Bross Utilities Service Corp. v. Aboubshait, Civ. No. H 78-582.
| Citation | 489 F. Supp. 1366 |
| Decision Date | 22 May 1980 |
| Docket Number | Civ. No. H 78-582. |
| Parties | BROSS UTILITIES SERVICE CORPORATION v. Abdulla Fouad A. ABOUBSHAIT, Abdulla Fouad A. Aboubshait Establishment, Fouad Abdulla Fouad, Fouad Abdulla Fouad Corporation, Electrical Mechanical Engineering Contractors, and Shamil Sami Ayntrazi. |
| Court | U.S. District Court — District of Connecticut |
Mark C. Yellin, Elliot G. Macht, West Hartford, Conn., for plaintiff.
No appearance for defendants.
Introduction
This action arises out of a joint venture for the construction of high voltage electrical lines in Saudi Arabia. Plaintiff Bross Utilities Service Corporation ("Bross"), a Connecticut corporation headquartered in this state, alleges various breaches of contract and of fiduciary duties, as well as tortious conduct, by the defendants, two Saudi corporations, a Lebanese corporation, two individual citizens of Saudi Arabia and one citizen of Lebanon. According to Bross, the defendants' wrongful acts deprived it of over $20,000,000, which represented Bross' share of the past and anticipated future profits of the joint venture.
Bross claims that the defendants are subject to the jurisdiction of this court through the application of the Connecticut "long-arm" statutes governing in personam jurisdiction over foreign corporations, Conn. Gen.Stat. § 33-411, and nonresident individuals, Conn.Gen.Stat. § 52-59b. Bross served process on the Secretary of State of Connecticut in the manner provided by Conn.Gen.Stat. §§ 33-411(d) and 52-59b(c) in November 1978.1 None of the defendants answered or appeared, and default was entered, pursuant to Rule 55(a), Fed.R. Civ.P., on December 28, 1979. On February 15, 1980, the court granted the plaintiff's motion for default judgment, under Rule 55(b), Fed.R.Civ.P., and ordered that a hearing be held to determine the damages which Bross might recover.2 At that hearing, which was held on March 10-11, 1980, the court raised questions concerning its jurisdiction over the defendants and reserved the right not to enter any judgment in favor of the plaintiff if it found that such jurisdiction was lacking.3 The plaintiff presented the testimony of its senior vice president, Peter G. Olson,4 as well as documentary evidence, concerning the questions of jurisdiction and damages.
After examination and analysis of the plaintiff's complaint, the evidence presented at the hearing, and Bross' post-hearing submissions, the court concludes that the applicable Connecticut statutes do not authorize in personam jurisdiction over the defendants. Accordingly, the plaintiff's motion for default judgment is, upon reconsideration, denied, the action is dismissed and judgment shall enter for the defendants.
Bross is incorporated in the State of Connecticut, with its principal place of business in Bloomfield, Connecticut.5 It was founded in 1924,6 and its shares have been publicly held and traded on the over-the-counter market since 1969.7 Its primary business is the construction of electrical high voltage transmission lines, associated substations and lines and facilities for the distribution of electricity to populated areas.8 Bross has approximately 100 employees,9 and conducts its business wherever in the country or world it obtains contracts to perform work; very little of its business is conducted in Connecticut and the northeastern United States.10
The three corporate defendants are Abdulla Fouad A. Aboubshait Establishment ("Establishment"), Fouad Abdulla Fouad Corporation ("FAFC") and Electrical Mechanical Engineering Contractors ("Emeco"); Establishment and FAFC are organized under the laws of Saudi Arabia, while Emeco is a Lebanese corporation.11 The individual defendants are Abdulla Fouad A. Aboubshait and Fouad Abdulla Fouad, two Saudi citizens, and Shamil Sami Ayntrazi, a citizen of Lebanon;12 the individual defendants control, respectively, Establishment, FAFC and Emeco.13
In December 1974, Bross officers met with defendant Fouad Abdulla Fouad and discussed the possibility that the plaintiff might enter into a joint venture to construct electrical transmission and distribution systems in Saudi Arabia.14 In April 1975, a joint venture, known as "Fouad Bross Emeco-Electrical Engineers," was formed by the plaintiff (through a wholly-owned subsidiary which was registered in the Grand Cayman Islands), Establishment and Emeco.15 The joint venture apparently was designed to take advantage of Bross' technical expertise and ability to procure skilled workers and specialized equipment from the United States, as well as its coventurers' capital and their capacity to oversee the enterprise locally.16 Bross owned 31.5% of the joint venture and was entitled to a proportionate share of its profits.17
