RMS Titanic, Inc. v. French Republic (In re RMS Titanic, Inc.)
| Decision Date | 25 April 2017 |
| Docket Number | Adv. No. 3:16–ap–183–PMG,Case No. 3:16–bk–2230–PMG |
| Citation | 569 B.R. 825 |
| Parties | IN RE: RMS TITANIC, INC., et al., Debtors. RMS Titanic, Inc., Plaintiff, v. French Republic a/k/a Republic of France, Defendant. |
| Court | U.S. Bankruptcy Court — Middle District of Florida |
Daniel F. Blanks, Nelson Mullins Riley & Scarborough LLP, Jacksonville, FL, Jeffery W. Cavender, Troutman Sanders, LLP, Atlanta, GA, Brian A. Wai, Virginia Beach, VA, for Plaintiff.
French Republic a/k/a Republic of France, pro se.
ORDER ON PLAINTIFF RMS TITANIC, INC.'S AMENDED MOTION FOR ENTRY OF CLERK'S DEFAULT AND AMENDED MOTION FOR DEFAULT JUDGMENT AGAINST DEFENDANT FRENCH REPUBLIC, a/k/a REPUBLIC OF FRANCE
THIS CASE came before the Court for hearing to consider the Plaintiff RMS Titanic, Inc.'s Amended Motion for Entry of Clerk's Default and Amended Motion for Default Judgment against Defendant French Republic, a/k/a Republic of France. (Docs. 45, 46).
The Debtor, RMS Titanic, Inc., asserts that it holds unconditional title to approximately 2,100 artifacts that were recovered from the Titanic salvage site in 1987 (the French Artifacts). In this proceeding, the Debtor seeks a determination under § 105 and § 363 of the Bankruptcy Code that the French Republic and its agencies have "no interest in the French Artifacts."
Under 28 U.S.C. § 1330 and the Foreign Sovereign Immunities Act, a foreign state is presumptively immune from the jurisdiction of a Court of the United States, unless a specified exception to sovereign immunity applies to the case. In order to exercise jurisdiction over a foreign state under 28 U.S.C. § 1330, a Bankruptcy Court must determine that the foreign state was properly served with process, and that a statutory exception to jurisdictional immunity applies to the foreign state.
In this case, the French Republic was properly served with process by delivery of a copy of the Summons and Complaint to France's Ministry of Justice.
Additionally, the French Republic is excepted from jurisdictional immunity in this action, because of the statutory waiver or abrogation of immunity provided by § 106(a) of the Bankruptcy Code for actions against a foreign state that are brought under § 105 and § 363 of the Bankruptcy Code. Accordingly, the Court may exercise jurisdiction over the French Republic in this action under 28 U.S.C. § 1330.
Pursuant to 28 U.S.C. § 1608(e), however, the Court may not enter a default judgment against a foreign state unless the plaintiff establishes its right to relief "by evidence satisfactory to the court." In this case, an evidentiary hearing should be scheduled on the Debtor's Amended Motion for Default Judgment, because the current record does not contain satisfactory evidence that the French Republic has no interest in the French Artifacts.
On June 14, 2016, the Debtor and seven affiliates filed petitions under Chapter 11 of the Bankruptcy Code. According to their Case Management Summary, the Debtors own approximately 5,500 artifacts recovered from the Titanic shipwreck, and present the artifacts to the public at their exhibitions and other venues. (Main Case, Doc. 8).
On June 20, 2016, the Debtors filed a Motion in the main bankruptcy case for an "Order Pursuant to Bankruptcy Code Sections 105 and 363 and Bankruptcy Rules 6003, 6004, and 9014 Authorizing the Debtors to Market and Sell Certain Titanic Artifacts Free and Clear of Liens, Claims, and Interests." (Main Case, Doc. 28).
According to the Motion, the Debtors' total Titanic collection consists of (1) the French Artifacts or French Collection, which includes approximately 2,100 artifacts that were recovered during a joint expedition with the French Government's oceanographic institute in 1987, and (2) the American Artifacts or American Collection, which includes more than 3,000 additional artifacts that were recovered during expeditions in 1993, 1994, 1996, 1998, 2000, and 2004.
In the Motion to Market and Sell Certain Artifacts in the main case, the Debtors asserted that they sought "only to sell a narrow subset of artifacts from the French Collection to pay the creditors in full, return all equity positions to the Debtors' shareholders, and possibly fund some or all of the Titanic reserve account." (Main Case, Doc. 28, ¶ 25).
On July 22, 2016, the Court entered an Order denying the Debtors' Motion, without prejudice to the Debtors' right to file the request to market and sell the French Artifacts as an adversary proceeding pursuant to Rule 7001 of the Federal Rules of Bankruptcy Procedure. (Main Case, Doc. 102).
