Republic of Haiti v. Duvalier

• Decision Date: 09 May 1995
• Citation: 211 A.D.2d 379,626 N.Y.S.2d 472
• Parties: REPUBLIC OF HAITI, Plaintiff-Appellant, v. Michele Bennett DUVALIER, Defendant-Respondent.
• Court: New York Supreme Court — Appellate Division

Page 472

626 N.Y.S.2d 472

211 A.D.2d 379

REPUBLIC OF HAITI, Plaintiff-Appellant, v. Michele Bennett DUVALIER, Defendant-Respondent.

Supreme Court, Appellate Division First Department.

May 9, 1995.

Michael Krinsky, of counsel (Ira J. Kurzban, Laurie Edelstein, and Jules Lobel on the brief, Rabinowitz, Boudin, Standard, Krinsky and Lieberman, P.C., and Kurzban, Kurzban and Weinger, P.A., attorneys), for plaintiff-appellant.

Richard K. Bernstein, of counsel (Richard K. Bernstein Associates, P.C., attorneys), for defendant-respondent.

Before SULLIVAN, J.P., and WALLACH, RUBIN and WILLIAMS, JJ.

WILLIAMS, Justice.

This action by plaintiff Haiti seeks to recover monies allegedly embezzled by defendant and her husband, Jean-Claude "Baby Doc" Duvalier, during the last six years, 1980-86, of his reign as dictator of Haiti. Although it is alleged that as much as $120 million was taken, this action seeks recovery of more than $5.5 million which was deposited in defendant's accounts at Irving Trust (now Bank of New York) here in New York City. Alternatively, Haiti seeks to recover approximately $300,000 remaining in that account.

A brief recounting of the history of this litigation is in order. This action was commenced on or about August 5, 1986, approximately six months after the Duvaliers were swept from power. Plaintiff alleged that defendant, as an accomplice of her husband, embezzled millions of dollars from Haiti and secreted it in foreign countries, including the United States. The relief sought was declaration of a constructive trust for the benefit of Haiti of funds then held in defendant's name in accounts at the Irving Trust Company in New York City; an order directing return of such funds to Haiti; and a preliminary injunction against transfer of any funds in the accounts pending determination of the action. Defendant moved to dismiss on the alleged grounds of lack of personal and subject matter jurisdiction, forum non conveniens, and failure to state a cause of action.

The decision and order of Supreme Court, New York County (Louis Grossman, J.), entered on or about May 15, 1987, denied defendant's motion to dismiss, finding that jurisdiction existed in personam and in rem; that the "act of state doctrine" did not bar this action; granted the motion for a preliminary injunction; and directed plaintiff to serve an amended complaint "setting forth with particularity the theories on which it seeks recovery, whether it be conversion or a specified violation of Haitian civil law".

Plaintiff's amended verified complaint set forth three causes of action: embezzlement and conversion of government funds in violation of Haitian penal and civil law, as well as under New York law, and seeking declaration of a constructive trust for the benefit of Haiti relative to the funds in the bank accounts at issue; embezzlement in violation of Haitian penal and civil law, and seeking recovery of the funds unlawfully taken from the public treasury by defendant and the proceeds of such funds, including the funds in the bank accounts; and conversion under New York law, also seeking recovery of funds as in the second count. Defendant sought dismissal on the same grounds alleged against the original complaint, and the motion was denied by Justice Grossman. Defendant appealed both of Justice Grossman's orders denying dismissal and this Court affirmed both orders without opinion on October 6, 1988 (Republic of Haiti v. Irving Trust Co., et al., 143 A.D.2d 1076, 532 N.Y.S.2d 954, appeal dismissed 73 N.Y.2d 871, 537 N.Y.S.2d 495, 534 N.E.2d 334).

Subsequently this case was assigned to Justice Friedman, whose order is the subject of this appeal. Justice Friedman, ruling on plaintiff's motion and defendant's cross-motion for summary judgment, granted the cross-motion and dismissed the complaint, finding that plaintiff's voluminous documentary evidence was insufficient to plead or prove a claim of conversion under Haitian law, and that the act of state doctrine precluded adjudication of this matter in a New York court.

The issues remaining on this appeal then are whether plaintiff Haiti's conversion claim may be adjudicated in the courts of this state, and if so, whether Haiti has established its claim prima facie such that summary judgment is warranted. It is the opinion of this court that these questions be answered in the affirmative.

