Court Opinion

ID: 2620362
Source: CourtListenerOpinion
Date Created: 2013-10-30 18:58:04.847921+00
Date Added: 2024-06-11T08:23:01.345206
License: Public Domain

United States Court of Appeals
                       For the First Circuit

No. 12-2143

                          RONNIE FULWOOD,

                       Plaintiff, Appellant,

                     MORTIMER OFF SHORE LTD.,

                            Plaintiff,

                                 v.

                   FEDERAL REPUBLIC OF GERMANY,

                            Defendant,

     NORDDEUTSCHE LANDESBANK GIROZENTRALE; HSH NORDBANK AG;
         WESTLB AG; HELABA LANDESBANK HESSEN-THUERINGEN;
                LBBW LANDESBANK BADEN-WUERTTEMBERG,

                      Defendants, Appellees.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF MASSACHUSETTS

              [Hon. Rya W. Zobel, U.S. District Judge]

                               Before

                        Lynch, Chief Judge,
              Torruella and Thompson, Circuit Judges.

     Robert A. Scher, with whom Rachel Kramer and Foley & Lardner
LLP were on brief, for appellant.
     Jeffrey Harris, with whom, Max Riederer von Paar, Walter E.
Diercks, Rubin, Winston, Diercks, Harris & Cooke, LLP, Evan Fray-
Witzer, and Ciampa Fray-Witzer, LLP were on brief, for appellees.
October 30, 2013
           LYNCH, Chief Judge.        Within the last decade, bondholders

who acquired old German Agra Bonds issued in 1928 to aid Germany's

agricultural recovery from World War I have sued both the Federal

Republic of Germany and enumerated German Banks in the federal

courts for payment on the bonds.            Two plaintiffs in 2010 brought

such suits in federal court in Massachusetts, seeking over $7

billion in accrued principal and interest on some 1,694 Agra Bonds.

           Several post World War II international treaties to which

the United States is a signatory were meant to distinguish invalid

bonds and to settle valid debts, including the Agra Bonds, and

governed how such bonds were to be validated. Under a 1953 treaty,

the courts of the United States could be used for enforcement of

such bonds only under certain conditions, requiring prior use of

enumerated validation procedures. Appellant owns and is attempting

to collect payment on non-validated bonds.              The Massachusetts

district court dismissed the two suits, as pertinent to this

appeal,   for   failure   to   meet    those    conditions.   One   of   the

claimants, Ronnie Fulwood, appeals from the dismissal of his claims

against the defendant German Banks, but does not appeal as to the

dismissal of his claims against Germany.

           We affirm.     Our holding is in accord with two other

circuits that have addressed similar issues.           See World Holdings,

LLC v. Fed. Republic of Germany, 701 F.3d 641 (11th Cir. 2012),

cert. denied, No. 12-1498, 2013 WL 3229961 (U.S. Oct. 7, 2013);

                                      -3-
Mortimer Off Shore Servs., Ltd. v. Fed. Republic of Germany, 615
F.3d 97 (2d Cir. 2010) ("Mortimer I").1

                                         I.

                Fulwood   seeks   to   recover      the    accrued    principal    and

interest on 83 pre-World War II bearer bonds entitled "German

Provincial & Communal Bank Consolidated Agricultural Loan US$1000

Secured Sinking Fund Gold Bonds Series A 6-1/2% Dated June 1928 --

Due June 1, 1958" ("Agra Bonds").             On June 1, 1928, a consortium of

14    provincial     banks    located   within       the    state    of    Prussia,   a

political subdivision of Germany, issued the Agra Bonds in an

effort     to    finance     improvements      to    the    state's       agricultural

infrastructure. Mortimer I, 615 F.3d at 99. The bonds were listed

on the New York Stock Exchange and marketed in the United States.

