Crystallex International Corporation v. Bolivarian Republic of Venezuela

Filing 95

MEMORANDUM ORDER. Signed by Judge Leonard P. Stark on 8/23/2108. (etg)

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF DELAWARE
CRYSTALLEX INTERNATIONAL

CORPORATION,
Plaintiff,
C.A.NO. 17-mc-151-LPS

V.

BOLIVARIAN REPUBLIC OF VENEZUELA,
Defendant.
MEMORANDUM ORDER

Plaintiff'Judgment Creditor Crystallex International Corporation ("Crystallex") holds a
$1.2 billion judgment against the Bolivarian Republic of Venezuela("Venezuela" or "the

Republic"). (D.I. 1) Crystallex seeks to collect on itsjudgment against Venezuela by executing

on property nominally owned by Petroleos de Venezuela, S.A.("PDVSA"),specifically shares of
common stock PDVSA owns in PDV Holding Inc.("PDVH"),a Delaware corporation. While
Venezuela has not appeared in this case,PDVSA intervened. (D.I. 14) On August 9,2018, the

Court issued an Opinion and Order finding that PDVSA is the alter ego of Venezuela, and
finding that identified property ofPDVSA -that is, the shares it owns ofPDVH -is subject to
attachment and execution in order to satisfy Venezuela's debt to Crystallex. (D.I. 78,79) On the
same date, the Court ordered letter briefing from Crystallex and PDVSA on how the case should

proceed and directed the Clerk of Court not to issue the writ of attachment until the Court issues
an additional order. The following day,PDVSA filed a Notice of Appeal to the U.S. Court of
Appeals for the Third Circuit. (D.I. 80)

Having reviewed the August 16joint letter from Crystallex and PDVSA containing their

1

respective positions on how the case should proceed (D.I. 86), a letter jfrom third parties CITGO
Holding, Inc. and CITGO Petroleum Corporation (collectively,"CIGTO")(D.I. 87), a letter from

third party Rosneft Trading S.A.("RTSA")(D.I. 92), and two additional letters from Crystallex
responding to CITGO and RTSA,respectively(D.I. 92, 94),IT IS HEREBY ORDERED that:
1.

The Clerk of Court is now directed to ISSUE Crystallex's Praecipe. (D.I. 4-1 Ex.

2)(attached)

2.

The Clerk of Court shall, pursuant to the Praecipe, thereafter ISSUE to the U.S.

Marshals Service the writ of attachmentfierifacias. (D.I. 4-1 Ex. 1)(attached)
3.

Thereafter, the U.S. Marshals Service shall SERVE the writ of attachment.

4.

Execution on the attached property is STAYED until further Order ofthe Court,

which will not be issued until after the Court has the opportunity to consider any additional
motions or other input any party, or any third party, wishes to provide. Such motions and
briefing shall be submitted in accordance with the following schedule:
A.

Any motion, including a motion to stay pending appeal pursuant to Federal

Rule of Civil Procedure 62(d), and any other input any party (i.e., Crystallex, Venezuela,

PDVSA)wishes to provide, shall be filed no later than seven(7)days after service ofthe writ.
B.

Any motion to intervene, or any other motion or input any third party

wishes to provide, shall also be filed no later than seven(7)days after service ofthe writ.
C.

Responses to any filings made pursuant to A or B above shall be due no

later than fourteen(14)days after any papers are filed pursuant to A or B above.

D.
such responses.

Replies to any responses shall be due no later than seven(7)days after

The Court agrees with Crystallex that, notwithstanding PDVSA's filing ofa Notice of
Appeal,the Court retains authority to enforce its August 9 Order. {See D.I, 86 at 2) Unless

PDVSA files a Rule 62(d) motion for a stay and posts a supersedeas bond,"the Court remains
free to issue further orders as needed to enforce the August 9 Order." {Id.) While PDVSA is
correct that the Court no longer retains jurisdiction over the issues on appeal {see id. at 6-7)those issues being the Court's conclusions that PDVSA's sovereign immunities imder the

Foreign Sovereign Immunities Act("FSIA")do not preclude the attachment and execution
sought by Crystallex -the Court retains authority to enforce the judgment that is currently on
appeal {see id. at 2).

"[T]he mere pendency of an appeal does not, in itself, disturb the finality of ajudgment.
The district court hasjurisdiction to act to enforce its judgment so long as the judgment has not
been stayed or superseded." N.L.R.B. v. Cincinnati Bronze, Inc., 829 F.2d 585,588(6th Cir.

