Dan Kelly and Laura Hofstatter v. General Interior Construction, Inc. ( 2008 )

Affirmed in Part, Reversed in Part, and Remanded, and Majority and Dissenting Opinions filed July 3, 2008

Affirmed in Part, Reversed in Part, and Remanded, and Majority and Dissenting Opinions filed July 3, 2008.

In The

Fourteenth Court of Appeals

____________

NO. 14-07-00270-CV

____________

DAN KELLY AND LAURA HOFSTATTER, Appellants

V.

GENERAL INTERIOR CONSTRUCTION, INC., Appellee

On Appeal from the 125th District Court

Harris County, Texas

Trial Court Cause No. 05-46388

D I S S E N T I N G   O P I N I O N

In this case, corporate officers of an Arizona-based general contractor appeal the denial of their joint special appearance in a lawsuit filed against them in their individual capacities by a Texas-based subcontractor.  The subcontractor seeks to recover damages based on purported breach-of-contract claims, alleged fraudulent statements, and alleged violations of Chapter 162 of the Texas Property Code.  In  its live pleading, the subcontractor did not allege (1) a breach-of-contract claim against the officers, (2) that the corporate officers committed any act in Texas, or (3) that the corporate officers were doing business in Texas at any time.  Because the subcontractor failed to satisfy the fundamental requirement that its pleading contain sufficient allegations of some basis for the exercise of personal jurisdiction, the corporate officers satisfied their burden of negating all bases of personal jurisdiction by presenting undisputed evidence that they are not Texas residents.  Moreover, as to the Chapter 162 claims, because the evidence conclusively proves that the corporate officers satisfied their burden of negating all bases of personal jurisdiction, the evidence is legally insufficient to support the trial court=s implied findings to the contrary.  Accordingly, this court should sustain the second and third issues, reverse the trial court=s order, and order the trial court to dismiss the subcontractor=s claims against the officers for lack of personal jurisdiction.  Because it does not, I respectfully dissent.

Factual and Procedural Background

Appellants Dan Kelly and Laura Hofstatter (collectively the AOfficers@) are the sole shareholders and officers of Diva Consulting, Inc. (ADiva@), an Arizona-based general contractor.  Hofstatter is the President of Diva, and Kelly is the company=s Vice President.  It is undisputed that both individuals are Arizona residents.  Diva, acting as the general contractor on a Texas construction project, contracted with subcontractor General Interior Construction, Inc. (AGeneral@), a Texas company, for hotel renovations to be performed in Texas.  Diva disputed the amount allegedly owed and stopped paying General because Diva claims to have incurred expenses in remedying alleged flaws in General=s work.

After the owner of the property, Meristar Hospitality Corporation (AMeristar@) sued both Diva and General, General filed a third-party petition against the Officers, ostensibly asserting three claims:  (1) breach of contract, (2) violations of Chapter 162 of the Texas Property Code, and (3) fraud.

In a section of its petition entitled ABreach of Contract,@ General made the following allegations:

!       Diva breached its contract with General, causing General to suffer damages in an amount in excess of the minimum jurisdictional limit of the trial court. 

!       Hofstatter is President of Diva; Kelly is Vice President of Diva.

!         The Officers are the only owners of Diva.

Citing to alleged violations of Chapter 162 of the Texas Property Code, General made the following allegations:

!         Payments Meristar made to Diva or the Officers were trust funds to be held for the benefit of General.

!         Meristar=s payments made to Diva were in return for work performed in Texas by General.

!         The Officers were trustees of all payments Meristar made to Diva.

!         General was the beneficiary of trust funds paid to the Officers.

!         The Officers acted with intent to defraud by providing affidavits to Meristar stating that all subcontractors were paid or would be paid when that statement was untrue.

!       Therefore, the Officers are liable to General for violating section 162.005(1)(C) of the Texas Property Code.

Finally, General made the following allegations pertaining to fraud:

!       The Officers promised that General would be paid under the contract, but General received only partial payment.

!       The Officers made material misrepresentations with the intention that General would rely on those misrepresentations.

!       The Officers made such misrepresentations with the knowledge that the statements were false or with reckless disregard for the truth.

!       General relied on the misrepresentations and was damaged as a result.

