Opinion
Civil Action No. 98-239 (NHP).
May 10, 1999
Tomas Espinosa, Esq., Jersey City, N.J., Attorney for Plaintiffs.
The Republic of Peru, Palacio DeGobierno (Casa de Gobierno), Plaza de armas Lima, Republica del Peru, Paterson, N.J., Defendant.
LETTER ORDER ORIGINAL ON FILE WITH CLERK OF THE COURT
Dear Mr. Espinosa:
This matter comes before the Court on Magistrate Judge Ronald J. Hedges' Report and Recommendation, filed April 16, 1999, to dismiss the Complaint filed by plaintiffs Victoria Batchelor, Luis Alcantara, Dionicia Alcantara, Orlando Alcantara and Angela Alcantara ("plaintiffs"). The Court has decided this matter without oral argument pursuant to Federal Rule of Civil Procedure 78. Having received no substantive reply from plaintiffs and after careful consideration of the record, the Court will ADOPT Judge Hedges' Report and Recommendation and DISMISS PLAINTIFFS' COMPLAINT WITH PREJUDICE.
DISCUSSION
This Court shall now make a de novo determination whether to accept, reject or modify, in whole or in part, the findings made by the Magistrate Judge. Local Rule 40D. The United States Supreme Court has held that "[w]here a Magistrate makes a finding or ruling on a motion or an issue, his determination should become that of the district court unless specific objection is filed within a reasonable time." Thomas v. Arn, 474 U.S. 140, 150-51 (1985).
In determining whether it is appropriate to dismiss plaintiffs' Complaint with prejudice, this Court finds ample support in the record to sustain Judge Hedges' findings made pursuant to the analysis set forth in the Report and Recommendation and the discussion herein.
Foreign Sovereign Immunities Act
Since it is undisputed that defendant, The Republic of Peru ("defendant") is a foreign state, plaintiffs' request for entry of default judgment must be addressed in accordance with the provisions of the Foreign Sovereign Immunities Act (hereafter "FSIA"), 28 U.S.C. § 1602, et seq.
In the present matter, defendant is in default and plaintiffs have moved for the entry of default judgment. Therefore, this Court must first set forth the standard for the entry of default judgment in a case involving a foreign state prior to resolving the issue of whether the foreign entity has sovereign immunity.
According to 28 U.S.C. § 1608(e),
No judgment by default shall be entered by a court of the United States or of a State against a foreign state, a political subdivision thereof, or an agency or instrumentality of a foreign state, unless the claimant establishes his claim or right to relief by evidence satisfactory to the court. A copy of any such default judgment shall be sent to the foreign state or political subdivision in the manner prescribed for service in this section.
Thus, pursuant to 28 U.S.C. § 1608(e), when an agency or instrumentality of a foreign state defaults, the court must determine whether a plaintiff's allegations are supported by evidence. Compania Americana Export-Import, S.A. v. Compania Dominicana de Aviacion, 88 F.3d 948, 950-951 (11th Cir. 1996).
Pursuant to the FSIA, a foreign state is "presumptively immune from the jurisdiction of United States courts; unless a specified exception applies, a federal court lacks subject-matter jurisdiction over a claim against a foreign state." Saudi Arabia v. Nelson, 507 U.S. 349 (1993). InArgentine Republic v. Ameradaq Hess Shipping Corporation, 488 U.S. 428 (1989), the United States Supreme Court articulated the exceptions to the general rule that a foreign state is presumptively immune from the jurisdiction of United States courts. The Supreme Court summarized those exceptions as those matters involving:
the waiver of immunity, § 1605(a)(1), commercial activities occurring in the United States or causing a direct effect in this country, § 1605(a)(2), property expropriated in violation of international law, § 1605(a)(3), inherited, gift, or immovable property located in the United States, § 1605(a)(4), noncommercial torts occurring in the United States, § 1605(a)(5), and maritime liens, § 1605(b).Argentine Republic v. Ameradaq Hess Shipping Corporation, 488 U.S. 428, 439 (1989). See also 28 U.S.C. § 1605.
Pursuant to the FSIA, a plaintiff has the burden of producing evidence to establish that one or more of the statutory exceptions applies, despite the general cloak of immunity afforded foreign states. See Federal Insurance Co. v. Richard I. Rubin Co., 12 F.3d 1270, 1285 (3d Cir. 1993), cert. denied, 511 U.S. 1107 (1994). The ultimate burden of persuasion remains with the state or instrumentality. See id.
Judge Hedges determined that the only applicable exception to the facts presented in the matter at bar is the exception set forth in Section 1605(a)(3).
Section 1605(a)(3)
The exception set forth in § 1605(a)(3) is the "expropriated property" exception. It provides:
(a) A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case —
(3) in which rights in property taken in violation of international law are in issue and that property or any property exchanged for such property is present in the United States in connection with a commercial activity carried on in the United States by the foreign state; or that property or any property exchanged for such property is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United States;28 U.S.C. § 1605(a)(3).
In order for section 1605(a)(3) to apply in this matter, property rights must have been taken in violation of international law, and (1) such "property or any property exchanged for such property is present in the United States in connection with a commercial activity carried on in the United States by the foreign state" or (2) such "property or any property exchanged for such property is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United States." 28 U.S.C. § 1605(a)(3); see also Hirsch v. State of Israel, et al., 962 F. Supp. 377, 383 (S.D.N.Y. 1997), aff'd, 133 F.3d 907 (2d Cir. 1997); Dayton v. Czechoslavak Socialist Republic, et al., 834 F.2d 203, 205 (D.C. 1987), cert. denied, 486 U.S. 1054 (1988).
As Judge Hedges' Report and Recommendation makes clear, plaintiffs have not alleged nor have they presented any proof that the subject property which they alleged was confiscated by defendant, is present in the United States "in connection with a commercial activity carried on in the United States." Similarly, plaintiffs have not alleged nor have they presented any evidence that the property is operated by an agency or instrumentality of Peru which "is engaged in a commercial activity in the United States." Since plaintiffs have not met the exception set forth in 1605(a)(3), the doctrine of sovereign immunity is applicable to this case.
Assuming arguendo that plaintiffs have sufficiently alleged facts and proffered sufficient evidence to convince this Court that Section 1605(a)(3) is applicable, this Court concurs with Magistrate Judge Hedges' conclusion that the case should be dismissed based upon the "act of state" doctrine. Traditionally, the "act of state" doctrine precludes the courts of this country, absent a treaty or other international agreement, from probing into the validity of the public acts committed by a foreign power within its own territory. W.S. Kirkpatrick Co., Inc. v. Environmental Tectonics Corp., 493 U.S. 400, 406 (1990); Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 401 (1964). This Court chooses to honor the long-standing tradition of exercising judicial restraint over such matters and, therefore, Judge Hedges' Report and Recommendation is ADOPTED and plaintiffs' Complaint is hereby DISMISSED WITH PREJUDICE.