Reich v. Signal Oil & Gas Co.

• Decision Date: 06 November 1974
• Docket Number: Civ. A. No. 72-H-945,72-H-864.
• Citation: 409 F. Supp. 846
• Parties: Patricia Ann REICH et al., Plaintiffs, v. SIGNAL OIL AND GAS COMPANY et al., Defendants. Vivian Jackson PACE et al., Plaintiffs, v. TEXTRON, INC., et al., Defendants.
• Court: U.S. District Court — Southern District of Texas

409 F. Supp. 846

Patricia Ann REICH et al., Plaintiffs, v. SIGNAL OIL AND GAS COMPANY et al., Defendants.

Vivian Jackson PACE et al., Plaintiffs, v. TEXTRON, INC., et al., Defendants.

Civ. A. Nos. 72-H-945, 72-H-864.

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

November 6, 1974.

COPYRIGHT MATERIAL OMITTED

Robert H. Roch and Michael W. Perrin, Fisher, Roch, & Gallagher, Houston, Tex.; and Derry D. Harding, Brown & Harding, Lubbock, Tex., for plaintiffs.

Alan S. Dale, Eastham, Watson, Dale & Forney, Houston, Tex., for The Mayflower Co.

Perry O. Barber, Jr., Baker & Botts, Houston, Tex., for Textron, Inc. and Bell Helicopter Co., a Division of Textron, Inc.

Gus A. Schill, Jr., Royston, Rayzor, Cook & Vickery, Houston, Tex., for Signal Oil & Gas Co.

MEMORANDUM AND ORDER:

SEALS, District Judge.

The Court, having considered the Motions to Quash Service and Dismiss for Lack of Jurisdiction made by Defendants Bristow Helicopters, Ltd., (Bristow) and Construzioni Aeronautiche Giovanni Agusta (Agusta), hereby ORDERS:

The Motions are GRANTED.

These motions arise following a long series of discovery procedures going to the jurisdictional questions in this most complex and multi-faceted pair of cases. In brief, these causes of action are the result of a tragic accident resulting in the deaths of two men, one a Louisiana resident and one a Texas resident. They were working on an oil drilling project off the Coast of Ghana in West Africa when the helicopter transporting them from the offshore rig to the airport in Accra, Ghana, crashed. The helicopter had been manufactured in Italy by Agusta, an Italian corporation, according to a design owned by Defendant Bell Helicopter Co., and licensed to Agusta by Bell. Bell is a division of Textron, Inc., an American corporation, and is not challenging jurisdiction as it is doing business in Texas. The helicopter was then sold by Agusta to Bristow, an English corporation. The sale negotiations and the delivery of the helicopter took place in England or Italy. The helicopter was then leased by Bristow to Defendant Mayflower Co., an American corporation doing business in Texas and not challenging jurisdiction. It appears that at no time prior to the accident was the helicopter ever in the United States, however, following the accident some metallurgical testing was apparently done by Bell in Texas. Based upon these facts, Movants assert that this Court may not maintain jurisdiction over them under the Texas Long Arm Statute, Article 2031b, Vernon's Annotated Texas Statutes.

The basic constitutional issues involved in the question of whether or not a federal district court may maintain jurisdiction over a nonresident defendant under the aegis of the forum state's long arm statute have been the subject of sufficient detailed and authoritative analysis that this Court need not trace the history of these concepts from their inception. See, e. g., Hanson v. Denckla, 357 U.S. 235, 78 S.Ct. 1228, 2 L.Ed.2d 1283 (1958); McGee v. International Life Insurance Co., 355 U.S. 235, 78 S.Ct. 199, 2 L.Ed.2d 223 (1957); International Shoe Co. v. Washington, 326 U.S. 310, 66 S.Ct. 154, 90 L.Ed. 95 (1945); Pennoyer v. Neff, 5 Otto 714, 95 U.S. 714, 24 L.Ed. 565 (1877). However, some discussion must be had of the application of these principles to the Texas statute and the construction of that statute by the Court of Appeals and this Court.

As the Court of Appeals recently reiterated in Product Promotions, Inc. v. Cousteau, 495 F.2d 483 (5th Cir. 1974), it cannot be gainsaid but

that Article 2031b represents an effort by Texas to reach as far as federal constitutional requirements of due process will permit in exercising jurisdiction over the persons of nonresident defendants.

Id. at 491 (Citations omitted). However, the state statute may not reach further than constitutional limits. Therefore, as the Court of Appeals stated in Product Promotions, the first of a trilogy of questions to be answered in a jurisdictional dispute, such as the one presented in the case at bar, is whether or not the acts of the defendant come within the strictures of the state statute. Id. at 492. If this primary question is answered affirmatively then both parts of a bipartite constitutional inquiry must also be satisfied, i. e., whether or not there are "minimum contacts," and whether or not it would be fair and reasonable to require the defendant to litigate in this forum. Id. at 494.

