Agribusiness United DMCC et al v. Blue Water Shipping Company, Inc.

Filing 17

MEMORANDUM OPINION granting 7 MOTION to Dismiss 1 Complaint, or, in the Alternative, to Transfer Venue (Signed by Magistrate Judge Nancy K Johnson) Parties notified.(sjones, 4)

United States District Court
Southern District of Texas

ENTERED
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF TEXAS
HOUSTON DIVISION
AGRIBUSINESS UNITED DMCC
and AGRIBUSINESS UNITED
NORTH AMERICA CORPORATION,
Plaintiffs,
v.
BLUE WATER SHIPPING
COMPANY, INC.,
Defendant.

§
§
§
§
§
§
§
§
§
§
§
§

April 13, 2017
David J. Bradley, Clerk

CIVIL ACTION NO. H-16-2249

MEMORANDUM OPINION
Pending before the court1 is Defendant’s Motion to Dismiss or,
in the Alternative, to Transfer Venue (Doc. 7).

The court has

considered the motion, Plaintiffs’ response, Defendant’s reply, all
other relevant filings, and the applicable law.

For the reasons

set forth below, the court GRANTS Defendant’s motion to dismiss.
I.

Case Background

Plaintiffs, “charterers/shippers of the M.V. FENGLI 11” (“the
Vessel”) filed this admiralty case against Defendant, a freight
forwarding service, for failing to provide services it committed to
perform.2
A.

Factual Background
Plaintiff Agribusiness United DMCC is a foreign corporation

1

The parties consented to proceed before the undersigned magistrate
judge for all proceedings, including trial and final judgment, pursuant to 28
U.S.C. § 636(c) and Federal Rule of Civil Procedure 73. See Doc. 15, Ord.
Transferring Case Dated Nov. 14, 2016.
2

Doc. 1, Pls.’ Verified Compl. pp. 2-3.

with its principal place of business in the United Arab Emirates,
and Plaintiff Agribusiness United North America Corporation is a
foreign

corporation

with

its

principal

place

of

business

in

Savannah, Georgia.3

Defendant was organized and maintains its

principal

business

place

of

in

Louisiana.4

Defendant

also

maintains a “small satellite office” in Houston and is registered
to do business in Texas.5
In October 2012, Plaintiffs were hired to transport soybean
meal in bulk to be loaded on the Vessel in Savannah, Georgia, and
Myrtle Grove, Louisiana.6
Defendant

to

certificates

secure
for

the

Plaintiffs, in turn, contracted with

necessary
cargo.7

inspections,

approvals,

and

particular,

Plaintiffs

gave

In

Defendant documentary instructions to arrange for the issuance of
bills

of

lading,

certificates,

and

phytosanitary
other

certificates,

documents.8

Defendant’s

fumigation
Louisiana

employees performed all actions related to the shipment that was

3

Id. pp. 1-2.

4
Doc. 7-3, Ex. 1 to Def.’s Mot. to Dismiss or, in the Alternative, to
Transfer Venue (“Def.’s Mot. to Dismiss”), Decl. of Keith Wild (“Wild”) ¶ 3.
5

Id. ¶ 5; Doc. 10-2, Ex. 3 to Pls.’ Opp. to Def.’s Mot. to Dismiss,
Bus. Orgs. Inquiry.
6

Doc. 1, Pls.’ Verified Compl. p. 2.

7

Id.

8

Id.

2

the subject of the contract with Plaintiffs.9
The Vessel arrived in Savannah in early December 2012 to begin
loading operations the following day.10

Defendant failed: (1) to

arrange for a Federal Grain Inspection Service (“FGIS”) holds
inspection; (2) to arrange for an FGIS surveyor to be present at
commencement

of

certificate

prior

loading;
to

(3)

or

loading.11

to

obtain

After

a

loading

complete, Plaintiffs learned of these omissions.12

phytosanitary
was

partially

To allow the

FGIS surveyor to complete the required inspection, Plaintiffs moved
the already loaded cargo from hold to hold and delayed the loading
of the remaining cargo.13

The resulting ten-day delay caused

Plaintiffs to sustain “losses in Vessel demurrage, extra costs
incurred for failure to timely inspect holds, shortages of cargos,
and extension penalties incurred at the second loading port.”14
In June 2014, Plaintiffs forwarded a demand to Defendant for

9

See Doc. 7-3, Ex. 1 to Def.’s Mot. to Dismiss, Decl. of Wild ¶ 5;
Doc. 7-3, Ex. 2 to Def.’s Mot. to Dismiss, Decl. of John W. Imms III ¶ 3; Doc.
7-3, Ex. 3 to Def.’s Mot. to Dismiss, Decl. of Kenneth J. Carson Jr. ¶ 3.
10

Doc. 1, Pls.’ Verified Compl. p. 3.

