Court Opinion

ID: 4652479
Source: CourtListenerOpinion
Date Created: 2021-01-20 16:13:25.760096+00
Date Added: 2024-06-11T08:01:47.962680
License: Public Domain

Opinion issued January 14, 2021

                                     In The

                              Court of Appeals
                                     For The

                          First District of Texas
                            ————————————
                              NO. 01-19-00980-CV
                           ———————————
        SHANNON MCCLARY AND TINA MCCLARY, Appellants
                                        V.
                      HARVEST FUELS, LLC, Appellee

                   On Appeal from the 344th District Court
                          Chambers County, Texas
                     Trial Court Case No. 19-DCV-0367

                         MEMORANDUM OPINION

      This is an accelerated interlocutory appeal from the trial court’s order

denying two special appearances. The underlying dispute arises from three trade

agreements for the sale and delivery of blendstock fuel product for processing at a

reclamation plant in Texas. Under the trade agreements, a Texas fuel trader,
Harvest Fuels, LLC, agreed to sell and deliver the blendstock to McClary

Transport—an entity purportedly owned by Oklahoma residents Shannon and Tina

McClary but not formed under the laws of any state and not registered to do

business in Texas. When McClary Transport failed to fully pay for the delivered

blendstock, Harvest Fuels sued the McClarys in their individual capacities. The

McClarys then filed special appearances, which the trial court denied.

      On appeal, the McClarys argue that the trial court erred in denying their

special appearances because (1) the trade agreements violate Railroad Commission

Statewide Rule 3.1 and are therefore void, (2) the McClarys did not establish

minimum Texas contacts necessary to support the exercise of jurisdiction over

them in their individual capacities, and (3) there is legally and factually insufficient

evidence for various findings of facts made by the trial court in support of its

rulings. We hold that (1) the trade agreement’s compliance with Statewide Rule

3.1 is irrelevant to our jurisdictional analysis, and the trade agreements, in any

event, comply with the rule, (2) the McClarys established minimum contacts by

acting on behalf of Harvest Transport, a fictitious entity for whom they are

personally liable, and (3) the trial court’s challenged findings of facts are supported

by legally and factually sufficient evidence.

      Therefore, we affirm.

                                           2
                                Factual Background

       In this interlocutory appeal, the underlying dispute arises from three trade

agreements under which a Texas fuel trader, Harvest Fuels, LLC, agreed to sell

and deliver blendstock fuel product to a nonresident buyer that is owned and

operated by nonresident individuals, Shannon and Tina McClary, but does business

in Texas. The principal factual dispute concerns the identity of this buyer. The

McClarys contend the buyer was McClary Energy, LLC, an entity formed under

Oklahoma law and registered to do business in Texas. Harvest Fuels contends the

buyer was McClary Transport, a fictitious entity and mere pseudonym for the

McClarys in their individual capacities. The following narrative focuses on the

facts relevant to the resolution of this dispute. We begin with a brief introduction to

the parties.

       The appellants are Shannon and Tina McClary, a married couple who reside

in Cameron, Oklahoma, but own property in Anahuac, Texas. The McClarys lease

this property to their business, McClary Energy, LLC. There, McClary Energy

operates a fuel reclamation plant, which mixes tank bottoms and other hydrocarbon

wastes with fuel blendstocks to produce reusable oil. McClary Energy possesses a

non-transferable permit to operate the reclamation plant, which was issued by the

Texas Railroad Commission under Statewide Rule 57. A signboard at the entrance

                                          3
to the property identifies the plant as a permitted reclamation facility. It states, in

large bold print:

      McCLARY ENERGY LLC.
      TEXAS     RAILROAD   COMMISSION                       RECLAMATION
      FACILITY
      PERMIT NO. R903-1603
      OPERATOR NO. 540182
      Emergency 911

      In addition to McClary Energy, the McClarys own two other entities,

McClary Trucking, Inc. and Interstate Energy, LLC. Like McClary Energy, these

two entities were formed under Oklahoma law and are registered to do business in

Texas. Further, and as discussed below, there is evidence that the McClarys have

also done business under the name of two fictitious entities, McClary Transport

and McClary Oil.

      The appellee in this appeal is Harvest Fuels, LLC, a limited liability

company formed under Texas law and headquartered in The Woodlands, Texas.

Harvest Fuels is a fuel trader that procures, blends, and processes hydrocarbon

wastes and other petrochemical products, which it then sells to reclamation plants

and similar entities. Harvest Fuels is owned by Marlon Williams, who serves as the

company’s president.

The parties enter into the first trade agreement

      In the fall of 2018, Marlon Williams, on behalf of Harvest Fuels, contacted

Shannon McClary and offered to begin selling tank bottoms and blendstock to
                                          4
Shannon’s business. Shannon agreed, and the two proceeded to negotiate the terms

of their first trade agreement over the phone. These terms included the buyer; the

seller; the type, quality, and quantity of product; the method, address, and date of

delivery; and the price and method of payment. The parties dispute who they

agreed the buyer would be. On the one hand, Marlon contends that Shannon told

him to list the buyer as “McClary Transport” and that, when he asked Shannon

whether he should include any corporate suffix, such as LLC, Shannon responded

that the buyer was “just McClary Transport.” On the other hand, Shannon contends

that he made clear that the buyer would be McClary Energy and that in negotiating

the agreement he was acting on behalf of McClary Energy alone.

