GULF CONSOLIDATED SERVICES, INC., Plaintiff-Appellee, v. CORINTH PIPEWORKS, S.A., Defendant-Appellant

GEE, Circuit Judge:

Today’s case presents the question whether a Greek oil field casing manufacturer, licensed by a Texas-based organization which allows the manufacturer to warrant conformity with certain set standards, was properly haled into court in Texas to answer a claim that its products failed to conform to those standards. Because the manufacturer had an expectation that its products would be used in Texas, and having determined that its being required to defend suit in Texas was not unfair, we affirm the district court’s exercise of personal jurisdiction.

I. Facts

The nominal plaintiff-appellee, Gulf Consolidated Services, Inc., (“Gulf”) is a Texas corporation with its principal office in Houston, Texas. Its insurer, the real party in interest who prosecuted this action, is American Motorists Insurance Company (“AMI”), an Illinois corporation with its principal place of business in Illinois. The defendant-appellant, Corinth Pipeworks, S.A., is a Greek corporation with its principal office in Athens, Greece.

In 1980 Gulf, under the name of International Materials & Services Co. (“IMS”), was engaged in the business of importing and selling pipe. In October of that year, IMS purchased 1,260 joints of steel oil field casing from Corinth. Corinth warranted that the casings were manufactured in accordance with American Petroleum Institute (“API”) standards.

After the casings arrived in Houston, Texas, they were sent to a pipe threading company. Following threading, 66 joints of the casings were then sold by IMS to United Pipe & Supply (“United”) in Midland, Texas. United subsequently sold the casings to one Wayman Buchanan. The 66 joints were sent to Mr. Buchanan’s oil well, Neely No. 1, in Wheeler County, Texas.

During drilling operations on the well, the casing failed in seven separate locations, increasing the cost of the well by $433,587.81. Two unused joints of the 66 sent to the site were taken to Failure *1073Analysis Associates in Houston, where Metallurgical tests and examinations indicated that the two casings contained weld seam defects. These defects demonstrated that the casings inspected were not manufactured in accordance with API specifications. United reimbursed Mr. Buchanan for the additional drilling expenses incurred; and United was reimbursed, in turn, by AMI.

Following a bench trial, the district court found Corinth liable for breach of an express warranty that the casing would meet API specifications and for breach of the implied warranties of merchantability and fitness for a particular purpose. The court awarded actual damages of $433,587.88, prejudgment interest in the amount of $394,640.62, attorneys’ fees in the amount of $55,050.18 and costs of $6,960.20.

II. Discussion

A. Jurisdiction

Corinth does not challenge its amenability to suit under the Texas Long-Arm Statute, but contends that it lacked sufficient contacts with Texas for it to be subject to the personal jurisdiction of the district court.

To satisfy the demands of due process, two requirements must be met before a non-resident defendant can be amenable to suit in a given forum. First, “(a) the nonresident must have some minimum contacts with the forum resulting from an affirmative act or acts on their part;” second, “(b) it must not be unfair or unreasonable to require the nonresidents to defend the suit in the forum state.” Patterson v. Dietze, Inc., 764 F.2d 1145, 1148 (5th Cir.1985).

1. Minimum Contacts

“[T]he concept of minimum contacts permits a non-resident to ‘structure his primary conduct as to avoid being haled into court in a particular state.’ ” Thompson v. Chrysler Motors Corp., 755 F.2d 1162, 1169 (5th Cir.1985). Corinth alleges that it had purposefully structured its conduct so as to avoid being haled into Texas. Corinth maintains that the following facts demonstrate its successful avoidance of minimum contacts with Texas in the present transaction: Corinth, a Greek corporation with its offices and factory in Greece, is not registered to do business in Texas or any other location in the United States; it maintains no agent, office, or assets in the United States; IMS and Corinth negotiated the transaction by telegram; the actual sale took place in Greece; IMS opened its letter of credit at a Greek bank in Athens; under the terms of the sale, performance was complete when it delivered the casings to the ocean carrier in Greece, the risk of loss transferring to the plaintiff at that time. Corinth also notes that all of its sales of pipe to United States customers had been on similar terms.

Although a party can, through its actions, avoid being haled into a foreign jurisdiction, the simple fact that a sales transaction is consummated outside that jurisdiction does not prevent the sale from forming the basis of jurisdiction. Oswalt v. Scripto, Inc., 616 F.2d 191, 197 n. 8 (1980) (“jurisdiction does not depend on the technicalities of when title passes”). Nor is jurisdiction always successfully evaded merely because the defendant has avoided physical contact with the forum. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 476, 105 S.Ct. 2174, 2184, 85 L.Ed.2d 528 (1985). The “minimum contacts” requirement is satisfied, and “specific” jurisdiction proper,1 where the contact with the forum arises from the sale or manufacture of a product by a foreign defendant, which has caused harm in the forum state, so long as the defendant delivered the product into the “stream of commerce” with the expectation that it should be purchased by or used by consumers in the forum state. Bearry v. Beech Aircraft Corp., 818 F.2d 370 (5th Cir.1987) (citing World-Wide Volkswagen v. Woodson, 444 U.S. 286, 100 S.Ct. 559, 62 L.Ed.2d 490 (1980)).

