Itel Corp. v. M/S Victoria U (Ex Pishtaz Iran)

• Citation: 710 F.2d 199
• Decision Date: 25 July 1983
• Docket Number: No. 82-3129,82-3129
• Parties: ITEL CORPORATION and Itel Container International, B.V., Plaintiffs-Appellants, v. The M/S VICTORIA U (EX PISHTAZ IRAN), Etc., et al., Defendants-Appellees. Summary Calendar.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 199

710 F.2d 199

1984 A.M.C. 508

ITEL CORPORATION and Itel Container International, B.V., Plaintiffs-Appellants, v. The M/S VICTORIA U (EX PISHTAZ IRAN), Etc., et al.,

Defendants-Appellees.

No. 82-3129

Summary Calendar.

United States Court of Appeals, Fifth Circuit.

July 25, 1983.

Phelps, Dunbar, Marks, Claverie & Sims, George B. Hall, Jr., New Orleans, La., Dorr, Cooper & Hays, Charles S. Donovan, James D. Boughey, Jeffrey A. Mansfield, San Francisco, Cal., for plaintiffs-appellants.

Don M. Stichter, Tampa, Fla., for Uiterwyk.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before RUBIN, JOHNSON and WILLIAMS, Circuit Judges.

ALVIN B. RUBIN, Circuit Judge:

The district court stayed a suit by a domestic corporation and its foreign subsidiary against another domestic corporation because the defendant corporation had a third-party claim against an Iranian corporation for which it had allegedly acted as agent and the Iranian corporation was deemed to be a necessary party. The stay was imposed to permit the entire matter to be adjudicated before the Iran-United States Claims Tribunal (the Tribunal). We grant leave for an interlocutory appeal and vacate the stay to permit adjudication of the claims that are not asserted against the Iranian corporation.

I.

Itel Corporation is incorporated under the laws of Delaware. Its subsidiary, Itel Container International, B.V., is a Netherlands corporation. Their interests being identical, we refer to the two corporations simply as Itel. Itel leased several hundred ocean cargo containers between 1976 and 1979, some leases naming as lessee Uiterwyk Corporation (Uiterwyk), a Florida corporation whose principal place of business is Tampa, others naming as lessee Iran Express Lines. Because the case comes to us by interlocutory appeal, there are no findings of fact and many facts crucial to determination of the merits are disputed. It is not yet established whether at the time the leases were made Uiterwyk represented to Itel that Iran Express Lines was a trade name under which Uiterwyk did business, as Itel asserts, or whether Itel then knew that it was a separate entity, an Iranian corporation, as Uiterwyk asserts. Whether the parties intended that leases made with Uiterwyk, as lessee, were intended to obligate it as principal or whether Itel intended to look to Iran Express Lines for payment has not been determined. Although in a memorandum in support of Uiterwyk's motion to file a third-party complaint and cross-claim, Uiterwyk asserts that it was agent for Iran Express Lines as "undisclosed principal," Uiterwyk contends in the pretrial order and now contends that it disclosed to Itel that Iran Express Lines was its principal.

One hundred nineteen leases were introduced in evidence: 83 named Uiterwyk as lessee, 27 named Iran Express Lines as lessee and 9 named Allied Transportation & Trading Corporation, described in the leases as agents for Iran Express Lines and Hong Kong Container Line. Until June, 1979, Uiterwyk made all lease payments to Itel. After negotiations in which Itel sought to recover the sums it claimed to be due, the parties reached a payment agreement "with respect to the outstanding sums owed by [Uiterwyk] to Itel, subject however to a reservation of all accrued rights, maritime and civil." Uiterwyk agreed to use its best efforts to redeliver Itel's containers and equipment, to pay the back rental due Itel through September 1979 in monthly installments, and thereafter to pay rent monthly on any unreturned containers. After several payments, Uiterwyk discontinued making payments on equipment remaining in Iran.

Itel then filed this suit against Uiterwyk, Beryl Shipping, Inc., a Uiterwyk affiliate, and Iran Express Lines, contending that the leases have been breached and seeking to recover the unpaid rental for the cargo containers and related equipment, the value of unreturned containers, and the expenses of repairing containers returned in damaged condition. Itel and Uiterwyk do not dispute that rental has not been paid, but the amount due is contested. Itel is currently in reorganization in the Bankruptcy Court for the Northern District of California under Chapter 11 of the Bankruptcy Code, 11 U.S.C. Sec. 1101 et seq. (Supp. V 1981), and Uiterwyk is in reorganization in the Bankruptcy Court for the Middle District of Florida.