      When they were done negotiating, Marlon sent Shannon an email, dated

October 1, 2018, to confirm and memorialize the terms of the agreement. The

email’s subject line was “Trade Agreement.” It stated:

      Shannon,

      As per our conversation, here is the trade agreement for the product
      currently being delivered. It is my understanding 4 loads have been
      completed and we will finish the remainder this week. Thanks,

      Seller:               Harvest Fuels LLC
      Buyer:                Mcclary Transport
      Product:              Light blendstock
      Quality:              Specs attached
      Quantity:             Approx. 1200 bbls (8 trucks)
      Deliver Terms:        Delivered by truck to Mcclary’s tanks (309
      South FM1724 anawack, tx, 77514)
      Pricing Terms:        $30.00/barrel Flat
                                         5
      Payment Terms:             Crude terms
      Delivery Window:           09/27/18-10/05/18

      Attached to the email was a Certificate of Analysis from a third-party

laboratory certifying the quality of the light blendstock. After receiving Marlon’s

email, Shannon responded, “Looks Good.” Shannon did not object to any of the

terms, including the buyer.

      Harvest Fuels then delivered the blendstock to “Mcclary’s tanks” as agreed.

The shipping invoices and bills of lading listed the consignee and recipient of the

blendstock variously as “McClary Oil” and “McClary Oil Co.” located at “309

South FN 1724 Anahuac, TX 77514.”

The parties enter into the second trade agreement

      Later that month, Marlon and Shannon entered into a second trade

agreement. As before, they first negotiated the terms over the phone. And when

they were done negotiating, Marlon sent Shannon an email, dated October 22,

2018, to confirm and memorialize the terms of the agreement. The email’s subject

line was “Light blendstock.” It stated:

      Shannon,

      As discussed, we will send you 2 loads of light blendstock (dms-145
      lights). Trade agreement below. Also, I’m resending our wiring info
      for our September payment. Please send over the correlating load
      report.

      Seller:                    Harvest Fuels
      Buyer:                     Mcclary Transport
                                          6
      Product:              Light Blendstock (dms-145 lights)
      Quality:              Specs attached
      Quantity:             Approx. 350 bbls (2 trucks)
      Delivery Terms:       Delivered by truck to Mcclary’s tanks (309
      South FM1724 anawack tx, 77514)
      Pricing Terms:        Platts WTI minus $6.00 per barrel
      Payment Terms:        Crude terms
      Delivery Date:        10/22/18

      Please wire payment to:

      Harvest Fuels, LLC
      c/o Wells Fargo, Houston, TX
      Routing: --------
      Account: --------

      Attached to the email was another Certificate of Analysis certifying the

quality of the light blendstock. Shannon responded to the email without objecting

to any of the terms, and Harvest Fuels delivered the blendstock as agreed. The

shipping invoices and bills of lading again listed the consignee and recipient as

either “McClary Oil” or “McClary Oil Co.”

Harvest Fuels receives partial payment

      On October 23, 2018, Harvest Fuels received a wire transfer from Interstate

Energy, LLC. The transfer was made to Harvest Fuels’ bank account in Houston,

Texas. Harvest Fuels determined the transfer was payment for the first trade

agreement since the amount received matched the amount owed under the

agreement. Harvest Fuels later confirmed that Interstate Energy is an Oklahoma

limited liability company owned and operated by Shannon McClary.

                                         7
      On November 21 and December 21, Harvest Fuels received two additional

wire transfers from Interstate Energy. As before, the transfers were made to

Harvest Fuels’ Houston bank account. The amounts received did not cover the

entire amount due under the second trade agreement.

The parties enter into the third trade agreement

      In late December 2018, Marlon and Shannon entered into a third trade

agreement. They followed the same process as before. Marlon and Shannon first

negotiated the terms over the phone, and then Marlon sent Shannon an email, dated

December 27, 2018, to confirm and memorialize the terms of the agreement. The

email’s subject line was “Trade agreement Diesel lightblendstock.” It stated:

      Shannon,

      As per our conversation, here is the trade agreement for the 11,500
      barrels diesel/light blendstock mix. Specs attached. This is in addition
      to all of our regular loads already scheduled. Also, Please send the run
      sheet for Last month’s payment.

      Seller:                 Harvest Fuels LLC
      Buyer:                  Mcclary Transport
      Product:                Diesel/Light blendstock
      Quality:                Specs attached
      Quantity:               Approx. 11,500 bbls (70 trucks)
      Delivery Terms:         (4 trucks/day) Delivered by truck to
      Mcclary’s tanks (309 South FM1724 anawack tx, 77514)
      Pricing Terms:          Platts WTI minus $8.00 per barrel
      Payment Terms:          Crude terms
      Delivery Window:        01/02/19-01/30/19

                                         8
      Attached to the email was a Report of Analysis certifying the quality of the

light blendstock. Shannon did not object to any of the terms in the email, and

Harvest Fuels delivered the blendstock as agreed. The shipping invoices and bills

of lading again listed the consignee and recipient as either “McClary Oil” or

“McClary Oil Co.”

Harvest Fuels receives partial payment for the second and third trade
agreements

      After Harvest Fuels delivered the blendstock under the third trade

agreement, Harvest Fuels received two additional wire transfers from Interstate

Energy, one on December 31, 2018, and one on January 23, 2019. Both were made

to Harvest Fuels’ Houston bank account. The amounts received did not cover the

amount still owing under the second and third trade agreements.

