Kaupthing Ehf. v. Bricklayers & Trowel Trades Int'l Pension Fund Liquidation Portfolio

291 F.Supp.3d 21

KAUPTHING EHF., Plaintiff,

v.BRICKLAYERS AND TROWEL TRADES INTERNATIONAL PENSION FUND LIQUIDATION PORTFOLIO, et al., Defendants.

Civil Action No. 17–761 (JEB)

United States District Court, District of Columbia.

Signed December 1, 2017

Charles N. Curlett, Jr., Levin & Curlett LLC, Baltimore, MD, for Plaintiff.

Todd E. Phillips, Caplin & Drysdale, Chartered, Washington, DC, Jason Sean Fuiman, O'Dwyer & Bernstien, LLP, New York, NY, for Defendants.

MEMORANDUM OPINION

JAMES E. BOASBERG, United States District Judge

Plaintiff Kaupthing ehf., an Icelandic bank, sold billions of dollars in notes to investors throughout the world. One such investor was Defendant Bricklayers and Trowel Trades International Pension Fund, which owned a series of these notes until Kaupthing bought them back under a repurchase provision. When Kaupthing thereafter went bankrupt, it filed a suit in Iceland to rescind the buy-back and recover the monies expended. The Fund, a resident of the District of Columbia, never appeared overseas to defend itself, and a default judgment resulted. That judgment, however, did not name the Fund as a liable party; instead, the Icelandic court ordered another party—an account owned by the Fund—to pay Kaupthing $422,296.

Plaintiff has come to this Court to enforce the Icelandic Judgment, suing the Account, the Fund, and the Fund's Board of Trustees. Defendants now move to dismiss, arguing that the Account lacks the capacity to be sued, the Icelandic Judgment does not name the Fund or the Trustees as liable parties, and Defendants, in any event, were not subject to personal jurisdiction in Iceland. Agreeing with all of these contentions, the Court will grant the Motion.

I. Background

The Court treats the facts set forth in the Complaint as true, as it must at this stage, but also draws much of the background from the Icelandic Judgment itself. Plaintiff is an Icelandic corporation. See Am. Compl., ¶ 4. In 2007, it initiated a multi-billion-dollar program in which it sold certain securities—namely, the notes at issue in this case—to investors all over the world. See ECF No. 11, Exh. C (Icelandic Judgment) at 2–3. Although the notes at issue originated with Plaintiff, investors purchased them through a program run by an American clearing house. Id. at 3–4. These notes and their indentures were also to be construed and governed "entirely in accordance with the law of the State of New York." Id. at 5. Purchase of a note entitled its owner to receive semiannual payments from Plaintiff and to eventually cash out at specified maturity dates. Id. at 3. Plaintiff, however, was empowered by a repurchase provision in the note program's prospectus to buy back outstanding notes and reduce its liability under the program by extinguishing them. Id. at 5.

In 2008, Plaintiff exercised this power under the repurchase provision and bought back notes owned by Bricklayers and Trowel Trades International Pension Fund—a District of Columbia resident. Id. at 6; Am. Compl., ¶ 6. The Fund, before the buy-back, held the notes in an account called the Bricklayers and Trowel Trades International Pension Fund Liquidation Portfolio (Account).See Icelandic Judgment at 7. Management of the Account was entrusted to the Western Asset Management Company—the Fund's agent—but the Fund maintained ultimate control over the Account and the notes contained therein. Id. Emails exchanged between Plaintiff and WAMC culminated in a "single transaction" whereby Plaintiff transferred payment to the Account, and, in return, its outstanding liabilities under the note program were reduced by the value of the interest purchased. Id. at 6.

Kaupthing went bankrupt shortly thereafter. Id. Its bankruptcy entitled it, under Icelandic law, to rescind its buy-back of the Fund's notes and to recover the sum paid. Id. at 8. Plaintiff filed a lawsuit in Iceland in June 2012 to pursue that end. Id. at 7–8; Am. Comp., ¶ 10. The complaint named WAMC as "primary defendant," the Account as "alternative defendant," and the Fund as "defendant of last resort." See Am. Compl., ¶ 10. Only WAMC, however, appeared in Icelandic court to defend itself. Id., ¶ 12.

That court ultimately declined to impose liability on WMAC because it "was involved in the transaction only as an intermediary." Icelandic Judgment at 13, 16; Am. Compl., ¶ 14. Next setting its sights on the Account, the Court held that it was "a legal person capable of having legal rights" and was thus able to "be the defendant in a lawsuit." Icelandic Judgment at 15. The court also identified the Account as the party that had been "the beneficial owner" of the "note interest" bought back by Plaintiff. Id. The court, accordingly, entered a default judgment ordering the Account to pay Plaintiff $422,296.03 plus interest. Id. at 16; Am. Compl., ¶ 14. The Fund, conversely, was not mentioned in the court's order. See Icelandic Judgment at 16 (omitting Fund, as defendant of last resort, from "ADJUDICATION" section).

