Rajet Aeroservicios S.A. v. Luis Castillo Cervante ( 2020 )


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  •      Case: 19-20354       Document: 00515295832         Page: 1     Date Filed: 02/03/2020
    IN THE UNITED STATES COURT OF APPEALS
    FOR THE FIFTH CIRCUIT
    United States Court of Appeals
    Fifth Circuit
    No. 19-20354                             FILED
    February 3, 2020
    Lyle W. Cayce
    RAJET AEROSERVICIOS S.A. DE C.V.,                                               Clerk
    Plaintiff - Appellant
    v.
    LUIS CARLOS CASTILLO CERVANTES,
    Defendant - Appellee
    Appeal from the United States District Court
    for the Southern District of Texas
    USDC No. 4:18-CV-4441
    Before OWEN, Chief Judge, and BARKSDALE and DUNCAN, Circuit Judges.
    PER CURIAM:*
    At issue in this diversity action is whether the district court erred by:
    granting defendant-appellee’s motion to dismiss for forum non conveniens
    (FNC); and sua sponte dismissing this action pursuant to Federal Rule of Civil
    Procedure 12(b)(7). VACATED and REMANDED.
    * Pursuant to 5th Cir. R. 47.5, the court has determined that this opinion should not
    be published and is not precedent except under the limited circumstances set forth in 5th Cir.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.
    Case: 19-20354     Document: 00515295832      Page: 2   Date Filed: 02/03/2020
    No. 19-20354
    I.
    Rajet Aeroservicios S.A. de C.V. (Rajet), owned by Luis Alfredo Rayet
    Diaz (Rayet), is a Mexican charter-flight company. It filed this diversity action
    against Luis Carlos Castillo Cervantes (Castillo), a dual citizen of the United
    States and Mexico who resides in the Southern District of Texas, claiming,
    inter alia, Castillo breached an oral contract and seeking payment of unpaid
    invoices, totaling approximately $1.3 million, for flights from April 2015
    through June 2016. Through the documents identified after the following
    statement of facts, the parties dispute many of the underlying facts giving rise
    to this action.
    Rajet, for its part, alleges it began a contractual relationship with
    Castillo for charter flights as early as 2002.       Further, Rajet alleges the
    relationship was between it and Castillo personally, despite Rayet’s agreeing,
    on Rajet’s behalf, that it would accept payment from various of Castillo’s
    companies on his behalf. According to Rajet, Castillo and Rayet ultimately
    agreed, during a 2014 telephone conversation, that Rajet would undertake the
    flights at issue for Castillo, which Rajet alleges included cross-border flights to
    Texas. Rajet also alleges: following this conversation, although Castillo made
    35 payments, through five of his companies, for the agreed-upon flights, he
    failed to pay the account balance of approximately $1.3 million. Castillo,
    according to Rajet, never denied the agreement existed or contended a third
    party owed the debt.
    Castillo, by contrast, alleges he never personally contracted, or even
    communicated, with Rajet regarding private air travel. Although Castillo
    acknowledges that he was the administrator for Lucamax, a company that
    ordered and paid for flights by Rajet, he alleges Lucamax was the party to any
    contract with Rajet and Lucamax staff handled any communications with it.
    Further, Castillo alleges: Lucamax did not order the specific flights at issue,
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    which, contrary to Rajet’s allegation, all occurred in Mexico. Rather, according
    to Castillo, Rajet provided them for Baltazar Manuel Hinojosa Ochoa’s
    (Hinojosa) 2016 campaign for Governor of Tamaulipas, Mexico.             Castillo
    alleges: Lucamax recommended Rajet to Hinojosa’s campaign, with which
    Castillo was involved; and the campaign is responsible for paying Rajet’s
    unpaid invoices.
    After Rajet filed its complaint in November 2018, Castillo filed: a motion
    to dismiss for FNC or, alternatively, to transfer venue; and a motion to dismiss
    for failure to state a claim under Rule 12(b)(6). Rajet responded to each motion,
    and Castillo filed replies.
