Linton v. Airbus Industrie, 14-95-00371-CV

• Decision Date: 12 September 1996
• Docket Number: No. 14-95-00371-CV,14-95-00371-CV
• Citation: 934 S.W.2d 754
• Parties: Laura Howell LINTON, et al., Appellants, v. AIRBUS INDUSTRIE and Aeroformation, Appellees. (14th Dist.)
• Court: Texas Court of Appeals

Page 754

934 S.W.2d 754

Laura Howell LINTON, et al., Appellants, v. AIRBUS INDUSTRIE and Aeroformation, Appellees.

No. 14-95-00371-CV.

Court of Appeals of Texas,

Houston (14th Dist.).

Sept. 12, 1996.

Rehearing Overruled Dec. 5, 1996.

Lewis E. Henderson, Francis I. Spagnoletti, Michael J. Maloney, David W. Holman, Kevin Dubose, Houston, for appellants.

Thad T. Dameris, Houston, John R. Gilbert, Angleton, Charles Schwartz, Raybourne Thompson, Jr., Michael J. Mucchetti, Houston, Jacques E. Soiret, Los Angeles, CA, for appellees.

Before YATES, JOE L. DRAUGHN ^* and O'NEILL, JJ.

OPINION

O'NEILL, Justice.

This is an appeal from an order granting appellees' motion for special appearance and dismissing appellants' claims for lack of subject matter jurisdiction. The trial court found appellees to be immune from suit in the United States because they are foreign sovereigns under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1602-11 (1989). We reverse and remand.

I. Background

This case arises from a suit brought by surviving family members of passengers killed in a crash of an Indian Airlines flight in Bangalore, India, in February of 1990. Two lawsuits were originally filed in state district court in Brazoria County, Texas, one by Laura Howell Linton, et al., and the other by Mr. and Mrs. Stan Moss, et al. Appellants alleged various products liability and negligence theories of recovery against Airbus Industrie ("AI"), who designed, tested and assembled the aircraft, and Aeroformation ("AeF"), who trained the pilots (AI and AeF are hereinafter referred to collectively as "the Airbus defendants" or "appellees").

On March 13, 1992, the cases were removed to the United States District Court for the Southern District of Texas, Galveston Division, on the basis of diversity and foreign sovereign immunity. The court sua sponte consolidated the actions, and Linton and Moss filed a motion to remand their cases to state court. On April 13, 1992, the Airbus defendants filed motions to dismiss the cases arguing that, as an "agency or instrumentality of a foreign state" under the FSIA, they are entitled to absolute immunity from suit in the United States. On July 22, 1992, the federal district court held that the FSIA did not apply because the Airbus defendants are not agencies or instrumentalities of a foreign state. Linton v. Airbus Industrie, 794 F.Supp. 650, 653-54 (S.D.Tex.1992) (hereinafter "Linton I "). The Airbus defendants appealed the court's decision, but the appeal was dismissed on the ground that the court's order was not a final, appealable order.

Finding it lacked subject matter jurisdiction, the federal district court remanded the case to state court, but stayed the remand order to allow the Airbus defendants to appeal the Linton I decision. The Airbus defendants appealed the remand order, but the Fifth Circuit found it had no appellate jurisdiction over a remand order and dismissed the appeal. See Linton v. Airbus Industrie, 30 F.3d 592, 600 (5th Cir.), cert. denied, 513 U.S. 1044, 115 S.Ct. 639, 130 L.Ed.2d 545 (1994)(hereinafter "Linton II "). The federal district court, in turn, remanded the case to the state district court in Brazoria County.

The Airbus defendants again filed a motion for special appearance arguing their immunity as agencies or instrumentalities of a foreign state under the FSIA. After a hearing on the motion, the trial court found appellees to be foreign sovereigns under § 1603(b)(2) of the FSIA and dismissed the case for want of jurisdiction.

II. Standard of Review

Appellants contend the Airbus defendants should have challenged the court's subject matter jurisdiction by filing a Rule 85 plea to the jurisdiction rather than a Rule 120a special appearance. TEX.R.CIV.P. 85, 120a. As a result, appellants argue, we must accept all of the allegations in appellants' petition as true and should review the trial court's findings of fact "without giving them the deference ordinarily anticipated in the resolution of fact issues." We disagree.

Challenges to the immunity of a foreign sovereign are commonly brought under TEX.R.CIV.P. 120a and have been upheld. See, e.g., K.D.F. v. Rex, 878 S.W.2d 589 (Tex.1994); United Mexican States v. Ashley, 556 S.W.2d 784 (Tex.1977). Moreover, appellants challenge only the legal assumptions underlying the trial court's fact findings, not their accuracy. Finally, even if the challenge should have been brought as a Rule 85 plea to the jurisdiction, appellants have failed to present any argument as to why such error would be reversible. We reject appellants' argument that the Airbus defendants' special appearance was an improper procedure to challenge the trial court's jurisdiction.

