Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Themis Capital, LLC and Des Moines Investments Ltd v. Democratic Republic of Congo and Central Bank of the Democratic Republic of the Congo

July 26, 2012

THEMIS CAPITAL, LLC AND DES MOINES INVESTMENTS LTD., PLAINTIFFS,
v.
DEMOCRATIC REPUBLIC OF CONGO AND CENTRAL BANK OF THE DEMOCRATIC REPUBLIC OF THE CONGO, DEFENDANTS.



The opinion of the court was delivered by: Paul A. Engelmayer, District Judge:

OPINION & ORDER

Plaintiffs Themis Capital, LLC and Des Moines Investments, Ltd. (collectively, "plaintiffs") bring this claim for breach of contract under New York law against the Democratic Republic of the Congo and the Central Bank of the Democratic Republic of the Congo (collectively, "defendants"). Plaintiffs have moved for pre-discovery summary judgment. For the reasons that follow, that motion is denied, without prejudice to plaintiffs' right to re-file after a period of limited discovery in accordance with this Opinion & Order.

I.Factual Background*fn1

On March 31, 1980, the Republic of Zaire, a sovereign state in Central Africa, and the Bank of Zaire, Zaire's national bank, entered into a Refinancing Credit Agreement with various creditors and agents, including Citibank N.A. ("Credit Agreement" or "Agreement"). See Hranitzky Decl. Ex. A. Under the Credit Agreement, the Bank of Tokyo Trust Company was identified as the servicing bank. The Credit Agreement restructured various debts that Zaire owed to its creditors. The creditors were listed in a "Credit Information Schedule" attached to the Credit Agreement. See id. at R-1 to R-2.

Themis Capital ("Themis") and Des Moines Investments, LLC ("Des Moines") are the assignees of all rights, title, interest, benefits, and obligations in the debt owed to the creditors under the Credit Agreement.*fn2 Under the Credit Agreement, defendants owed $9,562,500 in principal to Citibank, and $459,999.67 in principal to Bayerische Vereinsbank International S.A. See Pls. Mot. 3. Following the execution of a deed of assignment, effective August 5, 2008, Themis is the successor-in-interest to these two debts, for a total of $10,022,499.67 in principal. Hranitzky Decl. Ex. B at 1; id. Ex. C at 2. Additionally, under the Credit Agreement, defendants owed: $487,900.00 in principal to Citibank N.A. under Schedule A-1; $308,463.08 in principal to Banque Bruxelles-Lambert S.A. ("Bruxelles-Lambert") under Schedule A-2; $483,125.00 in principal to Electro Banque under Schedule A-14; $1,449,375.00 in principal to Citibank N.A. under Schedule A-14; $254,472.50 in principal to Bruxelles-Lambert under Schedule A-19; $308,451.77 in principal to Bruxelles-Lambert under Schedule A-21; and $4,689,271.00 in principal to Citibank N.A. under Schedule A-26. See Pls. Mot. 3; Hranitzky Decl. Exs. D--H (deeds of assignment). Following the execution of a deed of assignment, effective February 2, 2009, Des Moines is the successor-in-interest to these seven debts, for a total of $7,981,058.35 in principal. Hranitzky Decl. Ex. D at 1.

Under the Credit Agreement, Zaire was obliged to pay each contracting bank: "(a) The First Principal Payment of each Credit of such Bank, (b) The Reference Date Interest on each Credit of such Bank, and (c) all costs and expenses payable pursuant to Section 12.05 which shall have been notified to the [Republic of Zaire] by the Servicing Bank." Agreement § 2.01. Zaire was required to make such payments periodically on specified payment dates, the last of which was April 2, 1990. Id. § 4.01(f); Pls. Mot. 4. The Credit Agreement further provided that the Bank of Zaire was "irrevocably and unconditionally instruct[ed]" to make all such payments on behalf of the Zaire to the banks, subject to the availability to the Bank of Zaire of sufficient foreign currency. Agreement §§ 8.03, 9.01(c); Defs. Opp'n 3.

In the years following the execution of the 1980 Credit Agreement, Zaire was plagued with political and social instability. See Defs. Opp'n 14 n.7.*fn3 In May 1997, following 32 years of rule by authoritarian leader Joseph-Desire Mobutu, Mobutu was overthrown in a coup led by Laurent-Desire Kabila, who subsequently named himself president and changed the name of the country from Zaire to the Democratic Republic of the Congo ("DRC"). The Court assumes for the purpose of this motion, and defendants do not dispute, that defendants DRC and Central Bank of the DRC ("Central Bank") are successors in interest to the Republic of Zaire and the Bank of Zaire.

Plaintiffs allege that defendants failed to pay any outstanding principal or corresponding interest due under the 1980 Credit Agreement to plaintiffs' predecessors-in-interest, or to plaintiffs themselves. Am. Compl. ¶¶ 20, 23; Pls. Statement ¶ 7. Defendants do not dispute that no such payment has been made. Defs. Statement ¶ 7. It is also undisputed that this is the first lawsuit to raise such claims, i.e., that the original creditors, prior to transferring their rights to Themis and Des Moines, did not bring a claim against defendants alleging a breach of the Credit Agreement.

