Control Solutions, Inc. and United Phosphorus, Inc. v. Gharda USA, Inc., Gharda Chemicals Ltd., Benko Products, Inc., and Choctaw Sales, Inc.

Opinion issued September 13, 2007

In The

Court of Appeals

For The

First District of Texas

NO. 01-06-00802-CV

CONTROL SOLUTIONS, INC. AND UNITED PHOSPHOROUS, INC.,

Appellants

V.

GHARDA CHEMICALS LTD., Appellee

On Appeal from the 129th District Court

Harris County, Texas

Trial Court Cause No. 2004-67993

O P I N I O N

Appellants, Control Solutions, Inc. and United Phosphorous, Inc. (collectively,

"CSI"), file this interlocutory appeal challenging the trial court's order that granted

the special appearance motion of Gharda Chemicals, Ltd. ("Gharda Chemicals"). In

four issues, CSI argues that the trial court erred when (1) it ruled that it did not have

specific jurisdiction over Gharda Chemicals; (2) it failed to consider Gharda

Chemicals's post-injury contacts with Texas in its general jurisdictional analysis; (3)

it did not find the exercise of jurisdiction reasonable in light of traditional notions of

fair play and substantial justice; and (4) it ruled that jurisdiction over Gharda

Chemicals could not be imputed through the application of the alter ego, single

business enterprise, and agency doctrines.

We reverse and remand.

Facts

Control Solutions is a Texas corporation that, among other things, mixes and

sells insecticides. Its principal place of business is located in Harris County, Texas.

Mark Boyd serves as the president of Control Solutions.

Gharda Chemicals is an Indian corporation with several manufacturing

facilities in India. It was founded by Dr. Keki Gharda, its chairman, managing

director, and principal shareholder, in 1964.

Sometime in the 1990s, Gharda Chemicals began manufacturing Chlorpyrifos,

an insecticide, and Dicamba, an herbicide, and decided to enter the United States

market. After its first attempt at entering that market failed, Gharda Chemicals hired

Larry Miller as a consultant to aid in the registration of Chlorpyrifos and Dicamba

with the Environmental Protection Agency ("EPA"); without registration, the

chemicals could not legally be sold in the United States. Gharda Chemicals applied

for registration in its own name in 1996, and the EPA conditionally approved the

registration in early 1997.

In March 1997, Gharda Chemicals established Gharda USA, Inc. ("GUSA")

as a wholly-owned subsidiary "specifically to represent Gharda Chemical[s] in the

United States." Gharda Chemicals solely capitalized GUSA and retained total

ownership of all GUSA stock. Dr. Gharda and J.A. Somaiya, who are both directors

of Gharda Chemicals, served as two of the four directors of GUSA. The third director

was Uda Maroo, Gharda Chemicals' chief financial officer, and the fourth was Mamu

Tabbaykan, the sole "US director." Anthony Maro became president of GUSA in

2000. As president of GUSA, Maro wrote monthly reports to Dr. Gharda that

included how much product had been sold, to whom, and at what price; how much

money was outstanding; and, according to Dr. Gharda, why Maro "constantly needed

infusions of money from Gharda Chemicals to keep himself afloat."

After GUSA was formed, Gharda Chemicals transferred the EPA registrations

for Chlorpyrifos and Dicamba to GUSA; but, according to Maro, GUSA made no

cash payments for these transfers because there was "no money to do that with, and

. . . no assets to do it with." Ten million dollars that Gharda Chemicals had paid to

Dow Chemicals and BASF for the right to cite their data to the EPA for registration

purposes were transferred onto GUSA's books. Gharda Chemicals also initially paid

for GUSA's membership in various task forces because, according to Dr. Gharda,

"GUSA was just a shell company initially. It didn't . . . have any business. So it

didn't have any resources to pay." GUSA was thus created, owned, and controlled

by Gharda Chemicals and served as the U.S. distributor for Chlorpyrifos and

Dicamba.

In making purchases of the Chlorpyrifos manufactured by Gharda Chemicals,

Boyd, the president of Control Solutions, initially dealt with Miller, the consultant

who had been hired by Gharda Chemicals. During his deposition, Boyd testified that

when he was dealing with Miller, he believed Miller to be associated with Gharda

Chemicals because "his stuff that came to me [Boyd] said 'Agent of Gharda

Chemical[s]'" and he said that he was "[a]n agent for Gharda Chemical[s]" and

"worked for Dr. Gharda." Boyd also testified that he did not know that GUSA

existed until he began dealing with Maro and learned that Maro worked for GUSA.