    The parties provided limited evidence regarding FNC. Rajet attached to
    its complaint an unsworn declaration from Rayet, a demand letter from its
    counsel to Castillo, and Spanish-language documentation showing the
    transaction history between Rajet and Castillo. In support of his motion to
    dismiss for FNC, Castillo provided his affidavit and an email chain comprised
    of two emails, both sent by Rajet’s counsel. Rajet’s response attached only a
    new, unsworn declaration from Rayet. To his reply, Castillo attached his new
    affidavit, the same email chain from his motion, and a one-page letter from
    Lucamax’s counsel responding to Rajet’s demand letter.
    In May 2019, the court ruled, and rendered final judgment without
    prejudice, granting Castillo’s motion to dismiss for FNC, but failing to include
    the required return-jurisdiction provision, and also sua sponte independently
    dismissing the action pursuant to Rule 12(b)(7) for failure to join a required
    party. See Memorandum and Order, Rajet Aeroservicios S.A. de C.V. v. Luis
    Carlos Castillo Cervantes, No. 4:18-cv-04441 (S.D. Tex. 17 May 2019) (Order).
    In doing so, the court noted its FNC ruling rendered moot Castillo’s motions to
    transfer venue and to dismiss pursuant to Rule 12(b)(6).
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    II.
    Rajet challenges the court’s dismissing the action both for FNC and sua
    sponte pursuant to Rule 12(b)(7). Both challenges succeed.
    A.
    FNC dismissals are “committed to the sound discretion of the trial court”
    and “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”. Piper Aircraft Co. v. Reyno, 
    454 U.S. 235
    , 257 (1981)
    (citations omitted). We are “to review the [district] court’s decisionmaking
    process and conclusion and determine if it is reasonable; our duty is not to
    perform a de novo analysis and make the initial determination for the district
    court”. In re Air Crash Disaster Near New Orleans, La. on July 9, 1982, 
    821 F.2d 1147
    , 1167 (5th Cir. 1987) (en banc) (italics added and citation omitted),
    vacated on other grounds sub nom. Pan Am. World Airways, Inc. v. Pampin
    Lopez, 
    490 U.S. 1032
     (1989), opinion reinstated except as to damages, 
    883 F.2d 17
     (5th Cir. 1989) (en banc) (per curiam).
    For starters, Rajet claims the court abused its discretion by failing to
    include the requisite return-jurisdiction clause in its order of dismissal. More
    fundamentally, Rajet also claims the court abused its discretion by conducting
    an inadequate FNC analysis that neither considered relevant evidence nor
    properly applied the various elements of the FNC doctrine.            We agree
    regarding both claims.
    “[FNC] dismissals and federal venue transfers are entirely distinct
    schemes.” Veba-Chemie A.G. v. M/V Getafix, 
    711 F.2d 1243
    , 1246 (5th Cir.
    1983).   Federal venue-transfer statutes “facilitat[e] easy change of venue
    within a unified federal system”, see 
    id.
     (internal quotation marks and citation
    omitted), whereas “[t]he common-law doctrine of [FNC] has continuing
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    application [in federal courts] only in cases where the alternative forum is
    abroad . . . and perhaps in rare instances where a state or territorial court
    serves litigation[] convenience best”, Sinochem Int’l Co. v. Malay. Int’l
    Shipping Corp., 
    549 U.S. 422
    , 430 (2007) (third alteration in original) (internal
    quotation marks and citations omitted).
    “[A] federal court sitting in a diversity action is required to apply the
    federal law of [FNC] when addressing motions to dismiss a plaintiff’s case to a
    foreign [i.e., non-federal] forum”. Air Crash Disaster, 
    821 F.2d at 1159
    . “The
    general principle of the [federal FNC] doctrine is simply that a court may resist
    imposition upon its jurisdiction even when jurisdiction is authorized.” Dickson
    Marine Inc. v. Panalpina, Inc., 
    179 F.3d 331
    , 342 (5th Cir. 1999) (internal
    quotation marks and citation omitted).
