Court Opinion

ID: 24246
Source: CourtListenerOpinion
Date Created: 2010-04-25 08:19:39+00
Date Added: 2024-06-11T15:04:40.109891
License: Public Domain

Revised May 16, 2001

                       UNITED STATES COURT OF APPEALS
                            FOR THE FIFTH CIRCUIT

                   ________________________________

                             No. 99-60591
                   ________________________________

                         SUBMERSIBLE SYSTEMS, INC.,

                                    Plaintiff/Appellee/Cross-Appellant,

                                        v.

                  PERFORADORA CENTRAL, S.A. de C.V.,

                                    Defendant/Appellant/Cross-Appellee.

           _____________________________________________

           Appeals from the United States District Court
              for the Southern District of Mississippi
           _____________________________________________

                                 May 4, 2001

Before FARRIS*, JOLLY, and DAVIS, Circuit Judges.

W. EUGENE DAVIS, Circuit Judge:

      Submersible Systems, Inc. (“SSI”) sued Perforadora Central,

S.A. de C.V. (“Central”) in the southern district of Mississippi

for the conversion of some of its equipment aboard a vessel owned

by   Central   while    that   vessel    was   docked   in   a   Mexican   port.

Following a bench trial, the district court awarded SSI more than

$4.25 million in damages.       Because the district court did not have

personal jurisdiction over Central, we vacate the judgment of the

      *
       Circuit Judge of the Ninth Circuit, sitting by designation.
district court and remand with instructions to dismiss this case.

                                        I.

      SSI is a Louisiana corporation that operates small, remotely-

operated,   submersible      vehicles    used    in    underwater      inspection,

construction, and surveying.            In the latter part of 1996, SSI

contracted with Quantum Ingenieros, S.A. de C.V. (“Quantum”) to

provide   the   submersible    vehicles        for    Quantum’s   inspection     of

certain oil and gas pipelines located in Mexican waters.                  As part

of this project, Quantum also contracted with Central to transport

the   equipment,   including    SSI’s        submersible     vehicles,    and   the

personnel to be used to inspect the pipelines.                To carry out this

contract, Central dispatched the M/V DON FRANCISCO to Morgan City,

Louisiana in November of 1996 to pick up SSI’s equipment and

transport it to its destination in Mexico.

      Quantum   was   late   paying     both    SSI    and   Central    for   their

services, and Central twice brought its vessel back to port during

the early months of 1997 to force Quantum to pay what it owed.                    By

early June of 1997 Quantum owed both SSI and Central substantial

sums for their services on the pipeline inspection project.                     As a

result of Quantum’s indebtedness, Quantum and Central agreed to end

the charter of the DON FRANCISCO on June 23, 1997 and on that day

the DON FRANCISCO returned to the port of Dos Bocas, Mexico.                     At

that time, SSI had two employees, one of its submersible vehicles,

and some other related equipment on board the DON FRANCISCO.                    All

of SSI’s equipment was clearly marked as belonging to SSI.

                                      -2-
     At about 9 am on the morning of the 23rd, the captain of the

DON FRANCISCO woke the two SSI employees and told them that SSI’s

equipment had been seized to force Quantum to pay Central what it

was owed for the charter of its vessel.     Shortly thereafter, one of

Central’s agents boarded the vessel and inspected the immigration

papers of the two SSI employees.         Seeing that they were out of

order, the agent reported the two men to the Mexican immigration

authorities.   The two SSI employees then left the vessel and spent

the day getting their immigration papers in order.          While they were

gone, Central offloaded SSI’s equipment from the DON FRANCISCO and

put it into a locked yard at the port.

     Wolfgang Burnside, the owner of SSI, arrived in Mexico on June

26, 1997 to demand the release of SSI’s equipment. Central refused

to release the equipment and instead deposited it with the Mexican

Ministerio Publico.       In later proceedings before the Ministerio

Publico, Central asserted that the seized equipment belonged to

Quantum and should be held pending an investigation of Quantum for

its failure to pay its debts.         Central was eventually appointed

custodian of SSI’s equipment for the Ministerio Publico and moved

the equipment to Central’s yard in Ciudad del Carmen, Mexico, where

it was exposed to the elements.

