Predator Downhole Inc. and Nancy Vermeulen v. Flotek Industries, Inc.

Opinion issued August 18, 2016

In The

Court of Appeals

For The

First District of Texas

————————————

NO. 01-15-00846-CV

———————————

PREDATOR DOWNHOLE INC. AND NANCY VERMEULEN, Appellants

V.

FLOTEK INDUSTRIES, INC., Appellee

On Appeal from the 157th District Court

Harris County, Texas

Trial Court Case No. 2013-64649

OPINION

In this interlocutory appeal, Predator Downhole, Inc. [hereafter, “Predator”],

and Nancy Vermeulen [hereafter, “Nancy”] appeal the trial court’s order denying

their special appearances in a suit by Flotek Industries, Inc. [hereafter, “Flotek”].

See TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(7) (West Supp. 2012).

Predator and Nancy contend that they are not subject to personal jurisdiction in

Texas because they do not have the requisite minimum contacts with Texas that

would support jurisdiction and because the trial court’s exercise of jurisdiction

would violate traditional notions of fair play and justice. We reverse.

BACKGROUND

The Vermeulens Work for Flotek

Flotek is an energy services company specializing in downhole oilfield tools.

Flotek hired Chris Vermeulen [hereafter, “Chris”], Nancy’s husband, as an

Operations Coordinator in March 2008. Chris’s employment was governed by a

letter agreement and a Bonus Agreement, which required him to disclose and

convey to Flotek any inventions or ideas that he developed during his employment

and to preserve the confidentiality of Flotek’s confidential information. The bonus

agreement also prohibited him from competing with Flotek “anywhere in North

America or in any other geographical area in or with respect to which [Chris] has

any duties or responsibilities during [his] employment with [Flotek],” both during

his employment and for thirty-six months after the termination of his employment

by Flotek.1

1

We do not express any opinion on the enforceability of any particular term of the

Bonus Agreement or the merits of any of Flotek’s claims based on that agreement.

2

Flotek also employed Nancy, beginning in 2008. Chris was the highest-

ranking Flotek employee in Flotek’s office in Casper, Wyoming, and Nancy was

the office manager for that location.

The Vermeulens Leave Flotek

Chris resigned from Flotek on July 26, 2013. He established a new

company, Tycoon Oilfield Services [hereafter, “Tycoon”], which Flotek alleges

that Chris is now using to compete with Flotek in violation of the Bonus

Agreement. By August 1, 2013, Chris was communicating via email using a

tycoonoilfield.com email address and a signature referencing Tycoon Oilfield

Services. In deposition testimony in this case, he affirmed that he is the sole

employee of Tycoon, and Nancy confirmed that he is the sole owner.

Nancy resigned from Flotek in or around September 2013. She became a

co-owner and vice president of Predator, which was founded around the same

time.2 Predator is incorporated in Wyoming and has its headquarters and principal

place of business in Casper, Wyoming, its only office location. As Flotek states in

its live petition, “Predator is located directly across the street from Flotek,” that is,

in Casper. Predator rents, sells, and services downhole drilling motors and related

2

The other co-owners of Predator are Stacy Hall, Lionie Fladeland, Zeke DeCol,

and Chase Fladeland. Chris is not an owner or employee of Predator.

3

products and parts. Predator has six employees, all of whom work at Predator’s

facility in Casper.

Flotek Sues Predator and the Vermeulens

In October 2013, Flotek sued Chris in Texas, alleging that Chris breached

the Bonus Agreement, converted trade secrets and confidential information, and

tortiously interfered with Flotek’s current and prospective business relationships.

It also alleged that Chris “or someone at his direction” engaged in a conspiracy

with unspecified persons to “accept[] kick-backs from various machine shop

operators for placing certain orders.”

Flotek subsequently amended its petition, naming Predator and Nancy as

additional defendants. In its live pleading, Flotek first alleges that Chris breached

the Bonus Agreement, “both individually and working in concert with [Nancy]

Vermeulen and Predator.” Second, Flotek asserts that all three defendants have

converted Flotek’s confidential information, “including but not limited to,

customer lists, vendor information, cost and pricing information, and motor

designs, for the express purpose of wrongfully competing with Flotek and in an

effort to damage Flotek.” Third, Flotek argues that each defendant has

misappropriated Flotek’s trade secrets, listing the same general categories of

information identified in the original petition. Fourth, it argues that the defendants

have tortiously interfered with Flotek’s current and prospective business

4

relationships by using Flotek’s confidential and proprietary information to compete

with Flotek, although it does not specify which current or prospective relationships

or what the defendants did to interfere with them. Finally, Flotek argues that the

defendants have engaged in two civil conspiracies: first, that Chris has engaged in

the previously-alleged kick-back conspiracy with unspecified third parties and,

second, that Chris and Nancy “conspired to set up Predator in order to circumvent

the Bonus Agreement, to misappropriate Flotek’s trade secrets, and to tortiously

interfere with Flotek’s current and prospective customers.”

