Richmark Corp. v. Timber Falling Consultants, Inc.

• Decision Date: 03 July 1991
• Docket Number: 90-35894,Nos. 90-35549,s. 90-35549
• Citation: 937 F.2d 1444
• Parties: RICHMARK CORPORATION, a California Corporation, Plaintiff-Counter-Claim-Defendant, v. TIMBER FALLING CONSULTANTS, INC., an Oregon Corporation, Defendant-Counter-Claim-Third-Party Plaintiff-Appellee, v. PEACOCK MANUFACTURING COMPANY, INC., a Texas Corporation, Zhu Yuanchang, Eugene Wang, James Yang, Francis Tong, Third-Party-Defendants, and Beijing Ever Bright Industrial Company, a Foreign Corporation, Third-Party-Defendant-Appellant. , and 91-35280.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1444

937 F.2d 1444

19 Fed.R.Serv.3d 1370

RICHMARK CORPORATION, a California Corporation, Plaintiff-Counter-Claim-Defendant, v. TIMBER FALLING CONSULTANTS, INC., an Oregon Corporation, Defendant-Counter-Claim-Third-Party Plaintiff-Appellee, v. PEACOCK MANUFACTURING COMPANY, INC., a Texas Corporation,

Zhu Yuanchang, Eugene Wang, James Yang, Francis

Tong, Third-Party-Defendants,

and

Beijing Ever Bright Industrial Company, a Foreign

Corporation, Third-Party-Defendant-Appellant.

Nos. 90-35549, 90-35894, and 91-35280.

United States Court of Appeals Ninth Circuit.

Argued and Submitted May 16, 1991.

Decided July 3, 1991.

John F. Neupert, Miller, Nash, Wiener, Hager & Carlsen, Portland, Or., for Timber Falling Consultants, Inc., an Oregon corp.

David A. Ranheim, Dorsey & Whitney, Minneapolis, Minn., for Beijing Ever Bright Industrial Co., a foreign corp.

Appeal from the United States District Court for the District of Oregon.

Before PREGERSON, BRUNETTI and NELSON, Circuit Judges.

PREGERSON, Circuit Judge:

Third-Party Defendant-Appellant Beijing Ever Bright (BEB), a corporation of the People's Republic of China, appeals the district court's entry of default judgment, denial of BEB's Rule 60(b) motion to set aside the default judgment, and order granting a judgment debtor examination. 747 F.Supp. 1409. We affirm.

BACKGROUND

BEB, a corporation organized under the laws of the People's Republic of China, is a subsidiary of China Everbright Holdings Co. Ltd., a Hong Kong corporation. In early 1988, BEB entered into a contract with Richmark Corporation (Richmark), a California corporation, to purchase timber. Richmark subcontracted with Timber Falling Consultants, Inc. (Timber Falling), an Oregon corporation, to procure the timber.

Subsequently, Timber Falling failed to deliver the timber. As a result, Richmark defaulted on its contract with BEB. Richmark brought a contract action against Timber Falling for damages.

Timber Falling filed counterclaims against Richmark and BEB (as third-party defendant) for breach of contract, fraud, civil conspiracy, and tortious interference. Timber Falling alleges in its counterclaim: (1) BEB dispatched a ship for the timber without notifying Timber Falling and before Timber Falling's contract required delivery; (2) BEB and Richmark plotted to extract contract concessions from Timber Falling; and (3) Richmark wrongfully repudiated its contract with Timber Falling.

On June 5, 1990, the district court entered a default judgment on the contract, fraud, and civil conspiracy claims against BEB and dismissed the tortious interference claim. The district court found that Timber Falling submitted evidence justifying an award of $2.2 million to compensate for lost profits, pre-judgment interest, and out-of-pocket expenses.

BEB acknowledges that, in the Spring of 1989, it received the third-party complaint via DHL Courier in Beijing and understood the consequences of failing to respond with an answer or other pleading. Yet BEB failed to contact the court or Timber Falling until June 10, 1990--five days after the default judgment was entered. BEB contends that its efforts to respond were hampered by the Chinese government and the chaos caused by the Tiananmen Square Incident.

BEB appealed the judgment and filed a Fed.R.Civ.P. 60(b) motion to set aside the default judgment. On October 15, 1990, the district court denied the Rule 60(b) motion finding that (1) subject matter jurisdiction existed because BEB is an agency or instrumentality of the PRC as defined by the Foreign Sovereign Immunities Act (FSIA); ¹ (2) BEB had sufficient contacts with the United States to establish personal jurisdiction; and (3) BEB's failure to appear was the result of culpable conduct. BEB appeals the denial of its Rule 60(b) motion.

On January 11, 1991, the district court granted Timber Falling's motion for a judgment debtor examination. BEB timely appeals this order.

DISCUSSION

On appeal, BEB contends the district court erred because (1) it lacked personal jurisdiction under the FSIA, (2) service of process under the FSIA was improper, (3) BEB's failure to respond to Third-Party Plaintiff-Appellee Timber Falling's counterclaim did not constitute culpable conduct, and (4) the order granting a judgment debtor examination is overbroad. Finally, Timber Falling moved this court to dismiss BEB's judgment debtor examination appeal for lack of ripeness.

