Middleton v. Kawasaki Steel Corp.

• Decision Date: 03 January 1985
• Docket Number: No. C14-84-410CV,C14-84-410CV
• Citation: 687 S.W.2d 42
• Parties: John G. MIDDLETON d/b/a Middleton Oil Company, Appellant, v. KAWASAKI STEEL CORPORATION, Appellee. (14th Dist.)
• Court: Texas Court of Appeals

Page 42

687 S.W.2d 42

John G. MIDDLETON d/b/a Middleton Oil Company, Appellant, v. KAWASAKI STEEL CORPORATION, Appellee.

No. C14-84-410CV.

Court of Appeals of Texas Houston (14th Dist.).

Jan. 3, 1985.

Rehearing Denied Jan. 31, 1985.

Linda L.S. Moroney, Pannill & Reynolds, Houston, for appellant.

W. Robert Brown, Orran Lee Brown, Liddell, Sapp, Zivley, Brown & Laboon, Houston, for appellee.

Before JUNELL, MURPHY and SEARS, JJ.

OPINION

JUNELL, Associate Justice.

John G. Middleton, plaintiff below, appeals from a judgment dismissing Kawasaki Steel Corporation granted after the court heard a special appearance motion in which Kawasaki alleged a lack of jurisdiction over its person. The court's decision to dismiss is based upon two grounds: (1) that Kawasaki Steel Corporation lacks minimum contacts with this forum so that exercise of jurisdiction over it would violate due process and (2) Middleton has not properly invoked the jurisdiction of the court in that it has not alleged the jurisdictional requirements of the Texas Long Arm Statute nor effected service according to that statute. We reverse and remand because we hold that: (1) Kawasaki did have minimum contacts with this forum at the time Middleton's alleged cause of action accrued and should be subjected to suit in this state; and (2) Kawasaki's complaints as to service amount to a motion to quash and should not have been considered by the trial court in a Rule 120a special appearance hearing. See Tex.R.Civ.P. 120a.

A brief factual background will introduce the parties and issues. In December 1979 appellant Middleton, as operator in drilling a gas well in Colorado County, Texas, set 250 lengths of steel casing into the well. Oilworld Supply Company sold the casing to Middleton. Kawaski Steel Corporation of Japan (Kawasaki) allegedly manufactured the casing. Middleton alleges that the casing separated and the well had to be plugged back at a shallower, less productive zone.

In March 1980 Oilworld sued Middleton for payment for the pipe casing. Middleton filed a counterclaim for damages against Oilworld and third-party claims against Kawasaki and Japan Cotton Company (Japan Cotton), a subsidiary of Nichimen Co., Ltd., the Japanese trading company that had filled Oilworld's order for Kawasaki casing.

Middleton's claim against Kawasaki was filed May 25, 1981. In it he alleged that Kawasaki Steel Corporation was a New York Corporation authorized to do business in Texas and could be served with citation by service upon its registered agent Toshikazu Tomita at its registered office at 1440 Commerce Building, 914 Main Street, Houston, Texas. The return of service shows that citation was served by a Harris County constable by delivering the petition to "T. Tomita," a "v/p of the said corp." in person at the address alleged. If Middleton's allegations had been correct, service on Kawasaki through Mr. Tomita would have been authorized by Tex.Bus.Corp. Act Ann. art. 8.10(A) (Vernon 1980).

Middleton's allegations were wrong. Kawasaki Steel Corporation is and was a Japanese Corporation not licensed to do business in Texas. It has never had a registered agent for service of process in Texas. From 1975 until April 1, 1981, Kawasaki maintained an office at 1440 Commerce Building in Houston. On April 1, 1981, less than two months before Middleton's third-party action was filed, Kawasaki Steel Corporation formed a new, wholly-owned subsidiary, Kawasaki Steel America (Kawasaki America), and transferred its American offices to the subsidiary. The general manager for Kawasaki's Houston office, Mr. Tomita, became the general manager for Kawasaki America and all employees were transferred from the Japanese corporation to the American corporation. Kawasaki America used the same address and telephone number that had belonged to the parent. Kawasaki Steel America is a New York Corporation licensed to do business in Texas and Mr. Tomita is its registered agent for service of process at the Commerce Building address.

These facts distinguish this case from all those cited by the parties in that service of process was not even attempted through the Texas Long Arm statute, Tex.Rev.Civ.Stat.Ann. art. 2031b (Vernon 1964 & Supp.1984).

We consider only the first six points of error proposed by appellant. Appellant sought and received leave to file a supplemental brief so that he could restate his points of error in technical compliance with the broad scope of the opinion in La Sara Grain Co. v. First National Bank, 673 S.W.2d 558, 568 (Tex.1984). This leave did not authorize him to add two new points of error, as appellant attempted to do.

