Court Opinion

ID: 160484
Source: CourtListenerOpinion
Date Created: 2010-08-14 06:45:48+00
Date Added: 2024-06-11T09:44:00.177006
License: Public Domain

F I L E D
                                                                       United States Court of Appeals
                                                                               Tenth Circuit
                         UNITED STATES COURT OF APPEALS
                                                                               DEC 12 2000
                                    TENTH CIRCUIT
                                                                          PATRICK FISHER
                                                                                   Clerk

 ORIENT MINERAL, a Nevada
 corporation,

           Plaintiff-Counter-Defendant-
           Appellee,
 v.

 DAVID YUE, aka YIAOQUN YUE;
 SAREN GAOWA,
                                                            No. 99-4174
           Defendants,                                  (D.C. No. 98-CV-238)
                                                          (District of Utah)
 and

 BANK OF CHINA, a foreign Banking
 Institution doing business in the United
 States,

       Defendant-Cross-Claimant-
       Appellant.

                               ORDER AND JUDGMENT*

Before LUCERO, Circuit Judge, McWILLIAMS, Circuit Judge, and ALLEY**, Senior

       *
         This order and judgment is not binding precedent, except under the doctrines of
law of the case, res judicata, and collateral estoppel. The court generally disfavors the
citation of orders and judgments; nevertheless, an order and judgment may be cited under
the terms and conditions of 10th Cir. R. 36.3.

      Honorable Wayne E. Alley, Senior District Judge of the Western District of
       **

Oklahoma, sitting by designation.
District Judge.

       On April 3, 1998, Orient Mineral Company (“Orient”), a Nevada corporation, filed

a complaint in the United States District Court for the District of Utah, naming as

defendants the Bank of China (“Bank”), described in the caption of the complaint as a

foreign banking institution doing business in the United States, David Yue and Saren

Gaowa. The Bank was identified in the body of the complaint as a foreign banking

institution doing business in the United States with its main office in Los Angeles,

California.1 David Yue is described in the complaint as a citizen of the People’s Republic

of China, who was residing in Utah and owned property in Utah, and Saren Gaowa is

described as the spouse of David Yue and was also residing in Utah. It was alleged in

the complaint that jurisdiction was based on diversity of citizenship, 28 U.S.C. §§ 1331

and 1332, and that the amount in controversy exceeded $100,000.00. For the purposes of

this order and judgment, we need not set forth the four causes of action asserted by Orient

against the defendants.

       After answering the complaint2, the Bank filed a motion pursuant to Fed. R. Civ. P.

       On appeal, it is apparently agreed that the Bank is wholly owned by the People’s
       1

Republic of China, and is therefore an agency or instrumentality of a “foreign state,” and,
being such, a “foreign state” under the Foreign Sovereign Immunities Act (“FSIA”). 28
U.S.C. § 1603.
       2
        By amended answer, the Bank alleged, inter alia, that the district court lacked
subject matter jurisdiction and personal jurisdiction over it and that the purported service
of process was insufficient.

                                            -2-
12(c) asking for judgment on the pleadings based on the following: (1) the district court

lacked subject matter jurisdiction and personal jurisdiction under FSIA, 28 U.S.C. §§

1330, 1604; (2) venue was improper under FSIA, 28 U.S.C. § 1391(f); and (3) service of

process on the Bank was insufficient under FSIA, 28 U.S.C. § 1608 and the Hague

Convention. In support of that motion the Bank filed a memorandum brief with

supporting affidavits, to which Orient filed a brief in opposition.

       On July 19, 1999, the district court held that it did have subject matter jurisdiction

over the controversy, and that venue was properly in Utah, but that there was no proper

service of process on the Bank. In this latter connection, Orient had purported to serve

the Bank by serving the Chinese Consulate of the People’s Republic of China located in

San Francisco, California. The district court held that such did not comport with 28

U.S.C. § 1608(b), and that the Bank had not “waived its objections to service by filing the

pleadings it has filed to date.” The district court concluded by granting that part of the

Bank’s motion for judgment on the pleadings “to the extent that it is based upon

insufficient service of process” and in connection therewith quashed the purported service

of the Bank by service on the Chinese Consulate in San Francisco. In this regard, the

district court granted Orient 30 days within which to effect service of process pursuant to

28 U.S.C. § 1608(b), with the proviso that “if service is not accomplished within that

time, the complaint shall be deemed dismissed as against the Bank of China, without

                                             -3-
prejudice.”3 However, the district court, at the same time, went on to deny the Bank’s

motion insofar as it sought a determination by the district court that it lacked subject

matter jurisdiction.