According to Flotek, Chris “has used the Confidential Information and

technology developed during his employment at Flotek, to produce, and market, a

five-inch mud lube motors [sic] in order to poach current customers of Flotek.”

Specifically, Flotek alleges that Chris obtained his five-inch motor’s design from a

Chinese supplier identified in the briefing and in the record only as “Shanghai,” an

“undercover name” that Chris used for the supplier. Flotek alleges that “Shanghai”

is also a Flotek supplier and that Flotek considers “Shanghai’s” identity to be a

trade secret or otherwise confidential. Thus, Flotek alleges that Chris developed

and priced the five-inch motor using Flotek’s confidential information and trade

secrets, including the identity of “Shanghai,” the supplier that manufactured it.

In its live pleading, Flotek advances several theories as to why the trial court

has jurisdiction over Predator and Nancy:

5

Predator and Mrs. Vermeulen have purposefully availed themselves of

the privileges and benefits of conducting business in Texas by

engaging in business in Texas. Predator, through Mrs. Vermeulen[,]

placed hundreds of orders with Texas companies for the purchase and

repair of downhole oilfield tools from 2013 to 2015. These orders

were for motor parts shipped to Predator from Texas. Additionally,

Predator shipped motors to Texas for service in Texas. Predator paid

Texas companies in excess of $4,000,000 for the purchase of motor

parts and for servicing motors. Vermeulen’s five-inch mud lube

motor was among the motors serviced in Texas. Parts to assemble the

five-inch motor were also purchased in Texas. From April 30, 2014

to February 19, 2015, Predator issued over 150 invoices to former

Flotek customer and Texas corporation, Integrity Directional Services

(“Integrity”). These invoices were for the rental, service and repair of

motors. Many of these motors were purchased, serviced and/or

repaired by those Texas companies to whom Predator paid over

$4,000,000 from 2013 to 2015. Predator and Mrs. Vermeulen have

purposefully availed themselves of the privilege of conducting

business in Texas. This Court has specific personal jurisdiction over

Predator and Mrs. Vermeulen because their contacts with this State

are directly related to the causes of action alleged against them in this

petition.

Taken as a whole, Flotek’s petition alleges that (1) Chris developed and sold

a five-inch motor, with assistance from “Shanghai”; (2) in so doing, he breached

the Bonus Agreement and committed various torts against Flotek; (3) Predator and

Nancy conspired to assist Chris in doing so; and (4) Predator, through Nancy,

purchased and sold goods and services in Texas in furtherance of this conspiracy.

These allegations, taken together, constitute the only link in the live petition,

Flotek’s filings below, or the briefing on appeal between a cause of action asserted

against Predator or Nancy on the one hand and Texas on the other.

6

The Trial Court Denies Predator’s and Nancy’s Special Appearances

Predator and Nancy filed special appearances. Predator argued that it has no

or minimal contacts with Texas and is not a party to the Bonus Agreement. It

submitted as supporting evidence an affidavit by Stacy Hall, president and co-

owner of Predator. Hall testified, “[a]ll of Predator[’s] sales, rentals, and services

of motors have been provided to customers only in Wyoming, Colorado, or North

Dakota.” Hall further testified that Predator has never had a mailing address,

business license, inventory, phone listing, real or personal property, or registered

agent in Texas and has never maintained operations or had employees in Texas. In

addition, no Predator employee or representative has traveled to Texas on

Predator’s behalf. She also testified that Predator “has not received revenues for

motors shipped to a Texas address or serviced any motors or other equipment in

Texas.”

For her part, Nancy argued that she is and has been a resident of Wyoming

since 1977, does not own or rent real property in Texas, does not own or operate

any business in Texas, does not engage in any personal or business activities in

Texas, does not have a Texas mailing address or phone number, and has no assets

in Texas. She also observed that she is not a party to the Bonus Agreement and

has only traveled to Texas “a handful of times,” all on behalf of a former employer

unrelated to Predator.

7

Flotek responded to the special appearances, attaching evidence that

Predator has sold parts and services to Texas companies Integrity Directional

Services and Advanced Concepts Equipment, as well as purchased goods and

services from Texas companies, detailed more fully below. It alleges that these

contacts are both evidence of and in furtherance of the alleged conspiracies

between Predator and the Vermeulens. Critically, the evidence showed that

Predator billed various goods and services to Texas addresses and even shipped

some parts to Texas, but Flotek did not explain the relationship between those sales

and shipments, on the one hand, and the five-inch motor, “Shanghai,” or Flotek’s

purportedly confidential or trade secret information, on the other.

The trial court denied the special appearances, and this appeal followed.

