Lovati v. Bolivarian Republic of Venezuela
- Andrew Carter
- 1:19-cv-04796
- U.S. District Court · Southern District of New York
- 8
In Lovati v. Venezuela, Judge Carter denied dismissal, vacated default, and required strict service under federal law.
The four plaintiffs and the Bolivarian Republic of Venezuela. The plaintiffs’ existing service and the clerk’s entry of default were found ineffective, but the case was not dismissed; the plaintiffs were given additional time to serve Venezuela properly.
What happened
Lovati v. Bolivarian Republic of Venezuela involved four plaintiffs who sued Venezuela for allegedly failing to pay interest on bonds. After Venezuela did not respond, the clerk entered default, and Venezuela asked the court to cancel that default and dismiss the case for lack of personal jurisdiction.
The court held that service did not comply strictly with the Foreign Sovereign Immunities Act. The parties’ agreement required service at Venezuela’s New York consulate, but the consulate had closed and the plaintiffs instead served Venezuela at a different location under a court-approved alternative method. The court said that service was improper, but dismissal was not warranted, so it extended the time for proper service.
Judge Carter denied Venezuela’s motion to dismiss for lack of personal jurisdiction, granted its motion to vacate the entry of default, and denied its request for oral argument as moot. The plaintiffs were ordered to serve Venezuela strictly under the statute within 60 days or file a status report explaining the delay.
The detailed version
- Lovati v. Bolivarian Republic of Venezuela · No. 1:19-cv-04796
- Andrew Carter
- Nov. 11, 2020
Background
Sergio Lovati, Rudi Lovati, Alessandra Sarago Lovati, and Alessandro Lucibello Piani brought breach-of-contract actions against the Bolivarian Republic of Venezuela. They alleged that Venezuela failed to make interest payments on bonds held under a July 25, 2001 Fiscal Agency Agreement.
The agreement provided for service of legal papers on Venezuela’s consul general or another official of its consulate at 7 East 51st Street in New York. The plaintiffs reported that the consul general had been recalled and the consulate had closed. The court then authorized alternative service at Venezuela’s embassy to the United Nations or its embassy to the United States. The plaintiffs served papers at 335 East 46th Street in New York by personally delivering them to someone authorized to receive service there.
Venezuela did not respond or otherwise defend the case. The clerk entered default under Federal Rule of Civil Procedure 55(a). Venezuela later moved to vacate the entry of default and to dismiss for lack of personal jurisdiction. The plaintiffs had also moved for a default judgment.
Personal Jurisdiction and Service
The Foreign Sovereign Immunities Act, or FSIA, generally supplies the rules for jurisdiction over a foreign state in federal court. Under the FSIA, personal jurisdiction requires both subject-matter jurisdiction over the claim and service of process in the manner required by 28 U.S.C. § 1608.
The court said that § 1608(a) provides four service methods in a required order. The first method is service under a special arrangement between the plaintiff and the foreign state. The Fiscal Agency Agreement was such a special arrangement. Because the agreement specified service at the New York consulate, the plaintiffs’ service at a different address did not strictly comply with § 1608(a)(1). Venezuela’s actual notice of the lawsuit did not cure the failure because the statute requires strict compliance.
The court also rejected the argument that its order authorizing alternative service made the service valid. It noted that another part of the FSIA expressly allows court-directed service, while § 1608(a) does not. The court therefore declined to add a court-ordered alternative-service method to § 1608(a).
Dismissal and Default
Although service was improper, the court declined to dismiss the complaint. It stated that federal district courts have discretion either to dismiss for defective service or to extend the time for proper service. The court extended the time for the plaintiffs to serve Venezuela under § 1608(a), reasoning that Venezuela should not be able to rely on its failure to maintain the specified consulate or another service agent to defeat the case.
Because service was ineffective, the court held that the entry of default was void and granted Venezuela’s motion to vacate that entry. The court denied Venezuela’s motion to dismiss for lack of personal jurisdiction. It also denied Venezuela’s motion for oral argument as moot.
Disposition
The court denied the motion to dismiss for lack of personal jurisdiction, granted the motion to vacate the entry of default, and denied the motion for oral argument as moot. The plaintiffs were directed to serve Venezuela in strict compliance with § 1608(a) as soon as practicable. If service was not completed within 60 days, they had to file a status report by January 15, 2021 explaining why it had not been completed. Judge Andrew L. Carter, Jr. signed the order.
Read the full 8-page opinion on CourtListener, the free public archive maintained by the Free Law Project.