11

Id.

12

Id. Defendant’s employee stated in his declaration that, “[d]uring
the early stages of the loading process in Savannah, [he] came to realize the
failure on the part of [Plaintiff Agribusiness United DMCC] or its local
representatives to arrange for [U.S. Department of Agriculture] attendance at
loading, and [he] brought this matter to [Plaintiff Agribusiness United DMCC’s]
attention immediately.” Doc. 7-3, Ex. 2 to Def.’s Mot. to Dismiss, Decl. of John
W. Imms III ¶ 12.
13

See Doc. 1, Pls.’ Verified Compl. p. 3.

14

Id.

3

the payment of $636,234.61 in damages, interest, and costs.15
Defendant refused to pay.16
B.

Procedural Background
On July 28, 2016, Plaintiffs filed this action, asserting

jurisdiction pursuant to 28 U.S.C. § 1333, which allows a district
court to exercise original jurisdiction over admiralty or maritime
civil suits.17

Plaintiffs asserted that the venue was proper

because Defendant had a place of business in Houston.18

Plaintiffs

identified Defendant as “a foreign corporation registered to do
business

in

Plaintiffs

Texas

with

alleged

a

place

breach

of
of

business

in

contract,

Houston.”19
fraudulent

misrepresentation, negligence, and gross negligence and sought
compensatory and punitive damages, as well as costs and attorneys’
fees.20
On September 30, 2016, Defendant filed the pending motion to
dismiss.21

Since then, Plaintiffs have responded; Defendant has

replied; and the parties have consented to proceed before the

15

Id.

16

Id.

17

See id. p. 1.

18

See id.

19

Id. p. 2.

20

See id. pp. 4-6.

21

See Doc. 7, Def.’s Mot. to Dismiss.

4

undersigned.22
On October 28, 2016, Plaintiffs filed a lawsuit in the U.S.
District Court for the Eastern District of Louisiana (“EDLA”),
alleging the same claims based on the same facts against the same
defendant as pending here.23

The only differences between the two

complaints, other than the districts in which they were filed, are
that, in the EDLA, Plaintiffs pled diversity as well as admiralty
or maritime jurisdiction, Plaintiffs asserted that venue was proper
in the EDLA because Defendant was “a corporation organized and
existing

under

the

laws

of

the

State

of

Louisiana

with

its

principal place of business in Metairie, Louisiana,” and Plaintiffs
repeated that Defendant was organized under Louisiana law and
maintained

a

principal

place

of

business

in

Louisiana

in

identifying Defendant as a party.24
The court now addresses Defendant’s motion pending before this
court.
II. Defendant’s Motion to Dismiss
Defendant seeks dismissal of this action based on several
assertions: (1) the court cannot exercise admiralty or maritime
subject matter jurisdiction over the case; (2) the court cannot

22

See Doc. 10, Pls.’ Opp. to Def.’s Mot. to Dismiss; Doc. 13, Def.’s
Reply; Doc. 15, Ord. Transferring Case Dated Nov. 14, 2016.
23
See Doc. 13-1, Ex. 17 to Def.’s Reply, Pls.’ Verified Orig. Compl.
in Agribusiness United DMCC v. Blue Water Shipping Co., Civil Action No. 16-15926
(E.D. La. Oct. 28, 2016).
24

Compare id. p. 2 with Doc. 1, Pls.’ Verified Compl. pp. 1-2.

5

exercise

personal

jurisdiction

over

Defendant;

(3)

venue

is

improper in this district; and (4) even if venue is a proper here,
the court should transfer the case to the EDLA for the convenience
of the parties and witnesses and in the interest of justice.