PERSONAL JURISDICTION

Predator and Nancy raise nine issues on appeal, which in actuality represent

a single attack on the trial court’s order denying Predator’s and Nancy’s special

appearances. In issues 1, 2, 3, and 8, Predator argues that Texas has neither

general nor specific jurisdiction over Flotek’s claims against it.3 In issues 4, 5, 6,

and 9, Nancy makes essentially the same arguments with respect to the trial court’s

3

The issues are presented as (1) whether Predator has sufficient minimum contacts

with Texas to support personal jurisdiction at all, (2) whether Predator’s contacts

give rise to specific jurisdiction over Flotek’s claims, (3) whether Predator has

sufficient continuous and systematic contacts to permit Texas courts to exercise

general jurisdiction over it, and (8) whether Predator has sufficient minimum

contacts with Texas to satisfy federal due process requirements.

8

assertion of jurisdiction over her.4 Finally, in issue 7, Nancy argues that Texas

courts cannot exercise jurisdiction over her for actions taken in a purely

representative capacity. These issues can be summarized as a single contention:

the trial court erred in denying Predator’s and Nancy’s special appearances because

Texas has neither general jurisdiction nor specific jurisdiction over Predator and

Nancy.

Standard of Review

“Personal jurisdiction is a question of law for the court, even if it requires

resolving questions of fact.” Michiana Easy Livin’ Country, Inc. v. Holten, 168

S.W.3d 777, 790–91 (Tex. 2005); see also BMC Software Belgium, N.V. v.

Marchand, 83 S.W.3d 789, 794 (Tex. 2002). Because the trial court’s exercise of

personal jurisdiction over a nonresident defendant involves a question of law, an

appellate court reviews the trial court’s determination of a special appearance de

novo. Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 574 (Tex. 2007);

BMC Software, 83 S.W.3d at 794. However, the trial court frequently must resolve

fact questions before deciding the jurisdictional question. BMC Software, 83

S.W.3d at 794; Capital Tech. Info. Servs., Inc. v. Arias & Arias, Consultores, 270

4

The issues are presented as (4) whether Nancy has sufficient minimum contacts

with Texas to support personal jurisdiction at all, (5) whether Nancy’s contacts

give rise to specific jurisdiction over Flotek’s claims, (6) whether Nancy has

sufficient continuous and systematic contacts to permit Texas courts to exercise

general jurisdiction over her, and (9) whether Nancy has sufficient minimum

contacts with Texas to satisfy federal due process requirements.

9

S.W.3d 741, 748 (Tex. App.—Dallas 2008, pet. denied) (en banc). In a special

appearance, the trial court is the sole judge of the witnesses’ credibility and the

weight to be given their testimony. Leesboro Corp. v. Hendrickson, 322 S.W.3d

922, 926 (Tex. App.—Austin 2010, no pet.). We do not “disturb a trial court’s

resolution of conflicting evidence that turns on the credibility or weight of the

evidence.” Ennis v. Loiseau, 164 S.W.3d 698, 706 (Tex. App.—Austin 2005, no

pet.). When a trial court does not issue findings of fact or conclusions of law, “all

facts necessary to support the judgment and supported by the evidence are

implied.” BMC Software, 83 S.W.3d at 795. We will affirm the trial court’s ruling

on any legal theory that finds support in the record. Dukatt v. Dukatt, 355 S.W.3d

231, 237 (Tex. App.—Dallas 2011, pet. denied).

In a special appearance, the parties bear shifting evidentiary burdens. “[T]he

plaintiff bears the initial burden to plead sufficient allegations to bring the

nonresident defendant within the reach of Texas’s long-arm statute.” Kelly v. Gen.

Interior Constr., Inc., 301 S.W.3d 653, 658 (Tex. 2010). The plaintiff may carry

that burden in its petition or in response to the defendants’ special appearance.

Proppant Sols., LLC v. Delgado, 471 S.W.3d 529, 536 (Tex. App.—Houston [1st

Dist.] 2015, no pet.); Stull v. LaPlant, 411 S.W.3d 129, 134 (Tex. App.—Dallas

2013, no pet.). If the plaintiff meets this initial burden, the burden shifts to the

defendant filing the special appearance, who must negate all bases of personal

10

jurisdiction alleged by the plaintiff. Kelly, 310 S.W.3d at 658; Proppant Sols., 471

S.W.3d at 536. “Because the plaintiff defines the scope and nature of the lawsuit,

the defendant’s corresponding burden to negate jurisdiction is tied to the

allegations in the plaintiff’s pleading.” Kelly, 310 S.W.3d at 658. The defendant

can negate jurisdiction on either a factual or legal basis. Id. at 659. A defendant

negates the legal basis for jurisdiction by showing that “if the plaintiff’s alleged

facts are true, the evidence is legally insufficient to establish jurisdiction; the

defendant’s contacts . . . fall short of purposeful availment; . . . the claims do not

arise from the contacts; or . . . traditional notions of fair play and substantial justice

are offended by the exercise of jurisdiction.” Id.

If the nonresident defendant produces evidence negating personal

jurisdiction, the burden returns to the plaintiff to show that the court has personal

jurisdiction over the nonresident defendant. Stull, 411 S.W.3d at 134. A court

should dismiss a lawsuit against a nonresident defendant if the exercise of personal

jurisdiction lacks an adequate factual or legal basis. Id.

