NUMBER 13-08-00528-CV

COURT OF APPEALS

THIRTEENTH DISTRICT OF TEXAS

CORPUS CHRISTI - EDINBURG

 

MCELROY MACHINE & 

MANUFACTURING COMPANY, INC. AND

DVCC SERVICES CORPORATION F/K/A 

PREDCO SERVICES CORPORATION Appellants,

v.

LUIS BELTRAN FLORES, Appellee.

 

On appeal from the 404th District Court

of Cameron County, Texas.

 

MEMORANDUM OPINION

Before Justices Yañez, Rodriguez, and Benavides

Memorandum Opinion by Justice Yañez

In this accelerated interlocutory appeal, appellants, McElroy Machine &

Manufacturing Company., Inc. ("McElroy Machine") and DVCC Services Corporation. f/k/a

Predco Services Corporation ("DVCC"), challenge the trial court's denial of their special
See TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(7) (Vernon 2008); TEX. R. APP. P. 28.1. 1

 McElroy/Catchot W inch Co., Coastal Marine Equipment, Inc., Ocean Marine, Inc., Linwood Trawlers, 2

Inc., the M/V Capt. Linwood, and Dolby Linwood are not parties to this appeal.

2

appearance. Appellee is Luis Beltan Flores. Because we conclude that the trial court 1

lacked personal jurisdiction over appellants, we reverse the trial court's order and dismiss

the case against appellants.

I. Background

Flores filed suit against McElroy/Catchot Winch Co. ("McElroy/Catchot"), Coastal

Marine Equipment, Inc. ("CME"), Ocean Marine, Inc. ("OMI"), Linwood Trawlers, Inc., the

M/V Capt. Linwood, Dolby Linwood, and appellants, alleging that he was injured by a

defective winch while employed as a seaman on the M/V Capt. Linwood. Flores sued 2

appellants and OMI for negligence, gross negligence, misrepresentation, and products

liability.

Appellants filed a special appearance alleging that the trial court lacked personal

jurisdiction over them; appellants attached the affidavits of DVCC's former president,

Anthony Frascella, and McElroy Machine's former president, Harold Catchot, to their

special appearance. After a March 24, 2008 hearing, the trial court denied appellants’

special appearance. This appeal ensued.

II. PERSONAL JURISDICTION

A. Texas Long-Arm Statute

A Texas court may exercise personal jurisdiction over a nonresident defendant only
See TEX. CIV. PRAC. & REM. CODE ANN. § 17.042 (Vernon 2008) (permitting Texas courts to exercise 3

personal jurisdiction over nonresident defendants who are doing business in Texas). The Texas long-arm

statute, section 17.042, provides as follows:

In addition to other acts that may constitute doing business, a nonresident does business in

this state if the nonresident:

(1) contracts by mail or otherwise with a Texas resident and wither party is to

perform the contract in whole or in part in this state;

(2) commits a tort in whole or in part in this state; or

(3) recruits Texas residents, directly or through an intermediary located in this

state, for employment inside or outside this state.

Id.

BMC Software Belgium, N.V. v. Marchand, 83 S.W .3d 789, 795 (Tex. 2002) (quoting U-Anchor 4

Adver., Inc. v. Burt, 553 S.W .2d 760, 762 (Tex. 1977)).

Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945); BMC Software, 83 S.W .3d at 795; see U.S. 5

CONST. amend. XIV, § 1; see also Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471-72 (1985) ("The Due

Process Clause protects an individual's liberty interest in not being subject to the binding judgments of a forum

with which he has established no meaningful 'contacts, ties, or relations.'") (citing Int'l Shoe, 326 U.S. at 319).

3

if jurisdiction is authorized by the Texas long-arm statute. Although the Texas long-arm 3

statute lists activities that constitute "doing business," this list is not exclusive, and "section

17.042's broad language extends Texas courts' personal jurisdiction 'as far as the federal

constitutional requirements of due process will permit.'" The Due Process Clause of the 4

Fourteenth Amendment allows a Texas court to exercise personal jurisdiction over a

nonresident defendant when (1) the nonresident defendant has established minimum

contacts with Texas, and (2) the exercise of jurisdiction comports with "traditional notions

of fair play and substantial justice."

