Casa Express Corp v. Bolivarian Republic of Venezuela

UNITED STATES DISTRICT COURT

SOUTHERN DISTRICT OF FLORIDA

Case No. 21-cv-23103-BLOOM/Otazo-Reyes

CASA EXPRESS CORP, as Trustee

of Casa Express Trust,

Judgement Creditor,

v.

BOLIVARIAN REPUBLIC OF VENEZUELA,

Judgment Debtor.

________________________________________/

ORDER ADOPTING REPORT & RECOMMENDATION

THIS CAUSE is before the Court upon Judgment Creditor Casa Express Corp’s (“Casa”)

Motion for Default Final Judgment Against Impleaded Defendant Alejandro Andrade Cedeno

(“Andrade Cedeno”) and Judgment Debtor the Bolivarian Republic of Venezuela (“Venezuela”).

ECF No. [149] (“Motion”). All post-judgment matters, including the instant Motion, were referred

to United States Magistrate Judge Alicia Otazo-Reyes. ECF No. [148]. On May 24, 2023, Judge

Otazo-Reyes issued a Report and Recommendation, ECF No. [198] (“R&R”), recommending that

the Motion be granted in part and denied in part to enter a partial default final judgment against

Venezuela and a default final judgment against Andrade Cedeno. See id. at 6. The R&R advised

the parties that objections to the R&R must be filed within fourteen (14) days of the R&R. Id. Casa

thereafter timely filed Objections to the Magistrate Judge’s R&R, ECF No. [211] (“Objections”).

Respondents Raul Gorrin Belisario (“Gorrin”), RIM Group Investments Corp., RIM Group

Investments I Corp., RIM Group Investments II Corp., RIM Group Investments III Corp., Posh 8

Dynamic Inc., and Planet 2 Reaching Inc. (“Respondents”) filed a Response to the Objections,

ECF No. [213]. For the reasons that follow, the Objections are overruled and the R&R is adopted.

I. BACKGROUND

On August 27, 2021, Casa commenced this action by registering an Amended Final

Judgment issued by the Southern District of New York against Judgment Debtor Bolivarian

Republic of Venezuela (“Venezuela”). ECF No. [1]. Casa thereafter filed its Ex Parte Expedited

Motion to Commence Proceedings Supplementary, to Implead Defendants, and for Issuance of

Statutory Notices to Appear, ECF No. [3], on September 10, 2021. On June 7, 2022, Casa filed its

First Motion to Amend, ECF No. [42]. That Motion was granted by Judge Otazo-Reyes, see ECF

No. [59], and Casa thereafter filed its Amended Ex Parte Expedited Motion to Commence

Proceedings Supplementary, ECF No. [60]. Statutory Notices to Appear were issued to

Respondents. ECF Nos. [63]-[71].

On December 19, 2022, Casa moved for Clerk’s Default as to Venezuela, ECF No. [110],

and Andrade Cedeno, ECF No. [111]. On December 20, 2022, the Clerk entered Default against

Venezuela, ECF No. [112], and Andrade Cedeno, ECF No. [113]. On January 30, 2023, Casa filed

the instant Motion for Default Final Judgment. ECF No. [149]. On March 15, 2023, Judge Otazo-

Reyes issued an Order to Show Cause requiring Respondents to show cause in writing why Casa’s

Motion should not be granted or alternatively to file responses to the Motion. ECF No. [175]. On

April 4, 2023, Respondents filed a Response to the Order to Show Cause in which they argued that

the Motion should be denied as to Venezuela. ECF No. [176]. Casa filed a Reply in support of its

Motion on April 26, 2023. ECF No. [185].

On May 24, 2023, Judge Otazo-Reyes issued the R&R recommending that the Motion be

granted in part and denied in part, recommending that this Court enter a partial default final

judgment against Venezuela and a default final judgment against Andrade Cedeno. ECF No. [198].

Casa timely filed Objections, arguing that the R&R incorrectly concluded that factual issues raised

in Respondents’ affirmative defenses preclude the Court from granting certain requested

declaratory relief. ECF No. [211]. Respondents assert that Casa’s Objections to the R&R should

be overruled. See generally ECF No. [213].

