Court Opinion

ID: 8206854
Source: CourtListenerOpinion
Date Created: 2022-09-16 07:11:36.606663+00
Date Added: 2024-06-11T16:41:20.275451
License: Public Domain

In The

                           Court of Appeals

                 Ninth District of Texas at Beaumont

                           __________________

                          NO. 09-21-00146-CV
                           __________________

           TBS BUSINESS SOLUTIONS USA, INC.
        AND TEWODROS “TEDDY” SAHILU, Appellants

                                   V.

                     ALLCO, LLC, Appellee
__________________________________________________________________

            On Appeal from the 58th District Court
                    Jefferson County, Texas
                    Trial Cause No. A-207,203
__________________________________________________________________

                      MEMORANDUM OPINION

     The Texas long-arm statute authorizes a Texas court to exercise

jurisdiction over a nonresident defendant in a lawsuit when the

defendant does business in Texas. 1 The plaintiff sued the defendants, a

California-based business and individual who were both residents of

California, alleging they did business in Texas and the long-arm statute

     1Tex.   Civ. Prac. & Rem. Code Ann. § 17.042.
                                    1
authorized the court’s exercise of jurisdiction over them in Texas. The

defendants appeared through a special appearance, challenging the

plaintiff’s claim that a Texas court could enter a judgment that would

bind them because the trial court lacked jurisdiction over their persons.

      After hearing the defendants’ special appearance, the trial court

found it had jurisdiction over the defendants and denied the defendants’

special appearance. Later, at the plaintiff’s request, the trial court

reduced its findings and conclusions supporting its ruling to writing. In

its written findings, the trial court found that the defendants “routinely

sell and distribute products” in Texas, and concluded the exercise of

jurisdiction over them in the suit would not “offend traditional notions of

fair play[.]”

      The defendants, TBS Business Solutions USA, Inc. and Tewodros

“Teddy” Sahilu, its Chief Executive Officer, filed a timely, joint notice of

appeal after the trial court signed an order denying their special

appearance. 2 On appeal, the appellants filed a brief raising four issues to

support their arguments claiming the trial court’s order should be

      2Id. § 51.014(7) (authorizing the interlocutory appeal of a district
court’s ruling that grants or denies a special appearance).
                                     2
reversed. First, they argue that Allco failed to plead jurisdictional facts

sufficient to show they are subject to the jurisdiction of courts in Texas.

Second, they contend that because the litigation involves the plaintiff’s

contract with a business located in Texas rather than a contract between

the plaintiff and TBS, a company incorporated with its principal place of

business in California, the pleadings and evidence reveal the claims the

plaintiff brought against them are not substantially connected to the

operative facts of the litigation. Third, they argue the trial court’s

exercise of jurisdiction over them offends traditional notions of fair play

and substantial justice. And fourth, they contend the trial court erred in

concluding Sahilu’s unsworn declaration, which they used to verify their

Special Appearance, was noncompliant with the requirement of Rule

120a that special appearances be made by “sworn motion[.]” 3

     To resolve the appeal, we must decide whether the appellants, both

of whom are residents of California, did business in Texas under the

Texas long-arm statute, and if so whether the trial court’s exercise of

jurisdiction over them complies with the requirements of due process. For

     3Tex.   R. Civ. P. 120a(1).
                                    3
the reasons explained below, we conclude the trial court erred in denying

the special appearance. We reverse the trial court’s order, render

judgment granting the special appearance, and remand the case to the

trial court with instructions to dismiss TBS and Sahilu from the suit.

                               Background

     After the Coronavirus (Covid-19) pandemic began, Allco, LLC

ordered one million N95 masks manufactured by the 3M Company from

a Texas-based business, Global Management Services, LLC, a medical

supply business and authorized distributor of 3M masks. Allco ordered

the masks from Global on March 31, 2020. To secure Global’s delivery of

the masks, Allco sent Global a deposit of $870,000 toward the $2,900,000

Global charged for the masks. Allco transferred $870,000 to Global’s bank

account via a wire transfer.

     Global, which apparently didn’t have 3M masks in stock contacted

TBS, another authorized 3M distributor in California, seeking a source

of 3M, N95 face masks. On March 31, April 1, and April 6, 2020, Global

sent TBS three purchase orders for 3M masks. These three orders (had

the masks been delivered) would have allowed Global (had Global

complied with its agreement with Allco) to fulfill its agreement with Allco

                                    4
and supply Allco with one million 3M masks. When Global sent TBS

these orders, TBS knew Global had agreed to sell Allco one million 3M

masks; even so, TBS disputed that it was a party to the agreement

between Global and Allco.

     In all, the three purchase orders Global sent TBS, discussed above,

represent orders for 5.6 million N95 face masks manufactured by 3M.