5

B. Minimum Contacts

A nonresident establishes minimum contacts with Texas by purposefully availing
Moki Mac River Expeditions v. Drugg, 221 S.W .3d 569, 575, 578 (Tex. 2007) ("[A] defendant must 6

seek some benefit, advantage or profit by 'availing' itself of the jurisdiction.") (quoting Michiana Easy Livin'

Country, Inc. v. Holten, 168 S.W .3d 777, 785 (2005)); Michiana, 168 S.W .3d at 784 ("For half a century, the

touchstone of jurisdictional due process has been 'purposeful availment.'"); see Burger King Corp., 471 U.S.

at 476.

Moki Mac, 221 S.W .3d at 575 (citing Michiana, 168 S.W .3d at 784-85). 7

Michiana, 168 S.W .3d at 785 ("[P]urposeful availment 'ensures that a defendant will not be haled 8

into a jurisdiction solely as a result of . . . the unilateral activity of another party or a third person.'") (quoting

Burger King Corp., 471 U.S. at 475) (internal quotations omitted)).

Id. 9

Id. 10

Moki Mac, 221 S.W .3d at 575.

11

Id. at 572-73. 12

Id. at 585 ("[W ]e believe that for a nonresident defendant's forum contacts to support an exercise 13

of specific jurisdiction, there must be a substantial connection between those contacts and the operative facts

of the litigation.").

4

itself of the privileges and benefits inherent in conducting business in the state. There are 6

at least three aspects of our purposeful availment inquiry. First, only the nonresident 7

defendant's contacts with the forum state are considered and not acts of a third person or

another party. Second, the contacts must be purposeful and not "random, isolated, or 8

fortuitous." Finally, the nonresident defendant must have sought "some benefit,

9

advantage, or profit by 'availing' itself of the jurisdiction."10

A nonresident defendant's contacts with the forum state may create either specific

or general jurisdiction. Specific jurisdiction exists if the nonresident defendant 11

purposefully directed his activities at a resident of Texas and the litigation arose from or

related to those contacts. In other words, there must be a substantial connection 12

between the nonresident defendant's contacts and the operative facts of the litigation.13

General jurisdiction exists when the defendant's contacts in the forum are continuous and
BMC Software, 83 S.W .3d at 796.

14

Id. at 793.

15

Moki Mac, 221 S.W .3d at 574; BMC Software, 83 S.W .3d at 793; El Puerto de Liverpool, S.A. de 16

C.V. v. Servi Mundo Llantero, S.A. de C.V., 82 S.W .3d 622, 628 (Tex. App.–Corpus Christi 2002, pet. dism’d

w.o.j.).

 TEX. R. CIV. P. 120a(3). 17

Moki Mac, 221 S.W .3d at 574; BMC Software, 83 S.W .3d at 794.

18

Moki Mac, 221 S.W .3d at 574 (quoting BMC Software, 83 S.W .3d at 795). 19

5

systematic; therefore, the forum may exercise personal jurisdiction over the nonresident

defendant "even if the cause of action did not arise from or relate to activities conducted

within the forum state."

14

III. STANDARD OF REVIEW

The plaintiff bears the initial burden of pleading "sufficient allegations to bring a

nonresident defendant within the provisions of the long-arm statute." When a special 15

appearance is filed, the nonresident defendant assumes the burden of negating all bases

of personal jurisdiction asserted by the plaintiff. The trial court determines the special 16

appearance by referring to the pleadings, any stipulations made by and between the

parties, any affidavits and attachments filed by the parties, discovery, and any oral

testimony. Whetherthe trial court has personal jurisdiction over a defendant is a question 17

of law that this Court reviews de novo. "When, as here, the trial court does not make 18

findings of fact and conclusions of law in support of its ruling, we infer 'all facts necessary

to support the judgment and supported by the evidence . . . .'"19

IV. APPELLANTS' SPECIAL APPEARANCE

By their sole issue, appellants contend that they have not established minimum
6

contacts with Texas and that the exercise of jurisdiction over them does not comport with

traditional notions of fair play and substantial justice. Specifically, appellants argue that:

