In re Republic of Philippines
| Decision Date | 31 October 2002 |
| Docket Number | No. 01-71841.,No. 02-15340.,01-71841.,02-15340. |
| Citation | 309 F.3d 1143 |
| Parties | In re REPUBLIC OF THE PHILIPPINES; In re Presidential Commission on Good Government, The Republic of the Philippines; Presidential Commission on Good Government, Petitioners, v. United States District Court for the District of Hawaii, Respondent, Arelma Inc.; Merrill Lynch, Pierce, Fenner & Smith, Inc.; Suntrust Investment Co., S.A.; John K. Burns; Estate of Ferdinand E. Marcos, Imelda R. Marcos, Ferdinand R. Marcos, Jr., Maria Imelda Marcos, Irene Marcos Araneta; Frontier Risk Capital Management L.L.C.; ENC Corporation; Grosvenor Capital, Ltd.; Estate of Roger Roxas; the Golden Budha Corporation; Mariano J. Pimentel, on behalf of himself and all other persons similarly situated, Real Parties in Interest. Merrill Lynch, Pierce, Fenner & Smith, Incorporated, a corporation organized and existing under the laws of the State of Delaware with its principal place of business in New York, NY, Plaintiff-Appellee, v. Arelma Inc.; ENC Corporation; Suntrust Investment Co., S.A.; John K. Burns; the Estate of Ferdinand Marcos; Imelda R. Marcos; Ferdinand R. Marcos, Jr.; Maria Imelda Marcos; Irene Marcos Araneta; Frontier Risk Capital Management, L.C.C.; Grosvenor Capital, Ltd.; the Estate of Roger Roxas; Golden Budha Corp.; Mariano J. Pimentel; Philippine National Bank, Defendants, and Presidential Commission on Good Government, a government agency of the Republic of the Philippines; Republic of the Philippines, Defendants-Appellants. |
| Court | U.S. Court of Appeals — Ninth Circuit |
Stephen V. Bomse, Rachel M. Jones, Heller, Ehrman, White & McAuliffe, LLP, San Francisco, CA, for the defendants-appellants.
Jay R. Ziegler, Buchalter, Nemer, Fields & Younger, Los Angeles, CA, for the defendants-appellees.
Robert A. Swift, Kohn, Swift & Graf, PC, Philadelphia, PA, for the defendants-appellees.
Daniel C. Cathcart, Magaña, Cathcart & McCarthy, Los Angeles, CA, for the defendants-appellees.
A. Robert Pietrzak, Sidley, Austin, Brown & Wood, LLP, New York, NY, for the plaintiff-appellee.
Jeffrey S. Portnoy, Cades, Schutte, Fleming & Wright, Honolulu, HI, for the plaintiff-appellee.
Appeal from the United States District Court for the District of Hawaii; Manuel L. Real, District Judge, Presiding. D.C. No. CV-00-00595-MLR.
Before: SCHROEDER, Chief Judge, HARLINGTON WOOD, JR.,1 and D.W. NELSON, Circuit Judges.
This interpleader litigation is part of an on-going dispute between the Philippine government and creditors of the Estate of Ferdinand E. Marcos over assets Marcos allegedly secreted from the government while he was President of the Philippines. This litigation concerns the assets of Arelma Incorporated, a Panamanian company Marcos created. The assets were held in an account in New York by Merrill Lynch, the plaintiff in this action, until the assets were turned over to the district court in September 2000.
The defendant creditors include human rights victims whose claims we upheld in Hilao v. Estate of Marcos, 103 F.3d 767 (9th Cir.1996). The Republic of the Philippines ("Republic") is also a defendant in this action as is the Presidential Commission on Good Government ("PCGG"), an agent or instrumentality of the Republic.
This is an appeal by the Republic and the PCGG from the district court's ruling on two motions to dismiss them as parties to the suit: the Republic and the PCGG's own motion to dismiss on sovereign immunity grounds and the creditors' motion to dismiss the Republic and the PCGG on the basis that they are not real parties in interest. The district court granted the creditors' motion to dismiss and the Republic and the PCGG appeal. We reverse because we hold that the district court should have dealt with immunity first and that the Republic and the PCGG are immune from suit.
In 1972, Marcos transferred approximately $2 million to Arelma, placing the money in an account with Merrill Lynch in New York. After Marcos was deposed in 1986, President Corazon Aquino created the PCGG, an agency charged with recovering assets of the Republic that were wrongfully acquired by Marcos while he was in office. In July 2000, the PCGG asked Merrill Lynch to turn over the Arelma assets to the Philippine National Bank ("PNB"). The PCGG proposed that the PNB act as an escrow agent and hold the assets pending a ruling in the Sandiganbayan, a Philippine anti-corruption court, on whether the assets belonged to the Republic or the Marcos Estate.