An appellate court must review all of the evidence before the trial court on the question of jurisdiction raised in a special appearance. Vosko v. Chase Manhattan Bank, N.A., 909 S.W.2d 95, 99 (Tex.App.--Houston [14th Dist.] 1995, writ denied); Hotel Partners v. KPMG Peat Marwick, 847 S.W.2d 630, 632 (Tex.App.--Dallas 1993, writ denied). In the present case, the trial court made findings of fact and conclusions of law, which are binding upon the appellate court unless challenged on appeal. Hotel Partners, 847 S.W.2d at 632 (citing Wade v. Anderson, 602 S.W.2d 347, 349 (Tex.Civ.App.--Beaumont 1980, writ ref'd n.r.e.) and Zelios v. City of Dallas, 568 S.W.2d 173, 175 (Tex.Civ.App.--Dallas 1978, writ ref'd n.r.e.)). Appellants do not contest the accuracy of the trial court's findings of fact; rather, appellants challenge the legal assumptions underlying those findings. We may review the conclusions the trial court draws from or applies to the facts found to determine their correctness. Hotel Partners, 847 S.W.2d at 632 (citing Mercer v. Bludworth, 715 S.W.2d 693, 697 (Tex.App.--Houston [1st Dist.] 1986, writ ref'd n.r.e.)).

III. Points of Error One and Two

In their first point of error, appellants contend the trial court erred in dismissing their case for lack of subject matter jurisdiction because appellees are not agents or instrumentalities of a foreign state as defined in § 1603(a) of the FSIA.

The FSIA is the exclusive basis of jurisdiction in federal and state courts for suits involving foreign sovereigns. See Argentine Republic v. Amerada Hess Shipping Corp., 488 U.S. 428, 433, 109 S.Ct. 683, 688, 102 L.Ed.2d 818 (1989). The Act provides that, subject to certain exceptions enumerated in the Act, ¹ "a foreign state shall be immune from the jurisdiction of the courts of the United States and of the States." 28 U.S.C. § 1604. A "foreign state" is defined in the Act to include an "agency or instrumentality of a foreign state." 28 U.S.C. § 1603(a). An "agency or instrumentality of a foreign state" is defined as follows:

(b) An "agency or instrumentality of a foreign state" means any entity--

(1) which is a separate legal person, corporate or otherwise, and

(2) which is an organ of a foreign state or political subdivision thereof, or a majority of whose shares or other ownership interest is owned by a foreign state or political subdivision thereof, and

(3) which is neither a citizen of a State of the United States as defined in section 1332(c) and (d) of this title, nor created under the laws of any third country.

28 U.S.C. § 1603(b) (emphasis added). This appeal concerns interpretation of the second requirement of § 1603(b), specifically, whether or not a majority of appellees' shares or other ownership interest is owned by a foreign state.

Airbus Industrie (AI) and Aeroformation (AeF) are separate French legal entities known as Groupement d'Interet Economique, and are organized pursuant to treaties between the governments of France, Germany and Spain. Because AI owns 90% of AeF, we will first examine AI's ownership structure.

AI is owned by four corporations, none of which holds a majority interest. Two of these corporations, Aerospatiale (owned 99% by the French Republic) and CASA (owned 83% by the Spanish State) are controlled by foreign states and together own 41.9% of AI. British Aerospace is privately held and owns 20% of AI. The remaining 37.9% of AI is owned by Deutsche Airbus GmbH ("DA") and is the focus of the present dispute. DA is 50.75% privately owned. The remaining 49.25% ownership is divided between the Republic of Germany (20%), the State of Bavaria (13.46%), the City of Hamburg (10.19%), and the City of Bremen (5.59%).

Because 50.75% of DA's shares are privately owned, appellants argue that it cannot be considered an agency or instrumentality of a foreign state. Therefore, appellants contend, DA's 49.25% sovereign ownership may not be "tiered" through the company and "pooled" with the sovereign ownership interests of France and Spain to qualify for FSIA immunity. Appellees, on the other hand, argue that the relevant inquiry is the total amount of shares ultimately owned by foreign states, not whether the entities contributing ownership interests to be pooled together are themselves foreign states. The Fifth Circuit succinctly defined the issue before us as follows: "whether through 'tiering' a foreign state's ownership interest can be attributed when that foreign state did not own a majority interest in the company that held the ownership interest in Airbus." Linton II at 597 n. 28.

A. Pooling

Appellants claim the plain language of the FSIA indicates that "foreign state" status is conferred only where a majority interest in the entity in question is owned by a single foreign state, not a number of foreign states. In other words, pooling should not be allowed when no single foreign state owns more than 50% of the entity. Appellants' argument finds some support in the federal district court's opinion in Linton I. The federal court focused on the literal wording of the statute, which "speaks only of entities 50% or more of whose shares are owned by a foreign state, singular." Id. at 652. Had Congress intended to permit pooling, the...