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Africa Growth Corp. v. Republic of Angola

United States District Court, District of Columbia

December 3, 2018

AFRICA GROWTH CORPORATION, Plaintiff,
v.
REPUBLIC OF ANGOLA, et al., Defendants.

          MEMORANDUM OPINION

          BERYL A. HOWELL CHIEF JUDGE.

         Africa Growth Corporation (“AFGC”), a U.S.-based, publicly-listed corporation which, through its subsidiaries, builds and manages apartments in Angola's capital city, Luanda, initiated this suit against five Angolan government officials and the Republic of Angola to recover damages for an alleged series of brazen fraudulent actions culminating in the outright seizure and ongoing occupation of AFGC's properties by a General of the Angolan military, his son, and their “heavily-armed security detail.” Angolan courts have enjoined two of the defendants, Angolan General Antonio Francisco Andrade (“General Andrade”), and his son, Angolan Army Captain Miguel Kenehele Andrade (“Captain Andrade”), from occupying AFGC's properties-but to no avail. General Andrade and Captain Andrade have allegedly claimed “immunity” from these Angolan court orders, and the police, for their part, have been of limited service in enforcing the orders, allegedly because the police have been directed by none other than General Andrade's own daughter, Angolan State Prosecutor Natasha Andrade Santos (“Prosecutor Andrade”), not to enforce the Angolan court's orders.[1]

         The issue now before the Court is whether default judgment should be entered against Angola and the five Angolan government officials due, with respect to Angola, its eight-month delay in responding to plaintiff's complaint, and with respect to the individual defendants, their continuing failure to respond. The plaintiff filed the Complaint, ECF No. 1, on November 15, 2017, and effectuated service on the defendants, on December 26, 2017, by sending a copy of the summons and complaint and a notice of suit, pursuant to the procedure for service upon foreign states established by the Foreign Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1608(a)(3). See Return of Service/Affidavit, ECF No. 20.

         An answer to plaintiff's Complaint was due by February 24, 2018, for any defendant on whom service was properly made, which, as discussed below, is at issue for the individual defendants. No. answer was timely filed. Shortly after this deadline, on February 27, 2018, the plaintiff filed an Affidavit in Support of Default, ECF No. 21, and the Clerk of Court entered Default, ECF No. 22, on March 2, 2018. The plaintiff then, on March 15, 2018, filed a Motion for Default Judgment (“Pl.'s Mot.”), ECF No. 23. Nearly six months later, on September 4, 2018, Angola filed a Motion to Set Aside Default (“Def.'s Mot.”), ECF No. 28. For the reasons set forth below, the plaintiff's motion for entry of default judgment is denied as to all defendants, and Angola's motion to set aside the default entered by the Clerk of the Court is granted.

         I. BACKGROUND

         AFGC operates in Angola through three subsidiaries: AGPV Lda (“AGPV”), Illico Lda (“Illico”), and Maximilio Lda (“Maximilio”) (collectively, “AFGC's Subsidiaries”). Compl. ¶ 31, 35. As alleged in the Complaint, beginning in January 2015, AFGC invested in four “high-end apartment complexes” in Luanda that were managed by AFGC's Subsidiaries. Id. ¶¶ 2, 27, 29.[2] According to the plaintiff, the defendants' conspiracy to convert AFGC's Subsidiaries' assets began in October 2016 when General Andrade “fraudulently prepare[d] Powers of Attorney, which purported to appoint one of [General Andrade's] associates as the shareholder representative of two of Illico's parent companies, [AGPV] and [Maximilio], but in truth and in fact, were forged at the direction of General Antonio Andrade.”[3] Id. ¶ 35; see also Decl. of Brenton Kuss (“Kuss Decl.”) ¶ 13, ECF No. 23-2. General Andrade next had the “current and lawful director and Gerente (General Manager) of Illico” dismissed, and the General himself “unlawfully appoint[ed]” “as the director and Gerente of Illico, with signature authority over the Illico bank accounts.” Id. ¶ 36. The plaintiff claims these acts of “corporate fraud” were not immediately discovered because “they were not properly recorded and documented in the official corporate registry of Angola, which is administered by the Angolan Guichet Unico de Empresa (“GUE”), a division of the Angolan Ministry of Justice.” Id. ¶ 37.

