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TONOGA v. MINISTRY OF PUBLIC WORKS AND HOUSING

March 13, 2001

TONOGA, LTD., D/B/A TACONIC PLASTICS LTD., PLAINTIFF,
V.
MINISTRY OF PUBLIC WORKS AND HOUSING OF THE KINGDOM OF SAUDI ARABIA, THE KINGDOM OF SAUDI ARABIA, WERNER VOSS ARCHITECTS AND ENGINEERS, AND WERNER VOSS, DEFENDANTS.



The opinion of the court was delivered by: Kahn, District Judge.

    MEMORANDUM — DECISION AND ORDER

I. BACKGROUND

Plaintiff Tonoga, Ltd., d/b/a Taconic Plastics Ltd. ("Taconic") is a materials manufacturer incorporated in Ireland with its principal place of business located in Petersburgh, New York. The Sovereign Defendants are foreign states within the meaning of the Foreign Sovereign Immunities Act ("FSIA"). See 28 U.S.C. § 1603(a); see Reiss v. Societe Centrale Du Groupe Des Assurances Nationales, 235 F.3d 738, 746 (2d Cir. 2000).

In 1997 Taconic entered into a contract with a German construction company to supply specialized membrane material for a Saudi Arabian tent project designed to shelter religious pilgrims visiting holy sites there. Shortly after entering into this contract, the German construction company failed to make scheduled payments to Taconic and eventually filed for bankruptcy. Defendant Voss and his engineering firm, defendant Werner Voss Architects and Engineers, acting, for the purposes of this motion, as the Sovereign Defendants' authorized agent,*fn1 allegedly guaranteed the payments due Taconic via a series of three letter agreements in order to induce it into completing the tent project.*fn2

Taconic completed manufacturing of the material needed for the tent project and received two of the three payments due, the source of which is in dispute,*fn3 but did not receive the final payment due. Claiming that each of the named defendants breached the guarantee, Plaintiff brought suit in this Court seeking to collect, in part, DM 5,560,530.70, or about $3 million,*fn4 the final payment owed under the alleged guarantee. The Sovereign Defendants brought the current motion to dismiss based upon lack of subject matter jurisdiction, lack of personal jurisdiction, and forum non conveniens.

II. DISCUSSION

A. Subject Matter Jurisdiction

As such, the burden of proving that a federal court has subject matter jurisdiction over an action rests upon the party attempting to invoke the court's jurisdiction, see Thomson v. Gaskill, 315 U.S. 442, 446, 62 S.Ct. 673, 86 L.Ed. 951 (1942), and no presumption of truth attaches to the non-moving party's allegations, see Brown v. American Legion Cortland City Post, 64 F. Supp.2d 96, 97 (N.D.N.Y. 1999). Moreover, since a dismissal under 12(b)(1) is not a dismissal on the merits and is without res judicata effect on the underlying merits of the claims, when a court dismisses a case pursuant to 12(b)(1), it is precluded from exercising supplemental jurisdiction over related state claims. See Cushing v. Moore, 970 F.2d 1103, 1106 (2d Cir. 1992).

i. Subject Matter Jurisdiction Under the FSIA Generally

Under the FSIA, a foreign state is presumptively immune "from the jurisdiction of the United States and of the States" unless one of several statutory exceptions applies. 28 U.S.C. § 1604; see Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 610-11, 112 S.Ct. 2160, 119 L.Ed.2d 394 (1992). The most significant of these exceptions, and the one at issue here, is the "commercial activity" exception codified under 28 U.S.C. § 1605(a)(5). See Weltover, 504 U.S. at 610-11, 112 S.Ct. 2160. In relevant part, this portion of the FSIA states that a foreign state is not immune from suit in any case

in which the action is based [1] upon a commercial activity carried on in the United States by the foreign state; or [2] upon an act performed in the United States in connection with a commercial activity of the foreign state or elsewhere; or [3] upon an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States.

28 U.S.C. § 1605(a)(2). Plaintiff argues that the first ("commercial activity clause") and third ("direct effect clause") clauses of 28 U.S.C. § 1605(a)(2) confer subject matter jurisdiction in the present case. Because the Court concludes that the commercial activity clause provides it with subject matter jurisdiction, it does not ...


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