Hassanin Aly v. Hanzada Import & Export, etc.

United States Court of Appeals
For the Eighth Circuit
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No. 16-3353
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Hassanin Aly
lllllllllllllllllllll Plaintiff - Appellee
v.
Hanzada for Import & Export Company, LTD
lllllllllllllllllllll Defendant - Appellant
National Beef Packing Company, LLC
lllllllllllllllllllll Defendant
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Appeal from United States District Court
for the Western District of Missouri - St. Joseph
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Submitted: February 9, 2017
Filed: March 23, 2017
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Before SMITH,1 GRUENDER, and BENTON, Circuit Judges.
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BENTON, Circuit Judge.
1
The Honorable Lavenski R. Smith became Chief Judge of the United States
Court of Appeals for the Eighth Circuit on March 11, 2017.
Hassanin Aly obtained a jury verdict and judgment for breach of contract
against Hanzada for Import & Export Company, Ltd. Hanzada appeals, claiming the
district court:2 (1) lacked subject matter jurisdiction; (2) lacked personal jurisdiction;
and (3) erred in not applying the statute of frauds. Having jurisdiction under 28
U.S.C. § 1291, this court affirms.
I.
Hanzada is an Egyptian company that imports and exports beef. Aly is a dual
citizen of Egypt and the United States. Since 2001, he has resided in Ohio for 8 to
9 months of the year.
In Egypt, Aly met Samy Shaheen, an Egyptian citizen and an owner of
Hanzada. Shaheen asked Aly to help Hanzada import beef from the United States.
In 2005, Aly facilitated a contract for Hanzada to purchase beef from Greater Omaha
Packing. Shipments began in early 2006. Hanzada compensated Aly with beef
products.
In August 2006, Aly and Shaheen drove to Missouri to view the headquarters
of National Beef, Inc. During the drive, Aly claims they made an oral contract: if
Aly could “get National Beef for Hanzada,” Hanzada would pay Aly $10 per metric
ton of beef purchased. Aly says Shaheen reaffirmed the contract in Missouri near
National Beef’s headquarters and again on a plane ride to Kansas.
Aly established a relationship with National Beef. In August 2008, Hanzada
began buying product from National Beef. Hanzada did not pay Aly under the terms
of the oral contract.
2
The Honorable Greg Kays, Chief Judge, United States District Court for the
Western District of Missouri.
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In 2012, Aly sued Hanzada for breach of contract. Hanzada moved to dismiss,
asserting no subject matter or personal jurisdiction. The district court denied the
motion. In its answer and amended answer, Hanzada again challenged jurisdiction.
It moved for summary judgment, invoking Missouri’s statute of frauds. The court
denied the motion (and later Hanzada’s motions for judgment as a matter of law on
the same issue). A jury found in favor of Aly, awarding $1,591,286.60 in damages.
Hanzada appeals.
II.
Hanzada argues the district court lacked subject matter jurisdiction because the
parties were not diverse. This court reviews “whether diversity jurisdiction exists de
novo,” and factual findings for clear error. Branson Label, Inc. v. City of Branson,
Mo., 793 F.3d 910, 915 (8th Cir. 2015). The plaintiff bears the “burden of proving
subject matter jurisdiction.” V S Ltd. P’ship v. Dep’t of Hous. & Urban Dev., 235
F.3d 1109, 1112 (8th Cir. 2000).
“The district courts shall have original jurisdiction of all civil actions where the
matter in controversy exceeds the sum or value of $75,000 . . . and is between . . .
citizens of a State and citizens or subjects of a foreign state . . . .” 28 U.S.C. §
1332(a)(2). See U.S. Const. Art. III, § 2 (“The judicial Power shall extend to all
Cases . . . between a State, or the Citizens thereof, and foreign States, Citizens or
Subjects.”). The district court found: (1) Aly is a citizen of Egypt and the United
States; (2) when Aly sued, he was domiciled in Ohio; and (3) Hanzada is an Egyptian
citizen. Hanzada did not challenge these findings. The district court concluded it had
diversity jurisdiction because Aly was a citizen of a U.S. state, and Hanzada a citizen
of a foreign state.
