Filed: Jun. 05, 2000
Latest Update: Mar. 02, 2020
Summary: IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT _ No. 99-40800 _ VALERO ENERGY CORPORATION; VALERO MARKETING AND SUPPLY COMPANY Plaintiffs - Appellees v. EMPRESA ESTATAL PETROLEOS DEL ECUADOR, also known as Petroecuador Defendant - Appellant _ Appeal from the United States District Court for the Southern District of Texas (G-99-CV-88) _ June 5, 2000 Before KING, Chief Judge, and GARWOOD and DeMOSS, Circuit Judges. PER CURIAM:* Defendant-Appellant Empresa Estatal Petroleos Del Ecuador
Summary: IN THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT _ No. 99-40800 _ VALERO ENERGY CORPORATION; VALERO MARKETING AND SUPPLY COMPANY Plaintiffs - Appellees v. EMPRESA ESTATAL PETROLEOS DEL ECUADOR, also known as Petroecuador Defendant - Appellant _ Appeal from the United States District Court for the Southern District of Texas (G-99-CV-88) _ June 5, 2000 Before KING, Chief Judge, and GARWOOD and DeMOSS, Circuit Judges. PER CURIAM:* Defendant-Appellant Empresa Estatal Petroleos Del Ecuador ..
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IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 99-40800
_____________________
VALERO ENERGY CORPORATION; VALERO MARKETING AND SUPPLY
COMPANY
Plaintiffs - Appellees
v.
EMPRESA ESTATAL PETROLEOS DEL ECUADOR, also known as
Petroecuador
Defendant - Appellant
_________________________________________________________________
Appeal from the United States District Court
for the Southern District of Texas
(G-99-CV-88)
_________________________________________________________________
June 5, 2000
Before KING, Chief Judge, and GARWOOD and DeMOSS, Circuit Judges.
PER CURIAM:*
Defendant-Appellant Empresa Estatal Petroleos Del Ecuador
appeals from a district court order remanding this case to the
Texas state court from which it was removed. We dismiss for want
of appellate jurisdiction.
I. FACTUAL AND PROCEDURAL HISTORY
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
This appeal centers around the removal and remand of an
action for breach of contract and injunction. A proper
understanding of the issues involved requires that we begin by
setting forth some general legal propositions on which we take no
position. 28 U.S.C. § 1603 defines a “foreign state” for
purposes of the Foreign Sovereign Immunities Act (the “FSIA”).1
Defendant-Appellant Empresa Estatal Petroleos Del Ecuador
(“PetroEcuador”) argues that it is a “political subdivision” of a
foreign state under § 1603, and Plaintiffs-Appellees Valero
Energy Corporation and Valero Marketing and Supply Company
(collectively “Valero”) assert that PetroEcuador is an “agency or
instrumentality” of a foreign state. For our purposes, the
distinction matters because, as provided in 28 U.S.C. § 1608, the
requirements for serving process on an entity like PetroEcuador
1
Section 1603 provides, in pertinent part:
(a) A “foreign state”, except as used in section 1608 of
this title, includes a political subdivision of a
foreign state or an agency or instrumentality of a
foreign state as defined in subsection (b).
(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 (1994).
2
turn, in part, on whether the entity is a “political subdivision”
or an “agency or instrumentality.”2
2
Section 1608 provides, in pertinent part:
(a) Service in the courts of the United States and of the
States shall be made upon a foreign state or political
subdivision 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 foreign
state or political subdivision; 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), by sending a copy of the summons and
complaint and a notice of suit, together with a
translation of each into the official language of
the foreign state, by any form of mail requiring a
signed receipt, to be addressed and dispatched by
the clerk of the court to the head of the ministry
of foreign affairs of the foreign state concerned,
or
(4) if service cannot be made within 30 days under
paragraph (3), by sending two copies of the
summons and complaint and a notice of suit,
together with a translation of each into the
official language of the foreign state, by any
form of mail requiring a signed receipt, to be
addressed and dispatched by the clerk of the court
to the Secretary of State in Washington, District
of Columbia, to the attention of the Director of
Special Consular Services--and the Secretary shall
transmit one copy of the papers through diplomatic
channels to the foreign state and shall send to
the clerk of the court a certified copy of the
diplomatic note indicating when the papers were
transmitted.
. . . .
