Summary
In The Boeing Co. v. Egyptair, No. 05-5986-CV, 2007 WL 1315716, at *1 (2d Cir. May 7, 2007), the Second Circuit affirmed a determination that a foreign sovereign's commercial activity excepted it from immunity, where the foreign sovereign named the plaintiff as an additional assured in an insurance policy.
Summary of this case from Anderson Trucking Serv., Inc. v. Eagle Underwriting Grp., Inc.Opinion
No. 05-5986-cv.
May 7, 2007.
AFTER ARGUMENT AND UPON DUE CONSIDERATION, it is hereby ORDERED, ADJUDGED, AND DECREED that the order of the District Court is AFFIRMED in part and the appeal is DISMISSED in part.
SCOTT F. SEABLOM, Perkins Coie LLP, Seattle, W A (Jeffrey Dobbins, Perkins Coie LLP, Seattle, WA ; Joel W. Nomkin, Perkins Coie Brown Bain, P.A., Phoenix, AZ ; Lee S. Richards III, Arthur S. Greenspan, H. Rowan Gaither IV, Richards Kibbe Orbe LLP, New York, NY, on the brief), for Plaintiff-Appellee.
FREDERICK P. ALIMONTI, Alimonti Law Offices, P.C., White Plains, NY, for Defendant-Appellant.
PRESENT: HON. CHESTER J. STRAUB, HON. ROSEMARY S. POOLER, HON. BARRINGTON D. PARKER, Circuit Judges.
Misr Insurance appeals from the September 30, 2005 order of the United States District Court for the Eastern District of New York (Frederic Block, Judge), denying Misr's motions to dismiss. See The Boeing Co. v. EgyptAir, 392 F. Supp. 2d 461 (E.D.N.Y. 2005). We assume the parties' familiarity with the facts and procedural history of the case.
In pursuing this collateral appeal, Misr contends the District Court erred by not dismissing Boeing's complaint because (1) the court lacked subject matter jurisdiction based on the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. §§ 1330 1602 et seq.; (2) there were insufficient "minimum contacts" to establish personal jurisdiction; and (3) the court should have declined to exercise jurisdiction pursuant to the Declaratory Judgment Act. We address these arguments in turn.
First, under the collateral order exception to the final judgment rule, we have jurisdiction to review the District Court's finding that subject matter jurisdiction was properly premised on the FSIA. See Filler v. Hanvit Bank, 378 F.3d 213, 216 (2d Cir. 2004). In reviewing a denial of a motion to dismiss under the FSIA, we assume all of the nonmoving party's factual allegations to be true. Transatlantic Shiffahrtskontor GmbH v. Shanghai Foreign Trade Corp., 204 F.3d 384, 386 (2d Cir. 2000).
The District Court properly invoked the commercial activity exception to sovereign immunity under the FSIA. Section 1605 of Title 28 of the United States Code provides that an instrumentality of a foreign state such as Misr is not entitled to immunity in any case "in which the action is based . . . upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States." 28 U.S.C. § 1605(a)(2); see also Virtual Countries, Inc. v. Republic of South Africa, 300 F.3d 230, 236 (2d Cir. 2002).
It is undisputed that Misr, as a corporation that is wholly owned by the Arab Republic of Egypt, is considered a "foreign state" pursuant to 28 U.S.C. § 1603.
The District Court held that Misr's naming of Boeing as an additional assured under EgyptAir's hull and liability insurance policy constituted an act outside the United States taken in connection with Misr's commercial activity of providing insurance, and that this act had the direct effect of providing insurance coverage for the aircraft at issue to Boeing, without which EgyptAir would have been unable to fly to or from the United States. Misr argues that Boeing's lawsuit is not based upon the naming of Boeing as an additional assured, but rather based upon Misr's lawsuit in Egypt. This, however, is a myopic view of Boeing's claims. The naming of Boeing as an additional assured is central to its claims for declaratory relief, as Boeing contends that its status as a named insured means that Misr cannot recover from Boeing the damages it has paid as a result of the crash of Flight 990. There exists, therefore, the requisite "significant nexus" between Boeing's claims and Misr's commercial activity. See Reiss v. Société Centrale du Groupe des Assurances Nationales, 235 F.3d 738, 747 (2d Cir. 2000) ("[T]here must be `a significant nexus . . . between the commercial activity in [the foreign state] upon which the exception is based and a plaintiff's cause of action.'") (quoting NYSA-ILA Pension Trust Fund v. Garuda Indonesia, 7 F.3d 35, 38 (2d Cir. 1993)).
