Cerner Middle E. Ltd. v. Belbadi Enters. LLC

• Decision Date: 15 July 2020
• Docket Number: A166877
• Citation: 472 P.3d 299,305 Or.App. 413
• Parties: CERNER MIDDLE EAST LIMITED, a Cayman Islands exempted company, Plaintiff-Appellant, v. BELBADI ENTERPRISES LLC, a U.A.E. Limited Liability Company; and Orland Ltd., Defendants-Respondents.
• Court: Oregon Court of Appeals

305 Or.App. 413

472 P.3d 299

CERNER MIDDLE EAST LIMITED, a Cayman Islands exempted company, Plaintiff-Appellant,

v.BELBADI ENTERPRISES LLC, a U.A.E. Limited Liability Company; and Orland Ltd., Defendants-Respondents.

A166877

Court of Appeals of Oregon.

Argued and submitted June 10, 2019.

July 15, 2020

Warren E. Gluck, New York, argued the cause for appellant. Also on the briefs were David J. Elkanich, Garrett S. Garfield, and Holland & Knight LLP.

Gary I. Grenley argued the cause for respondents. Also on the brief were Paul H. Trinchero, Eryn Karpinski Hoerster, and Garvey Schubert Barer, P.C.

Before Armstrong, Presiding Judge, and Tookey, Judge, and Shorr, Judge.

ARMSTRONG, P. J.

Plaintiff Cerner Middle East Limited, a medical technology company incorporated and organized under the laws of the Cayman Islands with its primary place of business in Missouri, appeals a judgment dismissing for lack of jurisdiction its action to enforce two guarantees executed by defendant Belbadi Enterprises LLC, a limited liability company organized under the laws of the United Arab Emirates, and to attach property provided as security for the guarantees. We conclude that the trial court erred in dismissing the action and therefore reverse.

The dispute in this case centers around whether a court in Oregon has jurisdiction over Belbadi, a foreign company, because of the presence in Oregon of a Belbadi affiliate owned by Belbadi's wholly owned subsidiary. We draw the relevant facts from the pleadings and affidavits, construing the pleadings and affidavits liberally in favor of jurisdiction and assuming the truth of all well-pleaded allegations. O'Neil v. Martin , 258 Or. App. 819, 828, 312 P.3d 538 (2013) (in reviewing a trial court's grant of a motion to dismiss for lack of personal jurisdiction, we assume the truth of all well-pleaded allegations in the record and construe the pleadings liberally in support of jurisdiction).

Ahmed Saeed Mohammed Al Badi Al Dhaheri (Al Dhaheri), a citizen of the United Arab Emirates (UAE), was the sole proprietor of iCapital. Al Dhaheri happens also to be the former Minister of Health of the Abu Dhabi Emirate. iCapital entered into a contract with the Ministry of Health of the UAE for the development of a medical information technology platform for hospitals in the UAE. In July 2008, iCapital, in turn, entered into a contract with plaintiff Cerner, a medical information technology developer,¹ to provide the software and services necessary for the development of the platform. The contract is known by the parties as the Cerner Business Agreement (CBA).

Plaintiff embarked on work under the CBA, but iCapital, now reorganized as an LLC,² defaulted on its obligations to plaintiff. As provided in the CBA, plaintiff requested arbitration of the dispute with iCapital and Al Dhaheri before the International Chamber of Commerce International Court of Arbitration (ICC). Before an answer had been filed, plaintiff, Al Dhaheri, and iCapital reached a settlement.

Al Dhaheri is the sole member of iCapital's parent, defendant Belbadi Enterprises LLC, a UAE corporation with its principal place of business in Abu Dhabi, UAE. Under the settlement agreement, Al Dhaheri agreed that Belbadi would "irrevocably and unconditionally" guarantee iCapital's performance under the CBA through two guarantees. If iCapital defaulted on its obligations under the CBA or the settlement agreement, Belbadi unconditionally agreed to make payments to plaintiff "to the fullest extent permitted by law and until all of the Guaranteed Obligations have been fully performed." Belbadi waived "all rights and benefits which might otherwise have been available to [Belbadi] with respect to either or both of the Settlement Agreement and this Guarantee under applicable laws of suretyship and guarantor's defense generally."³ It is undisputed that Belbadi agreed to securitize the guarantees.

Belbadi, through other companies, owns Willamette Enterprises, Ltd., a company incorporated in the Cayman Islands. Willamette Enterprises, Ltd., owns Vandevco Limited, which, through its subsidiaries (the "VanSubs"), owns Vancouvercenter, a multiuse residential and commercial development in Vancouver, Washington.

Willamette Enterprises, Ltd. also owns Orland Ltd., an Oregon corporation formed in 1996. In 1999, Orland registered "Vancouvercenter" as an assumed business name in Oregon. But Orland's assets consist only of six residential properties in Tigard, Oregon, that Orland acquired in 1996 and 1997 for the purpose of further development. Because Orland is nominally owned by Willamette Enterprises, Ltd., which, in turn, is ultimately owned by Belbadi, Belbadi is Orland's parent, just as Belbadi is Vandevco's parent.