The Officers filed a joint special appearance contesting the trial court=s ability to exercise personal jurisdiction over them as to General=s third-party claims.  The trial court denied this special appearance, and the Officers have appealed.^[1]

Jurisdictional Analysis

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.^[2] For a defendant to have sufficient minimum contacts with the forum, it is essential that there be some act by which the nonresident defendant Apurposefully avails@ itself of the privilege of conducting activities in the forum state, thus invoking the benefits and protections of its laws.^[3] Although not determinative, foreseeability is an important consideration in deciding whether the nonresident defendant purposefully has established minimum contacts with Texas.^[4] 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.^[5] A defendant should not be subject to a Texas court=s jurisdiction based upon random, fortuitous, or attenuated contacts.^[6]

For specific jurisdiction to exist as to a particular claim, the claim must arise from or relate to the defendant=s purposeful contacts with Texas.^[7] In conducting a specific‑jurisdiction analysis, the focus is on the relationship among the defendant, Texas, and the litigation.^[8] 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 with Texas and the operative facts of the litigation.^[9]

Under three issues, the Officers challenge the trial court=s implied findings of specific jurisdiction.  Other intermediate courts of appeals have performed the specific-jurisdiction analysis on a claim-by-claim basis.^[10] The United States Supreme Court, the Texas Supreme Court, and this court have not yet addressed this issue.  By holding that the trial court=s order should be affirmed in part and reversed in part following a claim-by-claim specific-jurisdiction analysis, this court necessarily takes a position on the issue of whether all claims stand or fall together in a specific-jurisdiction analysis.  The majority chooses the correct approach C a claim-by-claim analysis C but nevertheless reaches the wrong result.

                                          Breach-of-Contract Claim

Though General claims to have asserted a breach-of-contract claim against the Officers, even liberally construing General=s third-party petition, the pleading does not contain such a claim.  After previously alleging the existence of a contract between General and Diva, General made the following allegations in a section of General=s petition entitled ABreach of Contract@:

DIVA wholly and completely failed to perform its obligations under the contract, resulting in damages to [General]. [General=s] damages were a natural, probable, and foreseeable consequence of DIVA=s breach.  DIVA failed to honor the contract by failing to pay [General] for all services and materials provided.  DIVA=s conduct constitutes a breach of the contractual obligations and relationship [sic] between the parties, both written and oral, express and implied.  DIVA=s breach has caused [General] to suffer damages in an amount in excess of the minimum jurisdictional limits of this Court.

At all relevant times herein, LAURA HOFSTATTER was President of [Diva] and DAN KELLY was Vice President of [Diva].  They are the only owners of [Diva].

These allegations are the only part of General=s pleading that arguably could constitute an allegation of breach of contract against the Officers.  However, General never alleged that the Officers entered into a contract with General, that General performed under such a contract, that the Officers breached such a contract, or that General has suffered any damages resulting from the breach of such a contract.  According to the majority opinion, General alleges in its petition that the Officers exclusively operated Diva and that the Officers are liable for breach of contract.  See ante at p.5, n.3.  However, General=s pleading contains neither of these allegations.  General does allege that the Officers are liable for violation of section 162.005(1)(C)(2) of the Texas Property Code and that General is suing the Officers for fraud; however, General does not state that the Officers are liable for breach of contract.

In the absence of special exceptions, this court must construe General=s third-party petition liberally and must find that the petition contains any claims that reasonably may be inferred from the specific language used in the petition, even if the petition fails to state all of the elements of that claim.^[11] This court, however, cannot use the liberal construction of the petition as a license to read into the petition a claim that it does not contain.^[12]

The elements of a breach-of-contract claim by General against the Officers would be:  (1) the existence of a valid contract between General and the Officers,  (2) performance or tendered performance by General under the contract, (3) breach of the contract by the Officers, and (4) damages sustained by General as a result of the Officers= breach.^[13] Even liberally construing General=s third-party petition, it cannot reasonably be inferred from the pleading=s language that General has alleged any of these elements.^[14] Though the petition does contain allegations under the heading ABreach of Contract,@ the only claim that reasonably can be inferred from the language of this section is a breach-of-contract claim by General against Diva.^[15] Because General failed to allege a breach-of-contract claim against the Officers, this court need not conduct a specific-jurisdiction analysis regarding breach of contract.

The majority concludes that General did allege a breach-of-contract claim against the Officers.  The majority, however, concludes that the Officers are not subject to personal jurisdiction as to this purported claim because the Officers were acting in their capacities as agents of Diva and because they are not parties to General=s subcontract with Diva.  In reaching its conclusion, the majority relies on Wolf v. Summer-Wood, L.P., in which the Fifth Court of Appeals held that the trial court lacked personal jurisdiction over corporate officers as to the contract claim solely because the Wolf court determined that the officers were not parties to the contract in question.^[16] Though the Wolf case supports the majority=s analysis, this analysis conflicts with prior precedents from this court and the Texas Supreme Court.

