United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 3, 2006 Decided May 19, 2006
No. 05-7098
FG HEMISPHERE ASSOCIATES, LLC,
APPELLEE
V.
DEMOCRATIC REPUBLIC OF CONGO,
APPELLANT
Appeal from the United States District Court
for the District of Columbia
(No. 03cv-01314)
Irene M. Solet, Attorney, U.S. Department of Justice,
argued the cause as amicus curiae in support of appellant. With
her on the brief were Kenneth L. Wainstein, U.S. Attorney, and
Douglas N. Letter, Attorney.
Stephen F. Malouf, pro hac vice, argued the cause for
appellant. On the briefs was Steven D. Cundra. Jeffrey M.
Sherman entered an appearance.
Bradford A. Berenson argued the cause for appellee. With
him on the brief was Eric A. Shumsky.
Before: RANDOLPH and TATEL, Circuit Judges, and
WILLIAMS, Senior Circuit Judge.
2
Opinion for the Court filed by Senior Circuit Judge
WILLIAMS.
WILLIAMS, Senior Circuit Judge: FG Hemisphere
Associates seeks to execute a default judgment against two
Washington, DC dwellings owned by the Democratic Republic
of Congo (“DRC”). DRC diplomatic officials resided in these
properties by virtue of their official capacities up until the mid-
1990s, when political disruption led to their removal from office
but not from the properties. (In 2005-06, the DRC succeeded in
recovering the properties for use as diplomatic residencies.) FG
Hemisphere’s predecessor-in-interest obtained a default
judgment against the DRC for breach of a credit agreement
unrelated to the properties. FG Hemisphere then sought writs of
execution against the two properties—their first mention in the
litigation. The DRC again defaulted. Some two months later,
the DRC filed a Rule 60(b) motion to quash the execution order,
arguing, among other things, that its failure to respond earlier
was due to “excusable neglect” and that the two properties were
immune from execution under 28 U.S.C. § 1609 as “property in
the United States of a foreign state.” The district court denied
the motion. The DRC appeals, and we reverse and remand the
district court’s order. The DRC’s neglect in the delay of its
response to the motion to execute was excusable.
* * *
In 1980 the DRC (then the Republic of Zaire) and its state-
owned electric company Société Nationale d’Électricité
(“SNEL”) entered into a credit agreement with Energoinvest to
finance the construction of an electric power transmission
facility in Zaire. The DRC failed to repay, and in 2003, after an
arbitration at which the DRC failed to appear, Energoinvest
3
obtained an arbitration award of roughly $11.7 million. After
providing the DRC with formal diplomatic service, Energoinvest
in September 2004 obtained a default judgment from the U.S.
district court for the District of Columbia confirming the arbitral
award. Energoinvest assigned its rights in the award to FG
Hemisphere, a company that identifies itself as “financial
advisor and investor specializing in sovereign debt obligations in
emerging markets.”
FG Hemisphere then moved to execute on the DRC’s
“commercial property . . . in the United States.” Motion for
Permission to Execute on Judgment and Memorandum in
Support Thereof at 5 (Nov. 30, 2004). The motion mentioned no
specific “commercial” properties. On March 14, 2005, FG
Hemisphere filed an amended motion (“Motion to Execute”)
seeking to execute on two pieces of DRC real property in
Washington, DC: 4001 Linnean Avenue, NW, and 5015
Glenbrook Road, NW. Zaire had originally bought both
properties to serve as diplomatic residences. The DRC’s
Ambassador, Oscar Tatanene Manata, lived in the Linnean
property during his ambassadorship (1990-95) and continued
there after he lost his position, leaving only in 2005. The DRC
Military Attaché lived in the Glenbrook property until 1993,
when he was dismissed and moved out; at that point the
similarly dismissed DRC Deputy Military Attaché (1988-1993),
Elinga Simoke Atembina, either continued to live there or
moved in. Compare Decl. of Faida Mitifu ¶ 6 (May 31, 2005)
(“Atembina refused to vacate the Glenbrook property when his
services were terminated”) with Appellant’s Br. at 7 (“[A]fter
the Glenbrook property was vacated by the Congolese Defense
