Byrd v. Corporacion Forestal Y Industrial, 98-60288

• Decision Date: 10 August 1999
• Docket Number: No. 98-60288,98-60288
• Citation: 182 F.3d 380
• Parties: (5th Cir. 1999) CORTEZ BYRD; ET AL, Plaintiffs, CORTEZ BYRD; SIMMONS LUMBER COMPANY S.A., Plaintiffs-Appellees, v. CORPORACION FORESTAL Y INDUSTRIAL DE OLANCHO S.A., ET AL, Defendants, CORPORACION FORESTAL Y INDUSTRIAL DE OLANCHO S.A.; ISRAEL PACHECO; ALBERTO FIGUEROA, Defendants-Appellants. GREAT SOUTHERN LUMBER COMPANY LLC, ET AL, Plaintiffs, v. WILLIAM E SIMMONS III, ET AL, Defendants
• Court: U.S. Court of Appeals — Fifth Circuit

Page 380

182 F.3d 380 (5th Cir. 1999)

CORTEZ BYRD; ET AL, Plaintiffs, CORTEZ BYRD; SIMMONS LUMBER COMPANY S.A., Plaintiffs-Appellees, v. CORPORACION FORESTAL Y INDUSTRIAL DE OLANCHO S.A., ET AL, Defendants, CORPORACION FORESTAL Y INDUSTRIAL DE OLANCHO S.A.; ISRAEL PACHECO; ALBERTO FIGUEROA, Defendants-Appellants.

GREAT SOUTHERN LUMBER COMPANY LLC, ET AL, Plaintiffs, v. WILLIAM E SIMMONS III, ET AL, Defendants.

No. 98-60288

IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

August 10, 1999

Appeal from the United States District Court for the Southern District of Mississippi

Before WISDOM, STEWART, and DENNIS, Circuit Judges.^*

CARL E. STEWART, Circuit Judge:

Defendants-appellants filed motions to dismiss with the court below, arguing that they are immune from suit pursuant to the Foreign Sovereign Immunities Act ("FSIA"), and because the court below did not have personal jurisdiction over them. The district court denied their motions, and defendants-appellants brought this immediate appeal. We conclude that we have appellate jurisdiction over the district court's decision as to FSIA immunity pursuant to the collateral order doctrine, and AFFIRM that decision by the district court. We also conclude that we do not have appellate jurisdiction over the personal jurisdiction issue, and DISMISS this portion of the appeal.¹

FACTUAL & PROCEDURAL BACKGROUND²

This case begins with a sawmill in Honduras. The sawmill is owned by defendant-appellant Corporacion Forestal y Industrial de Olancho, S.A., ("CORFINO"), a private corporation organized and existing under the laws of Honduras, and which is almost entirely (98% of its shares) owned and controlled by the Republic of Honduras through a governmental entity known as Corporation Hondure±a de Desarrolla Forestal ("COHDEFOR"). Running CORFINO at the time the facts alleged in this lawsuit took place are the two remaining defendants-appellants: Israel Pacheco, CORFINO's executive vice-president; and Alberto Figueroa, CORFINO's President. ³ Both Pacheco and Figueroa are adult resident citizens of Honduras.

Briefly, the factual setting of this case revolves around a power struggle between CORFINO's former business partners as to the control of the sawmill and its accompanying financial rewards. The losers of this struggle are suing the winners on several business-related legal theories, such as breach of contract. Defendants-appellants' relationship to this struggle is at the same time at the center and the outskirts of the struggle: the center, because defendants-appellants own the sawmill in question, and are alleged to have conspired with the other defendants to remove the plaintiffs from their positions in the sawmill's management; and on the outskirts, because defendants-appellants are not alleged to have directly participated in the actions taken against the plaintiffs.

A

On April 28, 1995, CORFINO leased its chief asset, the sawmill, to defendant William E. Simmons, III, an adult resident citizen of Mississippi. Later that year, plaintiff-appellee Cortez Byrd was contacted to evaluate and inspect the sawmill in Honduras, to examine lumber for the purpose of determining marketability, and to evaluate the financial feasibility of becoming involved in marketing production from the sawmill.

After Byrd expressed an interest in the sawmill project, several parties entered into a contract designated as a Memorandum of Understanding (hereinafter "Memorandum"). This contract is dated January 1, 1996. Importantly, none of the defendants-appellants are parties to the Memorandum. The parties to the Memorandum are:

(1) defendant Simmons;

(2) defendant Great Southern Lumber Company ("Great Southern"). Great Southern is a Mississippi limited liability company, and all of its shares are owned by American citizens. None of the appellants own part of Great Southern. Byrd was at this point CEO of Great Southern, but was later removed from this position. Great Southern's existence predated the Memorandum.