(1) Flores did not plead sufficient jurisdictional allegations; (2) there is no basis for specific

jurisdiction because appellants' alleged liability does not arise out of and is not related to

any activity they conducted in Texas; (3) there is no basis for general jurisdiction because

appellants do not have sufficient continuous and systematic contacts with Texas to satisfy

due process; and (4) there is "no constitutionally permissible basis to assert personal

jurisdiction over [appellants] in this action."

A. Flores's Jurisdictional Allegations

First, appellants assert that Flores did not plead sufficient jurisdictional allegations.

We acknowledge that when the plaintiff fails to plead jurisdictional allegations, the

defendant must simply prove nonresidency to sustain its burden; however, we disagree

with appellants' assertion that Flores did not plead jurisdictional allegations invoking the

long-arm statute.

In his live pleading, Flores alleged that he was injured by a defective winch that was

"originally designed, manufactured, assembled, and sold" by McElroy Machine and DVCC.

Flores further alleged that appellants were liable for his injuries "under the doctrine of strict

product liability" and that appellants "committed acts of omission and commission, which

collectively and severally constituted negligence" that were the proximate cause of his

injuries and damages. Finally, Flores asserted that Cameron County, Texas, was the

"county in which all or a substantial part of the events or omissions giving rise to [his] claim

occurred" and that he is a resident of Texas.
See Tex. Dep't of Parks & Wildlife v. Miranda, 133 S.W .3d 217, 226 (Tex. 2004) (holding that in 20

determining plea to jurisdiction, pleadings are liberally construed in favor of pleader in assessing whether he

has pled sufficient facts to demonstrate trial court's jurisdiction); see also TEX. CIV. PRAC. & REM. CODE ANN.

§ 17.042(2).

W e note that although we have concluded that Flores pleaded sufficient allegations under the long- 21

arm statute, the mere allegation that a tort occurred in Texas does not support jurisdiction over a defendant

under the Due Process Clause, which requires that the nonresident defendant purposefully avail itself of the

forum state's jurisdiction. See Michiana, 168 S.W .3d at 788, 791-92 ("Allegations that a tort was committed

in Texas satisfy the Texas Long-Arm Statute, but not necessarily the U.S. Constitution; the broad language

of the former extends only as far as the latter will permit. . . . [W ]e disapprove of those opinions holding

that . . . specific jurisdiction turns on whether a defendant's contacts were tortious rather than the contacts

themselves.").

See Moki Mac, 221 S.W .3d at 574; BMC Software, 83 S.W .3d at 793; El Puerto, 82 S.W .3d at 628.

22

 McElroy Machine was merged into DVCC in 1999. 23

 DVCC's corporate structure was terminated by way of corporate dissolution in 2007. 24

7

Liberally construing Flores's pleading, we conclude that Flores's allegations that 20

he suffered an injury in Texas due to a defective winch manufactured by appellants are

sufficient to bring appellants under the long-arm statute. Because Flores pleaded 21

sufficient jurisdictional allegations, upon filing their special appearance, appellants

assumed the burden of negating all bases of personal jurisdiction.22

B. Basis for Jurisdiction

1. General Jurisdiction

McElroy Machine was incorporated under the laws of the state of Mississippi and

has never been incorporated under the laws of Texas. DVCC was formerly incorporated 23

under the laws of New Jersey and has not been incorporated under Texas law. Neither 24

McElroy Machine nor DVCC has been registered as a business organization with the

Texas Secretary of State, and neither has owned, operated, or managed a place of

business, branch office, or division in Texas. McElroy Machine and DVCC have neither

owned real property in Texas nor paid income taxes in Texas. None of McElroy Machine
 W e note that Catchot testified that McElroy's records were destroyed by Hurricane Katrina. 25

 See CSR, Ltd. v. Link, 925 S.W .2d 591, 595 (Tex. 1996). 26

See BMC Software, 83 S.W .3d at 796.