Id.    Principal and interest was payable in Boston, Chicago, or New

York City.       Each of the 14 issuing banks was severally liable for

a stated percentage of each bond.             Each bank was owned in whole or

in part by the province in which it was located, with each province

guaranteeing the obligations of the banks located therein.                         The

       1
       Fulwood also argues on appeal that the district court erred
in denying his motion to supplement the record with an Indenture
Fulwood claims shows any defense based upon the April 1953 Treaty
has been waived. This court reviews a district court's denial of
a motion to supplement for abuse of discretion. See United States
v. Union Bank for Sav. & Inv. (Jordan), 487 F.3d 8, 23 (1st Cir.
2007).    We find no abuse here.      The Indenture at issue was
publically available in the Stanford University Libraries and could
have been discovered earlier. Moreover, Fulwood waited more than
four months after the Indenture's actual discovery to file his
motion to supplement.

                                        -4-
bonds   are     the   obligations     of   the   issuing   banks   and    their

"guarantors and successors."          The Banks against which Fulwood has

filed suit are the alleged successors of some of the issuing banks.

Germany   is    alleged   to   have    assumed    the   obligations      of   the

provincial guarantors.

A.            Historical Background

              In 1933, following the rise of the Nazi Party, the Third

Reich issued a moratorium on payment of bonds, including payment on

Agra Bonds.      That moratorium ended up remaining in effect until

after the end of World War II. After declaring the moratorium, the

Third Reich began a concerted effort to repurchase outstanding

bonds for eventual retirement. After the start of the second World

War, however, "it became 'impossible to present such bonds to the

American trustees or paying agents for cancellation.'" Mortimer I,
615 F.3d at 101 (quoting Abrey v. Reusch, 153 F. Supp. 337, 339

(S.D.N.Y. 1957)).       "As a result, German bank vaults held 'large

numbers' of reacquired, yet uncancelled foreign currency bonds, in

negotiable form, that 'no longer represented valid obligations.'"

Id. (quoting Abrey, 153 F. Supp. at 339).               Following the Third

Reich's surrender in 1945, Allied forces, including those of the

Soviet Union, occupied portions of Berlin until 1949.              During this

period, Soviet troops seized and returned to circulation many of

those invalid bonds.       These bonds "posed a significant problem,

                                       -5-
both domestically and internationally."     Id. at 101.   That was so

given the

            real possibility that the eventual holders of
            the looted bonds would share the available
            assets . . . of the German obligors equally
            with the legitimate bondholders, a large
            number of whom were nationals of the United
            States. Moreover, the free and open trading in
            the United States of all German Dollar Bonds
            was impeded by the [resulting] uncertainties .
            . . .

Id. (alterations in original) (quoting Abrey, 153 F. Supp. at 339).

            In 1949, several years after the end of World War II, the

German Reich lands were divided into East and West Germany.      The

land that was once Prussia was split between the two nations.     In

1951, West Germany entered into negotiations with creditor nations

to address its outstanding debt.    The result of those negotiations

was the 1953 multilateral treaty between West Germany, the United

States, and twenty other creditor nations known as the London

Agreement on German External Debts, Feb. 27, 1953, 4 U.S.T. 445

("London Debt Agreement").     The London Debt Agreement created a

framework for resolving claims against the West German government

and constituted an offer of settlement to all holders of bonds

covered by the Agreement.   Id. at 453.   If a bondholder assented to

the offer of settlement, she would be guaranteed payment, albeit at

a lesser rate than the one to which she would have otherwise been

entitled.     See World Holdings, LLC, 701 F.3d at 646.         If a

bondholder did not assent to the settlement offer, her preexisting

                                 -6-
rights of enforcement were not waived.                  See id.     Non-assenters

were, however, barred from bringing a recovery action until after

all assenting bondholders had been paid in full.                  See id.

                 As a condition on payment, bondholders assenting to the

London Debt Agreement's offer of settlement agreed to subject their

bonds       to   a   validation   process   "on   the    basis    of    the   German

Validation Law passed by its Parliament and about to be enacted."

London Debt Agreement, 4 U.S.T. at 527.             West Germany enacted the

German Validation Law on August 25, 1952 out of a concern over the

redemption of looted bonds. Mortimer I, 615 F.3d at 101–02. Under

the Validation Law, validation required that bonds be registered,

submitted with supporting evidence, and approved by a Board for the

Validation of German Bonds in the United States, in Germany, or the

country of offering following an administrative hearing.                        See

Validation of Dollar Bonds of German Issue, U.S.-Fed. Rep. Ger.,

Feb. 27, 1953, 4 U.S.T. 797, 839-42 ("February 1953 Treaty").

