Court Opinion

ID: 63526
Source: CourtListenerOpinion
Date Created: 2010-04-26 04:58:25+00
Date Added: 2024-06-11T17:20:19.374114
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS
                    FOR THE FIFTH CIRCUIT United States Court of Appeals
                                                   Fifth Circuit

                                                                            FILED
                                                                          August 25, 2008

                                     No. 08-20106                     Charles R. Fulbruge III
                                   Summary Calendar                           Clerk

THULE DRILLING ASA

                                                  Plaintiff - Appellant
v.

JACOB SCHIMBERG

                                                  Defendant - Appellee

                   Appeal from the United States District Court
                        for the Southern District of Texas
                             USDC No. 4:07-CV-3328

Before JOLLY, CLEMENT, and HAYNES, Circuit Judges.
PER CURIAM:*
       Thule Drilling (“Thule”) appeals the district court’s grant of summary
judgment in favor of Jacob Schimberg (“Schimberg”). Because the record before
us does not permit meaningful appellate review, we VACATE and REMAND.
       Thule, a Norwegian company, brought suit against Schimberg based on
business transactions between Thule and QGM Group (“QGM”), a corporation
based in the United Arab Emirates. Schimberg served as the CEO of QGM.

       *
         Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR.
R. 47.5.4.
                                  No. 08-20106

Thule entered into a contractual relationship with QGM in which QGM was to
do repair and construction work on three of Thule’s mobile drilling rigs. Thule
also entered into a contract with QGM in which it agreed to loan QGM funds so
that QGM’s work on the rigs could be completed. In its complaint, Thule alleged
that QGM breached the contracts that it had with Thule and that, accordingly,
Thule was entitled to take possession of the rigs. Thule further alleged that
Schimberg was the corporate agent of QGM, that he directly denied it access to
its rigs, and that in doing so he committed acts against Thule sounding in the
torts of conversion and trespass to chattel, as well as civil theft. See TEX. CIV.
PRAC. & REM. CODE § 134.004. Neither QGM nor Thule are located in the United
States; personal jurisdiction over Schimberg obtained based on Schimberg’s
citizenship and ownership of real property in Texas.
      In the course of the proceedings below, the district court decided to convert
Schimberg’s motion to dismiss under Federal Rule of Civil Procedure 12(b)(6)
into a motion for summary judgment under Rule 56. It then ruled in favor of
Schimberg in a brief order issued shortly after a conference in which it had
discussed its intent to convert the Rule 12(b)(6) motion. The district court gave
no rationale for its ruling. Thule now argues that this decision was improper
because the district court did not provide it the notice required by Rule 56 and
that, as a result, Thule was unable to present evidence that would have shown
the existence of a genuine issue of material fact.
      “We review the grant of summary judgment . . . de novo, including the
question whether the court provided the notice required by Federal Rule of Civil
Procedure 56.” Resolution Trust Corp. v. Sharif-Munir-Davidson Dev. Corp., 992
F.2d 1398, 1401 (5th Cir. 1993). Judging from the conference held before the
district court, the summary judgment here seems most likely to have been based
on the district court’s conclusion that Schimberg, as CEO of QGM, never acted
except in an agency capacity for the corporation. But this fact does not of itself

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                                         No. 08-20106

provide a rationale for summary judgment. The one-sentence order pronouncing
final judgment offers no further guidance.
       We note preliminarily that Texas law1 does permit corporate agents to be
liable for their own torts in many instances. In Texas, it is a “longstanding rule
that a corporate agent is personally liable for his own fraudulent or tortious
acts.” Miller v. Keyser, 90 S.W.3d 712, 717 (Tex. 2002); see generally Light v.
Wilson, 663 S.W.2d 813, 815 (Tex. 1983) (Spears, J., concurring) (collecting
cases). As such, “[a] corporation’s employee is personally liable for tortious acts
which he directs or participates in during his employment.” Leyendecker &
Associates v. Wechter, 683 S.W.2d 369, 375 (Tex. 1984). Or, stated another way,
“[a]n employee may be held individually liable for an employer’s tortious acts if
he knowingly participates in the conduct or has knowledge of the tortious
conduct, either actual or constructive.” Cass v. Stephens, 156 S.W.3d 38, 62
(Tex. App. 2004). “Instigating, aiding, or abetting the wrongdoing constitutes
participation. The employee or agent may be held liable regardless of whether
he receives any personal benefit from the tortious act.” Id. at 62-63. Texas law
in this respect is thus reflective of basic principles of agency law.                          See
RESTATEMENT (THIRD) OF AGENCY § 7.01 cmt. b (2005) (“An agent whose conduct
is tortious is subject to liability. This is so whether or not the agent acted with
actual authority, with apparent authority, or within the scope of employment.”).

       1
          Where, as here, federal jurisdiction is established owing to the diversity of the parties,
“federal courts . . . apply state substantive law and federal procedural law.” Foradori v. Harris,
523 F.3d 477, 486 (5th Cir. 2008). We also apply the choice of law rules of the forum state.
See Hartford Underwriters Ins. Co. v. Foundation Health Servs., Inc., 524 F.3d 588, 593 (5th
Cir. 2008). The district court provided no discussion relating to choice of law rules, although
all of the activity forming the basis of this suit appears to have occurred in foreign settings.
Because both parties based their Rule 12(b)(6) arguments on Texas law, we assume that the
district court applied Texas law. We should note, however, that Texas applies the “most
significant relationship” test for choice of law determinations, which, given the facts underlying
this case, adds to our uncertainty about the basis for the district court’s decision. See Hughes
Wood Prods., Inc. v. Wagner, 18 S.W.3d 202, 205 (Tex. 2000).

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                                  No. 08-20106

Texas courts have accordingly concluded that suits in tort do not always require
piercing the corporate veil. See Kingston v. Helm, 82 S.W.3d 755, 759 (Tex. App.
2002).
      The record before us does not permit meaningful appellate review; it
leaves us unable to determine on what basis the district court found that the
Texas laws related to corporate officer tort liability were not sufficient to make
Schimberg liable for his conduct or for the corporate conduct in which he is
alleged to have participated. See Hanson v. Aetna Life & Cas., 625 F.2d 573, 575
(5th Cir. 1980); Melancon v. Ins. Co. of North America,482 F.2d 1057, 1059 n.4
(5th Cir. 1973). Schimberg did submit affidavits indicating that he operated only
at the behest of his QGM superiors and that he was never a party to any of the
contracts between Thule and QGM.            But what role these affidavits—and
arguably contrary declarations submitted by Thule—played in the district
court’s decision, we cannot say. Because we are uncertain about the rationale
for the district court’s decision, we VACATE and REMAND for entry of reasons
in support of the granting of summary judgment, or for such other proceedings
that may be appropriate.

                                                   VACATED and REMANDED.

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