CONTINENTAL ALLOYS & SERVICES (DELAWARE) LLC AND CONTINENTAL ALLOYS & SERVICES, INC., Appellants
YANGZHOU CHENGDE STEEL PIPE CO., LTD. AND CIEC USAINCORPORATION, Appellees
Appeal from the 189th District Court Harris County, Texas
Trial Court Cause No. 2015-12653
consists of Chief Justice Frost and Justices Bourliot and
Thompson Frost, Chief Justice
company that purchased allegedly defective steel pipe from a
distributor sued the distributor and the Chinese company that
manufactured the steel, asserting various claims on its own
behalf and as assignee of its purchaser. The trial court
granted the distributor's motion to dismiss all claims
against the distributor based on an arbitration provision in
the contract between the distributor and the company that
bought the steel pipe. The trial court later sustained the
manufacturer's special appearance and dismissed the
claims against the manufacturer for lack of personal
jurisdiction. On appeal, the plaintiffs challenge each
ruling. Concluding the plaintiffs have not shown that the
trial court erred in sustaining the special appearance and
that the plaintiffs waived any error in the trial court's
granting of the distributor's motion to dismiss, we
affirm the trial court's judgment.
Procedural and Factual Background
YangZhou Chengde Steel Pipe Co., Ltd. ("Chengde")
manufactures steel pipe, some of which is used by oilfield
companies. Chengde, a Chinese company, maintains its
principal place of business in China. In July 2013, Chengde
entered into two contracts to sell steel pipe to
defendant/appellee CIEC USA Incorporation [sic]
("CIEC"), a Texas corporation and distributor of
steel products. Each contract required certain
specifications for the pipe and required Chengde to perform
certain tests on the pipe and to include in the shipping
documents an original mill test certificate. Each contract
specified that China would be the country of origin of the
pipe, and that Chengde would ship the pipe to the Port of
Houston, "CIF Houston Port, TX, USA." Under the
contracts, title to the pipe passes to CIEC when the pipe is
loaded into the vessel at the loading port in China. In each
contract, Chengde and CIEC agreed that Chinese law would
govern the validity, interpretation, performance, and
enforcement of the contract and that all disputes in
connection with the contract would be settled by arbitration
in Beijing, China.
same day that CIEC entered into the contracts to buy steel
pipe from Chengde, CIEC entered into two contracts to sell
the steel pipe to "Continental Alloys & Services
(DELAWARE) Inc." The name of the buyer in these
contracts appears to have been misstated, and there may be
some uncertainty as to whether the buyer is
appellant/plaintiff Continental Alloys & Services
(Delaware) LLC ("Continental LLC") or
appellant/plaintiff Continental Alloys & Services, Inc.
("Continental, Inc."). Each of these of these
parties is a Delaware entity with its principal place of
business in Texas. In this opinion, we shall refer to the
Continental entity that entered into the contracts with CIEC
as the "Continental Party."
Continental Party apparently bought the steel pipe from CIEC
to provide the pipe to Baker Hughes, an oilfield service
company that had ordered steel pipe from a Continental
entity. Each of the two contracts between CIEC and
the Continental Party provides that Texas law governs the
validity, interpretation, performance, and enforcement of the
contract and that all disputes in connection with that
contract will be resolved by arbitration in Houston, Texas.
LLC and Continental, Inc. (collectively the "Continental
Parties") allege that the steel pipe Chengde sold to
CIEC and that the Continental Party bought from CIEC
contained defects, did not conform to industry standards or
to Baker Hughes's specifications, and failed the implied
warranties of merchantability and fitness for a particular
purpose. According to the Continental Parties, after Baker
Hughes demanded arbitration of its claims against the
Continental Parties, the Continental Parties negotiated a
settlement of Baker Hughes's claims against them and
assigned to the Continental Parties Baker Hughes's claims
against CIEC and Chengde.
