Court Opinion

ID: 4553793
Source: CourtListenerOpinion
Date Created: 2020-08-07 04:18:19.036191+00
Date Added: 2024-06-11T09:25:58.623270
License: Public Domain

Opinion issued August 6, 2020

                                      In The

                               Court of Appeals
                                      For The

                          First District of Texas
                             ————————————
                               NO. 01-18-00548-CV
                            ———————————
MADISON DEVELOPMENT GROUP LLC, QUATTRO DEVELOPMENT,
           LLC, AND MICHAEL LIYEOS, Appellants
                                         V.
                      MATTRESS FIRM, INC., Appellee

                    On Appeal from the 151st District Court
                             Harris County, Texas
                       Trial Court Case No. 2017-73196

                                   OPINION

      In this case, appellee, Mattress Firm, Inc., sued multiple defendants, including

appellants Madison Development Group LLC (Madison), Quattro Development,

LLC (Quattro), and Michael Liyeos, arising out of an alleged multi-year fraudulent
scheme involving bribes and kickbacks paid to Mattress Firm insiders by real estate

brokers and property development companies in an effort to charge Mattress Firm

artificially inflated rental rates on leases throughout the country. Mattress Firm

brought claims for fraud, civil conspiracy, breach of fiduciary duty, aiding and

abetting breach of fiduciary duty, and negligence. It also alleged that the defendants

had been unjustly enriched, and it sought the imposition of a constructive trust. Most

of the defendants generally appeared in the underlying lawsuit. Madison, Quattro,

and Liyeos, however, are all nonresidents of Texas and they filed special

appearances.

      After a hearing, the trial court denied all three appellants’ special appearances.

On appeal, each of the appellants contends that the trial court erred in denying their

respective special appearances because they lack minimum contacts with Texas such

that maintenance of the suit against them in Texas fails to comport with due process.

Madison also argues that exercising personal jurisdiction over it would offend

traditional notions of fair play and substantial justice.

      We affirm.

                                     Background

      Mattress Firm is a Delaware corporation with its principal place of business

in Houston, Texas, and it sells mattresses and other bedding materials in retail stores

nationwide. Generally, Mattress Firm does not own the real property on which it has

                                            2
retail stores. Instead, “independent real estate developers” own and develop the

property, and Mattress Firm enters into a lease with the developer, or a “special

purpose entity” owned by the developer, to operate a retail store on the property.

Mattress Firm has a Real Estate Committee (the Committee) that regularly meets in

Houston and determines which leases to approve.

      In 2009, Mattress Firm embarked on a period of rapid expansion throughout

the United States, and it made several internal hires to facilitate this expansion. It

hired Bruce Levy as Vice President of Real Estate and Construction “to lead the

national leasing efforts,” and it hired Ryan Vinson as Director of New Market

Development. Levy later became Executive Vice President of Real Estate, and

Vinson later became Senior Vice President of Real Estate. On Levy’s

recommendation, Mattress Firm hired Alexander Deitch and the real estate

brokerage firm that employed him, Colliers International—Atlanta, LLC (Colliers

Atlanta), to serve as Mattress Firm’s “Master Broker,” primarily responsible for

“identifying, evaluating, and brokering new site locations and advising and

negotiating new leases and lease renewals on behalf of Mattress Firm.” Levy,

Vinson, Deitch, and Colliers Atlanta were responsible for evaluating potential

locations for new retail stores and for recommending to senior management at

Mattress Firm, including the Committee, which retail stores to open and where, lease

terms for these stores, construction budgets, which leases to renew, and which stores

                                          3
to close. Levy, Vinson, Deitch, and Colliers Atlanta are all defendants in the

underlying lawsuit but are not parties to this interlocutory appeal.

      According to Mattress Firm, Levy, Vinson, Deitch, and Colliers Atlanta

joined with real estate development companies and their principals—including

appellants Madison Development, Quattro Development, and Michael Liyeos, one

of Quattro’s principals—to engage “in a nationwide bribery, kickback, and fraud

scheme to financially enrich themselves at Mattress Firm’s expense.” To secure their

position as “Master Broker,” Deitch and Colliers Atlanta paid bribes and kickbacks

to Levy and Vinson. Levy and Vinson also used “preferred developers”—real estate

development companies that were also willing to pay bribes and kickbacks, often

disguised as “brokerage fees” or “development fees,” to Levy, Vinson, and Deitch—

to develop properties nationwide, and these developers “were given the largest

number of Mattress Firm leases with very favorable lease terms, including above-

market rents and longer lease terms.” The developer-friendly leases increased the

value of the properties, allowing the developers (or entities controlled by the

developers) to sell their properties at a substantial profit several months after

entering into a lease with Mattress Firm.

      As part of the alleged fraudulent scheme, Levy, Vinson, Deitch, and the

development companies worked together to identify properties for new retail stores,

negotiate long lease terms, and set inflated rental rates for new store locations that

                                            4
were beneficial to the development companies but detrimental to Mattress Firm.

Levy, who “controlled the real estate transactions for the company,” ensured that the

Committee would approve the leases at the agreed-upon terms through

misrepresentations and omissions about the nature of the transactions, including

misrepresenting “[t]he need to pay at the high end of the market, or above, to secure

a lease location,” “the fact that there were no secret side deals to secure the lease

location,” “that there were no conflicts of interests that would require the transaction

to be subject to closer scrutiny,” and “that the lease rates were reasonable and the

best deal possible under the circumstances.”

      In October 2017, Mattress Firm filed suit against seventeen defendants,

including the three appellants here—Madison, Quattro, and Liyeos.1 Madison is a

Washington limited liability company with its principal place of business in

Washington. Quattro is an Illinois limited liability company with its principal place

of business in Illinois, and Liyeos is a member of Quattro and an Illinois resident.

1
      Mattress Firm also sued Levy, Vinson, Deitch, Colliers Atlanta, Preferred Realty,
      LLC, Chase Ventures LLC, ABR Investment, LLC, Preferred Developers, LLC,
      Terra Consulting II, LLC, Win-Development, L.L.C., Owen C. Ewing, and Jesse
      McInerney. All of these defendants generally appeared and are not parties to this
      interlocutory appeal. Mattress Firm also sued Oldacre McDonald, LLC and Mark
      McDonald. These two defendants specially appeared and, after the trial court denied
      their special appearances, were originally parties to this interlocutory appeal.
      Oldacre McDonald, LLC and Mark McDonald reached a settlement agreement with
      Mattress Firm, and a panel of this Court dismissed these two defendants from this
      appeal on January 24, 2019.
                                           5
      Mattress Firm asserted a cause of action for common-law fraud against “all

defendants” named in its petition. Mattress Firm alleged that Levy, Vinson, Deitch,

and Colliers Atlanta knowingly made material misrepresentations and omissions to

Mattress Firm, including failing to disclose kickbacks, using “a network of single

purpose LLCs, partnerships, or other entities intended to conceal the unlawful

activity,” and providing inaccurate comparable lease information to Mattress Firm

to induce it to “pay millions in brokerage commissions and above-market rents.” It

also asserted a cause of action for civil conspiracy against “all defendants,” alleging

that the real estate development companies—including Madison and Quattro—acted

in concert to defraud Mattress Firm. Mattress Firm alleged that the development

companies knew that Levy, Vinson, Deitch, and Colliers Atlanta were engaged in a

scheme to defraud Mattress Firm “out of millions of dollars in excess rents and other

expenses through materially false and inaccurate real estate reports and

representations to [the Committee] and by hiding kickbacks and other costs that

served to inflate Mattress Firm’s lease expenses . . . .”

      Mattress Firm alleged that all of the defendants had been unjustly enriched as

a result of their respective actions, and it sought the imposition of a constructive

trust. With respect to the development companies, including Madison and Quattro,

Mattress Firm alleged that it had conferred upon them “multiple non-gratuitous

payments in the form of above-market rents that were provided in exchange for the

                                           6
kickbacks given to former Mattress Firm employees Levy and Vinson, which

information was concealed and misrepresented to Mattress Firm,” allowing the

development companies “to ‘flip’ the properties for substantial profits, which they

retained.”

      Mattress Firm asserted a claim for breach of fiduciary duty against its two

former employees—Levy and Vinson—and alleged that the other defendants,

including Madison and Quattro, were liable for aiding and abetting Levy’s and

Vinson’s breach of their fiduciary duties. Specifically, Mattress Firm alleged that

the development companies knew that Levy and Vinson “held positions of trust and

confidence” at Mattress Firm, but they “illegally capitalized on the positions of

authority held by Levy and Vinson for their own personal gain.” Finally, Mattress

Firm asserted a cause of action for negligence against Colliers Atlanta.

      In its second amended petition—its live pleading—Mattress Firm alleged

certain acts by Madison, Quattro, and Liyeos that connected each of these defendants

to Texas. Mattress Firm alleged that, while the fraudulent scheme was ongoing,

Quattro entered into at least twenty leases with Mattress Firm, including one for a

retail store in Lubbock, Texas. In March 2013, Liyeos and Rob Walters 2 toured

several cities in West Texas with Levy and Vinson, including a property in Lubbock

2
      Walters is the other member of Quattro, in addition to Liyeos, and he is not a party
      to the underlying lawsuit.
                                           7
that a Quattro-affiliated company later purchased. Through an email to Levy,

Quattro solicited Mattress Firm’s interest in this property. Levy and Vinson

approved the deal “and then pushed it through the [Committee] approval process

with Quattro’s and Deitch’s assistance.” Although Mattress Firm was in the process

of leasing a second property less than one mile away at a rate of $12 per square foot,

Quattro, Levy, Vinson, and Deitch agreed that Mattress Firm would lease the new

location at a rate of $34 per square foot, a price “well above market.” Quattro, Levy,

and Vinson knew that the rental rate for the Lubbock store was above-market and

not favorable to Mattress Firm, especially compared to the other retail store in the

area, but Levy and Vinson “pushed the Quattro lease through the [Committee]

approval process.” Quattro used a special purpose entity—Quattro Lubbock, LLC—

to purchase the real property for the store, and a second Quattro-affiliated entity—

Quattro Springfield, LLC—executed the lease for the store with Mattress Firm.