In

its response, Plaintiffs address each of Defendant’s asserted bases
for dismissal or transfer.
A.

Subject Matter Jurisdiction
Regarding

subject

matter

jurisdiction,

Plaintiffs

alternatively request that, “to the extent that the [c]ourt deems
it

necessary,

the

Plaintiff[s]

request[]

leave

to

amend

the

Complaint to allege diversity jurisdiction, which it easily has in
this case.”25

Although Defendant argues that the court may not

exercise admiralty or maritime jurisdiction, Defendant is not
opposed to Plaintiffs’ request to amend their complaint.26

If the

court has the authority to exercise diversity jurisdiction, it need
not determine whether it also may exercise admiralty or maritime
jurisdiction.

The court takes this path in its analysis.

In determining whether it is properly vested with subject
matter jurisdiction, the court is “free to weigh the evidence and
resolve factual disputes in order to satisfy itself that it has the
power to hear the case.”

Krim v. pcOrder.com, Inc., 402 F.3d 489,

25

Doc. 10, Pls.’ Opp. to Def.’s Mot. to Dismiss p. 2; see also id. pp.

26

See Doc. 13, Def.’s Reply p. 3.

19-20.

6

494 (5th Cir. 2005)(quoting Montez v. Dep’t of Navy, 392 F.3d 147,
149 (5th Cir. 2004)).

The court can exercise jurisdiction over

cases in which the amount in controversy exceeds $75,000 and the
controversy is between citizens of different states or between
citizens of a state and citizens of foreign states.
1332(a).

28 U.S.C. §

A corporation is deemed to be a citizen of every state

and foreign state in which it was incorporated and of the state or
foreign state in which its principal place of business is located.
29 U.S.C. § 1332(c)(1).
Here,

Plaintiffs

pled

that

both

Plaintiffs

were

foreign

corporations, one with its principal place of business in the
United Arab Emirates and one with its principal place of business
in Savannah, Georgia.27 Plaintiffs pled that Defendant was “foreign
corporation registered to do business in Texas with a place of
business in Houston” and, in its response that Defendant was
“domiciled in Texas.”28

In fact, Defendant was organized under the

laws of the State of Louisiana and maintains its principal place of
business in Metairie, Louisiana.29

Plaintiffs pled damage in the

amount of $636,234.61.30
The parties are diverse, and the amount in controversy exceeds

27

Doc. 1, Pls.’ Verified Compl. pp. 1-2.

28

Id. p. 2; Doc. 10, Pls.’ Opp. to Def.’s Mot. to Dismiss p. 20.

29

Doc. 7-3, Ex. 1 to Def.’s Mot. to Dismiss, Decl. of Wild ¶ 3.

30

See Doc. 1, Pls.’ Verified Compl. pp. 3, 6.

7

the $75,000 threshold. Therefore, assuming an amendment to add the
assertion of diversity jurisdiction, the court could exercise
jurisdiction over this action.
B.

Personal Jurisdiction
Defendant argues that it does not have sufficient contacts

with the State of Texas to warrant either specific or general
jurisdiction. Plaintiffs do not contend that specific jurisdiction
applies

but

argue

that

Defendant’s

contacts

with

Texas

sufficient to warrant the exercise of general jurisdiction.

are

Thus,

the court examines whether it can exercise general jurisdiction.
The Federal Rules of Civil Procedure authorize a court to
dismiss an action against a defendant when the court lacks personal
jurisdiction over that defendant.
12(h).

See Fed. R. Civ. P. 12(b)(2),

On a motion to dismiss, the burden is on the plaintiff to

establish a prima facie case in support of jurisdiction. Patterson
v. Aker Sols. Inc., 826 F.3d 231, 233 (5th Cir. 2016).
The district court “is not obligated to consult only the
assertions in the plaintiff’s complaint” but may receive “any
combination

of

recognized

methods

of

discovery,”

including

affidavits, interrogatories, and depositions to assist it in the
jurisdictional analysis. Hazim v. Schiel & Denver Book Publishers,
647 F. App’x 455, 457 (5th Cir. 2016)(unpublished)(quoting Paz v.
Brush Engineered Materials, Inc., 445 F.3d 809, 812 (5th Cir.
2006)); Walk Haydel & Assocs., Inc. v. Coastal Power Prod. Co., 517

8

F.3d 235, 241 (5th Cir. 2008)(internal quotation marks omitted)
(quoting Thompson v. Chrysler Motors Corp., 755 F.2d 1162, 1165 (5th
Cir. 1985)).