    The doctrine “presupposes at least two forums where the defendant is
    [amenable] to process and simply furnishes criteria for choice between them”,
    and courts follow a two-step inquiry, focused on convenience, when analyzing
    a motion to dismiss for FNC. See 
    id.
     (citations omitted). First, and obviously,
    there must be an adequate and available alternative forum. See 
    id.
     (citation
    omitted). “An alternative forum is adequate if the parties will not be deprived
    of all remedies or treated unfairly, even though they may not enjoy the same
    benefits as they might receive in [a federal] court.”                    Vasquez v.
    Bridgestone/Firestone, Inc., 
    325 F.3d 665
    , 671 (5th Cir. 2003) (internal
    quotation marks and citation omitted). “An alternative forum is considered
    available if the entire case and all parties can come within its jurisdiction.” 
    Id.
    (citation omitted).
    “[O]nce an adequate and available alternate forum is identified, several
    ‘private’ and ‘public’ interest factors must be balanced in order to determine if
    dismissal is warranted”. Dickson, 
    179 F.3d at 342
     (citation omitted). Private-
    interest factors, relating to litigant convenience, include:
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    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
    premises, if view would be appropriate to the action; and all other
    practical problems that make trial of a case easy, expeditious and
    inexpensive.
    Piper, 454 U.S. at 241 & n.6 (citations omitted). Public-interest factors,
    relating to forum convenience, include:
    administrative difficulties flowing from court congestion; the local
    interest in having localized controversies decided at home; the
    interest in having the trial of a diversity case in a forum that is at
    home with the law that must govern the action; the avoidance of
    unnecessary problems in conflict of laws, or in the application of
    foreign law; and the unfairness of burdening citizens in an
    unrelated forum with jury duty.
    Id. (internal quotation marks and citations omitted).
    “[T]here is ordinarily a strong presumption in favor of the plaintiff’s
    choice of forum, which may be overcome only when the private and public
    interest factors clearly point towards trial in the alternative forum”. Id. at 255.
    This presumption, however, is weaker with, as in this instance, a foreign
    plaintiff. Id. at 256 (citations omitted). In any event, “no one private or public
    interest factor should be given conclusive weight”, and “dismissal for [FNC] is
    the exception rather than the rule”. Air Crash Disaster, 
    821 F.2d at 1163
    , 1164
    n.26 (citation omitted).
    The moving defendant bears the burden on all elements of the FNC
    inquiry. 
    Id. at 1164
     (citations omitted). In this regard, “we require a defendant
    to put forth unequivocal, substantiated evidence presented by affidavit
    testimony”. Baris v. Sulpicio Lines, Inc., 
    932 F.2d 1540
    , 1550 n.14 (5th Cir.
    1991) (citation omitted). Along that line, “a moving defendant need not submit
    overly detailed affidavits to carry its burden, but it must provide enough
    information to enable the district court to balance the parties[’] interests”. Air
    6
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    Crash Disaster, 
    821 F.2d at
    1164–65 (internal quotation marks and citation
    omitted). And, “[a]lthough the level of detail required is dependent on the facts
    of each particular case, the defendant must at least allege detailed facts in its
    motion for dismissal which, if not controverted, are sufficient to support [an
    FNC] dismissal”. Raytheon Eng’rs & Constructors, Inc. v. H L H & Assocs. Inc.,
    No. 97-20187, 
    1998 WL 224531
    , at *4 (5th Cir. 17 Apr. 1998) (per curiam)
    (citations omitted).
    1.
    In general, a return-jurisdiction clause in a dismissal for FNC “permit[s]
    parties to return to the dismissing court should the lawsuit become impossible
    in the foreign forum”. Vasquez, 
    325 F.3d at 675
    . All FNC dismissals must
    include such a clause. See 
    id.