Plaintiff then filed this diversity action to enforce the Icelandic Judgment under the District of Columbia's Uniform Foreign–Country Money Judgments Recognition Act. See Am. Compl., ¶ 3; Yahoo! Inc. v. La Ligue Contre Le Racisme Et L'Antisemitisme, 433 F.3d 1199, 1212 (9th Cir. 2006) (en banc ) ("In diversity cases, enforceability of judgments of courts of other countries is generally governed by the law of the state in which enforcement is sought.") (citation omitted). The Amended Complaint names the Account, the Fund, and the individual members of the Fund's Board of Trustees as Defendants. Id., ¶ 7. All Defendants now move to dismiss.

II. Legal Standard

Federal Rule of Civil Procedure 12(b)(6) permits a court to dismiss any count of a complaint that fails "to state a claim upon which relief can be granted." In evaluating the motion, a court must likewise "treat the complaint's factual allegations as true and must grant plaintiff ‘the benefit of all inferences that can be derived from the facts alleged.’ " Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000) (quoting Schuler v. United States, 617 F.2d 605, 608 (D.C. Cir. 1979) ) (internal citation omitted). The court need not accept as true, however, "a legal conclusion couched as a factual allegation" or an inference unsupported by facts set forth in the Complaint. Trudeau v. FTC, 456 F.3d 178, 193 (D.C. Cir. 2006) (quoting Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) ).

This pleading standard is "not meant to impose a great burden upon a plaintiff." Dura Pharm., Inc. v. Broudo, 544 U.S. 336, 347, 125 S.Ct. 1627, 161 L.Ed.2d 577 (2005). While "detailed factual allegations" are not necessary to withstand a dismissal motion, Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007), the Complaint still "must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955 ). In other words, a plaintiff must put forth "factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id. A complaint may survive even if " ‘recovery is very remote and unlikely’ " or the veracity of the claims are "doubtful in fact" if the factual matter alleged in the complaint is "enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555–56, 127 S.Ct. 1955 (quoting Scheuer v. Rhodes, 416 U.S. 232, 236, 94 S.Ct. 1683, 40 L.Ed.2d 90 (1974) ).

In evaluating the sufficiency of a complaint under Rule 12(b)(6), a court may consider "the facts alleged in the complaint, any documents either attached to or incorporated in the complaint[,] and matters of which [the court] may take judicial notice." Equal Emp't Opportunity Comm'n v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624 (D.C. Cir. 1997). The court may thus consider those materials on a motion to dismiss without treating the motion "as one for summary judgment under Rule 56." Fed. R. Civ. P. 12(d) ; see also Marshall v. Honeywell Tech. Solutions, Inc., 536 F.Supp.2d 59, 65–66 (D.D.C. 2008).

III. Analysis

In seeking dismissal here, Defendants produce a congeries of arguments. The Court will first address the threshold question of the Account's capacity to be sued. It will then separately turn to the enforcement and jurisdictional requirements of the D.C. Uniform Foreign–Country Money Judgments Recognition Act. As its analysis of these issues resolves the Motion, the Court does not reach Defendants' contention regarding service of process in this suit.

A. Capacity of Account

Defendants' opening position is that the Account has no legal capacity here. In countering this challenge, Plaintiff first maintains that a party may not raise such an issue on a motion to dismiss. See Opp. at 11–12. While the relevant rule is silent on the issue, see Fed. R. Civ. P. 9(a)(2), there is ample case law contrary to Kaupthing's position. See, e.g., Smartdoor Holdings, Inc. v. Edmit Industries, Inc., 78 F.Supp.3d 275, 277 (D.D.C. 2015) (granting motion to dismiss for lack of capacity to be sued); Pushkin v. Nat'l Academies Bd. on Sci. Educ., 2012 WL 4889277, at *3 (D.D.C. Aug. 26, 2012) (granting motion to dismiss for lack of capacity to be sued where defect appeared on face of complaint); Bellow v. Charbonnet, 1999 WL 203740, at *1 (E.D. La. Apr. 7, 1999) (granting motion to dismiss "an account" for lack of capacity to be sued because it was used solely for the "receipt and disbursement of funds" and was "controlled" by other parties). The Court, accordingly, holds that the capacity to be sued may be raised on a motion to dismiss where, as here, the defect appears on the face of the complaint or in materials attached thereto—e.g. , the Icelandic Judgment.

In cases such as this, where the party in...