Opinion ID: 428296
Heading Depth: 1
Heading Rank: 2

Heading: the claims against the private defendants

Text: 10 Counts IV through VII of Naartex's amended complaint seek declaratory and injunctive relief and money damages from a variety of private defendants. These defendants include Raymond Albrecht, the brother and successor in interest of Norbert Albrecht, the winner of the 1975 lottery; RSC, the filing service that allegedly entered the Albrecht lease application without disclosing its own interest in that application; and numerous companies and individuals that gained interests in lease W-50394 after its issuance. 11 We believe the district court acted properly when it dismissed these counts. The district court lacked personal jurisdiction over these defendants. Moreover, proper venue for these claims does not lie in the District of Columbia. Finally, the district court had good reason to dismiss this case, rather than transfer it to another district. Personal Jurisdiction 12 The district court correctly held that it lacked personal jurisdiction over the numerous private defendants. None of the defendants resides or is incorporated in the District of Columbia. To establish personal jurisdiction, then, Naartex must show that the defendants had the requisite contacts with the District. The District of Columbia long-arm statute, D.C.Code Ann. Sec. 13-423, enumerates the possible bases for personal jurisdiction over nonresidents. Section 423(a)(1) extends personal jurisdiction to persons transacting any business in the District of Columbia; section 423(a)(4) extends to any person causing tortious injury in the District of Columbia by an act or omission outside the District of Columbia if he regularly does or solicits business, engages in any other persistent course of conduct, or derives substantial revenue ... in the District of Columbia. These provisions are limited by section 423(b), which states that only a claim for relief arising from the acts enumerated in this section may be asserted against him. Thus section 423(b) ... bar[s] ... claims unrelated to the acts forming the basis for personal jurisdiction. Willis v. Willis, 655 F.2d 1333, 1336 (D.C.Cir.1981). 13 While Naartex in its pleadings in the district court contended that the defendants' acts in securing and transferring the lease were intended to have an impact in this District, 13 we cannot reasonably conclude, and Naartex does not here contend, that any tortious injury in the District forms the basis for this action. Personal jurisdiction may be exercised over the private defendants, therefore, only if they transact[ed] business in the District in connection with the operative facts of this action. 14 Naartex puts forward three possible contacts that they say establish the basis for personal jurisdiction over the defendants. First, they point to an office located in the District, operated by defendant American National Resources Company, where defendant Michigan Wisconsin Pipeline Company lists its name on the door and maintains a D.C. telephone listing. See Naartex Brief at 20-21. Yet Naartex has failed to allege any activities emanating from this office that gave rise to its claims in this case. Furthermore, according to the uncontradicted affidavit of Daniel F. Collins, the office monitor[s] legislative and regulatory matters and maintain[s] official contacts with the Congress and the executive branch. Joint Appendix of Appellees (J.A.A.) at 31. 15 Until recently, we thought--as the district court here ruled--that under the law of the District of Columbia, personal jurisdiction could not be founded upon any kind of government contacts, i.e., getting information from or giving information to the government, or getting the government's permission to do something. Investment Co. Institute v. United States, 550 F.Supp. 1213, 1216-17 (D.D.C.1982); see Naartex Consulting Corp., 542 F.Supp. at 1199; see also Fandel v. Arabian American Oil Co., 345 F.2d 87, 89 (D.C.Cir.1965); Ramamurti v. Rolls-Royce, Ltd., 454 F.Supp. 407, 410-11 (D.D.C.1978), aff'd mem., 612 F.2d 587 (D.C.Cir.1980). Indeed, in 1978, the District of Columbia Court of Appeals, sitting en banc, said: 16 to permit our local courts to assert personal jurisdiction over nonresidents whose sole contact with the District consists of dealing with a federal instrumentality not only would pose a threat to free public participation in government, but also would threaten to convert the District of Columbia into a national judicial forum. 