Court Opinion

ID: 4658327
Source: CourtListenerOpinion
Date Created: 2021-02-08 08:19:33.96291+00
Date Added: 2024-06-11T08:01:49.179508
License: Public Domain

Affirmed and Memorandum Opinion filed February 2, 2021

                                      In The

                    Fourteenth Court of Appeals

                              NO. 14-19-00790-CV

                    CALYX ENERGY III, LLC, Appellant

                                        V.
       ENERFIN RESOURCES I LIMITED PARTNERSHIP, Appellee

                    On Appeal from the 189th District Court
                            Harris County, Texas
                      Trial Court Cause No. 2019-02865

                         MEMORANDUM OPINION

      Appellee Enerfin Resources Limited Partnership (“Enerfin”) filed suit
alleging a breach of contract claim against appellant Calyx Energy III, LLC.
(“Calyx”) Calyx, which is not a Texas resident, filed a special appearance. The
trial court denied Calyx’s special appearance and Calyx filed this interlocutory
appeal challenging the trial court’s denial. Concluding that the trial court did not
err when it denied Calyx’s special appearance, we affirm.
                                  BACKGROUND

      Enerfin is a Texas limited partnership with its principal place of business in
Houston, Texas. Enerfin owns and operates natural gas pipelines, compression
equipment, processing plants, and treating facilities, and oil and gas production.
Enerfin has operations in Texas, Oklahoma, Louisiana, California, and Oregon.
Calyx is a Delaware limited liability company with its main office in Tulsa,
Oklahoma. Calyx owns real property and natural gas wells in Oklahoma. Prior to
the contract at issue in this lawsuit, Calyx and its related entities were parties to
several multi-year gas purchase contracts with Enerfin dating back to 2008.

      Calyx approached Enerfin about entering into a contract for Enerfin to
gather gas from a project Calyx was developing on new acreage in Oklahoma. The
first meeting regarding the new acreage occurred at a restaurant in Oklahoma in
December 2016. A subsequent meeting took place in Enerfin’s Houston office in
January 2017. The Calyx personnel who attended the Houston meeting included
Calyx’s Vice President, Chief Financial Officer, and General Counsel Jim
Stephenson and Calyx’s Operations Manager, Roger DeMuth. Stephenson offices
in Texas and frequently lists his office address as a business address for Calyx in
his Calyx communications. Stephenson confirmed in his deposition that when he
attended the January 2017 meeting, he did so in his capacity as an officer of the
company.

      After the initial meetings, Calyx and Enerfin negotiated the Gas-Gathering
Contract primarily by emails between Stephenson and DeMuth for Calyx, and Tom
Guinn and Dave Cremer for Enerfin. It is undisputed that Stephenson, who served
as Calyx’s vice president, chief financial officer, and general counsel, participated
in these negotiations from his office located in Texas. The Gas-Gathering Contract
was signed in March 2017. It does not contain a provision mandating or limiting

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the venue or jurisdiction for disputes that might arise between the parties. It does
however, contain a choice-of-law provision stating that the contract would be
governed by Oklahoma law. The parties agreed to an initial one-year term for the
agreement. The Gas-Gathering Contract also provided that it would automatically
renew for subsequent one-year terms unless one of the parties gave written notice
of cancellation at least sixty days before the end of the initial one-year term, or any
subsequent one-year term.1

       The Gas-Gathering Contract required Calyx to provide monthly nominations
to Enerfin identifying the volume of gas Calyx would deliver to Enerfin. The
monthly nominations had to include the information Enerfin deemed necessary to
allocate and account for the volumes of nominated gas. To comply with the
monthly nomination requirement, Calyx contracted with BP Energy Company
(“BP”) for BP employees officed in Houston, Texas, to serve as Calyx’s “exclusive
agent.” Pursuant to that “Operational Agency Agreement,” BP would “manage
and administer” the Gas-Gathering Contract on behalf of Calyx.

