Gray v. PERMANENT MISSION OF PEOPLE'S REPUBLIC, ETC.

• Decision Date: 18 January 1978
• Docket Number: No. 77 Civ. 3670 (CHT).,77 Civ. 3670 (CHT).
• Citation: 443 F. Supp. 816
• Parties: Gordon GRAY, Jr., Plaintiff, v. PERMANENT MISSION OF the PEOPLE'S REPUBLIC OF the CONGO TO the UNITED NATIONS, Renewal Realty Corp. and Richard Ross, Defendants.
• Court: U.S. District Court — Southern District of New York

443 F. Supp. 816

Gordon GRAY, Jr., Plaintiff, v. PERMANENT MISSION OF the PEOPLE'S REPUBLIC OF the CONGO TO the UNITED NATIONS, Renewal Realty Corp. and Richard Ross, Defendants.

No. 77 Civ. 3670 (CHT).

United States District Court, S. D. New York.

January 18, 1978.

Leon Brickman, Brooklyn, N. Y., for plaintiff.

Mark J. O'Connor, Williamsville, N. Y., for defendant Congo Mission.

MEMORANDUM

TENNEY, District Judge.

In this action removed from the New York State Supreme Court, plaintiff Gordon Gray, Jr. moves to remand this action to the state court. Defendant Permanent Mission of the People's Republic of the Congo to the United Nations ("Congo Mission") cross-moves to dismiss the action for want of jurisdiction based on its sovereign immunity under the recently enacted Foreign Sovereign Immunities Act of 1976 ("Immunities Act"), 28 U.S.C. §§ 1602-11, and for want of personal jurisdiction based on the plaintiff's failure to serve the summons and complaint according to the requirements of the Act. For the reasons stated below, the motion to remand is denied and the motion to dismiss for lack of personal jurisdiction is granted.

The Congo Mission is the representative of the government of the People's Republic of the Congo to the United Nations. On February 26, 1975, it purchased from Richard Ross¹ a five-story structure located at 14 East 65th Street, New York City, to house its permanent mission to the United Nations. The purchase price of the property seems to have been in excess of $400,000. Affidavit of Mark J. O'Connor, sworn to August 12, 1977, Exh. B ("O'Connor Affidavit"). In 1971 plaintiff Gray had purchased this property from Alvin Gallant, giving Gallant a purchase money note and a mortgage in the amount of $500,000 at that time. Affidavit of Leon Brickman, sworn to August 4, 1977, ¶ 3 ("Brickman Affidavit"). In May 1974 Gray conveyed the property, subject to the mortgage, to Richard Ross. Affidavit of Helen T. Ives, sworn to August 4, 1977, ¶ 5 ("Ives Affidavit"). The conveyance to the Congo Mission in February 1975 was likewise subject to the existing mortgage. Id. ¶ 5.

These transactions seem to have proceeded uneventfully until the summer of 1976. The Congo Mission states that it paid over $300,000 to Ross in connection with the sale, thereby discharging second and third mortgages held by Ross. O'Connor Affidavit ¶ 4. A portion of these payments to Ross was conveyed to Gallant as payments on the first mortgage held by Gallant; such payments were made at least through May 1976. Id. ¶ 6 & Exh. B. Following discharge of the second and third mortgages, however, Ross appears to have stopped conveying these first mortgage payments to Gallant. Id. ¶ 6.

The interest and principal installment due on July 6, 1976 was not paid to Gallant. Ives Affidavit ¶ 7. Gallant's attorney conveyed this information to Helen Ives, an attorney who had represented Gray at the time of the 1971 purchase and who apparently continued to represent him, id. ¶¶ 3, 7 & Exh. A, and Ms. Ives advised the Congo Mission of their default. On August 4, 1976, the payment still was not made, Gallant exercised his option under the note and mortgage and declared the entire sum due, with interest. Id. ¶ 12 & Exh. B. He commenced an action in New York State Supreme Court on September 10, 1976 against Gray, the maker of the note. Brickman Affidavit ¶ 6 & Exh. A. On December 10, 1976, Justice Helman granted Gallant's cross-motion for summary judgment, finding that Gallant was not required to institute a foreclosure action prior to suing the maker of the note. Gallant v. Gray, Index No. 17452/76 (N.Y.Sup.Ct. Dec. 10, 1976). By checks dated January 3 and 5, 1977, Gray paid Gallant a total of $369,687.50 and took an assignment of the note and mortgage. Brickman Affidavit ¶ 7 & Exh. C.

The current action by Gray against the Congo Mission was commenced by the service of a summons and complaint on "defendant's secretary" on January 25, 1977. Id. ¶ 8. This individual is not further identified in the papers submitted by the plaintiff, and the Court has not been provided with a copy of the affidavit of service, although copies of the summons and complaint have been supplied. Id. Exh. D. The state court referred the matter to a referee for computation. Id. ¶ 9 & Exh. E. No answer was served by the defendant, and the court granted a judgment of foreclosure and sale on April 13, 1977; this judgment was entered on May 2, 1977. Id. The plaintiff states that a "copy of this judgment with notice of entry was served on the defendant on May 5, 1977." Id. ¶ 9. Again, no copy of an affidavit of service has been submitted to this Court, nor is the method of service set forth in the plaintiff's papers.

