Opinion
96 Civ. 7916 (RWS).
September 29, 2000.
WEIL, GOTSHAL MANGES, New York, NY, Attorney for Plaintiff.
By: OTTO G. OBERMAIER, ESQ., Of Counsel.
BAKER HOSTETLER, NW Washington, DC, Attorney for Defendants.
By: MARK A. CYNROT, ESQ., Of Counsel.
APPEARANCE.
OPINION
Plaintiff Elliott Associates, L.P. ("Elliott") has moved pursuant to Rule 59(e), Fed.R.Civ.P., to amend the judgment issued against defendant Banco de la Nacion ("Nacion"), as well as the order staying the execution of judgment that was originally issued against both Nacion and defendant the Republic of Peru ("Peru"). Defendants oppose the motion to amend on the grounds raised by the plaintiff and raise alternative grounds for amending the Nacion judgment. For the reasons stated below, the judgment and order issued against Nacion will be amended.
Peru has already appealed the judgment against it in the companion to this case and as such is not a party to the pending motion.
Backckground and Prior Proceedings
The facts and prior proceedings in these actions have been set forth in several opinions of this and other courts, familiarity with which is assumed. See, e.g., Elliott Assoc. L.P. v. Banco de la Nacion, 194 F.R.D. 116 (S.D.N.Y. 2000); Elliott Assoc. L.P. v. Banco de la Nacion, 194 F.3d 363 (2d Cir. 1999) ("Elliott V");Elliott Assoc. L.P. v. Banco de la Nacion, 12 F. Supp.2d 328 (S.D.N.Y. 1998) ("Elliott IV"); Elliott Assoc. L.P. v. Banco de la Nacion, 176 F.R.D. 93 (S.D.N.Y. 1997); Elliott Assoc. L.P. v. Banco de la Nacion, 961 F. Supp. 83 (S.D.N.Y. 1997); Elliott Assoc. L.P. v. Banco de la Nacion, 948 F. Supp. 1203 (S.D.N Y 1996). Facts and proceedings relevant to the instant opinion are set forth below.
After considering several proposed judgments submitted by the parties, this Court on June 22, 2000, entered two judgments in favor of Elliott, one against defendant Nacion for $24,725,391.41, and another against Peru (collectively the "Defendants") for $55,660,831.56, for principal and past due interest owed as of that date, nonexclusive of post-judgment interest. Both the judgments and the accompanying order (the "June 22, 2000 order") provided that, pursuant to 28 U.S.C. § 1610, execution of the judgment was "limited to property that is used for a commercial activity in the United States" (hereinafter referred to as the "limiting language").
The June 22, 2000 order stayed execution of judgment for ten days pursuant to 28 U.S.C. § 1610, and also continued the November 17, 1999 order until "ten days after the time when plaintiff Elliott Associates L.P. shall have commenced execution on its judgments."
By letter of June 30, 2000, Elliott petitioned the Court to amend the June 22 judgment against Nacion as well as the accompanying order. Elliott sought to delete the limiting language in the judgment on the grounds that, as an instrumentality of a foreign state, the amount of its property subject to judgment under § 1610(b) was greater than that of a foreign state under § 1610(a). Elliott sought to delete the same limiting language in the June 22 order on the grounds that it was (a) duplicative of the judgment against Peru, and (b) unnecessary against Nacion under § 1610(b).
Defendants responded on July 7, 2000, and objected to Elliott's proposal on two grounds. First, the defendants argued that the limiting language was proper in both the judgments and order because the property of Peru and Nacion outside of the United States is immune from attachment under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. § 1609 and 1610. Deleting the limiting language from the order, Defendants argued, would allow Elliott to seek enforcement of the judgment against property to which it was not entitled.
On July 11, 2000, one day before the expiration of the period in which to file a formal motion to amend pursuant to Rule 59 (e), Fed.R.Civ.P., Elliott moved to amend the June 22 judgment and order against Nacion on the grounds addressed in its June 30, 2000 letter. The Defendants filed their opposition on or about July 24, 2000, raising substantially the same grounds first addressed in its July 7, 2000 letter. Elliott filed a reply memorandum of law on or about August 1, 2000, and the motion was deemed fully submitted upon the filing of the Defendants' brief in further opposition on August 7, 2000.
Peru filed a notice of appeal on July 25, 2000 challenging the June 22, 2000 judgment and order.
On September 20, this Court issued amended judgments against both Nacion (for $57,244,752.36) and Peru (for $56,306,150.76), as well as an order for the execution of the judgments. Elliott moved to vacate only the September 20 order, and its motion was granted on September 22, 2000. The judgments were issued in error and have subsequently been vacated.
By order to show cause of September 25, 2000, Elliott moved for an order amending the September 20, 2000 judgment against Nacion (1) to reduce the amount thereof to $25,429,373.21, based upon the Court's prior determination that interest under the debt instruments continued until the amended Nacion judgment was issued on September 20, 2000, (2) to eliminate the limiting language in the judgments and accompanying order, and (3) to eliminate the automatic ten-day stay of execution required by Fed.R.Civ.P. Rule 62(a) on the grounds that the 10-day period had lapsed on July 6, 2000.