Harvest Fuels demands payment for the total amount due, but the McClarys
refuse

      In January 2019, Harvest Fuels notified the McClarys that payment for the

delivered product was “significantly short” and provided an accounting of the

loads and volumes that Harvest Fuels had delivered, along with a calculation of the

total amount owed. The McClarys then claimed that certain loads of blendstock

delivered by Harvest Fuels did not meet the quality specifications of the trade

agreements. Harvest Fuels investigated the claim and concluded the blendstock had

                                        9
in fact met the specifications. The parties attempted to negotiate a reduced price to

resolve the dispute but were unsuccessful.

      In March 2019, Harvest Fuels made a demand for payment on Shannon

McClary and Tina McClary d/b/a McClary Transport. The McClarys did not make

the demanded payment, and Harvest Fuels filed suit.

                                Procedural History

      In May 2019, Harvest Fuels filed its original petition against Shannon and

Tina McClary d/b/a McClary Transport and McClary Oil Company, asserting a

single claim for breach of contract. In response, the McClarys filed special

appearances, arguing that they are not amenable to process because they reside in

Oklahoma (not Texas) and have not conducted business in Texas or otherwise

established minimum contacts with the state in their individual capacities.

Extensive briefing followed.

      Harvest Fuels filed a brief in opposition to the McClarys’ special

appearances, asserting that the McClarys’ Texas contacts were made on behalf of

McClary Transport and McClary Oil Company, fictitious entities and mere

pseudonyms for the McClarys themselves. Harvest Fuels argued that because the

McClarys’ contacts were made on behalf of fictitious entities, the McClarys

assumed personal liability for the trade agreements.

                                         10
      The McClarys then filed supplemental special appearances and a reply to

Harvest Fuels’ brief, asserting that their contacts were made on behalf of McClary

Energy, not McClary Transport or McClary Oil Company. The McClarys alleged

that Harvest Fuels was aware they were acting on behalf of McClary Energy

because they had informed Marlon of this at the outset of the parties’ relationship.

The McClarys further argued that, to the extent they acted on behalf of McClary

Transport as Harvest Fuels alleged, the trade agreements were illegal and void

because Texas law—specifically, Railroad Commission Statewide Rule 3.1.—

prohibited Harvest Fuels from selling blendstock to them in their individual

capacities, as they lacked the requisite permits. Finally, the McClarys argued that

Tina had not established minimum contacts, as she never communicated with

anyone from Harvest Fuels and was not meaningfully involved in the performance

of the agreements.

      Harvest Fuels filed a sur-reply to the McClarys’ supplemental special

appearances and reply, asserting that the unambiguous terms of the written trade

agreements and other documents relating to the deliveries of the blendstock

demonstrated that the McClarys conducted business as McClary Transport and

McClary Oil Company, not McClary Energy. Harvest Fuels further asserted that

the McClarys had misconstrued Rule 3.1, which, according to Harvest Fuels,

prohibited the McClarys from reclaiming blendstock, but not from purchasing it.

                                        11
Finally, Harvest Fuels asserted that Tina was actively involved in the performance

of the trade agreements, as evidenced by numerous emails in which she directed

the delivery of the loads of blendstock, recorded the loads delivered, requested

additional loads, and authorized payment.

      Harvest Fuels filed its second amended petition against the McClarys. The

petition made new jurisdictional allegations, raising three separate but related

theories of jurisdiction: (1) that the McClarys acted as agents of the fictitious

entities McClary Transport and McClary Oil Company, (2) that the McClarys

acted under the assumed names of McClary Transport or McClary Oil Company,

and (3) that the McClarys acted as the general partners of a de facto partnership

doing business as McClary Transport and McClary Oil Company. The petition also

asserted two new claims, one for a suit on a sworn account and one for negligent

misrepresentation, the latter of which was asserted in the alternative in the event

the trial court found no contract exists between Harvest Fuels and the McClarys

individually.

      The McClarys filed substantively identical declarations in support of their

special appearances. In the declarations, Shannon and Tina stated that they had

never done any business in Texas, never done business in their individual

capacities, and never done business under the name McClary Transport or

McClary Oil Company. They stated that all their Texas contacts relating to the

                                        12
trade agreements were made on behalf of McClary Energy. And they stated that it

was their “understanding” that it was unlawful to sell blendstock and tank bottoms

to anyone who “does not have a permit to reclaim oilfield related hydrocarbons

issued by the Texas Railroad Commission.” Harvest Fuels filed objections to the

McClarys’ declarations, arguing that their statements were either conclusory or

inadmissible parol evidence.

      The McClarys filed additional evidence in support of their special

appearances. The evidence consisted of two emails, dated October 23, 2018, and

November 2, 2018, from McClary Energy employee Brittani Cooper to Marlon

Williams. The first email contained Cooper’s signature line, which indicated that

she worked for “McClary Energy LLC.” The second email included an attached

“Price Matrix for McClary Energy LLC.”

      In November 2019, the trial court held a hearing on the McClarys’ special

appearances. The trial court overruled Harvest Fuels’ objections to the McClarys’

declarations but ultimately denied the McClarys’ special appearances. The trial

court later made written findings of fact and conclusions of law in support of its

order. The trial court found that:

   • Harvest Fuels and Shannon and Tina McClary, doing business as “McClary
     Transport,” entered into three trade agreements for the purchase and delivery
     of blendstock fuel.