      With respect to Madison, Mattress Firm alleged that it entered into at least

seventeen development deals with Mattress Firm, including two in Spokane,

Washington, that had lease terms significantly longer than Mattress Firm’s average

and higher rental rates relative to other Mattress Firm stores in the same market.

Mattress Firm alleged that Madison worked behind-the-scenes with Levy to

negotiate lease terms that were favorable to Madison, which Levy would then push

through the Committee for approval, ensuring that Madison would later be able to

                                          8
sell the property at a substantial profit. Mattress Firm alleged the following with

respect to the two properties that Madison developed for Mattress Firm in Spokane:

      [Madison] secured its position as a Preferred Developer, and some of
      its earliest deals, at a meeting at Mattress Firm’s headquarters in
      Houston, Texas. In May of 2012, when Madison Development was first
      establishing its relationship with Mattress Firm, Jim Gallaugher, co-
      founder of Madison Development, traveled to Houston to participate in
      a [Committee] meeting to pitch how Madison Development could assist
      Mattress Firm in its efforts to expand in the Washington market.
      Although Gallaugher may not have actually made the presentation to
      the [Committee], he helped Jim Quigley, the presenter, come up with
      the market strategy for Washington to be presented to the [Committee].
      During the presentation, two Washington properties were discussed on
      which Madison Development ultimately closed with Mattress
      Firm . . . . Quigley, who made the presentation to the [Committee],
      was Mattress Firm’s local broker on both of these deals. Together,
      Gallaugher and Quigley pitched these deals to the [Committee] in
      Houston, Texas, as well as Madison Development’s efforts to expand
      Mattress Firm’s presence in Washington state.
      During the meeting, Gallaugher provided Mattress Firm with
      information about the rental rates in these areas. After the meeting,
      Gallaugher treated Levy and John Broses [a Mattress Firm employee]
      to dinner, where he continued to pitch [the properties] as great deals.
      Mattress Firm ultimately entered into leases on [the properties], but
      neither were great deals for Mattress Firm as falsely represented by
      Gallaugher in Houston, Texas. Instead, the leases contained above-
      market rents which had the effect of increasing Madison
      Development’s profits on the deals at Mattress Firm’s expense.

Mattress Firm alleged that Levy “fast tracked” the Washington leases through the

Committee approval process, “ensur[ing] that the transactions would receive little

scrutiny from the [Committee], making the [Committee] entirely dependent on

Levy’s recommendation to approve the leases.” Mattress Firm alleged that Madison,

                                         9
through two affiliated companies, sold the properties within one year of purchase

and made a profit of nearly $2 million for each property. Mattress Firm alleged that

Madison offered gifts to Levy, Vinson, and Deitch and “rewarded” them “for their

services with a suite at a Dallas Cowboys game, complete with Emmitt Smith in

attendance.”

      Madison, Quattro, and Liyeos all filed special appearances, arguing that they

were nonresidents of Texas and the trial court could not, consistent with federal due

process guarantees, exercise either general or specific personal jurisdiction over

them. Madison supported its special appearance with the declaration of Jim

Gallaugher, and Quattro and Liyeos supported their special appearance with the

affidavit of Liyeos. Madison and Quattro both acknowledged that they had a

business relationship with Mattress Firm, a Texas company, but they had not

committed any torts in Texas. The defendants argued that all of their contacts with

Texas were the result of Mattress Firm’s unilateral decision to base its headquarters

in Houston, the contacts were not the result of any purposeful actions by the

defendants, and the contacts did not have a substantial connection to the causes of

action asserted against them. Madison further argued that, even if it had purposefully

established contacts with Texas and even if Mattress Firm’s causes of action against

it had a substantial connection to those contacts, maintaining suit against it in Texas

                                          10
would be unduly burdensome and exercising personal jurisdiction would offend

traditional notions of fair play and substantial justice.

      Mattress Firm responded to both special appearances and argued that all three

defendants were subject to specific jurisdiction because they purposefully availed

themselves of the privileges of doing business in Texas. Mattress Firm attached

evidence relating to its deals with Madison and Quattro, including email

correspondence between the principals of both companies and Mattress Firm

personnel, internal Mattress Firm emails relating to the Lubbock property and both

Spokane properties, a copy of the PowerPoint presentation given at the Committee

meeting that Gallaugher attended, draft Letters of Intent relating to these three

properties, the lease agreements concerning these three properties, documents

relating to the later sale of the Spokane properties by Madison-affiliated companies,

and a guaranty agreement concerning the Lubbock property.

      After a hearing, the trial court denied Madison’s, Quattro’s, and Liyeos’s

special appearance. This interlocutory appeal followed.

                                 Special Appearance

      Madison, Quattro, and Liyeos all argue that the trial court erred by denying

their special appearances because they do not have sufficient minimum contacts with

Texas to support the exercise of personal jurisdiction over them. They argue that, to

the extent they do have purposeful contacts with Texas, there is no substantial

                                           11
connection between those contacts and Mattress Firm’s causes of action that would

justify exercising personal jurisdiction. Finally, Madison argues that even if its

contacts with Texas support personal jurisdiction, exercising jurisdiction over it

would offend traditional notions of fair play and substantial justice.

A.    Standard of Review and Governing Law

      Whether a trial court has personal jurisdiction over a nonresident defendant is

a question of law that we review de novo. Old Republic Nat’l Title Ins. Co. v. Bell,

549 S.W.3d 550, 558 (Tex. 2018); M & F Worldwide Corp. v. Pepsi-Cola Metro.

Bottling Co., 512 S.W.3d 878, 885 (Tex. 2017). When, as here, the trial court does

not issue findings of fact and conclusions of law relating to its decision on a special

appearance, we imply all relevant facts necessary to support the judgment that are

supported by evidence. Bell, 549 S.W.3d at 558 (citing BMC Software Belg., N.V. v.

Marchand, 83 S.W.3d 789, 795 (Tex. 2002)).

      Texas courts may exercise personal jurisdiction over a nonresident defendant

if (1) the Texas long-arm statute authorizes the exercise of jurisdiction, and (2) the

exercise of jurisdiction is consistent with state and federal due-process guarantees.
Id. (quoting Moncrief Oil Int’l Inc. v. OAO Gazprom, 414 S.W.3d 142, 149 (Tex.

2013)). The long-arm statute permits Texas courts to exercise jurisdiction over a

nonresident defendant that “does business” in Texas. TEX. CIV. PRAC. & REM. CODE

ANN. § 17.042; BMC Software, 83 S.W.3d at 795. Under the long-arm statute, a

                                          12
nonresident does business in Texas if the nonresident commits a tort in whole or in

part in Texas. TEX. CIV. PRAC. & REM. CODE ANN. § 17.042(1)–(2); Bell, 549
S.W.3d at 558–59. “However, allegations that a tort was committed in Texas do not

necessarily satisfy the United States Constitution.” Bell, 549 S.W.3d at 559.

      To establish personal jurisdiction over a nonresident defendant, federal due

process standards require that the defendant have “certain minimum contacts with

[the forum state] such that the maintenance of the suit does not offend ‘traditional

notions of fair play and substantial justice.’” Id. (quoting Int’l Shoe Co. v.

Washington, 326 U.S. 310, 316 (1945)). A defendant establishes minimum contacts

with a forum state when it “purposefully avails itself of the privilege of conducting

activities within the forum state, thus invoking the benefits and protections of its

laws.” Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 338 (Tex.

2009). The defendant’s activities “must justify a conclusion that the defendant could

reasonably anticipate being called into a Texas court.” Bell, 549 S.W.3d at 559;

Retamco Operating, 278 S.W.3d at 338; see TV Azteca v. Ruiz, 490 S.W.3d 29, 37

(Tex. 2016) (“Due process requires purposeful availment because personal

jurisdiction ‘is premised on notions of implied consent—that by invoking the

benefits and protections of a forum’s laws, a nonresident consents to suit there.’”)

(quoting Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 785 (Tex.

2005)).

                                         13
      When determining whether a defendant has purposefully availed itself of the

privilege of conducting activities in Texas, we consider three factors:

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

Bell, 549 S.W.3d at 559 (quoting Moncrief Oil Int’l, 414 S.W.3d at 151); TV Azteca,
490 S.W.3d at 38 (stating that defendant’s contacts must be “purposefully directed”

to Texas and “must result from the defendant’s own ‘efforts to avail itself of the

forum’”). A nonresident may purposefully avoid a jurisdiction “by structuring its

transactions so as neither to profit from the forum’s laws nor be subject to its

jurisdiction.” Michiana Easy Livin’ Country, 168 S.W.3d at 785. We assess the

quality and the nature of the contacts, not the quantity. TV Azteca, 490 S.W.3d at 38.

      A defendant’s contacts with the forum may give rise to either general or

specific jurisdiction. Bell, 549 S.W.3d at 559; M & F Worldwide, 512 S.W.3d at 885.

General jurisdiction, which is not at issue in this case,3 is established when a

defendant’s contacts with the state “are so ‘continuous and systematic’ as to render

[it] essentially at home in the forum State.” M & F Worldwide, 512 S.W.3d at 885

3
      Mattress Firm stated, in both its responses to the special appearances and in its briefs
      on appeal, that it does not contend that any of the three appellants are subject to
      general jurisdiction in Texas.
                                             14
(quoting Goodyear Dunlop Tires Operations, SA v. Brown, 564 U.S. 915, 919

(2011)).

