Perforaciones Exploración Y Producción v. Marítimas Mexicanas, S.A. De C.V. , 356 F. App'x 675 ( 2009 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT United States Court of Appeals
Fifth Circuit
FILED
December 9, 2009
No. 08-41021 Charles R. Fulbruge III
Clerk
PERFORACIONES EXPLORACIÓN Y PRODUCCIÓN, also known as
Protexa; CERTAIN REINSURING UNDERWRITERS, Subscribing to
Reinsurance Contract No. AHE-03004 As Amended to No. AHE-04004
Plaintiffs-Appellees
v.
MARÍTIMAS MEXICANAS, S.A. DE C.V., also known as MarMex
Defendant-Appellant
Appeal from the United States District Court for the
Southern District of Texas, Galveston Division
USDC No. 05-CV-00419
Before BENAVIDES, DENNIS, and ELROD, Circuit Judges.
PER CURIAM:*
Appellant Marítimas Mexicanas, S.A. de C.V. (“MarMex”) appeals from
several rulings in favor of Appellee Perforaciones Marítimas Mexicanas
(“Protexa”) in an ongoing case concerning an allision between two vessels in the
Gulf of Campeche, off the Mexican coast. For the reasons described below, we
affirm the district court and remand to allow trial to proceed on the scope of
*
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 R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH CIR .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.
No. 08-41021
damages awardable to Appellees.
I.
On March 31, 2004, a supply vessel, the M/V ISLA AZTECA (the “ISLA
AZTECA”), allided with a mobile operating drilling unit, the
MODU/TOTONACA (the “TOTONACA”), in the Bay of Campeche,
approximately 45 miles off the Mexican coast. The ISLA AZTECA allegedly
damaged the TOTONACA as a result of their allision. At the time of the
accident, MarMex owned and operated the ISLA AZTECA, and Protexa owned
the TOTONACA. Both MarMex and Protexa are Mexican entities, and both the
ISLA AZTECA and the TOTONACA were Mexican flagged vessels on the date
of the allision. The allision occurred beyond Mexican territorial waters but
within Mexico’s exclusive economic zone (“EEZ”). Under the United Nations
Convention on the Law of the Sea (“UNCLOS”), Mexico does not exercise full
sovereignty over its EEZ, but rather has certain “sovereign rights” within the
zone, including control over the economic exploitation and environmental
protection of the sea’s natural resources. See UNCLOS art. 56, Dec. 10, 1982,
1833 U.N.T.S. 397; 1 T HOMAS J. S CHOENBAUM, A DMIRALTY & M AR. L AW § 2-16
(4th ed. 2004).1
Shortly after the allision, MarMex commenced a limitation action in
Mexico under the Convention on Limitation of Liability for Maritime Claims (the
“1976 Convention”), Nov. 19, 1976, 1456 U.N.T.S. 221, as codified in the Mexican
Law of Navigation, and posted a bond of $427,460.97 to satisfy any claims
arising out of the allision. Commencing a limitation action allows shipowners
to avoid catastrophic liability for accidents at sea involving their vessels, capping
1
The United States has been a UNCLOS signatory for nearly three decades, but
the Senate has not yet ratified the treaty. Nevertheless, the United States has declared that
the provisions of UNCLOS establishing EEZs are declarative of customary international law.
See Mayaguezanos por la Salud y el Ambiente v. United States, 198 F.3d 297, 304 n.14 (1st Cir.
1999).
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No. 08-41021
potential damages based on some measure of the value of their ship and bringing
multiple claimants into a single action. 2 S CHOENBAUM, supra, § 15-1. The
United States is not party to the 1976 Convention, id., but rather has its own
Limitation of Liability Act, codified at 46 U.S.C. §§ 30501–30512 (2006). To
date, Protexa has not filed a claim against MarMex in the Mexican limitation
proceeding.
On July 28, 2005, Protexa 2 and its insurance underwriters filed suit
against MarMex in federal district court in Galveston, Texas, attempting to hold
MarMex liable for the alleged damage to the TOTONACA. MarMex eventually
filed a motion to dismiss Protexa’s suit on grounds of lack of subject matter
jurisdiction, forum non conveniens, and international comity, but the district
court denied the motion and allowed this case to proceed in the United States.
Subsequently, the district court performed a conflicts of law analysis and ruled
that Mexican substantive law, specifically Article 1913 of the Mexican Civil
Code, would apply to the case, but also held that the limits to recovery
established by the 1976 Convention were procedural and therefore were
inapplicable in U.S. court.