On August 17, 2016, the Debtor filed a Complaint against the French Republic. (Doc. 1). In the Complaint, the Debtor alleges that its predecessor in interest (Titanic Ventures Limited Partnership) conducted an expedition to the Titanic salvage site in 1987, with the assistance of France's oceanographic institute, and recovered approximately 2,100 artifacts from the wreck (the French Artifacts). (Complaint, ¶ 11). The Debtor further alleges:
15. On October 20, 1993, an Administrator in the French Office of Maritime Affairs (Ministry of Equipment, Transportation and Tourism) pursuant to the proces verbal awarded the Company title to the French Artifacts (the "Proces Verbal ").
(Complaint, ¶ 15). The Debtor further alleges that the administrator's award noted the "assurances" of the Debtor's predecessor that the artifacts would not be sold or disbursed, except for the purposes of an exhibition. (Complaint, ¶ 19).
Finally, the Debtor alleges that (1) the Proces–Verbal is a legally enforceable decision that transferred legal title to the French Artifacts to the Debtor, (2) that the transfer of title was unconditional, and (3) that the unconditional title is not encumbered by any liens or other interests. (Complaint, ¶¶ 25–28).
Accordingly, the Debtor seeks a declaration pursuant to § 105 and § 363 of the Bankruptcy Code, and Rule 7001(2) and Rule 7001(9) of the Federal Rules of Bankruptcy Procedure, that "France and all French government agencies have no interest in the French Artifacts." (Complaint, ¶ 30).
The existence of subject matter jurisdiction in an action against a foreign state is governed by the Foreign Sovereign Immunities Act (FSIA), which provides the sole basis for jurisdiction over a foreign state in federal court. Continental Casualty Company v. Argentine Republic , 893 F.Supp.2d 747, 750 (E.D. Va. 2012). The FSIA "provides the sole basis for obtaining jurisdiction over a foreign state in the courts of this country." SACE S.p.A. v. Republic of Paraguay , 243 F.Supp.3d 21, 31, 2017 WL 1066564, at *6 (D.D.C.).
The FSIA is codified at 28 U.S.C. §§ 1602 through 1611, and the jurisdictional provision related to the FSIA is found at 28 U.S.C. § 1330. Vermeulen v. Renault, U.S.A., Inc ., 985 F.2d 1534, 1543 (11th Cir. 1993). Section 1330 is "the jurisdictional statute corresponding to the FSIA." Coleman v. Alcolac, Inc ., 888 F.Supp. 1388, 1399–1400 (S.D. Tex. 1995). Section 1330 provides:
28 U.S.C. § 1330(a), (b) (Emphasis supplied). Generally, a "foreign state" under § 1330 and the FSIA is an entity that has the attributes of statehood, meaning a defined territory and population, self-governance and foreign relations, and the capacity to wage war and enter international agreements. Kirschenbaum v. 650 Fifth Avenue and Related Properties , 830 F.3d 107, 123 (2d Cir. 2016).
In determining whether to exercise jurisdiction over a foreign state under § 1330(a) and (b), federal courts must conduct a two-part inquiry as to: "(1) whether service of the foreign state was accomplished properly, and (2) whether one of the statutory exceptions to sovereign immunity applies." Jouanny v. Embassy of France in the United States , 220 F.Supp.3d 34, 38 (D.D.C. 2016) (quoting Abur v. Republic of Sudan , 437 F.Supp.2d 166, 171–72 (D.D.C. 2006) ). The "interlocking provisions" of § 1330"compress subject-matter jurisdiction and personal jurisdiction into a single, two-pronged inquiry: (1) whether service on the foreign state was accomplished properly, and (2) whether one of the statutory exceptions to sovereign immunity applies." Abur v. Republic of Sudan , 2006 WL 1892066, at *3 (D.D.C. 2006) (quoted in Howe v. Embassy of Italy , 68 F.Supp.3d 26, 31 (D.D.C. 2014) ).
Under § 1330, therefore, a Court may "consider the merits of a claim against a foreign state only if proper service is effectuated and one of the FSIA's enumerated exceptions to sovereign immunity applies to that claim." Abur v. Republic of Sudan , 2006 WL 1892066, at *3.
Rule 4(j)(1) of the Federal Rules of Civil Procedure, as made applicable in bankruptcy proceedings by Rule 7004(a)(1) of the Federal Rules of Bankruptcy Procedure, provides that a foreign state must be served in accordance with 28 U.S.C. § 1608. F.R.Civ.P. 4(j)(1).
Section 1608 is part of the FSIA, and provides in part:
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