Court Opinion

ID: 5123592
Source: CourtListenerOpinion
Date Created: 2021-11-05 00:00:34.325499+00
Date Added: 2024-06-11T08:22:34.675560
License: Public Domain

Case: 21-20534         Document: 00516081996            Page: 1   Date Filed: 11/04/2021

               United States Court of Appeals
                    for the Fifth Circuit                                  United States Court of Appeals
                                                                                    Fifth Circuit

                                                                                  FILED
                                                                           November 4, 2021
                                        No. 21-20534
                                                                             Lyle W. Cayce
                                                                                  Clerk
   Preble-Rish Haiti, S.A.,

                                                  Plaintiff—Appellant/Cross-Appellee,

                                            versus

   BB Energy USA, LLC,

                                                Garnishee—Appellee/Cross-Appellant.

                      Appeal from the United States District Court
                          for the Southern District of Texas
                               USDC No. 4:21-cv-01953

   Before Elrod, Oldham,* and Wilson, Circuit Judges.
   Per Curiam:**
          This dispute arises out of a garnishment action. The district court
   allowed discovery to proceed against the garnishee, BB Energy, without
   ruling on BB Energy’s motion to dismiss, which argued that the garnishment

          *
              Judge Oldham would grant the motion to stay.
          **
             Pursuant to 5th Circuit Rule 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   opinion should not be published and is not precedent except under the limited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 Circuit Rule 47.5.4.
Case: 21-20534       Document: 00516081996         Page: 2   Date Filed: 11/04/2021

                                    No. 21-20534

   action is barred by sovereign immunity. BB Energy has moved to stay
   discovery. Because the district court may permit limited discovery to
   determine its jurisdiction (i.e., whether the action is barred by sovereign
   immunity), we deny the stay and instruct the district court to limit discovery
   to only the sovereign immunity issue.
                                         I.
          Preble-Rish Haiti, S.A. (“PRH”) entered into three contracts with
   Haiti’s Bureau de Monétisation de Programmes d’Aide au Développement
   (“BMPAD”) to transport and deliver fuel to Haiti. The contracts provided
   that any disputes under the contracts would be submitted to binding
   arbitration in New York. A dispute arose after BMPAD allegedly seized a
   PRH vessel and forcibly offloaded its fuel without paying for it. PRH initiated
   arbitration in New York, which BMPAD opposed. A New York state court
   issued an order compelling arbitration, and the arbitration panel issued a
   Partial Final Award to PRH awarding roughly $23 million. BMPAD refused
   to post security and indicated that it would not honor the arbitration award.
          PRH filed this garnishment action in the U.S. District Court for the
   Southern District of Texas, seeking to use the maritime Rule B attachment
   process to garnish funds owned by BMPAD in the possession of BB Energy.
   BB Energy is also in the business of supplying fuel to Haiti. PRH alleged that
   BB Energy regularly receives prepayments from BMPAD for fuel, and PRH
   sought to attach BMPAD funds which had been prepaid to BB Energy. BB
   Energy has vigorously opposed such attachment in proceedings before the
   district court.
          The district court granted a writ of maritime attachment, which PRH
   served on BB Energy on July 1, 2021. BB Energy moved to dismiss the action
   and vacate the attachment, arguing, inter alia, that maritime Rule B
   attachment was improper because the contracts between PRH and BMPAD

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                                     No. 21-20534

   were not maritime contracts. The district court granted the motion to vacate
   the attachment in part, accepting BB Energy’s argument that the breach of
   contract claim did not provide a basis for maritime jurisdiction. But the
   district court also deferred the motion to vacate in part, finding that
   attachment might be proper on other grounds—namely, to enforce the
   arbitral award after it was finalized by New York courts.
          PRH then amended its complaint to invoke admiralty jurisdiction by
   alleging maritime torts in addition to breach of contract. BB Energy moved
   to dismiss PRH’s amended complaint, arguing, as relevant here, that the
   Foreign Sovereign Immunities Act (“FSIA”) barred PRH from asserting its
   maritime tort claims against BMPAD. After a hearing on October 25, 2021,
   the district court deferred ruling on BB Energy’s motion to dismiss and
   ordered BB Energy to submit to written discovery and a corporate
   representative deposition. BB Energy immediately appealed to us and moved
   for a stay of discovery. PRH filed a cross-motion to dismiss the appeal for
   lack of jurisdiction.
                                          II.
          BB Energy argues that the district court erred by permitting broad
   discovery without first determining whether sovereign immunity bars this
   garnishment action. As we have noted, “FSIA immunity is immunity not
   only from liability, but also from the costs, in time and expense, and other
   disruptions attendant to litigation.” Kelly v. Syria Shell Petrol. Dev. B.V., 213
   F.3d 841, 849 (5th Cir. 2000). “Accordingly, when FSIA immunity has been
   claimed, unlimited jurisdictional discovery is not permitted as a matter of
   course. Instead, it should be ordered circumspectly and only to verify
   allegations of specific facts crucial to an immunity determination.” Id.
   (citation and internal quotation marks omitted). BB Energy claims the