Important here, in 2003, a single-page document that referenced the 1980 Credit Agreement was circulated between Citibank and individuals in the DRC. See Hranitzky Decl. Ex. N ("2003 Letter"). The 2003 Letter, dated February 25, 2003, provided:

The Democratic Republic of Congo and the Central Bank of Congo hereby refer to the Refinancing Credit Agreement dated as of March 21, 1980 among the Democratic Republic of Congo (formerly known as the Republic of Zaire), the Central Bank of Congo (formerly known as the Bank of Zaire), the Banks and Agents party thereto and the Bank of Tokyo-Mitsubishi Trust Company (formerly known as Bank of Tokyo Trust Company), as Servicing Bank.

The Democratic Republic of Congo and the Central Bank of Congo hereby acknowledge and confirm as of the date hereof their respective obligations with respect to the principal and interest unpaid under such Refinancing Credit Agreement consisting, in the case of interest, both of interest accrued on principal installments prior to the maturity and interest accrued on overdue principal and interest, and all other obligations arising under such Refinancing Credit Agreement in accordance with the terms thereof. 2003 Letter at 1. The Letter specifically provided that it was intended to overcome any concerns that the DRC's and Central Bank's debts were no longer collectible, including based on the New York statute of limitations applicable to breach of contract claims:

It is the intention of the Democratic Republic of Congo and the Central Bank of Congo in executing and delivering this acknowledgment formally to recognize and confirm all such obligations in order to eliminate any concerns any person holding claims under such Refinancing Agreement may have due to any possible application or any principles of prescription, including without limitation, those established by the New York statute of limitations, which might lead any person in refraining from acting to enforce such claims might have an adverse effect on the ultimate enforceability of such claims.

Id. A header at the top of the Letter read: "Fax recu de: 212 559 0979," which, in English, translates to "fax received from 212 559 0979," and the date stamp "20/03/03 17:47." Id. The Letter also contained stamps at the top of the page that stated: "Received"; "Citibank, N.A."; "Democratic Rep. of Congo"; and "2003 Feb 27." Id.

The 2003 Letter was signed by Leonard Luongwe Kabule ("Luongwe"), who at the time was the DRC's interim Minister of Finance and Budget, and Jean-Claude Masangu Mulungo ("Masangu"), the Central Bank's Governor. The Letter was not signed by representatives of any of the creditors under the 1980 Credit Agreement.

II.Procedural Background

On February 23, 2009, plaintiffs brought this lawsuit. They allege that defendants breached the Credit Agreement by failing to pay the outstanding principal and interest owed to plaintiffs as assignees. On May 22, 2009, plaintiffs filed an amended complaint. On May 20, 2009, and again on November 19, 2009, service of the amended complaint was executed. Defendants did not appear following such service.

On February 1, 2010, plaintiffs moved for summary judgment or, in the alternative, default judgment. On April 28, 2010, the Hon. George B. Daniels, to whom this case was then assigned, entered an Order Granting Default Judgment (Dkt. 13). On June 17, 2010, Judge Daniels referred this case to Magistrate Judge Kevin N. Fox for a calculation of the amounts of interest owed to plaintiffs. On November 1, 2010, Judge Fox issued a Report and Recommendation ("Report") that the Court adopt plaintiffs' interest calculations (Dkt. 16). The Report recommended that plaintiffs be awarded $18,003,558.32 in principal, $61,316,391.16 in interest, and $228,405.24 in "out-of-pocket" expenses. See Report at 6.

On November 29, 2010, defendants made their first appearance in this case, in the form of a letter to the Court requesting additional time to object to the Report. Plaintiffs consented to the request. On January 21, 2011, defendants filed their objections to the Report; on March 4, 2011, plaintiffs responded to such objections.

On April 28, 2011, defendants moved to set aside the default judgment, upon consent of the plaintiffs. On June 3, 2011, the Court granted the unopposed motion and entered an order setting aside the default (Dkt. 38).

On June 28, 2011, Judge Daniels referred the case to Magistrate Judge Fox for the purpose of settlement. Settlement negotiations were unsuccessful. On October 18, 2011, following reassignment of the case, the Court directed the parties to submit a case management schedule. The parties each submitted letters proposing summary judgment motion briefing schedules (Dkt. 54). On October 26, 2011, the Court set a schedule for the submission of pre-motion letters and a pre-motion conference (Dkt. 55). On December 6, 2011, the Court set a schedule for the briefing of the present summary judgment motion. On April 3, 2012, after the motion was fully briefed by the parties, the Court requested supplemental briefing from the parties limited to the issue of whether the defendants had apparent authority to renew the 1980 Credit Agreement.

To this date, as a result of the parties' mutual belief that the plaintiffs' summary judgment motion could be resolved without discovery, no formal discovery has been taken in the case.

III.Legal Standard

To prevail on a motion for summary judgment, the movant must "show[] that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). The movant bears the burden of demonstrating the absence of a question of material fact. In making this determination, the Court must view all facts "in the light most favorable" to the non-moving party. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); see also Holcomb v. Iona Coll., 521 F.3d 130, 132 (2d Cir. 2008).