Boyd further testified that Maro did not make pricing decisions but "went back to Dr.

Gharda to get all these decisions made" and that "typically, it was Dr. Gharda that cut

the deals with me."

Sometime in 2002, at Dr. Gharda's request, Boyd traveled from Texas to

Chicago to meet with Dr. Gharda. According to Boyd, he and Dr. Gharda discussed

"what new products Dr. Gharda could make for [Boyd] in India to sell in Texas" and

how they could sell more Chlorpyrifos and Dicamba. Boyd suggested that they could

sell substantial quantities of Chlorpyrifos if the price were lowered and they entered

into the professional termiticide market, which later happened. According to Dr.

Gharda, a significant amount of its sales of both Chlorpyrifos and Dicamba,

amounting to millions of dollars, "were centered around Control Solutions."

In October 2002, Hoshang Patel, a member of Gharda Chemicals's board of

directors, accompanied Maro, GUSA's president, on a visit to Control Solutions. At

his deposition, Patel explained that the purpose of his visit was to let Control

Solutions know that Gharda Chemicals "was also interested in the products sold

here," that it "was watching this deal," and if there were ever a problem, Gharda

Chemicals would "stand by its products." Gharda also provided support by

communicating with Howard Stoddard of Control Solutions regarding the procedure

for melting Chlorpyrifos and providing other technological support when GUSA's

representatives were not able to answer customers' questions.

On March 8, 2004, 32 drums containing the solid chemical Chlorpyrifos, which

had been manufactured by Gharda Chemicals in India, sold to Control Solutions by

Gharda Chemicals's wholly-owned subsidiary, GUSA, and subsequently shipped

from India to Houston, Texas, were placed in a "hot box" in Control Solutions'

warehouse for melting pursuant to a procedure received from Gharda Chemicals.

Each drum had been sealed at Gharda Chemicals's plant in India, and the seals on the

drums were not broken until immediately before the drums were put in the hot box.

At some point during the melting process, the Chlorpyrifos caught on fire and blew

open the doors of the hot box. The fire spread throughout the warehouse and to a

second building. Everything inside those two buildings was destroyed, including

some inventory belonging to United Phosphorous. Subsequent analysis by Control

Solutions revealed that the drums of Chlorpyrifos were contaminated with flammable

chemicals.

In September 2004, Gharda Chemicals dissolved GUSA. GUSA's assets were

transferred to Gharda Chemicals and, according to Patel, GUSA "stop[ped] doing

business" and "Gharda Chemicals . . . stepped into the same offices with the same

employees, same warehouse, same customers and start[ed] doing business."

On December 1, 2004, Control Solutions filed suit against several parties,

including GUSA and Gharda Chemicals, for products liability, breach of express

warranty, breach of implied warranty of merchantability, and negligence. At some

point thereafter, United Phosphorous intervened in Control Solutions' suit. On

January 14, 2005, Gharda Chemicals filed a special appearance with the trial court

contesting the court's exercise of personal jurisdiction over it. The trial court granted

the special appearance without issuing findings of fact or conclusions of law. CSI

filed this interlocutory appeal.

Personal Jurisdiction In its first issue, CSI argues that the stream of commerce doctrine confers

specific personal jurisdiction over Gharda Chemicals.

Standard of Review

Whether a court has personal jurisdiction over a defendant is a question of law

subject to de novo review. BMC Software Bel., N.V. v. Marchand , 83 S.W.3d 789,

794 (Tex. 2002); Glattly v. CMS Viron Corp. , 177 S.W.3d 438, 445 (Tex.

App.--Houston [1st Dist.] 2005, no pet.). The trial court, however, must frequently

resolve questions of fact before deciding the jurisdictional question. BMC Software ,

83 S.W.3d at 794 . When the trial court issues findings of fact and conclusions of law,

we may review the findings of fact on legal and factual sufficiency grounds and

review the conclusions of law de novo as a legal question. Silbaugh v. Ramirez , 126

S.W.3d 88, 94 (Tex. App.--Houston [1st Dist.] 2002, no pet.) (citing BMC Software ,

83 S.W.3d at 794 ). If the trial court does not issue findings of fact and conclusions

of law, as here, "all facts necessary to support the judgment and supported by the

evidence are implied." BMC Software , 83 S.W.3d at 795 . In other words, if the trial

court does not issue findings of fact, a reviewing court should presume that the trial

court resolved all factual disputes in favor of its judgment. Tri-State Bldg.