In conducting a personal-jurisdiction analysis, this court should review only the claims and the evidence regarding the Texas contacts of the parties who are objecting to personal jurisdiction; this court should refrain from conducting a merits-based analysis.  Indeed, at this juncture, the merits of the claims are not at issue.^[17] The court=s task in reviewing a special appearance is simply to identify the claims in question and assess the Texas contacts of the Officers in light of those claims.

For example, in Cerbone, the specially appearing defendant asserted that the promissory note he signed in Illinois was executed only as agent of the corporation for which he served as president and chief executive officer.^[18] The plaintiff alleged that the corporate officer had executed the note in his individual capacity.^[19] This court declined an invitation to consider the merits and to determine whether the corporate officer was a party to the contract in his individual capacity.^[20] Instead, this court concluded that, presuming the corporate officer was a party to the contract in his individual capacity, the jurisdictional evidence conclusively proved that the claims against the corporate officer did not arise from or relate to the officer=s purposeful contacts with Texas.^[21] The majority asserts that its analysis does not address the merits of General=s purported breach-of-contract claim; however, if, as the majority holds, there is no valid contract between the Officers and General, then any contract claim by General against the Officers clearly lacks merit.^[22] Therefore, contrary to precedent, the majority does address the merits.^[23]

The majority=s analysis of the purported breach-of-contract claim is unnecessary because General has not pleaded a contract claim against the Officers.  In addressing this claim, the majority creates a conflict with Cerbone and other precedents that require this court to review the trial court=s personal-jurisdiction rulings without addressing the merits of the claims in question.  The better course would be to eliminate this unnecessary analysis and instead dispose of the issue based on General=s failure to assert a contract claim against the Officers.

Chapter 162 Claims and Fraud Claims

General=s petition does not contain sufficient allegations to invoke the exercise of personal jurisdiction over the Officers.

The record reflects that the Officers were served with process under Texas Rule of Civil Procedure 108.  Whether a nonresident defendant is served with process under this rule or under the Texas long-arm statute, the plaintiff must allege in its petition some basis for personal jurisdiction, such as the defendant=s conducting of business in Texas or the defendant=s commission of an act or acts in Texas.^[24] If the plaintiff does not make such jurisdictional allegations in the petition, then the defendant can satisfy his burden of negating all bases of personal jurisdiction by presenting evidence that the defendant is not a resident of Texas.^[25]

In its third-party petition, General alleges that the Officers acted with intent to defraud by providing false affidavits to Meristar and that the Officers violated section 162.005(1)(C) of the Texas Property Code.  General also asserts that the Officers fraudulently represented that General would be paid in full under its contract with Diva.  Notably, General does not allege that any of these acts occurred in Texas.  Moreover, in its third-party petition, General does not allege that the Officers committed any act whatsoever in Texas or that they conducted any business whatsoever in Texas.  Therefore, General=s third-party petition lacks sufficient allegations to invoke the trial court=s personal jurisdiction over the Officers, and the Officers, thus, could satisfy their burden of negating all bases of personal jurisdiction merely by presenting evidence that they are not residents of Texas.^[26]

In their joint special appearance, the Officers proved that they are residents of Arizona and not residents of Texas.  General has not disputed this evidence.  The Officers, thus, satisfied their burden of negating all bases of personal jurisdiction, and the trial court erred as a matter of law by denying their joint special appearance.^[27]

In any event, the evidence conclusively negates jurisdiction as to the Chapter 162 claims.

General alleges that the Officers are individually liable because they allegedly violated Chapter 162 of the Texas Property Code.^[28] General claims that all payments made by Meristar to Diva or the Officers were trust funds^[29] and that under Chapter 162, the Officers were trustees of all such payments because the Officers allegedly are owners and officers of a contractor who allegedly received trust funds or who allegedly had control or direction of trust funds.^[30] General alleges that it is a beneficiary of these alleged trust funds the Officers received or over which they had control or direction.^[31] General further alleges that the Officers acted with intent to defraud and are liable under section 162.005(1)(C) of the Texas Property Code because they allegedly used, disbursed, or diverted trust funds that were paid in reliance on an affidavit (furnished by the Officers under section 53.085) that contains false information relating to the trustee=s payment of current or past due obligations.^[32] Under binding precedent, for purposes of the jurisdictional analysis, this court is to presume without deciding that these allegations are true and then examine the evidence regarding the relationship between these allegations and the Officers= respective purposeful contacts with Texas.^[33]

To meet their burden to negate all potential bases of jurisdiction, the Officers filed a verified joint special appearance proving the following:

!       The Officers are both residents of Arizona.