         Once in control of Illico's bank accounts, General Andrade allegedly transferred money from Illico to his own privately-owned companies. Id. ¶ 40. The plaintiff alleges that he “then intimidated the AFGC staff with threats of violence and demanded that they recognize him as the owner and managers of” AFGC's assets, and “demanded that the local AFGC staff cut off all contact with AFGC senior management going forward.” Id. ¶ 41. In the ensuing power struggle, AFGC claims it was able to briefly reinstall its lawful director and Gerente of Illico in July 2017, but that General Andrade conspired with his son, Captain Andrade, his daughter, Prosecutor Andrade, and GUE to have himself unlawfully reappointed, in August 2017, as director and Gerente of AFGC's Subsidiaries, and moreover, amended AFGC's Subsidiaries' bylaws “to name himself as the sole legal representative and signatory, ” thereby “assum[ing] full and complete control” of AFGC's Subsidiaries. Id. ¶ 46-50.

         When AFGC representatives arrived in Angola in August 2017 to reassert control over AFGC's Subsidiaries' properties, they encountered General Andrade's “heavily-armed security detail, ” which forced them “to withdraw from their own properties.” Id. ¶¶ 51-56. The plaintiff alleges that “the Angolan police refused (at the express direction of [Prosecutor Andrade]) to take any action, ” “thereby aiding and supporting the ongoing conspiracy … to deprive AFGC of lawful ownership and possession of” its properties. Id. ¶ 58. As of the filing of plaintiff's Complaint, the “heavily-armed security detail continue[d] [] to patrol the buildings … with exposed AK 47 assault rifles.” Id. ¶ 61.

         The plaintiff's allegations also implicate the Attorney General of Angola, General Joao Maria de Sousa (“Attorney General de Sousa”), who allegedly conspired with Prosecutor Andrade “to prevent legitimate law enforcement action from being taken in support of AFGC, ” id. ¶ 81, and the Governor of the Province of Luanda, General Francisco Higino Lopes Carneiro (“Governor Carneiro”), who allegedly acted “in furtherance of the unlawful conspiracy, ” id. ¶ 99, by signing and approving “the fraudulent transfer of the surface rights” to AFGC's Subsidiaries' properties “through a transfer of title from Illico to Prosecutor Natasha Andrade, ” id. ¶ 97.

         Finally, the plaintiff claims that Angola itself “has aided and abetted in the unlawful conspiracy by enabling [General Andrades, Captain Andrade, and Prosecutor Andrade (the “Andrades”)] to convert AFGC's property through acts of fraud, illegally asserted control, and intimidation, ” and “has fostered an expectation of total impunity on the part of the [Andrades], who have had no reason to fear they will be brought to judgment in Angola for their bad acts.” Id. ¶ 120.

         The plaintiff apparently obtained from the Angolan Provincial Court “a written verdict and opinion, dated November 23, 2017 (the “November 23 Order”), ” in which “the Angolan Court specifically held” that AFGC's Subsidiaries' assets “had been taken ‘unlawfully and by exercising violence' against AFGC's representatives in Angola.” Pl.'s Mem. Supp. Mot. Default Judgment (“Pl.'s Mem.”) at 13, ECF No. 23-1. Nonetheless, “the Angolan government took no action to enforce the November 23 Order.” Id. Accordingly, “[o]n December 19, 2017, an amended verdict and decision of the Angolan Provincial Court (the “December 19 Order”) was issued, which reaffirmed the unlawful and violent nature of the [Andrades'] conduct and ordered the Angolan police to return to the [properties] to evict the [Andrades].” Id. at 14. Allegedly, the police enforced the December 19 Order, but “once the police departed, ” the Andrades returned. Id. at 14.