       The Operational Agency Agreement sets forth BP’s responsibilities to
perform the Gas-Gathering Contract on Calyx’s behalf. Among other things, BP,
as Calyx’s agent, was responsible for (1) “prepar[ing] and submit[ting] daily and
monthly nominations, as applicable, to facilitate Calyx’s delivery of Gas at the
[Gas-Gathering Contract] Delivery Point(s),” (2) “manag[ing] the applicable
Gathering Capacity” contracted for in the Gas-Gathering Contract; (3) “manag[ing]
any critical Day events or operational issues affecting the Gathering Capacity”
contracted for in the [Gas-Gathering Contract]; and (4) “balanc[ing] Gas delivery
activities.” The Operational Agency Agreement also required Calyx to provide

       1
          The parties incorporated three exhibits, A, B, and C, into the contract. Exhibit C
contains the general terms and conditions applicable to the contract.

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certain information to BP in Houston on a regular basis so that BP could manage
the Gas-Gathering Contract as Calyx’s agent. The Operational Agency Agreement
provided that all notices and communications from Calyx to BP were to be sent to
Chelsea Sandberg of BP in Houston, Texas, and all notices and communications
from BP to Calyx were to be sent to Stephenson, Calyx’s general counsel, at Calyx
Energy III, LLC located on Post Oak Drive in Houston, Texas. Once Calyx had
retained BP to act as Calyx’s agent, Stephenson forwarded the Gas-Gathering
Contract to Sandberg at her Houston office. The Gas-Gathering Contract provides
that all notices, requests, demands, statements, and payments must be sent to
Enerfin’s Houston, Texas office. Pursuant to that requirement, each month BP,
Calyx’s Texas-based agent, sent Calyx’s gas nominations to Enerfin in Houston.

      Sandberg notified Enerfin that BP would act as Calyx’s agent under the Gas-
Gathering Contract. She also provided Enerfin with her contact information in
Houston so that she could serve as the point of contact to manage the Gas-
Gathering Contract and Calyx’s obligations thereunder.       Representing BP as
Calyx’s agent, Sandberg and another BP employee located in Houston worked
with Enerfin employees and agents in Houston to coordinate the nomination and
allocation process for the gas that Calyx would deliver to Enerfin under the terms
of the Gas-Gathering Contract. Sandberg was in frequent contact with Enerfin on
Calyx’s behalf.   At times, Calyx employees also communicated directly with
Enerfin’s gas scheduler in Houston about operational issues related to the Gas-
Gathering Contract.

      In addition to appointing an agent in Texas to manage the Gas-Gathering
Contract for Calyx, Calyx officers and employees made phone calls and sent
emails to Enerfin in Texas regarding operations pursuant to the agreement. They
also attended in-person meetings with Enerfin in Texas where issues related to the

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agreement were discussed. On April 4, 2017, Stephenson met with Enerfin’s Dave
Cremer and Tom Guinn at Enerfin’s Houston office. Among other things, they
discussed Calyx’s progress in testing the first two wells that would be connected to
Enerfin’s gas-gathering system. Two months later, DeMuth, Calyx’s Operations
Manager, met with Guinn and George McCarty, Enerfin’s Director of Engineering,
in Dallas to discuss progress related to the first wells that Calyx connected to
Enerfin under the Gas-Gathering Contract.       They also discussed how Enerfin
intended to credit Calyx under the Gas-Gathering Contract for the richness of the
gas being produced by Calyx’s wells.

      In addition to regular interaction regarding performance of the Gas-
Gathering Contract, Calyx initiated discussions with Enerfin about the creation of a
joint venture between the two companies.       The concept for the joint venture
entailed both companies contributing certain specified assets, including the assets
involved in the Gas-Gathering Contract, to the joint venture. Enerfin would then
operate those assets for the mutual benefit of the joint venturers. Calyx and
Enerfin executed a confidentiality agreement in connection with the joint venture
discussions.