(b) Service in the courts of the United States and of the
States shall be made upon an agency or instrumentality
of a foreign state:
3
On July 15, 1998, Valero filed a petition in Texas state
court against PetroEcuador for breach of contract and injunction.
On that same date, Valero received an ex parte temporary
restraining order (“TRO”). Valero claims that it soon thereafter
faxed a copy of the petition and TRO to PetroEcuador. On
September 30, 1998, Valero filed its First Amended Original
Petition (the “Complaint”) in state court. Valero claims that
the Complaint was faxed to PetroEcuador the same day. On October
12, 1998, Valero served the Attorney General of the State of
Texas with citation and a copy of the Complaint. Valero avers
(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 either to an
officer, a managing or general agent, or to any
other agent authorized by appointment or by law to
receive service of process in the United States;
or 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. § 1608 (a) & (b) (1994).
4
that because PetroEcuador is an “agency or instrumentality,” this
constituted formal service of process under § 1608(b). The
Attorney General forwarded the citation and complaint to
PetroEcuador, which admits to having received them on October 23,
1998. Valero claims that under § 1608(b), PetroEcuador was
formally served, at the latest, on this date. PetroEcuador, on
the other hand, asserts that because it is a “political
subdivision,” it has yet to receive formal service of process
under § 1608(a).
On December 8, 1998, PetroEcuador filed a Notice of Removal
in the United States District Court for the Southern District of
Texas, Houston Division. The following day, it filed a motion to
dismiss for lack of personal jurisdiction due to improper service
of process. On January 4, 1999, Valero filed an opposition to
PetroEcuador’s motion to dismiss and moved for remand due to
untimely removal or, alternatively, to have the case transferred
to the Galveston Division. On January 6, 1999, PetroEcuador
filed a Notice of Filing Removal in state court. Valero argues
that PetroEcuador did not complete the removal process until this
date.3
3
Valero relies on 28 U.S.C. § 1446(d) for this argument.
Section 1446(d) provides:
Promptly after the filing of such notice of removal of a
civil action the defendant or defendants shall give written
notice thereof to all adverse parties and shall file a copy
of the notice with the clerk of such State court, which
shall effect the removal and the State court shall proceed
5
The court found that PetroEcuador’s removal was untimely but
that cause existed for its untimeliness.4 The court expanded the
time limitation for removal accordingly and explained in a
written order:
Pursuant to [§ 1441(d)], courts “liberally allow the
enlargement of time to further the purpose of providing a
federal forum for foreign states, when the rights of the
parties and judicial economy would not be prejudiced
thereby.” [Talbot v. Saipem, A.G., 835 F. Supp. 352, 355
(S.D. Tex. 1993)].
Petroecuador proffers several reasons for its delay.
It contends that the Chief of Judicial Process was not aware
of the fax transmissions, that the transmissions were not
translated, and that the documents were not served through
what it perceives as the normal channels under the FSIA.
Although these reasons might not constitute “good cause,”
the Court concludes that sufficient “cause” has been
presented.
With regards to prejudice, where little prior activity
has occurred in the state court, removal is generally
allowed. Id. (citing cases). As in Saipem, Petroecuador
filed its notice of removal only several months late. In
fact, Petroecuador provided its notice of removal to Valero
no further unless and until the case is remanded.
28 U.S.C. § 1446(d) (1994).
4
When a foreign state is involved, the time for removal
may, under certain circumstances, be enlarged:
Any civil action brought in a State court against a foreign
state as defined in section 1603(a) of this title may be
removed by the foreign state to the district court of the
United States for the district and division embracing the
place where such action is pending. Upon removal the action
shall be tried by the court without jury. Where removal is
based upon this subsection, the time limitations of section
1446(b) of this chapter may be enlarged at any time for
cause shown.
28 U.S.C. § 1441(d) (1994).
6
a mere forty-three days after the case had been filed.
Also, as in Saipem, no depositions or motions had been
argued or ruled upon; nor had a scheduling conference or
trial date been set. Accordingly, the Court concludes that
Valero will not be prejudiced and that this court has
subject matter jurisdiction over the lawsuit.
Order entered February 8, 1999, at 3 [hereinafter “Houston
Order”]. In the same order, the court determined that the case
had been removed to the wrong division and transferred it to the
Galveston Division. See id. at 4.
