Isaac Industries, Inc. v. Bariven S.A.

127 F.4th 289
Court of Appeals for the Eleventh Circuit·Decided January 24, 2025·No. 23-12095·Published·Cited by 5 cases

Opinion

[PUBLISH]

In the

United States Court of Appeals For the Eleventh Circuit

No. 23-12095

ISAAC INDUSTRIES, INC., Plaintiff-Appellee,

versus PETROQUÍMICA DE VENEZUELA, S.A. BARIVEN S.A.,

Defendants-Appellants,

PDVSA SERVICES, B.V., et al.,

Defendants.

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Appeal from the United States District Court for the Southern District of Florida D.C. Docket No. 1:19-cv-23113-RNS

Before WILLIAM PRYOR, Chief Judge, JORDAN and MARCUS, Circuit Judges. WILLIAM PRYOR, Chief Judge:

This appeal requires us to decide issues related to personal jurisdiction, foreign sovereign immunity, and the merits of a complaint for breach of contract. Isaac Industries contracted with Bariven, S.A., a Venezuelan oil company, for the sale of chemicals. After Isaac shipped the products, Bariven failed to pay for them. Later, Petroquímica de Venezuela, S.A., another oil company, assumed Bariven’s debt and negotiated an extended payment period. When that company made only the first payment, Isaac sued both companies in the district court. The oil companies initially raised objections about service of process and sovereign immunity. A magistrate judge concluded that effective service occurred but recommended denying Isaac’s motion for default and ordering it to amend its complaint. The oil companies raised no objection and answered the amended complaint. When Isaac later moved for summary judgment, the oil companies hired new counsel, argued that no valid contracts exist and that sovereign immunity shields Pequiven from suit, and urged the district court to defer ruling. The district court granted summary judgment for Isaac. No reversible error occurred. We affirm.

23-12095 Opinion of the Court 3

I. BACKGROUND

Two interwoven plots—Isaac’s sale of chemicals to the Venezuelan oil companies and the political upheaval in Venezuela— set the stage for this appeal, so we begin with them. We then turn to the procedural history of the lawsuit.

A. Isaac Industries Sells Chemicals to Bariven But Never Receives Full Payment.

This action involves four entities, one American company and three Venezuelan companies. Isaac Industries is a Florida corporation engaged in the wholesale distribution of chemicals. Its owner, David Avan, runs the company from Miami. Petroleos de Venezuela, S.A., Petroquímica de Venezuela, S.A., and Bariven, S.A. are oil and chemical companies associated with or owned by the Bolivarian Republic of Venezuela. Petroleos de Venezuela, known as PDVSA, serves as Venezuela’s state-owned and controlled oil company. Bariven, a “wholly owned subsidiary of . . . PDVSA,” acquires the equipment and machinery used to find and extract oil. And Petroquímica de Venezuela, known as Pequiven, operates as a “petrochemical company engaged in the production and sale of ” products like “fertilizers, industrial chemical products, olefins, and plastic resins.”

According to Avan, Isaac contracted with Bariven for the sale and delivery of 2-Ethylhexanol in 2014. Under the contract, Bariven would order the quantity it required at a unit price of $2,975.00 per metric ton. Isaac would then ship the product to Vopak Terminal in Puerto Cabello, Venezuela. Between July and September 2014,

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Bariven placed three orders for a total of 5,993.873 metric tons of 2-Ethylhexanol.

After it shipped each order, Isaac provided Bariven with an invoice. The first two invoices, both dated July 6, 2014, charged Bariven $5,950,000.00 for one shipment and $5,941,928.83 for the other. The third invoice, dated September 19, 2014, charged Bariven $5,939,843.35. All three listed Bariven and PDVSA as the buyers and Pequiven as the consignee. Although Bariven never objected to the invoices, it never paid for the shipments.

After two years passed without payment from Bariven, representatives of Pequiven asked Avan to meet about the “the current status” of the debt. Avan agreed. Negotiations took place on September 21, 2016, in Miami. Saul Silva, Pequiven’s legal counsel, represented the oil company. During the negotiations, Avan discussed the “monies owed to Isaac by Bariven . . . at length.” By the meeting ’s end, “Pequiven . . . voluntarily undertook the obligation to make the payments” Bariven owed.

A written contract memorialized the agreement. Silva signed on Pequiven’s behalf. The contract began with a reference to a prior “payment contract with subrogation of debt signed between Bariven[,] S.A., PDVSA Services B.V., Pequiven, and ISAAC INDUSTRIES INC.” It then described the terms of the newest repayment plan: that Pequiven agreed to pay the outstanding balance in exchange for Isaac’s release of Bariven’s debt. The payment structure applied an annual interest rate to the $17,831,772.18 principal amount. And Pequiven promised to pay 15 percent of the

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debt, plus interest, by December 31, 2016, followed by six quarterly installment payments. In turn, Isaac’s release of Bariven’s debt required Pequiven’s full payment. Absent that payment, Bariven remained responsible for the outstanding balance.

Pequiven met the first deadline but no others. Consistent with the written agreement, it tendered a payment of $2,947,542.00 (15 percent of the debt plus interest) on December 30, 2016. Neither Pequiven nor Bariven tendered the six remaining installments.

Two years later, the corporate governance of the oil companies splintered when Nicolás Maduro declared himself the winner of Venezuela’s presidential election. In protest, Venezuela’s National Assembly declared Maduro’s regime illegitimate and recognized Juan Gerardo Guaidó Márquez, the president of the National Assembly, as interim president in January 2019. The United States immediately affirmed the 2015 National Assembly as the legitimate government. But Maduro refused to cede control and blocked Guaidó from power.

State-owned entities—like the oil companies—were caught in the middle of the dueling regimes. In 2019, the National Assembly granted Interim President Guaidó the power to appoint ad-hoc boards to govern state entities. Interim President Guaidó, in turn, appointed an ad-hoc board to govern PDVSA—a board that also “safeguard[s] Bariven’s interests” abroad—and an ad-hoc board to govern Pequiven.

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Maduro refused to recognize these ad-hoc boards. His regime occupied the oil companies’ Venezuelan offices. And it declared the ad-hoc board members “criminals” for their “usurping [of] public functions.” Today, the members of the ad-hoc boards “reside outside [of] Venezuela” and risk “arrest” if they return. The United States, for its part, continues to recognize the 2015 National Assembly “as the last remaining democratic institution in Venezuela .”

B. Isaac Sues the Oil Companies for Breach of Contract.

Isaac sued Pequiven, Bariven, and PDVSA for breach of contract in July 2019. Although filing the complaint proved easy, effecting service on the oil companies was another matter. Within a month of filing the lawsuit, Isaac hired an international process service to “effectuate service . . . under the Hague [Service] Convention .” On September 10, 2019, the process server confirmed that Venezuela’s Central Authority received the process documents. Silence followed. The Central Authority never confirmed that it executed service to the oil companies or certified receipt of service, as required by the Hague Service Convention. See Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters arts. 2–6, opened for signature Nov. 15, 1965, 20 U.S.T. 361, 362–63.

The battle over service escalated near the one-year anniversary of the action. Citing its “unsuccessful” attempts to serve the defendants by the Central Authority, Isaac moved to permit

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Isaac Industries, Inc. v. Bariven S.A., 127 F.4th 289 (11th Cir. 2025).

127 F.4th 289 (Isaac Industries, Inc. v. Bariven S.A.) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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