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                                    No. 21-20534

   district court violated that rule here by deferring its ruling on the sovereign
   immunity defense and ordering broad discovery in the interim.
          PRH’s primary response is to argue that we lack jurisdiction over this
   appeal. According to PRH, we lack jurisdiction because BB Energy appealed
   from a discovery order. And “[a]s a general matter, discovery orders do not
   constitute final decisions under [28 U.S.C.] § 1291, and therefore, are not
   immediately appealable.” Piratello v. Philips Elecs. N. Am. Corp., 360 F.3d
   506, 508 (5th Cir. 2004).
          But some discovery orders are immediately appealable. In particular,
   when a defendant asserts an immunity defense, we have held that a district
   court’s order that declines or refuses to rule on a motion to dismiss based on
   the immunity defense is an immediately appealable order. Zapata v. Melson,
   750 F.3d 481, 484 (5th Cir. 2014). This is because such an order is
   tantamount to denying the immunity defense, part of the purpose of which is
   to protect the defendant from the burden of litigation itself—including
   discovery. Id. And we have held that a sovereign immunity claim may be
   raised by a garnishee holding a foreign sovereign’s property in addition to the
   foreign sovereign itself. FG Hemisphere Assocs., LLC v. République du Congo,
   455 F.3d 575, 584 (5th Cir. 2006).
          Here, BB Energy raised BMPAD’s sovereign immunity as a defense
   in its motion to dismiss. The district court permitted discovery, but it is
   unclear whether this was to aid its ruling on the motion to dismiss or whether
   the district court was proceeding to discovery without resolving BB Energy’s
   sovereign immunity defense. To the extent the latter was the case, this was
   error: A district court must rule on an immunity defense properly raised in a
   motion to dismiss before allowing any discovery that is not “ordered
   circumspectly and only to verify allegations of specific facts crucial to an

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                                           No. 21-20534

   immunity determination.” Kelly, 213 F.3d at 849.*** That being said, the
   district court could have just as well been exercising its discretion in ordering
   limited discovery to resolve whether BB Energy was, in fact, shielded by
   BMPAD’s sovereign immunity. Because this would have been permissible,
   we presume that was the case. Thus, we deny BB Energy’s stay motion, and
   we trust that the district court will allow limited discovery only as to evidence
   that will elucidate whether BB Energy is entitled to dismissal on sovereign
   immunity grounds.
                                       *        *         *
           BB Energy’s motion to stay discovery is DENIED. The district
   court is instructed, consistent with our precedent, to limit discovery “only to
   verify allegations of specific facts crucial to an immunity determination.”
   Kelly, 213 F.3d at 849. PRH’s motion to dismiss this appeal for lack of
   jurisdiction is DENIED.

           ***
                PRH contends that broader discovery is necessary to determine whether the
   district court has personal jurisdiction over BB Energy, and district courts confronted with
   multiple jurisdictional issues have discretion as to which challenge to resolve first. PRH’s
   authority for this proposition is Ruhrgas AG v. Marathon Oil Co., 526 U.S. 574 (1999), where
   the Supreme Court held that there is no general “unyielding jurisdictional hierarchy” as
   between personal jurisdiction and subject-matter jurisdiction determinations. Id. at 578.
   But Ruhrgas did not involve an immunity defense, and as already noted, immunity defenses
   uniquely require prioritization because they protect defendants from the burdens of
   litigation, including discovery. See Kelly, 213 F.3d at 849. PRH cites no authority
   supporting its position that a district court may forbear to rule on an immunity defense
   while allowing broad discovery on a separate jurisdictional issue.

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