To survive a summary judgment motion, the opposing party must establish a genuine issue of fact by "citing to particular parts of materials in the record." Fed. R. Civ. P. 56(c)(1); see also Wright v. Goord, 554 F.3d 255, 266 (2d Cir. 2009). "A party may not rely on mere speculation or conjecture as to the true nature of the facts to overcome a motion for summary judgment." Hicks v. Baines, 593 F.3d 159, 166 (2d Cir. 2010) (citation omitted). Only disputes over "facts that might affect the outcome of the suit under the governing law" will preclude a grant of summary judgment. Anderson v. Liberty Lobby Inc., 477 U.S. 242, 248 (1986). In determining whether there are genuine issues of material fact, "we are required to resolve all ambiguities and draw all permissible factual inferences in favor of the party against whom summary judgment is sought." Johnson v. Killian, 680 F.3d 234, 236 (2d Cir. 2012) (citing Terry v. Ashcroft, 336 F.3d 128, 137 (2d Cir. 2003)).

IV.Discussion

The dispute in this case reaches the Court in an unusual posture: Plaintiffs seek summary judgment after the case has been pending for more than three years, but no formal discovery has been taken by either party. Plaintiffs argue that summary judgment is merited because it is apparent on the face of the governing documents that defendants are obligated to repay all principal and accrued interest as provided in the Credit Agreement. Defendants argue that: (1) this Court cannot exercise jurisdiction over the dispute because the DRC enjoys sovereign immunity; and (2) plaintiffs' claims are time-barred under New York law. For the following reasons, the Court finds that it may properly exercise jurisdiction, but that discovery on discrete topics, including relating to defendants' argument that plaintiffs' claims are time-barred, must go forward before the Court can resolve the motion for summary judgment.

A.Sovereign Immunity

Defendants argue that the Court lacks jurisdiction to hear the plaintiffs' claim because the DRC, as a foreign sovereign, is immune from suit.*fn4 Claims of immunity of foreign states and their assets are governed by the Foreign Sovereign Immunities Act ("FSIA"), "the sole source for subject matter jurisdiction over any action against a foreign state." Kensington Int'l Ltd. v. Itoua, 505 F.3d 147, 153 (2d Cir. 2007) (internal quotation marks omitted).

The FSIA addresses two types of foreign sovereign immunities: (1) immunity from jurisdiction; and (2) immunity from attachment and execution of property of a foreign state. An exception to, or waiver of, each type of immunity must be independently established. See Walters v. Indus. & Commercial Bank of China, Ltd., 651 F.3d 280, 288 (2d Cir. 2011) (citing Restatement (Third) of Foreign Relations Law § 456(1)(b) (1987)) ("a waiver of immunity from suit does not imply a waiver of immunity from attachment of property, and a waiver of immunity from attachment of property does not imply a waiver of immunity from suit"). Accordingly, if a sovereign waives immunity from jurisdiction and a judgment is rendered, the plaintiff can generally execute the judgment only on property with respect to which the sovereign has explicitly waived immunity. See Walters, 651 F.3dat 289.

Defendants argue that they have not waived either jurisdictional immunity or immunity from attachment of the DRC's property. For the following reasons, the Court disagrees, and finds a clear such waiver in the 1980 Credit Agreement.

1.Immunity from Jurisdiction

Under the FSIA, a "foreign state shall be immune from the jurisdiction of the courts of the United States and of the States except as provided in" certain statutory exceptions. 28 U.S.C. § 1604. Exceptions exist, inter alia, when a foreign state has waived immunity, and when a state action is "based upon a commercial activity carried on in the United States." Id. § 1605(a)(1),

(2). If a foreign state is subject to a statutory exception, and thus not entitled to jurisdictional immunity, federal courts have "original jurisdiction without regard to amount in controversy of any non-jury civil action" against that foreign state. Id. § 1330(a).

A foreign state may waive immunity "either explicitly or by implication." Id. § 1605(a)(1). The term "explicitly," in the context of such a waiver, "takes its normal meaning of 'clear and unambiguous.'" Capital Ventures Int'l v. Republic of Arg.,552 F.3d 289 (2d Cir. 2009) (citing Libra Bank Ltd. v. Banco Nacional de Costa Rica, S.A., 676 F.2d 47, 49 (2d Cir. 1982)) (interpreting 28 U.S.C. § 1610(d)). Once a foreign sovereign has waived immunity under § 1605(1), it may withdraw that waiver only as provided by the terms of the original waiver. The FSIA provides:

A foreign state shall not be immune from the jurisdiction of courts of the United States or of the States in any case[:] (1) in which the foreign state has waived its immunity either explicitly or by implication, notwithstanding any withdrawal of the waiver which the foreign state may purport to effect except in accordance with the terms of the waiver.

28 U.S.C. ยง 1605(a)(1) (emphasis added). Accordingly, where a proper waiver does not contain a procedure for the future revocation of that waiver, a foreign state's ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.