Suraleb Inc v. Production Association "Minsk Tractor Works" Republic of Belarus

Filing 15

ORDER signed by Judge Rudolph T Randa on 6/25/10 granting Suralebs motion for leave to file a surreply [D. 14] and denying in part and granting in part 9 MTW's Motion to Dismiss consistent with this opinion. (cc: all counsel) (Randa, Rudolph)(dm)

UNITED STATES DISTRICT COURT E A S T E R N DISTRICT OF WISCONSIN

S U R A L E B , Inc., P l a in tif f , C a s e No. 10-C-104 -vsP R O D U C T I O N ASSOCIATION "MINSK T R A C T O R WORKS," REPUBLIC OF BE LA RUS, Defendant.

D E C IS IO N AND ORDER

P u rsu a n t to a contract executed in 2000, Suraleb, Inc. ("Suraleb") collected property d u e on certain debts on behalf of Production Association "Minsk Tractor Works" ("MTW"), a company owned and operated by the Republic of Belarus. In return, MTW agreed to pay S u r a le b a percentage of the recovered value. The parties disagreed about the worth of the c o lle c te d assets, so they submitted to arbitration in Stockholm, Sweden. In 2006, the a rb itra tio n panel issued an award in favor of Suraleb. This award was confirmed by the U n ite d States District Court for the Northern District of Illinois. Suraleb, Inc. v. Production A s s o c ia t io n "Minsk Tractor Works", Case No. 06-3496 (N.D. Ill.). In an attempt to execute on certain assets located in Wisconsin, Suraleb brought the in sta n t lawsuit in Milwaukee County Circuit Court. MTW is an agency or instrumentality o f a foreign state under the Foreign Sovereign Immunities Act ("FSIA"), 28 U.S.C. §§ 1 6 0 3 (a ), (b). Therefore, MTW's removal was proper under 28 U.S.C. § 1441(d), which

p ro v id e s that any civil action against a "foreign state as defined in section 1603(a) of this title m a y be removed by the foreign state to the district court of the United States for the district a n d division embracing the place where such action is pending." U n b e k n o w n st to MTW, the circuit court dismissed Suraleb's action for want of p ro s e c u tio n just seven days prior to removal, but the state court's dismissal does not in v a lid a te the subsequent removal. "The proper analysis in determining whether a removable c a se existed does not examine whether the order was final at the time entered, but whether th e order was still subject to the state court's modification or jurisdiction at the time of re m o v a l." Holmes v. AC & S, Inc., 388 F. Supp. 2d 663, 668 (E.D. Va. 2004); Aiken v. W a ffle House, Inc., 509 F. Supp. 2d 541, 545 (D.S.C. 2007). The dismissal order was subject to modification in state court under Wis. Stat. § 806.07, which allows motions for relief from ju d g m e n t to be filed within a "reasonable time . . . not more than one year after the judgment w a s entered . . ." This Court can now vacate the order of dismissal and proceed accordingly. S e e Laney ex rel. Laney v. Schneider Nat. Carriers, Inc., 259 F.R.D. 562, 565 (N.D. Okla. 2 0 0 9 ) ("After removal of an action to federal district court, `[a]ll injunctions, orders, and o th e r proceedings had in such action prior to its removal shall remain in full force and effect u n til dissolved or modified by the district court'") (quoting 28 U.S.C. § 1450). U n d e r Federal Rule of Civil Procedure 8(a)(2), a pleading must contain a "short and p la in statement of the claim showing that the pleader is entitled to relief." A pleading that o f f ers "labels and conclusions" or "a formulaic recitation of the elements of a cause of action w ill not do." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). To survive a motion to

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d ism iss , a complaint must contain sufficient factual matter, accepted as true, to "state a claim to relief that is plausible on its face." Twombly at 570. Determining whether a complaint states a plausible claim for relief is a "context-specific task that requires the reviewing court to draw on its judicial experience and common sense." Ashcroft v. Iqbal, -- U.S. --, 129 S . Ct. 1937, 1950 (2009). Ultimately, a defendant is owed "fair notice of what the . . . claim is and the grounds upon which it rests." Conley v. Gibson, 355 U.S. 41, 47 (1957). "Our syste m operates on a notice pleading standard; Twombly and its progeny do not change this f a ct." Bissessur v. Ind. Univ. Bd. of Trs., 581 F.3d 599, 603 (7th Cir. 2009); Smith v. Duffey, 5 7 6 F.3d 336, 339-40 (7th Cir. 2009) (noting courts' over reliance on Twombly). In federal court, a "money judgment is enforced by a writ of execution, unless the c o u rt directs otherwise. The procedure on execution ­ and in proceedings supplementary to a n d in aid of judgment or execution ­ must accord with the procedure of the state where the c o u rt is located, but a federal statute governs to the extent it applies." Fed. R. Civ. P. 6 9 (a )(1 ). Therefore, Wisconsin law applies, but any enforcement against MTW's property m u s t also comply with the FSIA, 28 U.S.C. §§ 1602-1611. T h e complaint alleges that MTW owns "certain property located" in Milwaukee c o n sis tin g of "a lot and various commercial buildings of less than two acres." D. 1-1, Exhibit A , ¶¶ 15-16. The complaint further alleges that MTW "owns certain personal property, w h i c h is in the possession of Suraleb, consisting of parts, inventory, cars, computers, desks, t ra d e m a rk s and other inchoate rights belonging to MTW." Id. at ¶ 17. MTW argues that th e s e allegations do not meet the specific requirements of the FSIA. See §§ 1610(a), (b).