The purchase orders show that Global expected to pay $5,423,250 for the

5.6 million masks. TBS accepted the three orders, and Global wired TBS

$5,423,250 to pay for them. But after receiving Global’s money, TBS

informed Global that it could not fill the orders through 3M. At Global’s

request, TBS turned to Makrite Industries Inc., an alternate supplier of

N95 masks, to supply Global with N95 masks manufactured by Makrite,

not by 3M.

     To account for the change in manufacturers and the fact the

Makrite masks were nearly three times more expensive, Global sent TBS

a fourth purchase order, dated August 13, 2020. In that order, Global

ordered 1,000,000 Makrite N95 masks for $2,850,000. On August 19,

2019, Global’s president, Roger Morgan, signed TBS’s Purchase Order

Acknowledgment/Acceptance form, which is the same form that Global

                                   5
had signed when TBS acknowledged it accepted Global’s previous three

orders. After TBS received the N95 masks from Makrite, pursuant to the

terms of Global’s purchase order, TBS shipped the masks to Global by

delivering them to a ground carrier so they could be delivered to Global

in Texas. And since Global had previously sent TBS around $5.4 million

to pay for orders TBS couldn’t fill with mask made by 3M, TBS applied

approximately $2.8 million of the $5.4 million Global had deposited to the

price    TBS charged Global for the Makrite masks, refunding

approximately $2.6 million to Global.

        Turning to Allco’s petition, Allco alleged that Global never sent it

any masks and that the defendants kept Allco’s $870,000 deposit even

though Allco demanded a refund. When negotiations among the parties

about refunding Allco’s $870,000 failed, Allco sued Global, Global’s

president (Roger Morgan), TBS, and Sahilu on nine claims: common-law

fraud, fraud by nondisclosure, conversion, statutory theft, breach of

contract, promissory estoppel, quantum meruit, vicarious liability, and

civil conspiracy.

        After Allco sued, Morgan and Global failed to appear or to file

answers to Allco’s suit. So Allco defaulted Global and Morgan. That said,

                                      6
after they were served, TBS and Sahilu appeared, and they filed a

combined Special Appearance and answer. The appellants supported

their Special Appearance with an unsworn declaration, signed by Teddy

Sahilu. In their Special Appearance, TBS and Sahilu (the appellants)

alleged that they are not residents of Texas, that TBS is incorporated and

has its principal place of business in California, and that TBS entered a

contract to sell face masks to Global, not to TBS. In his unsworn

declaration, Sahilu explained that TBS has no offices in Texas, that the

communications with Global were by phone or by email from TBS’s office

in California, and that he and TBS did not performed any of the work

related to TBS’s transactions with Global in Texas.

     In TBS’s sworn motion, TBS alleged that when TBS determined it

couldn’t fill Global’s orders with 3M masks, it partially filled Global’s

request with N95 masks manufactured by Makrite Industries based on

Global’s instructions to do so. To account for the change in Global’s order

of masks, Global sent TBS a new purchase order and ordered one million

Makrite Industries N95 masks for $2.85 million. Based on that order,

TBS ordered the masks from Makrite Industries and charged Global for

the masks, crediting the cost of the order for Makrite masks against the

                                    7
deposit it received from Global for the 3M masks and refunding the

balance due Global, around $2.6 million.

     In their special appearance, the appellants alleged they had not

purposefully availed themselves of the privilege of conducting business

in Texas, and they listed specific facts, which generally speaking explain

why. Even though the trial court found Sahilu’s declaration defective, we

note the appellants alleged in their Special Appearance that “[t]he

incident on which the suit against TBS and Mr. Sahilu is based did not

occur in Texas, and TBS and Mr. Sahilu have had no contacts with Texas

in connection with this lawsuit, except to send the Makrite masks to

Global via interstate commerce.”

     In response to the Special Appearance, Allco argued the trial court

could exercise specific jurisdiction over its suit because the appellants, in

selling the masks, “had actual knowledge that the Makrite masks . . .

were shipped to Texas.” Second, Allco claimed that by contracting with

Global—a Texas distributor—TBS should have reasonably expected the

masks would enter Texas. Allco concluded the exercise of personal

jurisdiction over TBS would not offend traditional notions of fair play

                                     8
because contracts with Texas residents to supply face masks are of “great

interest to the state of Texas.”

     When the trial court heard the special appearance, no one testified

or asked the trial court to consider evidence not already attached to the

pleadings on file. 4 Following the hearing, the trial court denied the

Special Appearance in a written order. Based on Allco’s request, filed

nearly a month after the hearing, the trial court issued Written Findings

of Fact and Conclusions of Law. In its request for findings, Allco asked

the trial court to find that Sahilu’s declaration was defective “because it

did not state that the facts set out in the pleadings were true and correct.”