Bondholders were given the opportunity to register their bonds

within five years of the applicable "opening date."2                   Id. at 839.

        2
          In relevant part:
        (1) The opening Date within the meaning of this Law
        is, in respect of the types of bonds listed in the
        Schedule of Foreign Currency Bonds, the first day
        after the expiration of six months from the
        effective date of the Law.
        (2) The Federal Government may, by Ordinance,
        establish in respect of bonds of a certain type
             1. an earlier Opening Date, if appropriate
             examination of registrations by the Foreign
             Representative and the Examining Agency is

                                       -7-
Late registration was allowed only if failure to register within

the specified period was "without . . . fault."        Id. at 855.

          West Germany and the United States entered into two

related bilateral treaties in 1953, which were negotiated at the

same time as the London Debt Agreement. The first, signed February

27, 1953, incorporated the validation procedures set out in the

German Validation Law.     February 1953 Treaty, 4 U.S.T. at 801-02.

Significantly, the February 1953 Treaty established the Board for

the Validation of German Bonds in the United States in New York

City to adjudicate validation claims in the United States, along

with twelve regional Arbitration Boards throughout the United

States to review the decisions of the Validation Board.           Id. at

803, 805, 824-25.

          April 1, 1953 Treaty

          The second treaty, signed April 1, 1953, is of even more

significance.   It   set    forth   the   limited   conditions   for   the

enforcement of outstanding German bonds in the U.S. courts.

Article II of the April 1953 Treaty provides:

          No bond . . . referred to in the first
          sentence of Article I above shall be
          enforceable unless and until it shall be

          already assured on such date, or
          2. an Opening Date not more than six months
          later, if the Foreign Representative or the
          Examining Agency are not able to commence
          appropriate examination of the registrations
          before such date.
February 1953 Treaty, 4 U.S.T. at 838-839.

                                    -8-
          validated either by the Board for Validation
          of German Bonds in the United States
          established by the Agreement on Validation
          Procedures, or by the authorities competent
          for that purpose in the Federal Republic.

Certain Matters Arising from the Validation of German

Dollar Bonds, U.S.-Fed. Rep. Ger., Apr. 1, 1953, 4 U.S.T.

885, 889 ("April 1953 Treaty").

          It is undisputed that the bonds at issue are referred to

in Article I.   Article I of the April 1953 Treaty refers to "bonds

. . . listed in the . . . Schedule" of foreign currency bonds

appended to the German Validation Law.   Id.    Agra Bonds are listed

as item 19 in section C.IV of that Schedule. February 1953 Treaty,

4 U.S.T. at 877.   It is also clear the bonds at issue were never

validated (indeed, no attempt was ever made to do so) by the

Validation Board in the United States.    And it is clear that the

bonds have never been validated by authorities competent for that

purpose in the Federal Republic.

B.        Procedural Background

          We describe the dismissal of Mortimer's complaint, which

has not been appealed, to provide context.     On March 28, 2012, the

district court dismissed Mortimer's claims against Germany, holding

that those claims were barred by either res judicata or collateral

estoppel from an earlier 2005 action Mortimer had filed in New York

seeking payment on 351 of the 1,611 Agra Bonds on which he was

seeking to recover in the present action.      See Mortimer Off Shore

                                  -9-
Servs., Ltd. v. Fed. Republic of Germany, No. 10-11551-RWZ, 2012 WL
1067648 (D. Mass. Mar. 28, 2012) ("Mortimer II").3