The parties must refer the appellate court to those portions of the record that

support their arguments. TEX. R. APP. P. 38.1(i) (“The [appellant’s] brief must

contain a clear and concise argument for the contentions made, with appropriate

citations to authorities and to the record.”), 38.2(a) (“An appellee’s brief must

conform to the requirements of Rule 38.1 . . . .”); see also Wade v. Comm’n for

11

Lawyer Discipline, 961 S.W.2d 366, 373 (Tex. App.—Houston [1st Dist.] 1997, no

writ); Brandon v. Am. Sterilizer Co., 880 S.W.2d 488, 493 (Tex. App.—Austin

1994, no writ). An appellate court is under no duty to make an independent search

of the record for evidence supporting a party’s position. Univ. Gen. Hosp., LP v.

Prexus Health Consultants, LLC, 403 S.W.3d 547, 557 n.6 (Tex. App.—Houston

[14th Dist.] 2013, no pet.); Hakemy Bros. v. State Bank & Trust Co., Dallas, 189

S.W.3d 920, 927–28 (Tex. App.—Dallas 2006, pet. denied); see also Wade, 961

S.W.2d at 373; Brandon, 880 S.W.2d at 493.

Applicable Principles of Law

A Texas court may assert personal jurisdiction over a nonresident defendant

if (1) the Texas long-arm statute authorizes the exercise of jurisdiction, and (2) the

exercise of jurisdiction is consistent with federal and state constitutional due

process guarantees. Moki Mac, 221 S.W.3d at 574. “Because the Texas long-arm

statute reaches ‘as far as the federal constitutional requirements of due process will

allow,’ the statute is satisfied if the exercise of personal jurisdiction comports with

federal due process.” Preussag Aktiengesellschaft v. Coleman, 16 S.W.3d 110,

113 (Tex. App.—Houston [1st Dist.] 2000, pet. dism’d w.o.j.) (quoting CSR, Ltd.

v. Link, 925 S.W.2d 591, 594 (Tex. 1996)).

“Personal jurisdiction is proper when the nonresident defendant has

established minimum contacts with the forum state, and the exercise of jurisdiction

12

comports with ‘traditional notions of fair play and substantial justice.’” Moki Mac,

221 S.W.3d at 575 (citing Int’l Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S.

Ct. 154, 158 (1945)). Minimum contacts are sufficient for personal jurisdiction

when the nonresident defendant has purposefully availed himself of the privileges

of conducting activities within the forum state, thus invoking the benefits and

protections of its laws. Id. (citing Hanson v. Denckla, 357 U.S. 235, 253, 78 S. Ct.

1228, 1240 (1958)). But “a defendant can only trigger specific jurisdiction through

its own conduct, not the unilateral acts of third parties.” IRA Res., Inc. v. Griego,

221 S.W.3d 592, 596 (Tex. 2007).

A nonresident defendant’s forum-state contacts may give rise to two types of

personal jurisdiction: specific and general. Moki Mac, 221 S.W.3d at 575. When

specific jurisdiction is alleged, the inquiry focuses on the relationship among the

defendant, the forum, and the litigation. Id. at 575–76. “[P]urposeful availment

alone will not support an exercise of specific jurisdiction.” Id. at 579. Rather,

specific jurisdiction has “two co-equal components,” and “purposeful availment

has no jurisdictional relevance unless the defendant’s liability arises from or relates

to the forum contacts.” Id. For a nonresident defendant’s forum contacts to

support an exercise of specific jurisdiction, “there must be a substantial connection

between those contacts and the operative facts of the litigation.” Id. at 585; see

Rush v. Savchuk, 444 U.S. 320, 329, 100 S. Ct. 571, 578 (1980)). The operative

13

facts of the litigation are those facts that would be the focus of the trial. Pulmosan

Safety Equip. Corp. v. Lamb, 273 S.W.3d 829, 839 (Tex. App.—Houston [14th

Dist.] 2008, pet. denied) (citing Moki Mac, 221 S.W.3d at 585).

A general jurisdiction inquiry is very different from a specific jurisdiction

inquiry. It requires a “more demanding minimum contacts analysis,” PHC–

Minden, L.P. v. Kimberly–Clark Corp., 235 S.W.3d 163, 168 (Tex. 2007) (quoting

CSR, Ltd. v. Link, 925 S.W.2d 591, 595 (Tex. 1996)), with a “substantially higher”

threshold. Id. (quoting 4 WRIGHT & MILLER, FEDERAL PRACTICE & PROCEDURE

§ 1067.5 (2007)). Usually, “the defendant must be engaged in longstanding

business in the forum state, such as marketing or shipping products, or performing

services or maintaining one or more offices there; activities that are less extensive

than that will not qualify for general in personam jurisdiction.” Id. General

jurisdiction is “dispute-blind,” meaning that it is an exercise of the court’s

jurisdiction made without regard to the nature of the claim presented or whether

the defendant’s alleged liability arises from those contacts. Id. The central

question is whether the defendant’s contacts are “continuous and systematic” such

that the relationship between the nonresident and the state approaches the

relationship between the state and its own residents. Id. (citing Helicopteros

Nacionales de Colombia, S.A. v. Hall, 638 S.W.2d 870, 882 (Tex. 1982) (Pope, J.,

dissenting), rev’d, 466 U.S. 408, 418–19, 104 S. Ct. 1868, 1874 (1984)).