Specialties, Inc. v. NCI Bldg. Sys., L.P. , 184 S.W.3d 242, 246 (Tex. App.--Houston

[1st Dist.] 2005, no pet.) (citing Am. Type Culture Collection, Inc. v. Coleman , 83

S.W.3d 801, 806 (Tex. 2002)). These findings are not conclusive when the appellate

record includes both the reporter's and clerk's records, and they may be challenged

for legal and factual sufficiency on appeal. Id. To the extent that the underlying facts

are undisputed, however, we conduct a de novo review. Glattly , 177 S.W.3d at 445 .

The plaintiff bears the initial burden of pleading sufficient allegations to bring

a nonresident defendant within the provisions of the Texas long-arm statute. BMC

Software , 83 S.W.3d at 793 . A nonresident defendant challenging the court's

exercise of personal jurisdiction through a special appearance carries the burden of

negating all grounds for personal jurisdiction alleged by the plaintiff. Id. ; Glattly ,

177 S.W.3d at 446 .

Texas Long-Arm Statute and Due Process

Two requirements must be met before a Texas court can exercise personal

jurisdiction over a nonresident defendant: (1) the Texas long-arm statute must

authorize the exercise of jurisdiction and (2) the exercise of jurisdiction must be

consistent with guarantees of due process. Moki Mac River Expeditions v. Drugg ,

221 S.W.3d 569, 574 (Tex. 2007); Tri-State , 184 S.W.3d at 248 .

The Texas long-arm statute permits Texas courts to exercise personal

jurisdiction over a nonresident (1) defendant that "does business" in Texas. Tex. Civ.

Prac. & Rem. Code Ann. § 17.042 (Vernon 1997); BMC Software , 83 S.W.3d at

795 . The statute lists three activities that constitute "doing business": (1) contracting

with a Texas resident when either party is to perform the contract in whole or in part

in Texas; (2) committing a tort in whole or in part in Texas; and (3) recruiting Texas

residents for employment inside or outside of Texas. Tex. Civ. Prac. & Rem. Code

Ann. § 17.042 . This list, however, is not exclusive, (2) and the statute's "doing

business" requirement is limited only by the requirements of federal due process

guarantees. Koll Real Estate Group, Inc. v. Purseley , 127 S.W.3d 142, 146 (Tex.

App.--Houston [1st Dist.] 2003, no pet.).

With respect to personal jurisdiction, federal due process requires two things.

First, the nonresident defendant must have purposefully established such minimum

contacts with the forum state that the defendant could reasonably anticipate being

sued there. Glattly , 177 S.W.3d at 447 (citing Burger King Corp. v. Rudzewicz , 471

U.S. 462, 475-76 , 105 S. Ct. 2174, 2183-84 (1985)). A nonresident establishes

minimum contacts with Texas by purposefully availing itself of the privileges and

benefits inherent in conducting business in the state. Moki Mac , 221 S.W.3d at 575

("defendant must seek some benefit, advantage or profit by 'availing' itself of the

jurisdiction"); Koll , 127 S.W.3d at 146 . It is the quality and nature of the defendant's

contacts, rather than their number, that is important to the minimum-contacts analysis.

Trigeant Holdings, Ltd. v. Jones , 183 S.W.3d 717, 725 (Tex. App.--Houston [1st

Dist.] 2005, pet. denied). Random, fortuitous, or attenuated acts, or the unilateral acts

of a third party, are not sufficient to confer personal jurisdiction. Id. Although not

determinative, foreseeability is an important consideration in deciding whether a

nonresident defendant has purposefully established minimum contacts. Glattly , 177

S.W.3d at 446-47 .

Second, if the nonresident defendant has purposefully established minimum

contacts with the forum, the exercise of personal jurisdiction must also comport with

traditional notions of fair play and substantial justice. Id. at 447 (citing Burger King ,

471 U.S. at 476-77 , 105 S. Ct. at 2184-85 ). As to fairness, the defendant bears the

burden of presenting a "compelling case" that exercising jurisdiction over him would

not be fair and just. See id. at 450. Only in rare cases will a Texas court's exercise

of personal jurisdiction not comport with fair play and substantial justice when the

nonresident defendant has purposefully established minimum contacts with the forum

state. Guardian Royal Exch. Assurance, Ltd. v. English China Clays, P.L.C. , 815

S.W.2d 223, 231 (Tex. 1991).

