Hilt Construction & Management Corporation v. The Permanent Mission of Chad to the United Nations in New York et al
Filing
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OPINION AND ORDER re: 19 FIRST MOTION to Dismiss SUMMONS AND COMPLAINT. filed by The Permanent Mission of Chad to the United Nations in New York, Cherif Mahamat Zene. The motion to dismiss is GRANTED WITH PREJUDICE as to defendant Ch erif Mahamat Zene. The motion to dismiss is GRANTED WITHOUT PREJUDICE as to defendant The Permanent Mission of Chad to the United Nations in New York. The Clerk is instructed to terminate the motion (Doc. #19) and close this case. (Signed by Judge Vincent L. Briccetti on 6/14/2016) (rj)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
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HILT CONSTRUCTION & MANAGEMENT
:
CORPORATION,
:
Plaintiff,
:
:
v.
:
:
THE PERMANENT MISSION OF CHAD TO :
THE UNITED NATIONS IN NEW YORK and :
CHERIF MAHAMAT ZENE,
:
Defendants.
:
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OPINION AND ORDER
15 CV 8693 (VB)
Briccetti, J.:
Plaintiff Hilt Construction & Management Corporation (“Hilt Construction”) brings this
action for breach of contract, quantum meruit, and account stated against The Permanent Mission
of Chad to the United Nations in New York (the “Mission”) and its Permanent Representative
and Head of Mission, Ambassador Cherif Mahamat Zene (“Ambassador Zene”).
Defendants move to dismiss under Fed. R. Civ. P. 12(b)(1), 12(b)(2), 12(b)(3), 12(b)(4),
12(b)(5), and 12(b)(6), the Foreign Sovereign Immunities Act, and the Vienna Convention on
Diplomatic Relations. (Doc. #19).
For the reasons set forth below, the motion to dismiss is GRANTED WITH PREJUDICE
as to Ambassador Zene, and GRANTED WITHOUT PREJUDICE as to the Mission.
BACKGROUND
In deciding the pending motion, the Court accepts as true all well-pleaded allegations in
the complaint and opposition briefs, and draws all reasonable inferences in plaintiff’s favor.
On October 27, 2014, the parties entered into a contract for the renovation of “an 1859
Gothic Revival style landmark structure building in New Rochelle, New York, which would
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officially be the Ambassador’s Residence.” (Affidavit of Ajaz Ahmed in support of plaintiff’s
opposition to the motion to dismiss (“Ahmed Aff.”) at ¶ 4).
The original contract price was $2,853,350. Plaintiff alleges defendants requested
additional work, for which plaintiff billed an additional $1,009,018. (Ahmed Aff. at ¶ 41).
Plaintiff alleges $1,400,460 of the total billed amount remains unpaid.
Plaintiff commenced this action on November 5, 2015. Plaintiff states that “[a]fter filing
the action with the Clerk . . . [p]laintiff attempted personal service of the Summons and
Complaint on both Defendants pursuant to 28 U.S.C. § 1608(a)(1), based on the working
relationship between the parties, directly at the Mission headquarters at 801 Second Avenue,
New York, New York.” (Plaintiff’s Memorandum of Law in Opposition to Defendants’ Motion
to Dismiss (“Pls. Opp.”) at 5). Defendants thereafter moved to dismiss. (Doc. # 19).
DISCUSSION
I.
Legal Standards
A.
Subject Matter Jurisdiction
“[F]ederal courts are courts of limited jurisdiction and lack the power to disregard such
limits as have been imposed by the Constitution or Congress.” Durant, Nichols, Houston,
Hodgson, & Cortese-Costa, P.C. v. Dupont, 565 F.3d 56, 62 (2d Cir. 2009) (internal quotation
marks omitted). “A case is properly dismissed for lack of subject matter jurisdiction under Rule
12(b)(1) when the district court lacks the statutory or constitutional power to adjudicate it.”
Nike, Inc. v. Already, LLC, 663 F.3d 89, 94 (2d Cir. 2011) (internal quotation marks omitted).
The party invoking the Court’s jurisdiction bears the burden of establishing that jurisdiction
exists. Conyers v. Rossides, 558 F.3d 137, 143 (2d Cir. 2009).
When, as here, the case is at the pleading stage, in deciding a motion to dismiss under
Rule 12(b)(1), the Court “must accept as true all material facts alleged in the complaint and draw
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all reasonable inferences in the plaintiff’s favor.” Id. But “argumentative inferences favorable to
the party asserting jurisdiction should not be drawn.” Buday v. N.Y. Yankees P’ship, 486 F.
