City of Virginia Beach, Va. v. Roanoke River Basin Ass'n

• Citation: 776 F.2d 484
• Decision Date: 01 November 1985
• Docket Number: Nos. 85-1022,s. 85-1022
• Parties: CITY OF VIRGINIA BEACH, VIRGINIA, a political subdivision of the Commonwealth of Virginia and the United States of America, Appellees, v. ROANOKE RIVER BASIN ASSOCIATION; V. Earl Stanley, Jr.; Jesse L. Fowler, Jr.; Harold Carawan; Dr. Allan A. Hoffman, Defendants, and James G. Martin, Governor of the State of North Carolina, Appellant. (Two Cases) (L), 85-1083.
• Court: United States Courts of Appeals. United States Court of Appeals (4th Circuit)

Page 484

776 F.2d 484

CITY OF VIRGINIA BEACH, VIRGINIA, a political subdivision of

the Commonwealth of Virginia and the United States

of America, Appellees, v. ROANOKE RIVER BASIN ASSOCIATION; V. Earl Stanley, Jr.;

Jesse L. Fowler, Jr.; Harold Carawan; Dr. Allan

A. Hoffman, Defendants,

and

James G. Martin, Governor of the State of North Carolina,

Appellant. (Two Cases)

Nos. 85-1022(L), 85-1083.

United States Court of Appeals, Fourth Circuit.

Argued Sept. 11, 1985.

Decided Nov. 1, 1985.

Andrew P. Miller, Washington, D.C. (Kenneth M. Simon, S. Audiway Peal, Karen M. Anderson, Washington, D.C., Beth L. Webb, Dickstein, Shapiro & Morin, Washington, D.C., Lacy H. Thornburg, Atty. Gen., Daniel C. Oakley, Sp. Deputy Atty. Gen., G. Criston Windham, Asst. Atty. Gen., N.C. Dept. of Justice, Raleigh, N.C., on brief), for appellant.

John F. Kay, Jr., Richmond, Va. (M. Scott Hart, James E. Ryan, Jr., George A. Somerville, Mays, Valentine, Davenport & Moore, Richmond, Va., J. Dale Bimson, City Atty., Charles M. Salle, Deputy City Atty., Virginia Beach, Va., on brief), for appellees.

Before PHILLIPS and MURNAGHAN, Circuit Judges, and BUTZNER, Senior Circuit Judge.

BUTZNER, Senior Circuit Judge:

Two actions, one filed in the United States District Court for the Eastern District of Virginia and the other in the United States District Court for the Eastern District of North Carolina, seek to test the validity of the same pipeline permits issued to the City of Virginia Beach, Virginia, by the United States Army Corps of Engineers. In the action filed in Virginia, the city seeks a declaratory judgment that the permits and a water storage contract with the Corps are valid. The Roanoke River Basin Association, several of its officers and members, and the Governor of North Carolina, all of whom are opponents of the pipeline, are named as defendants. They are sued in their own right and as representatives of a class composed of other opponents. The United States has intervened as a plaintiff. The State of North Carolina filed its action in North Carolina against officers of the Corps of Engineers. The state seeks a declaration that the permits are invalid.

City officials and state officials insist that the validity of the permits be adjudicated by district courts sitting in their respective states. We find no justification for their parochial concerns. Federal law will determine the validity of the permits, and we are confident that a federal judge, whether sitting in Virginia or North Carolina, will faithfully and impartially decide this controversy.

This appeal is from an order entered in the action brought by the city in the Eastern District of Virginia. Nevertheless, we cannot be oblivious to the action pending in the Eastern District of North Carolina. The complaint in that case is part of the record before us, and by briefs and oral argument the parties have referred to the proceedings.

The Governor of North Carolina, James G. Martin, ¹ appeals the district court's denial of his motion to dismiss for lack of personal jurisdiction. The district court determined that the Governor in his official capacity was amenable to service of process under provisions of the Virginia long-arm statute, Va.Code Sec. 8.01-328.1. The court also found that subjecting the Governor to suit in Virginia would not violate due process. The court certified its order pursuant to 28 U.S.C. Sec. 1292(b) and Fed.R.App.P. 5, and we granted permission to appeal. Because we believe that the requirements of the long-arm statute have not been met, we vacate the court's order and remand this case for disposition consistent with this opinion. ²

I

North Carolina and Virginia have significant interests in the management of the Roanoke River, which drains a basin of nearly 10,000 square miles located entirely within the two states. The Buggs Island Reservoir on the lower Roanoke River was constructed pursuant to the Flood Control Act of 1944, 58 Stat. 887, and is supervised by the Army Corps of Engineers, 33 U.S.C. Sec. 701b. The reservoir was designed to provide power production, flood control, and regulation of stream flow. In addition, the Flood Control Act contemplates that waters affected by flood control programs will be used for domestic and industrial consumption. See 33 U.S.C. Sec. 708.