For trial, the district court bifurcated the trial between liability and
damages to allow the Fifth Circuit to provide guidance to the court before
addressing damages. After a brief bench trial during which MarMex stipulated
that the ISLA AZTECA had allided with the TOTONACA, the district court
found that MarMex was liable to Protexa for the allision.
On appeal, MarMex asserts that this case should be dismissed for lack of
subject matter jurisdiction, forum non conveniens, and international comity. It
2
Perforaciones Exploración y Producción (“PEP”), an affiliate of Protexa, initially
filed suit against MarMex. However, when it became clear that Protexa was the real party
in interest, and not PEP, the district court granted leave for the plaintiffs to amend their
complaint, substituting Protexa for PEP.
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No. 08-41021
also argues that the district court erred when it concluded that the 1976
Convention is procedural and consequently may not be used to limit MarMex’s
liability in this case. We address these issues in turn.
II.
Whether a district court possesses subject matter jurisdiction is a question
of law, reviewed de novo on appeal. See Sandoz v. Cingular Wireless LLC, 553
F.3d 913, 915 (5th Cir. 2008). 28 U.S.C. § 1333(1) provides that “[t]he district
courts shall have original jurisdiction . . . of . . . [a]ny civil case of admiralty or
maritime jurisdiction . . . .” We determine that the district court does have
subject matter jurisdiction under section 1333 to resolve this dispute.
MarMex contends that subject matter jurisdiction under section 1333(1)
cannot reach an allision that occurred in Mexico’s EEZ, relying primarily on
Victory Carriers, Inc. v. Law, 404 U.S. 202 (1971). In Victory Carriers, the
Supreme Court stated that “the maritime tort jurisdiction of the federal courts
is determined by the locality of the accident and . . . maritime law governs only
those torts occurring on the navigable waters of the United States.” Id. at 205
(emphasis added). However, the weight of authority, including the precedent of
the Supreme Court, supports the view that there are no clear territorial limits
to federal maritime tort jurisdiction. See, e.g., Panama R. Co. v. Napier
Shipping Co., 166 U.S. 280, 285 (1897) (“[T]he law is entirely well settled . . .
that torts originating within the waters of a foreign power may be the subject of
a suit in a domestic court.”); Malay. Int’l Shipping Corp. v. Sinochem Int’l Co.,
436 F.3d 349, 355-56 (3d Cir. 2006) (seizure of ship at Chinese port establishes
admiralty jurisdiction), rev’d on other grounds, 549 U.S. 422 (2007); Coats v.
Penrod Drilling Corp., 61 F.3d 1113, 1117-19 (5th Cir. 1995) (finding admiralty
jurisdiction over tort in territorial waters of United Arab Emirates); Exxon Corp.
v. Chick Kam Choo, 817 F.2d 307, 311 (5th Cir. 1987) (finding that “admiralty
jurisdiction over claims by Singapore plaintiffs on an alleged tort in Singapore”
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No. 08-41021
is “undoubted”), rev’d on other grounds, 486 U.S. 140 (1988). Consequently, we
find MarMex’s reliance on Victory Carriers to be unfounded. The statement in
Victory Carriers appearing to limit jurisdiction to the navigable waters of the
United States is dicta. Victory Carriers concerned whether jurisdiction under
section 1333(1) reached an accident that occurred on a pier in Alabama, and did
not address whether jurisdiction reaches the high seas or waters under the
control of a foreign state. 404 U.S. at 203-04.
MarMex also argues that even if these cases are controlling, there can be
no admiralty jurisdiction over maritime collisions unless the parties or their
dispute have some clear link to the United States. While the strength of a case’s
ties to the United States are clearly relevant for a forum non conveniens or
choice of law analysis, it does not impact whether a court has admiralty
jurisdiction under section 1333(1). See Neely v. Club Med Mgmt. Servs., Inc., 63
F.3d 166, 177-78 (3d Cir. 1995); Kim v. Frank Mohn A/S, 909 F. Supp. 474, 476-
77 (S.D. Tex. 1995). Consequently, we are confident there is subject matter
jurisdiction over the allision of the TOTONACA and the ISLA AZTECA.
III.
