Isaac Indus. v. Petroquimica de Venez., S.A.
| Decision Date | 01 March 2022 |
| Docket Number | 19-23113-CIV-SCOLA/GOODMAN |
| Parties | ISAAC INDUSTRIES, INC., Plaintiff, v. PETROQUIMICA DE VENEZUELA, S.A., et al., Defendants. |
| Court | U.S. District Court — Southern District of Florida |
REPORT AND RECOMMENDATIONS ON PLAINTIFF'S MOTION FOR COURT'S ENTRY OF DEFAULT
Plaintiff Isaac Industries, Inc. (“Plaintiff” or “Isaac”) seeks payment for the delivery of $17 831, 772.18 worth of 2-Ethylhexanol.[1] Plaintiff's Motion for the Court's Entry of Default is pending. [ECF No. 60].
After several unsuccessful attempts to deem service of process effectuated and a Clerk's Non-Entry of Default [ECF No 57], Plaintiff now moves for the entry of a Court-issued default against Petroquimica de Venezuela, S.A., Bariven S.A, and Petroleos de Venezuela, S.A. (collectively, “Defendants”)[2] [ECF No. 60]. Defendants filed an opposition response and Plaintiff filed a reply. [ECF Nos. 62; 65].
United States District Judge Robert N. Scola, Jr. referred to the Undersigned Plaintiff's Motion for the Court's Entry of Default. [ECF No. 67]. For the reasons stated below, the Undersigned respectfully recommends that the District Court deny Plaintiff's motion, dismiss without prejudice the Complaint, and provide Plaintiff with an opportunity to amend the Complaint to assert subject matter jurisdiction under the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1602, et. seq.
On July 26, 2019, Isaac filed a Complaint against Defendants and PDVSA Services, B.V. (“PSBV”). [ECF No. 1]. The Complaint asserts a claim for breach of a written agreement (Count I) against Petroquimica de Venezuela, S.A. and a claim for breach of contract (Count II) and account stated (Count III) against Bariven, S.A., PSBV, and Petroleos de Venezuela, S.A. Id.
Plaintiff's claims stem from its agreement to sell $17, 831, 772.18 worth of 2-Ethylhexanol to Bariven, S.A., PSBV, and Petroleos de Venezuela, S.A. Id. at ¶ 13. The Complaint alleges that when these entities failed to remit payment, Petroquimica de Venezuela, S.A. “undertook the obligation to make the payments owed” but made only one payment in the amount of $2, 947, 542.00. Id. at ¶¶ 15, 26.
Because Defendants are located in Venezuela, Plaintiff hired a process server to effectuate service under the Convention on the Service Abroad of Judicial and Extrajudicial Documents (“Hague Service Convention” or “Convention”), 20 U.S.T. 361 (Nov. 15, 1965). On or about August 22, 2019, Plaintiff's process server received the summonses and the Complaint for service on Defendants. See Certificates of Due Diligence to Extend the Time to Serve Process Abroad [ECF No. 60-1]. The process server had the documents translated into Spanish. Id.
On or about September 6, 2019, Plaintiff's process server forwarded, through a courier service, Requests for Service Abroad of Judicial or Extrajudicial Documents and the translated copies of the summonses and the Complaint to Venezuela's Central Authority. Id. On September 10, 2019, Plaintiff's process server received confirmation from the courier service that the documents had been delivered to the Central Authority and had been signed for by Alexis Paredes. Id.
According to Plaintiff's process server, upon completion of service on Defendants, the Central Authority mails a certificate of service directly to counsel of record. Id. It takes an average of three to four months to complete service and “[t]here is no known means of expediting the process and obtaining a status of the service until a formal correspondence is sent to counsel of record.” Id. Plaintiff's process server made several requests for a status update to Venezuela's Central Authority -- the last request was made on June 24, 2021 -- and has not received a response. Id.
On May 29, 2020, Plaintiff moved for leave to serve Defendants and PSBV by emailing their counsel of record in unrelated cases in the United States. [ECF No. 9]. Plaintiff's motion cited difficulties completing service abroad, noting that, as of the date of its filing, Plaintiff had not received any information from Venezuela's Central Authority concerning service. Id.
Senior United States District Judge James Lawrence King[3] granted Isaac's motion on June 2, 2020, allowing Isaac to serve Defendants and PSBV through their United States counsel. [ECF No. 10].
On June 19, 2020, Defendants' counsel appeared in the case and moved for an extension of time to respond to the Complaint. [ECF Nos. 11-13]. In July 2020, Defendants and PSBV filed motions to dismiss. [ECF Nos. 17; 21]. Defendants asserted, among other things, that service had not been properly effectuated because Defendants were instrumentalities of a foreign state and, as such, must be served pursuant to the FSIA.
