Continental Alloys & Services (Delaware) LLC and Continental Alloys & Services, Inc. v. Yangzhou Chengde Steel Pipe Co., Ltd. and Ciec USA Incorporation

Appellee’s Motion to Dismiss for Lack of Jurisdiction Denied; Affirmed and
Opinion filed January 16, 2020.

In The

Fourteenth Court of Appeals

NO. 14-18-00127-CV

CONTINENTAL ALLOYS & SERVICES (DELAWARE) LLC AND
CONTINENTAL ALLOYS & SERVICES, INC., Appellants
V.

YANGZHOU CHENGDE STEEL PIPE CO., LTD. AND CIEC USA
INCORPORATION, Appellees

On Appeal from the 189th District Court
Harris County, Texas
Trial Court Cause No. 2015-12653

OPINION
A company that purchased allegedly defective steel pipe from a distributor
sued the distributor and the Chinese company that manufactured the steel, asserting
various claims on its own behalf and as assignee of its purchaser. The trial court
granted the distributor’s motion to dismiss all claims against the distributor based
on an arbitration provision in the contract between the distributor and the company
that bought the steel pipe. The trial court later sustained the manufacturer’s special
appearance and dismissed the claims against the manufacturer for lack of personal
jurisdiction. On appeal, the plaintiffs challenge each ruling. Concluding the
plaintiffs have not shown that the trial court erred in sustaining the special
appearance and that the plaintiffs waived any error in the trial court’s granting of
the distributor’s motion to dismiss, we affirm the trial court’s judgment.

I. PROCEDURAL AND FACTUAL BACKGROUND

Defendant/appellee YangZhou Chengde Steel Pipe Co., Ltd. (“Chengde”)
manufactures steel pipe, some of which is used by oilfield companies. Chengde, a
Chinese company, maintains its principal place of business in China. In July 2013,
Chengde entered into two contracts to sell steel pipe to defendant/appellee CIEC
USA Incorporation [sic] (“CIEC”), a Texas corporation and distributor of steel
products.1 Each contract required certain specifications for the pipe and required
Chengde to perform certain tests on the pipe and to include in the shipping
documents an original mill test certificate. Each contract specified that China
would be the country of origin of the pipe, and that Chengde would ship the pipe to
the Port of Houston, “CIF Houston Port, TX, USA.” Under the contracts, title to
the pipe passes to CIEC when the pipe is loaded into the vessel at the loading port
in China. In each contract, Chengde and CIEC agreed that Chinese law would
govern the validity, interpretation, performance, and enforcement of the contract
and that all disputes in connection with the contract would be settled by arbitration
in Beijing, China.

On the same day that CIEC entered into the contracts to buy steel pipe from
Chengde, CIEC entered into two contracts to sell the steel pipe to “Continental

1
In their opening brief, the appellants cite these contracts as the contracts that “called for
Chengde to deliver the defective steel products at issue in this litigation. . . .”

2
Alloys & Services (DELAWARE) Inc.” The name of the buyer in these contracts
appears to have been misstated, and there may be some uncertainty as to whether
the buyer is appellant/plaintiff Continental Alloys & Services (Delaware) LLC
(“Continental LLC”) or appellant/plaintiff Continental Alloys & Services, Inc.
(“Continental, Inc.”). Each of these of these parties is a Delaware entity with its
principal place of business in Texas. In this opinion, we shall refer to the
Continental entity that entered into the contracts with CIEC as the “Continental
Party.”

The Continental Party apparently bought the steel pipe from CIEC to
provide the pipe to Baker Hughes, an oilfield service company that had ordered
steel pipe from a Continental entity.2 Each of the two contracts between CIEC and
the Continental Party provides that Texas law governs the validity, interpretation,
performance, and enforcement of the contract and that all disputes in connection
with that contract will be resolved by arbitration in Houston, Texas.

Continental LLC and Continental, Inc. (collectively the “Continental
Parties”) allege that the steel pipe Chengde sold to CIEC and that the Continental
Party bought from CIEC contained defects, did not conform to industry standards
or to Baker Hughes’s specifications, and failed the implied warranties of
merchantability and fitness for a particular purpose. According to the Continental
Parties, after Baker Hughes demanded arbitration of its claims against the
Continental Parties, the Continental Parties negotiated a settlement of Baker
Hughes’s claims against them and assigned to the Continental Parties Baker
Hughes’s claims against CIEC and Chengde.

The Continental Parties sued Chengde and CIEC, asserting claims against
Chengde for fraud, negligent misrepresentation, breach of express warranty, breach
2
It is not clear from the record which Baker Hughes entity was involved.