      Specific jurisdiction, which is the focus of this case, exists when the cause of

action arises from or is related to a defendant’s purposeful activities in the state. Bell,
549 S.W.3d at 559. For a Texas court to exercise specific jurisdiction over a

nonresident defendant, (1) the defendant’s contacts with Texas must be purposeful,

and (2) the cause of action must arise from those contacts. Id. (quoting Michiana

Easy Livin’ Country, 168 S.W.3d at 795); see Bristol-Myers Squibb Co. v. Superior

Court of California, 137 S. Ct. 1773, 1780 (2017) (stating that, for specific

jurisdiction to exist, “there must be ‘an affiliation between the forum and the

underlying controversy, principally, [an] activity or an occurrence that takes place

in the forum State and is therefore subject to the State’s regulation” and that specific

jurisdiction “is confined to adjudication of issues deriving from, or connected with,

the very controversy that establishes jurisdiction”). The defendant’s purposeful

contacts “must be substantially connected to the operative facts of the litigation or

form the basis of the cause of action.” Bell, 549 S.W.3d at 559–60 (citing Moki Mac

River Expeditions v. Drugg, 221 S.W.3d 569, 585 (Tex. 2007)); see Walden v. Fiore,

571 U.S. 277, 284 (2014) (“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
      In analyzing specific jurisdiction, we focus on the relationship between the

forum, the defendant, and the litigation. Bell, 549 S.W.3d at 559; Walden, 571 U.S.

at 285 (“[O]ur ‘minimum contacts’ analysis looks to the defendant’s contacts with

the forum State itself, not the defendant’s contacts with persons who reside there.”).

“[A] defendant’s contacts with the forum State may be intertwined with his

transactions or interactions with the plaintiff or other parties,” but “a defendant’s

relationship with a plaintiff or third party, standing alone, is an insufficient basis for

jurisdiction.” Walden, 571 U.S. at 286. Specific jurisdiction must be established on

a claim-by-claim basis unless all of the asserted claims arise from the same contacts

with the forum. M & F Worldwide, 512 S.W.3d at 886; Moncrief Oil Int’l, 414
S.W.3d at 150–51.

      When personal jurisdiction is challenged, the plaintiff and the nonresident

defendant bear shifting burdens of proof. Bell, 549 S.W.3d at 559; Kelly v. Gen.

Interior Constr., Inc., 301 S.W.3d 653, 658 (Tex. 2010). The plaintiff bears the

initial burden to plead sufficient allegations to bring the nonresident defendant

within the scope of Texas’s long-arm statute. Bell, 549 S.W.3d at 559; Kelly, 301
S.W.3d at 658 (“Because the plaintiff defines 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.”). The trial court may consider the plaintiff’s original

pleadings as well as its response to the defendant’s special appearance in

                                           16
determining whether the plaintiff satisfied its initial burden. Touradji v. Beach

Capital P’ship, L.P., 316 S.W.3d 15, 23 (Tex. App.—Houston [1st Dist.] 2010, no

pet.). If the plaintiff fails to plead facts bringing the defendant within the reach of

the long-arm statute, “the defendant need only prove that it does not live in Texas to

negate jurisdiction.” Kelly, 301 S.W.3d at 658–59. In conducting our review, we

accept as true the allegations in the petition. Touradji, 316 S.W.3d at 23.

      If the plaintiff meets its initial pleading burden, the burden shifts to the

defendant to negate all bases of personal jurisdiction alleged by the plaintiff. Bell,
549 S.W.3d at 559; Kelly, 301 S.W.3d at 658. The defendant can negate jurisdiction

on either a factual or a legal basis. Kelly, 301 S.W.3d at 659. Factually, the defendant

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

plaintiff’s allegations.” Id. The plaintiff can then respond with its own evidence

affirming its allegations, and if it does not present evidence establishing personal

jurisdiction, it risks dismissal of its suit. Id. Legally, the defendant can show that

even if the plaintiff’s alleged facts are true, the evidence is legally insufficient to

establish jurisdiction; that the defendant’s contacts with Texas do not constitute

purposeful availment; for specific jurisdiction, that the claims do not arise from

contacts with Texas; or that the exercise of jurisdiction offends traditional notions

of fair play and substantial justice. Id.

                                            17
      The Texas Supreme Court has held that “[t]he mere existence or allegation of

a conspiracy directed at Texas is not sufficient to confer jurisdiction.” Bell, 549
S.W.3d at 560; Nat’l Indus. Sand Ass’n v. Gibson, 897 S.W.2d 769, 773 (Tex. 1995).

Jurisdiction may not be premised “solely upon the effects or consequences of an

alleged conspiracy in the forum state”; instead, it is the defendant’s conduct and

connection with the forum that is critical. Michiana Easy Livin’ Country, 168
S.W.3d at 789. Furthermore, “[j]urisdiction cannot turn on whether a defendant

denies wrongdoing—as virtually all will. Nor can it turn on whether a plaintiff

merely alleges wrongdoing—again as virtually all will.” Bell, 549 S.W.3d at 560

(quoting Michiana Easy Livin’ Country, 168 S.W.3d at 791). When conducting a

jurisdictional analysis, we must not “confuse ‘the roles of judge and jury by equating

the jurisdictional inquiry with the underlying merits.’” Id. (quoting Searcy v. Parex

Res., Inc., 496 S.W.3d 58, 70 (Tex. 2016)). The supreme court has expressly

disapproved of opinions holding that “specific jurisdiction turns on whether a

defendant’s contacts were tortious rather than the contacts themselves.” Michiana

Easy Livin’ Country, 168 S.W.3d at 791–92.

B.    Quattro’s and Liyeos’s Special Appearance

      Quattro and Liyeos both argue that the trial court erred in impliedly finding

that they had purposeful contacts with Texas. They argue that a lease transaction for

a retail store in Lubbock, Texas, should not be considered one of their contacts

                                         18
because Mattress Firm entered into that lease with an affiliate of Quattro—not

Quattro itself—and that Mattress Firm has neither pleaded nor proven any basis for

imputing this contact of Quattro’s affiliate to Quattro or Liyeos. They further argue

that their remaining contacts with Texas are not purposeful, are not substantially

connected to the operative facts of the litigation, and are not sufficient to support the

exercise of personal jurisdiction over them.

      1.     Contacts with Texas

      In support of Quattro’s and his own special appearance, Liyeos averred that

Quattro had not entered into any contracts in Texas and had not entered into any

leases with Mattress Firm or a Mattress Firm affiliate in Texas. Liyeos

acknowledged that, over a five-year period, Quattro-affiliated companies entered

into twenty-one leases with Mattress Firm, and Quattro itself entered into a lease

with Mattress Firm for a premises in Illinois, which it then assigned to an affiliated

entity. Liyeos averred the following with respect to the Lubbock store and Quattro’s

communications with Mattress Firm:

      Only one of the 22 [Mattress Firm] leases pertains to a [Mattress Firm]
      store in Texas. Specifically, in July 2013, Quattro Springfield, LLC
      (“Quattro Springfield”)—an Illinois limited liability company—
      entered into a ten-year lease with [Mattress Firm] covering property
      located in Lubbock, Texas. Quattro Springfield ceased being the
      landlord under the lease in June 2014, following the sale of the land
      upon which the Lubbock [Mattress Firm] store was located. Quattro did
      not pay any fees to Alexander Deitch or any entities owned or
      controlled by Deitch in connection with the Lubbock lease, and is not
      aware of any Quattro affiliate paying any such fees.

                                           19
      ....
      Over the course of the leases between Quattro affiliates and [Mattress
      Firm], Quattro representatives met with [Mattress Firm] representatives
      in Texas on approximately three occasions to discuss, in general terms,
      [Mattress Firm’s] national expansion efforts. Aside from those three
      occasions, Quattro representatives communicated with [Mattress Firm]
      representatives primarily by email or phone from outside of Texas.
      Neither Quattro nor I had any communications in Texas with [Mattress
      Firm] or any of the defendants in this lawsuit regarding any of the
      matters of which [Mattress Firm] complains in this lawsuit, including
      (i) equity participation by Deitch, any [Mattress Firm] employee, or any
      entity owned or controlled by Deitch or any [Mattress Firm] employee
      in any real estate development projects undertaken by Quattro or any
      of its affiliates, (ii) payment of development or brokerage fees to Deitch
      or entities owned or controlled by Deitch, or (iii) other payments or
      gifts to Deitch, any [Mattress Firm] employee, or any entity owned or
      controlled by Deitch or any [Mattress Firm] employee.

      In its response to Quattro’s and Liyeos’s special appearances, Mattress Firm

attached email correspondence involving Liyeos, Rob Walters (Quattro’s other

member), Levy, Vinson, and other Mattress Firm personnel. In June 2012, Walters

emailed Levy to inform him that Quattro was purchasing a site in Lubbock and

asking Levy if he would be interested in exploring the possibility of a Mattress Firm

retail store at that location. Levy forwarded this email to Tim Hughes, a broker in

Dallas, who began discussing the project with Walters. In September 2012, Walters

informed Hughes that “[w]e are finally under contract and ready to see if there is a

deal to be made with Mattress Firm.” Walters proposed providing 4,500 square feet

of space to Mattress Firm, and he told Hughes that “[t]he rent is going to need to be

$34/sf with their build out”; and, while he acknowledged that this rental amount was
                                         20
“probably high for Lubbock,” he stated that it was for a prime location at a red light

for an entrance to a shopping mall. Hughes and Levy then had an email conversation

about this potential deal, with Hughes asking Levy, “[C]an you go to $34psf net in

Lubbock?” Levy responded, “Yes. We like these guys[.]”

      Mattress Firm’s evidence also included email correspondence concerning a

trip Liyeos and Walters took to West Texas in March 2013 to view potential

locations in Amarillo, Lubbock, Midland, Odessa, San Angelo, and other towns.

Vinson went on this tour with Liyeos and Walters, and Walters communicated with

Levy concerning Vinson’s thoughts about proposed locations in Lubbock. Later in

March, Liyeos, Levy, Hughes, and Walters discussed scheduling the Lubbock

location for a presentation before the Committee, and the documents attached to this

email included site plans and a Letter of Intent with proposed lease conditions,

including a ten-year lease term and base rent at $34 per square foot. The draft Letter

of Intent was addressed to Liyeos at Quattro Development, LLC and listed the

“Landlord Entity” as Quattro Lubbock, LLC.” Liyeos and Quattro Development

were listed as the “Landlord Contact.”

      Mattress Firm also attached PowerPoint presentations from two Committee

meetings—one in April 2013 and one in May 2013—concerning two proposed retail

stores located along the same street in Lubbock. The first store had a base rent of

$12 per square foot, while the second store, developed by Quattro and presented at

                                         21
the May 2013 meeting, had a base rent of $34 per square foot. In both instances, the

Committee members signed a “Notice to Proceed.”

