UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
INVERSORA MURTEN, S.A., ) ) Plaintiff, ) ) v. ) Misc. Action No. 03-73 (RWR)(JMF) ) ENERGOPROJEKT HOLDING CO., ) ) Defendant. ) )
MEMORANDUM OPINION
Inversora Murten, S.A. (“Inversora”) filed a writ of
attachment against an intended garnishee, the Japan Bank for
International Cooperation (“JBIC”). Magistrate Judge John M.
Facciola has recommended that Inversora’s writ of attachment be
quashed for lack of subject matter jurisdiction because JBIC and
its successor organizations - - the Japan Finance Corporation
(“JFC”) and the Japan International Cooperation Agency (“JICA”)
- - enjoy sovereign immunity under the Foreign Sovereign Immunity
Act (“FSIA”), 28 U.S.C. §§ 1604, 1611. Inversora has submitted
objections to the report and recommendation. Because the
magistrate judge’s recommendation is fully supported in law and
Inversora’s objections are without merit, the recommendation will
be adopted and Inversora’s writ of attachment will be quashed. -2-
BACKGROUND
The history and background of this case and the underlying
motions are discussed in Inversora Murten, S.A. v.
Energoprojekt-Niskogradnja Co., 264 Fed. Appx. 13, 14 (D.C. Cir.
2008), and Magistrate Judge Facciola’s report and recommendation
of April 8, 2009 (“Report and Recommendation”), Docket Entry 63,
at 1-3. Briefly, Inversora obtained a default judgment for
roughly $39 million in the U.S. District Court for the District
of New Jersey against Energoprojekt Holding Company
(“Energoprojekt”). In September, 2005, Inversora obtained from
this court against JBIC a form writ of attachment bearing two
pre-printed interrogatories with spaces after them for JBIC’s
answers. That month, JBIC filed verified answers to the
interrogatories. Interrogatory 1 asked, “[w]ere you at the time
of the service of the writ of attachment, or have you been
between the time of such service and the filing of your answers
to this interrogatory, indebted to the defendant(s), and, if so,
how, and in what amount?” JBIC answered, “[w]ithout waiving any
defense based on a lack of personal jurisdiction, [JBIC] states
that, at the time of service of the writ of attachment and
between that time and service of this answer, JBIC was not
indebted to the defendant.” (See Verified Answers of JBIC
(“JBIC’s Answers”) at 2.) Interrogatory 2 asked, “[h]ad you at
the time of the service of the writ of attachment, or have you -3-
had between the time of such service and the filing of your
answer to this interrogatory, any goods, chattels, or credits of
the defendant(s) in your possession or charge, and if so, what?”
JBIC’s answer stated, “[w]ithout waiving any defense based on a
lack of personal jurisdiction, JBIC states that, at the time of
the service of the writ of attachment and between that time and
service of this answer, JBIC did not possess or have in its
charge any goods, chattels, or credits of defendant [sic].”
(Id.) Later, in November 2005, JBIC issued a letter to
Inversora’s counsel stating that it believed that Inversora’s
writ of garnishment was “without any force or effect” because,
among other things, “JBIC is immune under” the FSIA. (See JFC’s
Resp. to Pl.’s Objns., Ex. 1 (“November 9, 2005 Ltr.”) at 2-3.)
In December 2008, JBIC notified the court that it had been
restructured into two entities - - JFC and JICA. Shortly
thereafter, Inversora moved for an order requiring JFC and JICA
to appear at a hearing to allow Inversora and the magistrate
judge to question JFC and JICA under oath in order to determine
whether they held any property or credits that belonged to
Energoprojekt. The magistrate judge granted Inversora’s motion
and scheduled the hearing. (See Order of January 29, 2009,
Docket Entry 51, at 1.)
Instead of appearing at the hearing, JFC and JICA filed
notices of sovereign immunity. In its notice of sovereign -4-
immunity, JFC stated that it is not a “privatized public
corporation,” but instead is a “public corporation wholly owned
by the Japanese government and established by legislative
enactment of the Japanese Diet,” which “assumed the
responsibility for the former JBIC’s international financial
operations[.]” (See Notice of Sovereign Immunity by JFC (“JFC’s
Notice”) at 1-2.) Similarly, in its notice of sovereign
immunity, JICA stated that it is an “official agency of the
Government of Japan, established by legislative enactment of the
Japanese Diet.” (See Notice of Sovereign Immunity by JICA
(“JICA’s Notice”) at 1.)