Even if there is jurisdiction, as in this case, dismissal may still be
appropriate under the doctrine of forum non conveniens. However, “[t]he forum
non conveniens determination is committed to the sound discretion of the trial
court. It may be reversed only when there has been a clear abuse of discretion;
where the court has considered all relevant public and private interest factors,
and where its balancing of these factors is reasonable, its decision deserves
substantial deference.” Karim v. Finch Shipping Co., 265 F.3d 258, 268 (5th Cir.
2001) (quoting Piper Aircraft Co. v. Reyno, 454 U.S. 235, 257 (1981)).
Courts considering dismissal for forum non conveniens must carry out a
two-step test. First, the defendant seeking dismissal must establish that there
is an alternate forum that is both available and adequate. McLennan v. Am.
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No. 08-41021
Eurocopter Corp., Inc., 245 F.3d 403, 424 (5th Cir. 2001). Since the parties do
not seriously contest the availability and adequacy of the Mexican limitation
action on appeal, we proceed to the next step. Second, the defendant must
demonstrate that “private and public interests weigh heavily on the side of trial
in the foreign forum.” In re Air Crash Disaster Near New Orleans, La. on July
9, 1982, 821 F.2d 1147, 1164 (5th Cir. 1987) (emphasis added), vacated, Pan Am.
World Airways, Inc. v. Lopez, 490 U.S. 103 (1989), reinstated in pertinent part,
883 F.2d 17 (5th Cir.1989).3 “A defendant . . . bears the burden of invoking the
doctrine and moving to dismiss in favor of a foreign forum. This burden of
persuasion runs to all the elements of the forum non conveniens analysis.” Id.
(internal citations removed).
Although we might well not reach the same conclusion under de novo
review, since the district court’s refusal to dismiss this case resulted from “an
exercise in structured discretion founded on a procedural framework,” it is not
a clear abuse of discretion. Id. at 1165. With regard to private interests,
MarMex asserts that this case would be better litigated in Mexico because
certain Spanish language documents remain untranslated and because it cannot
access certain evidence regarding the repairs made to the TOTONACA after the
3
The private interest factors to be weighed include
the relative ease of access to sources of proof; availability of compulsory process
for attendance of unwilling, and the cost of obtaining attendance of willing,
witnesses; possibility of view of the premises, if view would be appropriate to
the action; and all other practical problems that make trial of a case easy,
expeditious and inexpensive; enforceability of judgment; and whether the
plaintiff has sought to vex, harass, or oppress the defendant.
Karim, 265 F.3d at 269 n.14 (quotation marks and brackets omitted). The public interest
factors include
the administrative difficulties flowing from court congestion; the local interest
in having localized controversies resolved at home; the interest in having the
trial . . . in a forum that is familiar with the law that must govern the action;
the avoidance of unnecessary problems in conflicts of law, or in application of
foreign law; and the unfairness of burdening citizens in an unrelated forum
with jury duty.
Air Crash Disaster, 821 F.2d at 1162-63.
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No. 08-41021
allision. However, in the district court’s analysis, it considered that certain
evidence might be inaccessible if this case were to proceed in the United States
and it also assumed that certain documents had not yet been translated. It
simply found that these concerns were outweighed by other factors, such as the
delay that would accompany dismissal, the relative proximity of Galveston to the
site of the accident, the completed translation of other documents, and the
availability of many witnesses.
With regard to public interests, the district court concluded that Mexico
has an interest in resolving this dispute in its courts, but again, found this to be
outweighed by other public interest factors, as it concluded that this case would
not overburden its docket and that a jury trial would not be necessary. We do
note that the district court based its public interest analysis on the assumption
that U.S. substantive law would apply in this case, an assumption that later
proved to be unfounded. However, a district court need not conduct a conflicts
of law analysis before ruling on forum non conveniens, id. at 1163 n.25, and as
a result, we can hardly condemn this mistake. We conclude that the application
of Mexican substantive law in this case does not undermine the district court’s
entire analysis, especially under this deferential standard of review.
The advanced stage of these proceedings also affects our review of the
district court’s decision to retain this case, as “[t]he fact that a trial on the merits
has occurred in the plaintiff’s selected forum does have some effect on our
decision of whether the district court abused its discretion in maintaining the
action before it.” Id. at 1167. Although the trial in this case has not yet reached
the damages stage, MarMex has already been found liable to Protexa. Moreover,
this litigation has now proceeded in our courts for more than four years, and its
resolution is finally in sight. MarMex has not demonstrated that it would be
“greatly prejudiced” if trial were to go forward in this country on damages. Id.
at 1168. Although some evidence concerning the cost of the repairs to the
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No. 08-41021
TOTONACA may be unavailable in this country, MarMex has not proven that
this evidence would be any more available if this case were to proceed in Mexico.