          In that same March 28, 2012 order, the district court

dismissed both Mortimer's and appellant Fulwood's claims against

the Banks, holding that Fulwood's claims failed because "the

Validation Law and [the April] 1953 Treaty apply to West German

     3
        The New York district court in the earlier action had
dismissed Mortimer's complaint for failure to state a claim,
holding that, under the April 1953 Treaty, Mortimer's failure to
validate its bonds in accordance with procedures set out in the
German Validation Law rendered those bonds unenforceable in U.S.
courts.    See Mortimer I, 615 F.3d at 104.     The Second Circuit
affirmed, holding that Mortimer could not seek to enforce the bonds
issued in territory that became West Germany without first
complying with the German Validation Law's requirements. Id. at
113-17.    As to the bonds issued in territory that became East
Germany, the Second Circuit affirmed on the alternative ground that
Mortimer had failed to make the threshold showing necessary to
invoke an exception to the Foreign Sovereign Immunities Act, 28
U.S.C. § 1602 et seq. ("FSIA"), and so the district court lacked
subject matter jurisdiction over Mortimer's claims based upon those
bonds. Mortimer I, 615 F.3d at 112-13. Under the FSIA, a foreign
state "shall be immune from the jurisdiction of the courts of the
United States," 28 U.S.C. § 1604, unless one of the FSIA's
exceptions, id. §§ 1605–07, applies.
     Mortimer's claims in Massachusetts against Germany based upon
West German bonds were barred on res judicata grounds because (1)
the parties in the two actions are identical; (2) the two actions
"indisputably arose out of the same operative nucleus of facts";
and (3) the earlier judgment as to those bonds was "on the merits"
and hence final. Mortimer II, 2012 WL 1067648, at *6-9 (citing
Havercombe v. Dep't of Educ. of the Commonwealth of P.R., 250 F.3d
1, 3 (1st Cir. 2001)).     Because the Second Circuit "reached a
valid, binding, final judgment" on the issue of whether the
commercial activity exception to the FSIA, 28 U.S.C. § 1605(a)(2),
renders Germany subject to suit with respect to such bonds, a
theory Mortimer relied upon again here, Mortimer's claims based
upon East German bonds were barred by collateral estoppel. Id. at
*10 (citing Grella v. Salem Five Cent Sav. Bank, 42 F.3d 26, 30
(1st Cir. 1994)).

                               -10-
debt, plaintiffs concede that the Defendant Banks hold only West

German debt, and plaintiffs admittedly have failed to comply with

the Validation Law."       Id. at *12.4    In so holding, the district

court relied upon the Second Circuit's decision in Mortimer I. See

id.   The district court dismissed Fulwood's claims against Germany

based upon the West German bonds on the same ground.           Id. at *11.

             In an order dated August 21, 2012, the district court

dismissed Fulwood's claims against Germany based upon the indemnity

of the East German bonds for lack of subject matter jurisdiction,

holding that the FSIA precluded consideration of Fulwood's claims.

Mortimer Off Shore Servs., Ltd. v. Fed. Republic of Germany, No.

10-11551-RWZ, 2012 WL 3600840, at *2-3 (D. Mass. Aug. 21, 2012).

The district court rejected Fulwood's argument that his claims

against Germany were permitted under the FSIA's commercial activity

exception, holding that even if, as Fulwood alleged, Germany is

"identical" to the pre-World War II German Reich and is the legal

successor to its political subdivisions, including both Prussia and

East Germany, "mere accession to liability is not a commercial

action under the FSIA."        Id. at *2; see also Mortimer I, 615 F.3d

at    110   ("Accession   to   liability   by   the   rules   of   customary

international law entails no action by the successor state with

respect to the commercial activity at issue -- the assumption of

       4
        Mortimer's claims against the Banks were barred                  by
collateral estoppel. Mortimer II, 2012 WL 1067648, at *11.

                                    -11-
liability.      The state performs no action when it automatically

assumes liability.").

             Fulwood now appeals the portion of the March 28, 2012

order dismissing his claims against the West German Banks.

                                    II.

             Fulwood's main argument is that the April 1953 Treaty's

verification requirements do not apply to his bonds but apply to

only those bondholders who assented to settlement under the London

Debt Agreement, which he did not.

             "This case presents a pure issue of law.           Our review of

a grant of a motion to dismiss is de novo."         Providence Sch. Dep't

v. Ana C., 108 F.3d 1, 2 (1st Cir. 1997).

             "The interpretation of a treaty, like the interpretation

of a statute, begins with its text."         Medellín v. Texas, 552 U.S.
491, 506 (2008).         "We also take into account the signatories'

intentions and expectations."        Yaman v. Yaman, ___ F.3d ___, No.