The court resolves all conflicts in the evidence in

favor of the plaintiff and accepts as true all of the plaintiff’s
uncontroverted allegations.

Johnston v. Multidata Sys. Int’l

Corp., 523 F.3d 602, 609 (5th Cir. 2008).

However, “vague and

overgeneralized assertions that give no indication as to the
extent, duration, or frequency of contacts are insufficient to
support general jurisdiction.” Hazim, 647 F. App’x at 460 (quoting
Johnston, 523 F.3d at 610).
A federal court has personal jurisdiction over a nonresident
defendant

if

the

forum

state’s

long-arm

statute

confers

jurisdiction and if jurisdiction is consistent with due process
under the United States Constitution.

Johnston, 523 F.3d at 609.

In Texas, the long-arm statute permits personal jurisdiction to the
full extent allowed by the Due Process Clause.

Id.

The Due Process Clause of the Fourteenth Amendment
permits the exercise of personal jurisdiction over a
nonresident defendant when (1) that defendant has
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
jurisdiction over that defendant does not offend
“traditional notions of fair play and substantial
justice.”
Latshaw v. Johnston, 167 F.3d 208, 211 (5th Cir. 1999)(quoting Int’l
Shoe Co. v. Wash., 326 U.S. 310, 316 (1945)).
General jurisdiction exists when the defendant’s contacts “are

9

so continuous and systematic as to render [it] essentially at home
in the forum State.”

Daimler AG v. Bauman, ___ U.S. ___, 134 S.

Ct. 746, 754 (2014)(internal quotation marks omitted)(quoting
Goodyear Dunlop Tires Operations, S.A. v. Brown, 564 U.S. 915, 919
(2011)).

However, not all continuous business activity within a

state

enough

is

to

support

personal

unrelated to the that activity.
Co., 326 U.S. at 318).

jurisdiction

for

claims

Id. at 757 (quoting Int’l Shoe

“[O]nly a limited set of affiliations with

a forum,” those that render the business “essentially at home”
there,

“will

render

jurisdiction there.”
For

a

a

defendant

amenable

to

all-purpose

Id. at 760, 761.

corporation,

the

“paradigm

bases

for

general

jurisdiction” are the place of incorporation and the principal
place of business.

Id. at 760 (quoting A General Look at General

Jurisdiction, 66 Tex. L. Rev. 721, 735 (1988)).

In support of the

paradigm bases, the Court noted that each ordinarily points to only
one state, which affords the plaintiff “recourse to at least one
clear and certain forum in which a corporate defendant may be sued
on any and all claims.”
AG,

the

Fifth

jurisdiction

Id.

Circuit

outside

of

Since the Court’s opinion in Daimler

has
the

referred
forum

to
in

establishing
which

a

general

business

was

incorporated or the forum in which it maintains its principal place
of business as “incredibly difficult.”

Monkton Ins. Servs., Ltd.

v. Ritter, 768 F.3d 429, 432 (5th Cir. 2014).

10

Recent decisions of the Fifth Circuit illustrate this point.
For example, prior to the Court’s issuance of Daimler AG, the Fifth
Circuit found that a plaintiff failed to establish a prima facie
case of general personal jurisdiction based on the following facts:
(1) six of the defendant’s employees worked at two military bases
in Texas; (2) the defendant’s employees sometimes worked at or
attended training programs at a Texas facility owned by another
company; (3) a few of the defendant’s employees were processed at
a

military

facility

in

Texas

before

traveling

overseas

for

assignments; (4) the defendant paid unemployment and franchise
taxes to the State of Texas; and (5) the defendant’s website could
be accessed in Texas and listed the email addresses for several of
defendant’s employees.

Bowles v. Ranger Land Sys., Inc., 527 F.

App’x 319, 321 (5th Cir. 2013)(unpublished).
In

another

case,

the

Fifth

Circuit

found

that

general

jurisdiction could not be exercised where a foreign defendant had
a sister division and mailing address in Texas, made sales in the
United States and Texas, and included Texas choice-of-law and
forum-selection provisions in the subject contract.
App’x at 460.
no

Hazim, 647 F.

