Opinion
Civil Action No. 99-3159 c/w 99-3161, 99-3632; REF: 99-3161; SECTION "C" (1)
July 25, 2000
ORDER AND REASONS
Third-party defendant Milagros Velasquez moves to quash service and to dismiss the third-party declaratory judgment action filed by defendants/third-party plaintiffs American Iron Reduction, L.L.C. ("American Iron") and IC RailMarine Co. ("IC RailMarine"). For the following reasons, the Court DEFERS any ruling on Mrs. Velasquez's objections to service of process and DENIES the portion of her motion urging dismissal for lack of subject matter jurisdiction.
I. FACTS
Four interrelated cases, Civil Actions 99-3159, 99-3161, 99-3632, and 00-1045, were filed in this district. As specified by Local Rule 3.1.1E, all of these actions have been transferred from various sections and consolidated in this Court. It is helpful to explain the general facts and circumstances of these cases before moving forward with the matter currently before the Court.
All of these actions stem from an explosion on the high seas aboard the M/V KARTERIA on August 25, 1999. The explosion occurred while the ship was carrying possibly volatile mineral cargo loaded at Convent, Louisiana. The explosion resulted in the deaths of two crewmen — Benigno Velasquez, Mrs. Velasquez's husband, and Enriquito Detoyato — and serious injury to another — Jing Caringal.
The Court proffers no opinion as to the volatility of the cargo but only notes that the argument has been raised previously.
The nexus to Convent, Louisiana is the reason why these actions have been filed in or removed to this Court.
The Court is unaware of any pending actions filed by Mr. Detoyato's survivors.
Mr. Caringal promptly filed suit in the 23rd Judicial District Court for the Parish of St. James against the M/V KARTERIA and its owners and operators; Koch Carbon, Inc. ("Koch"), the vessel's charterer; Universal Minerals, Inc. ("Universal"), the vessel's sub-charterer and cargo shipper; American Iron, the manufacturer of the ship's cargo; and IC RailMarine, the stevedoring company that loaded the ship's cargo. Koch, the ship's charterer, promptly removed the action to this Court under the Convention on the Recognition of Foreign Arbitral Awards, 9 U.S.C. § 201, et seq. ("Convention Act"), as related to an ongoing arbitration among some of the parties in London. This action, 99-3159 ("Caringal action"), remains on this Court's docket.
For purposes of the further cases filed, the Caringal defendants have basically fallen into three separate groups: (1) the ship, the shipping company, and related parties, hereinafter referred to as "Karteria" or the "Karteria parties;" (2) the charterer, the sub-charterer, and related parties, hereinafter referred to as the "chartering parties; and (3) the manufacturer of the cargo and the stevedoring company, hereinafter referred to as the "cargo parties."
The Court's grouping of these parties is not meant to imply that the interests of the parties within each of the three groups are co-extensive. Rather, the Court has grouped the parties this way for ease and logic in reference to the matters currently pending.
Thereafter, the Karteria parties filed Civil Action 99-3161 ("assignment case") in this Court against the cargo parties. The Karteria parties allegedly have settled all of Mrs. Velasquez's claims and obtained from her a full assignment of any rights against any of the other parties. The Karteria parties filed the assignment case against the cargo parties, allegedly under the unlimited assignment of rights, to recover the amounts paid to Mrs. Velasquez in settlement.
The Karteria parties then filed Civil Action 99-3632 ("limitation action"), a maritime limitation of liability action under Federal Rule of Civil Procedure 9(h) and Rule F of the Supplemental Rules for Admiralty and Maritime Claims. Before transfer and consolidation of the case, Section "J" ordered all claims against the Karteria parties to be filed by August 25, 2000. Caringal filed a motion to lift the limitation, but the Court denied the motion. Accordingly, the action remains before this Court, and parties have until August 25 to file claims. Currently, only the cargo parties have entered appearances in the limitation action: American Iron has filed for intervention, and IC RailMarine has filed a claim.
Mrs. Velasquez filed the last action ("Velasquez action") in the 23rd Judicial District Court for the Parish of St. James asserting state law tort claims against the cargo parties only. The cargo parties filed third-party petitions against the chartering parties. The chartering parties then removed the case to this Court under the Convention Act, asserting that the case was related to the ongoing London arbitrations. The case was assigned civil action number 00-1045. Mrs. Velasquez promptly filed a motion to remand the case to state court, arguing that the Convention Act did not support removal by the chartering parties. The Court granted Mrs. Velasquez's motion to remand, holding that third-party defendants cannot remove an action under the Convention Act's removal provision. See Rec. 99-3159, Doc. 103.