14

For Texas to exercise specific jurisdiction over Predator in this case,

(1) Predator must have made minimum contacts with Texas by “purposefully

availing” itself of the privilege of conducting activities here, and (2) its liability

must have arisen from or be related to those contacts. See Moki Mac, 221 S.W.3d

at 576. Likewise, for Texas to exercise specific jurisdiction over Nancy

Vermeulen, her own contacts and alleged liability must satisfy these requirements.

Even if there is “purposeful availment” in Texas, minimum contacts will not exist,

and jurisdiction will not attach, if there is not a “substantial connection” between

the alleged contacts and the operative facts of the litigation. See Info. Servs. Grp.,

Inc. v. Rawlinson, 302 S.W.3d 392, 404–05 (Tex. App.—Houston [14th Dist.]

2009, pet. denied).

In Moki Mac River Expeditions v. Drugg, the supreme court analyzed

whether there was a substantial connection between the alleged contact and the

operative facts of the suit. 221 S.W.3d at 569. In doing so, the court considered

whether the alleged contact would “be the focus of the trial,” or “[would] consume

most if not all of the litigation’s attention[.]” Id. at 585. In sum, the court

instructed us to consider whether the alleged contact was “the subject matter of the

case,” or was “related to the operative facts” of the cause of action asserted. Id.

The court concluded that the alleged contact—a misrepresentation in a sales

brochure—was not substantially related to the cause of action asserted—

15

negligence of tour guides in leading a hike of the Grand Canyon that resulted in the

plaintiffs’ son’s death. Id. “Whatever connection there may be between Moki

Mac’s promotional materials sent to Texas and the operative facts that led to

Andy’s death, we do not believe it is sufficiently direct to meet due process

concerns.” Id.

“[A]n individual’s contract with an out-of-state party alone [cannot]

automatically establish sufficient minimum contacts in the other party’s home

forum . . . .” Burger King v. Rudzewicz, 471 U.S. 462, 478, 105 S. Ct. 2174, 2185

(1985). “Merely contracting with a Texas resident does not satisfy the minimum

contacts requirement[;] [n]or is jurisdiction justified by the single fact that a

contract is payable in Texas.” Blair Commc’ns, Inc. v. SES Survey Equip. Servs.,

Inc., 80 S.W.3d 723, 729 (Tex. App.—Houston [1st Dist.] 2002, no pet.) (citations

omitted). A contract is “ordinarily but an intermediate step serving to tie up prior

business negotiations with future consequences which themselves are the real

object of the business transaction.” Burger King, 471 U.S. at 479, 105 S. Ct. at

2185. However, a single purposeful act may suffice to establish minimum contacts

providing the basis for jurisdiction. 471 U.S. at 475 n.18, 105 S. Ct. at 1284 n.18.

But, purposeful availment requires a defendant to seek some benefit, advantage, or

profit by availing itself of the jurisdiction. Michiana, 168 S.W.3d at 784.

16

In Michiana Easy Livin’ Country, Inc. v. Holten, the supreme court stated

that the contacts of parties “who reach out beyond one state and create continuing

relationships and obligations with citizens of another state” are purposeful rather

than fortuitous. Id. at 785. The court in Michiana concluded that a single sale of a

motorhome to a Texas resident was not a purposeful availment because the

relationship between the parties would end once the sale was consummated. Id. at

786–87.

In contrast, the Court in Burger King v. Rudzewicz found that a franchise

agreement between a Michigan franchisee, Rudzewicz, and a Florida franchisor,

Burger King, resulted in personal jurisdiction over Rudzewicz in Florida because

he voluntarily accepted the “long-term and exacting regulation” of his franchise

from Burger King’s Florida headquarters, and his relationship to Florida could not

be considered fortuitous. 471 U.S. at 480, 105 S. Ct. at 2186.

“[B]are assertions of . . . conspiracy, without more, are neither material nor

relevant in assessing contacts to determine personal jurisdiction over a nonresident

defendant.” Capital Fin. & Commerce AG v. Sinopec Overseas Oil & Gas, Ltd.,

260 S.W.3d 67, 78 (Tex. App—Houston [1st Dist.] 2008, no pet.). The Supreme

Court of Texas “decline[d] to recognize the assertion of personal jurisdiction over

a nonresident defendant based solely upon the effects or consequences of an

alleged conspiracy with a resident in the forum state.” Nat’l Indus. Sand Ass’n v.

