2005 D e c i sion s O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit

2-1-2005 

# LN C I n v L L C v . Republic N ic a r agua
P r e c e de n t i al or N on-P r e c e de n t i al : P r e c e de n t i al
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Thi s de c i sion i s br ou gh t t o you for f r e e a nd ope n a c c e s s b y the O p inion s of the U nit e d S t at e s C our t of Appe al s for the Thir d C ir c uit at V i l l a no va U nive r sit y S choo l of L a

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w Di g it al Re posit or y

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w . v i l l a no va . e du

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" LNC I n v LL C v . Re pub l ic Nica r a g ua" (2005). 2005 D e cisio n s . P ape r 1516. h tt p://d i g it alc ommon s .l a

w . v i l l a no va . e du/thir dc ir c uit_2005/1516PRECE DENTI AL

UNITED STATES COURT OF APPEALS FO R T HE TH IRD CIR CU IT

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LN C IN VE ST M EN TS LL C, f/k /a Investments, I nc.*,

Appellant

v.
THE RE PUBLI C NI CARAGUA (* See Clerk' s Order of 5/ 23/03)

On A ppeal from the Un ited States District Co urt

for the D istrict of Delaw are (D.C. No. 01-mc- 00134) District Judge: H onorab le Joseph J. Fa rnan, Jr.

Submitte d on Review of Juris dicti on

February 1, 2005
Be for e: S LO VI TE R, A M BR O, a nd A LD ISE RT , Circuit Judges

. (Fil ed February

1, 2005 )

_____ Elli ot H. Scherker Gre enbe rg Tr aurig Miami, FL 331312 Lau rie A . Krep to Scott Sal erni Gre enbe rg Tr aurig Wilmington, DE 19801 Raymond A. Levit es Pavelic & Levites New Y ork, NY 10012 Attorney s for Appell ant
Preeta D. Bansa l Scott D. Musoff Skadden, Arps, Slate, Meagher & Flom New Y ork, NY 10036
Scott M. Fli cker G. Hamilton Loeb Paul, Hast ings, Janofsky & W alker Washington, DC 20004
Philip D. Anker Wilm er Cutler Pick ering H ale & D orr Washington, DC 20037 Attorney s for Appell ee

OPINI ON OF THE COURT

SL OV ITE R, Circuit

Judge

. This garni shment act ion ari ses from the Distr ict Court of Delaware. Alt

hough the named parties i n the sui t are t he Republic of Nicaragua and LNC Investments , Inc. (“LNC”), the issue be fore us ar ises f

rom LNC’s attempt t o garnis h funds from Megatel, a c ompany which owes $50 mil lion t o Nicaragua. The Distri ct Court qua shed the wri t of attachment LNC filed on1 The Distri ct Court r easoned that even i f Megatel wer e to payLNC pursuant to the wri t of attach men t, Nica ragu an law wo uld not regard t

hat pay ment as a disch arge o f M egate l’s oblig ation to Nic arag ua.

2 28 U .S.C. § 196 3 pro vides in pertin ent pa rt:
A judgment i n an acti on for the r ecovery of money or propert

y ent ered in any cour

t of appeal s, di stri ct cour t, bankruptcy

cour t , or i n the Court of Intern ati ona l Trade may be r egist ered by filing a cert ifie d c opy of t

he judgment i n any ot

her dis tri ct or, with respect

to the Court of Int ernati onal Trade, in any judic ial district, w hen th e judg men t ha s bec ome final by appea l or expi rati on of the t ime for appeal or when orderedby the court that e ntered t he judgment for

good cause shown.