After all four cases had found their way to this Court, the cargo parties filed an unopposed motion for leave to file a third-party complaint in the assignment action. See Rec. 99-3159, Doc. 68. The cargo parties, finding themselves as defendants in two separate suits claiming recovery for the death of Mr. Velasquez by both the Karteria parties (under the alleged full assignment) and Mrs. Velasquez, filed the third-party complaint for a declaratory judgment to determine which party is entitled to pursue the Velasquez death claims. Mrs. Velasquez, even though having already filed the eventually successful remand motion, did not oppose the third-party complaint, which brought her into federal court as a third-party defendant in the assignment case. The Court, seeing no opposition to the third-party complaint, granted the cargo parties leave to file it. See Rec. 99-3159, Doc. 65. Mrs. Velasquez now moves the Court to invalidate the summons and to quash service of process in this third-party declaratory judgment action and further to dismiss the declaratory judgment action for lack of subject matter jurisdiction.
III. ANALYSIS
A. Service of Process
Mrs. Velasquez, a native of the Philippines, argues that the issuance of summons and service of process upon her was invalid under the provisions set forth in Federal Rules of Civil Procedure 4 and 5. Mrs. Velasquez claims (1) that, as a foreign national, she was not served the summons and complaint properly under the provisions of Rule 4(f); (2) that service upon her attorneys of record in another case is inadequate under Rule 5(b); and (3) that, even if service upon those attorneys was proper, the method of service was defective.
The third-party plaintiff cargo parties however have remedied, or are in the immediate process of remedying, any possible defect in the service of the summons and complaint. The cargo parties (1) have requested that the court clerk serve Mrs. Velasquez personally through international registered mail; and (2) have reissued a properly captioned summons and served it, or are in the process of serving it, by proper methods upon the attorneys who have represented Mrs. Velasquez so far in these consolidated actions. Furthermore, time for service of process has not yet expired. Accordingly, the Court will defer ruling on any of Mrs. Velasquez's objections to service of process.
Service through international registered mail is a proper form of service upon a Filipino national under Rule 4(f)(2)(C)(ii) because the Philippines is not a signatory to an international convention on the service of process and that nation allows service by registered mail with return receipt. See Third-Party Pls' Opp. Mem., Ex. A, at 1 (State Department Circular Re: Judicial Assistance — Philippines).
Rule 4(m) provides the time limit for service of process. Normally, plaintiffs must effect valid service of the summons and complaint upon defendants within one-hundred twenty (120) days after the filing of the complaint or risk dismissal of the action. However, the Rule specifically provides that the time limit does not apply to service upon individuals in a foreign country. Nevertheless, even under the time limit for domestic service, the cargo parties, having filed the third-party complaint on May 30, 2000, would have until September 28, 2000 to effect valid service.
B. Subject Matter Jurisdiction
1. Standard of Review
The standard of review for motions to dismiss for lack of subject matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) is the same as the standard for reviewing dismissals for failure to state a claim under Rule 12(b)(6). See Benton v. United States, 960 F.2d 19, 21 (5th Cir. 1992). The moving party bears the burden of showing that "plaintiff can prove no set of facts consistent with the allegations in the complaint which would entitle it to relief." Baton Rouge Bldg. Constr. Trades Council AFL-CIO v. Jacobs Constructors, Inc., 804 F.2d 879, 881 (5th Cir. 1986). The reviewing court "must accept all well-pleaded factual allegations in the light most favorable to the non-moving party." American Waste Pollution Control Co. v. Browning Ferris Inc., 949 F.2d 1384, 1386 (5th Cir. 1991). Conclusory allegations or legal conclusions however will not suffice to defeat a motion to dismiss. See Fernandez-Montes v. Allied Pilots Ass'n, 987 F.2d 278, 284 (5th Cir. 1993). A court's ultimate conclusion that a case should be dismissed may rest "on any one of three separate bases: (1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's resolution of disputed facts." Barrera-Montenegro v. U.S., 74 F.3d 657, 659 (5th Cir. 1996) (citations omitted).
2. Discussion
Mrs. Velasquez argues that this Court lacks subject matter jurisdiction over the third-party declaratory judgment action. She claims that the Court is without jurisdiction to consider any settlement agreement. She further claims that the Court lacks diversity jurisdiction and/or admiralty jurisdiction over this case. The Court however finds Mrs. Velasquez's arguments unavailing.
a. Jurisdiction to Resolve the Settlement Agreement
Mrs. Velasquez first claims that this Court has no jurisdiction to consider a settlement agreement. All of the cases she cites however stand for the proposition that a district court lacks the power to interpret and enforce a settlement agreement arising out of previous litigation before the court unless an independent jurisdictional basis over the settlement contract dispute exists or the court explicitly retains jurisdiction to resolve issues arising under the settlement agreement. See Kokkonen v. Guardian Lfe Ins. Co. of America, 511 U.S. 375, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994); Columbus-America Discovery Group v. Atlantic Mutual Ins. Co., 203 F.3d 291, 299 (4th Cir. 2000); Fairfax Countywide Citizens Assoc. v. Fairfax County, 571 F.2d 1299, 1303 (4th Cir. 1978). That proposition has no bearing on the facts of this case. Here, the cargo parties have brought a declaratory judgment action seeking the Court's resolution of a settlement contract not arising from previous litigation before the Court. This action simply calls for a declaratory judgment on a disputed contract. Accordingly, the holdings of Kokkonen and the other Fourth Circuit cases have no bearing here. Moreover, even if they did apply, the Court finds, as explained below, that it has independent jurisdictional bases over this action.
