Source: https://casetext.com/case/haven-v-polska
Timestamp: 2020-07-07 16:43:24
Document Index: 625190815

Matched Legal Cases: ['§ 1602', '§ 1605', '§ 1608', '§ 1623', '§ 1622', '§ 1605', '§ 1605']

Haven v. Polska, 215 F.3d 727 | Casetext Search + Citator
Haven v. Polska
The Seventh Circuit has stated that "[i]f a sovereign files a responsive pleading without raising the defense…
In re China Oil
We recognize, as the Lins assert, that the "conscious decision" language used by the courts in Drexel Burnham…
Full title:EDWARD HAVEN and ALLEN WELBEL, Plaintiffs-Appellants, v. RZECZPOSPOLITA…
determining that the commercial activity exception did not apply to expropriation of real property in Poland because it was not based upon any commercial activity within the United States
Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 99 C 1727 — Milton I. Shadur, Judge.
Eric V. Puchala (argued), Chicago, IL, for Plaintiffs-Appellants.
Owen C. Pell (argued), White Case, New York, NY, Alan S. Madans, Rothschild, Barry Meyers, Chicago, IL, for Defendants-Appellees.
When reviewing a dismissal for lack of subject matter jurisdiction, we assume the truth of the plaintiffs' factual allegations and consider those allegations in the light most favorable to the plaintiffs. See Komorowski v. Townline Mini-Mart Restaurant, 162 F.3d 962, 964 (7th Cir. 1998) (per curiam).
Edward Haven and Allen Welbel both emigrated from Poland to the United States after World War II because of the Polish government's anti-Semitic policies. Both of them left behind real property owned by their families. Mr. Haven's property was insured by Powszechny Zaklad Ubezpieczen ("PZU"), a Polish insurance company. Mr. Haven and Mr. Welbel allege that their family lands were illegally seized by the state, and Mr. Haven also alleges that PZU failed to honor its insurance contract. PZU itself was nationalized by Poland after World War II.
In March 1999, Mr. Haven and Mr. Welbel brought this action in the district court. The complaint sought the return of property and damages from the Republic of Poland and the State Treasury of the Republic of Poland (collectively "Poland"). It also sought damages from Poland for interfering with PZU's contracts and from PZU for failing to perform its contracts. Mr. Haven and Mr. Welbel served process on the Polish government on May 7. On July 8, the Polish Consulate in Chicago delivered a letter to the district court, purporting to express the Polish Ministry of Justice's view that service was improper under the Convention on the Service Abroad of Judicial and Extrajudicial Documents in Civil or Commercial Matters (the "Hague Convention"). The district court postponed a default hearing scheduled for July 12, and on July 13 counsel for Poland and PZU entered an appearance.
On August 10, Poland and PZU filed a motion to dismiss the case on several grounds, including lack of subject matter jurisdiction due to sovereign immunity. There is no dispute that all of the defendants in this case are "foreign states" within the meaning of the 1976 Foreign Sovereign Immunity Act ("FSIA"), 28 U.S.C. § 1602 et seq. The district court entered an order on August 24 holding that the FSIA could be applied retroactively to claims arising before its passage. On September 29, the district court ruled that it lacked subject matter jurisdiction because the action did not fall within any of the exceptions to the general rule that foreign sovereigns are immune from suit in United States courts. First, the court held that the Polish Consulate's July 8 letter was not a knowing relinquishment of rights that waived sovereign immunity. Second, it held that the Treaty had not expressly waived sovereign immunity. Third and finally, the district court found that PZU had not waived its sovereign immunity by undertaking commercial activity in the United States.