About two-and-a-half months after the case was transferred
to the Galveston Division, Valero moved the district court to
reconsider the motion to remand. The district court reconsidered
the motion and remanded the case. It first decided that “removal
was not effective until January 6, 1999, when PetroEcuador filed
its Notice of Removal with the state court.” Order entered June
3, 1999, at 1 n.1 [hereinafter “Galveston Order”]. The court
then determined that PetroEcuador’s removal was untimely and that
it had not established “cause” for its untimeliness. See id. at
4-5. The court concluded, “Accordingly, the Court holds that
this was untimely removed, and because this Court therefore LACKS
SUBJECT MATTER JURISDICTION, the case is REMANDED to the Court in
which it was originally brought.”
Id. at 5. As a result of its
determination that it lacked subject matter jurisdiction, the
court did not reach PetroEcuador’s Motion to Dismiss for Lack of
Personal Jurisdiction. PetroEcuador timely appealed from the
Galveston Order on July 2, 1999.
7
Valero filed a motion to dismiss and to assess costs and
attorney’s fees against PetroEcuador for a frivolous appeal under
Federal Rule of Appellate Procedure 38. Valero’s motion has been
carried with the case.
II. DISCUSSION
28 U.S.C. § 1447(c) provides, in part, that a remand motion
based on “any defect other than lack of subject matter
jurisdiction must be made within 30 days after the filing of the
notice of removal . . . . If at any time before final judgment
it appears that the district court lacks subject matter
jurisdiction, the case shall be remanded.” Section 1447(d)
relatedly provides that “[a]n order remanding a case to the State
court from which it was removed is not reviewable on appeal or
otherwise . . . .” The applicability of § 1447(d) is limited to
those cases remanded pursuant to § 1447(c). See Thermtron
Prods., Inc. v. Hermansdorfer, 423 U.S. 336, 345-46 (1976). “As
long as a district court’s remand is based on a timely raised
defect in removal procedure or on lack of subject-matter
jurisdiction–the grounds for remand recognized in § 1447(c)–a
court of appeals lacks jurisdiction to entertain an appeal of the
remand order under § 1447(d).” Things Remembered, Inc. v.
Petrarca,
516 U.S. 124, 127-28 (1995).
8
PetroEcuador advances several arguments in support of its
contention that § 1447(d) does not preclude our review of the
remand order in this case. Initially, it argues that the remand
order does not fall under § 1447(c) because it was not based upon
a defect in removal procedure. According to PetroEcuador, it
received an enlargement of time in which to remove, pursuant to
§ 1441(d); therefore, its removal was timely at the time it
removed, and to come under § 1447(c), defects in removal must
exist at the time of removal. PetroEcuador also asserts that the
Galveston Order, which ordered the case remanded, granted
Valero’s motion to reconsider, rather than its original motion to
remand. Valero’s original motion to remand was denied by the
district court in the Houston Order. PetroEcuador argues that
because the Galveston Order was not in response to a timely filed
motion to remand, the remand order was not based on a ground
recognized in § 1447(c), and we are not precluded from reviewing
the order by § 1447(d). Finally, PetroEcuador argues that
§ 1441(d) allows an enlargement of time to remove “at any time,”
and we can therefore enlarge the time allowed for removal and
review the Houston Order.
We need not reach any of these arguments, however, because
we disagree with PetroEcuador’s fundamental characterization of
the Galveston Order. PetroEcuador begins by pointing out that
both parties agree that PetroEcuador is a foreign state under
§ 1603. They simply disagree whether PetroEcuador is a
9
“political subdivision” or an “agent or instrumentality.”
Generally, 28 U.S.C. § 1330(a) grants the district courts
original jurisdiction over suits against foreign sovereigns.5
According to PetroEcuador, the district court here, therefore,
enjoyed subject matter jurisdiction. The statement in the
Galveston Order that the district court lacked subject matter
jurisdiction was simply a mistake; the district court really
remanded the case based upon untimely removal.6 PetroEcuador
states “that the Order granting Plaintiffs’ Motion to Reconsider
was not based on a lack of subject matter jurisdiction . . . .
Instead, the District Court apparently believed that the earlier
. . . extension of time was improvident. Accordingly, it
5
The statute provides, in pertinent part, that “[t]he
district courts shall have original jurisdiction without regard
to amount in controversy of any nonjury civil action against a
foreign state as defined in section 1603(a) . . . .” 28 U.S.C.
§ 1330(a) (1994).
6
PetroEcuador cites numerous cases in support of its
proposition that “[t]he District Court’s label of description of
its Order does not bind this Court–rather this Court bases its
rulings on the substance and effect of the Order.”
