Hirshon v. Republic of Bolivia, CIV.A. 95-1957 SSH.

• Decision Date: 19 August 1997
• Docket Number: No. CIV.A. 95-1957 SSH.,CIV.A. 95-1957 SSH.
• Citation: 979 F.Supp. 908
• Parties: Steve HIRSHON and Diane Rosen, on behalf of themselves and others similarly situated, Plaintiffs, v. The REPUBLIC OF BOLIVIA, Defendant.
• Court: U.S. District Court — District of Columbia

979 F.Supp. 908

Steve HIRSHON and Diane Rosen, on behalf of themselves and others similarly situated, Plaintiffs, v. The REPUBLIC OF BOLIVIA, Defendant.

No. CIV.A. 95-1957 SSH.

United States District Court, District of Columbia.

August 19, 1997.

COPYRIGHT MATERIAL OMITTED

Herbert E. Milstein, Cohen, Milstein, Hausfeld & Toll, Washington, DC, for Plaintiffs.

Alexander P. Starr, Alan D'Ambrosio, Reed, Smith, Shaw & McClay, Washington, DC, for Defendant.

OPINION

STANLEY S. HARRIS, District Judge.

I. Background

Before the Court is Salah Turkmani's Motion for Supplemental Order, defendant's opposition, plaintiffs' opposition, Turkmani's reply, and plaintiffs' surreply.¹ Turkmani moves the Court to supplement its Order of April 4, 1997, which finally approved a settlement agreement between class action plaintiffs and defendant and dismissed with prejudice all claims against defendant. Turkmani, who opted out of the class, requests that the Court supplement its final Order by issuing an order which would preserve Turkmani's alleged property interest in the sinking fund established by defendant with the Bank of New York and freeze a certain portion of any funds remaining in the Bank of New York after the settlement payments have been made. The Court denies the motion for a supplemental order.²

On October 18, 1995, plaintiffs Hirshon and Rosen filed a complaint pursuant to Federal Rules of Civil Procedure 23(a) and 23(b)(3), which govern class actions, alleging breach of contract. Plaintiffs asserted that defendant defaulted on its obligation to redeem and pay interest on bonds which it had issued in 1968 and which were owned by plaintiffs and other members of the proposed class.³ On September 9, 1997, the Court approved a joint stipulation for settlement and a dismissal with prejudice. On December 11, 1996, the Court issued an Order preliminarily approving the proposed settlement, conditionally certifying a settlement class, approving the form and manner of notice to the class, and setting a hearing on the proposed settlement. Notice of the proposed settlement was sent to all known bondholders on January 8, 1997, and was printed in several newspapers on January 15, 1997. The notice issued by the settling parties explained the payment provisions now challenged by Turkmani and specifically noted that they could affect the nonsettling parties' ability to satisfy an individual judgment. Turkmani concedes that he received notice of the terms of the settlement. On February 10, 1997, Turkmani notified class counsel that he was opting out of the conditionally certified class.

On April 4, 1997, the Court held a fairness hearing pursuant to Federal Rule of Civil Procedure 23(e). No objection to the settlement was raised either before or during that hearing. The Court approved the settlement on that date and issued a final Order and judgment of dismissal with prejudice. On July 8, 1997, Turkmani filed an individual suit in this Court seeking damages from Bolivia for breach of contract and simultaneously filed the instant motion for an order supplementing the April 4, 1997, Order.

II. Analysis

Turkmani asserts that the payment provisions of the April 4, 1997, Order infringe on his property rights in certain funds held by defendant and effectively destroy his ability to obtain satisfaction of any judgment which he might obtain against defendant in his individual suit. He argues that the terms of the bonds expressly provide that the money in the sinking fund is to be held in trust for the benefit of the bondholders. He further contends that the expected exhaustion of the sinking fund by the class members' claims under the settlement agreement, and the subsequent return of any remaining supplemental funds to Bolivia, will destroy his ability to obtain satisfaction of any judgment in his favor in his individual suit because the terms of the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. §§ 1609 and 1610(a), severely limit the type of assets which would be subject postjudgment attachment and execution. He asserts that the funds held in the sinking fund are likely to be the only ones which he could attach pursuant to the FSIA. Accordingly, Turkmani argues in essence that the April 4, 1997, Order has caused him plain legal prejudice and that the relief he requests is essential to protect his ability to satisfy any judgment in his favor.

