United States District Court, S.D. New York
November 7, 2005.
UNITED STATES FIDELITY & GUARANTY COMPANY and AMERICAN HOME ASSURANCE, Plaintiffs,
BRASPETRO OIL, et al., Defendants. UNITED STATES FIDELITY & GUARANTY COMPANY and AMERICAN HOME ASSURANCE, Plaintiffs, v. PETROLEO BRASILEIRO S.A. PETROBRAS, et al., Defendants.
The opinion of the court was delivered by: JOHN KOELTL, District Judge
MEMORANDUM OPINION AND ORDER
Defendants Petrobras and Brasoil (collectively "Petrobras")
move for reconsideration of this Court's July 23, 2005 Opinion
and Order to the extent that it granted Cameron & Hornbostel's
motion to fix a charging lien. Petrobras renews its arguments
that the Court has no jurisdiction to fix a charging lien due to
a forum selection clause in the July 2003 retainer agreement and
because of the Foreign Sovereign Immunities Act ("FSIA"). In the
alternative, Petrobras moves to certify the Court's Order for an interlocutory appeal pursuant to 28 U.S.C. § 1292 (b).
The standards for granting a motion for reconsideration
pursuant to Local Civil Rule 6.3 are well established and are the
same as those governing former Local Civil Rule 3(j). See
United States v. Letscher, 83 F. Supp. 2d 367, 382 (S.D.N.Y.
1999) (collecting cases). The moving party is required to
demonstrate that the Court overlooked the controlling decisions
or factual matters that were put before the Court in the
underlying motions. Nakano v. Jamie Sadock, Inc., 98 Civ. 0515,
2000 WL 1010825, at *1 (S.D.N.Y. July 20, 2000); Walsh v.
McGee, 918 F. Supp. 107, 110 (S.D.N.Y. 1996); In re Houbigant,
Inc., 914 F. Supp. 997, 1001 (S.D.N.Y. 1996). The rule is
"narrowly construed and strictly applied so as to avoid
repetitive arguments on issues that have been considered fully by
the court." Walsh, 918 F.Supp. at 110; see also Nakano,
2000 WL 1010825, at *1; United States v. Mason Tenders Dist.
Council of Greater N.Y., 909 F.Supp. 882, 889 (S.D.N.Y. 1995).
This Court previously ruled that the forum selection clause in
a retainer agreement and the FSIA did not bar fixing a charging
lien pursuant to N.Y. Judiciary Law § 475. See U.S. Fidelity &
Guar. Co. v. Braspetro Oil, 379 F. Supp. 2d 487 (S.D.N.Y. 2005).
Petrobras now argues, as it did in resisting the lien in the
original motion, that the charging lien is barred by the forum selection clause in the July 2003 Contract Between
Braspertro Oil Services Company Brasoil and Cameron &
Hornbostel LLP for Provision of Specialized Legal Advisory and
Consulting Services ("2003 Retainer Agreement"), which provides
for jurisdiction in Brazil for "any questions arising out of this
Contract." (2003 Retainer Agreement ¶ 16, attached at Ex. 2 to
Motion to Withdraw as Counsel and Fix a Charging Lien.)
In the prior Opinion and Order, the Court found that the
dispute over the charging lien did not arise out of the 2003
Retainer Agreement, and therefore was not barred by the forum
selection clause. Braspetro, 379 F. Supp. 2d at 489. Nothing
submitted by Petrobras suggests that the Court overlooked any
controlling issues of law or fact in reaching that decision, and
there is a sufficient basis for rejecting the application of the
forum selection clause as barring the charging lien.
The Court previously noted that the bulk of the services
performed by Cameron & Hornbostel were performed pursuant to a
May 9, 1997 agreement that did not include a forum selection
clause. See Ex. 1 to Motion to Withdraw as Counsel and Fix a
Charging Lien. Petrobras is correct to point out that the 2003
Retainer Agreement did supercede and dissolve the May 9, 1997
agreement, and that any success fee was to be paid under the 2003
Retainer Agreement, with any prior fees paid under the May 9,
1997 agreement to be deducted from that fee. See Sections 11.4
and 15 of the 2003 Retainer Agreement. Therefore, it was error to rely on the absence of a forum selection clause in the May 9,
1997 agreement. However, that does not change the result, because
the dispute over the charging lien does not arise out of the 2003
Retainer Agreement. As the Court previously explained, the
charging lien is separate from the contract and arises under New
York law relating to services rendered in connection with the
litigation in this Court.
Petrobras also seeks reconsideration of this Court's prior
finding that there was supplemental jurisdiction to fix the
charging lien, and that nothing in the FSIA barred the exercise
of such jurisdiction. Braspetro, 379 F. Supp. 2d at 490. There
is nothing in the motion for reconsideration that causes the
Court to reconsider its prior decision.
