      TEXAS COURT OF APPEALS, THIRD DISTRICT, AT AUSTIN


                                      NO. 03-05-00246-CV



                              Navasota Resources, Ltd., Appellant

                                                 v.

                     Heep Petroleum, Inc. and Larry W. Kimes, Appellees




     FROM THE DISTRICT COURT OF TRAVIS COUNTY, 53RD JUDICIAL DISTRICT
         NO. 97-01738, HONORABLE PETER M. LOWRY, JUDGE PRESIDING



                                          OPINION


               In this accelerated, interlocutory appeal, appellant Navasota Resources, Ltd.,

challenges the trial court’s denial of its special appearance. Appellee Heep Petroleum, Inc.1 sued

Navasota and several other defendants for breach of contract, breach of fiduciary duties, fraud,

conversion, and tortious interference with a contract arising out of oil and gas leases primarily

located in Montana and North Dakota. Because sufficient evidence supports the trial court’s exercise

of jurisdiction, we affirm the trial court’s denial of Navasota’s special appearance.




       1
            In their first amended petition, Heep Petroleum and appellee Larry W. Kimes describe
Kimes’s interest in the suit as follows: “Kimes is vice president of Heep Petroleum. By written
assignment, . . . Heep Petroleum assigned a portion of its interest in the Compensation Agreement
. . . to Kimes.” We will refer to appellees collectively as “Heep Petroleum,” and to Boone H. Heep,
III, Heep Petroleum’s president and chief executive officer, as “Heep.”
                                       Factual Background

               Navasota is a Canadian company that is involved in the drilling of oil and gas wells.

Heep Petroleum is a Texas corporation that focuses on generating oil and gas projects and also acts

as an independent producer. Although Navasota has worked with other Texas companies on projects

located in Texas and other states, those contacts are not relevant to our discussion in this case. We

will only consider Navasota’s contacts with Heep Petroleum with regard to the Williston Program,

which is the subject of this suit and involved oil and gas leases in Montana and North Dakota.

               Boone Heep, III, Heep Petroleum’s president and chief executive officer, first heard

of Navasota in 1993 when he met Jim Simpson, who Heep understood to be “affiliated” with

Navasota, at a barbeque in Texas. In the fall of 1995, Simpson returned to Texas, where he was

again introduced to Heep. Simpson told Heep that he was looking for oil and gas projects on

Navasota’s behalf and expressed an interest in the Williston Program.2 Shortly thereafter, Simpson

came back to Texas to meet with Heep and learn more about the project.

               On October 19, 1995, Simpson met with Heep and the owner of another Texas

corporation that was a partner in the Williston Program. At the conclusion of the presentation,

Simpson called Navasota’s president, Bill Sanesh, and explained the deal. Simpson hung up and told

Heep, “We’ll take the deal.” The parties—Navasota, Heep Petroleum, and two other Texas


       2
          The parties introduced several press releases issued by Navasota that list Simpson as a
Navasota officer or employee along with Navasota’s president and other executives. Simpson was
titled, “Corporate Development,” and was described as having the responsibility to “promote
[Navasota] in the United States and to find and develop corporate opportunities.” The issuance dates
of the press releases are uncertain, but they possibly show Simpson acting in that capacity perhaps
as early as mid-1995 and into 1996.

                                                 2
companies—then drafted and executed a letter of intent based on the meeting’s negotiations; Sanesh

signed on Navasota’s behalf, and Heep signed for Heep Petroleum. In December 1995, the same

parties executed a Participation and Exploration Agreement setting forth the terms of the joint

venture; Sanesh again signed on behalf of Navasota. The agreements provided that the laws of

Texas would govern the validity, construction, and interpretation of the agreement and required that

any disputes be submitted to binding arbitration under the Texas General Arbitration Act.

               In 1997, Heep Petroleum and others sued two Texas citizens who had worked with

Heep Petroleum in marketing various oil and gas projects, including the Williston joint venture. In

1999, Heep Petroleum amended its petition to join Navasota as a defendant. Navasota filed a special

appearance, asserting that it was not subject to personal jurisdiction in Texas. After a hearing, the

trial court overruled the special appearance. Navasota appeals, arguing that it lacks sufficient

minimum contacts with Texas to justify the trial court’s exercise of personal jurisdiction. Navasota

contends that because the various agreements concerned oil and gas leases in Montana and North

Dakota, the trial court improperly exercised jurisdiction; it further disputes whether Simpson had the

authority to act on Navasota’s behalf in negotiating the terms of the Williston Program.