The joint venture obtained contracts to construct electrical transmission lines and substations in Saudi Arabia for the Arabian American Oil Company ("Aramco"), and apparently performed those contracts.18 In addition, the joint venture was awarded several contracts for electrical distribution work in Saudi Arabia, for which it was to be paid on a "cost plus" basis.19 However, the plaintiff never received any profits earned by the joint venture on these contracts.20 Bross alleges that it was victimized by the defendants' wrongful appropriation of Bross' skilled American workers, the specialized equipment which Bross imported from the United States for the joint venture's use and business opportunities which rightfully belonged to the joint venture.21 The plaintiff alleges that this conduct and related acts (such as the refusal to permit Bross' accountants to audit the joint venture's books, the revocation of the employment contracts of Bross' American workers, the failure to make payment of working capital to the joint venture and the misrepresentation of material facts to Bross) constituted breaches of contracts, breaches of fiduciary duties, tortious interference with the plaintiff's contracts and business relations, and fraud.22
Bross' complaint is silent on questions relevant to the assertion of in personam jurisdiction over the defendants under Connecticut's "long-arm" statutes.23 Bross did not allege that the defendants are, or ever were, present in this state, or that they committed acts, either personally or through agents, which would give rise to jurisdiction under Conn.Gen.Stat. §§ 33-411 or 52-59b.
At the hearing held on March 10-11, 1980, the plaintiff was invited to present evidence on the question of in personam jurisdiction. Mr. Olson testified that there were no meetings in Connecticut between representatives of the plaintiff and either the individual defendants or officers or directors of the corporate defendants.24 The plaintiff introduced no evidence that the defendants came to Connecticut to transact any business, except the presence in this state of one Romeo R. Cote of Southington, Connecticut, who met twice with Mr. Olson and described himself as an agent of the Saudi defendants.25 The first of these meetings occurred in 1975, the second in 1976.26 On both occasions, Mr. Cote initiated the meetings, which were held at Bross' Bloomfield offices.27
At the first meeting, Mr. Cote introduced himself as an agent "for the Fouad Company" and explained that his job was to try to get business in the United States for the Saudi defendants. At the second meeting, Mr. Cote, who in Mr. Olson's words, "somehow or other . . . found out that the relationships were strained between the parties" to the joint venture, volunteered to help resolve those differences and assist the plaintiff in getting "substantial amounts of work" in Saudi Arabia.28 There is no evidence (and the plaintiff does not allege) that Mr. Cote had anything to do with the establishment of the joint venture or the performance of the contracts at issue here, and it appears that the two meetings were isolated incidents with little connection to the problems Bross experienced in its relations with the defendants in Saudi Arabia.29
A federal court adjudicating a case founded upon diversity of citizenship must determine questions of in personam jurisdiction by reference to the law of the forum state. Arrowsmith v. United Press International, 320 F.2d 219 (2d Cir. 1963) (en banc); McFaddin v. National Executive Search, Inc., 354 F.Supp. 1166, 1168 (D.Conn.1973) (Newman, J.). The state law relevant here is Conn.Gen.Stat. § 33-411 () and Conn.Gen. Stat. § 52-59b (). The court therefore considers the allegations of the complaint and the facts proved at the hearing held on March 10-11, 1980 in light of those statutory provisions.
(1) Transacting Business Under Conn. Gen.Stat. § 33-411(b)
None of the corporate defendants is alleged to have been authorized to transact business in Connecticut pursuant to Conn. Gen.Stat. §§ 33-395 or 33-396. Bross argues in its brief that they nonetheless transacted business here, in violation of those provisions, and are therefore "subject to suit in this state upon any cause of action arising out of such business." Conn.Gen. Stat. § 33-411(b). In support of this argument, the plaintiff relies upon: (1) the activities in this state of Romeo R. Cote, as agent for defendants Establishment and FAFC; (2) the activities here of Bross itself, on the theory that Bross' acts are to be imputed to their co-venturers, defendants Establishment and Emeco, under the law of agency; and (3) international communications between the corporate defendants, located outside of Connecticut, and the plaintiff, located within this jurisdiction.
None of these circumstances supports jurisdiction under Conn.Gen.Stat. § 33-411(b). In the first place, the plaintiff has not demonstrated that the...
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