3
of the implied warranty of merchantability, breach of the implied warranty of
fitness for a particular purpose, and indemnity under section 82.002 of the Texas
Civil Practice and Remedies Code. The Continental Parties asserted claims against
CIEC for breaches of the implied warranty of merchantability and of the implied
warranty of fitness for a particular purpose. The Continental Parties brought all
claims in their own name, and they asserted all claims except for the indemnity
claims “as the assignee of Baker Hughes’s claims.”

Shortly after answering the lawsuit, CIEC filed a motion to dismiss all
claims against it on the ground that the Continental Parties were required to
arbitrate these claims under the arbitration provisions in the contracts between the
Continental Party and CIEC. In response, the Continental Parties did not dispute
that their own claims against CIEC are subject to arbitration and did not oppose the
motion as to these claims. But, as to the Continental Parties’ claims as assignee of
Baker Hughes, they opposed the motion and argued that these claims are not
subject to arbitration. The trial court granted this motion in its entirety and
dismissed all of the Continental Parties’ claims against CIEC “in favor of binding
arbitration.”

Nine months later and before the trial court ruled on Chengde’s special
appearance, the Continental Parties amended their petition so that they no longer
asserted any claims against CIEC. Under the amended pleading, CIEC was no
longer a defendant. The trial court later sustained Chengde’s amended special
appearance and dismissed all claims against Chengde for lack of personal
jurisdiction, thus rendering a final judgment.

II. ISSUES AND ANALYSIS

On appeal, the Continental Parties raise eight issues. In the first five, they
challenge the trial court’s order sustaining Chengde’s amended special appearance.
4
In their sixth, seventh, and eighth issues, they challenge the trial court’s granting of
CIEC’s motion to dismiss as to the assigned claims. Before we tackle the merits of
the appeal, we first address Chengde’s motion to dismiss for lack of jurisdiction,
which we have taken with the case.

A. Does this court have appellate jurisdiction in this case?
If the deadline to file a notice of appeal was extended to 90 days after the
trial court signed the judgment, then the Continental Parties timely filed their
notice of appeal. See Tex. R. App. P. 26.1. If this deadline was not extended and
the deadline was 30 days after the trial court signed the judgment, then the
Continental Parties’ notice of appeal was late and this court lacks appellate
jurisdiction. The Continental Parties did not file a motion for new trial, motion to
modify the judgment, or a motion to reinstate under Texas Rule of Civil Procedure
165a. The Continental Parties did timely file a request for findings of fact and
conclusions of law as to the trial court’s ruling on the special appearance.3
Therefore, the appellate deadline was extended if findings and conclusions either
are required by the Rules of Civil Procedure or properly could be considered by the
appellate court. See id. The Rules of Civil Procedure do not require a trial court to
issue findings and conclusions as to a special-appearance ruling, so the issue is
whether we properly could consider findings and conclusions as to the trial court’s
special-appearance ruling. See id.

A request for findings of fact and conclusions of law does not extend the
time for perfecting appeal of a judgment rendered as a matter of law because, in
that context, findings and conclusions can have no purpose and should not be

3
The Continental Parties also timely filed a notice of past due findings of fact and conclusions of
law. The trial court never issued any findings or conclusions. The Continental Parties have not
assigned error on appeal as to the trial court’s failure to issue findings and conclusions.

5
requested, made, or considered on appeal. IKB Indus. (Nigeria) Ltd. v. Pro-Line
Corp, 938 S.W.2d 440, 443 (Tex. 1997). The Supreme Court of Texas has given
the following examples of this context: “summary judgment, judgment after
directed verdict, judgment non obstante veredicto, default judgment awarding
liquidated damages, dismissal for want of prosecution without an evidentiary
hearing, dismissal for want of jurisdiction without an evidentiary hearing,
dismissal based on the pleadings or special exceptions, and any judgment rendered
without an evidentiary hearing.” Id. The high court has given the following
examples of situations in which the Rules of Civil Procedure do not require
findings and conclusions but the appellate court properly could consider them:
“default judgment on a claim for unliquidated damages, judgment rendered as
sanctions, and any judgment based in any part on an evidentiary hearing.” Id.