Yet before requesting findings, Allco had never before pointed to any

defects in Sahilu’s declaration. After Allco requested and drafted

proposed findings of fact and conclusions of law, the trial court rubber

stamped Allco’s proposed findings and conclusions. In finding the facts,

the court found:

     4Other  than the pleadings on file when the hearing occurred, the
documents before the trial court when the hearing occurred are attached
either to Plaintiff’s Original Petition, Plaintiff’s Response in Opposition
to Special Appearance, and the combined Special Appearance and
Answer.
                                      9
1. TBS Business Solutions USA, Inc. and Teddy Sahilu have
sold and delivered medical supplies and equipment to Global
Management Services, LLC, a Texas company located in
Stafford, Texas that routinely sell and distribute products in
the State of Texas. See Affidavit of Roger Morgan.

2. Global Management Services, LLC ordered the 3M masks
at issue in this case from TBS Business Solutions USA, Inc.,
which some were destined for end use in the State of Texas.
See Affidavit of Roger Morgan.

3. Teddy Sahilu indicated to Roger Morgan that he knew that
products sold to Global Management Services, LLC would be
for end use in the State of Texas. See Affidavit of Roger
Morgan.

4. Roger Morgan has personal knowledge that TBS Business
Solutions USA, Inc. had a reasonable expectation that
products distributed to Global Management Services, LLC
would enter the stream of commerce in the State of Texas. See
Affidavit of Roger Morgan.

5. TBS Business Solutions USA, Inc. shipped Makrite masks
directly to Houston, Texas as a part of this litigation. See
Affidavit of Roger Morgan.

6. Global Management Services, LLC and Roger Morgan have
coordinated with Texas OrthoSolutions, LLC and end users in
the State of Texas regarding purchasing equipment that is
distributed by Global Management Services, LLC and these
products enter into the stream of commerce in Texas. See
Affidavit of Ryan Armstrong.

7. TBS Business Solutions USA, Inc. and Teddy Sahilu have
done business with another (unnamed) Texas company in a
June 2020 transaction in which they contracted to sell

                             10
     thermometers and isolation gowns to a company in Irving,
     Texas. See Declaration of Tewodros “Teddy” Sahilu.

     Relying on the above, the trial court then reached these six

conclusions.

     1. Defendants purposefully availed themselves of the
        privilege of conducting activities within Texas and the
        claims against them in this litigation resulted from injuries
        arising from their contacts with Texas.

     2. The exercise of personal jurisdiction over Defendants do
        not offend traditional notions of fair play and substantial
        justice.

     3. Defendants have sufficient minimum contacts with Texas
        such that the exercise of jurisdiction is fair and reasonable.

     4. Defendants also knew or reasonably anticipated that their
        activities in Texas would render it foreseeable that they
        may be “hailed into court” here.

     5. Defendants knew that some of their products were in or
        would wind up in Texas and intentionally acted to serve
        Texas with these products.

     6. The Declaration of Tewodros “Teddy” Sahilu, attached to
        Defendants’ Special Appearance, did not verify the special
        appearance as required by Texas Rules of Civil Procedure
        120(a), as it was defective because it did not state that the
        facts set out in the pleadings were true and correct.

                                    11
                          Standard of Review

     A nonresident defendant may object to the court’s authority to

exercise jurisdiction over the defendant’s person or property by filing a

special appearance meeting the requirements of Rule 120a. 5 Under Rule

120a, the trial court must decide the special appearance on “the

pleadings, any stipulations made by and between the parties, such

affidavits and attachments as may be filed by the parties, the results of

discovery processes, and any oral testimony.” 6 In deciding the motion, a

trial court may consider evidence and resolve disputed issues of fact tied

to resolving whether the trial court has personal jurisdiction over the

nonresidents who have challenged the court’s jurisdiction over them by

filing a special appearance. 7 When, as here, the trial court denies the

defendants’ special appearance and issues findings of fact and

conclusions of law to support its ruling, the findings may be challenged

on appeal on legal or factual sufficiency grounds. 8 We review a trial

     5See Tex. R. Civ. P. 120a; Tex. Dep’t of Parks & Wildlife v. Miranda,
133 S.W.3d 217, 240 (Tex. 2004).
     6Tex. R. Civ. P. 120a(3).
     7BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex.

2002).
     8Id.

