Court Opinion

ID: 9893658
Source: CourtListenerOpinion
Date Created: 2023-10-29 08:13:29.734127+00
Date Added: 2024-06-11T09:03:35.130065
License: Public Domain

Affirmed in Part, Reversed and Rendered in Part, and Memorandum Opinion
filed October 26, 2023.

                                      In The

                       Fourteenth Court of Appeals

                              NO. 14-22-00470-CV

     BUGLE SHIPPING COMPANY LIMITED, AND NIKI SHIPPING
                   COMPANY, S.A., Appellants
                                        V.
DILSHAD MAKBUL SHEIKH, INDIVIDUALLY, AND AS NEXT FRIEND
    OF MAKBUL ABDUL RAJJAK SHEKH (DECEASED), Appellee

                    On Appeal from the 412th District Court
                           Brazoria County, Texas
                      Trial Court Cause No. 114337-CV

                          MEMORANDUM OPINION

      In this interlocutory appeal from the denial of two special appearances, the
only issue is whether the trial court has specific personal jurisdiction over two
nonresident defendants. For the reasons explained below, we conclude that the trial
court has specific personal jurisdiction over one of the nonresident defendants, but
not both of them.
                                  BACKGROUND

      This is a Jones Act case, and it involves a seaman who sustained fatal injuries
in an alleged forklift accident. At the time of the accident, the seaman was working
on a ship that had been docked here in Texas.

      Dilshad Makbul Sheikh, the widow of the seaman, filed suit in Texas against
multiple parties, including Bugle Shipping Company, an Isle of Man entity, and Niki
Shipping Company, a Swiss entity. In her live pleading, Sheikh alleged that Bugle
and Niki were subject to the trial court’s jurisdiction because they “owned, operated,
managed, owned pro hac vice and/or controlled” the ship.

      Bugle filed a special appearance, admitting that it was the registered owner of
the ship. However, Bugle argued that it was not subject to the trial court’s specific
personal jurisdiction because Bugle did not direct or control the ship’s entry into
Texas waters. According to Bugle, the ship entered Texas randomly and fortuitously
while under the control of a third-party charterer.

      In a separate special appearance, Niki argued that it was not subject to the trial
court’s specific personal jurisdiction because Niki has never owned, managed,
operated, or controlled the ship. Niki asserted instead that it has merely provided
corporate management services to Bugle.

      Bugle and Niki also argued in their special appearances that they were not
subject to the trial court’s general personal jurisdiction. In a response, Sheikh
acknowledged that general personal jurisdiction was not at issue, but she argued that
the trial court could still exercise specific personal jurisdiction over Bugle and Niki.
The trial court agreed with Sheikh and signed separate orders denying the special
appearances from both Bugle and Niki.

      This interlocutory appeal followed.

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                                      ANALYSIS

      Because there is no dispute that Bugle and Niki are nonresident defendants,
the trial court could only assert personal jurisdiction over them if the Texas long-
arm statute authorized the exercise of jurisdiction, and if such exercise was
consistent with the federal and state constitutional guarantees of due process. See
Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex. 2007).

      The Texas long-arm statute authorizes the exercise of jurisdiction over a
nonresident when the nonresident “does business in this state.” See Tex. Civ. Prac.
& Rem. Code § 17.042. The statute describes that phrase with three examples, but
the examples are not exhaustive. Id. Instead, they are provided “in addition to other
acts,” and that broad language has been construed to mean that the statute will “reach
as far as the federal constitutional requirements of due process will allow.” See Moki
Mac, 221 S.W.3d at 574–75. Consequently, in many cases, the analysis of whether
a Texas court may assert personal jurisdiction over a nonresident collapses into the
single inquiry of whether the exercise of jurisdiction comports with the limitations
of federal due process. Id. at 575.

