Republic of Panama v. Lexdale, Inc.

804 F. Supp. 1521, 1992 U.S. Dist. LEXIS 16261, 1992 WL 309056
CourtDistrict Court, S.D. Florida
DecidedFebruary 28, 1992
DocketNo. 91-1468-CIV
StatusPublished
Cited by1 cases

This text of 804 F. Supp. 1521 (Republic of Panama v. Lexdale, Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. Florida primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Republic of Panama v. Lexdale, Inc., 804 F. Supp. 1521, 1992 U.S. Dist. LEXIS 16261, 1992 WL 309056 (S.D. Fla. 1992).

Opinion

ORDER OF DISMISSAL

MORENO, District Judge.

THIS CAUSE came before the Court upon defendant Lexdale, Inc.’s Motion to Dismiss for Lack of a justiciable case or controversy. The court heard oral argument on defendant’s motion. After reviewing the complaint, motion to dismiss and responsive memoranda, and considering the argument of the parties, the court grants Lexdale’s motion to dismiss for the following reasons.

I. Facts and Procedural History

Air Panama International, S.A. is a Panamanian corporation whose majority shareholder is the Government of Panama. Air Panama leased a Boeing 727 passenger jet aircraft owned by defendant Lexdale, Inc. When the lease expired, Air Panama at first refused to return the plane, but it was eventually retrieved in a damaged condition. Lexdale sued Air Panama to recover the costs of repairing the aircraft and was awarded a default judgment in the amount of approximately $2,700,000 on September 8, 1989.

Shortly after Lexdale commenced suit against Air Panama, President Reagan entered Executive Order 12635 declaring a national emergency with respect to Panama. See 53 Fed.Reg. 12134. Pursuant to the Executive Order, the United States blocked all property and interests in property in the United States belonging to the government of Panama, including assets owned by agencies, instrumentalities, and controlled entities. Id. According to regulations promulgated under the authority of the Executive Order, Air Panama is an entity of the Government of Panama. 31 C.F.R. § 565.303 and appendix A.

The Office of Foreign Asset Control (OFAC) oversees the operation of the executive blocking order on all Panamanian assets. No property or interests in property of the Government of Panama in the United States may be transferred without an express license from OFAC. 31 C.F.R. § 565.201(a). A transfer means, inter alia, the issuance, docketing, filing, or the levy of or under any judgment, decree, attachment, injunction, execution, or other judicial or administrative process or order. Id. § 565.308.

During the pendency of its suit against Air Panama, Lexdale sought and obtained a license from OFAC to continue pursuing the- action short of recording or enforcing any judgment in its favor. On March 3, 1989 the chief of licensing at OFAC granted a conditional license to Lexdale, authorizing any transaction in connection with the suit against Air Panama, but forbidding the docketing, payment or enforcement of any judgment with respect to any property in which the Government of Panama has an interest.

The circuit court judge denied Air Panama’s Motion to set aside the final default judgment on November 28, 1990. The circuit court also denied Air Panama’s motion for rehearing of its order denying the motion to set aside on May 7, 1991. On July 10, 1991 the Republic of Panama filed its complaint for declaratory relief before this court.

II. The Complaint

Plaintiff Republic of Panama seeks a declaratory decree that it is not legally responsible for the debts or obligations of [1523]*1523Air Panama. Panama contends that under the Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1602-1611, Panama and Air Panama are separate juridical entities, and therefore Panama is not liable for Air Panama’s debts. As an agency or instrumentality of a foreign state, Air Panama is accorded a presumption of independent status.

Panama maintains that if Panama has not abused the corporate form by which Air Panama exists as a separate juridical entity, then it is not liable for the debts or obligations of Air Panama. Panama acknowledges that Lexdale obtained a final judgment in the principal amount of approximately $2,700,000 against Air Panama.

Because Lexdale has applied to OFAC for a license to collect its judgment from the assets of the Government of Panama in the United States, Panama asserts that the matter is ripe for declaratory relief. As manifestations of injury, Panama argues that it is unable to persuade the United States government to lift the executive blocking order on account of Lexdale’s pursuit of their assets. Panama contends that OFAC will not issue a license to Lexdale until this court determines who is- legally responsible between Panama and Air Panama for Lexdale’s judgment against Air Panama. As a result, according to Panama, $300 million dollars in Panamanian assets will not be released because Lexdale is trying to enforce its judgment which now amounts to approximately $3,300,000.

III. Discussion and Analysis

Defendant Lexdale moves to dismiss for lack of a justiciable controversy. Lexdale maintains that no case or controversy exists until it may actually execute against the assets of Panama. Until Executive Order 12635 is repealed or a license is granted by OFAC, Lexdale may not try to enforce its judgment against the assets of Panama. Because Lexdale cannot enforce its judgment against Panama, even though it has applications for a license pending before OFAC, it argues that no actual case or controversy exists.

In short, Lexdale argues that where injury to the plaintiff is dependent on the discretionary acts of a third party, a matter is not sufficiently ripe to constitute an actual case or controversy. Alternatively, Lex-dale moves for a stay until the Executive blocking order is lifted or OFAC grants a license to attempt execution of its judgment against assets of the Republic of Panama.

It is fundamental that a court may only issue a declaratory judgment where there is an actual case or controversy. 28 U.S.C. § 2201; Wolfer v. Thaler, 525 F.2d 977, 979 (5th Cir.1976). The question for justici-ability in each case is whether the facts alleged, under all the circumstances, show that there is a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment. Maryland Casualty Co. v. Pacific Coal & Oil Co., 312 U.S. 270, 273, 61 S.Ct. 510, 512, 85 L.Ed. 826 (1941). From the allegations in the complaint, there is clearly a substantial controversy between Lexdale and Panama who are parties with adverse legal interests. The issue is whether that controversy is of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.

Panama relies on Maryland Casualty, supra, to support its allegation that this matter is ripe for judicial review. In Maryland Casualty, the declaratory judgment plaintiff had issued a conventional automobile liability insurance policy in which it agreed to indemnify the insured. The plaintiff additionally agreed to defend the insured against any action covered by the policy. While an action was pending in state court against its insured, the insurance company sued for a declaratory decree that it had no duty to defend or indemnify.

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Bluebook (online)
804 F. Supp. 1521, 1992 U.S. Dist. LEXIS 16261, 1992 WL 309056, Counsel Stack Legal Research, https://law.counselstack.com/opinion/republic-of-panama-v-lexdale-inc-flsd-1992.