                    NUMBER 13-12-00631-CV

                    COURT OF APPEALS

            THIRTEENTH DISTRICT OF TEXAS

              CORPUS CHRISTI – EDINBURG

CHRISTUS SPOHN HOSPITAL
SYSTEM CORPORATION D/B/A
CHRISTUS SPOHNHOSPITAL
CORPUS CHRISTI-MEMORIAL,                               Appellant,

                               v.


LAWRENCE CANARELLI,                                    Appellee.


             On appeal from the 117th District Court
                   of Nueces County, Texas.


                 MEMORANDUM OPINION
 Before Chief Justice Valdez and Justices Benavides and Longoria
            Memorandum Opinion by Justice Longoria
      By two issues, appellant, Christus Spohn Health System Corporation, appeals

the trial court’s order granting the special appearance of appellee, Lawrence Canarelli.

We affirm.

                                       I. BACKGROUND

      Appellee is a resident of Las Vegas, Nevada. Appellee travelled to Texas “two or

three” times in the early 1990s to visit his son who was attending Southern Methodist

University in Dallas. “[O]ther than changing planes” at the airport, appellee has not

otherwise travelled to Texas.

      Beginning in 2000, appellee owned a 75% interest in two entities, Corpus Christi

Day Cruise, LLC (“CCDC”) and Day Cruises Maritime, LLC (“DCM”).             CCDC is a

Nevada limited liability company. DCM is a Republic of the Marshall Islands limited

liability company. CCDC and DCM own and operate a casino vessel known as the

Texas Treasure. The Texas Treasure is based in Corpus Christi and Port Aransas,

Texas.

      On or about August 21, 2002, while in the employment of the Texas Treasure,

Judy A. Lanado was taken ashore for medical treatment. Part of that medical treatment

included hospital services provided by appellant. On December 31, 2002, the Lanado

family brought a healthcare liability claim against appellant. The parties settled the

claim. As part of the settlement, appellant was assigned Lanado’s right to recover

medical expenses from her employer, Texas Treasure.

      In November 2003, CCDC and DCM intervened in the Lanado suit.                  On

December 11, 2003, appellant asserted a counterclaim against CCDC and DCM to

recover the reasonable and necessary medical expenses incurred for the care and



                                           2
treatment of Lanado based on the assignment by Lanado. In 2010, the case proceeded

to a jury trial, resulting in a verdict in favor of appellant. On July 5, 2012, this Court

affirmed a judgment entered against CCDC and DCM in the amount of approximately

$1.6 million. See Corpus Christi Day Cruise, LLC v. Christus Spohn Health System

Corp., No. 13-11-00117-CV, 2012 Tex. App. LEXIS 5343 (Tex. App.—Corpus Christi

July 5, 2012, pet. denied) (mem. op.).

       On October 4, 2010, appellant commenced the instant suit against CCDC, DCM,

Corey Adcock, Patrick Beam, and appellee. Appellant alleged that Adcock is the “sole

or controlling member” and “sole manager or director” of CCDC and DCM. Appellant

alleged that Beam is the general counsel for CCDC and DCM. Appellant alleged that

Beam and appellee “owned or currently own a minority interest” in CCDC and DCM.

Appellant alleged that CCDC and DCM were the alter egos for Adcock, Beam, and

appellee.    Appellant alleged a claim against all defendants under the Uniform

Fraudulent Transfer Act (“UFTA”). See TEX. BUS. & COM. CODE ANN. §§ 24.001–.013

(West 2009). Appellant alleged that after it filed its counterclaim against CCDC and

DCM in 2003, the defendants “transferred millions of dollars out of [CCDC and

DCM] . . . in an effort to hinder, delay, or defraud [appellant] as a creditor shortly after a

known obligation became due.”

       Appellant alleged that appellee is not a resident of Texas. Appellant did not

allege any facts to establish personal jurisdiction over appellee. Appellee filed a special

appearance with an affidavit attached. See TEX. R. CIV. P. 120a. Appellee argued that

because appellant failed to plead jurisdictional facts, appellee met his burden of




                                              3
negating personal jurisdiction by providing the trial court with his affidavit stating that he

is not a resident of Texas.

