Brewer v. Socialist People's Republic of Iraq, 88-1646

• Decision Date: 22 November 1989
• Docket Number: No. 88-1646,88-1646
• Parties: Glenn V. BREWER and Paula M. Brewer, Appellants, v. The SOCIALIST PEOPLE'S REPUBLIC OF IRAQ and the State Organization for Tourism, an Instrumentality of the Socialist People's Republic of Iraq, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 97

890 F.2d 97

Glenn V. BREWER and Paula M. Brewer, Appellants, v. The SOCIALIST PEOPLE'S REPUBLIC OF IRAQ and the State

Organization for Tourism, an Instrumentality of

the Socialist People's Republic of Iraq,

Appellees.

No. 88-1646.

United States Court of Appeals,

Eighth Circuit.

Submitted Dec. 16, 1988.

Decided Nov. 22, 1989.

Dempster K. Holland, St. Louis, Mo., for appellants.

No one argued for appellees.

Before ARNOLD and JOHN R. GIBSON, Circuit Judges, and ROSENBAUM, ^* District Judge.

ROSENBAUM, District Judge.

Plaintiffs were granted a default judgment on September 3, 1986. This appeal, however, stems not from this judgment, but from a subsequent district court ¹ order, dated April 11, 1988, denying attachment of, and execution upon, defendants' property pursuant to the judgment. Plaintiffs argue they are entitled to execution under the Foreign Sovereign Immunities Act (FSIA), 28 U.S.C. Secs. 1602, et seq. As delineated below, we affirm.

I. BACKGROUND

In October, 1982, while in Detroit, Michigan, plaintiffs entered into an employment contract with defendants. The agreement provided that plaintiffs would work for defendants at a tourist facility in Habbaniya, Iraq. In that same month, plaintiffs moved to Iraq and began their duties.

On February 1, 1985, defendants terminated the agreement and refused to pay plaintiffs. On or about February 4, 1985, plaintiffs were forcibly evicted from their dwelling in Iraq by unknown individuals wielding firearms. These individuals drove plaintiffs to a nearby airport where plaintiffs were forced to board a plane leaving Iraq. All of plaintiffs' belongings were left behind and presumably fell into the hands of defendants or their agents.

Plaintiffs, having been denied their pay under the contract and now without their belongings, instituted this cause of action. Their complaint is in three counts: first, breach of contract; second, reimbursement for converted property; and third, damages for infliction of emotional distress arising out of their forced eviction and expulsion from Iraq. On September 3, 1986, the Honorable John K. Regan, United States District Judge, entered an order granting plaintiffs default judgment on all three claims pursuant to the FSIA, 28 U.S.C. Secs. 1602, et seq. Prior to hearing these matters concerning attachment and execution, Judge Regan died.

The case was reassigned to Judge Gunn. Judge Gunn approved execution on Count II of the complaint, but declined to allow execution on Count I or III. As to Count I, Judge Gunn reasoned that the contract claim judgment did not create "rights in property" as defined in the FSIA, thereby foreclosing execution pursuant to 28 U.S.C. Sec. 1610(a)(3). After expressing serious doubt as to whether the district court had jurisdiction as to Count III, Judge Gunn similarly held that plaintiffs' judgment on the emotional distress claim did not create "rights in property."

II. ANALYSIS OF FSIA

Congress enacted the FSIA to delineate "when and how parties can maintain a lawsuit against a foreign state or its entities in the Courts of the United States," and "when a foreign state is entitled to sovereign immunity." H.R.Rep. No. 1487, 94th Cong., 2d Sess. 6 (1976), reprinted in 1976 United States Code Cong. & Admin.News 6604, 6604. Application of the statute requires "some unraveling of the Act's interlocking provisions governing the separate issues of subject matter jurisdiction, sovereign immunity, and personal jurisdiction." Maritime Int'l Nominees Establishment v. Republic of Guinea, 693 F.2d 1094, 1099 (D.C.Cir.1982), cert. denied, 464 U.S. 815, 104 S.Ct. 71, 78 L.Ed.2d 84 (1983).

Title 28, United States Code, Section 1330(a), addresses subject matter jurisdiction over foreign states. It grants to federal district courts:

original jurisdiction without regard to amount in controversy of any nonjury civil action against a foreign state as defined in section 1603(a) of this title as to any claim for relief in personam with respect to which the foreign state is not entitled to immunity either under sections 1605-1607 of this title or under any applicable international agreement.

28 U.S.C. Sec. 1330(a).

Personal jurisdiction is encompassed in 28 U.S.C. Sec. 1330(b). The section provides, in relevant part:

Personal jurisdiction over a foreign state shall exist as to every claim for relief over which the district courts have jurisdiction under subsection (a) where service has been made under section 1608 of this title.

