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INTERNATIONAL FIN. CORP. v. GDK SYS.

April 14, 1989

INTERNATIONAL FINANCE CORPORATION, Plaintiff,
v.
GDK SYSTEMS, INC. and HOGAN SYSTEMS, INC., Defendants



The opinion of the court was delivered by: GASCH

 OLIVER GASCH, UNITED STATES DISTRICT COURT SENIOR JUDGE

 INTRODUCTION

 This case stems from the events surrounding several contracts between plaintiff the International Finance Corporation ("IFC"), an international lending organization, and defendant GDK Systems, Inc. ("GDK"), a New York corporation that performs computer software design, specializing in providing technical and applications expertise in international banking systems. Defendant Hogan Systems, Inc. ("Hogan") is a Delaware corporation with its principal place of business in Dallas, Texas. In approximately May, 1987, Hogan acquired the outstanding stock of GDK and GDK became a wholly-owned subsidiary of Hogan.

 IFC filed its original complaint in five counts, alleging (1) fraud, (2) negligent misrepresentation, (3) negligence, (4) breach of contract, and (5) breach of warranty; IFC claimed that the Court had jurisdiction over the action pursuant to 28 U.S.C. § 1332, the federal diversity statute.

 Defendants filed a Motion to Dismiss for Failure to State a Claim and to Dismiss Defendant Hogan for Lack of Personal Jurisdiction. At oral argument on defendants' motion to dismiss, defendants' counsel for the first time also raised the issue of whether the Court had subject matter jurisdiction.

 On January 18, 1989, the Court denied defendants' motion to dismiss. The Court indicated that it would not consider the issue of subject matter jurisdiction at that time. However, because Rule 12(h)(3) of the Federal Rules of Civil Procedure places the burden of establishing subject matter jurisdiction on the plaintiff, the Court directed the plaintiff to "file a memorandum within ten days clarifying the citizenship of IFC and discussing the statutory and case law governing how the citizenship of an 'international organization' is determined for purposes of 28 U.S.C. § 1332." Court's Order of January 18, 1989.

 On January 27, 1989, plaintiff responded by amending its complaint. Plaintiff's amended complaint, which is identical to its original one in all respects except for the jurisdictional and venue allegations, no longer asserts that jurisdiction exists pursuant to 28 U.S.C. § 1332 diversity. Instead, plaintiff now claims that jurisdiction is proper pursuant to 22 U.S.C. § 282f, which confers original federal subject matter jurisdiction over actions brought by or against the IFC.

 On February 10, 1989, defendants filed a Motion to Dismiss the Amended Complaint of Plaintiff for Lack of Subject Matter Jurisdiction ("Motion to Dismiss Amended Complaint"). In this motion, the defendants contend that jurisdiction under 22 U.S.C. § 282f as applied to this case is unconstitutional because it would conflict with Article III, § 2 of the Constitution.

 BACKGROUND

 The IFC is a major international lending institution which makes development loans in a large number of countries throughout the world. It was established pursuant to "Articles of Agreement" among a number of nations, including the United States. See Exhibit B of defendants' Motion to Dismiss Amended Complaint. Its status as an international organization was confirmed by implementing legislation which gives it certain immunities and privileges under United States law and recognizes its legal status. The United States is a major shareholder in the IFC. The Secretary of the Treasury serves as the United States' member Governor of the IFC. See 22 U.S.C. § 282a through § 282i.

 DISCUSSION

 Plaintiff IFC invokes the jurisdiction of this Court pursuant to 22 U.S.C. § 282f, which provides that:

 
any such action at law or in equity to which the [International Finance] Corporation shall be a party shall be deemed to arise under the laws of the United States, and the district courts of the United States ...

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