Far E. Mach. Co. v. Aranzamendi

• Decision Date: 13 September 2022
• Docket Number: 05-21-00267-CV
• Parties: FAR EAST MACHINERY CO., Appellant v. ISABEL ARANZAMENDI, INDIVIDUALLY AND AS WRONGFUL DEATH BENEFICIARY OF WILBER DIMAS, DECEASED, ET AL., Appellees
• Court: Texas Court of Appeals

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FAR EAST MACHINERY CO., Appellant
v.
ISABEL ARANZAMENDI, INDIVIDUALLY AND AS WRONGFUL DEATH BENEFICIARY OF WILBER DIMAS, DECEASED, ET AL., Appellees

No. 05-21-00267-CV

Court of Appeals of Texas, Fifth District, Dallas

September 13, 2022

On Appeal from the County Court at Law No. 5 Dallas County, Texas Trial Court Cause No. CC-18-05668-E

Before Justices Myers, Partida-Kipness, and Carlyle

MEMORANDUM OPINION

LANA MYERS JUSTICE

Far East Machinery Co. brings this interlocutory appeal of the trial court's order denying its special appearance. See Tex. Civ. Prac. & Rem. Code Ann. § 51.014(a)(7). Far East Machinery brings one issue on appeal contending the trial court erred by denying its special appearance. We reverse the trial court's order and render judgment dismissing appellees' claims against Far East Machinery for lack of jurisdiction.

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BACKGROUND

The Accident

In June 2018, a fire and natural gas explosion at a hospital construction site in Gatesville, Texas, injured and killed several people. Appellees^[1] allege Far East Machinery, a Taiwanese corporation, manufactured steel pipe that was used to carry natural gas at the construction project. Natural gas is odorless. The odorant mercaptan is added to provide a rotten-egg smell so the gas can be easily detected. Appellees allege that the pipe manufactured by Far East Machinery had not been properly treated to resist adsorption or absorption of the odorant. Natural gas escaped into the construction area, the workers were not aware of it, and there was a fire and an explosion.

The Sale of the Pipe

On April 22, 2016, Marubeni-Itochu Steel Canada, Inc., a company located in British Columbia, Canada, ordered pipe from Far East Machinery in Taiwan. The "Sales Contract" stated Marubeni was the "Buyer" and indicated All-Tex was the "Client." Two invoices from Far East Machinery were addressed to Marubeni and

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stated "Customer: All-Tex." The two invoices for the pipe totaled US$22,217.60. The shipping term for the pipe was "CFR" to the Port of Houston. "CFR" stands for "Cost of Freight" and means that the seller arranges and pays for the shipping of the cargo and that title and risk of loss passes when the cargo is loaded onto the ship at the port of export. In September 2016, the pipe was loaded on a ship in Kaohsiung, Taiwan and was unloaded at the Port of Houston. The documentation for the sale and shipment stated the pipe was "Manufactured, tolerance and tested with API 5LB PSLI satisfactory results in accordance with the requirement of the above material specification."

In December 2016 and September 2017, All-Tex received orders for pipe to be used in the Gatesville hospital project. All-Tex filled the order using some of the pipe manufactured by Far East Machinery.

The Litigation

After the fire and explosion at the construction site, the victims and their families brought suit against many defendants involved in the construction project including All-Tex and Far East Machinery. Appellees alleged causes of action against Far East Machinery for strict products liability for marketing and manufacturing defects, negligence, gross negligence, and breach of implied warranty.

Far East Machinery filed a special appearance asserting it did not do business in Texas, it lacked minimum contacts with Texas, and that the court's assumption of

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jurisdiction over it would offend traditional notions of fair play and substantial justice depriving it of due process. The trial court denied Far East Machinery's special appearance.

SPECIAL APPEARANCE

Texas courts may exercise personal jurisdiction over a nonresident defendant "when the state's long-arm statute authorizes such jurisdiction and its exercise comports with due process." Cornerstone Healthcare Grp. Holding, Inc. v. Nautic Mgmt. VI, L.P., 493 S.W.3d 65, 70 (Tex. 2016). The Texas long-arm statute provides in relevant part that "[i]n addition to other acts that may constitute doing business," a nonresident does business in Texas if the nonresident 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 if the nonresident commits a tort in whole or in part in this state. Civ. Prac. § 17.042(1), (2). The statute "provides for personal jurisdiction that extends to the limits of the United States Constitution, and so federal due process requirements shape the contours of Texas courts' jurisdictional reach." Searcy v. Parex Res., Inc., 496 S.W.3d 58, 66 (Tex. 2016).