   • The trade agreements were dated (1) October 1, 2018, (2) October 22, 2018,
     and (3) December 27, 2018.
                                       13
• Marlon telephonically negotiated the terms of the trade agreements with
  Shannon and then confirmed the negotiated terms through email
  correspondence.

• Shannon affirmatively confirmed the terms of the first trade agreement in an
  email. Neither Shannon nor Tina provided Harvest Fuels any oral or written
  notice of objection to the terms of the second and third trade agreements.

• Each trade agreement identified the seller as “Harvest Fuels LLC” and the
  buyer as “McClary Transport.”

• Shannon and Tina conducted business with Harvest Fuels as “McClary
  Transport.”

• McClary Transport is not organized under the laws of Texas or any other
  state, is not registered to do business in Texas or in any other state, and has
  no registered agent for service of process in Texas or in any other state.

• Each trade agreement contained a delivery term that required the product to
  be delivered to “McClary’s tanks” located at “309 South FM 1724 anawack,
  tx, 77514.”

• Each trade agreement required payment to be wired to Harvest Fuels’ bank
  account located in Houston, Texas.

• Harvest Fuels delivered the product to the McClarys’ tanks in Anahuac,
  Texas.

• The shipping records that document the transport and delivery of the product
  to the McClarys’ tanks identify the consignee as “McClary Oil” located at
  “309 South FM 1724, Anahuac, TX.”

• McClary Oil is not organized under the laws of Texas or any other state, is
  not registered to do business in Texas or in any other state, and has no
  registered agent for service of process in Texas or in any other state.

• Tina and Shannon regularly communicated with Harvest Fuels from
  December 2018 to February 2019 regarding the trade agreements.

                                     14
• Tina and Shannon regularly provided instruction to Harvest Fuels from
  December 2018 to February 2019 regarding the shipments of blendstock,
  calculation of final price, and invoicing and payment for the shipments.

• Shannon exchanged email communications with Harvest Fuels using the
  email address smcclary@windstream.net, and Tina exchanged email
  communications with Harvest Fuels using the email address
  tmcclary@windstream.net.

   From its findings, the trial court concluded that:

• Harvest Fuels’ claims arise from or relate to the McClarys’ contacts with
  Texas.

• McClary Transport and McClary Oil are fictitious entities that have no legal
  form and are pseudonyms for Shannon and Tina McClary.

• The McClarys’ contacts in Texas under the assumed names or on behalf of
  the fictitious entities McClary Transport and Mcclary Oil are their own
  personal contacts.

• The exercise of specific personal jurisdiction over the McClarys is consistent
  with federal and state due process standards.

• The McClarys’ transactions with Harvest Fuels constitute “doing business”
  in Texas, as they contracted by mail or otherwise with a Texas resident, the
  contract was to be performed in whole or in part in Texas, and payment was
  to be wired to a Texas bank account. See TEX. CIV. PRAC. & REM. CODE
  § 17.042.

• The McClarys have sufficient minimum contacts with Texas to warrant the
  exercise of personal jurisdiction. They engaged in multiple business
  transactions with a Texas resident under fictitious corporate pseudonyms
  whereby they purchased and received blendstock fuel product at their
  facility in Anahuac, Texas.

                                      15
   • The McClarys’ contacts were purposeful and intentional. The negotiated
     terms provided for purchase of the product and delivery in Texas, and the
     McClarys sought pecuniary benefit, advantage, or profit in Texas because
     the product was to be purchased and delivered in Texas.

   • The McClarys’ alleged liability for breach of contract, suit on sworn
     account, and negligent misrepresentation arises out of or is related to their
     activities in Texas.

   • The McClarys did not meet their burden of negating all bases of jurisdiction
     alleged in Harvest Fuels’ live petition and failed to respond to Harvest
     Fuels’ jurisdictional allegations that (1) they acted as agents of a non-
     existent entity, McClary Transport, resulting in personal jurisdiction over
     them as the purported “agents” of the non-existent entity, (2) they acted as a
     de facto partnership doing business in Texas, and (3) they engaged in
     tortious in-state conduct by making negligent misrepresentations during the
     negotiation and performance of the trade agreements.

      The McClarys appeal.

                               Special Appearance

      On appeal, the McClarys argue that the trial court erred in denying their

special appearances because (1) the trade agreements violate Railroad Commission

Statewide Rule 3.1 and therefore cannot support the exercise of specific

jurisdiction, (2) regardless whether the trade agreements violate Rule 3.1, the

McClarys did not establish minimum contacts to support the exercise of

jurisdiction over them in their individual capacities, and (3) there is insufficient

evidence to support various findings of fact made by the trial court.

                                         16
A.    Applicable law and standard of review

      A nonresident defendant is subject to personal jurisdiction in Texas if (1) the

Texas long-arm statute authorizes the exercise of jurisdiction, and (2) the exercise

of jurisdiction does not violate the due process guarantees of the federal and state

constitutions. Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 657 (Tex.

2010). The Texas long-arm statute allows the exercise of personal jurisdiction to

reach as far as the federal constitutional requirements of due process will

allow. Id.; see TEX. CIV. PRAC. & REM. CODE § 17.042 (long-arm statute).