     After SSI filed this lawsuit, Central released the equipment

in March of 1999 and SSI transported it back to the United States.

However,   because   of   prolonged   exposure   to   the   elements,   the

equipment had been rendered worthless.

                                   -3-
                                  II.

     While it was attempting to get Central to return its property,

SSI discovered that Central was building a marine drilling rig at

the TDI Halter shipyard in Pascagoula, Mississippi. SSI then filed

suit in the southern district of Mississippi, in May of 1998, for

the conversion of its equipment by Central.       SSI’s suit invoked

both the admiralty jurisdiction and the diversity jurisdiction of

the district court. SSI prayed for attachment of the rig, pursuant

to Rule B of the Supplemental Rules for Certain Admiralty and

Maritime Claims or pursuant to Rule 64 of the Federal Rules of

Civil Procedure and Mississippi law.

     Central responded to the suit by moving to dismiss for lack of

personal jurisdiction. Central argued that given the nature of the

suit, it had insufficient contacts with Mississippi to subject it

to suit in Mississippi.    Central argued against attachment of its

rig pursuant to Rule B by arguing that the district court had no

admiralty jurisdiction, or in the alternative that it could be

found within the southern district of Mississippi and so attachment

under Rule B would be improper.    Central argued against attachment

pursuant to Rule 64 and Mississippi law on the grounds that it was

not subject to suit in Mississippi.     Central also moved to dismiss

on the grounds of forum non conveniens.

     The district court denied both motions.       It ruled that the

nature of Central’s contacts with Mississippi made it subject to

suit in Mississippi.      The district court ruled that admiralty

                                  -4-
jurisdiction existed in this case, but denied attachment under Rule

B on two separate grounds.   The district court first held that as

Central was subject to jurisdiction in the southern district of

Mississippi, it could also be found within the southern district of

Mississippi.   The district court next held, in the alternative,

that SSI had not filed the affidavit required by Rule B regarding

SSI’s efforts to locate Central within the southern district of

Mississippi.   Having found Central subject to suit in Mississippi,

the district court allowed attachment of Central’s rig pursuant to

Rule 64 so long as SSI posted a $1 million bond.1              Concerning the

forum non conveniens issue, the district court found that Mexico

did not provide a civil remedy for conversion, and thus was not an

adequate alternative   forum.     In    ruling     on   both    motions,   the

district court also ruled that United States general maritime law,

and not Mexican law, should apply to the case.

     Following a three day bench trial, the district court found

that Central had converted SSI’s equipment.             The district court

awarded SSI actual damages of $289,734.62, pre-judgment interest of

$48,211.84, consequential damages of $106,520.50, lost profits of

$2,311,140.00, and punitive damages of $1,500,000.00.                Central

moved for a new trial on the grounds that it had newly discovered

evidence from the captain of the DON FRANCISCO concerning the

events of June 23, 1997.     The district court denied the motion,

     1
     SSI never    posted   the   bond   and   so    never      perfected   its
attachment.

                                  -5-
holding that the captain’s testimony was not credible, and that it

was suspicious that he was located just a few days following the

trial after being missing since the incident on June 23, 1997.

Central then took this appeal.

     Central argues on appeal that, 1) it is not subject to

personal jurisdiction in Mississippi, 2) the district court has no

admiralty jurisdiction in this case, 3) the district court should

have dismissed this case on the grounds of forum non conveniens, 4)

the district court should have applied Mexican law to this case, 5)

the district court erred in its damages calculations in several

respects, and 6) the district court should have granted it a new

trial.   SSI cross-appeals for an award of its costs and for

attachment of Central’s rig should we find that the district court

did not have jurisdiction over Central.

                                 III.

     We begin with the issue we find dispositive, namely whether

the district court had jurisdiction over Central.      Because the

facts concerning Central’s contacts with Mississippi and the United

States are undisputed, the issue of personal jurisdiction in this

case presents a question of law that we review de novo.      World

Tanker Carriers Corp. v. M/V YA MAWLAYA, 99 F.3d 717, 720 (5th Cir.

