Bank Melli Iran v. Pahlavi

• Decision Date: 29 June 1995
• Docket Number: No. 94-55292,94-55292
• Citation: 58 F.3d 1406
• Parties: 95 Daily Journal D.A.R. 8741 BANK MELLI IRAN; Bank Mellat, Plaintiffs-Appellants, v. Shams PAHLAVI, aka H.I.H. Princess Shams Pahlavi, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1406

58 F.3d 1406

95 Daily Journal D.A.R. 8741

BANK MELLI IRAN; Bank Mellat, Plaintiffs-Appellants, v. Shams PAHLAVI, aka H.I.H. Princess Shams Pahlavi, Defendant-Appellee.

No. 94-55292.

United States Court of Appeals Ninth Circuit.

Argued and Submitted June 6, 1995.

Decided June 29, 1995.

Steven D. Atkinson, Atkinson, Andelson, Loya, Ruud & Romo, Cerritos, CA, for plaintiffs-appellants.

Ralph Zarefsky, Baker & Hostetler, Los Angeles, CA, for defendant-appellee.

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

Before: FLETCHER, WIGGINS, and FERNANDEZ, Circuit Judges.

FERNANDEZ, Circuit Judge:

Bank Melli Iran and Bank Mellat (the Banks) filed this action for the purpose of enforcing certain judgments, which they had obtained against Shams Pahlavi in the tribunals of Iran. She is a resident of California and is the sister of the former Shah of Iran. The district court determined that at the times that the judgments were obtained Pahlavi could not have obtained due process of law in the courts of Iran. It, therefore, granted summary judgment in her favor. The Banks appeal and we affirm.

BACKGROUND

In January of 1979, the Shah of Iran fled the country in the midst of the series of events that ultimately resulted in the creation of the Islamic Republic of Iran. Prior to that time, Pahlavi, the Shah's older sister, had signed a number of promissory notes.

The Banks, which were the holders of those notes and which are at the very least closely associated with the government, brought collection actions against Pahlavi in the courts of Iran. They served her by publication and in 1982 and 1986 obtained default judgments in the total amount of $32,000,000. They now seek to enforce those judgments pursuant to the Algerian Accords ¹ and pursuant to the California Uniform Foreign Money-Judgments Recognition Act. Cal.Civ.Proc.Code Secs. 1713-1713.8 ("Foreign Money-Judgments Act" or the "Act").

Pahlavi filed a motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(6) to which she attached a number of documents containing extrinsic evidence to support her assertion that the judgments were rendered without due process of law. At a hearing on March 29, 1993, the district court recognized that this was a speaking motion and converted it to a motion for summary judgment. It then gave the parties a number of months to submit further evidence and on January 4, 1994 held the final hearing at which it granted summary judgment for Pahlavi. It is from that judgment that the Banks have now appealed.

JURISDICTION AND STANDARD OF REVIEW

The district court had jurisdiction pursuant to 28 U.S.C. Sec. 1331. We have jurisdiction pursuant to 28 U.S.C. Sec. 1291.

We review the district court's interpretation of treaties and related executive orders de novo. See United States v. Washington, 969 F.2d 752, 754-55 (9th Cir.1992), cert. denied, --- U.S. ----, 113 S.Ct. 1945, 123 L.Ed.2d 651 (1993). Executive agreements, like the Algerian Accords, are interpreted in the same manner as treaties and reviewed by the same standard. See Air Canada v. United States Dep't of Transp., 843 F.2d 1483, 1486 (D.C.Cir.1988); see also Boeing Co., 771 F.2d at 1283-84.

We review grants of summary judgment de novo. See Grove v. Mead Sch. Dist. No. 354, 753 F.2d 1528, 1533 (9th Cir.), cert. denied, 474 U.S. 826, 106 S.Ct. 85, 88 L.Ed.2d 70 (1985).

DISCUSSION

A. Summary Judgment Issues.

Once the district court decided to convert Pahlavi's motion from a motion to dismiss to a motion for summary judgment, it was required to give the parties a "reasonable opportunity to present all material made pertinent to such a motion by Rule 56." Fed.R.Civ.P. 12(b). In so doing, a district court need only apprise the parties that it will look beyond the pleadings to extrinsic evidence and give them an opportunity to supplement the record. See Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir.1994); Grove, 753 F.2d at 1532-33. The Banks complain that they did not have sufficient notice about the issues that the district court intended to consider. However, our review of the record makes it very clear that the Banks at the very least knew that the district court questioned whether due process was available to Pahlavi in the tribunals of Iran during the period from 1982 through 1986, that from what it had seen it doubted that due process was available, and that the parties should submit further information on that subject to it. There can be no doubt that the Banks knew that. Because that is the issue that the district court resolved in granting summary judgment, the Banks were neither misled nor subject to an erroneous decision in that respect.