However, in response to the arguments raised by Petrobras, it
should also be noted that this is not simply a case where
Petrobras was sued in the Southern District of New York and
defended itself through the retention of attorneys, as Petrobras
now claims. Brasoil affirmatively asserted claims, including
claims for the recovery of its attorneys' fees, and obtained a
judgment of in excess of $370 million prior to an appeal that
affirmed much of the judgment. In the course of the litigation,
both Brasoil and Petrobras affirmatively waived any immunity under the FSIA. See Joint Pre-Trial Order §§ II (B) (1) and
(2); U.S. Fidelity and Guar. Co. v. Braspetro Oil,
219 F. Supp. 2d 403, 473 (S.D.N.Y. 2002), aff'd in relevant part,
369 F.3d 34 (2d Cir. 2004). Both Brazoil and Petrobras thus explicitly
subjected themselves to the jurisdiction of this Court pursuant
to 28 U.S.C. § 1605(1).
Petrobras argues that the claim for the attorneys' fees arises
out of the separate and unrelated 2003 Retainer Agreement, but
this argument has no basis. The statutory attorneys' fee lien
arises out of the services rendered in this litigation as a
matter of statute, and would have existed even without an
explicit retainer agreement. See N.Y. Judiciary Law § 475.
Finally, Petrobras argues that it could not have foreseen
litigating before this Court an attorney's fee dispute in
connection with the original lawsuit in light of the forum
selection clause in the 2003 Retainer Agreement, and thus it did
not intend to waive its sovereign immunity regarding the dispute
with Cameron & Hornbostel. This argument ignores the fact that
the Joint Pre-Trial Order was entered prior to the trial at a
time when the original retainer agreement, which had no forum
selection clause, was in effect. Petrobras cannot limit the
effect of the waiver of FSIA immunity by subsequently entering
the 2003 Retainer Agreement. See 28 U.S.C. § 1605(1) (noting
that there is a waiver of immunity "notwithstanding any withdrawal of the waiver which the foreign state may purport to
effect except in accordance with the terms of the waiver.") The
statutory lien is thus well within the supplemental jurisdiction
of this Court.
Petrobras also seeks a certification for interlocutory appeal
pursuant to 28 U.S.C. § 1292(b). Section 1292(b) provides that a
district court may certify an interlocutory order for appeal if
it is of the opinion that (1) the order "involves a controlling
question of law"; (2) "as to which there is substantial ground
for difference of opinion"; and (3) "that an immediate appeal of
the order may materially advance the ultimate termination of the
litigation." 28 U.S.C. § 1292(b). The determination of whether
Section 1292(b) certification is appropriate under these
standards lies within the discretion of the district court. See
Ferraro v. Sec'y of U.S. Dep't of Health & Human Servs.,
780 F. Supp. 978, 979 (E.D.N.Y. 1992) (collecting cases and citations).
Interlocutory appeals under Section 1292(b) are an exception to
the general policy against piecemeal appellate review embodied in
the final judgment rule, and only "exceptional circumstances
[will] justify a departure from the basic policy of postponing
appellate review until after the entry of a final judgment." Coopers & Lybrand v. Livesay, 437 U.S. 463, 475 (1978); see
also Flor v. Bot Fin. Corp., 79 F.3d 281, 284 (2d Cir. 1996)
(per curiam) (collecting cases). Because piecemeal litigation is
generally discouraged, the Court of Appeals has repeatedly
emphasized that a district court is to "exercise great care in
making a § 1292(b) certification." Westwood Pharm., Inc. v.
Nat'l Fuel Gas Distrib. Corp., 964 F.2d 85, 89 (2d Cir. 1992);
see also Klinghoffer v. S.N.C. Achille Lauro Ed Altri-Gestione
Motonave Achille Lauro in Amministrazione Straordinaria,
921 F.2d 21, 25 (2d Cir. 1990) ("[T]he power to grant an
interlocutory appeal must be strictly limited to the precise
conditions stated in the law.") (internal citation and alteration
omitted). Section 1292(b) was not intended "to open the
floodgates to a vast number of appeals from interlocutory orders
in ordinary litigation," Telectronics Proprietary, Ltd. v.
Medtronic, Inc., 690 F. Supp. 170, 172 (S.D.N.Y. 1987) (internal
quotation marks omitted), or to be a "vehicle to provide early
review of difficult rulings in hard cases." German v. Fed. Home
Loan Mortgage Corp., 896 F. Supp. 1385, 1398 (S.D.N.Y. 1995).
Rather certification is warranted only in "exceptional cases,"
where early appellate review "may avoid protracted and expensive
litigation." Telectronics, 690 F. Supp. at 172; see also
German, 896 F. Supp. at 1398. In this case, the Court does not find that the issues on the
proposed appeal are ones as to which there is a substantial
ground for a difference of opinion. In any event, an
interlocutory appeal would not materially advance the litigation.
The litigation would be advanced by having the Magistrate Judge
determine the exact amount of the charging lien, which could then
be entered. This should not involve protracted and expensive
litigation. Petrobras would then have the opportunity to appeal
both the existence and the amount of the charging lien, and that
process would avoid piecemeal appeals. This does not infringe on
the sovereignty of Petrobras in view of the extensive use that
Petrobras has already made of this Court and the Court of Appeals
and the prior waivers of immunity under the FSIA in this case.
The motion for reconsideration is granted. Upon
reconsideration, the Court adheres to its prior order. The motion
for certification of an interlocutory appeal is denied.
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