We review de novo a district court's dismissal for lack of subject matter jurisdiction. See Fedorca v. Perryman, 197 F.3d 236, 239 (7th Cir. 1999); Kaplan v. United States, 133 F.3d 469, 472-73 (7th Cir. 1998). Foreign sovereigns historically enjoyed immunity from common law suit in United States courts. See In re Air Crash Disaster Near Roselawn, Ind., 96 F.3d 932, 945-46 (7th Cir. 1996); Goar v. Compania Peruana de Vapores, 688 F.2d 417, 425-26 (5th Cir. 1982). The FSIA provides a statutory codification of that immunity. See Verlinden B.V. v. Central Bank of Nigeria, 461 U.S. 480, 488 (1983); Employers Ins. of Wausau v. Banco De Seguros Del Estado, 199 F.3d 937, 941 (7th Cir. 1999); Wolf v. Federal Republic of Germany, 95 F.3d 536, 540-41 (7th Cir. 1996). The FSIA also provides exceptions to the rule of sovereign immunity. See Verlinden, 480 U.S. at 488; Wolf, 95 F.3d at 541. Because those exceptions are in derogation of the common law, we must not read them broadly. Statutes in derogation of the common law are narrowly construed. See Norfolk Redevelopment Housing Auth. v. Chesapeake Potomac Tel. Co., 464 U.S. 30, 35 (1983); In re Liberatore, 574 F.2d 78, 85 (2d Cir. 1978); Picker v. Searcher's Detective Agency, 515 F.2d 1316, 1319 (D.C. Cir. 1975).
28 U.S.C. § 1605(a)(1). If a sovereign files a responsive pleading without raising the defense of sovereign immunity, then the immunity defense is waived. See Frolova v. Union of Soviet Socialist Republics, 761 F.2d 370, 377 (7th Cir. 1985) (per curiam); accord Drexel Burnham Lambert v. Committee of Receivers, 12 F.3d 317, 326 (2d Cir. 1993); United States v. Crawford Enters., 643 F. Supp. 370, 378-79 (S.D.Tex. 1986). The letter sent by the Polish Consulate to the district court did not raise any sovereign immunity defense; therefore, if the letter was a responsive pleading, sovereign immunity has been waived. Mr. Haven and Mr. Welbel argue that the letter was a responsive pleading.
Rule 7 of the Federal Rules of Civil Procedure explains that only certain filings may be considered responsive pleadings, including a complaint, an answer, a reply to a counterclaim, an answer to a cross-claim, a third-party complaint, and a third-party answer. "No other pleading shall be allowed." Fed.R.Civ.P. 7. A responsive pleading need only be filed after proper service has been made. See Silva v. City of Madison, 69 F.3d 1368, 1376 (7th Cir. 1995) ("[A] responsive pleading is required only after service has been effected and the party has been made subject to the jurisdiction of the federal courts."); Bowman v. Weeks Marine, Inc., 936 F. Supp. 329, 336-37 (D.S.C. 1996).
Fed.R.Civ.P. 12 (emphasis added). We have acknowledged that the insufficiency of service of process may properly be raised through a motion to dismiss. See, e.g., Troxell v. Fedders of North Am., Inc., 160 F.3d 381, 382-83 (7th Cir. 1998) (affirming district court's grant of defendant's "motion to dismiss" for insufficient process). A motion to dismiss is not a responsive pleading. See Duda v. Board of Educ. of Franklin Park, 133 F.3d 1054, 1056-57 n. 2 (7th Cir. 1998); Camp v. Gregory, 67 F.3d 1286, 1289 (7th Cir. 1995); Scam Instrument Corp. v. Control Data Assoc., 458 F.2d 885, 889 (7th Cir. 1972).
The Federal Rules of Civil Procedure also specifically contemplate that foreign sovereigns will be allowed to object to the adequacy of service. Rule 4, which governs service of process, requires that service on foreign sovereigns comply with 28 U.S.C. § 1608. See Fed.R.Civ.P. 4(j)(1). The Hague Convention itself is attached to Rule 4 as an appendix. Article 4 of the Convention allows foreign sovereigns to object to the service of process.
