Opinion

FG Hemisphere Associates, LLC v. Democratic Republic of Congo

  • 447 F.3d 835
  • 371 U.S. App. D.C. 60
  • 2006 U.S. App. LEXIS 12248
  • 2006 WL 1359603
Court
Court of Appeals for the D.C. Circuit
Filed
May 19, 2006
Status
Published
Author
Williams
On the bench
Randolph, Tatel, Williams
Cited by
38 cases
Authority
More cited than 84.0%

explaining that, when considering vacatur of default judgments under Rule 60(b), that “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.”

How later courts described this case

  • explaining that, when considering vacatur of default judgments under Rule 60(b), that “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.”
  • noting that the Democratic Republic of the Congo was “hampered by its devastating civil war,” which was “accompanied by substantial confusion over responsibilities in the Foreign Ministry” and which explained defendants’ two-month delay in responding to plaintiffs’ motion
  • highlighting that the court’s interest in a foreign sovereign’s “being able to assert defenses based on its sovereign status” should be considered when determining whether to grant relief from default judgment
  • “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” beyond “simple exposure to adjudication.”

Written by the judges who cited it.

The opinion

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.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.

A word about cookies

We need a few to keep you signed in and the library working. The rest help us see which pages people use and where they get stuck. They stay off unless you say yes.