691 F.2d 1344 (11th Cir. 1982), 80-5731, Harris Corp. v. National Iranian Radio and Television

Docket Nº:80-5731.
Citation:691 F.2d 1344
Party Name:HARRIS CORPORATION, Plaintiff-Appellee, v. NATIONAL IRANIAN RADIO AND TELEVISION and Bank Melli Iran, Defendants- Appellants.
Case Date:November 22, 1982
Court:United States Courts of Appeals, Court of Appeals for the Eleventh Circuit
 
FREE EXCERPT

Page 1344

691 F.2d 1344 (11th Cir. 1982)

HARRIS CORPORATION, Plaintiff-Appellee,

v.

NATIONAL IRANIAN RADIO AND TELEVISION and Bank Melli Iran,

Defendants- Appellants.

No. 80-5731.

United States Court of Appeals, Eleventh Circuit

November 22, 1982

Page 1345

Kramer, Levin, Nessen, Kamin & Soll, Daniel P. Levitt, Greg A. Danilow, New York City, for Bank Melli Iran.

Abourezk, Shack & Mendenhall, Thomas G. Shack, Jr., Christine Nettesheim, Washington, D.C., Jeffrey S. Goldman, Ernest J. Rice, Orlando, Fla., for National Iranian Radio and Television.

Donovan, Leisure, Newton & Irvine, Louis C. Lustenberger, Robert Garcia, Howard R. Reiss, Charles W. Gerdts, III, New York City, Reinman, Harrell, Silberhorn,

Page 1346

Moule & Boyd, Edward J. Silberhorn, Melbourne, Fla., for plaintiff-appellee.

Robert E. Kopp, Michael F. Hertz, Civ. Div., Dept. of Justice, Washington, D.C., amicus.

Appeals from the United States District Court for the Middle District of Florida.

Before HILL and KRAVITCH, Circuit Judges, and MORGAN, Senior Circuit Judge.

JAMES C. HILL, Circuit Judge:

National Iranian Radio and Television ("NIRT") and Bank Melli Iran appeal from a district court order granting plaintiff-appellee Harris Corporation preliminary injunctive relief. The court enjoined: (1) NIRT from making a demand on Bank Melli under a certain bank guaranty letter of credit; (2) Bank Melli from making payment to NIRT under that letter of credit; and (3) Bank Melli from receiving payment from Continental Illinois National Bank and Trust Company ("Continental Bank") under a standby letter of credit issued by Continental Bank in favor of Bank Melli. 1 The appellants challenge the jurisdiction of the district court, assert a lack of proper venue, and argue that the court abused its discretion by ordering preliminary relief. After careful consideration of the issues presented, we affirm.

I. THE FACTS

On February 22, 1978, the Broadcast Products Division of Harris Corporation entered into a contract with NIRT ("the contract") to manufacture and deliver 144 FM broadcast transmitters to Teheran, Iran, and to provide related training and technical services for a total price of $6,740,352. Harris received an advance payment of $1,331,470.40, which was to be amortized over the life of the contract by deducting a percentage of the payment due upon shipment of the equipment or receipt of the services and training from the balance of the advance. 2

Pursuant to the contract, Harris obtained a performance guarantee in favor of NIRT from Bank Melli, an agency of the State of Iran. 3 The guarantee provides that Melli is to pay NIRT any amount up to $674,035.20 upon Melli's receipt of NIRT's written declaration that Harris has failed to comply with the terms and conditions of the contract.

Page 1347

The contract between Harris and NIRT makes the guarantee an integral part of the contract 4 and provides that NIRT must release the guarantee upon termination of the contract due to force majeure. 5 Before Melli issued the guarantee it required that Harris obtain a letter of credit in Melli's favor. Continental Bank issued this standby, which provides that Continental is to reimburse Melli to the extent that Melli pays on the guarantee it issued. Harris, in turn, must indemnify Continental Bank to the extent that Continental pays Melli.

From August 1978 through February 1979, Harris shipped to Iran 138 of the 144 transmitters (together with related equipment for 144 transmitters) and also conducted a 24-week training program in the United States for NIRT personnel. In February 1979, the Islamic Republic of Iran overthrew the Imperial Government of Iran. After the overthrow, one shipment of goods which Harris sent could not be delivered safely in Iran. Harris notified NIRT, by telex dated February 27, that those goods were taken to Antwerp, Belgium, and Sharjah, United Arab Empirates.

Frank R. Blaha, the Director of Customer Products and Systems Operations of the Broadcast Products Division of Harris Corporation, met with NIRT officials in Teheran in early May, 1979, to help them obtain the goods in Antwerp, to discuss amendments to the contract, and to discuss a revised delivery schedule made necessary by Iranian events. Harris, offering Blaha's affidavit, contends that all parties at those

Page 1348

meetings acknowledged the existence of force majeure as defined in the contract provisions set forth in note 5 supra.