The Fifth Circuit noted that the plaintiff provided

information

as

to

the

extent

or

duration

of

the

sister

division’s activity in Texas or detail about the extent, duration,
or frequency of the defendant’s sales in Texas and that the forumselection clause applied only to Texas state courts.

11

Id.

A

2015

district

court

decision

also

found

insufficient

contacts to exercise general personal jurisdiction in this forum
over a defendant that was a Michigan corporation with its principal
place of business in Michigan.

See Haskett v. Cont’l Land Res.,

L.L.C., Civil Action No. G-14-0281, 2015 WL 1419731, at *6 (S.D.
Tex. Mar. 27, 2015), vacated & rev’d in part on other grounds
(unpublished).

The district court found that employing several

residents of Texas, registering as a foreign entity with the Texas
Secretary of State, nominating an agent for service of process in
Texas, and filing a notice of change of its registered agent’s
address were not “continuous and systematic contacts” sufficient to
establish general jurisdiction.

Id.

This determination was not

raised on appeal. See Haskett v. Cont’l Land Res., L.L.C., No. 1540595, 2016 WL 4446075, at *1 (5th Cir. Aug. 23, 2016)(unpublished).
Reaching

a

contrary

result,

another

2015

district

court

decision held that plaintiff made a prima facie showing of general
jurisdiction in this forum where the defendant maintained an office
in Texas, the defendant designated an agent for service of process
in Texas, and the defendant’s website and publications indicated
that it or a related company installed equipment in three locations
in Texas.

See Del Castillo v. PMI Holdings N. Am. Inc., Civil

Action No. 4:14-CV-3435, 2015 WL 3833447, at *3 (S.D. Tex. June 22,
2015)(unpublished).

Without considering the third contact because

of

discovery,

the

need

for

the

12

court

found

that

general

jurisdiction could be based solely on the presence of an office in
Texas and the designation of an agent for service.

See id. **3-4.

The defendant’s permanent office in Texas was particularly
significant to the court, which, on that basis, characterized the
defendant’s resulting contacts as “doing business in Texas” as
opposed to only “doing business with Texas.”

Id. at *3 (quoting

Access Telecom Inc. v. MCI Telecomms. Corp., 197 F.3d 694, 717 (5th
Cir. 1999)).
service

of

The court also found the designation of an agent for
process

in

Texas

to

indicate

that

the

business

“reasonably anticipated being haled into court in the state.”

Id.

(internal alterations and quotation marks omitted)(quoting WorldWide Volkswagen Corp. v. Woodson, 444 U.S. 286, 297 (1980)).

The

court stated that Daimler AG “does not stand for the proposition
that offices alone are insufficient for general jurisdiction” but
that the percentage of Daimler AG’s overall business that was
conducted by its subsidiary in California was too small for Daimler
AG “to be considered at home in the state.”

Id. at *4 (internal

quotation marks omitted).
Here, Defendant was incorporated in Louisiana and maintains
its principal place of business in Louisiana.31

As support for the

exercise of general jurisdiction in this forum, Plaintiffs point to
Defendant’s registration with the Texas Secretary of State, its
maintenance of an office and telephone listing in Texas, and its

31

See Doc. 7-3, Ex. 1 to Def.’s Mot. to Dismiss, Decl. of Wild ¶ 3.

13

provision of agency services for the ports of Texas.

Plaintiffs

submit an internet business inquiry that indicates Defendant is
registered with the Texas Secretary of State as a foreign forprofit corporation with a registered agent in Texas.32

Plaintiffs

also proffer a webpage identified as Defendant’s Houston directory
that

pictured

nine

employees

information for each.33

and

provided

telephone

contact

Plaintiffs present no evidence of the

extent, duration, or frequency of the services Defendant provided
to Texas ports.

See Hazim, 647 F. App’x at 460.

