Consolidated Development Corp v. Sherritt Inc.

• Decision Date: 05 July 2000
• Docket Number: 97-5953,Nos. 97-5726,s. 97-5726
• Parties: (11th Cir. 2000) CONSOLIDATED DEVELOPMENT CORPORATION, a Delaware Corporation, Consolidated Cuban Oil and Gas Rights Corporation, a Florida Corporation, Plaintiffs-Appellants, v. SHERRITT, INC., a foreign corporation, a.k.a. Viridian Inc., Sherritt International, Inc., a foreign corporation, et al., Defendants-Appellees.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1286

216 F.3d 1286 (11th Cir. 2000)

CONSOLIDATED DEVELOPMENT CORPORATION, a Delaware Corporation, Consolidated Cuban Oil and Gas Rights Corporation, a Florida Corporation, Plaintiffs-Appellants, v. SHERRITT, INC., a foreign corporation, a.k.a. Viridian Inc., Sherritt International, Inc., a foreign corporation, et al., Defendants-Appellees.

Nos. 97-5726, 97-5953.

United States Court of Appeals Eleventh Circuit.

July 5, 2000.

[Copyrighted Material Omitted] Appeals from the United States District Court for the Southern District of Florida.

(No. 96-01820-CIV-DLG), Donald L. Graham, Judge.

Before EDMONDSON and BARKETT, Circuit Judges, and COHILL^*, District Judge.

COHILL, District Judge:

Plaintiffs-Appellants Consolidated Development Corporation and Consolidated Cuban Oil & Gas Rights Corporation (collectively "Consolidated"), are United States corporations whose Cuban subsidiaries formerly held oil concessions and leases to drill for oil in the Republic of Cuba. These concessions were expropriated by the Cuban government in 1959.¹ In 1996, Consolidated filed this action for damages against the Republic of Cuba, four Cuban corporations, and two Canadian corporations and their affiliates. Consolidated here appeals the district court's dismissal, under Fed.R.Civ.P. 12(b)(6), of its claims against the Canadian corporations and their affiliates, for failure to state a claim upon which relief could be granted

We may, of course, affirm the district court on any adequate grounds, including grounds other than those upon which the district court actually relied. Parks v. City of Warner Robins, 43 F.3d 609, 613 (11th Cir.1995). In addition, we are mindful of this court's own responsibility to ascertain jurisdiction in the first instance. FW/PBS, Inc. v. City of Dallas, 493 U.S. 215, 231, 110 S.Ct. 596, 607, 107 L.Ed.2d 603 (1990); University of S. Ala. v. American Tobacco Co., 168 F.3d 405, 410 (11th Cir.1999). Furthermore, "[a]n appellate federal court must satisfy itself not only of its own jurisdiction, but also of that of the lower courts in a cause under review." Mitchell v. Maurer, 293 U.S. 237, 244, 55 S.Ct., 162, 165, 79 L.Ed. 338 (1934). We conclude that the district court lacked personal jurisdiction over the Canadian corporations and their affiliates, and we will affirm on jurisdictional grounds without reaching the substantive questions raised by this appeal.

Dr. Alberto Diaz Masvidal, president of both Consolidated corporations, appears pro se and appeals the denial of his motion for intervention and other relief. Given our conclusion that the district court lacked jurisdiction over any of the defendants, we will affirm the district court's denial of his motion to intervene.

I.

This appeal is from a decision dismissing appellants' claims, and thus we take our factual framework from the allegations made in the first amended complaint, to the extent that they remain uncontroverted by the defendants' affidavits and depositions. Appellants filed this action against two Canadian corporations and their affiliates: Viridian, Inc. (f/k/a Sherritt, Inc.), and Viridian's affiliate, Canada Northwestern Energy Ltd. ("CNW"); and Sherritt International Corporation ("Sherritt International"), and its affiliates, The Cobalt Refinery Co., Inc. ("Corefco"), International Cobalt Company, Inc. ("ICCI"), and Moa Nickel, S.A. ("Moa Nickel").²

Viridian, CNW, and Sherritt International are organized under Canadian law and have their principal places of business in Canada. R1-2 at WW 3,4,5. Sherritt International is a wholly-owned subsidiary of Viridian. R1-2 at ¶ 4. Their operations include the production and marketing of fertilizers, the production and sale of oil and natural gas, the mining, refining, and sale of cobalt and nickel, and the development, marketing, and production of advanced industrial materials and metallurgical technologies. R1-2 at ¶ 6.

Defendant Corefco is organized under Canadian law as well. R1-2 at ¶ 14. Fifty per cent of its stock is held by Viridian and Sherritt International, and 50% is owned by General Nickel Co., S.A. ("GNC"), one of the defendant Cuban corporations. R1-2 at ¶ 14.

Defendant Moa Nickel is a corporation organized under the laws of Cuba with its principal place of business in Cuba. R1-2 at ¶ 12. Half of its stock is owned by GNC, and the other half by Viridian and Sherritt International. R1-2 at ¶ 12.

Defendant ICCI is a corporation organized under the laws of The Bahamas. R1-2 at ¶ 13. Its stock, too, is equally owned by GNC and by Viridian and Sherritt International. R1-2 at ¶ 13.