                                    12
court’s conclusions of law as legal questions. 9 Even though a party may

not challenge a trial court’s conclusions of law on grounds of factual

insufficiency, they may challenge a conclusion of law as incorrect.10

Should we determine that a conclusion of law is erroneous but despite

the error the trial court reached the correct ruling, the error—if the trial

court reached the right ruling anyway—would not require a reversal. 11

     Texas courts may exercise jurisdiction over nonresident defendants

if the pleadings and evidence show the following:

  • the Texas long-arm statute applies and authorizes a Texas
    court to decide the case; and
  • the court’s exercise of jurisdiction over a nonresident
    defendant comports with the constitutional guarantees of due
    process. 12

     In its brief, Allco argues because the evidence before the trial court

shows specific jurisdiction exists over the defendants for its claims, the

trial court properly denied the special appearance. But the appellants

question whether the trial court has the authority to bind them to a

judgment, an issue that hinges on whether they have “the ‘minimum

     9Id.
     10Id.
     11Id.
     12Searcy   v. Parex Res., Inc., 496 S.W.3d 58, 66 (Tex. 2016).
                                      13
contacts’ necessary to create specific jurisdiction.” 13 The minimum

contacts “necessary to create specific jurisdiction focuses on the

relationship among the defendant, the forum, and the litigation.” 14 “For

a State to exercise jurisdiction consistent with due process, the

defendant’s suit-related conduct must create a substantial connection

with the forum State.” 15

     Specific jurisdiction exists if the plaintiff’s claims arise from or

relate to the defendant’s purposeful contacts with the forum where the

plaintiff sued. 16 “A claim arises from or relates to a defendant’s forum

contacts if there is a substantial connection between those contacts and

the operative facts of the litigation.” 17 This standard “does not require

proof that the plaintiff would have no claim but for the contacts, or that

the contacts were a proximate cause of the liability.” 18 “Instead, we look

at what the claim is principally concerned with, whether the contacts will

     13Walden    v. Fiore, 571 U.S. 277, 283 (2014).
      14Id. at 284 (cleaned up).
      15Id.
      16Cornerstone Healthcare Grp. Holding, Inc. v. Nautic Mgmt. VI,

L.P., 493 S.W.3d 65, 73 (Tex. 2016); see also Moki Mac River Expeditions
v. Drugg, 221 S.W.3d 569, 576 (Tex. 2007).
      17TV Azteca v. Ruiz, 490 S.W.3d 29, 52 (Tex. 2016) (cleaned up).
      18Id. at 52-53 (cleaned up).

                                     14
be the focus of the trial and consume most if not all of the litigation’s

attention, and whether the contacts are related to the operative facts of

the claim.” 19

      The parties bear shifting burdens of proof in the hearing on the

special appearance. 20 Under the burden-shifting standard, the plaintiff

must plead sufficient facts to bring the nonresident defendant within the

reach of the Texas long-arm statute. 21 If the plaintiff’s pleadings do not

show the plaintiff’s claims fall under the long-arm statute, “the defendant

need only prove that it does not live in Texas to negate jurisdiction.”22 On

the other hand, should the plaintiff plead facts sufficient to show the

defendant committed a tort or did business with the plaintiff and that

the business conducted in the State satisfied the requirements of due

process, the burden shifts to the defendant to negate the well-pled

allegations. 23

      19Id.   at 53 (cleaned up).
      20Kelly    v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 658 (Tex.
2010)
      21Id.
      22Id.658-59.
      23See id. at 659.

                                     15
     Since the petition defines the scope of the lawsuit, “the defendant’s

corresponding burden to negate jurisdiction is tied to the allegations in

the plaintiff’s petition. 24 The defendant may “negate jurisdiction on

either a factual or a legal basis.” 25 “Factually, the defendant can present

evidence that it has no contacts with Texas, effectively disproving the

plaintiff’s allegations[,]” and on presenting evidence that it has no

contacts the burden shifts to the plaintiff to respond with evidence

“affirming its allegations” to avoid having the suit dismissed. 26 Or the

defendant may present a legal defense by showing

     that even if the plaintiff’s alleged facts are true, the evidence
     is legally insufficient to establish jurisdiction; the defendant’s
     contacts with Texas fall short of purposeful availment; for
     specific jurisdiction, that the claims do not arise from the
     contacts; or that traditional notions of fair play and
     substantial justice are offended by the exercise of jurisdiction.
     One way the defendant may show the trial court cannot
     exercise jurisdiction over the defendant’s person is by showing
     that it has had no contacts with the forum. 27

     24Id.
     25Id.
     26Id.
     27Id.

                                    16
                                 Analysis

                        The Unsworn Declaration

     Since deciding whether Sahilu’s Special Appearance met the

requirements of Rule 120a is a threshold issue, we must determine

whether the trial court erred in reaching that conclusion before we

address the appellants’ remaining issues. 28 On appeal, relying on Casino

Magic Corp. v. King, Allco argues the trial court could have denied the

appellants’ special appearance because the appellants failed to verify the

jurisdictional facts in their special appearance as true and correct, a

requirement of Rule 120a. 29 But even were Allco correct that Sahilu’s

declaration failed to verify the jurisdictional facts in the Special

Appearance (and it isn’t, as we later explain), defects in forms used to

support a special appearance may be cured if the opposing party objects.30

But here, Allco didn’t object to any alleged defects in Sahilu’s declaration

until after the hearing occurred; instead, it waited until nearly two weeks

     28See  Tex. R. Civ. P. 120a(1).
     29Casino  Magic Corp. v. King, 43 S.W.3d 14, 18 (Tex. App.—Dallas
2001, pet. denied).
      30See Dawson-Austin v. Austin, 968 S.W.2d 319, 322 (Tex. 1998)

(noting that even the lack of a verification to support a special appearance
is curable under Rule 120a).
                                      17
after the trial court denied the appellants’ Special Appearance, pointing

the alleged defect out for the first time when it asked the trial court to

conclude that because Sahilu’s declaration was defective, the declaration

failed to verify the Special Appearance.

