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Bulgartabac Holding Ad. v. Republic of Iraq

September 21, 2010


The opinion of the court was delivered by: Richard J. Holwell, District Judge


This case involves a contract dispute between Bulgartabac Holding AD ("Bulgartabac") and the Republic of Iraq and certain state entities (collectively, "Iraq"). On September 30, 2009, the Court issued an opinion and order [23] granting defendants' motion to dismiss on the grounds that this breach of contract action, brought some twenty years after the alleged breaches, was untimely. Plaintiff Bulgartabac moves for reconsideration or, failing that, for leave to amend its complaint. For the reasons discussed below, both motions are DENIED.


The Court assumes familiarity with the factual background of this case as set forth in its prior opinion. Bulgartabac is the successor to a Bulgarian state-owned tobacco company. During the 1980s, Bulgartabac contracted to produce cigarettes for Iraq. The parties reached an agreement through a complicated series of interrelated documents. Bulgartabac alleges that it provided the cigarettes as required under the contract, but Iraq did not provide full payment. The first unpaid invoice is dated October 7, 1985. Bulgartabac sent its last invoice to Iraq on April 24, 1989.

On August 2, 1990, Iraq began its invasion of Kuwait. As a result, the United Nations imposed sanctions on Iraq on August 7, 1990. Bulgartabac demanded payment for its unpaid invoices (when it first did so is not alleged), but Iraq allegedly informed Bulgartabac that it would be unable to make payments as long as the nation was under sanctions. On May 22, 2004, the United Nations lifted sanctions on Iraq. Bulgartabac again attempted to collect payment on its outstanding invoices and began negotiations to receive payment. These negotiations were not successful. On July 22, 2008, Bulgartabac filed this suit.

Iraq moved to dismiss the complaint on the grounds that the Court lacked subject matter jurisdiction because Iraq, as a foreign government, was immune from suit under the Foreign Sovereign Immunity Act, 28 U.S.C. §§ 1330, 1602 et seq., and on the grounds that the case was time-barred. Bulgartabac argued that Iraq was not immune from suit because its activities fell into an exception from immunity carved out by 23 U.S.C. § 1605(a)(2): Iraq had carried out "an act outside the territory of the United States in connection with a commercial activity of the foreign state elsewhere and that act causes a direct effect in the United States." Bulgartabac argued that its complaint was not time-barred for two reasons. First, it argued that its contract with Iraq required the parties to attempt to reach an amicable resolution before filing suit and that, as such, the statute of limitations did not begin to toll until 2007, when attempts at reaching an amicable resolution broke down. Bulgartabac read this requirement into a contractual clause that reads, "All disputes which may arise out of the present contract will be solved amicably." Second, Bulgartabac argued that Iraq should be equitably estopped from asserting a statue of limitations defense because it represented to Bulgartabac that the United Nations sanctions prevented it from making payments. This Court held that it was not possible to determine as a matter of law whether Iraq was immune from suit based on the submissions, but held that Bulgartabac was time-barred from filing suit and, further, that Iraq was not equitably estopped from asserting this defense. Bulgartabac asks the Court to reconsider its statute of limitations and equitable tolling rulings.


Under Local Civil Rule 6.3, reconsideration is appropriate if the Court overlooked controlling decisions or factual matters which, had they been considered, might reasonably have altered the result of the underlying decision. E.g., Levine v. AtriCure, Inc., 594 F. Supp. 2d 471, 474 (S.D.N.Y. 2009). To that end, "[a]ny controlling decisions or factual matters presented by a litigant for reconsideration must have been put before the Court in the underlying motion." Padilla v. Maersk Line, Ltd., 636 F. Supp. 2d 256, 258 (S.D.N.Y. 2009). Further, "[a] motion for reconsideration 'is not a motion to reargue those issues already considered when a party does not like the way the original motion was resolved.'" Finkelstein v. Mardkha, 518 F. Supp. 2d 609, 611 (S.D.N.Y. 2007).


Bulgartabac first asks the Court to reconsider its holding that the statute of limitations was not tolled for twenty years while the parties sought (but failed) to amicably resolve their dispute. In support of its argument that the statute of limitations was tolled, Bulgartabac cites entirely new legal authorities that were neither cited nor discussed in its prior submissions. This failure alone would lead the Court to deny plaintiff's motion. But Bulgartabac's arguments are also substantively without merit. Bulgartabac argues that a contractual provision calling for the amicable resolution of disputes is ambiguous as to whether it creates a condition precedent to the initiation of litigation, and, therefore, that the court should construe the contract only after hearing parol evidence. (Pl.'s Mot. For Recons. 2.) In support of this argument, Bulgartabac cites (for the first time) language in the Second Restatement of Contracts stating that "[n]o particular form of language is necessary to make an event a condition . . . ." Restatement (2d) Contracts, § 226(a) (2009). It argues that because no particular language is necessary to create an express condition precedent, the contractual clause at issue can be read as requiring the parties to pursue and fail to reach amicable resolution of disputes prior to seeking redress in court. This condition , according to plaintiff, was satisfied no earlier than November 2007, and the statute of limitations did not begin to run until this date. Perforce, its action is timely.

In making this argument, Bulgartabac overlooks a considerable body of law stating that in New York, as in many other jurisdictions, conditions precedent are "not favored." Ginett v. Computer Task Group, 962 F.2d 1085, 1099 (2d Cir. 1992); see also Summit Petroleum Corp. v. Ingersoll-Rand Financial Corp., 909 F.2d 862, 866 (6th Cir. 1990); Computer Systems of America, Inc. v. International Business Machines, Corp., 795 F.2d 1086, 1089 (1st Cir. 1986); In re Bubble Up Delaware, Inc., 684 F.2d 1259, 1264 (9th Cir. 1982). As the Second Circuit has observed, under New York state law, "in the absence of unambiguous language, a condition will not be read into the agreement." Ginett, 962 F.2d at 1099-1100.

Furthermore, Bulgartabac cites no case in which language similar to that found in its contract with Iraq was construed as creating an express condition precedent, and the Court is aware of no such case. Bulgartabac (again for the first time) cites Contracare, USA, Inc. v. Laboratories Contapharm, 1986 WL 3504 (W.D.N.Y. March 20, 1986) for the proposition that an amicable resolution may be a condition precedent to litigation being commenced in a particular forum. The contractual provision at issue in that case stated in substance that "'[i]f no agreement is able to be arrived at through an arbitrator,' then recourse may be had to the Tribunal de Commerce."*fn1 Id. at *2. Although the contract also called for an amicable resolution, that provision was not in dispute. As for the arbitration clause, the language of the provision differed significantly from the provision in the instant case in that recourse to litigation was explicitly identified as a conditional right and evidenced by the use of an "if . . . then" construct.

By contrast, the court in Vogt-Nem, Inc. v. M/V Tramper, 263 F. Supp. 2d 1226, 1232 (N.D.Cal. 2002), cited in this Court's original opinion, interpreted an amicable resolution clause that did not contain the conditional language found in Contracare. The Vogt-Nem court noted the absence of such terms and declined to find that settlement negotiations were a condition precedent to the initiation of litigation. The contractual language in the present case is even less susceptible of being read as creating a condition precedent as the right to initiate suit is not even referenced, much less subject to any conditions.*fn2

Although Bulgartabac has argued only that the amicable resolution clause reflects an agreement by the parties to create a condition precedent, that is, an express condition, it is true that a court may impose a constructive condition "to do justice." Oppenheimer & Co. v. Oppenheim, 660 N.E. 2d 415, 418 (N.Y. 1995) (citing Calamari and Perillo, Contracts ยง 11-8, ...

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