Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-99-07032/USCOURTS-caDC-99-07032-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 

---

<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued January 27, 2000 Decided June 16, 2000

No. 99-7032

Phoenix Consulting, Inc.,

Appellee

v.

Republic of Angola,

Appellant

Appeal from the United States District Court

for the District of Columbia

(No. 97cv01824)

Daniel Wolf argued the cause and filed the briefs for

appellant.

Richard S. Sternberg argued the cause and filed the brief

for appellee.

Before: Edwards, Chief Judge, Ginsburg, and Rogers,

Circuit Judges.

Opinion for the Court filed by Circuit Judge Ginsburg.

USCA Case #99-7032 Document #523737 Filed: 06/16/2000 Page 1 of 7
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

Ginsburg, Circuit Judge: Phoenix Consulting sued the

Republic of Angola for breach of contract, and Angola moved

to dismiss the suit for lack of subject matter jurisdiction

under the Foreign Sovereign Immunities Act of 1976 (FSIA),

28 U.S.C. ss 1330, 1602-1611. The district court, accepting

as true for purposes of the motion the plaintiff's allegation

that Angola had executed a contractual waiver of immunity,

denied Angola's motion. Angola appeals from the court's

order.

Because Angola's motion to dismiss raised a factual challenge to the court's subject matter jurisdiction under the

FSIA, the district court erred in accepting as true the

jurisdictional facts alleged by the plaintiff. Instead, the court

should have settled any contested jurisdictional facts necessary to decide Angola's motion to dismiss. We therefore

remand the matter to the district court for further proceedings consistent with this opinion.

I. Background

Phoenix Consulting, Inc., a United States affiliate of Phoenix Holdings, Ltd. of the United Kingdom (hereinafter collectively referred to as Phoenix), entered into an agency

contract with Eduardo Neto Sangueve. Sangueve was authorized to negotiate the sale to the Republic of Angola of a

prefabricated building owned by Phoenix and stored in Angola.

Sangueve proposed the sale in a meeting with Jose Anibal

Rocha, Angola's Minister of Territorial Administration. The

outcome of this meeting and the subsequent chain of events

are disputed by the parties. Phoenix claims that Rocha, on

behalf of Angola, contracted to purchase the building for

$325,000 (U.S.), and that Angola had its agents remove the

building from storage but never paid for it. Angola, in

contrast, maintains that Rocha merely took Phoenix's proposal under consideration, and that neither he nor any other

Angolan official contracted to purchase the building. Angola

professes to have no knowledge of who removed the building

from storage.

USCA Case #99-7032 Document #523737 Filed: 06/16/2000 Page 2 of 7
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

Phoenix filed suit in the Superior Court of the District of

Columbia claiming Angola had breached its contract or, alternatively, had converted Phoenix's property or been unjustly

enriched. After default judgment was entered in favor of

Phoenix, Angola removed the case to the United States

District Court for the District of Columbia. Angola then

successfully moved the district court to vacate the default

judgment and, prior to filing an answer to the complaint,

moved to dismiss for, among other reasons, lack of subject

matter jurisdiction under the FSIA. In response, Phoenix

invoked three exceptions to immunity under the FSIA, any

one of which would provide the district court with subject

matter jurisdiction: waiver, 28 U.S.C. s 1605(a)(1); commercial activity, id. s 1605(a)(2); and a taking of property in

violation of international law, id. s 1605(a)(3). In support of

the waiver exception, Phoenix proffered evidence that Rocha,

as Angola's agent, had executed a written sales contract

containing a choice of law provision subjecting the contract to

the jurisdiction and laws of the United States--which, according to the legislative history of the FSIA, would by implication have waived Angola's immunity from suit. See H.R. Rep.

No. 94-1487, at 18 (1976), reprinted in 1976 U.S.C.C.A.N.

6604, 6616-17. Angola replied with Rocha's sworn declaration that the signature on the written contract was a forgery

and that Angola had never agreed to any contract, much less

one containing a waiver provision.

The district court denied Angola's motion to dismiss. First

it held that the choice of law provision would constitute a

waiver of sovereign immunity. Then, stating that "[o]n motion to dismiss, the court is to consider all allegations of

jurisdictional facts in [the plaintiff's] favor," the court concluded that Phoenix's allegation that Angola had executed the

written contract would, if proven, establish that Angola had

waived its sovereign immunity.