      The exercise of personal jurisdiction is consistent with federal due process
when the nonresident has established “minimum contacts” with the forum state, and
when the exercise of jurisdiction comports with traditional notions of fair play and
substantial justice. Id. Minimum contacts are established when the nonresident
defendant purposefully avails itself of the privilege of conducting activities within
the forum state, thus invoking the benefits and protections of its laws. Id.

      The extent of the nonresident’s contacts can give rise to two types of personal
jurisdiction. Id. The first type is general jurisdiction, which depends on the
nonresident having made continuous and systematic contacts with this state. Id. In
such cases, jurisdiction is established regardless of whether the defendant’s alleged
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liability arises from those contacts. Id. The second type is specific jurisdiction, which
is established when the defendant’s alleged liability arises out of or is related to an
activity conducted within the forum. Id. at 575–76. This case involves a question of
specific jurisdiction only.

       In a challenge to either type of personal jurisdiction, the plaintiff and the
nonresident defendant bear shifting burdens of proof. See Kelly v. Gen. Interior
Constr., Inc., 301 S.W.3d 653, 658 (Tex. 2010). The plaintiff has the initial burden
of pleading sufficient allegations to bring the defendant within the reach of the Texas
long-arm statute. Id. If the plaintiff satisfies that burden, then the burden shifts to the
defendant to negate every basis for jurisdiction alleged. Id. The defendant can satisfy
that burden on a factual basis by presenting evidence that the defendant has had no
contacts with Texas, effectively disproving the plaintiff’s allegations. Id. at 658–59.
Alternatively, the defendant can show that even if the plaintiff’s allegations are true,
they are still legally insufficient to support the exercise of either general or specific
jurisdiction. Id. at 659.

       Whether the parties have met these respective burdens is a question of law
that we review de novo. See Searcy v. Parex Resources, Inc., 496 S.W.3d 58, 66
(Tex. 2016).

I.     Sheikh’s Initial Burden

       Sheikh alleged that Bugle and Niki were liable for damages arising out of her
husband’s death because her husband died on a “commercial vessel” in Texas that
Bugle and Niki “owned, operated, managed, owned pro hac vice and/or controlled.”
These allegations were sufficient to satisfy Sheikh’s initial burden of showing that
Bugle and Niki were “do[ing] business in this state,” and that the trial court could
exercise personal jurisdiction over them pursuant to the Texas long-arm statute. See
Huynh v. Nguyen, 180 S.W.3d 608, 619 (Tex. App.—Houston [14th Dist.] 2005, no
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pet.) (stating that the plaintiff’s minimal pleading burden is satisfied by an allegation
that the nonresident defendants are doing business in Texas).

      The burden accordingly shifted to Bugle and Niki to negate this basis for
jurisdiction.

II.   Bugle’s Special Appearance

      Bugle focused its special appearance largely on the issue of purposeful
availment, which is necessary for a trial court to exercise personal jurisdiction over
a nonresident defendant. See Moki Mac, 221 S.W.3d at 575.

      There are three rules in a purposeful-availment inquiry. Id. First, only the
defendant’s contacts with the forum are relevant, not the unilateral activity of
another party or third person. Id. Second, the contacts relied upon must be purposeful
rather than random, fortuitous, or attenuated. Id. And third, the defendant must seek
some benefit, advantage, or profit by availing itself of the jurisdiction. Id.

      With these rules in mind, Bugle asserted that it did not purposefully direct its
ship to Texas, nor did it control any of the ship’s activities in Texas. Even though
Bugle acknowledged that it was the registered owner of the ship, Bugle asserted that,
at the time of the accident, the ship had been under the direction and control of a
third party, which had been operating under the terms of a charter.

      A charter is an arrangement in which one person or entity (the “charterer”)
has the right to use the vessel of another (the “owner”). See Walker v. Braus, 995
F.2d 77, 80 (5th Cir. 1993). And in the field of maritime law, there are essentially
two types of charters: a time charter (also known as a voyage charter), and a bareboat
charter (also known as a demise charter). Id.