       Thereafter, appellant filed its first amended original petition, alleging facts to

establish personal jurisdiction over appellee:          (1) appellee committed tortious

misconduct in whole or in part in Texas; (2) appellee’s tortious conduct was purposefully

directed toward Texas; and (3) appellee has continuous and systematic contacts with

Texas. The parties entered into a Rule 11 agreement whereby they agreed to engage

in written discovery and a deposition of appellee on the issue of personal jurisdiction

only. See TEX. R. CIV. P. 11. Appellant served 145 document requests on appellee and

then noticed his deposition to take place in Las Vegas, Nevada, with an additional 15

document requests. After taking appellee’s deposition, appellant served another 36

document requests on appellee.

       On May 2, 2012, appellant filed a response to appellee’s special appearance,

arguing that the burden was now on appellee to negate the grounds for jurisdiction

alleged in its first amended original petition. On May 3, 2012, appellee filed his reply,

addressing the grounds for jurisdiction alleged in appellant’s first amended original

petition. Appellee submitted his affidavit and deposition testimony in support of his

reply. Appellee argued that his evidence established the following:

       (1) [appellee] never made any (let alone “numerous”) visits to Corpus
           Christi, Texas to visit the Texas Treasure;

       (2) [appellee] never met with other owners and potential owners of the
           Texas Treasure in Texas;

       (3) [appellee] never met with vendors of the Texas Treasure;

       (4) [appellee] never interviewed or hired prospective employees of the
           Texas Treasure;

                                              4
       (5) [appellee] never conducted the general business of the Texas
           Treasure;

       (6) [appellee] did not purchase his ownership interest in the Texas
           Treasure in the State of Texas;

       (7) [appellee] did not sign his ownership agreement in the State of Texas;

       (8) [appellee] did not receive any income derived from the business
           conducted by the Texas Treasure in the State of Texas;

       (9) [appellee] did not travel to the State of Texas on numerous occasions
           for personal and business activities;

       (10) [appellee] did not repeatedly make telephone calls to Texas
          residents;

       (11) [appellee] did not send or receive correspondence from Texas
          residents and Texas entities;

       (12)   [appellee] did not transfer any assets of the Texas Treasure; and

       (13)   [appellee] did not receive any assets of the Texas Treasure.

Appellee testified that his only involvement in the Texas Treasure was “investing

money.” Appellee also testified that he abandoned his ownership interests in CCDC

and DCM effective December 31, 2004 and that he did not receive any financial

remuneration for abandoning his interests.           Appellant maintains that appellee

abandoned his ownership interests effective December 31, 2005.              Appellant also

maintains that appellee received financial remuneration for abandoning his interests.

       On May 7, 2012, the trial court held a hearing on appellee’s special appearance.

The trial court did not hear evidence, but it stated that it had read appellee’s deposition

testimony. The trial court also stated that it was “inclined to think that there [are] not

sufficient minimum contacts.” The trial court also stated that it was “inclined to grant the




                                             5
special appearance, unless there is something special in [appellee’s] tax returns.” The

trial court stated that it was “going to carry the special appearance ruling.”

       On July 18, 2012, appellee produced for the trial court’s in camera inspection

complete copies of his federal and state income tax returns for 2004–2006 and his

personal financial statements for the same years. Appellee also provided the trial court

with copies of his supplemental production, which included the formation documents for

CCDC and DCM that arguably demonstrate that appellee had the ability to appoint

managers but not the ability to run day-to-day operations.

       Subsequently, appellant served an additional 179 document requests on

appellee.    On August 1, 2012, appellant filed its second amended original petition,

alleging that appellee “purposefully availed himself of the privileges and benefits of

conducting business in [Texas] . . . by creating, forming and investing over $30 million

dollars in an enterprise of several entities which do or did business primarily, if not

exclusively, in Texas.”      Appellant alleged that appellee maintained “all of the

management rights and voting power attendant with his majority ownership interest in

[CCDC and DCM].” Appellant also alleged that appellee “also received income or other

financial benefits, including tax benefits, derived from the business conducted by

[CCDC and DCM] in Texas.”            Appellant filed two motions to compel discovery

responses.

