Gutierrez v. Raymond Intern., Inc.

• Decision Date: 17 October 1979
• Docket Number: Civ. A. No. H-77-1639.
• Citation: 484 F. Supp. 241
• Parties: Teresa Herrero GUTIERREZ, Benjamin Perez Moreno, and Isabel Ruiperez Ortega, Plaintiffs, v. RAYMOND INTERNATIONAL, INC., Offshore Constructors, Inc., The Drilling Barge, Bredford Dolphin, J. Ray McDermott & Co., Inc., Oceanic Contractors, Inc., and Occidental Petroleum Corp., Defendants.
• Court: U.S. District Court — Southern District of Texas

484 F. Supp. 241

Teresa Herrero GUTIERREZ, Benjamin Perez Moreno, and Isabel Ruiperez Ortega, Plaintiffs, v. RAYMOND INTERNATIONAL, INC., Offshore Constructors, Inc., The Drilling Barge, Bredford Dolphin, J. Ray McDermott & Co., Inc., Oceanic Contractors, Inc., and Occidental Petroleum Corp., Defendants.

Civ. A. No. H-77-1639.

United States District Court, S. D. Texas, Houston Division.

July 25, 1979.

Rehearing Denied October 17, 1979.

COPYRIGHT MATERIAL OMITTED

Hubert L. Stone, Jr., Corpus Christi, Tex., for plaintiffs.

Eugene Silva, Vinson & Elkins, Houston, Tex., for defendants.

MEMORANDUM AND ORDER

SEALS, District Judge.

Presently pending before the Court is the motion to dismiss filed by the Occidental Petroleum Corporation. This action arises out of the disappearance of Jesus Perez Ruiperez, a Spaniard, from the Bredford Dolphin, a drilling barge being used in connection with the oil platform Piper Alpha in the North Sea. Plaintiffs, also Spanish citizens, filed their First Amended Original Complaint seeking damages pursuant to the Jones Act, 46 U.S.C. § 688, and the Death on the High Seas Act, 46 U.S.C. § 761, and the general maritime law. The Amended Complaint names Occidental Petroleum (OPC), a California corporation, as a defendant. Plaintiffs allege that OPC was an employer of the deceased, that the defendants' negligence caused the death of Ruiperez, and that the Bredford Dolphin was unseaworthy.

OPC does not maintain an office or a place of business in Texas. It has not appointed an agent for service of process in Texas and is not licensed to do business in the state. The plaintiffs therefore have attempted to effectuate service of process on OPC under Rules 4(d)(7) and 4(e), Fed.R. Civ.P. By serving the Secretary of State, the plaintiff have predicated the existence of in personam jurisdiction over the nonresident defendant on the Texas long arm statute, Tex.Rev.Civ.Stat.Ann. art. 2031b.

It may seem anomalous to require the plaintiffs to show the amenability of OPC to service of process in a Texas state court when they are seeking to have a federal district court exercise in personam jurisdiction in a case involving a federal, and not a state, claim.¹ Rule 4(d)(7) authorizes service in the manner provided by state law; OPC does not contend that service was not made in that manner. Rather, proper service turns upon whether Rule 4(d)(7) may be employed without reference to Rule 4(e) which requires in some situations that service be made in the manner and under the circumstances prescribed by state statute or rule. The Court concludes that it cannot and that the plaintiffs must show that OPC is amenable to service of process under the Texas long arm statute.

It is unnecessary for the purpose of this Memorandum to attempt to unravel all of the questions surrounding the relationship of Rules 4(d)(7) and 4(e) or to recount all of the cases which have considered this issue. Suffice it to say that the power of a federal court to maintain in personam jurisdiction over a defendant is limited both by the due process clause and by Congress. For certain kinds of litigation Congress has authorized service of summons upon a person not an inhabitant of or found within the state in which the district court is held. See, e. g. 15 U.S.C. §§ 22, 25, 77v & 78aa; 28 U.S.C. § 1655. In such a case service arguably may be obtained without reference to the circumstances prescribed by state statute or rule. Black v. Acme Markets, Inc., 564 F.2d 681, 685 n. 5 (5th Cir. 1977); Hilgeman v. Nat'l Ins. Co. of America, 547 F.2d 298, 300-01 (5th Cir. 1977). Where, however, Congress has not seen fit to authorize by statute service upon a nonresident, unless service may be obtained pursuant to another subsection of Rule 4,² the plaintiffs must look to state law. Congress has not enacted a statute authorizing service upon nonresident defendants in admiralty cases, and the service upon OPC is ineffective unless plaintiffs can show that OPC is amenable to suit under Texas law.