3 M egate l beca use it co nclud ed tha t M egate l wo uld b e exp osed to double li ability

if the writ were enforced. 1 The D istrict Court had juri sdict ion pursuant to 28 U.S. C. § 1963. 2 We hold that this court l acks jurisdi ction be cause the Distri ct Court’ s Order quashing t

he writ of attac hment agains t Megatel was not a final disposi tion of t

he case under

28 U.S.C. § 1291.
I.
A. Megatel’s $ 50 mi lli on Obligati on to Nicara gua By agree ment dated August 31, 2001 (“Eni tel Agreement”), the Republi c of Nicaragua s old fort y per cent of t

he authori zed and outst anding shar es of Empresa Nicar aguense de Telecomunicaci ones S.A. ( “Enitel ”), a s tate -owned and control led te lecommunicat ions company in Nicara gua, t o a consortium formed by Telia Swedtel AB , a Swedish tele communicati ons company, and EMC E, a Honduran holdi ng com pan y.
The Enite l Ag reem ent pro vided that the cons ortium could4 organize a company for the purpose of purchasing the shares, and that “all right s, pr ivil eges and obli gations granted to the [consort ium] thr ough this Agreement shal l be tr ansferr ed ipso jure ” to that company . App. at 271. Pursuant to t

his cl ause, t

he consort ium formed Megatel t o purchase t he shares under the Enite l Ag reem ent. O n D ecem ber 1 8, 200 1, M egate l paid $33,100,999 in cash to Nicaragua towards the pri ce for the shares of Enitelas per t

he EnitelAgreement. I n additi on, Megatel agree d to pay

the remai ning $50 mil lion of t he agreed price in five an nual installments o f $10 m illion a year.
B. The Rep ubl ic of

Nic ar ag ua ’s $86 mi ll io n De btto LNC On December 11, 1980, Nicar agua enter ed into a loan agree men t (“Lo an A greem ent”) w ith a syndic ate of bank s to restructur e its then exi sti ng debt. The Loan Agreement provided that Nic aragua would waive i ts sover eign immunit y wit h respect to any of its obligations ar isi ng under the a greement. It fur ther stated that any final judgm ent secured by lenders in N ew Y ork federalcourt “s hall be conclusi ve and may be enforced in other juri sdict ions by

suit on the judgment

or in any

other manner prov ided b y law, an d [N icarag ua] h ereby irrev ocab ly subm its to the jurisdi ction of

the court s of each j urisdi ction in which any Person shal l seek t o enforce such j udgment.” App. at 112-113.
In the 1 980 s, Nic aragu a w as un able to mak e paym ents req uire d un der the L oan Ag reem ent a nd d efa ulted on t he lo ans
. In 1986 and 1987, LNC purchased a por tion of t he debts owed by Nicaragu a unde r the Loan Agree ment on the second ary market. LNC then brought suit in the Unit ed State s District Court for t

he Southern Dis tri ct of New York for judgment on t he loans. In LNC Invs., Inc. v. Republi c of Nicaragua , No. 96 Civ. 6360 (JFK) slip op. at

2 (S.D.N.Y. Apr. 2, 1999), LNC w as aw arded a fina l judgm ent of $86 ,885,8 56.63 plus $ 230 ,000 in attorney ’s fees.
LN C as serts tha t it has be en un able to retain c oun sel in Nic arag ua to enforc e its ju dgm ent in the c our ts of that c oun try. Thus, it has att empted to satis fy i ts j udgment by garnishing the asset s of thi rd part ies who owe money to Nic aragua. On several5 occasions , othe r federalcourts have denied s uch att empts for reas ons oth er th an th e m erits o f L NC ’s jud gm ent. See LNC Invs. , Inc. v. Republi c of Nicaragua , N o. 99- 209 0, sl ip op. (S .D

. Fla. Oct . 2, 2002) (rej ecti ng LNC’s attempt t o enforce j udgment by se rv in g a wri t o f g arni sh men t o n Swe dt el AB, be caus e LNC failed to establ ish personal juri sdiction over Swedtel AB as a non -reside nt fore ign co rpora tion); LNC Invs., Inc. v. Republi c of Nicaragua , N o. 96 C iv . 6 360 (J FK) , 2 000 WL 74 555 0 ( S. D. N. Y. June 8, 2000) (rej ecti ng LNC’s attempt t o sati sfyjudgment by atta ching inc ome tax and value -added tax payment s owed by American Airl ines and Continental Airlines to Nicar agua on ground that