      To be sure, Sahilu’s Declaration lacks a jurat. So even though Allco

never complained the Declaration lacks a jurat, the Declaration Sahilu

filed does not function as an affidavit. 31 But even had Sahilu intended to

file an affidavit and left off the jurat, an affidavit filed without a jurat is

a defect that is subject to the rule of waiver since Rule 120a allows special

appearances to “be amended to cure defects.” 32 In other words, Allco

waived any errors in Sahilu’s declaration by never objecting to it until

after the trial court ruled on the appellants’ Special Appearance.

      And even if Sahilu intended to file an unsworn declaration, and in

our view that’s what he intended, his unsworn declaration (absent a

timely objection to its form) made the appellants’ Rule 120a Special

Appearance a “sworn motion” under Texas law. Under section 132.001 of

      31SeeTex. Gov’t Code Ann. § 312.011(1);
      32Tex. R. Civ. P. 120a(1); Mansions in the Forest, L.P. v.
Montgomery Cty., 365 S.W.3d 314, 317 (Tex. 2012); Dawson-Austin, 968
S.W.2d at 321-22.
                                  18
the Civil Practices and Remedies Code, an unsworn declaration

transforms a special appearance into a sworn motion. 33 With exceptions

not applicable here, section 132.001(a) provides: “[A]n unsworn

declaration may be used in lieu of a written sworn declaration,

verification, certification, oath, or affidavit required by statute or

required by a rule, order, or requirement adopted as provided by law.” 34

     Given the above, the trial court’s conclusion that Sahilu’s

declaration didn’t verify the Special Appearance because (in the trial

court’s opinion) it was defective is legally incorrect and unsupported by

the record. The record shows that Sahilu did verify the facts in the

appellants’ Special Appearance. He declared:

     I am a Defendant in the above-referenced lawsuit. I am over
     18 years of age, of sound mind, and capable of making this
     affidavit. The facts stated in this affidavit are within my
     personal knowledge and are true and correct. I have also
     reviewed the Special Appearance filed by me and
     Defendant TBS Business Solutions USA Inc. (“TBS”) in
     the above-referenced lawsuit, and according to my
     personal knowledge, the facts stated therein are true
     and correct. (emphasis added).

     33Tex.  Civ. Prac. & Rem. Code Ann. § 132.001.
     34Id. § 132.001(a).

                                  19
     For all these reasons, we hold the trial court erred in concluding

that Sahilu’s Declaration “did not verify the special appearance” as

required by Rule 120a.

                           Specific Jurisdiction

     In their first issue, the appellants argue that Allco failed to plead

jurisdictional facts showing their connection with Texas. According to

appellants, the “only jurisdictional allegations in [Allco’s] Original

Petition are conclusory statements that ‘[t]he court has personal

jurisdiction over Defendants because Defendants engaged in business in

Texas by contracting with a Texas resident’ and ‘Defendants committed

torts, which are the subject of this suit, in whole or in part in Texas.’”

Were those the only allegations relevant to the trial court’s jurisdictional

inquiry, we would agree that alone they cannot support the trial court’s

ruling. 35 But they don’t stand alone. When deciding a special appearance,

     35E.g.,Doe v. Univ. of N. Tex. Health Sci. Ctr., No. 02-19-00321-CV,
2020 Tex. App. LEXIS 2817, at *8 (Tex. App.—Fort Worth Apr. 2, 2020,
pet. denied) (“[A] plaintiff does not meet the burden to plead facts
affirmatively demonstrating jurisdiction with conclusory allegations; as
we have held, if conclusory allegations were sufficient, ‘the jurisdictional
inquiry would become meaningless.’”) (quoting City of Forest Hill v.
Cheesbro, No. 02-18-00289-CV, 2019 Tex. App. LEXIS 1572, at *5 (Tex.