App’x 894, 895 (2d Cir. 2012) (summary order) (quoting Atl. Mut. Ins. Co. v. Balfour Maclaine
Int’l Ltd., 968 F.2d 196, 198 (2d Cir. 1992)) (internal quotation marks omitted). When a factual
challenge to the Court’s jurisdiction has been raised, “the court may resolve [any] disputed
jurisdictional fact issues by referring to evidence outside of the pleadings, such as affidavits.”
Zappia Middle E. Constr. Co. v. Emirate of Abu Dhabi, 215 F.3d 247, 253 (2d Cir. 2000); accord
Makarova v. United States, 201 F.3d 110, 113 (2d Cir. 2000) (“In resolving a motion to dismiss
for lack of subject matter jurisdiction . . . a district court, as it did here, may refer to evidence
outside the pleadings.”).
B.
Insufficient Service of Process
“Where a defendant moves for dismissal under Rules 12(b)(2), (5), and (6), the Court
must first address the preliminary questions of service and personal jurisdiction.” Hertzner v.
U.S. Postal Serv., 2007 WL 869585, at *3 (E.D.N.Y. Mar. 20, 2007) (internal citations omitted).
When considering a motion to dismiss pursuant to 12(b)(5) for insufficient service of process,
courts must look to matters outside the complaint to determine whether it has jurisdiction.
Mende v. Milestone Tech., Inc., 269 F. Supp. 2d 246, 251 (S.D.N.Y. 2003). Plaintiff bears the
burden of proving service of process was adequate. Id.
II.
Ambassador Zene
Defendants argue the Court does not have subject matter jurisdiction over Ambassador
Zene because he enjoys diplomatic immunity.
The Court agrees.
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The United States is a signatory to the Vienna Convention on Diplomatic Relations
(“Vienna Convention”), which accords diplomatic agents diplomatic immunity. See United
States v. Khobragade, 15 F. Supp. 3d 383, 385 (S.D.N.Y. 2014).
Congress implemented the Vienna Convention in 1978 in 22 U.S.C. § 254d, which states:
Any action or proceeding brought against an individual who is
entitled to immunity with respect to such action or proceeding under
the Vienna Convention on Diplomatic Relations, under section 254b
or 254c of this title, or under any other laws extending diplomatic
privileges and immunities, shall be dismissed. Such immunity may
be established upon motion or suggestion by or on behalf of the
individual, or as otherwise permitted by law or applicable rules of
procedure.
As a result, “[u]nder 22 U.S.C. § 254d, a district court must dismiss any action or
proceeding brought against an individual who is entitled to immunity” under the Vienna
Convention. Swarna v. Al-Awadi, 622 F.3d 123, 133 (2d Cir. 2010) (internal quotation omitted)
(emphasis added).
The head of a United Nations mission is indisputably a “diplomatic agent.” Vienna
Convention, 23 U.S.T. 3227, Art. 1(e) (“A ‘diplomatic agent’ is the head of the mission or a
member of the diplomatic staff of the mission.”).
It is well-settled that “sitting diplomats are accorded near-absolute immunity in the
receiving state to avoid interference with the diplomat’s service for his or her government.”
Swarna v. Al-Awadi, 622 F.3d at 137.
However, under the Vienna Convention, certain exceptions to immunity apply.
Specifically, Article 31(1) of the Vienna Convention provides:
A diplomatic agent shall enjoy immunity from the criminal
jurisdiction of the receiving State. He shall also enjoy immunity
from its civil and administrative jurisdiction, except in the case of:
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a) a real action relating to private immovable property situated in
the territory of the receiving State, unless he holds it on behalf
of the sending State for the purposes of the mission;
b) an action relating to succession in which the diplomatic agent is
involved as executor, administrator, heir or legatee as a private
person and not on behalf of the sending State;
c) an action relating to any professional or commercial activity
exercised by the diplomatic agent in the receiving State outside
his official functions.
Vienna Convention, art. 31(1), April 18, 1961, 23 U.S.T. 3227, T.I.A.S. No. 7502 (entered into
force in U.S. Dec. 13, 1972) (emphasis added).
Thus, Ambassador Zene enjoys diplomatic immunity unless one of the exceptions in
Article 31(1) applies.
Plaintiff argues the exception to immunity stated in Article 31(1)(c) applies because the
contract for the renovation of the Ambassador’s house qualifies as a “commercial activity”
“peripheral to” his official functions. (Opp. at 9).
The Court disagrees.
