Gleizer v. Republic of Argentina

962 F.3d 667
Court of Appeals for the Second Circuit·Decided June 18, 2020·No. 19-595·Published·Cited by 5 cases

Opinion

19-595 Gleizer v. Republic of Argentina

United States Court of Appeals for the Second Circuit

AUGUST TERM, 2019

Argued: March 19, 2020

Decided, June 18, 2020

Docket No. 19-595

HERNAN LOPEZ FONTANA, MARIANA MORI DE LOPEZ, Plaintiffs-Appellees,

—v.—

REPUBLIC OF ARGENTINA,

Defendant-Appellee,

—v.—

GUILLERMO GLEIZER,

Movant-Appellant.

Appeal from the United States District Court for the Southern District of New York (Preska, J.)

No. 1:03-cv-08531

Before: KATZMANN, Chief Judge, WESLEY and PARK, Circuit Judges.

Movant-appellant Guillermo Gleizer brought an action on behalf of plaintiffs to recover money owed on defaulted Argentine bonds. That action resulted in a judgment for plaintiffs in 2006, which went unpaid until plaintiffs settled their claims with Argentina in 2016, without Gleizer’s involvement. Gleizer then moved to enforce his attorney’s lien on the settlement proceeds pursuant to New York Judiciary Law § 475. The district court (Preska, J.) denied Gleizer’s motion on the ground that he had not participated in the 2016 settlement. We conclude that the district court had jurisdiction over Gleizer’s claim against Argentina under the commercial activity exception of the Foreign Sovereign Immunity Act. We further conclude that Gleizer’s lien on his clients’ cause of action attached to the settlement proceeds even though he was not involved in the settlement. We therefore VACATE the order of the district court and REMAND for further proceedings consistent with this opinion.

ZACHARY G. MEYER, Sutton Sachs Meyer PLLC, New York, NY, for Movant-Appellant.

MARIANA MORI DE LOPEZ, pro se, Tierra del Fuego, Argentina.

RAHUL MUKHI (Carmine D. Boccuzzi, Jr., on the brief), Cleary Gottlieb Steen & Hamilton LLP, New York, NY, for Defendant-Appellee.

KATZMANN, Chief Judge:

In this case, we consider in principal part whether the Foreign Sovereign Immunities Act (“FSIA”) bars enforcement of New York Judiciary Law § 475 against the Republic of Argentina, and whether an attorney who secured a judgment for plaintiffs in Argentine bond litigation retains a lien, pursuant to New York Judiciary Law § 475, in the proceeds of a subsequent settlement used

to satisfy that judgment, where the settlement was offered universally to bondholders and the attorney did not participate in the settlement process.

Movant-appellant Guillermo Gleizer represented plaintiffs-appellees Hernan Lopez Fontana and Mariana Mori de Lopez in litigation against the Republic of Argentina relating to defaulted Argentine bonds. Although judgment was entered for plaintiffs in 2006, plaintiffs ultimately settled their claims with Argentina in 2016 without Gleizer’s involvement. 1 Almost three years later, Gleizer moved in the district court for an award of attorney’s fees jointly and severally against both plaintiffs and Argentina, arguing that he had a lien on the settlement proceeds by operation of New York Judiciary Law § 475. The district court denied Gleizer’s motion, as well as his subsequent motion for reconsideration, reasoning in both orders that, because Gleizer did not participate in the settlement, he was not entitled to a lien on the settlement proceeds.

Although the district court did not address foreign sovereign immunity, we conclude that Gleizer’s claim against Argentina falls within the commercial

1 It appears that plaintiff Fontana died some years prior to the settlement at issue. We nevertheless refer to “plaintiffs” in this opinion for the sake of consistency.

activity exception of the FSIA. Argentina’s settlement with plaintiffs constitutes an “act outside the territory of the United States in connection with a commercial activity of [Argentina] elsewhere.” 28 U.S.C. § 1605(a)(2). And that act caused “a direct effect in the United States,” id., because it ended long-running litigation in New York. See Atlantica Holdings v. Sovereign Wealth Fund Samruk-Kazyna JSC, 813 F.3d 98, 109 (2d Cir. 2016).

Proceeding to the merits of Gleizer’s claim, we hold that the enforceability of an attorney’s lien against the proceeds of a settlement does not turn on whether the attorney personally participated in the settlement negotiations. Rather, as the plain text of Judiciary Law § 475 indicates and New York caselaw confirms, an attorney “has a lien upon his or her client’s cause of action” that “attaches to” a subsequent settlement or judgment, and “the lien cannot be affected by any settlement between the parties.” N.Y. Jud. L. § 475; see also Sargent v. N.Y. Cent. & Hudson River R. R. Co., 209 N.Y. 360, 365 (1913) (holding that an attorney’s estate was entitled to a lien on a settlement even though the attorney died before the settlement was negotiated). 2 We therefore vacate the

2Unless otherwise indicated, case quotations omit all internal quotation marks, alterations, and citations.

district court’s order and remand for further proceedings consistent with this opinion.

BACKGROUND

In 1994, Argentina issued bonds pursuant to a Fiscal Agency Agreement (“FAA”). See Attestor Value Master Fund v. Republic of Argentina, 940 F.3d 825, 827 (2d Cir. 2019). Plaintiffs, citizens and residents of Argentina, acquired bonds issued under the FAA, but in 2001 the Republic defaulted. 3 Id. In 2003, plaintiffs, represented by Gleizer, commenced this suit to recover the unpaid amount owed on the bonds. The district court entered judgment for plaintiffs in 2006 in the amount of $696,385.14.

The case then lay almost dormant until 2016, when Argentina issued a settlement proposal (or “Propuesta”) to all owners of the defaulted bonds. Under the terms of the Propuesta, bondholders could release their claims against the Republic in exchange for payment in amounts specified by a Master Settlement Agreement (“MSA”). See Attestor, 940 F.3d at 828. Pursuant to the MSA, on

3 The history of the extensive litigation following Argentina’s default is well-known in this Circuit and will not be recounted in detail. See, e.g., NML Capital, Ltd. v. Republic of Argentina, 699 F.3d 246, 251–56 (2d Cir. 2012).

February 8, 2016, plaintiff Mori de Lopez, acting for herself and as executor of Fontana’s estate, agreed to accept $690,000 in satisfaction of the existing judgment.

On November 6, 2018, counsel for Argentina asked the district court to “dismiss” the claims in this case because the judgment had been satisfied. Ltr. Dated Nov. 6, 2018 1–2, Dist. Ct. Dkt. No. 69. Gleizer then moved the court for an order granting him attorneys’ fees of $207,000 “jointly and severally” against both plaintiffs and Argentina, based on their “violation of New York Judiciary Law § 475.” Proposed Order to Show Cause 1, Dist. Ct. Dkt. No. 72. Gleizer also sought a preliminary injunction to prevent Argentina from filing a Satisfaction of Judgment so “as to not prejudice the rights of co-plaintiff Hernan Lopez Fontana,” Id. at 2, apparently unaware that Fontana had passed away. The district court denied Gleizer’s request for injunctive relief as moot and without prejudice to a further application for fees. Order Dated Nov. 14, 2018, Dist. Ct. Dkt. No. 73. The court then entered the satisfaction of judgment on November 14 and dismissed plaintiffs’ claims against Argentina, while clarifying that it “retain[ed] jurisdiction . . . to adjudicate collateral matters in this action such as

attorneys’ fees.” Order of Satisfaction of Judgment and Dismissal, Dist. Ct. Dkt. No. 74.

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