TIG Ins. Co. v. Republic of Arg.
| Decision Date | 18 April 2022 |
| Docket Number | 18-mc-00129 (DLF) |
| Parties | TIG INSURANCE COMPANY, Judgment Creditor, v. REPUBLIC OF ARGENTINA et al., Judgment Debtor. |
| Court | U.S. District Court — District of Columbia |
In this miscellaneous action, TIG Insurance Company moves for a writ of attachment and writ of execution on a building owned by the Republic of Argentina based on two foreign judgments it obtained in another jurisdiction. See Registration of Foreign Js., Dkt. 1; Mot. for Emergency Relief at 2, Dkt 2. Before the Court is Argentina's motion to dismiss under Federal Rule of Civil Procedure 12(b)(1). See Mot. to Dismiss at 1, Dkt. 30. For the reasons that follow the Court will treat the motion as a motion for relief from judgment under Federal Rule of Civil Procedure 60(b)(4) and will grant it in part.
TIG is the successor in interest to two private insurance companies-the International Surplus Lines Insurance Company and the International Insurance Company-which entered into two casualty reinsurance contracts with Caja Nacional de Ahorro y Segurro in 1979. First LeGros Decl. ¶¶ 2-4, Dkt. 2-6.[2] Caja was a state-owned corporation created by Argentina in 1915. Custo Decl. ¶ 5, Dkt. 2-5. Under these contracts, the insurance companies paid Caja insurance premiums for tail coverage of various losses during the contract period that could arise after the contracts' termination. Second LeGros Decl. ¶¶ 3, 11, Dkt. 32-4. These contracts included arbitration provisions that survived the termination of the agreements. Second LeGros Decl. ¶ 13; Aldort Decl. ¶ 2, Dkt. 2-3; Aldort Decl. Ex. 1 (Casualty Reinsurance Contracts) at 14, 33.
In the 1990s, Argentina's then-Ministry of Economy and Works and Public Services issued two resolutions that placed Caja into liquidation. Custo Decl. ¶¶ 6-11. The first resolution began the liquidation in 1994 and directed the Ministry to manage the process. Custo Decl. ¶ 7. In 1998, the second resolution transferred “ascertained liabilities and contingent assets and liabilities of Caja Nacional, derived from active reinsurance transactions in private markets outside . . . Argentina in which [Caja] was involved . . . to the National Treasury.” Custo Decl. ¶ 8. This resolution specifically identified a $1.6 million contingent liability to TIG. Custo Decl. ¶ 9. In 2005, Argentina's Ministry of Economy and Production issued a final resolution concluding the Caja liquidation and dissolving the entity. Custo Decl. ¶ 10; see also Aldort Decl. Ex. 24, at 319. This resolution provided for Argentina to absorb all of Caja's liquidated and contingent assets and liabilities. Custo Decl. ¶ 11. It also directed the Ministry “to make payments that may rise from the liquidation process” and “manage any and all legal cases that C[a]a] . . . may be a party to and the ones that may be filed in the future.” Custo Decl. ¶ 11 (internal quotation marks omitted).
Although TIG paid Caja the reinsurance premiums it owed, Caja “has repeatedly failed to pay TIG for its portion of the losses under” the reinsurance contracts. First LeGros Decl. ¶ 5; Second LeGros Decl. ¶¶ 3-6. In response, TIG brought arbitral proceedings, first against Caja and then, after its dissolution, against Argentina. Aldort Decl. ¶ 2; First LeGros Decl. ¶ 5. TIG sought the insurance payouts for the portion of the risk that Caja assumed in the reinsurance contracts that TIG was paying out. Second LeGros Decl. ¶ 3. The first arbitration against Caja culminated in a default award for TIG in 2000. Aldort Decl. ¶ 4. In 2017, TIG initiated a second arbitration against Argentina for a different set of losses. Aldort Decl. ¶ 19. The arbitral panel determined that Argentina was the successor-in-interest to Caja and thus liable under the reinsurance contracts. Aldort Decl. Ex. 49 (Mar. 9, 2017, Final Order and Award) ¶¶ 1-4. This arbitration also concluded in a default award in TIG's favor. Aldort Decl. ¶ 20; Mar. 9, 2017, Final Order and Award ¶ 4.
On October 27, 2000, TIG petitioned the U.S. District Court for the Northern District of Illinois to confirm an approximately $4.7 million default arbitration award against Caja Int'l Ins. Co. v. Caja Nacional de Ahorro y Seguro, 293 F.3d 392, 393-94 (7th Cir. 2002). Illinois law requires certain foreign companies, before filing any pleadings, to post “a bond . . . sufficient to secure the payment of any final judgment” that could be entered against them. Id. at 394 (quoting 215 ILCS 5/123(5)). Although Caja did not challenge the Illinois court's subject matter jurisdiction, it did argue that the FSIA exempted it from the above requirement to post security. Id. at 394 & n.2. The district court rejected Caja's argument, struck its pleadings, and, after Caja refused to post security, entered default judgment against it. Id. at 394-95.