     (“The failure to include a return[-]jurisdiction
    clause in an [FNC] dismissal constitutes a per se abuse of discretion.” (internal
    quotation marks and citation omitted)); Robinson v. TCI/US W. Commc’ns
    Inc., 
    117 F.3d 900
    , 908 (5th Cir. 1997) (“[T]he failure to include a return[-]
    jurisdiction clause is a fatal error”. (citing Baris, 
    932 F.2d at 1551
    )).
    This is because, as our court has repeatedly made clear, “courts must
    take measures, as part of their dismissals in [FNC] cases, to ensure that
    defendants will not attempt to evade the jurisdiction of the foreign courts”.
    Baris, 
    932 F.2d at 1551
    . Notably, “[s]uch measures often include agreements
    between the parties to litigate in another forum, to submit to service of process
    in that jurisdiction, to waive the assertion of any limitations defenses, to agree
    to discovery, and to agree to the enforceability of the foreign judgment”. 
    Id.
    (citations omitted).     A return-jurisdiction clause assists in preventing
    defendants from circumventing these measures and ensures plaintiffs have the
    opportunity to proceed with the action in one of the forums.
    Because, as the parties agree, the court did not include a return-
    jurisdiction clause, “[a]t a minimum, . . . the district court’s ruling on [FNC]
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    must be vacated and remanded for the implementation of [that] clause”.
    Robinson, 
    117 F.3d at 908
    .
    2.
    The scope of our remand, however, must go further. This is because a
    court also abuses its discretion in ruling on a motion to dismiss for FNC “when
    it summarily denies or grants a motion to dismiss without either written or
    oral explanation” or “fails to address and balance the relevant principles and
    factors of the doctrine”. Air Crash Disaster, 
    821 F.2d at
    1166–67 (citations
    omitted). Similarly, a court abuses its discretion by not holding a moving
    defendant to his burden on all elements of the FNC analysis. See Raytheon,
    
    1998 WL 224531
    , at *4 (citation omitted). A district court’s findings and
    conclusions, therefore, “must be complete, detailed, and explicit”; and it must
    identify and explain its resolution of any conflicts in the evidence. CTF Cent.
    Corp. v. Inter-Cont’l Hotels Corp., No. 94-20841, 
    1995 WL 725353
    , at *7 (5th
    Cir. 13 Nov. 1995) (per curiam) (pursuant to Fifth Circuit Rule 47.5.4:
    precedential, even though unpublished, because issued before 1 January 1996).
    As Rajet conceded at oral argument here, the court properly articulated
    the FNC legal framework. But its analysis under that framework, quoted in
    full as follows, stated only:
    The evidence shows that at least two forums are available to
    the plaintiff as it relates to the defendant -- Mexico and Texas. The
    evidence is also disputed that the Mexican forum is adequate for
    resolution of the parties’ disputes, and that the parties will not be
    deprived of all remedies or otherwise be treated unfairly. Alpine
    View Co., 205 F.3d at 221. [Alpine View Co. v. Atlas Copco AB, 
    205 F.3d 208
    , 221 (5th Cir. 2000).] Moreover, there is no evidence that
    Texas has an interest equal to or greater than that enjoyed by
    Mexico.
    Finally, the defendant has established that private and
    public interest[s] favor Mexico. Specifically, Mexico has a primary
    interest in the resolution of this dispute because all witnesses and
    documents are in Mexico, or subject to process there and, the
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    witnesses[’] testimony and the documentary evidence generally
    will require translations and/or interpretations that would
    unnecessarily extend the time and expense associated with a trial
    in Texas.
    Order at 4.   (In the light of the court’s FNC ruling, it may have meant
    undisputed, not disputed, in the above sentence in the first quoted paragraph:
    “The evidence is also disputed that the Mexican forum is adequate for
    resolution of the parties’ disputes, and that the parties will not be deprived of
    all remedies or otherwise be treated unfairly.” (Emphasis added.))