13-1240, 2013 WL 4827587, at *7 (1st Cir. Sept. 11, 2013).

Further,    "[i]t   is   well   settled    that   the   Executive   Branch's

interpretation of a treaty 'is entitled to great weight.'"              Abbott

v. Abbott, 130 S. Ct. 1983, 1993 (2010) (quoting Sumitomo Shoji

Am., Inc. v. Avagliano, 457 U.S. 176, 185 (1982)).

             Fulwood's interpretation conflicts with the Treaty's

clear text and the Executive Branch's interpretation.             See United

States     v.   Kin-Hong,    110 F.3d 103,   106    (1st    Cir.    1997)

                                    -12-
("[S]eparation    of   powers   principles   .   .   .   preclude   us   from

rewriting the treaties which the President and the Senate have

approved.").     It is also inconsistent with the Treaty's apparent

purpose of preventing the enforcement of invalid bonds in U.S.

courts.   See Todok v. Union State Bank of Harvard, Neb., 281 U.S.
449, 454 (1930) (rejecting an interpretation that "seems to us to

be repugnant to the purpose of the treaty").

           Under Article II of the April 1953 Treaty, "[n]o bond .

. . referred to in the first sentence of Article I . . . shall be

enforceable unless and until it shall be validated."           4 U.S.T. at

889.   Fulwood does not contest -- nor could he -- that Agra Bonds

are "referred to in the first sentence of Article I."           Fulwood is

thus left to argue from weakness that "[n]o bond" means something

other than no bond.

           Fulwood attempts to construct an edifice, starting with

language from the Treaty's Preamble, which provides:

           [F]urther measures are required to permit
           debtors and creditors to proceed to the
           orderly settlement of the obligations arising
           from German dollar bonds with confidence in
           the stability of the procedures regarding
           validation and with assurance that claims
           prejudicial to such settlement will not be
           asserted on the basis of bonds which were
           unlawfully acquired[.]

Id. at 888 (emphasis added).      The term "settlement" as used in the

Preamble, he argues, is a term of art, referring specifically to

the offer of settlement extended by the London Debt Agreement.

                                   -13-
From this, Fulwood says it is a necessary inference that the

purpose of the April 1953 Treaty is merely to promote the voluntary

settlement of claims under the London Debt Agreement.                   And based

upon this understanding of the treaty's purpose from its Preamble,

Fulwood concludes that "bonds" as used Article II of the treaty

refers only to bonds held by those who assented to settlement under

the Agreement, as he did not.       But Article II does not use the term

"settlement" and its text is not ambiguous.             The argument fails in

its reliance on the Preamble rather than the text at issue.

             But even were we to look to the Preamble to interpret

Article II, his argument still fails. To support his limited term-

of-art   interpretation      of   the    word   "settlement,"      used   in   the

Preamble but not in Article II, Fulwood cites both the technical

definitions of the terms "settled" and "settlement" as set forth in

the London Debt Agreement5 as well as the fact that the Debt

Agreement,    the   German   Validation        Law,   and   the   two   bilateral

treaties between West Germany and the United States that were

     5
       In relevant part:
     (k)"settled," in relation to a debt, means that
     terms of payment and other conditions have been
     established for such debt in accordance with the
     provisions of the present Agreement and the Annexes
     thereto, by agreement between the creditor and
     debtor, or, in proceedings between the creditor and
     debtor, by final judgment or order of a court or by
     final decision of an arbitral body;
     (l) "settlement," in relation to a debt, means the
     establishment of terms of payment and other
     conditions in accordance with paragraph (k).
London Debt Agreement, 4 U.S.T. at 448.

                                        -14-
negotiated and enacted contemporaneously.6      We agree with the

Eleventh Circuit's observation in World Holdings, LLC v. Federal

Republic of Germany that the term "settlement" as used in the

Preamble also has familiar, non-technical readings, referring

either to "[a]n agreement ending a dispute or lawsuit" or a

"[p]ayment, satisfaction, or final adjustment." 701 F.3d at 652

(alteration in the original) (quoting Black's Law Dictionary 1496,

1497 (9th ed. 2009)).    Given these common usages, it would be

irrational to conclude the drafters of the April 1953 Treaty

intended to limit the scope of Article II by giving a limited

technical meaning to a term in the preamble.