27

Catchot purchased the assets of McElroy Machine in 1999 and formed McElroy/Catchot W inch 28

Company.

8

and DVCC's officers or directors have been residents of Texas, and neither McElroy

Machine nor DVCC has recruited or trained employees in Texas. There is no evidence

that McElroy Machine or DVCC has bank accounts in Texas or has entered a contract in

Texas. Furthermore, McElroy Machine has not maintained its records in Texas and has

no shareholders in Texas. Under these facts, neither McElroy Machine nor DVCC had 25

the systematic and continuous contacts with Texas sufficient to support general

jurisdiction.26

Flores argues that Catchot's testimony that he sold products to a Texas corporation

and that sales agents for McElroy/Catchot solicited business from a Texas retailer is

sufficient to establish personal jurisdiction. However, because Flores's cause of action did

not arise from or relate to these alleged activities conducted within Texas, the trial court

had personal jurisdiction over appellants only if those contacts between appellants and

Texas were continuous and systematic. Catchot testified at his deposition that sales 27

were made to a Texas corporation. According to Catchot, he sold discounted component

parts for replacement winches to a Texas dealer. Catchot did not specify whether the

sales were made by McElroy Machine or by McElroy/Catchot, and he did not state that

DVCC made any sales in Texas. Nevertheless, in their affidavits, Catchot and Frascella 28

stated, "Any business relationships between [McElroy Machine or DVCC] and any Texas
CSR Ltd., 925 S.W .2d at 595.

29

Id. 30

See Conner v. ContiCarriers & Terminals, Inc., 944 S.W .2d 405, 417-18 (Tex. App.–Houston [14th 31

Dist.] 1997, no writ) (finding no general jurisdiction even though nonresident defendant: (1) was authorized

to do business in Texas; (2) had a registered agent for service of process in Texas; (3) filed franchise tax

returns in Texas; (4) sent barges to Texas ports for over ten years; (5) had contacts with Texas businesses;

(6) earned yearly revenue from barges loaded or unloaded in Texas; (7) hired Texas employees; (8) litigated

in a Texas court; and (9) had a gross revenue from 1991 to 1993 from barges unloading and loading in Teas

between $8,000 and $12,000).

See Helicopteros Nacionales de Colombia, S.A., v. Hall, 466 U.S. 408, 411 (1984) (holding that the 32

defendant's contacts with Texas was insufficient to establish general jurisdiction, even though the defendant

had negotiated the contract for transportation of the decedent with his employer in Texas, purchased

approximately eighty percent of its helicopter fleet from a Texas seller, and sent pilots and other personnel

to Texas to be trained); see also Internet Adver., Inc. v. Accudata, Inc., No. 05-09-00405-CV, 2009 Tex. App.

LEXIS 8859, at *18 (Tex. App.–Dallas Nov. 18, 2009, no pet.) (mem. op.) (concluding evidence that

nonresident defendant "had thirteen customers [in Texas] from which it derived less than one percent of its

revenues is simply not sufficient to establish 'continuous and systematic' contacts"); Arth Brass & Aluminum

Castings, Inc. v. Harsco Corp., 13-03-323-CV, 2004 Tex. App. LEXIS 681, at *3, 18-20 (Tex. App.–Corpus

Christi Jan. 23, 2004, no pet.) (mem. op.) (concluding that the percentage of 1.6 in sales by the nonresident

defendant to two Texas companies were minimal and the nonresident defendant did not "continuously and

systematically invoke the benefits and protections of the laws of the State of Texas to the extent that it

consented to being sued here").

9

corporation comprised significantly less than 1% of the total business conducted by

[McElroy Machine and DVCC] during the time periods relevant to [Flores's] claims."

