Court Opinion

ID: 185194
Source: CourtListenerOpinion
Date Created: 2011-02-05 02:28:55+00
Date Added: 2024-06-11T17:26:13.904768
License: Public Domain

216 F.3d 36 (D.C. Cir. 2000)
Phoenix Consulting, Inc., Appelleev.Republic of Angola, Appellant
No. 99-7032
United States Court of Appeals FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued January 27, 2000Decided June 16, 2000

[Copyrighted Material Omitted]
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.
Ginsburg, Circuit Judge:

1
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. §§ 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.

2
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

3
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.

4
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.

5
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.  1605(a)(1);  commercial activity, id.  1605(a)(2);  and a taking of property in  violation of international law, id.  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.

6
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.

7
Angola brings this interlocutory appeal of the district  court's order pursuant to 28 U.S.C.  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);  Foremost-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

8
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.   1330(a);  id.  1604, by nine specifically enumerated exceptions, see id.  1605(a)(1)-(7), (b), (d), and by certain other  exceptions relating to counterclaims in actions brought by the  foreign state itself, see id.  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.  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.

9
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.  1605(a)(1), which invests the court  with subject matter jurisdiction under 28 U.S.C.  1330(a). See H.R. Rep. No. 94-1487, at 18 (1976), reprinted in 1976  U.S.C.C.A.N. 6604, 6616-17.*

10
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. §§ 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.

11
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 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, 93132 (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).

12
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

13
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.

14
So ordered.

Notes:

*
 This court has not yet addressed whether and upon what facts  "the intentionality requirement implicit in  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).