The trial court did not conduct an evidentiary hearing on Chengde’s
amended special appearance. Based on this fact, Chengde asserts that the trial
court’s special-appearance ruling was not based in any part on an evidentiary
hearing, and therefore this court could not properly consider any findings that the
trial court might have issued. Though a trial court may hold an evidentiary hearing
on a special appearance, the court also may consider stipulations, affidavits,
documents, and the results of discovery processes that the parties file with the
court. See Tex. R. App. P. 120a (stating that the trial court shall determine a
special appearance “on the basis of the pleadings, any stipulations made by and
between the parties, such affidavits and attachments as may be filed by the parties,
the results of discovery processes, and any oral testimony”); Phillips Dev. &
Realty, LLC v. LJA Eng’g, Inc., 499 S.W.3d 78, 85 (Tex. App.—Houston [14th
Dist.] 2016, pet. denied). Thus, in a special-appearance context, the absence of an
evidentiary hearing does not necessarily mean that the trial court ruled without

6
considering any evidence or ruled as a matter of law based on stipulations. See id.
Likewise, the absence of an evidentiary hearing alone does not mean that this court
could not properly consider findings and conclusions as to the trial court’s special-
appearance ruling. See Tex. R. App. P. 120a; Phillips Dev. & Realty, LLC, 499
S.W.3d at 85.

Chengde also suggests that the trial court made its special-appearance ruling
based on stipulated facts, and therefore the trial court ruled as a matter of law
based on agreed facts. Though the parties stipulated to various facts relating to
Chengde’s amended special appearance, Chengde also submitted an affidavit of
Xiaowei “Wade” Ge that contained factual statements to which the Continental
Parties did not stipulate. And, the Continental Parties also submitted a declaration
of Randall Zajicek containing statements to which Chengde did not stipulate. The
stipulations contained hundreds of pages of documents, and as to many of these
documents, the parties did not stipulate to the substance of the documents or their
contents. In sum, the record reflects that the trial court made its special-appearance
ruling based in part on stipulations of fact and in part on evidence. So, even
though the trial court did not conduct an evidentiary hearing, this case is like the
high court’s example of “any judgment based in any part on an evidentiary
hearing.” IKB Indus. (Nigeria) Ltd., 938 S.W.2d at 443. If the trial court had
chosen to issue findings of fact and conclusions of law as to the trial court’s
special-appearance ruling, this court properly could have considered the findings
and conclusions. See id.; Goldberg v. Zinn, 2013 WL 2456869, at *6 (Tex. App.—
Houston [14th Dist.] June 6, 2013, no pet.) (mem. op.) (holding that request for
findings and conclusions extended appellate deadline even though there was no
evidentiary hearing, because the trial court ruled based in part on evidence
submitted to the court by the parties); Brown v. Pennington, No. 05-14-01349-CV,

7
2015 WL 3958618, at *4–8 (Tex. App.—Dallas June 30, 2015, no pet.)
(considering trial court’s findings of fact and conclusions of law regarding a
special appearance, in case in which trial court did not conduct an evidentiary
hearing but ruling based on documentary evidence filed with the court) (mem. op.).

We conclude that the request for findings and conclusions extended the
deadline to file a notice of appeal and that the Continental Parties timely filed their
notice of appeal. See Tex. R. App. P. 26.1; IKB Indus. (Nigeria) Ltd., 938 S.W.2d
at 443; Goldberg, 2013 WL 2456869, at *6. We thus have appellate jurisdiction,
and we deny Chengde’s motion to dismiss for lack of jurisdiction.

B. Did the trial court err in sustaining Chengde’s special appearance?
In their first five issues, the Continental Parties assert that the trial court
erred by sustaining Chengde’s amended special appearance. We begin by
addressing the applicable legal standards and then consider the jurisdictional
evidence, specific jurisdiction, and general jurisdiction.4

1. Standard of Review

Whether the Continental Parties are subject to personal jurisdiction in Texas
is a question of law subject to de novo review. See BMC Software Belgium, N.V. v.
Marchand, 83 S.W.3d 789, 794 (Tex. 2002). When, as in today’s case, the trial
court does not issue findings of fact and conclusions of law, we imply all relevant
facts necessary to support the trial court’s ruling that are supported by evidence.
M&F Worldwide Corp. v. Pepsi–Cola Metro. Bottling Co., Inc., 512 S.W.3d 878,
884–85 (Tex. 2017).

4
The Continental Parties do not allege that Chengde is the alter ego of any other entity.

8
 2. Legal Standards as to the Exercise of Personal Jurisdiction

The Texas long-arm statute allows a court to exercise personal jurisdiction
as far as the federal constitutional requirements of due process will permit. See
Tex. Civ. Prac. & Rem. Code Ann. §§ 17.041–.045 (West, Westlaw through 2019
R.S.); BMC Software, 83 S.W.3d at 795. The plaintiff bears the initial burden of
pleading allegations sufficient to confer jurisdiction under the Texas long-arm
statute. See Moncrief Oil Int’l, Inc. v. OAO Gazprom, 414 S.W.3d 142, 149 (Tex.
2013). The long-arm statute allows the exercise of personal jurisdiction over a
nonresident defendant who “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” or who
“commits a tort in whole or in part in [Texas].” Tex. Civ. Prac. & Rem. Code §
17.042(1),(2) (West, Westlaw through 2019 R.S.). The Continental Parties satisfied
their initial burden by alleging that the Chengde was doing business in Texas
within the meaning of subsections (1) and (2) of Texas Civil Practice and
Remedies Code section 17.042. See id.; Moncrief Oil Int’l, Inc., 414 S.W.3d at
149. Because the Continental Parties met this initial burden, the burden shifted to
Chengde to negate all potential bases for personal jurisdiction the Continental
Parties alleged. See Moncrief Oil Int’l, Inc., 414 S.W.3d at 149.

