SERVAAS INC. v. Republic of Iraq

• Decision Date: 19 February 2010
• Docket Number: No. 09 Civ. 1862(RMB)(RLE).,09 Civ. 1862(RMB)(RLE).
• Citation: Servaas Inc. v. Republic of Iraq, 686 F. Supp.2d 346 (S.D. N.Y. 2010)
• Parties: SERVAAS INCORPORATED, Plaintiff, v. REPUBLIC OF IRAQ and Ministry of Industry of the Republic of Iraq, Defendants.
• Court: U.S. District Court — Southern District of New York

686 F.Supp.2d 346

SERVAAS INCORPORATED, Plaintiff, v.REPUBLIC OF IRAQ and Ministry of Industry of the Republic of Iraq, Defendants.

No. 09 Civ. 1862(RMB)(RLE).

United States District Court, S.D. New York.

February 19, 2010.

John Anthony Piskora, Loeb & Loeb LLP, New York, NY, for Plaintiff.

Stephen Albright, Stephen Albright, Esq., Commack, NY, Timothy Brian Mills, Maggs & McDermott LLC, Washington, DC, for Defendants.

DECISION & ORDER

RICHARD M. BERMAN, District Judge.

I.Introduction

On February 27, 2009, PlaintiffSerVaas Incorporated("Plaintiff" or "SerVaas Inc.") filed a Complaint pursuant to New York's Uniform Foreign Country Money-Judgments Recognition Act, N.Y. C.P.L.R. §§ 5301 et seq., against the Republic of Iraq ("Iraq") and the Ministry of Industry of the Republic of Iraq ("Ministry of Industry" or "Ministry")(collectively, "Defendants"), seeking recognition of a final money judgment in the amount of $14,152,800, dated April 16, 1991, issued in favor of Plaintiff and against the Ministry of Industry by the Paris Commercial Court in Paris, France ("French Judgment").(Compl., dated Feb. 27, 2009, ¶¶ 1, 7.)¹

On August 3, 2009, Defendants moved to dismiss the Complaint pursuant to Rules 12(b)(1), (2), and (6) of the Federal Rules of Civil Procedure("Fed. R. Civ.P.") arguing, among other things, that: (1)"no United States court possesses ... subject matter ... jurisdiction" over either Iraq or the Ministry of Industry "because neither...Defendant comes within any ... exception to foreign sovereign immunity" set out in the Foreign Sovereign Immunities Act("FSIA"), 28 U.S.C. §§ 1330,1602 et seq.;(2)"no United States court possesses personal jurisdiction" over either Iraq or the Ministry of Industry because "personal jurisdiction under the FSIA equals subject matter jurisdiction plus a valid service of process," and subject matter jurisdiction does not exist; (3)"the Complaint fails to state any claim upon which this Court can grant any relief against Iraq," because the French Judgment "exists only against the Ministry of Industry" and "there exists no French court judgment against Iraq," and (4)Plaintiff cannot enforce any judgment against Iraqi assets located in the United States because "Executive Order 13364 immunizes all such Iraqi assets `against any attachment, judgment, decree, lien, execution, garnishment or other judicial process' of any U.S. Court" and "the Complaint does not identify any other assets of the Ministry of Industry or Iraq that are not immune under either FSIA §§ 1610or 1611."(Mem. of Law in Supp. of Defs.'Mot. to Dismiss Compl., dated Aug. 3, 2009("Defs.MTD"), at 1-5, 7(quotingExec. OrderNo. 13,364, 69 Fed.Reg. 70,177(Nov. 29, 2004)).)

On August 13, 2009, Plaintiff filed an opposition to Defendants' motion arguing, among other things, that: (1) the Complaint "provides more than adequate `notice' of the facts underlying the applicability of the FSIA`commercial activity' exception"; the Ministry "contracted for and received goods, services, and proprietary technology from a United States company" and "Iraq must be held liable for the acts of the Ministry as its `alter ego'"; (2)"Defendants do not dispute that they were validly served"; (3)"under well-recognized international law and federal law principles, Iraq can be held liable for the French Judgment because... as a legal matter, Iraq and the Ministry are the same legal entity"; and (4)"the issue of whether SerVaas can ultimately enforce a United States judgment as against Iraq's assets in the United States is not an element of a cause of action for recognition of a foreign judgment (or any other cause of action)."²(Pl.'s Mem. of Law in Opp'n to Defs.'Mot. to Dismiss, dated Aug. 13, 2009("Pl. MTD Opp'n"), at 14, 18, 20-21, 23(quotingSeetransport Wiking Trader Schiffarhtsgesellschaft MBH & Co., KG v. Navimpex Centrala Navala,989 F.2d 572, 583(2d Cir.1993))(emphasis in original).)Along with its opposition, Plaintiff submitted a declaration executed by its owner and principal, Dr. Beurt SerVaas, M.D.("Dr. SerVaas"), with eleven attached exhibits.(See Decl. of Dr. Beurt SerVaas in Opp'n to Defs.'Mot. to Dismiss, dated Aug. 13, 2009("SerVaas Decl.").)