      Quattro Lubbock, LLC, a Quattro-affiliated company with Quattro as its sole

manager, purchased the real property for the Lubbock store on June 5, 2013. On July

24, 2013, Mattress Firm and Quattro Springfield, L.L.C., a Quattro-affiliated

company, entered into a lease agreement for the Lubbock property. On the same day,

and at Quattro’s request, Mattress Firm signed a guaranty agreement for the Lubbock

property.4 This guaranty named Quattro Springfield, L.L.C., as the landlord and

provided that it was to be governed by the laws of the state of Texas. Although the

lease agreement named Quattro Springfield as the landlord, it also provided that any

notices required to be sent to the landlord under the lease should be sent to Liyeos

at Quattro Development.

      Mattress Firm also attached email correspondence between Liyeos and a

Mattress Firm employee in which Liyeos planned to take a trip to Houston in

September 2013 to meet Mattress Firm employees “with whom we’ve worked but

have never actually met with in person.” In November 2013, Quattro’s Vice

President of Development and Construction sent an email to Mattress Firm’s Vice

President of Construction proposing that they set up biweekly meetings “so we can

4
      With respect to this guaranty, a Mattress Firm employee stated in an internal email,
      “This is our preferred developer so it is ok to give him [Walters] the guaranty for
      each of the three stores [including the Lubbock store] he is missing it from.”
                                           22
discuss our projects.” In April and May 2014, Walters met with Levy, Vinson, and

Deitch to tour potential locations in the Houston area, although, by July 2014,

Quattro had been unable to complete a deal for any of the potential Houston-area

locations, and there is no indication in the record that Quattro developed a property

for Mattress Firm in Houston.

        After Mattress Firm responded to the special appearances, Quattro filed an

additional declaration from Liyeos. Liyeos disputed Mattress Firm’s allegation that

the base rent for the Lubbock store was “above market,” stating that the rent was

“competitive and consistent with the market rents for comparable properties at the

time [Mattress Firm] and Quattro Springfield negotiated and entered into the lease.”

Liyeos also disputed the allegation that Quattro provided Mattress Firm with

“misleading comps” and “inflated numbers” to justify the high rent for the Lubbock

store. He declared that Quattro’s request of a guaranty of the lease by Mattress Firm

was a “normal business practice” for the company and was not an attempt by Quattro

to raise the value of the property and increase its profit when the property was later

sold.

        Liyeos also asserted that Quattro paid no compensation to Deitch, Levy,

Vinson, or any companies owned by these individuals in connection with the

Lubbock store, that Deitch did not participate in negotiations concerning the

Lubbock store, and that Quattro did not keep Hughes, Mattress Firm’s local broker

                                         23
for this location, “largely in the dark about the transaction” or conceal from Hughes

Deitch’s participation in the deal. With respect to the tour of potential Houston-area

locations that occurred in May 2014, Liyeos denied that Quattro coordinated with

Deitch “regarding ‘how best to profit’ from the Texas trip to [Mattress Firm’s]

detriment,” nor did they have any discussions related to the matters that formed the

basis of Mattress Firm’s lawsuit.

      2.     Whether Quattro’s and Liyeos’s Contacts Were Purposeful

      In asserting that they lack purposeful contacts with Texas, Quattro and Liyeos

first argue that the Lubbock lease cannot constitute a purposeful contact with Texas

that confers jurisdiction over them because a separate entity, Quattro Springfield,

negotiated and entered into the lease with Mattress Firm. They argue that because

Mattress Firm has neither alleged nor proven a jurisdictional veil-piercing theory,

Quattro Springfield’s contacts with Texas—the Lubbock lease—cannot be imputed

to Quattro or Liyeos. We disagree.

      Texas law presumes that two separate corporations are distinct entities. PHC-

Minden, L.P. v. Kimberly-Clark Corp., 235 S.W.3d 163, 173 (Tex. 2007).

Jurisdiction over one corporate entity, such as a parent corporation, does not

automatically establish jurisdiction over a related corporate entity, such as a

subsidiary. Spir Star AG v. Kimich, 310 S.W.3d 868, 874 (Tex. 2010). “Instead, to

‘fuse’ two corporations for jurisdictional purposes, a parent must ‘control[] the

                                         24
internal business operations and affairs of the subsidiary’ to an extent beyond its role

as an investor.” Id. (quoting PHC-Minden, 235 S.W.3d at 175); BMC Software Belg.,
83 S.W.3d at 799 (stating that parent company must exercise degree of control

“greater than that normally associated with common ownership and directorship”

and that evidence must show two entities ceased to be separate “so that the corporate

fiction should be disregarded to prevent fraud or injustice”). The rationale behind

exercising jurisdiction over the subsidiary corporation in such an instance is that “the

parent exerts such domination and control over its subsidiary that they do not in

reality constitute separate and distinct corporate entities but are one and the same

corporation for purposes of jurisdiction.” BMC Software Belg., 83 S.W.3d at 798

(quoting Hargrave v. Fibreboard Corp., 710 F.2d 1154, 1159 (5th Cir. 1983)). “The

party seeking to ascribe one corporation’s actions to another by disregarding their

distinct corporate entities must prove this allegation.” Id.; see PHC-Minden, 235
S.W.3d at 173.

      Quattro and Liyeos argue that Mattress Firm cannot rely on jurisdictional veil-

piercing to impute Quattro Springfield’s contacts with Texas to them because

Mattress Firm did not plead a veil-piercing theory, such as alter ego, nor did it offer

any evidence to support such a theory. They argue that Mattress Firm submitted no

evidence concerning the relationship between Quattro and Quattro Springfield or the

degree of control that one entity might exercise over the other. Mattress Firm,

                                          25
however, argues that its failure to plead and prove a jurisdictional veil-piercing

theory is not fatal to its attempt to use the Lubbock lease, entered into by Quattro

Springfield, as a contact of Quattro’s, citing as support the Texas Supreme Court’s

2016 decision in Cornerstone Healthcare Group Holding, Inc. v. Nautic

Management VI, L.P. See 493 S.W.3d 65 (Tex. 2016). We agree with Mattress Firm

that Cornerstone is controlling in this case.

      Cornerstone owned and operated long-term acute-care hospitals in Texas and

other states, and, in a quest to expand its business, several of its executives identified

Reliant Hospital Partners, LLC, which owned several rehabilitation facilities in

Texas, as a possible acquisition. Id. at 67–68. The executives approached Nautic

Partners, LLC, a Rhode Island company that investigates potential investments for

private equity funds, as an investment source for the acquisition of Reliant. Id. at 68.

One Cornerstone executive proposed to Nautic Partners that three equity funds

advised by Nautic Partners acquire the assets of Reliant and hire Cornerstone

executives to run the company. Id. Nautic Partners and Reliant signed a letter of

intent concerning the asset purchase, and the equity funds authorized the investment

in Reliant and issued a capital call. Id. at 68–69.

      Through a series of four newly created subsidiary companies, a company

known as New Reliant signed an asset purchase agreement with Reliant, and the

funds raised during the equity funds’ capital calls provided the purchase money for

                                           26
the transaction. Id. at 69. After New Reliant acquired Reliant, the Cornerstone

executives involved in proposing the deal quit Cornerstone and started working for

New Reliant. Id. Cornerstone sued its former executives, New Reliant, Nautic

Partners, Reliant, the equity funds, and other parties. Id. The equity funds and the

entity that was their partner and manager—and that had authorized the investment

in Reliant—all filed special appearances, arguing that they were Delaware limited

partnerships with their principal places of business in Rhode Island and were

therefore not subject to jurisdiction in Texas. Id.

      The equity funds argued that they lacked minimum contacts with Texas,

pointing out that New Reliant purchased and owned the hospitals located in Texas,

not the funds themselves, and that New Reliant’s contacts with Texas could not be

imputed to the funds under a jurisdictional veil-piercing theory. Id. at 71. In

addressing whether the equity funds had sufficient contacts with Texas, the Texas

Supreme Court reasserted the general law stated in PHC-Minden that if a parent and

subsidiary company maintain separate corporate entities, one entity’s contacts in a

forum state may not be attributed to the other. Id. at 72. The court stated:

      [The equity funds] are also correct that Cornerstone has not argued that
      the Funds and their subsidiaries failed to maintain their legal
      separateness or that the Texas contacts of any one of those entities could
      or should be attributed to any other. Accordingly, New Reliant’s Texas
      contacts—specifically, its ownership and operation of hospitals in
      Texas—could not in and of themselves subject New Reliant’s limited-
      partner parent companies and their general partner [the equity funds] to
      Texas’s jurisdiction.
                                           27
Id. However, the court then disagreed with the equity funds that their “use of a

subsidiary to purchase the hospitals effectively ends the inquiry.” Id.

      The supreme court noted that the chain of events beginning with the initial

presentation of the investment opportunity to the manager of the equity funds and

ending with New Reliant’s acquisition of the Texas hospitals “were all part of one

overarching transaction.” Id. The company agreement between the equity funds and

the first subsidiary in the chain required the funds’ capital calls to be used for New

Reliant’s purchase of the hospitals. Id. The equity funds directly transferred the

purchase money to the law firm that served as New Reliant’s disbursement agent,

which transferred the purchase money to Reliant. Id. Additionally, all of the

subsidiary companies involved in the transaction “were newly created to complete

the transaction that the [equity funds] set in motion.” Id. The court, in concluding

that the purchase of the Texas hospitals was a contact of the equity funds and not

solely that of New Reliant, stated:

      Cornerstone is not attempting to attribute the contacts established by
      New Reliant as a going concern to the Funds or the General Partner.
      Rather, it is seeking to trace the purchase of Texas assets to the entities
      that spearheaded and directed the transaction, and ultimately stood to
      profit from it. We agree with Cornerstone that “[k]eeping legal entities
      distinct does not mean they can escape jurisdiction by splitting an
      integrated transaction into little bits.” Although “only the defendant’s
      contacts with the forum” count, not “the unilateral activity of another
      party or a third person,” the Reliant deal did not stem from a third
      party’s unilateral activity; it was the result of a transaction stemming
      from the activity of the [equity funds] themselves.
                                          28
Id. at 72–73 (internal citations omitted).

