Viewpoint Professionals LLC v. National Investment Company
Filing
70
MEMORANDUM OPINION AND ORDER: For the foregoing reasons, Viewpoint has failed to establish that an exception to the FSIA applies to the conduct alleged in the AC and, accordingly, NIC's motion to dismiss the AC pursuant to Federal Rule of C ivil Procedure 12(b)(1) for lack of subject matter jurisdiction is granted. The Court need not consider the remaining aspects of NIC's motion to dismiss. This Memorandum Opinion and Order resolves docket entry no. 34. The Clerk of Court is respectfully requested to enter judgment for Defendants and close this case, and as further set forth in this order. Motions terminated: 34 MOTION to Dismiss for Lack of Jurisdiction /Notice of Motion to Dismiss the Amended Complaint, filed by National Investment Company. (Signed by Judge Laura Taylor Swain on 9/14/2017) (ap) Modified on 9/14/2017 (ap).
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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VIEWPOINT PROFESSIONALS LLC,
Plaintiff,
-v-
No. 16 CV 1468-LTS
NATIONAL INVESTMENT COMPANY,
Defendant.
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MEMORANDUM OPINION AND ORDER
Plaintiff Viewpoint Professionals LLC (“Viewpoint”) brought this suit seeking
breach of contract and other tort damages against Defendant National Investment Company
(“NIC”). (Docket entry no. 31, Amended Complaint (“AC”).) NIC is an agency and
instrumentality of the government of Libya. (AC ¶¶ 2, 4.)
Before the Court is NIC’s motion, pursuant to Federal Rules of Civil Procedure
12(b)(1), 12(b)(2), 12(b)(6), and the doctrine of forum non conveniens, to dismiss the AC,
arguing that this Court lacks jurisdiction of this dispute under the Foreign Sovereign Immunities
Act (“FSIA”), that the Court lacks personal jurisdiction over NIC, and that the contract at issue is
governed by a forum selection clause. The Court has considered the submissions of the parties
carefully and, for the following reasons, the Court finds that it lacks subject matter jurisdiction
and motion to dismiss is granted.
BACKGROUND
The following recitation of facts relevant to the disposition of the instant motion
is drawn from the AC, which is taken as true for purposes of these motions, and from documents
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integral to the AC, which the Court has determined are incorporated into the AC by reference
because the AC explicitly references the documents in question and relies upon their terms.
Chambers v. Time Warner, Inc., 282 F.3d 147, 153 (2d Cir. 2002).
In May 2009, Viewpoint and NIC entered into an agreement (the “2009
Agreement”) wherein Viewpoint agreed to serve as the general contractor for a construction
project on the waterfront of Tripoli, Libya. (AC ¶ 9; see also docket entry no. 37, Declaration of
Bashir Derwish (“Derwish Decl.”), Ex. 3 (the 2009 Agreement).) Attachment 1 to the 2009
Agreement identifies specific contract values, denominated in U.S. dollars, that would be owing
to Viewpoint upon performance of its obligations under the contract. (2009 Agreement,
Attachment 1.) Those values included $14,789,000 for material supplies, $475,000 for
engineering drawings, and a final guarantee payment of $318,000. (Id.) The 2009 Agreement
authorized NIC to withhold 5% of the total value of materials until “[a]fter installation of these
materials and equipment according to technical specifications,” and another 5% of the total value
of materials until “completion of primary receipt of all works of the contract.” (Id. Art. 11.)
In July 2009, NIC issued a letter of credit (the “LOC”) for the benefit of
Viewpoint in connection with the 2009 Agreement. (AC ¶ 6; Derwish Decl. Ex. 6 (the LOC).)
NIC’s payments to Viewpoint under the 2009 Agreement were to be disbursed, pursuant to the
LOC, by JPMorgan Chase Bank in New York, New York. (AC ¶ 6, LOC at 41A) The LOC was
issued in the amount of $15,303,400. (LOC at 32B.) The LOC specifically referred to the
payment amounts called for by the 2009 Agreement: $14,789,000 for “building materials and
equipments [sic]” and $475,000 for “designs.” (LOC at 45A.) Also as provided in the 2009
Agreement, the LOC contemplated payment of 90% of the value of materials on an ongoing
basis, with 5% of the materials cost to be paid “after final erection against presentation of a
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certificate issued and signed by the beneficiary [Viewpoint] and authenticated by the applicant
[NIC]” and a final 5% of the materials cost to be paid “against presentation of provisional taking
over certificate signed by the beneficiary [Viewpoint] and authenticated by the applicant [NIC].”
(LOC at 47A(1)(B)-(D).)
Viewpoint alleges that NIC requested additional work be done on the project
while it was underway, which Viewpoint agreed to perform. (AC ¶ 12.) Viewpoint alleges that
there was an agreement to generate a second written contract to cover that additional work, but
that agreement was never reduced to writing. (AC ¶ 13.)
Viewpoint seeks damages in the form of the final 10% of the value of materials
withheld by NIC pursuant to the 2009 Agreement, which Viewpoint argues is due and owing,
and a further $19,029,990 in contract or quantum meruit damages based on invoices issued
relating to the additional specifications. Viewpoint also seeks damages for conversion of
$100,000 of Viewpoint’s property by NIC. (AC ¶¶ 21-26.)
DISCUSSION
The Court must first address whether it has subject matter jurisdiction of this case.