Personal jurisdiction over a nonresident defendant is constitutional when two
conditions are met: (1) the defendant has established minimum contacts with the
forum state and (2) the exercise of personal jurisdiction comports with traditional
notions of fair play and substantial justice. See BMC Software, 83 S.W.3d at 795.
For a defendant to have sufficient contacts with the forum, it is essential that there
be some act by which the defendant “purposefully avails” itself of the privilege of
conducting activities in the forum state, thus invoking the benefits and protections
of its laws. Michiana Easy Livin’ Country, Inc. v. Holten, 168 S.W.3d 777, 784

9
(Tex. 2005). In analyzing personal jurisdiction, only the defendant’s purposeful
contacts with the forum count; personal jurisdiction over a defendant cannot be
based on the unilateral activity of another party. Id. at 785. A seller who reaches
out beyond one state and creates continuing relationships and obligations with
citizens of another state is subject to the personal jurisdiction of the latter in suits
based on the seller’s activities. Id. By contrast, a defendant should not be subject
to a Texas court’s jurisdiction based upon random, fortuitous, or attenuated
contacts. Id. For there to be purposeful availment, a defendant must seek some
benefit, advantage, or profit by “availing” itself of the jurisdiction. Id. A
nonresident may purposefully avoid a particular jurisdiction by structuring its
transactions so as neither to profit from the forum’s laws nor be subject to its
jurisdiction. Id.

Although not determinative, foreseeability is an important consideration in
deciding whether the nonresident defendant purposefully has established minimum
contacts with Texas. BMC Software, 83 S.W.3d at 795. The concept of
foreseeability is implicit in the requirement that there be a substantial connection
between the defendant and Texas arising from the defendant’s conduct
purposefully directed toward Texas. See Guardian Royal Exch. Assur., Ltd. v.
English China Clays, P.L.C., 815 S.W.2d 223, 227 (Tex. 1991).

Specific jurisdiction exists when the claims in question arise from or relate
to the defendant’s purposeful contacts with Texas. Am. Type Culture Collection
Inc. v. Coleman, 83 S.W.3d 801, 807 (Tex. 2002). In conducting a specific-
jurisdiction analysis, we focus on the relationship among the defendant, Texas, and
the litigation. See Guardian Royal, 815 S.W.2d at 228. For a nonresident
defendant’s contacts with Texas to support an exercise of specific jurisdiction,
there must be a substantial connection between the defendant’s purposeful contacts

10
with Texas and the operative facts of the litigation. See Moki Mac River
Expeditions v. Drugg, 221 S.W.3d 569, 585 (Tex. 2007).

A seller’s awareness that the stream of commerce may or will sweep the
seller’s product into Texas does not convert the mere act of placing the product in
the stream into an act purposefully directed toward Texas. See Spir Star AG v.
Kimich, 310 S.W.3d 868, 873 (Tex. 2010). Instead, the Supreme Court of Texas
generally follows Justice O’Connor’s plurality opinion in Asahi, which requires
some “additional conduct” — beyond merely placing the product in the stream of
commerce — that indicates “an intent or purpose to serve the market in the forum
State.” Asahi Metal Indus. Co., Ltd. v. Superior Court of Cal., 480 U.S. 102, 112,
107 S.Ct. 1026, 94 L.Ed.2d 92 (1987) (plurality opinion); see Spir Star AG, 310
S.W.3d at 873. Examples of this additional conduct include: (1) “designing the
product for the market in the forum State,” (2) “advertising in the forum State,” (3)
“establishing channels for providing regular advice to customers in the forum
State,” and (4) “marketing the product through a distributor who has agreed to
serve as the sales agent in the forum State.” Asahi, 480 U.S. at 112, 107 S.Ct.
1026; see Spir Star AG, 310 S.W.3d at 873.
3. The Stipulations and the Jurisdictional Evidence

The Continental Parties and Chengde stipulated to the following facts
relating to Chengde’s amended special appearance:

1. Chengde manufactures steel pipe, some of which is used by
oilfield services companies.

2. Chengde’s North American Sales Manager, Wade Ge,
maintained a mobile phone number from mid-2011 or early 2012,
until sometime in 2012 or 2013. Chengde furnished Ge with this cell
phone, which he sometimes used to contact customers or potential
customers in the United States.

