Ambar v. Fed. Republic of Ger.

596 F.Supp.3d 76

Sami AMBAR, et al., Plaintiffs,

v.FEDERAL REPUBLIC OF GERMANY, Defendant

Civil Action No. 20-3587 (CKK)

United States District Court, District of Columbia.

Signed March 15, 2022

Noam Binyamin Schreiber, Pro Hac Vice, Lawrence Marc Zell, Zell, Aron & Co., Israel, for Plaintiffs.

Walter Elmer Diercks, Rubin, Winston, Diercks, Harris & Cooke, LLP, Washington, DC, for Defendant.

MEMORANDUM OPINION

COLLEEN KOLLAR-KOTELLY, United States District Judge

This case arises from the alleged November 27, 1941 expropriation of a building located in Berlin, Germany (the "Building") by the Nazi regime. The Building was owned by Salo Feuerwerk who was Jewish and resided in Austria. Plaintiffs are Mr. Feuerwerk's grandchildren, Sami Ambar, Laila Ambar, Shlomit Abrahamoff, Ariela N. Abrahamoff, who bring this action against Defendant Federal Republic of Germany ("Germany") alleging that Germany is in wrongful possession of rent and sale proceeds related to the expropriated Building. In its pending [9] Motion to Dismiss, Germany argues that it is immune from suit pursuant to the Foreign Sovereign Immunities Act ("FSIA"). 28 U.S.C. §§ 1602 – 1611. Plaintiffs oppose Germany's motion, invoking the "expropriation exception" to the FSIA, which confers jurisdiction for claims involving property rights taken in violation of international law when there exists a connection with a commercial activity carried on in the United States. Id. § 1605(a)(3).

Upon review of the pleadings,¹ the relevant legal authority, and the record as a whole, the Court concludes that the Complaint's factual allegations make out a legally valid claim that the "expropriation exception" to the FSIA applies, and therefore Germany is not immune from suit in this case. Accordingly, the Court shall DENY Germany's Motion to Dismiss.

I. BACKGROUND

In 1924, Mr. Feuerwerk, a Jewish Austrian citizen who had resided in Vienna, Austria since at least 1914, purchased the Building in Berlin, Germany. Compl. ¶¶ 1, 5, 41, ECF No. 1. As the Building's sole owner, Mr. Feuerwerk collected rents from the Building from 1924 to 1937. Id. ¶¶ 43, 44.

Following its rise to power in Germany, see generally id. ¶¶ 22–28, the Nazi regime enacted a series of laws designed to diminish the rights of German Jews, known as the Nuremberg Laws. Id. ¶¶ 29, 30. One such law, the Reich Citizenship Law, enacted in 1935, stripped German Jews of citizenship and downgraded their legal status to one of "nationals," distinct from "Reich citizens." Id. ¶ 30. It is not disputed that at the time of the Reich Citizenship Law of 1935, Mr. Feuerwerk was a citizen and resident of Austria. Id. ¶¶ 1, 45; Def.’s Mot. at 6.

In 1937, Mr. Feuerwerk fled from Austria to Romania. Compl. ¶ 45. In March 1938, Austria was annexed by Nazi Germany, beginning a period known as the "Anschluss. "² Id. ¶ 35. In July 1938, Nazi Germany declared all Austrian citizens to be nationals of Germany, retroactive to March 1938. Pls.’ Opp'n at 8 (citing Def.’s Mot. at 6).

In March 1940, Mr. Feuerwerk and his family fled Romania to what was then the British Mandate of Palestine. Compl. ¶ 55.

On November 25, 1941, Germany issued a decree denationalizing German Jewish nationals residing abroad and confiscating all of their property, pursuant to the Reich Citizenship Law of 1935. Pls.’ Opp'n at 9 (citing Def.’s Mot. at 6).

On or about November 27, 1941, Germany took possession of Mr. Feuerwerk's Building, Compl. ¶ 57, and in January 1942, registered the Building in the name of the German Reich. Id. Mr. Feuerwerk died in Mandatory Palestine in April 1942. Id. ¶ 1.

Plaintiffs contend that following the downfall of the Nazi government, ownership of the Building passed to the German Democratic Republic and then to the Federal Republic of Germany, each of which collected rents from the Building. See id. ¶¶ 58–71. According to Plaintiffs, Germany sold the Building on January 3, 2006. Id. ¶ 71. Plaintiffs allege that Germany commingled the funds from the sale of the Building with its general revenue, and that the commingled funds were subsequently used in the United States to purchase military equipment, maintain bank accounts and bank deposits, sell and purchase U.S. treasury bonds, and issue German bonds and other financial instruments to U.S. investors. Id. ¶¶ 21, 71.

Plaintiffs previously sought to regain ownership of the Building pursuant to a treaty between Austria and the German Democratic Republic in an administrative court in Berlin. See generally id. ¶¶ 73–96. Plaintiffs have been unsuccessful in their efforts to regain ownership of the Building and/or to recoup proceeds from the 2006 sale. Id. ¶ 95.