          Nor could one deduce from the Preamble's three references

to "settlement" that the April 1953 Treaty's sole purpose was to

facilitate the "settlement" of the assenters to the London Debt

Agreement, and it had no purpose as to non-assenters.   Indeed, the

Preamble's first paragraph rules that out.     It identifies as the

overarching basis for the treaty the "agree[ment]" between the

United States and West Germany that:

          [I]t is in their common interest to provide
          for the determination of the validity of
          German dollar bonds in view of the possibility
          that a large number of such bonds may have
          been unlawfully acquired during hostilities in
          Germany or soon thereafter . . . .

     6
       As Fulwood observes, the February 1953 Treaty also uses
language of "settlement." See 4 U.S.T. at 801-02 (referring to
"the settlement of claims").    Like the April 1953 Treaty, the
February 1953 Treaty does not expressly define the term.

                               -15-
4 U.S.T. at 887 (emphasis added).      The April 1953 Treaty was

motivated at least in part by a concern over the instability that

would result from the redemption of looted bonds.          See also

February 1953 Treaty, 4 U.S.T. at 798-99 (observing that "bonds may

have fallen unlawfully into the hands of persons who will seek to

negotiate them, or to make claim under them against the debtors,

trustees or paying agents, or otherwise to profit from their

unlawful acquisition"). This concern applies both to assenters and

non-assenters.   The April 1953 Treaty has the broader purpose of

preventing the enforcement of wrongfully acquired bonds.

          That the April 1953 Treaty was not limited as Fulwood

argues is reinforced by a 1953 message from President Eisenhower to

the Senate.   See Jama v. Immigration & Customs Enforcement, 543
U.S. 335, 348 (2005) (noting judiciary's "customary policy of

deference to the President in matters of foreign affairs").    That

Message, which accompanied both of the 1953 bilateral treaties when

they were sent to the Senate for ratification, begins with the

observation that a large number of German bonds "found their way

into unauthorized hands after the occupation of Berlin."    Message

from the President of the United States, Enclosure 7(d), annexed to

Hearings Before the Committee on Foreign Relations, 83rd Congress,

1st Sess. 230 (1953).   The Message goes on to explain that, on

December 9, 1941, trading of German securities was suspended on

U.S. exchanges at the request of the Securities and Exchange

                               -16-
Commission;       the suspension was kept in place after World War II

and would remain "until measures have been taken which will ensure

that the looted bonds do not find a market in the United States."

Id.    The Message continues, "If no action were taken to deal with

this    situation,      the   Soviet    Government    could   introduce   these

unlawfully held bonds into our security markets upon the resumption

of trading."      Id.

               Significantly, the Message describes the February 1953

Treaty as "outlin[ing] the procedure for validation," the purpose

of which "will be to separate bonds legitimately held from those

which disappeared after the occupation."             Id. at 231.     The Message

then remarks that "a further measure" -- the April 1953 Treaty --

"was required to prevent the holders of looted bonds from using the

processes of American courts to enforce payment upon them."                Id.

The Message states:           "[The April 1953 Treaty] provides that the

holders of dollar bonds that have not been duly validated cannot

resort to courts in the United States for the purpose of enforcing

their rights under such bonds."           Id.; see also id. (characterizing

the    April    1953    Treaty   as    "the    agreement   denying   holders   of

non-validated bonds the right to resort to courts in the United

States").      The Treaty's verification requirements apply to London

Debt Agreement assenters and non-assenters alike.                After all, if

holders of looted bonds could enforce payment simply by waiting

until assenting bondholders had been paid in full, the Treaty's

                                        -17-
verification "requirement" would be utterly without bite.              See

World Holdings, LLC, 701 F.3d at 646 ("If a bondholder refused to

accept the settlement offer, he maintained his preexisting rights

of enforcement.")     We will not interpret Article II of the April

1953 Treaty in a way that "makes nonsense of it."         Hanover Shoe,

Inc. v. United Shoe Mach. Corp., 392 U.S. 481, 498 n.12 (1968)

(quoting United States v. Aluminum Co. of Am., 148 F.2d 416, 432

(2d Cir. 1945)).