and Army Forces Attaché, Mr. Atembina and his family moved
into the residence”). Both Manata and Atembina remained as
squatters for over ten years, at least in part as leverage to secure
past salaries for diplomatic service. See Manata’s Motion to
4
Intervene at 3-4 (May 2, 2005) (noting DRC judicial judgment
that Manata family has a “right of occupancy [in the Linnean
property] until the full payment of their salaries and benefits”);
Aff. of Manata at 2 (Apr. 29, 2005) (noting that “I [Manata]
have not been paid in fourteen years . . . . I must and will remain
in this home until the [DRC] settles with me”); Atembina’s
Motion to Intervene at 2 (May 9, 2005) (noting that “Atembina
Family’s occupancy is employment right as long as [the DRC]
will keep them abroad until the full payment of their salaries and
benefits [sic]”); Mem. Order at 2, Democratic Republic of
Congo v. Atembina, No. LTB05-18459 (D.C. Super. Ct., Jan. 3,
2006) (filed in DRC’s Rule 28(j) Letter, Feb. 7, 2006) (noting
that Atembina asserts “a right to remain in the Glenbrook
property until he is paid salary that he claims is due him”). Over
the years the DRC made some efforts to evict them, including a
request that the power company cut off electricity for the
Linnean address. It finally regained possession of the Linnean
property from Manata in 2005 and obtained an eviction order
against Atembina in 2006.
On filing the Motion to Execute, FG Hemisphere arranged
to deliver it by DHL courier service to the DRC. On March
22—eight days after the motion was filed—the mail department
in the DRC Foreign Ministry’s Office of Protocol received and
signed for the DHL package in Kinshasa, the DRC capital. As
delivered, the motion was in English; the DRC’s official
language is French. Two days later, the district court granted the
Motion to Execute (“March 24 Order”).
Meanwhile, in Kinshasa the DHL package made its
bureaucratic rounds. It went first to the Bureau of Translation,
and after translation into French, on to SNEL. SNEL forwarded
the package to the Office of Protocol, from which it went first to
the Office of Legal Affairs and then, in late May, to the Foreign
5
Minister’s Chief of Staff. For reasons that aren’t entirely clear,
ex-ambassador Manata learned of the Motion and phoned to
alert the Chief of Staff before it arrived in his Kinshasa office.
On May 4, evidently no more than a day after the alert from
Manata, the current Ambassador of the DRC, Faida Mitifu, was
directed to secure counsel. This was more than 40 days after the
district court granted the Motion to Execute and, of course,
before receipt of the Motion by the Chief of Staff.
The DRC then (1) moved to quash the writs of execution on
May 31, (2) filed a Rule 60(b) motion to vacate the March 24
Order on July 7, and (3) filed a Rule 62 motion to stay the
execution on July 8. On August 11—the same day that the
United States filed a Statement of Interest—the district court
denied the DRC’s three motions without opinion. The DRC
appeals, arguing that the district court erred because (1) the
March 24 Order was void under Rule 60(b)(4) for lack of
jurisdiction and/or notice, and (2) the DRC’s delay in its
response to the Motion to Execute qualified as excusable neglect
under Rule 60(b)(1).
We review the district court’s denial of the Rule 60(b)
motion for abuse of discretion. See Hall v. C.I.A., 437 F.3d 94,
99 (D.C. Cir. 2006); Lepkowski v. United States Dept. of
Treasury, 804 F.2d 1310, 1311-12 (D.C. Cir. 1986). Because
the district court provided no explanation for its denial of the
DRC’s motion, we face several possibilities: either the district
court found the DRC’s neglect inexcusable, and/or it remained
unpersuaded by the DRC’s position on the merits. Because we
find that the district court abused its discretion insofar as it may
have failed to find the DRC’s neglect excusable, we do not reach
the issue of whether the judgment was void.
6
* * *
Rule 60(b)(1) provides that a court may relieve a party from
a final judgment for “mistake, inadvertence, surprise, or
excusable neglect.” FED. R. CIV. P. 60(b)(1). In Pioneer
Investment Services Co. v. Brunswick Associates Ltd.
