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Agrocomplect, AD v. Republic of Iraq

January 25, 2008


The opinion of the court was delivered by: Reggie B. Walton United States District Judge


Agrocomplect AD, the plaintiff in this civil suit, seeks $47,000,000 in compensatory damages from the Republic of Iraq for the alleged breach of a construction contract entered into by the plaintiff and the defendant in the early 1980s (the "Contract").*fn1 First Amended Complaint (the "Am. Compl.") at 11. On November 14, 2007, the Court issued a memorandum opinion addressing the motion to dismiss filed by the Republic of Iraq in which the Court concluded that the defendant's motion had to be granted and the plaintiff's amended complaint "dismissed in its entirety." Agrocomplect, AD v. Republic of Iraq, Civil Action No. 07-0165 (RBW), slip op. at 32, 2007 WL 4218928, at *16 (D.D.C. Nov. 14, 2007) (Walton, J.),*fn2 and the order dismissing the plaintiff's amended complaint and closing this case (the "Dismissal Order"), Dismissal Order at 1. Currently before the Court is the plaintiff's motion to alter or amend the Dismissal Order pursuant to Federal Rule of Civil Procedure 59(e). Plaintiff['s] Motion for Reconsideration and to Alter or Amend Order and Judgment (the "Pl.'s Mot.") at 1.*fn3 After carefully reviewing the Court's prior memorandum opinion, the plaintiff's motion, and all memoranda and exhibits relevant thereto,*fn4 the Court concludes for the reasons that follow that it must deny the plaintiff's motion.

As this Court has noted in the past, motions for reconsideration under Rule 59(e) are "disfavored" and "should be granted only under extraordinary circumstances." Ctr. for Sci. in the Pub. Interest v. FDA, No. Civ. A. 03-1962, 2004 WL 2218658, at *2 (D.D.C. Sept. 17, 2004) (Walton, J.) (citation omitted). Indeed, such a motion "need not be granted unless the district court finds that there is an intervening change of controlling law, the availability of new evidence, or the need to correct a clear error or prevent manifest injustice." Messina v. Krakower, 439 F.3d 755, 758 (D.C. Cir. 2006) (internal quotation and citation omitted). The plaintiff does not contend that there has been a "change of controlling law" since the Court entered its Dismissal Order, that there is "new evidence" that merits the Court's attention,*fn5 or that some other form of "manifest injustice" will result from the Court's order. Thus, the only possible basis for reconsideration of the Court's Dismissal Order would be "a clear error" in the legal reasoning leading to the entry of the order.

In its prior memorandum opinion, the Court held that the plaintiff's amended complaint had to be dismissed for lack of subject-matter jurisdiction because the allegations in the amended complaint did not satisfy the requirements for any of the exceptions to the defendant's sovereign immunity set forth in § 1605 of the Foreign Sovereign Immunities Act, 28 U.S.C. §§ 1330, 1391, 1441, 1602-11 (2001) (the "FSIA"). See Agrocomplect, slip op. at 31-32, 2007 WL 4218928, at *16 (concluding that the plaintiff "failed to allege facts that satisfy any of the exceptions set forth in § 1605").*fn6 In reaching that conclusion, the Court specifically rejected the plaintiff's argument that its breach of contract claim against the defendant fell within "the exception for actions based upon a foreign nation's commercial activity outside the United States that has a 'direct effect' within the United States set forth in 28 U.S.C. § 1605(a)(2)," id. at 6, 2007 WL 4218928, at *3, notwithstanding the plaintiff's allegation in its amended complaint that "payment was to be made at least in part by and through banking institutions in the United States," Am. Compl. ¶ 30.*fn7 The Court reasoned that this allegation was insufficient in light of the terms of the parties' contract (the "Contract") and several documents attached to it (all of which were incorporated into the amended complaint) because "[t]he defendant was not 'supposed' to pay the plaintiff in the United States" under the terms of those documents, and because the plaintiff's claim was "not 'based upon' the commercial activities contemplated" in certain other documents (also incorporated in the amended complaint) reflecting banking arrangements between the People's Republic of Bulgaria ("Bulgaria") (through the Bulgarian Foreign Trade Bank (the "Bulbank")) and the Central Bank of Iraq (the "CBI") that did call for payment into New York accounts (the "Banking Arrangements"). Agrocomplect, slip op. at 27, 2007 WL 4218928, at *14.*fn8