We, therefore, analyze Gharda Chemicals's contacts with Texas to determine

whether they satisfy the "minimum contacts" requirement of due process under the

Texas long-arm statute and the Fourteenth Amendment. If so, we must determine

whether the Texas courts' exercise of jurisdiction over Gharda Chemicals comports

with traditional notions of fair play and substantial justice. Minimum Contacts The minimum contacts element of due process is divided into specific and

general personal jurisdiction. Glattly , 177 S.W.3d at 447 ; Moki Mac , 221 S.W.3d at

575-76 ; Schlobohm v. Schapiro , 784 S.W.2d 355, 357 (Tex. 1990) (explaining that

United States Supreme Court has "refined the minimum contacts analysis by

identifying recurring fact patterns and outlining guidelines for application of the due

process test to these patterns"-- i.e. , specific and general jurisdiction).

A court may exercise general jurisdiction over a nonresident defendant if the

defendant's contacts with the forum state are continuous and systematic, even if the

cause of action did not arise from or relate to the defendant's contacts with the forum.

Glattly , 177 S.W.3d at 447 . This inquiry demands that all contacts be carefully

investigated, compiled, sorted, and analyzed for proof of a pattern of continuing and

systematic activity. Schlobohm , 784 S.W.2d at 359 .

A court may exercise specific jurisdiction over a nonresident defendant if his

alleged liability arises out of or is related to an activity conducted within the forum.

Moki Mac , 221 S.W.3d at 576 ; Glattly , 177 S.W.3d at 446 (citing CSR, Ltd. v. Link ,

925 S.W.2d 591, 595 (Tex. 1996)). The contacts must be purposefully directed at the

forum and have a "substantial connection" with the forum state that results in the

alleged injuries. Burger King , 471 U.S. at 473-76 , 105 S. Ct. at 2182-84 ; Moki Mac ,

221 S.W.3d at 584-85 ; Shell Compañia Argentina de Petroleo, S.A. v. Reef

Exploration, Inc. , 84 S.W.3d 830, 837 (Tex. App.--Houston [1st Dist.] 2002, pet.

denied). In considering specific jurisdiction, we focus our analysis on the

relationship among the defendant, the forum, and the litigation. Moki Mac , 221

S.W.3d at 575-76 .

Here, CSI argues that the Texas courts have specific personal jurisdiction over

Gharda Chemicals under the stream of commerce doctrine.

Stream of Commerce Doctrine

The stream of commerce doctrine stems from World-Wide Volkswagen Corp.

v. Woodson , in which the United States Supreme Court stated, "The forum state does

not exceed its powers under the Due Process Clause if it asserts personal jurisdiction

over a corporation that delivers its products into the stream of commerce with the

expectation that they will be purchased by consumers in the forum State." 444 U.S.

286, 297-98 , 100 S. Ct. 559, 567 (1980). Later, however, in Asahi Metal Industry

Co. v. Superior Court of California, Solano County , a plurality of the Court held that

the placement of a product into the stream of commerce, absent additional conduct

indicating an intent to serve the market of the forum state, is not an act of the

defendant purposefully directed toward the forum state. 480 U.S.102, 112, 107 S. Ct.

1026, 1032 (1987); CSR , 925 S.W.2d at 595 . Likewise, the Texas Supreme Court has

held that "the mere sale of a product to a Texas resident will not generally suffice to

confer specific jurisdiction upon our courts. Instead, the facts alleged must indicate

that the seller intended to serve the Texas market." Moki Mac , 221 S.W.3d at 577

(citing CSR , 925 S.W.2d at 595 ; Asahi , 480 U.S. at 112 , 107 S. Ct. at 1032 ). This

rule accords with the due process requirement that a nonresident defendant must take

action that is purposefully directed towards the forum state. Id. (citing Asahi , 480

U.S. at 112 , 107 S. Ct. at 1032 ).