17 Environmental Research International, Inc. v. Lockwood Greene Engineers, Inc., 355 A.2d 808, 813 (D.C.1976). That holding would certainly preclude personal jurisdiction over American Natural Resources and Michigan Wisconsin Pipeline in this case. Two years later, however, a panel of the same court appeared to limit the government contacts exception to activities implicating first amendment rights. See Rose v. Silver, 394 A.2d 1368, 1373-74 (D.C.1978). In denying rehearing en banc in the Rose case, the full court failed to explain or reconcile the apparent conflict with the Environmental Research opinion, one judge finding none, and two other judges calling for the explicit rejection of the panel opinion in Rose. See Rose v. Silver, 398 A.2d 787 (D.C.1979). Since that time, the court has failed to clarify any possible conflict. Inasmuch as the denial of rehearing is evidence that no irreconcilable tension exists between the en banc opinion and a subsequent panel opinion, and considering that a panel of the District of Columbia Court of Appeals is prohibited from issuing an opinion which conflicts materially with a prior decision of [the full] court as this may be done only by the court sitting en banc, Rose v. Silver, 398 A.2d 787, 787 (D.C.1979) (denying petition for rehearing) (citing M.A.P. v. Ryan, 285 A.2d 310 (D.C.1971)), if it were necessary to determine what law controls today in the District of Columbia, we would still be hesitant to conclude that the clear holding against governmental contacts as a basis for personal jurisdiction in Environmental Research no longer controls. See Bernhardt v. Polygraphic Co. of America, 350 U.S. 198, 204-05, 76 S.Ct. 273, 27677, 100 L.Ed. 199 (1956); id. at 209-12, 76 S.Ct. at 279-81 (Frankfurter, J., concurring). 18 Fortunately, if there is any tension between Environmental Research and Rose, we need not resolve it, because in this case all relevant activities upon which Naartex seeks to base its claim--contacts upon which they must also rely to establish long-arm jurisdiction under the section 423(a)(1) transacting business provision, see, e.g., Berwyn Fuel, Inc. v. Hogan, 399 A.2d 79, 80 (D.C.1979) (per curiam); Bueno v. La Compania Peruana de Radiodifusion, S.A., 375 A.2d 6, 9 (D.C.1977); D.C.Code Sec. 13-423(b)--implicate the first amendment guarantee to petition the Government for redress of grievances and so would qualify for exemption under the Rose test as well. U.S. Const. amend. I. Naartex contends that American Natural Resources and Michigan Wisconsin made personal appearances before the Interior Department as a part of their allegedly fraudulent scheme, and that this activity forms the basis for personal jurisdiction. Naartex Brief at 21. These appearances, made in an attempt to influence government action as to lease W-50394, undoubtedly qualify as exercises in petitioning the government. See, e.g., California Motor Transport Co. v. Trucking Unlimited, 404 U.S. 508, 510, 92 S.Ct. 609, 611, 30 L.Ed.2d 642 (1972) (Certainly the right to petition extends to all departments of Government.); Doe v. McMillan, 566 F.2d 713, 718 (D.C.Cir.1977) (This right is not limited to petitioning Congress but extends to administrative agencies and to the courts.), cert. denied, 435 U.S. 969, 98 S.Ct. 1607, 56 L.Ed.2d 59 (1978). 19 Further, Naartex claims that American Natural Resources and Michigan Wisconsin made their administrative appearances not in order to engage in privileged lobbying activities, but simply to protect the[ir] lease. Naartex Brief at 21. However, the companies' defense of their rights before a governmental body is no less a petition simply because they sought to protect their proprietary interests from an adverse regulatory decision, or because Naartex in this action seeks to strip them of those very interests. A different case might be presented had Naartex made credible and specific allegations in the district court that the companies had used the proceedings as an instrumentality of the alleged fraud. The hour has passed for Naartex to raise such allegations now. 14 20 Finally, Naartex claims that RSC has submitted to service of process in the District by registering to do business here. Naartex Brief at 21. As we noted above, however, Naartex must also show that RSC's contacts with the District form at least part of the basis for its claims. Naartex has failed to do