International Transactions v. Embotelladora
| Decision Date | 22 October 2002 |
| Docket Number | No. CIV.A. 3:01-CV-1140-G.,CIV.A. 3:01-CV-1140-G. |
| Citation | 277 F.Supp.2d 670 |
| Parties | INTERNATIONAL TRANSACTIONS, LTD., Plaintiff, v. EMBOTELLADORA AGRAL REGIOMONTANA, S.A. DE C.V., et al., Defendants. |
| Court | U.S. District Court — Northern District of Texas |
Ernest W Leonard, Friedman & Feiger, Dallas, Gerald Thomas Drought, Martin & Drought, Inc., San Antonio, for International Transactions Limited, a Cayman Islands corporation, Plaintiff.
Molly Steele, Thompson & Knight, Dallas, George R Diaz-Arrastia, Schirrmeister Ajamie, Houston, Patrick J Neligan, Jr, Neligan Tarpley Andrews & Foley, Dallas Andrew C Schirrmeister, III, Schirrmeister Ajamie, Houston, George H Tarpley, Neligan Tarpley Andrews & Foley, Dallas, for Embotelladora Agral Regiomontana SA de CV, Embotelladora Agral de La Laguna SA de CV, Agral Arrendadora SA de CV, Agral Comisionista y Distribuidora SA de CV, Agral Inmobiliaria SA de CV, Pepsi-Gemex S A DE C V, Defendants.
Before the court is the motion of the defendants Agral Arrendadora, S.A. de C.V. and Agral Inmobiliaria, S.A. de C.V. (collectively, "Agral") to dismiss this case, pursuant to FED. R. CIV. P. 12(b)(1), for lack of subject matter jurisdiction.1 For the reasons set forth in detail below, Agral's motion is granted.
This is a collection case involving International Transactions, Ltd. ("ITL") as plaintiff and five Mexican companies as defendants.2 ITL is a Cayman Islands corporation. See Original Petition to Confirm Arbitration Award and for Entry of Judgment on Award ("Complaint") ¶ 2, attached to Notice of Removal Pursuant to 9 U.S.C. §§ 205 & 302 and 28 U.S.C. § 1446 ("Notice of Removal") as Exhibit A. The Agral defendants all have their principal place of business in Mexico. Notice of Removal ¶¶ 8, 14 (second ¶ 14); Complaint ¶¶ 3-7. Agral bottles and distributes Pepsi-Cola products in northeastern Mexico. Complaint ¶ 9. ITL originally brought this suit against the Agral defendants in the 68th Judicial District Court of Dallas County, Texas seeking an order confirming an arbitration award under Texas law. See id. On June 14, 2001, two of the defendants, Agral Arrendadora, S.A. de C.V., and Agral Inmobiliaria, S.A. de C.V., removed the case to this court pursuant to 9 U.S.C. §§ 205 & 302 and 28 U.S.C. § 1446. See Docket Sheet; Notice of Removal ¶ 1.
According to the complaint, ITL entrusted ten million dollars to Sharp Capital, Inc. ("Sharp")3 to invest in the purchase of a promissory note originally issued by Agral to NationsBank.4 Complaint ¶ 9; see also Response to Defendants' Motion to Dismiss for Lack of Subject Matter Jurisdiction and Memorandum in Support Thereof ("Plaintiff's Response") at 3. The loan proceeds were to be used by Agral for the construction of a Pepsi-Cola bottling plant in Monterrey, Mexico. Complaint ¶ 9. The promissory note contained an arbitration clause requiring that any disputes between Sharp, the holder of the note, and the Agral defendants be resolved through arbitration. Complaint ¶ 10; see also Promissory Note ¶ 17, attached to Complaint.
Agral defaulted on the promissory note in 1996. Complaint ¶ 10. Shortly thereafter, Sharp—acting pursuant to the arbitration clause in the note—initiated arbitration proceedings against the Agral defendants with Judicial Arbitration and Mediation Services ("JAMS") in Dallas, Texas.5 Id. In response, Agral brought two different suits against Sharp in this district. In the first case, Agral Regiomontana, one of the defendants in this action, filed suit against Sharp seeking to stay the arbitration proceedings commenced before JAMS and to compel arbitration before the American Arbitration Association. See Embotelladora Agral Regiomontana, S.A. de C.V., et al. v. Sharp Capital Inc., et al., NO. 3:96-CV-1600-D (N.D.Tex.) (Fitzwater, J.). Magistrate Judge Jane Boyle eventually denied Agral's request for relief and dismissed the case on August 26, 1996. See Docket Sheet for No. 3:96-CV-1600-D. In the second suit, filed on October 15, 1996, four of the five current Agral defendants sought to compel the joinder of additional parties to the arbitration proceedings, as well as to assert a claim for affirmative relief against Sharp on the basis of usury. See Embotelladora Agral Regiomontana, S.A. de C.V., et al. v. Sharp Capital Inc., et al., No. 3:96-CV-2862-P (N.D.Tex.) (Solis, J.). Judge Solis closed that case in 1999 on the ground that the dispute between the parties had been settled. See Docket Sheet for No. 3:96-CV-2862-P (entry of February 22, 1999).
