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TRANSLINEAR, INC. v. REPUBLIC OF HAITI

April 7, 1982

TRANSLINEAR, INC., Plaintiff,
v.
The REPUBLIC OF HAITI, et al., Defendant



The opinion of the court was delivered by: PRATT

This case concerns a dispute between the parties involved in a project to develop commercially the Haitian island of Tortue (in English, Tortuga). Translinear, a Texas corporation which undertook much of the development work, brings a contract action against the Republic of Haiti, The Bank of Development of the Republic of Haiti (Development Bank), and Jean Claude Duvalier, the Republic's "President-for-Life." *fn1" On October 21, 1981, the United States District Court for the Southern District of Texas transferred the case to this Court. Defendant Republic of Haiti has moved for summary judgment on the grounds that plaintiff's claims are barred by the District of Columbia three year statute of limitations on contract actions. D.C.Code § 12-301(7) (1981). Plaintiff has moved to transfer the case to the United States District Court for the Northern District of Texas. For the reasons which follow, we deny defendant's motion for summary judgment and grant plaintiff's motion to transfer.

 Background

 On May 12, 1976, Translinear's President wrote to the Haitian Ministry of Finance and Economic Affairs to protest Haiti's treatment of Translinear. On December 13, 1979, Translinear filed suit against defendants in the District Court of Harris County, Texas. The action was timely filed under the applicable Texas statute of limitations. Vernon's Annot.Civ.Stat.Tex. Art. 5527. Plaintiff's claim is based on breach of implied contract, quantum meruit, and restitution.

 On May 4, 1980, defendant Republic of Haiti petitioned for removal of the action to the United States District Court for the Southern District of Texas pursuant to 28 U.S.C. § 1441(d). Having remanded the case to the Southern District of Texas, defendant then moved to dismiss the action for, of all reasons, improper venue, or to transfer the case to this Court. On October 21, 1981, Judge Norman W. Black (S.D.Tex.) ordered the case transferred to the United States District Court for the District of Columbia pursuant to 28 U.S.C. § 1391(f)(4) (venue in D.D.C. for actions brought against a foreign state) and 28 U.S.C. § 1406(a) (transfer for improper venue). The Court gave no further explanation for its action. Defendant Republic of Haiti has moved in this Court for summary judgment on the grounds that plaintiff's action is barred by the District of Columbia statute of limitations. Plaintiff has moved to transfer the case to the Northern District of Texas.

 DISCUSSION

 I. Defendant's Motion for Summary Judgment

 The Republic of Haiti contends that plaintiff's claim is barred by the three year statute of limitations for contract actions under District of Columbia law. D.C.Code § 12-301(7) (1981). Plaintiff responds that the four year statute of limitations for contract actions under Texas law applies to the present action. Vernon's Civ.Stat.Tex. Art. 5527. The determining factor is whether the transfer of the case from the Southern District of Texas was pursuant to 28 U.S.C. § 1406(a) (improper venue in the transferor court) or 28 U.S.C. § 1404(a) (venue is proper in the transferor court but case transferred in the "interest of justice"). If the Texas Court correctly concluded that transfer was required due to improper venue, then we must apply the statute of limitations provision which would have been applied had the case originally commenced in this Court. Martin v. Stokes, 623 F.2d 469, 471-72 (6th Cir. 1980). In contrast, if venue was proper in the Southern District of Texas, thereby making the appropriate basis for transfer 28 U.S.C. § 1404(a), we must apply the statute of limitations which would have been applicable had the action proceeded in the transferor court. Van Dusen v. Barrack, 376 U.S. 612, 84 S. Ct. 805, 11 L. Ed. 2d 945 (1964).

 Plaintiff originally commenced this action in the state courts of Texas. Defendant successfully petitioned to remove the case to the United States District Court for the Southern District of Texas pursuant to 28 U.S.C. § 1441(d). That section provides in pertinent part,

 
Any civil action brought in a State court against a foreign state as defined in section 1603(a) of this title may be removed by the foreign state to the district court of the United States for the district and division embracing the place where such action is pending.

 Section 1441(d) governs the venue of an action removed from state court. Under its clear terms, venue is appropriate in the federal district "embracing the place where such action is pending." Willner v. Thompson, 285 F. Supp. 394, 395 (E.D.N.Y.1968).

 Defendant insists that under 28 U.S.C. § 1391(f), which sets forth the general federal venue requirements for actions against foreign states, venue was improper in the Southern District of Texas. However, 28 U.S.C. § 1391(f) applies only to actions which originally are "brought" in federal court. In that the present case was initially brought in state court and removed to federal court, section 1391(f) does not serve to render venue improper in the Southern District of Texas. *fn2" Polizzi v. Cowles Magazines, Inc., 345 U.S. 663, 665-66, 73 S. Ct. 900, 902-03, 97 L. Ed. 1331 (1953); Minnesota Mining and Manufacturing Co. v. Kirkevold, 87 F.R.D. 317, 321-22 (D.Minn.1980). That Court was the appropriate forum for venue purposes under section 1441 and, accordingly, the Court erred in basing the transfer of the action on 28 U.S.C.§ 1406(a). The ...


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