The Banks also complain that they were improperly assigned the burden of persuasion. We agree that in reviewing a request In Hilton v. Guyot, 159 U.S. 113, 205-06, 16 S.Ct. 139, 159, 40 L.Ed. 95 (1895), the leading common law foreign money judgment case, the Supreme Court indicated that:

for summary judgment it can be important to decide where the burden of persuasion lies. Here the Banks sought to enforce the judgment of the Iranian courts, and they had the burden of persuading the district court that they had judgments. See, e.g., Hopkins v. Dow Corning Corp., 33 F.3d 1116, 1121 (9th Cir.1994), cert. denied, --- U.S. ----, 115 S.Ct. 734, 130 L.Ed.2d 637 (1995). However, this case largely turns on the issue of whether the judgments were obtained in a manner that comported with due process. The question, then, is whether the Banks must demonstrate that the judgments were so obtained or whether Pahlavi must demonstrate that they were not or could not have been.

When an action is brought in a court of this country, by a citizen of a foreign country against one of our own citizens, to recover a sum of money adjudged by a court of that country to be due from the defendant to the plaintiff, and the foreign judgment appears to have been rendered by a competent court, having jurisdiction of the cause and of the parties, and upon due allegations and proofs, and opportunity to defend against them, and its proceedings are according to the course of a civilized jurisprudence, and are stated in a clear and formal record, the judgment is prima facie evidence, at least, of the truth of the matter adjudged....

That could be seen as a suggestion that the due process issue is part of the case which must be established by a plaintiff. However, the Court was not actually discussing burdens of persuasion, and a strong argument can be made that a claimed lack of due process should be treated as a defense. So doing would be consistent with the view of a leading commentary that " '[t]here is much sense in making the party who claims the unusual occurrence plead it affirmatively so that the usual assumptions may be indulged in as a matter of course wherever there is no such claim.' " 5 Charles A. Wright & Arthur R. Miller, Federal Practice and Procedure Sec. 1271, at 445 (1990) (citation omitted).

A number of courts have so treated it. See Banque Libanaise Pour Le Commerce v. Khreich, 915 F.2d 1000, 1005 (5th Cir.1990) ("Section five of the Texas Recognition Act provides that a 'foreign country judgment need not be recognized' if certain conditions exist. These conditions are phrased as affirmative defenses. Therefore, the burden of non-recognition rested with Khreich.") (citation omitted); McCord v. Jet Spray Int'l Corp., 874 F.Supp. 436, 440 (D.Mass 1994) (two exceptions to the inclusive nature of foreign judgments were raised, and the court determined that the "act specifically limits the defenses that may be raised in an action to enforce a foreign judgment."); Fiske, Emery & Assocs. v. Ajello, 577 A.2d 1139, 1141-43, 41 Conn.Sup. 376, 378-381 (Conn.Super.Ct.1989) (the court noted that under the Foreign Money-Judgments Act, a foreign judgment will be recognized unless "one of the grounds for nonrecognition of the foreign judgment" is made out; the nonrecognition conditions were characterized as "defense[s]"). Contra, Ackermann v. Levine, 788 F.2d 830, 842 n. 12 (2d Cir.1986) (plaintiff sought enforcement of a foreign judgment under the Act and had to show prima facie that there was subject matter jurisdiction, personal jurisdiction, and that there were regular proceedings conducted by tribunals with procedures that are compatible with due process).

While the issue is extremely interesting, we need not resolve it at this time because, as we will show, whether Pahlavi had to put in sufficient evidence to sustain a defense or whether she had only to point to weaknesses in the Banks' case, she carried her burden. See Celotex v. Catrett, 477 U.S. 317, 331, 106 S.Ct. 2548, 2557, 91 L.Ed.2d 265 (1986) (Brennan, J., dissenting) (heavier burden when moving party has burden of persuasion) and Houghton v. South, 965 F.2d 1532, 1536 (9th Cir.1992) (same). As the district court pointed out, Pahlavi's position was so persuasive that the Banks were going to have to point to something that refuted it. That was neither improper nor unfair.

B. The Merits.

Pahlavi's major bulwark against the Banks' attack is her assertion that the judgments cannot be enforced because she could not have had due process in Iran during the period that those judgments were obtained against her. That simple but crucial fact, she says, precludes enforcement of the Banks' judgments on any theory. ² We agree with her premise, and, on the record of this case, we agree with the district court's conclusion as well.

It has long been the law of the United States that a foreign judgment cannot be enforced if it was obtained in a manner that did not accord with the basics of due process. See Hilton, 159 U.S. at 205-06, 16 S.Ct. at 159. As the Restatement of the Foreign Relations Law of the United States succinctly puts it: "A court in the United States may not recognize a judgment of a court of a foreign state if: (a) the judgment was...