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" T h e FSIA says that immunity from execution is waived only for specific `property.' As a re su lt, in order to determine whether immunity from execution or attachment has been w a iv e d the plaintiff must identify specific property upon which it is trying to act." Autotech T e c h . LP v. Integral Research & Dev. Corp., 499 F.3d 737, 750 (7th Cir. 2007) (emphasis in original). The Court "cannot give a party a blank check when a foreign sovereign is in v o lv e d . . . The only way the court can decide whether it is proper to issue the writ is if it k n o w s which property is targeted." Id. M T W 's arguments are more appropriately raised, if necessary, when Suraleb actually a tte m p ts to execute on the property that was generally identified in the complaint. It is true th a t the complaint requests an Order of Attachment and Execution, but the Court is not in a p o s itio n to issue a writ of execution because it hasn't been moved to issue one. This was the p ro c e d u re followed by the district judge in Illinois when Suraleb attempted to execute on c e rta in property. There is no reason to treat this case differently, as MTW suggests, simply b e c a u se this is an enforcement action in the first instance. As it stands, the complaint easily s ta te s a plausible claim for relief under the FSIA and gives MTW sufficient notice of the c la im s brought by Suraleb. M T W argues that the complaint should include more detail because the immunity of a foreign sovereign is at stake. In Iqbal, the Supreme Court was concerned with "the inroads in to the defense of official immunity ­ which is meant to protect the officer from the burden o f trial and not merely from damages liability ­ that allowing implausible allegations to d e f ea t a motion to dismiss would make." Cooney v. Rossiter, 583 F.3d 967, 971 (7th Cir.

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2 0 0 9 ). However, this is not a traditional lawsuit. It is a supplementary proceeding to enforce a judgment. While supplementary proceedings can, for some purposes, be "fruitfully a n a lo g iz e d to regular civil proceedings, the analogy becomes strained when procedure at the t r i a l level is in issue. Proceedings to enforce judgments are meant to be swift, cheap, in f o rm a l." Resolution Trust Corp. v. Ruggiero, 994 F.2d 1221, 1226 (7th Cir. 1993). A c c o rd in g ly, the burdens of discovery and trial are not a relevant concern. In the alternative, MTW moves to dismiss that portion of the complaint which a ttem p ts to state a claim against intangible property ­ "trademarks and other inchoate rights b e lo n g in g to MTW." The sale of a trade name or mark apart from its goodwill constitutes a n invalid "assignment in gross." Marshak v. Green, 746 F.2d 927, 929 (2d Cir. 1984). To e f f e c t a valid transfer, Suraleb would have to either take over MTW's tractor business ("go o n in real continuity with the past") or "use [the mark] in connection with substantially the s a m e business or service [so that the] public is not deceived." Bambu Sales, Inc. v. Sultana C r a c k er s , Inc., 683 F. Supp. 899, 904-05 (E.D.N.Y. 1987); Defiance Button Machine Co. v. C & C Metal Prods., 759 F.2d 1053, 1060 (2d Cir. 1985). Correspondingly, MTW would b e forced to discontinue the business activities associated with its trademark ­ the production o f tractors in Belarus. No provision in the FSIA allows a federal court to order a foreign c o rp o ra tio n to stop doing business in a foreign country. More specifically, while the "situs o f intangible property is about as intangible a concept as is known to the law," Tabacalera S e v er ia n o Jorge, S.A. v. Standard Cigar Co., 392 F.2d 706, 714 (5th Cir. 1968), the situs of M T W 's goodwill is most likely its place of incorporation and doing business ­ Belarus. Cf.

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F G Hemisphere Ass. LLC v. Republique du Congo, 455 F.3d 575, 589 (5th Cir. 2006) ("to s a tis f y the § 1610 exception to immunity, the property must be in the United States when the d istrict court authorizes execution"). Even if the FSIA does not stand as a bar to Suraleb's c laim , Wisconsin law does not appear to authorize this type of execution on intangible p ro p e rty. See, e.g., Matter of Jermoo's Inc., 38 B.R. 197, 206 (W.D. Wis. 1984) ("While real p r o p e r ty and tangible property can be reached by judgment creditors upon execution ­ Wis. S tat. § 815.05 ­ executions upon some kinds of intangible personal property are difficult to e n v is io n . . . . [For example], it is hard to imagine execution upon a debtor's right to continue in business under a dealership contract"); Matter of Leonard, 125 F.3d 543, 545 (7th Cir. 1 9 9 7 ) (under Illinois law, only tangible property may be seized by the sheriff pursuant to a w rit of execution). Therefore, Suraleb's claims for execution upon MTW's trademark and g o o d w ill must be dismissed as a matter of law. N O W , THEREFORE, BASED ON THE FOREGOING, IT IS HEREBY O R D E R E D THAT: 1. 2. S u r a le b ' s motion for leave to file a surreply [D. 14] is GRANTED; M T W ' s motion to dismiss [D. 9] is DENIED-IN-PART and GRANTED-IN-

P A R T , consistent with the foregoing opinion. D a te d at Milwaukee, Wisconsin, this 25th day of June, 2010. S O ORDERED,

s / Rudolph T. Randa HON. RUDOLPH T. RANDA U.S. District Judge -6-