The Federal Rules of Civil Procedure, and our case law interpreting those rules, require us to hold that sovereign immunity was not waived by the Polish Consulate's letter. The only court filing that can waive a sovereign immunity defense is a responsive pleading that does not raise the defense. The Consulate's letter objecting to the propriety of service is properly treated as a motion to dismiss, not a responsive pleading. See Hirsh v. State of Israel, 962 F. Supp. 377, 380 (S.D.N.Y.) ("Although an implied waiver may be found where a foreign state files a responsive pleading that fails to raise the defense of sovereign immunity, Germany's letter is not a `responsive pleading.'" (citation omitted)), aff'd, 133 F.3d 907 (2d Cir. 1997). Indeed, until it was established that service of process had been properly executed, Poland was under no obligation to file any responsive pleading. See Silva, 69 F.3d at 1368. Because the letter was not a responsive pleading, its failure to raise the sovereign immunity defense did not compromise Poland's ability to raise that defense.
Even if Mr. Haven and Mr. Welbel had been United States nationals in 1960, the Treaty could not be said to waive Poland's sovereign immunity. Indeed, the text of the Treaty makes plain that Poland expected the Treaty to eliminate any obligation it had to defend against claims by United States nationals for nationalized property. The President of the United States has the authority to renounce or extinguish claims of United States nationals against foreign governments in exchange for lump-sum payments. See Dames Moore v. Regan, 453 U.S. 654, 679 (1981); Belk v. United States, 858 F.2d 706, 709 (Fed. Cir. 1988). The Treaty is an example of an agreement between the United States and a foreign sovereign that extinguishes all claims by United States nationals. See Dames Moore, 453 U.S. at 680 n. 9; see also Schmidt v. Polish People's Republic, 742 F.2d 67, 72 (2d Cir. 1984). The text of the Treaty is clear. Article I describes the lump sum payment made by Poland to the United States as a "full settlement and discharge of all claims of nationals of the United States." 11 U.S.T. 1953 at Art. I. That lump sum was to be distributed "in accordance with such methods of distribution as may be adopted by the Government of the United States." Id. at Art. III. Thus, by the terms of Articles I and III, the United States replaced Poland as the country responsible for ensuring that proper compensation was made to United States nationals who owned land nationalized by Poland. The language of the Treaty makes explicit that Poland expected the lump-sum payment to satisfy fully its duties to United States nationals. It would be futile, therefore, to allow Mr. Haven and Mr. Welbel to prove that they were United States nationals in 1960 because the 1960 Treaty did not waive Poland's sovereign immunity against United States nationals.
The United States fulfilled, through the Foreign Claims Settlement Commission (the "FCSC"), its obligation to make whole its nationals who owned land seized by Poland. The FCSC has jurisdiction to adjudicate claims brought by any United States national arising under:
the terms of any claims agreement concluded on or after March 10, 1954, between the Government of the United States and a foreign government (exclusive of governments against which the United States declared the existence of a state of war during World War II) similarly providing for the settlement and discharge of claims of the Government of the United States and of nationals of the United States against a foreign government, arising out of the nationalization or other taking of property, by the agreement of the Government of the United States to accept from that government a sum in en bloc settlement thereof.
22 U.S.C. § 1623(a)(1)(B). The FCSC disbursed the funds obtained from Poland in the Treaty. See Schmidt, 742 F.2d at 69 (discussing claims for recompense under the Treaty filed with the FCSC). The FCSC completed its administration of the Polish Claims Program in 1966. See Foreign Claims Settlement Comm'n, Twenty-Fourth Semiannual Report to the Congress 37 (1996). FCSC decisions may not be reviewed by a federal court. See 22 U.S.C. § 1622g.
