Hashemite Kingdom of Jordan v. Layale Enterprises

• Decision Date: 31 October 2001
• Docket Number: No. 00-11018,B-727,00-11018
• Citation: 272 F.3d 264
• Parties: (5th Cir. 2001) IN REAIRCRAFT SERIAL NO. 21010, Etc.; ET AL., Plaintiffs, HASHEMITE KINGDOM OF JORDAN, ex rel. by and through His Excellency Dr. Marwan Muasher, Ambassador and Chief of Mission to the United States in his Official Capacity, Plaintiff-Appellant, v. LAYALE ENTERPRISES, S.A., Appellee
• Court: U.S. Court of Appeals — Fifth Circuit

Page 264

272 F.3d 264 (5th Cir. 2001)

IN RE B-727 AIRCRAFT SERIAL NO. 21010, Etc.; ET AL., Plaintiffs,

HASHEMITE KINGDOM OF JORDAN, ex rel. by and through His Excellency Dr. Marwan Muasher, Ambassador and Chief of Mission to the United States in his Official Capacity, Plaintiff-Appellant, v. LAYALE ENTERPRISES, S.A., Appellee.

No. 00-11018

UNITED STATES COURT OF APPEALS,

FIFTH CIRCUIT

October 31, 2001

[Copyrighted Material Omitted]

[Copyrighted Material Omitted]

Appeal from the United States District Court for the Northern District of Texas

Before POLITZ and BARKSDALE, Circuit Judges, and FALLON, District Judge¹.

RHESA HAWKINS BARKSDALE, Circuit Judge:

The primary issue at hand is whether an in rem action brought by an ambassador in a representative capacity constitutes an action "against" that ambassador, so that a federal district court has subject matter jurisdiction pursuant to 28 U.S.C. § 1351 ("original jurisdiction, exclusive of the courts of the States, of all civil actions and proceedings against", inter alia, ambassadors). For lack of such jurisdiction, the district court dismissed this in rem action, seeking declaratory and injunctive relief and brought by the Hashemite Kingdom of Jordan (Jordan), through its Ambassador. Jordan claims subject matter jurisdiction pursuant to § 1351, as well as on several other grounds. AFFIRMED.

I.

In 1999, through its Ambassador, Jordan instituted this action with a "Complaint for Action In Rem", seeking declaratory and injunctive relief. The complaint stated: a Boeing 727-200 Aircraft, Serial No. 21010 (Aircraft), that had been sequestered by the Sheriff of Tarrant County, Texas, was subject to Jordan's immunity as a foreign sovereign; and any sequestration violated that sovereignty and must be dissolved.

A.

The complaint alleges the following: In October 1992, Rifaat Al Assad of Syria, then owner of the Aircraft, had it transported to Jordan. Al Assad is the father of the president of Layale Enterprises, S.A., a Panamanian company. The Aircraft was registered in the Cayman Islands. While the Aircraft remained in Jordan, Alia/The Royal Jordanian Airlines Corporation (Royal Jordanian), an entity wholly owned by Jordan, had several contacts with Layale's representatives concerning necessary repairs to the Aircraft. Royal Jordanian also issued charges for fees and estimates for necessary repair and maintenance work.

After the Aircraft had been in Amman for two years, Jordanian officials estimated it would cost in excess of $2 million for service, repairs, accumulated rental charges, and other expenses to satisfy minimum airworthiness requirements. Soon after this estimate was made, Al Assad gifted the Aircraft to Jordan (around mid-1994).

Jordan ultimately conveyed the Aircraft to HRH Prince Talal bin Mohammed and HRH Princess Ghida Talal (the alleged owners). The alleged owners are members of Jordan's Royal Family and also are, and were at all relevant times, accredited diplomats to the United States. They planned to use the Aircraft for travel associated with their official duties as diplomats and members of the Royal Family.

In mid-1996, Jordan's Civil Aviation Authority issued to the alleged owners a temporary registration for the Aircraft. (Layale asserts that the Aircraft continues to be registered in the Cayman Islands and has never been deregistered.)

Several months earlier, in March 1996, the alleged owners entered into an "Operating Agreement" with Arab Wings Co. Amman. Arab Wings is a wholly owned subsidiary of Royal Jordanian. Therefore, Jordan owns Arab Wings through Royal Jordanian. The contract was renewed in April 1997. (The renewed contract is in the record; it expired a year later, in April 1998.)

In February 1996 (prior to entering into the March 1996 Operating Agreement with Arab Wings), the alleged owners had entered into a lease agreement with HMS Aviation concerning the Aircraft. (HMS Aviation, a Jordanian company, has offices in Jordan and England.)

Under the terms of that lease agreement, the alleged owners agreed to provide the Aircraft to HMS Aviation, and HMS Aviation in turn agreed to undertake certain enhancements and repairs on behalf of the alleged owners and operator. Pursuant to its lease, and in fulfillment of its agreement to renovate and refurbish the Aircraft, HMS Aviation brought the Aircraft to the United States for servicing at Meacham Field, Fort Worth, Texas.