so here. 21 We also note that Naartex lists thirteen private defendants in its complaint--all nonresidents of the District--but alleges no contacts with the District concerning ten of them, beyond the bald speculation that these ten were alleged co-conspirators. Id. at 22. Such a conclusionary statement does not constitute the prima facie showing necessary to carry the burden of establishing personal jurisdiction. See, e.g., McLaughlin v. McPhail, 707 F.2d 800, 806 (4th Cir.1983) (bare allegation of fraudulent conspiracy insufficient); Greenspun v. Del E. Webb Corp., 634 F.2d 1204, 1208 n. 5 (9th Cir.1980) (a plaintiff must allege specific acts connecting defendant with the forum); Lehigh Valley Industries, Inc. v. Birenbaum, 527 F.2d 87, 93-94 (2d Cir.1975) (the bland assertion of conspiracy or agency is insufficient to establish [personal] jurisdiction). 22 Naartex next asserts that the district court committed reversible error by denying permission to conduct additional discovery for the purpose of establishing personal jurisdiction. Discovery under the Federal Rules of Civil Procedure is, of course, broad in scope and freely permitted. See Fed.R.Civ.P. 26(b)(1) advisory committee note. At the same time, however, [a] district court has broad discretion in its resolution of discovery problems that arise in cases pending before it. In re Multi-Piece Rim Products Liability Litigation, 653 F.2d 671, 679 (D.C.Cir.1981). The district court did not abuse its discretion when, as here, Naartex had ample opportunity to take discovery, 15 Zerilli v. Smith, 656 F.2d 705, 716 (D.C.Cir.1981), and the pleadings contained no allegations of specific facts that could establish the requisite contacts with the District, see McLaughlin v. McPhail, 707 F.2d at 807 (Finding no prima facie showing of conspiracy .... the district court properly exercised its discretion in denying the discovery); Lehigh Valley Industries, 527 F.2d at 93-95 (no abuse of discretion in the denial of discovery in face of the bland assertion of conspiracy). We accordingly uphold the district court's determination that the private defendants were not subject to personal jurisdiction in the district, and its denial of further discovery. 16 23 We also approve the district court's finding that these defendants are indispensable parties within the ambit of Fed.R.Civ.P. 19(b). Numerous cases hold that an action seeking rescission of a contract must be dismissed unless all parties to the contract, and others having a substantial interest in it, can be joined. Acton Co. v. Bachman Foods, Inc., 668 F.2d 76, 81-82 (1st Cir.1982); see Northrop Corp. v. McDonnell Douglas Corp., 705 F.2d 1030, 1044 (9th Cir.), cert. denied, --- U.S. ----, 104 S.Ct. 156, 77 L.Ed.2d ---- (1983); Crouse-Hinds Co. v. Internorth, Inc., 634 F.2d 690, 701 (2d Cir.1980); Chiodo v. General Waterworks Corp., 380 F.2d 860, 866-67 (10th Cir.), cert. denied, 389 U.S. 1004, 88 S.Ct. 562, 19 L.Ed.2d 599 (1967). More specifically, parties who hold royalty interests, assignments, or interests in the title of federal leases, in the absence of special circumstances not present here, are indispensable parties in an action to cancel the lease or to try title to the lease. See, e.g., Doty v. St. Mary Parish Land Co., 598 F.2d 885, 887-88 (5th Cir.1979); Lomayaktewa v. Hathaway, 520 F.2d 1324, 1325-26 (9th Cir.1975), cert. denied sub nom. Susenkewa v. Kleppe, 425 U.S. 903, 96 S.Ct. 1492, 47 L.Ed.2d 752 (1976). All private defendants in this action hold proprietary interests in lease W-50394, which Naartex seeks to cancel. Thus these defendants are indispensable parties, and the district court properly refused to proceed with the action in their absence, considering the availability of an alternative forum in Wyoming where personal jurisdiction might be achieved. See Fed.R.Civ.P. 19(b). Venue and Transfer 24 Naartex contends that even if the district court lacks personal jurisdiction over the private defendants, the dismissal of the action constitutes an abuse of discretion. Instead, Naartex argues, the district court should have transferred the case to Wyoming, where personal jurisdiction and venue would lie. 25 We note, to begin with, that venue for this action does not lie in the District of Columbia. When, as here, subject matter jurisdiction is not founded solely on diversity of citizenship, venue lies only in the judicial district where all defendants reside, or in which the claim arose .... 