Mr. Haven and Mr. Welbel submit that the Treaty has waived sovereign immunity by designating that American law would govern any contractual disputes. At the outset, we note that no such clause exists in this treaty. The portion of the Treaty's annex cited by Mr. Haven and Mr. Welbel is a discussion of what persons may seek recompense under the Treaty; it does not provide that United States law would govern any contractual disputes. See Treaty Annex A(b)-A(d) B. Moreover, although a sovereign may waive implicitly its immunity through a contract if the contract "stipulate[s] that American law should govern any contractual disputes," Frolova, 761 F.2d at 377, courts have required a more explicit waiver in the case of treaties, see id. at 378 ("[W]aiver by treaty is not included in the list of examples of implicit waivers.").
The portion of the Treaty Annex cited by Mr. Haven and Mr. Welbel reads, in full:
A. For the purpose of distribution by the Government of the United States of the sum to be paid by the Government of Poland, "claims of nationals of the United States" are rights and interests in and with respect to property nationalized, appropriated or otherwise taken by Poland which, from the date of such nationalization, appropriation or other taking to the date of entry into force of this Agreement, have been continuously owned, subject to the provisions of paragraphs B and C of this Annex,
(b) directly by juridical persons organized under the laws of the United States or of a constituent State or other political entity thereof, of which fifty per cent or more of the outstanding capital stock or proprietary interest was owned by nationals of the United States;
(c) directly by juridical persons organized under the laws of the United States or of a constituent State or other political entity thereof, of which fifty per cent or more of the outstanding capital stock or proprietary interest was owned by natural persons who were nationals of the United States, directly, or indirectly through interests in one or more juridical persons of any nationality;
(d) indirectly by natural persons who were nationals of the United States or by juridical persons organized under the laws of the United States or of a constituent State or other political entity thereof, through interests in juridical persons organized under the laws of the United States or of a constituent State or other political entity thereof which are not included within category (b) or (c) above[.]
B. Juridical persons organized under the laws of the United States or of a constituent State or other political entity thereof which have been reorganized through judicial proceedings after their property or rights and interests in and with respect to property were nationalized or taken by Poland shall participate in the sum to be paid by the Government of Poland only to the extent that the outstanding capital stock or proprietary interest in such juridical persons was owned, at the time of such nationalization or other taking, by natural persons who were nationals of the United States, directly, or indirectly through interests in one or more juridical persons organized under the laws of the United States or of a constituent State or other political entity thereof.
11 U.S.T. 1953 Annex, at A(b)-A(d) B.
Mr. Haven and Mr. Welbel's final argument that the district court had subject matter jurisdiction is based on the FSIA's commercial activity exception. A foreign sovereign may waive sovereign immunity by carrying on commercial activity in the United States. The FSIA permits jurisdiction in any case:
28 U.S.C. § 1605(a)(2). This subsection requires that the lawsuit itself must be "based upon" the commercial activity that supports a waiver of sovereign immunity. See Saudi Arabia v. Nelson, 507 U.S. 349, 358 (1993); Santos v. Compagnie Nationale Air France, 934 F.2d 890, 892 (7th Cir. 1991) ("This Court and most others have stated that the term `based upon' requires an `identifiable nexus' between the claim and the commercial activity at issue."); Rush-Presbyterian-St. Luke's Med. Ctr. v. Hellenic Republic, 877 F.2d 574, 582 (7th Cir. 1989). The Fifth Circuit has explained that "there must be a connection between the plaintiff's cause of action and the commercial acts of the foreign sovereign." Stena Rederi AB v. Comision de Contratos del Comite Ejecutivo General del Sindicato Revolucionario de Trabajadores Petroleros de la Republica Mexicana, S.C., 923 F.2d 380, 386 (5th Cir. 1991); see also Byrd v. Corporacion Forestal y Industrial de Olancho S.A., 182 F.3d 380, 389 (5th Cir. 1999) (quoting Stena Rederi); In re Tamimi, 176 F.3d 274, 280 (4th Cir. 1999) (same).
discussing applicability of second clause of § 1605 only with respect to insurance company defendants
treating the local action doctrine as a venue issue to be addressed after questions of subject matter jurisdiction
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