“In order to be a citizen of a State within the meaning of the diversity statute,
a natural person must both be a citizen of the United States and be domiciled within
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the State.” Newman-Green, Inc. v. Alfonzo-Larrain, 490 U.S. 826, 828 (1989).
Aly—a U.S. citizen, domiciled in Ohio—is a citizen of a State under § 1332(a)(2).
Hanzada—a citizen of Egypt—is a citizen of a foreign state under that statute. This
is a “civil action[] . . . between . . . [a] citizen[] of a State and citizen[] or subject[] of
a foreign state” under § 1332(a)(2).
Hanzada believes Aly’s Egyptian citizenship makes the parties non-diverse.
Aly’s Egyptian citizenship does not defeat jurisdiction. “An individual who resides
in more than one State is regarded, for purposes of federal subject-matter (diversity)
jurisdiction, as a citizen of but one State.” Wachovia Bank v. Schmidt, 546 U.S. 303,
318 (2006), citing Newman-Green, 490 U.S. at 828 (“an individual is deemed a
citizen of the State of her domicil”); Williamson v. Osenton, 232 U.S. 619, 625
(1914) (“domicil is the ‘technically preeminent headquarters’ of a person; ‘[i]n its
nature it is one’”). “For purposes of federal jurisdiction, ‘domicile’ and ‘citizenship’
are synonymous terms, and a person can have only one domicile at a time . . . .” Ellis
v. Southeast Const. Co., 260 F.2d 280, 281 (8th Cir. 1958) (alterations omitted). The
district court did not clearly err in determining Aly was a citizen of the United States,
domiciled in Ohio. This made Aly a citizen of Ohio, and only Ohio, for purposes of
§ 1332(a) because an individual is a “citizen” of only one place.
The district court relied on an alternative ground, the Seventh Circuit’s widely
adopted Sadat rule: “only the American nationality of the dual citizen should be
recognized under 28 U.S.C. § 1332(a).” Sadat v. Mertes, 615 F.2d 1176, 1187 (7th
Cir. 1980). See Molinos Valle Del Cibao, C. por A. v. Lama, 633 F.3d 1330, 1341
(11th Cir. 2011) (holding “that an individual who is a dual citizen of the United States
and another nation is only a citizen of the United States for the purposes of diversity
jurisdiction under § 1332(a)”); Sanchez v. Aerovias De Mex., S.A. De C.V., 590 F.3d
1027, 1028 n.1 (9th Cir. 2010) (applying Sadat); Frett-Smith v. Vanterpool, 511 F.3d
396, 400 (3d Cir. 2008) (“We agree with the courts that have already decided this
issue and hold that for purposes of diversity jurisdiction, only the American
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nationality of a dual national is recognized.”); Coury v. Prot, 85 F.3d 244, 247 (5th
Cir. 1996) (“For purposes of diversity jurisdiction, only the American nationality of
a dual national is recognized.”); Action S.A. v. Marc Rich & Co., 951 F.2d 504, 507
(2d Cir. 1991) (applying Sadat). Applying the Sadat rule yields the same result: Aly
was a U.S. citizen, domiciled in Ohio; his Egyptian citizenship does not defeat
jurisdiction.
The district court properly found diversity jurisdiction.
III.
Hanzada contends the district court lacked personal jurisdiction. This court
reviews personal jurisdiction de novo. Fastpath, Inc. v. Arbela Techs. Corp., 760
F.3d 816, 819 (8th Cir. 2014). When challenged, “the plaintiff bears the burden to
show that jurisdiction exists.” Id. at 820. Where, as here, “no hearing is held on the
motion,” this court views the evidence most favorably to the plaintiff, resolving
factual conflicts in the plaintiff’s favor. Id.
Aly believes Hanzada waived this argument by participating in the lawsuit. See
Yeldell v. Tutt, 913 F.2d 533, 539 (8th Cir. 1990) (holding defendants waived
personal jurisdiction by providing “no more than a bald assertion in their answer that
the court lacked personal jurisdiction over them”). Hanzada did not waive its
personal jurisdiction challenge. It filed a motion to dismiss for lack of personal
jurisdiction. It then challenged personal jurisdiction two more times during the
litigation. Hanzada maintained a “continuing objection” to the court’s jurisdiction.
