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Click here for the full text of this decision FACTS:Calypso Waterjet Systems Inc. sued Counter Intelligence Inc. for breach of contract, business disparagement, tortious interference with existing and prospective business relations, and conspiracy. Counter Intelligence filed a special appearance, alleging that it is a Maryland corporation with its principal place of business in Maryland and lacks the minimum contacts with Texas required for a Texas court to exercise jurisdiction over it. Calypso argued that the court had specific jurisdiction over Counter Intelligence, because of Counter Intelligence’s breach of a contract dated Nov. 3, 2004, in which Counter Intelligence of Silver Spring, Md. ordered two Calypso waterjets from Fox Machinery Associates Inc. of Bridgeport, Pa. The contract provided Counter Intelligence would wire funds to Fox Machinery’s bank account in Philadelphia. Under Delivery and Terms, the contract also provided, “Freight: F.O.B. Dallas, TX.” Calypso pleaded that the trial court had specific jurisdiction over Counter Intelligence because of Counter Intelligence’s breach of this contract. There is no allegation Calypso’s business disparagement, tortious interference or conspiracy claims have any connection to Texas. While Calypso’s breach of contract claim was premised only upon the Nov. 3, 2004 contract, Calypso’s petition and the evidence offered in the trial court revealed a previous contract between Calypso and Counter Intelligence dated Sept. 29, 2004. Calypso’s petition recited that under this contract, Counter Intelligence agreed to purchase a waterjet cutting system from Calypso for $162,050. This contract, on Calypso’s letterhead bearing an address in Dallas, also provided “FOB Dallas, Texas.” Both Calypso and Counter Intelligence agree Counter Intelligence satisfied the payment terms of this first contract, although the trial judge refused Counter Intelligence’s proposed finding of fact on this point. Calypso also pleaded and offered evidence that Counter Intelligence had ordered and paid Calypso for more than $14,000 in replacement parts and repair charges, sending at least 20 checks to Calypso in Texas in response to more than 30 invoices sent by Calypso from Texas. Calypso also alleged the trial court could properly exercise general jurisdiction over Counter Intelligence, because of Counter Intelligence’s continuing contractual relationship with Cosentino U.S.A., a Florida corporation with its principal place of business in Stafford, Texas. After a hearing, the trial judge concluded that the exercise of both specific and general jurisdiction was proper over Counter Intelligence. Counter Intelligence appealed, alleging in five issues that the trial judge erred in concluding the exercise of specific and general jurisdiction was proper. HOLDING:Reversed and rendered. A Texas court, the court stated, may exercise personal jurisdiction over a defendant only if the defendant has minimum contacts with the state and the exercise of jurisdiction will not offend traditional notions of fair play and substantial justice. To establish minimum contacts, the defendant purposefully avails itself of the privilege of conducting activities inside Texas and enjoys the benefits and protections of Texas laws. The trial judge, the court noted, found Counter Intelligence was aware that it was contracting with a Texas party for both contracts. But awareness that a contracting party is a Texas resident does not necessarily constitute purposeful availing for jurisdictional purposes, the court stated. The parties did not structure the contract to avoid a particular forum, the court noted. The question here, the court stated, is whether a Maryland entity purposefully availed itself of the benefits and protections of Texas law by entering into a contract with a Pennsylvania entity for equipment to be paid for in Pennsylvania and used in Maryland, where the contract provided the equipment is to be delivered “F.O.B. Dallas.” Although title passed in Texas, the court stated, the conduct complained of in Calypso’s breach of contract claim related to Counter Intelligence’s failure to pay the amount due under the contract. This breach, the court found, arose out of Counter Intelligence’s conduct in Pennsylvania and Maryland, not Texas. Thus, the court held the trial judge erred in concluding Texas could exercise specific jurisdiction over Counter Intelligence. The trial judge’s conclusion, the court stated, is incorrectly based on Calypso’s actions for example, the location of Calypso’s bank accounts, the location of Calypso’s service representative and the issuing of invoices by Calypso but not the actions of Counter Intelligence. Counter Intelligence’s awareness, the court found, that Calypso was located in Texas and that the waterjet systems would be shipped from Texas was not enough to establish that Counter Intelligence purposefully availed itself of the privilege of doing business in Texas. Calypso’s claims, the court stated, do not arise out of activity by Counter Intelligence in Texas. Thus, the court held that the trial judge erred in concluding that Texas may exercise specific jurisdiction over Counter Intelligence. The court then held that the trial judge incorrectly concluded that Counter Intelligence’s substantial continuous and systematic contacts with Texas gave rise to general jurisdiction over the company in Texas. Counter Intelligence’s contacts with Texas were insufficient to establish general jurisdiction, the court found. OPINION:Whittington, J.; Morris, Whittington and Richter, J.J.

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