In April 1997, while the Aircraft was located at Meachem Field, Layale initiated litigation in Texas state court in Tarrant County. Layale claimed ownership of the Aircraft and sought a judgment for title and possession. Jordan was not a named defendant. Layale obtained an ex parte writ of sequestration for the Aircraft on the basis of a $5,000 bond. The writ remains in effect.

HMS Aviation, the lessee, made a special appearance in the state court proceedings solely to contest personal jurisdiction. In May 1997, HMS Aviation removed the action to federal court based on claimed federal question jurisdiction pursuant to 28 U.S.C. § 1331 ("The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States."). In this regard, HMS Aviation asserted that Layale's complaint raised substantial federal questions relating to the conduct of foreign relations. Layale's motion to remand was granted that July. Layale Enters., S.A. v. HMS Aviation, No. 4:97-CV-390-A (N.D. Tex. 21 July 1997) (unpublished).

Almost a year later, in April 1998, the state court ruled: HMS Aviation was not subject to personal jurisdiction; but the court had in rem jurisdiction over the Aircraft. Therefore, the state court dismissed HMS Aviation but retained in rem jurisdiction. HMS Aviation filed an interlocutory appeal, contesting such jurisdiction.

That appeal was pending when, in August 1998, Jordan intervened to assert foreign sovereign immunity as an absolute jurisdictional bar to any judicial proceeding in the United States regarding the Aircraft operated by Jordan's wholly-owned instrumentality, Arab Wings, and owned by members of the Royal Family. Pursuant to 28 U.S.C. § 1441(d), Jordan immediately removed the case to federal court. That same day, it moved to dismiss, pursuant to Federal Rule of Civil Procedure 12, asserting: Layale's claims for title and possession were barred by sovereign immunity; and dismissal was mandated by the doctrines of Act of State and forum non conveniens. The motion was supported by: a declaration by Jordan's Ambassador to the United States; copies of the Aircraft's Jordanian registration; and the agreements between the alleged owners, Arab Wings, and HMS Aviation, regarding the ownership, operation, and lease of the Aircraft.

In early 1999, the district court sua sponte remanded the case to state court, pursuant to 28 U.S.C. § 1447(c), ruling it lacked jurisdiction under 28 U.S.C. § 1330 (original jurisdiction for certain actions against foreign states; discussed infra) because: Layale's petition did not name Jordan as a party; and, therefore, the action was not "against" a sovereign. Jordan's Rule 59(e) motion was denied.

Jordan sought mandamus from our court and appealed. Mandamus was denied. In Re Hashemite Kingdom of Jordan, No. 99-10581 (5th Cir. 8 June 1999)(unpublished). And, in December 1999, pursuant to 28 U.S.C. § 1447(d), our court dismissed the appeal for lack of appellate jurisdiction. Layale Enters., S.A. v. HMS Aviation, No. 99-10632 (5th Cir. 3 Dec. 1999) (unpublished).

B.

Shortly after the dismissal of its appeal, Jordan filed this action, making the above described allegations and giving notice to Layale as a potentially interested party. Layale responded by moving to dismiss for lack of subject matter jurisdiction and for failure to state a claim; and, in the alternative, Layale moved for abstention. It also moved to strike the affidavit of Jordan's Ambassador filed in support of the complaint.

In January 2000, Jordan entered a special appearance in the long pending state court action (filed in April 1997). It did so in order to challenge subject matter jurisdiction. The state court stayed that proceeding pending resolution of the jurisdictional issues in this federal action.

That August, the federal district court granted Layale's motion to dismiss this action for lack of subject matter jurisdiction. It concluded: neither the Declaratory Judgment Act, the Foreign Sovereign Immunities Act (FSIA), nor 28 U.S.C. § 1251, § 1330, or § 1351 provided federal subject matter jurisdiction.

II.

A district court dismissal for lack of subject matter jurisdiction is reviewed de novo. E.g., John G. & Marie Stella Kenedy Mem'l Found. v. Mauro, 21 F.3d 667, 670 (5th Cir.), cert. denied, 513 U.S. 1016 (1994). It goes without saying that federal courts are courts of limited jurisdiction.

Article III of the Constitution of the United States provides that "[t]he judicial Power ... shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish". U.S. Const. art. III, § 1. "The judicial Power shall extend to all Cases, in Law and Equity, arising under [the] Constitution, the Laws of the United States, and Treaties made, or which shall be made, under their Authority; -- [and] to [, inter alia,] all Cases affecting Ambassadors, other public Ministers and Consuls." Id. § 2. "In all Cases [,inter alia,] affecting Ambassadors, other public Ministers and Consuls, ... the supreme Court shall have original Jurisdiction." Id.

It is more than well established that Congress has plenary authority to regulate federal court jurisdiction and can withhold such jurisdiction at its discretion. See Doleac v. Michalson, 264 F.3d 470, 492 (5th Cir. 2001); see also Kline v. Burke Constr. Co., 260 U.S. 226, 234 (1922); Cary v. Curtis, 44 U.S. 236, 245 (1845). "Courts created by statute can have no jurisdiction but such as ...