1996).

                                  A.

     Absent a federal statute that provides for more expansive

personal jurisdiction, the personal jurisdiction of a federal

                                 -6-
district court is coterminous with that of a court of general

jurisdiction of the state in which the district court sits.             Fed.

R. Civ. P. 4(k)(1).    For a federal district court in a particular

state to exercise personal jurisdiction over a defendant, that

exercise of jurisdiction must first be proper under that state’s

long-arm statute.      If   the   state   long-arm   statute   allows    the

district court to exercise personal jurisdiction, the exercise of

personal jurisdiction must also be proper under the Due Process

Clause of the Fourteenth Amendment.

     The Mississippi long-arm statute provides, in relevant part,

     Any nonresident person, firm, general or limited
     partnership, or any foreign or other corporation not
     qualified under the Constitution and laws of this state
     as to doing business herein, who shall make a contract
     with a resident of this state to be performed in whole or
     in part by any party in this state, or who shall commit
     a tort in whole or in part against a resident or
     nonresident of this state, or who shall do any business
     or perform any character of work or service in this
     state, shall by such act or acts be deemed to be doing
     business in Mississippi and shall thereby be subjected to
     the jurisdiction of the courts of this state.

Miss. Code § 13-3-57.       A plaintiff who is not a resident of

Mississippi, such as SSI, may not take advantage of the contract

portion of the Mississippi long-arm statute.          Lifeline Ambulance

Services, Inc. v. Laidlaw, Inc., 16 F. Supp. 2d 686, 688 (S.D. Miss.

1998).   Any tort committed by Central in this case was committed

solely in Mexico.     Thus, SSI may not take advantage of the tort

portion of the Mississippi long-arm statute.         By arranging to have

a drilling rig built in a shipyard in Pascagoula, it could be

                                   -7-
argued that Central did business in Mississippi.      However, a non-

resident plaintiff like SSI may not take advantage of the doing

business portion of the Mississippi long-arm statute.        Herrley v.

Volkswagen of America, Inc., 957 F.2d 216, 218 (5th Cir. 1992);

Smith v. DeWalt Prods. Corp., 743 F.2d 277, 279 (5th Cir. 1984);

Lifeline, 16 F. Supp. 2d at 688.   Thus, Central is not subject to the

personal   jurisdiction   of   the   Mississippi   courts    under   the

Mississippi long-arm statute.

     Nor would a district court’s exercise of personal jurisdiction

over Central in Mississippi comport with the requirements of the

Due Process Clause of the Fourteenth Amendment.             Due process

requires that a foreign corporate defendant, “establish sufficient

contacts or ties with the state of the forum to make it reasonable

and just according to our traditional conception of fair play and

substantial justice to permit the state to enforce the obligations

which [the defendant] has incurred there.”    International Shoe Co.

v. Washington, 326 U.S. 310, 320, 66 S. Ct. 154, 90 L. Ed. 95 (1945);

Shaffer v. Heitner, 433 U.S. 186, 207, 97 S. Ct. 2569, 53 L. Ed. 2d
683 (1977).   An exercise of personal jurisdiction, even when a

foreign corporate defendant has established sufficient contacts

with a forum, must also be reasonable in light of the forum’s

interest in the litigation in question.      Asahi Metal Indus. Co.,

Ltd. v. Superior Court of California, Solano County, 480 U.S. 102,

113-14, 107 S. Ct. 1026, 94 L. Ed. 2d 92 (1987).

     The extent of the contacts that a foreign corporate defendant

                                 -8-
must establish with a forum to satisfy due process concerns differs

depending on the nature of the litigation. In this case, Central’s

contacts with the state of Mississippi are wholly unrelated to

SSI’s claim that Central converted SSI’s equipment in Mexico. When

a plaintiff’s claim does not arise out of a defendant’s contacts

with a forum, then the defendant’s contacts with the forum must be,

“continuous and systematic” to satisfy the requirements of due

process.     Helicopteros Nacionales de Colombia, S.A. v. Hall, 466
U.S. 408, 416, 104 S. Ct. 1868, 80 L. Ed. 2d 404 (1984); Perkins v.

