Byrd v. Corporacion Forestal y Industrial de Olancho, S.A.

974 F. Supp. 2d 264, 86 Fed. R. Serv. 3d 1016, 2013 WL 5452526, 2013 U.S. Dist. LEXIS 143444
CourtDistrict Court, S.D. New York
DecidedSeptember 30, 2013
DocketNo. 11 MISC. 0443
StatusPublished
Cited by4 cases

This text of 974 F. Supp. 2d 264 (Byrd v. Corporacion Forestal y Industrial de Olancho, S.A.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Byrd v. Corporacion Forestal y Industrial de Olancho, S.A., 974 F. Supp. 2d 264, 86 Fed. R. Serv. 3d 1016, 2013 WL 5452526, 2013 U.S. Dist. LEXIS 143444 (S.D.N.Y. 2013).

Opinion

MEMORANDUM AND ORDER

WILLIAM H. PAULEY III, District Judge:

In 2003, Plaintiffs Cortez Byrd and Simmons Lumber Company, S.A. obtained a $188,301,528.87 judgment against Defendant Corporación Forestal y Industrial de Olancho, S.A. (“Corfíno”), an “agent or instrumentality” of the Republic of Honduras, as that term is defined in section 1603 of the Foreign Sovereign Immunities Act (“FSIA”). See Byrd v. Corporacion Forestal y Industrial de Oloncho, S.A., No. 3:97-cv-00415-WS, S.D.Miss., Docket No. 127. In 2011, Plaintiffs registered their Southern District of Mississippi judgment in the Southern District of New York. By that time, with interest, the judgment totaled $205,880,749.18.

In January 2013, before attaching any assets in this district, Plaintiffs applied for a declaration that they satisfied the FSIA section 1610(c) notice provisions. By Or[266]*266der dated January 23, 2013 (the “January Order”), this Court, sitting as Part 1, concluded that Plaintiffs met the statutory requirements and found that the Republic of Honduras was the successor in interest of Corfino. The January Order enabled Plaintiffs to seek execution of their judgment against Honduras directly. Honduras did not appear at the hearing on Plaintiffs’ application even though they had served it on the Honduran Attorney General.

On February 22, 2013, Honduras filed a notice of appeal from the January Order. Thereafter, on March 15, 2013, Honduras sought relief from the January Order pursuant to Rule 60(b), as part of an application to this Court seeking vacatur of a restraining notice Plaintiffs had since obtained to execute on their judgment. Because Honduras filed its Rule 60(b) motion more than 28 days after entry of the January Order, the February 22, 2013 notice of appeal stripped this Court of jurisdiction to decide the motion. See Fed. R.App. P. 4(a)(4)(A)(vi).

But pursuant to Fed.R.Civ.P. 62.1, “[i]f a timely motion is made for relief that the court lacks authority to grant because of an appeal that has been docketed and is pending, the court may: (1) defer considering the motion; (2) deny the motion; or (3) state either that it would grant the motion if the court of appeals remands for that purpose or that the motion raises a substantial issue.” For the following reasons, this Court indicates that if jurisdiction were restored, it would reconsider and vacate the January Order. In view of this indicative ruling, a related motion for reconsideration filed by Plaintiffs on April 1, 2013 is denied.

I. Background

In 1997, Plaintiffs filed suit against Corfino in the Southern District of Mississippi alleging various breach of contract and tort claims related to Plaintiffs’ ouster as managers of a multimillion dollar project to exploit lumber resources in Honduras’ Olancho region. Corfino, a public corporation created under Honduran law by Cohdefor,1 the Honduran Forest Ministry, initiated the project. Corfino moved to dismiss the Mississippi action on sovereign immunity grounds. While Corfino was an “agent or instrumentality” of Honduras under FSIA § 1603(b), the district court applied the “commercial activities” exception and concluded that Corfino was not entitled to sovereign immunity. See 28 U.S.C. § 1605(a)(2) (no foreign sovereign immunity for actions based on commercial activities having a direct effect in the United States). Corfino appealed and the Fifth Circuit affirmed. See Byrd v. Corporacion Forestal y Industrial De Oloncho, S.A., 182 F.3d 380 (5th Cir.1999). Thereafter, Corfino ceased defending the lawsuit and the judgment was entered after a hearing on the merits. In 2003, Corfino was dissolved. Over the following decade, Plaintiffs endeavored to collect on their judgment without success. In 2011, they registered their judgment in the Southern District of New York but took no further action until January 2013.

At that time, Plaintiffs sought an order from this Court finding compliance with the notice provisions of section 1610(c) of the FSIA. Under section 1610(c), “[n]o attachment or execution [of the property of a foreign state or its instrumentality] ... shall be permitted until the court has ordered such attachment and execution after having determined that a reasonable period of time has elapsed following the entry of judgment and the giving of any notice required under section 1608(e) of this [267]*267chapter.” Section 1608(e) sets forth the procedures for serving a default judgment on a foreign state or its instrumentality. Plaintiffs sought a “narrow order” finding only that a reasonable period of time had elapsed after entry of the judgment against Corfino in 2003 and that notice under section 1608(e) was not required because the judgment was not a default. (Pis.’ Br. in Supp. of Mot. for 1610(c) Order, dated 12/29/12 (“Pis.’ Br.”) at 3.) The January Order neither authorized the attachment of any specific property nor made any findings whether such property would be immune from attachment or execution under sections 1610(a) or (b) of the FSIA.

Plaintiffs also sought a judicial finding that Honduras was Corfino’s successor in interest. In their application, Plaintiffs noted that Corfino was created under Honduran law, that Cohdefor was required by law to hold 51% of its stock at all times, that Cohdefor in fact held no less than 98% of Corfino’s stock during the span of Corfino’s existence, that Honduras treated the debts of Corfino as debts of the state, and that Honduras’ Secretariat of Finances assumed Corfino’s debts upon its liquidation. (Pis. Br. at 6-9.) Plaintiffs served their motion on Honduras’ Attorney General, but Honduras did not appear.

On March 15, 2013, Honduras was set to close on a $500,000,000 bond offering with Deutsche Bank. But the transaction was threatened when Plaintiffs — using the January Order — obtained a restraining notice against Deutsche Bank pursuant to N.Y. C.P.L.R. § 5222(b). Deutsche Bank informed Honduras it would not proceed unless the restraining notice was lifted. Honduras sought emergency relief from this Court seeking vacatur of the January Order and the restraining notice. While this Court deferred ruling on Honduras’ request to vacate the January Order, it vacated the restraining notice on the ground that no Honduran property was in Deutsche Bank’s possession at the time the notice was served. See N.Y. C.P.L.R. § 5222(b). On April 1, 2013, Plaintiffs moved for reconsideration, claiming they had new evidence that Deutsche Bank was in the possession of Honduran property at the time that restraining notice was served.2

II. Honduras’ Motion to Vacate the January 28 Order

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974 F. Supp. 2d 264, 86 Fed. R. Serv. 3d 1016, 2013 WL 5452526, 2013 U.S. Dist. LEXIS 143444, Counsel Stack Legal Research, https://law.counselstack.com/opinion/byrd-v-corporacion-forestal-y-industrial-de-olancho-sa-nysd-2013.