Partnership, 507 U.S. 380 (1993), the Supreme Court held that
the determination of excusable neglect is an equitable matter and
identified several relevant factors: the risk of prejudice to the
non-movant, the length of delay, the reason for the delay,
including whether it was in control of the movant, and whether
the movant acted in good faith. Id. at 395-97. While Pioneer
involved “excusable neglect” under Bankruptcy Rule
9006(b)(1), cf. id. at 393-95, the same test governs our
determination under Rule 60(b)(1). See, e.g., In re Vitamins
Antitrust Class Actions, 327 F.3d 1207, 1209-10 (D.C. Cir.
2003). Though the United States as amicus argues excusable
neglect in more detail than the DRC, the latter’s opening brief
clearly preserved the issue. See Kamen v. Kemper Financial
Services, Inc., 500 U.S. 90, 99 (1991).
The factors listed by Pioneer are of course not exclusive.
See Pioneer, 507 U.S. at 395-96; Robb v. Norfolk & Western Ry.
Co., 122 F.3d 354, 362 (7th Cir. 1997). In a case applying other
sections of Rule 60(b), we’ve stressed a foreign sovereign’s
interest—and our interest in protecting that interest—in being
able to assert defenses based on its sovereign status. “Intolerant
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.” Practical Concepts
Inc. v. Republic of Bolivia, 811 F.2d 1543, 1551 n.19 (D.C. Cir.
1987) (Ruth Bader Ginsburg, J.) (internal quotation, brackets,
7
and ellipsis omitted). See also Pulliam v. Pulliam, 478 F.2d 935,
936 (D.C. Cir. 1973) (noting that in the context of a default
judgment “a court should liberally allow relief under” Rule
60(b) because “a resolution on the merits is preferable to a
judgment by default”); Meadows v. Dominican Republic, 817
F.2d 517, 521 (9th Cir. 1987) (noting that “default judgments are
generally disfavored”); Pena v. Seguros La Comercial, S.A., 770
F.2d 811, 814 (9th Cir. 1985) (same); C.K.S. Engineers, Inc. v.
White Mountain Gypsum Co., 726 F.2d 1202, 1206 (7th Cir.
1984) (finding that “rule 60(b) is applied liberally in the default
judgment context only in the exceptional circumstance” where
default was not in “the meaningful control” of the moving
party).
Apart from the United States’s interest in assuring foreign
nations’ ability to rely on the U.S. courts, the express Pioneer
factors favor the DRC. The duration of the delay, to be sure, is
hard to calculate because of uncertainty over when the starting
shot was fired—that is, when the DRC received the relevant
notice. FG Hemisphere suggests that delay should be measured
from September 2004, when the DRC defaulted in the action to
enforce the arbitral award—a point in time, of course, when
there had been no mention of executing on the diplomatic
properties. It relies on Rule 5, which says “[n]o service need be
made on parties in default for failure to appear except that
pleadings asserting new or additional claims for relief against
them shall be served upon them in the manner provided for
service of summons in Rule 4.” FED. R. CIV. P. 5(a). The DRC
and the United States as amicus want to use the March 14, 2005
filing of the Motion to Execute as the starting point. They argue,
moreover, that the attempt to execute against the diplomatic
properties is a new claim for relief within the meaning of Rule
5(a), thus triggering the rule’s reference to Rule 4 (and thus,
8
under Rule 4(j)(1), to the service provisions of the Foreign
Sovereign Immunities Act (“FSIA”), 28 U.S.C. § 1608).
We do not here decide whether the attempt to reach the
diplomatic residences qualifies as a new claim under Rule 5(a).
In resolving the equitable question under Rule 60(b)(1),
however, we think it appropriate to use the time the Motion to
Execute was filed, as that represented the first time that the DRC
received the slightest hint that its diplomatic properties were in
jeopardy. As we said in Practical Concepts, quoting language
drawn from the brief of the United States in that case, when a
foreign government “has appeared and asserts legal defenses,
albeit after a default judgment has been entered, it is important
that those defenses be considered carefully and, if possible, that
the dispute be resolved on the basis of . . . all relevant legal
arguments.” 811 F.2d at 1552. The context of the language
underscores its force; we used it to explain our decision to give
the foreign government an extra chance to establish its
jurisdictional immunity under FSIA—even after having just
found no substantial basis for immunity. 811 F.2d at 1551.