Inversora responded that its writ of attachment should not
be quashed and that the garnishment proceeding should occur
because JBIC, the predecessor to JFC and JICA, implicitly waived
the defense of sovereign immunity by answering the
interrogatories that accompanied the writ of attachment with a
filing that did not contain the defense of sovereign immunity or
lack of subject matter jurisdiction. (See Resp. of Inversora to
JFC’s Notice at 2-3; Resp. of Inversora to JICA’s Notice
(“Inversora’s Resp. to JICA”) at 3-4.) Inversora asserted that
JBIC’s answers to the interrogatories constituted a responsive
pleading, and that once JBIC waived the defense of sovereign
immunity by failing to include it in the responsive pleading,
neither JBIC nor its successor organizations could reassert the -5-
argument. (See Inversora’s Resp. to JICA at 5-7.) However,
Inversora did not dispute the assertion that the JBIC, JFC, and
JICA qualified as agencies or instrumentalities under the FSIA.
The magistrate judge’s report and recommendation first
determined that based upon the assertions that they made in their
notices of sovereign immunity, both JFC and JICA qualified for
sovereign immunity as instrumentalities of a foreign state under
28 U.S.C. § 1603(b) because both entities were successors in
interest to JBIC and because Peterson v. Islamic Republic of
Iran, 563 F. Supp. 2d 268, 273 (D.D.C. 2008), held that “JBIC is
an ‘agency or instrumentality of a foreign state as defined under
28 U.S.C. § 1603(b).’” See Report and Recommendation at 4-6.
Next, the report and recommendation determined that JBIC did not
waive the defense of sovereign immunity because an answer to
interrogatories served with a writ of garnishment is not
identified as a responsive pleading under Federal Rule of Civil
Procedure 7(a), and because JBIC’s response to Inversora’s
interrogatories “can be interpreted as neither asserting nor
waiving immunity.” Report and Recommendation at 7-8. Finally,
the report recommended quashing Inversora’s writ of attachment
against JFC and JICA because JFC and JICA were immune from suit
under the FSIA. Id. at 9. Inversora objected, insisting that
the interrogatory answers bearing no assertion of sovereign -6-
immunity constituted a responsive pleading that waived the
defense.
DISCUSSION
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UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
INVERSORA MURTEN, S.A., ) ) Plaintiff, ) ) v. ) Misc. Action No. 03-73 (RWR)(JMF) ) ENERGOPROJEKT HOLDING CO., ) ) Defendant. ) )
MEMORANDUM OPINION
Inversora Murten, S.A. (“Inversora”) filed a writ of
attachment against an intended garnishee, the Japan Bank for
International Cooperation (“JBIC”). Magistrate Judge John M.
Facciola has recommended that Inversora’s writ of attachment be
quashed for lack of subject matter jurisdiction because JBIC and
its successor organizations - - the Japan Finance Corporation
(“JFC”) and the Japan International Cooperation Agency (“JICA”)
- - enjoy sovereign immunity under the Foreign Sovereign Immunity
Act (“FSIA”), 28 U.S.C. §§ 1604, 1611. Inversora has submitted
objections to the report and recommendation. Because the
magistrate judge’s recommendation is fully supported in law and
Inversora’s objections are without merit, the recommendation will
be adopted and Inversora’s writ of attachment will be quashed. -2-
BACKGROUND
The history and background of this case and the underlying
motions are discussed in Inversora Murten, S.A. v.
Energoprojekt-Niskogradnja Co., 264 Fed. Appx. 13, 14 (D.C. Cir.
2008), and Magistrate Judge Facciola’s report and recommendation
of April 8, 2009 (“Report and Recommendation”), Docket Entry 63,
at 1-3. Briefly, Inversora obtained a default judgment for
roughly $39 million in the U.S. District Court for the District
of New Jersey against Energoprojekt Holding Company
(“Energoprojekt”). In September, 2005, Inversora obtained from
this court against JBIC a form writ of attachment bearing two
pre-printed interrogatories with spaces after them for JBIC’s
answers. That month, JBIC filed verified answers to the
interrogatories. Interrogatory 1 asked, “[w]ere you at the time
of the service of the writ of attachment, or have you been
between the time of such service and the filing of your answers
to this interrogatory, indebted to the defendant(s), and, if so,
how, and in what amount?” JBIC answered, “[w]ithout waiving any
defense based on a lack of personal jurisdiction, [JBIC] states
that, at the time of service of the writ of attachment and
between that time and service of this answer, JBIC was not
indebted to the defendant.” (See Verified Answers of JBIC
(“JBIC’s Answers”) at 2.) Interrogatory 2 asked, “[h]ad you at
the time of the service of the writ of attachment, or have you -3-
had between the time of such service and the filing of your
answer to this interrogatory, any goods, chattels, or credits of
the defendant(s) in your possession or charge, and if so, what?”
