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D.C. PRECISION, INC. v. U.S. GOVERNMENT

June 29, 1999

D.C. PRECISION, INC., PLAINTIFF,
v.
UNITED STATES GOVERNMENT, JUGOBANKA A.D., FORMERLY DOING BUSINESS AS JUGOBANKA D.D. NEW YORK AGENCY, AND BEOGRADSKA BANKA A.D., FORMERLY DOING BUSINESS AS BEOGRADSKA BANKA D.D. NEW YORK AGENCY, DEFENDANTS



The opinion of the court was delivered by: Robert L. Carter, District Judge

  OPINION

Plaintiff D.C. Precision, Inc. ("D.C.Precision") brought this action against defendants the United States Government (the "government"), Jugobanka A.D. ("Jugobanka"), and Beogradska Banka A.D. ("Beogradska Banka"), seeking compensatory, declaratory, and injunctive relief on the ground that the blocking of its funds on deposit in a New York agency of a Yugoslav bank constitutes an uncompensated "taking" in violation of the Fifth Amendment of the United States Constitution. Now before the court is the government's and Jugobanka's motions to dismiss the complaint pursuant to Rules 12(b)(1) and 12(b)(6), F.R.Civ.P.

BACKGROUND

A. Facts

In the early 1990s, political crisis led to the dissolution of the Socialist Federated Republic of Yugoslavia. In response to this crisis, the United States has imposed a comprehensive economic sanctions program against the Federal Republic of Yugoslavia (Serbia and Montenegro) (the "FRY (S & M)"). Invoking his authority under the International Emergency Economic Powers Act ("IEEPA"), President Bush issued Executive Order 12808 on May 30, 1992, blocking "all property and interests in property of . . . the [FRY (S & M)] that hereafter come within the United States, or that are or hereafter come within the possession or control of United States persons." President Clinton continued the sanctions program by blocking the property and interests in property of all commercial, industrial, and public utility entities organized or located in the FRY (S & M) through the issuance of Executive Order 12846, dated April 25, 1993. (collectively, the "Executive Orders").

The Executive Orders are implemented by the Department of the Treasury
through the Federal Republic of Yugoslavia (Serbia and Montenegro) and
Bosnian Serb — Controlled Areas of the Republic of Bosnia and
Herzegovina Sanctions Regulations (the "Sanctions Regulations"). See 31
C.F.R. Part 585. Under the Sanctions Regulations, blocked property or
interests in property may not be "transferred, paid, exported, withdrawn
or otherwise dealt in without a license from the Office of Foreign Assets
Control in the Department of the Treasury" ("OFAC"). See

31 C.F.R. § 585.201(a) & (b).

D.C. Precision is a California corporation that has approximately $40,000 in assets on deposit in a New York agency of Jugobanka, a bank which is organized under the laws of the FRY (S & M). Jugobanka's property and interests in property, including D.C. Precision's deposit, have been blocked pursuant to the Executive Orders.

B. Procedural History

On December 10, 1997, D.C. Precision filed complaint on behalf of itself and on behalf of all other "depositors who are either U.S. nationals or U.S. corporations whose accounts are being held by the United States Government's [sic] pursuant to sanctions against Yugoslavia," see Complaint ¶ V, asserting a violation of the Fifth Amendment of the United States Constitution. The complaint sought, inter alia, damages in excess of $10,000,000. On March 24, 1998, the government moved for dismissal on the ground that this court lacked subject matter jurisdiction because the United States Court of Federal Claims has exclusive jurisdiction of Fifth Amendment taking claims that exceed $10,000, and because D.C. Precision had not attempted to obtain a license from OFAC and therefore had not exhausted the available administrative remedies. The government also moved for dismissal on the basis that the complaint failed to state a claim. On March 30, 1998, defendant Jugobanka similarly moved for dismissal for failure to state a claim.

In its October 14, 1998 opposition papers to the government's motion to dismiss, D.C. Precision contended that the government had misconstrued its claims. D.C. Precision stated that it had in fact only sought declaratory relief from the government, not monetary damages. Plaintiff also informed the court that it had since applied for a license from OFAC on April 6, 1998 to withdraw its assets from Jugobanka. On October 22, 1998, OFAC informed D.C. Precision that its application for a license was denied.

After the government's filing of its reply papers, D.C. Precision submitted a "Declaration in Further Opposition" to the motion to dismiss on November 3, 1998. In the Declaration, D.C. Precision implied that OFAC's denial of its license application was made in bad faith and retaliatory. The government filed its surreply on November 30, 1998.

DISCUSSION

A. Jurisdiction and Sovereign Immunity

In any suit where the United States is a defendant, plaintiff must demonstrate subject matter jurisdiction, a waiver of sovereign immunity, and that he has a valid cause of action. See Presidential Gardens Assoc. v. United States, 175 F.3d 132, 139 (2d Cir. 1999) (to be reported at 175 F.3d 132). The waiver of sovereign immunity is a prerequisite to subject matter jurisdiction, but "the issues of subject-matter jurisdiction and sovereign immunity are nonetheless `wholly distinct.'" Id. (citations omitted). Therefore, a demonstration of subject matter jurisdiction is "not alone sufficient to allow [a suit against the ...


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