Merrill Lynch denied the request, apparently because of the existence of other claimants, and instead filed this interpleader action in the U.S. District Court for the District of Hawaii on September 14, 2000, seeking to resolve conflicting claims to the Arelma assets. The complaint named as defendants several possible claimants. They included the Republic, the PCGG, Arelma, the Estate of Roger Roxas, the Golden Budha Corporation, and Mariano J. Pimentel. The Roxas Estate and Golden Budha assert claims as judgment creditors of the Marcos Estate on the basis of judgments obtained in state courts. Pimentel is a member of the plaintiff class of human rights victims that obtained a judgment against the Estate on February 3, 1995. See Hilao v. Estate of Marcos, 103 F.3d 767 (9th Cir.1996). The district court granted Pimentel's motion to join the PNB in May 2001.
The Republic and the PCGG moved to dismiss the interpleader arguing, inter alia, that they were entitled to sovereign immunity under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1604. Pimentel also moved to dismiss the Republic and the PCGG claiming that they were not real parties in interest. The Republic and the PCGG then asked the court to determine their immunity and dismiss the action because they claimed they were indispensable parties. Fed.R.Civ.P. 19(b). The district court held a telephonic hearing on September 24, 2001.
At that hearing, the district court said that it was granting Pimentel's motion to dismiss the Republic and the PCGG because the court found they were not real parties in interest. The court declined to decide any issue of sovereign immunity. The district court then entered a written order on December 20, 2001, that stated:
Defendants PNB, with offices in Honolulu, and Arelma are the real parties in interest as to claims that may be proffered by the Republic and PCGG, and the former are capable of asserting claims to the assets that had been held by Merrill Lynch in account No. 165-07312 in the name of Arelma (the "Assets") and were deposited by Merrill Lynch with the Court, including the claim that the source of the Assets was stolen. The Republic and PCGG have both sought to be dismissed from the lawsuit on various grounds and have averred under oath that PNB has exclusive authority to control the assets at issue. Therefore, defendants PNB and Arelma are the real parties in interest as to claims that the Republic and PCGG may make in this interpleader proceeding.
The court denied as moot the Republic and the PCGG's motion to dismiss on sovereign immunity and ruled that "neither the Republic nor PCGG are necessary or indispensable parties in this litigation." The district court also continued its prior injunction that enjoined defendants named in the interpleader from bringing any further actions in the United States to pursue the Arelma assets. The Republic and PCGG appeal their dismissal on the merits and the denial of their motion for dismissal based on sovereign immunity.
Because denial of a motion to dismiss on grounds of foreign sovereign immunity may result in the parties having to litigate claims over which the court lacks jurisdiction, we permit an interlocutory appeal from the denial of a motion to dismiss on sovereign immunity grounds. See Schoenberg v. Exportadora de Sal, S.A., 930 F.2d 777, 779 (9th Cir.1991) (). It is on that basis that we exercise jurisdiction over this appeal. We deny as moot appellants' mandamus petition filed as an alternative route to jurisdiction.
The effect of the district court's ruling was to adjudicate the merits of the Republic's claim to the assets and thus effectively deny its claim to sovereign immunity. The district court determined that the Republic and the PCGG had no claim to the Arelma assets, thus proceeding to the heart of the dispute, without first determining whether the Republic and the PCGG had sovereign immunity. We agree with the Republic that the district court should have addressed the merits of the immunity question first in order to preserve the immunity that may be determined to exist. See Phaneuf v. Republic of Indonesia, 106 F.3d 302, 305 (9th Cir.1997) (); Siderman de Blake v. Republic of Argentina, 965 F.2d 699, 706 (9th Cir.1992) ().
The FSIA provides the sole basis for subject matter jurisdiction over foreign states and their agents or instrumentalities. See 28 U.S.C. § 1604. The FSIA provides that a foreign state is immune from the jurisdiction of U.S. courts unless one of the statutory exceptions applies. 28 U.S.C. §§ 1604, 1605. The creditors do not dispute that the Republic and the PCGG are, respectively, a foreign state and its instrumentality within the meaning of the FSIA. 28 U.S.C. § 1603. The creditors, however, have the burden of establishing that one of the statutory exceptions applies. See Siderman, 965 F.2d at 707. The only two exceptions claimed to be applicable here are the "successor" exception, 28...
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