17

Gibson, 897 S.W.2d 769, 773 (Tex. 1995); see also MasterGuard L.P. v. Eco

Techs. Int’l LLC, 441 S.W.3d 367, 376 (Tex. App—Dallas 2013, no pet.) (“A

conspiracy claim alone is not enough to establish personal jurisdiction.”). Instead,

a jurisdictional inquiry focuses on the “critical” concern: “the defendant’s conduct

and connection with the forum.” Michiana, 168 S.W.3d at 789.

The Contacts Relied Upon by Flotek

Flotek alleges and relies on ten categories of contacts to establish

jurisdiction over Predator and Nancy. Our review of these allegations and the

evidence upon which Flotek relies reveals that Flotek does not allege and support

with evidence any connection between (1) Predator or Nancy, (2) Texas, and

(3) the “operative facts of the litigation.” See Info. Servs. Grp., 302 S.W.3d at 404.

First, Flotek alleges that Predator has done business with Integrity

Directional Services, a Texas company. Specifically, Predator has sold various

parts and services to Integrity.5 It sent invoices for at least some of those parts and

services to an Integrity address in Fort Worth, Texas. Many of these invoices

contain, below the listing of parts and services covered, addresses in Colorado,

Wyoming, or North Dakota. None of them reflects that any parts were sent to

5

The parts and services are identified in invoices from Predator, using such terms as

“Redress and Inspection,” “Seal Kit,” “Poly Pac Seals,” “Stator Adaptor,” “Catch

Rod,” “Bearing Adaptor,” and “Machined Rotor Head and pushed back lobes.”

None of the invoices explicitly references a five-inch motor, nor does Flotek

identify any invoices that are particularly relevant to a five-inch motor.

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Texas or that any serviced equipment was sent to or from Texas. Further, Flotek

does not identify any invoices from Predator to Integrity that specifically relate to

the five-inch motor, parts or information obtained from “Shanghai,” or any other

connection between Predator and Flotek’s substantive allegations of wrongdoing.

Second, Flotek points to emails between Nancy and Kelly Molder, an

Integrity employee in Fort Worth, regarding payment of Predator invoices. Nancy

also exchanged emails with Jason Gibson, a “Motor Manager” for Integrity whose

emails have a signature block containing a phone number with an area code

corresponding to the Nacogdoches–Huntsville area of Texas.6 Flotek does not

explain the relevance of these invoices or emails to its causes of action.

Third, Flotek points to what it calls “chargebacks to Integrity for shipping

motors to and from Texas.” As support, it points to a single document bearing the

Predator logo and contact information. This document contains a blank labeled

“Sold To” and completed with the words, “Integrity Directional.” It lists a line

item described as “5" 6 [illegible] Motor [illegible],” with a quantity of forty. It

also has a signature line, but is not signed. Adjacent to the entry referring to

Integrity Directional is a line reading “Company: EOG Resources,” under which

the document refers to a location in Laramie, Wyoming. The document does not

6

According to Flotek, the defendants in this suit have also produced more than 900

pages of emails between Predator and Integrity, although the majority of these are

not in the record before us.

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explicitly refer to Texas or any location in Texas. Flotek asserts, nonetheless, that

it constitutes a Texas contact by Predator simply because it references Integrity.

Flotek does not, however, identify any evidence in support of its claim that this

document relates to motors shipped to or from Texas, five-inch motors of the type

that it claims are at issue in this case, “Shanghai,” or any other aspect of Flotek’s

substantive claims.

Fourth, Predator purchased motor parts and had motors serviced by Dyna-

Drill Technologies LLC, a Texas company that issued its invoices and shipped

parts from a location in Katy, Texas. Dyna-Drill has invoiced Predator for more

than $3 million in goods and services. It is not clear from the documents upon

which Flotek relies, however, what relevance, if any, these transactions have to

five-inch motors or to “Shanghai.” Flotek does not identify evidence of their

relevance, but makes the conclusory assertion that the purchases include five-inch

motors.

Fifth, United Machine Works, another Texas company, performed services

for Predator. According to Flotek, these services included repairs on downhole

motors, including Predator’s five-inch motor. The documents to which Flotek

cites, however, use terms such as “5" FXD BEND HSG 1.50,” “1.50 FIXED

BEND HOUSING,” and “HARD BANDED PAD.” It is not apparent from the

face of these documents what relevance, if any, they have to the substance of

20

Flotek’s claims, and Flotek does not identify evidence indicating that they have

any such relevance.

Sixth, Fusion, Inc., a Houston-based company, provided services to

Predator. According to Flotek, “Fusion invoices [which Flotek filed in the trial

court] clearly show that [Fusion] services motors for Predator, including [five-

inch] motors.” One of the invoices in question includes line items containing text

such as “PDM ROTOR – 5.00:" 6/7 LOBE 8.0 STAGE.” But again, Flotek does

not identify any evidence regarding the meaning of these entries or showing that

they relate to the five-inch motors that are the basis of many of its claims.

