Proppant Solutions, LLC v. Emma Delgado

471 S.W.3d 529, 2015 WL 4299503
CourtCourt of Appeals of Texas
DecidedJuly 16, 2015
DocketNO. 01-14-00800-CV
StatusPublished
Cited by14 cases

This text of 471 S.W.3d 529 (Proppant Solutions, LLC v. Emma Delgado) is published on Counsel Stack Legal Research, covering Court of Appeals of Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Proppant Solutions, LLC v. Emma Delgado, 471 S.W.3d 529, 2015 WL 4299503 (Tex. Ct. App. 2015).

Opinions

OPINION

Harvey Brown, Justice

This is a personal jurisdiction case. Proppant' Solutions,' a California limited liability company, partnered with Christ-Del, a Tennessee corporation, to provide oilfield proppant to EOG, a Texas oil company. After Proppant Solutions and ChristDel completed the contract, Prop-pant Solutions filed this lawsuit claiming that ChristDel breached the partnership agreement, breached its fiduciary duty as a partner, and committed fraud. It also claimed that the three siblings who owned ChristDel, including Tennessee resident Emma Delgado, participated in Christ-Del’s breach of fiduciary duty, made fraud[534]*534ulent misrepresentations, and conspired to accomplish the fraud.

Emma filed a special appearance challenging the trial court’s exercise of personal jurisdiction over her because she is a Tennessee resident, has no contacts with Texas outside of her business, and is not alleged in the petition to have committed a tort in Texas. Proppant Solutions responded that Texas has specific jurisdiction over Emma because of her involvement in the creation and performance of the contract between ChristDel and Prop-pant Solutions. The trial court granted Emma’s special appearance, and Proppant Solutions timely appealed. We affirm.

Background

This lawsuit arises from a contract between two businesses, Proppant Solutions and ChristDel. Proppant Solutions is a California limited liability company with its principal place of business in California. ChristDel is a Tennessee Corporation with its principal place of business in Tennessee.

Joseph Brown formed Proppant Solutions when, according to his affidavit, he “began looking into the business of selling oilfield proppant.” Proppant Solutions obtained a contract to provide oilfield prop-pant 1 to EOG facilities in Pleasanton, Texas. It planned to buy the proppant from China' but needed a way to ship it to the United States, According.to its petition, Proppant, Solutions’ majority owner, Brown, discovered ChristDel online. On its website, ChristDel represented- that it “had extensive experience as a logistics supplier of proppant.” Brown contacted ChristDel’s corporate officers, including Emma; they told Brown that ChristDel “had extensive experience ... moving large shipments of proppant from China to the U.S.A.” They also represented that ChristDel “had fixed logistics contracts in place” for most of the shipping expenses and that with some variable expenses the total cost was “just over 15 cents per pound of proppant.” Proppant Solutions offered — and ChristDel agreed — to fulfill the contract with EOG as a partnership, splitting the profits. As part of the partnership agreement, Proppant Solutions agreed to pay ChristDel the amount of the base costs, i.e., 15 cents per pound.

According to the petition, these representations were false. Proppant Solutions alleged that it would not have offered to complete the EOG contract with ChristDel as a partnership but for these representations. Brown relied on ChristDel because he “had no prior experience in buying, selling, or shipping proppant in the oilfield industry.”

The petition alleged that ChristDel shipped millions of dollars of proppant from China to EOG in Texas over 18 months... ChristDel, acting through Emma, invoiced Proppant Solutions monthly. The invoices did not disclose ChristDel’s costs, allegedly to “hide ChristDel’s prior misrepresentations.” Over the course of the contract, Proppant Solutions paid ChristDel over $50 million in expenses and $6 million in shared partnership profits. After the contract was completed, ChristDel refused to provide an accounting of its costs.

The petition identified four specific misrepresentations by Emma: (1) “Defendants had extensive experience in providing the logistics to move large shipments of proppant from China to Houston,” (2) “Defendants had fixed logistics contracts [535]*535in place and ... the only variables were trucking fuel surcharges and demurrage,” (3) “Defendants calculated their actual costs ... [were] just over $0.15/pound of proppant,” and (4) “the parties would share the profits 60/40.” Proppant Solutions further alleged that Emma and the other individual defendants used ChristDel “for the purpose of perpetrating” a fraud.

All defendants appeared except Emma. Emma filed a special appearance stating that she is a Tennessee resident with- no ties to Texas outside of her business, she is a director of ChristDel, she had no conversations with Proppant Solutions regarding the matters in the lawsuit in, her personal capacity, and all of her communications with Proppant Solutions occurred while she was in Tennessee. During her one trip to Texas in connection with the contract, she met with EOG, not Proppant Solutions.

In response to Emma’s special appearance, Proppant Solutions filed an affidavit signed by its majority owner, Brown. In addition to supporting many of the factual allegations in the petition, Brown stated that after he discovered ChristDel’s website he called and talked with Juan, Marcus, and Emma Delgado, who misrepresented ChristDel’s experience. Contrary to these representations, ChristDel “had little or no experience in the logistics of moving proppant from China to the U.S.A.” Therefore, ChristDel secretly hired a third party to perform many of its contractual obligations in return for a portion of its profits.

Brown claimed that he communicated with Emma “numerous times by email and telephone calls,” although he never claimed that the communications between he and Emma were transmitted to or from Texas. With respect to the claim that ChristDel hid its costs, Brown averred that, because of her financial position with ChristDel, Emma “had to be personally aware of ... this fact.”

Proppant Solutions filed a second affidavit by its co-owner, Michael Hall. Hall, who had primary responsibility for the company’s ' financial matters, stated that he worked’ primarily out of his home in Texas and dealt directly with Emma regarding “finance and billing.” She communicated with Hall by email and telephone from her office in Tennessee. Emma sent him invoices for ChristDel’s expenses. ■ One expense item was a visit to Texas by Emma to meet with EOG officials and tour their Pleasanton facility. Finally, Hall stated that Emma also sent him documentation regarding the movement of proppant into the Port of Houston and then to Pleasan-ton.

Proppant Solutions filed a third affidavit signed by Ronald Cope, the principal shareholder of the Houston-based company that assisted ChristDel with shipping the proppant. Cope averred that he had estimated ChristDel’s shipping cost at only 10 cents per pound, but ChristDel marked up the cost to over 15 cents per pound to increase its profits.

. The trial court granted Emma’s special appearance without issuing any findings of fact or conclusions of law. Proppant Solutions timely appealed.

Standard of Review

“Whether a court has personal jurisdiction over a nonresident defendant is a question of law, which we review de novo.” ‘‘ Zinc Nacional, S.A. v. Bouche Trucking, Inc., 308 S.W.3d 395, 397 (Tex. 2010) (citing BMC Software Belg., N.V. v. Marchand, 83 S.W.3d 789, 794 (Tex.2002)).

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Cite This Page — Counsel Stack

Bluebook (online)
471 S.W.3d 529, 2015 WL 4299503, Counsel Stack Legal Research, https://law.counselstack.com/opinion/proppant-solutions-llc-v-emma-delgado-texapp-2015.