Continental Parties sued Chengde and CIEC, asserting claims
against Chengde for fraud, negligent misrepresentation,
breach of express warranty, breach of the implied warranty of
merchantability, breach of the implied warranty of fitness
for a particular purpose, and indemnity under section 82.002
of the Texas Civil Practice and Remedies Code. The
Continental Parties asserted claims against CIEC for breaches
of the implied warranty of merchantability and of the implied
warranty of fitness for a particular purpose. The Continental
Parties brought all claims in their own name, and they
asserted all claims except for the indemnity claims "as
the assignee of Baker Hughes's claims."
after answering the lawsuit, CIEC filed a motion to dismiss
all claims against it on the ground that the Continental
Parties were required to arbitrate these claims under the
arbitration provisions in the contracts between the
Continental Party and CIEC. In response, the Continental
Parties did not dispute that their own claims against CIEC
are subject to arbitration and did not oppose the motion as
to these claims. But, as to the Continental Parties'
claims as assignee of Baker Hughes, they opposed the motion
and argued that these claims are not subject to arbitration.
The trial court granted this motion in its entirety and
dismissed all of the Continental Parties' claims against
CIEC "in favor of binding arbitration."
months later and before the trial court ruled on
Chengde's special appearance, the Continental Parties
amended their petition so that they no longer asserted any
claims against CIEC. Under the amended pleading, CIEC was no
longer a defendant. The trial court later sustained
Chengde's amended special appearance and dismissed all
claims against Chengde for lack of personal jurisdiction,
thus rendering a final judgment.
Issues and Analysis
appeal, the Continental Parties raise eight issues. In the
first five, they challenge the trial court's order
sustaining Chengde's amended special appearance. In their
sixth, seventh, and eighth issues, they challenge the trial
court's granting of CIEC's motion to dismiss as to
the assigned claims. Before we tackle the merits of the
appeal, we first address Chengde's motion to dismiss for
lack of jurisdiction, which we have taken with the case.
Does this court have appellate jurisdiction in this
deadline to file a notice of appeal was extended to 90 days
after the trial court signed the judgment, then the
Continental Parties timely filed their notice of appeal.
See Tex. R. App. P. 26.1. If this deadline was not
extended and the deadline was 30 days after the trial court
signed the judgment, then the Continental Parties' notice
of appeal was late and this court lacks appellate
jurisdiction. The Continental Parties did not file a motion
for new trial, motion to modify the judgment, or a motion to
reinstate under Texas Rule of Civil Procedure 165a. The
Continental Parties did timely file a request for findings of
fact and conclusions of law as to the trial court's
ruling on the special appearance.Therefore, the appellate
deadline was extended if findings and conclusions either are
required by the Rules of Civil Procedure or properly could be
considered by the appellate court. See id. The Rules
of Civil Procedure do not require a trial court to issue
findings and conclusions as to a special-appearance ruling,
so the issue is whether we properly could consider findings
and conclusions as to the trial court's
special-appearance ruling. See id.
request for findings of fact and conclusions of law does not
extend the time for perfecting appeal of a judgment rendered
as a matter of law because, in that context, findings and
conclusions can have no purpose and should not be requested,
made, or considered on appeal. IKB Indus. (Nigeria) Ltd.
v. Pro-Line Corp, 938 S.W.2d 440, 443 (Tex. 1997). The
Supreme Court of Texas has given the following examples of
this context: "summary judgment, judgment after directed
verdict, judgment non obstante veredicto, default judgment
awarding liquidated damages, dismissal for want of
prosecution without an evidentiary hearing, dismissal for
want of jurisdiction without an evidentiary hearing,
dismissal based on the pleadings or special exceptions, and
any judgment rendered without an evidentiary hearing."
Id. The high court has given the following examples
of situations in which the Rules of Civil Procedure do not
require findings and conclusions but the appellate court
properly could consider them: "default judgment on a
claim for unliquidated damages, judgment rendered as
sanctions, and any judgment based in any part on an
evidentiary hearing." Id.
trial court did not conduct an evidentiary hearing on
Chengde's amended special appearance. Based on this fact,
Chengde asserts that the trial court's special-appearance
ruling was not based in any part on an evidentiary hearing,
and therefore this court could not properly consider any
findings that the trial court might have issued. Though a
trial court may hold an evidentiary hearing on a special
appearance, the court also may consider stipulations,
affidavits, documents, and the results of discovery processes
that the parties file with the court. See Tex. R.
