MacArthur Area Citizens Ass'n v. Republic of Peru, 85-5828

• Court: United States Courts of Appeals. United States Court of Appeals (District of Columbia)
• Citation: 809 F.2d 918
• Docket Number: No. 85-5828,85-5828
• Parties: , 55 USLW 2403 MacARTHUR AREA CITIZENS ASSOCIATION, Appellant, v. REPUBLIC OF PERU, et al.
• Decision Date: 23 January 1987

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809 F.2d 918 258 U.S.App.D.C. 77, 55 USLW 2403 MacARTHUR AREA CITIZENS ASSOCIATION, Appellant,
v.
REPUBLIC OF PERU, et al. No. 85-5828. United States Court of Appeals,
District of Columbia Circuit. Argued Dec. 5, 1986.
Decided Jan. 23, 1987.

Appeal from the United States District Court for the District of Columbia, (Civil Action No. 84-03070).

James L. Dooley, Washington, D.C., for appellant.

Martin J. Jaron, Jr., with whom Eugene M. Propper, Washington, D.C., was on brief for appellee, Republic of Peru.

David R. Addis and Jeffrey M. Johnson, Washington, D.C., were on brief for appellees, Shannon & Luchs and Laura Astiz.

Before BORK and STARR, Circuit Judges, and McGOWAN, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge STARR.

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STARR, Circuit Judge:

This case involves an effort by the MacArthur Area Citizens Association to collect damages from the Republic of Peru for Peru's temporary occupation and use of a building as a chancery for its Naval Attache. The building, located at 5758 MacArthur Boulevard in the District of Columbia, is zoned for residential occupancy. Peru's conversion of the property to a chancery constituted, in the view of the Citizens' Association, a violation of local zoning laws. The District Court dismissed the suit, holding that Peru's actions were immune from judicial scrutiny under the Foreign Sovereign Immunities Act of 1976 (FSIA), 28 U.S.C. Secs. 1330, 1602-1611 (1982). We conclude that the District Court correctly interpreted FSIA's provisions and accordingly affirm.

I

After the State Department had advised that it had no objection, Joint Appendix (J.A.) at 9, Peru purchased the MacArthur Boulevard building in June 1984. Peru then began making various alterations designed to render the property a suitable chancery. According to the complaint, Peru bricked up various openings, installed bars on other openings, and installed an elaborate burglar alarm system. J.A. at 10. The Association also observed, in alarmed tones, that the "interior of the dwelling was ruthlessly stripped of its residential type lighting fixtures" and replaced by harsh fluorescent lights. Id. In addition to what the Association colorfully calls these physical "transmogrifications," Peru's occupancy led, the Association claims, to congestion from an increased number of chancery cars "vying for close-in parking places." J.A. at 11.

Believing that its new neighbor was causing denigration and depreciation of the value of its members' residences nearby, the Association repaired to federal district court in October 1984. The Association sought injunctive relief against Peru, the State Department, and the District of Columbia, as well as damages from Peru's real estate agents in connection with the purchase of the property. ¹ The complaint was later amended to include a damages claim against Peru. J.A. at 19. Feeling the sting of neighborhood antipathy (or at least that of the Association), Peru voluntarily vacated the premises in June 1985, thereby mooting the claim for injunctive relief.

In an order dated June 21, 1985, the District Court dismissed the remaining claims for damages. J.A. at 21-26. The court dismissed the claims against Peru on FSIA grounds, rejecting the argument that any exception to FSIA immunity applied to render Peru liable for the MacArthur Boulevard imbroglio. J.A. at 23-25. Refusing to exercise pendent jurisdiction, the court also dismissed the damages claim against Peru's real estate agents. J.A. at 26; see also supra note 1.

II

FSIA sets forth "the sole and exclusive standards to be used in resolving questions of sovereign immunity raised by foreign states before Federal and State courts in the United States." H.R.Rep. No. 1487, 94th Cong., 2d Sess., reprinted in 1976 U.S.Code Cong. & Ad.News 6604, 6610. This Act's basic premise is that foreign sovereigns will enjoy immunity from suit unless one of the specific statutory exceptions applies. Moreover, under FSIA, "immunity remains the rule rather than the exception." Gibbons v. Republic of Ireland, 532 F.Supp. 668, 671 (D.D.C.1982). However, subject matter and personal jurisdiction exist in the federal courts over claims for which the foreign sovereign is

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not entitled to immunity. 28 U.S.C. Secs. 1605-1607 (1982).

