Revised May 16, 2001
UNITED STATES COURT OF
FOR THE FIFTH CIRCUIT
SUBMERSIBLE SYSTEMS, INC.,
PERFORADORA CENTRAL, S.A.
Appeals from the United
States District Court
for the Southern District
May 4, 2001
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 district court and
remand with instructions to dismiss this case.
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
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.
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
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.
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
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 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.(2) 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, 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.
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).
Absent a federal statute that provides
for more expansive personal jurisdiction, the personal jurisdiction
of a federal 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 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
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 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 (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 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.(3)
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 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.
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 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.(4)
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 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).
SSI, as part of its cross-appeal,
has argued that if we find 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
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 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
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 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.(5)
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.
1. Circuit Judge
of the Ninth Circuit, sitting by designation.
2. SSI never
posted the bond and so never perfected its attachment.
3. 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.
4. We find Central's
contention that the district court lacked admiralty jurisdiction
in this case to be without merit.
5. 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 jurisdiction over