       On August 27, 2012, appellee filed his supplemental reply in support of his

special appearance. On August 30, 2012, appellant served appellee with disclosures of

expert witnesses it intended to call as witnesses at the hearing on appellee’s special

appearance. Appellant filed a motion for continuance of the hearing.



                                              6
       On August 31, 2012, the trial court conducted a second hearing on appellee’s

special appearance. The trial court denied appellant’s motion for continuance, struck

appellant’s experts as untimely designated, and heard the special appearance. The trial

court indicated that it took into consideration expert testimony from a separate hearing

held on August 13, 2012 on a discovery dispute and the affidavits filed by the parties.

The trial court stated that it was granting the special appearance because there was no

general or specific jurisdiction.

       Notwithstanding this ruling, the trial court allowed appellant to submit expert

affidavits within seven days of the hearing and appellee to submit any responsive expert

affidavits within seven days thereafter. On September 7, 2012, appellant filed and

served the affidavit of Donald M. Clanton and the affidavit of Randall Lemer.            In

response, on September 14, 2012, appellee submitted the affidavit of Robert Evans and

the affidavit of Gary Lambrix.

       On September 25, 2012, the trial court convened a telephonic hearing to re-

address the special appearance and a number of outstanding motions. The trial court

confirmed its ruling of August 31, 2012, granting appellee’s special appearance and

dismissing the claims against appellee with prejudice. On September 26, 2012, the trial

court entered an order granting appellee’s special appearance and dismissing the

claims against him. This interlocutory appeal ensued. See TEX. CIV. PRAC. & REM.

CODE ANN. § 51.014(a)(7) (West Supp. 2011).

                                       II. ANALYSIS

       In its first issue, appellant argues that the trial court erred in ruling that Texas

courts lack specific jurisdiction over appellee. In its second issue, appellant argues that



                                            7
the trial court erred in ruling that exercising personal jurisdiction over appellee would not

comport with fundamental notions of fair play and justice.

A. Applicable Law

       A Texas court may exercise personal jurisdiction over a nonresident defendant

only if jurisdiction is authorized by the Texas long-arm statute. See id. § 17.042 (West

2008). The Texas “long-arm statute,” which permits Texas courts to exercise personal

jurisdiction over nonresident defendants who do business in Texas, provides as follows:

       In addition to other acts that may constitute doing business, a nonresident
       does business in this state if the nonresident:

              (1) 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;

              (2) commits a tort in whole or in part in this state; or

              (3) recruits Texas residents, directly or through an intermediary
              located in this state, for employment inside or outside this state.

Id. “[T]he Texas long-arm statute’s broad doing-business language allows the statute to

reach as far as the federal constitutional requirements of due process will allow.”

Retamco Operating, Inc. v. Republic Drilling Co., 278 S.W.3d 333, 337 (Tex. 2009).

“Therefore, we only analyze whether [appellee’s] acts would bring [appellee] within

Texas’ jurisdiction consistent with constitutional due process requirements.” Id.

       “Under constitutional due-process analysis, personal jurisdiction is achieved

when (1) the non-resident defendant has established minimum contacts with the forum

state, and (2) the assertion of jurisdiction complies with traditional notions of fair play

and substantial justice.”    Id. at 338.    “We focus on the defendant’s activities and

expectations when deciding whether it is proper to call the defendant before a Texas

court.” Id.