      This case is sufficiently analogous to Cornerstone such that the Lubbock lease

executed by Quattro Springfield is a contact of Quattro’s, just as New Reliant’s

purchase of the Texas hospitals was a contact of the equity funds. Mattress Firm

presented evidence that Rob Walters, a member of Quattro, informed Levy via email

in June 2012 that Quattro intended to purchase a location in Lubbock and asked if

Levy would be interested in locating a retail store at this location. Walters sent this

email from his Quattro Development email address, and the email’s signature block

stated, “Quattro Development, L.L.C.”5 As an attachment to this email, Walters

included two pages that showed a map of the location, information on the area’s

demographics, and a diagram of the building and parking lots. Both of these pages

included a logo that stated “Quattro Development” and included contact information

for “Quattro Development Construction Contact” and “Quattro Development

Leasing Contact.” Throughout the negotiation process for the purchase and leasing

of the Lubbock location, all of the email correspondence from Walters and Liyeos

were sent from their Quattro Development email addresses. A site plan for the

Lubbock location included a reference to “Quattro Development, LLC.”

5
      This email stated, “Lubbock, TX — We are buying the Cancun Restaurant which
      is at a stoplight at the northern entrance to the mall.”
                                             29
      An unexecuted “Letter of Intent to Lease Space” on Mattress Firm letterhead,

dated March 28, 2013, concerned the property and was addressed to Liyeos at

“Quattro Development, L.L.C.” One part of the Letter of Intent listed “Quattro

Lubbock, L.L.C.” as the “Landlord Entity.” However, the Letter of Intent listed

Liyeos at “Quattro Development, L.L.C.” as the “Landlord Contact,” and the

signature block, which was left blank, stated, “LANDLORD: QUATTRO

DEVELOPMENT, L.L.C.” The Letter of Intent did not mention Quattro Springfield.

The record contains a general warranty deed for the Lubbock property, reflecting

that on June 5, 2013, the property was conveyed to “Quattro Lubbock, LLC.”

      The only two documents in the record that connect Quattro Springfield to the

transaction involving the Lubbock property are the lease agreement and the

guaranty, both of which were executed on July 24, 2013, and identify Quattro

Springfield as the landlord of the property. The lease, however, also includes a

section detailing where parties are to send notices required under the lease. This

provision states, “To Landlord: Quattro Development, L.L.C.” and “Attention:

Mike Liyeos.”

      Quattro attempts to distinguish Cornerstone by pointing out that, unlike the

subsidiary entities created by the equity funds after their investment in Reliant had

been authorized, Quattro Springfield had been in existence for at least a year before

execution of the Lubbock lease and therefore Quattro did not create Quattro

                                         30
Springfield solely “as a ‘vehicle’ for leasing premises to [Mattress Firm] in Texas.”

See Cornerstone, 493 S.W.3d at 72. Quattro also argues that, unlike in Cornerstone,

the record here does not contain evidence concerning the source of the funds used to

acquire the property that Quattro Springfield leased to Mattress Firm. See id. These

differences between Cornerstone and this case, however, do not compel a conclusion

that the Lubbock lease is solely a contact of Quattro Springfield and not of Quattro.

      The record before the trial court does not support Quattro’s contention that

Quattro Springfield was the entity that negotiated the transaction for the Lubbock

lease. Instead, the record reflects that Quattro itself initiated the deal and was heavily

involved in bringing the transaction to fruition. As in Cornerstone, by arguing that

the Lubbock lease is a contact of Quattro’s, Mattress Firm “is seeking to trace the

purchase of Texas assets to the entit[y] that spearheaded and directed the transaction,

and ultimately stood to profit from it.” See id. at 73. The negotiation and execution

of the Lubbock lease was an “integrated transaction,” and Quattro cannot “escape

jurisdiction” by using separate entities to “split[] an integrated transaction into little

bits.” See id. Purchasing the real property in Lubbock and negotiating the lease of

the property to Mattress Firm “did not stem from a third party’s unilateral activity”;

instead, this “was the result of a transaction stemming from the activity” of Quattro

itself. See id. We therefore conclude that the Lubbock lease is a contact of Quattro’s,

                                           31
and we now turn to whether that contact constitutes purposeful availment of the laws

of Texas.

      In Retamco Operating, Inc. v. Republic Drilling Co., the Texas Supreme

Court held that a California company, Republic, that took assignment of oil and gas

interests located in Texas had purposeful contacts with Texas that were not “random,

fortuitous, or attenuated.” 278 S.W.3d at 339. Republic was aware that the interests

it received were located in three Texas counties and it “purposefully took assignment

of Texas real property.” Id. By taking assignment of these property interests located

in Texas, Republic “reached out and created a continuing relationship in Texas,” and

the ownership of the property interests allowed Republic to enjoy the benefits and

protections of Texas laws. Id. (quoting Michiana Easy Livin’ Country, 168 S.W.3d

at 787). The court held that Republic’s Texas contacts were not the result of

unilateral actions of a third party; instead, “Republic was a willing participant in a

transaction with an affiliated Texas company to purchase Texas real property.” Id.

at 340. The assignment of the oil and gas interests “gave Republic valuable assets in

Texas,” and Republic had benefitted from the assignment, as it had made over $1

million in revenue and had sold some of the property. Id. The court thus concluded

that Republic, by purchasing real property interests located in Texas, had

“purposefully availed itself of the privilege of conducting activities in Texas.” Id.

                                          32
      Here, Quattro informed Levy of its intent to purchase a site in Lubbock, Texas,

and proposed that Mattress Firm use that location for a retail store. After months of

negotiations, a Quattro affiliate—Quattro Lubbock—purchased the real property

and a second Quattro affiliate—Quattro Springfield—executed a lease with Mattress

Firm. Quattro initiated and was directly involved in this transaction. This transaction

was the result of Quattro’s actions, not the unilateral actions of a third party. See

Bell, 549 S.W.3d at 559. With the Lubbock lease, Quattro specifically sought out a

Texas property as an investment opportunity and presented this property to Mattress

Firm as a potential transaction, which was later finalized. This contact was

purposeful and was not random or fortuitous. See Cornerstone, 493 S.W.3d at 73

(“[T]he Funds, through the General Partner, targeted Texas assets in which to invest

and sought to profit from that investment.”); Retamco Operating, 278 S.W.3d at

339–40 (stating that “the location of the transferred asset is not fortuitous; the

property’s location is fixed in this state” and that “when purchasing real property,

the location matters”). Finally, owning and leasing real property in Texas through

its affiliates gave Quattro a valuable asset located in Texas and allowed Quattro to

“enjoy the benefits and protection” of Texas laws. See Retamco Operating, 278
S.W.3d at 339. Moreover, the lease agreement between Quattro Springfield and

Mattress Firm for the Lubbock property provided that it was to be governed by the

laws of the State of Texas.

                                          33
      We conclude that, by proposing, negotiating, and executing the Lubbock

lease, and by agreeing that it was to be governed by the laws of Texas, Quattro

“purposefully directed its activities towards Texas” and “has purposefully availed

itself of the privilege of conducting activities in Texas.” See id. at 340; see also

Cornerstone, 493 S.W.3d at 73 (stating that equity funds “specifically sought both a

Texas seller and Texas assets” and concluding that funds had purposeful contacts

with Texas and sought “some benefit, advantage, or profit” from Texas “such that

they impliedly consented to suit here”).

      Exercising specific jurisdiction requires more than just purposeful contacts

with Texas, however; for the nonresident defendant to be subject to suit here, the

defendant’s purposeful contacts “must be substantially connected to the operative

facts of the litigation or form the basis of the cause of action.” Bell, 549 S.W.3d at

559–60. Here, Mattress Firm asserted causes of action for fraud, civil conspiracy,

and aiding and abetting breach of fiduciary duty against Quattro; it also alleged that

Quattro had been unjustly enriched, and it sought the imposition of a constructive

trust. All of Mattress Firm’s causes of action are based on its allegations that Quattro,

along with multiple other real estate development companies, engaged in a wide-

ranging fraudulent scheme involving the payment of bribes and kickbacks to

Mattress Firm personnel and brokers—Levy, Vinson, Deitch, and Colliers Atlanta—

in a conspiracy to defraud Mattress Firm. Mattress Firm alleged that development

                                           34
companies such as Quattro paid bribes and kickbacks to help secure favorable lease

terms in an effort to increase the value of the properties to maximize the profit on

the later sale of the properties. Mattress Firm also alleged that the development

companies worked behind-the-scenes with Levy, Vinson, and Deitch to ensure

favorable lease terms, such as inflated rental rates, which Levy, Vinson, and Deitch

would then present to the Committee as favorable deals for Mattress Firm, using

misrepresentations and omissions to ensure approval of the deals by the Committee.

      Resolution of these claims will involve examining the circumstances

surrounding the transactions that were a part of the purportedly fraudulent bribery

and kickback scheme. The process by which the Lubbock lease—among many

others—was negotiated and executed will be an operative fact in the litigation of

Mattress Firm’s claims. We conclude that Mattress Firm’s claims have a substantial

connection with Quattro’s purposeful contacts with Texas and that the claims arise

out of and relate to Quattro’s contacts. See id.; Cornerstone, 493 S.W.3d at 74

(holding that claims concerning improper use of confidential information, tortious

interference, and aiding and abetting breach of duties arose out of Reliant

transaction, which was “the crux of the [equity funds’] purposeful contact with

Texas” and would be focus of claims against equity funds at trial).

      Quattro argues that there is no substantial connection between the Lubbock

lease and the operative facts of Mattress Firm’s claims because Quattro presented

                                         35
evidence, in the form of Liyeos’s affidavit, that Quattro paid no fees—proper or

improper—to Deitch, entities owned by Deitch, or Mattress Firm “insiders” such as

Levy and Vinson with respect to the Lubbock lease. Essentially, Quattro argues that

it is not subject to specific jurisdiction in Texas because its conduct in Texas

concerning the Lubbock lease was not tortious.