28 U.S.C. Sec. 1391(b). Because no defendants in this action, except perhaps the Secretary of Interior, reside in the District of Columbia, and because Naartex's claim did not arise in the District of Columbia, 17 venue does not lie here. 26 Naartex nevertheless asserts that the district court was obliged to transfer this case pursuant to 28 U.S.C. Sec. 1406(a), which provides that [t]he district court of a district in which is filed a case laying venue in the wrong division or district shall dismiss, or if it be in the interest of justice, transfer such case to any district or division in which it could have been brought. 27 A court may transfer a case to another district even though it lacks personal jurisdiction over the defendants. See, e.g., Goldlawr, Inc. v. Heiman, 369 U.S. 463, 466, 82 S.Ct. 913, 915, 8 L.Ed.2d 39 (1962). The decision whether a transfer or a dismissal is in the interest of justice, however, rests within the sound discretion of the district court. See, e.g., Cook v. Fox, 537 F.2d 370, 371 (9th Cir.1976); Hayes v. RCA Service Co., 546 F.Supp. 661, 665 (D.D.C.1982). See generally 15 Wright, Miller & Cooper, Federal Practice and Procedure Sec. 3827, at 170 (1976). We find that the district court did not abuse its discretion by dismissing this action, because, as explained below, Naartex failed to show that its claims--both the implied statutory right of action and the common law fraud claims--could properly be heard in any federal court. In light of the substantive problems with its asserted claims, Naartex's additional objection that the case should have been transferred to another federal court is likewise without merit. 28 First, the Mineral Lands Leasing Act of 1920 does not create an implied right of action against the private defendants. As noted many times, when determining whether an implied right of action exists under a federal statute, legislative intent is the dispositive factor. See, e.g., Jackson Transit Authority v. Local Division 1285, Amalgamated Transit Union, 457 U.S. 15, 22, 102 S.Ct. 2202, 2206, 72 L.Ed.2d 639 (1982); Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 24, 100 S.Ct. 242, 249, 62 L.Ed.2d 146 (1979). 29 In enacting the Mineral Lands Leasing Act, Congress did not express any intention to create a statutory private right of action to enforce compliance with the disclosure requirements found in the DOI lease lottery regulations. Congress' central purpose in enacting the Mineral Leasing Act was the establishment of an orderly system by which the federal government could control the leasing of public land: 30 Prior to 1920, oil and gas rights in public lands were acquired in the same way as rights in other minerals--by a form of location. One staked out a location and prospected for oil or other minerals; upon making a discovery, he became entitled to a patent to the land as well as the minerals. 31 .... 32 The Mineral Leasing Act of 1920 changed the procedure for acquiring oil and gas rights in public lands: The Secretary was empowered to issue prospecting permits and required, in the event a discovery was made under the permit, to issue a lease .... 33 Udall v. Tallman, 380 U.S. 1, 21-22, 85 S.Ct. 792, 803-804, 13 L.Ed.2d 616 (1965); 18 see also California Co. v. Udall, 296 F.2d 384, 388 (D.C.Cir.1961) (The Act was intended to provide wise development of these natural resources and to obtain for the public a reasonable financial return on assets that 'belong' to the public.). Accordingly, the statutory scheme confers upon the Secretary of Interior authority to administer the leasing program as the statutory guardian of this public interest. Id. (footnote omitted). The Secretary, and not the citizenry at large, was intended to oversee the proper allocation and development of the public lands. 34 Furthermore, section 27 of the Act expressly authorizes cancellation of a lease, acquired in violation of the Act, only through an appropriate proceeding instituted by the Attorney General. 