11
3. Exhibit A attached to the stipulations is a true and correct copy
of a business card that Chengde had printed for Ge.
4. Exhibits B.l to B.93 attached to the stipulations are true and
correct copies of contracts by which Chengde sold steel pipe that was
shipped to the Port of Houston between 2010 and 2014.
5. Chengde manufactured and sold over $51 million worth of steel
pipe that was shipped to the Port of Houston from January 2010
through December 2014. Texas was not the final destination for all
pipe Chengde shipped to the Port of Houston.
6. Chengde was on the Approved Vendor List for Baker Hughes,
an oilfield services company based in Texas.
7. Exhibit C attached to the stipulations is a true and correct copy
of email communications from January 4-8, 2011, among Chengde,
the Continental Parties, and Hangzhou Cogeneration regarding Baker
Hughes’s audit of the Chengde mill.
8. After Baker Hughes conducted its audit of the Chengde mill,
Chengde became an approved Baker Hughes vendor.
9. In connection with Chengde becoming an approved vendor for
Baker Hughes, Baker Hughes requested that Chengde provide Baker
Hughes with a sample ring for testing. Exhibit D attached to the
stipulations is a true and correct copy of email communications from
January 27-28, 2011, between Chengde and Baker Hughes regarding
this testing. At Baker Hughes’s direction, Chengde sent the sample
ring to Baker Hughes in Texas.
10. Ge traveled to Texas on behalf of Chengde in March 2011, to
meet with customers and potential customers of Chengde. On that trip,
Ge met with representatives of the Continental Parties. The meeting
took place at the Continental Parties’ office in Spring, Texas on
March 22, 2011. Exhibit E attached to the stipulations is a true and
correct copy of email communications among Chengde, the
Continental Parties, and CIEC regarding Ge’s visit.
11. Ge traveled to Texas on behalf of Chengde in June 2011 to
meet with customers and potential customers of Chengde. While in
Texas, Ge met with the Continental Parties to discuss Chengde’s new
products and improvements. The meeting was arranged by Singapore
(Cogeneration) Steel Pte., Ltd. and Hangzhou Cogeneration Imp. &
Exp. Co., Ltd, and took place at the Continental Parties’ office in
12
Spring, Texas on June 8, 2011. Exhibit F attached to the stipulations is
a true and correct copy of email communications among Chengde, the
Continental Parties, and CIEC regarding Ge’s visit.
12. Attached to the stipulations as Exhibit G is a true and correct
copy of email communications among Chengde, the Continental
Parties, and CIEC from June 22, 2011 through June 27, 2011.
13. Exhibit H attached to the stipulations is a true and correct copy
of an email communication dated July 25, 2011 from CIEC notifying
Chengde that it had been approved as a vendor for Baker Hughes and
attaching “Baker Hughes Approved Mill List by Name,” dated July
14, 2011.
14. On or about October 21, 2013, Ge met with Baker Hughes at
Baker Hughes’s office in Houston, Texas. At that meeting, Ge
personally handed the business card attached to the stipulations as
Exhibit I to a Baker Hughes employee.
15. Attached to the stipulations as Exhibits J.l through J.9 are true
and correct copies of contracts between Chengde and CIEC.
16. Attached to the stipulations as Exhibits K.l and K.2 are true and
correct copies of certificates prepared by Chengde related to steel pipe
at issue in this case.
17. Attached to the stipulations as Exhibit L is a true and correct
copy of email communications among Chengde, the Continental
Parties, and CIEC from March 15, 2014 to April 15, 2014, regarding
testing related to the steel products at issue in this case.
18. Attached to the stipulations as Exhibit M is a true and correct
copy of an “Invitation Letter” from Chengde regarding the
Continental Parties’ visit to the Chengde mill in April 2014.
19. Attached to the stipulations as Exhibit N is a true and correct
copy of an “Invitation Letter” from Chengde regarding Baker
Hughes’s visit to the Chengde mill in April 2014.
20. Attached to the stipulations as Exhibit O is a true and correct
copy of a Power Point presentation prepared by Chengde and
provided to Baker Hughes and the Continental Parties at the Chengde
mill in April 2014.