The Defendants opposed the motion on the grounds that the FSIA required the limiting language with regard to property owned by Peru and Nacion, and that the Defendants are entitled to a reasonable stay of execution under both the FSIA and Rule 62, Fed.R.Civ.P.
The parties' submissions will hereinafter be cited as follows: Plaintiff's Letter of June 30, 2000 ("Pltf. June 30 Ltr. at "); Defendants' July 24, 2000 Opposition to Elliott's Motion to Amend Judgment and Order ("Def. Opp. Mem. at ___ "); Plaintiff's July 31, 2000 Reply Memorandum in Further Support of its Motion to Amend ("Pltf. Repl. Mem. at __"); Defendants' Further Opposition to Elliott's Motion to Amend ("Def. Further Opp. Mem. at __ Plaintiff's September 25, 2000 Order to Show Cause ("OSC"); and Defendant's September 27, 2000 Opposition to Elliott's Motion to Amend ("Def.3d Opp. Mem. at ___ ").
On September 27, 2000, the September 20, 2000 judgments were vacated because they were signed as a result of a clerical error, having been submitted on June 8, 2000 as proposed judgments prior to the original June 22, 2000 judgments. In light of that action, this opinion considers the pending motion to amend in regard to the now reinstated June 22, 2000 judgment against Nacion.
Discussion
The questions presented in the instant motion are: (1) whether the inclusion of limiting language in the Nacion judgment and order was correct under the FSIA, and, if the Nacion judgment is amended on this basis, (2) whether Nacion is entitled to an automatic ten-day stay of execution of the amended judgment due to any such change. These issues are addressed seriatim.
Elliott submits that the appropriate amount of the judgment against Nacion should be $25,429,373.21, including interest accruing from June 22, 2000 to September 20, 2000. The June 22, 2000 judgment awarded Nacion $ 24,725,391.41 for principal and past-due interest up to the date of judgment, nonexclusive of postjudgment interest. However, as stated above, the September 20, 2000 judgment was issued in error and has been vacated, so that date is not relevant in computing prejudgment interest. As such, the $24,725,391.41 amount established in the June 22, 2000 judgment stands.
I. Limiting Language in the Nacion Judqment and Order
All parties agree that Nacion is an "agency or instrumentality" of Peru, a foreign state. (See Pltf. June 30 Ltr at 1; Def.3d Opp. Mem. at 3.) The FSIA defines an "agency or instrumentality of a foreign state" as:
any entity —
(1) which is a separate legal person, corporate or otherwise, and
(2) which is an organ of a foreign state or political subdivision thereof; and
(3) which is neither a citizen of a State of the United States as defined in section 1332(c) and (d) of this title, nor created under the laws of any third country.28 U.S.C. § 1603. The FSIA renders property of a foreign state immune from attachment and execution except as provided in §§ 1610 and 1611. See 28 U.S.C. § 1609. Neither party disputes the fact that the FSIA's exception to immunity from attachment — whether for foreign states or their instrumentalities — extends at most to property located "in the United States." See 28 U.S.C. § 1610 (a), (b); Richmark Corp. v. Timber Fallnig Consultants, 959 F.2d 1468, 1477 (9th Cir. 1992), cert. dismissed, 506 U.S. 948 (1992); Fidelity Partners v. Philippine Export Foreign Loan Guar. Corp., 921 F. Supp. 1113, 1119 (S.D.N.Y. 1996). Both parties also agree that § 1610(b) governs the restrictions on attachment in aid of execution on judgments against Nacion. (See Pltf. June 30 Ltr. at 1; Def.3d Opp. Mem. at 4.)
However, each side construes the language of § 1610(b) differently. Section 1610(b) provides:
In addition to subsection (a), any property in the United States of an agency or instrumentality of a foreign state engaged in commercial activity in the United States shall not be immune from attachment in aid of execution, or from execution, upon a judgment entered by a court of the United States . . . if —
[. . .]
(2) the judgment relates to a claim for which the agency or instrumentality is not immune by virtue of section 1605(a)(2), (3) or (5), or 1605(b) of this chapter, regardless of whether the property is or was used for the activity upon which the claim is based.28 U.S.C. § 1610 (b) (emphasis added). Subsection (a) of § 1610 limits the availability of attachment in aid of execution or execution to property of a "foreign state" that is "used for a commercial activity in the United States." 28 U.S.C. § 1610 (a).
Like § 1610(a), the referenced sections of § 1605 relate only to "foreign states," not their "agencies and instrumentalities."