The settling parties argue that Turkmani has no standing to object to or alter provisions of the settlement. They further contend that, even if he had standing, his objections would be untimely since he had notice of the proposed settlement and failed to make any objection prior to his motion. Finally, they argue that Turkmani failed to comply with Federal Rules of Civil Procedure 59(e) and 60(b), which provide the procedural mechanisms for altering or amending a final judgment. The settling parties note that relief under Rule 59(e) is time-barred because a motion to amend must be made within ten days of the date of the final order and that relief under Rule 60(b) should be denied because Turkmani did not make his motion within a "reasonable time" of the entry of final judgment. The Court denies Turkmani's motion on the grounds that it is untimely and that it fails to comply with either Federal Rule of Civil Procedure 59(e) or 60(b).

A. Standing

Although the question of standing is generally a threshold jurisdictional issue, the Court declines to decide the standing issue and instead decides the motion on the other grounds just noted, that is, that it was untimely and failed to comply with Federal Rules of Civil Procedure 59(e) or 60(b). See Cross-Sound Ferry Services, Inc. v. I.C.C., 934 F.2d 327, 333 (D.C.Cir.1991) (internal citations omitted). "When the merits of a case are clearly against the party seeking to invoke the Court's jurisdiction, the jurisdictional question is especially difficult or far-reaching, and the inadequacies in the record or briefing make the case a poor vehicle for deciding the jurisdictional question, [the Court] may rule on the merits without reaching the jurisdictional issue." Id. This Court concludes that the situation at hand fits within this narrow exception to the general proposition that jurisdictional issues must be decided prior to reaching the merits of a motion. See National Law Ctr. on Homelessness and Poverty v. Kantor, 91 F.3d 178, 180 (D.C.Cir.1996) (noting that the exception is extremely narrow).

First, as discussed below, Turkmani's motion clearly should be denied on the merits. Second, the question of whether Turkmani has standing is difficult, and its decision might have far-reaching consequences. As noted above, Turkmani opted out of a class-action settlement agreement and is now pursuing an individual action against defendant. If this motion is denied, he may file a motion for a preliminary injunction in his individual suit — which also is before this Court — in an attempt to gain the same relief requested here. A central issue confronting the Court in deciding such a motion for a preliminary injunction would be whether Turkmani has a property interest in the funds which he would request that the Court protect from dissipation.

Similarly, the essential question in determining standing would be whether Turkmani has a valid property interest in the same funds. The sole factor in determining whether Turkmani, as a nonsettling party, has standing to object to a settlement agreement is whether the agreement causes him plain legal prejudice. See Mayfield v. Barr, 985 F.2d 1090, 1092 (D.C.Cir.1993). Such prejudice occurs when "`the settlement strips the party of a legal claim or cause of action.'" Id. at 1093 (internal citation omitted). Turkmani asserts that the settlement agreement causes him plain legal prejudice by stripping him of an asserted property interest in the sinking fund. Consequently, a decision on standing would force this Court to prematurely and unnecessarily determine the validity of Turkmani's asserted property interest in the sinking fund, thus binding the Court in its later consideration of any possible motion for a preliminary injunction in Turkmani's individual suit.

Such a premature decision would be particularly troublesome here because the record before the Court concerning the validity of the asserted property interest is inadequate. It cannot be determined conclusively from the record whether Turkmani actually owns the bonds at all or in what quantity. Furthermore, the settling parties' pleadings regarding Turkmani's asserted property interest arising from a trust are inadequate to determine the validity of Turkmani's asserted property interest.⁴ The inadequacy of the record makes decision of the standing issue here unwise and satisfies the third factor of the Cross-Sound Ferry Services, Inc. test. Accordingly, the Court declines to decide the question of whether Turkmani has standing, and instead decides the motion on other grounds.

B. Timeliness

The Court initially concludes that Turkmani's motion is untimely. Turkmani concedes that he received the notice regarding the proposed settlement which was issued in January 1997. As a result of that notice — which specifically explained the payment provisions of the agreement at issue and their possible effects on the likelihood of obtaining satisfaction of any judgments stemming from individual suits — Turkmani notified the class representatives of his decision to opt out on February 10, 1997. However, despite his current contention that he has standing to object to the settlement agreement, Turkmani never opposed the proposed settlement prior to its approval by the Court, either in writing or at the fairness hearing. Indeed, he chose to wait over three months from the date of the April 4, 1997, Order finally approving the settlement agreement to alert the Court to any objections. Turkmani, having forgone the opportunity to submit an opposition to the...