1987)(internal citation, quotation marks, and alteration omitted); see also Lauber v. Belford
High Sck,2012 WL 12994877, at *2 n.4(E.D. Mich. Aug. 31,2012)(citing "well established
rule that district courts retain jurisdiction, even after a notice ofappeal is filed, to enforce an

order already issued prior to the filing ofthe notice ofappeal"); 20 Moore's Federal Practice
§ 303.32(2)(b)(vi)("Until the district court'sjudgment is superseded or stayed, the judgment is
fully in effect and the district court retains the authority to enforce the judgment."). "If an appeal
from an order orjudgment divested the district court ofjurisdiction to enforce that order or
judgment,there would be no point to Rule 62(d)ofthe Federal Rules of Civil Procedure, which

provides for a stay ofan appealed order orjudgment with the posting ofa supersedeas bond."^ In
re Gushlak, 2012 WL 2564523, at *4(E.D.N.Y. July 2,2012);see also Brown v. Braddick, 595
F.2d 961,965 (5th Cir. 1979)("Since Braddick failed to ask the district court for a stay pending

appeal and to post supersedeas bond as required by F.R.C.P. 62(d), the district court retained
power to enforce its order by civil contempt proceedings.")^ 11 Fed. Prac. & Proc. Civ. § 2905
(3d ed.)("In the absence ofa stay obtained in accordance with Rule 62(d), the pendency of an
appeal does not prevent the judgment creditor from acting to enforce the judgment.").
In the D.C. District Court, Venezuela followed this procedure and filed a Rule 62(d)

motion to stay the judgment against it pending appeal. However, since Venezuela failed to post

the required bond, and that failure could have injured Crystallex, Judge Contreras declined to
grant the requested stay. See Crystallex Int'l Corp. v. Bolivarian Republic of Venezuela, 16-cv661-RC D.I. 44 at 5-6(D.D.C. Aug. 8, 2017); of. Ministry ofDef & Supportfor Armed Forces of

Islamic Rep. ofIran v. Cubic Def Sys., Inc., 984 F. Supp. 2d 1070,1074-75,1098(S.D. Cal.
2013)(deciding, after confirmation ofarbitration award and finding that FSIA authorized
attachment of certain assets, to "immediately provide[] for execution on the attachment" while
"stay[ing] disbursement ofthe funds until the conclusion of any appeal," based on debtor's

depositing offunds with court and filing of Rule 62(d) motion to stay pending appeal).
As long as "a district court [does] not alter or enlarge the scope ofits judgment pending

appeal, it does retain jurisdiction to enforce the judgment," absent a stay pending appeal.
Cincinnati Bronze, 829 F.2d at 588;see also 20 Moore's Federal Practice § 303.32(2)(b)(vi)

'Rule 62(d)provides:"Ifan appeal is taken, the appellant may obtain a stay by supersedeas bond.
... The bond may be given upon or after filing the notice of appeal or after obtaining the order
allowing the appeal. The stay takes effect when the court approves the bond."

("[T]he district court may not enlarge or alter the scope ofthe judgment after a notice of appeal
has been filed."). Although the Court initially directed the Clerk of Court not to issue the writ in

its August 9 Order,the Court did grant "Crystallex's motion for an order authorizing the issuance
of a writ of attachmentfierifacias''(D.I. 78), so today's Order is not altering or enlarging the

scope ofthe Court's August 9judgment. Hence,today's decision is within the scope ofthe
Court's authority, notwithstanding the pending appeal.

Therefore, ifPDVSA wishes to prevent execution ofthe writ of attachment, it must file a

Rule 62(d) motion and post a supersedeas bond (or seek other appropriate relief). IfPDVSA
cannot furnish the bond and the Court denies tlie stay (for any reason),PDVSA does not lose the

right to appeal. See 11 Fed. Prac. & Proc. Civ. § 2905(3d ed.).

As Crystallex, CITGO,and RTSA acknowledge {see D.I. 86 at 3; D.I. 87 at 2; D.I. 92 at
2), the sale ofPDVH's shares will not begin until the Court separately issues an order of sale.
See 8 Del. C. § 324("No order of sale shall be issued until after final judgment shall have been
rendered.").

August 23,2018

HONORABLE LEONARD ^TAklC

Wilmington, Delaware

UNITED STATES DISTRICT COURT

IN THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF DELAWARE

CRYSTALLEX INTERNATIONAL

CORPORATION,
Plaintiff,
C.A. No. I7-mc-00151-UNA

V.