      About six months after the parties had signed the Gas-Gathering Contract,
on September 25, 2017, Calyx sent a letter notifying Enerfin that it was terminating
the Gas-Gathering Contract effective April 30, 2018. Stephenson sent the notice of
termination from his office in Houston. However, after sending its notice of
termination, Calyx reached out to Enerfin to discuss the Gas-Gathering Contract.
In a series of phone calls and in-person meetings, representatives of the two
companies discussed connecting additional wells under the terms of the Gas-
Gathering Contract.    They also discussed the differing viewpoints regarding
Calyx’s right to terminate the contract at the time it sent the notice. The two

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companies also discussed possibly resolving the disagreement by entering into a
new joint venture or gas-gathering agreement.          These discussions were not
successful however, and Calyx ceased nominating and delivering gas to Enerfin on
May 31, 2018.

      Enerfin filed suit alleging that Calyx breached the Gas-Gathering Contract.
Enerfin alleged that Calyx sent notice to Enerfin in Texas purporting to terminate
the Gas-Gathering Contract in violation of the agreement’s Primary Term
provision. According to Enerfin, Calyx had developed additional wells and had
connected those wells to Enerfin’s system which had the effect of extending the
Primary Term of the Gas-Gathering Contract until at least February 1, 2019.
Enerfin specifically alleged that Calyx breached the Gas-Gathering Contract when
its Texas-based agent stopped nominating and delivering gas to Enerfin as required
by the Gas-Gathering Contract before the end of that extended Primary Term.

      Calyx filed a special appearance objecting to personal jurisdiction in Texas.
Calyx initially argued that Enerfin had not pleaded sufficient facts to establish
jurisdiction, and that Calyx was not subject to specific or general jurisdiction in
Texas. The parties conducted discovery relating to Calyx’s special appearance and
Enerfin filed amended petitions with additional jurisdictional facts against Calyx.
Enerfin also filed a response with evidence attached to Calyx’s special appearance.
Calyx subsequently filed a reply brief in support of its special appearance in which
it asserted only one argument challenging the trial court’s personal jurisdiction
over it: Calyx is not subject to specific jurisdiction because “the operative facts in
this case relate exclusively to events that occurred in Oklahoma.”            Enerfin
responded by pointing out that Calyx’s substantial contacts with Texas in
negotiating, performing, and then breaching the Gas-Gathering Contract in Texas
related to Enerfin’s breach-of-contract claim.

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      The trial court held a non-evidentiary hearing on Calyx’s special appearance.
The trial court denied Calyx’s special appearance. Calyx subsequently filed this
interlocutory appeal. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(7).

                                     ANALYSIS

      In a single issue, Calyx argues that the trial court erred when it denied its
special appearance because “there is no connection, much less a substantial
connection, between Calyx’s purported contacts with Texas and the operative facts
underlying Enerfin’s breach of contract claim.” We disagree.

I.    Standard of Review and Applicable Law

      We review de novo a trial court’s denial of a special appearance. 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, we imply all relevant facts necessary to support the judgment
that are supported by the evidence. BMC Software Belgium, N.V. v. Marchand, 83
S.W.3d 789, 795 (Tex. 2002).         Parties may challenge the legal and factual
sufficiency of these implied factual findings. Id.

      In a legal sufficiency review, we view the evidence in the light most
favorable to the finding and indulge every reasonable inference that supports the
challenged finding, crediting favorable evidence if a reasonable fact finder could
and disregarding contrary evidence unless a reasonable fact finder could not. Dodd
v. Savino, 426 S.W.3d 275, 284 (Tex. App.—Houston [14th Dist.] 2014, no pet.
(citing City of Keller v. Wilson, 168 S.W.3d 802, 827 (Tex. 2005)). We will set
aside a finding on legal sufficiency grounds only if (a) there is a complete absence
of a vital fact, (b) we are barred by legal or evidentiary rules from giving weight to
the only evidence offered to prove a vital fact, (c) the evidence offered to prove a

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vital fact is no more than a scintilla, or (d) the evidence conclusively establishes
the opposite of the vital fact. Id. In reviewing for factual sufficiency, we consider
all the evidence; we will set aside a finding only if it is so against the great weight
and preponderance of the evidence as to be clearly wrong and unjust. Id. Finally,
we review the trial court’s legal conclusions de novo. Id.