Benguet Consol. Mining Co., 342 U.S. 437, 445, 72 S. Ct. 413, 96
L. Ed. 485 (1952); Wilson v. Belin, 20 F.3d 644, 647 (5th Cir.

1994).

     As commentators have recognized, the continuous and systematic

contacts test is a difficult one to meet, requiring extensive

contacts between a defendant and a forum.     16 JAMES WM. MOORE ET

AL., MOORE’S FEDERAL PRACTICE ¶ 108.41[3] (3d ed. 1999).         The

Supreme Court has upheld an exercise of personal jurisdiction when

the suit was unrelated to the defendant’s contacts with a forum

only once.    Id.   Purchasing equipment in a forum and traveling to

that forum on related business are, without more, insufficient to

confer personal jurisdiction when the plaintiff’s cause of action

does not arise out of those purchasing activities.     Helicopteros,
466 U.S. at 417.

     Central’s only contacts with the state of Mississippi grow out

of its construction of a marine drilling rig at the TDI Halter

                                  -9-
shipyard in Pascagoula. Central contracted with TDI Halter for the

construction of the rig, and also maintained an office at the

shipyard with three employees to monitor the construction.2   These

are not the sort of continuous and systematic contacts that would

allow the district court to take jurisdiction over Central in this

case.

     In Helicopteros, the Supreme Court considered a tort claim

against a Colombian helicopter operator arising out of a helicopter

crash in Colombia. The Colombian company had negotiated a contract

in Houston, Texas to provide for the services that led to the

crash.   The Colombian company had also purchased about 80% of its

fleet of helicopters from a Texas company, had sent its pilots to

Texas for training, had sent members of its management to Texas for

technical consultations in connection with the purchase of its

fleet, and had accepted payment for the services that led to the

     2
      SSI has argued that Central conceded personal jurisdiction in
its opposition to attachment of the drilling rig under Rule B.
Central did admit, as part of that opposition, to the contacts with
Mississippi which are discussed above. Central argued that those
contacts meant that it could be found within the southern district
of Mississippi and so attachment under Rule B would be improper.
However, Central specifically stated that it was not thereby
conceding the issue of personal jurisdiction outside of the context
of Rule B attachment.      Central stated, “Perforadora does not
dispute that the presence of the rig in the district itself is
sufficient to satisfy general personal jurisdiction in the district
for the purposes of Rule B as Rule B is not subject to common law
due process constraints. Maritime attachment warrants consideration
of a more flexible application of the doctrines of due process
consistent with its historical functions.” 4th Supplemental R. at
80 (emphasis added). Whether Central is correct or not concerning
what due process requires in the Rule B attachment context, Central
cannot be said to have conceded the issue of personal jurisdiction.

                               -10-
crash in funds drawn on a Texas bank.       In spite of all these

contacts with the state of Texas, the Supreme Court held that they

were insufficient to allow the Texas courts to take jurisdiction

over the Colombian company, considering that the litigation was

unrelated to the company’s contacts with Texas.     Id. at 416.   In

this case, Central, a Mexican company that has its headquarters in

Mexico and that does business almost exclusively in Mexico, made

contact with Mississippi only by virtue of its arrangement to

construct one marine drilling rig in a shipyard in Mississippi.

These contacts with Mississippi are even less substantial than

those of the Colombian company with Texas in Helicopteros.

     The Mississippi long-arm statute does not allow a federal

district court sitting in Mississippi to take jurisdiction over

Central in this case.   Even if it did, such an exercise of personal

jurisdiction would be inconsistent with the due process clause of

the Fourteenth Amendment.

                                 B.

     SSI argues, as an alternative ground for supporting the

judgment entered by the district court in its favor, that Federal

Rule of Civil Procedure 4(k)(2) authorized the district court to

assume jurisdiction over Central.