                                              8
       “A defendant establishes minimum contacts with a state when it purposefully

avails itself of the privilege of conducting activities within the forum state, thus invoking

the benefits and protections of its laws.” Id. “The defendant’s activities, whether they

consist of direct acts within Texas or conduct outside Texas, must justify a conclusion

that the defendant could reasonably anticipate being called into a Texas court.” Id. A

nonresident defendant’s contacts with the forum state may create either specific or

general jurisdiction. Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 575, 575

(Tex. 2007). “General jurisdiction arises when the defendant’s contacts with the forum

are continuous and systematic.” Retamco, 278 S.W.3d at 338. “Specific jurisdiction

exists if the nonresident defendant purposefully directed his activities at a resident of

Texas and the litigation arose from or related to those contacts.” San Pedro Impulsora

De Inmuebles Especiales, S.A. De C.V. v. Villarreal, 330 S.W.3d 27, 38 (Tex. App.—

Corpus Christi 2010, no pet.). “In other words, there must be a substantial connection

between the nonresident defendant’s contacts and the operative facts of the litigation.”

Id.

       “Specific jurisdiction, which is alleged here, arises when (1) the defendant

purposefully avails itself of conducting activities in the forum state, and (2) the cause of

action arises from or is related to those contacts or activities.” Retamco, 278 S.W.3d at

338.   “In a specific jurisdiction analysis, we focus on the relationship among the

defendant, the forum, and the litigation.” Id. The Texas Supreme Court has explained

that we consider three issues in determining whether a defendant purposefully availed

itself of the privilege of conducting activities in Texas:

       First, only the defendant’s contacts with the forum are relevant, not the
       unilateral activity of another party or a third person. Second, the contacts

                                               9
       relied upon must be purposeful rather than random, fortuitous, or
       attenuated. Thus, sellers who reach out beyond one state and create
       continuing relationships and obligations with citizens of another state are
       subject to the jurisdiction of the latter in suits based on their activities.
       Finally, the defendant must seek some benefit, advantage or profit by
       availing itself of the jurisdiction.

Id. at 338–39. “Additionally, the minimum-contacts analysis is focused on the quality

and nature of the defendant’s contacts, rather than their number.” Id. at 339.

       “Purposeful availment alone will not support an exercise of specific jurisdiction

unless the defendant’s liability arises from or relates to the forum contacts.” Id. at 340.

“We look for a substantial connection between the defendant’s forum contacts and the

operative facts of the litigation.” Id. “Thus, we must consider the claims involved in the

litigation to determine the operative facts.” Id. Appellant “alleges that [appellee] is the

transferee of a fraudulent transfer in violation of the UFTA.” Id. at 340–41. “The UFTA

provides, in part, that ‘[a] transfer . . . is fraudulent . . . if the debtor made the

transfer . . . with actual intent to hinder, delay, or defraud any creditor of the debtor; or

without receiving a reasonably equivalent value in exchange for the transfer or

obligation.’” Id. at 341 (quoting TEX. BUS. & COM. CODE ANN. § 24.005(a)(1)–(a)(2)).

“Without an asset, no fraudulent transfer can occur under the UFTA.” Id. (citing TEX.

BUS. & COM. CODE ANN. § 24.002(12)). “Proof that . . . assets were transferred and an

assessment of their value will be essential to the UFTA analysis; without that proof, the

UFTA claim fails.” Id.

       “Even if minimum contacts are present, a trial court may not exercise personal

jurisdiction over a nonresident defendant if it would offend traditional notions of fair play

and substantial justice.” Villarreal, 330 S.W.3d at 38. Whether the court’s exercise of

personal jurisdiction over a nonresident defendant meets this requirement depends on

                                             10
several factors, including: (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 or international judicial system’s

interest in obtaining the most efficient resolution of controversies”; and (5) “the shared

interest of the several nations or states in furthering fundamental substantive social

policies.” Id. “Only in rare cases, however, will the exercise of jurisdiction not comport

with fair play and substantial justice when the nonresident defendant has purposefully

established minimum contacts with the forum state.” Id.

B. Special Appearance

       “Our special-appearance jurisprudence dictates that the plaintiff and the

defendant bear shifting burdens of proof in a challenge to personal jurisdiction.” Kelly v.