Here, Corinth’s expectation that the casings would be used in Texas is indisputa*1074ble. Corinth had a license agreement with API, an organization in Dallas, Texas, which allowed Corinth to sell API specification pipe. IMS purchased the casing in question in reliance upon Corinth’s warranty that the casing was manufactured in accordance with API specifications. Corinth’s sole market for API oilfield casing was Houston, Texas, and Corinth representatives frequently called on customers there. Corinth was the charterer of the vessels which carried the casing shipments from Greece to Houston.

Corinth contends that the “stream of commerce doctrine” is inapplicable in this case as the nominal plaintiff in the suit did not encounter the product in the stream of commerce. This contention is meritless. The question to be answered in determining whether “minimum contacts” has been satisfied is whether “the defendant’s conduct and connection with the forum State are such that he should reasonably anticipate being haled into court there.” World-Wide Volkswagen, 444 U.S. at 295, 100 S.Ct. at 566. A defendant’s expectation that it may be held into a foreign court does not lessen simply because the ultimate consumer’s claim of damages is subrogated to an insurer.

2. Fair and Reasonable

The second part of due process analysis asks the question whether it is fair and reasonable to request the non-resident defendant to defend suit in the forum. The determination of the reasonableness of the exercise of jurisdiction in each case will depend on an evaluation of several factors, including the burden on the defendant, the interests of the forum state, and the plaintiff’s interest in obtaining relief. Asahi Metal Industry Co., Ltd. v. Superior Court of California, 480 U.S. 102, 113, 107 S.Ct. 1026, 1033-34, 94 L.Ed.2d 92 (1987).

In Asahi, the Court was faced with a situation in which a Taiwanese motorcycle inner tube manufacturer sought indemnity in a California court from its Japanese supplier of valve stems for its settlement of a personal injury claim. In analyzing the burden on the defendant in defending the suit in California, the court stated:

Certainly the burden on the defendant in this case is severe. Asahi has been commanded by the Supreme Court of California not only to traverse the distance between Asahi’s headquarters in Japan and the Superior Court of California in and for the County of Solano, but also to submit its dispute with Cheng Shin to a foreign nation’s judicial system. The unique burdens placed upon one who must defend oneself in a foreign legal system should have significant weight in assessing the reasonableness of stretching the long arm of personal jurisdiction over national borders.

Id. at 114, 107 S.Ct. at 1034. Likewise, the burden on Corinth, in having to defend suit in a legal system greatly different from that of Greece, should be given significant weight in our assessment of the reasonableness of Texas’s assertion of personal jurisdiction in the present case.

The burden on a defendant to have to defend suit in a foreign country may nonetheless be justified if the interests of the plaintiff and the forum are of sufficient importance. Id. In Asahi, the interests of the plaintiff and the forum were held to be slight for several reasons: the transaction took place in Taiwan; Asahi’s valve stems were shipped from Japan to Taiwan; the Taiwanese company had not demonstrated that it was more convenient for it to litigate its indemnification claim in California, rather than in Taiwan or Japan. Moreover, because the plaintiff was not a California resident, California’s legitimate interests in the dispute were found to have been considerably diminished.

Although the transaction in the present case took place in Greece, the defendant sold the pipe in anticipation that it would be shipped to Texas aboard a ship it chartered. Most important, however, Texas has a demonstrable interest in providing a forum for litigation involving an allegedly defective product where the product was intended for use in Texas, where the defect surfaced in Texas, and where the economic injury befell a Texas resident. *1075See Bean Dredging Corp. v. Dredge Technology Corp., 744 F.2d 1081 (5th Cir.1984). Additionally, it is important to note that Corinth has made 42 sales of tubular goods totalling over $73 million to the Texas market during a seven year period; when viewed in light of this brisk activity, any unfairness to Corinth in having to defend a claim in Texas which arises out of one of those sales is relatively insignificant. The court below did not err in exercising jurisdiction over Corinth.

B. Choice of Law

Corinth maintains that the district court erred in applying Texas law instead of Greek law, under which the plaintiffs claim would have been time-barred. Although this question is close, we hold that the district court’s application of Texas law to have been proper.