With the Motion to Execute as the starting point, the
roughly two month delay between the deadline to respond to the
Motion and the DRC’s response (and two-and-a-half month
delay between the Motion’s filing and DRC’s response) was
relatively short, especially in light of the distance between the
DRC and the U.S. On brief amicus United States, Br. at 26-27,
and FG Hemisphere, Br. at 19 n.7, appear to assume that the
DRC was entitled to 14 days to respond to the March 14, 2005
motion.1 Of those 14 days, it took eight simply for the DHL
1
Local rules call for response to a motion within “11 days of the
date of service [of a motion] or at such other time as the Court may
direct, an opposing party shall serve and file a memorandum of points
9
package to be delivered to the DRC. Had the DRC used the
same courier service, its response could easily have taken
another eight days, until well after the district court ruled.
Moreover, the DRC secured counsel only one day after receiving
its first actual notice, filing its motion to quash less than four
weeks later.
In light of the difficulties, the delay period doesn’t seem
long in relation to the benchmarks of the rather limited set of
cases (none of which, so far as we’ve discovered, involves
comparable international distance complications). See, e.g.,
Bateman v. U.S. Postal Service, 231 F.3d 1220, 1225 (9th Cir.
2000) (finding excusable neglect when delay was over one
month because plaintiff left country on a family emergency); cf.
Smith v. District of Columbia, 430 F.3d 450, 456 n.5 (D.C. Cir.
2005) (noting that delay of “well over a year” militated against
finding excusable neglect).
Second, there is no danger of prejudice to FG Hemisphere.
Prejudice under Rule 60(b)(1) appears typically and properly to
contemplate costs that reconsideration of the final judgment
would inflict on the non-moving party independent of the chance
of reversal. See, e.g., Bateman, 231 F.3d at 1224-25. Pigford v.
Johanns, 416 F.3d 12, 20-22 (D.C. Cir. 2005), is not to the
contrary. There, in ruling on courts’ Rule 60(b)(5) power to
modify an order in light of changed circumstances, we referred
to excusable neglect by way of analogy and noted that relaxing a
and authorities in opposition to the motion.” LCvR 7(b) (emphasis
added). Assuming in favor of FG Hemisphere that service occurred at
dispatch rather than delivery, and adding three days under Rule 6(e)
for cases where service has been by mail under Rule 5(b)(2)(B), would
yield March 28, 2005 as the due date for a response.
10
consent decree’s deadline would lead “the government to be
prejudiced to the tune of almost one million dollars.” Given our
concern in Pigford about protecting the benefit of the
government’s bargain (in which the firm deadline was
presumably agreed on in consideration for offsetting benefits for
the claimants), Pigford cannot be read as making simple
exposure to adjudication a qualifying form of prejudice under
Rule 60(b)(1). See id. at 21 (“If the district court had granted
the requested relief from the deadlines, the government would
have lost the benefit of its bargain. . . .”). Reliance interests
control.
Here, FG Hemisphere used the delay period to appraise and
make arrangements to auction off the properties. But these costs
appear negligible—FG Hemisphere’s brief makes no effort to
quantify them or otherwise show their significance. Besides, the
DRC in the trial court offered to compensate FG Hemisphere for
its expenses in having the writs executed and the properties
appraised. See Defendant the Democratic Republic of the
Congo’s Reply to Plaintiff’s Response to Emergency Motion to
Quash March 24, 2005, Writs of Execution at 18-19 (July 30,
2005). Cf. Smith, 430 F.3d at 457 n.5 (noting that “the award of
costs and attorney’s fees was aimed at remedying . . .
prejudice.”). Reconsideration imposes no cognizable prejudice
on FG Hemisphere.