      With a time charter, the owner retains possession and control of the vessel. Id.
at 81. The owner also provides whatever crew is needed and is responsible for

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normal operating expenses. Id. The charterer’s use of the vessel is generally limited
to a defined period of time (or when the charter is characterized as a voyage charter,
between two or more defined points). Id.

      With a bareboat charter, the owner relinquishes possession and control of the
vessel without crew, provisions, fuel, or supplies—hence, a “bare” boat. Id. The
charterer must cover all essential operating expenses, and has liability for any
casualties resulting from such operation. Id.

      Bugle asserted that the ship in this case had been operating under the terms of
a bareboat charter. But Bugle did not attach a copy of the alleged bareboat charter to
its special appearance. Instead, Bugle offered the affidavit testimony of its director,
who made the following select statements:

      12.    Bugle has not solicited or done any acts constituting business in
             the State of Texas.
      22.    Bugle did not have control over where the [ship] would go, what
             it would carry, or for whom it would work.
      28.    At the time of the alleged incident at issue in this suit, the [ship]
             was bareboat chartered by Bugle to MSC Mediterranean
             Shipping Company S.A., a Swiss company.
      30.    At the time of the alleged incident at issue, the [ship] was under
             the control and direction of the vessel’s bareboat charterer, MSC
             Mediterranean Shipping Company S.A.
      32.    Bugle has never purposely directed the [ship] to Texas.
      34.    To the extent that the [ship] has called at Texas ports, any and all
             such calls were made under the commercial direction and control
             of the vessel’s bareboat charterer . . . .
      Based on this evidence, Bugle argued that it did not purposefully avail itself
of the privilege of conducting activities in Texas. Bugle argued instead that its
contacts with Texas were random and fortuitous, because the affidavit testimony

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established that its ship was brought here at the unilateral direction of the charterer,
rather than at Bugle’s own direction.

      Bugle repeats these arguments in its brief on appeal, and Sheikh responds that
Bugle’s affidavit testimony cannot be considered because it is conclusory. We agree
with Sheikh.

      A conclusory statement asserts a legal or factual conclusion with no basis or
explanation. See Pipkin v. Kroger Tex., L.P., 383 S.W.3d 655, 670 (Tex. App.—
Houston [14th Dist.] 2012, pet. denied). Such statements are substantively defective
and amount to no evidence. See Hoagland v. Butcher, 396 S.W.3d 182, 193 (Tex.
App.—Houston [14th Dist.] 2013, pet. denied).

      Here, the affidavit testimony that “Bugle has not solicited or done any acts
constituting business in the State of Texas” and that “Bugle has never purposely
directed the [ship] to Texas” are unsupported legal conclusions. Cf. Ennis v. Loiseau,
164 S.W.3d 698, 703 (Tex. App.—Austin 2005, no pet.) (affidavit testimony was
conclusory where affiant asserted “I do not have any substantial connection with
Texas arising from any of my actions or conduct purposefully directed toward
Texas”).

      When paraphrased, the remaining statements in the affidavit assert that Bugle
had no control over the ship because it was bareboat chartered. But the existence of
a bareboat charter is a mixed question of law and fact. See Torch, Inc. v. Alesich,
148 F.3d 424, 426 (5th Cir. 1998) (“Determining whether a bareboat charter exists
is a mixed question of law and fact and is subject to broad appellate review.”). And
without a copy of the alleged bareboat charter, Bugle’s naked assertion that it
relinquished control of the ship under the charter is conclusory. Cf. Brownlee v.
Brownlee, 665 S.W.2d 111, 112 (Tex. 1984) (affiant’s unsupported assertion that an
agreement had been modified was conclusory without a copy of the modification);
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Kolius v. Center Point Energy Houston Elec. LLC, 422 S.W.3d 861, 866 (Tex.
App.—Houston [14th Dist.] 2014, no pet.) (affiant’s unsupported assertion that a
utility was supervising a third party was conclusory without any contracts or
documents relating to the alleged supervision).