PetroEcuador’s Brief at 16. The cited cases that do not deal
with remand orders are unpersuasive. Those dealing with remand
orders do not stand for the proposition put forward by
PetroEcuador. In re Digicon Marine, Inc., 966 F.2d 158, 160 (5th
Cir. 1992), stands for the proposition that the basis for remand
stated in the district court’s original remand order controls
over the district court’s description of the remand order in its
subsequent order on reconsideration. Tillman v. CSX Transp.,
Inc.,
929 F.2d 1023 (5th Cir. 1991), stands for the unremarkable
proposition that, “even if the trial court neither states as
grounds for remand the specific words of § 1447(c) nor cites the
statute itself, the order is unreviewable if, by substantially
similar language, it is evident that the court intends to remand
for the grounds recited in § 1447(c).”
Id. at 1027.
10
retracted the enlargement and remanded on that, non-
jurisdictional basis.” PetroEcuador’s Brief at 16. PetroEcuador
concludes that, because the Houston Order remanded the case based
on a non-§ 1447(c) procedural defect -- rather than a
jurisdictional defect -- our appellate jurisdiction is not
defeated.
The Galveston Order states that the case “was untimely
removed, and . . . this Court [the district court] therefore
LACKS SUBJECT MATTER JURISDICTION . . . .” Galveston Order at 5.
PetroEcuador’s interpretation of the order is understandable
considering the intertwined procedural and jurisdictional bases
for the district court’s decision to remand. A careful reading
of the Galveston Order reveals, however, that the district court
concluded that improper removal divested it of subject matter
jurisdiction. The district court therefore remanded the case, at
least in part, because it believed that it lacked subject matter
jurisdiction. Section 1447(d) precludes us from reviewing a
district court’s remand order entered pursuant to 28 U.S.C.
§ 1447(c), “even if the remand order is clearly erroneous.”
Soley v. First Nat’l Bank, 923 F.2d 406, 408 (5th Cir. 1991). A
remand order based on lack of subject matter jurisdiction is
entered pursuant to § 1447(c) and is therefore unreviewable. See
In re Shell Oil Co.,
932 F.2d 1518, 1520 n.5 (5th Cir. 1991)
(“[R]emand orders based on lack of subject matter jurisdiction
are clearly unreviewable.”). We have explained before that “we
11
will only review remand orders if the district court
affirmatively states a non-1447(c) ground for remand.” Soley, 923
F.2d at 408 (internal quotation marks omitted). We will not
review a remand order if “the district court remanded, at least
in part, for lack of subject matter jurisdiction.” Mobil Corp.
v. Abeille General Ins. Co.,
984 F.2d 664, 666 (5th Cir 1993).
PetroEcuador’s argument that, in a case such as this, we
should look past the erroneous jurisdictional ground for remand
and examine whether the underlying procedural ground is really
based upon § 1447(c) is inviting. Our precedent requires,
however, that we reject that argument. Once the district court
arrives at the conclusion that it lacks subject matter
jurisdiction, the path it traveled to arrive at that point
becomes irrelevant; pursuant to § 1447(d) the jurisdictional
determination divests this court of appellate jurisdiction.
Despite our conclusion that we lack appellate jurisdiction to
address this appeal, however, certain other of PetroEcuador’s
arguments warrant comment.
First, PetroEcuador argues that we have jurisdiction to
determine whether it was ever properly served with process.
PetroEcuador’s concern seems to be that Valero will argue in
state court that process was properly served, otherwise the
district court could not have determined that removal was
untimely. PetroEcuador argues that we may review a decision of
12
the district court that is separable from the remand order, and
the service of process question is just such a decision.
We begin by noting that the service of process question was
tied to PetroEcuador’s Motion to Dismiss for Lack of Personal
Jurisdiction. The district court, faced with what it considered
to be two jurisdictional questions -- that of personal
jurisdiction and that of subject-matter jurisdiction -- opted to
address the question of subject-matter jurisdiction first.7
Finding that issue dispositive, the district court declined to
reach the issue of personal jurisdiction. The district court’s
decision to address the question of subject-matter jurisdiction
first was entirely appropriate. Cf. Ruhrgas AG v. Marathon Oil
Co., 526 U.S. 574, 578 (1999) (“Customarily, a federal court
first resolves doubts about its jurisdiction over the subject
matter . . . .”).