BOLIVARIAN REPUBLIC OF VENEZUELA,
Defendant.

PRAECIPE

TO:

Clerk ofCourt
United States District Court

844 North King St.
Wilmington, DE 19801-3570

PLEASE ISSUE to the U.S. Marshals Service the writ of attachmentfierifacias filed

with this Praecipe to attach all shares ofstock and any other assets or rights incident to that stock
ownership belonging or owing to Petroleos de Venezuela. S.A.. alter ego of Defendant and
Judgment Debtor Bolivarian Republic of Venezuela, to be served upon PDV Holding,Inc., c/o
its Registered Agent, Corporation Trust Company,1209 Orange Street, Wilmington,DE
19801.

/s/ Travis S. Hunter

Raymond J. DiCamillo(#3188)
Jeffrey L. Moyer(#3309)
OF COUNSEL:

Robert L. Weigel
Jason W. Myatt

Travis S. Hunter(#5350)
RICHARDS,LAYTON & FINGER,P.A.
One Rodney Square
920 North King Street

New York, New York 10166
Tel:[phone]
Fax:[phone]

Wilmington, Delaware 19801
Tel: [phone]
Fax: [phone]
[e-mail]
[e-mail]
[e-mail]

Dated: August 14,2017

Attorneysfor Plaintiff

Rahim Moloo

GIBSON,DUNN & CRUTCHER LLP
200 Park Avenue

IN THE UNITED STATES DISTRICT COURT FOR THE
DISTRICT OF DELAWARE

CRYSTALLEX INTERNATIONAL

CORPORATION,
Plaintiff,
C.A.NO. 17-mc-00151-UNA

BOLIVARIAN REPUBLIC OF VENEZUELA,
Defendant.

WRIT OF ATTACHMENT FIERIFACIAS

TO THE U.S. MARSHALS SERVICE,YOU ARE COMMANDED:

To serve this writ of attachmentfierifacias on PDV Holding,Inc., c/o its Registered Agent,

Corporation Trust Company,1209 Orange Street, Wilmington,DE 19801,to attach all
shares ofstock and any other assets or rights incident to that stock ownership belonging or owing
to Petroleos de Venezuela. S.A.("PDVSA"), alter ego ofDefendant and Judgment Debtor
Bolivarian Republic of Venezuela("Venezuela"),to satisfy the judgment owed to the above
named Plaintiff and Judgment Creditor Crystallex International Corporation ("Crystallex") by
Venezuela in the amount of$1,202,000,000.00, plus interest, according to the judgment ofthe
United States District Court ofthe District of Columbia, C.A. No. 16-cv-661 (RC), which has
been registered by the United States District Court for the District of Delaware in this
proceeding.
To the defendant's garnishee who is served this paper:

The United States District Court for the District of Delaware requires, within 20 days after
service ofthis process, that you serve upon Raymond J. DiCamillo of Richards, Layton &
Finger,P.A., One Rodney Square,920 North King Street, Wilmington,Delaware 19801,
telephone [phone],a verified answer, which shall specify what shares ofstock and other
assets or rights incident to that stock ownership belonging to or owing to PDVSA,as alter ego of
Defendant and Judgment Debtor Venezuela, you currently possess. You must do this within 20
days after service of this writ upon you, not counting the day that you received this writ.
Your failure to respond may result in a defaultjudgment against you in an amount equal to the
value ofthe property subject to the attachment, or the amount ofthe judgment, whichever is less,
with interest and costs. As the Garnishee, you are to retain the items stated by you in your
answer. You are to hold these items until another order ofthis Court releases you from this
obligation.
The amount ofthe judgment owed by Venezuela is as follows:

Principal:

$1,202,000,000.00

Pre-award interest from April 13,2008 to April 4,2016
(the date ofthe Award)at a rate ofthe 6-month average
U.S. Dollar LIBOR plus 1%,compounded annually
TOTAL:

$184,663,586.22

$1,386,663,586.22

Clerk of Court

Issued:

per Deputy:

By Attorneys: Raymond J. DiCamillo (#3188), Jeffrey L. Moyer (#3309), and Travis S. Hunter
(#5350), Richards, Layton & Finger, P.A., One Rodney Square, 920 North King Street,
Wilmington, Delaware 19801, 302-651-7700.