Natl. Un. Fire Ins. Co. v. the People's Republic of Congo

Full title: NATIONAL UNION FIRE INSURANCE COMPANY OF PITTSBURGH, PA, Plaintiff v. THE…

Court: United States District Court, N.D. Texas, Dallas Division

Date published: Apr 8, 2005

Civil Action No. 3:04-CV-2440-R (N.D. Tex. Apr. 8, 2005)

Opinion

Civil Action No. 3:04-CV-2440-R.

April 8, 2005

MEMORANDUM OPINION AND ORDER

JERRY BUCHMEYER, District Judge

Now before this Court are three Motions to Remand filed by Plaintiff National Union Fire Insurance Company of Pittsburgh, PA ("NUFI") (filed December 10, 2004; December 13, 2004; and, February 10, 2005).¹ For the reasons stated herein, Plaintiff's motions are DENIED.

1 On January 24, 2005, this Court sua sponte ordered three cases (3:04-cv-2440-R, 3:04-cv-2441-K, 3:05-cv-0093-P) be consolidated. For this reason, three separate Motions to Remand have been filed in this case.

BACKGROUND

NUFI is a judgment creditor for the People's Republic of Congo (the "Congo") under a French judgment from 1996.² An Oklahoma state judgment dated June 15, 2004 recognized and enforced that judgment. NUFI thereafter filed and registered that Oklahoma judgment with the Texas courts on October 1, 2004. Next, Plaintiff NUFI filed an Application for a Writ of Garnishment in the Texas courts ("First Application for Writ of Garnishment"). As Texas law dictates, the Application for Writ of Garnishment was docketed in state court as a separate case listing the garnishees, but not the Congo, as the defendants.³

The Congo removed these two cases to federal court, the Texas Judgment Case being assigned to this Court (3:04-cv-2440-R) (the "Judgment Case") and the First Application for Writ of Garnishment originally being assigned to Judge Kinkeade (3:04-cv-2441-K) (the "First Garnishment Case"). Plaintiff then proceeded to file a second Application for Writ of Garnishment in the Texas courts, which the Congo also removed and which originally was assigned to Judge Solis (3:05-cv-0093-P) ("The Second Garnishment Case").⁴ Both Applications for Writ of Garnishment regard the same property, barrels of oil in possession of the Garnishees that are owed as in-kind royalty payments to the Congo under the Convention.

4 Herein, the First Garnishment Case and the Second Garnishment Case will collectively be referred to as the "Garnishment Cases."

The Congo has owed NUFI money under the original Paris arbitration agreement for nearly fifteen years-money which NUFI appears to have been attempting to recover continually. The current action is one such example of NUFI's continual attempts to recover its undisputed judgment.

ANALYSIS

A. Standard of Review

To remand or not to remand . . . that is the question. While the process of removing a case from state to federal court is incredibly simple, the fight to keep the case in federal court can be significantly more onerous. A defendant seeking removal bears the burden of establishing that removal is proper. Pullman Co. v. Jenkins, 305 U.S. 534, 540, 59 S.Ct. 347 (1939); Asociacion Nacional de Pescadores a Pequena Escala o Artesanales de Colombia (ANPAC) v. Dow Quimica de Colombia, S.A., 988 F.2d 559, 563 (5^th Cir. 1993) cert denied, 114 S.Ct. 685 (1994). Thus, in reviewing a Motion to Remand, the burden is on the removing party to establish the federal court's removal jurisdiction to hear the case.

B. Discussion

As discussed above, this case involves the consolidation of three cases that were originally filed separately, the Judgment Case, the First Garnishment Case, and the Second Garnishment Case. In its analysis, this Court first discusses generally the special removal rights under the Foreign Sovereign Immunities Act ("FSIA"). This Court then proceeds to analyze the Judgment Case and then the Garnishment Cases.