In determining whether the defendant purposefully directed action towards

Texas, we may look to conduct beyond the particular business transaction at issue,

as "[a]dditional conduct of the defendant may indicate an intent or purpose to serve

the market in the forum State." Moki Mac , 221 S.W.3d at 577 (quoting Asahi , 480

U.S. at 112 , 107 S. Ct. at 1032 ). Some examples of "additional conduct" that may

indicate an intent to serve the market of the forum state are: (1) designing the product

for the market in the forum state; (2) advertising in the forum state; (3) establishing

channels for providing regular advice to customers in the forum state; and (4)

marketing the product through a distributor who has agreed to serve as the sales agent

in the forum state. Asahi , 480 U.S. at 111 , 107 S. Ct. at 1032 .

Intent to serve the Texas market alone is not sufficient, however, to confer

specific jurisdiction over a foreign defendant. For a Texas court to exercise specific

jurisdiction over a nonresident defendant, two requirements must be met: (1) not only

must the defendant have established minimum contacts with Texas by purposefully

availing itself of the privilege of conducting activities here, but also (2) the

defendant's liability must have arisen from or be related to those contacts. Moki Mac ,

221 S.W.3d at 576 (citing Am. Type Culture , 83 S.W.3d at 806).

We, therefore, examine the record for evidence both that Gharda Chemicals

purposefully directed acts towards Texas indicating that it intended to serve the Texas

market and that its liability arises from its contacts with Texas.

Purposeful Availment

In CSR , the Texas Supreme Court held that the nonresident defendant did not

purposefully direct any act toward Texas indicating that it intended to serve the Texas

market. 925 S.W.2d at 596 . In that case, CSR, an Australian company, sold 363 tons

of asbestos to another company in Australia, which then shipped the asbestos to

Houston where it was used to manufacture pipe. Id. at 593-94 . In reaching its

conclusion, the Supreme Court noted that CSR did not advertise its asbestos in Texas,

provide advice to Texas buyers, have any sales agents in Texas, or create, control, or

employ the distribution system that brought the asbestos to Texas, and there was no

direct evidence that CSR knew that the 363 tons of asbestos would be distributed in

Texas. Id. at 595-96 . Likewise, in Michiana Easy Livin' Country, Inc. v. Holten , the Texas Supreme

Court held that Michiana did not have the requisite minimum contacts with Texas for

jurisdiction to attach. 168 S.W.3d 777 (Tex. 2005). In that case, Holten, a Texas

resident, telephoned Michiana in Indiana and purchased an RV, which Michiana

shipped to Holten in Texas at Holten's expense . Id. at 784 . A dispute arose, and

Holten sued Michiana in Texas. Id. at 781 . Michiana had no employees or property

in Texas, was not authorized to do business in Texas, did not advertise in Texas or

over the internet, and had not solicited business from anyone in Texas, including

Holten. Id. at 784 . "Michiana's only contact with Texas was Holten's decision to

place his order from there ." Id. at 794 . Thus, the Supreme Court held that there was

no conduct by Michiana purposefully establishing minimum contacts that justified the

exercise of specific jurisdiction over Michiana by the Texas courts. See id.

Here, the factual situation is virtually the opposite of that in CSR and Michiana .

Gharda Chemicals began manufacturing Chlorpyrifos in the 1990s and decided to

enter the U.S. market. In March 1997, it established a wholly owned and controlled

subsidiary, GUSA, to market its chemicals in the United States. Gharda Chemicals

obtained EPA registration for Chlorpyrifos and Dicamba and then transferred the

EPA registration for Chlorpyrifos to GUSA. Gharda and GUSA established an on-going business relationship with Control Solutions in Texas for the sale of Gharda

Chemicals's products, which were manufactured in India and shipped to Texas

pursuant to contract.

Boyd, president of Control Solutions, initially dealt with Miller, who,

according to Boyd, was working as an agent for Gharda Chemicals. Boyd later dealt

with Maro, the president of GUSA, but testified that Maro did not make pricing

decisions, but "went back to Dr. Gharda" for pricing decisions, and that "typically it

was Dr. Gharda that cut the deals with [Boyd]." In October 2002, Patel accompanied

Maro on a visit to Control Solutions. At his deposition, Patel explained that the

purpose of his visit was to let Control Solutions know that Gharda Chemicals "was

also interested in the products sold here," "was watching this deal," and if there was

ever a problem, Gharda Chemicals would "stand by its products." Also in 2002, at

Dr. Gharda's request, Boyd traveled to Chicago to meet with Dr. Gharda. According

to Boyd, he and Dr. Gharda discussed "what new products Dr. Gharda could make for

[Boyd] in India to sell in Texas" and how they could sell more Chlorpyrifos and

Dicamba. Boyd suggested that they could sell substantial quantities of Chlorpyrifos

if the price were lowered and they entered into the professional termiticide market,

which later happened. A very significant amount of Gharda Chemicals's sales in the

United States of both Chlorpyrifos and Dicamba "were centered around Control

Solutions." (3) Thus, Gharda Chemicals had both direct and indirect systematic contacts

with Control Solutions in Texas.