            In a last-ditch effort, Fulwood argues if the April 1953

Treaty's validation requirement were to apply to assenters and non-

assenters alike, that requirement would be inconsistent with the

voluntary    nature   of   the   London   Debt   Agreement's   offer    of

settlement. The argument would not undercut our reading of Article

II in any event; regardless, it fails in its own terms.

            Fulwood reasons that if the April 1953 Treaty makes

validation in accordance with the German Validation Law a condition

of enforcement even for non-assenters, the Treaty would require,

barring a valid excuse, registration for validation within the

applicable five-year period from 1953 through 1958.             However,

because the London Debt Agreement prohibited non-assenters from

bringing an enforcement action prior to the resolution of all

claims by assenters -- a point he says went well beyond the

expiration of any applicable five-year period -- Fulwood contends

that the only way for a bondholder to comply with the validation

                                   -18-
requirement     would    be    for   her    to    assent   to   the   London    Debt

Agreement's offer of settlement.

            This argument, even within its own terms, is without

merit, resting on a conflation of the different concepts of

enforcement and validation.                The London Debt Agreement gives

priority to assenters as to enforcement, barring non-assenters from

pursuing enforcement actions until all assenters have been paid in

full.    On the other hand, the Agreement gives no priority to

assenters as to validation, stating only:               "Payment on bonds . . .

which require validation under the German validation procedure

shall not be made until such bonds . . . shall have been validated

pursuant thereto."        London Debt Agreement, 4 U.S.T. at 527.                The

German   Validation      Law    in   turn    draws    no   distinction    between

assenters and non-assenters, thus providing assenters and non-

assenters   the    same       opportunity    to     register    their   bonds   for

validation within five years of the applicable opening date.                    See

February 1953 Treaty, 4 U.S.T. at 839.                Likewise, the Validation

Law provides both assenters and non-assenters the opportunity to

register their bonds for validation even after the expiration of

the applicable five-year period if "the failure to register [those

bonds]   timely    was    not    due   to    [the    bondholder's]      own    gross

negligence."7     Id. at 856.        The February 1953 Treaty incorporated

     7
       All U.S. Validation Boards established by the February 1953
Treaty appear to have been dissolved by 1960. However, it remains
open to a bondholder to seek validation from "authorities competent

                                       -19-
the German Validation Law in full.           See 4 U.S.T. at 801-02.        As

such, the April 1953 Treaty's conditioning the enforcement of bonds

in   U.S.   courts   on    their   validation   in    accordance    with    the

Validation Law created no incentive whatsoever for bondholders to

assent to the London Debt Agreement's offer of settlement.8

                                     III.

            Under    the   April   1953   Treaty,    these   Agra   Bonds   are

enforceable in U.S. courts only if they have been validated.

Fulwood's bonds have not been validated and are unenforceable in

U.S. courts.    The district court's dismissal of Fulwood's claims

against the Banks is affirmed.        Costs are awarded to the Banks.

for that purpose" in Germany.        April 1953 Treaty, 4 U.S.T. at 889.
      8
       At oral argument, Fulwood made the additional argument that
the April 1953 Treaty's verification requirements apply only as to
the enforcement of listed bonds against Germany. Fulwood failed to
raise this argument in his opening brief before this court, and it
is waived. United States v. Pakala, 568 F.3d 47, 57 (1st Cir.
2009) ("We have consistently held that arguments not raised in the
initial appellate legal brief are considered waived." (quoting
United States v. Capozzi, 486 F.3d 711, 719 n.2 (1st Cir. 2007))
(internal quotation marks omitted)). Waiver aside, the argument
has no merit, lacking any textual basis whatsoever. See, e.g.,
April 1953 Treaty, 4 U.S.T. at 888 ("[T]he United States and
[Germany] agree that further measures are required to permit
debtors and creditors to proceed to the orderly settlement of . .
. obligations . . . ." (emphasis added)).

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