Additionally, since the district court denied MarMex’s motion to dismiss in 2006,
new evidence has come to light suggesting that Galveston may be a more
convenient forum than it initially appeared: MarMex conducts some business
in the United States, and the ISLA AZTECA has called on U.S. ports from time
to time. Given these considerations, since the district court weighed all relevant
factors, and we do not find its analysis unreasonable, we find that the district
court did not abuse its discretion by denying a forum non conveniens dismissal.
IV.
MarMex also contends that the district court erred when it did not dismiss
Protexa’s suit out of respect for international comity. A district court’s decision
to exercise or decline jurisdiction in the face of possible international comity
concerns is reviewed for abuse of discretion. Seguros Del Estado, S.A. v.
Scientific Games, Inc., 262 F.3d 1164, 1169 (11th Cir. 2001); Jota v. Texaco, Inc.,
157 F.3d 153, 160 (2d Cir. 1998). We conclude the district court did not abuse
its discretion.
Comity “is the recognition which one nation allows within its territory to
the legislative, executive or judicial acts of another nation, having due regard
both to international duty and convenience, and to the rights of its own citizens
or of other persons who are under the protection of its laws.” Hilton v. Guyot,
159 U.S. 113, 164 (1895). Dismissal of a suit on international comity grounds
may sometimes be appropriate when there is litigation pending in a foreign
forum or, even absent such litigation, when allowing a case to proceed in the
United States would intrude on the interests of a foreign government. See
Ungaro-Benages v. Dresdner Bank AG, 379 F.3d 1227, 1238 (11th Cir. 2004).
MarMex relies on Sequihua v. Texaco, Inc. to suggest that this case should
be dismissed out of deference to Mexican interests. 847 F. Supp. 61 (S.D. Tex.
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No. 08-41021
1994). However, this case is readily distinguishable from Sequihua, where a
district court dismissed a suit alleging pollution affecting a third of Ecuadorian
territory after Ecuador had “expressed its strenuous objection to the exercise of
jurisdiction.” Id. at 63. Mexico has remained silent in this case, and while the
TOTONACA was engaged in oil exploration at the time of the allision, it is
unclear how the resolution of this private dispute by a U.S. court would impede
Mexico’s ability to exercise its sovereign rights over economic exploitation within
its EEZ. See UNCLOS art. 56, supra.4
Additionally, MarMex has failed to cite any case where a U.S. court has
deferred to a foreign limitation proceeding on international comity grounds.
Limitation proceedings commenced under U.S. law only receive domestic
recognition, Otal Invs. Ltd. v. M.V. Clary, 494 F.3d 40, 63 (2d Cir. 2007); Matter
of Bowoon Sangsa Co., 720 F.2d 595, 599 (9th Cir. 1983) (“Because a decree in
limitation normally receives only domestic recognition, ‘the courts of each
country will apply local law on the question of limitation; no country will give
effect to a foreign limitation decree as barring further suit.’” (internal brackets
removed) (quoting G RANT G ILMORE & C HARLES B LACK, T HE L AW OF A DMIRALTY
945 (2d ed. 1975))), and although the 1976 Convention requires its signatories
to defer to certain limitation proceedings abroad, the United States has not
adopted the Convention. 2 S CHOENBAUM, supra, § 15-1 n.7. Given these
considerations, the district court’s decision not to defer to the Mexican limitation
4
We note that Sequihua is inapposite in this case for another reason. In
Sequihua, the district court relied on section 403 of the Restatement (Third) of the Foreign
Relations Law of the United States to guide its analysis. 847 F. Supp. at 63. However, section
403 is not relevant to MarMex and Protexa’s private law dispute, as section 403 concerns
prescriptive jurisdiction, the authority of the United States to make its public law applicable
extraterritorially. See RESTATEMENT (THIRD ) OF THE FOREIGN RELATIONS LAW OF THE UNITED
STATES pt. IV, ch. 1, subch. A introductory note (“[Section 403] concentrates on so-called public
law—tax, antitrust, securities regulation, labor law, and similar legislation. . . . [T]he rules
stated in [Section 403] do not necessarily apply to controversies unrelated to public law
issues.”).