On its face, Article 31(1)(c) only applies to commercial activity exercised “outside of
[the] official functions” of the diplomatic agent.
Here, there can be little doubt Ambassador Zene was acting purely within his official
functions when he contracted for the renovation of the Ambassador’s official residence.
Defendants assert, and plaintiffs do not dispute, that “the Permanent Mission of Chad, through
Ambassador Cheriff Mahamat Zene, hired Plaintiff on behalf of the Mission of Chad to renovate
a property belonging to the Mission.” (Defs’ Br. at 13) (emphasis added). This assertion is
supported by the underlying documents. The first sentence of the contract states: “The
Permanent Mission of the Republic of Chad to the United Nations intends to renovate its
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Ambassador’s residence.” (Affirmation of Ryanne Konan in Support of Defs’ Motion (“Konan
Aff.”) at Ex. A, p. 1). Furthermore, correspondence between the parties clearly identifies
Ambassador Zene as the “representative” of the Mission. (Id. at Ex. H, n.1).
Because the contract for the renovation of the Ambassador’s official residence was
undertaken by the Mission through Ambassador Zene as its representative, the Court is satisfied
Ambassador Zene was acting within his official functions when he oversaw the project. As a
result, the “commercial activity” exception does not apply to Ambassador Zene, and he is
immune from this lawsuit. The Court therefore does not have subject matter jurisdiction over the
claims against Ambassador Zene.
Since the Court lacks subject matter jurisdiction as to Ambassador Zene, it need not
address defendants’ alternate arguments with respect to him. Rhulen Agency, Inc. v. Alabama
Ins. Guar. Ass’n, 896 F.2d 674, 678 (2d Cir. 1990) (if the court “must dismiss the complaint for
lack of subject matter jurisdiction, the accompanying defenses and objections become moot and
do not need to be determined”) (internal citation omitted).
Accordingly, plaintiff’s claims against Ambassador Zene are dismissed with prejudice.
III.
The Mission
Defendants argue the complaint should be dismissed against the Mission on several
grounds: (i) lack of subject matter jurisdiction, (ii) lack of personal jurisdiction, (iii) improper
venue, (iv) because the Mission’s assets are immune against execution and levy under the
Vienna Convention, and (v) for failure to state a claim upon which relief can be granted.
The Court concludes it has subject matter jurisdiction, but lacks personal jurisdiction
because the Mission was not properly served in accordance with the applicable law. The
remainder of defendants’ arguments are unavailing.
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A.
Subject Matter Jurisdiction
Defendants argue the Court lacks subject matter jurisdiction over the claims against the
Mission because it enjoys foreign state immunity.
The Foreign Sovereign Immunities Act (“FSIA”) “is the sole basis for obtaining
jurisdiction over a foreign state in federal court.” Samantar v. Yousuf, 560 U.S. 305, 314 (2010)
(internal quotations omitted). Under the FSIA, “a federal court lacks subject-matter jurisdiction
over a claim against a foreign state,” unless “a specified exception applies.” Saudi Arabia v.
Nelson, 507 U.S. 349, 355 (1993).
A country’s Mission to the United Nations is a “foreign state” within the meaning of
FSIA. USAA Cas. Ins. Co. v. Permanent Mission of Republic of Namibia, 681 F.3d 103, 107
(2d Cir. 2012) (“A foreign state’s permanent mission to the United Nations is indisputably the
‘embodiment’ of that state.”).
There are several enumerated exceptions to the immunity granted to foreign states by the
FSIA. In particular, here, plaintiff argues the “commercial activity” exception applies. Under
that exception, “[a] foreign state shall not be immune from the jurisdiction of courts of the
United States or of the States in any case . . . in which the action is based upon a commercial
activity carried on in the United States by the foreign state.” 28 U.S.C. § 1605(a)(2) (emphasis
added).
The parties dispute whether a construction contract for the renovation of a diplomat’s
residence can be considered a “commercial activity.”
The FSIA defines “commercial activity” as:
[E]ither a regular course of commercial conduct or a particular
commercial transaction or act. The commercial character of an
activity shall be determined by reference to the nature of the course
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of conduct or particular transaction or act, rather than by reference
to its purpose.
28 U.S.C. § 1603(d).
Defendants argue a contract to renovate a building does not qualify as “commercial
activity” because “[t]he Mission did not perform an action by which a private party engages in
trade and traffic or commerce, nor did the Mission acquire any goods from Plaintiff.” (Defs’ Br.
at 15). They appear to draw a distinction between “deliver[ing] construction material and
services” and “renovat[ing] the premises,” arguing the former would constitute commercial
activity, but not the latter. Defendants further argue that “engaging a contractor to renovate the
premises of a foreign state in order to further its diplomatic mission is a power peculiar to
sovereigns,” and is therefore part of the political and governmental “core functions” of the
Mission.
