United States Court of Appeals
Fifth Circuit
F I L E D
UNITED STATES COURT OF APPEALS
March 12, 2007
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
Clerk
No. 06-10552
MONCRIEF OIL INTERNATIONAL INC.,
Plaintiff-Appellant,
v.
OAO GAZPROM; OAO ZAPSIBGAZPROM; OAO SEVERNEFTEGAZPROM,
Defendants-Appellees.
Appeal from the United States District Court for the
Northern District of Texas, Fort Worth
Before REAVLEY, JOLLY, and BENAVIDES, Circuit Judges.
BENAVIDES, Circuit Judge:
This is an appeal from the district court’s dismissal of
Plaintiff’s claims against foreign defendants. Because we agree
that personal jurisdiction is lacking as to each defendant, we
affirm.
I. FACTUAL BACKGROUND AND PROCEDURAL HISTORY
This case arises from a business dispute between a Texas
plaintiff, Moncrief Oil International Inc. (“Moncrief”), and
Russian defendants OAO Gazprom (“Gazprom”), OAO Zapsibgazprom
(“Zapsib”), and OAO Severneftegazprom (“Severn”) (collectively “the
Gazprom defendants”) . The district court dismissed Moncrief’s
complaint for lack of personal jurisdiction, and Moncrief appeals.
Moncrief is a Texas corporation that identifies investments in
unexplored and/or underdeveloped foreign oil and gas projects
around the world. The Gazprom defendants are organized under the
laws of the Russian federation and their principal place of
business is in Moscow, Russia. Gazprom is the majority shareholder
of Zapsib, and wholly owns Severn as a subsidiary.
Zapsib obtained a license from Russian authorities to produce
natural gas from the Yuzhno-Russkoye gas field (the “Y-R Field”) in
1993, and commenced negotiations with Moncrief to work together to
develop the field. Zapsib and Moncrief subsequently entered into
three agreements: the Investment Agreement (1997), Framework
Agreement (1998), and Cooperation Agreement (1998). As part of the
Cooperation Agreement, Zapsib transferred the Y-R license to
Severn, and agreed to provide Moncrief a 20% interest in that
enterprise in exchange for securing financing, providing technical
expertise, and investing $120 million. Additionally, the
Cooperation Agreement provided that all disputes arising out of the
agreement would be subject to mandatory arbitration in Russia
before the International Arbitration Court, and that Russian law
would apply to any disputes.
Shortly after the Cooperation Agreement, Gazprom temporarily
lost control of Zapsib and Severn because of internal fraud. After
Gazprom regained control, Moncrief worked directly with the parent
2
company regarding performance of the various agreements in 2000.
Gazprom allegedly assured Moncrief that it would continue working
with them and honor those prior agreements. In 2004, however,
Gazprom announced that it had partnered with German entities to
develop the Y-R field.
Moncrief filed suit in federal court for declaratory relief,
breach of contract, promissory estoppel, and negligent
misrepresentation, with estimated damages of several billion
dollars. The court dismissed the case for lack of personal
jurisdiction. Moncrief appeals. The Gazprom defendants argue that
the district court correctly dismissed the case. In the
alternative, they assert that Moncrief’s claims are subject to a
binding arbitration clause and that the case should be dismissed
under the doctrine of forum non conveniens.
II. STANDARD OF REVIEW
We review a district court’s dismissal for lack of personal
jurisdiction de novo. Central Freight Lines Inc. v. APA Transport
Corp., 322 F.3d 376, 380 (5th Cir. 2003). The district court
denied the Gazprom defendants’ motion to dismiss for mandatory
arbitration and forum non conveniens as moot given its finding as
to the lack of personal jurisdiction, and thus never reached those
issues. This Court may affirm on any ground supported by the
record, however, even if it was not reached by the district court.
See, e.g., United States v. Dow Chem. Co., 343 F.3d 325, 330 (5th
3
Cir. 2003); Pub. Citizen, Inc. v. Bomer, 274 F.3d 212, 217 (5th
Cir. 2001).
