International Energy Ventures Management, L.L.C. v. United Energy Group, Ltd.
2016 U.S. App. LEXIS 6394
| 5th Cir. | 2016Background
- IEVM (Texas LLC) claimed it introduced UEG (Bermuda/Chinese interests) to BP Pakistan assets; parties agreed IEVM would provide consulting services and receive payments and a 6% commission on the acquisition.
- After the sale closed and some post-closing services were performed, IEVM alleged UEG paid sporadically and refused the pre-closing amounts and the 6% commission.
- IEVM sued UEG and Mueller (Texas resident broker) in Texas state court for breach of contract, promissory estoppel, quantum meruit, and fraud; defendants removed to federal court asserting complete diversity and that Mueller was improperly joined.
- The district court denied remand, granted Mueller’s Rule 12(b)(6) motion, and dismissed UEG for lack of personal jurisdiction; IEVM appealed those rulings.
- The Fifth Circuit affirmed denial of remand (holding Mueller was improperly joined under the federal pleading standard), vacated the merits dismissal of Mueller (dismissal should have been without prejudice for lack of jurisdiction), and affirmed dismissal of UEG for lack of personal jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicable pleading standard for improper-joinder/remand | State (Texas) "fair notice" pleading standard applies when testing joinder | Federal Rule 12(b)(6)/Twombly/Iqbal federal plausibility standard applies | Court held federal pleading standard (Rule 12(b)(6) as refined by Twombly/Iqbal) governs improper-joinder analysis under Smallwood |
| Whether Mueller was properly joined (sufficiency of claims against him) | IEVM alleged claims (breach, promissory estoppel, quantum meruit, fraud) against Mueller based on his role as broker/representative | Mueller argued IEVM alleged no contract with him, no promise by him, no services to him, and fraud allegations fail Rule 9(b) particularity | Under federal pleading standard, IEVM’s allegations against Mueller were implausible/insufficient; Mueller was improperly joined (remand denied) |
| Effect of improper joinder on Mueller dismissal | IEVM opposed merits dismissal of Mueller in federal court | Defendants treated dismissal as merits Rule 12(b)(6) dismissal | Court held district court lacked jurisdiction to dismiss on merits; dismissal should be without prejudice for lack of subject-matter jurisdiction; vacated merits dismissal and remanded to vacate with instructions |
| Personal jurisdiction over UEG; effect of supplemental arbitration clause | IEVM argued supplemental agreement (choice-of-law and arbitration in Texas) and contacts (agents, principals’ travel, Texas law clause) establish jurisdiction | UEG argued arbitration provision only permits Texas courts to compel arbitration and contacts do not arise from the unwritten original agreement | Court held arbitration clause did not waive jurisdiction for prior/unwritten claims and UEG lacked minimum contacts related to those claims; affirmed dismissal for lack of personal jurisdiction |
Key Cases Cited
- Smallwood v. Illinois Central R.R. Co., 385 F.3d 568 (5th Cir. 2004) (en banc) (establishes improper-joinder test and directs a Rule 12(b)(6)-type analysis)
- Bell Atl. Corp. v. Twombly, 550 U.S. 544 (2007) (articulates federal plausibility pleading standard applied via Rule 12(b)(6))
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (clarifies application of Twombly plausibility standard to all civil actions)
- Paxton v. Weaver, 553 F.2d 936 (5th Cir. 1977) (federal removal/jurisdiction questions governed by federal law, not state procedural rules)
- Grubbs v. General Electric Credit Corp., 405 U.S. 699 (1972) (federal removal statutes require uniform nationwide application)
- Bobby Jones Garden Apartments, Inc. v. Suleski, 391 F.2d 172 (5th Cir. 1968) (read state court pleading through federal lenses for joinder inquiry)
- International Shoe Co. v. Washington, 326 U.S. 310 (1945) (minimum contacts for personal jurisdiction)
- Walden v. Fiore, 134 S. Ct. 1115 (2014) (specific-jurisdiction analysis focusing on defendant’s contacts with the forum)
- Daimler AG v. Bauman, 571 U.S. 117 (2014) (limits on general jurisdiction over foreign corporations)