A federal court must follow the choice-of-law rules of the state in which it sits. Texas has adopted the ‘most significant relationship’ test of the Restatement (Second) of Conflicts section 6 (1971) for determining the applicable law in contracts cases, other than those in which the parties have agreed to a choice of law. The law of the state with ‘the most significant relationship to the particular substantive issue’ shall govern the dispute.

Atlantic Mutual Insurance Co. v. Truck Insurance Exchange, 797 F.2d 1288, 1291 (5th Cir.1986) (citations omitted). The Texas Supreme Court, in applying the “significant relationship” test, looked to the contacts the litigation had with the two forums. Duncan v. Cessna Aircraft Co., 665 S.W.2d 414, 421 (Tex.1984).

Once these contacts are established, the question of which state’s law will apply is one of law. Moreover, the number of contacts with a particular state is not determinative. Some contacts are more important than others because they implicate state policies underlying the particular substantive issue. Consequently, selection of the applicable law depends on the qualitative nature of the particular contacts.

Id.

In the present case, the substantive issues of the litigation were whether the warranty made by Corinth that the casings it sold conformed to API standards and whether the failure to comply with those standards was the cause of the plaintiff’s loss. Although the sale of the casings took place in Greece, the warranty underlying the lawsuit arose out of a license agreement between Corinth and API, a Dallas-based organization. It is this agreement that allows Corinth to service Texas customers seeking casings meeting API standards. The district court found that this agreement gave Texas a “significant and sufficient” relationship with the warranties made by Corinth, such that Texas law should be applied.

Corinth contends that as the ultimate economic loss incurred as a result of the casing failures fell upon AMI, an Illinois corporation, Texas has lost any interest it may have had in the present lawsuit. We disagree. To say that Texas’s interest in this case begins and ends with the economic loss suffered by the nominal plaintiff ignores any general economic, environmental, or public safety interest Texas may have in a failed drilling operation performed within its borders. Moreover, the warranty made in the present case does not represent an isolated occurrence. Between the years 1978 through 1985, as we note above, Corinth made 42 sales of API standard tubular goods, totalling $73 million, to customers in Texas. Texas is Corinth’s only market for API standard goods. In these circumstances, Texas could be found to have a substantial interest in ensuring that a manufacturer, whose products are purchased by Texas customers in reliance upon a warranty that they conform to the standards of a Texas organization, not be allowed to escape responsibility for its breach of that warranty through a six-month statute of limitations which expressly disallows a prediscovery tolling period. See Greek Civil Code 554, 555.

*1076We acknowledge that Greece has a substantial interest in protecting its citizens from lawsuits it considers time-barred. Nevertheless, we agree with the district court that the Texas contacts with the present litigation are of a sufficiently substantial nature to mandate the use of Texas law in its resolution.

C. Findings of Fact

Review of factual determinations by the district court is limited by the “clearly erroneous” standard of Fed.R.Civ.P. 52(a). This limited review recognizes the unique opportunity of the district court to make credibility choices and resolve conflicts in the evidence. ‘ “[U]nless an appellate court is left with the ‘definite and form conviction that a mistake has been committed,’ it must accept the trial court’s findings.” ’

Ayers v. United States, 750 F.2d 449, 452 (5th Cir.1985) (quoting Inwood Laboratories, Inc. v. Ives Laboratories, Inc., 456 U.S. 844, 855, 102 S.Ct. 2182, 2189, 72 L.Ed.2d 606 (1982)).

Corinth challenges two of the district court’s findings of fact. First, Corinth challenges the district court’s finding that the casings which failed in Neely No. 1 were part of the casings shipped aboard the M/Y JENNIE S in May of 1981. Second, Corinth challenges the district court’s finding that manufacturing defects were the cause of the casing failures.

1. The origin of the failed casing

At trial, Gulf introduced documentary evidence demonstrating that the casings offloaded from the M/Y JENNIE S were sent by IMS to Onyx Pipe Threaders for threading and that the 66 joints of casing shipped to Neely No. 1 were taken from IMS’s batch of casing at Onyx. Corinth does not dispute that the casing shipped from Onyx to Neely No. 1 was manufactured by Corinth and sold with the warranty that the casing complied with API standards. Corinth contends, however, that the evidence did not foreclose the possibility that IMS may have had unsold casing left over from a previous shipment at the Onyx yard at the time the 66 joints were sold; as the 66 joints may have come from a previous shipment, the statute of limitations for breach of warranty may have run.

At trial, Blaine Curry, the vice president of purchasing for IMS in 1981, testified that, in light of IMS’s practices and the market conditions at the time in question, there would have been no inventory kept at the Onyx yard. He could not, however, answer with assurance the question whether the previous shipment of the 8% 24-pound casing to Onyx had been entirely sold out when the 66 joints were shipped.