                                        Standard of Review

               A plaintiff suing a nonresident defendant bears the initial burden of pleading

sufficient allegations to satisfy the Texas long-arm statute, which authorizes a trial court to exercise

jurisdiction over a nonresident who “does business” in Texas. BMC Software Belgium, N.V. v.

Marchand, 83 S.W.3d 789, 793, 795 (Tex. 2002); see Tex. Civ. Prac. & Rem. Code Ann. § 17.042



                                                   3
(West 1997) (Texas’s long-arm statute). Texas courts may exercise personal jurisdiction over a

nonresident if it is authorized by the Texas long-arm statute and comports with constitutional

guarantees of due process. Schlobohm v. Schapiro, 784 S.W.2d 355, 356 (Tex. 1990). The Texas

long-arm statute reaches as far as the federal Constitution permits and, therefore, our state-law due

process analysis is consistent with the federal test. Guardian Royal Exch. Assurance, Ltd. v. English

China Clays, P.L.C., 815 S.W.2d 223, 226 (Tex. 1991). Once the plaintiff pleads sufficient facts

to satisfy the long-arm statute, the burden shifts to the defendant to negate all asserted jurisdictional

bases. See BMC Software, 83 S.W.3d at 793.

                Personal jurisdiction may arise through either specific jurisdiction, under which the

cause of action is tied to the defendant’s act in Texas, or general jurisdiction, which arises from

continuing and systematic contacts in Texas. Schlobohm, 784 S.W.2d at 358; General Elec. Co. v.

Brown & Ross Int’l Distribs., Inc., 804 S.W.2d 527, 531 (Tex. App.—Houston [1st Dist.] 1990, writ

denied). A nonresident defendant may be subject to specific jurisdiction in Texas if (1) it

purposefully does some act or consummates some transaction in Texas, thus establishing minimum

contacts with the forum; (2) that act or transaction is connected or gives rise to the cause of action;

and (3) the exercise of jurisdiction does not offend traditional notions of fair play and substantial

justice. Schlobohm, 784 S.W.2d at 358. The “touchstone” of our jurisdictional analysis is whether

the nonresident purposefully availed itself of the benefits of conducting business in Texas. Michiana

Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 784 (Tex. 2005). We consider the defendant’s

contacts and ask whether they were purposeful, not “random, isolated, or fortuitous,” and whether

the defendant availed itself of the forum. Id. at 785 (quoting Keeton v. Hustler Magazine, Inc., 465

                                                   4
U.S. 770, 774 (1984)). Because specific jurisdiction requires a substantial connection between

Texas, the lawsuit, and the defendant, not the plaintiff, we focus not on where the injury was felt,

but on the defendant’s actions in Texas. Id. at 789-90.

                Whether a trial court properly granted or denied a special appearance is a question

of law that we review de novo. BMC Software, 83 S.W.3d at 794. In making a jurisdictional

determination, the trial court must resolve necessary factual questions. Id. The trial court is the sole

judge of witness credibility and the weight to be given to testimony. Young Chevrolet, Inc. v. Texas

Motor Vehicle Bd., 974 S.W.3d 906, 914 (Tex. App.—Austin 1998, pet. denied). We may not

disturb a trial court’s resolution of evidentiary conflicts that turn on credibility determinations or the

weight of the evidence. Benoit v. Wilson, 239 S.W.2d 792, 796-97 (Tex. 1951); Young Chevrolet,

974 S.W.2d at 914. In determining whether the evidence is sufficient to support a trial court’s

factual determinations, we consider the entire record and conduct an ordinary sufficiency review,

setting aside the trial court’s finding only if it is so against the great weight and preponderance of

the evidence as to be manifestly erroneous or unjust. In re King’s Estate, 244 S.W.2d 660, 661 (Tex.

1951). If a trial court does not issue findings of fact and conclusions of law when ruling on a special

appearance, we will assume that the court made all necessary findings of fact that are supported by

the evidence. BMC Software, 83 S.W.3d at 795. If the record includes the reporter’s and clerk’s

records, those implied findings may be challenged for legal and factual sufficiency. Id. We will

affirm the trial court’s determination on any legal theory supported by the evidence. Worford v.

Stamper, 801 S.W.2d 108, 109 (Tex. 1990).