the ass ets were i mmune from attachment under the Fore ign S over eign Im mu nities A ct (“FS IA” )); LNC Invs., Inc. v. Republic of Nicaragua , 115 F. Supp. 2d 358 (S.D.N.Y. 2000) (rej ecti ng LNC’s attempt t o sati sfyjudgment by executi ng on asset s of Banco Centralde Nicaragua hel d in the Fede ral Reserve Bank of New York on ground that as sets were immune fro m a ttach me nt u nde r the FS IA ), aff’d , 228 F.3d 423 (2d Cir. 200 0).
C. The Present Act ion On December 12, 2001, LNC regist ered it s forei gn ju dgm en t withth e Di st ri ct Cou rt of Del awa re . T he re af

te r, LNC file d writs of

atta chment agains t Megatel, and against its former par ent comp ani es , Meg at el , LL C andIn ver te l, LLC.
The writ of at

tachment aga inst

Megatel, LLC (one of the former pare nts) was fi led on May 16, 2002. After r eceivi ng no respo nse, L NC serve d a w rit of attac hm ent fo r con temp t on Ju ly 12, 2002. On Jul y 15, 2002, Megatel r esponded to t he writ of attach men t for co ntem pt stating that it ho lds no goo ds or a ssets belonging to the Republi c of Nicaragua. Thereafter , LNC served a subpoena duces tecum on M egate l, LLC to w hich M egate l, LLC filed a motion f

or a prot ecti ve order t o quash or modify subpoena.
The writ of at

tachment aga inst

Invert el, LLC (the other former pare nt) was fi led on August 6, 2002. After r eceivi ng no response, LNC served a writ of at tachment for

contempt on6 Sept ember

11, 2002. On Sept ember 13, 2002, Inv ert el , LLC responded t o the initialwrit of at tachment and t

he writ of attach men t for co ntem pt, stating that it ho lds no goo ds or a ssets belonging to the Republi c of Nicaragua. No further action was takenon t

he wr it of att achment

aga in st In ver te l, LLC. On July 19, 2002, LNC served a writ of att achment against Megatel it self. On Novem ber 19, 2002 Megatelmoved to quash t

he writ of attac hment agains t it , arguing that enforcement would s ubject it t o double li ability , that the payment s in question were immune from attachment under the FSIA, and that

the Dist rict Court lac ked juri sdict ion to or der atta chment of the payments . On December 18, 2002, t he Distr ict Co urt issue d a m emo rand um orde r gran ting M egate l’s mo tion to quash the wri t of attachment, finding t hat Megatel would be exposed to doubl e lia

bili ty if the writ were enforced. On January16, 2003, LNC file d a notic e of appeal from the December 18, 2002 Order quashing t

he writ of attac hment against Megatel. By

lett er date d February

11, 2003, we di recte d the parties t o respond as to whether LNC’s appeal was juri sdict ionally defec tive be cause “i t appear s that a writ of atta chment remains pending agai nst Inve rtel .” That l ette r did not re fer to th e pe ndi ng wr it

of att achment

aga in st Megat el , LL C, although it is app arent that this writ is pend ing as w ell. In response to our lett er, LNC m oved the District Court to dis miss its pending writ s of att achment agai nst bot h Megatel, LLC and Inte rve l, LL C, a s ga rnish ees for Nic arag ua, w itho ut p reju dice

. The Distri ct Court gr anted this re quest on Febr uary 26, 2003. On August 4, 2004, Megatelwas bought by Se rcot el, SA de CV (“Sercotel ”), a wholly owned subsi diary of America Movil, SA de CV, a publicly t raded Mexican company . Thus, at the pres ent time, Megatel, LLC and Invertel , LLC are no longer the pa rent co mp anies o f M egate l.
II

. To recapit

ulate , LNC seeks to appealthe order quashing its writ o f attach men t on M egate l. The issue b efore us is3 28 U .S.C . § 12 91 s tates in p ertin ent p art,
The courts of appeals (other than the United Stat es Cou rt of A ppea ls for the Federal Ci rcuit) shal l have juri sdict ion of

appe als fro m all final decisi ons of the district courts of the Unite d States , the United Stat es Distri ct Court for t