The defense assertion, upheld by the IAS court, that the act of state doctrine prevents adjudication of this action in New York courts is erroneous. The act of state doctrine prevents the judiciary from intruding into the domain of the President and Congress in their management of foreign policy and relations (see, Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 423, 84 S.Ct. 923, 937-38, 11 L.Ed.2d 804; Republic of the Philippines v. Marcos, 806 F.2d 344, 357-59 [2d Cir.1986], cert denied sub nom New York Land Co. v. Republic of Philippines, 481 U.S. 1048, 107 S.Ct. 2178, 95 L.Ed.2d 835). Under the circumstances here, the act of state doctrine is not applicable for at least several reasons. First, inasmuch as the foreign sovereign itself is seeking adjudication in our courts and the regime which committed the act of state in question is no longer in existence, there is little justification for applying the doctrine (Kirkpatrick & Co., Inc. v. Environmental Tectonics Corp., Intl, 493 U.S. 400, 409, 110 S.Ct. 701, 706-07, 107 L.Ed.2d 816, citing Banco Nacional v. Sabbatino, supra, 376 U.S. at 428, 84 S.Ct. at 940), since there is little danger of interfering with the conduct of foreign policy or of the adjudication giving offense to the foreign sovereign plaintiff.

Second, in this instance, the United States took an official stance in support of the Republic of Haiti's position in this lawsuit. In a Statement of Interest filed in this action, the United States asserted that it has "a substantial foreign policy interest ... in assisting the Haitian government in recovering its assets" (quoting Public Law 99-529, [The Special Foreign Assistance Act of 1986 ]. During most of the pendency of this litigation, it was impossible to bring this action in Haiti due to the ascendancy of various illegitimate military regimes; and specifically, during the pendency of this appeal, the democratically elected legitimate government was in exile, swept out of power by yet another military regime, and only recently returned to power.

Aside from the reasons stated above, there is also authority for not applying the act of state doctrine in circumstances at bar. In Republic of the Philippines v. Marcos, 862 F.2d 1355, 1360 [9th Cir.1988], the Ninth Circuit stated: "the classification of 'act of state' is not a promise to the ruler of any foreign country that his conduct, if challenged by his own country after his fall, may not become the subject of scrutiny in our courts." The purpose of the act of state doctrine is "to facilitate the foreign relations of the United States, not to furnish the equivalent of sovereign immunity to a deposed leader ... Our courts have had no difficulty in distinguishing the legal acts of a deposed ruler from his acts for personal profit that lack a basis in law" (supra, at 1361; see also, Republic of the Philippines v. Marcos, 806 F.2d 344; Jiminez v. Aristeguieta, 311 F.2d 547, 557-58 [5th Cir.1962]; New York Land Co. v. Republic of the Philippines, 634 F.Supp. 279, 289 [S.D.N.Y.1986], aff'd sub nom Republic of Philippines v. Marcos, 806 F.2d 344, supra ).

Nor are the other reasons advanced for disallowing adjudication in the courts of this state persuasive. Contrary to the holding of the IAS court, the claim herein does constitute a cause of action under Haitian civil law, meeting the requirement of Cuba R.R. Co. v. Crosby, 222 U.S. 473, 478-79, 32 S.Ct. 132, 56 L.Ed. 274. Not only is this position supported by the rebuttable presumption, unrebutted here, enunciated by Justice Holmes in Crosby, i.e., that a fundamental wrong is prohibited by the law of a foreign state if it would be prohibited by all civilized nations (Arams v. Arams, 182 Misc. 328, 335, 45 N.Y.S.2d 251; Silberfeld v. Swiss Bank Corp., 183 Misc. 234, 236, 50 N.Y.S.2d 838, aff'd 268 A.D. 984, 52 N.Y.S.2d 583), but also by affidavits submitted by plaintiff, including that of the Chief Justice of the Supreme Court of the Republic of Haiti, which set forth, inter alia, the legal limitations on a Haitian President's access to government funds and the various theories of recovery available against defendant and her husband for misappropriation of such funds under Articles 1162 and 1168 of the Haitian Civil Code. ¹ Furthermore, plaintiff successfully demonstrated that New York law provides a remedy for the claim herein (see, Islamic Republic of Iran v. Pahlavi, 94 A.D.2d 374, 379, 464 N.Y.S.2d 487, aff'd 62 N.Y.2d 474, 478 N.Y.S.2d 597, 467 N.E.2d 245 [the court declined to adjudicate on forum non conveniens grounds, because plaintiff sought recovery of property located throughout the world, but stated that New York courts could determine disputed claims to the ownership of specific property having a situs in New York]; Republic of the Philippines v. Marcos, 806 F.2d 344, 356, supra [claim was sufficiently stated for relief under New York law]. Finally, the IAS court erred in reading the Haitian Constitution, Article 147 of Title IV, as disallowing this action. As interpreted by the Chief Justice of the Supreme Court of the Republic of Haiti, this provision requires that an action in the nature of impeachment against a sitting head of state be brought before the Haitian Senate. The provision is irrelevant in an action against the defendant, or one against her husband, now deposed.

Having established that adjudication in this state is not barred, as urged by the IAS court and defendant, plaintiff Haiti sufficiently established its claim such that summary judgment is warranted. The tort of conversion is...