30 U.S.C. Sec. 184(h)(1). Considering the elemental canon of statutory construction that where a statute expressly provides a particular remedy or remedies, a court must be chary of reading others into it, Transamerica Mortgage Advisors, Inc. v. Lewis, 444 U.S. 11, 19, 100 S.Ct. 242, 246, 62 L.Ed.2d 146 (1979), we hold that no implied cause of action of the sort Naartex asserts exists under the Mineral Leasing Act. 19 See National Railroad Passenger Corp. (Amtrak) v. National Association of Railroad Passengers, 414 U.S. 453, 458, 94 S.Ct. 690, 693, 38 L.Ed.2d 646 (1974) (when legislation expressly provides a particular remedy or remedies, courts should not expand the coverage of the statute to subsume other remedies); Pullman v. Chorney, 712 F.2d 447, 449-50 (10th Cir.1983) (finding no private right of action under the Mineral Lands Leasing Act because the Act itself implies that there should be no further private remedy since 30 U.S.C. Sec. 184(h)(1) (1976) authorizes the Attorney General to bring an action for the forfeiture of any lease acquired in violation of the Act.). 35 Naartex in its brief also objects to the district court's failure to determine whether its amended complaint stated ... a cause of action for fraud, misappropriation or unjust enrichment under the common law. We believe, however, that the district court did not abuse its discretion when it failed to address, and thereby sub silentio failed to transfer, the common law fraud claim. 36 In the first place, Naartex itself failed to make clear in the district court that it sought to pursue a claim for common law fraud separate and apart from its private right of action under the Mineral Lands Leasing Act. For example, the district court concluded that Naartex had concede[d] that its action against the private defendants assumes the existence of an implied private right of action in the Mineral Leasing Act of 1920. 542 F.Supp. at 1202. To reach this conclusion, the district court relied upon Naartex's somewhat enigmatic statement that the defendants will not be required under the Act to disgorge these illegal proceeds unless the court recognizes a private right of action under the Act and enters a judgment based on common law fraud. Reply in Support of Joint Motion for Russell Huff to Intervene or Be Joined as a Party Plaintiff at 2 (quoted in Naartex, 542 F.Supp. at 1202). Naartex made numerous other statements in the district court that appear to place complete reliance upon a private statutory right of action in support of its claims against the private defendants. See, e.g., id. at 2-3 (Naartex and Huff are now seeking two basic forms of relief. First is the implication of a private right of action under the Mineral Leasing Act of 1920 .... Second, .... plaintiff and Huff are also seeking judicial review of the decisions of the Secretary of the Interior denying plaintiff a hearing and cancellation of the lease.); Opposition of Naartex to Defendants' Motions to Dismiss the Amended Complaint at 15 (plaintiff's cause of action is not of the type traditionally relegated to state law .... state law could not provide a remedy for plaintiff's harms.); id. at 21 (Naartex's and Huff's property right adheres [sic] in the administrative process itself, i.e., the right to a fair, untainted, oil and gas leasing program as prescribed in the Mineral Leasing Act and the regulations promulgated pursuant to the Act. ) (emphasis added). 37 Moreover, Naartex's amended complaint does not make out any clear allegations of common law fraud. Cf. Fed.R.Civ.P. 9(b) (the circumstances constituting fraud or mistake shall be stated with particularity). Instead, in its complaint Naartex repeatedly alleged regulatory violations in support of its claims against the private defendants. See Amended Complaint p 77 (RSC's and Albrecht's lease applications were invalid under the applicable regulations); id. p 87 (American Natural Resources' and Michigan Wisconsin's interests in lease obtained in violation of Department regulations); id. p 116 (RSC violat[ed] Department prohibitions against multiple filings); id. p 123 (RSC, Harrell, Michigan Wisconsin, American Natural Resources, and General American Oil Co. conspired to violate Department regulations governing the issuance and transfer of federal mineral leases). At best, Naartex's complaint intertwined its purported common law claims and its asserted private statutory right of action to such a degree as to shroud its common law fraud claim from the view of a reasonably diligent eye. We therefore find that the district court did not abuse its discretion in failing expressly to address the common law claims. 