Uiterwyk obtained leave to file a cross-claim against Iran Express Lines and a third-party complaint against "the Government of Iran." Neither a cross-claim nor a third-party complaint appears in the record, although the pretrial order asserts "Uiterwyk ... has filed a third-party complaint against Iran Express Lines and the Government of Iran." The district court has, however, entered a default judgment against Iran Express Lines in favor of Itel. Its pretrial minute entry states that, if, at trial, the court determines that Uiterwyk "was acting as agent for the Government of Iran and/or Iran Express Lines, and in the further event that it is determined that Iran Express Lines was or is an agent of the Government of Iran, then the matter will be stayed so that plaintiffs may pursue any claim they have against the Government of Iran [before the Iran-United States Claims Tribunal (the Tribunal) ]." The district court severed and stayed what it called Uiterwyk's third-party action, i.e., Uiterwyk's cross-claim, against Iran Express Lines "so that said claim may be pursued with the [Tribunal]." It did not mention Uiterwyk's third-party complaint against the "Government of Iran."

Thus the case went to trial only on Itel's claims against Uiterwyk. After two days of trial, both parties rested, and Uiterwyk renewed its motion for a stay of the proceedings against it pending submission of the entire matter to the Tribunal. After hearing oral argument, the district court, without making any findings, entered an oral order staying further proceedings pending submission to the Tribunal of Itel's and Uiterwyk's claims against Iran Express Lines. It later certified the order for interlocutory appeal under 28 U.S.C. Sec. 1292(b) (1976) and required Uiterwyk to post security in the amount of 32% of Itel's claim, with interest, plus $25,000 to cover the expense to Itel of proceeding before the Tribunal. We have been advised by the parties that Uiterwyk has filed a claim before the Tribunal against both the Government of Iran and Iran Express Lines and that Itel has filed a claim against the Government of Iran.

II.

In order to obtain the release of fifty-two United States citizens taken hostage in Iran, the United States reached an agreement with the Government of Iran. Reflected in a document entitled, "Declaration of the Government of the Democratic and Popular Republic of Algeria Concerning the Settlement of Claims by the Government of the United States of America and the Government of the Islamic Republic of Iran" of January 19, 1981 (the Declaration), this agreement committed the United States to transfer Iranian assets that it had seized to an escrow account from which certain assets would be released to Iran once the American hostages had safely departed from Iran. Assets valued at one billion dollars would be retained in a security account to satisfy awards against Iran rendered by the Tribunal, and this account was to be continually replenished. Declaration of the Government of the Democratic and Popular Republic of Algeria of January 19, 1981 para. 7 (the Companion Declaration), 20 International Legal Materials 224, 226 (1981); Dames & Moore v. Regan, 453 U.S. 654, 665, 101 S.Ct. 2972, 2979, 69 L.Ed.2d 918, 931 (1981).

The Declaration provides that the Tribunal will "decid[e] claims of nationals of the United States against Iran and claims of nationals of Iran against the United States and any counterclaim which arises out of the same contract, transaction, or occurrence that constitutes the subject matter of that national's claim...." ¹ Declaration art. II, para. 1, 20 International Legal Materials 230, 230-31 (1981). Pursuant to the Declaration, President Carter issued five executive orders directing the transfer of Iranian assets held by United States nationals, both in the United States and beyond its borders, to an escrow account in the name of the Central Bank of Algeria. ² When he assumed office, President Reagan "ratified" President Carter's Orders in Executive Order No. 12,294, 3 C.F.R. 139 (1982). This Order also provides, "All claims which may be presented to the Iran-United States Claims Tribunal under the terms of Article II of the Declaration ... and all claims for equitable or other judicial relief in connection with such claims, are hereby suspended, except as they may be presented to the Tribunal." In Dames & Moore, the Supreme Court upheld the President's authority to suspend such claims pending in the federal courts.

Neither Itel nor Uiterwyk appeals the severance of Uiterwyk's cross-claim against Iran Express Lines or the stay of that claim and neither party appeals the stay of all claims against Iran. ³ The issue here is whether Executive Order 12,294 requires that an action involving claims against a non-Iranian corporation be stayed because the outcome of the suit may affect an Iranian corporation. Without deciding this question of law, a district judge cannot decide whether to exercise his discretion to stay an action that involves claims against Iran and other claims, and we cannot adequately review his decision. Therefore, we grant the motion for interlocutory appeal because the decision to issue a stay order "involves a controlling question of law as to which there is substantial ground for difference of opinion and ... an immediate appeal from the order may materially advance the ultimate termination of the litigation...." 28 U.S.C. Sec. 1292(b) (1976).

III.

Federal courts exist to decide controversy. Those who have, in the common parlance, a "federal...