      The exercise of personal jurisdiction is consistent with due process when the

nonresident defendant has established minimum contacts with the forum state, and

the exercise of jurisdiction comports with traditional notions of fair play and

substantial justice. Kelly, 301 S.W.3d at 657. A nonresident defendant establishes

minimum contacts with the forum state when it purposefully avails itself of the

privilege of conducting activities within the state, thus invoking the benefits and

protections of its laws. Id. at 657–58.

      Depending on the nature of the nonresident’s contacts, personal jurisdiction

may be either general or specific. TV Azteca v. Ruiz, 490 S.W.3d 29, 37 (Tex.

2016). General jurisdiction is party-focused, whereas specific jurisdiction is

transaction-focused. Gulf Coast Int’l, L.L.C. v. Research Corp. of the Univ. of

                                          17
Hawaii, 490 S.W.3d 577, 584 (Tex. App.—Houston [1st Dist.] 2016, pet. denied).

This case concerns specific jurisdiction.

      Specific jurisdiction arises when (1) the defendant’s contacts with the forum

state were purposeful and (2) the cause of action arises from or relates to those

contacts. Kelly, 301 S.W.3d at 658. When a nonresident defendant is subject to

specific jurisdiction, the trial court may exercise jurisdiction over the defendant

even if the defendant’s forum contacts are isolated or sporadic. TV Azteca, 490

S.W.3d at 37.

      The first prong of specific jurisdiction, purposeful availment, is the

“touchstone of jurisdictional due process.” Michiana Easy Livin’ Country, Inc. v.

Holten, 168 S.W.3d 777, 784 (Tex. 2005). It requires the nonresident defendant to

have purposefully availed itself of the privilege of conducting activities in the

forum state. Id. In determining whether a nonresident defendant has purposefully

availed itself of the privileges of conducting activities in Texas, we consider the

defendant’s own actions without considering the unilateral activity of any other

party and ask (1) whether the defendant’s actions were purposeful rather than

random, isolated, or fortuitous, and (2) whether the defendant sought some benefit,

advantage, or profit by availing itself of the jurisdiction. Id. at 785.

      The second prong of specific jurisdiction, relatedness, “lies at the heart of

specific jurisdiction by defining the required nexus between the nonresident

                                            18
defendant, the litigation, and the forum.” Moki Mac River Expeditions v. Drugg,

221 S.W.3d 569, 579 (Tex. 2007). It requires that there be a “substantial

connection” between the defendant’s forum contacts and the “operative facts of the

litigation.” Id. at 585. In determining whether there is a substantial connection, we

do 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. TV Azteca, 490 S.W.3d

at 52–53. Instead, we consider what the claim is “principally concerned with,”

whether the contacts will 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. Id. at 53.

       Whether a court can exercise personal jurisdiction over nonresident

defendants is a question of law, which we review de novo. Kelly, 301 S.W.3d at

657.

       In a special appearance, the plaintiff and the defendant have shifting burdens

of proof. Id. at 658. The plaintiff has the initial burden of pleading sufficient facts

to bring the defendant within the reach of the Texas long-arm statute. Id. If the

plaintiff meets its initial burden, the burden then shifts to the defendant to negate

all bases of personal jurisdiction alleged by the plaintiff. Id. If, however, the

plaintiff fails to meet its initial burden, the defendant need only prove that it is not

a Texas resident to negate jurisdiction. Id. at 658–59. Because the plaintiff defines

                                          19
the scope and nature of the lawsuit, the defendant’s corresponding burden to negate

jurisdiction is tied to the allegations in the plaintiff’s pleading. Id. at 658. The

defendant has no burden to negate a potential basis for personal jurisdiction when

it is not pleaded by the plaintiff. See id.

       The defendant can negate jurisdiction on either a factual or legal basis.

Proppant Sols., LLC v. Delgado, 471 S.W.3d 529, 536 (Tex. App.—Houston [1st

Dist.] 2015, no pet.). A defendant negates jurisdiction on a factual basis by

presenting evidence showing an absence of contacts with Texas, thus disproving

the plaintiff’s jurisdictional allegations. Id. A defendant negates the legal basis for

jurisdiction by showing that even if the plaintiff’s alleged facts are true, the

plaintiff’s claims do not arise from the contacts. Id.

       When, as here, the trial court denies a special appearance and issues findings

of fact and conclusions of law relating to its ruling, the defendant may challenge

the fact findings on legal and factual sufficiency grounds. BMC Software Belgium,

N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002). We review a trial court’s

conclusions of law as legal questions. Id. The defendant may not challenge a trial

court’s conclusions of law for factual insufficiency; however, we may review the

trial court’s legal conclusions drawn from the facts to determine their

correctness. Id. If we determine a conclusion of law is erroneous, but the trial court

                                              20
rendered the proper judgment, the erroneous conclusion of law does not require

reversal. Id.

B.     Analysis

       1.       Whether the trade agreements violate Rule 3.1

       We begin by considering the McClarys’ argument that the trial court erred in

denying their special appearances because the trade agreements violate Railroad

Commission Statewide Rule 3.1 and are therefore void. We disagree with the

McClarys’ argument for two reasons.

       First, the McClarys’ argument improperly reaches the merits of the case.

