766 F.2d 1333 (9th Cir. 1985), 84-5628, Tchacosh Co., Ltd. v. Rockwell Intern. Corp.

Docket Nº:84-5628.
Citation:766 F.2d 1333
Party Name:TCHACOSH COMPANY, LIMITED, Plaintiff-Appellant, v. ROCKWELL INTERNATIONAL CORPORATION, and Rockwell International Systems, Inc., Defendants-Appellees.
Case Date:July 23, 1985
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

Page 1333

766 F.2d 1333 (9th Cir. 1985)




International Systems, Inc., Defendants-Appellees.

No. 84-5628.

United States Court of Appeals, Ninth Circuit

July 23, 1985

Argued and Submitted Oct. 4, 1984.

Stephen D. Miller, Thomas J. Nolan, George W. Buehler, Miller & Nolan, Inc., Beverly Hills, Cal., for plaintiff-appellant.

Munger, Tolles & Rickershauser, Jeffrey I. Weinberger, Ralph F. Hirschmann, Los Angeles, Cal., for defendants-appellees.

Appeal from the United States District Court for the Central District of California.

Before TANG, SCHROEDER and BEEZER, Circuit Judges.

Page 1334

TANG, Circuit Judge:

Tchacosh Company, Ltd. (Tchacosh) appeals the district court's judgment in favor of defendants-appellees Rockwell International Corporation and Rockwell International Systems, Inc. (Rockwell). It found that Tchacosh lacked capacity to sue, and granted summary judgment for Rockwell. We affirm.


In November, 1978, Tchacosh entered into a subcontract with Rockwell for the construction of certain defense facilities at the Mehrabab Airport in Teheran, Iran. This subcontract was part of a prime contract Rockwell had entered into with the Government of Iran. Tchacosh's action arises from its subcontract with Rockwell.

Throughout all relevant time periods Tchacosh has been a corporation organized and operating under the laws of Iran. When Rockwell subcontracted with Tchacosh only three authorities were authorized under Iranian law to manage a company such as Tchacosh: the general meetings of shareholders, the board of directors and the managing director. Prior to mid-1979, Hassan M. Hashemi was the managing director and chairman of the board of Tchacosh.

On June 14, 1979, the Government of Iran enacted the Temporary Director Act. 1 This Act provides that the former directors of a company cease to have power to manage the company upon appointment of a temporary director. 2 A subsequent amendment vests the temporary director with all the functions of the director, managing director and general meetings of the shareholders. Pursuant to this Act, the Government of Iran appointed Ali Mahmoudi as temporary director of Tchacosh on August 18, 1979.

Article 212 of the Companies Law of Iran provides that upon appointment of a liquidator and upon institution of liquidation proceedings, the powers of the director of the company involved are "extinguished." The liquidators are considered to be representatives of the company and they "possess all necessary powers to facilitate the liquidation of the company, including instituting lawsuits and referring claims for arbitration." In 1981, the Government of Iran dissolved Tchacosh under the authority of the Management and Acquisition Act: it appointed Mohammad Ali Shabestari as liquidator for Tchacosh and instituted liquidation proceedings.

Hashemi departed Iran in June, 1979, before the appointment either of a temporary director or liquidator to Tchacosh.

In December, 1979, Hashemi filed this suit on behalf of Tchacosh against Rockwell, claiming that Tchacosh had substantially performed on its subcontract with Rockwell and is therefore entitled to some form of recovery. In its third amended complaint, Tchacosh alleged causes of action for breach of contract, money had and received, quantum meruit, and unjust enrichment against Rockwell.

Rockwell moved for and the district court granted summary judgment, finding that Tchacosh had not been properly authorized to bring suit. See Fed.R.Civ.P. 17(b). The court found that Hashemi had directed the action against Rockwell and ruled that Hashemi was not qualified to maintain an action on behalf of Tchacosh under Iranian law as of August 19, 1979. The court found that the actions of the Government of Iran divesting Hashemi of his authority were executed within Iranian territory; and that the act of state doctrine barred judicial examination of acts committed by a government within its own territory. 3

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Upon review of summary judgment, this court views the evidence in the light most favorable to the nonmoving party, and determines whether the trial court correctly found that there was no genuine issue of material fact and that the moving party was entitled to a judgment as a matter of law. Veit v. Heckler, 746 F.2d 508, 510 (9th Cir.1984).

Appellant Tchacosh raises two legal issues on appeal. First, appellant contends that the district court incorrectly interpreted Iranian law, arguing that the Iranian government did not intend for the decrees divesting Hashemi of control to apply to his authority to maintain suit on behalf of Tchacosh for work performed while he still managed the affairs of the company.

Upon review, the district court's determination of foreign law is treated as a question of law. Fed.R.Civ.Proc. 44.1; Matter of McLinn, 739 F.2d 1395, 1398 (9th Cir.1984) (en banc). Rockwell's expert on Iranian law established that the decrees, by their own terms, divested Hashemi of all control over the on-going affairs of Tchacosh. The Temporary Director Act disqualifies former directors from managing the company's affairs and vests all authority and responsibilities of the director, managing director and general meetings of shareholders in the temporary director. Article 212 of the Companies Law of Iran provides further that upon appointment of a liquidator to a company the powers of the directors, including temporary directors, are extinguished and the liquidator possesses "all necessary powers to facilitate the referring claims for arbitration or compromise." Tchacosh does not dispute that on August 18, 1979, the Government of Iran appointed a temporary...

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