On September 8, 2009, Defendants filed a reply arguing, among other things, that "the issue of whether Iraq is the same legal person as the Ministry of Industry for purpose of the Court's jurisdiction over Iraq ... is not one of Federal law, but instead strictly one of Iraqi law, and is conclusively settled by Iraqi law contrary to Plaintiffs claims."(See Defs.' Reply Mem. in Supp. of Defs.'Mot. to Dismiss the Compl., dated Aug. 28, 2009("Defs. MTD Reply"), at 5-9 & n. 7.)With their Reply, Defendants submitted a document styled "Notice of Intent to Raise Issue About Law of the Republic of Iraq (Fed. R.Civ.P. 44.1)and Request for Judicial Notice & Consideration of Certain Materials Concerning the Laws of the Republic of Iraq Relevant to Issues Raised in the Defendants' Motion to Dismiss"("Defs. Notice of Intent"), along with supporting declarations (regarding Iraqi law), executed on August 26, 2009 by Fakhri Kadhum, and on August 27, 2009 by Omar Ghassan Jamil Al-Wiswasi.³(See Defs. Notice of Intent, dated Aug. 28, 2009; Decl. of Fakhri Kadhum in Supp. of Defs.'Mot. to Dismiss, dated Aug. 26, 2009("Kadhum Decl."); Decl. of Omar Ghassan Jamil Al-Wiswasi in Supp. of Defs.'Mot. to Dismiss, dated Aug. 27, 2009("Al-Wiswasi Decl.").)

Also on September 8, 2009, Defendants moved pursuant to Fed.R.Civ.P. 56(e) to strike portions of the SerVaas Declaration, arguing that twenty-nine of the Declaration's thirty-three paragraphs are, among other things, based upon a "lack of personal knowledge,""conclusory allegations of purported fact,""improper legal argument,""irrelevant,""immaterial,""inadmissible hearsay,""inadmissible parol evidence," and/or "in violation of the best evidence rule."(See Mem. of Law in Supp. of Defs.'Mot. to Strike Decl. of Beurt SerVaas in Opp'n to Defs.'Mot. to Dismiss, dated Sept. 8, 2009("Defs. Mot. to Strike").)

On October 6, 2009, Plaintiff filed an opposition to Defendants' motion to strike arguing, among other things, that "Dr. SerVaas stated in his declaration that his testimony was based upon personal knowledge" and that Iraq is "wrong" to argue that "Dr. SerVaas's testimony or the documents he introduces into evidence are irrelevant or should ... be stricken on hearsay grounds or pursuant to the `best evidence rule' or the parol evidence rule."(See Pl.'s Mem. of Law in Opp'n to Defs.'Mot. to Strike, dated Oct. 6, 2009("Pl. Mot. to Strike Opp'n"), at 1-2.)

On October 13, 2009, Defendants filed a reply in support of their motion to strike.(See Defs.' Reply to Pl.'s Opp'n to Defs.'Mot. to Strike Decl. of Beurt SerVaas in Opp'n to Defs.'Mot. to Dismiss Compl., dated Oct. 13, 2009("Defs. Mot. to Strike Reply").)

On February 18, 2010, the Court heard oral arguments.⁴

For the reasons set forth below, Defendants' motion to dismiss is denied in its entirety.Defendants' motion to strike is also denied.⁵

II.Background

On September 10, 1988, SerVaas Inc., an Indiana corporation, entered into a (preliminary) contract with the "Ministry of Industry, Al-Shaheed Factory, Anbar, Iraq," pursuant to which the Ministry of Industry agreed to pay SerVaas Inc. $40,602,000.00 in exchange for the provision of proprietary "technology, know-how and technical documents" developed by SerVaas Inc. that would enable the Ministry of Industry to remove the silicon from some 70,000 tons of brass scrap metal, thereby yielding commercial-grade copper.⁶(SerVaasDecl. ¶¶ 4-10 & Ex. B (Contract, dated Sept. 10, 1988("Preliminary Contract")), at 1-2, 4.)The Preliminary Contract provided that it would "not become final and binding on either party... unless it has been approved by the appropriate governmental authority of Iraq by December 31, 1988."(Preliminary Contract¶ 5.1.)Final approval was to "be evidenced by a Telex from" the Ministry of Industry to SerVaas, Inc."stating the date of such approval."(Preliminary Contract¶ 5.1.)

The contract "became final and binding on both parties ... upon the approval by the appropriate governmental authority of Iraq"("Contract").(SerVaas Decl. Ex. D (Contract, datedAug. 10, 1989), ¶ 5.1.)Approval was conveyed to Plaintiff by a Telex sent on October 6, 1988, addressed to "SerVaas Incorporated, Dr. Beurt SerVaas" and signed by "Farouk B. Yacoub, Al-Shaheed Factory Director"("Oct. 6, 1988 Telex").(See SerVaas Decl. Ex. E)(Oct. 6, 1988 Telex)("We would like to inform you that the contract has been approved by our higher authority and we are proceeding on opening the letter of credit.".)According to Plaintiff, the Oct. 6, 1988 Telex demonstrates that "the Republic of Iraq gave the necessary approval for the Contract to become binding."(SerVaasDecl. ¶ 12.)On November 14, 1988, a second Telex, which was addressed to "SerVaas Incorporated, Mr. Clarence Ormsby" and was signed by "AlShaheed Factory Director," notified Plaintiff that a letter of credit had been opened in its favor at Banco del Lavoro in Atlanta.⁷(See SerVaas Decl. Ex. F)(Telex from AlShaheed Factory Director to Clarence Ormsby, dated Nov. 14, 1988("Nov. 14, 1988 Telex").)Plaintiff asserts that, through the Nov. 14, 1988 Telex, "Iraq advised that it had opened the requisite irrevocable letter of credit."(SerVaasDecl. ¶ 15.)

Between 1988 and 1990, payments were made to SerVaas Inc. in the United States, "by way of agreed-upon draws on the irrevocable letter of credit the Ministry had established with the Atlanta branch of Banco Del Lavoro."(SerVaasDecl. ¶ 19.)Plaintiff asserts that "in accordance with the Contract, Iraq made millions of dollars of payments to SerVaas."(SerVaasDecl. ¶ 19.)

Plaintiff further asserts that, following Iraq's 1990 invasion of Kuwait, SerVaas Inc.'s "continued...