General Interior Constr., Inc., 301 S.W.3d 653, 658 (Tex. 2010). “[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.” Id. “Once the plaintiff has pleaded sufficient

jurisdictional allegations, the defendant filing a special appearance bears the burden to

negate all bases of personal jurisdiction alleged by the plaintiff.” Id. “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.” Id.

       “If the plaintiff fails to plead facts bringing the defendant within reach of the long-

arm statute (i.e., for a tort claim, that the defendant committed tortious acts in Texas),

the defendant need only prove that it does not live in Texas to negate jurisdiction.” Id.

at 658–59.    “When the pleading is wholly devoid of jurisdictional facts, the plaintiff

should amend the pleading to include the necessary factual allegations, thereby



                                              11
allowing jurisdiction to be decided based on evidence rather than allegations, as it

should be.” Id. at 659 (citation omitted).

       The Texas Supreme Court has explained as follows:

       The defendant can negate jurisdiction on either a factual or legal basis.
       Factually, the defendant can present evidence that it has no contacts with
       Texas, effectively disproving the plaintiff’s allegations. 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. Legally, the defendant can show that
       even 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.

C. Standard of Review

       “Whether a court can exercise personal jurisdiction over nonresident defendants

is a question of law, and thus we review de novo the trial court’s determination of a

special appearance.” Id. at 657. “When as here a trial court does not issue findings of

fact and conclusions of law with its special appearance ruling, all facts necessary to

support the judgment and supported by the evidence are implied.”             Id. (quotation,

citation omitted).   “When the appellate record includes the reporter’s and clerk’s

records, these implied findings are not conclusive and may be challenged for legal and

factual sufficiency in the appropriate appellate court.” BMC Software Belg., N.V. v.

Marchand, 83 S.W.3d 789, 798 (Tex. 2002).

       “When examining a legal-sufficiency challenge, we review the evidence in the

light most favorable to the challenged finding and indulge every reasonable inference

that would support it.” Bryan v. Gordon, 384 S.W.3d 908, 913 (Tex. App.—Houston



                                             12
[14th Dist.] 2012, no pet.) (citing City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex.

2005)). “We credit favorable evidence if a reasonable fact finder could and disregard

contrary evidence unless a reasonable fact finder could not.” Id. “The evidence is

legally sufficient if it would enable a reasonable and fair-minded person to find the fact

under review.” Id. “The fact finder is the sole judge of witness credibility and the weight

to give their testimony.” Id.

       “In a factual-sufficiency review, we consider and weigh all the evidence, both

supporting and contradicting the finding.” Id. (citing Mar. Overseas Corp. v. Ellis, 971

S.W.2d 402, 406–07 (Tex. 1998)). “We set aside the finding only if it is so contrary to

the overwhelming weight of the evidence as to be clearly wrong and unjust.” Id. (citing

Pool v. Ford Motor Co., 715 S.W.2d 629, 635 (Tex. 1986)). “We may not substitute our

own judgment for that of the trier of fact or pass upon the credibility of the witnesses.”

Id.   “The amount of evidence necessary to affirm a judgment is far less than that

necessary to reverse a judgment.” Id. at 913–14.

D. Discussion

       In support of its first issue, appellant makes four arguments:         (1) “specific

jurisdiction exists over [appellee] based on [appellant’s] pleading that [appellee]

committed a tort in whole or in part in Texas”; (2) “the trial court erred in sustaining

[appellee’s] special appearance based on [appellant’s] alleged failure to prove the

merits of its claims against [appellant]”; (3) “even assuming Texas law required

[appellant] to prove the merits of its claims against [appellee], [appellant] presented

sufficient evidence of the merits of its claims against [appellee] to defeat his special

appearance”; and (4) appellant’s evidence was sufficient to raise a genuine issue of



                                            13
material fact regarding whether CCDC and DCM transferred assets to appellee. We will

address each argument in turn.