II. LEGAL STANDARD

A. Objections to R&R

“In order to challenge the findings and recommendations of the magistrate judge, a party

must file written objections which shall specifically identify the portions of the proposed findings

and recommendation to which objection is made and the specific basis for objection.” Macort v.

Prem, Inc., 208 F. App’x 781, 783 (11th Cir. 2006) (quoting Heath v. Jones, 863 F.2d 815, 822

(11th Cir. 1989)) (alterations omitted). The objections must also present “supporting legal

authority.” S.D. Fla. L. Mag. J.R. 4(b). The portions of the report and recommendation to which

an objection is made are reviewed de novo only if those objections “pinpoint the specific findings

that the party disagrees with.” United States v. Schultz, 565 F.3d 1353, 1360 (11th Cir. 2009); see

also Fed. R. Civ. P. 72(b)(3). If a party fails to object to any portion of the magistrate judge’s

report, those portions are reviewed for clear error. Macort, 208 F. App’x at 784 (quoting Johnson

v. Zema Sys. Corp., 170 F.3d 734, 739 (7th Cir. 1999)); see also Liberty Am. Ins. Grp. v. WestPoint

Underwriters, L.L.C., 199 F. Supp. 2d 1271, 1276 (M.D. Fla. 2001). “It is improper for an

objecting party to . . . submit [ ] papers to a district court which are nothing more than a rehashing

of the same arguments and positions taken in the original papers submitted to the Magistrate Judge.

Clearly, parties are not to be afforded a ‘second bite at the apple’ when they file objections to an

R & R.” Marlite, Inc. v. Eckenrod, No. 10-23641-CIV, 2012 WL 3614212, at *2 (S.D. Fla. Aug.

21, 2012) (quoting Camardo v. Gen. Motors Hourly-Rate Emps. Pension Plan, 806 F. Supp. 380,

382 (W.D.N.Y. 1992)). A district court may accept, reject, or modify a magistrate judge’s report

and recommendation. 28 U.S.C. § 636(b)(1).

III. DISCUSSION

As an initial matter, the Court finds the R&R’s recommendation that default judgment be

granted as to Andrade Cedeno to be well reasoned. Because Casa lodged specific objections to

Judge Otazo-Reyes’s recommendation that the Court issue only partial declaratory judgment and

omit declarations that (1) Venezuela waived sovereign immunity and (2) used the properties at

issue for commercial use, the Court reviews those recommendations de novo. The Court does not

consider Respondents’ arguments that the Motion for Default Judgment is procedurally improper

or their substantive arguments about immunity and the Act of State Doctrine, except to the extent

that they respond Casa’s Objections.

A. Waiver of Sovereign Immunity

Casa argues that the Court should interpret the Waiver of Immunity Provisions of the Fiscal

Agency Agreements issued by Venezuela and conclude that Venezuela expressly waived its

sovereign immunity from suit. ECF No. [211] at 2-3. Casa requests in its Objections that the Court

include in its Default Judgment against Venezuela a declaration that “Plaintiff established that

Venezuela expressly waived its immunity from suit and from execution under the Foreign

Sovereign Immunities Act in the fiscal agency agreements that govern the underlying debt

securities that form the basis of Plaintiff’s judgment. ECF Nos. [60-24] at § 14(d); [60-25] at §

14(d).” Id. at 3.

Respondents assert that “the purported contractual waiver of sovereign immunity does not

expand the property subject to attachment beyond: (i) property in the United States; (ii) used for

commercial proposes.” ECF No. [213] at 10 (citing Connecticut Bank of Com. v. Republic of

Congo, 309 F.3d 240, 254 (5th Cir. 2002), as amended on denial of reh’g (Aug. 29, 2002)).

Respondents have directly challenged whether Venezuela waived its sovereign immunity through

their asserted affirmative defenses. See ECF No. [127] at 3-6.