Several months after the fire in Texas that gave rise to this litigation, Gharda

Chemicals dissolved GUSA, absorbed its assets, and undertook direct operations in

the United States. According to Patel, a member of Gharda Chemicals's board of

directors, GUSA "stop[ped] doing business" and "Gharda Chemicals . . . stepped into

the same offices with the same employees, same warehouse, same customers and

start[ed] doing business."

Based on the foregoing, we conclude that Gharda Chemicals established

minimum contacts with Texas because it purposefully availed itself of the privileges

and benefits inherent in conducting business in Texas. See Koll , 127 S.W.3d at 146 ;

see also Tex. Civ. Prac. & Rem. Code Ann. § 17.042 (defining "doing business") .

Liability Related to Forum Contacts

For specific jurisdiction purposes, however, purposeful availment has no

jurisdictional relevance unless the defendant's liability arises from or relates to the

forum contacts. Moki Mac , 221 S.W.3d at 579 . In assessing the strength of the

necessary connection, the Texas Supreme Court has held that "for a nonresident's

forum contacts to support an exercise of jurisdiction, there must be a substantial

connection between those contacts and the operative facts of the litigation." Id. at

585 (emphasis added).

In Moki Mac , the Texas Supreme Court held that the nonresident defendant's

activities in Texas were not sufficiently related to the facts of the litigation. Id. at

588 . In that case, the plaintiffs' 13-year-old son died on a river rafting trip in Arizona

with Moki Mac, a Utah-based river rafting outfitter. Id. at 573 . Although Moki Mac

had not directly solicited the plaintiffs to participate in the trip, the court found that

Moki Mak had purposefully availed itself of the privileges and benefits inherent in

conducting business in Texas by selling rafting trips to Texas residents; purposefully

directing marketing efforts to Texas with the intent to solicit business from the state;

regularly advertising in Texas; hiring public relations firms to target media groups

and tour operators, some of which were located in Texas; soliciting Texas residents

through mass and targeted direct-marketing e-mail campaigns; compiling and

obtaining a mailing list that included Texas residents; and utilizing particular

customers, some of whom were located in Texas, to act as de facto group leaders for

the planning, organizing, and promoting of trips. Id. at 577-78 . The court held,

however, that the relationship between these contacts and the operative facts of the

litigation--the guides' conduct on the rafting trip and whether they exercised

reasonable care in supervising the plaintiffs' son-- were "too attenuated to satisfy

specific jurisdiction's due-process concerns." Id. at 585, 588 .

Here, in contrast, in March 2004, 32 drums containing Chlorpyrifos, which had

been manufactured by Gharda Chemicals in India, were sold to Control Solutions in

Texas by GUSA, shipped directly from India to Texas, and stored in Control

Solutions' warehouse in Texas. The drums were unsealed and placed in a "hot box"

for melting pursuant to a procedure received by Control Solutions from Gharda

Chemicals. Each drum had been sealed at Gharda Chemicals's plant in India, and the

seals on the drums were not broken until immediately before the drums were put in

the hot box. Sometime during the melting process, the Chlorpyrifos caught on fire

and blew open the doors of the hot box. The fire spread throughout the warehouse

and to a second building. Everything inside those two buildings was destroyed,

including inventory belonging to United Phosphorous. Subsequent analysis by

Control Solutions revealed that the drums of Chlorpyrifos were contaminated with

flammable chemicals.

CSI alleged four causes of action against Gharda Chemicals: (1) strict products

liability; (2) breach of express warranty; (3) breach of implied warranty of

merchantability; and (4) negligence. All four causes of action center around the

allegation that the drums of Chlorpyrifos put in the hot box in March 2004 were

contaminated with flammable chemicals, which ultimately caused the fire at Control

Solutions. Thus, the operative facts of the litigation concern the fire and the

contamination of the drums of Chlorpyrifos, and the related questions of (a) whether

this contamination rendered the Chlorpyrifos defective, (b) whether the delivery of

the contaminated drums breached an express warranty, the implied warranty of

merchantability, or both, and (c) whether Gharda Chemicals exercised reasonable care

in the manufacture and packaging of the Chlorpyrifos.

