Mohammad Hilmi Nassif & Partners v. Republic of Iraq

MOHAMMAD HILMI NASSIF & PARTNERS, Plaintiff, v. REPUBLIC OF IRAQ, et al., Defendants.

No. 17-cv-2193 (KBJ)

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

March 25, 2020

MEMORANDUM OPINION

In 1995, Plaintiff Mohammad Hilmi Nassif & Partners ("Nassif" or "Plaintiff"), a Jordanian entity, entered into a contract with Defendants Republic of Iraq and the Ministry of Industry and Minerals of the Republic of Iraq (collectively, "Defendants") in which Defendants agreed to ship 450,000 tons of sulfur and 100,000 tons of urea to settle an outstanding debt owed to Nassif. (See Compl., ECF No. 1, ¶ 11.) Defendants subsequently failed to deliver the materials to Nassif. (See id. ¶ 13.) Thereafter, in November of 2010, Nassif filed a lawsuit in the country of Jordan, alleging that Defendants had breached the agreement. (See id. ¶ 14.) In September of 2015, the Jordanian court found Defendants jointly and severally liable for breaching the contract and awarded Nassif $53 million in damages. (See id. ¶ 16.) Neither defendant has paid any portion of the judgment. (See id. ¶ 19.)

Nassif filed the instant lawsuit to enforce the Jordanian judgment under the laws of the District of Columbia—specifically, the Uniform Foreign-Country Money Judgments Recognition Act of 2011 ("UFCMJRA"), D.C. Code § 15-361 et seq.—in October of 2017. (See id. ¶ 21.) Initially, Defendants failed to respond to Nassif's complaint, and the Clerk of the Court filed an entry of default as to each Defendant. (See Clerk's Entry of Default, ECF No. 14; Clerk's Entry of Default, ECF No. 15.) Nassif then filed a motion requesting that this Court issue a default judgment against Defendants (see, e.g., Amended Mot. for Default J., ECF No. 24), and while that motion was pending, Defendants noticed their appearances in the case. They also filed two motions: one to set aside the Clerk's entry of default (see Mot. to Set Aside Default, ECF No. 29) and the other to dismiss Nassif's complaint in its entirety (see Mot. to Dismiss, ECF No. 28). This Court subsequently referred the case (including Defendants' two motions) to Magistrate Judge G. Michael Harvey for full case management. (See Minute Order of Mar. 26, 2019.)

In the motion to dismiss—which was filed pursuant to Federal Rules of Civil Procedure 12(b)(1), 12(b)(5), and 12(b)(6)—Defendants argue (1) that this Court lacks subject matter jurisdiction, because Defendants have sovereign immunity under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. §§ 1602 et seq.; (2) that service of the complaint was improper, because Nassif failed to comply with the specific service requirements of the FSIA; and (3) that Nassif's complaint fails to state a claim upon which relief can be granted, because the Jordanian judgment is "based on an illegal agreement that violated the Iraqi Sanctions Regime" and therefore contravenes the UFCMJRA. (Mot. to Dismiss at 1-2.)¹ Defendants' motion to set aside the defaultstrikes a similar chord, insofar as Defendants argue that, because service of process was improper under the FSIA, they never formally received the complaint, which is good cause for the Court to set the Clerk's entry of default aside. (See Mot. to Set Aside Default at 1.)

Before this Court at present is a Report and Recommendation ("R&R") that Magistrate Judge Harvey has filed to articulate his findings and conclusions with respect to each of the arguments that Defendants raised in their motion to dismiss. (See R. & R., ECF No. 40.)² Generally speaking, and in relevant part, the R&R concludes that Defendants explicitly waived their sovereign immunity under the FSIA. (See id. at 17.) Nevertheless, Magistrate Judge Harvey finds that Nassif failed to serve the complaint properly on Defendants (see id. at 26), and that Nassif should be permitted to reattempt service of its plausible complaint, rather than dismissing it (see id. at 28; see also id. at 29 (concluding that the complaint sufficiently pleads a cognizable claim under the UFCMJRA); id. at 35 (recommending that Defendants' motion to dismiss be denied)). Apparently contemplating further litigation once Nassif cures the service defect, Magistrate Judge Harvey's R&R also recommends that the Court grant Defendants' motion to set aside the Clerk's entry of default (see id. at 34) and deny Nassif's amended motion for default judgment as moot (see id. at 35).