III. DISCUSSION
In order for personal jurisdiction to satisfy Due Process
requirements, a plaintiff must show that (1) the defendant
purposefully availed himself of the benefits and protections of the
forum state by establishing “minimum contacts” with the forum
state, and (2) the exercise of personal jurisdiction over that
defendant does not offend traditional notions of fair play and
substantial justice.” Int’l Shoe Co. v. Wash., 326 U.S. 310, 316
(1945); Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir. 1999).1
We find that the Gazprom defendants did not establish minimum
contacts.
A. Minimum Contacts
A plaintiff’s or third party’s unilateral activities cannot
establish minimum contacts between the defendant and forum state.
Hydrokinetics, Inc. v. Alaska Mech., Inc., 700 F.2d 1026, 1028 (5th
Cir. 1983). A single act directed at the forum state can confer
personal jurisdiction so long as that act gives rise to the claim
asserted, but merely contracting with a resident of the forum state
1
The Texas long-arm statute extends personal jurisdiction to
the permissible limits of the Due Process Clause, and so we only
need to determine whether the exercise of personal jurisdiction in
this case would comport with those federal guarantees. Latshaw,
167 F.3d at 211; Bullion v. Gillespie, 895 F.2d 213, 216 (5th Cir.
1990).
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does not establish minimum contacts. Latshaw, 167 F.3d at 211;
Hydrokinetics, 700 F.2d at 1028.
An exchange of communications in the course of developing and
carrying out a contract also does not, by itself, constitute the
required purposeful availment of the benefits and protections of
Texas law. Holt Oil & Gas Corp. v. Harvey, 801 F.2d 773, 778 (5th
Cir. 1986). Otherwise, jurisdiction could be exercised based only
on the fortuity that one of the parties happens to reside in the
forum state. Id. To avoid that, we evaluate multiple factors in
determining whether a defendant purposefully established minimum
contacts within the forum. Burger King Corp. v. Rudzewicz, 471
U.S. 462, 479 (1985). Random, fortuitous, or attenuated contacts
are not sufficient to establish jurisdiction. Id. at 476. We
consider each of the Gazprom defendants in turn.2
i. Zapsib
Moncrief argues that Zapsib established minimum contacts by
(1) entering into contracts with Moncrief, (2) knowing from the
outset that Moncrief is a Texas resident, (3) acknowledging and
approving of Moncrief’s substantial performance in Texas, and (4)
2
Personal jurisdiction can be of either the general or
specific variety, Mink v. AAAA Develop., LLC, 190 F.3d 333, 336
(5th Cir. 1999), but Moncrief only alleges specific jurisdiction,
meaning that the defendants must have purposefully directed their
activities at residents of the forum, and the litigation results
from alleged injuries arising out of or related to those
activities. See Burger King, 471 U.S. at 472; Bullion, 895 F.2d at
216.
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sending an executive to visit Texas—at Moncrief’s expense—in
furtherance of that performance. The plaintiffs do not dispute
that all the agreements were executed in Russia, with a Russian
corporation, concerning a Russian joint venture, to develop a
Russian gas field. Further, the Cooperation Agreement provided for
arbitration in Russia, under Russian law.
As stated above, merely contracting with a resident of Texas
is not enough to establish minimum contacts. Latshaw, 167 F.3d at
211. Moreover, a plaintiff’s unilateral activities in Texas do not
constitute minimum contacts where the defendant did not perform any
of its obligations in Texas, the contract did not require
performance in Texas, and the contract is centered outside of
Texas. Hydrokinetics, 700 F.2d at 1029. Nevertheless, Moncrief
cites Central Freight Lines, Inc. v. APA Transp. Corp., 322 F.3d
376 (5th Cir. 2003), and Mississippi Interstate Express, Inc. v.