b. Alienage Jurisdiction
Mrs. Velasquez also claims that the Court lacks alienage jurisdiction over this matter because the thrust of the cargo parties' declaratory judgment complaint pits Karteria against Mrs. Velasquez, both of whom are foreign nationals. Her analysis of the situation however is incorrect. The third-party plaintiffs in this declaratory judgment action are American Iron and IC RailMarine, both domestic corporations. The third-party defendants are the Karteria parties, foreign corporations, and Mrs. Velasquez, a foreign national. Furthermore, the amount in controversy exceeds $75,000, the threshold amount for diversity and alienage jurisdiction. Accordingly, there is valid alienage jurisdiction in this case.
Mrs. Velasquez and the cargo parties in the original third-party complaint actually refer to "diversity jurisdiction." However, the correct technical term for jurisdiction over cases in which domestic parties are aligned against foreign parties is "alienage jurisdiction."
Mrs. Velasquez and Karteria may very well enter cross-claims against each other in the declaratory judgment action under Federal Rule of Civil Procedure 13(g) and thereby adopt adversarial positions. Cross-claims between co-parties under Rule 13(g) however fall within a district court's supplemental jurisdiction under 28 U.S.C. § 1367 and therefore need no independent basis for federal jurisdiction. See SMS Associates v. Clay, 868 F. Supp. 337, 343, n. 9 (D.D.C. 1994), aff'd without opinion, 70 F.3d 638 (D.C. Cir. 1995). See also 6 Charles A. Wright Arthur R. Miller, Federal Practice and Procedure § 1433. Accordingly, contrary to Mrs. Velasquez's assertions, adversarial cross-claims between Karteria and Mrs. Velasquez would not destroy alienage jurisdiction.
c. Admiralty Jurisdiction
Mrs. Velasquez also argues that this Court lacks admiralty jurisdiction over this matter because the settlement agreement concerns matters on land rather than on sea. The Court first notes that the legal proposition Mrs. Velasquez relies upon addresses admiralty jurisdiction over tort claims. See Egorov, Puchinsky, Afansiev Juring v. Terriberry, Carroll Yancey, 183 F.3d 453, 455-57 (5th Cir. 1999) (tortious interference with contract claim). The instant declaratory judgment action however is a contract claim. Second, the Court finds that its admiralty jurisdiction over this action rests on a strong foundation — the liberal third-party practice permitted in admiralty and maritime actions under Federal Rule of Civil Procedure 14(c). "Rule 14(c) may be invoked whenever the original plaintiff's claim is specifically identified in the complaint as one in admiralty pursuant to Rule 9(h)." 6 Wright Miller, § 1465. The original complaint in the assignment case filed by Karteria against the cargo parties specifically pled admiralty jurisdiction under Rule 9(h). See Rec. 99-3161, Doc. 1, at 1. Furthermore, the declaratory judgment action, asking for resolution of the ownership of claims on Mr. Velasquez's death, clearly arises out of the same transaction or occurrence as the original assignment case, which Karteria brought against the cargo parties as the assignee of claims on Mr. Velasquez's death. Therefore, the Court finds that it has admiralty jurisdiction over this declaratory judgment action properly filed as a third-party claim in admiralty under Rule 14(c).
d. Supplemental Jurisdiction
Even if the Court lacked jurisdiction under the bases explained above, the Court could still exercise supplemental jurisdiction under 28 U.S.C. § 1367 over this third-party declaratory judgment action. Supplemental jurisdiction exists where a secondary claim is "so related to the claims in the [original] action . . . [such that it] form[s] part of the same case or controversy." 28 U.S.C. § 1367(a). Moreover, supplemental jurisdiction extends to claims involving the joinder or intervention of additional parties, as is the case here. See id. In the instant case, it is clear that the issue before the Court in the cargo parties' declaratory judgment action, i.e., who owns the claims, is part of the same case or controversy as the original claim brought by Karteria as assignee of the claims against the cargo parties. The Court clearly has jurisdiction over the original claim both in admiralty and in diversity. Accordingly, if there were no other basis for this Court to exercise jurisdiction over the third-party declaratory judgment action, the Court could exercise supplemental jurisdiction over this claim.
III. CONCLUSION
For the reasons explained above, IT IS ORDERED that third-party defendant Milagros Velasquez's Motion to Quash Return of Service and to Dismiss (Rec. 99-3159, Doc. 99) is hereby DEFERRED IN PART as to service of process and DENIED IN PART as to subject matter jurisdiction.