    Regarding the court’s threshold finding that Mexico is an available
    alternative forum, it did not describe the “evidence” it used to reach this
    conclusion. And, regarding Mexico’s availability vel non as a forum, it did not
    address the parties’ dispute over the effect of Castillo’s federal-court-imposed
    restrictions on his traveling outside the Southern District of Texas (from a
    separate and ongoing criminal matter). The court similarly did not identify
    the “evidence” it relied on in making its threshold adequacy finding.
    Moreover, of the numerous private-interest and public-interest factors
    that require balancing as part of the FNC inquiry, the court’s opinion briefly
    considered only two.     Those two factors—practical concerns surrounding
    translations and/or interpretations and the location and availability of
    documents and witnesses—relate to private interests and are mentioned in a
    single, conclusory sentence.
    Therefore, the court’s order did not “address and balance the relevant
    principles and factors of the [FNC] doctrine” with the level of detail our
    precedent demands. See CTF Cent. Corp., 
    1995 WL 725353
    , at *7; Air Crash
    Disaster, 
    821 F.2d at
    1166–67 (citations omitted).        It also did not resolve
    conflicts in the above-described evidence provided by the parties, particularly
    where evidence cuts against its conclusions, see CTF Cent. Corp., 
    1995 WL 725353
    , at *7, which is vital where, as here, the parties provided conflicting
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    factual accounts. The court, therefore, abused its discretion on this issue. We
    vacate the dismissal on this FNC basis and remand to district court for further
    proceedings consistent with this opinion.
    In doing so, and “[a]s is standard in such situations, we ‘intimate no view
    as to what ultimate decision the court should make on the [FNC] issue’”. Royal
    Ten Cate USA, Inc. v. TT Inv’rs, Ltd., 562 F. App’x 187, 191 (5th Cir. 2014) (per
    curiam) (quoting Baris, 
    932 F.2d at 1552
    ). Moreover, “[t]he district court is
    reminded: with regard to disputed issues of fact in a motion to dismiss for
    [FNC], the moving party retains the burden of proof regarding all issues”, CTF
    Cent. Corp., 
    1995 WL 725353
    , at *9 (citations omitted); and the court may take
    additional evidence from the parties in making its new FNC determination,
    see, e.g., Royal Ten Cate, 562 F. App’x at 191; Baris, 
    932 F.2d at 1552
    . And,
    because we review FNC dismissals for clear abuse of discretion, not de novo,
    the district court is also reminded it must provide on remand thorough findings
    of fact and conclusions of law in making its new FNC decision. See, e.g.,
    Forsythe v. Saudi Arabian Airlines Corp., 
    885 F.2d 285
    , 290 (5th Cir. 1989)
    (per curiam). Finally, should the court reach the same conclusion on remand,
    it is again reminded to include a return-jurisdiction clause in its new order of
    dismissal. See, e.g., Vasquez, 
    325 F.3d at 675
     (citation omitted).
    B.
    Dismissals pursuant to Rule 12(b)(7) (failure to join a required party) are
    also reviewed for abuse of discretion. HS Res., Inc. v. Wingate, 
    327 F.3d 432
    ,
    438–39 (5th Cir. 2003) (citation omitted). A ruling “based on an erroneous view
    of the law” constitutes such an abuse of discretion. Hood ex rel. Miss. v. City
    of Memphis, 
    570 F.3d 625
    , 628 (5th Cir. 2009) (citation omitted).
    Rajet contends the court abused its discretion in sua sponte dismissing
    the action pursuant to Rule 12(b)(7) because it misapplied Rule 19 and
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    improperly determined unnamed Mexican parties were indispensable to this
    action. We agree.
    In a diversity action, joinder is a question of federal law. Provident
    Tradesmens Bank & Tr. Co. v. Patterson, 
    390 U.S. 102
    , 125 n.22 (1968)
    (citation omitted). Rule 12(b)(7) permits dismissal of an action for “failure to
    join a party under Rule 19”, see Fed. R. Civ. P. 12(b)(7), with Rule 19’s detailing
    the requirements for required-party joinder, see Fed. R. Civ. P. 19.
