Transaero, Inc. v. La Fuerza Aerea Boliviana, an Instrumentality of the Republic of Bolivia, a Foreign State

38 F.3d 648, 1994 U.S. App. LEXIS 29369, 1994 WL 584702
CourtCourt of Appeals for the Second Circuit
DecidedOctober 19, 1994
DocketDocket 93-7903
StatusPublished
Cited by10 cases

This text of 38 F.3d 648 (Transaero, Inc. v. La Fuerza Aerea Boliviana, an Instrumentality of the Republic of Bolivia, a Foreign State) is published on Counsel Stack Legal Research, covering Court of Appeals for the Second Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Transaero, Inc. v. La Fuerza Aerea Boliviana, an Instrumentality of the Republic of Bolivia, a Foreign State, 38 F.3d 648, 1994 U.S. App. LEXIS 29369, 1994 WL 584702 (2d Cir. 1994).

Opinion

PETITION FOR REHEARING

JON 0. NEWMAN, Chief Judge:

Pending before us is a petition for rehearing of our May 19, 1994, decision, 24 F.3d 457, affirming the District Court’s denial of a motion, pursuant to Fed.R.Civ.P. 60(b). The motion sought to vacate a default judgment obliging defendant La Fuerza Aerea Bolivia-na (the B obvian Air Force) (“BAF”) to pay plaintiff Transaero, Inc. $983,696.60. The petition arises in an unusual procedural context that prompts this brief opinion.

In the course of the default proceedings in the District Court, Judge Mishler ruled on April 21, 1989, that BAF had been given proper notice of Transaero’s complaint and of the hearing that led to entry of the default judgment. After entry of the default judgment, Transaero brought suit in the District Court for the District of Columbia to enforce *649 its judgment. BAF sought summary judgment to dismiss the enforcement proceedings on the ground of improper service of the complaint in the Eastern District action. The late Judge Revereomb denied that motion on September 25, 1992. BAF appealed the interlocutory ruling, see Foremost-McKesson, Inc. v. Islamic Republic of Iran, 905 F.2d 438, 443 (D.C.Cir.1990) (denial of claim of sovereign immunity appealable as collateral order).

While the D.C. Circuit appeal was pending, BAF filed a motion under Rule 60(b) in the Eastern District of New York to vacate the default judgment. BAF relied primarily on a claim that the default judgment had been obtained by fraud, a claim based on representations by Transaero’s counsel in support of the entry of default judgment. Judge Mishler denied the Rule 60(b) motion on August 12, 1993, and BAF appealed that ruling to this Court.

In its appeal, BAF primarily renewed its contention that the default judgment had been obtained by fraud. Its appellate brief also contended that the default judgment should have been vacated because BAF had no “actual” notice of the judgment until February 28, 1992, almost three years after the judgment was entered. The brief referred to this notice as notice “pursuant to section 1608(e)” of the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. §§ 1602-1611 (1988). Brief for Appellant at 41 n. 12. BAF contended that the lateness of the notice of the judgment, along with other considerations, amounted to “extraordinary circumstances,” see Ackermann v. United States, 340 U.S. 193, 199, 71 S.Ct. 209, 212, 95 L.Ed. 207 (1950), justifying Rule 60(b) relief. The brief did not contend that defective service of the complaint impaired the validity of the Eastern District judgment.

In its reply brief, however, BAF asserted that it had not been properly served with notice of either the suit or the March 1989 inquest that led to the entry of the default judgment. It made this assertion in the course of answering Transaero’s argument that Judge Revercomb’s ruling in the District of Columbia had a preclusive effect on the. issue of adequacy of notice of the suit. BAF responded that Judge Revercomb’s ruling had no preclusive effect because it was an interlocutory ruling, citing Lummus Co. v. Commonwealth Oil Refining Co., 297 F.2d 80, 89-90 (2d Cir.1961). “There is literally no judgment in that ease [the District of Columbia litigation] yet — let alone a final judgment.” Reply Brief for Appellant at 9. BAF also contended that preclusion was inapplicable because “the issue of notice had nothing to do with [Judge Revercomb’s] order.” Id.

At oral argument on the appeal, both sides took the position that the adequacy of the notice that initiated the Eastern District suit would be resolved by the'then-pending appeal in the D.C. Circuit from Judge Rever-comb’s ruling. On May 19,1994, we affirmed Judge Mishler’s denial of the Rule 60(b) motion. 24 F.3d 457 (2d Cir.1994). Our decision rejected the claim of a fraud on the court, but remanded to permit the District Court to reconsider two aspects of the interest calculation — the proper starting date for the running of interest and the proper interest rate. The only reference in the opinion to the issue of defective notice of the suit is a footnote acknowledging BAF’s contention and noting that Judges Mishler and Rever-comb had rejected BAF’s argument and that Judge Revercomb’s ruling was on appeal. Id. at 459 n. 1.

On July 6, 1994, BAF filed the pending petition for rehearing. The petition primarily contended that the remand should be expanded to include consideration of the proper ending date for the running of interest. The petition also urged that we stay our mandate until BAF’s jurisdictional challenges have been adjudicated in the D.C. Circuit.

On July 29, 1994, the D.C. Circuit decided the appeal from Judge Revercomb’s ruling and reversed. Transaero v. La Fuerza Aerea Boliviana, 30 F.3d 148 (D.C.Cir.1994). By a divided vote, the Court ruled that BAF is a “foreign state” rather than an “agency or instrumentality of a foreign state” for purposes of section 1608 of the FSIA and that service was not properly accomplished pursuant to subsection 1608(a), applicable to service on a foreign state, although it may have sufficed under subsection 1608(b), applicable *650 to service on an agency or instrumentality of a foreign state. The Court concluded that the Eastern District of New York lacked personal jurisdiction and that the default judgment was void and unenforceable; the enforcement proceedings in the District of Columbia were ordered dismissed. A petition for rehearing with a suggestion for rehearing in banc was denied on September 15, 1994.

We then invited the parties’ views as to whether the default judgment should now be vacated. In response, both sides have substantially altered their prior positions. Tran-saero now contends that the D.C. Circuit’s opinion should not cause us to vacate the default judgment because (a) the opinion is incorrect on the merits, (b) BAF is precluded by judicial estoppel from abandoning the position it has taken in prior litigation before the courts of this Circuit that it is an instrumentality of the Republic of Bolivia, and (c) this Court’s affirmance of Judge Mishler’s denial of the Rule 60(b) motion is a ruling implicitly upholding the jurisdictional validity of the default judgment that should have been accorded preclusive effect in the District of Columbia.

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38 F.3d 648, 1994 U.S. App. LEXIS 29369, 1994 WL 584702, Counsel Stack Legal Research, https://law.counselstack.com/opinion/transaero-inc-v-la-fuerza-aerea-boliviana-an-instrumentality-of-the-ca2-1994.