American Exp. Intern., Inc. v. Mendez-Capellan, MENDEZ-CAPELLAN

• Decision Date: 04 May 1989
• Docket Number: MENDEZ-CAPELLAN,No. 88-1568,88-1568
• Citation: 889 F.2d 1175
• Parties: AMERICAN EXPRESS INTERNATIONAL, INC., Plaintiff, Appellant, v. Victor, etc., et al., Defendants, Appellees. . Heard
• Court: U.S. Court of Appeals — First Circuit

Page 1175

889 F.2d 1175

AMERICAN EXPRESS INTERNATIONAL, INC., Plaintiff, Appellant, v. Victor MENDEZ-CAPELLAN, etc., et al., Defendants, Appellees.

No. 88-1568.

United States Court of Appeals First Circuit.

Heard May 4, 1989.

Decided Nov. 17, 1989.

A.J. Bennazar-Zequeira with whom Alberto De Diego and Gonzalez, Bennazar & Colorado, were on brief for plaintiff, appellant.

Pedro Jimenez, New York City, with whom Wallace Gonzalez Oliver and Jorge R. Jimenez, Hato Rey, P.R., were on brief for defendants, appellees.

Before BOWNES and TORRUELLA, Circuit Judges, and RE, ^* Chief Judge.

RE, Chief Judge:

In this diversity action, American Express International, Inc., (AMEX), sued Victor Mendez Capellan and Vimenca Travel Agency, (collectively, Vimenca) in the United States District Court for the District of Puerto Rico, contending that Vimenca breached its contractual and fiduciary duties as AMEX's paying agent in the Dominican Republic. AMEX appeals from the judgment of the district court which granted Vimenca's motion to dismiss for lack of in personam jurisdiction.

The question presented on this appeal is whether the district court erred in dismissing the case for lack of in personam jurisdiction based on its finding that Vimenca did not have sufficient contacts with the forum to justify subjecting it to jurisdiction and trial in Puerto Rico.

On the facts of record, not seriously in dispute, we hold that Vimenca's contacts with the forum are too minimal and attenuated to confer jurisdiction upon the district court of Puerto Rico. Accordingly, the judgment of the district court is affirmed.

BACKGROUND

AMEX, a Delaware corporation with its principal offices in New York, conducts business throughout the world. Defendant Victor Mendez Capellan (Capellan), a Dominican citizen, is president of Vimenca Travel Agency, a corporation organized under the laws of the Dominican Republic. Vimenca is not licensed to do business in Puerto Rico.

The business relationship between Vimenca and AMEX commenced in 1961, and involved several successive contracts. In 1978, the parties entered into an "American Express Worldwide Representative Agreement," called the "master agreement." According to AMEX, the master agreement "confers upon [Vimenca] a series of specific functions to be carried out as Amex representative in the Dominican Republic, including, but not limited to, cardmember sales development, service establishment servicing, paying agent, service establishment solicitation, card authorization services, representative tour operations, traveler's cheques sales, and others." (emphasis added). The master agreement was supplemented by specific agreements for the various functions to be carried out by Vimenca.

As paying agent, Vimenca's role was to serve as plaintiff's paying representative for Dominican commercial establishments that received payment for their goods or services by American Express cards. For a fixed annual stipend, Vimenca would receive funds from AMEX to pay the commercial establishments. Pursuant to the master agreement and supplementary contracts, Vimenca could make these payments in either American or Dominican currency.

In the early 1980's, the Dominican peso began to decline in value with respect to the United States dollar. Consequently, the Dominican government enacted certain laws to control the flow of currency exchange. AMEX responded by instructing Vimenca "to take the necessary measures so that Amex cardmembers would enjoy the best possible exchange rate available in the free market, within the legal mechanisms established by the Dominican Government." AMEX, however, contends that Vimenca "began to make a profit on foreign exchange transactions, ... denying [AMEX] Cardmembers ... the best possible exchange rates legally available at the time in the Dominican Republic[,]" thus keeping the surplus for itself. AMEX also contends that, after it objected to Vimenca's actions, Vimenca "reacted by lobbying with ... Dominican authorities to obtain administrative interpretations to the [Dominican] exchange laws that allowed defendants to continue improperly obtaining a [profit] in their foreign exchange transactions...." AMEX further charged that when it terminated Vimenca's status as paying agent, Vimenca "unleash[ed] a virulent harassment and defamation crusade, to ... besmirch the reputation of A[MEX] in the Dominican Republic through a national AMEX sued in the District Court for the District of Puerto Rico, seeking a declaratory judgment justifying termination of the "master agreement," and $8,250,000 in damages for breach of contract, breach of fiduciary duties, injury to business reputation, and tortious interference with business relations.

newspaper and publicity campaign...."