                                    20
the court’s jurisdictional inquiry is not limited to one paragraph of the

pleadings. Instead Rule 120a requires the jurisdictional inquiry to

encompass the factual allegations in “the pleadings . . . and such

affidavits and attachments as may be filed by the parties, the results of

discovery processes, and any oral testimony.” 36 So even though the

appellants focus on one paragraph of the Plaintiff’s Original Petition to

argue Allco’s pleadings of jurisdictional facts were insufficient, the trial

court was not free to ignore the remaining allegations of fact in Allco’s

thirteen-page-long Original Petition or the factual allegations in Allco’s

thirteen-long-page Response in Opposition to Special Appearance. When

considering the matters encompassed by Rule 120a, we conclude the

pleadings and evidence, if taken as true, are sufficient to show the trial

court was authorized on the pleadings, had the pleadings been

undisputed, to exercise specific jurisdiction over at least one of Allco’s

nine claims.

App.—Fort Worth Feb. 28, 2019, no pet.) (mem. op.)); McLane v. Thomas,
No. 03-18-00439-CV, 2020 Tex. App. LEXIS 1964, at *20 (Tex. App.—
Austin Mar. 6, 2020, pet. denied) (“[C]onclusory allegations are not
sufficient to overcome sovereign immunity.”).
      36Tex. R. Civ. P. 120a(3).

                                   21
     In issue two, the appellants contend their contacts with Texas are

insufficient under the pleadings and evidence before the trial court to

establish that the trial court could exercise specific jurisdiction over them

in the suit. As to Allco’s claims, the parties do not dispute that on March

31, 2020, Global agreed to sell Allco one million N95 face masks

manufactured by 3M for $2,900,000. To secure the sale, Allco sent Global

$870,000 in advance as a deposit toward its purchase of the masks.

Global, an authorized distributor of 3M masks, contacted TBS, a business

incorporated in California with its principal place of business there, to

fill orders Global was receiving from its customers, customers that

included Allco, for N95 face masks manufactured by 3M.

     The evidence shows that between March 31, 2020, and August 13,

2020, Global sent four Purchase Orders to Allco for face masks. The first

three of these orders were for 3M masks, but the last order on August 13,

2020, was for N95 masks made by Makrite Industries, which Global told

TBS to order after learning that TBS couldn’t fill Global’s first three

purchase orders for 3M masks even though Global had already paid TBS

in advance for those orders and before TBS delivered the 3M masks that

were ordered.

                                     22
     In its petition, Allco alleged the “Defendants represented to [Allco]

that they were ready, willing, and able to provide the N95 masks upon

receipt of payment[.]” But there were no facts alleged about where TBS

or Sahilu allegedly made those representations to Allco. Simply put, Allco

alleged no facts claiming that Sahilu or any employees of TBS were in

Texas when these representations were made. And the facts Sahilu swore

to in his special appearance—that its business with Global was all by

phone or email from California—was undisputed. More than a decade

ago, the Texas Supreme Court rejected the “directed a tort” approach and

the “effects test,” the very tests Allco asked the trial court to apply (and

the court appears to have applied based on its findings of fact) in ruling

on the defendants’ special appearance. 37

     Next, we turn to the jurisdictional evidence attached to Allco’s

pleadings. It shows that Global’s relationship concerning both the 3M

masks, which weren’t delivered, and the Makrite face masks, which were

delivered, were with TBS and its managing director, Sahilu. In other

     37See Old Republic Nat’l Title Ins. Co. v. Bell, 549 S.W.3d 550, 564-
565 (Tex. 2018); Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d
777, 790-792 (Tex. 2005).

                                    23
words, TBS’s and Sahilu’s relationships on these transactions were not

with Allco, and Allco’s evidence does not show otherwise. For instance,

every time TBS accepted Global’s purchase orders for 3M face masks,

TBS sent Global a “Purchase Order Acknowledgement/Acceptance” form,

which Global’s president, Roger Morgan, signed. Allco is not a party to

these agreements. The record contains no contract between TBS and

Allco obligating TBS to sell Allco any product, including 3M or Makrite

face masks.

     Add to that, the following condition is in each of the Acceptance

forms that Morgan signed when purchasing 3M masks from TBS:

     As the cases of COVID-19 accelerate across the United States
     and Canada, 3M is receiving an increasing number of requests
     for large-volume supply to support the healthcare industry
     and national preparedness efforts. As a result, order status
     and shipping dates could fluctuate based on supply. We value
     your business and patience during this time. This is an
     evolving situation and we are supplying the best manner
     possible. We are dedicated to fulfilling all orders in a timely
     manner.