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No. 08-41021
proceeding on comity grounds does not rise to being an abuse of discretion.5
V.
Finally, MarMex asserts that the district court erred in determining that
the limits on liability established by the 1976 Convention and codified in
Mexican law are procedural and thus cannot be applied in United States court.
“This Court reviews questions of law, including conflicts of law questions, de
novo.” Cantu v. Jackson Nat’l Life Ins. Co., 579 F.3d 434, 437 (5th Cir. 2009)
(quoting Abraham v. State Farm Mut. Auto. Ins. Co., 465 F.3d 609, 611 (5th
Cir.2006)). Similarly, determinations of foreign law are reviewed de novo on
appeal, and courts may consider information from any relevant source, including
information not considered by the district court. See Fed. R. Civ. P. 44.1; Grupo
Protexa, S.A. v. All Am. Marine Slip, 20 F.3d 1224, 1239 (5th Cir. 1994).
The leading case on conflicts of law in this area is Black Diamond S.S.
Corp. v. Robert Stewart & Sons, Ltd. (The Norwalk Victory), 336 U.S. 386 (1949).
In The Norwalk Victory, the Supreme Court held that U.S. courts may apply a
foreign limit on liability, but only when the limit is substantive and “attaches”
to the right of recovery created by foreign law, as opposed to merely “provid[ing]
procedural machinery by which claims otherwise created are . . . scaled down to
their proportionate share of a limited fund.” Id. at 396. MarMex argues that
we should perform a “policy-based conflicts analysis” to determine which liability
limit applies in this case, relying on a reading of The Norwalk Victory advanced
in Complaint of K.S. Line Corp., 596 F. Supp. 1268, 1270-72, 1274 (D. Alaska
1984). However, we have never adopted such an approach, finding instead that
“United States courts ‘must apply foreign limitation law if the substantive
liability of the parties is governed by a foreign law and if the limitation law of
5
We do not mean to suggest that a district court could not properly exercise its
discretion to dismiss a case under forum non conveniens when a party has commenced a
foreign limitation action.
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No. 08-41021
the foreign country is such an integral part of the substantive law governing the
action that it can be said to ‘attach’ to the substantive liability law.’” Karim, 265
F.3d at 270 (quoting In re Korea Shipping Corp., 919 F.2d 601, 604-05 (9th Cir.
1990)). In other words, the term “substantive” is a term of art, referring to how
integral a cap on liability is to a cause of action. Korea Shipping Corp., 919 F.2d
at 605.
We conclude that the cap on liability created by the 1976 Convention does
not attach to the right of recovery created by Article 1913 of the Mexican Civil
Code. The 1976 Convention does not create a right of recovery, but only limits
the recovery available under Article 1913 and other sources of liability. See 1976
Convention art. 2, supra, 1456 U.N.T.S. at 223 (“[T]he following claims, whatever
the basis of liability may be, shall be subject to limitation of liability . . . .”
(emphasis added)). We find the reasoning in Matter of Bethlehem Steel Corp.
persuasive, where a district court held that a cap on liability established by the
Canada Shipping Act should not be applied in U.S. court, as the cap did not
“limit the individual claimant’s right to recover certain categories of damages,”
but instead served “only to measure or quantify damages.” 435 F. Supp. 944,
948 (N.D. Ohio 1976); aff’d, 631 F.2d 441 (6th Cir. 1980). Additionally, the cap
on liability established by the 1976 Convention is not “substantive” because it
is not so integral as to follow liability under Article 1913 in all maritime cases,
as an absolute cap on recovery would. The 1976 Convention provides only that
“[l]imitation of liability may be invoked” by a shipowner, not that it must be
applied by a court as an absolute limit to liability. 1976 Convention art. 10,
supra, 1456 U.N.T.S. at 227 (emphasis added). As a result, the limits
established by the 1976 Convention are not substantive—liability under Article
1913 in a maritime case could exceed the cap established by the 1976
Convention. Cf. The Norwalk Victory, 336 U.S. at 395 (suggesting that “if it is
the law of Belgium that the wrong creates no greater liability than that
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No. 08-41021
recognized by the Convention of 1924,” then the Convention’s limit on liability
would be substantive). The district court did not err in finding the Mexican limit
on liability inapplicable in this case.
VI.
For the foregoing reasons, the district court is AFFIRMED and this case
is REMANDED to allow trial to proceed on damages.
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