       The Texas Supreme Court has, however, repeatedly held that whether the

defendant’s conduct is tortious is not relevant to the minimum-contacts analysis that

is to be performed at the special appearance stage of litigation. See Bell, 549 S.W.3d

at 562 (stating that “we may not determine the underlying merits in order to answer

the jurisdictional question” and that, whether transfers of money at issue in case were

innocent loans or part of elaborate conspiracy to defraud creditors, focus of special

appearance inquiry was defendant’s contacts with Texas); Searcy, 496 S.W.3d at 70

(“We must not confuse ‘the roles of judge and jury by equating the jurisdictional

inquiry with the underlying merits.’”) (quoting Michiana Easy Livin’ Country, 168
S.W.3d at 790); Cornerstone, 493 S.W.3d at 73 (“[W]hether the [equity funds’]

conduct was ultimately tortious is not before us and is not relevant to the minimum-

contacts analysis.”); Michiana Easy Livin’ Country, 168 S.W.3d at 791

(“Jurisdiction cannot turn on whether a defendant denies wrongdoing—as virtually

all will. Nor can it turn on whether a plaintiff merely alleges wrongdoing—again as

virtually all will.”).

                                          36
      The trial court had pleadings and evidence before it that Quattro purposefully

purchased property in Texas and executed a lease on the property with Mattress

Firm. Mattress Firm alleges improprieties in this transaction, which was allegedly

part of a broader fraudulent scheme. Regardless of whether Quattro’s conduct with

respect to the Lubbock lease was innocent or was fraudulent, this contact with Texas

was purposeful and is substantially connected to the operative facts of Mattress

Firm’s claims. See Michiana Easy Livin’ Country, 168 S.W.3d at 790–91 (stating

that “[i]f purposeful availment depends on whether a tort was directed toward Texas,

then a nonresident may defeat jurisdiction by proving there was no tort” and that it

is better for judges to “limit their jurisdictional decisions” to business contacts of

defendants, which are “generally a matter of physical fact,” without “involving

themselves in trying” tort liability, which “turns on what the parties thought, said, or

intended”).

      Liyeos, individually, argues that the trial court erred in denying his special

appearance because Mattress Firm failed to plead any facts showing that he

committed a tort in Texas or any facts that would bring him within the scope of

Texas’s long-arm statute, nor did the language of Mattress Firm’s petition assert any

tort claims against Liyeos. Liyeos further argues that he does not have sufficient

minimum contacts with Texas and, to the extent he does have any contacts with

                                          37
Texas, there is no substantial connection between his contacts and Mattress Firm’s

causes of action.

      We do not agree with Liyeos’s contention that Mattress Firm did not allege

facts bringing him within the scope of the Texas long-arm statute. Mattress Firm

alleged that Liyeos was one of two members of Quattro and that he regularly

communicated with Levy, Vinson, and other Mattress Firm employees by email and

phone. It alleged that Quattro “and Liyeos, one of two sole members of Quattro,

were participants in the massive, multi-year fraud, bribery, and kickback scheme that

is the subject of this lawsuit.” Mattress Firm alleged that Liyeos and Walters

arranged a tour of West Texas locations in March 2013 and a trip to Mattress Firm’s

Houston headquarters in November 2013. It alleged that, on the draft Letter of Intent

for the Lubbock lease, Liyeos was listed as the landlord contact and that Liyeos

“emailed Levy about pushing the Lubbock deal” to the Committee. Mattress Firm

alleged that Quattro and Liyeos conducted the negotiations for the Lubbock lease,

and the lease agreement for the Lubbock property listed Liyeos as the contact for all

notices to be sent to the landlord. With respect to its civil conspiracy cause of action,

asserted against “All Defendants,” Mattress Firm alleged:

      Defendants, Levy, Terra Consulting, Deitch, Colliers Atlanta, Chase
      Ventures, Vinson, Oldacre McDonald, Win-Development, Quattro, and
      Madison Development, and others acting in concert with or on behalf
      of the foregoing, knowingly, willfully, and unlawfully did conspire,
      combine, confederate, and agree together to defraud Mattress Firm.

                                           38
Mattress Firm also sought the imposition of a constructive trust against “All

Defendants,” and it requested the disgorgement of ill-gotten gains from “All

Defendants” based on an unjust enrichment theory.6

      Most of Mattress Firm’s allegations mention only Quattro, which, as an entity,

can act only through its members: Liyeos and Walters. However, Mattress Firm’s

live pleading does contain allegations concerning specific actions that Liyeos took

with respect to negotiating the Lubbock lease, and the evidence that Mattress Firm

attached to its response to Quattro’s and Liyeos’s special appearance also reflects

that Liyeos played a significant role in completing that transaction. Mattress Firm’s

live pleading, although not a model of clarity with respect to which claims are being

asserted against which defendants, also asserts causes of action against Liyeos and

seeks relief against him.

      All of Liyeos’s contacts with Texas are a result of his position as one of

Quattro’s members. We have already held that the Lubbock lease constitutes a

purposeful contact of Quattro’s and that there is a substantial connection between

this contact and the operative facts of Mattress Firm’s causes of action. The

jurisdictional allegations and evidence reflect Liyeos’s significant involvement in

6
      Mattress Firm also stated that its fraud cause of action was asserted against “All
      Defendants,” but the subsequent allegations concerning this cause of action solely
      addressed misrepresentations and omissions made to Mattress Firm by Levy,
      Vinson, Deitch, and Colliers Atlanta. None of the other defendants are mentioned
      in the specific allegations for the fraud cause of action.
                                          39
the Lubbock transaction. To the extent Liyeos argues that the Lubbock lease should

not be considered his contact, individually, because all of his actions with respect to

this transaction occurred as an officer of Quattro and were taken on Quattro’s behalf,

we note that Texas courts have held that the “fiduciary shield doctrine,” while

applicable to protect a corporate officer “in some circumstances from being subject

to jurisdiction on a general jurisdiction theory, . . . does not protect a corporate

officer from specific personal jurisdiction as to intentional torts or fraudulent acts

for which he may be held individually liable.” See, e.g., Nw. Cattle Feeders, LLC v.

O’Connell, 554 S.W.3d 711, 725 (Tex. App.—Fort Worth 2018, pet. denied); Ennis

v. Loiseau, 164 S.W.3d 698, 707 (Tex. App.—Austin 2005, no pet.) (“Courts

recognize that a corporate officer is not protected from the exercise of specific

jurisdiction, even if all of his contacts were performed in a corporate capacity, if the

officer engaged in tortious or fraudulent conduct, directed at the forum state, for

which he may be held personally liable.”); see also Nwokedi v. Unlimited

Restoration Specialists, Inc., 428 S.W.3d 191, 201 (Tex. App.—Houston [1st Dist.]

2014, pet. denied) (“A corporate officer who knowingly participates in tortious or

fraudulent acts may be held individually liable to third persons even though he

performed the act as an agent of the corporation.”). Status as a corporate employee

“does not somehow insulate [the officer] from jurisdiction,” and an officer “may not

escape liability where he had direct, personal participation in the wrongdoing, as to

                                          40
be the ‘guiding spirit behind the wrongful conduct’ or the ‘central figure in the

challenged corporate activity.’” See Ennis, 164 S.W.3d at 707–08 (quoting Calder

v. Jones, 465 U.S. 783, 790 (1984), and Mozingo v. Correct Mfg. Corp., 752 F.2d
168, 174 (5th Cir. 1985)).

      We therefore conclude that the Lubbock lease is also a purposeful contact of

Liyeos’s, sufficient to subject him to the exercise of specific jurisdiction in Texas.

      3.     Traditional Notions of Fair Play and Substantial Justice

      As we have determined that Quattro and Liyeos have sufficient minimum

contacts with Texas to support specific jurisdiction, we now must decide whether

exercising that jurisdiction comports with traditional notions of fair play and

substantial justice. See Bell, 549 S.W.3d at 559. In making this determination we

consider the following factors, when appropriate:

      (1) the burden on the defendant; (2) the interests of the forum in
      adjudicating the dispute; (3) the plaintiff’s interest in obtaining
      convenient and effective relief; (4) the international judicial system’s
      interest in obtaining the most efficient resolution of controversies; and
      (5) the shared interest of the several nations in furthering fundamental
      substantive social policies.

Cornerstone, 493 S.W.3d at 74; Moncrief Oil Int’l, 414 S.W.3d at 155. “If a

nonresident has minimum contacts with the forum, rarely will the exercise of

jurisdiction over the nonresident not comport with traditional notions of fair play

and substantial justice.” Moncrief Oil Int’l, 414 S.W.3d at 154–55. The defendant

bears the burden of presenting a compelling case that the presence of some

                                          41
consideration would render the exercise of jurisdiction over it unreasonable.

Hoagland v. Butcher, 474 S.W.3d 802, 816 (Tex. App.—Houston [14th Dist.] 2014,

no pet.).

      Quattro and Liyeos have not presented a compelling case that exercising

personal jurisdiction over them would be unreasonable or would violate traditional

notions of fair play and substantial justice. Indeed, Quattro and Liyeos did not argue

this basis for defeating personal jurisdiction either in its special appearance in the

trial court or in its briefing on appeal. See Kelly, 301 S.W.3d at 659 (stating that

defendant can negate jurisdiction on legal basis, such as demonstrating that exercise

of jurisdiction offends traditional notions of fair play and substantial justice). We

conclude that because Quattro and Liyeos have minimum contacts with Texas

sufficient to support specific jurisdiction and they have not demonstrated or argued

that exercising jurisdiction would offend traditional notions of fair play and

substantial justice, exercising specific jurisdiction over Quattro and Liyeos in this

case comports with state and federal due process guarantees. See Bell, 549 S.W.3d

at 559. We hold that the trial court did not err by denying Quattro’s and Liyeos’s

special appearances.

C.    Madison’s Special Appearance

      Madison argues that the trial court erred by impliedly finding that it had

sufficient minimum contacts with Texas to support specific jurisdiction.