         Thus, as of March 15, 2018, the plaintiff alleges that it “remains: (i) without possession or control of [AFGC's Subsidiaries' properties]; (ii) without recorded and secured legal title to [AFGC's Subsidiaries' properties] returned and cleared of all fraudulently obtained encumbrances on title; (iii) without possession or control of [AFGC's Subsidiaries]; (iv) without possession or control of the corporate bank accounts of [AFGC's Subsidiaries]; and (v) without the ability to collect rental income from [AFGC's Subsidiaries' properties]. Id. at 14. In the ten-count Complaint, alleging expropriation in violation of International Law (Count I), violations of the Racketeer Influenced and Corrupt Organizations (“RICO”) Act, 18 U.S.C. § 1962(c), (d) (Counts II, III), conspiracy to commit fraud and conversion, and conversion (Count IV, VII), tortious interference with contract (Count V), defamation (Count VI), accounting (Count IX), and an Action to Impose Constructive Trust (Count X), AFGC seeks “damages in excess of US$55 million owed to AFGC arising from Defendants' unlawful conspiracy, expropriation, and outright theft of AFGC's properties and rental income in Angola.” Compl. ¶ 1.

         II. LEGAL STANDARD

         The Federal Rules of Civil Procedure “provide for default judgments . . . [to] safeguard plaintiffs ‘when the adversary process has been halted because of an essentially unresponsive party, '” and to protect “‘the diligent party . . . lest he be faced with interminable delay and continued uncertainty as to his rights.'” Mwani v. bin Laden, 417 F.3d 1, 7 (D.C. Cir. 2005) (quoting Jackson v. Beech, 636 F.2d 831, 836 (D.C. Cir. 1980)). Pursuant to Federal Rule of Civil Procedure 55(a), “[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, the clerk must enter the party's default.” Fed.R.Civ.P. 55(a); see 10A Charles Alan Wright et al., Federal Practice and Procedure § 2682 (4th ed. 2018) (“When the prerequisites of Rule 55(a) are satisfied, an entry of default may be made by the clerk without any action being taken by the court . . . [as long as] the clerk [has] examine[d] the affidavits filed and [found] that they meet the requirements of Rule 55(a).”). “[A]n entry of default is merely a formal matter and does not constitute the entry of judgment.” Id.

         Rule 55 further provides that a “court may set aside [a clerk's] entry of default for good cause.” Fed.R.Civ.P. 55(c). The D.C. Circuit has made clear that courts, when exercising their discretion under Fed.R.Civ.P. 55(c), should consider “‘whether (1) the default was willful, (2) a set-aside would prejudice plaintiff, and (3) the alleged defense was meritorious.'” Mohamad v. Rajoub, 634 F.3d 604, 606 (D.C. Cir. 2011) (quoting Keegel v. Key West & Caribbean Trading Co., 627 F.2d 372, 373 (D.C. Cir. 1980)). The three factors articulated in Keegel are not exclusive, however, as the “good cause” standard of Rule 55(c) “is designed to empower courts to consider the equities that specially arise in a given case.” Gilmore v. Palestinian Interim Self-Government Authority, 843 F.3d 958, 966 (D.C. Cir. 2016). The D.C. Circuit has also “stressed a foreign sovereign's interest-and [the Court's] interest in protecting that interest-in being able to assert defenses based on its sovereign status, ” FG Hemisphere Associates, LLC v. Democratic Republic of Congo, 447 F.3d 835, 838 (D.C. Cir. 2006), because “‘[i]ntolerant adherence to default judgments against foreign states could adversely affect this nation's relations with other nations and undermine the State Department's continuing efforts to encourage foreign sovereigns generally to resolve disputes within the United States' legal framework, '” id. at 838-839 (quoting Practical Concepts Inc. v. Republic of Bolivia, 811 F.2d 1543, 1551 n.19 (D.C. Cir. 1987)).

         III. ...


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