JBIC’s answer stated, “[w]ithout waiving any defense based on a
lack of personal jurisdiction, JBIC states that, at the time of
the service of the writ of attachment and between that time and
service of this answer, JBIC did not possess or have in its
charge any goods, chattels, or credits of defendant [sic].”
(Id.) Later, in November 2005, JBIC issued a letter to
Inversora’s counsel stating that it believed that Inversora’s
writ of garnishment was “without any force or effect” because,
among other things, “JBIC is immune under” the FSIA. (See JFC’s
Resp. to Pl.’s Objns., Ex. 1 (“November 9, 2005 Ltr.”) at 2-3.)
In December 2008, JBIC notified the court that it had been
restructured into two entities - - JFC and JICA. Shortly
thereafter, Inversora moved for an order requiring JFC and JICA
to appear at a hearing to allow Inversora and the magistrate
judge to question JFC and JICA under oath in order to determine
whether they held any property or credits that belonged to
Energoprojekt. The magistrate judge granted Inversora’s motion
and scheduled the hearing. (See Order of January 29, 2009,
Docket Entry 51, at 1.)
Instead of appearing at the hearing, JFC and JICA filed
notices of sovereign immunity. In its notice of sovereign -4-
immunity, JFC stated that it is not a “privatized public
corporation,” but instead is a “public corporation wholly owned
by the Japanese government and established by legislative
enactment of the Japanese Diet,” which “assumed the
responsibility for the former JBIC’s international financial
operations[.]” (See Notice of Sovereign Immunity by JFC (“JFC’s
Notice”) at 1-2.) Similarly, in its notice of sovereign
immunity, JICA stated that it is an “official agency of the
Government of Japan, established by legislative enactment of the
Japanese Diet.” (See Notice of Sovereign Immunity by JICA
(“JICA’s Notice”) at 1.)
Inversora responded that its writ of attachment should not
be quashed and that the garnishment proceeding should occur
because JBIC, the predecessor to JFC and JICA, implicitly waived
the defense of sovereign immunity by answering the
interrogatories that accompanied the writ of attachment with a
filing that did not contain the defense of sovereign immunity or
lack of subject matter jurisdiction. (See Resp. of Inversora to
JFC’s Notice at 2-3; Resp. of Inversora to JICA’s Notice
(“Inversora’s Resp. to JICA”) at 3-4.) Inversora asserted that
JBIC’s answers to the interrogatories constituted a responsive
pleading, and that once JBIC waived the defense of sovereign
immunity by failing to include it in the responsive pleading,
neither JBIC nor its successor organizations could reassert the -5-
argument. (See Inversora’s Resp. to JICA at 5-7.) However,
Inversora did not dispute the assertion that the JBIC, JFC, and
JICA qualified as agencies or instrumentalities under the FSIA.
The magistrate judge’s report and recommendation first
determined that based upon the assertions that they made in their
notices of sovereign immunity, both JFC and JICA qualified for
sovereign immunity as instrumentalities of a foreign state under
28 U.S.C. § 1603(b) because both entities were successors in
interest to JBIC and because Peterson v. Islamic Republic of
Iran, 563 F. Supp. 2d 268, 273 (D.D.C. 2008), held that “JBIC is
an ‘agency or instrumentality of a foreign state as defined under
28 U.S.C. § 1603(b).’” See Report and Recommendation at 4-6.
Next, the report and recommendation determined that JBIC did not
waive the defense of sovereign immunity because an answer to
interrogatories served with a writ of garnishment is not
identified as a responsive pleading under Federal Rule of Civil
Procedure 7(a), and because JBIC’s response to Inversora’s
interrogatories “can be interpreted as neither asserting nor
waiving immunity.” Report and Recommendation at 7-8. Finally,
the report recommended quashing Inversora’s writ of attachment
against JFC and JICA because JFC and JICA were immune from suit
under the FSIA. Id. at 9. Inversora objected, insisting that
the interrogatory answers bearing no assertion of sovereign -6-
immunity constituted a responsive pleading that waived the
defense.