Angola brings this interlocutory appeal of the district

court's order pursuant to 28 U.S.C. s 1291 and the collateral

order doctrine of Cohen v. Beneficial Indus. Loan Corp., 337

U.S. 541 (1949). See Jungquist v. Sheikh Sultan Bin Khalifa, 115 F.3d 1020, 1025-26 (D.C. Cir. 1997); ForemostUSCA Case #99-7032 Document #523737 Filed: 06/16/2000 Page 3 of 7
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

McKesson, Inc. v. Islamic Republic of Iran, 905 F.2d 438, 443

(D.C. Cir. 1990). Upon appeal, Angola raises only the following question of law: May a district court resolve a sovereign

defendant's factual challenge to the court's subject matter

jurisdiction under the FSIA by accepting as true the plaintiff's allegations of jurisdictional facts?

II. Analysis

Under the FSIA a foreign state is immune from the

jurisdiction of both the federal and the state courts, except as

provided by international agreements, see 28 U.S.C.

s 1330(a); id. s 1604, by nine specifically enumerated exceptions, see id. s 1605(a)(1)-(7), (b), (d), and by certain other

exceptions relating to counterclaims in actions brought by the

foreign state itself, see id. s 1607. If no exception applies, a

foreign sovereign's immunity under the FSIA is complete:

The district court lacks subject matter jurisdiction over the

plaintiff's case, see id. s 1330(a). Thus the sovereign has "an

immunity from trial and the attendant burdens of litigation,

and not just a defense to liability on the merits." ForemostMcKesson, 905 F.2d at 443. In order to preserve the full

scope of that immunity, the district court must make the

"critical preliminary determination" of its own jurisdiction as

early in the litigation as possible; to defer the question is to

"frustrate the significance and benefit of entitlement to immunity from suit." Id. at 449.

The FSIA establishes a specific framework for determining

whether a sovereign is immune from suit and consequently

whether the district court has jurisdiction. As a threshold

matter, if the sovereign makes a "conscious decision to take

part in the litigation," then it must assert its immunity under

the FSIA either before or in its responsive pleading.

Foremost-McKesson, 905 F.2d at 443-45. This requirement

holds even though FSIA immunity is jurisdictional because

failure to assert the immunity after consciously deciding to

participate in the litigation may constitute an implied waiver

of immunity, 28 U.S.C. s 1605(a)(1), which invests the court

with subject matter jurisdiction under 28 U.S.C. s 1330(a).

USCA Case #99-7032 Document #523737 Filed: 06/16/2000 Page 4 of 7
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

See H.R. Rep. No. 94-1487, at 18 (1976), reprinted in 1976

U.S.C.C.A.N. 6604, 6616-17.*

Once the defendant has asserted the jurisdictional defense

of immunity under the FSIA, the court's focus shifts to the

exceptions to immunity laid out in 28 U.S.C. ss 1604, 1605,

and 1607. "In accordance with the restrictive view of sovereign immunity reflected in the FSIA," the defendant bears

the burden of proving that the plaintiff's allegations do not

bring its case within a statutory exception to immunity.

Transamerican S.S. Corp. v. Somali Democratic Republic,

767 F.2d 998, 1002 (D.C. Cir. 1985); see Princz v. Federal

Republic of Germany, 26 F.3d 1166, 1171 (D.C. Cir. 1994).

By moving to dismiss, the defendant may challenge either the

legal sufficiency or the factual underpinning of an exception,

and how the district court proceeds to resolve the motion to

dismiss depends upon whether the motion presents a factual

challenge.

If the defendant challenges only the legal sufficiency of the

plaintiff's jurisdictional allegations, then the district court

should take the plaintiff's factual allegations as true and

determine whether they bring the case within any of the

exceptions to immunity invoked by the plaintiff. See, e.g.,

Saudi Arabia v. Nelson, 507 U.S. 349, 351, 361 (1993) (disputed allegations forming basis for suit, even if true, not "commercial activity" within meaning of exception therefor);

Princz, 26 F.3d at 1172 (disputed allegations of use of U.S.

mail and banking system, even if true, not "direct effect in the

United States" of commercial activity within meaning of

exception); Foremost-McKesson, 905 F.2d at 450 (undisputed

__________

* This court has not yet addressed whether and upon what facts

"the intentionality requirement implicit in s 1605(a)(1)," Princz v.