So the written terms of Global’s and TBS’s agreements informed Global

that TBS’s ability to supply 3M masks could fluctuate based on supply

and that it would “supply in the best manner possible.” That statement

reflects TBS would supply customers like Global 3M masks given the

                                   24
demands for them in the “best manner possible,” basically a best-efforts

term in filling Global’s orders. It doesn’t show that TBS represented to

Global that it had over 5 million N95 masks manufactured by 3M on hand

when Global issued the purchase orders in March and April 2020. And

while Allco attached an affidavit signed by Global’s president, Roger

Morgan, to its reply, Morgan never claimed that TBS ever told him that

it had millions of N95 face masks manufactured by 3M on hand when he

spoke to Sahilu or anyone at TBS. So despite Allco’s conclusory allegation

claiming “Defendants” represented “they” were ready, willing, and able

to supply 3M masks, allegations that are devoid of specifics are

insufficient to affirmatively demonstrate how TBS or Sahilu did business

or committed a tort in Texas. 38

     We further conclude that the purchase orders attached to Allco’s

pleadings show that Global, a Texas business, reached into California by

ordering face masks under an order requiring TBS to ship the masks to

it by a common ground carrier so that Global could then use the masks

         Doe, 2020 Tex. App. LEXIS 2817, at *8; Cheesbro, 2019 Tex.
     38See

App. LEXIS 1572, at *5; McLane, 2020 Tex. App. LEXIS 1964, at *20.
                                 25
in its business to fulfill its own agreements with its customers. 39 In other

words, TBS would have discharged its obligations under the purchase

orders for the 3M masks (had it obtained and delivered the masks) on

handing the masks to a common carrier in California, regardless of

whether California or Texas law were to apply to these three unfilled

purchase orders. 40 Our conclusion that TBS’s obligations would have

been discharged upon delivering the masks in California is reinforced by

the fact that Global left the box labeled “F.O.B. POINT” in the purchase-

orders blank. The term F.O.B. is a commercial term, which is defined by

California and Texas law as “free on board.” 41 Thus, under Global’s

purchase orders, the parties to the contract anticipated that the risk of

loss of the goods involved in the transaction passed to Global when TBS

delivered the masks to a common carrier in California, meaning the

     39Cal.  Com. Code § 2509(1)(a) (Deering, Lexis Advance through
Chapter 138 of the 2022 Regular Session); Tex. Bus. & Com. Code Ann. §
2.509(a)(1).
     40Id.
     41Cal. Com. Code § 2319(1) (Deering, Lexis Advance through

Chapter 175 of the 2022 Regular Session); Tex. Bus. & Com. Code Ann. §
2.319
                                 26
purchase orders did not require TBS to perform any part of the work

under the purchase orders in Texas. 42

     Given the evidence about the nature of the relationship (or lack

thereof) between Allco and TBS as it relates to the purchase orders that

lie at the heart of the controversy, the question boils down to whether

Allco’s claims arise from or relate to TBS’s purposeful contacts with the

forum where Allco filed suit. 43 The answer is clearly no. Even though the

trial court improperly relied on the directed tort and effects test, both of

which tests have been rejected by the Texas Supreme Court, Allco led the

court into the error. Just because TBS knew the masks would end up in

Texas is insufficient without more than is shown in this record to support

the trial court’s conclusion that it had specific jurisdiction over TBS or

Sahilu because a product TBS sold ended up in Texas. 44

     To support the exercise of specific jurisdiction over a defendant, the

jurisdictional evidence or allegations in the pleadings must establish the

     42Id.
     43Cornerstone Healthcare   Grp. Holding, Inc., 493 S.W.3d at 73; see
also Moki Mac, 221 S.W.3d at 576.
      44See Spir Star AG v. Kimich, 310 S.W.3d 868, 873 (Tex. 2010); see

also Asahi Metal Indus. Co., Ltd. v. Superior Court of Cal., 480 U.S. 102,
107 (1987) (plurality opinion).
                                    27
nonresident defendant engaged in conduct sufficient to demonstrate the

nonresident defendant reached beyond its own state, created a

continuing relationship with the resident of the other state, and the suit

is related to the nonresident’s activities. 45 Examples of conduct that show

a nonresident purposefully availed itself of a benefit or advantage in the

forum where the suit was filed include: (1) designing the product for the

market in the forum; (2) advertising for business in the forum; (3)

establishing channels for providing its customers with regular advice in

the forum; and (4) marketing products through a distributor who serves

as the nonresident’s sales agent in the forum. 46 Allco’s pleadings do not

allege that TBS designed any product, advertised in Texas, or that Global

was TBS’s sales agent in Texas. And even though the trial court found

that TBS and Sahilu “routinely sell and distribute products” in Texas,

the trial court based that finding on Roger Morgan’s affidavit. But all he

said in his affidavit was that “I have ordered medical supplies and

equipment from [TBS] in the past, namely 3M respirator masks.” While

Morgan’s affidavit does mention routine sales, he mentions routine sales

     45Asahi,   480 U.S. at 112; Spir Star AG, 310 S.W.3d at 873.
     46Id.