!       The Officers do not reside in Texas, own property in Texas, have an office or employees in Texas, or transact business in Texas in their individual capacities.

!       The Officers are corporate officers and directors of Arizona-based Diva.

!       Diva is a party to the contract at issue in the underlying lawsuit, but the Officers are not parties to that contract in their individual capacities and did not guarantee the contract.

!       Meristar is the owner of the property.

!       Meristar is based in Arizona.

!       The contract between Meristar and Diva was entered into in Arizona.

!       Diva Aworked with Meristar=s agent in Arizona.@

!       When Meristar paid monies in connection with work on the property, funds were transferred from one Arizona bank account to Diva=s Arizona bank account.

!       The funds were held in Diva=s Arizona general operating account and used to pay expenses and salaries in Arizona.^[34]

The evidence provided by General in response to the Officers= special appearance does not conflict with any of these facts.  Therefore, these facts are undisputed.

          Any alleged knowledge that the brunt of the alleged damages caused by the alleged torts would be felt by General in Texas is insufficient to support specific jurisdiction.^[35] The proper approach is to analyze the degree of connectedness between the Officers= Texas contacts and the operative facts of the Chapter 162 claims to determine whether the operative facts involve contacts with Texas.^[36] To find specific jurisdiction over the non-resident Officers, the evidence must establish a substantial connection between each defendant=s purposeful contacts with Texas and the operative facts of the Chapter 162 claims.^[37] In conducting the personal-jurisdiction analysis, only the Officers= purposeful contacts with Texas are to be considered C not the Texas contacts of any other parties.^[38] This court may not consider Diva=s contacts with Texas.

Nonetheless, in determining that specific jurisdiction exists as to the Texas Property Code claim, the majority relies on the following alleged contacts of Diva:

!       Diva=s regular conducting of business in Texas

!       Diva=s entering into the contract for the project in question

!       Diva=s entering into numerous agreements with Texas subcontractors, including General

!       Diva=s sending of two checks to General to make payment on Diva=s contract with General  Diva=s and/or General=s performance of the construction work in Texas

!       Diva=s receipt of invoices from General.

Because there is no pleading or proof of any theory for piercing the corporate veil, this court should consider only the Officers= purposeful contacts with Texas and not the contacts of Diva or any other party.^[39] The majority concludes that, because Chapter 162 provides for personal liability for corporate officers under certain circumstances, General=s allegation of liability under Chapter 162 allows this court to consider all of Diva=s contacts with Texas as if they were the Officers= contacts with Texas in their individual capacity.  The majority=s analysis conflicts with this court=s opinion in Cerbone, in which the court presumed that the corporate officer executed the contract in his individual capacity, as alleged by the plaintiff; however, the Cerbone court did not count all the contacts of the corporation with Texas as being contacts of the corporate officer in his individual capacity.^[40]

The operative facts regarding General=s claims under Chapter 162 are (1) the Officers= submission of affidavits to Meristar, (2) Meristar=s payment of funds to Diva or the Officers in reliance on these affidavits, (3) the Officers= alleged receipt or exercise of control over payments from Meristar, and (4) the Officers= alleged use of these funds.  However, the undisputed evidence before the trial court shows that none of these events occurred in Texas.^[41]

Under Chapter 162 of the Texas Property Code, corporate officers are subject to  potential personal liability.  Rather than focus on the operative facts under which the Officers would be personally liable under General=s Chapter 162 allegations, the majority focuses on contacts that cannot give rise to liability under Chapter 162 C evidence that Kelly made three or four trips to the site of the Texas project (Hofstatter made no such trips), letters and faxes between the Officers (as representatives of Diva) and representatives of General in Texas regarding the project, and two checks the Officers sent on behalf of Diva to General.^[42]

The majority relies on Herbert v. Greater Gulf Coast Enterprises, Inc., a case in which the First Court of Appeals rejected a writ-of-error challenge to a default judgment awarding a subcontractor recovery on its Chapter 162 claim against the president of a general contractor.^[43] The appellant in Herbert asserted that the plaintiff=s petition did not contain sufficient allegations regarding personal jurisdiction.^[44] The Herbert court concluded that the subcontractor=s petition contained a Asufficient allegation of appellant=s purposeful act or transaction in the State of Texas@ and that A[t]he cause of action, collection of money owed under the construction contract, clearly arose out of the transaction.@^[45]  In the context of a review of General=s claims and the personal-jurisdiction evidence in this case, the Herbert case is not on point because it involves only the sufficiency of the allegations in the plaintiff=s petition.^[46] However, even equating, as the majority does, the allegations in Herbert with jurisdictional proof, the Herbert court found that the following was sufficient to allow the trial court to exercise personal jurisdiction:

!       The nonresident general contractor accepted, benefitted from, and promised to pay for labor and materials from a Texas subcontractor on a Texas construction project.