DISCUSSION
The magistrate judge’s report and recommendation is reviewed
de novo. LCvR 72.3(c); see also Fed. R. Civ. P. 72; Ames v.
Yellow Cab of D.C., Inc., Civ. Action No. 00-3116 (RWR), 2006 WL
2711546, at *4 (D.D.C. September 21, 2006).
“The FSIA provides the exclusive basis for a court’s
jurisdiction over a foreign state.” Intelsat Global Sales &
Mktg. v. Cmty. of Yugoslav Posts Telegraphs & Telephones, 534 F.
Supp. 2d 32, 34 (D.D.C. 2008). “Under the FSIA, a court may
entertain jurisdiction over a civil complaint directed against a
foreign sovereign ‘only if the foreign state lacks immunity under
the Act’s prescriptions[.]’” Doe v. Bin Laden, 580 F. Supp. 2d
93, 96 (D.D.C. 2008) (quoting Practical Concepts, Inc. v.
Republic of Bolivia, 811 F.2d 1543, 1544 (D.C. Cir. 1987) and 28
U.S.C. § 1604). An agency or instrumentality of a foreign state
is treated as a foreign state under the FSIA, 28 U.S.C.
§ 1603(a), and thus is “immune from the jurisdiction of the
courts of the United States.” Peterson, 563 F. Supp. 2d at 273
(quoting 28 U.S.C. § 1604). Under the FSIA, an agency or
instrumentality of a foreign state is an entity that is (1) “a
separate legal person, corporate or otherwise”; (2) “an organ of
a foreign state”; and (3) “neither a citizen of a State of the -7-
United States . . . nor created under the laws of any third
country.” 28 U.S.C. § 1603(b). When a defendant qualifies for
sovereign immunity, “the federal courts lack subject matter
jurisdiction” over proceedings against that defendant, and
therefore “must dismiss the case” against the immune defendant.
Auster v. Ghana Airways, Ltd., 514 F.3d 44, 48 (D.C. Cir. 2008).
However, an agency or instrumentality of a state that would
otherwise be immune under the FSIA may waive its immunity,
“either explicitly or by implication.” See 28 U.S.C.
§ 1605(a)(1); Gutch v. Fed. Republic of Germany, 255 Fed. Appx.
524, 525 (D.C. Cir. 2007). While the FSIA lacks a definition of
an implied waiver, the D.C. Circuit has held that there are three
situations where a foreign state or an agency or instrumentality
of a foreign state implicitly waives the defense of sovereign
immunity: “where a foreign state has filed a responsive pleading
without raising the defense of sovereign immunity”; where a
foreign state agrees to participate in arbitration in another
country; and where a foreign state agrees in a contract that the
laws of another country will govern that contract. See World
Wide Minerals, LTD. v. Republic of Kazakhstan, 296 F.3d 1154,
1161 n.11 (D.C. Cir. 2002). However, the D.C. Circuit construes
the implied waiver provision narrowly. Id. (citing Creighton
Ltd. v. Government of the State of Qatar, 181 F.3d 118, 122 (D.C.
Cir. 1999) (“[I]mplicit in [the concept of implied waiver] is the -8-
requirement that the foreign state have intended to waive its
sovereign immunity.”); see also Doe v. State of Israel, 400 F.
Supp. 2d 86, 105 (D.D.C. 2005) (stating that implicit waiver
requires that a foreign sovereign “subjectively intend” to waive
the defense of sovereign immunity). Furthermore, in general,
participation in discovery will not be the basis for an implied
waiver of sovereign immunity. See Rodriguez v. Transnave Inc.,
8 F.3d 284, 289 (5th Cir. 1993) (citing federal cases for the
proposition that “federal courts have been reluctant to find a
waiver from the nature of a foreign state’s participation in
litigation”).
Inversora does not object to the report and recommendation’s
determination that JFC and JICA are successors in interest to
JBIC, or the determination that all three entities qualify for
sovereign immunity under the FSIA as agencies or
instrumentalities of a foreign state. Instead, Inversora objects
to only the report and recommendation’s determination that
because JBIC’s filing was not a responsive pleading under Rule
7(a), JBIC did not waive its sovereign immunity by filing answers
to the interrogatories that did not assert the sovereign immunity
Inversora has not presented any authority showing that this
court or any other court has held that a party’s answers to
interrogatories, whether in a normal civil action or in a -9-
garnishment proceeding, have been deemed a responsive pleading.