The Court disagrees.
“The commercial character of a course of activity or particular transaction is determined
by reference to the nature of the activity, not its purpose.” Hilaturas Miel, S.L. v. Republic of
Iraq, 573 F. Supp. 2d 781, 793 (S.D.N.Y. 2008). “An activity is commercial if it is ‘the type of
action[] by which a private party engage[s] in trade and traffic or commerce.’” Id. at 793-94
(quoting Republic of Argentina v. Weltover, 504 U.S. 607, 614 (1992)).
Construction contracts are “undeniably commercial.” Lewis & Kennedy, Inc. v.
Permanent Mission of Republic of Botswana to the U.N., 2005 WL 1621342, *3 (S.D.N.Y. July
12, 2005) (internal citations omitted); see also U.S. Fidelity and Guar. Co. v. Braspetro Oil
Servs. Co., 199 F.3d 94, 98 (2d Cir. 1999) (noting defendants’ commercial construction projects
constituted commercial activity). As a result, the Mission is not immune from suit.
Accordingly, the Court has subject matter jurisdiction over the Mission in this case.
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B.
Personal Jurisdiction
Defendants argue the Court lacks personal jurisdiction over the Mission because the
service of process upon the Mission was defective and, accordingly, the claims against the
Mission should be dismissed.
The Court agrees.
“Before a federal court may exercise personal jurisdiction over a defendant, the
procedural requirement of service of summons must be satisfied.” Dynegy Midstream Servs. v.
Trammochem, 451 F.3d 89, 94 (2d Cir. 2008) (internal quotations omitted).
“A foreign state . . . must be served in accordance with 28 U.S.C. § 1608.” Fed. R. Civ.
P. 4(j)(1).
Section 1608(a), part of the FSIA, requires that service on a foreign state must be effected
in one of four ways:
(1) by delivery of a copy of the summons and complaint in
accordance with any special arrangement for service between the
plaintiff and the foreign state or political subdivision; or
(2) if no special arrangement exists, by delivery of a copy of the
summons and complaint in accordance with an applicable
international convention on service of judicial documents; or
(3) if service cannot be made under paragraphs (1) or (2), by
sending a copy of the summons and complaint and a notice of suit,
together with a translation of each into the official language of the
foreign state, by any form of mail requiring a signed receipt, to be
addressed and dispatched by the clerk of the court to the head of the
ministry of foreign affairs of the foreign state concerned, or
(4) if service cannot be made within 30 days under paragraph (3),
by sending two copies of the summons and complaint and a notice
of suit, together with a translation of each into the official language
of the foreign state, by any form of mail requiring a signed receipt,
to be addressed and dispatched by the clerk of the court to the
Secretary of State in Washington, District of Columbia, to the
attention of the Director of Special Consular Services—and the
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Secretary shall transmit one copy of the papers through diplomatic
channels to the foreign state and shall send to the clerk of the court
a certified copy of the diplomatic note indicating when the papers
were transmitted.
As used in this subsection, a “notice of suit” shall mean a notice
addressed to a foreign state and in a form prescribed by the Secretary
of State by regulation.
“Courts have been unequivocal that § 1608(a) mandates strict adherence to its terms, not
merely substantial compliance.” Lewis & Kennedy, Inc. v. Permanent Mission of the Republic
of Botswana to the U.N., 2005 WL 1621342, at *3 (internal quotations omitted) (emphasis
added). Moreover, “[w]hether or not [defendants] received actual notice of the suit is irrelevant
when strict compliance is required,” as it is here. Finamar Inv’rs, Inc. v. Republic of
Tadjikistan, 889 F. Supp. 114, 118 (S.D.N.Y. 1995).
Plaintiff argues it has complied with the FSIA because it “attempted personal service of
the Summons and Complaint on both Defendants, pursuant to 28 U.S.C. § 1608(a)(1), based on
the working relationship between the parties, directly at the Mission headquarters at 801 Second
Avenue, New York, New York.” (Opp. at 5). However, “[c]ourts require a more definite
manifestation of agreement when determining that a special arrangement has been made, such as
a contract provision specifying a method of service in the event of suit.” Pablo Star Ltd. v. The
Welsh Gov’t, 2016 WL 1056590, at *4 (S.D.N.Y. March 16, 2016). No such manifestation of
agreement is present here.
