Impact Fluid Solutions LP v. Bariven SA

CourtDistrict Court, S.D. Texas
DecidedMarch 18, 2022
Docket4:19-cv-00652
StatusUnknown

This text of Impact Fluid Solutions LP v. Bariven SA (Impact Fluid Solutions LP v. Bariven SA) is published on Counsel Stack Legal Research, covering District Court, S.D. Texas primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Impact Fluid Solutions LP v. Bariven SA, (S.D. Tex. 2022).

Opinion

□ Southémn District of Texas ENTERED March 18, 2022 IN THE UNITED STATES DISTRICT COURT Nathan Och Clerk FOR THE SOUTHERN DISTRICT OF TEXAS eee □□ HOUSTON DIVISION IMPACT FLUID SOLUTIONS LP, a/k/a § IMPACT FLUID SOLUTIONS LLC, § § Plaintiff, § VS. § CIVIL ACTION NO. 4:19-CV-00652 § BARIVEN SA and PDVSA Services BV, § § Defendants. § ORDER Before the Court is Plaintiff Impact Fluid Solutions LP’s Motion for Attorneys’ Fees (Doc. No. 93). Defendants Bariven SA and PDVSA Services BV did not file a substantive response.! After careful consideration, the Court grants Plaintiff's Motion. I. Background Plaintiff Impact Fluid Solutions LP (“Impact” or “Plaintiff’) is a Texas limited partnership that develops advanced fluid additives for oilfield operations in Houston. Defendant PDVSA Services BV is a Netherlands company and subsidiary of Defendant Bariven SA (collectively, “Defendants”), a Venezuelan corporation and subsidiary of Venezuela’s state-owned oil company. Impact sued Defendants for failure to make payment on two contracts for drilling fluids. After awarding summary judgment in favor of Impact (Doc. No. 84), this Court entered final

1 Instead of a response, Defendants filed a notice stating, “For the reasons set forth by Defendants during the parties’ pretrial hearing on November 1, 2021, Defendants contest Plaintiff's entitlement to any damages and to the recovery of attorneys’ fees, but are not filing a substantive response to Plaintiffs Motion.” (Doc. No. 94). At the pretrial hearing, counsel for the Defendants explained that due to the ongoing political turmoil in the Venezuela, the Defendants’ attorneys “do not have access to the documents and witnesses that we would need to contest [Plaintiff's] claims.” The Court notes that Defendants do have the ability and the wherewithal to contest the motion for attorneys’ fees, as the entitlement to fees is a legal issue and the factual support, if any, is based upon documents that were provided to them by Plaintiffs counsel.

judgment (Doc. No. 90). Impact subsequently moved for attorneys’ fees pursuant to Texas Civil Practice and Remedies Code § 38.001. (Doc. No. 93). II. Analysis A. Applicability of Texas Fee-Shifting Statute In its Motion, Impact contends that “[s|tate law governs attorney’s fee awards in a diversity case. Id. (quoting HCC Ins. Holdings, Inc. v. Remeika, No. CV H-15-2564, 2016 WL 4272345, at *5 (S.D. Tex. Aug. 15, 2016)). While this is essentially a true statement the basis for jurisdiction in this case is not diversity. Instead, this Court’s subject matter jurisdiction is based on the Foreign Sovereign Immunities Act (FSIA), which is “the exclusive basis for federal court jurisdiction in suits against corporations owned by foreign states.” Goar v. Compania Peruana de Vapores, 688 F.2d 417, 421 (Sth Cir. 1982). Despite this distinction, the Court finds that state law does indeed govern an award of attorneys’ fees in this case. As the Fifth Circuit has explained, “[s]tate law controls both the award of and the reasonableness of fees awarded where state law supplies the rule of decision.” Walker Int’l Holdings, Ltd. v. Republic of Congo, 415 F.3d 413, 415 (Sth Cir. 2005) (quoting Mathis v. Exxon Corp., 302 F.3d 448, 461 (Sth Cir. 2002)). Texas law provided the rule of decision in this case (Doc. No. 84, at 9) and therefore controls the issue of attorneys’ fees. Texas law provides for the recovery of attorneys’ fees against an “individual or organization” in a suit for “a sworn account” or for “an oral or written contract.” TEX. CIV. PRAC. & REM. CODE § 38.001(b)(7)-(8). “Organization” is defined by reference to the Texas Business Organizations Code. Jd. § 38.001(a). The Code provides: “Organization” means a corporation, limited or general partnership, limited liability company, business trust, real estate investment trust, joint venture, joint stock company, cooperative, association, bank, insurance company, credit union, savings and loan association, or other organization, regardless of whether the organization is for-profit, nonprofit, domestic, or foreign. TEX. BUS. ORGS. CODE § 1.002(62). 2