38 Furthermore, even if the district court had discerned the separate claim for common law fraud, it would properly have dismissed the claim. Because the court's federal question jurisdiction was predicated upon a non-existent private right of action under the Mineral Lands Leasing Act, the district court should dismiss any state claims pendent to the defective federal claim. As the Supreme Court set it down, in the absence of diversity jurisdiction, if the federal claims are dismissed before trial, even though not insubstantial in a jurisdictional sense, the state claims should be dismissed as well. United Mine Workers of America v. Gibbs, 383 U.S. 715, 726, 86 S.Ct. 1130, 1139, 16 L.Ed.2d 218 (1966). 39 Of course, there might have been an independent jurisdictional basis for hearing the state claims if diversity jurisdiction had been adequately established in the Naartex amended complaint. In its amended complaint, however, Naartex neither alleged that 28 U.S.C. Sec. 1332 extended jurisdiction to the district court over this case, nor did it plead the requisite facts to establish complete diversity. 20 Because federal courts are of limited jurisdiction, there is a presumption against the existence of diversity jurisdiction. See 13 Wright, Miller & Cooper, Federal Practice and Procedure Secs. 3522, 3611 (1975). Accordingly, the party seeking the exercise of diversity jurisdiction bears the burden of pleading the citizenship of each and every party to the action. See, e.g., Owen Equipment & Erection Co. v. Kroger, 437 U.S. 365, 98 S.Ct. 2396, 57 L.Ed.2d 274 (1978); Anderson v. Watt, 138 U.S. 694, 702, 11 S.Ct. 449, 451, 34 L.Ed. 1078 (1891). After three attempts, however, and after notice that diversity jurisdiction should be shown, Naartex failed to meet this burden. 21 We therefore find the district court would have been justified in dismissing the common law claim on this alternative ground. 40 Finally, we note that Naartex did not allege all the elements necessary to make out a common law fraud action. In order to state a claim for common law fraud, the plaintiff must allege that the fraud caused him damage: neither fraud without damage nor damage without fraud is sufficient to support an action. 37 Am.Jur.2d, Fraud & Deceit Sec. 12, at 34; see Securities and Exchange Commission v. Capital Gains Research Bureau, Inc., 375 U.S. 180, 192, 84 S.Ct. 275, 283, 11 L.Ed.2d 237 (1962); Mariner Water Renaturalizer of Washington, Inc. v. Aqua Purification Systems, Inc., 665 F.2d 1066, 1070-71 (D.C.Cir.1981). Furthermore, damages are restricted in all cases to such damages as were the natural and proximate consequences, or the direct consequences, of the fraud, and to such damages as can be clearly defined and ascertained. 37 Am.Jur.2d, Fraud & Deceit Sec. 343, at 461; see Day v. Avery, 548 F.2d 1018, 1028 (D.C.Cir.1976), cert. denied, 431 U.S. 908, 97 S.Ct. 1706, 52 L.Ed.2d 394 (1977). 41 Naartex, however, has failed to allege any causal connections between the [fraud] and the injury which [Naartex] charges. Day v. Avery, 548 F.2d at 1028. This court recently described the workings of the simultaneous oil and gas lottery: 42 All applications filed before the deadline are deemed to have been filed simultaneously, and the BLM office holds a drawing early in each month to award the leases. Three applications are drawn for each parcel. If the person filing the first-drawn application qualifies to hold the lease, the lease is awarded to that person; if not, it is awarded to the second-drawn applicant, and so forth. 43 Lowey v. Watt, 684 F.2d 957, 960 (D.C.Cir.1982). Russell Huff, whose interest Naartex seeks to represent in this action, was not one of the three applicants selected in the 1975 lottery for lease W-50394. Accordingly, in the absence of the alleged fraud, the lease would have been assigned to the second or third drawn applicants, and not to Huff. Thus, the alleged fraud could possibly have caused Huff any damage only if the second and third drawn applicants were also unqualified to receive lease W-50394, in which case the lands under consideration would again be put up for lease in the next drawing. Geosearch, Inc. v. Andrus, 508 F.Supp. 839, 843 (D.Wyo.1981). Because Naartex did not allege that the second and third drawn applicants were not qualified to receive lease W-50394, therefore, the complaint failed to make out the causation and damage elements necessary to support a claim for common law fraud. 22 44 To sum up, we find that the district court acted within its sound discretion when it dismissed the claims asserted against the private defendants. We now turn to review the district court's dismissal of the claims against the government.