On January 31, 1997, an arbitration award of more than eleven million dollars was entered in favor of Sharp. Complaint ¶ 11; see also Notice of Removal ¶ 2; Plaintiff's Response at 4. Less than a month later, four of the five Agral defendants filed for bankruptcy protection in Mexico. Defendants' Motion to Dismiss for Lack of Subject Matter Jurisdiction ("Defendants' Motion") at 8. ITL apparently had notice of the bankruptcy proceedings but chose not to pursue its claim in the Mexican bankruptcy court. Id. at 9. On August 31, 1998, Sharp assigned the arbitral award and note to Jose Trevino Canamar ("Canamar"), a Mexican attorney working in Monterrey, Mexico, in exchange for an account of Bridgestone, Inc. and payment of Sharp's legal fees. See Defendants' Motion at 5; Plaintiff's Response at 6; Appendix to Defendants' Motion to Dismiss for Lack of Subject Matter Jurisdiction ("Defendants' Appendix") at 52, 57-58; Supplemental Appendix to Reply Brief in Support of Defendants' Motion to Dismiss for Lack of Subject Matter Jurisdiction ("Supplemental Appendix") at 2.6 On September 9, 1998, Canamar assigned the same arbitral award and note to Grupo Embotellador Noreste, SA. de C.V. ("GEN") in exchange for 55 million pesos. See Defendants' Appendix at 71, 87. Sharp, Canamar, and GEN also signed on September 9, 1998 a "Master Agreement" releasing all claims against each other and against the Agral defendants. See id. at 86. The assignment between Sharp and Canamar and between Canamar and GEN, as well as the execution of the Master Agreement between Sharp, Canamar, and GEN, took place in Mexico.7 See id. at 52, 71, 86-87.
On February 4, 1999, ITL brought suit in this district against Sharp and Mauricio A. Gutierrez, Sharp's President, seeking to regain custody of the arbitration award. See International Transactions Limited v. Mauricio Gutierrez, et al., No. 3:99-CV-0241-M (N.D.Tex.) (Lynn, J.). On November 6, 2001, GEN presented to the Mexican bankruptcy court the assignment of the arbitral award and note from Sharp to Canamar and from Canamar to GEN, leading that court to conclude ultimately that GEN was the owner of the award. Defendants' Motion at 9-10; see also Defendants' Appendix at 264-66, 272-75. A month later, according to the defendants, all five Agral companies merged with GEN.8 Defendants' Appendix at 174. Then, on January 31, 2001, Judge Lynn dismissed all of ITL's claims against Sharp and Gutierrez but ordered the Special Master9 for the Sharp Estate to convey the arbitration award to ITL.10 Complaint ¶ 12; Notice of Removal ¶ 6; Memorandum Order and Judgment, filed January 31, 2001, in International Transactions Limited v. Gutierrez, No. 3:99-CV-0241M (N.D.Tex.) (Lynn, J.). ITL thereafter brought the present action in a Texas state court to enforce payment of the arbitration award. Complaint ¶ 14.
After removing the case to this court, the Agral defendants filed various motions to dismiss the case for insufficient service of process, defective process, lack of personal jurisdiction, and international comity. Both Agral and ITL also filed a number of motions to strike certain materials contained in those motions. On March 13, 2002, this court issued a thirty-page memorandum order that denied Agral's motion to dismiss the case for lack of personal jurisdiction, defective process, and insufficient process and denied the motions to strike filed by both ITL and Agral. See Memorandum Order, Civil Action No. 3:01-CV-1140-G, March 13, 2002. The court also gave the Agral defendants thirty days to file a motion to dismiss this case for lack of subject matter jurisdiction, an issue which Agral had raised for the first time in its reply brief. See Agral Companies' Response to Plaintiff's Supplemental Brief (filed March 1, 2002) at 4. On April 1, 2002, this court granted ITL's motion for leave to amend its complaint in order to add as an additional defendant Pepsi-Gemex, which—according to ITL—assumed the liabilities of the Agral defendants. On April 12, 2002, two of the Agral defendants—Agral Arrendadora and Agral Inmobiliaria—filed, within the thirty-day limit imposed by the court, this motion to dismiss the case for lack of subject matter jurisdiction.
Federal courts are courts of limited jurisdiction. See Kokkonen v. Guardian Life Insurance Company of America, 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994); Owen Equipment and Erection Company v. Kroger, 437 U.S. 365, 374, 98 S.Ct. 2396, 57 L.Ed.2d 274 (1978). A federal court may exercise jurisdiction over cases only as expressly provided by the Constitution and laws of the United States. See U.S. CONST. art. III §§ 1-2; see also Kokkonen, 511 U.S. at 377, 114 S.Ct. 1673. Federal law gives the federal district courts original jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. Moreover, a party seeking relief in a federal district court bears the burden of establishing the subject matter jurisdiction of that court. United States v. Hays, 515 U.S. 737, 743, 115 S.Ct. 2431, 132 L.Ed.2d 635 (1995); McNutt v. General Motors Acceptance Corporation of Indiana, Inc., 298 U.S. 178, 189, 56 S.Ct. 780, 80 L.Ed. 1135 (1936); Langley v. Jackson State University, 14 F.3d 1070, 1073 (5th Cir.), cert. denied, 513 U.S. 811, 115 S.Ct. 61, 130 L.Ed.2d 19...
To continue reading
Request your trial