Opinion ID: 200026
Heading Depth: 2
Heading Rank: 3

Heading: Immovable Property

Text: 39 The Fagots contend that their claims fall within the exception to sovereign immunity for any case in which ... rights in immovable property situated in the United States are at issue. Id. § 1605(a)(4). The district court disagreed, reasoning that the immovable property exception extends only to actions involving rights to actual possession or title. Fagot Rodriguez IV, 139 F.Supp.2d at 195. Neither of those rights is at issue here: none of the defendants has used or possessed the Fagots' property since October of 1994, and they never challenged the Fagots' title. Thus, the only right at stake is the Fagots' right to compensation for non-payment of rent or for trespass. Like the district court, we conclude that purely compensatory rights, without more, are insufficient to sustain jurisdiction under the immovable property exception. 40 The legislative history to the FSIA indicates that the immovable property exception was intended to codify existing international practice. See House Report, supra, at . Under that practice, a foreign sovereign generally was not immune from an action to obtain possession of or establish a property interest in immovable property located in the territory of the state exercising jurisdiction. Restatement (Second) of Foreign Relations Law of the United States § 68(b) (1965), quoted in Asociacion de Reclamantes v. United Mexican States, 735 F.2d 1517, 1521 (D.C.Cir.1984). However, the exception to immunity for claims involving immovable property did not extend to cases, such as slip-and-fall suits seeking damages for injury suffered on a foreign state's property, in which the state's title or rights of use and possession were not contested. See Restatement, supra, § 68(b) cmt. d. 41 The traditional real property exception was founded on the view that [a] territorial sovereign has a primeval interest in resolving all disputes over use or right to use of real property within its own domain. Asociacion de Reclamantes, 735 F.2d at 1521. Such disputes not only implicate core sovereignty interests; they also raise questions of institutional competence. Put simply, foreign courts typically are not well equipped to decide property interests or rights to possession with regard to land outside their jurisdiction, particularly land located in a foreign nation. Id. Thus, it is important for property disputes to be adjudicated by local courts, notwithstanding foreign sovereign immunity. 42 Those concerns suggest that the immovable property exception was not intended broadly to abrogate immunity for any action touching upon real estate. MacArthur Area Citizens Ass'n, 809 F.2d at 921. Rather, like the traditional exception it was intended to codify, its purpose is to permit jurisdiction in cases where the United States' interests in adjudicating the dispute are particularly strong. It is difficult to understand how a simple contract dispute over nonpayment of rent — without more — falls within that category. The Fagots do not cite, nor can we find, any case so holding. To the contrary, courts have construed the immovable property exception to apply only in cases that implicate rights of ownership, use, or possession. See, e.g., City of Englewood v. Socialist People's Libyan Arab Jamahiriya, 773 F.2d 31, 36 (3d Cir.1985) (describing immovable property exception as a title dispute exception codifying the recognized principle of international law that a sovereign may resolve disputes over title to real estate within its geographic limits); cf. Logan v. Dupuis, 990 F.Supp. 26, 29 (D.D.C.1997) (interpreting the analogous exception to diplomatic immunity to exclude suits for breach of a rental contract). 43 In support of their expansive reading of the immovable property exception, the Fagots point to the legislative history of the FSIA. They emphasize certain language in the House Report suggesting that the pre-existing real property exception to sovereign immunity extended to suits involving questions of ownership, rent, servitudes, and similar matters. House Report, supra, at  (emphasis added). 8 We do not believe that one passing reference to rent in the legislative history is sufficient to show that Congress intended the immovable property exception to apply broadly to garden-variety contract disputes in which title or possession is not in dispute. As the court explained in Asociacion de Reclamantes, 735 F.2d at 1522 n. 5, actions for rent frequently involve issues of title and possession. Thus, the reference to rent in the House Report does not establish any departure from the traditional principle that the real estate exception to sovereign immunity is bounded by concern for those issues. Id. 44 The Fagots also rely on the Restatement (Third) of Foreign Relations § 455, cmt. b, which states that the immovable property exception includes controversies concerning payment of rent, taxes, and other fees concerning [consular premises]. Like the legislative history, however, the Restatement is silent on the question whether such controversies are cognizable when they involve only the payment of rent or other debts. Comment b to § 455 states in full: 45 Title to land and to buildings on land traditionally is subject to adjudication by the courts of the state where the land is situated. The fact that the land (or buildings, apartments, or appurtenances) in controversy is owned or leased by a foreign state does not detract from the desirability of adjudicating controversies in local courts. Premises used for an embassy, consulate, or diplomatic mission come under this rule, so that controversies relating to rights of ownership, possession, occupation, or use, as well as controversies concerning payment of rent, taxes, and other fees concerning such premises are subject to adjudication in local courts. 46 The phrase as well as certainly could mean that controversies concerning the payment of rent can, by themselves, support jurisdiction under the immovable property exception. However, it also could mean that a plaintiff can recover rent, taxes, and other fees in the process of adjudicating rights of ownership, possession, occupation or use. The latter reading finds support in the first sentence of the comment, which emphasizes the traditional importance of settling questions about title to real property. Although actions for rent sometimes involve such questions, a simple controversy over the breach of a rental contract — unaccompanied by issues of ownership, possession, or use — usually will not implicate the special concerns regarding real property located on United States territory. 47 We conclude that the immovable property exception applies only in cases in which rights of ownership, use, or possession are at issue. As noted, those rights are not implicated here: the defendants voluntarily vacated the property in October of 1994, and they never questioned the Fagots' ownership. The only remaining dispute concerns Costa Rica's liability for non-payment of rent. The peculiar circumstances of this case should not obscure the fact that such a dispute is, first and foremost, a contract dispute. Thus, plaintiffs seeking to recover unpaid rent usually will be able to proceed under the commercial activity exception to foreign sovereign immunity. 48 That approach may fail where — as here — the foreign sovereign did not in fact agree to pay the rent demanded. However, the possibility that jurisdiction will be lacking in some cases should not lead us to adopt an unduly broad reading of the immovable property exception. The very purpose of the FSIA is to restrict the class of cases in which United States courts can adjudicate claims against foreign sovereigns. As we have seen, each of the exceptions to the FSIA has its own specific requirements designed to identify cases in which immunity is or is not appropriate. Plaintiffs should not be allowed to circumvent those requirements simply because their claims are somehow related to real property.