767 Third Avenue Associates v. Consulate General of Socialist Federal Republic of Yugoslavia

218 F.3d 152, 2000 WL 963428
CourtCourt of Appeals for the Second Circuit
DecidedJuly 12, 2000
DocketDocket No. 99-9011
StatusPublished
Cited by5 cases

This text of 218 F.3d 152 (767 Third Avenue Associates v. Consulate General of Socialist Federal Republic of Yugoslavia) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
767 Third Avenue Associates v. Consulate General of Socialist Federal Republic of Yugoslavia, 218 F.3d 152, 2000 WL 963428 (2d Cir. 2000).

Opinion

FEINBERG, Circuit Judge:

On its face, this case concerns nothing more than a garden-variety landlord-tenant dispute. Plaintiffs (the landlords) are seeking to recover unpaid rent for offices leased to the former Socialist Federal Republic of Yugoslavia (SFRY) for use as consular offices in New York. Unfortunately for the landlords, the SFRY has ceased to exist. Beginning in 1991, the SFRY faced political upheaval and military conflict that eventually led to its disintegration. As a result, the SFRY has been replaced by five successor states: Slovenia, Croatia, Bosnia-Herzegovina, Macedonia, and the Federal Republic of Yugoslavia which is composed of Serbia and Montenegro (FRY). (Successors or successor states). A by-product of this conflict has been a number of civil suits in this country involving the SFRY, its agencies and state-owned companies, and the successor states, regarding their assets and liabilities in the United States.1

The landlords are suing the former SFRY and the five successor states. The landlords appeal from a judgment of the United States District Court for the Southern District of New York, Constance B. Motley, J., holding that the issues of whether any or all of defendant states succeed to the liabilities of the SFRY, and, if so, in what proportion, raise political questions that a federal court is not competent to decide. Instead of simply dismissing, however, the court issued an indefinite stay of the action. For the reasons set forth below, we affirm the district [156]*156court’s decision as to justiciability, vacate the stay order and remand to the district court with instructions to enter a judgment for defendants and dismiss the complaint.

I. Background

A. Dissolution of the SFRY and Emergence of Successor States

Much has been written about the sad events in the Balkans in the last decade leading to the breakup of the former SFRY and the emergence of the successor states. For the purposes of this appeal, we see no need to add to the volumes of print on the subject except to cite those facts pertinent to the appeal.

Slovenia and Croatia formally declared independence in June 1991. Macedonia issued a declaration of independence in September 1991 and adopted a constitution in November 1991. Bosnia-Herzegovina declared its independence in March 1992. The United States recognized Slovenia, Croatia and Bosnia-Herzegovina in April 1992. In the following month, the three republics were admitted to the United Nations.2 Susan L. Woodward, Balkan Tragedy 403-04 (1995). On April 27, 1992, the republics of Serbia and Montenegro declared themselves, under the name of FRY, the continuation and sole successors of the former SFRY. Neither the United States nor the European Community recognized the FRY. Richard Holbrooke, To End A War 5 n.0 (1998).3 The Arbitration Commission, an arm of the International Conference on Former Yugoslavia which coordinated peacemaking efforts during the conflict, issued a number of opinions relevant to the succession of the successor states from the SFRY. Among its recommendations, the Commission noted that aspects of succession involving “state property, archives and debts” are issues that must be resolved “by negotiation and agreement” among the successor states.

On May 24, 1992, the United States formally acknowledged that the SFRY had ceased to exist. In addition, SFRY’s assets in this country have been blocked by executive orders dated May 30, 1992 and June 5, 1992 and related Treasury Department Regulations. See Exec. Order No. 12,808, 57 Fed.Reg. 23,299 (1992); Exec. Order No. 12,810, 57 Fed.Reg. 24,347 (1992).

The wars between the FRY and the other successor states, most notably Bosnia-Herzegovina, raged from the end of 1991 until 1995. In late 1995, following intense negotiations mediated primarily by the United States, the FRY and the successor states signed the Dayton Accords marking the end of the armed conflict in Bosnia. Simultaneously, a Peace Implementation Council was established in order to arrive at a comprehensive resolution of succession issues among the successor states. The United States and the successors claim that negotiations on these subjects have been sporadic but are still continuing.

B. The Leases

The SFRY had entered into three leases with the landlords in early 1981. The offices were leased for use by three SFRY government agencies: the Consulate General of the SFRY (Consulate), the Yugoslav Press and Cultural Center (Cultural Center), and the Yugoslav Chamber of Economy (Chamber of Economy). All three leases expired in August 1991. On August 5, 1991, the Chamber of Economy’s lease was extended to August 31, 1996; on October 21, 1991, the Cultural Center’s lease was extended to September 30, 1994; [157]*157and, on October 28, 1991, the Consulate’s lease was extended to August 31, 1996. See 767 Third Ave. Assocs. v. Consulate General of the SFRY, 60 F.Supp.2d 267, 269 (S.D.N.Y.1999).

As a result of the disintegration of the SFRY in 1991 and in opposition to Serbia’s conduct, the United States Department of Treasury ordered the SFRY to close its consular offices and terminate all operations by May 31, 1992. The State Department also ordered all SFRY personnel to leave the United States by June 7, 1992. The landlords now allege that the-SFRY breached the lease extensions by failing to pay the rent owed under the leases. The landlords claim that the total rent owed is $2,262,224 plus interest. Id. at 269-70.

C. Procedural History

In June 1992, shortly after they were notified of the tenants’ breach, the landlords filed a civil suit against the United States in the United States Court of Federal Claims, alleging that the closing of SFRY’s consular offices “constituted a regulatory taking of its property, consisting of the benefits of its leases, for which it was entitled to just compensation under the Fifth Amendment.” 767 Third Ave. Assocs. v. United States, 48 F.3d 1575, 1578 (Fed.Cir.1995). The trial court granted the United States’ motion for summary judgment, holding that plaintiffs “had no compensable investment-backed expectation ‘to be free from government interference with [their] contract rights.’ ” Id. (quoting 30 Fed. Cl. 216, 222 (1993)). The Court of Appeals for the Federal Circuit affirmed.

In July 1992, while the landlords’ action in the Court of Federal Claims was pending, they filed another action in the Southern District against the Consulate, the Cultural Center, and the Chamber of Economy. 767 Third Ave. Assocs. v. Consulate Gen. of the Socialist Federal Republic of Yugoslavia, No. 92 Civ. 4946 (S.D.N.Y.1992). In December 1992, a default judgment against the Chamber of Economy was entered in the amount of $8,483.63 with interest. The Chamber of Economy has not yet paid the judgement. The case against the Consulate and the Cultural Center was settled in December 1992. While the Cultural Center made its payment under the settlement, the Consulate has not yet made its payment. See 767 Third Ave., 60 F.Supp.2d at 270.

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