Normally, when ruling on a special appearance, the trial court cannot reach the

merits of the case. Phillips Dev. & Realty, LLC v. LJA Eng’g, Inc., 499 S.W.3d 78,

85–86 (Tex. App.—Houston [14th Dist.] 2016, pet. denied); Angelou v. African

Overseas Union, 33 S.W.3d 269, 278 (Tex. App.—Houston [14th Dist.] 2000, no

pet.). The McClarys contend there is an exception for when a case arises from a

contract. In such a case, the McClarys contend, the defendant can defeat

jurisdiction by showing the contract is void. The McClarys misconstrue the scope

of the exception.

       The opinions cited by the McClarys establish that when a case arises from a

contract, the defendant can defeat jurisdiction by showing that it did not enter into

the contract, as such a showing negates the defendant’s alleged actions forming the

                                         21
basis of jurisdiction. See Cobb v. Stern, Miller & Higdon, 305 S.W.3d 36, 42–43

(Tex. App.—Houston [1st Dist.] 2009, no pet.) (nonresident client not considered

to have entered into contingency fee agreement with law firm because client

exercised statutory right to void agreement before firm performed); Phillips Dev.

& Realty, 499 S.W.3d at 86 (nonresident defendant argued it did not enter into

contract because it executed contract by mistake); Schuman v. TSP Dev., Ltd., No.

14-04-01159-CV, 2005 WL 1772262, at *3 (Tex. App.—Houston [14th Dist.] July

26, 2005, no pet.) (mem. op.) (nonresident defendants argued they never entered

into any contract performable in Texas); Ross F. Meriwether & Assocs., Inc. v.

Aulbach, 686 S.W.2d 730, 732 (Tex. App.—San Antonio 1985, no writ) (president

of out-of-state corporation argued he did not enter into contract because he

negotiated and executed contract in representative capacity).

      But the McClarys do not contend that McClary Transport did not actually

enter into the trade agreements. Instead, they contend the trade agreements violate

Rule 3.1. But showing that the trade agreements violate Rule 3.1 does not negate

the defendant’s alleged actions forming the basis of jurisdiction; that is, it does not

show that McClary Transport did not actually enter into the agreements.

      Second, assuming the issue is relevant to our jurisdictional analysis, the

trade agreements do not actually violate Rule 3.1. The McClarys construe Rule 3.1

as prohibiting the sale of blendstock to anyone who does not have on file with the

                                          22
Railroad Commission an approved organization report. See 16 TEX. ADMIN. CODE

§ 3.1(a)(1). McClary Energy has an approved organization report. But the

McClarys themselves do not. Because they do not individually possess an

approved organization report, the McClarys argue that Harvest Fuels could not

legally sell them blendstock. Thus, the McClarys conclude, the trade agreements

violate Rule 3.1 to the extent the agreements purport to sell blendstock to the

McClarys in their individual capacities, as alleged by Harvest Fuels. The McClarys

misconstrue Rule 3.1.

      Rule 3.1 requires “any person . . . performing operations within the

jurisdiction of the Commission” to have “on file with the Commission an approved

organization report.” Id. The rule does not define “operations” but rather provides

the following non-exhaustive list of examples:

      (A) drilling, operating, or producing any oil, gas, geothermal resource,
      brine mining injection, fluid injection, or oil and gas waste disposal
      well;
      (B) transporting, reclaiming, treating, processing, or refining crude
      oil, gas and products, or geothermal resources and associated
      minerals;
      (C) discharging, storing, handling, transporting, reclaiming, or
      disposing of oil and gas waste, including hauling salt water for hire by
      any method other than pipeline;
      (D) operating gasoline plants, natural gas or natural gas liquids
      processing plants, pressure maintenance or repressurizing plants, or
      recycling plants;
      (E) recovering skim oil from a salt water disposal site;
      (F) nominating crude oil;
      (G) operating a directional survey company;
      (H) cleaning a reserve pit;
                                        23
      (I) operating a pipeline;
      (J) operating as a cementer approved for plugging wells, operating as
      a cementer cementing casing strings or liners, or operating a well
      service company performing well stimulation activities, including
      hydraulic fracturing; or
      (K) operating an underground hydrocarbon or natural gas storage
      facility.

Id.

      Thus, the list does not include the “selling, purchasing, or buying” of

blendstock or language that could be reasonably construed to that effect. Instead,

the listed examples all involve the performance of practical types of work, not the

purchase of the material and equipment used to perform the work. Construing the

list according to the contextual canon of noscitur a sociis, we hold that Rule 3.1

does not include the sale of blendstock as among those “operations” for which a

person must have “an approved organization report.” See Greater Houston P’ship

v. Paxton, 468 S.W.3d 51, 61 (Tex. 2015) (“The canon of statutory construction

known as noscitur a sociis—‘it is known by its associates’—holds that the

meaning of a word or phrase, especially one in a list, should be known by the

words immediately surrounding it.”).1

1
      We note that the trade agreements do not provide that McClary Transport will
      actually reclaim, treat, or process the blendstock. See 16 TEX. ADMIN. CODE
      § 3.1(a)(1)(B) (defining “operations” to include “reclaiming, treating, [and]
      processing” blendstock). Instead, the trade agreements merely provide that
      McClary Transport will purchase the blendstock. Under the trade agreements,
      Harvest Fuels agreed to sell and deliver the blendstock to McClary Transport. The
      delivery point was the reclamation facility owned by the McClarys individually
                                         24
      We hold that the McClarys cannot defeat jurisdiction by showing the trade

agreements violate Rule 3.1.