In the case at hand, there is obviously no question that Peru is a foreign state entitled to the benefits and protections of FSIA. The dispute is whether one of the three FSIA exceptions invoked by the Association covers Peru's conduct and thereby renders that Nation subject to suit in the courts of the United States. Specifically, appellant urged the District Court, and now us, to apply the "commercial activity" exception, 28 U.S.C. Sec. 1605(a)(2), the "immovable property" exception, id. Sec. 1605(a)(4), or the "tortious act" exception, id. Sec. 1605(a)(5), to FSIA immunity. We consider each in turn.

First. The "commercial activity" exception eliminates immunity in cases "in which the action is based upon a commercial activity carried on in the United States by the foreign state...." Id. Sec. 1605(a)(2). The definitional section of FSIA explains that

[a] "commercial activity" means either a regular course of commercial conduct or a particular commercial transaction or act. The commercial character of an activity shall be determined by reference to the nature of the course of conduct or particular transaction or act, rather than by reference to its purpose.

Id. Sec. 1603(d). We thus look to the nature of Peru's actions. Our inquiry is aided by the FSIA's legislative history, which provides several examples of conduct deemed to fall within the exception:

[A] contract by a foreign government to buy provisions or equipment for its armed forces or to construct a government building constitutes commercial activity. The same would be true of a contract to make repairs on an embassy building.

H.R.Rep. No. 1487, 94th Cong., 2d Sess., reprinted in 1976 U.S.Code Cong. & Ad.News 6604, 6615.

Appellant characterizes Peru's conduct as being in the nature of operating an office in a residential neighborhood, not of operating a chancery to conduct diplomatic relations. The argument seems to be that "[i]f Peru's occupancy had not been commercial, there would have been no lawsuit." Appellant's Reply to Peru's Brief at 16 (emphasis in original); see also Appellant's Brief at 11. The notion apparently lurking behind this tautological assertion is that if Peru's occupancy were not an arguable violation of the zoning ordinances--that is, were not a non-residential use--the Association would not have sued alleging zoning violations. In other words, appellant seeks to equate, for FSIA purposes, the District of Columbia's zoning law designations of "residential" and "non-residential" with the immunity concepts of "non-commercial" and "commercial." We disagree. We are in accord with the District Court's sensible conclusion that operation of a chancery is, by its nature, cf. 28 U.S.C. Sec. 1603(d), governmental, not commercial. ²

Second. The "immovable property" exception removes immunity in cases "in which ... rights in immovable property situated in the United States are in issue." Id. Sec. 1605(a)(4). This court had occasion only two years ago to construe the reach of this exception. In Asociacion de Reclamantes v. United Mexican States, 735 F.2d 1517 (D.C.Cir.1984), cert. denied, 470 U.S. 1051, 105 S.Ct. 1751, 84 L.Ed.2d 815 (1985), the court held that "[t]he immovable property exception was enacted to codify, with minor modifications ... the pre-existing real property exception to sovereign

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immunity recognized by international practice." We observed that the practice was to decline "to extend the immunity of a foreign sovereign to 'an action to obtain possession of or establish a property interest in immovable property located in the territory of the state exercising jurisdiction.' " Id. at 1521 (quoting Restatement (Second) of Foreign Relations Law of the United States Sec. 68(b) (1965)).

Consideration of the statutory language itself and the authoritative construction of that language in Asociacion de Reclamantes leads us to conclude that the Association's claim falls outside the ambit of the "immovable property" exception. That exception was not intended broadly to abrogate immunity for any action touching upon real estate. Cf. id. (exception not to be given "most expansive reading possible"). Here, the Association is obviously not seeking to establish any rights in 5758 MacArthur Boulevard. It makes no claim to any interest in that property. Upon analysis, the Association's complaint sounds not in the law of real property at all, but the law of nuisance.

Third. We thus turn to the final...