      The Texas long-arm statute authorizes Texas courts to exercise jurisdiction
over a nonresident defendant who “does business” in the state. Tex. Civ. Prac. &
Rem. Code § 17.042. The Supreme Court of Texas has interpreted the broad
language of the Texas long-arm statute to extend Texas court’s personal
jurisdiction “as far as the federal constitutional requirements of due process will
permit.” M & F Worldwide, 512 S.W.3d at 885. A plaintiff bears the initial
burden of pleading allegations sufficient to bring a nonresident defendant within
the scope of the long-arm statute. BMC Software, 83 S.W.3d at 794–95. A
defendant challenging a Texas court’s personal jurisdiction must negate all
jurisdictional bases alleged. Id.

      A trial court may constitutionally exercise personal jurisdiction over a party
when (1) the nonresident defendant has minimum contacts with the forum state and
(2) the assertion of jurisdiction complies with traditional notions of fair play and
substantial justice. Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945); Peters
v. Top Gun Exec. Grp., 396 S.W.3d 57, 62 (Tex. App.—Houston [14th Dist.] 2013,
no pet.).   Minimum contacts are sufficient for personal jurisdiction when the
nonresident defendant purposefully avails itself of the privilege of conducting
activities within the forum state, thus invoking the benefits and protections of its
laws. M & F Worldwide, 512 S.W.3d at 886. “The defendant’s activities, whether
they consist of direct acts within Texas or conduct outside Texas, must justify a
conclusion that the defendant could reasonably anticipate being called into a Texas

                                          8
court.” Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801, 806 (Tex.
2002) (citing World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297
(1980)).

      A nonresident defendant’s contacts with a forum state can give rise to either
general or specific jurisdiction. Id. Only specific jurisdiction is at issue here. In
analyzing specific jurisdiction, we focus on the relationship among the defendant,
the forum, and the particular litigation at hand. See M & F Worldwide, 512
S.W.3d at 886 (citing Spir Star AG v. Kimich, 310 S.W.3d 868, 873 (Tex. 2010)
and Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 575-76 (Tex. 2007)).
Specific jurisdiction is established when the plaintiff’s cause of action arises from
or relates to the defendant’s alleged minimum contacts within the forum. Id. For
specific jurisdiction purposes, a defendant’s minimum contacts with a forum are
established when the defendant “purposefully avails itself of the privilege of
conducting activities within the forum state, thus invoking the benefits and
protections of its laws.” Id. (quoting Retamco Operating, Inc. v. Republic Drilling
Co., 278 S.W.3d 333, 338 (Tex. 2009)). Three principles govern the purposeful-
availment analysis: (1) “only the defendant’s contacts with the forum” are relevant,
not the unilateral activity of another party or third person; (2) the defendant’s acts
must be “purposeful” and not “random, isolated, or fortuitous”; and (3) the
defendant “must seek some benefit, advantage, or profit by ‘availing’ itself of the
jurisdiction” such that it impliedly consents to suit there. Id. “The defendant’s
activities, whether they consist of direct acts within Texas or conduct outside
Texas, must justify a conclusion that the defendant could reasonably anticipate
being called into a Texas court.” Id.

      In the present case general jurisdiction is not at issue and Enerfin has
asserted only a single cause of action, breach of contract, against Calyx. Specific

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jurisdiction is transaction focused. Napoli, Bern, Ripka, Shkolnik & Associates,
LLP v. Stratos Legal Servs., No. 14-18-00420-CV, 2019 WL 2589885, at *4 (Tex.
App.—Houston [14th Dist.] June 25, 2019, no pet.) (mem. op.). A trial court has
specific jurisdiction over a nonresident defendant when (1) the defendant’s
contacts with the forum state are purposeful, and (2) the plaintiff’s cause of action
arises from or relates to those contacts. Id.