Transpo Inc., 681 F.2d 1003 (5th Cir. 1982), to argue that minimum
contacts exist in a breach of contract case where a nonresident
enters into a contract with a known resident of the forum state, if
it is reasonably foreseeable that the resident will perform a
material part of its obligations in the forum state and thereby
cause business activity in the forum state. See Central Freight,
322 F.3d at 382 (“a nonresident can establish contact with the
forum by taking purposeful and affirmative action, the effect of
which is to cause business activity (foreseeable by the defendant)
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in the forum state”).
Reading that language broadly, Zapsib surely could have
foreseen that Moncrief might perform many of its duties in Texas.
Nevertheless, this argument ultimately fails. As we noted in
Patterson v. Dietze, 764 F.2d 1145, 1147 (5th Cir. 1985), our
finding of jurisdiction in Transpo was supported not only by
foreseeability, but also by the fact that the forum state was
“clearly the hub of the parties’ activities.” 681 F.2d at 1008–09.
That was not true in Patterson, nor in this case, where the parties
negotiated and prepared key elements abroad (Mexico and Russia,
respectively).
Mere foreseeability, standing alone, does not create
jurisdiction. In addition to the hubs of activity lying within the
forum states, Transpo and Central Freight differ from the present
case in other ways, including a plaintiff that only existed within
the forum state, and a defendant actively engaged in the various
activities taking place therein. Transpo, 681 F.2d at 1005, 1009,
1011. In Central Freight, the contract contemplated that the
plaintiff would make shipments from Texas on behalf of third-party
Texas customers. The plaintiff’s Texas location was strategically
advantageous to the defendant and was the basis for the agreement,
see Cent. Freight, 322 F.3d at 382, suggesting that the defendant
had purposefully availed itself of doing business in Texas. In
contrast, Moncrief agreed to perform analysis, without any
7
discussion of where it would be done. The contract was silent as
to location. Given the nature of the work, there’s no indication
that the location of the performance mattered, and it is not clear
how performance of that work would “cause business activity.”
Moncrief, though based in Texas, is an international company
engaged in various projects around the world. Moncrief even
established an office in Russia specifically for this relationship.
Perhaps most significantly, the Cooperation Agreement—which
cemented the earlier agreements between the parties—included
clauses calling for mandatory arbitration in Russia, under Russian
law. In Central Freight, this Court gave weight to the absence of
a choice of law provision that might have given the defendant
reason to believe it could not be haled into court in the forum
state. 322 F.3d at 383 (“Although the . . . Agreement apparently
does not contain a forum selection clause, a choice of law clause,
or some other provision that could have put [the defendant] on
specific notice that it might be amenable to suit in Texas, neither
does the Agreement contain any provision that would give [the
defendant] reason to think that it could not be haled into court in
Texas . . . .”).
The arbitration and choice of law clauses found in the
Cooperation Agreement suggest that Gazprom meant for the
undertaking to remain wholly Russian in nature. See Jones v.
Petty-Ray Geophysical, Geosource, Inc., 954 F.2d 1061, 1069 (5th
8
Cir. 1992) (stating that forum-selection and choice-of-law clauses
“indicate rather forcefully” that defendant “did not purposefully
direct its activities towards Texas”). Moncrief’s Texas location
was irrelevant, and this case thus falls into the category of cases
discussed in Holt Oil, where mere fortuity that one company happens
to be a Texas resident, coupled with that company’s unilateral
performance, is not enough to confer jurisdiction. See Holt Oil,
801 F.2d at 778.
The only remaining alleged contact for Zapsib is the 1997
visit of its executive, Mr. Nikiforov, to Texas. The visit, at the
invitation of Moncrief, helped to further planning and
negotiations, but no agreement was established during the trip. In
Hydrokinetics, we found that the defendant’s two physical visits to
Texas did not create jurisdiction, in part because the defendant
did not regularly do business in Texas, and because most of the
negotiations appeared elsewhere. 700 F.2d at 1028–29. The same is
true here, and Mr. Nikiforov’s visit did not create jurisdiction.
ii. Gazprom
Moncrief’s argument for jurisdiction over Gazprom stems from
its vice chairman, Mr. Yurlov’s visit to Texas in 2002 to speak at
a U.S./Russia Energy Summit. During that visit, Yurlov met with
Moncrief and allegedly misrepresented that, despite internal
changes within the company, Gazprom would continue to honor and
work in furtherance of the already existing agreements.
