MIRKO DESPOTOVICH v. Republic of Croatia

Background

The plaintiff originally appeared under the name “Tradexim International Co. California.” The opinion states that the business was a sole proprietorship of Mirko Despotovich, that Despotovich acknowledged he was the real party in interest, and that he ratified the amended complaint. The court therefore directed that Despotovich be substituted in the caption as plaintiff.

Despotovich’s claims arose from a 1990 contract with non-party “Gavrilovic” for delivery of canned ham to the United States. The shipments were returned after bacteria was found. Despotovich later obtained a judgment against Gavrilovic in Croatia, which was affirmed by Croatia’s High Commercial Court. A New York court domesticated that judgment on January 21, 2020. Despotovich then filed this action to enforce the New York judgment against the Republic of Croatia, alleging that Croatia was Gavrilovic’s alter ego.

Motion to Dismiss

Croatia moved to dismiss under Federal Rule of Civil Procedure 12(b)(1) for lack of subject-matter jurisdiction under the Foreign Sovereign Immunities Act (FSIA), and under Rule 12(b)(6). The court stated that because it resolved the case on the FSIA jurisdiction issue, it did not reach Croatia’s other arguments.

The FSIA generally gives foreign states immunity from suit in United States courts, subject to specific exceptions. Despotovich relied on the statute’s commercial-activity exception. The court explained that this exception requires the lawsuit to be based on particular commercial conduct by the foreign state that fits one of the statute’s listed categories. Commercial conduct by another entity may be attributed to a foreign state if that entity is the state’s alter ego.

Court’s Analysis

The court assumed, for purposes of its analysis, that Gavrilovic was Croatia’s alter ego. It nevertheless concluded that the commercial-activity exception did not apply. The court identified the basis of the present lawsuit as Croatia’s alleged nonpayment of the 2020 New York judgment, which the court described as arising from nonpayment of the Croatian judgment. The court held that the 1990 canned-ham transaction was too attenuated because it was not the particular conduct on which this enforcement action was based.

The court also stated that the amended complaint did not allege commercial activity in the United States or elsewhere that gave rise to nonpayment of the 2020 judgment. It further stated that, even if nonpayment were attributed to Croatia’s nationalization of Gavrilovic’s assets, nationalizing property would be a sovereign act rather than commercial activity. The court therefore found that the action did not fall within the first clause of the FSIA commercial-activity exception and that Despotovich had not met his initial burden of production.

Despotovich requested jurisdictional discovery and, if needed, a factual hearing. The court denied jurisdictional discovery because he had not explained what discovery could establish jurisdiction over Croatia. The opinion does not state that the court reached the merits of the underlying contract dispute or determined whether Croatia was actually Gavrilovic’s alter ego.

Disposition

The court granted Croatia’s motion to dismiss and dismissed the case. It separately denied Despotovich’s request for jurisdictional discovery. The clerk was directed to amend the caption to read “MIRKO DESPOTOVICH, doing business as TRADEXIM INTERNATIONAL CO. CALIFORNIA,” terminate all pending motions, and close the case.

Classification

This is a procedural order because the court dismissed the action for lack of subject-matter jurisdiction under the FSIA without reaching the underlying enforcement or alter-ego merits.