       On August 18, 1999, the Bank filed a notice of appeal wherein it appealed that part

of the district court’s order of July 19, 1999, denying the Bank’s motion for judgment on

the pleadings on the ground that the district court lacked subject matter jurisdiction under

FSIA. 28 U.S.C. § 1604. In its notice of appeal, the Bank asserted that the district

court’s order as concerns the immunity issue was “immediately appealable,” citing U.S. v.

Moats, 961 F.2d 1198 (5th Cir. 1992) and Stena Rederi AB v. Comision de Contratos del

Comite, 923 F.2d 380 (5th Cir. 1991).4

       In this court, both Orient and the Bank are only concerned with the question of

whether the district court erred in concluding that it had subject matter jurisdiction under

the “direct effect” prong of FSIA’s “commercial activity” exception. 28 U.S.C. §

1605(a)(2). Our initial concern was whether we needed to address that issue, since it

appeared from the record before us that Orient had not effected valid service of process

       3
        On August 12, 1999, Orient filed a motion in the district court to extend the time
up to and including December 31, 1999, to file its return of service of process on the
Bank. That motion was granted by the district court on August 18, 1999. The record
before us does not indicate that any return of service of process was filed on or before
December 31, 1999, or at any time thereafter.
       4
         Orient did not file a cross-appeal of that part of the district court’s order of July
19, 1999, quashing its purported service of process on the Bank. Yue and Gaowa are not
parties to this appeal.

                                             -4-
on the Bank. In other words, if there was no valid service of process on the Bank, we

were doubtful of any necessity to grapple with the question of subject matter jurisdiction.

Gadlin v. Sybron International Corp., 222 F.3d 797 (10th Cir. 2000). Accordingly, on

September 18, 2000, we issued an Order to Show Cause, directing the parties to show

within 30 days why this appeal should not be dismissed, and the case remanded to the

district court with directions that it vacate that part of its order of July 19, 1999, wherein

it held that there was subject matter jurisdiction. On October 17, 2000, Orient filed a

response to our show cause order. On October 23, 2000, the Bank filed a motion for

leave to file a reply to Orient’s response, which motion was granted on November 3,

2000, and its tendered reply was accepted by this court.

       In its response to our Order to Show Cause Orient stated that, in accordance with

28 U.S.C. § 1608 and the Hague Convention, it had caused a summons and complaint to

be served upon the Chinese Central Authority and that the latter had “delivered” the

summons and complaint to the Bank on September 23, 1999, but that it (Orient) had not

yet received a certificate to that effect from the Chinese Central Authority. Further, in its

response, Orient went on to state that, notwithstanding the failure of the Chinese Central

Authority to return a certificate of service to it, counsel for the Bank had “agreed that the

Bank has been served.” Finally, in its response Orient stated that it had sent a letter to

that effect to the district court on December 22, 1999.

       In a reply to Orient’s response, the Bank states that “[i]n fact . . . there was no

                                              -5-
‘agreement’ by the Bank concerning service of process as alleged by Orient Mineral,”

although the Bank had decided to “not renew its dismissal motion but instead continue

with its [then pending] appeal in this Court.” Counsel for the Bank in his reply concluded

by declaring that “[n]either during my December 22, 1999 telephone conversation with

Mr. Eck [counsel for Orient] nor at any other time, have I or anyone else on behalf of the

Bank of China ‘agreed’ that service of process under the requirements of the Foreign

Sovereign Immunities Act (“FSIA”) or the Hague Convention . . . – which require more

than mere delivery of the complaint to a foreign state defendant such as the Bank of

China – has been effected on the Bank or that the Bank of China ‘considered itself so

served’.”

       We are not inclined on the basis of Orient’s response to our Order to Show Cause,

and the Bank’s reply thereto, to consider whether Orient has complied with the district

court’s order that it had until December 31, 1999, to effect valid service of process on the

Bank, and, if not so served, the complaint as it related to the Bank would be “deemed

dismissed . . . without prejudice.” That question should be considered, in the first

instance, in the district court. As stated above, the record of the district court before us

shows that the district court quashed Orient’s purported service of process, i.e., service on

the Chinese Consulate in San Francisco, California, and granted Orient 30 days to effect

service of process pursuant to 28 U.S.C. § 1608, which time was later extended to

December 31, 1999. The record of the district court does not show compliance with the

                                             -6-
district court’s order to effect service by December 31, 1999, or at any time thereafter. It

is on this state of the record that we further decline to review the propriety of the district

court’s order denying the Bank’s motion to dismiss on the ground that the district court

lacked subject matter jurisdiction.

       Accordingly, the appeal is dismissed and the case is remanded to the district court

with directions that it vacate, as premature, that part of its order of July 19, 1999, wherein

it held that there was subject matter jurisdiction. Further proceedings in the district court

are to be consonant with the views herein expressed.

                                            Entered for the court,

                                            Robert H. McWilliams
                                            Circuit Judge

                                              -7-