GNC, Moa Nickel, ICCI, and Corefco are included on the United States Department of the Treasury's list of "Blocked Persons and Specially Designated Nationals," for purposes of the United States government's embargo against Cuba. R1-2 at WW 11-14.

In addition to the claims against these defendants, Consolidated also filed suit against the Republic of Cuba and four Cuban corporations: Cubapetroleo ("Cupet"), Commercial Cupet, S.A. ("Commercial Cupet"), Union de las Empresas de Niquel ("Union"), and the aforementioned GNC. R1-2 at WW 7-11.

Consolidated contends that Viridian, Sherritt International, and CNW ( the order of dismissal calls these the "Viridian defendants") hold a working interest in four oil production contracts with Cuba, Cupet, and Commercial Cupet. R1-2 at ¶ 21. These are production-sharing contracts, under which Viridian provides technical assistance in return for a percentage of the incremental oil production. According to the complaint, these contracts encompass most of the oil fields in Cuba, including Consolidated's expropriated properties and rights. R1-2 at ¶ 21.

Consolidated claims that Viridian's share of the oil produced from these wells is sold to the Republic of Cuba, which pays Viridian with nickel and cobalt ore. R1-2 at ¶ 21. Viridian also operates a cobalt and nickel refining operation through its affiliates Moa Nickel, Corefco, and ICCI, and uses these materials, inter alia, in its fertilizer production business. R1-2 at WW 23, 25, 26. Consolidated contends that some of these products find their way to markets in the United States, and that this arrangement violates international law by wrongfully converting properties and rights which the Cuban government expropriated from Consolidated in 1959. R1-2 at WW 25, 27.

The district court referred motions and discovery matters to a magistrate judge. Viridian, Corefco, CNW, Sherritt International, Moa Nickel, and ICCI, filed motions to dismiss under Fed.R.Civ.P. 12(b)(6). These defendants also filed motions to dismiss for lack of personal jurisdiction under 12(b)(2). Both grounds for dismissal were thoroughly briefed and argued. The magistrate judge permitted Consolidated to conduct limited discovery on the question of jurisdiction, and allowed the plaintiffs to file a supplemental memorandum on jurisdiction after taking the depositions.³

On April 2, 1997, the magistrate judge heard oral argument on all motions to dismiss. On July 30, 1997, the court dismissed plaintiffs' claims against Viridian, Corefco, CNW, and ICCI for failure to state a cause of action under 12(b)(6). R4-117. The motions to dismiss pursuant to 12(b)(6) filed by defendants Moa Nickel and Sherritt International were granted by order dated September 18, 1997, in accordance with the court's July 30 opinion. R5-141. The court determined that plaintiffs' claims were barred by the act of state doctrine, and did not reach the jurisdictional question.⁴ All other motions in the case, including the motions to dismiss under Rule 12(b)(2) for lack of personal jurisdiction, were deemed moot. R4-107.

The court did not adjudicate Consolidated's claims against the Republic of Cuba or any of the Cuban defendants. Indeed, although the court directed the United States Department of State to serve the complaint on the Cuban corporations, it is not clear from the record that these defendants were ever served. A default judgment was entered against the Republic of Cuba on July 31, 1997. R4-114.

After some procedural delay, the district court entered a final judgment on October 7, 1997 in favor of Viridian, CNW, Sherritt International, Corefco, ICCI, and Moa Nickel, dismissing all claims against them. R5-151.

Dr. Alberto Diaz Masvidal, pro se, moved to intervene on October 20, 1997. R5-152. On November 7, 1997, the district court issued an omnibus order which mooted Dr. Masvidal's motion to intervene as well as all other outstanding motions in the case. The order also vacated the default judgment against the Republic of Cuba, and dismissed plaintiffs' claims against Cuba without prejudice. Dr. Masvidal's motion to stay and his petition for a re-hearing were denied, and the case was closed as to all defendants. R6-160. This appeal followed.

We have jurisdiction over a final decision of a district court under 28 U.S.C. § 1291.

II.

Whether a federal court has personal jurisdiction over a defendant is a question of law and subject to de novo review. Sculptchair, Inc. v. Century Arts, Ltd., 94 F.3d 623, 626 (11th Cir.1996). Where a district court does not conduct an evidentiary hearing on the question, the burden is on the Plaintiff to establish a prima facie case of personal jurisdiction over a nonresident defendant. Madara v. Hall, 916 F.2d 1510, 1514 (11th Cir.1990), citing Morris v. SSE, Inc., 843 F.2d 489, 492 (11th Cir.1988). A prima facie case is established if the Plaintiff presents enough evidence to withstand a motion for directed verdict. Id. We must accept the allegations in the complaint as true, to the extent that they are uncontroverted by the Defendant's affidavits and depositions, and must construe all reasonable inferences in favor of the Plaintiff. Id.

III.

The amended complaint relies on Fed R. Civ. P. 4(k)(2), the national long-arm statute, as the basis of personal jurisdiction over the Canadian defendants.⁵ R75 at ¶ 17. Where, as here, a...