Federal Republic of Germany, 26 F.3d 1166, 1174 (D.C. Cir. 1994),

might allow a sovereign defendant to claim immunity after consciously deciding to take part in the proceeding and filing a responsive pleading. See Alpha Therapeutic Corp. v. Nippon Hoso Kyokai, 199 F.3d 1078 (9th Cir. 1999) (no waiver where in-house counsel

of public broadcaster, unaware of pleading requirement when filing

answer, raised FSIA promptly upon discovering requirement less

than three months after complaint filed).

USCA Case #99-7032 Document #523737 Filed: 06/16/2000 Page 5 of 7
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

allegations of "commercial activity" adequate to survive motion to dismiss). In some cases, however, the motion to

dismiss will present a dispute over the factual basis of the

court's subject matter jurisdiction under the FSIA, that is,

either contest a jurisdictional fact alleged by the plaintiff, see,

e.g., Filetech S.A. v. France Telecom S.A., 157 F.3d 922, 931-

32 (2d Cir. 1998) (factual dispute whether sufficient commercial activity for jurisdiction), or raise a mixed question of law

and fact, see, e.g., Foremost-McKesson, 905 F.2d at 448-49

(dispute whether person alleged to have harmed plaintiff was

agent of sovereign). When the defendant has thus challenged

the factual basis of the court's jurisdiction, the court may not

deny the motion to dismiss merely by assuming the truth of

the facts alleged by the plaintiff and disputed by the defendant. Instead, the court must go beyond the pleadings and

resolve any disputed issues of fact the resolution of which is

necessary to a ruling upon the motion to dismiss. See

Jungquist, 115 F.3d at 1027-28; Foremost-McKesson, 905

F.2d at 448-49; see also Filetech, 157 F.3d at 932; Moran v.

Saudi Arabia, 27 F.3d 169, 172 (5th Cir. 1994); Gould v.

Pechiney Ugine Kuhlmann, 853 F.2d 445, 451 (6th Cir. 1988);

cf. Herbert v. National Academy of Sciences, 974 F.2d 192,

197-98 (D.C. Cir. 1992) (affirming district court's resolution of

disputed facts necessary for subject matter jurisdiction under

Copyright Act). The district court retains "considerable latitude in devising the procedures it will follow to ferret out the

facts pertinent to jurisdiction," but it must give the plaintiff

"ample opportunity to secure and present evidence relevant

to the existence of jurisdiction." Prakash v. American University, 727 F.2d 1174, 1179-80 (D.C. Cir. 1984). In order to

avoid burdening a sovereign that proves to be immune from

suit, however, jurisdictional discovery should be carefully

controlled and limited, see Foremost-McKesson, 905 F.2d at

449; it should not be authorized at all if the defendant raises

either a different jurisdictional or an "other non-merits

ground[ ] such as forum non-conveniens [or] personal jurisdiction" the resolution of which would impose a lesser burden

upon the defendant, In re Papandreou, 139 F.3d 247, 254-55

(D.C. Cir. 1998).

USCA Case #99-7032 Document #523737 Filed: 06/16/2000 Page 6 of 7
<<The pagination in this PDF may not match the actual pagination in the printed slip opinion>>

With these principles in mind, we see that in ruling upon

Angola's motion to dismiss the district court erred by assuming the truth of an allegation of jurisdictional fact contested

by the defendant. When Angola asserted immunity under

the FSIA, Phoenix invoked the waiver exception thereto and

presented evidence that Angola had executed a written contract waiving its immunity under the FSIA. Angola responded with a challenge to the facts upon which Phoenix relied for

the waiver exception: It presented evidence that the written

contract was a forgery and that it had never agreed to waive

its immunity from suit. The district court was required to

resolve this factual dispute material to its subject matter

jurisdiction; and in order to preserve the significance and

benefit of a foreign sovereign's immunity from suit under the

FSIA, the court could not "postpon[e] the determination of

subject matter jurisdiction until some point during or after

trial." Gould, 853 F.2d at 451. We therefore remand this

matter to the district court for further consideration whether

it has subject matter jurisdiction under the FSIA.

III. Conclusion

For the foregoing reasons, the order of the district court is

reversed in part and the case remanded for further proceedings consistent with this opinion.

So 

ordered.

USCA Case #99-7032 Document #523737 Filed: 06/16/2000 Page 7 of 7