II.   The trial court did not err when it denied Calyx’s special appearance
      because Enerfin’s breach of contract claim arises from, and has a
      substantial connection with, Calyx’s Texas contacts.
      In its single issue, Calyx challenges only the second element above, arguing
that Enerfin’s breach of contract claim did not arise out of or relate to Calyx’s
Texas contacts. For a cause of action to arise from or relate to purposeful forum
contacts, there must be a substantial connection between those contacts and the
operative facts of the litigation. Moki Mac, 221 S.W.3d at 585. In making its
argument that there is no substantial connection between its contacts with Texas
and the operative facts of the litigation, Calyx dissects them, and then addresses
each individually. But, this is not the proper analysis. See Dodd, 426 S.W.3d at
286 (“[T]he question before us is not whether certain of appellants’ contacts with
Texas, standing alone, are sufficient to subject them to personal jurisdiction
here.”). Instead, the proper analysis “is whether there is a substantial connection
between all of appellants’ Texas contacts, considered collectively, and the
operative facts of the litigation.” Id. As summarized above, Calyx had numerous
contacts with Texas related to Enerfin and the Gas-Gathering Contract. While
each, individually, may be insufficient to establish jurisdiction, as explained below
we conclude they collectively establish that Calyx had a substantial connection
with Texas.

      Prior to the events at issue here, Calyx had a pre-existing, long-term
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business relationship with Enerfin.         In addition, the Gas-Gathering Contract
created a continuing relationship between the two companies. This establishes that
Calyx’s contacts with Texas cannot be described as “random, isolated, or
fortuitous.” Moki Mac, at 575. Nor do they create “an attenuated affiliation with
the forum.” See id. at 577 (internal quotation marks omitted). It was Calyx that
reached out to Enerfin in pursuit of a new gas-gathering agreement. Businesses
that reach out beyond one state to create continuing relationships and obligations
with citizens of another state are subject to jurisdiction of the latter in suits “based
on their activities.” Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d
777, 785 (Tex. 2005) (internal quotation marks omitted); see Billingsley Parts &
Equip., Inc. v. Vose, 881 S.W.2d 165, 169 (Tex. App.—Houston [1st Dist.] 1994,
writ denied) (finding specific jurisdiction when, among other factors, nonresident
defendant made initial contact with Texas company).

       Additionally, while not a Texas resident, Calyx maintained a Texas office
where Stephenson, Calyx’s vice president, chief financial officer, and general
counsel, worked.2 While there is evidence in the record that the start of the
negotiations leading to the Gas-Gathering Contract took place at a restaurant in
Oklahoma, the record also contains evidence establishing that the negotiations
continued through communications sent to Enerfin that were initiated by Calyx in
Texas, and also during in-person meetings in Texas. (CR92-93, 98-99, 105, 119,
153) The record also establishes that it was Stephenson, based in Texas, who led
the negotiations on behalf of Calyx.              See Dodd, 426 S.W.3d at 285–87
(concluding, after examining parties’ contract negotiations and communications,
that there was “a substantial connection between appellants’ purposeful contacts

       2
         While Calyx attempts to minimize the significance of this office by describing it as
Stephenson’s “personal law office,” the record contains communications sent by Stephenson to
Enerfin which identify his office located in Houston, Texas as a Calyx office.

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with Texas and the operative facts of Savino’s litigation”); Peters, 396 S.W.3d at
63 (“In contract disputes, we must consider the parties’ prior negotiations, the
contemplated future consequences, the terms of the contract, and the actual course
of dealing of the parties.”); Walker Ins. Servs. v. Bottle Rock Power Corp., 108
S.W.3d 538, 553–54 (Tex. App.—Houston [14th Dist.] 2003, no pet.) (concluding
that trial court had specific jurisdiction over out-of-state defendant based in part on
in-person office meetings in Texas where defendant’s agent and point man
discussed deal). Finally, Calyx sent a signed copy of the executed Gas-Gathering
Contract to Enerfin in Texas. This also qualifies as a purposeful contact with
Texas. See Parker v. Robert Ryan Realtors, Inc., No. 14-10-00325-CV, 2010 WL
4226550, at *5 (Tex. App.—Houston [14th Dist.] Oct. 26, 2010, no pet.) (mem.
op.) (stating that sending signed contracts to Texas was a purposeful contact to be
considered in jurisdictional analysis).