                                                    5
                                         Specific Jurisdiction

                Although Navasota disputed whether Jim Simpson had the authority to act on its

behalf in the fall of 1995, when the contract was negotiated in Texas, the trial court impliedly found

that Simpson had such authority. There was evidence to support this implied finding in the form of

testimony by Boone Heep and press releases issued by Navasota listing Simpson as head of corporate

development. Simpson traveled to Texas and told Heep that he was seeking business opportunities

for Navasota. After Simpson and Heep negotiated the terms of the deal during their October 1995

meeting, Navasota entered into the resulting letter of intent and related amendments and agreements.3

The trial court as fact-finder had sufficient evidence on which to base its implied finding that


        3
           Navasota disputed whether Simpson was authorized to represent it in the fall of 1995, and
in its response to interrogatories, it stated that Simpson was not an officer, director, or representative
of Navasota when he met with Heep in the fall of 1995. However, at the hearing on Navasota’s
special appearance, Heep testified that Simpson told him he was seeking opportunities for Navasota
and that he heard Simpson call Sanesh following the October 1995 meeting, at the end of which
Simpson told Heep, “We’ll take the deal.” Heep was also asked about three Navasota press releases
that were introduced into evidence. One is dated “9/96” and lists Simpson as part of Navasota’s
management team in charge of “Corporate Development.” The other two are not dated; one lists
Simpson as head of corporate development and refers to projects that “will commence in the summer
of 1996 and have a positive affect [sic] on the cash flow during the fall of 2006,” leading to the
conclusion that the release was issued sometime before the summer of 1996. The other undated
press release gives short biographies about its president, director, chairman, secretary/treasurer, and
Simpson, who is titled “Corporate Development” and described as having the role to “promote
[Navasota] in the United States and to find and develop corporate opportunities.” This release
announces that effective June 2, 1995, the company had changed its name to Navasota and that in
1995 new directors had been elected. Heep agreed that according to this release, “[a]s early as June
2, 1995, Mr. Simpson was in charge of corporate development for Navasota.” The press releases
had already been introduced into evidence when Navasota objected, arguing that their issuance dates
had not been established. The trial court overruled the objection, and Navasota did not question
Heep as to his knowledge of the issuance dates. We will not second-guess the trial court’s resolution
of evidentiary conflicts or credibility determinations. Benoit v. Wilson, 239 S.W.2d 792, 796-97
(Tex. 1951); Young Chevrolet, Inc. v. Texas Motor Vehicle Bd., 974 S.W.3d 906, 914 (Tex.
App.—Austin 1998, pet. denied).

                                                    6
Simpson was authorized to act for Navasota during the fall of 1995, when the contract was

negotiated, and we may not disturb the court’s resolution of evidentiary conflicts or issues of

credibility. See Benoit, 239 S.W.2d at 796-97; Young Chevrolet, 974 S.W.3d at 914.

               There was sufficient evidence to support the following implied findings of fact:

Simpson, acting as Navasota’s head of corporate development, traveled to Texas, where he told Heep

he was looking into oil and gas projects on Navasota’s behalf. Simpson expressed an interest in the

Williston Program, and on October 19, he returned to Texas and met with Heep and the president

of another Texas-based company, who provided a presentation about the project. At the end of the

meeting, Simpson called Navasota’s president and then told Heep, “We’ll take the deal.” The parties

drafted a letter of intent summarizing the terms negotiated during the meeting, and the parties

executed the letter of intent on November 1; Navasota’s president signed on Navasota’s behalf.

From December into early 1996, Navasota and Heep Petroleum negotiated and signed amendments

to their letter of intent and other contracts related to this and one other project in South Dakota.

               Although the Williston Program sites were not located in Texas, Navasota

purposefully availed itself of the benefits of doing business in Texas. First, Navasota sent an

authorized representative to Texas to solicit and negotiate business deals. See Holk v. USA Managed

Care Org., Inc., 149 S.W.3d 769, 776 (Tex. App.—Austin 2004, no pet.) (op. on reh’g) (defendants

actively solicited contracts with Texas plaintiff); General Elec. Co., 804 S.W.2d at 532-33

(defendant traveled to and telephoned companies in Texas to solicit business). Then, once Simpson

made contact with Heep, he returned to Texas and negotiated a contract on Navasota’s behalf with

Heep Petroleum, a Texas company. See Fish v. Tandy Corp., 948 S.W.2d 886, 895 (Tex.