Third, the failure to file a timely response was in
considerable measure out of the DRC’s control. The movant’s
use of English rather than French virtually guaranteed the
DRC’s inability to file a timely response. Although we do not
rule on the argument that service should have been governed by
FSIA’s service provision, 28 U.S.C. § 1608(a), we note that
§ 1608(a) calls for translation by the serving party, thus
facilitating the sovereign’s ability to make a timely response and
11
tending in part to overcome what Practical Concepts recognized
as the “perils of converting the legal terms and concepts of one
system into those of another.” 811 F.2d at 1546. The absence of
translation is comparable to the placement of the claim-filing
deadline at the bottom of a letter entitled “Notice for Meeting of
Creditors,” an obscurity that the Pioneer Court found to militate
in favor of creditors who had missed the deadline. 507 U.S. at
398-99. Further, it seems likely that much of the Motion’s
bouncing around the various departments within the DRC was
due to substantial political and institutional differences between
the United States and the DRC, which Practical Concepts
exhorts us to consider. See 811 F.2d at 1546. Finally, of course,
the DRC was plainly hampered by its devastating civil war,
which cost over three million lives, shattered the DRC’s already
shaky political structure, and set off hyperinflation that peaked at
over 500% per year in 2000. It is not surprising that the war
would be accompanied by substantial confusion over
responsibilities in the Foreign Ministry—indeed the Office of
the Foreign Minister itself appears not to have any record of
receiving the Motion. Cf. Brenner v. Shore, 297 N.E.2d 550,
553-54 (Ohio Ct. App. 1973) (vacating default judgment under
parallel state rule 60(b)(1) because of “complete physical and
mental collapse” of defendant).
FG Hemisphere points to the facts that the DRC sold
electricity to neighboring countries, that DRC President Kabila
visited East Asia with an entourage of 200 people, and that the
DRC sent a delegation to Pope John Paul II’s funeral, arguing
that each of these supports a finding that DRC’s neglect was
inexcusable. But a polity’s ability to fund foreign travel for its
chief executive and other officials is hardly evidence of the sort
of general state capacity that would make for swift and efficient
handling of a DHL package with English-language materials.
The delay here, then, seems like the sort of innocent neglect that
12
in the absence of prejudice or bad faith commonly qualifies as
excusable. See, e.g., Walter v. Blue Cross & Blue Shield United
of Wisconsin, 181 F.3d 1198, 1201-02 (11th Cir. 1999) (finding
excusable neglect in secretary’s clerical error in failing to record
deadline).
FG Hemisphere itself seems virtually to admit as much, see
Oral Arg. Tape at 49:02 (conceding that “it is a record . . . [from]
which one could conclude that it was excusable neglect.”), in the
end relying mainly on a number of points apparently thought to
show the DRC’s bad faith—the fourth express Pioneer factor.
See Pioneer, 507 U.S. at 398; Robb, 122 F.3d at 362. For
example, it notes that the DRC participated actively in two
litigations in the United Kingdom and Belgium. FG Hemisphere
doesn’t explain why an erratic litigation record supports an
inference of bad faith. In fact, preoccupation with other
litigation may even strengthen a finding of excusable neglect.
See, e.g., Kryzak v. Dresser Industries, 118 F.R.D. 12, 13-14 (D.
Me. 1987); see also WRIGHT, MILLER & KANE, FEDERAL
PRACTICE AND PROCEDURE: CIVIL 2D § 2858 at 270-71 (“Relief
has been given from a default suffered through the excusable
neglect of counsel preoccupied with other litigation.”).
Along the same lines FG Hemisphere argues that the DRC
has engaged in a systematic litigation strategy aimed at
frustrating creditors by artificial claims of diplomatic immunity.
It points to the Belgian suit, where the court found immunity for
a property formerly used by diplomatic personnel and allegedly
under renovation to serve as the ambassador’s residence. Two
months after the court’s ruling the DRC sold the property. We
have no basis for trying to sort out the merits of this Belgian
conflict, and fail to see how, even on the worst assumptions, it
could show strategic behavior in the DRC’s defaulting in its
response to the Motion to Execute.
13
FG Hemisphere also espies chicanery in the contrast
between the DRC’s hiring of attorneys within one day of ex-
ambassador Manata’s telling the foreign ministry of the order to
execute, and its earlier failure to participate in the litigation. FG
Hemisphere doesn’t explain why this might show bad faith
rather than (at worst) rather chaotic neglect. And even if there
was “strategy” in defaulting on the merits but resisting the
execution, the strategy may have been simply to fight on issues
where its merits position was strong; this is hardly reprehensible.
Finally, our cases (and those of other circuits) antedating
Pioneer generally required a party seeking relief on grounds of
excusable neglect to assert a potentially meritorious defense.