                                         42
Specifically, it argues that its limited contacts with Texas did not constitute

purposeful availment and were not substantially connected to the operative facts of

Mattress Firm’s claims against it. Madison also argues that exercising specific

jurisdiction over it would offend traditional notions of fair play and substantial

justice.

       1.    Contacts with Texas

       The focus of Madison’s argument that it lacks sufficient minimum contacts

with Texas is a meeting that occurred in May 2012 before the Committee—Mattress

Firm’s real estate committee responsible for deciding which leases for new retail

stores to approve—in Houston. In its live pleading, Mattress Firm alleged:

       [Madison] secured its position as a Preferred Developer, and some of
       its earliest deals, at a meeting at Mattress Firm’s headquarters in
       Houston, Texas. In May of 2012, when Madison Development was first
       establishing its relationship with Mattress Firm, Jim Gallaugher, co-
       founder of Madison Development, traveled to Houston to participate in
       a [Committee] meeting to pitch how Madison Development could assist
       Mattress Firm in its efforts to expand in the Washington market.
       Although Gallaugher may not have actually made the presentation to
       the [Committee], he helped Jim Quigley, the presenter, come up with
       the market strategy for Washington to be presented to the [Committee].
       During the presentation, two Washington properties were discussed on
       which Madison Development ultimately closed with Mattress
       Firm . . . . Quigley, who made the presentation to the [Committee],
       was Mattress Firm’s local broker on both of these deals. Together,
       Gallaugher and Quigley pitched these deals to the [Committee] in
       Houston, Texas, as well as Madison Development’s efforts to expand
       Mattress Firm’s presence in Washington state.
       During the meeting, Gallaugher provided Mattress Firm with
       information about the rental rates in these areas. After the meeting,
                                        43
      Gallaugher treated Levy and John Broses [a Mattress Firm employee]
      to dinner, where he continued to pitch [the properties] as great deals.
      Mattress Firm ultimately entered into leases on [the properties], but
      neither were great deals for Mattress Firm as falsely represented by
      Gallaugher in Houston, Texas. Instead, the leases contained above-
      market rents which had the effect of increasing Madison
      Development’s profits on the deals at Mattress Firm’s expense.

Mattress Firm alleged that Levy then “fast tracked” the two Spokane leases through

the Committee approval process and that the Committee ultimately approved the

leases. Mattress Firm further alleged that Madison purchased the properties through

two affiliated companies and, through these affiliates, later sold the properties within

one year and made a substantial profit, in excess of $2 million per property.

      In its special appearance, Madison acknowledged that, from 2011 through

2017, it developed twenty-nine stores for Mattress Firm in several states, although

none of those developments were located in Texas.7 In a declaration in support of

Madison’s special appearance, Madison’s principal, Gallaugher, declared that

“[n]one of the negotiations for the [Mattress Firm] stores Madison developed were

conducted in Texas.” Madison also acknowledged that the May 2012 Committee

meeting occurred and that Gallaugher was in attendance at this meeting. With

respect to this meeting, Gallaugher declared as follows:

7
      In a response to Mattress Firm’s requests for production, Madison stipulated that
      Madison’s employees had regular email and phone communications with Mattress
      Firm’s employees and that “[t]here were a handful of email communications
      regarding two potential Texas locations but those potential Texas projects did not
      go forward.”
                                          44
      In or around May 2012, I observed a presentation in Texas before [the
      Committee] concerning the Spokane, Washington, real estate market.
      Madison did not prepare for or present this presentation to [Mattress
      Firm]. The presentation was prepared and presented by Jim Quigley, a
      local Washington broker hired by [Mattress Firm]. After the
      presentation, I was asked one single question regarding why the rents
      at the two locations were the same, to which I answered that the two
      locations’ development costs were essentially the same. I observed
      [Steve] Stagner8 [Mattress Firm’s former President and CEO] ask
      Vinson why the projected sales numbers for the Spokane properties
      seemed low, to which Vinson replied that he was being conservative
      with his projections. Stagner advised Vinson to increase the
      projections.

      Madison later filed a further declaration from Gallaugher in which he

expanded on the May 2012 meeting. Gallaugher again declared that the presentation

was prepared and conducted by Quigley, a local broker hired by Mattress Firm who

was “very knowledgeable about the Spokane real estate market.” Gallaugher

declared that Levy developed the strategy for Mattress Firm’s entry into the Spokane

real estate market “after he visited and inspected a number of potential sites in

Spokane for new [Mattress Firm] stores.” Gallaugher declared that neither he nor

any other Madison employee assisted Quigley in preparing the materials for the

presentation to the Committee, nor did Gallaugher “pitch” Madison or the two

Spokane properties at the Committee meeting or offer an opinion concerning the

potential profitability of the properties. He reiterated that, at this meeting, he “was

asked a single question after the presentation concluded about why the Properties

8
      Steve Stagner is not a party to the underlying lawsuit.
                                           45
had the same rent,” and he responded that the development costs for the projects

were the same. He declared that he was never asked about comparable rental rates

in the Spokane market.

      Gallaugher further declared that, after the meeting, he went to dinner with

Quigley, a Mattress Firm employee, and one of Mattress Firm’s “Master Brokers.”

He characterized this as a “business entertainment dinner” and stated that it was

“[s]omething [he] would have done when taking any other of Madison’s clients out

to dinner under similar circumstances.” Gallaugher declared that, in August 2012,

he learned that the Committee had approved the two leases in Spokane, but he was

not present for that meeting, he did not request that the leases be “fast tracked” for

approval, and he did not know what the “fast tracking” process entailed. Gallaugher

also disputed Mattress Firm’s allegations that Madison, after selling the two Spokane

properties, made a profit of over $2 million dollars on each property, stating that

Mattress Firm had failed to take into consideration development costs for the

properties. He declared that, after those costs were taken into account, Madison’s

profit for both of the sales was approximately $370,000.

      In response to Madison’s special appearance, Mattress Firm did not present a

competing affidavit addressing what occurred at the May 2012 Committee meeting.

                                         46
Instead, Mattress Firm submitted documentary evidence,9 including email

correspondence involving Gallaugher, Levy, Vinson, and others. In one email,

addressed November 23, 2011, six months before the Committee meeting at issue,

Gallaugher emailed a person named Jeffrey Rosen about Mattress Firm. Gallaugher

stated, “I am helping Mattress Firm’s expansion in several northwest markets

including Spokane. Jim Quigley of KHCO and I have been coming up with a market

strategy for eastern Washington when we discovered that you . . . were also

representing them.” Gallaugher’s email to Rosen referenced both Vinson, whom

Gallaugher characterized as a “rogue franchisee,” and Levy. Rosen forwarded this

email to Vinson, who then forwarded it to Levy. Levy responded to Vinson that

Rosen “was hired not by me, but you” and that for Mattress Firm business, Rosen

was “not entitled to commissions against my guys [sic] work.” Levy sent the entire

chain of emails back to Gallaugher on November 24, 2011.

      Madison also acknowledged that Gallaugher traveled to Texas on three other

occasions in 2015. Mattress Firm was a corporate sponsor of the Houston Livestock

Show & Rodeo in 2015, and Gallaugher declared that he attended the event at the

9
      Mattress Firm’s evidence also included draft Letters of Intent concerning the
      properties; the PowerPoint presentation slides from the May 2012 Committee
      meeting; internal Mattress Firm documents indicating that the leases were “fast
      tracked” and approved in August 2012; and the leases themselves, executed by
      Gallaugher on behalf of the Madison-affiliated entities in September 2012. Both
      leases included provisions stating that the lease provisions would be construed in
      accordance with the laws of Washington.
                                          47
request of Mattress Firm. He declared that neither Madison nor he contributed

financially to the event, that the trip “was a purely social event,” and that he did not

discuss or conduct business with Mattress Firm. In August 2015, Mattress Firm

requested that Gallaugher attend a meeting in Texas “to discuss layout and design at

one of [Mattress Firm’s] potential warehouse sites in Colorado.” Vinson, along with

other Mattress Firm personnel, attended, and he “presided over the meeting and

asked Madison, as the potential fee developer, questions about the project.” Finally,

Madison and E. Smith Realty Partners, a brokerage firm founded by former Dallas

Cowboys player Emmitt Smith and a business partner of Mattress Firm’s, co-hosted

and split the cost of a “business entertainment [event] of a social nature” at a

Cowboys game in November 2015. Gallaugher and his family attended, as did Levy,

Vinson, Stagner, and their families, among others. Gallaugher declared that “no

business was conducted or discussed” at this event.

      2.     Whether Madison’s Contacts Were Purposeful

      It is undisputed that Gallaugher, Madison’s principal, traveled to Texas on

several occasions related to Madison’s ongoing business relationship with Mattress

Firm, including the May 2012 Committee meeting. It is also undisputed that, at this

meeting, Quigley gave a PowerPoint presentation recommending that Mattress Firm

enter into leases for retail stores on two properties in Spokane, Washington, to be

developed by Madison. It is undisputed that, at a later meeting, the Committee

                                          48
approved these leases and that Mattress Firm and two affiliated companies of

Madison later executed leases for these properties. The two Madison-affiliated

companies that owned the real property later sold the properties and made a profit

on the sales transactions.

      Madison argues that Gallaugher’s attendance at the Committee meeting does

not constitute a purposeful contact with Texas because Mattress Firm has not alleged

that any wrongful act occurred at that meeting and because Madison did not commit

a tort at that meeting. It points to Gallaugher’s declarations, in which he declares

that Quigley made the presentation before the Committee, he did not assist Quigley

in preparing the presentation, he did not “pitch” the properties at the meeting, he

only answered one question at the meeting—after Quigley’s presentation—

concerning why the rental rates for the two properties were the same, and he made

no statements concerning comparable rental rates or other information relevant to

the Spokane market. Madison argues that the record contains no evidence that it

“conducted ‘business with a Texas resident’ or made a statement amounting to a

misrepresentation sufficient to confer jurisdiction.”