On appeal of that default judgment, the Seventh Circuit specifically addressed subject matter jurisdiction. Id. at 395-97. The court concluded that federal question jurisdiction was present “pursuant to the Inter-American Convention on International Commercial Arbitration (known popularly as the ‘Panama Convention'), codified at 9 U.S.C. §301 et seq.” Id. at 395- 96. In the alternative, the court also determined that diversity jurisdiction was available under 28 U.S.C. § 1332(a)(2) because “it [wa]s undisputed that [TIG] [wa]s an American corporation and that Caja [wa]s an Argentinian Business entity.” Id. at 396 n.10. As another alternative basis for jurisdiction, the court said that “even if [Caja] [wa]s a foreign instrumentality, [it] waived its immunity in a proceeding to confirm the arbitral award” and thus jurisdiction was available under the arbitration exception to the FSIA. Id. at 397 (citing 28 U.S.C. § 1605(a)(6)(A)). However, the Court went on to hold that “Caja ha[d] not presented sufficient prima facie evidence to establish that it [wa]s a foreign instrumentality under the FSIA such that it would be entitled to immunity from posting pre-judgment security.” Id. at 399. Accordingly, the Seventh Circuit affirmed the default judgment against Caja. Id. at 393.
While the appeal was pending, TIG sought discovery to aid enforcement of the default judgment. Int'l Ins. Co. v. Caja Nacional de Ahorro y Seguro, No. 00-C-6703, 2001 WL 1516730, at *1 (N.D. Ill. Nov. 28, 2001). The district court originally quashed the plaintiff's citation to discover assets, id. at *3, but later entered an agreed order to govern discovery, Agreed Order, No. 00-CV-06703 (Mar. 19, 2002), Dkt. 52. On December 4, 2002, the district court found that Caja failed to comply with its discovery obligations and sanctioned the company at the rate of $2, 000 per day. Minute Order, No. 00-CV-06703 (Dec. 4, 2002), Dkt. 64; see also Int'l Ins. Co. v. Caja Nacional de Ahorro y Seguro, No. 00-CV-06703, 2004 WL 555618, at *1 (N.D. Ill. Mar. 18, 2004) (documenting discovery history). After further discovery disputes and Caja's failure to comply with court orders, the court increased the sanctions against the company to $4, 000 per day. Mem. Op. & Order at 3, 5, No. 00-CV-06703 (Mar. 17, 2005), Dkt. 115. When the Northern District of Illinois revived the judgment in 2014, the total judgment against Caja-the arbitral award, post-judgment interest, sanctions granted, and attorneys' fees granted-amounted to $23, 898, 354. Reg. of Foreign J. Ex. 1 (Clerk's Certification of Judgment), at 6, Dkt. 1-1.
2. Judgment against Argentina
On April 14, 2017, TIG filed a second petition to confirm a default arbitral award in the Northern District of Illinois. Pet. for Confirmation of Final Arbitration Award, No. 17-cv-2835 (N.D. Ill. Apr. 14, 2017), Dkt. 2. This petition named the Republic of Argentina as the respondent and sought confirmation of a 2017 arbitral award against Argentina in the amount of $3, 459, 489.31, inclusive of interest and costs. Id. ¶¶ 1, 3, 17-18. TIG brought the arbitration against Argentina as the successor-in-interest to Caja to recover on TIG's reinsurance contracts with Caja. Id. ¶¶ 3, 7-10. In September, Argentina contested service of process. Letter from Consulate General of the Argentine Republic, No. 17-cv-2835 (N.D. Ill. Sep. 20, 2017), Dkt. 15. On December 6, the court overruled Argentina's objection to service of process. Minute Entry, No. 17-cv-2835 (N.D. Ill.Dec. 6, 2017), Dkt. 27. On January 8, 2018, the court granted TIG's motion for default judgment, which the clerk entered in the amount of $3, 459, 489.31. J. in Civil Case, No. 17-cv-2835 (N.D. Ill. Jan. 8, 2018), Dkt. 27. The case docket does not reflect an appearance by Argentina or any adjudication of the court's subject matter jurisdiction.
3. Enforcement of judgments
On September 24, 2018, TIG began this proceeding against Argentina and Caja by registering the two Northern District of Illinois judgments pursuant to 28 U.S.C. § 1963. Registration of Foreign Js. The next day, TIG moved for emergency relief related to the real property at 2136 R Street, N.W., Washington, D.C., a writ of attachment on the property and any future proceeds therefrom, and a writ of execution on any future proceeds therefrom. Mots. For Emergency Relief, Attachment-Related Relief, and Writ of Execution on Judgments at 1-3, Dkt. 2. On October 5, the Court requested additional briefing on service of process and the uses of the property. Order at 1, Dkt. 6. On October 24 Argentina entered a special appearance for the limited purpose of contesting service of process and this Court's jurisdiction. Notice of Special Appearance, Dkt. 10. On November 16, Argentina moved to dismiss this case for lack of personal jurisdiction under Rule 12...
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