                                                  7
App.—Fort Worth 1997, pet. denied) (defendant negotiated contracts with Texas company through

personal visits and telephone calls). Finally, after Simpson’s negotiations, Navasota entered into the

contract, conducted further negotiations to amend the letter of intent, and made numerous contacts

with Heep Petroleum in Texas. See Holk, 149 S.W.3d at 776 (after soliciting business in Texas,

defendants entered into contract with Texas company that included possibility of partial performance

in Texas); Fish, 948 S.W.2d at 895 (defendant executed letter agreement and paid Texas company

from his personal account). The claims at issue in this case arise directly out of Navasota’s

purposeful contacts with Texas, thus satisfying the requirements for specific jurisdiction. See BMC

Software, 83 S.W.3d at 795-96. Therefore, based on the quality and nature of Navasota’s contacts

in Texas with Heep and Heep Petroleum, sufficient evidence supported the trial court’s finding that

Navasota was subject to specific jurisdiction in Texas.4 See Holk, 149 S.W.3d at 776; Fish, 948

S.W.2d at 895.


                                 Fair Play and Substantial Justice

                 Having held that Heep Petroleum established that Navasota had sufficient contact

with Texas to justify the exercise of specific jurisdiction, we must ensure that the exercise of

jurisdiction will comport with traditional notions of fair play and substantial justice. Guardian

Royal, 815 S.W.2d at 226; Holk, 149 S.W.3d at 777. In making this determination, we consider the

relative convenience of the parties, Texas’s interest in adjudicating the dispute, the interstate judicial


        4
        Once specific jurisdiction is established, we need not consider whether general jurisdiction
may be exercised. See Daimler-Benz Aktiengesellschaft v. Olson, 21 S.W.3d 707, 725 (Tex.
App.—Austin 2000, pet. dism’d w.o.j.); see also Tex. R. App. P. 47.1 (court of appeals must hand
down opinion that is “as brief as practicable”).

                                                    8
system’s interest in the efficient resolution of disputes, and the various states’s interest in furthering

fundamental substantive social policies. World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286,

292 (1980). Although the minimum-contacts analysis considers issues of fairness, making it less

likely that the exercise of jurisdiction will violate notions of fair play, this analysis is separate and

distinct from the minimum-contact issue and must be conducted. Schlobohm, 784 S.W.2d at 357-58.

If the court finds the minimum contacts necessary to exercise jurisdiction, only rarely will the

exercise of jurisdiction not comport with fair play and substantial justice, and the defendant must

present a compelling argument that the exercise of jurisdiction would be unreasonable. Guardian

Royal, 815 S.W.2d at 231 (quoting Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985)).

                Navasota argues that the burden of litigating this cause in Texas would be great

because it is a Canadian company located in a remote region of British Columbia and travel expenses

are prohibitive. The projects at issue in the lawsuit are in Montana and North Dakota, and Navasota

contends that therefore Texas’s interest in hearing the dispute is minimal, saying, “The only

connection to Texas is the fact that Heep is a Texas resident.” We disagree.

                Simpson traveled to Texas multiple times to solicit business for Navasota, Navasota

held leasehold interests in other projects in several Texas counties, and Navasota did not offer

evidence at the hearing or identify its representatives or witnesses. Thus, we cannot say that

litigating the dispute here would be unreasonably burdensome. Further, Texas has a legitimate

interest in adjudicating this dispute because the parties negotiated the agreements here and chose

Texas law to govern their agreements. See Fish, 948 S.W.2d at 896 (“[A]t least one agreement at

issue in this lawsuit compels arbitration in Texas. Accordingly, Texas has a significant interest in



                                                    9
adjudicating the dispute.”). Finally, allowing these issues to be resolved in one lawsuit here in

Texas, rather than possibly through separate suits in North Dakota and Montana, will further the

judicial system’s interest in efficient dispute resolution. See id. We hold that the exercise of

jurisdiction over Navasota will not offend traditional notions of fair play and substantial justice.5


                                             Conclusion

               We have held that Navasota had sufficient contacts with Texas to justify the exercise

of specific personal jurisdiction and that the exercise of such jurisdiction will not offend the

traditional notions of fair play and substantial justice. Therefore, we affirm the trial court’s order

overruling Navasota’s special appearance.




                                               __________________________________________

                                               David Puryear, Justice

Before Justice B. A. Smith, Patterson and Puryear: Opinion by Justice Puryear;
    Concurring Opinion by Justice Patterson

Affirmed

Filed: June 30, 2006




       5
         Our jurisdictional inquiry merely asks whether Navasota sufficiently engaged in purposeful,
minimum contacts toward Texas in connection with the underlying dispute. Any other issues are
reserved for trial on the merits. See Walker Ins. Servs. v. Bottle Rock Power Corp., 108 S.W.3d 538,
554 (Tex. App.—Houston [14th Dist.] 2003, no pet.) (in deciding jurisdictional inquiry, “trial court
should rely only upon the necessary jurisdictional facts and should not reach the merits of the case”).

                                                  10