Within months of the settlement agreement, iCapital defaulted on its obligations. Plaintiff then pursued arbitration with the ICC, which entered an award of over $62 million for plaintiff and against iCapital, and jointly and severally against Al Dhaheri, who, the ICC determined, was iCapital's alter ego. Neither iCapital nor Al Dhaheri has paid anything toward the arbitration award. Additionally, an Abu Dhabi appellate court upheld a lower court judgment establishing iCapital's and Al Dhaheri's liability to plaintiff and approving plaintiff's provisional seizure of iCapital's assets held by third parties.

In its complaint here, plaintiff alleges that iCapital's default triggered Belbadi's obligation on the guarantees, which Belbadi has not honored. Plaintiff brought this action in Oregon against Belbadi and Orland for breach of the guarantees, for prejudgment attachment of Orland's shares as security for the guarantees, and to foreclose on the security. Plaintiff's complaint alleges that, in agreeing to the guarantees, plaintiff relied on Belbadi's ownership of assets outside of the UAE and plaintiff's alleged right under the guarantees to seize those assets.⁴

Plaintiff also sought and obtained a temporary restraining order to prevent Belbadi or Orland from selling or otherwise transferring interests in or assets of Orland in a way that would devalue its shares. Belbadi does not reside in Oregon, does not directly own property in Oregon or do business in Oregon, and has not been served with process in this action.⁵

The trial court granted defendants' motion to dismiss plaintiff's claim for lack of personal jurisdiction over Belbadi, and plaintiff challenges that ruling on appeal. We review the trial court's ruling for legal error. Kotera v. Daioh Int'l U.S.A. Corp ., 179 Or. App. 253, 262, 40 P.3d 506 (2002) (trial court's dismissal of complaint for lack of personal jurisdiction reviewed for legal error).

As relevant here, ORCP 4 provides:

"A court of this state having jurisdiction of the subject matter has jurisdiction over a party served in an action pursuant to Rule 7 under any of the following circumstances:

"A Local presence or status. In any action, whether arising within or without this state, against a defendant who when the action is commenced:

"* * * * * "A(3) Is a corporation created by or under the laws of this state[.]"

It is undisputed that Orland, an Oregon corporation, is subject to the court's jurisdiction under ORCP 4 (A)(3). Plaintiff asserts that Oregon's statutory personal jurisdiction extends, in personam , through Orland to Belbadi, because Belbadi, along with all of the Belbadi affiliates, is Orland's "alter ego"—that is, they are one in the same. If Belbadi and Orland are alter egos, then jurisdiction over Belbadi derives from the court's jurisdiction over Orland. See Rice v. Oriental Fireworks Co. , 75 Or. App. 627, 632, 707 P.2d 1250 (1985), rev. den. , 300 Or. 546, 715 P.2d 93 (1986) (a corporation's identity may be disregarded for purposes of maintaining jurisdiction over a controlling shareholder).

Plaintiff also asserts that the court has jurisdiction over Belbadi for enforcement of the guarantees on a theory of quasi-in-rem jurisdiction, through which the presence of Belbadi's assets in the state would allow for jurisdiction up to the value of the property. Hobgood v. Sylvester , 242 Or. 162, 165, 408 P.2d 925 (1965) ("The underlying theory of quasi-in-rem jurisdiction does not contemplate a typical personal judgment against the defendant, but only a judgment to the extent of the defendant's property within the state."). Because it is dispositive, we address only plaintiff's contentions relating to in personam jurisdiction under ORCP4 (A)(3) and do not reach plaintiff's contentions relating to quasi-in-rem jurisdiction.

Belbadi, organized under the laws of the UAE, is a separate entity from Orland and does not directly own property or have a physical presence in Oregon, except that it does, ultimately, own Orland. Plaintiff's in personam jurisdiction argument depends first on a showing of a unity of identity of Belbadi and Orland. In addition to a unity of identity, plaintiff asserts that, based on Belbadi's alleged conduct toward Orland and among its other affiliates, Belbadi has lost its right to rely on its separate limited liability identity to shield it from jurisdiction and liability, that the corporate and limited liability veils of Orland and Belbadi should be pierced, and that jurisdiction in Oregon should lie based on Belbadi's presence through Orland.⁶

We have previously held that in personam jurisdiction can arise based on a defendant's presence in Oregon through a corporate alter ego. In Rice , the plaintiff was injured while discharging fireworks distributed by Chou, a resident of Maryland, and Chou's Maryland corporation, J.C. Oriental Fireworks, Inc. 75 Or. App. at 629, 707 P.2d 1250. It was undisputed that the corporation had sufficient ties in Oregon for personal jurisdiction. The question was whether Chou also could be subject to personal jurisdiction in an Oregon court. Id. We first addressed and rejected the plaintiff's contention that Chou's contacts with Oregon gave rise to jurisdiction under ORCP 4 L,...