App. P. 120a (stating that the trial court shall determine a
special appearance "on the basis of the pleadings, any
stipulations made by and between the parties, such affidavits
and attachments as may be filed by the parties, the results
of discovery processes, and any oral testimony");
Phillips Dev. & Realty, LLC v. LJA Eng'g,
Inc., 499 S.W.3d 78, 85 (Tex. App.-Houston [14th Dist.]
2016, pet. denied). Thus, in a special-appearance context,
the absence of an evidentiary hearing does not necessarily
mean that the trial court ruled without considering any
evidence or ruled as a matter of law based on stipulations.
See id. Likewise, the absence of an evidentiary
hearing alone does not mean that this court could not
properly consider findings and conclusions as to the trial
court's special-appearance ruling. See Tex. R.
App. P. 120a; Phillips Dev. & Realty, LLC, 499
S.W.3d at 85.
also suggests that the trial court made its
special-appearance ruling based on stipulated facts, and
therefore the trial court ruled as a matter of law based on
agreed facts. Though the parties stipulated to various facts
relating to Chengde's amended special appearance, Chengde
also submitted an affidavit of Xiaowei "Wade" Ge
that contained factual statements to which the Continental
Parties did not stipulate. And, the Continental Parties also
submitted a declaration of Randall Zajicek containing
statements to which Chengde did not stipulate. The
stipulations contained hundreds of pages of documents, and as
to many of these documents, the parties did not stipulate to
the substance of the documents or their contents. In sum, the
record reflects that the trial court made its
special-appearance ruling based in part on stipulations of
fact and in part on evidence. So, even though the trial court
did not conduct an evidentiary hearing, this case is like the
high court's example of "any judgment based in any
part on an evidentiary hearing." IKB Indus.
(Nigeria) Ltd., 938 S.W.2d at 443. If the trial court
had chosen to issue findings of fact and conclusions of law
as to the trial court's special-appearance ruling, this
court properly could have considered the findings and
conclusions. See id.; Goldberg v. Zinn,
2013 WL 2456869, at *6 (Tex. App.- Houston [14th Dist.] June
6, 2013, no pet.) (mem. op.) (holding that request for
findings and conclusions extended appellate deadline even
though there was no evidentiary hearing, because the trial
court ruled based in part on evidence submitted to the court
by the parties); Brown v. Pennington, No.
05-14-01349-CV, 2015 WL 3958618, at *4-8 (Tex. App.-Dallas
June 30, 2015, no pet.) (considering trial court's
findings of fact and conclusions of law regarding a special
appearance, in case in which trial court did not conduct an
evidentiary hearing but ruling based on documentary evidence
filed with the court) (mem. op.).
conclude that the request for findings and conclusions
extended the deadline to file a notice of appeal and that the
Continental Parties timely filed their notice of appeal.
See Tex. R. App. P. 26.1; IKB Indus. (Nigeria)
Ltd., 938 S.W.2d at 443; Goldberg, 2013 WL
2456869, at *6. We thus have appellate jurisdiction, and we
deny Chengde's motion to dismiss for lack of
Did the trial court err in sustaining Chengde's
their first five issues, the Continental Parties assert that
the trial court erred by sustaining Chengde's amended
special appearance. We begin by addressing the applicable
legal standards and then consider the jurisdictional
evidence, specific jurisdiction, and general
Standard of Review
the Continental Parties are subject to personal jurisdiction
in Texas is a question of law subject to de novo review.
See BMC Software Belgium, N.V. v. Marchand, 83
S.W.3d 789, 794 (Tex. 2002). When, as in today's case,
the trial court does not issue findings of fact and
conclusions of law, we imply all relevant facts necessary to
support the trial court's ruling that are supported by
evidence. M&F Worldwide Corp. v. Pepsi-Cola Metro.
