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HAVEN v. RZECZPOSPOLITA POLSKA

October 13, 1999

EDWARD HAVEN, ETC., ET AL., PLAINTIFFS,
v.
RZECZPOSPOLITA POLSKA (REPUBLIC OF POLAND), ET AL., DEFENDANTS.



The opinion of the court was delivered by: Shadur, Senior District Judge.

  MEMORANDUM OPINION AND ORDER

Four name plaintiffs — Edward Haven as representative of the Estate of Maksymilian Rechtszafen, Evelyn Ruebner as representative of the Estate of Herbert Prerauer, Allen Welbel and Mark Krug — have brought this putative class action against Rzeczpospolita Polska ("Poland") and Skarb Panstwa, Rzeczpospolita Polska (the State Treasury of Poland, referred to here simply as "Treasury"), charging (1) their wrongful seizure and expropriation of real property owned by plaintiffs or their predecessors and by other Jewish property owners during and shortly after World War II and (2) their interference with and prevention of the performance of insurance contracts between plaintiffs and other class-member property owners on the one hand and insurers Warta S.A. ("Warta") and Powszechny Zaklad Ubezpieczen S.A. ("PZU") on the other. Plaintiffs have also sued Warta and PZU for breach of those property and life insurance contracts.

From the time of their first appearances in this court, all defendants have moved for dismissal for, among other things, a claimed lack of federal subject matter jurisdiction due to foreign sovereign immunity. Because the very nature of a jurisdictional challenge calls for no more than a surface examination (without substantive evaluation) of the abhorrent conduct alleged in the First Amended Class Action Complaint ("Complaint"), this opinion will sketch out those allegations and then turn to the relevant legal analysis. And because that analysis discloses that this court does indeed lack subject matter jurisdiction under the Foreign Sovereign Immunities Act ("Act," 28 U.S.C. § 1330, 1602-1611),*fn1 this action must be and is dismissed.*fn2

Background

Everyone agrees that the four defendants are "foreign states" or "agencies or instrumentalities of foreign states" under the Act: Poland and its Treasury (collectively "Governmental Defendants") as a tautological matter, Warta and PZU (collectively "Insurance Company Defendants") because they were owned and operated by the Polish government during all relevant times. As for plaintiffs, who are alleged to be citizens of the United States and residing here as of the date of the Complaint, nothing in their papers specifies when each plaintiff became a United States national. From the nature of plaintiffs' claim, though, each of them (or his or her predecessor in interest) was a Polish national at the time that the property at issue was expropriated and the applicable policy or policies was or were allegedly breached. That being so, plaintiffs would not be "nationals of the United States" within the coverage of the Agreement Between the United States and Poland Regarding Settlement of Claims of United States Nationals (the "Treaty," 11 U.S.T. 1953).

In that respect, it is true that "nationals of the United States" is not a term expressly defined in the Treaty, nor is there caselaw on the subject. But the Annex to the Treaty provides that "claims of nationals of the United States are rights and interests in and with respect to property nationalized, appropriated or otherwise taken by Poland which, from the date of such nationalization, appropriation or other taking to the date of entry into force of this Agreement, have been continuously owned . . . directly by natural persons who were nationals of the United States." That use of the past tense plainly requires a claimant to establish United States citizenship at or before the time of the alleged taking, as well as continuous ownership of the subject property from the time of the taking until the Treaty's effective date of July 16, 1960. Here plaintiffs have offered no showing to trigger application of the Treaty under those criteria.

To turn now to the background of foreign sovereign immunity in this country, before 1952 all foreign sovereigns were entitled to assert absolute immunity from suit in United States courts (see Verlinden B.V v. Central Bank of Nigeria, 461 U.S. 480, 486, 103 S.Ct. 1962, 76 L.Ed.2d 81 (1983)). Then the 1952 issuance of the Tate Letter*fn3 by the State Department announced an executive policy that would restrict immunity to suits involving the public acts of a foreign sovereign, while eliminating such immunity for commercial acts (see, e.g., Jackson v. People's Republic of China, 794 F.2d 1490, 1493 (11th Cir. 1986)). Nearly a quarter century later (in 1976) Congress entered the picture with the Act, which both (1) codified and clarified that restrictive theory of sovereign immunity and (2) granted subject matter jurisdiction and personal jurisdiction to United States courts over lawsuits and states, respectively, that fall within certain exceptions to sovereign immunity.