Defendants timely filed an objection to Magistrate Judge Harvey's R&R (see Defs.' Objs., ECF No. 42), to which Nassif responded (see Pl.'s Opp'n to Defs.' Objs.("Pl.'s Opp'n"), ECF No. 43).³ Defendants then filed a reply. (See Defs.' Reply to Pl.'s Opp'n, ECF No. 44.) The entirety of Magistrate Judge Harvey's findings and conclusions, and all of the parties' related filings, are now before the Court; however, the Court finds that it need only address one of the issues that the R&R addresses: its finding that Nassif had improperly served Defendants because the envelope in which the complaint and summons were mailed "failed to identify the head of the Ministry of Foreign Affairs by name or title" as the FSIA requires. (R. & R. at 25.) For the reasons explained below, this Court agrees with Magistrate Judge Harvey's findings regarding service of process, and it further finds that the Court lacks personal jurisdiction over Defendants until service is properly effected. Therefore, Magistrate Judge Harvey's R&R will be ADOPTED IN PART, and Nassif will be permitted to reattempt service. Moreover, as the R&R suggests, Defendant's motion to set aside the entry of default must be GRANTED, and their motion to dismiss will be DENIED WITHOUT PREJUDICE, while Nassif's amended motion for default judgment will be DENIED AS MOOT.⁴ A separate Order consistent with this Memorandum Opinion will follow.

I.

The FSIA provides four methods for serving a complaint on a foreign state, which must be attempted one-by-one and in a specified order. See 28 U.S.C. § 1608(a)(1)-(4); see also Barot v. Embassy of the Republic of Zambia, 785 F.3d 26, 27 (D.C. Cir. 2015). The third method of service is at issue in this case; in relevant part, it requires that service be effected "by sending a copy of the summons and complaint and a notice of suit . . . to be addressed . . . to the head of the ministry of foreign affairs of the foreign state concerned[.]" 28 U.S.C. § 1608(a)(3) (emphasis added); (see also R. & R. at 26).

Here, Nassif attempted to serve Defendants pursuant to the third service method by mailing an envelope that was addressed to the Iraqi Ministry of Foreign Affairs. (See R. & R. at 25.) Magistrate Judge Harvey noted that Nassif "does not dispute that the envelope sent to the Iraqi Ministry of Foreign Affairs was not addressed to the head of the ministry." (Id. (emphasis added).) Magistrate Judge Harvey also found that the plain text of the statute and the relevant case law both support a finding that, in order for an envelope to be properly "addressed" for FSIA purposes, the name of the head of the ministry of foreign affairs must be "placed on the outside of the item to be sent." (Id. at 27 (quoting Rep. of Sudan v. Harrison, 139 S. Ct. 1048, 1057 (2019)).) Thus, Magistrate Judge Harvey found that Nassif had "failed to comply with section 1608(a)(3), and [its] service was [therefore] improper." (Id. at 26; see also id. (explaining that even actual notice will not cure improper service) (citing Azadeh v. Gov't of Islamic Rep. of Iran, 318 F. Supp. 3d 90, 100 (D.D.C. 2018)).)

Notably, consistent with what other courts in this district have done under similar circumstances, Magistrate Judge Harvey further recommended that this Court permit Nassif to reattempt proper service rather than dismiss its case. (See id. at 27.) It appears that, in the FSIA context, courts routinely analyze three factors when deciding whether a plaintiff should be permitted to reattempt service in lieu of dismissal: "(1) whether the attempted service 'came very close to satisfying the [FSIA's] requirements . . . [thus] showing good faith'; (2) whether the statute of limitations on the plaintiff's claim has run; and (3) whether the defendant has identified any 'particular prejudice' that it would incur if the plaintiff were permitted to reattempt proper service." (Id. at 28 (quoting Law Offices of Arman Dabiri & Assocs. P.L.L.C. v. Agric. Bank of Sudan, No. 17-2497 (RDM), 2019 WL 231753, at *5 (D.D.C. Jan. 16, 2019)) (alterations in original).) With respect to the defective service at issue here, Magistrate Judge Harvey found that, while Nassif had come very close to effecting proper service in a manner that demonstrates a good faith attempt (id. at 28), it would not be prejudiced by dismissal of the instant case because the statute of limitations for enforcing the Jordanian judgment has not yet run (id.). Yet, Magistrate Judge Harvey also found that Defendants had not identified any harm that would befall them if Nassif were permitted to reattempt service. (See id. at 28.) Consequently, according to the R&R, two of the three commonly considered factors weigh in favor of Nassif, such that Nassif should be permitted to reattempt service. (See id.)

Defendants' objections to the R&R transcend the service issue—i.e., Defendants have addressed each of Magistrate Judge Harvey's myriad findings about all of the various issues raised in the motion to dismiss. But, not surprisingly, Defendants agreewith Magistrate Judge Harvey's findings and recommendations concerning Nassif's defective service, and they do not appear to oppose the R&R's suggestion that Nassif be provided with another opportunity to effect service properly. (See Defs.' Objs. at 10-11.) For its part, Nassif appears to concede that its service of process was not proper under the FSIA. (See Pl.'s Opp'n at 11 n.1.) The remaining dispute between the parties concerns what happens next: Defendants insist that, because service was improper, no responsive pleading was required, and therefore, the...