13
 21. In May 2014, Wade Ge and Jason Wang traveled to Texas to
attend a meeting with the Continental Parties and Baker Hughes to
attempt to resolve issues regarding the steel pipe at issue in this case.
The meeting took place on or about May 9, 2014, at the Continental
Parties’ office in Spring, Texas.
22. In July 2014, Wade Ge and Jason Wang again traveled to Texas
to attend a meeting with the Continental Parties and Baker Hughes to
attempt to resolve issues regarding the steel pipe at issue in this case.
The meeting took place on or about July 18, 2014, at the Continental
Parties’ office in Spring, Texas.

The Continental Parties submitted a declaration of Randall Craig Zajicek,
the President of Continental, Inc., in which he testifies that, on April 10, 2014,
while attending a trade show in Germany, Zajicek met Wade Ge, whom Zajicek
understood to be the North American Sales Manager for Chengde. Zajicek
attached to his declaration a copy of the business card that Ge handed Zajicek at
that time. This business card is the same card attached as Exhibit A to the
stipulations.

Chengde submitted the affidavit of Ge, in which he testified as follows:

• Ge is Chengde’s “Sales Manager-North America.”

• Chengde was founded in China in 2006.
• Chengde’s headquarters and principal place of business are in China.
• Chengde has no offices in Texas.
• Chengde has no employees in Texas.
• Chengde does not advertise in Texas.
• Chengde does not pay taxes in Texas.
• Chengde does not own property in Texas.
• Chengde has no bank account in Texas.
• Chengde has no agreement with anyone to market its products
in Texas.

14
 • Chengde has sold products to buyers located in Texas;
however, these sales account for a very small portion of
Chengde’s total sales.
• From 2009 through 2014, the percentage of Chengde’s total
sales to Texas buyers were as follows: about 0.23%, about
9.5%, 0.17%, 1.46%, 1.75%, and 2.20%.
• The total percentage of Chengde’s sales to Texas customers
from Chengde’s founding in 2006 through the end of 2014 is
2.27%.
• Chengde has no contracts with Continental, Inc., Continental,
LLC, or Baker Hughes.
• From mid-2011 or early 2012, until sometime in 2012 or 2013,
Ge maintained a cell phone number with a 713 area code.
Chengde furnished Ge with this cell phone, which Ge
sometimes used to contact customers or potential customers in
the United States.
• In January 2011, two auditors for Baker Hughes came to the
Chengde steel mill in China to determine whether Chengde
could be a Baker Hughes “approved mill.” Chengde did not
request Baker Hughes’s approval or in any way solicit this visit
from Baker Hughes.
• In April 2014, representatives of Baker Hughes and
Continental, Inc. came to the Chengde steel mill in China to
review the production of pipe manufactured by Chengde.
Chengde did not sell this pipe to Baker Hughes or Continental,
Inc.
4. Specific-Jurisdiction Analysis

As to the specific-jurisdiction analysis, on appeal, the Continental Parties
allege that Chengde entered into contracts with CIEC to deliver the steel pipe to
the Port of Houston in Texas. But, those contracts do not require Chengde to
deliver the steel pipe to the Port of Houston in Texas. Instead, the contracts require
Chengde to ship the steel pipe to the Port of Houston, “CIF Houston Port, TX,
USA.” The term “CIF Port of Houston, Texas” means that Chengde would pay the
15
cost, insurance, and freight to ship the steel pipe by sea to the destination port and
would provide CIEC with the documents to obtain the steel pipe from the vessel or
other carrier. See Lansing Trade Group, LLC v. 3B Biofuels GmbH & Co., KG,
612 F. Supp. 2d 813, 817 (S.D. Tex. 2009). The term “CIF” also means that CIEC
bears all risk of loss or damage to the goods from the time they pass the ship’s rail
at the port of shipment in China. See id. In the contracts, Chengde and CIEC
agree that title to the pipe passes to CIEC when the pipe is loaded into the vessel at
the port of shipment in China. In each contract, Chengde and CIEC agreed that
Chinese law would govern the validity, interpretation, performance, and
enforcement of the contract and that all disputes in connection with the contract
would be settled by arbitration in Beijing, China. Thus, the unambiguous language
of the contracts does not require that Chengde deliver the pipe to the Port of
Houston; instead, it requires that Chengde ship the pipe to the Port of Houston and
pay the cost, insurance, and freight for this shipment, with title and risk of loss
passing to CIEC when the pipe is loaded on the vessel in China. See id.