Vimenca moved to dismiss for improper service of process under Rule 12(b)(5), lack of in personam jurisdiction under Rule 12(b)(2), and, in a supplementary motion, for forum non conveniens. AMEX opposed the motion to dismiss, and, pursuant to Rule 56(f), moved for leave to take the deposition of codefendant Capellan on the issue of in personam jurisdiction. Subsequently, at a status conference, the "[p]arties agreed that [AMEX] will not take the deposition of ... Capellan on the issue of in personam jurisdiction pending plaintiff's substantiation of jurisdiction and the need to take said deposition."

It is undisputed that Vimenca has no office or employees in Puerto Rico. Neither does Vimenca have a telephone listing in Puerto Rico. According to Capellan, neither he nor his travel agency has "ever operated, conducted, engaged in or carried on any business or business venture in Puerto Rico," and "[a]ny and all services ... to be performed by [Vimenca] or [AMEX] under the terms of the agreements ... were to be performed exclusively within the Dominican Republic."

AMEX, through the affidavits of three of its Florida employees, asserts that Vimenca has at least two bank accounts in Puerto Rico, and that Vimenca has used one of these accounts to pay obligations owed to AMEX. It also asserts that another Puerto Rico account was used by Vimenca "as the key credit reference for the issuance of an American Express 'Company Card' to ... Capellan...." AMEX stresses that, prior to 1984, when AMEX had a regional office in Puerto Rico, Vimenca had "frequent and regular" contacts with the Puerto Rico office, including sending employees to Puerto Rico for AMEX training sessions. After receiving affidavits from both AMEX and Vimenca on the issue of in personam jurisdiction, the district court converted the motion into one for summary judgment.

The district court acknowledged that, on summary judgment, the court "must examine the record in the light most favorable to the party opposing the motion[,] [AMEX.]" American Express v. Mendez Capellan, No. 87-601, slip op. at 8 (D.P.R. Mar. 21, 1988) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986)). The district court stated that its "jurisdiction over [Vimenca] is governed by the forum's long-arm statute," and discussed Puerto Rico's long-arm statute, set forth in Rule 4.7 of the Puerto Rico Rules of Civil Procedure. See id. at 9-10. The district court concluded that a non-resident defendant is subject to the jurisdiction of Puerto Rico, under the long-arm statute, if the defendant performs an act in Puerto Rico, if the cause of action arises out of that act, and if the defendant's contacts with Puerto Rico are sufficient to meet the constitutional requirements of due process. Id. at 10 (citing Arthur H. Thomas Co. v. Superior Court, 89 P.R.R. 864, 870 (1970)).

After listing Vimenca's "limited" contacts with Puerto Rico, the court found that these contacts "do not arise from the causes of action." Id. at 13. The court found that the past training of Vimenca employees at AMEX's Puerto Rico office "does not enrich the nature of the contact with the forum." Id. As for Vimenca's bank accounts in Puerto Rico, the court noted that "[t]hese ... accounts have no substantial nexus with the causes of action...." Id. at 17. The court observed that "[a]ll of AMEX'[s] injuries occurred in the Dominican Republic, [and] ... [a]ll significant contacts between the parties also arise in the Dominican Republic." Id.

In sum, the district court held that the causes of action did not arise out of AMEX's meager contacts in Puerto Rico, and that, in any event, they were insufficient to satisfy the constitutional requirements of due process. Accordingly, the district court granted Vimenca's motion to dismiss.

STANDARD OF REVIEW

The district court converted Vimenca's Rule 12(b)(2) motion to dismiss for lack of in personam jurisdiction to a motion for summary judgment. The Rules provide that a Rule 12(b)(6) motion "to dismiss for failure of the pleading to state a claim upon which relief can be granted ... shall be treated as one for summary judgment" if "matters outside the pleading are presented to and not excluded by the court...." Fed.R.Civ.P. 12(b). Rule 12(b), however, has no similar provision for motions to dismiss for lack of jurisdiction. Nonetheless, it has been noted that "[i]t is not important whether the objection is called a motion to dismiss or one for summary judgment. Since the same relief is sought, the difference in name is unimportant. In any event, the affidavits presented are available on either motion." Central Mexico Light & Power Co. v. Munch, 116 F.2d 85, 87 (2d Cir.1940). In addition, we note that AMEX did not object to the court's decision to treat Vimenca's motion to dismiss as one for summary judgment.

As we have stated, "[t]he burden of proving the facts necessary to sustain jurisdiction is on the plaintiff." Escude Cruz v. Ortho Pharmaceutical Corp., 619 F.2d 902, 904 (1st Cir.1980) (citing McNutt v. General Motors Acceptance Corp., 298 U.S. 178, 56 S.Ct. 780, 80 L.Ed. 1135 (1936)). It is also fundamental that, on a motion to dismiss...