Blaha worked in May to obtain the Antwerp goods for NIRT, then returned to Teheran to continue discussions with NIRT officials. At these discussions, NIRT agreed to delay shipment of the final six transmitters until the fall of 1979 due to the conditions in Iran.

Negotiations on contract modifications continued during the summer and fall of 1979. On August 18, 1979, Harris formally advised NIRT of the additional costs it had incurred with respect to the goods that had been reshipped from Antwerp, and Harris requested payment for the additional amount in accordance with the contract's force majeure clause and with a letter from NIRT authorizing Harris to reship the goods.

On November 4, 1979, Iranian militants took 52 hostages at the United States Embassy in Teheran. Harris received no further communications from NIRT after the seizure of the hostages.

Harris completed the remaining six transmitters in November 1979 and inventoried them for future delivery. Harris, supported by Blaha's affidavits, has argued that disruptive conditions created by the Iranian revolution initially prevented shipment of the final six transmitters. Subsequently, Harris contends, it was unable to ship the materials as a result of the Iranian Assets Control Regulations effective November 14, 1979. 6 In particular, Harris points out, the Treasury voided all general licenses to ship to Iran and required sellers to obtain special license on a case-by-case basis before exporting goods. See 31 C.F.R. Sec. 535.533 (1979). An affidavit submitted by Blaha states that Harris's counsel was advised by the Office of Foreign Assets Control that special licenses would be issued only in emergency situations or for humanitarian reasons and would not be issued for the transmitters. This request is not documented, and Harris did not inform NIRT of its inability to ship. On April 7, 1980, Treasury Regulation 535.207 became effective and prohibited the shipment of nonessential items to Iran. 45 Reg. 24,434 (1980).

On June 3, 1980, Continental Bank received a telex from Melli reporting that NIRT had presented Melli with a written declaration that Harris had failed to comply with the terms of the contract 7 and stating that NIRT had demanded that Melli extend or pay the guarantee. Melli demanded that it be authorized to extend the guarantee and that Continental Bank extend its corresponding letter of credit to Melli, or else Melli would pay the guarantee and demand immediate payment from Continental. 8

Page 1349

In response to the demand by Melli, Harris sought and obtained the preliminary injunction at issue in this case. On July 11, 1980, Harris filed a verified complaint against NIRT and Melli in the United States District Court for the Middle District of Florida, seeking to enjoin payment and receipt of payment on the guarantee and receipt of payment on the letter of credit. The complaint also sought a declaratory judgment that the contract underlying the guarantee and the letter of credit had been terminated by force majeure. The court granted a temporary restraining order on June 13, 1980, pending a hearing on Harris's motion for a preliminary injunction. 9

On June 16, 1980, a copy of the TRO was mailed to Melli's counsel and on the following day was hand-delivered to Melli's branch office in Manhattan. On June 20, 1980, three days after receipt of the June 13th TRO at its Manhattan branch office, and despite the restraint against payment contained in the TRO, Melli telexed Continental Bank that it had paid the full amount of the guarantee "after receipt of a demand for payment from the National Iranian Radio and Television stating that there has been a default by Harris Corporation, Broadcast Products Division[,] to comply with the terms and conditions of contract F-601-1 ...." Appendix of Appellee at 421 (Exhibit D of Reply Affidavit of Louis C. Lustenberger, Jr.). The telex also demanded that Continental pay Melli by crediting Melli's London office with the amount of the letter of credit. After a hearing on August 15, 1980, the district court issued the preliminary injunction at issue here. 10

II. VENUE

The parties agree that 28 U.S.C. Sec. 1391(f) controls the question of venue since Harris seeks to invoke jurisdiction under the Foreign Sovereign Immunities Act of 1976 ("FSIA" or "Act"). Both appellants urge that the district court erred in granting the preliminary injunction because venue was improper under the tests set forth in Sec. 1391(f).

We need not decide, however, whether venue is proper here. As Harris points out, venue is a personal privilege to be raised by motion and the privilege may be waived. See 15 C. Wright and A. Miller, Federal Practice and Procedure Sec. 3846 (1976). Venue is not a jurisdictional prerequisite and its presence or absence does not affect a court's authority to adjudicate. See Neirbo Co. v. Bethlehem Shipbuilding Corp., 308 U.S. 165, 167-68, 60 S.Ct. 153, 154, 84 L.Ed. 167 (1939). Since the propriety of venue was never questioned before the district court, the appellants have waived any right to raise the issue on appeal. See Fed.R.Civ.P. 12(h); Keene v. International Union of Operating Engineers Local 624, 569 F.2d 1375, 1378 (5th Cir. 1978); Kentucky Fried Chicken v. Diversified Packing Corp., 549 F.2d 368, 392...

To continue reading

FREE SIGN UP