It seems clear from the pleadings in this case that this is an action arising under the tort clause and not the contract clause of the Texas statute. The statute defines "doing business" in relation to the commission of torts as follows:

For the purpose of this Act, and without including other acts that may constitute doing business, any foreign corporation, joint stock company, association, partnership, or non-resident natural person shall be deemed doing business in this State by . . . the committing of any tort in whole or in part in this State.

Article 2031b(4), V.A.T.S. In order to permit a clearer application of this statute to the Movants, they will be dealt with separately.

Bristow is a British corporation engaged in the business of purchasing and leasing helicopters. It has had numerous and substantial contacts with Texas which Bristow readily admits. These contacts are the result of Bristow's dealings with Bell, the manufacturer of the helicopter that Bristow purchased from Agusta, the Italian Movant-Defendant. It is Plaintiff's contention that Bristow's contacts with Texas resulted in Bristow "doing business" within the meaning of the Texas statute. Therefore, the constitutional trilogy of questions, as enunciated in Product Promotions, must be answered vis-a-vis Bristow's dealings with Texas.

In answer to the first part of the constitutional trilogy, there are three Court of Appeals decisions which are apposite to this cause of action and particularly to Bristow's motions. These cases are Jetco Electronic Industries, Inc. v. Gardiner, 473 F.2d 1228 (5th Cir. 1973), Coulter v. Sears, Roebuck & Co., 426 F.2d 1315 (5th Cir. 1970), and Eyerly Aircraft v. Killian, 414 F.2d 591 (5th Cir. 1969).

In Jetco, the cause of action did not arise out of "contractual contacts with Texas," therefore, Plaintiff had to show that Defendant "`committed a tort in whole or in part' in Texas." 473 F.2d at 1232. In following the letter of Article 2031b the Court in Jetco determined that prima facie cases were established, however, in the case at bar this Court is of the opinion that the Plaintiffs have not established such a case. If Bristow committed a tort through its negligence in maintaining or operating the helicopter, it perforce occurred outside of Texas because the helicopter itself was outside of Texas. If Bristow breached any contract that it might have made in Texas (and there is no small dispute over whether or not any contract was entered into in Texas by Bristow) then Plaintiffs have not pleaded such a cause of action and it is doubtful that Plaintiffs would have standing to so plead inasmuch as they were not parties to a contract made by Bristow in Texas.

In Coulter the controlling factor which the Court of Appeals held to confer jurisdiction was the fact that the manufacturer of the defective product had reason to know that some of its goods were going to be introduced into Texas retail markets. This case would seem to impart to Article 2031b a certain aspect of geographic foreseeability. Plaintiffs raise this point, however, it does not seem applicable to Bristow. In its refutation of this theory Bristow claims that because it is a "user" rather than a manufacturer or retailer then this theory could have no application to Bristow. In this regard it is the opinion of this Court that under no interpretation of Coulter would Bristow be amenable to jurisdiction, however, this Court draws no conclusion as to whether or not a "user," as Bristow characterizes itself, would be subject to this factor in determining long arm amenability under different circumstances.

Finally, in Eyerly the manufacturer-defendant had business contacts in Texas unrelated to the cause of action, as there are in the case at bar. In Eyerly the defective product was sold outside of Texas, however, the fact that the product was put into the stream of interstate commerce when coupled with the Defendant's unrelated business contacts constituted "doing business." In the case at bar Bristow put the helicopter into the stream of international commerce which can in no way satisfy the requirements of due process inasmuch as the helicopter was never put into service in the United States.

Therefore, it is the opinion of this Court that Bristow was not "doing business" within the meaning of Article 2031b. However, in the interest of completeness, the other two elements of the constitutional trilogy will be dealt with, if only cursorily.

The first of the due process requirements, "minimum contacts," requires but slight mention because

if a foreign corporation has "minimum contacts", it is necessarily within the scope of Article 2031b. Although Section 4 of Article 2031b is somewhat ambiguous due to the phrase "without including other acts that may constitute doing business", this court adheres to the view that the scope of Article 2031b is as broad as the constitutional standard of "minimum contacts".

Amco Transworld, Inc. v. M/V Bambi, 257 F.Supp. 215, 217 (S.D.Tex.1966) (footnote omitted). Therefore, because it is the determination of this Court that Bristow is not "doing business," then there are no "minimum contacts."

The last element to be considered, as stated in Product Promotions, is that "it must not be unfair or unreasonable to require the nonresident to defend the suit in the forum." 495 F.2d at 497-98. As the Court of Appeals indicated, the resolution of this question involves rather nebulous standards. However, there are at...