he Distr ict

of the Canal Zone, the Distri ct Cou rt of

Guam, and the Dist

rict Court of the Virg in Islands, except where adirect review maybe had in the S upre me C ourt. 7 whether LNC’s dismis sal wit hout prej udice of i ts writ s of atta chment agains t Megatel, LLC and Invertel , LLC is suffi cient to re nde r the cas e pr oce dur ally fin al fo r pu rpo ses o f 28 U.S .C. § 1291. 3 We hold it is not.
The finali ty

requir ement of 28 U.S.C. § 1291 is grounde d “not in mer ely

techni cal conceptions of ‘ final ity ,’” but rather on a polic y “aga inst

piecemeal litigati on.” Catli n v. Unite d States , 324 U.S . 229, 2 33 (1 945 ). Thu s, we have “adh ered c onsiste ntly to the ge neral r

ule that we lack appel late juri sdict ion over par tial adjudications w hen certain o f the claims b efore the d istrict court have been dis missed without pr ejudic e .” Fed. Home Loan Mortgage Corp. v. Scotts dale Ins . Co. , 316 F.3d 431, 438 (3d Cir. 20 03); see also Erie County Retire es Ass’n v. County of Erie, Pa. , 220 F.3d 193, 201 (3d. Cir . 2000) ( “[O]rdinarily we do not have j urisdi ction unde r 28 U.S.C. § 1291 of an appeal fr om an order par

tial ly adjudic ating a

case when an appell ant has assert ed a clai m in the di stri ct court which it ha s withdrawn or dism issed wit hou t pre jud ice.” ), cert. denied , 532 U.S. 913 (20 01)

. We have recog nized an ex ceptio n to this gene ral rule wh ere the claim s dism issed w ithout p rejudic e are “ effe ctively barred.” In thos e cases, w e have h eld that the district court’s order or judgment i s finalfor purpose s of § 1291. For e xample, in Fassett

v. Delt a Kappa Epsilon , 807 F.2d 1150 (3 d Cir. 198 6), the dis tri ct court

granted s ummary judgment on behalf of four

of the fiv e defenda nts. Ra ther tha n pro ceed to trial ag ainst the fifth8 defendant al one, pl ainti ffs fil ed a stipulati on of dismis sal without pr ejudic e against that de fendant. Plaintiffs t hen fil ed a timel y not ice of appeal . We sua sp onte explored t he issue of final ity and held that despi te the general rule bar ring par tial appeals, plaintiffs’ claim s against the fifth d efenda nt were “effectively

barred” be cause the stat ute of l imit ations on that clai m had lapsed at

the time the plaintiff

entere d into t

he stipu latio n of

dism issal

. Id . at

1155. Thus, a dopting a pr acti cal approach, we held that

the fi nalit

y r equirement

of § 1291 was satis fied

. Similarly , in GF L A dvan tage F und , Ltd. v. C olkitt , 272 F.3d 189, 198- 99 n.3 (3d Cir . 2001), the dis tri ct court twice dismis sed without

prejudi ce defendant’ s counter clai ms for lack of specifi city . Notwiths tanding t hat the dismis sal was without prejudi ce, we held t

hat we had jur isdi ction unde r § 1291 to hear defendant’ s appeal f

rom the dis tri ct court ’s order granti ng summary j udgment to pl ainti ff because t he dist rict court had determined that defend ant’s affirma tive defense s, which w ere identical to his counterclaims, fai led as a matter of law. Thus, th e di stri ctcourt ’s di smi ss al of d efe ndant ’s count er cl ai ms without pr ejudic e effectively barred t hese cla ims, and r endered the distric t court’s judg men t final.
In the i nstant

case, LNC initiate d writs of atta chment against Megatel and against Megatel’s former parent companies, Megatel, LLC and Invert el, LLC, in it s att empt to gar nish the $50 mill ion that