The Continental Parties cite the Spir Star case from the Supreme Court of
Texas for the proposition that Chengde cannot rely on the passage-of-title term and
the structure of the sales transaction to avoid being subject to personal jurisdiction
in Texas courts. See Spir Star AG, 310 S.W.3d at 875–76. In the Spir Star case,
the high court stated that many transactions could be structured to avoid the seller
being subject to the exercise of personal jurisdiction by Texas courts, but that the
structure of the transaction in that case did not do so. See id. In Spir Star, the
German manufacturer created a Texas distributor who agreed to serve as the
manufacturer’s sales agent in Texas, marketed its products through that distributor,
and made over one-third of its annual sales to the Texas distributor. See id. In the
face of these facts, the high court stated that the passage of title to the distributor in

16
Germany and the fact that the profits from the subsequent sale of the product
accrued to the distributor were not a basis for the manufacturer to avoid the
exercise of personal jurisdiction by Texas courts. See id. In today’s case, the total
percentage of Chengde’s sales to Texas customers from Chengde’s founding in
2006 through the end of 2014 was 2.27%. There is no evidence that Chengde
created CIEC or that CIEC agreed to serve as Chengde’s sales agent in Texas. The
Spir Star case is not on point. See id.

In addition, today’s case does not involve the “additional conduct” Justice
O’Connor described in the plurality opinion in Asahi, which Texas has adopted.
Asahi, 480 U.S. at 112, 107 S.Ct. 1026; see Spir Star AG, 310 S.W.3d at 873. The
record contains no evidence that Chengde has (1) designed its steel pipe for the
market in Texas, (2) advertised in Texas, (3) established channels for providing
regular advice to customers in Texas, or (4) marketed the product through a
distributor who had agreed to serve as Chengde’s sales agent in Texas. See Asahi,
480 U.S. at 112, 107 S.Ct. 1026; see Spir Star AG, 310 S.W.3d at 873.

The Continental Parties cite to Ge’s use of a Chengde business card
indicating that Ge had an office in Houston and that he had a Houston cell phone
number. The Continental Parties do not assert that Chengde actually had a
Houston office, and the office address on Ge’s card was the address of an office of
CIEC. The card did list a Houston cell phone number, but it also listed a phone
number and fax number in China. Though the parties stipulated that Ge had the
Houston cell phone from mid-2011 or early 2012 through 2013, at the latest, the
only evidence of Ge using the business card — in October 2013 and in April 2014
— occurred after CIEC ordered the steel pipe from Chengde under the July 2013
contracts. The record contains no evidence that Ge called any person working for
CIEC, Continental, LLC, or Continental, Inc. using the Texas cell phone.

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 The Continental Parties also assert that Ge made unsolicited trips to Texas in
2011, for the purpose of marketing Chengde steel products and that year took steps
to become an approved manufacturer of steel products for Baker Hughes.
Presuming that Chengde had these contacts with Texas, the Continental Parties
have not shown that a substantial connection exists between these contacts and
the operative facts of this litigation. See Moki Mac River Expeditions, 221 S.W.3d
at 585.

Under the applicable standard of review, we conclude that the Continental
Parties have not shown that the trial court erred in implicitly concluding that
specific jurisdiction does not apply and that no substantial connection exists
between Chengde’s purposeful contacts with Texas and the operative facts of the
litigation. See id.; Michiana Easy Livin’ Country, Inc., 168 S.W.3d at 785–86; see
also Belden Technologies, Inc. v. LS Corp., 829 F.Supp.2d 260, 270–71 (D. Del.
2010).

5. General-Jurisdiction Analysis

The Continental Parties also assert that the trial court erred in not exercising
jurisdiction over Chengde based on general jurisdiction. They cite Chengde’s
more than 100 contracts with various Texas entities to sell its steel products and
the more than $51 million dollars of steel products shipped to the Port of Houston
since January 2010. General jurisdiction is present only when a defendant not only
has continuous and systematic contacts with the forum state, but also has these
kinds of contacts to such an extent that they make the defendant essentially at
home in that state. See Searcy v. Parex Res., Inc., 496 S.W.3d 58, 72–73 (Tex.
2016). Chengde is a Chinese company with its principal place of business in
China. Courts have found no general jurisdiction in cases with many more goods
flowing into and out of the forum than are present in the case under review. See,

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e.g., Reyes v. Marine Drilling Cos., 944 S.W.2d 401, 402–05 (Tex. App.—
Houston [14th Dist.] 1997, no writ) (finding no general jurisdiction despite
purchases of more than $183 million in goods in Texas from 471 sources, hundreds
of contracts with Texas entities, and sales of more than $850,000 of scrap metal to
Texas companies); Bearry v. Beech Aircraft Corp., 818 F.2d 370, 372–73, 375–76
(5th Cir. 1987) (finding no general jurisdiction despite $250 million in products
flowing into Texas over five years, $72 million in contracts for products
manufactured in Texas, and more than $195 million in goods and services
purchased from more than 500 Texas vendors).