Seventh, BasinTek LLC, another Houston company, received orders from

Predator for goods and services totaling more than $380,000. Flotek does not

allege that these transactions relate to five-inch motors, “Shanghai,” or other

allegedly confidential information.

Eighth, Predator shipped engine parts to and from Apex Blasting, a company

in Baytown, Texas. Again, Flotek does not allege that these transactions relate to

five-inch motors, “Shanghai,” or other allegedly confidential information.

Ninth, Tycoon, Chris’s company, ordered parts called “tread protectors”

from Essentra Pipe Protection, a Texas company, and had them shipped to

Predator. Predator also placed orders on its own behalf with Essentra. Again,

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Flotek does not allege that these transactions relate to five-inch motors,

“Shanghai,” or other allegedly confidential information.

Finally, Predator purchased motor parts from Advanced Concepts

Equipment, a company in Conroe, Texas. Invoices from Advanced Concepts

Equipment appear to show that Chris verbally placed at least some of Predator’s

orders.7 Predator also purchased motor parts from Kalsi Engineering, Inc., a

company in Sugar Land, Texas, and sold Kalsi parts to Advanced Concepts

Equipment.8 Again, Flotek does not allege that these transactions relate to five-

inch motors, “Shanghai,” or other allegedly confidential information.

Considering all ten categories together, Flotek alleges that Predator has

bought and sold goods and services in Texas, including goods and services used by

the defendants to create and sell a five-inch motor. Critically, however, it does not

allege which goods and services are relevant to a five-inch motor, goods or

services obtained from “Shanghai,” or any other aspect of Flotek’s substantive

claims against Predator. Nor does Flotek allege what percentage of the defendants’

total Texas contacts are relevant to a five-inch motor. Thus, Flotek alleges a

variety of contacts between Predator and Texas, and it asserts that these contacts

7

Several invoices to Predator from Advanced Concepts Equipment show a purchase

order number of “Verbal Chris.”

8

The parts are identified as “3 3/4" Kalsi Seals” or “6-1/2" Kalsi Seals.” None of

the invoices in question refer explicitly to a five-inch motor, nor has Flotek alleged

that these purchases are relevant to a five-inch motor.

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are relevant to its claims against Predator and Nancy, but it identifies no evidence

connecting the contacts to the allegations supporting its causes of action. And the

only contacts that Flotek alleges that Nancy has had with Texas that are relevant to

this suit are actions by Nancy as an agent of Predator.

General Jurisdiction

In their third and sixth issues, Predator and Nancy, respectively, argue that

they are not subject to general jurisdiction in Texas because they do not have the

kinds of “continuous and systematic” contacts necessary to support an exercise of

general jurisdiction. See PHC–Minden, 235 S.W.3d at 168. Flotek does not

address these issues in its briefing, nor did it argue below that Predator or Nancy

was subject to general jurisdiction. We agree with Predator and Nancy that Texas

does not have general jurisdiction over Flotek’s claims against them.

In order for a Texas court to exercise general jurisdiction over a defendant,

the defendant usually “must be engaged in longstanding business in the forum

state, such as marketing or shipping products, or performing services or

maintaining one or more offices there; activities that are less extensive than that

will not qualify for general in personam jurisdiction.” Id. (quoting 4 WRIGHT &

MILLER, FEDERAL PRACTICE & PROCEDURE § 1067.5). The contacts must be

“continuous and systematic” before general jurisdiction will attach. Id. As the

Supreme Court of Texas has explained, “purchases from Texas vendors will not

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alone support the exercise of general jurisdiction,” nor will payments to Texas

vendors, nor will hiring a contractor to perform limited services within the state.

Id. at 171 (quoting Am. Type Culture Collection, Inc. v. Coleman, 83 S.W.3d 801,

808 (Tex. 2002)); see also Helicopteros Nacionales de Colombia, S.A. v. Hall, 466

U.S. 408, 416–18, 104 S. Ct. 1868, 1873–74 (1984) (trip by company’s chief

executive officer to forum state, purchases of helicopters from company in forum

state, and acceptance of checks drawn on bank in forum state were insufficient to

give rise to general jurisdiction).

Although Predator has had numerous contacts with Texas, those contacts are

all incidental to particular purchases or sales of goods and services. They have not

involved the physical presence of any Predator employees in Texas. And Flotek

has not directed our attention to any evidence that Predator has conducted any

marketing in or specifically directed at Texas. It is undisputed that Predator does

not have any permanent or semi-permanent contacts such as a registered agent,

office, bank account, or assets in Texas.

Predator’s actions in purchasing goods and services from Texas companies

are not enough, taken alone, to subject Predator or, by extension, Nancy to general

jurisdiction in Texas, even though those purchases appear to have occurred at

somewhat regular intervals. See Helicopteros Nacionales, 466 U.S. at 416–18, 104

S. Ct. at 1873–74; PHC–Minden, 235 S.W.3d at 168. And Flotek has not

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established that Predator’s sales of parts or services in the state give rise to general

jurisdiction; indeed, it has established only that various documents show

occasional, not continuous, contacts with residents of the state.