"[W]hether a trial court's exercise of jurisdiction is consistent with due process requirements turns on two requirements: (1) the defendant must have established minimum contacts with the forum state; and (2) the assertion of jurisdiction cannot offend traditional notions of fair play and substantial justice." Id. (citing Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). "[S]ufficient

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minimum contacts exist when the nonresident defendant 'purposefully avails itself of the privilege of conducting activities within the forum [s]tate, thus invoking the benefits and protections of its laws.'" Id. at 67 (quoting Hanson v. Denckla, 357 U.S. 235, 253 (1958)). "The nub of the purposeful availment analysis is whether a nonresident defendant's conduct in and connection with Texas are such that it could reasonably anticipate being haled into court here." Id. at 67. "Purposeful availment involves contacts that the defendant 'purposefully directed' into the forum state." Id. (citing Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 228 (Tex. 1991)).

When determining whether a nonresident purposefully availed itself of the privilege of conducting activities in Texas, we consider three factors: (1) only the defendant's contacts with the forum are relevant, not the unilateral activity of another party or third person; (2) the contacts relied upon must be purposeful rather than random, isolated, or fortuitous; and (3) the defendant must seek some benefit, advantage, or profit by availing itself of the jurisdiction. Cornerstone, 493 S.W.3d at 70-71. This analysis assesses the quality and nature of the contacts, not the quantity. Moncrief Oil Int'l Inc v. OAO Gazprom, 414 S.W.3d 142, 151 (Tex. 2013). A defendant will not be haled into a jurisdiction based solely on contacts that are random, isolated, or fortuitous, or on the unilateral activity of another party or a third person. Michiana Easy Livin' Country, Inc. v. Holten, 168 S.W.3d 777, 785 (Tex. 2005); Guardian Royal Exch., 815 S.W.2d at 226. In addition to minimum contacts,

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due process requires the exercise of personal jurisdiction to comply with traditional notions of fair play and substantial justice. Moncrief Oil, 414 S.W.3d at 154 (citing Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 338 (Tex. 2009)).

The plaintiff bears the initial burden of pleading allegations that suffice to permit a court's exercise of personal jurisdiction over the nonresident defendant. Searcy, 496 S.W.3d at 66. Once the plaintiff has met this burden, the defendant then assumes the burden of negating all potential bases for personal jurisdiction that exist in the plaintiff's pleadings. Id. The defendant can negate jurisdiction on either a factual or legal basis. Kelly v. Gen. Interior Constr., Inc., 301 S.W.3d 653, 659 (Tex. 2010). A defendant negates jurisdiction on a factual basis by presenting evidence to disprove the plaintiff's jurisdictional allegations. Id. "The plaintiff can then respond with its own evidence that affirms its allegations, and it risks dismissal of its lawsuit if it cannot present the trial court with evidence establishing personal jurisdiction." Id. (footnotes omitted). A defendant negates jurisdiction on a legal basis by showing:

[E]ven if the plaintiff's alleged facts are true, the evidence is legally insufficient to establish jurisdiction the defendant's contacts with Texas fall short of purposeful availment; for specific jurisdiction, that the claims do not arise from the contacts; or that traditional notions of fair play and substantial justice are offended by the exercise of jurisdiction

Id.

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"Minimum contacts with a forum state give rise to either general or specific jurisdiction." Vinmar Overseas Sing. PTE Ltd. v. PTT Int'l Trading PTE Ltd., 538 S.W.3d 126, 131 (Tex. App.-Houston [14th Dist.] 2017, pet. denied); see also KC Smash 01, LLC v. Gerdes, Hendrichson, Ltd., L.L.P., 384 S.W.3d 389, 392 (Tex. App.-Dallas 2012, no pet.). "A state court may exercise general jurisdiction only when a defendant is 'essentially at home' in the state." Ford Motor Co. v. Mont. Eighth Judicial Dist. Court, 141 S.Ct. 1017, 1024 (2021). An individual is subject to general jurisdiction in the state where the person is domiciled. Id. (citing Daimler AG v. Bauman, 571 U.S. 117, 137 (2014)). The equivalent of a domicile for a corporation are its place of incorporation and its principal place of business. Id.

Far East Machinery is a corporation organized under the laws of Taiwan, and its principal place of business is in Taiwan. Chien Hsing Liu, Far East Machinery's deputy manager, testified that Far East Machinery is not registered with the Texas Secretary of State, has not been authorized to conduct business in Texas, has never conducted business in Texas, and has not held itself out as doing business in Texas. Thus, Far East Machinery established it is not "essentially at home" in Texas. Appellees do not assert that general jurisdiction applies to Far East Machinery, and we conclude Far East Machinery is not subject to general jurisdiction.

Our inquiry is therefore limited to specific jurisdiction, which is based on "whether the defendant's activities in the forum state themselves 'give rise to the liabilities sued on.'" Searcy, 496 S.W.3d at 67 (quoting Int'l Shoe, 326 U.S. at 317).

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