Opinion ID: 393941
Heading Depth: 2
Heading Rank: 2

Heading: The Unjust Enrichment Theory

Text: 32 The basis on which the district court upheld BBI's claims was that when Banco Nacional took over the pesos deposited with Branches by the Cuban purchasers of the letters of credit, leaving Boston to pay the beneficiaries of those letters, Banco Nacional was unjustly enriched: 33 Banco Nacional ... took over the going business being conducted in Cuba by (Branches), and receiving the avails, became liable in quasi contract for the countervailing burdens of the transactions. 34 Opinion at 14. This view cannot be sustained. 35 As a general matter the act of state doctrine bars courts from examining the validity of an expropriation of property by a foreign sovereign in its own territory. Banco Nacional de Cuba v. Sabbatino, 376 U.S. 398, 84 S.Ct. 923, 11 L.Ed.2d 804 (1964); see Chase, supra. There is no question here that Banco Nacional, acting as an alter ego of the Cuban government, see Chase, supra; Banco Nacional de Cuba v. First National City Bank, 478 F.2d 191, 193-94 (2d Cir. 1973), succeeded to the Branches' assets through an act of nationalization through forced expropriation pursuant to a Law and a Resolution of the Cuban government. Given these facts, we see no basis for refusing to apply the act of state doctrine to bar BBI's present claims. As we stated in Menendez v. Saks & Company, 485 F.2d 1355 (2d Cir. 1973) (Menendez), rev'd on other grounds sub nom. Alfred Dunhill of London, Inc. v. Republic of Cuba, 425 U.S. 682, 96 S.Ct. 1854, 48 L.Ed.2d 301 (1976) (Alfred Dunhill). 36 (n)o authority has been cited for the proposition that the act of state doctrine does not apply to a quasi-contractual claim based on unjust enrichment .... Nor has any sound reason been advanced in support of such an exception. 37 485 F.2d at 1370. Indeed, were there an unjust enrichment exception to the act of state doctrine, we would expect the exception to swallow the rule, for virtually every taking will enrich the sovereign, 8 and to the extent that compensation is not paid that enrichment will have been unjust. We may not avoid application of the act of state doctrine by simply compartmentalizing the expropriation and narrowing our sights to the precise injustice associated with the taking of a particular asset. 38 Nor do we find any exception to the doctrine availing to BBI. If there were a commercial activity doctrine, see Alfred Dunhill, supra, 425 U.S. at 695-706, 96 S.Ct. at 1861-1866 (plurality opinion of Justice White), 9 we would not view it as applicable here since the liability sought to be imposed on Banco Nacional does not arise out of its own commercial activity, but rather results from the pre-expropriation activities of Boston and Branches. All 324 letters of credit were issued by Branches and confirmed by Boston prior to the expropriation. Those that were paid prior to the expropriation obviously were not commercial obligations of Banco Nacional. As to the letters that were paid after the expropriation, the payments were made by Boston with no participation, encouragement, or reassurance although Boston solicited reassurance as to reimbursement by Banco Nacional. We do not view Banco Nacional's intercession aiding Cuban buyers to gain possession of the shipped goods without proper documentation as a commercial activity. Nor can we construe as a commercial activity Banco Nacional's collection of pesos from those few Cuban buyers who had not already paid for their letters of credit. Banco Nacional obtained the right to collect those pesos, along with all debts owed Branches, by means of the expropriation. In all, we are at a loss to see what commercial activity of Banco Nacional could have given rise to BBI's claims. 39 Finally, the decision of the Supreme Court in First National City Bank v. Banco Nacional de Cuba, 406 U.S. 759, 92 S.Ct. 1808, 32 L.Ed.2d 466 (1972), does not advance BBI's cause. That case held that the act of state doctrine did not bar adjudication of a counterclaim for expropriation where the Executive Branch of the United States government has advised the courts that it believes the act of state doctrine need not be applied, 10 where there was no showing that adjudication would interfere with delicate foreign relations, and where the amount of the counterclaim did not exceed the value of the sovereign's claim. See Chase supra. This exception is obviously not applicable to the present case since the action was initiated not by Banco Nacional but by BBI, and since BBI seeks not merely a setoff against Banco Nacional's claims, but an affirmative award of damages. 40 We conclude that BBI's claims should have been dismissed on the basis of the act of state doctrine.