Further, Misr has no rights against Boeing that are not premised on its subrogeesubrogor relationship with EgyptAir. This relationship was created by the policy on which Boeing is an additional assured, and is limited by the rights given to EgyptAir under its contracts with Boeing. Thus, Boeing's claims against Misr are "based upon" the insurance policy Misr issued in Egypt. See Saudi Arabia v. Nelson, 507 U.S. 349, 357 (1993) (holding that a lawsuit is "based upon" an act or acts outside the United States if this act or these acts, "if proven," would establish the "elements of [the] claim that . . . would entitle a plaintiff to relief under his theory of the case").
Because we find that the District Court properly concluded that Misr does not have sovereign immunity under the FSIA's commercial activity exception, we need not address whether Misr also expressly waived sovereign immunity in its role as EgyptAir's subrogee.
The second basis for Misr's interlocutory appeal is its contention that there were insufficient "minimum contacts" to establish personal jurisdiction under the Due Process Clause. We will exercise pendent appellate jurisdiction over this argument because "questions regarding minimum contacts for personal jurisdiction purposes and commercial contacts for FSIA purposes [are] inextricably intertwined." U.S. Fidelity and Guar. Co. v. Braspetro Oil Services, Co., 199 F.3d 94, 97 (2d Cir. 1999) (per curiam). Assuming, arguendo, that the minimum contacts requirement of the Due Process Clause applies to foreign instrumentalities such as Misr, see Hanil Bank v. PT. Bank Negara Indonesia, 148 F.3d 127, 134 (2d Cir. 1998) (noting that it is an open question whether foreign sovereigns are subject to due process analysis), we have no difficulty finding that there were sufficient minimum contacts here. As the District Court explained, Boeing's claims arise out of Misr's contact with the United States; Misr purposefully availed itself of the privilege of conducting commercial activities within the United States by adding Boeing as an additional assured to EgyptAir's hull and liability insurance policy and by insuring EgyptAir's flight operations to and from the United States; and the United States has a substantial interest in adjudicating this dispute because Boeing is a U.S. corporation and two of the agreements central to Boeing's claims are governed by, and will require application of, U.S. law.
Finally, Misr asks us to review the District Court's decision to retain jurisdiction of this dispute under the Declaratory Judgment Act ("DJA"). We decline to do so, however, because the District Court's discretionary decision to exert jurisdiction under the DJA is neither dependent on, nor inextricably intertwined with, our analysis of Misr's immunity under the FSIA. As a general rule, we do not exercise pendant appellate jurisdiction on interlocutory appeals of issues not themselves immediately appealable. U.S. Fidelity and Guar. Co., 199 F.3d at 97. We recognize "only two exceptions to this rule: (a) where an issue is inextricably intertwined with a question that is the proper subject of an immediate appeal, or (b) where review of a jurisdictionally insufficient issue is necessary to ensure meaningful review of a jurisdictionally sufficient one." Id. (internal citations and quotation marks omitted). Misr concedes that the second exception does not apply here, but argues that the first does because the "true and singular basis for Boeing's claims for purposes of both the FSIA and the DJA" is Misr's action against Boeing in Egypt.
Regardless of whether Misr is correct about the "true basis" for Boeing's claims, however, the issues pertaining to DJA jurisdiction and FSIA immunity in this case are not so intertwined as to warrant the exercise of pendent appellate jurisdiction. Resolving the DJA question would require determining whether the District Court abused its discretion in weighing the factors we identified in Dow Jones Co. v. Harrods Ltd., 346 F.3d 357, 359-60 (2d Cir. 2003) (per curiam). These factors include (1) whether the declaratory judgment "will serve a useful purpose in clarifying or settling the legal issues involved," and (2) "whether a judgment would finalize the controversy and offer relief from uncertainty," as well as other factors such as whether the proposed remedy is being used merely for procedural fencing; whether the use of a declaratory judgment would increase friction between sovereign legal systems; and whether there is a better or more effective remedy. Id. at 360. Applying and weighing these factors would certainly touch on our FSIA immunity analysis — both require, for example, examining Misr's obligations as the insurer-subrogee for EgyptAir — but the DJA determination turns on issues wholly separate from the immunity analysis, including to what extent a declaratory judgment would resolve the Egyptian subrogation action. Thus, we cannot say that the DJA and FSIA immunity issues are inextricably intertwined. See Rein v. Socialist People's Libyan Arab Jamahiriya, 162 F.3d 748, 761 (2d Cir. 1998) (pendent interlocutory jurisdiction is not appropriate where "we can easily decide subject matter jurisdiction and leave key issues of [the second question] unresolved").
For the foregoing reasons, the order of the District Court is AFFIRMED to the extent that it denied Misr's motion to dismiss based on lack of subject matter jurisdiction and lack of personal jurisdiction, and Misr's appeal of the District Court's decision to retain jurisdiction pursuant to the DJA is DISMISSED.