      Calyx also had extensive purposeful contacts with Texas in connection with
its performance of the Gas-Gathering Contract. Perhaps Calyx’s most important
contact with Texas regarding its performance of the agreement was the
appointment of a formal agent, BP, in Houston, Texas, “to manage and administer”
Gas-Gathering Contract on Calyx’s behalf. In its role as Calyx’s agent, BP worked
on an almost daily basis with Enerfin to coordinate the nomination and allocation
process for the gas that Calyx would deliver to Enerfin pursuant to the Gas-
Gathering Contract. It was also BP that ceased nominating and delivering gas to
Enerfin. These actions by a Texas-based agent to perform Calyx’s duties under the
Gas-Gathering Contract, can all be attributed to Calyx, BP’s principal. See Parker,
2010 WL 4226550, at *5 (“[I]n a principal-agent relationship, the contacts of the
agent may be imputed to the principal for the purposes of personal jurisdiction.”);
Walker Ins., 108 S.W.3d at 549, n.4 (“For purposes of personal jurisdiction, the

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actions of an agent may be attributed to the principal.”); Mort Keshin & Co., Inc. v.
Houston Chronicle Pub. Co., 992 S.W.2d 642, 647 (Tex. App.—Houston [14th
Dist.] 1999, no pet.) (“When an agent negotiates a contract for its principal in
Texas, it is the principal who does business in this state, not the agent.”).

      Calyx places a great deal of emphasis on the Oklahoma location of the gas
throughout its appellate briefing. We conclude that this undisputed fact has little
connection to the operative facts of this litigation. Further, we are called to focus
on the out-of-state defendant’s contacts with Texas. See Michiana Easy Livin’
Country, Inc., 168 S.W.3d at 785 (“[I]t is only the defendant’s contacts with the
forum that count”). Thus, at least in this case, the relevant jurisdictional facts are
not the physical location of the gas and the pipeline, but the purposeful contacts
Calyx had with Texas in its efforts to profit from that gas. Calyx also points out
the existence of the choice-of-law clause in the Gas-Gathering Contract. While
this is a factor to consider in the jurisdictional analysis, it is not dispositive.
Hoagland v. Butcher, 396 S.W.3d 182, 194, n.13 (Tex. App.—Houston [14th
Dist.] 2013, pet. denied). We conclude that the focus of this dispute will not be on
anything that happened in Oklahoma.

      The focus will instead be on the terms of the Gas-Gathering Contract that
was largely negotiated and performed in Texas and whether Calyx had the
contractual authority to terminate the agreement.         In conducting a personal-
jurisdiction analysis, we review the claims in question and the evidence regarding
the jurisdictional facts, but we do not determine the merits of the claims. See TV
Azteca, S.A.B. De C.V. v. Ruiz, 490 S.W.3d 29, 35 n.1 (Tex. 2016); Dresser-Rand
Group v. Centauro Capital, S.L.U., 448 S.W.3d 577, 584 (Tex. App.—Houston
[14th Dist.] 2014, no pet.). Without commenting on the merits of Enerfin’s claims,
we conclude that there is a substantial connection between Calyx’s Texas contacts

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and the operative facts of the litigation. See Moki Mac, 221 S.W.3d at 585; Dodd,
426 S.W.3d at 285–87 (concluding, after examining parties’ contract negotiations
and communications that there was “a substantial connection between appellants’
purposeful contacts with Texas and the operative facts of Savino’s litigation”);
Parker, 2010 WL 4226550, at *5 (concluding there was personal jurisdiction
because there was a substantial connection between agent’s Texas contacts and the
operative facts of the litigation); Walker Ins., 108 S.W.3d at 553 (concluding trial
court had personal jurisdiction over defendant based in part on agent’s pre-
litigation activities). We overrule Calyx’s single issue on appeal.

                                   CONCLUSION

      Having overruled Calyx’s issue on appeal, we affirm the trial court’s denial
of Calyx’s special appearance.

                                       /s/    Jerry Zimmerer
                                              Justice

Panel consists of Justices Zimmerer, Poissant, and Wilson.

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