      We find Madison’s arguments unavailing. Madison admits that it had an

ongoing business relationship with Mattress Firm, a Texas resident. Over a period

of six years, Madison developed twenty-nine properties for Mattress Firm retail

stores, albeit none of them located in Texas. Each lease for a retail store had to be

                                          49
approved by Mattress Firm’s Committee, which met in Houston. Madison sought to

develop two retail stores for Mattress Firm in Spokane, Washington, and these

locations were put on the agenda to be discussed at a Committee meeting in Houston

in May 2012. Although Quigley, a local Washington real estate broker, made the

actual presentation to the Committee, Mattress Firm presented evidence, in the form

of an email from Gallaugher to Jeffrey Rosen in November 2011, that Gallaugher

was “helping Mattress Firm’s expansion in several northwest markets including

Spokane” and was working with Quigley on “coming up with a market strategy for

eastern Washington.” There is evidence, therefore, that Madison was not simply a

passive observer at the meeting in Texas, but that it had been involved with

developing the proposal for the two Spokane properties—as well as a larger strategy

for Mattress Firm in Washington. One of the purposes of the Committee meeting

was to propose the Spokane properties as opportunities for new Mattress Firm retail

stores developed by Madison and to obtain approval from the Committee concerning

those leases. Gallaugher, after having worked with Quigley and Mattress Firm

personnel such as Levy, attended the meeting as Madison’s representative and

answered a question about the proposal after Quigley’s presentation concluded.

      In addition to attending the May 2012 Committee meeting, Madison

acknowledged that it regularly communicated by email and phone with Mattress

Firm personnel. It also acknowledged that Gallaugher traveled to Texas on three

                                        50
other occasions: once to meet with Vinson and other Mattress Firm personnel

concerning the design of a potential Mattress Firm warehouse located in Colorado;

once to attend the Houston Livestock Show & Rodeo as a guest of Mattress Firm

personnel; and once to co-sponsor and attend a Dallas Cowboys game, at which

several high-ranking Mattress Firm employees were present with their families. The

pleadings and the evidence thus demonstrate that Madison had an ongoing

relationship with Mattress Firm that lasted years, that Madison conducted business

in Texas by attending a meeting to seek approval of the development of two retail

stores, and that Madison personnel traveled to Texas to further their relationship with

Mattress Firm personnel via social events. We conclude that this conduct constitutes

purposeful contacts with the state of Texas.

      The Texas Supreme Court has held that although a single business transaction

that occurs outside of Texas is insufficient to confer specific jurisdiction, activity

that is “aimed at getting extensive business in or from” Texas constitutes purposeful

and substantial contacts. Moncrief Oil Int’l, 414 S.W.3d at 153; Michiana Easy

Livin’ Country, 168 S.W.3d at 787–90. Defendants who agree to attend business

meetings in Texas at which conduct related to the operative facts of the plaintiff’s

claims occur have a “say in the matter” and are not “unilaterally haled into forming

contacts with Texas.” Moncrief Oil Int’l, 414 S.W.3d at 153.

                                          51
      Here, Madison did not engage solely in a single out-of-state transaction with

a Texas resident. Instead, it entered into a years-long relationship with Mattress

Firm; both parties sought to cultivate and continue this relationship; and it traveled

to Texas to attend a meeting concerning two potential new developments for

Mattress Firm, both of which were later approved and ultimately secured Madison a

financial benefit when it sold the properties. Madison’s contacts with Texas were

purposeful; they were not the unilateral result of conduct by third parties; and

Madison sought a benefit, advantage, or profit by creating and sustaining a

relationship with Mattress Firm, a Texas resident. See id. at 154 (noting that supreme

court had previously found jurisdiction over nonresident with no physical ties to

Texas when out-of-state transaction “was actively and successfully solicited in

Texas”); Michiana Easy Livin’ Country, 168 S.W.3d at 785 (“Sellers who ‘reach out

beyond one state and create continuing relationships and obligations with citizens of

another state’ are subject to the jurisdiction of the latter in suits based on their

activities.”) (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 473 (1985)).

      We now turn to whether Madison’s purposeful contacts with Texas are

substantially connected to the operative facts of the litigation. See Bell, 549 S.W.3d

at 559–60. Mattress Firm asserted the same causes of action against Madison that it

did against Quattro and Liyeos: fraud, civil conspiracy, aiding and abetting breach

of fiduciary duty, unjust enrichment, and imposition of a constructive trust. As we

                                         52
discussed above with respect to Quattro and Liyeos, all of Mattress Firm’s causes of

action are based on its allegations that Madison, as a real estate development

company, was involved in a scheme to defraud Mattress Firm by, among other

things, paying bribes and kickbacks to Mattress Firm insiders and one of its brokers

and working with Mattress Firm insiders to agree on above-market rental rates and

longer-than-average lease terms—conditions that were unfavorable to Mattress Firm

as a tenant but that would make the properties more valuable and would yield a

greater profit for Madison when it sold the properties shortly after executing the

lease with Mattress Firm—that the insiders would then present to the Committee as

favorable deals to ensure the Committee’s approval of the leases.

      Mattress Firm alleges that the transactions involving the two Spokane

properties developed by Madison were two of the lease agreements purportedly

secured by making misrepresentations and omissions to the Committee. Resolution

of Mattress Firm’s claims against Madison will involve, among other evidence,

consideration of the circumstances surrounding the execution of the Spokane leases,

including conduct related to developing the market strategy for the Spokane leases

and conduct that occurred at the May 2012 Committee meeting attended by

Gallaugher on behalf of Madison. Mattress Firm also alleges that, in exchange for

“lucrative deals,” Madison offered “items of significant value” to Levy, Vinson, and

Deitch, and it identified one instance that occurred in Texas: Madison allegedly

                                        53
“rewarding” Levy, Vinson, and Deitch for their part in the scheme by co-sponsoring

a suite at a Dallas Cowboys game. We conclude, as we did with respect to Quattro

and Liyeos, that Madison’s purposeful contacts with Texas are substantially

connected to the operative facts of the litigation, such that Mattress Firm’s claims

against Madison arise out of and relate to Madison’s Texas contacts.10 See Bell, 549
S.W.3d at 559–60.

      3.     Traditional Notions of Fair Play and Substantial Justice

      Madison argues that the burden placed on it if it were forced to continuing

defending itself in Texas would be great because it “is a small business with only

two employees” and a lawsuit in Texas “would greatly interfere with [Madison’s]

operations and its employees’ responsibilities.” Although it would be a burden on

Madison for its representatives—presumably Gallaugher—to travel to Texas to

participate in litigation, “the same can be said of all nonresidents” and “[d]istance

alone cannot ordinarily defeat jurisdiction.” Moncrief Oil Int’l, 414 S.W.3d at 155;

Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d
223, 231 (Tex. 1991) (noting that “modern transportation and communication have

10
      Madison, like Quattro, argues that there is no substantial connection between its
      Texas contacts and the operative facts of the litigation in part because Madison did
      not engage in any wrongful conduct at the May 2012 Committee meeting. As we
      concluded with respect to Quattro, whether Madison’s conduct concerning the May
      2012 Committee meeting in particular and the Spokane leases in general is
      ultimately tortious is not relevant to the inquiry at the special appearance stage of
      the litigation. See, e.g., Cornerstone Healthcare Grp. Holding, Inc. v. Nautic Mgmt.
      VI, L.P, 493 S.W.3d 65, 73 (Tex. 2016).
                                           54
made it much less burdensome for a party sued to defend himself in a State where

he engages in economic activity”). Additionally, Madison, through Gallaugher, has

attended meetings and events in Texas before. Madison may be burdened by having

to defend itself in litigation—which Mattress Firm points out would happen

regardless of which forum it chose to litigate its claims against Madison—but

Madison has not demonstrated that this burden is an unreasonable one. See

Hoagland, 474 S.W.3d at 816 (stating that defendant bears burden of presenting

“compelling case” that Texas’s exercise of jurisdiction over it would be

unreasonable).

      Madison further argues that Texas has “very little interest” in adjudicating the

dispute between Madison and Mattress Firm “because the controversy does not arise

out of contacts with Texas” and all of the lease agreement Madison and Mattress

Firm signed were for retail store locations in other states and provided that disputes

concerning the leases would be governed by the law of the state where the store was

located. However, as Mattress Firm points out, it is a Texas resident, and Texas “has

an obvious interest in providing a forum for resolving disputes involving its citizens,

particularly disputes in which the defendant allegedly committed torts in whole or

in part in Texas.” See id.; see also Moncrief Oil Int’l, 414 S.W.3d at 155 (noting that

burden on Russian defendants in defending against claims in Texas was “somewhat

mitigated by the convenience to Moncrief, a Texas resident, of litigating in the forum

                                          55
where the alleged trade secrets were appropriated and then purportedly used” and

that “allegations that the Gazprom Defendants committed a tort in Texas against a

resident implicate a serious state interest in adjudicating the dispute”). Furthermore,

Mattress Firm sued a total of seventeen defendants: two of the defendants have

settled; twelve of the defendants have generally appeared and will be participating

in litigation in Texas; and we have held that the other two defendants aside from

Madison—Quattro and Liyeos—are subject to specific jurisdiction in Texas.

Litigating the claims against Madison along with the claims against the other

defendants, particularly against the other similarly situated real estate development

company defendants, together in Texas promotes judicial economy. See

Cornerstone, 493 S.W.3d at 74 (considering facts that several other defendants had

not challenged jurisdiction and litigating claims against all defendants together

promoted judicial economy).

      We conclude that Madison has not presented a “compelling case” that the

exercise of specific jurisdiction over it in Texas would be unreasonable such that

exercising jurisdiction would offend traditional notions of fair play and substantial

justice. See Moncrief Oil Int’l, 414 S.W.3d at 154–55 (“If a nonresident has

minimum contacts with the forum, rarely will the exercise of jurisdiction over the

nonresident not comport with traditional notions of fair play and substantial

                                          56
justice.”). We hold that the trial court did not err by denying Madison’s special

appearance.

      We overrule Madison’s, Quattro’s, and Liyeos’s issues on appeal.

                                  Conclusion

      We affirm the orders of the trial court denying Quattro’s, Liyeos’s, and

Madison’s special appearances.

                                            Evelyn V. Keyes
                                            Justice

Panel consists of Justices Keyes, Goodman, and Countiss.

                                       57