Appeals from the United States District Court for the District of Columbia (No. 00cv01455)
Before: Rogers, Tatel, and Garland, Circuit Judges.
The opinion of the court was delivered by: Garland, Circuit Judge
This appeal arises from a conversion action brought by plaintiff Bernard J. Bucheit in the United States District Court for the District of Columbia. Bucheit alleges that the defendants, the Palestine Liberation Organization (PLO) and the Palestinian Authority (PA), converted property and money associated with a concrete plant that his company operated in Gaza. After a bench trial, the district court found the defendants liable for over $1.5 million, basing its valuation in part on offers to buy the converted property. At the same time, the court denied Bucheit's request for prejudgment interest. The defendants now appeal the court's valuation of the converted property, while the plaintiff cross-appeals the court's denial of prejudgment interest. We affirm the judgment of the district court.
Bucheit is the president of Bucheit International Limited (BIL), a construction firm with offices in the United States and Great Britain.*fn1 In 1994, BIL built and began to operate a precast concrete plant in Gaza. During the plant's first year of operation, BIL imported equipment and materials into Gaza via Haifa, Israel. The equipment included a Grove crane, two high trailers, a lowboy trailer, and a tractor truck. At the border, BIL filed customs declarations totaling $56,200 for these items. By contrast, in November 1995, BIL valued the same items at $542,590 for insurance purposes.
In 1994, Bucheit appointed a Gaza resident, Ghassan Abdel Aziz Abu Ramadan, as manager of the concrete plant. In January 1996, BIL dismissed Ramadan due to disagreements concerning his management and representation of BIL in Gaza. Notwithstanding his dismissal, Ramadan continued to contract with the PA for BIL's services and the use of BIL's equipment. In August 1997, for example, the PA's Military Financial Administration leased BIL's Grove crane for use in Gaza Emergency Harbor, paying a total of $77,000 to Ramadan rather than to BIL.
BIL had obtained financing for the concrete plant from the Overseas Private Investment Corporation (OPIC), a U.S. government agency that provides loans and political risk insurance to U.S. companies for private investments abroad. BIL obtained a $1,100,000 loan from OPIC, which it secured with BIL's Gaza assets. In addition, Bucheit's three children, through the Bucheit Children's Trust, guaranteed the loan with real estate located in the District of Columbia.
In May 1997, after experiencing financial and other difficulties operating in Gaza, BIL defaulted on the OPIC loan. In order to repay OPIC, BIL began efforts to liquidate its Gaza assets. A company named Avi Cranes offered BIL $105,000 for the Grove crane and lowboy trailer, but BIL was unable to complete the sale because the PA's Military Financial Administration was using the crane in Gaza Emergency Harbor -- pursuant to the lease with Ramadan. Another company, Gulf Global, submitted a bid of $1,630,000 for all of BIL's assets in Gaza, but that sale could not be completed, both because the crane was still being used at the harbor, and because the defendants would not provide the necessary documentation for the plant and other assets. Later, Gulf Global made another bid of $106,000 for the crane alone, but that sale fell through as well: the crane needed repairs after its detour to the harbor project.
Finally, in the fall of 1999, a non-profit corporation called Builders for Humanities (BFH) submitted a letter of intent to purchase BIL's plant and machinery for $1,600,000. BIL accepted the letter of intent. But that deal failed as well, again because BIL could not obtain the necessary authorizing documentation from the defendants.
Because BIL was unable to liquidate its Gaza assets, the Bucheit Children's Trust had to satisfy its guarantee of the OPIC loan by selling its District of Columbia real estate. The Trust did so in December 1999, and wired the proceeds to OPIC. OPIC declared the loan paid in full and assigned all rights arising out of the interference with its secured collateral to the Trust, which, in turn, assigned its rights to Bucheit.
In June 2000, Bucheit sued the PA and the PLO in the United States District Court for the District of Columbia. Bucheit alleged that he had succeeded to all of OPIC's interest in the secured assets by virtue of the assignments, and charged that the defendants had wrongfully converted OPIC's money and property by interfering with its lien on the Gaza assets. The district court concluded that it had jurisdiction over the matter under the commercial activity exception to the Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1330, 1605(a)(2). It further concluded that Bucheit was an "equitable subrogee" of OPIC's rights under the BIL loan, and that he was entitled "to those remedies and damages" -- but only those remedies and damages -- "that OPIC could have asserted." Bucheit v. Palestine Liberation Organization, No. 00-1455, Findings of Fact and Conclusions of Law at 14 (D.D.C. Aug. 18, 2003). Pursuant to the parties' stipulation that District of Columbia law would apply unless it differed from "the relevant Palestinian commercial law," and finding that the defendants had not identified any applicable portions of the latter, the court relied on District of Columbia law without objection by the parties. Id. at 12-13.
The district court conducted a two-day trial to determine whether the defendants were liable for conversion for interfering with OPIC's rights to BIL's assets, and, if so, the amount of damages OPIC suffered as a consequence of such conversion. With respect to liability, the court concluded that the defendants had indeed converted OPIC's property. Noting that conversion is "any unlawful exercise of ownership, dominion or control over the personal property of another in denial or repudiation of his rights thereto," id. at 14 (quoting Duggan v. Keto, 554 A.2d 1126, 1137 (D.C. 1989)), the court found that the defendants were "liable for conversion of any funds paid [to Ramadan] under contracts for use of BIL assets and for impeding liquidation sales" of those assets. Id. at 18.
In calculating the amount of damages, the district court "rel[ied] primarily on documentary evidence of valuation and on the amounts BIL was prepared to accept for the attempted sales of these assets." Id. at 19. The court found that the total value of the converted assets was $1,782,000 -- $77,000 in lease payments to Ramadan, $105,000 for the crane and lowboy (the amount of Avi Cranes's accepted offer), and $1,600,000 for the plant and machinery (the amount of BFH's accepted offer). The court declined to rely on either of Gulf Global's offers, noting that there were ...