Plaintiffs now bring the following six claims against Germany: international expropriation (Count I); genocide in violation of the law of nations (Count II); conversion of proceeds of the sale (Count III); conversion of the rental income (Count IV); unjust enrichment from the proceeds of the sale (Count V); and unjust enrichment from the rental income (Count VI). Plaintiffs seek, among other things, compensatory damages and/or compensation for unjust enrichment for the taking of the building.

Germany moved to dismiss the Complaint, contending that it is entitled to sovereign immunity. See Def.’s Mot. That motion is now ripe for the Court's consideration.

II. LEGAL STANDARD

Pursuant to Federal Rule of Civil Procedure 12(b)(1), a party may move for dismissal based on "lack of subject-matter jurisdiction." Fed. R. Civ. P. 12(b)(1). When a foreign sovereign defendant moves for dismissal under Rule 12(b)(1) on the grounds of sovereign immunity, initially, the plaintiff bears the burden of overcoming the presumption of sovereign immunity "by producing evidence that an [FSIA] exception applies." Bell Helicopter Textron, Inc. v. Islamic Republic of Iran , 734 F.3d 1175, 1183 (D.C. Cir. 2013). After the plaintiff has met this initial burden of production, the foreign sovereign defendant bears the "ultimate burden of persuasion" to show that the alleged exception to sovereign immunity does not apply. Id.

In resolving a motion to dismiss pursuant to Rule 12(b)(1), the court can, and often must, go beyond the allegations in the complaint. "Where a motion to dismiss a complaint ‘present[s] a dispute over the factual basis of the court's subject matter jurisdiction ... the court may not deny the motion to dismiss merely by assuming the truth of the facts alleged by the plaintiff and disputed by the defendant." Feldman v. Fed. Deposit Ins. Corp. , 879 F.3d 347, 351 (D.C. Cir. 2018) (quoting Phoenix Consulting v. Republic of Angola , 216 F.3d 36, 40 (D.C. Cir. 2000) ). Instead of merely relying on the truth of the facts alleged in the complaint, "the court must go beyond the pleadings and resolve any disputed issues of fact the resolution of which is necessary to a ruling upon the motion to dismiss." Id. (quoting Phoenix Consulting , 216 F.3d at 40 ).

III. DISCUSSION

Under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. §§ 1602 – 1611, "a foreign state is presumptively immune from the jurisdiction of United States courts," and "unless a specified exception applies, a federal court lacks subject-matter jurisdiction over a claim against a foreign state." Saudi Arabia v. Nelson , 507 U.S. 349, 355, 113 S.Ct. 1471, 123 L.Ed.2d 47 (1993). The FSIA provides "the sole basis for obtaining jurisdiction over a foreign state in the courts of this country." Id. (quoting Argentine Republic v. Amerada Hess Shipping Corp. , 488 U.S. 428, 443, 109 S.Ct. 683, 102 L.Ed.2d 818 (1989) (internal quotation marks omitted)). Because "subject matter jurisdiction in any such action depends on the existence of one of the [FSIA's] specified exceptions ... [a]t the threshold of every action in a District Court against a foreign state ... the court must satisfy itself that one of the exceptions applies." Verlinden B.V. v. Cent. Bank of Nigeria , 461 U.S. 480, 493–94, 103 S.Ct. 1962, 76 L.Ed.2d 81 (1983). "In other words, U.S. courts have no power to hear a case brought against a foreign sovereign unless one of the exceptions applies." Diag Human S.E. v. Czech Republic–Ministry of Health , 64 F. Supp. 3d 22, 30 (D.D.C. 2014), rev'd on other grounds 824 F.3d 131 (D.C. Cir. 2016).

The FSIA's exceptions to sovereign immunity are narrowly construed. Fed. Republic of Germany v. Philipp , ––– U.S. ––––, 141 S. Ct. 703, 713, ––– L.Ed.2d –––– (2021) ("Germany's interpretation of the exception is also more consistent with the FSIA's express goal of codifying the restrictive theory of sovereign immunity[.]"); Bolivarian Republic of Venezuela v. Helmerich & Payne Int'l Drilling Co. , ––– U.S. ––––, 137 S. Ct. 1312, 1320, 197 L.Ed.2d 663 (2017) (discussing the overarching framework of the "restrictive theory" in codifying sovereign immunity).

Plaintiffs assert that this Court has jurisdiction under the FSIA's "expropriation exception," 28 U.S.C. § 1605(a)(3). Compl. ¶ 15. The FSIA's "expropriation exception" allows a party to proceed with a claim against a foreign sovereign:

in which rights in property taken in violation of international law are in issue and that property or any property exchanged for such property is present in the United States in connection with a commercial activity carried on in the United States by the foreign state; or that property or any property exchanged for such property is owned or operated by an agency or instrumentality of the foreign state and that agency or instrumentality is engaged in a commercial activity in the United States[.]

28 U.S.C. § 1605(a)(3). As such, to satisfy the FSIA's "expropriation exception," a plaintiff must demonstrate that (1) "rights in property" are "in issue"; (2) the property right was "taken in violation of international law"; and (3) there is a commercial activity nexus such that property exchanged for the taken property "is present in the United States in connection with a commercial activity carried on in the United States by...