“A plaintiff asserting subject matter jurisdiction has the burden of proving by a preponderance of
the evidence that it exists.” Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000). A
case must be dismissed for lack of subject matter jurisdiction where “the district court lacks the
statutory or constitutional power to adjudicate it.” Id.
Pursuant to the FSIA, 28 U.S.C. § 1604, foreign states and their agencies and
instrumentalities are presumptively immune from the jurisdiction of the courts of the United
States, unless a statutory exception to immunity applies. “[I]f the claim does not fall within one
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of the exceptions, federal courts lack subject matter jurisdiction” of the claim, as well as personal
jurisdiction over the foreign state defendant. Verlinden B.V. v. Central Bank of Nigeria, 461
U.S. 480, 489 & n.14 (1983). One of the exceptions to the FSIA provides that a foreign state is
not immune from suit if the claims at issue are based upon “an act outside the territory of the
United States in connection with a commercial activity of the foreign state elsewhere and that act
causes a direct effect in the United States.” 28 U.S.C.S. § 1605(a)(2) (LexisNexis 2014). This is
one of three ‘commercial activity’ exceptions to sovereign immunity that are codified in Section
1605(a)(2). The Second Circuit has held that “an action to enforce ... foreign judgments in U.S.
courts must fail for lack of subject matter jurisdiction” where “the acts upon which the . . .
judgments are themselves grounded do not meet the ‘based upon’ requirement of Section
1605(a)(2) of the FSIA.” Transatlantic Shiffahrtskontor GMBH v. Shanghai Foreign Trade
Corp., 204 F.3d 384, 391 (2d Cir. 2000).
In the instant case, it is uncontested that NIC is an agency or instrumentality of
Libya, and therefore is generally immune from liability under FSIA unless a statutory exception
applies. Viewpoint relies solely on the Section 1605(a)(2) exception to the FSIA’s general
immunity from jurisdiction. Specifically, Viewpoint argues that the payments it was due under
the LOC were made from New York, and therefore NIC’s failure to make those payments had a
direct effect in the United States. As a general matter, and as NIC concedes, Viewpoint is
correct that the Section 1605(a)(2) requirement of a direct effect in the United States can be
satisfied by a defendant’s failure to honor a letter of credit lodged in a New York bank. In Hanil
Bank v. PT. Bank Negara Indonesia (Persero), the Second Circuit held that “failure to remit
funds in New York, as contractually obligated, had a direct effect in the United States.” 148
F.3d 127, 132 (2d Cir. 1998).
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Viewpoint’s claims in this action, however, cannot be tied to a failure to pay
under the LOC. By its terms, the LOC expired on June 17, 2010. Accordingly, after June 17,
2010, none of Viewpoint’s damages can be traced to a failure to pay on a letter of credit lodged
in a New York bank, because no such letter existed. The allegations in the AC, read in the light
most favorable to Viewpoint, indicate that Viewpoint left the worksite in Tripoli in the spring of
2011—after the LOC expired. There are no allegations in the AC that the two certificates of
completion contemplated by the 2009 Agreement and required by the LOC before the final 10%
of material costs could be remitted to Viewpoint were ever signed, nor even that Viewpoint had
actually completed all of the work required under the 2009 Agreement prior to the expiration of
the LOC. Simply put, the AC and the supplemental material submitted by Plaintiff in connection
with this motion practice are entirely devoid of factual allegations from which the Court could
conclude that Viewpoint’s entitlement to the final 10% of material costs arose before the LOC
expired in June 2010. Accordingly, Viewpoint has not shown that NIC’s failure to pay the final
10% of material costs—representing $1,804,500 in damages claimed in Viewpoint’s breach of
contract and quantum meruit claims—caused a direct effect in the United States and,
accordingly, NIC is protected by the FSIA’s general immunity from the jurisdiction of this
Court.
Similarly, with respect to the remaining amounts claimed by Viewpoint, the lack
of a related letter of credit lodged with a bank in the United States means that Viewpoint cannot
show a direct effect in the United States resulting from NIC’s alleged failure to pay. Viewpoint
concedes, in its opposition brief to the instant motion, that “no letter of credit was ever created
for this additional money, but NIC promised a letter of credit for it.” (Docket entry no. 49, Pl.’s
Mem. of Law in Opp., at 16.) Viewpoint has submitted no facts indicating that this promise,
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and NIC’s alleged failure to honor it, resulted in direct effects in the United States. Accordingly,
NIC is protected by the FISA’s general immunity from the jurisdiction of this Court as to
Viewpoint’s claim for the remaining $19,029,990.
Viewpoint has also failed to allege or establish any direct effect in the United
States on its claim for $100,000 in converted property and, for substantially the same reasons,
NIC is protected by immunity as to that claim as well.
CONCLUSION
For the foregoing reasons, Viewpoint has failed to establish that an exception to
the FSIA applies to the conduct alleged in the AC and, accordingly, NIC’s motion to dismiss the
AC pursuant to Federal Rule of Civil Procedure 12(b)(1) for lack of subject matter jurisdiction is
granted. The Court need not consider the remaining aspects of NIC’s motion to dismiss.
This Memorandum Opinion and Order resolves docket entry no. 34. The Clerk of
Court is respectfully requested to enter judgment for Defendants and close this case.
SO ORDERED.
Dated: New York, New York
September 14, 2017
/s/ Laura Taylor Swain
LAURA TAYLOR SWAIN
United States District Judge
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