Points of error one, two and five state that the trial court erred in holding that it lacked jurisdiction because Kawasaki Steel Corporation of Japan had insufficient contacts with Texas when the evidence showed conclusively that the company actively cultivated the Texas market, knew it was selling defective casing to a Texas oilfield supplier and had continuous and systematic contacts in the Houston market. Appellant argues that as a matter of law Kawasaki's amenability to suit in Texas was established, and alternatively, that the lower court's findings and conclusions are so contrary to the overwhelming weight and preponderance of the evidence as to be clearly wrong and unjust.

Appellant has offered no guidance concerning the standard of review to which we must adhere. Appellee argues that in reviewing the no evidence claims, we should consider only the evidence and reasonable inferences from the evidence which, viewed in their most favorable light, support the trial court's findings of fact and disregard all evidence and inferences to the contrary, citing Roark v. Allen, 633 S.W.2d 804, 809 (Tex.1982); Estate of Claveria v. Claveria, 615 S.W.2d 164 (Tex.1981); and Stedman v. Georgetown Savings & Loan Association, 595 S.W.2d 486 (Tex.1979). This is the general rule. However, this court is not only reviewing findings of fact, but also the conclusions of law based upon those facts. Conclusions of law are always reviewable. Muller v. Nelson, Sherrod & Carter, 563 S.W.2d 697, 702 (Tex.Civ.App.--Fort Worth 1978, no writ).

We do not agree with appellee that we must presume that sufficient evidence was introduced to support the findings and judgment of the trial court. Appellee cites Yoast v. Yoast, 649 S.W.2d 289 (Tex.1983), a case in which the appellate record contained no statement of facts. Where a statement of facts is contained in the record, as is the case here, findings of fact are not conclusive on appeal if the contrary is established as a matter of law, or if there is no evidence to support the findings. Swanson v. Swanson, 148 Tex. 600, 228 S.W.2d 156, 158 (1950); Armstrong v. Armstrong, 601 S.W.2d 724, 727 (Tex.Civ.App.--Beaumont 1980, writ ref'd n.r.e.).

When the Dallas Court of Civil Appeals reviewed a trial court's holding that a defendant had insufficient contacts with Texas to be subject to Texas jurisdiction, it accepted all but one of the court's findings of fact, but noted that "the court's findings are not, however, a complete reflection of the evidence." Wright Waterproofing Co. v. Applied Polymers, 602 S.W.2d 67, 70 (Tex.Civ.App.--Dallas), writ ref'd n.r.e. per curiam, 608 S.W.2d 164 (Tex.1980). The appellate court then proceeded to review the other undisputed evidence in the record and reversed the trial court. The court of civil appeals found that the defendant was "doing business" in Texas and that it had sufficient contacts with this forum to acquire jurisdiction over it without offending traditional notions of fair play and substantial justice. 602 S.W.2d at 70-71. See also National Truckers Service, Inc. v. Aero Systems, Inc., 480 S.W.2d 455 (Tex.Civ.App.--Fort Worth 1972, writ ref'd n.r.e.) (no findings of fact mentioned).

We take the same approach. We first will consider the court's relevant findings of fact and apply the usual "no evidence" standard of review. Then we will look to the uncontroverted evidence in the record that is not reflected in the court's findings of fact to determine whether its conclusions of law are supported by the evidence as a whole.

We also note at this point that it was Kawasaki's burden to establish a lack of minimum contacts because it has the burden to prove that it is not amenable to the jurisdiction of a Texas court. Minexa Arizona, Inc. v. Staubach, 667 S.W.2d 563, 565 (Tex.App.--Dallas 1984, no writ); Tex.R.Civ.P. 120a. If the contacts found from the evidence in the record are more than minimum contacts, then the trial court was incorrect in its conclusions of law.

Findings of Fact 42 through 68 relate to the issue of minimum contacts. The court found that Kawasaki Steel Corporation has never maintained an inventory in Texas; does not own real estate or other assets in Texas; is not registered to do business in Texas; has no agent or representative living or stationed in Texas at the time of hearing or at the time service was attempted; does not and did not at time of service maintain an office or place of business in Texas; has no bank accounts or telephone listings in Texas; does not pay Texas taxes; does not and never did advertise its products specifically in Texas or direct advertising at Texas; and at no time solicited or accepted orders for its products directly in or from Texas nor sold any of its products directly to a customer in Texas.

The court also found that Kawasaki products, including the casing that allegedly failed, reach Texas through trading companies in Japan. A Texas customer places an order with a trading company in this country (like Japan Cotton). That trading company forwards the order to its Japanese parent company, which places the order with Kawasaki. Kawasaki has always sold its products to the Japanese trading company f.o.b. Japan and is paid in Japan.

All of these findings of fact are supported by the record. We note that most of...