[ECF Nos. 17, p. 9; 21, p. 7].[4] Plaintiff “concede[d] that service of process may only [be] effectuated under 28 U.S.C. [§] 160[8](b)” [ECF No. 31], and the parties submitted an agreed order to the Court.
On August 31, 2020, Judge King issued the Agreed Order. [ECF No. 34]. The Agreed Order granted Defendants' motions to dismiss based on insufficient service of process, but it also provided Plaintiff with an additional 60 days in which to serve Defendants. Id.
The Agreed Order stated that: (1) “pursuant to 28 U.S.C. [§] 160[8](b), [5] service of process may only be made upon an agency or instrumentality of a foreign state under one of the three authorized methods of service contained in that Section 160[8](b)”; (2) “[Defendants] assert that they are agencies and instrumentalities of the Bolivarian Republic of Venezuela”; and (3) “Plaintiff concedes that service of process must be completed under Section 160[8](b), which did not occur in this case.” Id. (footnote added). The Agreed Order further stated that it was “without prejudice to Defendants' ability to reassert the remaining bases for dismissal contained in their Motions to Dismiss . . . once service of process [was] effectuated.” Id.
On September 25, 2020, Plaintiff filed a motion to deem service of process effectuated under Article 15 of the Hague Service Convention, or, alternatively, to allow Plaintiff to serve Defendants pursuant to section 1608(b)(3)(B) of the FSIA.[6] [ECF No. 35]. Plaintiff argued that pursuant to Article 15 of the Convention, the Court could deem service of process effectuated because the Central Authority had not confirmed service or responded to Plaintiff's requests for updates in more than a year. Id. at 6. In a footnote, Plaintiff explained that it was not seeking the entry of a default because Defendants had made an appearance in the case through counsel. Id. at 6, n.1.
Alternatively, Isaac argued that the Court should permit it to serve Defendants by mail pursuant to § 1608(b)(3)(B) because there was no “special arrangement for service between [the parties]” as provided for in § 1608(b)(1) and Isaac had not been able to complete service under the Hague Service Convention pursuant to § 1608(b)(2) ().
Defendants opposed Plaintiff's motion, arguing that Article 15 concerns the entry of default judgments and did not provide a means for effectuating service. [ECF No. 36].
Defendants further argued that Plaintiff's request to serve Defendants pursuant to § 1608(b)(3) should be denied because service by mail on instrumentalities of Venezuela was not permitted under Venezuelan law and therefore was not permitted under the Hague Service Convention. Id. In short, Defendants took the position that Plaintiff had to wait until it received the certificates of service from the Central Authority.
Judge King referred to United States Magistrate Judge Jacqueline Becerra Isaac's motion to deem service of process effectuated or, alternatively, to allow Isaac to serve Defendants pursuant to § 1608(b)(3)(B). [ECF No. 38]. After a telephonic hearing and supplemental briefs from the parties, Judge Becerra issued her Report and Recommendation (“R&R”). [ECF No. 54].
Judge Becerra determined that “Article 15 of the Hague Convention [was] inapplicable because, in its plain terms, Article 15 only speaks to the issue of default judgments and Plaintiff [had] not moved for a default against Defendants.” Id. at 7. She noted that in each of the cases cited by Plaintiff, the party had moved for a default against the defendant. Id.
Judge Becerra further determined that Plaintiff was permitted to effectuate service pursuant to § 1608(b)(3) because service under subsection (b)(2) could not be made (i.e., service pursuant to the Hague Service Convention). Id. at 8. In reaching this conclusion, Judge Becerra noted that “[b]y any reasonable measure, it appears that service cannot be made under the Hague Convention” and “[t]o hold otherwise would be to accept Defendants' position that Plaintiff might have to wait in perpetuity for relief.” Id. at 9. Judge Becerra observed that Plaintiff had not been able to effectuate service in “nearly two years” despite having “taken all the steps necessary under the Hague Convention to effect service ....” Id.
Thus, Judge Becerra concluded that because service of process could not be made under the Hague Service Convention, “Plaintiff may proceed to complete service as prescribed by . . . [§ 1608(b)(3)] ‘by delivery of a copy of the summons and complaint, together with a translation of each into the official language of the foreign state . . . by any form of mail requiring a signed receipt, to be addressed and dispatched by the clerk of the court to the agency or instrumentality to be served.'” Id. at 10 (quoting 28 U.S.C. § 1608(b)(3)).
Defendants objected to the R&R. [ECF No. 55]. While Defendants' objections...
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