!       Although requested to do so, the nonresident general contractor refused to pay the subcontractor as it had agreed.

!       Under Chapter 162 of the Texas Property Code, the nonresident general contractor and its president Paul Herbert were trustees for construction draws, as to which the plaintiff subcontractor was the beneficiary; and these defendants diverted and disposed of these draws.^[47]

Even presuming that our record contained evidence of all of the above facts, under the current legal standard for special appearances in Texas, this evidence would not be sufficient to prove a substantial connection between a nonresident officer=s purposeful contacts with Texas and the operative facts of the Chapter 162 claims.^[48] The Herbert court used as its legal standard for personal jurisdiction the three-pronged test enunciated in O=Brien v. Lanpar Co.^[49] In 1984, the United States Supreme Court began using the concepts of specific jurisdiction and general jurisdiction in the legal standard for analyzing personal jurisdiction.^[50] The Texas Supreme Court then tried to incorporate these two concepts into its personal-jurisdiction analysis without discarding the three-pronged O=Brien test.^[51] Finally, in 1991, the Texas Supreme Court discarded the O=Brien test in favor of a legal standard focusing on the two prongs from International Shoe Co. v. Washington, and the definitions of specific jurisdiction and general jurisdiction from Helicopteros.^[52] When Herbert was decided, there were courts of appeals decisions holding that if a nonresident tortfeasor knows that the brunt of the injury will be felt by a particular resident in the forum state, he reasonably must anticipate being haled into court there to answer for his actions.^[53] However, in 2005, the Texas Supreme Court rejected this line of cases, because, among other things, the analysis used in this line of cases did not call for courts to focus sufficiently on the actions of the nonresident defendant.^[54]

The Herbert court relied on the language from the O=Brien test indicating that the connection between the defendant and Texas was sufficient if the plaintiff=s claim arose out of a transaction by the nonresident defendant in Texas.^[55] However, under the current legal standard, the plaintiff=s claim must arise from or relate to the defendant=s purposeful contacts with Texas.^[56] In addition, the Texas Supreme Court has emphasized the necessity for a substantial connection between the defendant=s purposeful contacts with Texas and the operative facts of the litigation.^[57] Although the Herbert court did not mention the Abrunt of the injury@ analysis, its conclusion seems implicitly based on this approach because there was no allegation that Herbert had committed any act in Texas but there was an allegation that he had misappropriated trust funds for a Texas construction project.^[58] Therefore, the Herbert court appears to have concluded that Herbert=s alleged out-of-state misappropriation of alleged trust funds for a Texas construction project was sufficient because Herbert reasonably should have anticipated being haled into court, given that he was aware that the brunt of the injury would be felt by the subcontractor in Texas.^[59] The Texas Supreme Court, however, has since rejected this analysis.^[60] Given the significant difference between the legal standard applied in Herbert and the legal standard that applies to a personal-jurisdiction analysis today, Herbert is not on point.^[61]

The majority also cites various cases regarding liability under Chapter 162.^[62] Because the merits of General=s claims are not at issue in determining the trial court=s ability to exercise personal jurisdiction consistent with the federal due process guarantees, these cases are not on point.^[63]

The undisputed evidence shows that there is no substantial connection between the Officers= purposeful contacts with Texas and the operative facts of the Chapter 162 claims.^[64] Based upon the undisputed facts, the evidence is legally insufficient to support the trial court=s implied finding that the Officers established sufficient minimum contacts with Texas to support the trial court=s exercise of personal jurisdiction over the Officers as to the Chapter 162 claims.^[65]

Conclusion

General did not allege a breach-of-contract claim against the Officers, nor did General carry its burden of alleging in its petition some basis for personal jurisdiction over them.  The Officers satisfied their burden of negating all bases of personal jurisdiction by proving that they are residents of Arizona and not residents of Texas.  Therefore, the trial court erred as a matter of law by denying the Officers= joint special appearance, and this court should reverse the trial court=s order and remand to the trial court with instructions to dismiss General=s claims for lack of personal jurisdiction.

/s/      Kem Thompson Frost      

Justice

Judgment rendered and Majority and Dissenting Opinions filed July 3, 2008.