      2.    Whether the McClarys established minimum contacts

      We now consider the McClarys’ argument that even if the trade agreements

comply with Rule 3.1, the McClarys have not established minimum Texas contacts

to support the exercise of specific jurisdiction over them in their individual

capacities. Specifically, the McClarys argue that they have not established

minimum contacts because:

   • their relevant Texas contacts were made in their corporate capacities on
     behalf of their Oklahoma limited liability company, McClary Energy, not
     their individual capacities on behalf of the fictitious entity, McClary
     Transport;

   • Shannon’s contacts were limited to “communications related to the
     execution and performance” of the three trade agreements; and

   • Tina’s contacts were limited to “e-mail communications regarding payment
     and deliveries” under the three trade agreements.

      We consider each argument in turn, beginning with the first.

      The McClarys’ Texas contacts were made on behalf of the buyer under the

trade agreements. The terms of the trade agreements were expressed in emails

      and leased to McClary Energy. Thus, the blendstock was purchased by McClary
      Transport but reclaimed by McClary Energy, the latter of which had an approved
      organization report. We further note that Harvest Fuels did not actually transport
      the blendstock. See id. (defining “operations” to include “transporting”
      blendstock). Instead, Harvest Fuels contracted with third-party carriers to ship the
      blendstock from the point of origin to the delivery point.

                                           25
Marlon sent Shannon on October 1, 2018; October 22, 2018; and December 27,

2018. See Chalker Energy Partners III, LLC v. Le Norman Operating LLC, 595

S.W.3d 668, 669 (Tex. 2020) (recognizing that “an agreement can be expressed in

multiple writings exchanged between the parties” including “[e]mails”). In each of

these emails, the buyer was identified as “McClary Transport.” Shannon

affirmatively confirmed the terms set forth in the October 1 email, and neither

Shannon nor Tina objected to the terms set forth in the October 22 email or the

December 27 email. Thus, under the unambiguous terms of the written trade

agreements, the buyer is McClary Transport, not McClary Energy.

      The McClarys contend the unambiguous terms of the written trade

agreements are contradicted by their sworn declarations, in which they both state

that all their Texas contacts relating to the trade agreements were made on behalf

of McClary Energy. But under Texas law, it is well-established that “[a] party may

not introduce parol evidence to vary the terms of an unambiguous contract.”

Markert v. Williams, 874 S.W.2d 353, 355 (Tex. App.—Houston [1st Dist.] 1994,

writ denied); see also DeClaire v. G & B Mcintosh Family Ltd. P’ship, 260 S.W.3d

34, 45 (Tex. App.—Houston [1st Dist.] 2008, no pet.) (“Evidence that violates the

parol evidence rule has no legal effect.”). Because the trade agreements

                                       26
unambiguously identify the buyer as McClary Transport, the McClarys’

declarations are inadmissible to show the buyer is McClary Energy.2

      The McClarys further contend that the signboard at the entrance of their

property, identifying McClary Energy as the licensed operator of the reclamation

plant, shows they acted on behalf of McClary Energy, not McClary Transport.

Again, we disagree. Like the McClarys’ declarations, the signboard is inadmissible

parol evidence; it cannot contradict or vary the unambiguous terms of the written

trade agreements. Moreover, and as noted above, the fact that McClary Energy

reclaimed the blendstock does not prove that it purchased the blendstock.

      We hold that the McClarys’ Texas contacts were made on behalf of McClary

Transport. Because it is undisputed that McClary Transport is a fictitious entity and

that Shannon negotiated and executed the trade agreements on McClary

Transport’s behalf, we further hold that Shannon is personally liable for the trade

agreements and that McClary Transport’s contacts are Shannon’s personal

contacts. See Stacy v. Energy Mgmt. Grp. Ltd., 734 S.W.2d 149, 150 (Tex. App.—

Houston [1st Dist.] 1987, no writ) (“[A]n agent who executes a contract on behalf

of a fictitious principal is also personally liable on the contract for failure to

accurately disclose his principal.”); Kahn v. Imperial Airport, L.P., 308 S.W.3d

2
      Harvest Fuels timely objected to the McClarys’ declarations, but the trial court
      overruled its objection. The trial court erred in doing so; the declarations should
      not have been admitted into evidence.

                                          27
432, 438 (Tex. App.—Dallas 2010, no pet.) (holding that defendant who

“purported to sign” lease on behalf of DBA entity “bound only himself”); A to Z

Rental Car Ctr. v. Burris, 714 S.W.2d 433, 436 (Tex. App.—Austin 1986, writ

ref’d n.r.e.) (discussing “general rule that one who contracts as an agent in the

name of a nonexistent or fictitious principal, or a principal without legal status or

existence, renders himself personally liable on those contracts”); RESTATEMENT

(THIRD)   OF   AGENCY § 6.04 (2006) (“Unless the third party agrees otherwise, a

person who makes a contract with a third party purportedly as an agent on behalf

of a principal becomes a party to the contract if the purported agent knows or has

reason to know that the purported principal does not exist or lacks capacity to be a

party to a contract.”).

      We now turn to the McClarys’ argument that Shannon’s contacts are

insufficient because they were limited to “communications related to the execution

and performance” of the three trade agreements and “derive from Harvest Fuels’

unilateral activity,” as Harvest Fuels initially solicited the McClarys for business

and not the other way around.