      Bugle nonetheless contends that it is not amenable to jurisdiction in Texas,
citing American Home Assurance Co. v. M/V One Helsinki, 546 F. Supp. 3d 90 (D.
Mass. 2021). In that case, the district court concluded that the owner of a ship had
not purposefully availed itself of the benefits of the forum state because the owner
had entered into a bareboat charter and had relinquished all control over the ship’s
destinations. Id. at 96. Bugle believes that the same reasoning should apply here,
based on the alleged existence of a bareboat charter, but that case is distinguishable
because the terms of the bareboat charter appeared in the record, unlike here. Id.
(addressing how the charter had been designated in the record).

      Bugle also cites to Porina v. Marward Shipping Co., 521 F.3d 122 (2nd Cir.
2008) as authority that the unilateral activities of third-party charterers cannot be
imputed to a ship’s owner. But again, the court in that case was able to review the
terms of the charter, unlike here. Id. at 128 (noting that the charterers “were free
under the charters to take the ship to any safe port in the world”).

      Because the key portions of Bugle’s affidavit testimony are conclusory—and
therefore, not evidence—we conclude that Bugle failed to negate Sheikh’s
jurisdictional allegations. Furthermore, we need not consider whether the trial
court’s exercise of jurisdiction would comport with traditional notions of fair play
and substantial justice because Bugle did not present any arguments in its brief
concerning that issue. See Tex. R. App. P. 38.1(i).

      In sum, we conclude that the trial court correctly denied Bugle’s special
appearance.
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III.   Niki’s Special Appearance

       Like Bugle, Niki also focused its special appearance on the issue of purposeful
availment, but unlike Bugle, Niki’s arguments did not depend on the existence of a
bareboat charter.

       Niki supported its special appearance with an affidavit from its CEO, who
testified in part as follows:

       22.   Niki has never held an ownership interest in the [ship]. Niki has
             merely provided corporate management services to the owner of
             the [ship], Bugle Shipping Company Limited.
       23.   At all times relevant to this lawsuit, Niki was not the ship
             manager of the [ship]. Niki had no control over where the [ship]
             traveled.
       This affidavit testimony fully negates Sheikh’s jurisdictional allegation that
Niki “owned, operated, managed, owned pro hac vice and/or controlled” the ship.

       Sheikh suggests that this affidavit testimony depends on the terms of a
bareboat charter, which was omitted from Niki’s special appearance, just like with
Bugle. And in the absence of the bareboat charter, Sheikh argues that the affidavit
testimony is conclusory. We disagree. Unlike Bugle, Niki disclaimed an ownership
interest in the ship. And due to that lack of ownership interest, Niki never claimed
to have entered into a bareboat charter with another party.

       To be sure, there was additional affidavit testimony from Niki’s CEO that a
bareboat charter existed between Bugle and a third party, but even if that testimony
is excluded from consideration, the other statements recited above were sufficient to
establish that Niki lacks minimum contacts with Texas.

       Sheikh did not produce any controverting evidence in response to Niki’s
special appearance. In the absence of such evidence, we conclude that the trial court

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erred by denying Niki’s special appearance. Cf. Asarco, Inc. v. Glenara, Ltd., 912
F.2d 784, 786 (5th Cir. 1990) (holding that the manager of a ship was not subject to
a trial court’s jurisdiction where the manager produced uncontroverted evidence that
it did not control the destination of the ship).

                                   CONCLUSION

      The order denying Bugle’s special appearance is affirmed, whereas the order
denying Niki’s special appearance is reversed, and judgment is rendered dismissing
Sheikh’s allegations against Niki for want of personal jurisdiction.

                                         /s/       Tracy Christopher
                                                   Chief Justice

Panel consists of Chief Justice Christopher and Justices Bourliot and Wilson.

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