Panel consists of Chief Justice Hedges and Justices Anderson and Frost (Hedges, C.J., majority).

---

^[1]  Whether a trial court may exercise personal jurisdiction over the nonresident officers is a question of law for de novo review.  See BMC Software Belgium, N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex. 2002).  The trial court did not issue any findings of fact or conclusions of law.  Therefore, all facts necessary to support the trial court=s ruling that are supported by the evidence are implied in favor of the trial court=s decision.  Id. at 795.  Parties may challenge on appeal the legal and factual sufficiency of these implied factual findings.  Id.  In conducting a no‑evidence analysis, this court is to review the evidence in the light most favorable to the challenged finding and indulge every reasonable inference that would support it.  See City of Keller v. Wilson, 168 S.W.3d 802, 822 (Tex. 2005).  This court must credit favorable evidence if a reasonable factfinder could and disregard contrary evidence unless a reasonable factfinder could not.  See id. at 827.  This court must determine whether the evidence at trial would enable reasonable and fair‑minded people to find the facts at issue.  See id.  The factfinder is the sole judge of the credibility of the witnesses and the weight of their testimony.  See id. at 819.

^[2]  See BMC Software, 83 S.W.3d at 795. 

^[3]  Michiana Easy Livin= Country, Inc. v. Holten, 168 S.W.3d 777, 784 (Tex. 2005).

^[4]  BMC Software, 83 S.W.3d at 795.

^[5]  See Guardian Royal Exch. Assur., Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 227 (Tex. 1991). 

^[6]  BMC Software, 83 S.W.3d at 795.

^[7]  Am. Type Culture Collection Inc. v. Coleman, 83 S.W.3d 801, 806B07 (Tex. 2002).

^[8]  See Guardian Royal, 815 S.W.2d at 228.

^[9]  See Moki Mac River Expeditions v. Drugg, 221 S.W.3d 569, 585 (Tex. 2007).

^[10]  See Seiferth v. Helicopteros Atuneros, Inc., 472 F.3d 266, 274B75 (5th Cir. 2006) (analyzing specific jurisdiction on a claim-by-claim basis because the Due Process Clause precludes a court from exercising specific jurisdiction as to a claim that does not arise from or relate to the defendant=s forum contacts based on the court=s legitimate exercise of specific jurisdiction over a defendant as to another claim); Barnhill v. Automated Shrimp Corp., 222 S.W.3d 756, 767 (Tex. App.CWaco 2007, no pet.).

^[11]  See San Saba Energy, L.P. v. Crawford, 171 S.W.3d 323, 336B37 (Tex. App.CHouston [14th Dist.] 2005, no pet.).

^[12]  See id.

^[13]  See Aguiar v. Segal, 167 S.W.3d 443, 450 (Tex. App.CHouston [14th Dist.] 2005, pet. denied).

^[14]  See San Saba Energy, L.P., 171 S.W.3d at 336B37.

^[15]  See id.

^[16]  214 S.W.3d 783, 792 (Tex. App.CDallas 2007, no pet.). 

^[17]  See, e.g., Michiana Easy Livin= Country, Inc., 168 S.W.3d at 791; Weldon-Francke v. Fisher, 237 S.W.3d 789, 792 (Tex. App.CHouston [14th Dist.] 2007, no pet.).

^[18]  See Cerbone, 225 S.W.3d at 766B68 & n.1.

^[19]  See id.

^[20]  See id. at 769B70. 

^[21]  See id. at 768B71.

^[22]  See Aguiar, 167 S.W.3d at 450.

^[23]  See PHC-Minden, L.P. v. Kimberly-Clark Corp., 235 S.W.3d 163, 174 (Tex. 2007) (citing with approval cases holding that courts should not determine merits of claims in determining whether personal jurisdiction may be exercised over the claims); Michiana Easy Livin= Country, Inc., 168 S.W.3d at 791 (stressing that courts must not equate liability with personal jurisdiction because it would be improper if a party=s liability established personal jurisdiction and a party=s nonliability negated personal jurisdiction); Weldon-Francke, 237 S.W.3d at 792 (stating that Athe merits of the [plaintiffs=] claims are not at issue in determining whether the trial court erred in concluding that it could exercise personal jurisdiction over [the defendants]@); Cerbone v. Farb, 225 S.W.3d 764, 769B77 (Tex. App.BHouston [14th Dist.] 2007, no pet.) (presuming, for purpose of personal-jurisdiction analysis, that nonresident corporate officer signed promissory note in individual capacity, as alleged by plaintiff, rather than addressing whether, as alleged by officer, he signed note solely on behalf of the corporation). 