The minimum contacts analysis becomes more demanding when determining

whether the nonresident defendant has established general jurisdiction with the forum

state; the contacts must be "substantial." In other words, when general jurisdiction is 29

alleged, there must be "continuous and systematic contacts" between the nonresident

defendant and Texas. In the present case, the business contacts with Texas were 30

sporadic and minimal at best and are insufficient to support general personal jurisdiction.31

Therefore, we cannot conclude that continuous and systematic contacts between either

McElroy Machine or DVCC and Texas were established.32

2. Specific Jurisdiction
 Flores also argues that Catchot "specifically recognized the names of shrimp boat 33

manufacturers . . . in Cameron County, namely Zimco Marine and Marine Mart, as purchasers of winches from

his company." However, Flores does not allege that the winch that allegedly injured him was sold in Texas,

and he does not claim that Zimco Marine or Marine Mart built the M/V Capt. Linwood. Therefore, we do not

find this argument persuasive. Moreover, upon our review of the record, there is no evidence that the winch

that allegedly caused Flores's injury was sold in Texas. The evidence in the record establishes that OMI, an

Alabama corporation that built the M/V Capt. Linwood, purchased winches from McElroy Machine in

Mississippi. The evidence does not reveal whether the winch located on the M/V Capt. Linwood was actually

purchased from either McElroy Machine or DVCC.

M.G.M. Grand Hotel v. Castro, 8 S.W .3d 403, 409 (Tex. App.–Corpus Christi 1999, no pet.). 34

Asahi Metal Insustry Co. v. Superior Court of Cal., Solano County, 480 U.S. 102, 112 (1987). 35

CSR, 925 S.W .2d at 595.

36

Id. 37

 Michiana, 168 S.W .3d at 786.

38

10

Next, appellants assert that Flores has not established that jurisdiction is proper

under the stream-of-commerce theory. Appellants argue that they have taken no actions

to purposefully avail themselves of the benefits and protections of Texas law. Flores

counters that personal jurisdiction attached because it was foreseeable that the winches

sold by appellants would reach Texas."

33

"Merely releasing into the stream of commerce a product that comes to rest in

Texas is not sufficient to establish jurisdiction." Placing a product into the stream of 34

commerce without additional conduct indicating an intent to serve the market of the forum

state is not an act of the defendant purposefully directed toward the forum state.35

"Although foreseeability is a factor to consider in a minimum contacts analysis,

foreseeability alone will not support personal jurisdiction." There must be some indication 36

that the nonresident defendant intended to serve the Texas market. The stream of 37

commerce theory of jurisdiction is not satisfied by a single sale or a few sales from a

nonresident seller because it requires a "stream" and not a "dribble."

38
See Moki Mac, 221 S.W .3d at 575-76. 39

Id.; Michiana, 168 S.W .3d at 785.

40

Exito Electronics Co., LTD v. Trejo, 166 S.W .3d 839, 855 (Tex. App.–Corpus Christi 2005, no pet.) 41

(quoting CMMC v. Salinas, 929 S.W .2d 435, 438 (Tex. 1996)).

CSR, 925 S.W .2d at 595.

42

11

Moreover, the mere sale of products by a nonresident defendant to a Texas resident

is not sufficient to confer jurisdiction. The evidence must show that the nonresident 39

defendant targeted marketing efforts in a state to generate business in that state. When 40

a product is placed within the stream of commerce, additional conduct may indicate an

intent or purpose to serve the market of the forum state, including: (1) designing the

product for the market in the forum state; (2) advertising in the forum state; (3) establishing

channels for providing regular advice to customers in the forum state; or (4) marketing the

product through a distributor who has agreed to serve as the sales agent in the forum

state.41

Although we acknowledge that foreseeability is only a factor to consider in our

minimum contacts analysis and it alone will not support personal jurisdiction, we can

consider it. Here, appellants manufactured winches for shrimp boats, and it was 42

foreseeable that these shrimp boats would be used in Texas waters. The evidence shows

that appellants made sales of component parts for winches to a Texas corporation and

used sales agents to solicit those sales. This intent to serve the Texas market combined

with our consideration of the fact that it was foreseeable to appellants that winches they

manufactured would reach the Texas coast persuades us that appellants purposefully

availed themselves of the Texas courts.
Moki Mac, 221 S.W .3d at 585.