     Rule 4(k)(2) provides,

     If the exercise of jurisdiction is consistent with the
     Constitution and laws of the United States, serving a
     summons or filing a waiver of service is also effective,
     with respect to claims arising under federal law, to
     establish personal jurisdiction over the person of any

                                -11-
     defendant who is not subject to the courts of general
     jurisdiction of any state.

Our court has previously held that claims falling within the

admiralty jurisdiction of the federal courts are claims arising

under federal law for the purposes of Rule 4(k)(2).           World Tanker,
99 F.3d at 722-23.3

     Rule 4(k)(2) applies to actions in which a federal court draws

its authority directly from federal law, and does not borrow it

from state law. The due process required in federal cases governed

by Rule 4(k)(2) is measured with reference to the Fifth Amendment,

rather   than   the   Fourteenth   Amendment.    That   is,   Rule   4(k)(2)

requires us to consider Central’s contacts with the United States

as a whole, and not just Central’s contacts with the state of

Mississippi.    Id. at 720; Busch v. Buchman, Buchman & O’Brien, 11
F.3d 1255, 1258 (5th Cir. 1994); United States v. Swiss Am. Bank,

Ltd., 191 F.3d 30, 36 (1st Cir. 1999).          If Central has sufficient

contacts with the United States, then the district court could have

exercised jurisdiction over Central pursuant to Rule 4(k)(2).

     In analyzing Central’s contacts with the United States, we

must keep in mind that this case does not arise out of Central’s

contacts with the United States.          All the events constituting

Central’s conversion of SSI’s equipment - the seizure aboard the

DON FRANCISCO, the unloading of the equipment at the port of Dos

     3
     We find Central’s contention that the district court lacked
admiralty jurisdiction in this case to be without merit.

                                   -12-
Bocas, and the proceedings before the Mexican Ministerio Publico -

took place in Mexico.        Therefore, Central’s contacts with the

United States must be, “continuous and systematic” to have allowed

the district court to take jurisdiction over Central pursuant to

Rule 4(k)(2).    Consolidated Dev. Corp. v. Sherritt, Inc., 216 F.3d
1286, 1292 (11th Cir. 2000); BP Chems., Ltd. v. Formosa Chem. &

Fibre Corp., 229 F.3d 254, 262-63 (3rd Cir. 2000).

     The record reflects very few contacts between Central and the

United States other than those related to the construction of the

rig in Pascagoula.     Central has an account at a Houston bank and

sends some employees to an offshore drilling conference in Houston

every year.     Central has purchased spare parts and vessels in the

United States, though to what extent is not clear from the record.

Central’s vessels have also occasionally called on United States

ports.    These contacts with the United States are, at best,

sporadic and of small consequence.         Central conducts no operations

in the United States, maintains no office in the United States

(other   than   the   one   which   is    maintained   solely   to   oversee

construction in Pascagoula), and owns no real or personal property

located in the United States.

     Because Central’s contacts with the United States are not

continuous and systematic, the district court had no authority to

assume jurisdiction over Central pursuant to Rule 4(k)(2).

                                     C.

     SSI, as part of its cross-appeal, has argued that if we find

                                    -13-
that the district court lacks personal jurisdiction over Central

then we should order attachment of Central’s rig under construction

in Pascagoula pursuant to Rule B and otherwise enforce the judgment

entered by the district court.       As we have explained, the district

court did not have jurisdiction over Central.               Nevertheless, we

decline to order attachment of Central’s rig pursuant to Rule B.

       Rule B of the Supplemental Rules for Certain Admiralty and

Maritime Claims provides, in relevant part,

       In an in personam action:
       (a) If a defendant is not found within the district, a
       verified complaint may contain a prayer for process to
       attach the defendant’s tangible or intangible personal
       property - up to the amount sued for - in the hands of
       garnishees named in the process.
       (b) The plaintiff or the plaintiff’s attorney must sign
       and file with the complaint an affidavit stating that, to
       the affiant’s knowledge, or on information and belief,
       the defendant cannot be found within the district.