In order for the Court to find that OPC is amenable to service of process pursuant to the Texas long-arm statute, there must be a determination that OPC was doing business within the State as that term has been defined by Article 2031b. If a foreign corporation is doing business within the state, and it does not have an agent for service of process, the acts constituting doing business are deemed the equivalent of the appointment of the Secretary of State as agent for service of process "in any action, suit or proceedings arising out of such business done in the State." Article 2031b § 3. Thus, in order to show that the Secretary of State was constructively appointed agent for service of process, the plaintiffs must show that OPC was doing business and that this action arises out of that business engagement.

Section 4 of Article 2031b provides as follows:

For the purpose of this Act, and without including other acts that may constitute doing business, any foreign corporation, . . . shall be deemed doing business in this State by entering into a contract by mail or otherwise with a resident of Texas to be performed in whole or in part by either party in this State, or the committing of any tort in whole or in part within this State.

In order to be amenable to suit under Article 2031b § 4, plaintiffs traditionally have been required to show that the corporation's activities satisfy either the contract or tort component of section 4. Article 2031b, however, is an effort to stretch Texas's jurisdiction over non-residents to the limits of due process, and the Court also will consider whether OPC has committed "other acts that may constitute doing business."

The plaintiffs have not alleged that a tort has been committed in whole or in part in Texas. Nor is it alleged that any tort committed elsewhere has had any effect in the forum state. Thus, it will be assumed that the tort component of Article 2031b § 4 is inapplicable.

The contract portion of the Texas long-arm statute requires the plaintiffs to show that "(1) a contract to be performed in whole or in part within Texas existed between the parties and (2) the present suit arose out of that contractual arrangement." Product Promotions, Inc. v. Cousteau, 495 F.2d 483, 491 (5th Cir. 1974). See also Walker v. Newgent, 583 F.2d 163 (5th Cir. 1978).

The plaintiffs have alleged two contractual relationships in support of their assertion of in personam jurisdiction. The first of these is that OPC was an employer of the deceased. Amended Complaint at III. This certainly fails to satisfy the plain meaning of the statute which requires that the contract be entered into with a resident of Texas. Neither of the parties to the alleged contract of employment are Texas residents.

The second contractual relationship upon which jurisdiction is based is the involvement of OPC's subsidiary, Occidental of Britain (OBI), in the Piper Alpha, a drilling rig operating in the North Sea. OBI's contract, however, was with Oceanic Contractors, Inc., a corporation organized and existing under the laws of the Republic of Panama with offices in Beirut, Lebanon. Assuming for the sake of argument that OBI is the alter ego of OPC, that contract would not support the exercise of in personam jurisdiction over either the subsidiary or the parent corporation. First, the deceased and those in privity with him are not parties to the contract, and the contract was not entered into with a Texas resident. Second, the plaintiffs have made no allegations concerning the Piper Alpha in their Amended Complaint and the Court is uncertain of the connection between the Piper Alpha and this litigation. The Defendant, in its Memorandum of Law in support of its motion to dismiss, explained that the Bredford Dolphin, the in rem defendant, is an ocean barge which was used in support of the Piper Alpha. Nevertheless, the plaintiffs have not alleged that Ruiperez was aboard the Piper Alpha, or that he was employed as a member of its crew. The contractual rights OBI has in the Piper Alpha not only appear insufficient to make OPC amenable to process, but have only questionable relevance to this lawsuit.

The only connection that the plaintiffs have shown between the contract and Texas is a provision that any dispute between the parties with respect to the contract shall be settled by arbitration in Houston, Texas, or such other places as the parties may agree.³ Even if arbitration had taken place in Houston, that "contact" would not make the contract one that was entered into with a Texas resident to be performed in whole or in part in this state. The Texas Supreme Court has held that a "single and fortuitous contact with Texas" will not justify the assertion of jurisdiction by the Texas courts even when the contact meets the literal requirements of Article 2031b. U-Anchor Advertising, Inc. v. Burt, 553 S.W.2d 760, 763 (Tex.1977). This fortuitous connection does not meet those requirements because the plaintiffs have not shown that either party is a resident of Texas. An agreement to hold an arbitration in Houston is not "grounded on the expectation or necessity of invoking the benefits and protections of Texas law, nor is it designed to result in a profit from a business transaction undertaken in Texas." Id. The designation of Houston as a possible place for arbitration is so incidental to the contract as not to constitute performance thereunder. Article 8.01(B)(1), Tex. Bus.Corp.Act Ann., provides that a corporation will not be considered to be doing business in the state merely because it is a party to an arbitration proceeding in the state. ". . . A foreign corporation shall not be considered to be transacting business within this state . . . by reason of . . . maintaining or defending . . . arbitration proceedings . . .."⁴ Accordingly, even if OBI is the later ego of OPC, the existence of such an arbitration clause does not make OPC amenable to...