On April 27, 1978, the governors of North Carolina and Virginia entered into a formal agreement to hold continuing discussions about water resources of mutual interest to the two states. Pursuant to this agreement, the governors established the North Carolina-Virginia Water Resources Management Committee which was to propose a joint water resources policy for the two states. The committee was cochaired by the North Carolina Secretary of Natural Resources and Community Development and the Virginia Secretary of Commerce and Resources, who were authorized to appoint all other members of the committee. The committee was not given power to bind either state.

The city of Virginia Beach participated in a number of committee meetings. One of the topics discussed was a proposal by the city to construct an 84.5 mile pipeline wholly within Virginia to bring as much as 60 million gallons of water a day from Lake Gaston, a part of the Buggs Island Reservoir, to Virginia Beach. The pipeline, which is designed to satisfy the demands for water of Virginia Beach and other communities until the year 2030, has a projected cost of at least $176,000,000. Discussions of the Virginia Beach proposal occurred from 1979 to 1983, but the committee was unable to reach an agreement.

On July 15, 1983, Virginia Beach unilaterally filed an application with the Corps of Engineers for authorization to construct the pipeline. After conducting public hearings at which representatives of North Carolina opposed the project, and after receiving comments, the Corps issued permits to Virginia Beach to build the pipeline. Later the city and the Corps contracted for water storage.

II

Analysis of the Virginia long-arm statute involves two steps. The court must determine first whether the statutory language permits service of process on the defendant. If it does, the court must then determine whether exercise of personal jurisdiction over the defendant would offend the due process clause of the fourteenth amendment of the United States Constitution. Peanut Corp. of America v. Hollywood Brands, Inc., 696 F.2d 311, 313 (4th Cir.1982). The Supreme Court of Virginia has construed the long-arm statute to extend in personam jurisdiction to the limits of due process. See John G. Kolbe, Inc. v. Chromodern Chair Co., 211 Va. 736, 740, 180 S.E.2d 664, 667 (1971).

The district court held that the governor was amenable to suit in Virginia under two clauses of the long-arm statute, Va.Code Sec. 8.01-328.1 A, which provide:

A court may exercise personal jurisdiction over a person who acts directly or by an agent as to a cause of action arising from the person's:

1. Transacting any business in this Commonwealth; ... [or]

6. Having an interest in, using, or possessing real property in this Commonwealth ...

The importance of the phrase "cause of action arising from" is emphasized in subsection B of the statute:

When jurisdiction over a person is based solely upon this section, only a cause of action arising from acts enumerated in this section may be asserted against him....

Thus, the statute confers no jurisdiction for the assertion of claims that do not arise from the defendant's acts in the state. Our initial inquiry, therefore, is whether the Virginia Beach suit is an action arising from the discussions, some of which occurred within Virginia, between the governors of North Carolina and Virginia and their representatives.

In order for a cause of action to arise from business transacted in Virginia, the activities that support the jurisdictional claim must coincide with those that form the basis of the plaintiff's substantive claim. "[A] single act by a nonresident which amounts to 'transacting business' in Virginia and gives rise to a cause of action may be sufficient to confer jurisdiction upon [Virginia] courts." Danville Plywood Corp. v. Plain and Fancy Kitchens, Inc., 218 Va. 533, 534-36, 238 S.E.2d 800, 802 (1977); see Luke v. Dalow Industries, Inc., 566 F.Supp. 1470, 1472 (E.D.Va.1983).

The difficulty with the city's assertion of jurisdiction under the long-arm statute is its inability to show a cause of action arising from the Governor's acts in Virginia. The discussions about water resources imposed no obligation on either state with respect to the city's pipeline application to the Corps of Engineers, for the committee was merely advisory. The lack of connection between the relief the city requests and the water discussions is evident on the face of the city's complaint. Virginia Beach does not seek to compel the Governor to honor an agreement relating to the proposed pipeline. It does not even claim a right to compel him to negotiate about the pipeline. It asserts that his representatives opposed the pipeline while in Virginia, but it does not allege that this opposition in any way affects the validity of the permits. Consequently, the Governor has not transacted any business in Virginia from which the city's action arose.

We also conclude that the Governor's participation in hearings conducted in Virginia by the Corps of Engineers, was not an invocation of the benefits and protections of Virginia law sufficient to subject the Governor to service under Virginia's long-arm statute. The Governor's representatives did not select Virginia as a site for the hearings. Rather, they simply responded to notices given by the Corps and appeared at the hearing locations chosen by the Corps. See Naartex Consulting Corp. v. Watt, 722 F.2d 779, 785-87 (D.C.Cir.1983).

The district court also held that the governor was amenable to service of process in Virginia under the clause of Virginia's long-arm statute...