Rule   B   allows   a   district   court    to   take   jurisdiction   over   a

defendant in an admiralty or maritime action by attaching property

of the defendant.        Great Prize, S.A. v. Mariner Shipping Pty.,

Ltd., 967 F.2d 157, 159 (5th Cir. 1992).            We have interpreted the

requirement of Rule B that the defendant not, “be found within the

district” as meaning that the defendant is neither subject to the

jurisdiction of the district court nor amenable to service of

process within the district. Heidmar, Inc. v. Anonima Ravennate di

Armamento Sp.A. of Ravenna, 132 F.3d 264, 268 (5th Cir. 1998);

LaBanca v. Ostermunchner, 664 F.2d 65, 67 (5th Cir. 1981).

       The district court gave two grounds for denying SSI’s motion

                                     -14-
to attach the rig pursuant to Rule B.      The district court held that

Central could be found within the southern district of Mississippi

because   its   contacts    with   Mississippi    made     it   subject    to

jurisdiction there.      The district court also held that SSI did not

submit the affidavit required by Rule B stating that Central could

not be found within the southern district of Mississippi.                   As

discussed above, we disagree with the district court’s conclusion

that Central’s contacts were sufficient to permit it to exercise

jurisdiction over this action.      Thus, the district court erred in

concluding that Central would be found within the southern district

of   Mississippi   for   the   purposes   of   Rule   B.    However,      that

conclusion does not mean that the district court erred in refusing

to attach Central’s rig pursuant to Rule B.

      Rule B requires that a plaintiff seeking attachment pursuant

to Rule B file an affidavit, as well as a verified complaint,

concerning the presence of the defendant within the district in

which the action is filed.      As the district court held, and as our

review of the record confirms, SSI did not file the required

affidavit with its verified complaint when it sought attachment of

Central’s drilling rig.        SSI has argued, on the basis of the

holding in Amstar Corp. v. M/V ALEXANDROS T., 431 F. Supp. 328 (D.

Md. 1977), that its verified complaint alone should suffice to

allow attachment of the rig pursuant to Rule B.        The district court

in Amstar did excuse the lack of an affidavit from the plaintiff in

that case given that the plaintiff also filed a verified complaint

                                   -15-
which stated that the defendant could not be found within the

district.    However, Amstar does not stand for the proposition that

a district court must excuse a plaintiff’s failure to file the

affidavit required by Rule B when the plaintiff also files a

verified complaint. We cannot say that the district court erred in

this case because it chose to enforce Rule B as it is written.

        The affidavit required by Rule B serves a useful purpose: it

assures the district court that the plaintiff has been diligent in

searching for the defendant within the district in which the action

is filed.     Oregon v. Tug Go Getter, 398 F.2d 873, 874 (9th Cir.

1968); West of England Ship Owners Mut. Ins. Ass’n. v. McAllister

Bros., Inc., 829 F. Supp. 122, 124 (E.D. Pa. 1993).   As the district

court said, the contacts that Central had with Mississippi raised

questions about whether Central could be found within the southern

district of Mississippi.     Thus, it was especially important that

SSI demonstrate that it had been diligent about searching for

Central and that SSI was not seeking attachment merely for purposes

of security or harassment.    There was good reason for the district

court to enforce Rule B as written and refuse to attach Central’s

rig.4

        4
     Because we decide that the district court did not have
personal jurisdiction over Central, we do not reach the other
issues raised by Central in its appeal, including the choice of law
question, the forum non conveniens issue, or the district court’s
calculation of damages.    We also do not reach the question of
whether ordering attachment of Central’s rig would be consistent
with the Supreme Court’s holding in Shaffer in light of the fact
that the district court did not otherwise have personal

                                 -16-
                               IV.

     For the reasons discussed above, Central was not subject to

the personal jurisdiction of the district court.   Because SSI has

failed to comply with the requirements of Rule B, we need not

consider whether the district court could have taken jurisdiction

over Central by attaching its property. Therefore, the judgment of

the district court is VACATED and this case is REMANDED with

instructions to DISMISS this case for lack of jurisdiction.

jurisdiction over Central.

                              -17-