^[24]  See Tex. Civ. Prac. & Rem. Code Ann. '' 17.041B.045 (Vernon Supp. 2005); Tex. R. Civ. P. 108; Moki Mac River Expeditions, 221 S.W.3d at 574 (stating that plaintiff who serves nonresident defendant under the Texas long-arm statute bears the initial burden of pleading in its petition sufficient allegations to invoke personal jurisdiction); Paramount Pipe & Supply Co., Inc. v. Muhr, 749 S.W.2d 491, 495B96 (Tex. 1988) (holding that, even if plaintiff serves a nonresident defendant under Rule 108, rather than the Texas long-arm statute, the plaintiff still bears the initial burden of pleading in its petition sufficient allegations to invoke personal jurisdiction, such as the defendant=s conducting business in Texas and committing purposeful acts in Texas); Boston Medical Group, Inc. v. Ellis, No. 14-06-00801-CV, 2007 WL 2447360, at *3 (Tex. App.CHouston [14th Dist.] Aug. 30, 2007, no pet.) (noting that there is a minimal requirement that pleadings support personal jurisdiction over nonresident defendants by alleging that they did business in Texas or committed acts in Texas) (mem. op.).

^[25]  See Perna v. Hogan, 162 S.W.3d 648, 653 (Tex. App.CHouston [14th Dist.] 2005, no pet.). 

^[26]  See id. 

^[27]  See id. (holding that trial court erred in denying special appearances because plaintiffs= petition did not contain sufficient allegations invoking personal jurisdiction over the nonresidents and because the nonresidents presented undisputed evidence that they are not residents of Texas).

^[28]  See Tex. Prop. Code Ann. '' 162.001B.033 (Vernon 2007). 

^[29]  See id. ' 162.002.

^[30]  See id.

^[31]  See id. ' 162.003. 

^[32]  See id. ' 162.005(1).

^[33]  See Michiana Easy Livin= Country, Inc., 168 S.W.3d at 791; Weldon-Francke, 237 S.W.3d at 792.

^[34]  The Officers also attached documents to their joint special appearance that purportedly show (1) the funds from Meristar were used to pay for business-related expenses for the Texas hotel renovation and (2) Diva=s calculations of the expenses incurred in remedying flaws in General=s work as evidence that General owes Diva money instead of Diva owing General.  Although these documents might relate to affirmative defenses under section 162.031(b), this court is to presume that General=s claims have merit for the purposes of our jurisdictional analysis.  See Tex. Prop. Code Ann. ' 162.031(b) (Vernon 2007); Michiana Easy Livin= Country, Inc., 168 S.W.3d at 791; Weldon-Francke, 237 S.W.3d at 792.  These documents do not provide any evidence regarding the Officers= purposeful contacts with Texas or lack thereof.

^[35]  See Tex. Prop. Code Ann. '' 162.002, 162.031(a); Michiana Easy Livin= Country, Inc., 168 S.W.3d at 788B92 (overruling court of appeals cases applying the Abrunt of the injury@ specific-jurisdiction analysis); Markette v. X-Ray X-Press Corp., 240 S.W.3d 464, 469 n.4 (Tex. App.CHouston [14th Dist.] 2007, no pet.) (holding that Supreme Court of Texas has overruled court of appeals cases applying the Abrunt of the injury@ specific-jurisdiction analysis). 

^[36]  See Moki Mac River Expeditions, 221 S.W.3d at 584B85. 

^[37]  See id. at 585.

^[38]  See id. at 575 (stating that, in analyzing personal jurisdiction, the only contacts that are relevant are the purposeful contacts with Texas of the parties challenging the trial court=s personal jurisdiction and that the contacts of all other parties are not relevant).

^[39]   See Commonwealth Gen. Corp. v. York, 177 S.W.3d 923, 925 (Tex. 2005) (holding, in personal-jurisdiction analysis, that contacts of corporation could not be considered as contacts of sole shareholder unless there was evidence that would support a finding that shareholder and corporation were alter egos, in which case the corporation would be viewed as the same legal person as the shareholder); Michiana Easy Livin= Country, Inc., 168 S.W.3d at 785 (stressing that personal-jurisdiction analysis considers only the purposeful Texas contacts of the defendant challenging personal jurisdiction).

^[40]  See Cerbone, 225 S.W.3d at 768B71.

^[41]  Indeed, the evidence submitted by General indicates that the affidavits were sent to Meristar in Virginia and that Meristar sent checks drawn on a Virginia bank account to Diva in Arizona.