Judge Otazo-Reyes determined that “[g]iven the factual issues regarding Venezuela’s

waiver of immunity” issuing a “Partial Default Final Judgment as to Venezuela that only directly

quotes the Southern District of New York’s factual finding regarding Venezuela’s waiver of

immunity” is appropriate. ECF No. [198] at 6. Granting a complete Default Judgment would create

the risk of inconsistent judgments and be improper. See Drill S., Inc. v. Int’l Fid. Ins., 234 F.3d

1232, 1237 n.8 (11th Cir. 2000) (“where multiple defendants are jointly liable, it would be

‘incongruous’ for judgment to be entered against a defaulting defendant prior to the decision on

the merits as to the remaining defendants”).

However, the findings in the proposed Partial Default Judgment, ECF No. [198] at 8-10,

do not present the issue of possible inconsistency because it adopts only the findings with regard

to sovereign immunity. Those findings were already articulated by the Southern District of New

York which issued the underlying judgment registered with this Court. See ECF No. [198] at 6;

ECF No. [1-1]. The Court therefore agrees with Judge Otazo-Reyes that a Partial Default Judgment

which limits its declarations to the findings of the Southern District of New York court which

issued the underlying judgment is appropriate to avoid the possibility of inconsistent verdicts in

this case.

B. Commercial Use of the Properties

Casa further contends that the “undisputed facts establish that Venezuela used the

Properties to enter into an agreement with Plaintiff.” ECF No. [211] at 4 (emphasis omitted). Casa

objects to the omission of the following paragraph from the Default Judgment:

Plaintiff established that Venezuela [used] the Properties for a commercial activity,

as defined by 28 U.S.C. § 1610(a). Specifically, Venezuela contracted with Plaintiff

(a private party) an assignment of its litigation rights against Raul Gorrin Belisario

and his related entities guaranteeing that the real properties that are the subject of

this action would be used to repay Plaintiff’s judgment in exchange for Plaintiff’s

assumption of risk and cost of litigation and an express waiver of additional

collection efforts against other public assets. By guaranteeing that the properties

would be used to repay Plaintiff’s judgment, Venezuela used the Properties for a

commercial activity.

ECF No. [211] at 2.

Respondents respond that Casa did not allege that Venezuela used the properties for

commercial activity. Id. (citing ECF No. [60]). Respondents further submit that their affirmative

defenses raised in response to the Amended Ex Parte Expedited Motion specifically challenge

whether the properties at issue were used for a commercial purpose. ECF No. [127] at 4-6.

The Court agrees with Judge Otazo-Reyes that it should not make a dispositive finding on

the commercial use issue at this point given the need to fully resolve and adjudicate the issue on

its merits. The Court finds that adding the declaratory language requested by Casa will present the

possibility of inconsistent judgments within the same case. ECF No. [198] at 5-6; see also Frow

v. De La Vega, 82 U.S. 552, 554 (1872) (“A final decree on the merits cannot be made separately

against one of several defendants upon a joint charge against all, where the case is still pending as

to the others.”).

However, consistent with the R&R’s recommendation, the Court finds that entering a

partial default judgment in the form proposed and attached to the R&R as Exhibit A is appropriate.

Such partial default judgment includes only the specific findings articulated by the Southern

District of New York and omits the potentially inconsistent findings, avoiding the risk of

inconsistent liability.

IV. CONCLUSION

Accordingly, it is ORDERED and ADJUDGED as follows:

1. The Report and Recommendation, ECF No. [198], is ADOPTED.

Case No. 21-cv-23103-BLOOM/Otazo-Reyes

2. Casa’s Objections, ECF No. [211], are OVERRULED.

3. Casa’s Motion for Default Judgment, ECF No. [149], is GRANTED IN PART AND

DENIED IN PART consistent with this Order.

4. Default Judgment against Andrade Cedeno and Partial Default Judgment against

Venezuela will be entered by separate Order.

DONE AND ORDERED in Chambers at Miami, Florida, on July 17, 2023.

BETH BLOOM

UNITED STATES DISTRICT JUDGE

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