It is this latter conclusion that the plaintiff challenges in its motion for reconsideration. The plaintiff contends that the Court erred in concluding that the collective impact of the Banking Arrangements was that "Bulgaria . . . agreed to 'cover' the defendant's obligations to Bulgarian companies like the plaintiff with respect to the United States dollar portion of the contract price," which, the Court speculated, could mean that "[t]he defendant remained liable to Bulgarian companies only with respect to the Iraqi component of the contract price." Id. at 19, 2007 WL 4218928, at *10. According to the plaintiff, "[e]ven if [the] Bulbank . . . could be construed to be a new obligor of [the] plaintiff, the absence of any proof of a release of [the] defendant's contractual obligations to [the] plaintiff precludes any determination that [the] plaintiff lacks standing to assert contractual claims against [the] defendant." Pl.'s Mem. at 5.

As the defendant correctly notes, this issue is "entirely irrelevant" to the Court's analysis. Def.'s Opp'n at 5. As the Court explained in some detail in its earlier memorandum opinion, neither the Contract nor any of the documents attached to or incorporated in the Contract "either require or give the party receiving the payment discretion to require that payment be made 'through and into' United States banks," nor is there any allegation in the amended complaint of a "subsequent arrangement" between the parties to that effect. Agrocomplect, slip op. at 16, 2007 WL 4218928, at *8. Thus, the plaintiff's only basis for asserting that the defendant was obliged to pay the plaintiff in the United States is the Banking Arrangements, which require the CBI to make payments into a Credit Lyonnais account in New York City. Id. at 16-17, 2007 WL 4218928, at *8.

Unfortunately for the plaintiff, the Banking Arrangements at best relate to the advancement and repayment of the financing for the defendant's obligations under the Contract, not the obligations themselves. See Agrocomplect, slip op. at 18-19, 2007 WL 4218928, at *9 (holding that one of the two Banking Arrangements "memorializes a financing agreement between Bulgaria and the defendant whereby the Bulbank would advance the CBI credit to cover the foreign currency of all Iraqi construction contracts with Bulgarian companies," and that the second one "memorializes a refinancing agreement between the same two countries that would permit the defendant to defer half of the amount due to the Bulbank in 1986 for one year").*fn9 The plaintiff is thus left in a proverbial "Catch-22" situation: either Bulgaria assumed the defendant's payment obligations under the Contract, in which case "the plaintiff has sued the wrong party," id. at 23, 2007 WL 4218928, at *12, or the defendant remained obligated to pay the plaintiff under the Contract, which does not specify a place of performance, and was separately obligated to repay the Bulbank--not the plaintiff--by telexing funds to the Bulbank's Credit Lyonnais account in New York City, see id. at 24, 2007 WL 4218928, at *12 ("Either way, the 'direct effect' requirement of § 1605(a)(2) . . . is not satisfied."). The plaintiff's protestation that it "had not extinguished its contract claims against [the defendant] in exchange for a promise by [the] Bulbank to assume the existing obligation," Pl.'s Mem. at 4, if correct, would mean only that the plaintiff's "direct effect" argument fails for the latter reason, not the former, Agrocomplect, slip op. at 24, 2007 WL 4218928, at *12 ("If . . . the defendant's obligations ran directly to the plaintiff, then there is no basis whatsoever for the plaintiff's assertions that the defendant was obligated to make payments to the plaintiff in New York.").