(3) plaintiff John S. Roberts, Sr;

(4) plaintiff John S. Roberts, Jr.;

(5) plaintiff-appellee Byrd;

(6) plaintiff-appellee Simmons Lumber Company, S.A. ("Simmons Lumber"). Simmons Lumber is a private corporation, organized at the time the Memorandum was created, and exists under the laws of Honduras. Simmons Lumber is owned exclusively by American citizens Simmons, Byrd, Roberts Jr., Roberts Sr., and plaintiff Doug Grissom. None of the appellants own part of Simmons Lumber. Byrd was at this point President and CEO of Simmons Lumber, and Grissom was at this point Chief Financial Officer of Simmons Lumber.

After this Memorandum was signed, Simmons assigned his lease in the sawmill to Simmons Lumber. Simmons Lumber was then acquired by Great Southern.

As CEO of Great Southern, as well as President and CEO of Simmons Lumber, Byrd contends that the sawmill project offered him a potentially large financial reward. He claims he was to receive a $30,000 fee for bringing the mill into operation, reimbursement of expenses, full authority over the mill's operations, a fixed amount per thousand feet of board produced by the mill, a monthly salary in the event no logs were available, and certain options to purchase stock in Simmons Lumber or Great Southern. Appellants note that they were not the ones who owed these payments to Byrd.

B

In June 1996, defendant-appellant Pacheco met with Byrd, Grissom, and Gary Stewart in his Honduras office, and agreed to form a company called PROSEMA. PROSEMA purchased edges sawn off from timbers at the sawmill, at a very low price, to be used to process broomsticks. However, PROSEMA failed to pay Simmons Lumber a debt of $22,000. In September 1996, Byrd (as Great Southern's CEO and president, and as Simmons Lumber's CEO) cut off PROSEMA's credit.

Plaintiffs-appellees Byrd and Simmons Lumber allege that this event triggered a series of retaliatory actions against them. That same month, defendant John Pearson allegedly began colluding with the other defendants, in particular defendants Simmons and Carl Swan, to oust Byrd from his management position and illegally take over the sawmill project. Both Pearson and Swan are adult resident citizens of Oklahoma. In September and October 1996, Pearson traveled to Honduras and allegedly conspired with the defendants - including defendants-appellants - in a series of "secret meetings" to illegally act in furtherance of a scheme to take over the mill.

In late October, 1996, Byrd discovered that one of the secret meetings was to take place. Byrd alleges that, as CEO of Simmons Lumber, he instructed Simmons not to meet with defendant-appellant Figueroa. When it became clear that Simmons planned to attend, Byrd sent a letter to defendant-appellant Figueroa in which he authorized a Honduran attorney by the name of Cesar Gonzalez to appear at all meetings on behalf of Simmons Lumber. Defendants refused to allow the attorney to attend, however, and at the meeting allegedly made sensitive decisions regarding the mill and the CORFINO lease.

On November 8, 1996, Pearson allegedly hand-delivered a letter to the Board of Directors for Simmons Lumber and Great Southern, in which he stated his objective to obtain an ownership interest in both companies and proposing a breach of the Memorandum whereby he would replace Grissom as Chief Financial Officer, while Simmons would replace Byrd as CEO and Chairman. Pearson further proposed that an executive committee be formed, and that it include Pearson, Swan, Simmons, and Roberts, Sr. According to the proposal, the executive committee would run the operation of the companies with limited involvement in management by the Board of Directors. The proposal also called for the appointment of defendant Oscar Alvarenga as Simmons Lumber's attorney in Honduras, and that he be authorized and directed to correct or void the minutes of past Board of Directors' meetings, on file in Honduras.

On January 28, 1997, Simmons, Swan, and other unspecified individuals called together a managers meeting for Great Southern. There, they terminated Byrd's services. None of the defendants-appellants were at this meeting.

In roughly the same time period, defendants-appellants allegedly began complaining that the CORFINO lease, which at this point was assigned to Simmons Lumber, was in jeopardy due to noncompliance with certain lease terms. Plaintiffs contend that this complaint was without foundation. Plaintiffs also allege that defendant Simmons began colluding with CORFINO officials, including defendants-appellants Figueroa and Pacheco, to undermine the CORFINO lease in order to oust plaintiff-appellee Byrd from his position as CEO and general manager of the sawmill project. Plaintiffs further contend that this collusion ultimately resulted in appellant CORFINO issuing a sixty day notice to Simmons Lumber in March 1997, instructing Simmons Lumber that it would cancel the lease if the lease noncompliance were not cured. Plaintiffs also allege that defendant Simmons "signed off" on this notice prior to its issuance by CORFINO, and that Simmons withheld notifying plaintiffs about the 60 day notice for an additional seven days. According to plaintiffs, this delay deprived them of an opportunity to address and cure the alleged deficiencies, and thus constituted actions in furtherance of a fraudulent scheme to take over the sawmill project.

Immediately prior to the issuance of this notice, plaintiffs allege that Glenn Taylor, an attorney representing Simmons, Pearson, and Swan, mailed illegal minutes and other fraudulent misrepresentations to the State Bank and Trust in Mississippi. Taylor also allegedly provided similar material to Bob Riley, of the United States Embassy located in Tegucigalpa, Honduras. These documents were allegedly sent with the knowledge of all of the defendants, including appellants, and were intended to convince Bank and Embassy officials that Simmons controlled...