The Defendants contend that by specifically referring to "subsection (a)," section 1610(b) applies the "used for a commercial activity in the United States" limitation for foreign states to agencies or instrumentalities such as Nacion. Elliott disputes this reading of § 1610(b), which, it argues, would "render the entire subsection superfluous and redundant of § 1610(a)." (Pltf. Reply Mem. at 3.) Instead, Elliott contends, the plain language of § 1610(b) dictates that "any" of Nacion's "property in the United States" — not just that used in a commercial activity — is subject to attachment.
Starting with the plain language of the statute, § 1610(b) does in fact provide a more expansive exception to immunity for instrumentalities than that provided for foreign states. Whereas § 1610(a) limits recovery against a foreign state to "property in the United States . . . used for a commercial activity in the United States," section § 1610(b) provides that "any property in the United States of an agency or instrumentality of a foreign state engaged in commercial activity in the United States shall not be immune from attachment. . . ." The legislative history of the FSIA clarifies that the requirement that the instrumentality be engaged in commercial activity in the United States is simply a prerequisite to the attachment of any property in the United States under § 1610(b), not a limitation on the kind of property that may be attached. H.R. Rep. No. 94-1487, at 55 (1976) ("However, the agency or instrumentality must be engaged in a commercial activity in the United States. If so, the plaintiff may obtain an attachment in aid of execution or execution against any property, commercial and noncommercial, of the agency or instrumentality. . . .").
Furthermore, the phrase "in addition to subsection (a)" in § 1610(b) does not incorporate the limitation of § 1610(a) but rather expands the § 1610(a) foreign state immunity exception to agencies or instrumentalities of foreign states. H.R. Rep. No. 94-1487, at 55 ("Section 1610(b) provides for execution against the property of agencies or instrumentalities of a foreign state in circumstances additional to those provided in section 1610(a).") See Gibbons v. Republic of Ireland, 532 F. Supp. 668, 671 (D.D.C. 1982) (finding that commercial activity limitation did not apply to instrumentalities of foreign states under § 1610(b)). The Restatement confirms this reading of the FSIA:
For purposes of post-judgment attachment and execution, the Foreign Sovereign Immunities Act draws a sharp distinction between the property of states and the property of state instrumentalities: (i) The property of states may be attached only if it is or was used in commercial activity; the property of state instrumentalities may be attached without any such limitation, so long as the instrumentality itself is engaged in commercial activity in the United States. . . These distinctions reflect the premise that state instrumentalities engaged in commercial activities are akin to commercial enterprises, so that immunity is exceptional and limited, whereas the primary function of states is government and, absent waiver, their liability should be limited to particular claims and their amenability to post-judgment attachment should be limited to particular property.
Restatement (Third) of the Foreign Relations Law of the United States § 460, cmt. b.
Accordingly, the Nacion judgment will be amended (in the "amended judgment") to eliminate the language "that is used for a commercial activity." The relevant portion of the amended judgment will now read, "Pursuant to 28 U.S.C. § 1610 (b), execution against property of Defendant Banco de la Nacion to satisfy this judgment is limited to property in the United States." The parties are directed to submit a proposed amended judgment and order of execution forthwith in accordance with this opinion.
II. Stay of Execution of amended Judgment
The final issue to be addressed is whether Nacion is entitled to an automatic ten-day stay of execution of the amended judgment.
Elliott claims that the relevant provision is 28 U.S.C. § 1610 (c). which restrains any post-judgment attachment or execution until a court determines that a "reasonable period of time has elapsed following the entry of judgment." 28 U.S.C. § 1610 (c). In the June 22, 2000 order, the Court ruled that ten days was a reasonable period, and imposed a stay accordingly. According to Elliott, the ten days lapsed on July 6, 2000, so there is no cause to impose an additional stay upon the issuance of an amended judgment.
However, although courts have discretion whether to impose a stay under § 1610(c), courts have no discretion not to impose a stay under Fed.R.Civ.P. Rule 62(a). Rule 62(a) provides that "no execution shall issue upon a judgment nor shall proceedings be taken for its enforcement until the expiration of 10 days after its entry." Rule 62(a), Fed.R.Civ.P. Although courts have discretion to stay the execution of judgment for a longer period under Rule 62 pending appeal or a motion for a new trial, for example, see Fed.R.Civ.P. Rules 62(a)-(c), Rule 62 (a) in effect provides a mandatory minimum ten-day stay after judgment is imposed.
Rule 62(a) does not make any reference to amended judgments, nor has Court found any prior decision addressing this question. Yet regardless of the fact that the forthcoming amended judgment supersedes a prior judgment, it still constitutes a "judgment,"see Wikoff v. Vanderveld, 897 F.2d 232, 236 (7th Cir. 1990). As such, the amended judgment will trigger Rule 62(a), so that a ten-day stay of execution must be granted in the attached second amended order of execution.
Conclusion
For the foregoing reasons, the June 22, 2000 judgment and order against Nacion will be amended to eliminate language limiting attachable property to that used in commercial activity. An automatic ten-day stay of execution will be imposed in an order of execution.