Id. See generally Dakota Indus., Inc. v. Ever Best Ltd., 28 F.3d 910, 914-15 (8th
Cir. 1994) (reviewing a personal jurisdiction appeal where defendants filed and lost
a motion to dismiss for lack of personal jurisdiction and then proceeded to trial).
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On the merits, “[b]ecause the Missouri long-arm statute authorizes the exercise
of jurisdiction over non-residents to the extent permissible under the due process
clause,” this court considers “whether the assertion of personal jurisdiction would
violate” due process. Eagle Tech. v. Expander Americas, Inc., 783 F.3d 1131, 1136
(8th Cir. 2015) (quotations and citations omitted). There must be sufficient
“minimum contacts between a defendant and the forum state” so that “jurisdiction
over a defendant with such contacts may not offend ‘traditional notions of fair play
and substantial justice.’” Downing v. Goldman Phipps, PLLC, 764 F.3d 906, 912
(8th Cir. 2014), quoting World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286,
291-92 (1980). Determining “whether asserting personal jurisdiction over a party
comports with due process,” this court considers five factors: “(1) the nature and
quality of the contacts with the forum state; (2) the quantity of those contacts; (3) the
relationship of those contacts with the cause of action; (4) Missouri’s interest in
providing a forum for its residents; and (5) the convenience or inconvenience to the
parties.” Eagle Tech., 783 F.3d at 1136. This court gives “significant weight to the
first three factors.” Fastpath, Inc., 760 F.3d at 821.
Aly asserts that Hanzada, through Shaheen, had the following contacts with
Missouri: (1) In 2006, Shaheen traveled with Aly to National Beef’s headquarters in
Missouri, where Shaheen agreed to pay Aly $10 per metric ton if he could “get
National Beef for Hanzada;” (2) At an unspecified time, Shaheen and Aly flew on
National Beef’s private plane to Missouri; and (3) In 2010, Shaheen met with Aly and
the president of National Beef’s international division, at its headquarters in Missouri,
to discuss the quantity of exports. Hanzada does not contest these contacts,
conceding “[a] few brief visits for a couple of hours over many years to National
Beef’s headquarters in Missouri by . . . Shaheen and Aly.”
The first and second personal jurisdiction factors consider the nature, quality,
and quantity of Hanzada’s Missouri contacts. The district court said:
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In arranging the contract at issue, Hanzada acquired strong, numerous,
and relevant contacts in Missouri. Hanzada’s representative [Shaheen]
traveled to Missouri, where he contacted Aly. He negotiated and
concluded the contract in Missouri. The contract’s focus was
establishing a business relationship between Hanzada and National
Beef, a Missouri corporation. As Hanzada expected and intended, the
contract obliged Aly to network with National Beef executives in
Missouri for Hanzada’s benefit. Thus, the first two prongs favor the
exercise of personal jurisdiction.
As the district court found, Hanzada entered a contract in Missouri to establish
a business relationship with National Beef, a Missouri corporation. The contract
envisioned future transactions between Hanzada, Aly, and National Beef. Hanzada’s
representative, Shaheen, returned to Missouri at least twice to meet about the
Missouri-made contract. Hanzada’s “physical entry into the State—either by the
defendant in person or through an agent, goods, mail, or some other means—is
certainly a relevant contact.” Walden v. Fiore, 134 S. Ct. 1115, 1122 (2014). The
contact was substantial—forming a contract to establish a business with a Missouri
corporation. See Downing, 764 F.3d at 912 (finding contacts with the forum were
“frequent and substantial” where an attorney made trips “attempting to settle [his]
state court cases and to secure personal compensation”), citing Chromalloy Am.
Corp. v. Elyria Foundry Co., 955 S.W.2d 1, 4-5 (Mo. banc 1997) (holding two trips
to Missouri are “sufficient minimum contacts” for personal jurisdiction where the
purpose of the trips was to initiate and further the purchase of a foundry from a
Missouri corporation). The district court did not err in finding the first two factors
weigh in favor of jurisdiction.
