Inversora Murten, S.A. v. Energoprojekt Holding

• Decision Date: 03 December 2009
• Docket Number: Misc. Action No. 03-73 (RWR)(JMF).
• Citation: 671 F.Supp.2d 152
• Parties: INVERSORA MURTEN, S.A., Plaintiff, v. ENERGOPROJEKT HOLDING CO., Defendant.
• Court: U.S. District Court — District of Columbia

671 F.Supp.2d 152

INVERSORA MURTEN, S.A., Plaintiff, v. ENERGOPROJEKT HOLDING CO., Defendant.

Misc. Action No. 03-73 (RWR)(JMF).

United States District Court, District of Columbia.

December 3, 2009.

Jon Schuyler Brooks, Phillips Nizer LLP, Garden City, NY, for Plaintiff.

MEMORANDUM OPINION

RICHARD W. ROBERTS, District Judge.

Inversora Murten, S.A. ("Inversora") filed a writ of attachment against an intended garnishee, the Japan Bank for International Cooperation ("JBIC"). Magistrate Judge John M. Facciola has recommended that Inversora's writ of attachment be quashed for lack of subject matter jurisdiction because JBIC and its successor organizations—the Japan Finance Corporation ("JFC") and the Japan International Cooperation Agency ("JICA")—enjoy sovereign immunity under the Foreign Sovereign Immunity Act ("FSIA"), 28 U.S.C. §§ 1604, 1611. Inversora has submitted objections to the report and recommendation. Because the magistrate judge's recommendation is fully supported in law and Inversora's objections are without merit, the recommendation will be adopted and Inversora's writ of attachment will be quashed.

BACKGROUND

The history and background of this case and the underlying motions are discussed in Inversora Murten, S.A. v. Energoprojekt-Niskogradnja Co., 264 Fed.Appx. 13, 14 (D.C.Cir.2008), and Magistrate Judge Facciola's report and recommendation of April 8, 2009 ("Report and Recommendation"), Docket Entry 63, at 1-3. Briefly, Inversora obtained a default judgment for roughly $39 million in the U.S. District Court for the District of New Jersey against Energoprojekt Holding Company ("Energoprojekt"). In September, 2005, Inversora obtained from this court against JBIC a form writ of attachment bearing two pre-printed interrogatories with spaces after them for JBIC's answers. That month, JBIC filed verified answers to the interrogatories. Interrogatory 1 asked, "[w]ere you at the time of the service of the writ of attachment, or have you been between the time of such service and the filing of your answers to this interrogatory, indebted to the defendant(s), and, if so, how, and in what amount?" JBIC answered, "[w]ithout waiving any defense based on a lack of personal jurisdiction, [JBIC] states that, at the time of service of the writ of attachment and between that time and service of this answer, JBIC was not indebted to the defendant." (See Verified Answers of JBIC ("JBIC's Answers") at 2.) Interrogatory 2 asked, "[h]ad you at the time of the service of the writ of attachment, or have you had between the time of such service and the filing of your answer to this interrogatory, any goods, chattels, or credits of the defendant(s) in your possession or charge, and if so, what?" JBIC's answer stated, "[w]ithout waiving any defense based on a lack of personal jurisdiction, JBIC states that, at the time of the service of the writ of attachment and between that time and service of this answer, JBIC did not possess or have in its charge any goods, chattels, or credits of defendant [sic]." (Id.) Later, in November 2005, JBIC issued a letter to Inversora's counsel stating that it believed that Inversora's writ of garnishment was "without any force or effect" because, among other things, "JBIC is immune under" the FSIA. (See JFC's Resp. to Pl.'s Objns., Ex. 1 ("November 9, 2005 Ltr.") at 2-3.)

In December 2008, JBIC notified the court that it had been restructured into two entities—JFC and JICA. Shortly thereafter, Inversora moved for an order requiring JFC and JICA to appear at a hearing to allow Inversora and the magistrate judge to question JFC and JICA under oath in order to determine whether they held any property or credits that belonged to Energoprojekt. The magistrate judge granted Inversora's motion and scheduled the hearing. (See Order of January 29, 2009, Docket Entry 51, at 1.)

Instead of appearing at the hearing, JFC and JICA filed notices of sovereign immunity. In its notice of sovereign immunity, JFC stated that it is not a "privatized public corporation," but instead is a "public corporation wholly owned by the Japanese government and established by legislative enactment of the Japanese Diet," which "assumed the responsibility for the former JBIC's international financial operations[.]" (See Notice of Sovereign Immunity by JFC ("JFC's Notice") at 1-2.) Similarly, in its notice of sovereign immunity, JICA stated that it is an "official agency of the Government of Japan, established by legislative enactment of the Japanese Diet." (See Notice of Sovereign Immunity by JICA ("JICA's Notice") at 1.)