a. § 1441 (d) Right of a Foreign Sovereign

Congress enacted FSIA in an effort to introduce uniformity into the process of granting sovereign immunity. Callejo v. Bancomer, 764 F.2d 1101, 1107 (5^th Cir. 1985) ( citing H.R. Rep. No. 1487, 94^th Cong., 2d Sess. 7, reprinted in 1976 U.S. Code Cong. Ad. News 6604, 6605-6). Recognizing FSIA to be a "remarkably obtuse" document and a "statutory labyrinth," the Fifth Circuit Court of Appeals has paid serious attention to Congress' intent in enacting FSIA. Callejo, 764 F.2d at 1107. Generally, the intent is viewed as one for uniformity — a purpose "best served by trying all FSIA cases in federal court unless the parties unequivocally choose otherwise." McDermott Int'l, Inc. v. Lloyds Underwriters of London, 944 F.2d 1199, 1212 (5^th Cir. 1991); See also Associated Elec. Gas Ins. Servs., Ltd. v. Texas E. Transmission Corp., 15 F.3d 1230, 1239-42 (3^rd Cir. 1994). This intent and desire for overall uniformity supports Congress' decision to grant special removal rights to foreign sovereigns.

One provision of FSIA grants foreign sovereigns special rights of removal. 28 U.S.C. § 1441(d) (2004). In pertinent part, that provision reads:

(d) Any civil action brought in a State court against a foreign state as defined in section 1603(a) of this title [ 28 USCS § 1603(a)] may be removed by the foreign state to the district court of the United States for the district and division embracing the place where such action is pending.

Id. There is no dispute amongst the parties that the Congo is a foreign state. The issue, then, is whether these actions, first, a final judgment against the Congo and, second, cases filed against the Garnishees seeking garnishment of the property of the Congo, constitute civil actions against the Congo that are removable under § 1441(d).

b. The Judgment Case

Plaintiff urges this Court to remand the Judgment Case on the grounds that unchallenged final state court judgments are not removable civil actions.

In the early stages of the litigation of Af-Cap, Inc. v. The Republic of Congo, No. 1:01-321 (W.D. Tex.), that district court denied plaintiff's motion to remand a very similar case.⁵ In its motion to remand, the plaintiff therein argued, just as the plaintiff herein argues, that final state court judgments are not removable. Recognizing the general principle cited by the plaintiff to be correct, the court nonetheless denied plaintiff's motion to remand. Specifically, Judge Sparks ruled:

5 This Court believes all parties in this case to be familiar with the referenced case. In that case, the plaintiff bank filed a New York judgment in the 345^th District Court of Travis County to convert the judgment into a Texas judgment. The plaintiff bank thereafter filed multiple garnishment actions in that same county court. In response, the defendant Republic of Congo and the garnishees in that case removed the garnishment actions as well as the final state court judgment. Civil Action 1:01-CA-321 constituted the Judgment Action.

The Court finds that plaintiff's recitation of case law is accurate, but not necessarily applicable to the unique circumstances of the present case. The Fifth Circuit has recognized that removability is not absolutely foreclosed upon entry of a trial court judgment as long as the federal court on removal has authority to set aside or grant other relief from the judgment.

Af-Cap, Inc. v. Republic of Congo, No. 1:01-321 (W.D. Tex. August 3, 2001 Order at 3) (citing Northshore Dev., Inc. v. Lee, 835 F.2d 580, 583 (5^th Cir. 1988)).

Judge Sparks' reasoning further recognized "the Congo's right to have issues relating to jurisdiction, foreign sovereign immunity, and enforcement of judgments determined in federal court, as intended by the FSIA and 28 U.S.C. §§ 1331 1441 (a), (d)." Id. at 4. The court found that permitting the removal of the final judgment to federal court helped preserve what it viewed to be the foreign sovereign defendant's right to have garnishment actions against its property heard in federal court as well. Accordingly, Judge Sparks ruled removal of the judgment action to be "proper . . . and perhaps most importantly, necessary to protect the defendant's rights under FSIA." Id.

This Court agrees with Judge Sparks' reasoning. Plaintiff's argument, while persuasive, disregards context as well as congressional intent regarding the special situation of foreign sovereigns in United States' courts. This Court finds it has removal jurisdiction over the Judgment Case under § 1441 (d). Accordingly, Plaintiff's Motion to Remand the Judgment Case is denied.

c. The Garnishment Cases ⁶

6 The Motions to Remand the First Garnishment Case and the Second Garnishment Case are identical for all purposes necessary to respond to them collectively.