Rule 7(a) states that the only filings that are considered
pleadings are a complaint, an answer to a complaint, an answer to
a counterclaim designated as a counterclaim, an answer to a
crossclaim, a third-party complaint, an answer to a third-party
complaint, and a reply to an answer. Fed. R. Civ. P. 7(a); see
also Adkins v. Safeway, Inc., 985 F.2d 1101, 1102 (D.C. Cir.
1993) (identifying complaints, answers, replies to counterclaims,
third-party complaints and third-party answers as pleadings).
While Inversora argues that the opinion in Pinkston v. Briley,
129 A.2d 185, 188 (D.C. 1957) deemed a party’s answer to
interrogatories served with a writ of garnishment an “answer,”
that opinion did not find that a party’s answer to
interrogatories was a responsive pleading, or that a party would
waive a defense by failing to assert it in that answer. In light
of the D.C. Circuit’s practice of construing the implied waiver
provision in the FSIA narrowly, JBIC’s answers to the
interrogatories are more akin to discovery responses than a
responsive pleading that consciously demonstrated JBIC’s
subjective intent to waive sovereign immunity and participate in
this litigation. JBIC stated at the beginning of its answers
that it did not waive any defenses based upon personal
jurisdiction. Moreover, shortly after JBIC answered the
interrogatories, JBIC informed Inversora by letter that it was -10-
immune from these proceedings under the FSIA. Inversora was
aware for more than three years before seeking to compel JBIC’s
successors to attend a hearing that JBIC believed that it was
immune from these proceedings under the FSIA, and that JBIC
intended to retain some form of defense for lack of jurisdiction
even after answering the interrogatories that accompanied the
writ. This is not a case where JBIC strung Inversora along for
years by a clear and early demonstration that it intended to
engage in these proceedings only to switch defenses mid-stream by
filing a surprise claim of sovereign immunity.1
1 JFC and JICA also request fees and costs from Inversora under D.C. Code § 16-522 (which states that “[i]f any garnishee answers to interrogatories that he does not have property or credits of the defendant, . . . the issue thereby made may be tried. . . . In such a case, where judgment is rendered for the garnishee, the plaintiff shall be adjudged to pay to the garnishee, in addition to the taxed costs, a reasonable attorney’s fee”), and 28 U.S.C. § 1927 (stating that “[a]ny attorney . . . who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct”). As an initial matter, § 16-522 does not apply to this case because the issue of JFC’s and JICA’s liability to Inversora was not “tried.” As for § 1927, a court is allowed to impose sanctions under that provision when a lawyer’s conduct transcends mere negligence and carelessness, and instead is reckless under the circumstances of the case. United States v. Wallace, 964 F.2d 1214, 1219 (D.C. Cir. 1992). “The decision to award attorney’s fees under [§ 1927] is committed to this Court's discretion.” Newborn v. Yahoo! Inc., 437 F. Supp. 2d 1, 9 (D.D.C. 2006). The party moving for sanctions and fees bears the burden of showing that opposing counsel acted at least recklessly. Healey v. Labgold, 231 F. Supp. 2d 64, 68 (D.D.C. 2002). Here, JFC and JICA offer no legal analysis in support of their request, and do not carry their burden of demonstrating the requisite level of culpability to justify an award of fees and costs. See Newborn 437 F. Supp. -11-
CONCLUSION
Inversora has not demonstrated that the magistrate judge
erred by determining that JFC and JICA are immune from this
proceeding under the FSIA. Accordingly, because JFC and JICA
enjoy immunity from these attachment proceedings, Inversora’s
objections to Magistrate Judge Facciola’s recommendation will be
overruled, and Inversora’s writ of attachment will be quashed.
An appropriate order accompanies this memorandum opinion.
SIGNED this 3rd day of December, 2009.
/s/ RICHARD W. ROBERTS United States District Judge
2d at 10 (declining to impose sanctions where defendant failed to show that plaintiff’s attorney filed a non-meritorious motion deliberately); Wallace, 964 F.2d at 1218-19 (reversing a district court’s imposition of costs and fees under § 1927 where there was no showing that the defendant’s attorney deliberately delayed a trial); FDIC v. Bank of New York, 479 F. Supp. 2d 1, 22 (D.D.C. 2007) (while attorney’s conduct was questionable, the court did not have clear and convincing evidence that the attorney intended to be vexatious or dilatory).