Inversora responded that its writ of attachment should not be quashed and that the garnishment proceeding should occur because JBIC, the predecessor to JFC and JICA, implicitly waived the defense of sovereign immunity by answering the interrogatories that accompanied the writ of attachment with a filing that did not contain the defense of sovereign immunity or lack of subject matter jurisdiction. (See Resp. of Inversora to JFC's Notice at 2-3; Resp. of Inversora to JICA's Notice ("Inversora's Resp. to JICA") at 3-4.) Inversora asserted that JBIC's answers to the interrogatories constituted a responsive pleading, and that once JBIC waived the defense of sovereign immunity by failing to include it in the responsive pleading, neither JBIC nor its successor organizations could reassert the argument. (See Inversora's Resp. to JICA at 5-7.) However, Inversora did not dispute the assertion that the JBIC, JFC, and JICA qualified as agencies or instrumentalities under the FSIA.

The magistrate judge's report and recommendation first determined that based upon the assertions that they made in their notices of sovereign immunity, both JFC and JICA qualified for sovereign immunity as instrumentalities of a foreign state under 28 U.S.C. § 1603(b) because both entities were successors in interest to JBIC and because Peterson v. Islamic Republic of Iran, 563 F.Supp.2d 268, 273 (D.D.C.2008), held that "JBIC is an `agency or instrumentality of a foreign state as defined under 28 U.S.C. § 1603(b).'" See Report and Recommendation at 4-6. Next, the report and recommendation determined that JBIC did not waive the defense of sovereign immunity because an answer to interrogatories served with a writ of garnishment is not identified as a responsive pleading under Federal Rule of Civil Procedure 7(a), and because JBIC's response to Inversora's interrogatories "can be interpreted as neither asserting nor waiving immunity." Report and Recommendation at 7-8. Finally, the report recommended quashing Inversora's writ of attachment against JFC and JICA because JFC and JICA were immune from suit under the FSIA. Id. at 9. Inversora objected, insisting that the interrogatory answers bearing no assertion of sovereign immunity constituted a responsive pleading that waived the defense.

DISCUSSION

The magistrate judge's report and recommendation is reviewed de novo. LCvR 72.3(c); see also Fed.R.Civ.P. 72; Ames v. Yellow Cab of D.C., Inc., Civ. Action No. 00-3116(RWR), 2006 WL 2711546, at *4 (D.D.C. September 21, 2006).

"The FSIA provides the exclusive basis for a court's jurisdiction over a foreign state." Intelsat Global Sales & Mktg. v. Cmty. of Yugoslav Posts Telegraphs & Telephones, 534 F.Supp.2d 32, 34 (D.D.C. 2008). "Under the FSIA, a court may entertain jurisdiction over a civil complaint directed against a foreign sovereign `only if the foreign state lacks immunity under the Act's prescriptions[.]'" Doe v. Bin Laden, 580 F.Supp.2d 93, 96 (D.D.C.2008) (quoting Practical Concepts, Inc. v. Republic of Bolivia, 811 F.2d 1543, 1544 (D.C.Cir.1987) and 28 U.S.C. § 1604). An agency or instrumentality of a foreign state is treated as a foreign state under the FSIA, 28 U.S.C. § 1603(a), and thus is "immune from the jurisdiction of the courts of the United States." Peterson, 563 F.Supp.2d at 273 (quoting 28 U.S.C. § 1604). Under the FSIA, an agency or instrumentality of a foreign state is an entity that is (1) "a separate legal person, corporate or otherwise"; (2) "an organ of a foreign state"; and (3) "neither a citizen of a State of the United States .. . nor created under the laws of any third country." 28 U.S.C. § 1603(b). When a defendant qualifies for sovereign immunity, "the federal courts lack subject matter jurisdiction" over proceedings against that defendant, and therefore "must dismiss the case" against the immune defendant. Auster v. Ghana Airways, Ltd., 514 F.3d 44, 48 (D.C.Cir.2008). However, an agency or instrumentality of a state that would otherwise be immune under the FSIA may waive its immunity, "either explicitly or by implication." See 28 U.S.C. § 1605(a)(1); Gutch v. Fed. Republic of Germany, 255 Fed.Appx. 524, 525 (D.C.Cir.2007). While the FSIA lacks a definition of an implied waiver, the D.C. Circuit has held that there are three situations where a foreign state or an agency or instrumentality of a foreign state implicitly waives the defense of sovereign immunity: "where a foreign state has filed a responsive pleading without raising the defense of sovereign immunity"; where a foreign state agrees to participate in arbitration in another country; and where a foreign state agrees in a contract that the laws of another country will govern that contract. See World Wide Minerals, Ltd. v. Republic of Kazakhstan, 296 F.3d 1154, 1161 n. 11 (D.C.Cir.2002). However, the D.C. Circuit construes the implied waiver provision narrowly. Id. (citing Creighton Ltd. v. Government of the State of Qatar, 181 F.3d 118, 122 (D.C.Cir.1999) ("[I]mplicit in [the concept of implied waiver] is the requirement that the foreign state have intended to waive its sovereign immunity.")); see also Doe v. State of Israel, 400 F.Supp.2d 86, 105 (D.D.C.2005) (stating that implicit waiver requires that a foreign sovereign "subjectively intend" to waive the defense of sovereign immunity). Furthermore, in general, participation in discovery will...