       First, appellant is correct that its “initial burden [was] to plead sufficient

allegations to bring the nonresident defendant within the reach of Texas’s long-arm

statute.” Kelly, 301 S.W.3d at 658. The parties agree that appellant met this burden by

alleging that appellee committed a tort in whole or in part in Texas. See TEX. CIV. PRAC.

& REM. CODE ANN. § 17.042(2). Specifically, appellant alleged that jurisdiction existed

based on appellee’s conduct in orchestrating and receiving two fraudulent transfers of

assets from CCDC and DCM that occurred in whole or in part in Texas. See Retamco,

278 S.W.3d at 341 (“Republic is alleged to have received transfer of Texas real property

from a Texas resident, during the pendency of a Texas suit, for the purpose of

defrauding a Texas resident . . . . These contacts are sufficient to demonstrate that this

alleged tort occurred at least, in part, in Texas.”). Thus, the burden shifted to appellee

to negate all bases for personal jurisdiction alleged by appellant. See Kelly, 301 S.W.3d

at 659.

       In his special appearance, appellee purported to negate the factual basis and

legal basis for jurisdiction. Appellee purported to negate the factual basis for jurisdiction

by producing evidence that he did not have any relevant contacts with Texas. Kelly,

301 S.W.3d at 659. In addition, appellee presented evidence that he did not receive

any transfer of assets from CCDC or DCM, as alleged by appellant. Appellee also

purported to negate the legal basis for jurisdiction on two independent grounds: (1) his

contacts with Texas fall short of purposeful availment; and (2) the exercise of personal

jurisdiction would offend traditional notions of fair play and substantial justice. See id.



                                             14
        Appellant argues that appellee did not meet his burden to negate the factual

basis for jurisdiction. According to appellant, appellee had the burden to prove that the

allegedly tortious conduct “did not occur in whole or in part in Texas.” In other words,

appellant argues that appellee had the burden to prove that the allegedly tortious

conduct “occurred entirely outside of Texas.” Appellant argues that appellee failed to

meet this burden because he did not present “any evidence that the [alleged] transfers

of assets occurred entirely outside of Texas.”                   However, in Retamco, the Texas

Supreme Court rejected the argument that jurisdiction could be negated by establishing

that the allegedly fraudulent transfer “occurred entirely outside of Texas.” Retamco, 278

S.W.3d at 337. In any event, appellant concedes that appellee presented evidence that

the transfers did not occur at all. We conclude that this evidence and appellee’s other

evidence was sufficient to meet appellee’s burden.

        “Once the defendant has produced credible evidence negating all bases of

jurisdiction, the plaintiff bears the ultimate burden to establish that the Texas court has

personal jurisdiction over the defendant as a matter of law.” MGM Grand Hotel, Inc. v.

Castro, 8 S.W.3d 403, 408 (Tex. App.—Corpus Christi 1999, no pet.).1 The Texas

Supreme Court has warned that at this stage of the burden-shifting analysis, the plaintiff

“risks dismissal of its lawsuit if it cannot present the trial court with evidence establishing

personal jurisdiction.” Kelly, 301 S.W.3d at 659. At the August 31, 2012 hearing on


        1
           See also Tabacinic v. Frazier, 372 S.W.3d 658, 663 (Tex. App.—Dallas 2012, no pet.) (“If the
defendant does so, the burden shifts back to the plaintiff to show the court has personal jurisdiction over
the defendant as a matter of law.”); Alliance Royalties, LLC v. Boothe, 329 S.W.3d 117, 120 (Tex. App.—
Dallas 2010, no pet.) (“If the nonresident defendant produces evidence negating personal jurisdiction, the
burden returns to the plaintiff to show, as a matter of law, that the court had personal jurisdiction over the
nonresident defendant.”); Oryx Capital Int’l, Inc. v. Sage Apts., L.L.C., 167 S.W.3d 432, 441 (Tex. App.—
San Antonio 2005, no pet.) (“If the defendant produces evidence negating jurisdiction, the burden returns
to the plaintiff to show as a matter of law that the court has jurisdiction over the defendant.”).