This Court's August 24, 1999 memorandam opinion and order ("Opinion") held generally, for the reasons most recently expressed by the Court of Appeals for the District of Columbia, that the Act conferred subject matter jurisdiction over claims arising before 1952. But the Opinion deferred decision as to the applicability of any of the exceptions to sovereign immunity set out in the Act. This opinion now addresses those exceptions.

Lack of Subject Matter Jurisdiction

Foreign countries enjoy a presumption of immunity in United States courts (see, e.g., 28 U.S.C. § 1330 (a) and (b) Moran v. Kingdom of Saudi Arabia, 27 F.3d 169, 172 (5th Cir. 1994)). It is also clear that the Act's exceptions provide the exclusive set of circumstances in which a foreign state will be denied such immunity.*fn4 And although the party seeking immunity retains the burden of persuasion throughout, once a defendant is shown to be a "foreign state" under the Act the burden of production shifts to plaintiff to prove that one of the Act's exceptions to immunity applies (see, e.g., Byrd v. Corporacion Forestal y Industrial de Olancho S.A., 182 F.3d 380, 388 (5th Cir. 1999); Frolova v. Union of Soviet Socialist Republics, 761 F.2d 370, 372 (7th Cir. 1985) (per curiam)).

Here plaintiffs do not challenge defendants' "foreign state or instrumentality" status under the Act, so the burden of production rests on plaintiffs to demonstrate that defendants' claims fall within one of the immunity exceptions. In an effort to meet that burden, plaintiffs contend that subject matter jurisdiction exists pursuant to four of the Act's provisions: (1) the "subject to" exception for international agreements under Section 1604; (2) the waiver exception under Section 1605(a)(1); (3) the commercial activity exception under clause three of Section 1605(a)(2); and (4) the international law violation exception under clause two of Section 1605(a)(3). Those contentions are dealt with in turn.

Section 1604: The Treaty

In an effort to advance economic relations between the two countries, the United States entered into the Treaty with Poland effective July 16, 1960 (11 U.S.T. 53). Poland there agreed to pay $40 million to the United States "in full settlement and discharge of all claims of nationals of the United States . . . against the Government of Poland on account of the nationalization and other taking by Poland of property and of rights and interests in and with respect to property, which occurred on or before the entry into force of this Agreement" (id. Art. I.A, emphasis added).

Both plaintiffs and defendants seek to invoke Section 1604 of the Act in an effort to benefit from application of the Treaty. That statutory provision prescribes the limit on a foreign state's immunity emphasized in the following quotation:

  Subject to existing international agreements to which
  the United States is a party at the time of enactment
  of this Act a foreign state shall be immune from the
  jurisdiction of the courts of the United States and of
  the States except as provided in sections 1605 to 1607
  of this chapter.

Because the Treaty became effective 16 years before the Act's passage, the statute must yield to any conflicting provisions or effects of the Treaty. For their part, plaintiffs claim that the Treaty created an additional "exception" to foreign sovereign immunity because it constituted Poland's waiver of immunity as to all expropriation and related claims. To the contrary, defendants say that all expropriation and related claims of United States nationals were effectively settled by the Treaty. As the following discussion reflects, both sides' contentions miss the mark by a wide margin.

Plaintiffs' Mem. 3 asserts that Poland's entry into the Treaty somehow "waived its immunity and the immunity of defendants PZU and Warta" as to any plaintiff whose claims were not settled by the Treaty — that is, as to any claimant who either was not a United States national by the time of the taking or who did not own property in Poland continuously from the time of the taking until 1960 (Treaty Annex A). Defendants' July 23, 1999 Mem. 23 takes the reverse side of that argument, contending that the Treaty represents a "final settlement by Poland for [all] nationalized property."*fn5 ...


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