I. Personal Jurisdiction

Whether personal jurisdiction exists is reviewed de novo where the underlying facts are undisputed. Brainerd v. Governors of the Univ. of Alberta, 873 F.2d 1257, 1258 (9th Cir.1989). Personal jurisdiction under the FSIA is determined by resorting to the traditional minimum contacts tests. Gregorian v. Izvestia, 871 F.2d 1515, 1529 (9th Cir.), cert. denied, --- U.S. ----, 110 S.Ct. 237, 107 L.Ed.2d 188 (1989). A court may assert general personal jurisdiction if a non-resident defendant has "substantial" or "continuous and systematic" contacts with the forum state. Helicopteros Nacionales de Colombia, S.A. v. Hall, 466 U.S. 408, 414-16 & 414 n. 9, 104 S.Ct. 1868, 1872-73 & 1872 n. 9 Here, BEB entered into a contract with Richmark, a California corporation for twelve shiploads of timber valued at $24,300,000. The contract terms called for BEB to pick up each load of timber at a U.S. port. Payments were to be made in U.S. currency. BEB sent a ship to Oregon to pick up those logs. Finally, BEB sent a representative to Los Angeles to meet with Richmark and Timber Falling about the undelivered timber.

                (1984). 2   "[W]here service is made under FSIA section 1608, 'the relevant area in delineating contacts is the entire United States, not merely [the forum state].' "  Meadows v. Dominican Republic, 817 F.2d 517, 523 (9th Cir.)  (quoting Texas Trading & Milling Corp. v. Federal Republic of Nigeria, 647 F.2d 300 (2d Cir.1981), cert. denied, 454 U.S. 1148, 102 S.Ct. 1012, 71 L.Ed.2d 301 (1982)), cert. denied, 484 U.S. 976, 108 S.Ct. 486, 487, 98 L.Ed.2d 485 (1987)
                

Moreover, BEB does not dispute the following factual allegations: BEB dispatched a ship to California and Oregon to obtain substitute logs after Timber Falling failed to deliver; BEB's representative inspected and took title to the logs in Oregon; BEB negotiated other export transactions with a California export company; BEB transferred millions of dollars to a New York corporation during 1988-89; and BEB funded the purchase of a controlling interest in Mesta Engineering, a Pennsylvania corporation. These contacts establish a consistent pattern of conducting and soliciting business in the United States that certainly may be characterized as substantial. Therefore, we affirm the district court's finding of personal jurisdiction.

II. Service of Process

BEB contends that Timber Falling failed to properly effect service of process pursuant to 28 U.S.C. Sec. 1608(b). Section 1608(b) provides:

Service in the courts of the United States and of the States shall be made upon an agency or instrumentality of a foreign state:

(1) by delivery of a copy of the summons and complaint in accordance with any special arrangement for service between the plaintiff and the agency or instrumentality; or

(2) if no special arrangement exists, by delivery of a copy of the summons and complaint ... in accordance with an applicable international convention on service of judicial documents; or

(3) if service cannot be made under paragraphs (1) or (2), and if reasonably calculated to give actual notice, by delivery of a copy of the summons and complaint, together with a translation of each into the official language of the foreign state--

(A) as directed by an authority of the foreign state or political subdivision in response to a letter rogatory or request or

(B) by any form of mail requiring a signed receipt, to be addressed and dispatched by the clerk of the court to the agency or instrumentality to be served, or

(C) as directed by order of the court consistent with the law of the place where service is to be made.

28 U.S.C. Sec. 1608(b).

Timber Falling contends that it satisfied the requirements of Sec. 1608(b)(3)(B) by serving BEB via DHL Worldwide Express courier, which provided a return receipt. BEB acknowledges receipt of the summons and counterclaim in Beijing, but argues that service of process on Chinese entities should be made pursuant to Sec. 1608(b)(3)(A), which requires a letter rogatory. This contention is not convincing for two reasons. First, it is based on information outside the record allegedly obtained from the United States State Department. Second, the express language of Sec. 1608(b)(3) provides that Timber Falling Finding that Timber Falling satisfied Sec. 1608(b)(3)(B), however, does not end the analysis. Section 1608(b)(3) applies only "[i]f service cannot be made under paragraphs [1608(b) ](1) or (2)." Section 1608(b)(2) allows service "in accordance with an applicable international convention on service of judicial documents." BEB asserts that the Consular Convention Between the United States and the People's Republic of China (Consular Convention) is "an applicable international convention on service of judicial documents," and thus that service could have been made under paragraph (2).

may effect service under subsections (A) or (B) or (C).

Article 29 of the Consular Convention, the only article out of forty-two articles in the convention to address service of process, provides:

A consular officer shall be entitled to serve judicial and other legal documents in accordance with international agreements in force between the sending and receiving States or, in absence of such agreements, to the extent permitted by the law of the receiving State. ³

The Consular Convention between the United States and the People's Republic of China, Feb. 19, 1982, art. 29, 33 U.S.T. 2973, 2998, T.I.A.S. No. 10209.

BEB's contention is incorrect. The Consular Convention is not an ...