      As just discussed, Shannon is personally liable for McClary Transport’s

Texas contacts. And those contacts are not limited to communications made in

response to the initial solicitation of Harvest Fuels. Instead, these contacts include

accepting multiple deliveries of blendstock at a facility in Texas and making

                                         28
multiple payments to a bank account in Texas as part of an ongoing business

relationship with a Texas fuel trader. Because McClary Transport’s contacts are

Shannon’s personal contacts, we hold that Shannon has established minimum with

Texas.

      Finally, we consider the McClarys’ argument that Tina’s contacts are

insufficient because they were limited to “e-mail communications regarding

payment and deliveries” under the three trade agreements.

      In its live petition, Harvest Fuels alleged that the McClarys’ Texas contacts

were made on behalf of the fictitious entity, McClary Transport. Harvest Fuels

further alleged that in making these contacts, the McClarys acted as a de facto

partnership under Chapter 152 of the Business Organizations Code. See TEX. BUS.

ORGS. CODE § 152.051(b) (“[A]n association of two or more persons to carry on a

business for profit as owners creates a partnership, regardless of whether: (1) the

persons intend to create a partnership; or (2) the association is called a

‘partnership,’ ‘joint venture,’ or other name.”). The McClarys denied Harvest

Fuels’ first allegation that their contacts were made on behalf of a fictitious entity.

But they did not deny or otherwise respond to Harvest Fuels’ second allegation that

they acted as a de facto partnership.

      Under Texas law, “all partners are jointly and severally liable for all

obligations of the partnership.” Id. § 152.304(a). So if the McClarys acted as a

                                          29
partnership, then Tina is liable for Shannon’s contacts, which, as just discussed, are

sufficient to establish minimum contacts. By failing to deny or respond to Harvest

Fuels’ second allegation, the McClarys’ failed to negate a basis for jurisdiction

over Tina. We hold that Tina has established minimum contacts with Texas.

      3.     Whether the trial court’s findings of fact are supported by
             sufficient evidence

      Finally, we consider the McClarys’ argument that the trial court erred in

denying their special appearances because there is legally and factually insufficient

evidence for various findings of fact made by the trial court in support of its

rulings. The McClarys’ challenges are primarily based on arguments that we have

already discussed and rejected. Therefore, our analysis will be brief.

      First, the McClarys challenge the trial court’s findings that (1) doing

business as McClary Transport, Shannon and Tina entered into the three trade

agreements, and (2) Shannon and Tina conducted business with Harvest Fuels as

McClary Transport. The McClarys argue that the evidence is insufficient to

support these findings because (1) Shannon acted on behalf of McClary Energy

and (2) Tina did not negotiate or enter into any agreement on behalf of any entity.

But, as we have already discussed, the unambiguous terms of the written trade

agreements show that Shannon negotiated, executed, and performed the trade

agreements on behalf of McClary Transport and that Tina, for her part, performed

the trade agreements on behalf of McClary Transport as well. And even though

                                         30
Tina did not personally negotiate or execute the trade agreements, there is

sufficient evidence to support a finding that Tina is personally liable for the trade

agreements due to the McClarys’ failure to respond to Harvest Fuels’ allegations

that the McClarys acted as a de facto partnership.

      Second, the McClarys challenge the trial court’s finding that neither

Shannon nor Tina objected to any of the terms of the second and third trade

agreements. The McClarys contend the finding erroneously assumes Tina received

the terms of the second and third trade agreements, when she was not even copied

on the emails. By this challenge, the McClarys make their own erroneous

assumption that Tina had to have been included on the original emails

memorializing the trade agreements in order to object to the terms or be held liable

for the contract. Regardless of assumptions made by the finding, such assumptions

do not change the undisputed fact that Tina made no objections to the trade

agreements.

      Third, the McClarys challenge the trial court’s finding that each trade

agreement required payment to be wired to Harvest Fuels’ bank account located in

Houston. The McClarys argue this finding lacks sufficient evidence because none

of the trade agreements reference payment to be wired to Harvest Fuels’ bank

account located in Houston, Texas. We disagree. In the second trade agreement,

beneath the “Delivery Date” term, Harvest Fuels provided the payment

                                         31
information, including its bank’s name, the routing number, and the account

number. The email states that Harvest Fuels was resending this information, which

indicates that the parties had previously discussed the location for payment.

      Fourth and finally, the McClarys challenge the trial court’s finding that

Harvest Fuels delivered the blendstock to “McClary’s tanks” in Anahuac, TX. The

McClarys contend the finding is not supported by the evidence because “all

deliveries that Harvest Fuels made related to the three alleged trade agreements at

issue were made to McClary Energy, LLC’s Reclamation Plant for reclaiming.”

The unambiguous terms of the trade agreements support the trial court’s finding.

Each agreement contains a delivery term requiring the blendstock to be delivered

to “McClary’s tanks (309 South FM1724 anawack tx, 77514).” The reference

“McClary’s tanks” could be reasonably construed to mean the tanks where

McClary Transport’s deliveries will be received at the delivery location.

      We hold that the challenged findings are supported by legally and factually

sufficient evidence. Accordingly, we hold that the trial court did not err in denying

the McClarys’ special appearances.

                                         32
                                  Conclusion

      We affirm.

                                            Gordon Goodman
                                            Justice

Panel consists of Justices Kelly, Goodman, and Countiss.

                                       33