The Court noted in its prior memorandum opinion that the only conceivable way in which the plaintiff's claim could be "based upon" the defendant's credit repayment obligation to the Bulbank as required by the plain language of § 1605(a)(2) would be if Bulgaria had acted as an agent for the plaintiff in entering into the agreements set forth in the Banking Arrangement Documents. See id. at 19-21, 2007 WL 4218928, at **10-11 (recognizing possible authority for the proposition that "a missed payment that is 'supposed' to be made to a plaintiff's agent in the United States may satisfy the 'direct effect' requirement").*fn10 The Court recognized, however, that the plaintiff "d[id] not allege the facts necessary for the Court to infer" a principal-agent relationship between the plaintiff and the Bulgarian government. Id. at 23, 2007 WL 4218928, at *11. Undaunted by the Court's prior admonition not to raise new arguments after the close of briefing on dispositive motions,*fn11 the plaintiff now argues for the first time--in its reply memorandum, no less--that the plaintiff, "at that time an agency of the Bulgarian government[,] would naturally be a principal . . . of the Bulgarian government bank which undertook to negotiate structured payments from Iraq on behalf of the various government agencies seeking payment from Iraq." Pl.'s Reply at 4.*fn12

This argument is both procedurally infirm and substantively unavailing. First, "[a] Rule 59(e) motion is not a second opportunity to present arguments upon which the Court already has ruled or to present arguments that could have been presented earlier." Harrison v. Lappin, 510 F. Supp. 2d 153, 155 (D.D.C. 2007). There is no reason why the plaintiff could not have raised its agency argument in its opposition to the defendant's motion to dismiss, especially given that the case from which the Court inferred the possibility that payment that is "supposed to" be made to an agent in New York City might function as a waiver of sovereign immunity with respect to the principal of the agent as well, Commercial Bank of Kuwait v. Rafidain Bank and Cent. Bank of Iraq, 15 F.3d 238 (2d Cir. 1994) ("Commercial Bank"), was a case cited by the plaintiff in its opposition to the defendant's motion to dismiss. See Agrocomplect, slip op. at 19, 2007 WL 4218928, at *10 ("The plaintiff cites [Commercial Bank] for the proposition that the direct effect required by § 1605(a)(2) is not limited to effects on the plaintiff . . . ." (internal quotation and citation omitted)). The plaintiff's agency argument could be rejected for this reason alone.

Second, even if the Court were to take at face value the plaintiff's description of itself as "an agency of the Bulgarian government" when the Banking Arrangements were written, it is far from self-evident that the plaintiff was therefore "naturally . . . a principal" of the entire Bulgarian government. The plaintiff itself suggests in its initial memorandum of law in support of its motion for reconsideration (and repeats again in its reply memorandum) that the Banking Arrangements reflect an instance in which "one Bulgarian state agency undertook to assist another Bulgarian state agency in the collection of overdue debts," Pl.'s Mem. at 4; see also Pl.'s Reply at 5 (quoting this statement with approval), an arrangement that hardly bespeaks a principal-agent relationship.*fn13 In any event, nothing in the plaintiff's amended complaint, opposition to the defendant's motion to dismiss, discovery motion and attendant memoranda, or memoranda in support of its motion for reconsideration suggests that the plaintiff exercised the type of control over Bulgaria (or the National Bank, for that matter) that is the hallmark of any principal-agent relationship. See Transamerica Leasing, Inc. v. La Republica de Venezuela, 200 F.3d 843, 849 (D.C. Cir. 2000) ("The relationship of principal and agent depends . . . upon the principal 'having the right to control the conduct of the agent with respect to matters entrusted to [the agent].'" (quoting Restatement (Second) of Agency § 14 (1958)).

In short, the plaintiff's arguments for reconsideration are deeply flawed as a matter of substance and, in some instances, untimely. The Court will therefore deny the plaintiff's motion for reconsideration. A separate order to that effect follows.

SO ORDERED this 25th day of ...

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