    Rule 19 “requires a two-step inquiry” that “is a highly-practical, fact-
    based endeavor”. Hood, 
    570 F.3d at 628
     (citation omitted). “First a court must
    determine whether a party should be added under the requirements of [Rule]
    19(a); then the court must determine [under Rule 19(b)] whether litigation can
    be properly pursued without the absent party . . . .” August v. Boyd Gaming
    Corp., 135 F. App’x 731, 732 (5th Cir. 2005) (citation omitted). “If the absent
    party should be joined under [R]ule 19(a), but the suit cannot proceed without
    that party under the requirements of [R]ule 19(b), the case must be dismissed.”
    
    Id.
     And, although a party may move for a Rule 12(b)(7) dismissal, “[a] court
    with proper jurisdiction may also consider sua sponte the absence of a required
    person and dismiss for failure to join”. Republic of Phil. v. Pimentel, 
    553 U.S. 851
    , 861 (2008) (citations omitted).
    For its sua sponte dismissal pursuant to Rule 12(b)(7), the court
    identified the relevant law but stated, without further explanation: “The Court
    has performed an appraisal of the facts and concludes that a necessary party
    to the resolution of this dispute is absent. The plaintiff has not presented any
    evidence, beyond its pleadings, that renders doubtful the Court’s appraisal”.
    Order at 6. The court did not then identify the indispensable party or parties,
    but it had stated earlier in its order that “individual Mexican citizens,
    includ[ing] L[u]camax, are indispensable parties over which the Court lacks
    jurisdiction”. Id. at 2.
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    Such conclusory analysis is insufficient to justify a Rule 12(b)(7)
    dismissal. See, e.g., Santiago v. Honeywell Int’l, Inc., 768 F. App’x 1000, 1007
    (11th Cir. 2019) (per curiam) (noting a court “abused its discretion by not
    undertaking a complete Rule 19 analysis” and by not otherwise “adequately
    explain[ing] why [an entity] was an indispensable party”). This is particularly
    true given that the court ruled on the issue sua sponte and without affording
    the parties the opportunity to address it.
    But even assuming arguendo the court’s ruling contains sufficient
    analysis showing how its consideration of the various elements of Rule 19
    justified its Rule 12(b)(7) dismissal, the court’s application of Rule 19 cannot
    be correct. This is because Rule 19 relates to the specific action at bar. See,
    e.g., Fed. R. Civ. P. 19(b) (emphasis added) (“If a person who is required to be
    joined if feasible cannot be joined, the court must determine whether, in equity
    and good conscience, the action should proceed among the existing parties or
    should be dismissed.”). This action is between Rajet and Castillo over, inter
    alia, a claimed breach of contract. It goes without saying that Rule 19 is not
    the proper mechanism for reviewing whether that claimed contract existed or
    Castillo was a party to it. Rather, the rule is designed to evaluate whether a
    non-party either impedes the court’s ability to “accord complete relief among
    existing parties” or has, among additional requirements, “claim[ed] an interest
    relating to the subject of the action”—the only two tests for determining
    whether a person is a required party under Rule 19(a). See Fed. R. Civ. P.
    19(a)(1)(A)–(B).
    That is not the case here: the court can otherwise afford Rajet relief, and
    no non-party has claimed any “interest relating to the subject of the action”—
    the claimed contract between Rajet and Castillo.           See Fed. R. Civ. P.
    19(a)(1)(B). The court’s sua sponte Rule 12(b)(7) dismissal, therefore, was an
    abuse of discretion.
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    III.
    For the foregoing reasons, the dismissals pursuant to FNC and Rule
    12(b)(7) are VACATED; and this action is REMANDED to district court for
    further proceedings—including the FNC issues—consistent with this opinion.
    13