Using that § 38.001 definition, the Court finds that the Defendants are organizations and thereby liable for attorneys’ fees to Impact, the prevailing party. Although both Defendants are either directly or indirectly state-owned entities of the Venezuelan government, they are also corporations acting in a private capacity engaged in competition with other private companies.” As a result, they come within the ambit of the fee-shifting statute, which makes “corporations” liable for attorneys’ fees in certain types of suits, including here. TEX. Civ. PRAC. & REM. CODE § 38.001(b)(7)-(8); TEX. BUS. ORGS. CODE § 1.002(62). Nothing in the Foreign Sovereign Immunities Act contradicts this holding. Walker □□□□□ Holdings, 415 F.3d at 416 (“FSIA does not supply law conflicting with Texas law on the issue of attorney’s fees.”). Although the Fifth Circuit has recognized that § 38.001 does not permit a party to recover attorneys’ fees from a foreign governmental entity, Box v. Dallas Mexican Consulate Gen., 623 F. App’x 649, 657 (Sth Cir. 2015), the Defendants here are in fact corporate entities □ functioning in furtherance of their market activities in the oil sector. That is to say, while a governmental entity (Bolivarian Republic of Venezuela) may be their owner, PDVSA Services BV and Bariven S.A. here are liable in their private, corporate capacities, and have not been sued as sovereign entities.? The Court therefore considers them corporations for purposes of fee-shifting

2 PDVSA Services BV, per its notice of removal, is a “corporation.” (Doc. No. 1, at 1). Bariven SA, as its business suffix reflects, is a société anonyme, the equivalent of a corporation. See Pittway Corp. v. United States, 88 F.3d 501, 502 (7th Cir. 1996) (explaining that the “S.A.” or “société anonyme” is a “business form roughly equivalent to a U.S. corporation’’). 3 In so holding, the Court notes this reasoning resembles Texas courts’ historical distinction between municipal governmental entities acting in their “proprietary” capacity (whereby they were subject to an award of attorneys’ fees) versus their “governmental” role (whereby they were not liable for attorneys’ fees) for purposes of § 38.001. Gates v. City of Dallas, 704 S.W.2d 737, 738-39 (Tex. 1986) (construing predecessor version of § 38.001). The distinction made by this line of cases is now moot due to subsequent legislation. In 1989, the Texas Legislature effectively amended § 38.001 by enacting what is now § 5.904 of the Local Government Code, which states: “A municipality may not be considered a corporation under a state statute governing corporations unless the statute extends its application to a municipality by express use of the term ‘municipal corporation,’ ‘municipality,’ ‘city,’ ‘town,’ or ‘village.’” TEX. LOC. GOV’T CODE § 5.904(a); see id. § 5.904(b) (“It is the intent of the legislature that the limitation provided by this section apply regardless of whether the municipality is acting in a governmental or proprietary function.”).

under § 38.001. There is no reason in fact or policy to treat these corporations operating in the private sector differently from others. B.

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Impact Fluid Solutions LP v. Bariven SA, Counsel Stack Legal Research, https://law.counselstack.com/opinion/impact-fluid-solutions-lp-v-bariven-sa-txsd-2022.