We hold that neither Predator’s nor Nancy’s Texas contacts alleged by

Flotek are so “continuous and systematic” as to give rise to general jurisdiction in

Texas courts. We therefore sustain Predator and Nancy’s third and sixth issues.

These issues do not, however, dispose of the entire appeal, so we turn to the

remaining issues on appeal relevant to specific jurisdiction.

“Substantial Connection” to Operative Facts of the Litigation

For Texas to exercise specific jurisdiction in this case, (1) Predator and

Nancy must have made minimum contacts with Texas by “purposefully availing”

themselves of the privilege of conducting activities here, and (2) their liability must

have arisen from or be related to those contacts. See Moki Mac, 221 S.W.3d at

576. Even if there is “purposeful availment” in Texas, minimum contacts will not

exist, and specific jurisdiction will not attach, if there is not a “substantial

connection” between the alleged contacts and the operative facts of the litigation.

Info. Servs. Grp., 302 S.W.3d at 404. Because Predator and Nancy have adduced

evidence that they do not have sufficient contacts with Texas to subject them to

jurisdiction, Flotek bears the burden of identifying evidence that they do. Stull,

411 S.W.3d at 134; Proppant Sols., 471 S.W.3d at 536. Should it fail to do so, an

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appellate court has no obligation to make an independent search of the record for

evidence supporting Flotek’s claims. Univ. Gen. Hosp., 403 S.W.3d at 557 n.6;

Hakemy Bros., 189 S.W.3d at 927–28; see also Wade, 961 S.W.2d at 373;

Brandon, 880 S.W.2d at 493.

Here, the contacts that Flotek alleges between Predator and Texas have at

most a remote relationship to the actual substance of Flotek’s claims and are no

more than effects of the alleged conspiracy. The alleged contacts are transactions

between Predator and various Texas companies for the purchase and sale of

various parts and services. But Flotek has not identified which such parts and

services are relevant to its claims against Predator or Nancy or to the five-inch

motor at the heart of its conspiracy claims. Nor has it clearly articulated how any

parts or services relevant to that motor are connected to its asserted causes of

action, except to assert generally that everything relevant to the five-inch motor is

relevant to the claims against all three defendants. The connections between Texas

and Flotek’s claims are, at most, only implied or stated in a conclusory manner.

Indeed, Flotek has not clearly stated what any of its claims against Predator

or Nancy have to do with Texas. Reading the live petition, Flotek’s filings below,

and Flotek’s brief in this Court as generously as possible, Flotek alleges only that

Predator and Nancy acted to further a conspiracy—conceived and consummated

outside of Texas—by engaging in acts that eventually had effects in Texas. That

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is, Flotek alleges that (1) Chris breached the Bonus Agreement, converted

confidential information, misappropriated trade secrets, and tortiously interfered

with unspecified business relationships; (2) Nancy then acted, outside of Texas, to

assist Chris in these actions by conspiring with Chris to establish Predator;

(3) Predator, Nancy, and Chris then conspired to bring the fruit of Chris’s efforts—

the five-inch motor—to market; and (4) this resulted in some alleged sales of

unspecified parts and services in Texas. In short, Flotek does not allege that

Predator or Nancy actually did anything in Texas that is actionable, with the

exception of acts that are mere results or effects of an alleged conspiracy that was

conceived and carried out entirely outside of Texas.

Flotek’s allegations against Predator and Nancy are, with respect to their

Texas connections, no more than “bare assertions of . . . conspiracy” and thus

“neither material nor relevant in assessing contacts to determine personal

jurisdiction over a nonresident defendant.” Capital Fin. & Commerce AG, 260

S.W.3d at 78; see also Nat’l Indus. Sand Ass’n, 897 S.W.2d at 773 (mere “effects

or consequences of an alleged conspiracy with a resident in the forum state” cannot

support assertion of jurisdiction); MasterGuard, 441 S.W.3d at 376 (“A conspiracy

claim alone is not enough to establish personal jurisdiction.”). Flotek has failed to

demonstrate that, absent the conspiracy allegations, Predator and Nancy have any

“conduct and connection with the forum” that is relevant to Flotek’s claims. See

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Michiana, 168 S.W.3d at 789. Accordingly, the trial court improperly asserted

jurisdiction over Predator and Nancy.

We sustain Predator and Nancy’s second and fifth issues. We do not reach

the remaining issues, namely issues 1, 4, 7, 8, and 9.

Conclusion

Neither Nancy nor Predator is subject to general jurisdiction in Texas, and

neither has sufficient contacts with Texas that are substantially connected to the

operative facts of this litigation to permit a Texas court to exercise specific

jurisdiction. The trial court therefore erred in denying Predator’s and Nancy’s

special appearances. We reverse and render judgment dismissing without

prejudice Flotek’s claims against Predator and Nancy.

Sherry Radack

Chief Justice

Panel consists of Chief Justice Radack and Justices Jennings and Lloyd.

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