COURT OF APPEALS
FOR THE FIFTH
SYSTEM PIPE & SUPPLY, INC.,
M/V VIKTOR KURNATOVSKIY;
AZOV SHIPPING CO.,
Appeal from the United States
for the Southern District
February 26, 2001
Before POLITZ, DeMOSS, and STEWART,
POLITZ, Circuit Judge:
System Pipe & Supply, Inc.,
appeals the dismissal of its complaint for lack of personal jurisdiction
and the denial of its motion for a new trial. For the reasons
assigned, we vacate and remand.
System, a Texas Corporation with
its principal place of business in Texas, filed a complaint against
M/V Viktor Kurnatovskiy, in rem, and against its owner,
Azov Shipping Company. According to the complaint, Azov is a
foreign corporation not authorized to do business in Texas which
did business there by carrying cargo to the Port of Houston on
the Kurnatovskiy. The complaint further alleges that Azov committed
a tort in Texas. Azov has not designated, nor does it maintain
an agent for service in Texas. The address for service which
System provided the Texas Secretary of State is in the Ukraine.
According to the complaint, Azov
transported cargo for the plaintiff from the Ukraine to Houston
in the defendant vessel. Azov acknowledged receipt of the cargo
on May 4, 1998 and issued a bill of lading which notes no exceptions
or damages. The ship docked at Houston and discharged the cargo
on June 7, 1998. Upon arrival, much of the cargo allegedly was
rusted or otherwise damaged. System further alleges that the
damage was proximately caused by Azov's acts or omissions which
constituted breach of contract, breach of bailment, and violations
of its duties as a common carrier. The Office of the Texas Secretary
of State informs that it forwarded the complaint to Azov. Azov
made no appearance in court and System sought entry of a default
judgment. The district court, acting sua sponte, entered
an order dismissing the case for lack of personal jurisdiction.
System's motion for a new trial was denied and it timely appealed.
System contends that the district
court erred in dismissing the complaint sua sponte for
lack of personal jurisdiction. The company notes that lack of
personal jurisdiction is a defense which may be waived. Consequently,
it maintains that the district court had no authority to assert
this defense on behalf of Azov.
We previously have determined that
a judgment entered without personal jurisdiction is void.(1) It should therefore be apparent that
a district court has the duty to assure that it has the power
to enter a valid default judgment. Our colleagues in the Tenth
Circuit have held that, "[W]hen entry of default is sought
against a party who has failed to plead or otherwise defend,
the district court has an affirmative duty to look into its jurisdiction
both over the subject matter and the parties."(2)
We agree. The district court committed no error in raising the
issue of personal jurisdiction sua sponte.
In the alternative, System maintains
that even if the district court had the authority to raise the
issue, it erred in determining that it did not have personal
jurisdiction over Azov. The Texas long-arm statute authorizes
personal jurisdiction to the fullest extent allowed by the Constitution.(3) In an action as is here presented,
the district court must determine whether exercising jurisdiction
over the defendant is consistent with the due process clause
analysis of minimum contacts. A single contact with the forum
state may be sufficient to support personal jurisdiction,
if the cause of action arises out of that specific act.(4) As a practical matter, however, a
single act will rarely suffice to meet the minimum contacts standard.
The allegations in System's original petition reflect only a
single contact with Texas: the discharge of cargo at the port
The trial court's ruling opined
that this "fortuitous call" of Azov's vessel did not
confer personal jurisdiction over Azov. We do not perceive the
docking and cargo delivery at Houston to be merely "fortuitous."
The port of Houston was the specified destination in this contract.
The vessel was not at the port because of error or happenstance.
For present purposes, however, we need not resolve whether there
were sufficient minimum contacts with the state of Texas to satisfy
personal jurisdiction requirements. Another jurisdictional predicate
System alleges that Azov committed
a tort in the state of Texas. It would appear from the pleadings
that the actions which caused the damage to the cargo occurred
while the vessel was at sea or before. The alleged tort, accordingly,
was not committed in the state of Texas. But there necessarily
is more to our jurisdictional review.