Bottling Co., Inc., 512 S.W.3d 878, 884-85 (Tex. 2017).
Legal Standards as to the Exercise of Personal
Texas long-arm statute allows a court to exercise personal
jurisdiction as far as the federal constitutional
requirements of due process will permit. See Tex.
Civ. Prac. & Rem. Code Ann. §§ 17.041-.045
(West, Westlaw through 2019 R.S.); BMC Software, 83
S.W.3d at 795. The plaintiff bears the initial burden of
pleading allegations sufficient to confer jurisdiction under
the Texas long-arm statute. See Moncrief Oil Int'l,
Inc. v. OAO Gazprom, 414 S.W.3d 142, 149 (Tex. 2013).
The long-arm statute allows the exercise of personal
jurisdiction over a nonresident defendant who "contracts
by mail or otherwise with a Texas resident and either party
is to perform the contract in whole or in part in this
state" or who "commits a tort in whole or in part
in [Texas]." Tex. Civ. Prac. & Rem. Code §
17.042(1), (2) (West, Westlaw through 2019 R.S.). The
Continental Parties satisfied their initial burden by
alleging that the Chengde was doing business in Texas within
the meaning of subsections (1) and (2) of Texas Civil
Practice and Remedies Code section 17.042. See id.;
Moncrief Oil Int'l, Inc., 414 S.W.3d at 149.
Because the Continental Parties met this initial burden, the
burden shifted to Chengde to negate all potential bases for
personal jurisdiction the Continental Parties alleged.
See Moncrief Oil Int'l, Inc., 414 S.W.3d at 149.
jurisdiction over a nonresident defendant is constitutional
when two conditions are met: (1) the defendant has
established minimum contacts with the forum state and (2) the
exercise of personal jurisdiction comports with traditional
notions of fair play and substantial justice. See BMC
Software, 83 S.W.3d at 795. For a defendant to have
sufficient contacts with the forum, it is essential that
there be some act by which the defendant "purposefully
avails" itself of the privilege of conducting activities
in the forum state, thus invoking the benefits and
protections of its laws. Michiana Easy Livin'
Country, Inc. v. Holten, 168 S.W.3d 777, 784 (Tex.
2005). In analyzing personal jurisdiction, only the
defendant's purposeful contacts with the forum count;
personal jurisdiction over a defendant cannot be based on the
unilateral activity of another party. Id. at 785. A
seller who reaches out beyond one state and creates
continuing relationships and obligations with citizens of
another state is subject to the personal jurisdiction of the
latter in suits based on the seller's activities.
Id. By contrast, a defendant should not be subject
to a Texas court's jurisdiction based upon random,
fortuitous, or attenuated contacts. Id. For there to
be purposeful availment, a defendant must seek some benefit,
advantage, or profit by "availing" itself of the
jurisdiction. Id. A nonresident may purposefully
avoid a particular jurisdiction by structuring its
transactions so as neither to profit from the forum's
laws nor be subject to its jurisdiction. Id.
not determinative, foreseeability is an important
consideration in deciding whether the nonresident defendant
purposefully has established minimum contacts with Texas.
BMC Software, 83 S.W.3d at 795. The concept of
foreseeability is implicit in the requirement that there be a
substantial connection between the defendant and Texas
arising from the defendant's conduct purposefully
directed toward Texas. See Guardian Royal Exch. Assur.,
Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 227
jurisdiction exists when the claims in question arise from or
relate to the defendant's purposeful contacts with Texas.
Am. Type Culture Collection Inc. v. Coleman, 83
S.W.3d 801, 807 (Tex. 2002). In conducting a
specific-jurisdiction analysis, we focus on the relationship
among the defendant, Texas, and the litigation. See
Guardian Royal, 815 S.W.2d at 228. For a nonresident
defendant's contacts with Texas to support an exercise of
specific jurisdiction, there must be a substantial connection
between the defendant's ...