Estate of Yael Botvin v. Heideman, Nudelman & Kalik, P.C.

115 F.4th 594
Court of Appeals for the D.C. Circuit·Decided September 6, 2024·No. 22-7171·Published

Opinion

United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 16, 2024 Decided September 6, 2024

No. 22-7171

ESTATE OF YAEL BOTVIN, BY RUSSELL ELLIS, ADMINISTRATOR, ET AL., APPELLANTS

v.

HEIDEMAN, NUDELMAN & KALIK, P.C., ET AL., APPELLEES

Appeal from the United States District Court for the District of Columbia (No. 1:21-cv-03186)

Robert J. Tolchin argued the cause and filed the briefs for appellants.

Jason R. Waters argued the cause and filed the brief for appellees.

Before: KATSAS and PAN, Circuit Judges, and GINSBURG, Senior Circuit Judge.

Opinion for the Court filed by Circuit Judge KATSAS.

KATSAS, Circuit Judge: The plaintiffs in this legal-

malpractice action are the estate and family members of Yael Botvin, who was killed in 1997 by Hamas suicide bombers. In 2005, the plaintiffs sued the Islamic Republic of Iran for helping Hamas orchestrate the attack. They won large default judgments and recovered about $2.8 million from a United States fund for victims of state-sponsored terrorism. But because it took nearly eight years to obtain the default judgments, the plaintiffs were unable to participate in a 2012 agreement that disbursed to victims of Iranian-sponsored terrorism a trove of Iranian assets seized in the United States. According to the plaintiffs, their recovery would have been much larger had they been able to participate in that agreement.

The plaintiffs sued their former lawyers for malpractice.

They allege that the lawyers’ negligence delayed their default judgment against Iran and caused them to miss out on the larger settlement. On a motion to dismiss, the district court held the plaintiffs had adequately pleaded that the alleged negligence was a but-for cause of the lower recovery. But in addressing proximate cause, the court held that the plaintiffs had not adequately pleaded the requisite degree of foreseeability. We reverse that decision.

I

On a motion to dismiss for the failure to state a claim, we must accept as true the facts alleged in the complaint. See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). We also may consider court records and other judicially noticeable documents. EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624–25 (D.C. Cir. 1997).

A

In 1997, three Hamas suicide bombers blew themselves up in a pedestrian mall in Jerusalem. They killed five people, including fourteen-year-old Yael Botvin, and injured nearly two hundred more. Other victims of the bombing successfully obtained judgments against Iran for sponsoring the attack.

In 2004, Botvin’s estate and family hired the law firm of Heideman Nudelman & Kalik, P.C. to do the same. In 2005, the firm filed a complaint against Iran in our district court. Iran never appeared to defend, yet the firm did not obtain a default judgment until July 2012. According to the plaintiffs, attorney negligence caused this long delay.

As originally filed, the complaint raised various state-law tort claims. Although United States courts generally lack jurisdiction over foreign sovereigns, the Foreign Sovereign Immunities Act contained an exception for suits seeking damages for state-sponsored acts of terrorism. 28 U.S.C. § 1605(a)(7) (2004).

After Iran failed to appear, the lawyers moved the district court to enter a default. Because the request should have been made to the clerk of the court, see Fed. R. Civ. P. 55(a), the court denied the motion, App’x 98. Only then did the lawyers ask the clerk to enter the default.

Once the clerk did so, the lawyers moved the court for entry of a default judgment, which required them to establish a “right to relief by evidence satisfactory to the court.” 28 U.S.C. § 1608(e). The motion proffered no evidence other than findings and conclusions in another case holding Iran liable for the same bombing. The district court held that this evidence did not establish each element of the plaintiffs’ individual claims, so it denied the motion without prejudice. Estate of

Botvin ex rel. Ellis v. Islamic Republic of Iran, 510 F. Supp. 2d 101, 102–03 (D.D.C. 2007).

When the lawyers filed the complaint, there was no federal cause of action against foreign sovereigns for injuries caused by state-sponsored terrorism. The FSIA provided subjectmatter jurisdiction for such actions, but the actions had to arise under state or foreign law. See Cicippio-Puleo v. Islamic Republic of Iran, 353 F.3d 1024, 1027 (D.C. Cir. 2004). In 2008, shortly after the district court denied the first motion for a default judgment, Congress changed the legal landscape. It enacted 28 U.S.C. § 1605A(c), which created a plaintifffriendly cause of action against foreign sovereigns for supporting terrorism. Because some plaintiffs had incorrectly assumed that the FSIA provided a federal cause of action, Congress allowed any plaintiff who had invoked the Act as the basis for its claim to convert the action into one under the new statute. See id. § 1605A(a)(2)(A)(i)(II); id. § 1605A note (2)(A) (Prior Actions). Congress also allowed for certain parties who had not relied on a federal cause of action to refile their claims under the new law. Id. § 1605A notes (2)–(3).

Congress’ creation of the federal cause of action gave Botvin’s lawyers three options: continue the existing lawsuit under state law, invoke the new federal cause of action in the pending lawsuit, or refile the lawsuit under the federal cause of action. The lawyers attempted both options for teeing up federal claims. In the pending action, they moved the court to convert their state-law causes of action into the federal ones and to enter a default judgment. Simultaneously, they filed a new lawsuit raising federal causes of action. App’x 16–17. Neither strategy bore fruit.

The motion in the existing case was flawed in two respects.

First, because the original complaint did not invoke any purported federal cause of action, it could not proceed under 28

U.S.C. § 1605A(c). See Estate of Botvin ex rel. Ellis v. Islamic Republic of Iran, 604 F. Supp. 2d 22, 25–26 (D.D.C. 2009). Second, the evidence again was insufficient to support a default judgment under state law because the lawyers had submitted unsworn declarations and failed to explain how the evidence related to the Botvins’ claims. Id. at 24–25. Denying the motion without prejudice, the court requested further briefing on unanswered choice-of-law questions. Id. at 26.

The lawyers tried again. They argued that California law should apply because Botvin was born in California before moving to Israel. And they sought entry of a default judgment under California law. But after an intervening decision made clear that Israeli law should apply, see Oveissi v. Islamic Republic of Iran, 573 F.3d 835 (D.C. Cir. 2009), the district court again denied the motion without prejudice, and it allowed further briefing on whether Iran was liable to the Botvins under Israeli law, Estate of Botvin ex rel. Ellis v. Islamic Republic of Iran, 684 F. Supp. 2d 34, 39–42 (D.D.C. 2010).

The next (fourth) motion for default judgment failed for the same reason. Instead of providing satisfactory analysis under Israeli law, the lawyers primarily tried to relitigate the choice-of-law question. Left again without adequate evidence and argument under the governing legal standards, the district court once more denied the motion without prejudice and again allowed further briefing on liability under Israeli law. Estate of Botvin ex rel. Ellis v. Islamic Republic of Iran, 772 F. Supp. 2d 218, 223–32 (D.D.C. 2011).

While the lawyers were attempting to obtain a default judgment in the original case, the parallel case (invoking the new federal cause of action) fared even worse. The lawyers failed to file proof of service. A year passed, and after the lawyers ignored a show-cause order, the district court dismissed the case for lack of prosecution. Order at 1,

Goldberg-Botvin v. Islamic Republic of Iran, No. 1:08-cv- 00503, ECF No. 3 (D.D.C. Apr. 23, 2010).

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Estate of Yael Botvin v. Heideman, Nudelman & Kalik, P.C., 115 F.4th 594 (D.C. Cir. 2024).

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