                                                     15
appellee’s special appearance, the trial court correctly stated that appellant’s burden

was “not just to plead” jurisdictional facts and warned appellant not to base “everything

on pleadings.” We conclude that the trial court did not err in “allowing jurisdiction to be

decided based on evidence rather than allegations, as it should be.” Id. Accordingly,

we reject appellant’s argument to the contrary.

       Second, appellant is correct that it did not have the burden to prove the merits of

its claims against appellee in order to establish personal jurisdiction. See Nichols v.

Bridges, 163 S.W.3d 776, 783 (Tex. App.—Texarkana 2005, no pet.) (“When reaching a

decision to exercise or decline jurisdiction based on the defendant’s alleged commission

of a tort, the trial court should examine only the necessary jurisdictional facts and should

not reach the merits of the case.”). The Texas Supreme Court has cautioned against

“equating the jurisdictional inquiry with the underlying merits.”    Michiana Easy Livin’

Country, Inc. v. Holten, 168 S.W.3d 777, 790 (Tex. 2005). Yet, we are not persuaded

that the trial court did so in this case.

       Appellant argues that it established specific jurisdiction by “properly alleging that

[appellee] was the recipient of assets transferred from a Texas resident, during the

pendency of a Texas suit, for the purpose of defrauding a Texas resident.” As set forth

above, appellee purported to negate this factual basis for jurisdiction by presenting

evidence that contrary to appellant’s allegations, appellee did not receive any transfer of

assets. Thereafter, appellant “risk[ed] dismissal of its lawsuit if it [did ]not present the

trial court with evidence establishing personal jurisdiction.” Kelly, 301 S.W.3d at 659.

Appellant attempted to meet this burden by presenting evidence that appellee received

two transfers of assets from CCDC and DCM.



                                            16
       Appellant argues that the trial court erred in granting appellee’s special

appearance because its ruling was based on an implied finding of fact that there was no

transfer of assets from CCDC or DCM to appellee. According to appellant, this was an

error because the existence of a transfer goes to the merits of appellant’s claims against

appellee, in effect, requiring appellant to prove the merits of its claims in order to

establish personal jurisdiction. We disagree.

       “[W]here the movant in a special appearance motion establishes the

nonexistence of an act or omission on which jurisdiction rests, he or she has destroyed

the basis for the power of the Texas court to determine the issue of liability.” Nichols,

163 S.W.3d at 783. “The fact that the showing of an absence of the factual basis for

exercise of jurisdiction also tends to show the absence of liability is irrelevant.” Id.

       In this case, appellant alleged that appellee had relevant jurisdictional contacts

with Texas by orchestrating and receiving the alleged transfers of assets from CCDC

and DCM. These contacts were disputed by appellee, who offered evidence that he did

not receive any transfer of assets from CCDC or DCM. As noted above, appellant

offered evidence to establish the alleged transfers. Furthermore, counsel for appellant

told the trial court that “the issue of transfer . . . goes directly to specific jurisdiction.”

Accordingly, we conclude that the trial court did not err in considering evidence about

whether these transfers occurred as part of the jurisdictional inquiry. Furthermore, we

reject appellant’s argument that the trial court based its decision on appellant’s alleged

failure to prove the merits of its claims against appellee. There is nothing in the record

to indicate that the trial court based its decision on the alleged failure of appellant to




                                              17
prove the merits of its claims. On the contrary, the record supports the trial court’s

statement that “we’re not litigating the merits of the case in this special appearance.”

       Third, we express no opinion on appellant’s assertion that it proved the merits of

its claims against appellee.    “[T]he mere existence of a cause of action does not

automatically satisfy jurisdictional due process concerns.” Kelly, 301 S.W.3d at 660. “A

state is powerless to create jurisdiction over a nonresident by establishing a remedy for

a private wrong and a mechanism to seek that relief.” Id. Furthermore, “the Texas

jurisdictional rule . . . [is not that] guilty nonresidents can be sued here, innocent ones

cannot.” Michiana, 168 S.W.3d at 791. “Instead, jurisdictional analysis always centers

on the defendant’s actions and choices to enter the forum state and conduct business.”