The third factor considers the relationship between Hanzada’s Missouri
contacts and this lawsuit—whether “the defendant purposely directs its activities at
the forum state and the litigation results from injuries relating to the defendant’s
activities in the forum state.” Id. at 913 (alterations omitted). Hanzada entered a
contract in Missouri to conduct business with a Missouri corporation. It later
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discussed terms of the contract (the amount of beef sold) in Missouri. As the district
court found, “[t]he Complaint’s sole cause of action is for breach of contract,” which
“is predicated exclusively on Hanzada’s breach of its oral contract with Aly, which
gave rise to several Missouri contacts.” Although Hanzada argues it did not breach
the contract in Missouri, “proximate causation between the contacts and the cause of
action is not required.” Id. The district court properly found this factor weighs in
favor of jurisdiction.
The fourth factor considers Missouri’s interest in providing a forum for its
residents. The district court found, without authority, that “Missouri favors
protecting contractual expectations arising within its borders.” Because neither party
is a Missouri resident, this factor does not favor jurisdiction.
The fifth factor considers the convenience to Aly and Hanzada of litigating in
Missouri. Missouri is not a convenient forum for either party, one of whom resides
in Ohio and the other in Egypt. As the district court found:
As an Egyptian business association with only Egyptian principals,
Hanzada stands to incur great cost and inconvenience in conducting
transnational discovery and possibly having to fly witnesses and
executives from Egypt to defend a lawsuit in Missouri. This factor
opposes a finding of personal jurisdiction.
Three of the five factors—including all three of “significant weight”—favor
jurisdiction. The district court properly exercised personal jurisdiction over Hanzada.
IV.
Hanzada asserts the district court should have granted its motions for summary
judgment and judgment as a matter of law based on the Missouri statute of frauds.
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This court reviews the applicability of the statute of frauds de novo. Melford Olsen
Honey, Inc. v. Adee, 452 F.3d 956, 961 (8th Cir. 2006).
Under Missouri law, “[n]o action shall be brought . . . upon any agreement that
is not to be performed within one year from the making thereof, unless the agreement
upon which the action shall be brought, or some memorandum or note thereof, shall
be in writing . . . .” Mo. Rev. Stat. § 432.010. Where a plaintiff has fully performed
under the contract, the statute of frauds is no defense:
[T]he great weight of authority supports the rule that the statute of
frauds has no application where there has been a full and complete
performance of the contract by one of the contracting parties, and the
party so performing may sue on the contract in a court of law.
Koman v. Morrissey, 517 S.W.2d 929, 935-36 (Mo. 1974), quoting 37 C.J.S.
Frauds, Statute of § 251, p. 762. Finding Hanzada breached a contract with Aly, the
jury found Aly fully performed under the contract. Because he fully performed, the
statute of frauds does not apply
Even if Aly had not fully performed, the statute of frauds does not apply. As
the district court found, the “key question” is “whether the contract could be
performed within one year.” See Crabb v. Mid-Am. Dairymen, Inc., 735 S.W.2d
714, 716 (Mo. banc 1987) (“Our cases hold, consistently, that a contract is not
unenforceable under the statute of frauds if it could possibly be performed in
compliance with its terms within one year, even though the actual performance is
expected to continue over a much longer period.”). Hanzada argues the
contract—requiring it to pay Aly $10 per metric ton received from National
Beef—could never have been performed within one year because of the “involved
process” of establishing a relationship and exporting beef to Egypt. Although many
steps were required before National Beef began selling beef to Hanzada, there is no
evidence it was impossible to perform the agreement fully within one year. See Vess
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Beverages, Inc. v. Paddington Corp., 886 F.2d 208, 212-13 (8th Cir. 1989)
(interpreting Missouri law as holding that where an oral contract is for an indefinite
period of time, it does not violate the statute of frauds).
The district court properly found the statute of frauds inapplicable.
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The judgment is affirmed.
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