In reply, Defendant provides the declaration of Keith Wild
(“Wild”), Defendant’s secretary and treasurer.34

Therein, Wild

stated that Defendant employs thirty-nine people, twenty-five of
whom are located in Louisiana, ten are in California, and four are
in Texas (none of whom are company executives).35

Wild further

32
See Doc. 10-2, Ex. 3 to Pls.’ Opp. to Def.’s Mot. to Dismiss, Bus.
Orgs. Inquiry.
33
See Doc. 10-2, Ex. 4 to Pls.’ Opp. to Def.’s Mot. to Dismiss, Def.’s
Houston Directory.
34

See Doc. 13-1, Ex. 13 to Def.’s Reply, Decl. of Wild.

35
Id. ¶¶ 3, 5. Wild stated in his declaration that only four of the
nine individuals listed on its Houston directory are located in Texas with four
of the other five located in Louisiana and one in Oregon. See Doc. 13-1, Ex. 13
to Def.’s Reply, Decl. of Wild ¶ 4. The court notes that the area codes on the
telephone numbers of the employees on the internet directory supports Wild’s
statement, as four employees have telephone numbers with a 713 (Houston) area
code, four with a 504 (southeastern Louisiana) area code, and one with a 503
(northwestern Oregon) area code. See Doc. 10-2, Ex. 4 to Pls.’ Opp. to Def.’s
Mot. to Dismiss, Def.’s Houston Directory. The one in Oregon is not listed in
Wild’s overall location numbers. See Doc. 13-1, Ex. 13 to Def.’s Reply, Decl.
of Wild ¶ 2. The court places little importance on the exclusion of the Oregon
employee from the total and finds that Wild’s declaration supplements, rather
than contradicts, Plaintiffs’ evidence.

14

stated that Defendant’s presence in Texas accounted for 9.77
percent of the vessels to which Defendant provided full agency
services in 2015 and 10.78 percent of the vessels in 2016 as of
November 3, 2016.36

Employees located in Texas generated 7.65

percent of Defendant’s revenues in 2015 and 7.49 percent in 2016 as
of November 3, 2016.37
Unlike the court in Del Castillo, which found the presence of
an

office

and

the

designation

of

a

registered

agent

to

be

sufficient for general jurisdiction, this court finds that the
jurisdictional facts before it do not support exercising general
personal jurisdiction over Defendant. Although Defendant maintains
an

office

in

approximately

Texas,
ten

its

percent

presence
or

less

services to vessels, and revenue.

in
of

Texas

accounted

Defendant’s

for

workforce,

Moreover, while having a

registered agent in Texas may reflect the reasonable anticipation
of being haled into court in this forum related to activities in
the state, it does not reflect an expectation of being haled into
court for activities unrelated to Defendant’s contacts with Texas.
Cf. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 474 (1985)
(describing the foreseeability necessary for establishing minimum
contacts as “conduct and connection with the forum State . . . such
that [it] should reasonably anticipate being haled into court

36

Id. ¶ 6.

37

Id. ¶ 7.

15

there”).
Considering Defendant’s company size and the low percentage of
Defendant’s overall business that takes place in Texas, the court
finds that exercising general personal jurisdiction over Defendant
would offend the “traditional notions of fair play and substantial
justice” guaranteed by the due process clause.
F.3d at 211.

See Latshaw, 167

Even though Defendant is doing business in Texas, it

remains at home only in Louisiana.38

Cf. Daimler AG, 134 S. Ct. at

761-62 (quoting Burger King Corp., 471 U.S. at 472 and cautioning
against “exorbitant exercises of all-purpose jurisdiction [that]
would scarcely permit out-of-state defendants ‘to structure their
primary conduct with some minimum assurance as to where that
conduct will and will not render them liable to suit.’”).
IV.

Conclusion

Based on the foregoing, the court GRANTS Defendant’s motion to
dismiss

for

lack

of

personal

jurisdiction

without

reaching

Defendant’s arguments on venue.
SIGNED in Houston, Texas, this 13th

day of April, 2017.

______________________________
U.S. MAGISTRATE JUDGE
38

The court finds this conclusion consistent with the federal trend
away from the exercise of general jurisdiction. See Daimler AG, 134 S. Ct. at
758 (describing general jurisdiction as occupying “a less dominant place in the
contemporary scheme”); Monkton Ins. Servs., Ltd., 768 F.3d at 432 (emphasizing
how difficult it is to establish general jurisdiction in a forum other than a
business’s place of incorporation or its principal place of business).

16