Kelly, 301 S.W.3d at 660. “The concept of minimum contacts is rooted in the notion that

a defendant may reasonably be haled into the forum state’s courts when it purposefully,

not randomly or fortuitously, engages in activities there.” Id. Accordingly, we reject

appellant’s argument that it established specific jurisdiction by proving the merits of its

claims against appellee.

       Fourth, appellant argues that its evidence was sufficient to raise a genuine issue

of material fact regarding whether CCDC and DCM transferred assets to appellee.

According to appellant, it “need only present sufficient evidence to establish that a

genuine issue of material fact exists on that jurisdictional fact.” According to appellant,

“[t]hat is the burden of proof that the Texas Supreme Court has applied when

‘jurisdictional facts’ and ‘merits facts’ overlap in disputes over the existence of subject

matter jurisdiction, and it should be applied in disputes over personal jurisdiction as

well.” See Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 227–28 (Tex.



                                            18
2004) (“If the evidence creates a fact question regarding the jurisdictional issue, then

the trial court cannot grant the plea to the jurisdiction, and the fact issue will be resolved

by the fact finder.”).    Ostensibly for this reason, appellant has not argued that the

evidence was legally or factually insufficient to support the trial court’s implied finding

that there was no transfer of assets.         Instead, appellant argues that it produced

sufficient evidence to raise a genuine issue of material fact on whether there were one

or more transfers to appellee. On this basis, appellant argues that it is entitled to have

the finder-of-fact determine personal jurisdiction when it decides the merits of the case.

         We note that there is an important distinction between subject matter jurisdiction

and personal jurisdiction. Subject matter jurisdiction cannot be waived. In re Dep’t of

Family & Protective Servs., 273 S.W.3d 637, 642 (Tex. 2009) (“Subject-matter

jurisdiction, however, cannot be waived.”).        In contrast, personal jurisdiction can be

waived.     Burger King Corp. v. Rudzewicz, 471 U.S. 462, 472 n.14 (1985) (“[T]he

personal jurisdiction requirement is a waivable right.”).       As the Fourteenth Court of

Appeals has observed:

         A defendant waives its right to contest the trial court’s exercise of personal
         jurisdiction under Texas Rule of Civil Procedure 120a when the defendant:
         (1) invokes the judgment of the court on any question other than
         jurisdiction; (2) engages in acts that recognize an action is properly
         pending; or (3) seeks affirmative action from the court.

Knight Corp. v. Knight, 367 S.W.3d 715, 723 (Tex. App.—Houston [14th Dist.] 2012, no

pet.).     Thus, as a practical matter, under existing precedent, postponing the

determination of personal jurisdiction until trial would result in waiver.           See id.

Accordingly, we adhere to the precedent of the Texas Supreme Court that allows the

losing party to challenge the legal and factual sufficiency of the evidence to support the



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trial court’s implied findings with respect to jurisdictional facts. See BMC Software, 83

S.W.3d at 798.

       As set forth above, appellant has not challenged the legal or factual sufficiency of

the evidence to support the trial court’s implied finding that there was no transfer of

assets. Therefore, we do not address the sufficiency of the evidence to support the trial

court’s implied finding.    See DeSoto Wildwood Dev., Inc. v. City of Lewisville, 184

S.W.3d 814, 822 (Tex. App.—Fort Worth 2006, no pet.) (“[B]ecause the findings of fact

are unchallenged through a factual or legal sufficiency point, they are binding on the

parties and [on] this court.”).

       In sum, we have addressed and rejected each of the four arguments made in

support of appellant’s first issue on appeal.       Accordingly, appellant’s first issue is

overruled. We do not address the merits of appellant’s second issue because it is moot.

                                          III. CONCLUSION

       The order of the trial court is affirmed.




                                                   _______________________
                                                   NORA L. LONGORIA
                                                   Justice

Delivered and filed the
25th day of April, 2013.




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