System maintains that personal jurisdiction
over Azov exists under the theory of general jurisdiction. System
correctly suggests that because its action arises under federal
admiralty law, it need not prove minimum contacts with the state
of Texas, but only with the United States as a whole.(5) In its motion for a new trial, System
detailed its factual basis for claiming general jurisdiction,
including: (1) Azov's fleet of vessels regularly calls at most
major ports in over fifty countries, including the United States;
(2) in 1993, Azov established and began to advertise Azsco America
Line to provide service for U.S. Gulf Ports to the Mediterranean
and Black Seas; (3) Azov maintained another line of vessels to
carry cargo from the east coast to Israel; (4) at least one of
Azov's vessels had previously been detained in the state of Texas;
(5) Azov's ship, the M/V Viktor Kurnatovskiy, called and discharged
System's cargo at the Port of Houston; (6) since 1993, Azov has
been a named party in approximately fifty actions in United States
District Courts; and (7) Azov had been a defendant in another
suit maintained in the Southern District of Texas which was not
dismissed for lack of personal jurisdiction.
Generally the plaintiff is required
to make a prima facie showing of general jurisdiction
in the pleadings and record before the court at the time of the
motion. Neither System's original complaint, nor its motion for
default judgment contained any allegations concerning Azov's
contacts with the United States in general. The procedural posture
of this case, however, is unusual. In most instances the personal
jurisdiction issue is resolved after a defendant moves to dismiss
and the plaintiff has been given an opportunity to respond. Here,
because the district court raised the issue sua sponte
with no notice to the plaintiff, System had no such opportunity
to respond. The above allegations, if established, or evidence
similar thereto, would be sufficient for the plaintiff to make
a prima facie showing of national minimum contacts. The
issue of general jurisdiction was not considered by the trial
The plaintiff's original complaint
invoked admiralty law. Accordingly, general jurisdiction should
have been considered by the district court in determining whether
it lacked personal jurisdiction. We conclude that the district
court erred in dismissing this complaint without allowing the
plaintiff an opportunity to respond to the court's concerns over
personal jurisdiction. When the district court raises the issue
of personal jurisdiction sua sponte, the court should
allow the plaintiff a reasonable opportunity to present any available
evidence supporting the court's jurisdiction.
For the foregoing reasons, the judgment
of dismissal is VACATED and this action is REMANDED to the district
court for further proceedings consistent herewith.
Music, Inc. v. M.T.S. Enterprises, Inc., 811 F.2d 278 (5th
v. Life Savings and Loan, 802 F.2d 1200, 1203 (10th Cir.
1986). See also Dennis Garberg & Assoc., Inc. v.
Pack-Tech Int'l Corp., 115 F.3d 767 (10th Cir. 1997) (district
court erred in failing to determine whether it had personal jurisdiction
over a non-appearing defendant before entering default); In
re Tuli, 172 F.3d 707 (9th Cir. 1999) (Bankruptcy court properly
raised sua sponte issue of personal jurisdiction over
Iraq on motion for default judgment when Iraq failed to enter
3. Tex. Civ.
Prac. & Rem. Code Ann. § 17.042 (West 2000).
Gas Turbines, Inc. v. Donaldson Co., 9 F.3d 415 (5th Cir.
5. This court
has held that Federal Rule of Civil Procedure 4(k)(2) allows
personal jurisdiction over foreign defendants for claims arising
under Federal law when the defendant has sufficient contacts
with the nation as a whole, despite lacking sufficient contacts
to satisfy the due process concerns of the long arm statute of
a particular state. World Tank Carriers Corp. v. M/V Ya Mawlaya,
99 F.3d 717 (5th Cir. 1996).
Fed. R. Civ. P. 4(k)(2) provides:
If the exercise of jurisdiction
is consistent with the Constitution and the 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 jurisdiction of the courts of general
jurisdiction of any state."