the future that's part of it but there was also the issue of whether in fact  us a fraud doesn't increase the damages in terms of we have crates of contract bridge a contract gets you attorneys fees and taxes fraud is here for the purposes of establishing that it's not dischargeable in bankruptcy which is probably the next step that we're going to be on this on this very road with the l shari's and so i think it is very important and i think that that's why they're fighting itself hard is and so i would say that there are certainly reliance here i don't think you have to have a whole lot of reliance but i think if you have an expectation someone's going to bring it back to you and you've put your operation on hold and you're not silent a lawsuit against them and you're not buying new equipment then you've relied on their integrity to to bring you that product back you by showing last orders didn't have any more equipment like this other questions other facts that would have supported that you well the answer the answer to that is what we're talking now about the loss of uses is the daily rate and mr mccullough testified and i didn't noticed i didn't include that in my brief which is which was not good but if you look at the finding of fact number for drug hidden or does address it and it's contained on page eighty five of the transcript mccullough basically says again in the course of thirty five years of vienna general counsel in dealing with these issues that a custom in the industry is basically when you bring something back late whether it be a crew boat or whether it be a generator or while they kept the equipment and so you're collecting rent while they use the equipment or had the equipment which where there are no damages here that's a really good question your honor and it's both because we know you can look at this from both sides of the issue on the one hand we have the what do we do with the equipment if it had been returned well mr pena said there was a good market and he would have been out there trying to deploy it and rent it on the other hand they kept it and what we now know what we didn't know until until it returned with smelling of the ocean and having marine growth on the on the product only when we open the boxes that their lawyers office what we now know is they were using it and so the whole relationship here of between  s and and global to act is that global tech rents this equipment at a daily rate and then they deploy it and they get a daily rate plus whatever they're marked they've marked it up to their customer so let's say they  global tech five hundred dollars a day for a day that it's use and they make three hundred dollars a day or whatever number that they that they market up then now by just keeping the equipment they've benefited from this whole situation and they've now had it for two years and nine months and we know they were using it all the way up to probably a month before this this this equipment comes back but what damages did the judge give you give the damages under the theory that there was a reliance on your part and that you could run it did someone else are ober right not paid while they kept the equipment well i think he understood that from what mr pena said was that we could have made money by the use of this equipment but i think it's equally true to say that they obtained that the profit instead and that that's the whole fraud component of this thing they they took it with the intent to keep it permanently and they went and made the money that would have otherwise been made by by d p s now opposing counsel gamers this hypothetical about a car rental that if you keep the car beyond the time period you rented it far they can't continue to charge you rent on those days or that applicable here or why is it not applicable here i don't think so because you know they didn't include in this hypothetical you did it deliberately with the intent to take it forever i mean the simple facts of the matter are  never see any of this equipment back in houston texas until they lost that motion to dismiss individually they knew they were facing a day of reckoning in august and the very first thing they did within a day is he went in ordered up that equipment  somehow couldn't couldn't you know extract from mexico i mean he literally did that the record establishes that you know that to me tells me that equipment was never coming back he took it with the intent to keep it permanently and in fact he got away with it partially because some of it still there never showed up so you know to me i mean there's no question here that he was using it he was making money off of it and he's and he would have continued to do that merrily if if day every day during jury duty and they forgave him elation i think what i what i said earlier about what mr mccullough testified to that it was customary in the industry was a basis for it it certainly was relied upon by the judge in his findings  fact and i know absent any i mean the judge is freed up to calculate damages to a degree he's got some latitude in doing it and i guess the question is is how would you fashion damages otherwise in this situation where you know that it was being wrongfully kept you know what was being used and this gets back to their failure to attend trial a lot of the things that council are saying here today are very interesting issues which could have been raised on cross examination but they deliberately boycotted the trial with the hope i suppose that you know they wouldn't get hit for very much and they and then that would only be a global tack and they would just try to to avoid any responsibility and now they are now they're trying to raise all these issues by appellate briefs and they're raising fact issues and you can't really do when i said that we don't want to give personal jurisdiction short shrift i meant it we really do have a full price argument about personal jurisdiction let me say two things about that first of all on the merits he says their best case is the central freight line's case i'll give you the two cases that we think that it moncrief and walter because moncrief on page three thirteen turns on the following conclusion that there was quote no indication that the location of the performance matters that's our argument here that these defendants didn't care where the defendant was coming from or having to be sent back and that gets reaffirmed in walt right and page eleven twenty five that's a failure to return the property case and the court decides it because quote that the failure to return the property is not the sort of a fact that is tethered to the forum in any meaningful way and i think the court to read those cases for itself and so i don't just recite them back but let's be clear about we think it's a very close case on jurisdiction and that walden and  decisions that we think prevent the court from affirming now on the waiver question you heard suggestion that we only preserve the question of personal jurisdiction for the individuals and not the company but that's wrong and i can disprove it quickly that answer tonight personal jurisdiction as to both the individuals and the company i think my friend agrees to that the motion to dismiss did so as well if you look at page three sixty seven of the record that's the motion to dismiss that was filed by the individual defendants and it says specific jurisdiction over global tech however is probably a factual issue intertwined with the merits so the motion to dismiss didn't lay over for global tech and the last preservation citation i have for you is page seven eighty one of the record that's a  pretrial proposed findings and conclusions from our side and before trial we tell the court you should find the following neither global tech nor mr or mrs all shari have minimum contacts with texas sufficient to subject any or all of them to jurisdiction in texas the jurisdiction all issue is preserved in the court needs decided before it goes to the merits now to damages i think that i've counted for arguments about the reliance and damage that the plaintiffs say they suffered and i think i can dispense with them the first thing they said is that if we hadn't lied to them they wouldn't have sent us the equipment in the first place well that can't be a fraud action because that's the contract remember that's the original promise that we'll pay you to send us the property that can't be done tomorrow wise for fraud that's the breach of contract action the second thing he says is he talks about a customs issue that because we kept the property too long and then sent it back it couldn't have been used in mexico that's not part of detrimental reliance because that doesn't have anything to do with the misrepresentation we made it's our concept we kept the stuff too long that may have made the property less profitable later but it doesn't have anything do with the misrepresentation and them changing what they did we took something from them maybe we gave them back damaged or hurt but they still haven't shown that their conduct change the third thing we have is this idea about custom in the industry that because in other contracts other parties decide to set some level of damages of the contract if you thought it was invade us but here there is no provision the contract ends after six months we have one provision about damages equipment but i told you why that doesn't work because not all the equipment was damaged and so the idea that sometimes in other deals people pay x level of damages doesn't inform this contract i don't think that argument was pressed below and it certainly wasn't pressed in the breeze but i don't think it solves the case well in a proper way for the district court to determine damages by determining what the rent would have been they would have collected from you for keeping this equipment beyond the contract it's not your honor because that buys into the idea that once the contract is over the remedy is to keep imposing the contract we didn't agree to anything more than six months it's the idea that in a conversion case which i think this really is courts don't create a contract and impose it in perpetuity what you do is use the common law of damages and say what lost profits were there and if there were lost profits proven then you get the replacement value or that's restatement section three fifty with quoted you the illustration in our brief that speaks specifically to property machines that are used to make profit the case really does rise or fall on  eleven sixty five it's the pena testimony that i quoted to you if you think that proves lost profits then i think they get their damages but that's really the only evidence of not being able to have the demand and supply that they need th