Under the applicable standard of review, we conclude that the Continental
Parties have not shown that the trial court erred in implicitly concluding that
general jurisdiction does not apply and that Chengde does not have continuous and
systematic contacts with Texas to such an extent that the contacts make Chengde
essentially at home in Texas. See Searcy, 496 S.W.3d at 72–73; Reyes, 944
S.W.2d at 402–05; Bearry, 818 F.2d at 372–73, 375–76.

Because the Continental Parties have not shown that the trial court erred in
concluding that the trial court could not exercise personal jurisdiction over
Chengde based on either specific or general jurisdiction, we overrule the
Continental Parties’ first five issues.

C. Did the Continental Parties waive their challenges to the trial
court’s dismissal of their claims against CIEC by abandoning
these claims?

In their sixth, seventh and eighth issues, the Continental Parties challenge
the trial court’s granting of CIEC’s motion to dismiss as to their claims against
CIEC as assignee of Baker Hughes. In its interlocutory order granting this motion,
the trial court dismissed all claims the Continental Parties asserted against CIEC

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“in favor of binding arbitration.” The trial court did not sever the Continental
Parties’ claims against CIEC into a different case to create a final judgment.
Instead, the case continued, Chengde amended its special appearance, and Chengde
and the Continental Parties filed their stipulations of fact regarding the special
appearance. Nine months after the trial court granted CIEC’s motion to dismiss,
and before the trial court ruled on Chengde’s amended special appearance, the
Continental Parties filed a “First Amended Original Petition,” in which they
amended their pleading so that they no longer asserted any claims against CIEC.
The Continental Parties no longer named CIEC as a defendant. They revised the
style of the amended pleading to show Chengde as the sole defendant. In the
amended petition, the Continental Parties neither asserted claims against CIEC nor
sought any relief against CIEC.

An amended petition supersedes and supplants all previous pleadings. See
Tex. R. Civ. P. 65 Amerigroup Texas, Inc. v. True View Surgery Ctr., L.P., 490
S.W.3d 562, 570 (Tex. App.—Houston [14th Dist.] 2016, no pet.). The law treats
claims omitted from the amended pleading as dismissed and abandoned. See
Amerigroup Texas, Inc., 490 S.W.3d at 570; Randolph v. Walker, 29 S.W.3d 271,
274 (Tex. App.—Houston [14th Dist.] 2000, pet. denied). Even presuming that the
trial court erred in dismissing a plaintiff’s claims against one of the defendants, the
plaintiff loses its right to complain about this error on appeal if, after the trial
court’s erroneous ruling on these claims, the plaintiff files an amended pleading
abandoning the claims upon which the trial court ruled. See Amerigroup Texas,
Inc., 490 S.W.3d at 570; Randolph, 29 S.W.3d at 274.

In their amended petition, the Continental Parties omitted all claims against
CIEC and no longer named CIEC as a defendant in the case. The amended petition
contains no language stating that the Continental Parties were not dismissing,

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waiving, or abandoning their claims against CIEC or that the Continental Parties
reserved the right to appeal the trial court’s granting of CIEC’s motion to dismiss.
By filing the amended petition, the Continental Parties dismissed and abandoned
their claims against CIEC and waived any error in the trial court’s order granting
CIEC’s motion to dismiss. See Amerigroup Texas, Inc., 490 S.W.3d at 570
(holding that plaintiff waived any error in trial court’s partial summary judgment
dismissing certain claims by amending its petition after the trial court’s ruling to
omit those claims, thus abandoning and dismissing the claims); Randolph, 29
S.W.3d at 274–75 (concluding that plaintiffs waived any error in trial court’s
interlocutory order striking their claims against two defendants by omitting their
claims against these defendants from amended pleadings filed after the trial court’s
ruling). Therefore, we overrule the Continental Parties’ sixth, seventh, and eighth
issues.

III. CONCLUSION

The Continental Parties’ request for findings and conclusions extended the
deadline to file a notice of appeal, and the Continental Parties timely filed their
notice of appeal. Because this court has appellate jurisdiction, we deny Chengde’s
motion to dismiss for lack of jurisdiction.

The Continental Parties have not shown that the trial court erred in
concluding that the trial court could not exercise personal jurisdiction over
Chengde based on either specific or general jurisdiction. Therefore, we affirm the
trial court’s order sustaining Chengde’s amended special appearance.

By filing their amended petition the Continental Parties dismissed and
abandoned their claims against CIEC and waived any error in the trial court’s order
granting CIEC’s motion to dismiss. So, we overrule the Continental Parties’

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challenges to this order.

/s/ Kem Thompson Frost
Chief Justice

Panel consists of Chief Justice Frost and Justices Bourliot and Poissant.

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