^[42]  See York, 177 S.W.3d at 925 (holding court of appeals erred in finding specific jurisdiction because, even though shareholder had contacts with Texas, the claims against shareholder did not have a sufficient connection with these contacts).  

^[43]  See 915 S.W.2d 866, 870B71 (Tex. App.BHouston [1st Dist.] 1995, writ denied).

^[44]  See id.

^[45]  Id.

^[46]  See id.

^[47]  See id. at 869B71.

^[48]  Compare id. at 870B71, with Moki Mac River Expeditions, 221 S.W.3d at 584B85.

^[49]  See Herbert, 915 S.W.2d at 870 (applying the O=Brien test and citing Siskind v. Villa Foundation for Educ., 642 S.W.2d 434, 436 (Tex. 1982)); O=Brien v. Lanpar Co., 399 S.W.2d 340, 342 (Tex. 1966). 

^[50]  See Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414B15, 104 S. Ct. 1868, 1872, 80 L. Ed. 2d 404 (1984). 

^[51]  See Schlobohm v. Schapiro, 784 S.W.2d 355, 358 (Tex. 1990); Zac Smith & Co. v. Otis Elevator Co., 734 S.W.2d 662, 663B64 (Tex. 1987). 

^[52]  See Guardian Royal Exch. Assur., Ltd. v. English China Clays, P.L.C., 815 S.W.2d 223, 226B28 (Tex. 1991); see also Helicopteros Nacionales de Colombia, S.A., 466 U.S. at 414B15, 104 S. Ct. at 1872; International Shoe Co. v. Washington, 326 U.S. 310, 316, 66 S. Ct. 154, 158, 90 L. Ed. 95 (1945).

^[53]  See, e.g., Mem=l Hosp. Sys. v. Fisher Ins. Agency, Inc., 835 S.W.2d 645, 650 (Tex. App.CHouston [14th Dist.] 1992, no writ).

^[54]  See Michiana Easy Livin= Country, Inc., 168 S.W.3d at 788B92 (overruling court of appeals cases applying the Abrunt of the injury@ specific-jurisdiction analysis);  Cerbone, 225 S.W.3d at 772 (concluding that, under Michiana, personal jurisdiction cannot be based on allegations that out-of-state tortfeasors knew that the torts they were committing outside of Texas would cause damages in Texas).

^[55]  See Herbert, 915 S.W.2d at 870B71.

^[56]  Am. Type Culture Collection Inc., 83 S.W.3d at 806B07.

^[57]  See Moki Mac River Expeditions, 221 S.W.3d at 585.

^[58]  See Herbert, 915 S.W.2d at 870B71. 

^[59]  See id.

^[60]  See Michiana Easy Livin= Country, Inc., 168 S.W.3d at 788B92.

^[61]  Compare Herbert, 915 S.W.2d at 870B71, with Moki Mac River Expeditions, 221 S.W.3d at 575B85.

^[62]  See C&G, Inc. v. C.N. Jones, 165 S.W.3d 450, 453B54 (Tex. App.CDallas 2005, pet. denied); Perry & Perry Builders v. Galvan, No. 03-02-00091-CV, 2003 WL 21705248, at *4 (Tex. App.CAustin July 24, 2003, pet. denied) (mem. op.); Lively v. Carpet Servs., Inc., 904 S.W.2d 868, 873 (Tex. App.CHouston [1st Dist.] 1995, writ denied). 

^[63]  See PHC-Minden, L.P., 235 S.W.3d at 174; Michiana Easy Livin= Country, Inc., 168 S.W.3d at 791; Cerbone, 225 S.W.3d at 770 (concluding that liability cases are not on point in reviewing trial court=s personal-jurisdiction ruling).  The majority also emphasizes that, by enacting Chapter 162, the Texas Legislature expressed a policy of protecting subcontractors, materialmen, and other Chapter 162 beneficiaries; however, the Texas Supreme Court has pointed out that statutory policies and liability choices do not override the requirement of the United States Constitution that a nonresident defendant have sufficient minimum contacts with the forum state to justify the exercise of personal jurisdiction.  See PHC-Minden, L.P., 235 S.W.3d at 174.

^[64]  See Moki Mac River Expeditions, 221 S.W.3d at 585B88 (concluding that there was no specific jurisdiction based on the lack of a substantial connection between the defendant=s purposeful contacts with Texas and the operative facts of the litigation). 

^[65]  Because this court should reverse based on the first prong of the jurisdictional test, there is no need to determine whether the exercise of personal jurisdiction comports with traditional notions of fair play and substantial justice.