PetroEcuador correctly asserts, however, that, even if a
case is properly remanded pursuant to § 1447(c), we may review
decisions of the district court that are separable from the
remand order. See Angelides v. Baylor Coll. of Med., 117 F.3d
7
The district court, citing Ruhrgas AG v. Marathon Oil Co.,
526 U.S. 574 (1999), stated that it would “exercise its
discretion to decide the Motion to Reconsider first, thereby
determining whether the case is properly before it prior to
deciding personal service questions.” Galveston Order at 1-2.
We recognize that the Motion to Reconsider dealt with the
timeliness of removal, but, as we have stated, the district court
here saw the question of timely removal as one of subject-matter
jurisdiction.
13
833, 837 (5th Cir. 1997). A decision is separable if it precedes
the remand order in logic and fact and is conclusive. “An order
is conclusive if it will have the preclusive effect of being
functionally unreviewable in the state court.” Id. (internal
quotation marks omitted). Here, the district court’s decision to
remand was jurisdictional, leaving the state court free to
examine, or reexamine as the case may be, any question regarding
service of process, unhindered by the decision of the district
court. See
id. Because any decision the district court may have
reached in this regard is not binding on the state court, that
decision is not conclusive and is, therefore, unreviewable in
this court.
Second, PetroEcuador argues that the district court’s
decision to withdraw the prior enlargement of time to remove is
reviewable because that decision was prior in logic and fact to
its decision to remand and is effectively unreviewable in state
court. The district court’s decision to withdraw the prior
enlargement of time was simply a step in its decision to remand.
We will not, as PetroEcuador seems to suggest we should,
indirectly review the district court’s unreviewable remand order
by scrutinizing the court’s decisions that formed the basis for
its determination that remand was appropriate. Just as § 1447(d)
prevents us from reviewing directly the district court’s decision
to remand, it likewise prevents us from reviewing that decision
14
through some backdoor, as PetroEcuador suggests. To do so would
negate the clear directive of § 1447(d).
Finally, PetroEcuador argues that Congress manifested a
preference for federal courts to hear cases involving foreign
states. According to PetroEcuador, we should therefore take the
steps necessary to ensure its access to the federal courts. We
agree that Congress, in enacting the FSIA, intended for foreign
sovereigns to have access to federal courts. As we have
explained previously, however, that access is not absolute.
Section 1447(d) predated FSIA and its removal
provision, but Congress made no exception for appellate
review of a remanded FSIA case, as it has done for civil
rights and FDIC cases. Relatedly, in waiving the sovereign
immunity of the United States, Congress did not provide a
[Federal Tort Claims Act] exception to § 1447(d) and this
court has refused to create one. Mitchell v. Carlson, 896
F.2d 128, 131 (5th Cir.1990). The FSIA has no such
exception and, as in Mitchell, we must adhere to the broad
application of § 1447(d).
Mobil, 984 F.2d at 666 (internal quotation marks and some
citations omitted). When, as here, we determine that the
district court remanded the case pursuant to § 1447(c), the FSIA
provides no exception to the mandate of § 1447(d).8
8
Valero has filed a motion in this court requesting that we
order PetroEcuador to pay Valero twice its costs and attorney’s
fees for a frivolous appeal. Federal Rule of Appellate Procedure
38 provides that “[i]f a court of appeals determines that an
appeal is frivolous, it may, after a separately filed motion or
notice from the court and reasonable opportunity to respond,
award just damages and single or double costs to the appellee.”
“An appeal is frivolous if it relies on legal points that are not
arguable on their merits.” Walker v. City of Bogalusa, 168 F.3d
237, 241 (5th Cir. 1999) (internal quotation marks omitted). We
disagree with Valero’s contention that PetroEcuador’s legal
15
III. CONCLUSION
The remand order in this case having been entered pursuant
to § 1447(c), we are without appellate jurisdiction to entertain
an appeal from it. Valero’s motion to DISMISS the appeal for
want of appellate jurisdiction is GRANTED. Its motion to award
costs and attorney’s fees is DENIED.
points are not arguable on the merits. PetroEcuador’s argument
that we should look past the jurisdictional conclusion and focus
on the underlying procedural issues has appeal. Ultimately,
however, we conclude that we are constrained by the statute and
our precedent. The legal points raised by PetroEcuador are
nonetheless, in our minds, arguable on their merits.
16