The plaintiff instituted a foreclosure search, which revealed the existence of tax arrears of approximately $50,000. The plaintiff, notwithstanding the fact that he had commenced a foreclosure action against the Congo Mission, requested their cooperation in having these taxes cancelled. The defendant complied, and on May 4, 1977, only two days after the default judgment was entered against the defendant, the taxes were cancelled. Id. ¶¶ 11-12 & Exh. H.

Gray then took steps to have the Congo Mission removed from the premises, sending a letter requesting that they vacate in advance of the foreclosure sale scheduled for June 27, 1977. A copy of the return receipt is provided. Id. Exh. K. The foreclosure sale was held, and Gray, being the highest bidder, received a deed to the property on July 1, 1977, sending a copy to the defendant on July 5. Id. ¶¶ 14-17. The Congo Mission not having vacated the premises, Gray moved pursuant to N.Y.R.P. A.P.L. § 221 for a writ of assistance and an adjudication of contempt. Brickman Affidavit ¶ 18.

There is no indication that the Congo Mission had any legal representation in this matter up to July;² the Ambassador has stated that the Congo Mission was without legal representation in this matter until July 22, 1977. Statement of Nicolas Mondjo, dated August 5, 1977.³ Ives, notwithstanding the fact that she was representing the interests of Gray in this matter, takes exception to the statement by the Congo Mission's attorney that the defendant was not aware of its legal rights, stating that

from July, 1976 through June 24, 1977, on more than 30 different occasions, in writing, in person and over the telephone, I spelled out to the defendant's Ambassador and his various representatives, the rights, duties and obligations of the defendant.

Ives Affidavit ¶ 22. This advice seems to have consisted of a description of the court proceedings instituted by Gray and warnings that the defendant must either pay the amounts demanded by the plaintiff, vacate the premises or be evicted. Id. ¶¶ 14-20 & Exhs. D-G.

Defendant's current attorney was retained July 22, 1977. O'Connor Affidavit ¶ 4. He appeared on behalf of the Congo Mission in state court on July 25, the return date of the motion for a writ of assistance, and obtained an adjournment until August 3, 1977. Brickman Affidavit ¶ 26. On July 29, 1977 he filed a removal petition pursuant to 28 U.S.C. § 1441(d), and the removed case was assigned to this Court.

Discussion

On August 8, 1977, Gray filed a notice of motion to remand the case to the state court contending that the state court action had already proceeded to judgment and that the motion for a writ of assistance was a nonremovable ancillary proceeding. The Congo Mission opposed this motion and filed a further motion seeking the dismissal of the action for lack of subject-matter jurisdiction and lack of personal jurisdiction due to insufficiency of service of process. After consideration of the papers submitted and the applicable law, the Court concludes that the action was properly removed and therefore denies the motion to remand. The Court also concludes that the plaintiff failed to comply with the clear requirements of the Foreign Sovereign Immunities Act of 1976 in its service of process. Accordingly, the default judgment is vacated and the action against the Congo Mission is dismissed.

Removal

The Foreign Sovereign Immunities Act of 1976 was passed primarily to provide a unitary rule for determinations of sovereign immunity in American courts. Martropico Compania Naviera S.A. v. Pertamina, 428 F.Supp. 1035, 1037 (S.D.N.Y.1977). While Congress left open the option to bring actions against foreign states in the state courts, it clearly intended to encourage the bringing of such actions in federal courts. Id. Thus, the Immunities Act contained both a new grant of federal court jurisdiction, 28 U.S.C. § 1330, and an addition to the removal statute: "any civil action brought in a State court against a foreign state . . . may be removed by the foreign state" to the local district court. Id. § 1441(d). There can be no doubt that the Congo Mission is a foreign state within the meaning of 28 U.S.C. § 1603(a). Plaintiff contends, however, that the proceeding was not removable since the action, seven months old, had proceeded to judgment and consisted at the time of removal solely of plaintiff's ancillary motion to evict the defendant. It is true that the Immunities Act incorporates the time limits for removal of 28 U.S.C. § 1446(b). The Act grants an exception, however, allowing enlargement of this time limit "at any time for cause shown." Id. § 1441(d). Such cause has been demonstrated here.

The Immunities Act was in effect prior to January 25, 1977, the date on which the plaintiff attempted to serve his summons and complaint on the Congo Mission. See Martropico, supra, 428 F.Supp. at 1037; Immunities Act § 8, Pub.L.No.94-583, 90 Stat. 2891 (1976). Thus, the plaintiff was mandated to make service according to one of the alternatives stated in 28 U.S.C. § 1608(a):

(a) Service in the courts of the United States and of the States shall be made upon a foreign state or political subdivision of a foreign state:

(1) by delivery

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