Given the facts of this case, we conclude that Gharda Chemicals's liability

"arises from or relate[s] to the forum contacts." See Moki Mac , 221 S.W.3d at 579 .

Because Gharda Chemicals purposefully availed itself of the privileges and benefits

of doing business in Texas and because its alleged liability arises from or relates to

the forum contacts, the minimum contacts prong of personal jurisdiction is satisfied.

Fair Play and Substantial Justice

Having found that Gharda Chemicals purposefully established minimum

contacts with Texas, we must consider whether the exercise of personal jurisdiction

over it comports with traditional notions of fair play and substantial justice. See

Glattly , 177 S.W.3d at 447 (citing Burger King , 471 U.S. at 476-77 , 105 S. Ct. at

2184-85 ). In making this inquiry, we consider, when appropriate, (1) the burden on

the defendant; (2) the interests of the forum state in adjudicating the dispute; (3) the

plaintiff's interest in obtaining convenient and effective relief; (4) the interstate

judicial system's interest in obtaining the most efficient resolution of controversies;

and (5) the shared interest of the several states in furthering fundamental, substantive

social policies. Guardian Royal , 815 S.W.2d at 231 .

First, there is no undue burden on Gharda Chemicals in defending this case in

Texas. Gharda Chemicals owns 100% of the stock of GUSA, which has not contested

the trial court's exercise of jurisdiction and against whom CSI's suit will go forward

here in Texas. Moreover, Gharda Chemicals has been directly conducting business

in Texas since dissolving GUSA and purchasing all of its assets in September 2004.

Second, Texas has an interest in resolving this dispute because it involves

injury to a Texas corporation and Texas has a substantial interest in protecting its

citizens against harm from dangerous products entering this state. See Gen.

Refractories Co. v. Martin , 8 S.W.3d 818, 823 (Tex. App.--Beaumont 2000, pet.

denied) (finding that Texas has a manifest interest in protecting residents exposed to

products alleged to be unreasonably dangerous).

Third, as a Texas resident, Control Solutions can obtain the most convenient

and efficient relief in Texas. Fourth, the efficient resolution of this controversy is

promoted by adjudication in Texas because none of the other parties have contested

jurisdiction; and trying CSI's suit against Gharda Chemicals in Texas will avoid

duplication of efforts and minimize the possibility of inconsistent findings on

common issues. See J.D. Fields & Co. v. W.H. Streit, Inc. , 21 S.W.3d 599, 605 (Tex.

App.--Houston [1st Dist.] 2000, no pet.) (finding efficient resolution of controversy

promoted by adjudication in Texas because suit against defendant company's surety

was still pending in Texas and reconsolidating suit against defendants with suit

against surety avoided duplication of efforts and minimized possibility of inconsistent

findings on common issues). We do not address the fifth factor, as only one state is

involved in this dispute.

Accordingly, we hold that the exercise of personal jurisdiction over Gharda

Chemicals does not offend traditional notions of fair play and substantial justice.

Glattly , 177 S.W.3d at 447 (citing Burger King , 471 U.S. at 476-77 , 105 S. Ct. at

2184-85 ). The exercise of personal jurisdiction over Gharda Chemicals is supported

by the evidence and is, therefore, proper.

We sustain CSI's first issue. (4)

Conclusion

We reverse the order of the trial court that granted Gharda Chemicals's special

appearance and remand the cause to the trial court for further proceedings consistent

with this opinion.

Evelyn V. Keyes

Justice

Panel consists of Chief Justice Radack and Justices Keyes and Higley.

1. A "nonresident" includes "an individual who is not a resident of [Texas]" and "a

foreign corporation, joint-stock company, association, or partnership." Tex. Civ.

Prac. & Rem. Code Ann. § 17.041 (Vernon 1997).

2. BMC Software Belg., N.V. v. Marchand , 83 S.W.3d 789, 795 (Tex. 2002)

.

3. Upon questioning by plaintiff's counsel, Patel admitted that of the 50 states, Texas is

ranked in the top five as a market for Gharda Chemicals's products.

4. Because our resolution of CSI's first issue is dispositive of this appeal, we need not

reach CSI's remaining issues. See Tex. R. App. P. 47.1.