The testimony of Mr. Curry, along with the documentary evidence admitted at trial, is sufficient to support the finding of the district court that the casing shipped to Neely No. 1 was the same casing that was shipped aboard the M/V Jennie S. Although Corinth is correct in its assertion that Gulf has failed to foreclose the possibility that the 66 casings were from a previous sale from Corinth to IMS, upon which the statute of limitation might have run, the burden falls on the defendant to prove that a claim is time-barred. See Woods v. William M. Mercer, Inc., 769 S.W.2d 515, 517 (Tex.1988). Corinth failed at trial to produce any evidence that the casings in question were from a previous shipment and made no offer of proof as to when any previous shipments took place. As Corinth demonstrated no more than the mere possibility that the action was time-barred, it failed to meet its burden of proof required by this defense.

2. The cause of the casualty

Corinth contends the district court’s finding that the casing failures were due to manufacturing defects was clearly erroneous or not supported by the evidence. Because the actual casing which failed was subsequently cemented in the well, none of it could be inspected after the events. As a result, no direct evidence was introduced at trial demonstrating that the casualty was caused by the casing’s failing to meet API standards.

Evidence produced at trial demonstrated that the seven casing splits occurred only *1077in the 24-pound casing string; no failures were discovered in the 32-pound easing which was used above and below it. Evidence was also introduced that two unused casings, part of the 66 24-pound casings delivered to the well, had weld seam and occlusion imperfections which rendered them defective by API standards. Gulf introduced expert testimony demonstrating that the defects were present when the casings left the manufacturer and that similar defects were the cause of the downhole failures. Corinth countered this testimony with its own expert who testified that the likely cause of the first casing failure was from mishandling and that the likely cause of the other six failures was from wear on the easing by the drill string during drilling operations.

The resolution of the issue of what caused the casing failures required the district court to make a judgment as to the relative credibility of the testimony given by the two experts, evaluated in light of the direct evidence supporting each opinion. Such choices are within the province of the court, when sitting without a jury, subject only to the clearly erroneous standard. See Ayers v. United States, 750 F.2d 449, 455 (5th Cir.1985). As the district court’s determination to credit the opinion of Gulf’s expert cannot be characterized as clearly erroneous, the court’s finding that manufacturing defects caused the down-hole failures will not be disturbed in this appeal.

D. Prejudgment Interest

When Mr. Buchanan suffered the loss due to the casing failures, he received reimbursement from United. United, in turn, made claim against Gulf. The loss was ultimately paid by AMI, Gulf’s insurer. The court calculated its award of prejudgment interest from the date United paid Mr. Buchanan. Corinth contends that, as AMI did not suffer any loss until it reimbursed United, prejudgment interest should not accrue until the date of that payment. Gulf maintains, however, that the date the cause of action accrued should have been utilized in calculating prejudgment interest.

There is no Texas case law dealing explicitly with the issue of prejudgment interest awards to subrogees, but the language used by the Texas Supreme Court in Cavnar v. Quality Control Parking, Inc., 696 S.W.2d 549, 554-55 (1985), is instructive:

A plaintiff is not entitled to recover prejudgment interest on damages until those damages have actually been sustained. Until that time, the plaintiff has not lost the use of the money he ultimately receives from the defendant.
Yet a system which would force litigants to determine precisely when each element of a plaintiff’s damage award was incurred would impose an onerous burden on both the trial bench and bar.
A few jurisdictions allow recovery of prejudgment interest as of the date the cause of action accrues. This approach, however, does not preserve the integrity of the principle that prejudgment interest is not meant to punish defendant’s misbehavior, but to achieve full compensation for plaintiffs. Rather, it overcompensates the plaintiff by awarding interest on losses not yet incurred.

Id. at 554-55. Allowing prejudgment interest only from the time of payment by AMI, the subrogee in this case, effectuates the intent expressed by the court in Cavnar, as it will result in a complete recovery for AMI and not overcompensate it. See also 83 C.J.S. Subrogation 71 (1953). As the date of AMI’s payment to United does not appear in the record before us, it is appropriate for us to remand the prejudgment interest award to the district court to allow for evidence to be taken concerning AMI’s date of payment to United and for a recalculation of prejudgment interest from that date.

III. Conclusion

We AFFIRM the judgment of the district court and its award of actual damages, attorneys’ fees, expenses and costs to the plaintiff; we VACATE the district court’s award of prejudgment interest and REMAND for a hearing on the issue of AMI’s *1078date of payment to United and for a recalculation of the prejudgment interest award.

. Although Gulf contends that both "specific" and "general” jurisdiction exist, our ruling that the requirements of the former are met obviates the need to address the latter.