43

Moki Mac, 221 S.W .3d at 579, 588 (concluding that the nonresident defendant had purposefully 44

availed itself of Texas jurisdiction under the stream of commerce theory but that the relationship between the

operative facts of the litigation and the nonresident defendant's promotional activities in Texas were "too

attenuated to satisfy specific jurisdiction's due-process concerns").

CSR, 925 S.W .2d at 595.

45

12

Our analysis, however, does not end there. Under specific jurisdiction, there must

be a substantial connection between the appellants' contacts with the forum state and the

operative facts of the litigation. The operative facts of this case are that Flores was 43

injured by an allegedly defective winch on the M/V Capt. Linwood while in Texas waters.

However, it is undisputed that the winch that allegedly caused Flores's injuries was sold

in Mississippi to an Alabama shipbuilder, not in Texas. Therefore, the winch that allegedly

injured Flores was not connected to appellants' contacts with Texas. Although appellants

sold component winch parts to a Texas corporation and at one time solicited sales to that

corporation, these sales are not substantially connected to the operative facts of this

litigation. Therefore, based on the record before us, we conclude that appellants' sales 44

in Texas were too attenuated to satisfy specific jurisdictions's due process concerns.

Furthermore, foreseeability alone will not support personal jurisdiction.45

3. Other Basis for Jurisdiction

Finally, appellants assert that personal jurisdiction cannot be predicated on Flores's

remaining theories that: (1) in actions against a seaman's employer for personal injuries,

Flores is required, pursuant to maritime law, to sue his employer "only in the district of the

employer's residence or principal place office"; and (2) under maritime law, a seaman is

considered a "ward" of the court, and "[a]ny acts detrimental to the interest of the [trial
 In a supplemental brief filed with leave of this Court, Flores argues that Texas has personal 46

jurisdiction over appellants because 28 U.S.C. section 1367 "mandates that the trial court continue to exercise

its jurisdiction over this proceeding." Section 1367 concerns the supplemental jurisdiction of federal district

courts to hear cases involving state claims that derive from a common nucleus of operative facts and would

be expected to be tried in one judicial proceeding. See Motient Corp. v. Dondero, 269 S.W .3d 78, 87 (Tex.

App.–Dallas 2008, no pet.). In other words, section 1367 pertains to the federal district court's subject matter

jurisdiction. Therefore, section 1367 is not relevant to our analysis of the state district court's exercise of

personal jurisdiction over appellants. See CSR, Ltd., 925 S.W .2d at 594 ("A court must possess both subject

matter jurisdiction over a case and personal jurisdiction over a party to issue a binding judgment.").

Michiana, 168 S.W .3d at 785 ("[P]urposeful availment 'ensures that a defendant will not be haled 47

into a jurisdiction solely as a result of . . . the unilateral activity of another party or a third person.'") (quoting

Burger King Corp., 471 U.S. at 475) (internal quotations omitted).

13

court's] ward are viewed with considerable suspicion." Flores cites no authority, and we 46

find none, that allows a forum state to exercise personal jurisdiction over a nonresident

defendant merely because the plaintiff is a seaman. When determining whether the forum

has personal jurisdiction over the nonresident defendant, we must only consider the

nonresident defendant's contacts with the forum state and not acts of a third person or

another party. We have already concluded that there is no general or specific jurisdiction 47

over appellants in this case; therefore, even if Flores must sue his employer in Texas and

is a ward of the state of Texas for purpose of federal supplemental jurisdiction, this is not

a basis for personal jurisdiction over appellants in a state court.

V. CONCLUSION

Having determined that appellants negated all possible grounds for jurisdiction, we

sustain their sole issue. We reverse the trial court's order denying appellants' special

appearance and render judgment dismissing the case against appellants for lack of

personal jurisdiction.

______________________

Linda R. Yañez,

Justice

Delivered and filed

the 11th day of February, 2010.