28 U.S.C. Sec. 1330(b).

While it is axiomatic, subsection (b) makes clear that lack of subsection (a) subject matter jurisdiction deprives a district court of personal jurisdiction. If a nation enjoys subsection (a) sovereign immunity, no claim may be maintained under FSIA. The "absence of immunity is a condition to the presence of subject matter jurisdiction." Maritime Int'l Nominees, 693 F.2d at 1099.

The FSIA has three immunity provisions pertinent to this matter. Under the Act, a foreign state or its agents are without immunity in cases:

(2) in which the action is based upon a commercial activity carried on in the United States by the foreign state; or upon an act performed in the United States in connection with a commercial activity of the foreign state elsewhere; or 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;

(3) in which rights in property taken in violation of international law are in issue and that property or any property exchanged for such property is present in the United States in connection with a commercial activity carried on in the United States by the foreign state; or that property or any property exchanged for such property is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United States;

* * *

* * * (5) not otherwise encompassed in paragraph (2) above, in which money damages are sought against a foreign state for personal injury or death, or damage to or loss of property, occurring in the United States and caused by the tortious act or omission of that foreign state or of any official or employee of that foreign state while acting within the scope of his office or employment....

28 U.S.C. Sec. 1605(a)(2), (3), and (5). If any of these provisions are satisfied, the foreign state is subject to civil suit.

The FSIA, however, holds another immunity barrier. Foreign states are further protected from execution of judgments by 28 U.S.C. Sec. 1609, which provides, in pertinent part:

Subject to existing international agreements to which the United States is a party at the time of enactment of this Act the property in the United States of a foreign state shall be immune from attachment arrest and execution except as provided in sections 1610 and 1611 of this chapter.

28 U.S.C. Sec. 1609.

Therefore, even the victorious plaintiff may only pursue particular property of a foreign state. Title 28, United States Code, Section 1610, excepts certain property from this immunity. That section states, in relevant part:

(a) The property in the United States of a foreign state, as defined in section 1603(a) of this chapter, used for a commercial activity in the United States, shall not be immune from attachment in aid of execution, or from execution, upon a judgment entered by a court of the United States or of a State after the effective date of this Act, if--

* * *

* * *

(2) the property is or was used for the commercial activity upon which the claim is based, or

(3) the execution relates to a judgment establishing rights in property which has been taken in violation of international law or which has been exchanged for property taken in violation of international law.

28 U.S.C. Sec. 1610(a)(2) and (3).

Sections 1605(a)(3) and 1610(a)(3) do not define "rights in property." The provision has been defined, however, and limited to the expropriation of property. A court will have jurisdiction pursuant to Section 1605(a)(3), therefore, only if property has been taken from a plaintiff. Kalamazoo Spice Extraction Co. v. Provisional Military Government of Socialist Ethiopia, 616 F.Supp. 660, 663 (W.D.Mich.1985); Friedar v. Government of Israel, 614 F.Supp. 395, 399 (S.D.N.Y.1985); Canadian Overseas Ores Ltd. v. Compania de Acero de Pacifico S.A., 528 F.Supp. 1337, 1346 (S.D.N.Y.1982), aff'd, 727 F.2d 274 (2d Cir.1984). As will be seen below, a coherent reading of Section 1610(a)(3) indicates a plaintiff may only execute pursuant to that section if such property has been expropriated.

Plaintiffs appeal the district court's denial of attachment and execution on Counts I and III. Plaintiffs argue that their judgment on Counts I and III entitle them to execution pursuant to Section 1610(a)(3). They argue that their claims of breach of contract and infliction of emotional distress create property rights.

Plaintiffs also contend the district court erred in concluding it had no jurisdiction over the emotional distress claim pursuant to Section 1605(a)(2) and suggest that the jurisdiction question is res judicata based upon their default judgment. As is seen below, this issue, going to the heart of the court's authority, remains open for review by this Court. Plaintiffs argue their tort claim is sufficiently connected to commercial activities carried on by defendant to satisfy Section 1605(a)(2).

III. DISCUSSION

The district court has jurisdiction only if defendants are without immunity. Olsen by Sheldon v. Government of Mexico, 729 F.2d 641, 644 (9th Cir.), cert. denied, 469 U.S. 917, 105 S.Ct. 295, 83 L.Ed.2d 230 (1984). Generally, the party seeking to invoke immunity is allocated the burden of proof on that issue. Trans-American Steamship Corporation v. Somali Democratic Republic, 767 F.2d 998, 1002 (D.C.Cir.1985); Vencedora Oceania...