As alluded to above, there is a special relationship between an underlying final judgment and subsequent actions filed to collect the underlying judgment. While an underlying judgment and a subsequent garnishment action constitute separate cases, they are also ancillary and certainly related. In context, they can be viewed as one matter. Logically, the garnishment actions are against the judgment debtor in that they seek to collect that owed by garnishing the debtor's property. Garnishment actions, then, are clearly and directly against the debtor, regardless of whether the debtor is technically a named defendant to the garnishment action.⁷ Logically, the action is to collect the judgment against the Congo.

7 This Court notes that the situation of a garnishment action for the property of a foreign sovereign is very different from a case wherein a foreign sovereign chooses to voluntarily intervene because it may be affected by, or have its interests "inextricably intertwined" with, the outcome of a given litigation. Compare with J. Baxter Brinkman Oil and Gas Corp. v. Thomas, 682 F. Supp. 898, 900 (N.D. Tex. 1988).

Nonetheless, technical arguments that garnishment actions are not "against" the debtor, such as that made here by NUFI, are not wholly without merit. NUFI makes a rather compelling argument regarding who is and who is not a party to garnishment actions under Texas law. This Court finds, however, that when analyzed in context, an action to garnish the property of a foreign sovereign is removable to federal court under § 1441 (d).

At least one district court in this circuit has already considered a similar technical argument and likewise ruled, nonetheless, that a garnishment action against the property of a foreign state constitutes a "civil action against a foreign state" such that the foreign state had the right to remove the case to federal court under § 1441 (d). See FG Hemisphere Associates, LLC v. The Republique Du Congo, 4:02-4261 (S.D. Tex. November 19, 2002 Order Dissolving Writs of Garnishment at 2). In FG Hemisphere, the plaintiff sought, in state court, to garnish the property of the Congo, the judgment debtor, and the Congo removed the case to federal court. The federal district court found it had jurisdiction, under § 1441 (d), over the garnishment action despite the plaintiff's argument that the Republique du Congo was not a party to the Writs.⁸ That court analyzed the question as follows:

8 While the cited opinion directly addressed an Emergency Motion to Dissolve, the plaintiffs made the argument that the court lacked jurisdiction to hear the case because the Congo was not a party to the Writs — virtually the same argument made in this case. The FG Hemisphere court's discussion of jurisdiction is completely applicable to the issue this Court now addresses, regardless of the fact that the motion therein was not one to remand as is the one here.

Contrary to the plaintiff's argument, the Court is of the view that it has jurisdiction over the writ proceedings under § 1441 (d). This is so because the Republique du Congo is the named party debtor in the garnishment Writs, which Writs were also served on The Republique du Congo. Thus, in the Court's opinion, jurisdiction lies in federal court.

Id.

Again, in enacting FSIA, and specifically § 1441(d), Congress intended to develop a uniform FSIA jurisprudence. Part of Congress' plan to achieve this goal was to channel cases against foreign sovereigns to the federal courts. In researching the current motions before this Court, this Court found several federal district courts which have heard and continue to hear incredibly similar garnishment actions. E.g., Af-Cap, 1:01-100 (W.D. Tex.), FG Hemisphere, 4:02-cv-4261 (S.D. Tex.). Furthermore, the Fifth Circuit has heard appeals on the merits in such cases. Regardless of whether or not motions to remand were filed, that these courts heard the cases supports a conclusion that jurisdiction exists to hear the case.

This Court, agreeing with the FG Hemisphere court's reasoning and further recognizing congressional intent of FSIA, finds it has removal jurisdiction over the Garnishment Cases under § 1441 (d). Accordingly, Plaintiff's Motions to Remand in the Garnishment Cases are denied.

CONCLUSION

For all the reasons stated above, this Court finds it has removal jurisdiction under 28 U.S.C. § 1441 (d) over both the Judgment Case and the Garnishment Cases. Accordingly, Plaintiff's Motions to Remand are hereby DENIED.

It is so ORDERED.