See, e.g., Lepkowski, 804 F.2d at 1314; Combs v. Nick Garin
Trucking, 825 F.2d 437, 441-42 (D.C. Cir. 1987); Falk v. Allen,
739 F.2d 461, 463 (9th Cir. 1984); Gross v. Stereo Component
Systems, Inc., 700 F.2d 120, 122 (3d Cir. 1983). Since then
other circuits have held, without much explanation, that the
requirement survives Pioneer, even though that decision
mentions no such criterion. See, e.g., Johnson v. Dayton Elec.
Mfg. Co., 140 F.3d 781, 784 (8th Cir. 1998) (“[W]e believe the
existence of a meritorious defense continues to be a relevant
factor after Pioneer.”); TCI Group Life Ins. Plan v. Knoebber,
244 F.3d 691, 696-97 (9th Cir. 2001) (noting that pre-Pioneer
factors of culpable conduct, meritorious defense, and prejudice
are “quite sufficient after Pioneer . . . to guide district courts’
exercise of discretion under Rule 60(b)(1) in the context of
default judgments”). Of course Pioneer’s list of factors was
non-exclusive. And the requirement advances judicial economy:
if the 60(b)(1) movant’s substantive claim is plainly meritless,
there seems little point in a nuanced treatment of data bearing on
the excusability of the movant’s neglect. Indeed, in a post-
Pioneer case, we held that a potentially meritorious defense is a
precondition for Rule 60(b) relief (without discussion of
14
Pioneer), reasoning that the movant must show “that vacating
the judgment will not be an empty exercise or a futile gesture.”
Murray v. District of Columbia, 52 F.3d 353, 355-56 (D.C. Cir.
1995).
The DRC has met easily that standard. Under the FSIA the
property of a foreign state is immune from execution subject to
certain exceptions, 28 U.S.C. § 1609, the one asserted by FG
Hemisphere being use of the property “for a commercial activity
in the United States.” 28 U.S.C. § 1610(a). See also 28 U.S.C.
§ 1603(d) (defining commercial activity as “a regular course of
commercial conduct or a particular commercial transaction or
act”); Republic of Argentina v. Weltover, Inc., 504 U.S. 607, 614
(1992) (concluding “that when a foreign government acts . . . in
the manner of a private player within [a market], the foreign
sovereign’s actions are ‘commercial’ within the meaning of the
FSIA”). While FG Hemisphere bears the burden of producing
evidence to show that immunity should not be granted, the DRC
bears the ultimate burden of persuasion (i.e., to show that the
commercial-activity exception does not apply). See Princz v.
Federal Republic of Germany, 26 F.3d 1166, 1171 (D.C. Cir.
1994); Robinson v. Government of Malaysia, 269 F.3d 133, 141
(2d Cir. 2001). FG Hemisphere asserts that the commercial
activity exception applies to the two dwellings because they
have been occupied by persons other than accredited diplomats
for over ten years and thus, FG Hemisphere asserts, are
presumably held as “investment[s] in a rapidly-appreciating real
estate market.”
We are unconvinced. The fact that former diplomats
squatted on the properties says little. FG Hemisphere’s labeling
the DRC as canny is implausible; the DRC entirely failed to
collect rent on the properties for over a decade. FG Hemisphere
counters that this was a payoff to the former diplomats and
15
hence a form of imputed rent to the DRC. But the far more
likely explanation for the failure to pursue the squatters is that
the DRC’s political condition (including civil war) disabled its
government from effectively protecting the state’s interests. It
appears undisputed that the Glenbrook and Linnean sites have
been and are intended to be used as diplomatic residencies of
DRC officials. Both the State Department and the District of
Columbia have recognized the properties as diplomatic—and do
so to this day. While the holdover diplomats may have invoked
non-payment of wages to justify squatting, there is nothing to
show that the DRC conceived of the relation as an indirect way
of providing compensation. (We pass no judgment on whether,
if such a relation existed, it would qualify as commercial.) So
far as the record now appears, there is thus no evidentiary basis
for believing that the properties have been “used for a
commercial activity.”
Because we find that the DRC’s neglect was excusable and
that the DRC’s claim of immunity is potentially meritorious, we
reverse the district court’s denial of the DRC’s Rule 60(b)
motion and vacate the March 24 Order. As the DRC’s neglect is
excused, the district court must consider the merits as it would
have if the DRC had filed a timely response. We thus remand
for further proceedings on the merits.
So ordered.