Megatel owes Nicaragua pur suant t o the Enit el Agree ment. In ord er to be able to a ppeal the D istrict Court’s December 18, 2002 Order quas hing the wri t of attachment against Megatel, LNC has dismi ssed the pending writ s of atta chment agains t Megatel, LLC and Invertel , LLC, but i t has done so without

prejudi ce. It

argues t hat the dismis sal of M egate l’s form er pare nts, albe it witho ut preju dice, effectiv ely bars any future garnishment

acti on against

them, r endering t

he De cem ber 1 8, 200 2 O rder f inal.
LN C firs t conte nds th at as of Au gust 4 , 2004 , Me gatel, LLC and Invertel , LLC are no longer the pare nt companies of Meg atel, and thus, any future garnishment acti on brought against4 For in stanc e, the EnitelAgreement provi des that the tr ansfe r of right s from the Tel ia / EMCE consortium t o Megatel “w ill not re lieve the . . . [ consort ium] of it s repre sentations and obligations under [cert ain cl auses] of this Agreemen t, forwhich the [consort ium] willbe several ly liabl e.” App. at

271.

5 Indeed, e ven after

Megat el , LLC responded t hat it held no assets belonging to the Republ ic of Nicar agua, LNC filed a discovery motion agai nst Megatel , LLC. This di scove ry motion rema in ed pending in t

he Distr ict Court

untilLNC dismissed i t without pr ejudic e on February 26, 2003. 9 the former

parent c ompanies, predicated on the Enitel trans acti on, willfail as a practicalmatter . This argument maybe factual ly correct ---i t is often the case that the dissolution of a parent s ubsidi ary

relationshi p will compl etel y se ver any debt obl igati ons wh ich th e pa ren t ow es o n be half of th e su bsid iary. However, such fact

– continge nt dete rminati ons must be made by the distr ict co urt in the first in stan ce. See, e. g. , Sewak v. I. N.S. , 900 F.2d 667, 673 (3d Cir. 199 0) (“As a n appe llate court we do not take t esti mony, he ar evide nce or det ermine di sputed facts in the first instance. Instead , we rely upon a record dev elop ed in tho se f

ora that d o tak e ev iden ce a nd find fac ts.”). There is not

hing in t he record t o elimi nate t he possibi lit

y t hat Megatel, LLC or Inver

tel, LLC assumed some of the debt obligations of Megatel from the Enitel Agreement, and that these obliga tions re main with the pa rent co mp anies e ven a fter the sale of Megatel to Ser cotel . Thus, e ven after the August 4, 2004 sale, LNC m ay have a colora ble garni shment act ion agai nst t he former parent companies. 4 LNC also argues that because both Megatel, LLC and Invert el, LLC’s responded to t he origi nal writ s of att achment by stat ing that

they held no proper

ty of the Republi c of Nicaragua, their dismissal w ithout prejudice effectively barred any future garnis hment acti on. We are not per suaded. We cannot a ccept the unil atera l asse rti ons of part ies opposing a garnis hment acti on as fact ually determi native

. 56 Such a findin g w ill not de prive L NC of the opp ortun ity for app ellate rev iew

. See Ohntrup v. Fi rearms Ctr ., I nc. , 802 F.2d 676, 6 78 (3d C ir. 1986). LNC need only pursue i ts gar

nishment acti on against

Megat el , LLC and I nver te l, LLC to their conclus ion in th e Di st

ri ct Cou rt , o r wi thdraw those pr oceedings wit h prejudi ce. 10 Unlike the cases applyi ng the exception refe rred t o above, we are no t face d w ith a straig htforw ard ap plication of law to undisput ed fact, as was the cas e in Fass ett , nor is t his a case where the Dist

rict Court made the initi al fact ual and l egal determ ination s wh ich effectiv ely ende d the c ase b efore it, as in GF L A dvan tage F und , Ltd . Accord ingly, we hold that L NC ’s voluntar y di smissalwithout pr ejudic e of the pendi ng garnis hment acti ons agains t Megatel, LLC and Invertel , LLC, as a pract ical matter , does not effecti vely

bar a fut ure garni shment acti on against

the pare nt companies aris ing from the Enitel Ag reem ent. Accordingly , the Distri ct Court’ s December 18, 2002 Order is not

final for purpose s of 28 U.S.C. § 1291. 6 See Fed. Home Loan M ortgage , 316 F .3d at 4 38 (3 d C ir. 2003 ); Erie Cou nty Retirees Ass’n , 220 F .3d at 2 01 (3 d. Cir. 2 000 ). We will theref ore dis miss this appealfor lac k of juri sdict ion.

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