                                    28
only in the context of Global’s business, not that of TBS: He swore: “My

company [Global] has routinely sold and distributed products in the state

of Texas for end use in the State of Texas, and thus, said products have

entered the stream of commerce in the State of Texas.” Even though

Morgan may have ordered medical supplies and equipment from TBS and

Sahilu in the past, his affidavit fails to show how Allco’s claims “arise out

of or relate to” TBS’s contacts in Texas on a case involving Global’s

alleged failure to return Allco’s deposit of $870,000 and where the

relationship between TBS and Global as to the 3M masks Global ordered

is a relationship that is centered in California, not Texas. 47

     Here, it appears the trial court focused on the unilateral activity of

Global rather than the nonresident’s relationship with the forum in

ruling on the Special Appearance. But the jurisdictional analysis

requires courts to focus on the nonresident’s relationship to the forum,

not the unilateral activity of a third party. 48 And even when the

     47See  Burger King Corp. v. Rudzewicz, 471 U.S. 462, 427 (1985);
Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 338
(Tex. 2009).
      48Luciano v. SprayFoamPolymers.com, LLC, 625 S.W.3d 1, 9 (Tex.

2021).
                                  29
nonresident literally has a flood of contacts with the forum, “the exercise

of specific jurisdiction is prohibited if the suit does not arise out of or

relate to the defendant’s contacts with the forum.” 49 This concept—that

specific jurisdiction is confined to adjudicating issues deriving from or

connected with the controversy involved in the lawsuit—which courts

refer to as the relatedness inquiry, applies to all of Allco’s claims. 50

      The heart of the dispute in the trial court was Global’s failure to

return Allco’s deposit of $870,000. In a sworn motion, the appellants

alleged that TBS was not “privy to any of Global’s clients’ purchase orders

or delivery information,” an allegation sufficient to shift the burden to

Allco to prove Allco was a party to the agreement between TBS and

      49Id.at 14 (cleaned up).
      50Burger King Corp. v. Rudzewicz, 471 U.S. 462, 478 (1985) (“[A]n

individual’s contract with an out-of-state party alone [cannot]
automatically establish sufficient minimum contacts in the other party’s
home forum[.]”); Luciano, 625 S.W.3d at 14 (noting that a flood of
purposeful contacts is insufficient for a court to exercise specific
jurisdiction unless there is a nexus between the defendant, the litigation,
and the forum); TV Azteca, 490 S.W.3d at 46 (comparing the stream-of-
commerce cases with the directing-a-tort cases); Moncrief Oil, 414 S.W.3d
at 152 (“Texas’s interest in protecting its citizens against torts is
insufficient to automatically exercise personal jurisdiction upon an
allegation that a nonresident directed a tort from outside the forum
against a resident.” ).
                                    30
Global involving Global’s purchase of 3M face masks. 51 But the

documents Allco attached to its pleadings do not show that Allco was a

party to the TBS/Global contract or that TBS was a party to the

Allco/Global contract. 52 And during the hearing on the appellants’ Special

Appearance, in response to a question from the court, Allco’s attorney

agreed that TBS had returned the money owed to Global after accounting

for Global’s obligation to pay TBS for delivering to Global one million

Makrite N95 masks.

     To sum up: The evidence before the trial court shows that TBS and

Global conducted their business in California, not in Texas. Allco failed

to allege and prove the appellants’ contacts with Texas related to and

were connected in a substantial way to the facts of the litigation involving

the agreement between Global and Allco.

     51See Kelly, 301 S.W.3d at 658 (noting the caselaw governing special
appearances “dictates that the plaintiff and the defendant bear shifting
burdens of proof); First Bank v. Brumitt, 519 S.W.3d 95, 102 (Tex. 2017)
(“As a general rule, the benefits and burdens of a contract belong solely
to the contracting parties, and no person can sue upon a contract except
he be a party to or in privity with it.”) (cleaned up).
      52See Brumitt, 519 S.W.3d at 102 (placing the burden of proof on the

party who seeks to prove it is a third-party beneficiary to another’s
contract).

                                    31
      For the reasons explained above, we conclude TBS was not doing

business in Texas under the purchase orders Global issued to TBS. We

sustain the appellants’ second issue. Because resolving the appellants’

third issue would not provide appellants more relief, we need not address

that issue. 53

                               Conclusion

      We overrule the appellants’ first issue, sustain issues two and four,

and conclude we need not reach issue three. We reverse the trial court’s

order denying the special appearance. We remand the case to the trial

court, with instructions that the trial court dismiss and then sever the

claims against the appellants, TBS Business Solutions USA, Inc. and

Tewodros “Teddy” Sahilu, from the claims against any other parties to

the suit.

      REVERSED AND REMANDED.

                                              _________________________
                                                   HOLLIS HORTON
                                                        Justice
Submitted on November 4, 2021
Opinion Delivered September 15, 2022
Before Golemon, C.J., Horton and Johnson, JJ.

      53Tex. R.App. P. 47.1. (requiring opinions to address each issue that
is necessary to resolving the appeal).
                                    32