Turning next to Section 1608(a)(2), the parties agree there is no applicable international
convention on service of judicial documents that applies to the parties. As a result, Section
1608(a)(2) is inapplicable.
Thus, plaintiff is required to comply with either Section 1608(a)(3) or, if it is unable to
perfect service under that subsection within thirty days, it must comply with Section 1608(a)(4).
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Plaintiff admits it has not yet complied with either of these methods of service. It states
that it has “commenced the groundwork” to perfect service under Section 1608(a)(3), and “has
made, and continues to make, diligent effort to serve Defendants properly.” (Opp. at 11).
Plaintiff has not strictly complied with the service requirements of the FSIA. As a result,
the Court does not currently have personal jurisdiction over the Mission, and the complaint must
be dismissed without prejudice. Kirkendall v. Univ. of Conn. Health Ctr., 2000 WL 232071, *1
(2d Cir. 2000) (where service was improper, “the District Court did not have personal
jurisdiction over the individual defendants in their individual capacities and properly dismissed
the claims against them without prejudice”).
C.
Venue
Defendants argue venue is not proper in the Southern District of New York and therefore
the case should be dismissed under Rule 12(b)(3). Venue over foreign states is governed by 28
U.S.C. § 1391, which states in pertinent part: “A civil action against a foreign state as defined in
section 1603(a) of this title may be brought . . . in any judicial district in which a substantial part
of the events or omissions giving rise to the claim occurred, or a substantial part of property that
is the subject of the action is situated.” 28 U.S.C. § 1391(f)(1).
Here, the property that is the subject of the action is located in the Southern District of
New York, and all or substantially all of the events giving rise to the claim occurred within this
District. Thus, there is a clear nexus to the Southern District of New York.
Accordingly, venue is proper in this District.
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D.
Immunity of Assets Against Execution
Defendants argue the Court should dismiss the case because the Mission’s assets are
immune against execution and levy and thus, even if plaintiff succeeds in its lawsuit, it will be
unable to enforce a judgment. They cite Article 22 of the Vienna Convention, which states:
1. The premises of the mission shall be inviolable. The agents of
the receiving State may not enter them, except with the consent
of the head of the mission.
2. The receiving State is under a special duty to take all appropriate
steps to protect the premises of the mission against any intrusion
or damage and to prevent any disturbance of the peace of the
mission or impairment of its dignity.
3. The premises of the mission, their furnishings and other property
thereon and the means of transport of the mission shall be
immune from search, requisition, attachment or execution.
Vienna Convention, art. 22, Apr. 18, 1961, T.I.A.S. No. 7502, 23 U.S.T. 3227.
Although foreign missions and their premises are immune from attachment and execution
under the Vienna Convention, the Second Circuit has held that missions are not immune from
judgments against them. 767 Third Ave. Assocs. v. Permanent Mission of Zaire to the U.N., 988
F.2d 295, 300 (2d Cir. 1993) (finding a space leased by the Mission of the Republic of Zaire was
inviolable, but noting this did not mean plaintiff was left “wholly without a remedy,” because the
district court could award monetary damages in favor of the plaintiff); see also Foxworth v.
Permanent Mission of Republic of Uganda to the U.N., 796 F. Supp. 761, 764 (S.D.N.Y. 1992)
(“The [Vienna Convention] do[es] not immunize defendant from being haled into court.”).
Accordingly, dismissal on this ground is not warranted.
E.
Failure to State a Claim
Defendants reference Rule 12(b)(6) and state in a section heading that “The Complaint
Fails to State a Claim,” but they include no arguments relevant to the Rule 12(b)(6) standards,
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instead reiterating their jurisdictional arguments. (See Reply at 4-5). In any event, the Court
finds the complaint meets the standards articulated in Ashcroft v. Iqbal, 556 U.S. 662, 679
(2009), and Bell Atl. Corp. v. Twombly, 550 U.S. 544, 564 (2007). Accordingly, to the extent
the Mission seeks dismissal on Rule 12(b)(6) grounds, that motion is denied.
CONCLUSION
The motion to dismiss is GRANTED WITH PREJUDICE as to defendant Cherif
Mahamat Zene.
The motion to dismiss is GRANTED WITHOUT PREJUDICE as to defendant The
Permanent Mission of Chad to the United Nations in New York.
The Clerk is instructed to terminate the motion (Doc. #19) and close this case.
Dated: June 14, 2016
White Plains, NY
SO ORDERED:
____________________________
Vincent L. Briccetti
United States District Judge
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