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Moncrief’s initial complaint stated only a breach-of-contract
claim against Gazprom, which would require a showing of minimum
contacts in order to find that there is personal jurisdiction. The
district court, however, accurately described Yurlov’s visit to
Houston as “fortuitous,” and the visit and meeting were certainly
not sufficient to establish personal jurisdiction: Yurlov was
visiting for purposes of the summit, and his meeting with Moncrief
was purely incidental to that. Perhaps realizing that personal
jurisdiction might not otherwise exist for Gazprom, Moncrief later
amended the complaint to add a claim for negligent
misrepresentation, a tort, thus giving rise to the argument that
personal jurisdiction exists because Gazprom committed a tort in
Texas.
“When a nonresident defendant commits a tort within the state
. . . that tortious conduct amounts to sufficient minimum contacts
with the state by the defendant to constitutionally permit courts
within that state . . . to exercise personal adjudicative
jurisdiction . . .” Guidry v. United States Tobacco Co., Inc., 188
F.3d 619, 628 (5th Cir. 1999). Therefore, even without other
contacts, jurisdiction would exist if Gazprom committed a tort
while in the state. Moncrief, however, failed to state a claim of
negligent representation.
The elements of negligent misrepresentation include providing
false information upon which a plaintiff relies. Federal Land Bank
Ass’n v. Sloane, 825 S.W.2d 439, 442 (Tex. 1991). We have further
10
clarified that a negligent misrepresentation claim must allege
misstatement of an “existing fact.” Accord Clardy Mfg. Co. v.
Marine Midland Bus. Loans Inc., 88 F.3d 347, 357 (5th Cir. 1996).
The misrepresentation alleged by Moncrief concerned the future
behavior of Gazprom—that Gazprom would continue to honor the
agreements—rather than an existing fact.
Moncrief also argues that there is “effects jurisdiction”
based on the representation made in Texas, as well as a subsequent
promise made in Russia. “Effects” jurisdiction is premised on the
idea that an act done outside the state that has consequences or
effects within the state can suffice as a basis for personal
jurisdiction if the effects are seriously harmful and were intended
or highly likely to follow from the nonresident defendant’s
conduct. See Guidry, 188 F.3d at 628. Such jurisdiction is rare.
We have expressly declined to allow jurisdiction for even an
intentional tort where the only jurisdictional basis is the alleged
harm to a Texas resident. See Panda Brandywine Corp. v. Potomac
Elec. Power Co., 253 F.3d at 870 (5th Cir. 2001). Moreover, the
alleged promise made in Russia succumbs to the same problem as the
one made in Texas: the complaint alleged a misstatement of a future
event, rather than misstatement of an already existing fact. It
therefore fails as a negligent misrepresentation claim, and cannot
give rise to jurisdiction as a tort.
iii. Severn
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Moncrief argues that the jurisdictional contacts of the parent
company, Gazprom, are attributable to Severn given that Severn is
wholly owned and controlled by Gazprom. Because we find that no
minimum contacts exist for Gazprom, and because Moncrief does not
allege any contacts for Severn independent of Gazprom, we need not
consider whether Gazprom’s contacts, if existent, would be
attributable to Severn.
B. Traditional Notions of Fair Play and Substantial Justice
Given our finding that no minimum contacts exist to exercise
jurisdiction over the Gazprom defendants, we do not need to
consider whether such jurisdiction would violate traditional
notions of fair play and substantial justice. We also do not need
to reach the Gazprom defendants’ arguments concerning binding
arbitration and forum non conveniens.
IV. CONCLUSION
For the foregoing reasons, we AFFIRM the district court’s
dismissal.
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Moncrief Oil International Inc. v. OAO Gazprom
Court: Court of Appeals for the Fifth Circuit
Date filed: 2007-03-12
Citations: 481 F.3d 309
Copy Citations